2409.15,32.23-32.8 Page 1 of 17 FSH 2409.15 - TIMBER SALE ADMINISTRATION HANDBOOK WO AMENDMENT 2409.15-92-6 EFFECTIVE 8/3/92 CHAPTER 30- CHANGES IN STATUS OF CONTRACTS 32.23 - Harvest Schedule Modification. The purchaser or the Forest Service may propose changes in the harvest schedule. Changes may be proposed at any time, normally before seasonal operations to align the harvest schedule with the Plan of Operations (C/CT6.3 or C/CT6.3 (Option 1)) and the annual Schedule of Operations (B/BT6.31). Such changes require mutual agreement through corresponding changes in individual contract removal schedules (C/CT6.31). Changes must meet the original criteria for harvest schedules. The effective date of a harvest schedule change must be the date of the contract modifications that implement the change. Harvest schedule modifications may occur for the following reasons: 1. The purchaser wants to harvest volume sooner than planned. 2. The purchaser distributes the planned harvest level among the sales included in the harvest schedule. The purchaser can shift the planned harvest for a given year between sales. 3. The purchaser adds or deletes sales directly involved if the purchaser sells (it's) entire business or merges with another firm. Neither the original purchaser nor the party that assumes the interest of the original purchaser need an approved multisale extension plan at the time of the assumption of interest. If the interest is in a sale that is eligible for extension, under the multi-sale extension plan, the assuming party may request a plan for the sales directly involved in the transaction. The purchaser must add or delete sales from the harvest schedule or submit a new multisale extension plan when assuming interest within 30 days of assuming interest, unless the line officer with the authority to approve or modify the plan specifies a different time period. 4. The purchaser adds or deletes sales directly involved as a result of third-party agreements. See exhibit 02 (B), in section 32.22. Neither the original purchaser nor the third party need an approved multisale extension plan at the time of the third-party agreement. If the sale that is eligible for extension under the multisale extension plan is third partied to a party without a multisale extension plan, the third party may request a multisale extension plan for the sale (or sales) directly involved in the third-party agreement. The addition or deletion of sales from the harvest schedule, or submittal of a new multisale extension plan, in conjunction with a third-party agreement, must be made within 30 days of the third-party agreement, unless the line officer with the authority to approve or modify the plan specifies a different time period. 5. The purchaser and the Forest Service agree there shall be a substantial overrun of a scaled sale in the harvest schedule. For purposes of the multisale extension plan, a substantial overrun occurs when the agreed volume of included timber to be cut in a sale exceeds the total estimated volume as shown in provision A2 of that sale by more than the average annual volume scheduled for harvest from the sale during the multisale extension plan period. A sale in the harvest schedule that is completed with an under run does not require a change in the harvest schedule. However, the purchaser may wish to change the schedule by planning to harvest another sale in the schedule earlier than planned. 6. The purchaser includes sales eligible for the October 1981, authorization in the harvest schedule, plans for such an extension before an extension under the multisale extension program, and then decides to extend only under the multisale extension program. Conversely, the harvest schedule may be changed if the purchaser does not plan to get an extension under the October 1981 authorization but then decides to obtain an extension. 7. Early extensions under the multisale extension program. Exhibit 02 (D), section 32.22 is an example of minimum harvest schedule level recalculation because of an early extension under the multisale extension program. 8. The purchaser makes changes between the multisale extension plan's alternative 1 and alternative 2 methods of computing the minimum harvest schedule levels. The purchaser can make these changes only if in compliance with provisions C(T)4.262 and C/CT6.31#. See exhibit 03 (D), section 32.22. 9. The purchaser includes a sale in the harvest schedule without a planned multisale extension, and then, at a later time, requests such an extension under the multisale extension program. 10. The purchaser includes a sale in the harvest schedule with a planned multisale extension program, and then, at a later time, decides not to request such an extension. 11. Contract term adjustment on a sale provides an opportunity for a shift in the schedule. 12. The purchaser deletes a sale because of wilderness legislation requiring cancellation of the sale, or the Forest Service cancels the sale pursuant to C(T)8.201, Termination for Convenience. 13. The purchaser deletes a sale by cancelling it for the following reasons: a. Cancellation by Agreement (FSM 2453.64). b. Cancellation because of catastrophic damage (FSM 2453.65). c. Cancellation to prevent damage to the environment (FSM 2453.67). 