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The original documents are located in Box 34, folder "12/16/75 S364 Timber Sale
Contracts" of the White House Records Office: Legislation Case Files at the Gerald R.
Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
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copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
Digitized from Box 34 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
signd 12/16/25
APPROVED DEC16
THE WHITE HOUSE
ACTION
WASHINGTON
Last Day: December 20
December 16, 1975
To
archives
MEMORANDUM FOR THE PRESIDENT
<1/21
FROM:
JIM CANNON
X
SUBJECT:
S. 364 - Timber Sale Contracts
portal
12/17
Attached for your consideration is S. 364, sponsored
by Senator McClure, which would authorize the Secretary
of Agriculture to permit the transfer of a purchaser's
unused "purchaser credit" for road construction from
one timber sale to another within the same National
Forest.
A discussion of the bill is provided in OMB's enrolled
bill report at Tab A.
OMB, Max Friedersdorf, Counsel's Office (Lazarus) and
I recommend approval of the enrolled bill.
RECOMMENDATION
That you sign S. 364 at Tab B.
LIBRARY GERALD 8. FORD
THE
PRESIDENT
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE
UNITED
OFFICE OF MANAGEMENT AND BUDGET
SECURE
STATE
WASHINGTON, D.C. 20503
DEC 12 1975
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 364 - Timber sale contracts
Sponsor - Sen. McClure (R) Idaho
Last Day for Action
December 20, 1975 - Saturday
Purpose
Authorizes the transfer of certain "purchaser credits"
for road construction among National Forest timber sales.
Agency Recommendations
Office of Management and Budget
Approval
Department of Agriculture
Approval
Discussion
The purchasers of National Forest timber are often
required to construct portions of the permanent road
system needed to remove timber from the areas where it
is harvested. Under this approach, the purchaser earns
a credit for costs incurred which is applied against
charges for the Federal timber. However, current
interpretation of the law limits applying this credit
to only the timber sale where the credit is earned.
Road construction typically precedes timber removal and
results in tying up the timber purchaser's capital until
timber of commensurate value is harvested.
In reporting on S. 364, the Senate Committee on Public
Works explained that this situation is creating
problems in the timber industry:
"The shortage of available cash created by
unrealized road amortization, compounded by
other current problems, has adversely affected
some timber processing companies in bidding
on new sales and created uncertainty
concerning future timber supplies. Small
2
to medium size companies are most severely
affected by the cash flow problem, while,
typically, the large, integrated companies
are less affected by the capital shortage
thus created."
The enrolled bill would overcome the problems discussed
above by authorizing the Secretary of Agriculture to
permit the transfer of a purchaser's unused "purchaser
credit" for road construction from one timber sale to
another within the same National Forest. Such a "purchaser
credit" transfer would be subject to the rules and regu-
lations prescribed by the Secretary and would apply to
only those credits earned after the date of enactment.
In its enrolled bill letter, Agriculture notes that while
it had originally opposed S. 364 as introduced, the
enrolled version is "greatly improved" and the Department
recommends that you approve the enactment. Specifically,
Agriculture notes that:
"
Purchasers of National Forest timber
maintain that this limitation unnecessarily
ties up their operating capital. They
further maintain that the ability to trans-
fer credit to other sales to meet charges for
timber being harvested would free operating
capital to build other roads and harvest
other timber, and would in some instances
allow them to avoid borrowing capital. We
believe the arguments of the purchasers are
reasonable and defensible. We also believe
that the credit transfers as provided by
S. 364 would stimulate more road
construction in advance of immediate use.
Advance road construction usually results in
better road construction. These roads
become a permanent part of the National
Forest road systems; therefore, the Govern-
ment also stands to benefit from S. 364.
*
"
In its present form, S. 364 provides
that only unused effective purchaser credit
that is earned after the date of enactment
may be transferred. This new provision would
3
greatly reduce estimated first year credit
transfers (from $169 million to $39 million)
and substantially mitigate the impact on
payments to States ... We anticipate that
the present provisions will stimulate road
construction. Consequently, some compensating
economic benefits relating to the increased
industrial activity should be realized by
the counties."
"The Forest Service does not anticipate any
significant increase in the cost of
administering timber sales as a result of
S. 364. "
James James M. m. m. Frey
Assistant Director
for Legislative Reference
Enclosures
STATES DEPARTMENTO DEPARTMENT
DEPARTMENT OF AGRICULTURE
OFFICE OF THE SECRETARY
WASHINGTON, D.C. 20250
December 9, 1975
Honorable James T. Lynn
Director, Office of Management
and Budget
Dear Mr. Lynn:
In reply to the request of your office, the following report is submitted
on the enrolled enactment S. 364, "Relating to certain Forest Service
timber sale contracts involving road construction."
