2409.22_75-76
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FOREST SERVICE HANDBOOK
DENVER, CO
FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
Region 2 Amendment No. 2409.22-96-12
Effective December 6, 1996
POSTING NOTICE: Amendments are numbered consecutively by Handbook number and calendar year. Post by document
name. Remove entire document and replace with this amendment. Retain this transmittal as the first page of this document.
The last amendment to this Handbook was Amendment 2409.22-96-11 to 2409.22,70 Contents.
This amendment supersedes R-2 Amendment No. 98.
Document Name
2409.22,76-77
Ex. 7 & 8
2409.22,75-76
2409.22,75.4,Ex.01-02
Superseded New
(Number of Pages)
17
2
-
14
2
Digest:
75-76 - Renumbered from former 76-77 to eliminate missing section. Reformatted to current directives direction. Makes
minor editing and technical changes without effecting content.
75.3 - Removes content but reserves the section and title for future direction should appraisal methodology change.
ELIZABETH ESTILL
Regional Forester
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EFFECTIVE 12/6/96
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FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
R2 AMENDMENT 2409.22-96-12
EFFECTIVE 12/6/96
75 - DETERMINATION OF DAMAGES IN UNCOMPLETED TIMBER SALE CONTRACTS. (FSH 2409.18, sec. 47.1).
Appraise for damages in uncompleted timber sale contracts with utmost care and impartiality. Do not include any item which
cannot be supported in the appraisal.
The appraisal is only one part of the damage report. Discuss fully each item of damage, the provision of the contract violated,
the amount of damage sustained, and the method of appraisal used in the report. Document the cost of making the resale or
reoffer and include in the damages to the Government depending upon whether the resale sells and the applicable contract
provision.
Appraise merchantable timber in accordance with standard appraisal practices and instruction in effect on the termination
date of the sale. The procedures used and the damages charged must follow the contract provisions. Uncut volumes should be
determined as of the termination date, and damages caused by failure to do required work or protect other resources should be
determined after the contractual obligations have been completed.
Determine the contract provisions covering failure to cut from the sale. Older FS-2400-6/6T sales are covered by B/BT9.4 Failure to Cut. Sales sold since April 1982 have made B/BT9.4 inapplicable and replaced with C/CT9.4 - Failure to Cut. The
C/CT9.4 provision allows more items that can be charged as damages for failure to cut. Older FS-2400-3/3T sales are covered
by Standard Provision 16 - Failure to Cut and/or Cutting Undesignated Trees. More current FS-2400-3/3T sales are covered
by Standard Provision 16 and Special Provision 16.3 - Failure to Cut.
Exhibit 01 shows the format summarizing damages as the contract governs.
75.1 - Appraisal for Determination of Damages in Expired Contracts. The general measure of damages is the extent to which
the resale value of remaining timber is less than the amount the purchaser would have paid had the contract been completed.
Resale value of the remaining timber is defined as the appraised value at termination or the actual value bid in a resale,
whichever is greater.
The volume of remaining timber must be carefully determined. Often subtraction of volume cut from volume sold will suffice.
If there are indications that the sale was undercutting or overcutting, then it should be recruised. For sales sold on an acre
unit, see instructions for same.
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75 - Exhibit 01
TIMBER SALE DAMAGE SUMMARY SHEET
A. Damage for Failure to Cut
1. Volume and Current Contract Value of remaining timber
a. on area not cut over
b. on area cut over
1) designated
a) cut, but not removed
b) not cut
2) not designated
a) cut, but not removed
3) material wasted
c. Total Volume and Contract Value
2. cost of Resale 2/ or Reoffer 1/
3. Increase in Purchaser Credit Limit 3/, 1/
4. cost of Eliminating Individual Trees 1/
5. Interest - (A1 - A7) X Interest Rate X Time 1/
6. Increased Reforestation Costs 1/
7. Less Effective Purchaser Credit 3/
8. Less Resale Value at new Rates
a. Original Terms at Termination
b. Bid Value
c. Resale Value - Greater of 8b or 8a
B. Maximum Potential Damages for Failure to Cut 4/
(A1c + A2 + A3 + A4 + A5 + A6 + - A7 - A8c)
+
+
+
+
+
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C. Physical Damages by Referenced Provision:
1. (Add more lines as needed)
2.