14. The purchaser adds sales due to the Federal Timber Contract Payment Modification Act. The Federal Timber Contract Payment Modification Act provided changes in the conditions to be imposed for multisale extension program extensions. Therefore, a purchaser may want to add sales to the harvest schedule. A purchaser who, on October 16, 1984, held an approved, complete multisale extension plan that meets the standards established in the Federal Register (48 FR 54812) may add eligible sales to the harvest schedule. A purchaser may request such an addition within 45 days after receipt of the Regional Forester's approval of its application for contract buy-out. If a purchaser does not submit an application for contract buy-out, a purchaser must request any such addition within 45 days after the final policy modifying the contract extension policy appears in the Federal Register. Any request for addition of sales to the harvest schedule also must include a revised plan and harvest schedule that includes additional sales. The revised plan must provide for proportionate harvest of the sales included in the harvest schedule, as provided elsewhere in this section. 15. The purchaser removes sales results from the Federal Timber Contract Payment Modification Act. Contracts to be bought out under the Federal Timber Contract Payment Modification Act must be deleted from the multisale extension plan harvest schedule by a plan modification that the purchaser submits within 45 days of the purchaser's receipt of the Forest Service approval of the purchaser's application for contract buy-out. The revised minimum harvest schedule level must provide for proportionate harvest of the sales remaining in the harvest schedule. Failure to request and agree to a multisale extension plan revision in accordance with 36 CFR 223.177(g) and to agree to the timber sale contract modifications necessary to implement the plan revision makes a purchaser ineligible for any additional contract extensions under the multisale extension program. 16. The purchaser removes a conditionally returned contract from an approved application for contract buy-out. A purchaser may decide not to return a contract after receiving the Regional Forester's conditions required to return the sale. If the sale is eligible for extension under the multisale extension program, the purchaser may add such a contract to a multisale extension plan harvest schedule. The purchaser must request such an addition within 30 days of receipt of the Regional Forester's conditions for return of that contract. If the Cumulative Removal Schedule (C/CT6.31) is adjusted because of contract term adjustment or a substantial overrun, the purchaser shall make corresponding adjustments in the harvest schedule. Harvest schedule modification for reasons 6, 7, 8, 9, 10, 14, 15, or 16 requires a recalculation of the minimum harvest schedule level. If the purchaser modifies the harvest schedule as a result of a third-party agreement or an assumption of interest (reasons 3 or 4), the purchaser must recalculate the minimum harvest schedule level unless there are no changes in the scheduled harvest of the affected sales. See exhibits 2(E) and 2(F), in section 32.22 for examples of minimum harvest schedule level recalculations based on contract buy-out (reason 15). Harvest schedule modification for reasons 3 and 4, when there are no changes in scheduled harvest and harvest schedule modification for reasons 1, 2, 5, 11, 12, or 13 may be the basis for a recalculation of the minimum harvest schedule level. Upon the purchaser's request, such a recalculation may be made as long as the resulting minimum harvest schedule level conforms with section 32.22. The purchaser and the Forest Service must agree to the recalculation of the minimum harvest schedule level. The new minimum harvest schedule level must be calculated as if the effective date of the recalculation is the start of the plan period and must be based on the volume remaining in the harvest schedule as of the effective date of the recalculation. The effective date of the revised minimum harvest schedule level may be either the date of the revision or January 1 of the year following the harvest schedule modification. For example, a September 10, 1985, revision of the harvest schedule because of contract buy-out could be effective either September 10, 1985, or January 1, 1986. Line officers shall not approve harvest schedule modifications that do not provide for harvest of priority removal timber as prescribed by the contracts or that do not provide for completion of all national forest sales before their extended termination dates. An important consideration in administering multisale extension plan harvest schedules and modifications is that the multisale extension plan is a planning document. Purchasers do not comply with or violate the plan; they comply with or violate their timber sale contracts. A purchaser may harvest more timber in a given year than planned in the harvest schedule but may be in breach of some contracts if they do not meet the requirements of the C/CT6.31, Removal Schedule. 