The Department of Agriculture recommends that the President approve the
enactment.
S. 364 would amend section 4 of the Act of October 13, 1964 (78 Stat.
1089; 16 U.S.C. 535), to authorize the Secretary of Agriculture, under
such rules and regulations as he shall prescribe, to permit a purchaser
of National Forest timber to transfer earned but unused effective
purchaser credit from one of his sales in a National Forest to another
of his sales in that same National Forest to be used in payment of timber
harvested. Only unused effective purchaser credit that would be earned
after date of enactment could be transferred.
Purchasers of National Forest timber would receive the principal benefits
of this legislation. Under present law, the capital investments that
purchasers make in the construction of roads needed to harvest timber are
ultimately converted into credit that is applied to meet charges for the
Federal timber. However, the present law has been interpreted as limiting
the application of such credit to the timber sale where the credit is
earned. Purchasers of National Forest timber maintain that this limi-
tation unnecessarily ties up their operating capital. They further
maintain that the ability to transfer credit to other sales to meet
charges for timber being harvested would free operating capital to build
other roads and harvest other timber, and would in some instances allow
them to avoid borrowing capital. We believe the arguments of the pur-
chasers are reasonable and defensible. We also believe that the credit
transfers as provided by S. 364 would stimulate more road construction
in advance of immediate use. Advance road construction usually results
in better road construction. These roads become a permanent part of
the National Forest road systems; therefore, the Government also stands
to benefit from S. 364.
Earlier in this session of Congress the Department of Agriculture reported
and testified in opposition to S. 364 as introduced. We cited the bill's
potential effects of sharply reducing Federal receipts and payments to
Honorable James T. Lynn
2
counties from those receipts, its retroactive effect on existing contracts,
and problems that might be encountered in administration as reasons for
recommending against enactment.
Both bodies of Congress amended and greatly improved the provisions of
S. 364. Those amendments have alleviated the concerns raised in our
negative report and testimony. As introduced, the bill would have
directed the Secretary of Agriculture to include provisions for the
transfer of credit in every timber sale contract that involved road
construction. This language would have mandated contract modifications
without consideration of whether any prospects for earning or trans-
ferring credit existed. In its present form, S. 364 authorizes the
Secretary to provide for the transfer of credit through the issuance of
rules and regulations, and thereby permits the Secretary to develop
relevant procedures and proper safeguards for implementing the intent
of the legislation. As introduced, the bill would have permitted timber
sale purchasers to transfer unused credits already accumulated under
existing contracts. That feature would have permitted an estimated
$169 million of credit to be transferred and used in substitution for
cash during the first year following enactment (assuming enactment
on July 1, 1975). The postponement of cash receipts would have resulted
in a proportional postponement of payments to States from those receipts.
The postponement in payments to States would have been equal to 35
percent of the total payments made from fiscal year 1974 receipts or 48
percent of the total made from fiscal year 1975 receipts. In its
present form, S. 364 provides that only unused effective purchaser
credit that is earned after the date of enactment may be transferred.
This new provision would greatly reduce estimated first year credit
transfers (from $169 million to $39 million) and substantially mitigate
the impact on payments to States. We do not believe the new provision
would have a disruptive effect on the budgets of the counties that
receive the monies paid to the States. We anticipate that the present
provisions will stimulate road construction. Consequently, some com-
pensating economic benefits relating to the increased industrial
activity should be realized by the counties.
The Forest Service does not anticipate any significant increase in the
cost of administering timber sales as a result of S. 364.
Sincerely
J. Phil Comprell Campbell
Acting Secretary
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
12-12-75
DEC 12 1975
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill S. 364 - Timber sale contracts
Sponsor - Sen. McClure (R) Idaho
Last Day for Action
December 20, 1975 - Saturday
Purpose
Authorizes the transfer of certain "purchaser credits"
for road construction among National Forest timber sales.
Agency Recommendations
Office of Management and Budget
Approval
Department of Agriculture
Approval
Discussion
The purchasers of National Forest timber are often
required to construct portions of the permanent road
system needed to remove timber from the areas where it
is harvested. Under this approach, the purchaser earns
a credit for costs incurred which is applied against
charges for the Federal timber. However, current
interpretation of the law limits applying this credit
to only the timber sale where the credit is earned.
Road construction typically precedes timber removal and
results in tying up the timber purchaser's capital until
timber of commensurate value is harvested.
