Small Business Timber Set Aside Program

Issued by Small Business Administration
on Wednesday 25 March 2015
Comments closed on 2015-05-26
 

Table of Contents Back to Top

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DATES: Back to Top

Comments must be received on or before May 26, 2015.

ADDRESSES: Back to Top

You may submit comments, identified by RIN: 3245-AG69, by any of the following methods:

  • Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
  • For mail, paper, disk, or CD/ROM submissions: Brenda J. Fernandez, Procurement Analyst, U.S. Small Business Administration, Office of Policy, Planning and Liaison, 409 Third Street SW., 8th Floor, Washington, DC 20416.
  • Hand Delivery/Courier: Brenda J. Fernandez, Procurement Analyst, U.S. Small Business Administration, Office of Policy, Planning and Liaison, 409 Third Street SW., 8th Floor, Washington, DC 20416.

SBA will post all comments on www.regulations.gov. If you wish to submit confidential business information (CBI) as defined in the User Notice at www.regulations.gov, please submit the information to: Brenda J. Fernandez, Procurement Analyst, U.S. Small Business Administration, Office of Policy, Planning and Liaison, 409 Third Street SW., 8th Floor, Washington, DC 20416, or send an email to brenda.fernandez@sba.gov. Highlight the information that you consider to be CBI and explain why you believe SBA should hold this information as confidential. SBA will review the information and make the final determination on whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: Back to Top

Brenda J. Fernandez, Procurement Analyst, Office of Policy, Planning and Liaison, 409 Third Street SW., Washington, DC 20416; (202) 205-7337; brenda.fernandez@sba.gov.

SUPPLEMENTARY INFORMATION: Back to Top

The Forest Service, an agency of the federal government sells saw logs in accordance with the Small Business Act (Pub. L. 85-536 as amended) and the National Forest Management Act (Pub. L. 94-588 as amended). Timber is regularly sold from the federal forests managed by the U.S. Department of Agriculture's Forest Service (USDA/FS) and the U.S. Department of the Interior's Bureau of Land Management (DOI/BLM). On occasion, timber is sold from federal forests which are under the supervision of the U.S. Department of the Interior's U.S. Fish and Wildlife Service, the U.S. Department of Defense, the U.S. Department of Energy, and the Tennessee Valley Authority. Collectively, these agencies are considered the “sales agencies.” SBA and the sales agencies jointly set aside timber sales for bidding by small concerns when market data demonstrates that small businesses would not obtain their fair share under open sales. In 1971, USDA and SBA signed a Memorandum of Understanding (MOU) intended to accomplish the declared policy of Congress that a fair proportion of the total sales of Government property be made to small business enterprises defined by SBA (Small Business Act. 15 U.S.C. 631, et seq.). In the 1980s and 1990s, efforts to protect species habitat and watersheds in compliance with federal law and regulation resulted in dramatic changes to the United States timber industry. These changes included reduced timber harvests on Federal and private lands which in turn caused market failures for timber mills that could not adapt and retool. As a result, many small timber mills (western mills in particular) have been forced to close. As such, the Small Business Timber Set-Aside Program has become increasingly important to ensure that a “fair proportion” of Federal timber is available for purchase by qualified small business concerns.

SBA is soliciting public comment on the Small Business Timber Set-Aside Program to help the agency determine what, if any, changes should be proposed. Specifically, SBA is soliciting public comments on methods to include stewardship sales in the calculation of the timber sale share for small business and considerations for how timber sale appraisals are performed for small business set-aside sales. These possible amendments would not impact the DOI/BLM's Timber Sale and Forest Management Programs. DOI/BLM's small business set-asides, which are limited to 8 markets in Oregon, are made in accordance with the terms of a separate MOU between SBA and DOI/BLM. Rather than setting forth computation methods for small business market share considerations, SBA's MOU with DOI/BLM affords SBA the opportunity to review DOI/BLM annual timber sale plans prior to publication and to request set-asides under the authority of the Small Business Act. When DOI/BLM agrees to set aside certain timber sales, DOI/BLM consults with SBA concerning financial and other performance qualifications to be included in the conditions of sale. While DOI/BLM utilizes various stewardship contracting vehicles, the regulatory amendments contemplated by SBA will not impact DOI/BLM's use of stewardship contracting. Further, DOI's current policy regarding small business set-aside timber sales is to appraise the hauling costs to the closest mill that qualifies as a small business under SBA's definition located in.

Saw logs are sold through conventional timber sales and through stewardship contracting. The stewardship contracting program was established by Section 347 of the FY1999 Omnibus Appropriations Act (Pub. L. 105-277) to help achieve land management goals on the national forests, and to help meet the needs of local and rural communities. Stewardship contracting is a goods-for-services arrangement that requires timber companies who cut trees on National Forest System lands to perform other service work in exchange for the timber volume. Integrated Resource Timber Contract (IRTC) formats were developed by the Forest Service for exclusive use in implementing stewardship contracting projects when the value of goods exceeds the cost of services. Integrated Resource Service Contract (IRSC) formats were developed by the Forest Service for exclusive use in implementing stewardship contracting projects when the cost of services exceeds the value of the goods. As demonstrated below, stewardship sales accounted for 31% of all timber (sawtimber plus non-sawtimber) sold by the FS in Fiscal Year 2013. This is the highest percentage of total sales in the last ten years. However, some stakeholders believe that certain FS Regions could/should do consistently better in making timber sales awards to small business.