32.24 - Market Related Contract Term Additions. The rules at 36 CFR 223.52 (55 FR 50645; December 7, 1990) set forth procedures for adding time to timber sale contracts that contain provision C/CT8.211 when drastic wood product price reductions occur. A market-related contract term addition cannot be granted to contracts previously extended under the Multi-Sale Extension Policy pursuant to the Federal Timber Contract Payment Modification Act (16 USC 618(b)(1). Follow the procedures in the text of the rule as shown in exhibit 01. 32.24 - Exhibit 01 36 CFR 223.52 - Market Related Term Additions. (a) Contract Provision. Each timber sale contract that contains periodic payment requirements shall contain a provision allowing the addition of time to the contract term if the Forest Service determines that adverse wood products market conditions have resulted in a drastic reduction in wood product prices. Such extension must be requested by the purchaser in writing. (b) Determination of drastic wood product price reductions. (1) The Forest Service shall maintain and use producer price indices for wood products as prepared by the Department of Labor and Bureau of Labor Statistics adjusted to a constant dollar base, to determine whether a drastic reduction in wood product prices has occurred. Where there is more than one producer price index for a Region, the Regional Forester shall determine the index to be used for each National Forest based on the characteristics of the volume being harvested on the Forest. (2) Determine that a drastic reduction in wood product prices has occurred when, for two or more consecutive quarters, the applicable adjusted price index is less than 80 percent of the average of such adjusted index for the 4 highest of the 8 calendar quarters immediately prior to the initial qualifying quarter. A qualifying quarter is a quarter where the applicable adjusted index is more than 20 percent below the average of such index for the 4 highest of the previous 8 calendar quarters. Qualifying quarter determinations will be made using the Producer Price Indexes for the months of March, June, September, and December. (3) A determination that a drastic reduction in wood product prices, as defined in paragraphs 1. and 2 ... has 0ccurred shall constitute a finding that the substantial overriding public interest justifies the contract term addition. (c) Granting contract term additions. Purchasers shall receive appropriate notice whenever the Regional Forester determines that a drastic reduction in wood product prices has occurred. When ... a drastic reduction in wood product prices has occurred after contract award and before contract termination, upon a purchaser's written request, ... add 1 year to the contract's term, except as provided in paragraphs in this section. This 1-year addition includes time outside of the normal operating season. 32.24 - Exhibit 01--Continued (1) For each additional consecutive quarter, in which a contract qualifies for a term addition, the Forest Service will, upon the purchaser's written request, add an additional 3 months during the normal operating season to the contract. (2) No more than twice the original contract length or 3 years, whichever is less, shall be added to a contract's term by market-related contract term addition. (3) In no event shall a revised contract term exceed 10 ears as a result of market-related contract term additions. (d) Recalculation of Periodic Payments. Where a contract is lengthened as a result of market conditions, any subsequent periodic payment dates shall be recalculated using the new termination dates, and the payment dates shall be delayed accordingly; however, no periodic payment may be delayed beyond a contract's revised termination date. 32.25 - Producer Price Indicies by Region. Adjust each producer price index to a constant dollar base through division by the Bureau of Labor Statistics-All Commodities-Producer Price Index, Commodity Code 00000000. Producer price indexes are assigned by Forest Service Region or subregion as shown in exhibit 01. Regional Foresters for Regions with more than one producer price index must specify and document each index to be used by each National Forest. 32.25 - Exhibit 01 Producer Price Indicies by Region Forest Service Region Bureau of Labor Statistics Commodity Producer Price Index Code Northern (1) Other Softwood, Dressed 081103 Rocky Mountain (2) Other Softwood, Dressed 081103 Southwestern (3) Other Softwood, Dressed 081103 Intermountain (4) Other Softwood, Dressed 081103 Pacific Southwest (5) Other Softwood, Dressed 081103 Pacific Northwest (6): Westside Douglas Fir, Dressed 081101 Eastside Other Softwood, Dressed 081103 Southern (8): Primarily Hardwood NF's Hardwood Lumber 0812 Primarily Softwood NF's Southern Pine, Dressed 081102 Eastern (9): Primarily Hardwood NF's Hardwood Lumber 0812 Primarily Softwood NF's Other Softwood, Dressed 081103 Alaska (10) Other Softwood, Dressed 081103 32.3 - Contract Modification For Extensions to Prevent Environmental or Resource Damage. An early extension of the contract term may be necessary when a contract modification to prevent environmental or resource damage cannot be executed before the start of an operating period and before the purchaser's operations are delayed. Use the following guidelines to determine the period of contract extension: 1. Consider all factors relating to harvesting the timber involved in the environmental modification, including the procurement, scheduling, move-in, and use of equipment (types) other than that contemplated in the original sale. If the modification occurs after the midway date of a normal operating season, disregard the remainder of that logging season in establishing the time needed to harvest the timber involved in the environmental modification. 