Public Law 110-234, Section 8401 - Farm Bill`

Subtitle E—Miscellaneous Provisions
SEC. 8401. QUALIFYING TIMBER CONTRACT OPTIONS.

(a) DEFINITIONS.—In this section:
(1) AUTHORIZED PRODUCER PRICE INDEX.—The term ‘‘authorized
Producer Price Index’’ includes—
(A) the softwood commodity index (code number WPU 0811);
(B) the hardwood commodity index (code number WPU 0812);
(C) the wood chip index (code number PCU 3211133211135); and
(D) any other subsequent comparable index, as established
by the Bureau of Labor Statistics of the Department of Labor and
utilized by the Secretary of Agriculture.
(2) QUALIFYING CONTRACT.—The term ‘‘qualifying contract’’
means a contract for the sale of timber on National Forest System
land—
(A) that was awarded during the period beginning on
July 1, 2004, and ending on December 31, 2006;
(B) for which there is unharvested volume remaining;
(C) for which, not later than 90 days after the date of
enactment of this Act, the timber purchaser makes a written
request to the Secretary for one or more of the options
described in subsection (b);
(D) that is not a salvage sale;
(E) for which the Secretary determines there is not an
urgent need to harvest due to deteriorating timber conditions
that developed after the award of the contract; and
(F) that is not in breach or in default.
(3) SECRETARY.—The term ‘‘Secretary’’ means the Secretary
of Agriculture, acting through the Chief of the Forest Service.
(b) OPTIONS FOR QUALIFYING CONTRACTS.—
(1) CANCELLATION OR RATE REDETERMINATION.—Notwithstanding
any other provision of law, if the rate at which a qualifying contract
would be advertised as of the date of enactment of this Act is at least
50 percent less than the sum of the original bid rates for all of the
species of timber that are the subject of the qualifying contract, the
Secretary may, at the sole discretion of the Secretary—
(A) cancel the qualifying contract if the timber purchaser—
(i) pays 30 percent of the total value of the timber
remaining in the qualifying contract based on bid
rates;
(ii) completes each contractual obligation (including
the removal of downed timber, the completion of
road work, and the completion of erosion control work)
of the timber purchaser with respect to each unit on
which harvest has begun to a logical stopping point, as
determined by the Secretary after consultation with the
timber purchaser; and
(iii) terminates its rights under the qualifying contract; or
(B) modify the qualifying contract to redetermine the
current contract rate of the qualifying contract to equal the
sum obtained by adding—
(i) 25 percent of the bid premium on the qualifying
contract; and

(ii) the rate at which the qualifying contract would
be advertised as of the date of enactment of this Act.
(2) SUBSTITUTION OF INDEX.—
(A) SUBSTITUTION.—Notwithstanding any other provision
of law, the Secretary may, at the sole discretion of the
Secretary, substitute the Producer Price Index specified in
the qualifying contract of a timber purchaser if the timber
purchaser identifies—
(i) the products the timber purchaser intends to
produce from the timber harvested under the qualifying
contract; and
(ii) a substitute index from an authorized Producer
Price Index that more accurately represents the predominant
product identified in clause (i) for which
there is an index.
(B) RATE REDETERMINATION FOLLOWING SUBSTITUTION
OF INDEX.—If the Secretary substitutes the Producer Price
Index of a qualifying contract under subparagraph (A), the
Secretary may, at the sole discretion of the Secretary, modify
the qualifying contract to provide for—
(i) an emergency rate redetermination under the
terms of the contract; or
(ii) a rate redetermination under paragraph (1)(B).
(C) LIMITATION ON MARKET-RELATED CONTRACT TERM
ADDITION; PERIODIC PAYMENTS.—Notwithstanding any
other provision of law, if the Secretary substitutes the Producer
Price Index of a qualifying contract under subparagraph
(A), the Secretary may, at the sole discretion of the
Secretary, modify the qualifying contract—
(i) to adjust the term in accordance with the marketrelated contract term addition provision in the
qualifying contract and section 223.52 of title 36, Code
of Federal Regulations, as in effect on the date of the
adjustment, but only if the drastic reduction criteria in
such section are met for 2 or more consecutive calendar
year quarters beginning with the calendar quarter in
which the Secretary substitutes the Producer Price
Index under subparagraph (A); and
(ii) to adjust the periodic payments required under
the contract in accordance with applicable law and
policies.
(3) CONTRACTS USING HARDWOOD LUMBER INDEX.—With respect
to a qualifying contract using the hardwood commodity
index referred to in subsection (a)(1)(B) for which the Secretary
does not substitute the Producer Price Index under paragraph
(2), the Secretary may, at the sole discretion of the Secretary—
(A) extend the contract term for a 1-year period beginning
on the current contract termination date; and
(B) adjust the periodic payments required under the
contract in accordance with applicable law and policies.
(c) EXTENSION OF MARKET-RELATED CONTRACT TERM ADDITION
TIME LIMIT FOR CERTAIN CONTRACTS.—Notwithstanding any other
provision of law, upon the written request of a timber purchaser, the

Secretary may, at the sole discretion of the Secretary, modify a timber
sale contract (including a qualifying contract) awarded to the
purchaser before January 1, 2007, to adjust the term of the contract
in accordance with the market-related contract term addition provision
in the contract and section 223.52 of title 36, Code of Federal
Regulations, as in effect on the date of the modification, except that
the Secretary may add no more than 4 years to the original contract
length.
(d) EFFECT OF OPTIONS.—
(1) NO SURRENDER OF CLAIMS.—Operation of this section
shall not have the effect of surrendering any claim by the
United States against any timber purchaser that arose—
(A) under a qualifying contract before the date on
which the Secretary cancels the contract or redetermines
the rate under subsection (b)(1), substitutes a Producer
Price Index under subsection (b)(2), or modifies the contract
under subsection (b)(3); or
(B) under a timber sale contract, including a qualifying
contract, before the date on which the Secretary adjusts
the contract term under subsection (c).
(2) RELEASE OF LIABILITY.—In the written request for any
option provided under subsections (b) and (c), a timber purchaser
shall release the United States from all liability, including
further consideration or compensation, resulting from—
(A) the cancellation of a qualifying contract of the purchaser
or rate redetermination under subsection (b)(1), the
substitution of a Producer Price Index under subsection
(b)(2), the modification of the contract under subsection
(b)(3) or a determination by the Secretary not to provide the
cancellation, redetermination, substitution, or modification;
or
(B) the modification of the term of a timber sale contract
(including a qualifying contract) of the purchaser
under subsection (c) or a determination by the Secretary not
to provide the modification.
(3) LIMITATION.—Subject to subsection (b)(1)(A), the cancellation
of a qualifying contract by the Secretary under subsection
(b)(1) shall release the timber purchaser from further obligation
under the canceled contract.