Outfitting and Guiding Land Use Fees in the Alaska Region, 54454-54464 [06-7621]

Agencies

• DEPARTMENT OF AGRICULTURE
• Forest Service

[Federal Register Volume 71, Number 179 (Friday, September 15, 2006)]
[Notices]
[Pages 54454-54464]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7621]


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DEPARTMENT OF AGRICULTURE

Forest Service


Outfitting and Guiding Land Use Fees in the Alaska Region

AGENCY: Forest Service, USDA.

ACTION: Notice of proposed policy; request for comment.

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SUMMARY: The Alaska Region is proposing to adopt a long-term flat fee 
policy for outfitters and guides operating in the Alaska Region. Under 
the flat fee policy, a single land use fee would be charged for each 
type of service provided by outfitters and guides in the Alaska Region.

DATES: Comments must be received in writing by December 14, 2006.

ADDRESSES: Send comments to Regional Forester, Attention: Recreation, 
Lands and Minerals, P.O. Box 21628, Juneau, Alaska 99802-1628; via 
electronic mail to comments-alaska-regional-office@fs.fed.us; or via 
facsimile to (907) 586-7866. All comments, including names and 
addresses when provided, will be placed in the record and will be 
available for public inspection and copying. The public may inspect 
comments received on this proposed policy in the Recreation, Lands and 
Minerals Staff, Room 519D, Federal Office Building, 709 West 9th 
Street, Juneau, Alaska, between 9 a.m. and 4 p.m.

FOR FURTHER INFORMATION CONTACT: Trish Clabaugh, (907) 586-8855, or 
Neil Hagadorn, (907) 586-9336.

SUPPLEMENTARY INFORMATION: The Forest Service issues special use 
authorizations for a variety of uses of National Forest System (NFS) 
lands, including outfitting and guiding. Outfitting is defined as 
``renting on or delivering to National Forest System lands for 
pecuniary remuneration or other gain any saddle or pack animal, 
vehicle, boat, camping gear, or similar supplies or equipment. The term 
`outfitter' includes the holder's employees and agents'' (36 CFR 
251.51). Guiding is defined as ``providing services or assistance (such 
as supervision, protection, education, training, packing, touring, 
subsistence, transporting people, or interpretation) for pecuniary 
remuneration or other gain to individuals or groups on National Forest 
System lands. The term `guide' includes the holder's employees and 
agents'' (36 CFR 251.51). The Forest Service charges a land use fee for 
special use authorizations, including outfitting and guiding permits.

Applicable Law

    The Independent Offices Appropriations Act of 1952 (IOAA) 
authorizes each Federal agency to collect a fee ``for a service or 
thing of value provided by the agency'' (31 U.S.C. 9701(b)). The IOAA 
requires that each fee charged to fair and be based on factors such as 
the costs to the Government, the value of the service or thing to the 
recipient, the public policy or interest served, and other relevant 
facts (31 U.S.C. 9701(b)).
    Pursuant to the IOAA, the Office of Management and Budget (OMB) 
issued a circular which ``establish[es] guidelines for Federal agencies 
to assess fees for Governmental services and for the sale or use of 
Government property or resources'' (OMB Circular No. A-25, 58 FR 38142 
(September 23, 1959, as amended July 15, (1993)). Paragraph 6a(2)(b) of 
OMB circular No. A-25 instructs agencies that when the Federal 
government is not acting in the capacity of a sovereign, but rather is 
acting in a proprietary capacity, as it is here in authorizing the use 
of Federal land for commercial purposes, user charges or fees are to be 
``based on market prices.''
    OMB Circular No. A-25 further provides that under such conditions, 
user charges need not be limited to the recovery of full costs, but may 
yield net revenues (OMB Circular No. A-25, ] 6a(2) (a) and (b)). The 
Circular directs that ``[i]n the absence of substantial competitive 
demand, market price will be determined by taking into account the 
prevailing prices for goods, resources, or services that are the same 
or substantially similar to those provided by the Government, and then 
adjusting the supply made available and/or price of the good, resource, 
or service so that there will be neither a shortage nor a surplus'' 
(OMB Circular No. A-25, ] 6d(2)(b)).
    Consistent with the IOAA and OMB Circular No. A-25, Forest Service 
regulations at 36 CFR 251.57(a) provide that special use permit fees 
``will be based upon the fair market value of the rights and privileges 
authorized by appraisal or other sound business management 
principles.''

