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DEPARTMENT OF STATE LANDS




 





DIVISION 15
PROCEDURES GOVERNING DEFAULTS ON

COMMON SCHOOL TIMBER SALE CONTRACTS

 
141-015-0000
Purpose
The purpose of these rules is to provide a uniform procedure governing defaults on Common School timber sale contracts involving only Common School Lands or contracts in which the timber on the Common School Lands predominates in value.
Stat. Auth.: ORS 273

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83
141-015-0005
Definitions
(1) "Default" occurs whenever the Forester finds that the purchaser has not complied with the terms and conditions of the contract, or if the purchaser injures or severs timber not included in the sale.
(2) "Damages and Expense" means costs, damages, losses and expense incurred by the State of Oregon by reason of a default including but not limited to any unpaid balances owing the State as determined by either a calculation of the State Forester or as the result of the difference in values between the original sale and the resale of the defaulted parcel; calculated or actual costs for preparing the defaulted parcel for resale; rehabilitation or regeneration delay costs; any expense incurred by the department for legal services resulting from the default, any interest charge as provided for in these rules or any other damages allowed by law.
(3) "Department" means the State Forestry Department.
(4) "Director" means the Director of the Division of State Lands.
(5) "Forester" means the State Forester.
(6) "Market Value" means the value of timber as determined by the Forester, using relevant transaction evidence. Relevant transaction evidence may include, but not be limited to, recent timber sale bid data, log prices, or appraisals.
Stat. Auth.: ORS 273.521

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83; LB 3-1990, f. & cert. ef. 8-7-90
141-015-0010
Default -- Future Bidding
(1) Except where the purchaser posts security as provided in OAR 141-015-0030, or except as may be otherwise provided in these rules, any purchaser of timber from Common School Forest Lands or any assignee of such purchaser who defaults on a contract with the Forester for the purchase of Common School Forest Lands timber shall not thereafter be permitted to bid any Common School Land timber sale conducted by the department including a sale involving the timber in default until the state is reimbursed for all damages and expense incurred by it as a result of the default.
(2) In the case of a contract for the sale of timber which includes both Common School Forest Lands and other lands, this rule shall apply only if the timber on the Common School Forest Lands predominates in value.
Stat. Auth.: ORS 273

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83
141-015-0020
Notice of Default to Purchaser
The State Forester by certified mail shall notify a purchaser of any default. The notice shall include the following information:
(1) The default allegedly committed by the purchaser and the facts showing the alleged default.
(2) The corrective action, if any, that can be taken by the purchaser to remedy the default and the time within which such action must be taken.
(3) That if the purchaser refuses to correct the default or the default cannot be remedied, the purchaser will be barred from bidding on future contracts including the contract in dispute, unless the state is reimbursed for all damages and expense incurred by it as a result of the default or the purchaser posts a bond or places in escrow cash or marketable securities in an amount estimated by the Forester to be sufficient to reimburse the state for all damages and expense that will be incurred by it as a result of the default.
(4) The right of the purchaser pursuant to OAR 141-015-0030, to request the Forester to estimate the damages and expense that will be incurred by the state as a result of the default.
(5) The right of the purchaser to request a contested case hearing on the existence of the default, the corrective action required by the Forester, the estimate of damages and expense by the Forester, any questions that may arise concerning the security that may be posted by the purchaser in order to be permitted to bid and any other questions concerning the purchaser's qualifications to bid.
Stat. Auth.: ORS 273

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83
141-015-0030
Request to Bid by Purchaser -- Appeal
If a purchaser in default wishes to bid on future contracts, it shall so notify the Forester in writing. The Forester shall, within 30 days of receipt of the notice, estimate the damages and expense that will be incurred by the state as a result of the default. The estimate shall be sent by certified mail to the purchaser. If the purchaser posts a bond in an amount sufficient to cover the estimated damages and expense or places in an escrow account cash or marketable securities readily convertible into cash in an amount sufficient to cover the estimated damages and expense or a combination of such bond, cash and securities in the required amount, the Forester shall grant permission to the purchaser to bid on contracts other than the contract in dispute. The terms of the escrow agreement shall be satisfactory to the State Forester.
Stat. Auth.: ORS 273