In reporting on S. 364, the Senate Committee on Public
Works explained that this situation is creating
problems in the timber industry:
"The shortage of available cash created by
unrealized road amortization, compounded by
other current problems, has adversely affected
some timber processing companies in bidding
on new sales and created uncertainty
concerning future timber supplies. Small
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
Time:
December 12
700pm
FOR ACTION: Paul Leach on
cc (for information): Jack Marsh
Max Friedersdorf th
Jim Cavanaugh
Ken Lazarus of
FROM THE STAFF SECRETARY
DUE: Date: December 15
Time: 400pm
SUBJECT:
S. 364 - Timber sale contracts
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material; please
K. R. COLE, JR.
ielephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
CTRON MEMORANDUM
WASHINGTON
LOG NO.:
Date:
Time:
December 12
700pm
FOR ACTION: Paul Leach
CC (for information): Jack Marsh
Max Friedersdorf
Jim Cavanaugh
Ken Lazarus
FROM THE STAFF SECRETARY
DUE: Date: December 15
Time: 400pm
SUBJECT:
S. 364 - Timber sale contracts
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X
For Your Comments
Draft Remarks
REMARKS:
Please return to Judy Johnston, Ground Floor West Wing
No objection.
Ken Lazarus
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
telephone the Staff Secretary immediately.
James
THE WHITE HOUSE
WASHINGTON
December 15, 1975
MEMORANDUM FOR:
JIM CAVANAUGH
FROM:
MAX L. FRIEDERSDORF M.b.
SUBJECT:
S.364 - Timber sale contracts
The Office of Legislative Affairs concurs with the agencies
that the
subject bill be signed.
Attachments
Calendar No. 413
94TH CONGRESS
SENATE
REPORT
1st Session
No. 94-426
TIMBER SALE ROAD COSTS
OCTOBER 9 (legislative day, SEPTEMBER 11, 1975) -Ordered to be printed
Mr. McCLURE, from the Committee on Public Works,
submitted the following
REPORT
[To accompany S. 364]
The Committee on Public Works, to which was referred the bill
S. 364 relating to certain Forest Service timber sale contracts involv-
ing road construction, having considered the same, reports favorably
thereon with an amendment and recommends that the bill as amended
do pass.
PURPOSE OF THE LEGISLATION
S. 364, as amended, provides a new authority under section 4 (2) of
the Act of October 13, 1964 (78 Stat. 1089, 16 U.S.C. 535), which au-
thorizes the Secretary of Agriculture, under rules and regulations he
shall prescribe, to provide for the transfer of the unamortized portion
of road costs on timber sale contracts from one timber sale contract to
another timber sale contract held by the same purchaser within the
same proclaimed National Forest.
BACKGROUND OF LEGISLATION
The economic impact on the timber industry of the recent national
inflation/recession has been more severe than upon the economy of the
Nation as a whole. Housing starts dropped markedly below the
recent level of 2 million housing units per year, seriously curtailing
the domestic market for lumber. At the same time, the costs of forest
road construction, timber harvesting equipment, and labor have risen
faster than the rate of inflation in the Nation as a whole. The sharp
price increases of the needed gasoline, oil, diesel fuel, and asphalt are
the leading factors in the disproportionate advancing costs in the
timber industry. These increases in costs of timber production and
57-010
2
3
decreases in markets for lumber are further complicated by sharply
tion under the present Forest Service policy of funding road con-
rising bid prices on recent Federal timber sales.
The profitability of the timber processing industry has understand-
struction out of timber sale receipts. The 25 percent county share is
also reduced proportionately by this Office of Management and Budget
ably declined under these negative influences. Since timber processing
imposed practice of funding all forest road construction from timber
is a capital intensive industry, cash flow has become a critical prob-
sales.
lem. Although precise cost data are not available, approximately $200
The committee notes that when the fiscal year 1975 budget was
million is invested in permanent type national forest roads annually.
prepared it was estimated that revenues from timber, which con-
This investment is required as a part of the timber sale contract and
stitute about 95 percent of Forest Service revenues, would be $425 mil-
is accomplished by the timber processing industry as a part of timber
lion. However, current revenue estimates show a substantial drop to
harvesting. The finished National Forest roads are often unused for a
$332 million, a decline of $93 million. This reflects a drop of national
period of 1 to 3 years before the timber purchaser can use his invest-
ment in forest road construction as a credit against Forest Service
forest timber harvest volume, as well as a drop in lumber price.
Housing starts reached a peak of 2.4 million on a yearly basis in 1972,
stumpage fees in that timber sale.
and have declined to the present level of 1.2 million starts.