3. Subtotal Physical Damages (C1 + C2)
D. Total Damages (B + C5)
E. Less Unobligated Cash on Hand
F. (Refund) or Additional Due from Purchaser (D - E)
1/ Only applicable to FS-2400-6/6T contracts which contain C9.4 and FS-2400-3/3T contracts which contain
Special porvision 16.3.
2/ Include Resale Cost only if resale sells.
3/ Not applicable to FS-2400-3/3T contracts.
4/ A negative value will be entered as zero.
The appraised value must be comparable with current contract value with roads in place. Apply unused effective purchaser
credit to reduce damages. Credit the 5% hold back on uncompleted specified roads to the sale as established purchaser credit.
Effective purchaser credit that has been transferred out may be returned to mitigate damages, but must be replaced by cash
payments to the other contracts involved. Unused purchaser credit becomes ineffective for all purposes other than damages
pertinent to the sale on which it was earned, upon default of that sale.
Transfer of Purchaser Credit between sales causes problems when default occurs. Contact sale administration zone specialists
for how to handle the different situations that may apply.
75.11 - Appraisal at the Time of Termination. The first step in determining damages is to appraise the remaining timber
using standard Forest Service methods in effect at termination under the original contract terms and conditions. Do not
violate current regulations or perpetuate inappropriate actions under original conditions. Seek permission to sell under
"differing conditions". The completion of all uncompleted work required of the original purchaser or made necessary by its
operation will be computed separately from the appraisal for the remaining timber. It may be included in the resale appraisal.
If the original contract was modified, the terms of the modified contract are the basis for the appraisal. Use the original
contract termination date or the last termination date for extension or contract term adjustment shown on contract
modification forms or notices as the basis for damage appraisal timing.
R2 AMENDMENT 2409.22-96-12
EFFECTIVE 12/6/96
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In stumpage rate adjustment sales, when an adjusted date for termination falls on a date that is not at the end of a calendar
year quarter, advertised rates and current contract rates must be adjusted to the end of the quarter according to the stumpage
rate adjustment formula specified by the timber sale contract.
When the appraised value is equal to or greater than current contract value at termination, do not assess damages for loss of
stumpage value on remaining timber regardless of how that timber is subsequently offered and what value is received. There
may be other damages, however, including the cost of resale or reoffer.
75.2 - Determination of Resale Value. When the appraised value is less than current contract value, determination of resale
value and hence damages will depend on how the timber is reoffered. The four situations are:
1. Timber not reoffered for sale. In this case, the resale value is the appraised value at termination.
2. Timber reoffered under original conditions: The resale value is the greater of:
a. Bid value of the resale.
b. Appraised value at time of termination if no bids are received.
3. Timber reoffered under different conditions (change in contract). If it is desirable to reoffer the timber under different
conditions from those of the original contract, it is necessary to make two appraisals. Make the first appraisal under the
original contract conditions and the second under the changed conditions. Use standard appraisal methods in effect at time of
termination date. The difference, if it reduces the value of the remaining timber, will be used to reduce damages. For
example:
a. Contract value of uncut timber at expiration
$6,000
b. Appraised value under original contract provision
$4,000
c. Appraised value under changed contract provision
$3,000
d. Difference in value due to changed conditions
-$1,000
e. Damages under original contract provision, if sale is not
reoffered (not including bid premium) $6,000 - 4,000 =
$2,000
f. Reoffered at later date with changed conditions;
bid value is
$3,500
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g. Potential damages are: Contract value less bid value
minus difference in value due to changed conditions
$6,000 - 3,500 - 1,000 =
$1,500
It should be noted that the maximum potential damages in the above example are not to exceed $2,000 as indicated under
paragraph 2 above.
If changed conditions result in an increase in appraised value, the difference will not be used in determining damages.
Damage in this event is determined as paragraph 2.
4. Timber Reoffered partially. When only a portion of the remaining timber is reoffered, the price received for the
reoffered timber is not as good a measure of damages as it would be had all the remaining timber been sold.
First, determine the difference between the contract value and appraised value of the remaining timber under the same
contract conditions in effect at time of expiration as done under paragraphs 1, 2, and 3 above.
Second, make an analysis of bid results to determine whether there should be a reduction of damages on the unoffered portion
of the remaining timber after the portion of remaining volume is resold.
