U.S. Forest Service:
Fees for Recreation Special-Use Permits
Do Not Reflect Fair Market Value

B-274879

December 20, 1996

The Honorable William S.  Cohen
Chairman, Subcommittee on Oversight
 of Government Management and
 the District of Columbia
Committee on Governmental Affairs
United States Senate

Dear Mr.  Chairman: 

The Department of Agriculture's Forest Service authorizes, through
special-use permits, a variety of recreational activities within the
nation's forests.  These activities include such things as hunting,
fishing, rafting, lodging services, the use of lots for vacation
houses, and a variety of special group events.  The Forest Service
generally is required to obtain fees that reflect fair market value
for the rights and privileges authorized by the permits.\1

Since 1993, we have issued a number of reports demonstrating that the
Forest Service does not routinely charge fees reflecting fair market
value for many of the larger, commercially oriented activities
authorized in the nation's forests.  These special-use activities
have included ski area concessions, the use of mountain tops for
communications sites for radio and TV broadcasting, and rights-of-way
for pipelines and power lines.\2 Overall, our past work has shown
that frequently the Forest Service charges considerably less than
fair market prices for the use of the land for these major commercial
activities and that as a result federal fee revenues are millions of
dollars less than they could be.  This report builds on our past work
by focusing on another group of authorized activities occurring
within the nation's forests.  Specifically, this report addresses
special uses that provide recreational opportunities for forest
visitors, including such activities as commercial hunting, fishing,
rafting, lodging services, the use of lots for private recreational
cabins, and a variety of special group events. 

As part of its activities as the nation's largest single supplier of
outdoor recreation, the Forest Service administers about 26,000
recreation special-use permits to businesses and individuals.  In
1994, the most recent year for which complete data are available,
fees from these recreation special-use permits totaled about $36.7
million.  For years, however, the adequacy of the agency's fees for
recreation special-use permits and the effectiveness of the program's
administration have been questioned.  Since 1992, for example, the
Forest Service has reported its administration of the recreation
special-use program as a material management weakness resulting in
the loss of potential revenues to the federal government. 

Concerned about the Forest Service's progress in addressing these
issues, you asked us to review the agency's management of the
recreation special-use program.  Specifically, you asked (1) whether
the fees currently charged for recreation special-uses reflect fair
market value; (2) whether application processing and review costs are
recovered; and (3) if fees do not reflect fair market value and costs
are not being recovered, why not.  In addition, as you requested, we
are providing information on the Forest Service's efforts to
streamline its permit processes in order to stretch available
resources.  This information can be found in appendix I. 


--------------------
\1 The term permit in this report refers to several types of Forest
Service authorizations to occupy and use national forest system land,
including permits, short-term permits, and leases. 

\2 Forest Service:  Little Assurance That Fair Market Value Fees Are
Collected From Ski Areas (GAO/RCED-93-107, Apr.  16, 1993); Federal
Lands:  Fees for Communications Sites Are Below Fair Market Value
(GAO/RCED-94-248, July 12, 1994); Forest Service:  Fee System for
Rights-of-Way Program Needs Revision (GAO/RCED-96-84, Apr.  22,
1996). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

In many instances, the Forest Service is not getting fair market fees
for commercial and noncommercial recreation special-use permits.  The
Forest Service's fee system that sets fees for most commercial uses
has not been updated in nearly 30 years and generally limits fees to
less than 3 percent of a permittee's gross revenues.  In comparison,
fees for similar commercial uses of nearby state-held land average 5
to 15 percent of a permittee's gross revenues.  For example, marina
operators on state lands in Colorado pay fees averaging about 7
percent of gross revenues while marina operators on Forest Service
lands in Colorado pay fees that average about 2.8 percent. 
Furthermore, fees for holders of recreation residence permits--the
most common noncommercial users of national forest lands--are based
on out of date assessments of the value of the land.  For example, in
the forests we visited, most of the appraisals for recreation
residences were conducted between 1978 and 1982.  As a result, fees
for many of these permit holders are lower than they should be on the
basis of current market conditions. 

While the Forest Service has been authorized to recover costs
incurred in reviewing and processing all types of special-use permit
applications since as far back as 1952, it has not done so.  On the
basis of information provided by the agency, we estimated that in
1994 the costs to review and process special-use permits were about
$13 million.  However, this would not represent the cost to run the
entire program, which also includes activities such as annual
billing, conducting inspections, and training staff.  Forest Service
officials acknowledge that because they do not have a cost accounting
system, they do not know the cost of administering all aspects of the
special-use permit program. 

Two major factors contribute to the agency's problems in collecting
fees and recovering costs--the lack of priority given to the program
by agency management and the lack of incentives to correct known
problems.  Forest Service officials acknowledge that the relatively
small size of this program has translated into little recognition or
priority being given to it.  As a result, resources needed to improve
known program weaknesses--such as outdated fee systems and untimely
billings--have not been made available.  Furthermore, updating and
collecting fees are labor-intensive efforts and would require
additional resources.  However, since additional fees collected would
generally be returned to the U.S.  Treasury--and not benefit the
forest--there is a lack of incentive for the agency to dedicate the
additional resources to address these issues.