2. Include any changes in harvest methods that could reduce production rates below those used to establish the original contract term in the period of time needed to harvest the timber volume involved in the contract modification to prevent environmental or resource damage must. Estimate the production rate for the harvest methods specified in the modification, considering volumes per acre to be cut, road construction, and any other variables affecting the establishment of a logical contract period. 3. Use the estimated production rates for the volume involved in the environmental modification and other considerations included in items 1 and 2 to calculate the time needed to harvest the timber involved in the modification. 4. Using the period of time calculated in item 3, determine if sufficient time remains under the original contract term to harvest the timber involved in the environmental modification. If not, extend the contract term to fully provide for the changed conditions of the modified sale and for any time the purchaser lost while the Forest Service was preparing the modification. Consult the purchaser when estimating the time required to complete the sale. 32.4 - Conditional Extensions. Conditional extensions may delay the expiration of timber sale contracts in a limited number of situations. Contracting Officers have the authority to conditionally extend timber sale contracts under the following situations: 1. If there are less than 30 days for a timber sale purchaser to consider the stumpage rates and other terms under which the Forest Service shall grant an extension, the Contracting Officer should grant a conditional extension for a period that allows the purchaser 30 days to consider these conditions (FSM 2453.12f). 2. If the purchaser returns an extension or modification agreement that indicates the purchaser has signed under protest, the Contracting Officer should return the agreement promptly to the purchaser. If necessary, the Contracting Officer may conditionally extend the contract to provide the purchaser 15 days to decide whether or not to agree to the extension or modification terms. 3. If the purchaser files a dispute according to the contract's disputes provisions or files a claim pursuant to the Contract Disputes Act, and that dispute or claim is not resolved before the termination date of the contract, and the Contracting Officer decides it is in the public interest that the contract should not expire until resolution of the dispute or until the Contracting Officer makes a decision on the claim, the Contracting Officer may grant a conditional extension pending resolution of the dispute or may make the decision on the claim. 4. If there is an appeal before the Agriculture Board of Contract Appeals or a case in Federal Court concerning a timber sale, and the Contracting Officer decides that it is in the public interest that the contract should not expire pending resolution of the appeal or court case, the Contracting Officer may grant a conditional extension pending resolution of the appeal or case. 5. If the Agriculture Board of Contract Appeals or a court acting within its jurisdiction orders that a contract should not expire pending resolution of an appeal case, the Contracting Officer shall grant a conditional extension, if necessary, unless the board or court decrees some other form of termination date modification. The Chief may authorize conditional extensions of certain timber sale contracts if it is in the public interest that certain timber sales should not expire before a specified time or event. An example of this is the authorization of conditional extensions for certain timber sale contracts that have expired before the due date for submitting multisale extension plans. Conditional extensions occur through contract modification. The modification must specify the purpose and duration of the extension as well as the conditions involved. Conditional extensions shall not give the purchaser or a group of purchasers an advantage over other timber sale purchasers. Neither shall a conditional extension serve instead of a time limit waiver (FSM 2453.15). Unless the Contracting Officer decides otherwise, no timber felling or removal from the sale area should occur during a conditional extension. Conditional extensions may serve as the basis for Contract Term Adjustment pursuant to provision B/BT8.21. If a timber sale contract with a conditional extension subsequently is extended under another authority, that extension becomes the starting date of the conditional extension unless the Forest Officer who authorized the conditional extension specifies otherwise. 