Stewardship Timber/Service Sales Sold Back to Top
Year (FY) R-1 R-2 R-3 R-4 R-5 R-6 R-8 R-9 R-10 All FS
[FY 2004-2013]
Data Source: Timber Data Company; November 19, 2013.
All sales, sawtimber + non-sawtimber (MMbf)                    
2004 159 163 49 107 208 434 359 319 85 1,883
2005 243 132 72 49 386 392 414 364 54 2,105
2006 189 165 69 68 228 470 858 381 83 2,511
2007 135 198 57 69 272 489 501 352 29 2,101
2008 186 201 43 70 109 525 539 349 4 2,026
2009 216 199 21 41 236 498 476 319 6 2,011
2010 180 196 46 60 252 424 540 358 45 2,100
2011 149 159 54 46 212 464 556 379 37 2,056
2012 144 196 32 53 219 512 521 419 41 2,137
2013 115 210 129 71 229 527 475 393 13 2,162
Stewardship timber/service sales (MMbf)                    
2004 7 9 25 12 23 19 0 0 0 96
2005 12 9 17 7 23 30 4 2 1 105
2006 48 16 18 15 24 64 42 4 0 231
2007 44 16 28 9 62 91 34 23 1 308
2008 64 35 21 12 14 100 28 10 1 284
2009 45 38 15 11 54 96 62 22 0 343
2010 56 70 26 38 75 120 50 50 0 486
2011 43 33 31 21 47 105 62 50 33 427
2012 41 35 19 22 102 175 92 67 40 592
2013 36 39 107 51 75 202 90 61 0 661
% Stewardship                    
2004 4 5 51 12 11 4 0 0 0 5
2005 5 7 23 13 6 8 1 1 1 5
2006 25 10 26 22 11 14 5 1 0 9
2007 33 8 49 14 23 19 7 6 2 15
2008 35 17 49 17 13 19 5 3 27 14
2009 21 19 72 27 23 19 13 7 0 17
2010 31 36 56 64 30 28 9 14 0 23
2011 29 21 59 47 22 23 11 13 9 21
2012 28 18 58 42 47 34 18 16 96 28
2013 32 19 83 72 33 38 19 16 0 31

To help ensure a fair proportion of timber sales go to small businesses, timber sales must be set aside when small business participation falls below a certain amount. In determining this trigger amount, the FS calculates the amount of small business market share based on small business purchases of saw timber volume over a five-year period. This percentage, based upon historical purchases, sets the framework for what constitutes small businesses' fair proportion of the total sales volume. Currently, the computation of small business market share does not include saw logs from stewardship contracts. SBA is seeking comment on whether the calculation should also include saw timber purchased through stewardship contracts. Specifically, SBA invites comments and supporting data in response to the following questions.

Stewardship Contracting Questions Back to Top

1. How should the FS include the saw timber volume on stewardship contracts awarded to small business in the computation of small business market share?

2. How might including stewardship saw timber volume impact future market share calculations for small business concerns that participate in stewardship contracts and/or conventional timber sales?

3. What are the potential impacts (costs and benefits) if SBA regulations at 13 CFR 121.506 were to include the saw timber volume from IRTCs and IRSCs in the calculation of small business market share?

a. What is the anticipated impact of the inclusion of saw timber volume from stewardship contracts on stumpage prices?

b. If inclusion of saw timber volume from stewardship contracts leads to lower stumpage prices, what is the impact to land management activities (paid for by stumpage prices) and retained receipts?

c. What is the anticipated impact on sale values both from an agency perspective and a treasury perspective?

4. What would be the most efficient and effective way to account for actual saw timber volume from stewardship contracts awarded to small business?

5. Would an increase in the utilization of stewardship contracts in a market area result in a lower representation of small businesses successfully bidding for timber sales in that market area? Should this lead to lowering the market share for small business set-aside sales in that market area when the FS and SBA compute small business participation?

6. Would including stewardship saw timber volume on contracts awarded to small business in the calculation result in more accurate representation of small business participation in the market area?

Unrelated to stewardship contracting, SBA is also seeking public comments on potential amendments to its current regulations at 13 CFR 121.507(a)(4)(i), which provides that on a set-aside timber sale, the small business may not resell more than 30% of the saw timber volume to a large business concern. When the FS offers any timber sale, it appraises the sale for its potential market value and sets the minimum bid that it will accept based on that appraisal. One factor in the appraisal is the haul cost that the purchaser (small or large) will absorb to bring the timber to a manufacturing facility. Currently, all appraisals are made to the nearest mill. In timber sales set aside for small businesses, large mills are ineligible to bid. In the context of a set-aside, if the nearest mill is a large mill, the appraisal will not accurately capture the haul cost to eligible bidders. As such, SBA is seeking public comment on whether the appraisal for a small business set-aside sale should be made to the nearest, small mill.

Set-aside Sale Appraisal Point Questions Back to Top

1. How can the actual haul costs to eligible small business timber set-aside purchasers be better reflected in the appraisal process?

2. Should there be considerations for keeping the appraisal point to the nearest mill on a small business timber set-aside sale in those market areas that do not have mills that would qualify as “small” under the SBA criteria?

3. How should the prohibition against small businesses reselling more than 30% of the saw timber volume to a large business concern be taken into account when making appraisals for small business timber set-aside sales?

4. What is the financial impact to the Forest Service if the 30% rule is included in the appraisal point haul cost calculation of a small business timber set-aside sale?

5. What is the anticipated impact on trust funds (e.g., Knutson-Vandenberg), if any, if appraisals are made to a small mill rather than the closest processer.

6. SBA is also requesting data on mill size and location.

The SBA welcomes comments and any available data to help substantiate recommendations made in response to the foregoing general questions, or other potential policy options—including status quo—that should be considered for the Small Business Timber Sales Set-Aside Program.

Dated: March 16, 2015.

Maria Contreras-Sweet,

Administrator.

[FR Doc. 2015-06557 Filed 3-24-15; 8:45 am]

BILLING CODE 8025-01-P

Citation: 80 FR 15697
 

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