The shortage of available cash created by unrealized road amortiza-
tion, compounded by other current problems, has adversely affected
The fiscal year 1976 budget presented to Congress estimates reve-
nues from timber at $485 million. Clearly, given actual revenues for
some timber processing companies in bidding on new sales and created
fiscal year 1975, unless the economy and housing make a miraculous
uncertainty concerning future timber supplies. Small to medium size
recovery, Forest Service revenues will never approach even the opti-
companies are most severely affected by the cash flow problem, while,
mistic estimate of fiscal year 1975. Thus payments to counties just
typically, the large, integrated companies are less affected by the
made for fiscal year 1976 (which are from income earned in 1975) are
capital shortage- thus created.
There is a basic Forest Service road construction funding policy
down to $88 million, the greatest recorded drop in a single year (down
from $117 million).
imposed by the Office of Management and Budget which further ag-
INTENT OF LEGISLATION
gravated the pressure on timber investment capital. Since 1972, the
use of appropriated funds for timber access roads has declined from
S. 364 addresses one aspect of the overall problem by improving
$57 million to zero. The President has submitted a deferral and a
the cash flow that is now restricted by timber company investments
recission which will, if permitted to become effective, continue the
in forest road construction. The bill would enable a timber company
zero level of forest road construction from appropriated funds. The
to use earned, unused road cost credits on one sale in a National
costs of forest road construction have been shifted entirely to timber
Forest in lieu of cash for stumpage fees on another sale in that Na-
sale purchasers, with the result that the cest of all forest roads are now
tional Forest. This provision would become effective with road costs
regarded as a part of the cost of harvesting timber, even though many
earned on existing and new contracts after the date of enactment. It
of the roads have other uses and the roads with the greatest diversity
would not apply retroactively to road costs earned before the date
of use are the most costly to construct. This includes use by hunters,
of enactment.
fishermen, picnickers, recreationists, sightseers, berry pickers, and
The unamortized road costs that will be eligible for transfer will
other commerce and industry.
only be those earned on existing or new sales after enactment of this
For fiscal year 1976. currently in progress. it is expected that reve-
act. The committee intends that Forest Service accounting procedures
nues from the sale of timber from National Forests will be reduced by
will be considered in the actual timing of the date of implementation.
about $200 million to cover timber purchaser road construction. The
The unamortized road costs, which will be earned only after the road
budget as presented allocates $8,267,000 in appropriated funds to all
is constructed by the purchaser, and accepted by the Forest Service,
Forest Service direct road construction, of which $5,267,000 is for
would be transferable to any existing or new contract.
bridge replacement and only $3 million is for road construction.
The committee intends that the authority to transfer unamortized
Consistent statements in congressional hearings and reports show
road costs shall only extend to transfers between timber sales under
that the strongly expressed, clear and preferred intent of Congress
contract to the same timber purchaser and located on the same pro-
is to use appropriated funds for all forest arterial roads and other
claimed National Forest. This limitation is necessary to maintain
permanent forest roads. The reliance on forest timber sale receipts as
contract integrity and to minimize the impact on the distribution of
the sole source of road construction funds subjugates all natural re-
the portion of timber receipts to States and counties that is provided
source planning and management, including road construction, to the
by other law.
chance location of a harvestable timber sale which can support the
A proclaimed National Forest is considered an existing National
cost of the necessary access road.
Forest formally established by Public Law, Proclamation, Executive
Counties containing National Forest lands now receive 25 percent
Order, Secretary's Order. or Public Land Order. and includes any
of the net receipts of timber sales in National Forests. The total timber
lands added thereto by these same types of authorities. In certain
sales receipts are now reduced by the amount of forest road construc-
States and areas two or more proclaimed National Forests are ad-
ministered as a unit by one Forest Supervisor, and the unit may be
S.R. 426
S.R. 426
4
5
referred to as a single National Forest. However, each proclaimed Na-
ROLLCALL VOTES
tional Forest within the unit retains its separate identity for such
purposes as the distribution of receipts under this legislation.
Section 133 of the Legislative Reorganization Act of 1970 and the
The committee considers the term "unamortized road costs" as used
rules of the Committee on Public Works require that any rollcall votes
in the bill to be the equivalent of what is currently refered to in Forest
be announced in this report. No rollcall votes were taken during con-
Service timber sale contracts as "effective purchaser credit." The com-
sideration of this bill, and S. 364 was ordered reported by a voice vote.
mittee recognizes that in certain situations involving SO called "deficit
timber sales" and timber sale contracts subject to payment rate ad-
CHANGES IN EXISTING LAW
justments, the amount of purchaser credit earned on an individual
sale may exceed the amount that can be applied under the terms of the
In the opinion of the Committee on Public Works it is necessary to
contract to meet charges for timber. The Committee does not intend
dispense with the requirements of subsection (4) of rule XXIX of
for such unusable (ineffective) purchaser credit to be transferred to
the Standing Rules of the Senate in order to expedite the business of
the Senate.
other timber sales. Hence, it is the intent of the Committee to only
authorize the transfer of effective purchaser credit.
