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a. Fixed-Price Arrangements
In a fixed-price or a lump-sum arrangement, petitioner paid
a fixed price or a lump sum to cut timber for a fixed period.
Petitioner assumed the risk of loss if the land produced an
insufficient yield of timber.
b. “Pay-as-Cut” Arrangements
In a pay-as-cut or stumpage permit arrangement, petitioner
paid the landowner for the timber as it was cut. Foresters
identified the timber to cut, and petitioner’s foresters oversaw
the cutting crews.
Although petitioner’s contractual arrangements for
purchasing timber varied, petitioner’s typical stumpage permit
granted petitioner the right to cut timber on a designated parcel
of land. Petitioner paid the landowner for the logs at the time
of cutting. The stumpage permit granted petitioner the right to
enter the property with labor and equipment to cut and remove the
timber. Petitioner indemnified and held harmless the landowner
from all liabilities, claims, judgments, or liens associated with
its work on the premises. Petitioner also covenanted to observe
all Federal, State, and local laws, ordinances, and regulations
relating to the cutting of forest products and the removal of all
products and related waste from the premises.
Petitioner obtained stumpage permits from major timber
landowners such as J.M. Huber Corp., Great Northern Paper Co.,
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Last modified: May 25, 2011