Forest Service:
Barriers to Generating Revenue or Reducing Costs

GAO Report RCED-98-58, Feb. 13, 1998 (118 pages).
Available As either [Text] or Adobe Format [PDF]


The Forest Service manages about 192 million acres--nearly nine percent of the nation's total surface area and about 30 percent of all federal lands. In fiscal year 1996, revenue generated from the sale or use of resources and lands within the National Forest System totaled about $0.9 billion. More than $2 billion in appropriations and $0.4 billion in trust funds were available to manage the system's 155 national forests. Congress has expressed interest in making the agency's operations more cost-effective and businesslike.

This report (1) identifies the lessons that can be learned from efforts by nonfederal land managers to generate revenue or become financially self-sufficient from the sale or use of natural resources on their lands and (2) discusses legal and other barriers that may prevent the Forest Service from implementing similar efforts on its lands.



"   If the Congress believes that increasing revenue or decreasing costs from the sale or use of natural resources should be mission priorities for the Forest Service, it will need to work with the agency to identify legislative and other changes that are needed to clarify or modify the Congress's intent and expectations for revenue generation relative to ecological, social, and other values and concerns."


Important Passage

The Congress has given the Forest Service the authority to obtain
fair market value for some goods or to recover costs for some
services.  However, the agency has not always taken advantage of this
authority, as the following examples from our prior work show. 

  -- In June 1997, we reported that the sealed bid auction method is
     significantly and positively related to higher bid premiums on
     timber sales.  However, the Forest Service used oral bids at
     single-bidder sales rather than sealed bids, resulting in an
     estimated decrease in timber sales receipts of $56 million from
     fiscal year 1992 through fiscal year 1996.\33

  -- In December 1996, we reported that, in many instances, the
     Forest Service has not obtained fair market fees for commercial
     activities on the national forests, including resort lodges,
     marinas, and guide services, or for special noncommercial uses,
     such as private recreational cabins and special group events. 
     Fees for such activities are the second largest generator of
     revenue for the agency, after timber sales.  The Forest
     Service's fee system, which sets fees for most commercial uses
     other than ski operations, had not been updated for nearly 30
     years and generally limited fees to less than 3 percent of a
     permittee's gross revenue.  In comparison, fees for similar
     commercial uses of nearby state-held lands averaged 5 to 15
     percent of a permittee's total revenue.\34

  -- In December 1996, we also reported that although the Forest
     Service had been authorized to recover the costs incurred in
     reviewing and processing all types of special-use permit
     applications since as far back as 1952, it had 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. 

  -- In April 1996, we reported that the Forest Service's fees for
     rights-of-way for oil and gas pipelines, power lines, and
     communications lines frequently did not reflect fair market
     value.  Agency officials estimated that in many
     cases--particularly in high-value areas near major cities--the
     Forest Service may have been charging as little as 10 percent of
     the fair market value.\35

The Forest Service has been aware for some time of the need to
improve its efforts to obtain fair market value for goods or recover
costs for services.  However, it has studied and restudied issues
without reaching closure.  For example, in 1987 and 1995, the agency
developed draft regulations that, if enacted, would have allowed
forest managers to recover the costs incurred in reviewing and
processing special-use permit applications.  However, the draft
regulations were never finalized or published because, according to
Forest Service headquarters officials, the staff resources assigned
to develop and publish the regulations were diverted to other
higher-priority tasks.\36

\33 Forest Service:  Factors Affecting Bids on Timber Sales
(GAO/RCED-97-175R, June 17, 1997). 

\34 U.S.  Forest Service:  Fees for Recreation Special-Use Permits Do
Not Reflect Fair Market Value (GAO/RCED-97-16, Dec.  20, 1996). 

\35 U.S.  Forest Service:  Fee System for Rights-of-Way Program Needs
Revision (GAO/RCED-96-84, Apr.  22, 1996). 

\36 U.S.  Forest Service:  Fees for Recreation Special-Use Permits Do
Not Reflect Fair Market Value (GAO/RCED-97-16, Dec.  20, 1996). 



   "Because the Forest Service has not exercised its authority to obtain fair market value for certain goods and recover costs for certain services and has not always acted to contain costs, even when requested to do so by the Congress, GAO recommends that the Secretary of Agriculture direct the Chief of the Forest Service to revise the strategic plan that the agency developed to comply with the requirements of the Results Act to include goals and performance measures for obtaining fair market value for goods, recovering costs for services, and containing expenses as the necessary first step in holding the Forest Service accountable for its performance."


Wild Wilderness foot note:

The USFS has lost hundreds of millions of dollars by literally giving away America's natural resources to extractive industries. It has lost tens of millions of dollars by undercharging commercial recreation providers and concessionaires who are permitted to operate private businesses on public lands. Let's not even think about charging working families to take a simple walk in the woods until corporations are paying full market value for what they take from the American public!