Development of the Alaska Region's Interim Flat Fee Policy

    In general, the gross revenues of a business conducted on NFS lands 
are an accurate reflection of the value of the business's use of those 
lands. However, in Alaska many outfitters and guides base a significant 
percentage of their client charges on activities that occur off NFS 
lands. Thus, flat land use fees that are based on an average of the 
revenues generated by outfitters and guides conducting activities on 
NFS lands more accurately reflect the value of the use of NFS lands for 
outfitting and guiding in the Alaska Region.
    Consistent with this assessment, in 1997, the Alaska Region issued 
for public comment a proposed flat fee schedule for outfitting and 
guiding in the Alaska Region. This fee schedule was recommended for 
consideration in the development of an outfitting and guiding fee 
system by a working group from Federal and State agencies assisting the 
Alaska Land Use Council (ALUC). See Final Fee Recommendations of the 
Alaska Land Use Council Outfitter and Guide Working Group (May 15, 
1985).
    Based on comments received on the proposed fee schedule, the Alaska 
Region revised some fee categories and added others to accommodate all 
outfitting and guiding activities authorized on NFS lands in Alaska. 
The Alaska Region incorporated some of

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respondents' suggestions, such as using actual tour prices reported by 
permit holders, rather than advertised prices, to determine land use 
fees and using the number of service days by trip to weight the fee 
calculations. In addition, the Alaska Region responded to respondents' 
concerns that land use fees by determined according to the types of 
uses, recreational setting, and facilities involved.
    At the time the flat fee schedule was issued for public comment, an 
outfitter and guide conducting boat-based tours with stops on NFS lands 
in Alaska challenged the Forest Service's national outfitting and 
guiding land use fee policy, which was still in effect in the Alaska 
Region and which bases land use fees on 3 percent of an outfitter's or 
guide's adjusted gross revenue. Concerned that different fees were 
being charged for the same type of commercial use of NFS lands, the 
magistrate judge recommended that the federal district court require 
the Forest Service to devise a land use fee system that would be fair 
to the plaintiff, as well as based on the market value of the use of 
NFS lands. The district court adopted the recommendation of the 
magistrate judge and ruled that there was ``insufficient evidence in 
the record to support a conclusion that the fees charged plaintiff were 
both fair and based upon the value of the use of Forest Service lands 
available to the plaintiff.'' The Tongass Conservancy v. Glickman, No. 
J97-029-CV (D. Alaska October 5, 1998), slip op September 19, 1998. 
Accordingly, the court ordered the Forest Service to undertake further 
actions consistent with the court's ruling and applicable law.
    In response, on July 21, 1999, the Alaska Region published in the 
Federal Register for public notice and comment a proposed interim flat 
fee policy for all outfitting and guiding in the Alaska Region (Alaska 
Region interim flat fee policy or ARIFFP) (64 FR 39114, July 21, 1999). 
The ARIFFP developed flat fees for 24 outfitting and guiding activities 
that fall into five categories: (1) Guiding for big game hunting; (2) 
guiding for activities other than big game hunting; (3) road-based and 
remote-setting activities; (4) outfitting; and (5) visitor centers.
    The Alaska Region based the proposed ARIFFP on the proposed flat 
fee schedule issued for public comment in 1997. As with the fees in the 
proposed schedule, the Alaska Region developed the fees in the proposed 
ARIFFP by determining the average price charged each client per day for 
each category of outfitting and guiding activities in the Alaska 
Region. Under the ARIFFP, the same flat fee is charged for similar 
commercial uses of NFS lands. To avoid basing flat fees on revenues 
that result from services provided off NFS lands, the Alaska Region 
eliminated from the pool used to develop the flat fees certain high-
cost operators, such as those who provide overnight accommodations on 
tour boats in the category of remote-setting nature tours. Descriptions 
of derivation of the flat fees for each category of outfitting and 
guiding activities under the ARIFFP follow.

Big Game Hunting

    Fees for guiding big game hunting are charged by the hunt. The flat 
fees for day use were calculated to reflect a 40 percent discount for 
use off NFS lands. Hunt types were categorized based on the species 
hunted and whether the hunt involves an overnight stay on NFS lands. 
Fee data for 1998 were used to calculate an average charge per client 
per service day (a day or any part of a day on NFS lands for which an 
outfitter or guide provides goods or services, including 
transportation, to a client) for each type of hunt. The average was 
calculated by dividing the total amount of client charges for each type 
of hunt by the total number of service days. An average hunt length (in 
days) was also calculated for each type of hunt. A fee per service day 
was derived for each category of hunt by matching the indicated average 
per client per service day with the ALUC schedule and adjusting for the 
percentage of time spent off NFS lands. A flat fee (rounded to the 
nearest $5) for each category was then calculated by multiplying the 
fee per client per service day by the average hunt length. A fee for 
camping is reflected in the flat fees for guiding big game hunting 
involving overnight camping on NFS lands. Therefore, no additional fee 
for camping is charged for guiding big game hunting.