Under the terms of Forest Service timber sale contracts, it is pos-
sible for the amount of effective purchaser credit earned on a timber
sale to decrease as a result of subsequent payment rate adjustments.
In such situations, a transfer might be made before payment rate ad-
justments occur, and, as a result, the transferred amount may be
later found to be in excess of the amount of effective purchaser credit
to which the timber sale purchaser is entitled. In this event, the pur-
chaser would be required to reimburse the Government with cash
for the excess amount transferred.
The committee expects that the authority granted in this amendment
will be used with care and discretion. The impact on payments to
counties generally and to specific counties or groups of counties should
be taken into consideration. The committee does not intend this pro-
vision to be used to affect the competitive position of various potential
customers for National Forest timber. It shall not be used to engender
or condone speculation, pyramiding of sales under contract, or to
support the continuation of the exclusive use of timber sales to build
roads. To the contrary, this provision is to be used to promote prompt,
timely, orderly construction of roads incorporated into timber sales
and the harvest of timber under contract. Special care should be taken
that the authority is judiciously used and not abused.
The committee desires that the Secretary develop the rules and reg-
ulations required under this bill based on a policy statement drafted
in consultation with conservation, forest industry, and local govern-
mental groups. Final rules and policies should be published only
after consideration of all suggestions so that the Secretary can assure
that the published proposals are in the broad public interest.
Cost OF THE LEGISLATION
Section (1) of the Legislative Reorganization Act of 1970
requires publication in this report of the committee's estimate of the
cost of reported legislation, together with estimates prepared by any
Federal agency. This bill does not authorize any expenditure of funds.
Net timber sale revenues would decrease in the first years, but over
time there should be no net decrease in total revenues as timber begins
to be marketed from sales from which road costs have been transferred.
S.R. 426
S.R. 426
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
1st Session
No. 94-656
FOREST SERVICE ROADS
NOVEMBER 12, 1975.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. JONES of Alabama, from the Committee on Public Works
and Transportation, submitted the following
REPORT
together with
ADDITIONAL VIEWS
[To accompany S. 364]
The Committee on Public Works and Transportation, to whom was
referred the bill (S. 364) relating to certain Forest Service timber
sale contracts involving road construction, having considered the same,
report favorably thereon with an amendment and recommend that the
bill as amended do pass.
The amendment is as follows:
On the first page, strike out lines 6 through 9 and insert the
following:
Rules and regulations as he shall prescribe, to permit the
transfer of unused effective purchaser credit for road con-
struction earned after the date of enactment of this sentence,
from one timber sale to a purchaser to another timber sale
to the same purchaser within the same National Forest.'.
PURPOSE OF THE LEGISLATION
S. 364, as amended by this Committee, would amend section 4 of the
Act of October 13, 1964 (78 Stat. 1089; 16 U.S.C. 535) to authorize
the Secretary of Agriculture under such rules and regulations as he
shall prescribe, to permit the transfer of unused effective purchaser
credit for road construction earned after the date of enactment of
this bill, from one timber sale to a purchaser to another timber sale to
the same purchaser within the same National Forest.
57-006
2
3
BACKGROUND OF LEGISLATION
ation of Counties also expressed concern over the bill's potential effect
Section 4 of the Act of October 13, 1964, provides that the financing
on receipts.
of forest development roads within lands administered by the Forest
S. 364 as passed by the Senate is substantially different in two re-
Service may be accomplished through four methods. One of the meth-
spects from the bills S. 364 and H.R. 5077 as introduced. The bills as
ods commonly used is to authorize purchasers of National Forest
introduced, would have directed the Secretary of Agriculture to in-
timber to build the roads needed to remove timber from the areas
clude provisions for the transfer of credit in every timber sale contract
where it is harvested. Under this method, timber is appraised and
that involved road construction. This language would have mandated
offered for sale as if the necessary roads had already been constructed.
