GAO RCED-97-16, Dec. 20, 1996 (27 pages).
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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.
Wild Wilderness foot note:
Resort operators, campground concessionaires, outfitter guides and other commercial forest users get sweetheart deals, while the general public is charged top dollar. We say this is wrong!