B-136117, MAR. 9, 1962

B-136117, MAR. 9, 1962

TO CASCADES PLYWOOD CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 31, 1961, REQUESTING REVIEW OF THE ADMINISTRATIVE DENIAL OF YOUR CLAIM (STATED AS NOW AMOUNTING TO THE SUM OF $33,982.81), ON ACCOUNT OF AN ALLEGED OVERPAYMENT FOR TIMBER PURCHASED UNDER DEPARTMENT OF THE INTERIOR, BUREAU OF LAND MANAGEMENT, CONTRACT NO. 14-11-001-/14/-201, DATED DECEMBER 17, 1956, WITH THE CEDAR CREEK LOGGING COMPANY, SWEET HOME, OREGON, ASSIGNED ON THE SAME DATE TO YOUR COMPANY.

THE CONTRACT COVERED THE SALE OF TIMBER FROM THE RIGHT-OF-WAY FOR AN ACCESS ROAD DESIGNATED AS THE YELLOWBOTTOM ROAD IN LINN COUNTY, OREGON, OVER FOREST LANDS MANAGED BY THE BUREAU OF LAND MANAGEMENT. THE TOTAL PURCHASE PRICE WAS TO BE ARRIVED AT BY MULTIPLYING THE ACTUAL TREE SCALE BY STIPULATED PRICES PER THOUSAND BOARD FEET. THE ESTIMATED NET VOLUMES FOR SIX SPECIES OF TIMBER AND TOTAL ESTIMATED PRICES FOR EACH KIND OF TIMBER WERE SET FORTH IN A SCHEDULE UNDER SECTION 3 OF THE CONTRACT, SHOWING A TOTAL ESTIMATED NET VOLUME OF 4,599,000 BOARD FEET AND A TOTAL ESTIMATED PURCHASE PRICE OF $132,308.20. BELOW THIS SCHEDULE IT WAS PROVIDED THAT THE SCALING OF THE TIMBER SOLD UNDER THE CONTRACT WOULD BE PERFORMED IN ACCORDANCE WITH PARAGRAPH (G) OF SECTION 7 OF THE CONTRACT.

PARAGRAPH (G) OF SECTION 7 PROVIDED THAT TREE SCALE WOULD BE DETERMINED BY THE OFFICER IN CHARGE USING STANDARD TREE VOLUME TABLES COMMONLY USED BY THE BUREAU OF LAND MANAGEMENT WITH ADJUSTMENT FOR DEFECT AND NORMAL BREAKAGE, AND THAT NO TIMBER WOULD BE SEVERED PRIOR TO TREE SCALING BY THE OFFICER IN CHARGE.

THE CONTRACT CONTAINED A FURTHER PROVISION THAT, PRIOR TO THE REMOVAL OF ANY TIMBER FROM THE CONTRACT AREA, THE PURCHASER WOULD PAY TO THE GOVERNMENT THE SUM OF $6,116.67 FOR THE MAINTENANCE OF THE GOVERNMENT ROAD TO BE USED IN TRANSPORTING THE TIMBER CUT UNDER THE CONTRACT.

THE RECORD INDICATES THAT YOU PAID THE AMOUNT OF $130,934.70 FOR TIMBER CUT FROM THE RIGHT-OF-WAY, PLUS THE SUM OF $6,116.67 FOR ROAD PURCHASE PRICE FOR THE TIMBER, YOU REQUESTED A REFUND OF $31,241.67, MAINTENANCE. BEFORE MAKING A FINAL PAYMENT OF $2,217.33 ON THE TOTAL WHICH INCLUDED A CLAIMED ADJUSTMENT OF ROAD MAINTENANCE CHARGES AND A STATEMENT SHOWING $96,388.34 AS YOUR ESTIMATE OF THE VALUE OF THE TIMBERWHICH WAS SOLD. SUCH VALUATION WAS ARRIVED AT BY ADDING 11 PERCENT TO ALLEGED LOG SCALE VOLUMES OF FIVE SPECIES OF TIMBER CUT FROM THE RIGHT-OF-WAY AND MULTIPLYING THE RESTATED VOLUMES BY THE CONTRACT UNIT PRICES. WE HAVE NOT ATTEMPTED TO ASCERTAIN THE EXACT MANNER IN WHICH YOUR PRESENT CLAIM FOR $33,982.81 WAS COMPUTED.

THE CLAIM IS BASED UPON ALLEGEDLY GROSS ERRORS MADE BY THE BUREAU OF LAND MANAGEMENT WHEN SCALING THE TIMBER WHICH WAS SOLD UNDER THE CONTRACT. YOU INDICATE IN YOUR LETTER OF OCTOBER 31, 1961, THAT THE NET TOTAL VOLUME AS DETERMINED UNDER THE "TREE SCALE" OF THE BUREAU OF LAND MANAGEMENT WAS 4,755,660 BOARD FEET, AS COMPARED WITH AN ASSUMED NET TOTAL VOLUME OF 3,173,868 BOARD FEET, DEVELOPED FROM LOGGING REPORTS PREPARED BY THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU. IT WAS YOUR UNDERSTANDING THAT THE GOVERNMENT'S TREE SCALES WOULD NORMALLY RUN APPROXIMATELY 11 PERCENT HIGHER THAN SCALES OF LOGS BY THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU AFTER THE TIMBER HAD BEEN CUT.

THE MANAGER OF THE SALEM, OREGON, DISTRICT FOREST OFFICE, REFUSED TO MAKE ANY ADJUSTMENT IN THE MATTER AND HIS DENIAL OF YOUR CLAIM WAS AFFIRMED IN ADMINISTRATIVE DECISIONS OF THE DIRECTOR, BUREAU OF LAND MANAGEMENT, AND THE DEPUTY SOLICITOR, DEPARTMENT OF THE INTERIOR, RENDERED ON JUNE 2, 1960, AND JANUARY 31, 1961, RESPECTIVELY. THE JANUARY 31, 1961, DECISION CONTAINS A FOOTNOTE WHICH INDICATES THAT A REVISED CLAIM FOR $33,664.36 DID NOT INCLUDE ANY ITEM COVERING AN ADJUSTMENT IN THE AGREED UPON ROAD MAINTENANCE CHARGE OF $6,116.67.

