U.S. Forest Service

Fee System for Rights-of-Way Program Needs Revision Gao ID: RCED-96-84 April 22, 1996

The Forest Service needs to update its fees to reflect fair market value for rights-of-way used by operators of oil and gas pipelines, power lines, and communications lines. In most cases, nonfederal landowners charge higher fees for similar rights-of-way. To determine fees on the basis of fair market value, the Forest Service has several options, some of which have advantages and disadvantages. The initial cost of developing a new fee system could be substantial because of the need to do appraisals and collect the market data to establish fair market value. These costs could be mitigated, and in some instance negated, with administrative improvements to the program. Given the tight budgets at federal land management agencies today, one option appears to be particularly advantageous: obtaining site-specific appraisals that are paid for by the users of rights-of-way. However, implementing this option would require several changes to the program to make it more market-like and efficient to run.

GAO found that: (1) Forest Service fees for rights-of-way for oil and gas pipelines, power lines, and communications lines are typically below fair market value; (2) Forest Service fees for rights-of-way are generally less than those charged by nonfederal landowners; (3) options available to the Forest Service for revising its fee determination system include using a new fee schedule based on recent appraisals and local market data, using a new fee schedule with the flexibility to disregard it when its fees are below fair market value, and using site-specific appraisals only; and (4) many rights-of-way users would be willing to pay fair market value for Forest Service rights-of-ways if the Forest Service would improve the administration of its rights-of-way program.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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