Activities Other Than Big Game Hunting

    Fees for guiding activities other than big game hunting are charged 
per client per service day. To determine the flat fee for guiding 
activities other than big game hunting, the Alaska Region determined 
the average price charged each client per day for each type of activity 
in that category. The average price for each type of activity was 
determined by dividing the total amount of client charges for all 
operators in the category by the total number of service days of all 
the operators. The average price for each type of activity was matched 
to a fee per client per service day from the ALUC fee schedule and 
adjusted by the percentage of time spent off NSF lands for that 
activity, pursuant to Forest Service Handbook (FSH) 2709.11, section 
37.21e. The resulting fees were rounded to the nearest $0.25. Fees for 
guiding activities other than big game hunting are charged only for 
those days when clients are on NFS lands. Where multiple activities are 
involved, flat fees are charged for the highest valued use authorized. 
For example, if an outfitted and guided trip involving an activity 
other than big game hunting includes overnight camping on NFS lands, 
the camping flat fee of $4.00 is charged for each client per service 
day spent on NFS lands. A single overnight say, therefore, is 
calculated as two service days at the camping rate of $4.00 per client 
per service day, for a fee of $8.00 per client. The camping fee 
includes other lower valued activities, such as hiking.

Road-Based and Remote-Setting Activities

    Road-based and remote-setting activities were developed as separate 
fee categories to reflect the different values that outfitters and 
guides and their clients place on activities in these settings. The 
value of outfitting and guiding activities, such as hiking and viewing 
wildlife, is distinctly different in road-based environment than in a 
remote setting. In a road-based environment, clients typically 
experience a more developed setting. Clients are likely to encounter 
other recreationists and a modified landscape (i.e., a timber harvest 
or other landscape modifications) and generally are exposed to a more 
human-manipulated environment. The road-based nature tours flat fee was 
developed by averaging the reported service days multiplied by the 
client day charges of each of 12 permit holders who conduct road-based 
nature tours.
    In a remote area, in contrast, clients typically experience the 
characteristics of a pristine setting and are likely to encounter few 
other forest visitors. These activities typically occur in a primitive 
environment, where human modifications are highly unlikely or absent, 
with the possible exception of low-impact developments such as a trail 
to facilitate foot travel. These activities have outstanding 
opportunities for solitude and recreating in more natural settings. 
These features are what draw many tourists to Alaska. The remote-
setting nature tours flat fee was developed by averaging the reported 
service days multiplied by the client day charges of each of 21 nature 
tour permit holders who operate in remote settings.

[[Page 54456]]

Outfitting

    The flat fee per vehicle per day for outfitting was established by 
applying the ALUC fee schedule to the average daily rental charge for 
boats reported by outfitters providing boats for unguided trips on NFS 
lands.

Visitor Centers

    The Alaska Region adopted short-stop flat fees that had been 
developed for Forest Service visitor center in Alaska using a 
methodology similar to that used in calculating the other flat fees in 
the ARIFFP.
    Copies of the proposed ARIFFP were sent with a request for comment 
to all holders of Forest Service outfitting and guiding permits in 
Alaska and other potentially interested parties. The Alaska Region 
received 34 comments on the proposed ARIFFP. The Alaska Region 
addressed the comments in the final interim policy. The notice for the 
final ARIFFP was published in the Federal Register, and went into 
effect on February 14, 2000 (65 FR 1846, January 12, 2000).

Concern About Market Value

    While a flat fee based on a percentage of gross revenue is fair for 
outfitters and guides, since outfitters and guides providing similar 
services are paying the same flat fee, the Forest Service has been and 
continues to be concerned that the ARIFFP may not yield a fair return 
to the Federal government for the use of its resources. The primary 
intent of Congress in enacting the IOAA was to ensure that the 
Government not undercharge for the use of its property or services; 
``overcharging was not considered'' (Yosemite Park & Curry Co. v. 
United States, 686 F.2. 925, 929 (Ct. Cl. 1982)).
    In 1996, the Government Accountability Office (GAO) analyzed the 
Forest Service's current fee policy for recreation special use permits 
to determine if the fees charged for the permits reflect market value 
(GAO Report, ``Fees for Recreation Special-Use Permits Do Not Reflect 
Fair Market Value'' (Sept. 1996)). GAO concluded that adjusted gross 
revenue was an appropriate measure of the fair market value of the use 
authorized by Forest Service permits, but criticize the Forest Service 
for charging less than market prices by using a lower percentage of 
gross revenue in comparison to other State and Federal agencies (e.g., 
the State of Idaho charges 5 percent of gross revenue, and the State of 
Colorado charges 7 percent).
    In the Federal Register notice for the final ARIFFP, the Alaska 
Region stated that it would conduct an ongoing review of the ARIFFP; 
that the Alaska Region would develop a long-term flat fee policy for 
outfitting and guiding in the Region based on that review; that the 
Alaska Region would make adjustments to the ARIFFP as appropriate, 
based on appraisals or other methods for determining fair market value; 
and that the Forest Service might conclude that higher land use fees 
are needed to ensure a fair return to the Federal government for the 
use of its resources (65 FR 1846, January 12, 2000).

