Timber Management

Each year, the Forest Service and the Bureau of Land Management (BLM) award thousands of contracts for the removal of timber from public lands. Since the early 1990s, the Forest Service and BLM have suspended or canceled timber sale contracts for various reasons. Suspending or canceling timber contracts to protect threatened or endangered species is a relatively new but growing practice. GAO found that BLM has suspended or canceled significantly fewer timber sale contracts than has the Forest Service, and BLM has consistently taken steps to protect itself from the damages that could arise from suspending or canceling contracts to protect threatened or endangered species. In contrast, the Forest Service's actions have not fully protected the agency. As of October 1996, for example, the Forest Service had 73 pending claims with potential damages of about $61 million; BLM had one pending claim totaling almost $2.2 million. Since the late 1980s, the Forest Service has been developing new regulations and a new timber sale contract that would limit the government's liability on canceled timber sale contracts and redistribute the risk between agency and purchaser. The Forest Service has yet to finalize either the regulations or the contract.

GAO found that: (1) from October 1992 through June 1996, the Forest Service and BLM paid more than $6.6 million in claims for 49 contracts that were suspended or cancelled to protect threatened or endangered species; (2) the agencies have paid purchasers for the value of replacement timber, interest, lost profits, and unrecovered costs; (3) the Forest Service paid damages of almost $6.5 million from its appropriations and BLM settled its single claim by modifying another contract held by the purchaser to reduce the amount paid to the government for purchased timber without changing the original volume of timber to be harvested; (4) as of October 1996, the Forest Service had 73 pending claims with potential damages of about $61 million, but it could incur at least an additional $198 million in damages; (5) BLM had one pending claim for almost $2.2 million, but it could incur between $35 million and $40 million more in potential future liability; (6) uncertainty arises from the agencies' inability to predict the outcome of ongoing and future litigation that could result in the award of more or less in damages than the purchasers claim, the results of countersuits that could be filed by the Forest Service and BLM, or the success of the agencies' efforts to offer replacement timber or other settlements in lieu of paying damages; (7) Forest Service officials stated that the Service may not have the funds to pay for pending and future claims without additional congressional funding; (8) according to a BLM official, if purchasers sought and were awarded damages, the agency would first attempt to reduce the price of existing contracts to offset damages; and (9) BLM has repeatedly revised its timber sale contract to minimize its liability when it must suspend or cancel a timber sale contract to protect threatened and endangered species, but the Forest Service has not finalized either new regulations or a new timber sale contract that would limit the government's liability on cancelled timber sale contracts and redistribute the risk between the Forest Service and the purchaser.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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