IN HIS LETTER DATED FEBRUARY 24, 1958, WHICH DENIED YOUR ORIGINAL CLAIM FOR $31,241.67, THE DISTRICT MANAGER STATED IN PART AS FOLLOWS:

"ALSO YOUR LETTER INDICATES A 50 PERCENT DIFFERENCE BETWEEN CRUISE AND SCALE. ACTUALLY YOU ARE TRYING TO COMPUTE THE ALLEGED ERROR IN THE CRUISE WHICH WOULD BE 1,581,792 DIVIDED BY 4,755,660 EQUALS 33 PERCENT.

"WITH THE 11 PERCENT DIFFERENCE IN YOUR SCALING METHODS AND THE BUREAU OF LAND MANAGEMENT-S, THIS WOULD GIVE AN ERROR OF 22 PERCENT. WE WILL AGREE THAT UNDER NORMAL CIRCUMSTANCES A COMPETENT TIMBER CRUISER SHOULD NOT BE OFF 22 PERCENT. HOWEVER, WE BELIEVE THERE ARE MANY OTHER FACTORS THAT COULD CONTRIBUTE TO THIS DIFFERENCE, SUCH AS:

"1. A POOR, FALLING MARKET MATERIALLY AFFECTED LOG VOLUME RECOVERY. FROM MANY RECENT COMMENTS WE HAVE RECEIVED OVER THIS DISTRICT, MANY LOGS HAVE BEEN HEAVILY DOCKED BY SCALERS; MORE SO THAN HAS BEEN NORMALLY THE CASE IN THE LAST FEW YEARS.

"2. CHECKING THE AREA ADJACENT TO THE CLEARED RIGHT-OF-WAY ON THE LAST SEGMENT FAILED TO ACCOUNT FOR THE NUMBER OF CULLS INDICATED ON THE TREE SCALE SHEETS. IT WOULD APPEAR THESE CULLS HAD BEEN HAULED OUT OR THE CRUISE WAS TOO CONSERVATIVE.

"3. BECAUSE OF THE ABOVE IT WOULD APPEAR THAT A GAIN ON SOME OF THE LAST SEGMENTS COULD HAVE MADE UP FOR THE POSSIBLE ERROR IN THE FIRST 77 STATIONS. THERE DOES NOT SEEM TO BE ANY DIRECT COMPLAINTS CONCERNING ANY SEGMENTS SUBSEQUENT TO THE FIRST 77 STATIONS.

"OUR DISTRICT PERSONNEL MADE SEVERAL ATTEMPTS TO OBTAIN A DIRECT CHECK BETWEEN THE TREE SCALE AND THE LOG SCALE IN DECKS OR BUCKED LOGS ON THE GROUND. HOWEVER, THIS WAS NEVER POSSIBLE BECAUSE OF LOGS BEING YARDED FROM ADJOINING SEGMENTS. WE FEEL IT WAS UNFORTUNATE THAT WE WERE NEVER ABLE TO MAKE SUCH A CHECK.'

THE DECISION RENDERED ON JUNE 2, 1960, BY THE DIRECTOR, BUREAU OF LAND MANAGEMENT, SETS FORTH THAT THERE IS A DIFFERENCE OF 25.9 PERCENT BETWEEN THE BUREAU OF LAND MANAGEMENT FIGURE AND THAT OF THE ADJUSTED COLUMBIA RIVER LOG SCALING AND GRADING BUREAU FIGURE AND THAT, TO SUPPORT THE CONCLUSION THAT THERE WAS AN OVERCRUISE, YOU HAD REFERRED TO A CHECK CRUISE OF THE FIRST 77 STATIONS CONDUCTED JOINTLY BY CRUISERS OF THE BUREAU OF LAND MANAGEMENT AND OF YOUR COMPANY. ALTHOUGH YOU CONTENDED THAT THIS CRUISE INDICATED A VOLUME OF ONLY 50 PERCENT, THE DECISION STATES THAT THE CHECK CRUISE "WAS CONDUCTED AFTER THE TIMBER HAD ALREADY BEEN REMOVED, AND WAS IN REALITY A CHECK CRUISE OF ADJACENT TIMBER. THE PROBATIVE VALUE OF THIS CHECK CRUISE IS THEREFORE SLIGHT.' THE DECISION ALSO CONTAINS THE FOLLOWING PERTINENT FINDINGS IN THE MATTER:

1. AS COMPARED WITH THE ORIGINAL SCALE, A CHECK SCALE OF THE STANDING TIMBER INVOLVING THE FIRST FEW STATIONS, BY ANOTHER BUREAU CRUISER, SHOWED CONSISTENT RESULTS, WITH ONLY A 4 PERCENT DIFFERENCE IN THE TWO CRUISES OF THE SAME TIMBER.

2. AFTER EXAMINING THE CUT TIMBER, THE TREE OR CRUISE SCALERS FOUND NO INCREASED ADJUSTMENT FOR DEFECT AS TO THE PRINCIPAL VOLUME AND HIGHEST VALUED TIMBER, DOUGLAS FIR, THOUGH SOME ADJUSTMENT WAS MADE, AS THE CRUISE PROCEEDED, WITH RESPECT TO THE DEFECT ALLOWANCE ON HEMLOCK.

3. THE RELATIVELY SMALL DIFFERENCE IN THE DEFECT ALLOWANCES IN THE HEMLOCK SPECIES IS INSUFFICIENT TO ACCOUNT FOR THE SUBSTANTIAL DIFFERENCES IN VOLUMES REACHED BY THE TWO SCALING METHODS (TREE SCALE AND LOG SCALE), AND DOES NOT SUPPORT THE ALLEGATION OF GROSS ERROR IN THE BUREAU'S ESTIMATE UNDER THE CONTRACT.

