B-162376, SEP. 20, 1967

B-162376, SEP. 20, 1967

CONTRACTS - TIMBER SALES - WITHHOLDING FROM ADVANCE PAYMENTS DECISION TO CERTIFYING OFFICER, FOREST SERVICE, CONCERNING PROPRIETY OF WITHHOLDING AN AMOUNT FROM AN ADVANCE PAYMENT MADE BY MOORE MILL AND LUMBER CO. UNDER TIMBER SALES CONTRACT. WHERE EMPLOYEES OF TIMBER SALES CONTRACTOR APPEAR TO BE RESPONSIBLE FOR FOREST FIRE STARTED AS RESULT OF SMOKING IN CONTRACTOR'S SALES AREA, THE CONTRACTOR MAY BE REGARDED AS HAVING FAILED TO FULFILL THE CONTRACT OBLIGATION TO TAKE REASONABLE CARE TO PREVENT AND SUPPRESS FOREST FIRES AND SINCE OREGON STATUTE PRESCRIBES DOUBLE LIABILITY WHEN FIRE IS DUE TO NEGLIGENCE, RETENTION OF AN AMOUNT FROM THE ADVANCE PAYMENT IS PROPER. MOREOVER, THE FACT THAT THE EMPLOYEES' RESPONSIBILITY FOR THE FIRE HAS NOT BEEN ADJUDICATED BY A COURT DOES NOT PRECLUDE A WITHHOLDING OF DAMAGES ADMINISTRATIVELY DETERMINED TO BE DUE. B-84150, OCT. 22, 1951.

TO MR. JENSEN:

REFERENCE IS MADE TO YOUR LETTER 6540 OF AUGUST 29, 1967, WITH ENCLOSURES, REQUESTING A DECISION WHETHER IT WOULD BE LEGALLY PROPER TO WITHHOLD A BALANCE OF $91,747.84 REMAINING FROM AN ADVANCE PAYMENT MADE BY THE MOORE MILL AND LUMBER CO. UNDER TIMBER SALE CONTRACT 11-225 DATED SEPTEMBER 15, 1964, NOW COMPLETED.

THE CONTRACTOR MADE A PAYMENT TO THE FOREST SERVICE OF $101,000 IN ADVANCE OF CUTTING TIMBER PURSUANT TO SECTION 4A2 OF THE CONTRACT. CHARGES IN THE AMOUNT OF $9,252.16 HAVE BEEN APPLIED AGAINST THE ADVANCE PAYMENT LEAVING A BALANCE OTHERWISE DUE OF $91,747.84. YOU PROPOSE WITHHOLDING REFUND OF SUCH BALANCE TO THE CONTRACTOR BECAUSE IT IS BELIEVED THAT SMOKING BY THE CONTRACTOR'S EMPLOYEES WAS RESPONSIBLE FOR A FOREST FIRE THAT STARTED IN HEAVY LOGGING DEBRIS WITHIN THE SALE AREA WITH THE RESULT THAT $58,507.13 OF TIMBER WAS DESTROYED AND BECAUSE THE OREGON STATUTES PROVIDE THAT WHERE A FOREST FIRE IS CAUSED BY NEGLIGENCE THERE MAY BE ASSESSED DOUBLE DAMAGES WHICH, IN THIS CASE, WOULD AMOUNT TO $117,014.26.

SECTION 4A OF THE CONTRACT PROVIDES THAT THE CONTRACTOR SHALL MAKE PAYMENTS TO THE FOREST SERVICE IN CERTAIN MINIMUM AND MAXIMUM AMOUNTS IN ADVANCE OF CUTTING TIMBER. SECTION 4C AUTHORIZES THE FOREST SERVICE TO APPLY THE ADVANCE PAYMENTS TO PAYMENT FOR STUMPAGE, LIQUIDATED DAMAGES, REQUIRED DEPOSITS AND COOPERATIVE WORK. SECTION 13B1 PROVIDES THAT, UPON FAILURE OF THE CONTRACTOR TO FULFILL ALL AND SINGULAR THE REQUIREMENTS SET FORTH IN THE CONTRACT, ANY MONEY ADVANCED UNDER THE CONTRACT MAY BE RETAINED BY THE FOREST SERVICE TO BE APPLIED TOWARD THE SATISFACTION OF THE CONTRACTOR'S OBLIGATIONS ASSUMED UNDER THE CONTRACT. ONE OF THE CONTRACTOR'S OBLIGATIONS UNDER THE CONTRACT WAS TO TAKE ALL REASONABLE AND PRACTICABLE ACTION TO PREVENT AND SUPPRESS FOREST FIRES. SEE FOR EXAMPLE THE VARIOUS PROVISIONS OF SECTION 9 OF THE CONTRACT, PARTICULARLY SUBSECTIONS 9B.1, 9G.1, 9J.1, 9U.1 AND 9V.1 WHICH PROVIDE AS FOLLOWS:

"9B.1 FIRE SUPPRESSION.

"DURING THE PERIOD OF THIS CONTRACT, THE PURCHASER SHALL, BOTH INDEPENDENTLY AND IN COOPERATION WITH THE FOREST SERVICE, TAKE ALL REASONABLE AND PRACTICABLE ACTION TO PREVENT AND SUPPRESS FOREST FIRES ON THE SALE AREA AND VICINITY. THE PURCHASER SHALL REQUIRE HIS EMPLOYEES, SUBCONTRACTORS AND THEIR EMPLOYEES, RESPECTIVELY, TO DO LIKEWISE.

"9G.1 SMOKING AND LUNCH FIRE RESTRICTIONS.

