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USDA/FS

RIN: 0596-AC80

Publication ID: Fall 2008

Title: Down Payment; Periodic Payments
Abstract: The proposed action is to revise two separate but related rules by providing notice of the proposed rules and request for comments. 36 CFR 223.49 would be revised to correct problems with procedures for releasing down payments associated with a drastic reduction in wood product prices. The public will also be asked to comment on an alternative procedure for use and release of down payments proposed by the timber industry. 36 CFR 223.49 and 223.50 would be revised to remove the requirement for a downpayment and periodic payments on stewardship contracts. Seek public comment on these proposed amendments prior to issuing final rules. Justification for Proposed Action: The drastic reduction in wood product prices that is currently ongoing has revealed problems with the downpayment procedures that were not evident when forest product markets were stronger. Under the current regulations a purchaser must pay for, cut and remove timber equal in value to 10% of the total advertised value plus 20 percent of the bid premium. On some stumpage rate adjusted sales prices de-escalated so much that most, and in some cases all, of the included timber was cut and paid for without triggering the release of the downpayment. To avert this problem industry has proposed tying release of the downpayment to volume rather than value. But, that method can result in the government not being adequately protected in sharply rising markets or in unit rate sales including combinations of very high and very low value species. A procedure that uses both value and volume components for triggering release of the downpayment would be a more equitable approach. Industry has also proposed treating the downpayment like periodic payments where the cash deposited can be used to pay for timber as it is cut. This would help their cash flow while still providing the economic incentive the regulation intended to encourage purchasers to harvest the timber sooner rather than later. Additionally, because stewardship contracting procedures negate the need for down payments and periodic payments the 36 CFR 223.49 and 223.50 regulations need to be revised to exclude stewardship contracts from those requirements.
Agency: Department of Agriculture(USDA)	Priority: Substantive, Nonsignificant
RIN Status: Previously published in the Unified Agenda	Agenda Stage of Rulemaking: Proposed Rule Stage
Major: Undetermined	Unfunded Mandates: Undetermined
CFR Citation: 36 CFR 223.49 36 CFR 223.50
Legal Authority: Not Yet Determined

Legal Deadline: None

Timetable:

Action	Date	FR Cite
NPRM	10/29/2008	73 FR 64288
NPRM Comment Period End	12/29/2008

Regulatory Flexibility Analysis Required: Undetermined	Government Levels Affected: Undetermined
Federalism: Undetermined
Included in the Regulatory Plan: No
RIN Data Printed in the FR: No
Agency Contact: Lorrie Parker Regulatory Analyst Department of Agriculture Forest Service ATTN: ORMS, D&R Branch, 1400 Independence Avenue SW, Washington, DC 20250-0003 Phone:202 205-6560 Fax:202 205-6539 Email: lsparker@fs.fed.us