4. THE BUREAU EMPLOYEES WHO CONDUCTED THE CRUISE ON WHICH THE $130,934.70 CHARGE FOR THE TIMBER WAS BASED WERE EXPERIENCED AND COMPETENT CRUISERS AND, WITHOUT FURTHER EVIDENCE, THERE IS NO REASON TO CONCLUDE THAT THEY WERE GROSSLY WRONG IN THIS INSTANCE.

5. THE FIRST 77 STATIONS HAD ALREADY BEEN SCALED AND THE TREE SCALE RESULTS MADE KNOWN TO YOU BEFORE THE CONTRACT OF DECEMBER 17, 1956, WAS SIGNED. PRACTICALLY THE ENTIRE TREE SCALING JOB HAD BEEN COMPLETED BEFORE THE COMPLAINT WAS RECEIVED FROM YOU ON THE VOLUME OF TIMBER RECOVERED FROM THE FIRST 77 STATIONS, ALTHOUGH YOU APPARENTLY UNDERSTOOD AT THE TIME OF TAKING AN ASSIGNMENT OF THE TIMBER SALE AGREEMENT THAT THE PURCHASE PRICE WAS TO BE BASED ON GOVERNMENT TREE SCALE AND NOT ON PRIVATE LOG SCALE MEASUREMENT.

A MORE DETAILED ANALYSIS OF THE FACTS OF THE CASE IS CONTAINED IN THE DECISION OF JANUARY 31, 1961, WHICH WAS RENDERED ON BEHALF OF THE SECRETARY OF THE INTERIOR BY THE DEPUTY SOLICITOR OF THE DEPARTMENT.

IT IS POINTED OUT IN THAT DECISION THAT THE BUREAU OF PUBLIC ROADS TOOK COMPETITIVE BIDS TO LET A CONTRACT TO THE LOWEST BIDDER FOR THE CONSTRUCTION OF THE YELLOWBOTTOM ROAD. THE ROAD CONSTRUCTION CONTRACT CONTAINED A PROVISION REQUIRING THE CONTRACTOR TO NEGOTIATE A CONTRACT WITH THE BUREAU OF LAND MANAGEMENT FOR THE PURCHASE OF THE TIMBER ON THE ROAD RIGHT-OF-WAY AT SPECIFIED RATES FOR ALL MERCHANTABLE TIMBER. THE SUCCESSFUL BIDDER ON THE ROAD CONSTRUCTION CONTRACT ENTERED INTO A TIMBER PURCHASE CONTRACT ON DECEMBER 17, 1956, AND ON THE SAME DATE ASSIGNED THE TIMBER PURCHASE CONTRACT TO YOUR COMPANY.

YOU COMMENCED LOGGING OPERATIONS WHEN THE SCALE HAD BEEN MADE ON ONLY THE FIRST 77 OF THE 194 STATIONS OF THE RIGHT-OF-WAY. AFTER MAKING PAYMENT FOR TIMBER TO STATION 125 PLUS 58, YOUR REPRESENTATIVE CALLED AT THE DISTRICT OFFICE ON JUNE 20, 1957, AND REPORTED THAT A COLUMBIA RIVER WATER SCALE OF LOGS REMOVED FROM THE FIRST 77 STATIONS OF THE RIGHT-OF-WAY SHOWED ABOUT 700,000 BOARD FEET AS COMPARED WITH THE BUREAU'S TREE SCALE OF 1,611,910 BOARD FEET AND THAT THE VOLUME DIFFERENCE WOULD CAUSE A LOSS OF $35,000. HE WAS TOLD THAT A COMPLAINT SHOULD HAVE BEEN MADE IMMEDIATELY UPON RECEIPT OF THE BUREAU'S NOTIFICATION OF THE SCALE ON THE FIRST 77 STATIONS, BUT THAT HE MIGHT EMPLOY A COMPETENT TIMBER CRUISER TO OBTAIN FACTUAL EVIDENCE FOR COMPLAINT AGAINST PAYMENTS FOR TIMBER TAKEN FROM THE LAST THREE SECTORS OF THE ROAD RIGHT-OF-WAY.

ALTHOUGH NO INDEPENDENT EFFORT WAS MADE TO CHECK THE BUREAU'S SCALING OPERATIONS, A BUREAU SCALER, DEGROOTE, AND A REPRESENTATIVE OF YOUR COMPANY CRUISED A TOTAL OF 20 QUARTER-ACRE PLOTS ON EITHER SIDE OF THE RIGHT-OF-WAY AND, APPLYING THE DATE OBTAINED FROM ACTUAL OBSERVATION OF 20 ACRES OF STANDING TREES TO 22 ACRES OF THE RIGHT-OF WAY FROM WHICH THE TIMBER HAD BEEN CUT, ASCERTAINED THAT 1,102,000 BOARD FEET OF TIMBER HAD BEEN CUT, WHEREAS THE LOG SCALE REPORT SHOWED 1,078,000 BOARD FEET.

MR. DEGROOTE HAD CHECKED THE SCALE OF THE FIRST 14 STATIONS WHEN ONLY THAT PORTION HAD BEEN COMPLETED AND THE CHECK RESULTS WERE WITHIN 4 PERCENT OF THE SCALER'S REPORT. MR. DEGROOTE ALSO OBSERVED INDICATIONS ON THE GROUND AFTER REMOVAL OF TIMBER FROM THE FIRST 77 STATIONS AND CONCLUDED THAT THERE WERE MANY DEFECTIVE HEMLOCKS BECAUSE OF FROST SEAMS AND FORKED TOPS RESULTING FROM SNOW BREAKS YEARS BEFORE. HE FOUND THAT HEMLOCKS WITH FROST SEAMS HAD A LARGE AMOUNT OF SHAKE IN THE FIRST 32-FOOT LOG. A LARGE PERCENTAGE OF DOUGLAS FIRMS WERE SOUND ON THE STUMPS BUT LOGS EXAMINED ON THE GROUND SHOWED BLIND CONKS IN THE BUTT, SECOND AND THIRD LOGS. THERE WERE ALSO LOGS THAT APPEARED TO BE SOUND FROM THEIR EXTERNAL APPEARANCE WITH ROTTEN KNOTS HEALEDOVER BY THREE OR FOUR INCHES OF SOUND WOOD AND WITH POCKETS OF ROT, RING ROT AND WHITE SPECK. DEGROOTE ACCOUNTED FOR THE SHAKE IN THE HEMLOCK BECAUSE OF THE ELEVATION OF 3,500 FEET AND THE ROT BECAUSE OF THE SHALLOW SOIL.