Example where 50% of the timber will be resold:
a. Contract value of remaining timber
$10,000
b. Appraisal value of remaining timber
9,000
c. Potential damages
1,000
d. Resell 50% of the timber
(1) Resell half the timber
4,500
(2) Bid value
5,000
e. No damages on half that is resold since bid value is
greater than or equal to $1,000 / 2 =
f. Potential of $500 damages on half that was not resold.
$500
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In this example, the half resold would have the same sale characteristics and volume as the second half. Make a comparison
of these factors prior to determining damages on the remaining portion. If the half that will not be sold would also receive a
$500 bid premium had the timber been included in the resale, then the appraiser may recommend that the Regional Forester
contact the OGC before approving this recommendation.
Prepare an analysis to determine damages on the portion not sold when the sale conditions and/or volume are different on the
portion resold. For example, consider a sale where the portion resold displayed the same sale conditions as the unsold portion,
but the volume of the resold portion was one-fourth of the remaining volume. The potential damages would relate to damages
not mitigated through bidding on the resold portion in addition to the damages directly proportional to three-fourths of the
volume since the volume was the only variable. The appraiser must determine if the bid premium received on one-fourth of
the remaining volume would have been received on the three-fourths which was not sold. If it is determined that the unsold
portion would have received the bid premium, damages relate to those not mitigated through bidding and the Regional
Forester must contact OGC. The same is true for differing sale characteristics. The appraiser must relate bid premium on the
portion resold to that portion not sold as separate entities. Both portions stand on their own.
75.3 - Changes in Appraisal Methodology. [Reserved].
75.4 - Damages Other Than For Loss of Stumpage Value. (FSM 2453.54). Following are the more common kinds of damage:
1. Merchantable Timber Cut and Not Paid For. Determine the amount and value by species of (a) designated trees and
(b) undesignated trees.
Merchantable timber that is cut and not paid for must be billed to the purchaser before the termination date of the sale or
before the termination of the Payment Bond, letter of credit, or other payment guarantee. Where the contract provides
payment of liquidated damages for the cutting of undesignated timber, determine the amount due and show separately from
the stumpage value.
2. Designated Trees Left Uncut. Determine amount and value by species of designated timber left on portions of the sale
area that have been logged. Do not include volumes in occasional trees left for reasons permitted by the contract and for which
charges would not have been made in the normal course of sale administration.
Also determine damages resulting from the physical presence of uncut trees (as opposed to loss of stumpage) and show
separately from stumpage. Base damages on the actual cost of cutting and removing or otherwise disposing of uncut trees if
provided in the contract, .
3. Merchantable Material Wasted in Abandoned Logs and In Top and Stumps. Determine amount and value by species.
Do not include volumes of (a) incidental material, the leaving of which was justified under existing sale condition, or (b)
material authorized to be left.
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If the contract does not provide for payment for designated timber cut but not removed, include the cost of removing or
otherwise disposing of wasted material as well as the stumpage value.
4. Parts of Sale Area Left Uncut, Whether Timber is Marked or Unmarked. Determine amount and value, by species,
particularly with reference to any reduction in value due to the acts of the purchaser removing timber of better quality or
accessibility than the average for the entire sale area, and in reducing the volume to be cut below that suitable for economical
operation.
5. Young Growth and Standing Trees Which Have been Killed or Seriously Injured. Determine amount and value by
species. Damages may be actual market value of the damaged timber, or cost of replacement of the stand. Damages should be
either market or replacement value, whichever is the sounder measure of damages suffered by the National Forest. Damages
should not include both types of value, because this would be duplication in most cases. Three methods of measuring damages
to market value, and two elements of replacement value are described below.
a. Actual Market Value of the Young Growth. Three approaches are suggested to establish values of damaged
young growth. Test all approaches on any damage situation. Use the one that appears most sound and defensible,
considering all facts of the individual case.
(1) Transaction Evidence. Transaction Evidence is the most acceptable to the courts, but often most difficult to
obtain. This is actual evidence of sale value of lands stocked with immature timber, as compared with actual sales
of bare land. The difference is the value of the immature timber. This is the preferred method if it can be used. If
such transaction evidence is not available, analytical estimates of damage may be based on one of the analytical
methods that follow.
(2) Damage Due to Loss of Increment to Date. Use the formula D = (M x Y x K x S) x V x A, where:
D = Damage.