32.5 - Early Extensions. A purchaser may request and receive extensions under the multisale extension program before the imminent termination date of sales not previously extended. In addition, a purchaser may request and receive an early multisale extension program extension on qualified sales extended under the October 15, 1981, authority. Sales must meet eligibility standards (sec. 32.21, para. 1) before receiving an early multisale extension program extension, and the applicable conditions and requirements apply (sec. 32.21, para. 2). If such a sale has not yet been extended under any authority, it may be extended only at intervals of 1 or more full years before the current termination date. For example, an eligible contract expiring March 31, 1988, that has not been extended before could be modified and extended under the multisale extension program as of March 31, 1986, or March 31, 1987. Except for environmental modifications and extensions under the multisale extension program, the approving officer may grant an early extension only when it is in the interest of the United States to permit a purchaser to interrupt or to reduce operations on National Forest timber to log other timber needing harvesting more urgently, for example, fire-killed or insect-threatened timber. When the purchaser cannot operate the National Forest timber at the rate required to complete the contract by the termination date and at simultaneously operate the other timber needing harvesting more urgently, the approving officer may grant additional time for operating a National Forest timber sale. The Contracting Officer should process an early extension for sales on Form FS-2400-2, Timber Land Use Classification, when National Forest timber is in urgent need of harvesting and should grant contract term adjustments for sales on other contract forms (sec. 31.13). The approving officer extensions or contract term adjustments for this purpose should be granted only when stated in the prospectus for the timber in more urgent need of harvesting. For environmental modifications or when the timber in more urgent need of harvesting is other than National Forest timber, the early extension procedure must be followed regardless of contract form. The Contracting Officer should avoid either excessive or inadequate early extension time periods. Where necessary, it is reasonable to provide some slack time in the extension period to cover unforeseen difficulties, such as lower production or greater than expected volume. Because specific situations vary widely, no hard and fast rules apply. The purchaser's Plan of Operations should serve as a guide. The Contracting Officer should grant an extension to permit harvesting of other than Forest Service timber when one or more of the following conditions exist: 1. Substantial timber quantities or values are involved. 2. The managing agency has requested Forest Service cooperation for other public timber. 3. Failure to harvest the timber promptly may result in significant resource loss or create a threat of an insect epidemic for private timber. 4. The purchaser presents an acceptable Plan of Operations for completing the sale to be extended. 32.6 - Procedure for Sales Needing Urgent Harvesting. During the sale preparation phase of sales requiring urgent harvesting, the responsible official must make a decision whether or not to grant early extension or contract term adjustment on other sales to operators who purchase the sales. The decision to grant extensions or adjustments should be in the prospectus (FSM 2430). When the purchaser submits a sale, the Contracting Officer shall check against the criteria listed in the prospectus and if it meets the criteria, shall normally grant the early extension or contract term adjustment unless there is clear evidence that the urgent harvesting does not impact the sales. If a requested sale does not qualify, the Contracting Officer should advise the purchaser promptly. The Contracting Officer should grant early extensions before the start of logging on sales involving timber needing urgent harvesting and shall make Contract Term Adjustments granted pursuant to the provisions of contract forms FS-2400-5 and FS-2400-6 only after the urgent harvesting is completed. The purchaser must show the impacts on existing sales. Such impacts should not be limited to physical limitation on log storage, or physical moving of personnel and equipment. Transfer of capital, inventory limitations established for fiscal purposes, and similar indirect impacts should also be considered. 