THE BUREAU'S SCALER, KOELLE, WHO SCALED THE STATIONS BETWEEN 77 AND 194 PLUS 92, REPORTED THAT HE ALLOWED A NORMAL DEFECT FOR HEMLOCK ON HIS FIRST 30 STATIONS, BUT AS HE SAW THE AMOUNT OF DEFECT IN THE FELLED TIMBER, HE INCREASED THE ALLOWANCE FOR DEFECT ON THE REMAINING TIMBER.

IT WAS INDICATED IN THE DECISION THAT YOU HAD FURNISHED NO EVIDENCE TO SUPPORT YOUR CLAIM FOR REFUND EXCEPT A STATEMENT OF ONE OF YOUR FELLERS, HEARSON, TO THE EFFECT THAT IN DIFFERENT PLACES ALMOST ALL OF THE TIMBER WAS AFFLICTED WITH ROT OR WHITE SPECK. HEARSON ATTRIBUTED THIS CONDITION TO THIN SOIL, WHERE THERE WAS MUCH LOOSE ROCK, AND SOILS ON SOLID ROCK. THE DECISION STATES THAT YOU DID NOT OFFER ANY FACTUAL DATA AS TO THE EXTENT OF THE INCIDENCE OF ROT; THAT YOU DID NOT CALL FOR OR PROCEED IN A MANNER WHICH WOULD MAKE POSSIBLE A CHECK ON THE SITE OF DEFECTIVE TIMBER; THAT YOU REMOVED BROKEN AND DEFECTIVE TIMBER FROM THE RIGHT-OF-WAY AS YOU PROCEEDED WITH THE LOGGING; THAT YOU MERELY RELIED UPON THE LOG SCALE MADE BY THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU TO ESTABLISH A REFUNDABLE DISCREPANCY; AND THAT YOU DID NOT INVITE ANY OBSERVATION OF THE LOG SCALING PROCESS OR SUBMIT EVIDENCE AS TO ITS RELIABILITY EXCEPT A STATEMENT OF THE MANAGER OF THE COLUMBIA BUREAU DENYING THAT HARSH LOG SCALING ATTENDS FALLING MARKETS AND EASY SCALING, RISING MARKETS.

REGARDING THE ASSUMED DIFFERENCE OF APPROXIMATELY 11 PERCENT IN THE RESULTS OF TREE SCALING AND LOG SCALING, THE DEPUTY SOLICITOR'S DECISION INVITES ATTENTION TO THE DIRECTOR'S CITATION TO PUBLISHED EVIDENCE OF INDEPENDENT BELIEF IN THE GREATER ACCURACY OF THE BUREAU OF LAND MANAGEMENT'S TREE SCALINGS, BASED ON COMPARISON WITH SUBSEQUENT SHORT LOG SCALES, AS DISTINGUISHED FROM THE COLUMBIA RIVER LONG LOG SCALES, AND MILL TALLIES OF LUMBER. CERTAIN OF YOUR SALES RECORDS FAILED TO DISCLOSE A SALE OF 100,000 BOARD FEET OF LUMBER AND IT WAS INDICATED THAT YOU MADE NO ATTEMPT TO SHOW THAT THE REPORTED AGGREGATE OF THE SALE OF LOGS FROM THE RIGHT-OF-WAY ACTUALLY REFLECTS ALL SALES MADE OF RIGHT-OF-WAY TIMBER. HENCE, IT WAS CONCLUDED THAT THE REPORTED AGGREGATE COULD NOT BE ACCEPTED AS CONCLUSIVE EVIDENCE OF ALL MERCHANTABLE TIMBER CUT ON THE RIGHT-OF- WAY. IT WAS RECOGNIZED THAT YOU HAD THE RIGHT TO INSIST THAT THE TREE SCALING OPERATIONS CONFORM TO BUREAU OF LAND MANAGEMENT STANDARDS. IT WAS SUGGESTED THAT, TO INSURE SUCH RESULT, YOU MIGHT HAVE SCRUTINIZED THE TREE SCALING PROCESS AND REQUIRED THE CORRECTION OF ANY ERRORS INDICATING A DEPARTURE FROM SUCH STANDARDS. HOWEVER, THE DECISION STATES THAT YOU CHOSE TO WAIVE THIS PRECAUTIONARY MEASURE AND THAT YOU FAILED TO SHOW BY COMPETENT EVIDENCE THAT THE COMPLETED SCALE WAS SO GROSSLY INACCURATE AS TO JUSTIFY A REDUCTION IN THE PURCHASE PRICE BASED UPON SUCH SCALE. WAS CONSIDERED THAT THE LOG SCALE COULD HAVE SIGNIFICANCE ONLY IF THE PURCHASER FIRST PROVED THAT THE TREE SCALE WAS GROSSLY INACCURATE; THAT THE VOLUME OF MERCHANTABLE TIMBER IS REFLECTED EXACTLY BY THE VOLUME OF LOGS SOLD; AND THAT THE MEASUREMENT OF THE LOGS SOLD IS ACCURATE.

CONCERNING YOUR CONTENTION THAT IT WAS IMPOSSIBLE TO CRUISE TIMBER IN THE AREA WHEN CONTRACT OPERATIONS COMMENCED BECAUSE SNOW WAS ON THE GROUND, THE COMMENT WAS MADE THAT YOU FAILED TO MAKE AN INDEPENDENT CRUISE OR TO MONITOR THE BUREAU'S CONTINUED SCALING WHEN WEATHER CONDITIONS HAD ABATED AND YOUR CONFIDENCE IN THE BUREAU HAD BEEN SHAKEN.