M = Mean annual increment per acre (at rotation age).
Y = Age of stand at termination date.
K = Percentage of stand killed at termination date.
S = Percentage of stocking just prior to termination date.
V = Current stumpage value per unit (CCF, MBF, and so forth) at maturity.
A = Acres affected.
In the formula above, "M x Y x K x S" is the volume damaged per acre; "V" is the value per CCF, and "A" is the
number of acres damaged. This method gives the current value of that portion of the future harvest that is in
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existence today. It assumes, in effect, that growth from now until the stand would have been of merchantable size is
equal to the discount rate from that time back to present.
(3) Damage Due to Loss of Total Potential Increment at Harvest Date. In this method, the procedure is similar to
method (2) above except that "Yr" is the age of the stand at rotation age and a discount factor for the number of
years (Yr minus Y) is applied. A discount or interest factor of 3 percent is considered fair. The formula is D = [(M X
Yr X K X S) X V X A]/(1 + p)n, where:
D, M, K, S, V, and A are the same as in method (2) above.
Yr = Age at rotation.
p = interest rate.
n = number of years to rotation age (Yr minus Y).
Example for Methods (2) and (3):
A 20-year old stand with mean annual increment of 41 cubic feet per acre per year, 80 percent stocked before
termination, 80 percent killed, current value to stumpage $20 per CCF, 40 acres affected. Rotation age is 80 years.
Method (2)
D = (0.410 CCF X 20.0 X .80 X .80) X $20 X 40
= 5.248 CCF/acre X $20 X 40 acres
= $104.96/acre X 40 acres
= $4,198.40
Method (3)
D = [(0.410 CCF X 80.0 X .80 X .80) X $20 X 40] / (1.03)60
= (20.99 CCF/acre X $20 X 40) / 5.8916.
= $419.80 per acre X 40 acres / 5.8916
= $16,792 / 5.8916
= $2,850.15
In this example, method (3) shows a lower value than method (2). The reason is that the growth rate of 1.25 percent
(for example, 0.410 / (80 X .410)) is lower than the 3 percent interest rate in method (3). If the growth rate were
greater than 3 percent, method (3) would yield a higher value.
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Mean annual increment (m.a.i.) data from growth tables may be used if the tables are defensible in court and the
data are adjusted to the ground conditions. When the stand destroyed is so young that m.a.i. cannot be measured,
the growth should be calculated from normal-yield tables.
b. Replacement Value of Young Growth. The approach to this method of damages determination is based on the
cost of replacing the stand of young growth destroyed by the purchaser's actions. Use this approach when the stand
destroyed was young and normal yield tables cannot be applied for growth calculations.
Cost of Reestablishment. If the stand must be regenerated artificially, use the formula:
D = (K x S x A x C) x (1 + p)n, where:
D, K, S, A and p are the same as in method (3) above.
C = Cost of planting or seeding one acre.
n = Age of the stand at time of damage.
This is the replacement cost of a stand n years of age, with (K x S) percent of stocking.
Include here any site preparation cost made necessary and essential to successful artificial or natural regeneration
of the young growth lost.
6. Slash, Snags, and Refuse Left on the Sale Area in Violation of the Contract. Determine actual cost of disposition.
7. Failure to Clean up Camp Area, Sawmill Sites, Landings in Accordance With the Terms of the Contract. Determine
actual cost of disposition.
8. Forest Service Expenditures Necessary Because of Failure of the Purchaser to Require Employees to Prevent or Fight
Fires.
9. Damage to Improvements Not Repaired. Determine the actual cost of the repairs.
10. Unacceptable Damage to Stream and Stream Environment From Excessive Accumulation of Slash and Logging
Debris. Determine the actual cost of channel clearing and disposition of debris.
11. Any Other Damage Directly Attributable to a Violation of the Sale Contract.
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12. Cost of Resale. The cost of resale is a legitimate damage claim item when the sale is reoffered or resold and the
contract contains contract provision C(T)9.4 with an edition date of 4/82 or later. When the contract contains a previously
dated provision, the cost of resale is only legitimate when the sale is resold. Do not include any cost item that cannot be
supported. Being able to justify all items or costs becomes difficult when remaining timber is reoffered under changed or
delayed conditions. Under these situations it may be necessary to delete certain items that normally are includable as damage
items.