Development of the Alaska Region Long-Term Flat Fee Policy

    On June 23, 2000, the Alaska Region issued a request for proposals 
(RFP) for an outfitter and guide use valuation for the Alaska Region. 
According to the RFP, the primary objective of the use valuation is 
identification of a fee schedule that can be used to develop a long-
term flat fee policy for outfitting and guiding in the Alaska Region. 
To achieve this objective, the RFP provides for two phases of work: (1) 
Analysis of potential methodologies, including the ARIFFP, for 
determining the market value of the use of NFS lands in the Alaska 
Region for outfitting and guiding that is not associated with 
commercial public service sites, such as a resort or lodge; the 
analysis will address fairness to outfitters and guides, as well as to 
the Federal government for the use of its resources; and (2) 
development of alternative fee systems based on viable potential 
methodologies (RFP at 11).
    The RFP further states that it is the Alaska Region's intent to 
develop an outfitting and guiding fee system that will result in stable 
fees that do not vary widely over time; will not require competitive 
award of permits except in circumstances of limited new outfitting and 
guiding opportunities where demand to provide services exceeds supply; 
is fair in that it would charge similar fees for similar uses of NFS 
lands; and will be simple to administer and will not result in an undue 
reporting or record-keeping burden on permit holders (RFP at 11).
    The Alaska Region awarded the contract for the outfitter and guide 
use valuation to Black-Smith & Richards, Inc. (BSR), an appraisal firm 
in Anchorage, Alaska. BSR prepared three reports, one for Phase I 
(Phase I Report) and a preliminary and final report for Phase II 
(Preliminary and Final Phase II Reports). The Final Phase II Report 
incorporates the Phase I Report and Preliminary Phase II Report (Final 
Report at 2, 11). Both the Phase I and Final Phase II Reports contain 
certifications stating that BSR has no present or prospective interest 
in Forest Service special use authorizations; that BSR has no personal 
interest or bias with respect to the parties involved in the outfitting 
and guiding use valuation; that BSR's employment was not conditioned 
on, nor its compensation contingent upon, the reporting of a 
predetermined objective or direction that favors the cause of the 
Forest Service or any other party, the amount of the value estimate, 
the attainment of a stipulated result, or the occurrence of a 
subsequent event; and that BSR's analyses, opinions, and conclusions 
were developed, and the reports prepared, in conformity with the 
Uniform Standards of Professional Appraisal Practice and the Uniform 
Appraisal Standards for Federal Land Acquisitions (Phase I Report at 4; 
Final Phase II Report at 5).

Phase I: Analysis of Potential Methodologies

    BSR's Phase I Report analyzes potential methodologies for 
determining the market value of the use of NFS lands in the Alaska 
Region for outfitting and guiding, including a review of the Forest 
Service's national outfitting and guiding fee policy and the ARIFFP. In 
analyzing Options A and B, the two principal methods for determining 
outfitting and guiding fees under the national policy, the Phase I 
Report concludes that Options A and B are pricing methods, rather than 
measures of value. Under both Options A and B, gross revenues are 
processed into client-day fees using a percentage multiplier.
    Using virtually the same fee schedule as the ALUC, Option A 
processes 3 percent of adjusted gross revenues into a per client day 
fee. The number of client days (the number of service days for a trip 
multiplied by the number of clients on the trip) is multiplied by the 
client day fee corresponding to a price bracket in the fee schedule 
representing the average day charge (adjusted gross revenue divided by 
the total number of client days). The client day fees are derived from 
3 percent of the median daily client charge for each price bracket 
(Phase I Report at 42-43; Final Phase II Report at 12).
    Under Option B, the land use fee is 3 percent of an outfitter/
guide's annual adjusted gross revenue, minus any applicable adjustment 
for use off NFS lands (Phase I Report at 42-43; Final Phase II Report 
at 13).
    Options A and B produce results that are reasonably similar. Either 
option is easily applied to both existing and new activities. However, 
the ability of these methods to develop prices that are fair to the 
Federal government depends on