THE DEPUTY SOLICITOR ALSO COMMENTED ON SUGGESTIONS THAT THE BUREAU SCALERS DID NOT IN FACT SCALE THE CONTRACT AREA. HIS DECISION REFERS TO A MEMORANDUM OF MAY 14, 1958, FROM THE DISTRICT MANAGER, TO THE EFFECT THAT THE REQUIRED SCALING OPERATIONS WERE PERFORMED WITHIN THE POSTED BOUNDARIES OF THE RIGHT-OF-WAY. ALSO, WITH RESPECT TO THE POSTING OF SUCH BOUNDARIES AND APPARENT DIFFERENCES BETWEEN STATION NUMBERS USED BY THE BUREAU OF PUBLIC ROADS AND THOSE USED BY THE BUREAU OF LAND MANAGEMENT, THE DEPUTY SOLICITOR'S DECISION STATES THAT "ALL OF THESE MATTERS WERE OPEN TO INQUIRY AND INVESTIGATION BY CASCADES AND NEED NOT HAVE BEEN RELEGATED TO THE REALM OF PURE GUESSES AS CASCADES ADMITTED IN ITS BRIEF SUBMITTED TO THE DIRECTOR THAT IT HAD DONE.'

THERE FOLLOWS IN HIS DECISION AN INDICATION THAT THE DEFECTIVE TREES PROBABLY EXCEEDED THE ALLOWANCE IN THE SCALING OF THE FIRST 77 STATIONS, BUT THAT ALLOWANCES OF DEFECTS IN THE SCALING OF THE LATER SECTIONS OF THE RIGHT-OF-WAY WERE INCREASED AND COMPENSATED IN SOME DEGREE FOR INADEQUATE ALLOWANCES IN THE FIRST 77 STATIONS. THEREFORE, IT WAS CONSIDERED DOUBTFUL THAT YOU SUFFERED ANY LOSS BECAUSE OF AN OVERSCALE OF THE FIRST 77 STATIONS. ALSO, THE FACT THAT THE TOTAL SCALE APPROXIMATED THE ESTIMATE IN THE TIMBER SALE AGREEMENT WAS BELIEVED TO BE SOME EVIDENCE OF ITS AUTHENTICITY ALTHOUGH YOU HAD SUGGESTED THAT THIS FACTOR MAY, ON THE CONTRARY, BE EVIDENCE THAT THE TREE SCALERS WERE TRYING TO JUSTIFY THE PRELIMINARY ESTIMATE AND MADE NO ATTEMPT TO BE FAIR. THE DEPUTY SOLICITOR INDICATED THAT THERE IS NO POSSIBILITY OF CHECKING THE BUREAU'S TREE SCALE OR YOUR LOG SCALE NOW, AFTER THE TREES HAVE BEEN CUT AND REMOVED; AND STATED THAT "THE PURCHASE CONTRACT CALLS FOR COMPUTATION OF THE PURCHASE PRICE ON THE BASIS OF THE BUREAU'S TREE SCALE. HENCE, ANY ADJUSTMENT MUST BE MADE ON THE BASIS OF SPECIFIC EVIDENCE WHICH SHOWS A DEVIATION OF THAT SCALE FROM THE DEGREE OF ACCURACY NORMALLY MAINTAINED IN THE TIMBER TRADE.'

YOU FORWARDED A COPY OF YOUR LETTER DATED SEPTEMBER 14, 1961, TO THE DISTRICT MANAGER, BUREAU OF LAND MANAGEMENT, SALEM, OREGON, ENCLOSING A CHECK FOR $2,217.33 AND REQUESTING A RELEASE OF THE CONTRACT PERFORMANCE BOND. IN THAT LETTER, YOU STATED VARIOUS REASONS FOR TAKING EXCEPTION TO THE DECISION RENDERED BY THE DEPUTY SOLICITOR ON YOUR REVISED CLAIM, THEN IN THE AMOUNT OF $33,664.36, INCLUDING AN UNPAID BILLING IN THE SUM OF $2,313.09, WHICH WAS FINALLY REDUCED TO $2,217.33. THE ALLEGATIONS AND CONTENTIONS MADE IN THE SEPTEMBER 14, 1961, AND OCTOBER 31, 1961, LETTERS MAY BE SUMMARIZED AS FOLLOWS:

1. YOU HAD THE TIMBER REMOVED BY A CONTRACT LOGGER WHO WAS PAID ON THE BASIS OF LOG SCALE REPORTS PREPARED BY THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU, BASED ON MEASUREMENT OF LOGS IN THE POND AND ON TRUCKS BY HIGHLY QUALIFIED SCALERS WHO CALCULATE THE VOLUME WITH DUE ALLOWANCE FOR DEFECTS.

2. CONTRARY TO ANY SUGGESTION THAT LOG SCALING MAY BE EITHER HARSH OR EASY DEPENDING UPON MARKET CONDITIONS, YOU CONSIDER THAT MARKET CONDITIONS WOULD NOT HAVE AFFECTED THE LOG SCALE RESULTS IN THIS CASE BECAUSE THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU IS UNIVERSALLY REGARDED AS A HIGHLY QUALIFIED AND SCRUPULOUSLY CAREFUL INDEPENDENT AGENCY WHOSE RESULTS ARE RELIED UPON IN PREFERENCE TO VIRTUALLY ANY OTHER SOURCE OF VOLUME.

3. BY NOVEMBER 1957 ALL LOGGING HAD BEEN COMPLETED AND THE AGGREGATE VOLUME AS SHOWN BY THE LOG SCALE REPORTS WAS MADE AVAILABLE TO THE BUREAU OF LAND MANAGEMENT. THE LOGGERS CHANGED BRANDS AT EACH SECTION OF THE RIGHT-OF-WAY AND ALL LOG SCALING VOLUMES CAN BE TIED IN TO INDIVIDUAL SEGMENTS; DECKED LOGS COULD HAVE BEEN CHECKED WITH CRUISE RESULTS AND THE LOG SCALE REPORTS COULD HAVE BEEN COMPARED DIRECTLY AGAINST THE BUREAU OF LAND MANAGEMENT'S CRUISE RESULTS FOR EACH AREA. THIS CAN STILL BE DONE.