contract modifications without consideration of whether any prospects
As road construction proceeds, the timber purchaser is credited for
for earning or transferring credit existed. As passed by the Senate,
the estimated cost of such work up to a maximum amount stated in
S. 364 authorizes the Secretary to provide for the transfer of credit
the timber sale contract. As harvesting proceeds, earned credit is
through the issuance of rules and regulations. This change recognizes
applied against the charges for the timber in excess of stated base
that new authorities are being added to an already complex area of
rates. Since road construction generally precedes timber removal, and
timber sale contract administration, and that the details for imple-
the initial rate of removal may not be sufficient to currently amortize
menting the intent of the bill can be best developed by the Secretary.
costs, earned but unused credit may accumulate. The intent of S. 364
The bills, as introduced, would have permitted timber sale purchasers
is to permit the unused credit to be applied toward charges for timber
to transfer unused credits already accumulated under existing con-
under other contracts held by the same purchaser in the same National
tracts. As passed by the Senate, S. 364 provides that only credit earned
Forest. Legislation is required to authorize this because such credit
after date of enactment can be transferred; thus the immediate impact
transfers have been found by the Comptroller General to be without
on National Forest receipts and payments to the counties is consider-
statutory authority. (51 Comp. Gen. 826.)
ably lessened and the aspect of reforming the executed portion of an
It is typical for purchasers of National Forest timber to have two
existing contract is minimized.
or more timber sales involving road construction under contract dur-
The Committee's amendment to S. 364. imbodies all the improve-
ing the same period of time. In such situations it is generally advan-
ments made by the Senate and provides additional clarification as to
tageous to harvest timber on one sale area while constructing roads
the intent of the legislation. The Committee's amendment is more de-
on another sale area where future harvesting is planned. This elimi-
scriptive of the type of credit that may be transferred and expressly
nates conflicts between harvesting and road construction operations
provides that credit can only be transferred between timber sales under
and allows the new roads to be stabilized prior to use. Other factors,
contract to the same purchaser.
such as seasonal rains and snowfall, often cause purchasers to shift
harvesting or road construction operations from one timber sale to
INTENT OF LEGISLATION
another.
The capital investments that a purchaser makes in constructing
The bill would enable a purchaser of National Forest timber to
roads are ultimately converted into credit; however, the present in-
transfer earned but unused effective purchaser credit from one of his
terpretations of the law limit the application of credit to the timber
sales in a National Forest to another of his sales in that same National
sale where the credit is earned. Purchasers of National Forest timber
Forest to be used in payment of timber harvested. Only unused effec-
maintain that this limitation unnecessarily ties up their operating
tive purchaser credit that is earned after the date of enactment of this
capital. They further maintain that the ability to transfer credit to
bill is authorized to be transferred.
other sales to meet charges for timber being harvested would free
The committee considers the term "purchaser credit for road con-
operating capital to build other roads and harvest other timber, and
struction," as used in the bill, to mean credit earned by purchaser's
would in some instances allow them to avoid borrowing capital.
construction of permanent roads through a timber sale contract.
"Effective purchaser credit" means credit which does not exceed cur-
COMMITTEE ACTION
rent contract value minus base rate value. "Unused" means earned
effective purchaser credit which has not been applied to meet charges
On May 21, 1975, the Subcommittee on Surface Transportation con-
for payment of timber harvested. The Committee does not intend for
ducted a public hearing on H.R. 5077, a bill identical to S. 364 as in-
purchaser credits which are unusable (ineffective) to meet charges
troduced. Spokesmen representing both the large and small enterprise
under the terms of the contract under which such credits were earned,
sectors of the timber industry unanimously supported H.R. 5077. The
to be transferred to other timber sales.
Department of Agriculture recommended that H.R. 5077 not be
The Committee recognizes that situations may arise under certain
enacted because of the bill's retroactive effect on existing timber sale
contracts where transferred purchaser credit may be found to be un-
contracts, and because the Department believed the bill would, on a
usable after it has been transferred. In this event, the purchaser would
temporary basis, sharply reduce timber sale receipts and payments
be required to reimburse the Government with cash for the excess
to counties from those receipts. Spokesmen for the National Associ-
amount transferred.
The Committee intends that the authority to transfer unused effec-
tive purchaser credit shall only extend to transfers between timber
H.R. 656
H.R. 656
4
5
sales under contract to the same timber purchaser and located on the
ported, are shown as follows (new matter is printed in italic, existing
same National Forest. For the purposes of this legislation, a National
law in which no change is proposed is shown in roman) :
Forest shall be considered as a unit of the National Forest System,
regardless of how it was established, which maintains a separate
ACT OF OCTOBER 13, 1964
identity with respect to the distribution of receipts earned thereon to
States and counties. The limitation pertaining to the same purchaser
AN ACT To enable the Secretary of Agriculture to construct and maintain an
adequate system of roads and trails for the national forests, and for other
is necessary to maintain contract and fiscal integrity. The limitation
purposes.
pertaining to the same National Forest is necessary to prevent disrupt-
ing the system, that is provided by other law, for distributing timber
Be it enacted by the Senate and House of Representatives of the
receipts to States and counties.
