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IN VIEW OF THE ADMINISTRATIVE POSITION THAT THE LISTING OF ROADS FOR CONSTRUCTION IN A TIMBER SALES CONTRACT HAD NO DIRECT CORRELATION TO THE AMORTIZATION OF ROAD CONSTRUCTION COSTS BUT INSTEAD THAT ROAD CONSTRUCTION WAS TO BE DETERMINED BY THE CONTRACTOR AS IT HARVESTED THE TIMBER. IN VIEW OF THE CORPORATION'S POSITION THAT THERE WAS NO CONTRACT REQUIREMENT TO BUILD THE LISTED .97-MILE SECTION SINCE SUCH ROAD WAS NOT NEEDED FOR HARVESTING TIMBER UNDER THE CONTRACT. THE CASE WAS REFERRED TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE LEGAL ACTION. THAT DEPARTMENT HAS ADVISED YOUR GENERAL COUNSEL THAT AFTER CAREFUL CONSIDERATION IT WAS NOT DEEMED ADVISABLE TO INSTITUTE PROCEEDINGS AGAINST THE CORPORATION FOR RECOVERY OF THE AMOUNT OF $32.

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B-160577, FEB. 26, 1968

TIMBER SALES - ROAD CONSTRUCTION DECISION TO SECRETARY OF AGRICULTURE APPROVING CLOSING OF FILE IN MATTER OF GEORGIA-PACIFIC CORPORATION'S REFUSAL TO CONSTRUCT ROAD AS REQUIRED UNDER TIMBER SALES CONTRACT. IN VIEW OF THE ADMINISTRATIVE POSITION THAT THE LISTING OF ROADS FOR CONSTRUCTION IN A TIMBER SALES CONTRACT HAD NO DIRECT CORRELATION TO THE AMORTIZATION OF ROAD CONSTRUCTION COSTS BUT INSTEAD THAT ROAD CONSTRUCTION WAS TO BE DETERMINED BY THE CONTRACTOR AS IT HARVESTED THE TIMBER, RECOVERY OF THE ESTIMATED CONSTRUCTION COST OF THE ROAD MAY BE ABANDONED.

TO MR. SECRETARY:

BY LETTER DATED NOVEMBER 30, 1967, THE ASSISTANT SECRETARY REFERRED TO OUR DECISION OF FEBRUARY 2, 1967, TO YOU, WHEREIN WE CONCLUDED THAT TIMBER SALES CONTRACT NO. 13-60 WITH THE GEORGIA-PACIFIC CORPORATION MAY NOT BE MODIFIED WITHOUT A CORRESPONDING PRICE ADJUSTMENT TO PROVIDE FOR THE DELETION OF A .97-MILE SECTION OF ROAD LISTED IN SECTION 10B OF THE CONTRACT.

DESPITE OUR DECISION, THE CORPORATION HAS REFUSED TO EITHER CONSTRUCT THE ROAD SECTION OR MAKE PAYMENT FOR THE VALUE OF THE ROAD NOT CONSTRUCTED. IN VIEW OF THE CORPORATION'S POSITION THAT THERE WAS NO CONTRACT REQUIREMENT TO BUILD THE LISTED .97-MILE SECTION SINCE SUCH ROAD WAS NOT NEEDED FOR HARVESTING TIMBER UNDER THE CONTRACT, THE CASE WAS REFERRED TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE LEGAL ACTION. THAT DEPARTMENT HAS ADVISED YOUR GENERAL COUNSEL THAT AFTER CAREFUL CONSIDERATION IT WAS NOT DEEMED ADVISABLE TO INSTITUTE PROCEEDINGS AGAINST THE CORPORATION FOR RECOVERY OF THE AMOUNT OF $32,601, REPRESENTING THE ESTIMATED CONSTRUCTION COST OF THE .97-MILE SECTION.

ESSENTIALLY, THE DEPARTMENT OF JUSTICE, THE FOREST SERVICE AND THE CORPORATION TAKE THE POSITION THAT THE LISTING OF ROADS IN SECTION 10B OF THE CONTRACT REQUIRED TO BE CONSTRUCTED HAD NO DIRECT CORRELATION TO THE AMORTIZATION OF ROAD CONSTRUCTION COSTS PROVIDED IN SECTION 3A OF THE CONTRACT. RATHER, IT IS BELIEVED THAT ROAD CONSTRUCTION REQUIREMENTS WERE THOSE DETERMINED BY THE CORPORATION AS A PRUDENT OPERATOR AS IT HARVESTS THE TIMBER AND THAT THE LISTING OF ROADS IN SECTION 10B WAS A ROUGH, BUT REASONABLE, ESTIMATE OF ROAD REQUIREMENTS MADE BY THE FOREST SERVICE. FURTHER, IT IS BELIEVED THAT THE REFUSAL OF A CONTRACTOR TO CONSTRUCT A ROAD WHICH WAS NOT NEEDED FOR ITS OPERATIONS DID NOT CREATE A CLAIM FOR DAMAGES SHOULD THE ROAD NOT BE CONSTRUCTED.

IN VIEW OF THE FOREGOING, THE ASSISTANT SECRETARY ADVISES THAT, UNLESS WE ADVISE YOUR DEPARTMENT TO THE CONTRARY, THE FILE IN THE MATTER WILL BE CLOSED WITHOUT FURTHER ACTION.

UPON RECONSIDERATION AND SINCE THE INSTANT PROBLEM AROSE UNDER AN OLD FORM OF TIMBER SALES CONTRACT WHICH WAS REPLACED BY A NEW CONTRACT FORM IN 1965, WE WILL OFFER NO OBJECTION IF YOUR DEPARTMENT CLOSES YOUR FILE IN THIS MATTER. IN THE EVENT SIMILAR CASES SHOULD ARISE UNDER THE OLD REPLACED CONTRACT FORM, WE ALSO WOULD HAVE NO OBJECTION IF SUCH CASES BE CLOSED WITHOUT FURTHER ACTION.

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