Include only those costs directly applicable to the resale of remaining timber from the original sale. Major items to consider
are:
a. Recruising only the material included in the original sale.
b. Remarking up to normal marking costs of the original trees or volume. If time is spent in finding the original
marked trees in order to establish damages, the extra costs must be excluded since they are incurred in order to
establish damages.
c. Remarking original sale and cutting unit boundaries.
d. Cost of appraisal and completing new contract. This would include only the appraisal made to determine value of
remaining included timber. This would also include the cost of preparing related documents for reoffering the
remaining timber.
e. Cost of newspaper advertisement for offering the remaining volume.
Do not include costs incurred in establishing amount of damages as a resale cost or any other damage cost (these actions may
be necessary but are not chargeable as damages) such as:
a. Scaling felled timber - costs incurred to determine volumes for damage appraisal purposes.
b. Marking and cruising done only to establish damages.
c. Sale inspection to determine what, if any, contract requirements purchaser has failed to complete.
d. Making damage appraisal.
e. Redesigning sale to meet new standards. If the prescribed treatment is changed, the remarking may include (1)
original trees, (2) new trees, or (3) deleting some original trees. Unless there is a sound basis to determine what
portion of the remarking costs involved remarking original trees, that cost may have to be excluded as damages.
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13. Failure to Cut. For sales containing special provision C/CT9.4 (4/82). In addition to the costs listed in items 1-12,
purchasers shall be liable for the following when applicable:
a. Any increase in construction costs for specified roads not completed by termination date. Such roads must be
needed to harvest the uncut timber in the resale. Costs are limited to increases for constructing the road to the
same standard and specifications that were in the contract on termination date.
b. The Government's loss caused by the delay in receipt of stumpage payments. Interest, at the current rate being
paid for borrowing by the United States (as calculated and published by the U.S. Treasury in Treasury Fiscal
Requirements Manual 6-8020-20) at termination, shall be charged on the unpaid contract value for half of the
contract resale period. Not more than one year's additional interest is allowed to cover the time needed by the
Forest Service to resell the timber, for example, if the resale contract is a three year sale, and does not take place
until 18 months after the contract termination date; then interest would be charged for 2.5 years (18 months to
midpoint, plus the one year maximum resale period). Conversely, if the resale takes place four months after sale
expiration date then interest would be charged for 22 months (four months plus 18 months to resale midpoint).
c. The loss to the Government caused by delay in harvest measured by increased regeneration costs (including site
preparation, seeding, and planting). Such costs must be substantiated by the difference in the regeneration costs in
original sale area improvement plan and increased costs caused by the delay in harvest as measured by the
regeneration costs in the sale area improvement plan prepared at time of resale.
The following exhibits show examples of how damages are determined under various circumstances. Note that the situation at
termination is the same for all examples in each exhibit
.
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EFFECTIVE 12/6/96
75.4 - Exhibit 01
Calculation of Damages When FS-2400-6/6T B/BT9.4 - Failure to Cut or FS-2400-3/3T Standard Provision 16 Applies.
Appraisal Value At Termination Date Is:
Greater Than
Less Than Items A.1. Through A.3. for Failure to Cut
Items A.1.
Timber is Reoffered Promptly for Sale With:
Through A.3.