United States of America in Congress assembled, That the Congress
hereby finds and declares that the construction and maintenance of
COMPLIANCE WITH CLAUSE 2(1) OF RULE XI OF THE RULES OF THE
an adequate system of roads and trails within and near the national
HOUSE OF REPRESENTATIVES
forests and other lands administered by the Forest Service is essential
if increasing demands for timber, recreation, and other uses of such
(1) With reference to Clause 2(1) (3) (A) of Rule XI of the Rules
lands are to be met; that the existence of such a system would have the
of the House of Representatives, no separate hearings were held on
effect, among other things, of increasing the value of timber and other
the subject matter of this legislation by the Subcommittee on Investi-
resources tributary to such roads; and that such a system is essential
gations and Review; however, the Subcommittee on Surface Trans-
to enable the Secretary of Agriculture (hereinafter called the Secre-
portation held hearings on this subject matter.
tary) to provide for intensive use, protection, development, and man-
(2) With respect to Clause 2(1) (3) (C) of the Rules of the House
agement of these lands under principles of multiple use and sustained
of Representatives, the Committee has not received an estimate and
yield of products and services.
comparison prepared by the Director of the Congressional Budget
SEC. 2. The Secretary is authorized, under such regulations as he
Office under section 403 of the Congressional Budget Act.
may prescribe, subject to the provisions of this Act, to grant perma-
(3) With respect to Clause 2(1) (3) (D) of rule XI of the Rules of
nent or temporary easements for specified periods or otherwise for
the House of Representatives, the Committee has not received a report
road rights-of-way (1) over national forest lands and other lands ad-
from the Committee on Government Operations pertaining to the
ministered by the Forest Service, and (2) over any other related lands
subject matter.
with respect to which the Department of Agriculture has rights under
(4) With reference to Clause 2(1) (4) of rule XI of the Rules of
the terms of the grant to it.
the House of Representatives, the following information is provided:
SEC. 3. An easement granted under this Act may be terminated by
S. 364, as reported, does not authorize any additional cost to the
consent of the owner of the easement, by condemnation, or after a five-
United States.
year period of nonuse the Secretary may, if he finds the owner has
Accordingly, the Committee has determined that the enactment of
abandoned the easement, make a determination to cancel it. Before
this legislation will not have an inflationary impact on prices and costs
the Secretary may cancel an easement for nonuse the owner of such
in the operation of the national economy.
easement must be notified of the determination to cancel and be given,
upon his request made within sixty days after receipt of the notice, a
COST OF LEGISLATION
hearing in accordance with such rules and regulations as may be
In accordance with Rule XIII of the Rules of the House of Rep-
issued by the Secretary.
SEC. 4. The Secretary is authorized to provide for the acquisition,
resentatives the following information is furnished on the cost to the
construction, and maintenance of forest development roads within and
United States in carrying out S. 364 in Fiscal Year 1976 and in each
near the national forests and other lands administered by the Forest
of the five following fiscal years.
There is no additional cost to the United States.
Service in locations and according to specifications which will permit
maximum economy in harvesting timber from such lands tributary to
With reference to section 308 (a) of the Congressional Budget Act
such roads and at the same time meet the requirements for protection,
of 1974, S. 364, as reported, does not provide any new budget authority
development, and management thereof, and for utilization of the other
or any new increased tax expenditures.
resources thereof. Financing of such roads may be accomplished
VOTE
(1) by the Secretary utilizing appropriated funds, (2) by require-
ments on purchasers of national forest timber and other products,
The Committee ordered the bill reported by voice vote.
including provisions for amortization of road costs in contracts. (3)
by cooperative financing with other public agencies and with private
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
agencies or persons, or (4) by a combination of these methods: Pro-
vided, That where roads of a higher standard than that needed in
In compliance with clause 3 of Rule XIII of the Rules of the House
the harvesting and removal of the timber and other products covered
of Representatives, changes in existing law made by the bill, as re-
by the particular sale are to be constructed, the purchaser of the na-
H.R. 656
H.R. 656
6
tional forest timber and other products shall not be required to bear
that part of the costs necessary to meet such higher standard, and
the Secretary is authorized to make such arrangements to this end as
may be appropriate. The Secretary is authorized, under such rules
and regulations as he shall prescribe, to permit the transfer of unused
ADDITIONAL VIEWS OF CONGRESSMAN BUD SHUSTER
effective purchaser credit for road construction earned after the date
of enactment of this sentence, from one timber sale to a purchaser
Service purpose timber greater flexibility in recovering costs incurred it would
The of S. 364 is to permit purchasers of National Forest in the
to another timber sale to the same purchaser within the same National
Forest.