[[Page 54457]]

the appropriateness of the percentage rate component. Although the 1966 
GAO report indicated that the Forest Service's rate (3 percent) is 
below those charged by some state agencies (5 to 15 percent) for 
similar uses of land, the rate has not been adjusted. In addition, a 
universal percentage applied to adjusted gross revenue does not 
establish similar market prices for similar activities, nor does it 
differentiate among categories of use, as required by The Tongass 
Conservancy ruling (Phase I Report at 43-44; Final Phase II Report at 
13).
    According to the Phase I report, the ARIFFP is a modification of 
Option A under the Forest Service's national outfitting and guiding fee 
policy. For most activities, the ARIFFP yields outfitting and guiding 
fees that are not significantly different from those calculated under 
Option A or B of the Forest Service's national policy. The additional 
steps in the ARIFFP assign unique prices (flat fees) to specific 
categories of activities so that outfitters and guides pay similar fees 
for similar activities. In terms of the criteria established by The 
Tongass Conservancy ruling, the Phase I Report concludes that the 
ARIFFP is thus arguably fair to the permit holders (Phase I Report at 
48-50).
    However, the Phase I Report states that the ARIFFP client day fees 
are often less than what unguided users pay for the same activity. This 
comparison suggests that the 3 percent multiplier, and/or the discount 
for use off NFS lands, result in fees that are not fair to the Forest 
Service. The Phase I Report also notes that because the ARIFFP is an 
interim policy, periodic recalculation of ARIFFP fees has not been 
scheduled. The Phase I Report concludes that without modifications that 
address these deficiencies, the ARIFFP cannot establish or maintain 
prices that are fair to the Forest Service (Phase I Report at 48-50).
    In Phase I, BSR screened several additional pricing methods for 
their potential to meet the RFP's objectives (BSR Phase I Report at 52-
63). BSR analyzed three of these methods with the greatest potential to 
meet the RFP's objectives: (1) The modified ARIFFP; (2) the bottom-up 
pricing method; and (3) the flat fee plus percentage method.
    The ARIFFP derives flat fees by processing a percentage of 
outfitting and guiding gross revenues into per client day or per hunt 
charges. The process includes adjustment for time spent off NFS lands. 
The modified ARIFFP calculates fees based on a percentage multiplier 
that reflects market value and provides for periodic recalculation of 
fees. Determination of an optimum rate is aided by a comparison of the 
flat fees with unguided fees for similar activities. BSR refers to the 
modified ARIFFP as a top-down pricing method because it starts with an 
outfitter's or guide's gross revenue, in contrast to the bottom-up 
pricing method, which starts with the value of unguided use (Phase I 
Report at 68-70).
    The bottom-up pricing method prices outfitter and guide use in 
terms of the value of comparable unguided use evidenced in the market 
place. The bottom-up pricing method develops flat fees based on these 
comparable unguided use values and applies them to outfitter and guide 
client volumes to determine annual outfitting and guiding land use 
fees. The landowner receives from outfitters and guides what unguided 
users are willing to pay for an equivalent unit of use (per day or per 
hunt) for the same or a similar activity. Flat fees per client day or 
per hunt are derived from market comparisons of unguided fees for 
similar activities. The market comparison entails generation of price 
data by survey and a correlation to the outfitting and guiding 
activities recognized by the Alaska Region. The only permit holder data 
required are annual reports of client volumes. There is no percentage 
component (Phase I Report at 71-72; Final Phase II Report at 20-21).
    Under the flat fee plus percentage method, outfitting and guiding 
land use fees consist of two components: Flat fees that are developed 
by the bottom-up pricing method and a percentage of client charges or 
gross revenues. Per client day and per hunt fees are derived from a 
market comparison of unguided fees for similar activities. The flat fee 
is merely a cost of production: A unit of use that is acquired from the 
landowner and resold to a client. The percentage component represents 
an increment of price attributable to the privilege of conducting 
business on the owner's land. The flat fees are differentiated by type 
of activity, while the percentage component is applied universally. The 
sum of the flat fees and the percentage charges would be different for 
each operator in a category (Phase I Report at 73-75).