Timber Not
Failure to Cut
(CCF)
($)
Reoffered
(CCF)
($)
Bids Received Under:
Original
Terms
(CCF)
Lower Market
New Terms
($)
(CCF)
($)
Higher Market
New Terms
(CCF)
No Bids
Received
($)
(CCF)
($)
A. Damage for Failure to Cut
1. Volume and Current Contract Value of remaining timber
a. on area not cut over (item 4)
1,000
25,000
a) cut, but not removed (item 1)
200
5,000
b) not cut (item 2)
100
2,500
50
1,250
b. on area cut over
(1) designated
SAME VOLUME AND CURRENT CONTRACT VALUE OF FIRST COLUMN
(2) not designated
a) cut, but not removed (item 1)
(3) material wasted (item 3)
c. total Volume and Current Contract Value
50
1,250
1,400
35,000
2. Cost of Resale (item 12) 1/
3. Less Effective Purchaser Credit 2/
1,400
35,000
1,400
35,000
1,400
35,000
1,400
35,000
1,400
35,000
500
N/A
500
500
500
N/A
5,500
5,500
5,500
5,500
5,500
5,500
4. Less Resale Value at new Rates
a. Original Terms at Termination
(waste volume not appraised)
1,350
40,500
1,350
27,00
1,350
27,000
1,350
27,000
1,350
27,000
1,350
27,000
b. New Terms at Termination:
1) Appraised Under changed Conditions
2) Adjustment for Changed Conditions
(4a-4b1)
c. Appraised at New Terms for Resale
N/A
N/A
N/A
1,000
15,000
1,000
15,000
N/A
N/A
N/A
N/A
350
12,000
350
12,000
N/A
N/A
N/A
N/A
1,000
9,000
1,000
25,000
N/A
d. Bid Value
1,350
40,500
N/A
1,350
28,350
1,000
10,000
1,000
30,000
0
e. Resale Value (Greater of 4b2+4d or 4a)
1,350
40,500
27,000
1,350
28,350
1,350
27,00
1,350
42,000
1,350
1,350
27,000
B. Maximum Potential Damages for Failure to Cut
(BT9.4 or provision 16 - A1c+A2-A3-A4e) 3/
C. Physical Damages (e.g., B/BT2.132, B/BT9.5, etc. or Standard
Porv. 17, Special Prov. 6.1,etc.)
0
2,500
1,650
3,000
0
2,500
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EFFECTIVE 12/6/96
1. Liquidated damages (if provided for in contract)
a. on area cut over, designated but not cut (item 2)
b. on area cut over, not designated, cut, but not removed (item 1)
(100)
2,500
(100)
2,500
(100)
2,500
(100)
2,500
(100)
2,500
(100)
2,500
(50)
1,250
(50)
1,250
(50)
1,250
(50)
1,250
(50)
1,250
(50)
1,250
2. Additional Damages (items 5 - 11)
1,000
1,000
1,000
1,000
1,000
1,000
3. Subtotal Physical Damages (C1 + C2)
4,750
4,750
4,750
4,750
4,750
4,750
D. Total Damages (B + C3)
4,750
7,250
6,400
7,750
4,750
7,250
E. Less Unobligated Cash on Hand
5,000
5,000
5,000
5,000
5,000
5,000
F. (Refund) or Additional Due from Purchaser (D - E)
(250)
2,250
1,400
2,750
(250)
2,250
1/ Include Resale Cost only if sale resells.
2/ Not applicable to FS-2400-3/3T contracts.
3/ A negative value will be entered as zero.
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75.4 - Exhibit 02
Calculation of Damages When FS-2400-6/6T C/CT9.4 - Failure to Cut or FS-2400-3/3T Standard Provision 16 and Special Provision 16.3 Applies.
Appraisal Value At Termination Date Is:
Greater Than
Less Than Items A.1. Through A.7. for Failure to Cut
Items A.1.
Timber is Reoffered Promptly for Sale With:
Through A.7.
Timber Not
Failure to Cut
(CCF)
($)
Bids Received Under:
Original
Terms
Reoffered
(CCF)
($)
(CCF)
A. Damage for Failure to Cut
Lower Market
New Terms
($)
(CCF)
Higher Market
New Terms
($)
(CCF)
No Bids
Received
($)
(CCF)
($)
SEE 75 - EXHIBIT 01
1. Volume and Current Contract Value
c. Total Volume and Current Contract Value
1,400
35,000
1,400
35,000
1,400
35,000
1,400
35,000
1,400
35,000
1,400
35,000
2. Cost of Resale or Reoffer (item 2)
500
N/A
500
500
500
N/A
3. Increase in Purchaser Credit Limit 1/
500
500
500
500
500
500
0
0
0
0
0
0
5,163
N/A
5,163
5,163
5,163
N/A
100
N/A
100
100
100
N/A
5,500
5,500
5,500
5,500
5,500
5,500
4. Cost of Eliminating Individual Trees
5. Loss caused by delay in stumpage payments not made
(Assume14.0% at term. date and sale reoffered 90 days after
term. date. Resale is for 2 years. Interest will be charged on
$29,500 for 15 months 2/
6. Increased reforestation costs
7. Less Effective Purchaser Credit 1/
8. Less Resale Value at New Rates
a. Original Terms at Termination:
(waste volume not appraised)
1,350
40,500
1,350
27,00
1,350
27,00
1,350
27,00
1,350
27,00
1,350
27,00
N/A
N/A
1,000
12,000
15,000
350
1,000
12,000
15,000
350
N/A
N/A
b. New Terms at Termination:
1) Appraised Under Changed Conditions
2) Adjustment for Changed Conditions (8a-8b1)
c. Appraised at New Terms for Resale
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1,000
9,000
1,000
25,000
d. Bid Value
1,350
40,500
N/A
1,350
28,350
1,000
10,000
1,000
30,000
e. Resale Value (Greater of 8b2+8d or 8a)
1,350
40,500
27,00
1,350
28,350
1,350
27,000
1,350
42,000
1,350
N/A
0
1,350
27,00
B. Maximum Potential Damages for Failure to Cut
(C/CT9.4 or Standard Prov. 16 and Special Prov. 16.3)