32.7 - Extension Procedure. When a sale will not be completed by the termination date, the Contracting Officer must examine the file to determine if the contract entitles the purchaser to an adjustment of termination date. When the contract entitles the purchaser to such an adjustment and when the purchaser requests it in writing, the Contracting Officer shall grant such adjustment. If no such term adjustment is evident, an extension request may be considered. Before the Contracting Officer considers an extension request, the purchaser must present a schedule for the completion of road construction and cutting to meet the contract obligation during the proposed extended period. The purchaser also shall include a plan for meeting road construction and cutting obligations for all other National Forest timber sale contracts that the purchaser holds. The Contracting Officer must modify the contract for a sale extension to change the termination date, to change payment rates when appropriate, to make provision B/BT4.226 inapplicable, to delete provision C/CT4.226 if it is in the contract, and, except for early extensions, to make provision B/BT4.221 and B/BT4.23 inapplicable and to add national provisions C.CT4.221-Advance Deposits, C/CT4.23-Refund of Excess Cash, and C/CT4.25-Extension Deposits. The Contracting Officer may modify other contractual requirements regarding items such as slash disposal, erosion control, and fire prevention but shall not make changes in sale boundaries that add additional area to the sale. The Contracting Officer shall change logging methods or timber designation only when the changes are essential for resource or environmental protection. Except for early extension, the Contracting Officer must make rate redetermi- nations for all contracts before granting an extension (FSM 2420). Bid premiums are added to resulting appraised rates to arrive at rates that compare with current contract rates. The rates resulting in the highest value are established for the extension period. This appraisal reflects changes in contract provisions to the extent possible within the contract terms. However, the inability to reflect the cost of such changes does not preclude incorporating them in the modification if they are necessary for environmental protection. The alternative is to let the sale expire. The purchaser credit limit changes based on an appraisal of the of uncompleted road construction cost. However, any increase must not exceed the increase in contract value that becomes effective during the extension period for sales advertised before or on April 15, 1982. Increases in the purchaser credit limit are not permissible for sales advertised after April 15, 1982, when such increases are due to increased construction costs. Earned purchaser credit that is not effective as of the termination date shall carry forward: however, there is no assurance that it may become effective during the extension period. The Contracting Officer shall notify a purchaser promptly of action on an extension request. If an extension is forthcoming, the notification should state clearly that granting the extension is contingent on accepting the revised rates, if applicable, and modifications that the Forest Service deems necessary to justify the extension. It also is contingent on paying the first extension deposit if an extension deposit is necessary at the time of extension. Failure to pay any subsequent extension deposits when due constitutes a breach under provision B/BT9.3. The contracting officer shall notify the purchaser of the breach. Failure to remedy the breach within 30 calendar days subjects the sale to termination for breach of contract. In considering the extension of sales sold before July 1, 1971, the total time period for the contract plus the extension should not be less than the contract period for similar sales sold after that date. Expenses resulting from contract extension not compensated for by additional benefits could be disadvantageous to the United States. An example is the cost of remarking timber because weather has obliterated previous paint marks due to delay in completing the contract. The Contracting Officer should enter into cooperative agreements with the purchaser to pay for such additional costs and make such an agreement a condition of the extension. When this work must be performed before an extension is granted, the cost of the work shall be included as payments pursuant to provision C/CT8.23. The total charges resulting from contract extension become part of the package that the Contracting Officer submits to the purchaser for consideration when the extension is offered. The Contracting Officer also should include a bill for that amount and request payment at the time the purchaser returns the signed documents. As part of the extension modification the purchaser must agree to pay the charges in addition to any initial extension deposit required. 32.71 - Procedure for Sales After April 15, 1982. Sales advertised after April 15, 1982, require the purchaser to make payments in addition to extension deposits pursuant to provision C/CT4.25. Such payments include, but are not limited to the following: 1. Interest on the Value of Timber Remaining (or for Tree Measurement Sales Timber Remaining and Not Paid for) on the Sale From the Termination Date to the Midpoint of the Extension Period. Contracting Officers should use the best estimate available of timber remaining and should apply stumpage rates, by species, that are in effect just before the extension to determine the total stumpage value as of termination date. The purchaser pays interest on this value is paid in consideration for the extension. The interest is at the rate for borrowing used by the United States (U.S. Treasury Fiscal Requirements Manual 6-8020-20) on this stumpage value from the termination date to the midpoint of the extension period. The rate of interest is in effect on the termination date. The amount owed is the rate times the stumpage value for each month or portion thereof (see exhibits 01 and 02). 