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83
141-015-0040
Contested Case Hearing
(1) Within 30 days after mailing of the estimate by the Forester, the purchaser may request a contested case hearing before the Forester and the Director of the Division of State Lands concerning any of the following issues:
(a) Whether a default was committed by the purchaser;
(b) Whether the corrective action which the Forester ordered to be taken by the purchaser is appropriate;
(c) Whether the Forester's estimate of damages and expense incurred or to be incurred by the state as a result of the alleged default is reasonable or arbitrary;
(d) Whether the security posted or proposed to be posted by the purchaser is sufficient; and
(e) Any other issues relevant to the purchaser's qualifications to bid.
(2) The hearing shall be governed by ORS 183.413 to 183. 497. A hearings officer may be appointed by the Director and the Forester to hear the case. However, the hearings officer shall not have authority to issue a final order. Any order issued under this rule shall be signed by both the Director of the Division of State Lands and the State Forester and may be appealed as provided in ORS 183.482.
Stat. Auth.: ORS 273

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83
141-015-0050
Settlement of Default
(1) In the event of default, the purchaser shall have the following options for settlement of the contract:
(a) Prompt settlement:
(A) A purchaser may settle a default by the completion date of the contract. Such settlement shall include payment of the balances owing the state plus any other damages and expense incurred by the state as a result of the default;
(B) Damages and expense shall include, but not be limited to, any calculated costs and losses resulting from the resale of the parcel and any rehabilitation or regeneration delay costs and losses in areas which have been harvested;
(C) Any delays in this payment after the termination date of the contract shall be subject to an interest charge.
(b) Delayed settlement:
(A) Cash Resale. The original purchaser shall be responsible for any monies due the state if the balance of payments owing and other damages and expense incurred as a result of the default are not offset by the values of the resale on a cash basis. Such balances shall be due 30 days after the resale and award of the contract. Any delays in payment after the due date shall be subject to an interest charge;
(B) Recovery Resale. The original purchaser shall be responsible for any monies due the state if the balance of payments owing and other damages and expense incurred in the original sale are not offset by the values in the new sale on a recovery basis. The original purchaser shall have the option of settling with the state based upon the resale bid and the state's estimate of volume and value to be recovered. If this option is not exercised within 30 days of the award of the resale, then an interest charge on any monies owing shall accrue from the date the resale is awarded until the settlement is made;
(C) Without Resale. In the event a defaulted parcel is not resaleable, the difference between the appraised price of the parcel and the original bid price plus any damages and expense and interest due shall become the basis for a negotiated settlement between the purchaser and the state Forester.
(c) Default because of the purchaser's injury to or severance of timber not included in the sale:
(A) The Forester may take one or more of the following actions:
(i) Terminate the contract;
(ii) Assess damages and expenses in the amount of:
(I) Treble the market value of the severed or injured timber if the purchaser's action is willful or intentional or;
(II) Double the market value of the severed or injured timber if the purchaser's action is not willful or intentional.
(B) Any damages assessed for injury or severance are in addition to and not in lieu of any other damages to which the Forester may be entitled under section (1) of this rule.
(2) In either option, the following shall apply:
(a) The interest rates used shall be those in effect being earned by the excess fund in the state Treasurer's office at the time interest commences to run;
(b) In the case of a required project which was completed by the purchaser for the defaulted contract, the purchaser is entitled to credit for the project in the amount of the appraised value of the project as shown in the appraisal filed in the Forester's office minus any compensation the purchaser has received for the project during the course of the contract;
(c) Initial down payments may be retained by the state and surety bonds shall be maintained in effect until the State has been reimbursed for all damages and expense incurred as a result of the default.
Stat. Auth.: ORS 273.521

Stats. Implemented: ORS 273.521

Hist.: LB 10-1982(Temp), f. & ef. 11-18-82; LB 1-1983, f. & ef. 4-29-83; LB 3-1990, f. & cert. ef. 8-7-90





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