(A1c + A2 + A3 + A4 + A5 + A6 - A7 - A8e) 3/
C. Total Damages (e.g. B/BT2,132, C/CT9.5, etc.)
0
3,000
7,413
8,763
0
3,500
R2 AMENDMENT 2409.22-96-12
2409.22_75-76
Page 16 of 19
EFFECTIVE 12/6/96
1. Liquidated damages (if provided in Contract)
a. on area cu;t over, designated, not c;ut
b. on area cut over, not designated, cut, but not removed
(100)
2,500
(100)
2,500
(100)
2,500
(100)
2,500
(100)
2,500
(100)
2,500
(50)
1,250
(50)
1,250
(50)
1,250
(50)
1,250
(50)
1,250
(50)
1,250
2. Additional Damages (items 5 - 11)
1,000
1,000
1,000
1,000
1,000
1,000
3. Subtotal Physical Damages Damages (C1 + C2)
4,750
4,750
4,750
4,750
4,750
4,750
D. Total Damages (B + C3)
4,750
7,250
12,163
13,513
4,750
8,250
E. Less Unobligated Cash on Hand
5,000
5,000
5,000
5,000
5,000
5,000
F. (Refund) or Additional Due from Purchaser (D - E)
(250)
2,750
7,163
8,513
(250)
3,250
1/ Not applicable to FS-2400-3/3T contracts. 2/ Interest charged on $29,500 (Current contract value less unused effective purchaser credit.
3/ A negative value will be entered as zero.
4/ Cost of eliminating individual trees is included in Physical Damages.
R2 AMENDMENT 2409.22-96-12
EFFECTIVE 12/6/96
2409.22_75-76
Page 17 of 19
76 - RATE REDETERMINATION APPRAISAL WHEN CONTRACT PERIOD IS EXTENDED. (FSH 2409.18, sec. 46.62c).
Complete rate redetermination appraisals made at the time an extension of the contract period is requested by the purchaser
in a timely fashion. Design the appraisal as though it is for a new sale with a bid opening date as of the first day following the
termination of the contract. Base the redetermined rates on standard Forest Service appraisal methods and data in effect 45
days before the original termination date of the contract. If the sale has a contract term adjustment, the termination date is
the original termination date prior to application of the adjustment.
Present the new proposed rates and possible contract modifications to the purchaser in time sufficient to allow at least 30 days
prior to the redetermination date (the termination date) for the purchaser to consider the proposals. (FSH 2409.18, sec. 46.4)
Form FS-2400-19a (pink) or R2-2400-19a, hereinafter referred to as the 2400-19a, is used to summarize the rate
redetermination for extension. Refer to section 91 for instructions on preparing the form. The Paradox automated appraisal
program can be used to enter the data for the appraisal side of the 2400-19a.
Include a copy of the written application for extension from the purchaser and a Forest evaluation of the purchaser's reasons
for failure to complete the contract in the rate redetermination report. Also include the construction status of specified and
temporary roads and the amount of purchaser credit earned and used. Include the 2400-19a in an appendix to document the
reappraisal.
The appraisal should reflect applicable information and experience gained on the specific sale area. Base the appraisal on
volume in the sale as a whole, even though the rates will be applied only to the remaining volume.
Calculate volume remaining under contract by direct estimate, not as the result of the original sale volume less the volume
reported cut or scaled to termination date. The proportion by species of the remaining volume can be the deciding factor in
determining whether weighted value of redetermined rates plus bid premium is higher than the weighted value of current
contract rates.