"THE PURCHASER SHALL PROHIBIT SMOKING AND THE BUILDING OF CAMP, LUNCH, WARMING AND OTHER FIRES BY HIS EMPLOYEES, CONTRACTORS, AND EMPLOYEES OF CONTRACTORS WITHIN THE SALE AREA EXCEPT AT ESTABLISHED CAMPS, OR AT DESIGNATED SAFE PLACES WHERE, AFTER ALL INFLAMMABLE MATERIAL HAS BEEN CLEARED AWAY, SUCH FIRES MAY BE BUILT AND WHERE AT THE OPTION OF THE PURCHASER SMOKING MAY BE PERMITTED. THE PURCHASER SHALL ENFORCE THIS PROHIBITION BY ALL MEANS WITHIN HIS POWER.

"9J.1 WATCHMEN AT LOGGING ENGINES.

"UNLESS RELIEVED IN WRITING OF THIS REQUIREMENT BY THE FOREST SERVICE, THERE SHALL BE AT EACH OPERATING SIDE WHERE POWER DRIVEN EQUIPMENT HAS BEEN OPERATED A WATCHMAN WHO SHALL BE CONTINUOUSLY ON DUTY DURING THE NOON HOURS AND FOR AT LEAST THREE HOURS AFTER CEASING OPERATIONS FOR THE DAY OR ANY PART THEREOF, AND IN ANY EVENT UNTIL 8:00 P.M. ALL WATCHMEN SHALL BE COMPETENT AND SATISFACTORY TO THE FOREST SERVICE.

"9U.1 FIRE (FOREMAN AND) PATROL.

"/THE PURCHASER SHALL EMPLOY DURING THE DESIGNATED FIRE SEASON AS SPECIFIED IN SECTION 9E, A FIRE FOREMAN WHOSE DUTY (UNLESS OTHERWISE MUTUALLY AGREED TO IN WRITING IN ADVANCE DURING THE PERIOD OF FIRE DANGER, AS DETERMINED BY THE FOREST SERVICE), SHALL BE THE PREVENTION AND SUPPRESSION OF FOREST FIRES ON THE OPERATION WITHIN THE NATIONAL FOREST.) DURING THE PERIOD OF FIRE DANGER, AS DETERMINED BY THE FOREST SERVICE, THE PURCHASER AGREES TO FURNISH ADDITIONAL MEN, AS REQUIRED BY THE FOREST SERVICE, FOR PATROL OF THE AREA UPON WHICH LOGGING OPERATIONS ARE IN PROGRESS, AND OF OTHER PARTS OF THE SALE AREA WHERE THE FIRE HAZARD IS INCREASED ON ACCOUNT OF UNBURNED BRUSH OR SLASH. THE (FIRE FOREMANAND) PATROLMEN SHALL BE PROVIDED WITH ADEQUATE MEANS OF TRANSPORTATION AND SHALL BE SATISFACTORY TO THE FOREST SERVICE.

"9V.1 COMPLIANCE WITH STATE FOREST LAWS

"THE SPECIFIC FIRE PRECAUTIONARY MEASURES AS LISTED IN THE FOREGOING SECTIONS SHALL NOT BE CONSTRUED AS RELIEVING THE PURCHASER OF COMPLIANCE WITH STATE FOREST LAWS COVERING FIRE PREVENTION AND SUPPRESSION EQUIPMENT, APPLICABLE TO HIS OPERATIONS UNDER THIS CONTRACT.'

INASMUCH AS IT IS REPORTED THAT THE FIRE IS BELIEVED TO HAVE RESULTED FROM SMOKING IN THE AREA OF DEBRIS, THERE APPEARS TO HAVE BEEN A FAILURE BY THE CONTRACTOR TO ABIDE BY THE OBLIGATION IMPOSED BY THE CONTRACT. SINCE SECTION 13B1 PROVIDES THAT THE FOREST SERVICE MAY RETAIN ANY MONEY ADVANCED UNDER THE CONTRACT TO BE APPLIED TOWARD THE CONTRACTOR'S OBLIGATIONS WHEN HE HAS FAILED TO FULFILL THEM, AND SINCE THE OREGON STATUTES PROVIDE FOR DOUBLE LIABILITY WHEN THE FIRE IS DUE TO NEGLIGENCE, RETENTION DOES NOT APPEAR INAPPROPRIATE. IN THAT CONNECTION, SEE NEWPORT NEWS SHIPBUILDING AND DRYDOCK COMPANY V. UNITED STATES, 226 F.2D 137, 141, WHEREIN IT WAS STATED:

"* * * CERTAINLY SUCH DAMAGES WERE REASONABLY WITHIN THE CONTEMPLATION OF THE PARTIES TO THE CONTRACT AND WERE THE NATURAL AND PROBABLE CONSEQUENCES OF THE NEGLIGENT FAILURE TO COMPLY WITH IT. WHETHER DENOMINATED -DIRECT- OR -CONSEQUENTIAL-, WE THINK THAT THEY WERE CLEARLY RECOVERABLE EITHER ON THE BASIS OF CONTRACT OR OF TORT.'

MOREOVER, THE FACT THAT THE MATTER OF THE EMPLOYEE'S RESPONSIBILITY FOR THE FIRE HAS NOT BEEN ADJUDICATED BY A COURT OF LAW DOES NOT PRECLUDE A WITHHOLDING OF DAMAGES ADMINISTRATIVELY DETERMINED TO BE DUE. B-84150, OCTOBER 22, 1951.

ACCORDINGLY, THE VOUCHER SUBMITTED WITH THE AUGUST 29 LETTER IN THE AMOUNT OF $91,747.84 IN FAVOR OF THE CONTRACTOR MAY NOT BE CERTIFIED FOR PAYMENT.