Phase II: Development of a Fee System Based on the Most Viable 
Methodology

    The Preliminary Phase II Report analyzes the three methodologies 
with the most potential to meet the objectives of the RFP. The modified 
ARIFFP, the bottom-up pricing method, and the flat fee plus percentage 
method. The three methodologies were applied to 2001 outfitting and 
guiding permit holder data for six Alaska Region outfitting and guiding 
activities: Road-based nature tours; remote-setting nature tours; 
helicopter land tours; visitor centers; day use brown bear hunting; and 
overnight mountain goat hunting.
    Based on the conclusions in the Preliminary Phase II Report, BSR 
and the Forest Service jointly decided that BSR should further study 
the modified ARIFFP and bottom-up pricing method, but not the flat fee 
plus percentage method (Final Phase II Report at 9). In the Preliminary 
Phase II Report, BSR concluded that the ability of the flat fee plus 
percentage method to yield fees that are similar for similar activities 
is subject to interpretation. The flat fees are differentiated by type 
of activity, while a percentage component is applied universally. The 
sum of the flat fees and the percentage charges would be different for 
each operator in a category. In addition, the amount of analysis, 
related data requirements, and subjectivity are maximized (Final Phase 
II Report at 73, 76).
    The Final Phase II Report develops flat fee systems using the 
bottom-up pricing method and the modified ARIFFP (Final Phase II Report 
at 20-71). The analysis relies primarily on the market data gathered 
for the Preliminary Phase II Report and the 2002 permit holder data 
provided by the Alaska Region (Final Phase II Report at 11). Table 1 
from the Final Phase II Report compares flat fees derived under the 
ARIFFP using 1998 permit holder data; under the ARIFFP using 1998 
permit holder data that have been index-adjusted; under the ARIFFP 
using 2002 permit holder data; under the bottom-up pricing method; and 
under the modified ARIFFP (Final Phase II Report at 67).
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    In the Final Phase II Report, BSR recognized that while both the 
modified ARIFFP and the bottom-up pricing method could be used to 
develop an outfitting and guiding permit fee system for the Alaska 
Region in compliance with The Tongass Conservancy ruling, the bottom-up 
method was less likely to meet the objectives of the RFP. 
Implementation of the bottom-up pricing method requires a small number 
of related activity categories. The data are too limited to develop 
unique values in the bottom-up pricing method for the diverse 
activities recognized in the Alaska Region. Also, in the bottom-up 
pricing method, client charges are not a component of the fee 
development process, so sensitivity to change in Alaska Region market 
condition is limited to fluctuations in client volumes and comparable 
fees charged elsewhere. In addition, this method relies heavily on data 
from outside the Alaska Region. While the data can be meaningful, they 
are too limited to isolate percentage or dollar considerations for the 
positive and negative attributes of the Alaska Region. There is no 
reliable means of adjusting for these differences (Final Phase II 
Report at 59-60).
    In contrast, the modified ARRIFFP is fair to outfitters and guides, 
in that it assigns flat fees to specific categories of activities so 
that outfitters guides pay similar fees for similar activities. 
Further, since the modified ARIFFP is sensitive to both client volumes 
and local client charges, the method is particularly responsive to the 
unique conditions of the various Alaska Region submarkets represented 
by each of the six categories of outfitting and guiding activities in 
the Region:

    By recognizing local operator data, the method is sensitive to 
the economics of Alaska Region submarkets, yet support is derived 
from the broader market. Data requirements are comparatively minor 
and subjective correlations are minimized. Permit holder reporting 
requirements are generally not objectionable. Finally, it is the 
only apparent method that can develop unique prices for the wide 
variety of outfitting and

[[Page 54460]]

[guiding] activities recognized by the Alaska Region (Phase I Report 
at 78).

    Equally important, the modified ARIFFP is fair to the Federal 
government because this method calculates fees based on a percentage 
rate that reflects market value and because this method provides for 
periodic recalculation of fees based on surveys of similar outfitting 
and guiding activities on Federal, State, and private lands. Thus, BSR 
concluded that the modified ARIFFP has the best potential to meet the 
objectives of the RFP (Final Phase II Report at 68-69, 75-76).