Do not change contractual terms such as utilization standards and yarding on merchantable material (YUM) in effect prior to
termination when preparing the rate redetermination. Contractual terms may be changed only by formal modification at time
of extension. The only time modifications can be made which require more work than called for in the original contract, are
when redetermined rates go into effect and the rates reflect the cost of accomplishing the additional work. Deposits for slash
disposal and road maintenance cannot be increased unless redetermined rates go into effect.
Prepare a new slash disposal plan considering the current need and using current costs. Do not put the plan into effect unless
redetermined tentative rates become effective.
Do not change the appraisal point for remaining timber unless there has been a significant change in transportation or
marketing conditions (see FSH 2409.18, sec. 46.2 for expanded discussion).
R2 AMENDMENT 2409.22-96-12
EFFECTIVE 12/6/96
2409.22_75-76
Page 18 of 19
Base rates in a contract normally will not change over the life of the contract; however, in connection with a contract extension
at the request of a purchaser, the base rate may be increased, if necessary, to ensure funds for regeneration of the uncut parts
of the sale area.
For species sold at standard rates, use current standard rates on the rate redetermination appraisal.
Use current costs for all appraisal estimates except for specified roads. Even if the work is all or partially completed, use
updated costs for the entire job as though appraising a new sale.
Specified road costs are equal to earned purchaser credit plus the current (updated) cost of building remaining uncompleted
portions of the roads. Normally, specified roads must be completed prior to termination, and current purchaser credit is the
basis for reappraisal.
Treat changes to the purchaser credit limit according to special provision C/CT8.23 of the contract and FSH 2409.18, sec.
46.62c.
Where redetermined rates go into effect, any increase in the purchaser credit limit must not exceed the difference between the
redetermined value and the current contract value. The monetary return to the Government from a given timber sale cannot
be less during the extension period than during the normal contract period had the sale been completed. For example:
Volume remaining - 500 CCF
Rates
Purchaser Credit
Stumpage
Payment
Current
Rate
Value
$15
$7500
10
5000
5
2500
Redetermined
Rate
Value
$17
$8500
13
6500
4
2000
Indicated
Value
Change
+$1000
= 1500
- 500
Established
Rate
Value
$17
$8500
12
6000
5
2500
The redetermined rates go into effect with a purchaser credit limit of $6000.
Other items dependent upon special provision C/CT8.23 of the contract are interest payments, regeneration and remarking
costs. For sales sold with C/CT8.23 dated 2/76 or earlier, no consideration is made for these items. For sales sold with
C/CT8.23 dated 4/82 or later, compute the following and require the purchaser to pay for these items before the contract
extension is granted.
1. Interest on the current contract value of the remaining timber calculated from the original termination date to the
midpoint of the extension period using the current rate being paid for borrowing by the United States.
R2 AMENDMENT 2409.22-96-12
EFFECTIVE 12/6/96
2409.22_75-76
Page 19 of 19
2. Increased costs of regeneration due to the delay including nursery stock loss, carryover, or replacement cost.
3. Costs of remarking timber on the sale area, reestablishing cutting unit boundaries, or restoring road staking.
Escalated Rates. The escalation procedure to be used during the extension period for stumpage rate adjustment sales is
determined by special provision C/CT3.2. If C/CT3.2 is not included in the contract, use the normal escalation procedure for
the extension period. If C/CT3.2 is included, use the normal escalation procedure, except payment rates for each species
cannot be less than tentative rates established for the extension period. The following illustrates the difference between the
two contracts.
Contract Without
C/CT3.2
170.00
$20.00
Contract With
C/CT3.2
170.00
$20.00
1st Quarter Index
Current Contract Rate
190.00
$30.00
190.00
$30.00
2nd Quarter Index
Current Contract Rate
165.00
$15.00
165.00
$20.00
Base Index
Tentative Rate
The redetermined tentative rate established for any species-product cannot be less than current contract rate for that
particular species-product. Refer to section 91 instructions for line 44, for an example of the adjustment when the
redetermined rate of one species is lower and one species is higher than current contract rates.
For a comparison of the current value to the redetermined value, the current contract tentative rates will be adjusted by the
stumpage rate formula (for escalated sales) to the same WWPA base index used to calculate the adjusted redetermined rates.
The adjusted redetermined rates are always computed to a calendar quarter basis even though the rate redetermination might
have been computed using a rolling quarter or composite index.