2. Increased Regeneration Cost. Increased costs include the costs of site preparation, seeding or planting, and nursery stock carryover, loss, or replacement. Based on the Plan of Operations submitted with the purchaser's extension request, the Contracting Officer a determination must make of any delay in accomplishing the regeneration work as originally planned for the sale. The Contracting Officer if there is any delay caused by the extension, shall list any losses or expenses resulting from such delays when it can be shown that they represent an actual increased cost to the Government. 3. Cost of Remarking Timber on the Sale Area or Reestablishing Cutting Unit Boundaries. The Contracting Officer should handle this item under a collection agreement that is part of the extension agreement and, when the work is required before the extension, shall listed the costs to the Government and the shall expend total amount charged in the same manner. The total charges listed in this section are part of the package the Contracting Officer submits to the purchaser for consideration when the extension is offered as well as a bill for that amount and payment a request for when the purchaser returns the signed documents. As part of the extension modification, the purchaser must agree to pay the charges in addition to any initial extension deposit required as a condition of the extension by the termination date. The Contracting Officer shall use Form FS-2400-9, Agreement to Modify Contract, if contract modifications are necessary for a term extension, and shall change the form to read: "...as heretofore modified be extended to , and in addition, be modified as follows." In sales with a performance bond, extensions of more than 1 year beyond the original contract termination date require consent of surety using Form FS-2400-10, Agreement to Extend and Modify Timber Sale Contract. 32.71 - Exhibit 01 a. Value of Remaining Timber (12/31/85) Species Volume Rate Value DF 300 $250 $ 75,000 H&O 200 150 30,000 PAM 20 (acres) 20 400 Totals 500 $105,400 20 (acres) b. Extended termination date 12/31/86 c. Midpoint of extension period (months) 6 d. Interest rate in effect on termination date (12/31/85) TFRM 6-8020-20 (14.82 %) .1482 e. Amount of interest due (a x c x d) 12 $7,810.14 32.71 - Exhibit 02 a. Value of Remaining Timber (12/31/85) Species Volume Rate Value DF 300 $250 $ 75,000 H&O 200 150 30,000 PAM 20 (acres) 20 400 Totals 500 $105,400 20 (acres) b. Extended termination date 9/30/86 c. Midpoint of extension period (months) 5 d. Interest rate in effect on termination date (12/31/85) TFRM 6-8020-20 (14.82 %) .1482 e. Amount of interest due (a x c x d) 12 $6,508.45 32.72 - Rates. Rates during an extended period may not be lower than those in effect before the extension or lower than those resulting from a rate redetermination using standard Forest Service appraisal methods as of 45 days prior to the original termination date in the contract or any extensions. The only exception to the latter rule is the early extension for which a rate redetermination is not made. If Contracting Officer grants a time extension and an appraisal indicates that values are higher than rates in effect just before the extension, the stumpage rates during the extended period shall increase to the redetermined rates. When the redetermined stumpage value for the remaining timber is higher than the average rates in effect just before the extension but the indicated rate for one or more species is below the contract rate, the floor for such species during the extended period is the contract rate. If appraised values are the same as or less than the stumpage rates in effect immediately before the extension, the latter stumpage rates become the floor during the extension. If a multisale extension program extension is at rates higher than the contract rates in effect immediately before such an extension and if the purchaser qualifies for a contract term adjustment before such an extension, the higher rates are not applicable for a period equal to the amount of earned contract term adjustment. For sales with a stumpage rate adjustment, the base indices, tentative rates, and required deposits for sale improvement during the extended period result in a sum of adjusted rates and required deposits no lower than those from application of base indices, tentative rates, and required deposits in effect immediately before the effective date of the extension. Sales with provision for quarterly stumpage rate adjustment involve special consideration. In such sales, a continuation of the adjustment provision may result, through changes in indices, in a return to the United States either higher or lower than if the sale had been completed before the termination date. It usually is just as advantageous to the United States to continue the adjustment provision during an extended period as to include this provision in the original contract. To do this and simultaneously to give purchasers of sales with the rate adjustment provision the same treatment as other pur- chasers, it is necessary to regard the base index and tentative rates in effect immediately