Identification of a Market-Based Percentage Rate

    The 1996 GAO report concluded that the 3 percent rate under the 
national outfitting and guiding fee policy (which is also the basis of 
the ARIFFP) was below market. Data from both public agencies and the 
private sector support this finding (Preliminary Phase II Report at 18, 
Final Phase II Report at 61-62). Thus, the ARIFFP results in fees that 
are below what the market will support. the modified ARIFFP includes an 
additional analytical step to determine a market-based percentage rate 
(Phase I Report at 73 and 76).
    In the modified ARIFFP, an appropriate multiplier was developed 
from a range of rates identified from data collected from a survey of 
public and private landowners. The data reflect a broad range of gross 
revenue multipliers from 3 to 12.5 percent (Final Phase II Report at 
65), as shown in Table 2. The 3 percent rate is below market value, 
while the upper-end rates reflect high demand or exclusivity of the 
use. The rate reported with the greatest frequency is 5 percent. 
However, a simple selection of 5 percent based on frequency does not 
adequately address the objective of creating a fee policy that is fair 
to the outfitting and guiding industry as well as to the Government 
(Final Phase II Report at 63).
    Based on these findings, BSR concluded that an appropriate rate for 
outfitting and guiding in the Alaska Region would fall within a 
narrower range of 4 to 8 percent (Preliminary Phase II Report at 18, 
Final Phase II Report at 65). BSR further concluded that an appropriate 
rate would produce flat fees that are closely supported by the 
indicated values for individual units of use (net of outfitting and 
guiding services) produced by the bottom-up pricing method (Preliminary 
Phase II Report at 18; Final Phase II Report at 63-64). Thus, flat fees 
produced by the bottom-up pricing method will corroborate the flat fees 
produced by the modified ARIFFP using an appropriate multiplier.
    Table 2 displays the flat fees using the 2002 data and compares the 
varied percentage rates.
    In Table 2, the first column of fees is shaded and displays the 
flat fees generated by applying the ARIFFP (with a 3 percent rate) to 
the 2002 permit holder. The next ten columns display flat fees 
generated by applying the percentage rates suggested by the market data 
(4 to 12.5 percent) to the 2002 permit holder data. The last column 
displays the values for individual units of use developed by the 
bottom-up pricing method. The values in the middle columns that are 
shown in bold and lightly shaded approximate the values developed by 
the bottom-up pricing method in the last column (Final Phase II Report 
at 65).
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[[Page 54461]]


[GRAPHIC] [TIFF OMITTED] TN15SE06.004

    Table 2 shows that for 8 of the 10 activities, the 3 percent rate 
applied in the ARIFFP yields fees that are less than the indicated 
values for individual (unguided) units of use generated by the bottom-
up pricing method for a comparable activity. Thus, Table 2 confirms 
that the 3 percent rate is below market value for the Alaska Region. 
Rates above 8 percent are suggested by only two of the activities, 
based on exclusivity of the use or high demand.
    The comparisons for most of the activities (6 out of 10) support a 
narrower range of multipliers from 4 to 8 percent (Final Phase II 
Report at 65). The indicated mean and median reflected by the majority 
of the comparisons is 5.5 percent. Thus, the analysis establishes a 
rate of 5.5 percent as an appropriate multiplier for the modified 
ARIFFP (Final Phase II Report at 66). Future updates that reapply the 
fee calculation process to updated permit holder data may result in a 
different percentage rate.

Implementation of the Alaska Region Long-Term Flat Fee Policy

    The proposed Alaska Region long-term flat fee policy is based on 
the analysis, findings, and conclusions in BSR's Phase I and 
Preliminary and Final Phase II Reports, which were approved by the 
Alaska Regional Appraiser. Based on these reports, the Alaska Region is 
proposing to adopt the modified ARIFFP for outfitting and guiding land 
use fees in the Alaska Region, with a market rate of 5.5 percent. The 
Alaska Region is proposing to implement the 5.5 percent rate beginning 
in January, 2008. The activity rates will be adjusted annually by the 
percentage of change in the Implicit Price Deflator-Gross National 
Product (IPD-GNP) from the second quarter of the previous year to the 
second quarter of the current year.
    According to the Final Phase II Report, the modified ARIFFP cannot 
be applied to new activities without a lead-in period that is 
sufficient to generate the necessary data. However, in the interim, the 
fee for the most similar activity may be applied (Final Phase II Report 
at 19, 73). Based on those findings, the proposed Alaska Region long-
term flat fee schedule for outfitting and guiding has six activities 
that were added after the Final Phase II Report was issued in 2003: 
Black bear camping, moose hunts day use; elk hunts day use; elk hunts 
camping; Dall sheep hunts day use; and Dall sheep hunts camping. Fees 
for the black bear, moose and elk hunts are the same. Fees for Dall 
sheep hunts are the same as those for mountain goat hunts. Fees for the 
added activities would remain linked to existing activities until data 
can be collected to establish a set fee.
    The proposed flat fee for each category of outfitting and guiding 
activity in the Alaska Region is shown in the shaded column in Table 3. 
Those fees are based on the modified ARIFFP and index adjusted to 2006. 
The proposed fees are based on 2002 revenue data from permit holders. 
The last column is the fees that are charged under the current fee 
schedule that is based on 1998 revenue data from permit holders. The 
second column with the modified ARIFFP Fee using 2002 data is the same 
as the last column shown in Table 1 and is taking from the BSR study.
    Publication of this proposed flat fee policy in the Federal 
Register constitutes formal notice per the Regional Forester's letter 
dated November 24, 1997, regarding a fee increase for Forest Service 
outfitting and guiding permits in the Alaska Region.
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Regulatory Certifications