4. YOU WERE UNABLE TO CRUISE THE TIMBER IN QUESTION AT ANY TIME, FIRST, BECAUSE OF WEATHER CONDITIONS PRIOR TO THE EXECUTION OF THE CONTRACT AND, SECOND, BECAUSE DELAYS BY THE GOVERNMENT IN STAKING THE RIGHT-OF-WAY ELIMINATED ANY TIME LAG BETWEEN GOVERNMENT CRUISING AND CUTTING IN WHICH CRUISING COULD BE DONE. YOU PROTESTED THE SERIOUS UNDERRUN AS SOON AS LOG SCALING REPORTS WERE AVAILABLE TO DISCLOSE IT AND THE BUREAU OF LAND MANAGEMENT WAS ADVISED OF THE DISCREPANCY NOT LATER THAN JUNE 1957. AFTER THE FIRST 77 STATIONS, TREE SCALING WAS PERFORMED ON A PIECEMEAL BASIS AND AT NO TIME WAS THERE AN OPPORTUNITY FOR YOUR CRUISERS TO CHECK THE RESULTS WHILE THE TREES WERE STANDING UNCUT. YOU DID NOT WAIVE ANY OPPORTUNITY TO REVIEW THE SITUATION ITSELF OR PROCURE REVIEW BY THE BUREAU OF LAND MANAGEMENT BUT INSISTED REPEATEDLY ON SUCH REVIEW.

5. YOU PRESENTED THE BEST POSSIBLE EVIDENCE OF THE TIMBER ACTUALLY EXISTING ON THE GROUND, NAMELY, THE RESULTS OF THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU'S LOG SCALES ON YOUR TOTAL PRODUCTION FROM THE RIGHT-OF-WAY.

6. YOUR HEAD CRUISER, MR. GORDON BELL, COOPERATED WITH MR. LLOYD H. DEGROOTE IN A JOINT CRUISE OR COMPARABLE TIMBER ADJACENT TO THE FIRST 77 STATIONS OF THE RIGHT-OF-WAY AT THE EARLIEST POSSIBLE STAGE, AND THE RESULTS VERIFIED THE LOG SCALE REPORTS ON THE PRODUCTION AND NOT THE BUREAU OF LAND MANAGEMENT'S TREE SCALE. YOU ARE UNABLE TO VERIFY WHERE THE DEPUTY SOLICITOR DERIVED THE FIGURES SHOWN IN THE SECOND FULL PARAGRAPH OF PAGE 2 OF HIS DECISION AND THEY ARE NOT SUPPORTED BY ANYTHING OF WHICH YOU HAVE KNOWLEDGE. THE BUREAU OF LAND MANAGEMENT DISOWNED THE AGREED UPON METHOD OF CHECKING THE TREE SCALE ONLY AFTER THE DISCREPANCY IN THE TREE SCALE WAS DISCLOSED. THE DESIGNATION OF CULLS IS A MATTER OF JUDGMENT AND THE JOINT CRUISE REFLECTED THE COMBINED JUDGMENT OF THE BUREAU OF LAND MANAGEMENT AND YOUR COMPANY.

7. THE GAIN ON THE LATTER PART OF THE ROAD CLEARLY DID NOT MAKE UP FOR THE POSSIBLE ERROR IN THE SCALE OF THE FIRST 77 STATIONS.

8. REGARDING THE INDICATION TO THE EFFECT THAT A CHECK CRUISE ON THE FIRST FEW STATIONS TENDED TO CONFIRM THE TREE SCALE ON THE SAME TIMBER, YOU WERE CONSISTENTLY DENIED ACCESS TO ANY FIELD NOTES BY ANY ORIGINAL OR CHECK CRUISE OR "TREE SCALE" AND IT IS NOT POSSIBLE FOR YOU TO COMMENT ON THIS "EVIDENCE.'

9.ALTHOUGH THE GOVERNMENT CRUISERS MAY BE COMPETENT, THERE WAS ABUNDANT EVIDENCE THAT THEY WERE WRONG IN THIS INSTANCE AND ONE CRUISER, MR. PAUL KOELLE, WAS TRANSFERRED AFTER YOUR COMPLAINT. ALSO, HIS FIELD REPORTS WERE FIRST SAID TO BE LOST, THEN FOUND, AND THEN NOT AVAILABLE TO YOU.

10. THE GOVERNMENT'S TREE SCALE AND THE LOG SCALE MAY DIFFER BY AS MUCH AS 30 PERCENT. HOWEVER, EXPERIENCE IN THE DOUGLAS FIR AREA SHOWS THE DIFFERENCE IN FACT RUNS CONSISTENTLY CLOSE TO 4 PERCENT. IN ANY EVENT, IF THE 11 PERCENT DIFFERENCE IS DISREGARDED, THE LOG SCALE VOLUME WOULD HAVE TO BE INCREASED BY NOT 30 PERCENT BUT 50 PERCENT TO EQUAL THE GOVERNMENT'S TREE SCALE ALLOWANCE.

THE DEPARTMENT OF THE INTERIOR HAS REPORTED THAT IT IS NOT DISPUTED THAT 77 OF 194 STATIONS ON THE RIGHT-OF-WAY HAD BEEN TREE SCALED BEFORE LOGGING OPERATIONS BEGAN OR THAT YOU MADE PAYMENTS FOR 125 STATIONS BEFORE REPORTING TO THE BUREAU'S DISTRICT OFFICE THAT YOUR SCALE OF LOGS REMOVED FROM THE FIRST 77 STATIONS WAS ONLY ABOUT HALF THAT OF THE BUREAU'S TREE SCALE. THE BUREAU CHECKED ITS OWN OPERATIONS AND COOPERATED WITH YOUR REPRESENTATIVE IN A CHECK OF TIMBER ON EITHER SIDE OF THE RIGHT-OF-WAY AS A CHECK ON THE TIMBER SCALE FOR THE FIRST 77 STATIONS. SINCE THERE WAS SUFFICIENT TIME BETWEEN THE STAKING AND THE LOGGING FOR THE BUREAU TO MAKE ITS TREE SCALE, THE DEPARTMENT BELIEVES THAT THERE WAS ALSO SUFFICIENT TIME FOR CRUISES BY ONE OF YOUR REPRESENTATIVES OF SOME OR ALL OF THE RIGHT-OF-WAY IMMEDIATELY BEHIND THE BUREAU'S SCALERS.