before to the effective date of the extension the same as the stumpage rate in effect immediately before the extension in sales without the rate adjustment provision. Exceptions to this rule may be in connection with early extensions as discussed earlier in this section. Sales sold after April 15, 1982, contain a contract provision that prevents the adjustment procedure during any extension period granted pursuant to provision C/CT8.23 to establish rates lower than the tentative rates established for the extension period. Each species or species group is adjusted based on its own indices and no adjustments are made between species or species groups. At times, United States may benefit by terminating the rate adjustment provision and extending the sale at flat rates. Such flat rates must not be less than the adjusted rate in effect at the original expiration date. 32.8 - Purchaser Notification. Both parties must make decisions relating to an extension when the termination date of a contract is imminent and the contract is not completed. The Contracting Officer must decide if an extension is appropriate. The purchaser should receive notification in writing, by certified mail, return receipt request, if the decision is not to extend the contract, stating the reasons for the decision. This notice should arrive in sufficient time for the purchaser to complete the sale within the designated operating season. If the Contracting Officer decides that an extension is appropriate, the purchaser should receive notification that an application for extension is being considered. Although it is not necessary, the Forest Service and the purchaser benefit if the purchaser receives two letters. The first, mailed approximately 90 days before the termination date, reminds the purchaser of the impending termination date. If requesting an extension, the purchaser, must reply and include the operating plans and schedules discussed in section 32.7. If the Forest Service decides to approve the extension, after receiving the purchaser's application and considering the operating plans and schedules, a rate redetermination must be made to determine the stumpage rates for the extension and the contract conditions be modified. The Contracting Officer shall forward the extension documents by certified mail to allow the purchaser 30 days to consider the stumpage rates and other terms under which the Forest Service shall grant the extension. This second letter specifies that granting the extension is contingent upon acceptance of the redetermined stumpage rates and other modifications that the Forest Service deems necessary. Both parties must resolve questions about the extension procedures before the contract termination date during the 30-day period consideration or during any subsequently granted additional consideration period. The Contracting Officer shall not approve an agreement to extend or modify a contract signed under protest and shall return such agreements promptly to the purchaser. Purchasers may receive an additional consideration period, not to exceed 15 days in such cases. No felling or removal of included timber is permissible after the contract termination date during such authorized consideration periods. The conditional extension should occur through contract modification that specifies the purpose and duration of the extension as well as the involved conditions. The letter transmitting the modifications should follow a format similar to that in exhibit 01. 32.8 - Exhibit 01 (date) (Addressee) (Address) Dear : Your request for Contract Term Extension for the Timber Sale, Contract Number , has been approved. The contract is hereby tentatively extended to , contingent upon your execution and return of the enclosed (Agreement to Extend and Modify Contract) (Agreement to Modify Contract) (and payment of the Initial Extension Deposit of $ .) $ of your cash on hand shall be used to satisfy the balance of the Initial Deposit Requirements not covered by the enclosed billing. The rates at which extension is granted are as follows: (space for appropriate rates) (It is the intent of the Forest Service that you have, after receipt of this letter, at least 30 days in which to decide whether or not you wish to accept extension of this contract at the terms and conditions under which it is offered (and to obtain consent of surety 1/). Upon your request, the Forest Service is willing to grant a conditional extension that will provide you at least that number of days for such considera- tion (and/or to obtain consent of surety 2/), provided that no timber cutting on the sale area or timber removal from the sale area will be permitted during such conditional extension period. 1/) Please sign and execute the original and copies, (obtain consent of surety 2/) and return to this office by no later than . Unless this is done, (or a request for a conditional extension is received prior to , the contract will terminate on . (Signature) CONTRACTING OFFICER Enclosure 1/ Include this paragraph (phrase) if notification letter is sent less than 30 days prior to termination date. 2/ Include when extended termination date listed in the first paragraph is more than 1-year later than the original termination date.