construction of roads to provide access to the timber. Thus, small
SEC. 5. Copies of all instruments affecting permanent interests in
help solve legitimate cash flow problems for large and opera-
land executed pursuant to this Act shall be recorded in each county
tors alike, while protecting the interests of the United States. the
where the lands are located. Copies of all instruments affecting inter-
ests in lands reserved from the public domain shall be furnished to the
Service involve a complex relationship, which can be summarized timber as
Timber sale contracts between private companies and Forest
Secretary of the Interior.
follows: under existing law and administrative regulations, a
SEC. 6. The Secretary may require the user or users of a road under
operator of reimbursing the Forest Service for timber cut. But he is Tract
is allowed to offset the cost of road construction in the process limited
the control of the Forest Service, including purchasers of Government
timber and other products, to maintain such roads in a satisfactory
to use of this purchaser credit provision to road construction on
condition commensurate with the particular use requirements of
X to payment for timber cut on Tract X.
each. Such maintenance to be borne by each user shall be proportionate
to total use. The Secretary may also require the user or users of such a
conditions to the extent of construction involved, it may be a long
The problem is that for a number of reasons ranging from weather
road to reconstruct the same when such reconstruction is determined
time between road construction on a given tract and actual cutting on
to be necessary to accommodate such use. If such maintenance or re-
that tract. Meanwhile, an operator also may have a contract to cut
construction cannot be SO provided or if the Secretary determines that
timber on another tract in the same national forest involving little
maintenance or reconstruction by a user would not be practical, then
no road construction. A road may already have been constructed
the Secretary may require that sufficient funds be deposited by the
or under the purchaser-credit arrangement. Or only a comparatively
user to provide his portion of such total maintenance or reconstruction
small amount of road construction may be needed. Therefore, this
Deposits made to cover the maintenance or reconstruction of roads
bill would allow a single purchaser to apply credits for road construc-
are hereby made available until expended to cover the cost to the
tion on one tract to reduce his timber payment obligations under
United States of accomplishing the purposes for which deposited:
another contract involving another tract in the same forest.
Provided, That deposits received for work on adjacent and overlap-
I find this a reasonable adjustment on our part, particularly at a
ping areas may be combined when it is the most practicable and
time when the industry has been beset by slackened demand in hous-
efficient manner of performing the work, and cost thereof may be de-
ing construction. This bill has passed the Senate, and we have every
termined by estimates: And provided further, That unexpended bal-
assurance from the Forest Service that the rights and interests of the
ances upon accomplishment of the purpose for which deposited shall
United States will be protected.
be transferred to miscellaneous receipts or refunded.
This bill has undergone clarifying amendments in subcommittee to
SEC. 7. Whenever the agreement under which the United States has
assure that (1) the transfer of credits be limited to contracts held by
obtained for the use of, or in connection with, the national forests and
the same purchaser, and (2) only those credits to which he would be
other lands administered by the Forest Service a right-of-way or ease-
legitimately entitled would be subject to such transfer. This was in
ment for a road or an existing road or the right to use an existing road
accord with the Senate's objectives, as spelled out in it's committee
provides for delayed payments to the Government's grantor, any fees
report. But I think it best whenever possible to spell out our intent
or other collections received by the Secretary for the use of the road
in the language of the statute itself.
may be placed in a fund to be available for making payments to the
On the basis of the consideration it has received, I support this
grantor.
measure and recommend its enactment.
BUD SHUSTER.
O
(7)
H.R. 656
H.R. 656
S. 364
Ainety-fourth Congress of the United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday, the fourteenth day of January,
one thousand nine hundred and seventy-five
An Art
Relating to certain Forest Service timber sale contracts involving road
construction.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That section 4 of
the Act of October 13, 1964 (78 Stat. 1089), is amended by adding at
the end thereof a new sentence as follows: "The Secretary is author-
ized, under such rules and regulations as he shall prescribe, to permit
the transfer of unused effective purchaser credit for road construction
earned after the date of enactment of this sentence, from one timber
sale to a purchaser to another timber sale to the same purchaser within
the same National Forest.".
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
December 9, 1975
Dear Mr. Director:
The following bills were received at the White
House on December 9th:
S. 233
S. 364
S. 1800
Please let the President have reports and
recommendations as to the approval of these
bills as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D. C.