IT IS REPORTED THAT THE FIGURES SHOWN IN THE SECOND FULL PARAGRAPH ON PAGE 2 OF THE DEPUTY SOLICITOR'S DECISION WERE BASED UPON THE WRITTEN REPORT DATED AUGUST 27, 1957, FROM MR. LLOYD H. DEGROOTE; AND THAT YOUR STATEMENT THAT LOG BRANDS WERE CHANGED AT EACH CRUISE SEGMENT SO THAT DECKED LOGS COULD BE CHECKED AGAINST THE SCALE RESULTS IS WITHOUT ANY SUPPORT IN THE RECORD. WE WERE ADVISED THAT IN A MEMORANDUM OF SEPTEMBER 4, 1957, THE DISTRICT FORESTER INDICATED THAT IT WOULD BE IMPOSSIBLE TO GET AN ACCURATE CHECK ON THE VOLUME REMOVED ON A SHORT SECTION OF THE ROAD AND THAT THE LOGGER PROPOSED TO CHANGE BRANDS FOR THE LAST 34 STATIONS. HOWEVER, IT IS STATED BY THE DEPARTMENT THAT SUBSEQUENT LOGGING OPERATIONS FAILED TO RECOGNIZE THE SCALING SEGMENTS AND YOU DID NOT ASK FOR A CHECK OF FELLED LOGS WHILE LOGGING WAS IN PROGRESS. THE DEPARTMENTAL REPORT FURNISHES THE FOLLOWING ADDITIONAL COMMENTS:

"THE RECENT LETTERS ALSO SHOW THAT CASCADES CONTINUES TO BASE ITS CLAIM UPON A DIFFERENCE BETWEEN THE VOLUME OF TIMBER WHICH THE BUREAU SCALERS FOUND BY COUNTING THE TREES AND COMPUTING THE BOARD FEET OF STANDING TIMBER BY THE USE OF STANDARD TREE VOLUME TABLES AND THE VOLUME SHOWN BY THE LOG SCALE MADE BY THE COLUMBIA RIVER LOG SCALING AND GRADING BUREAU AS THE BASIS OF ITS SALES OF LOGS WITHOUT DEMONSTRATING IN ANY WAY THE RELIABILITY OF THE LOG SCALE AS A MEASUREMENT OF ITS STANDING TIMBER. THE BUREAU'S INSPECTION OF CASCADES' SALES RECORDS FOR ONE SECTOR OF THE RIGHT -OF-WAY RESULTED IN DISCOVERY OF ONE SALE OF 100 THOUSAND BOARD FEET NOT INCLUDED IN THE REPORTED AGGREGATE OF LOG SALES FROM CONTRACT LOGGING OPERATIONS. HENCE, THE DEPARTMENT CONCLUDED THAT CASCADES' CLAIM OF A REFUNDABLE DISCREPANCY BETWEEN THE CONTRACT PRICE PAID BASED ON AN ERRONEOUS BUREAU SCALE OF STANDING TIMBER AND A PRICE BASED UPON A RELIABLE RECORD OF TIMBER REMOVED FROM THE CONTRACT AREA AS SHOWN BY ITS TIMBER SALES HAD NOT BEEN SUPPORTED BY RELIABLE EVIDENCE WHICH JUSTIFIES A REFUND BY THE UNITED STATES IN THE AMOUNT PROPOSED.'

IT APPEARS THAT YOUR REQUEST FOR VERIFICATION OF THE BUREAU OF LAND MANAGEMENT'S TREE SCALE WAS NOT MADE WITHIN A REASONABLE TIME, CONSIDERING THAT TIMBER FROM THE FIRST 125 STATIONS OF THE RIGHT-OF-WAY WAS REMOVED BEFORE REPORTING THAT THERE WAS A CONSIDERABLE DIFFERENCE BETWEEN THE VOLUME AS SHOWN ON LOG SCALE REPORTS COVERING THE FIRST 77 STATIONS AND THE VOLUME CHARGED TO YOU ON THE BASIS OF THE BUREAU'S TREE SCALE. ASSUMING, AS YOU CONTEND, THAT LOG SCALING REPORTS CONSTITUTE THE BEST POSSIBLE EVIDENCE OF VOLUMES OF MERCHANTABLE TIMBER, IT IS APPARENT FROM THE RECORD BEFORE US THAT YOU HAVE NOT ACCOUNTED FOR ALL OF THE MERCHANTABLE TIMBER CUT FROM THE CONTRACT AREA AND THAT THIS WOULD BE A NECESSARY PREREQUISITE FOR SHOWING GROSS ERROR IN THE BUREAU'S TREE SCALE WHICH NECESSARILY REPRESENTED ESTIMATES OF VOLUMES RATHER THAN COMPUTATIONS OF ACTUAL QUANTITIES OF MERCHANTABLE TIMBER EXISTING ON THE 194 STATIONS OF THE ROAD RIGHT-OF-WAY. CONTRACT PAYMENTS WERE TO BE BASED ON THE TREE SCALE VOLUME AND THE GOVERNMENT DID NOT GUARANTEE THAT RECOVERY WOULD BE EQUAL TO THE VOLUME DETERMINED BY LOG SCALING AFTER THE TIMBER WAS CUT.