Environmental Impact

    This proposed policy would establish administrative fee categories 
and procedures for calculating permit fees for outfitters and guides 
operating in the Alaska Region of the Forest Service. Section 31.12 
(formerly section 31.1b) of FSH 1909.15 (57 FR 43180, September 18, 
1992) excludes from documentation in an environmental assessment or 
environmental impact statement ``rules, regulations or policies to 
establish Service-wide administrative procedures, program processes or 
instructions.'' The Alaska Region's preliminary assessment is that this 
proposed policy falls within this category of actions and that no 
extraordinary circumstances exist, which would require preparation of 
an environmental assessment or environmental impact statement. A final 
determination will be made on adoption of the final policy.

Regulatory Impact

    This proposed policy has been reviewed under USDA procedures and 
Executive Order 12866 on regulatory planning and review. It has been 
determined that this is not a significant policy. The proposed policy 
would not have an annual effect of $100 million or more on the economy, 
nor would it adversely affect productivity, composition, jobs, the 
environment, public health or safety, or State or local government. 
This proposed policy would not interfere with an action taken or 
planned by another agency, nor would it raise new legal or policy 
issues. Finally, this proposed action would not alter the budgetary 
impacts of entitlements, grants, user fees, or loan programs, or the 
rights and obligations of recipients of such programs.

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Accordingly, this proposed policy is not subject to OMB review under 
Executive Order 12866.
    Moreover, this proposed policy has been considered in light of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). It has been 
determined that this proposed policy would not have a significant 
economic impact on a substantial number of small entities as defined by 
the Act because the proposed action would not impose recordkeeping 
requirements on them; it would not affect their competitive position in 
relation to large entities, and it would not affect their cash flow, 
liquidity, or ability to remain in the market.

No Takings Implications

    This proposed policy has been analyzed in accordance with the 
principles and criteria contained in Executive Order 12630. It has been 
determined that the proposed policy would not pose the risk of a taking 
of private property.

Civil Justice Reform

    This proposed policy has been reviewed under Executive Order 12988 
on civil justice reform. If this proposed policy were adopted, (1) All 
State and local laws and regulations that are in conflict with this 
proposed policy or which would impede its full implementation would be 
preempted; (2) no retroactive effect would be given to this proposed 
policy; and (3) it would not require administrative proceedings before 
parties may file suit in court challenging its provisions.

Unfunded Mandates

    Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 
U.S.C. 1531-1538) which the President signed into law on March 22, 
1995, the Alaska Region has assessed the effects of the proposed policy 
on State, local, and tribal governments and the private sector. This 
proposed policy would not compel the expenditure of $100 million or 
more by any State, local or tribal government or anyone in the private 
sector. Therefore, a statement under Section 202 of the act is not 
required.

Federalism and Consultation and Coordination With Indian Tribal 
Governments

    The Alaska Region has considered this proposed policy directive 
under the requirements of Executive Order 13132 on federalism and has 
determined that the proposed policy would conform with the federalism 
principles set out in this Executive Order; would not impose any 
compliance costs on the States; and would not have substantial direct 
effects on the States, the relationship between the Federal government 
and the States, or the distribution of power and responsibilities among 
the various levels of government. Therefore, the Alaska Region has 
determined that no further assessment of federalism implications is 
necessary.
    Moreover, this proposed policy would not have Tribal implications 
as defined by Executive Order 13175, ``Consultation and Coordination 
with the Indian Tribal Governments,'' and therefore advance 
consultation with Tribes is not required.

Energy Effects

    This proposed policy has been reviewed under Executive Order 13211 
of May 18, 2001, ``Actions Concerning Regulations That Significantly 
Affect Energy Supply, Distribution, or Use.'' It has been determined 
that this proposed policy would not constitute a significant energy 
action as defined in the Executive Order.

Controlling Paperwork Burdens on the Public

    This proposed policy does not contain any recordkeeping or 
reporting requirements or other information collection requirements as 
defined in 5 CFR part 1320 that are not already required by law or not 
already approved for use. The information collection being requested as 
a result of this action has been approved by OMB. Accordingly, the 
review provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.) and implementing regulations at 5 CFR part 1320 do not 
apply.

    Dated: September 5, 2006.
Dennis E. Bschor,
Regional Forester, Alaska Region.
[FR Doc. 06-7621 Filed 9-14-06; 8:45 am]
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