THERE IS NO EVIDENCE IN THE BUREAU'S FILE, WHICH WAS LOANED TO OUR OFFICE, TO SHOW THAT THE RESULTS OF THE JOINT CRUISE ON ADJACENT TIMBER VERIFIED THE LOG SCALE REPORTS ON PRODUCTION. THE FILE DOES INDICATE, HOWEVER, THAT THE BUREAU'S TREE SCALE ON THE FIRST 77 STATIONS WAS PROBABLY ERRONEOUS TO SOME EXTENT AS SET FORTH AT PAGES 2 AND 3 OF THE DEPUTY SOLICITOR'S DECISION. MR. DEGROOTE'S REPORT IN THE MATTER STATES THAT "MY CHECK CRUISE WAS 1102M, AND THE SCALE REPORT FOR THE AMOUNT REMOVED IS 1078M.' THE DIFFERENCE OF 24,000 BOARD FEET WAS ONLY ABOUT 2.2 PERCENT OF THE ASSUMED VOLUME OF 1078M BOARD FEET IN THE TREE SCALE OF TIMBER ON COMPARABLE FOREST LANDS IN THE CONTRACT AREA.

WE FIND NOTHING IN THE RECORD TO SUBSTANTIATE YOUR CONTENTION THAT YOU HAVE BEEN DENIED ACCESS TO FIELD REPORTS CONCERNING THE TREE SCALES MADE ON THE VARIOUS STATIONS OF THE RIGHT-OF-WAY. THE DISTRICT MANAGER REPORTED ON OR ABOUT APRIL 21, 1958, THAT, RATHER THAN REFUSE TO LET COMPANY REPRESENTATIVES REVIEW DATA IN THE BUREAU'S FILES,"WE INVITED THEM TO DO SO.' AT THE SAME TIME, THE DISTRICT MANAGER EXPRESSED THE OPINION THAT MR. PAUL KOELLE IS THE BEST CRUISER IN THE DISTRICT, NEXT TO LLOYD DEGROOTE, THE CHIEF APPRAISER. WITH RESPECT TO YOUR QUESTIONING OF MR. DEGROOTE'S REPORTED CHECK CRUISE ON 14 OF THE FIRST 77 STATIONS, HIS REPORT SHOWS THAT THIS WAS DONE IN NOVEMBER 1956, BEFORE THE TIMBER SALE AGREEMENT WAS ENTERED INTO. SECTION 21 OF THE GENERAL TIMBER SALE CONTRACT STIPULATIONS, MADE A PART OF CONTRACT NO. 14-11-001-/14/-201 PROVIDES THAT AN APPEAL AS PROVIDED BY THE RULES OF PRACTICE OF THE DEPARTMENT OF THE INTERIOR (43 CFR PART 221) MAY BE MADE. THE CITED RULES OF PRACTICE ARE MADE APPLICABLE TO CERTAIN TYPES OF PROCEEDINGS WHICH DO NOT INVOLVE CONTRACT CLAIMS BUT YOU WERE AFFORDED APPEAL RIGHTS SUBSTANTIALLY IN ACCORDANCE WITH THE REGULATION. IT APPEARS THAT ALL OF THE AVAILABLE EVIDENCE OF THE CASE WAS GIVEN CAREFUL CONSIDERATION IN THE DECISION RENDERED ON THE APPEAL TO THE SECRETARY OF THE INTERIOR. IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE TO SHOW THAT THE FINDINGS OF FACT AS MADE IN THE FINAL ADMINISTRATIVE DECISION AND IN THE DEPARTMENTAL REPORT ON YOUR CLAIM WERE GROSSLY ERRONEOUS, WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION THERETO.

AS ABOVE INDICATED, YOU MADE NO COMPLAINT WITH RESPECT TO THE BUREAU'S TREE SCALE ON THE FIRST 77 STATIONS OF THE ROAD RIGHT-OF-WAY UNTIL AFTER MOST OF THE TIMBER SOLD HAD BEEN CUT. EVERY REASONABLE EFFORT WAS NEVERTHELESS MADE BY THE BUREAU TO VERIFY THE AMOUNTS OF MERCHANTABLE TIMBER AS DISCLOSED IN REPORTS SHOWING THE RESULTS OF TREE SCALES MADE BY THE BUREAU'S CRUISERS. SUCH ERRORS AS WERE CONSIDERED PROBABLE IN THE TREE SCALES OF SOME OF THE FIRST SEGMENTS OF THE RIGHT-OF-WAY DID NOT REFLECT ANY POSSIBLY GREAT DISCREPANCY AND THEY WERE CONSIDERED TO HAVE BEEN COMPENSATED FOR AT LEAST TO SOME EXTENT THROUGH THE GRANTING OF MORE LIBERAL ALLOWANCES THAN USUAL FOR DEFECTS WHEN SOME OF THE REMAINING SEGMENTS OF THE RIGHT-OF-WAY WERE CRUISED BY EMPLOYEES OF THE BUREAU. ALSO, ACCORDING TO THE FINDING OF THE DEPUTY SOLICITOR, IT WOULD NOT NOW BE POSSIBLE TO VERIFY EITHER THE TOTAL TREE SCALE OR THE TOTAL LOG SCALE.

IN THESE CIRCUMSTANCES, SINCE GROSS ERROR IN THE BUREAU'S TOTAL TREE SCALE HAS NOT BEEN CLEARLY DEMONSTRATED ALTHOUGH YOU HAVE BEEN AFFORDED ALL OF THE ADMINISTRATIVE APPEAL RIGHTS UNDER THE CONTRACT, AND SINCE CONTRACT PAYMENTS WERE TO BE BASED ON REPORTED TREE SCALE VOLUMES RATHER THAN VOLUMES TO BE ASCERTAINED FROM LOG SCALES AFTER CUTTING OF TIMBER IN THE CONTRACT AREA, WE FIND NO LEGAL BASIS ON THE PRESENT RECORD FOR AUTHORIZING PAYMENT OF ANY PART OF YOUR CLAIM FOR $33,982.81. ACCORDINGLY, THE CLAIM IS HEREBY DISALLOWED IN ITS ENTIRETY.