National Park Service--Special Park Use Fees
B-307319: Aug 23, 2007
The National Park Service (NPS) may set special park use fees based on market value when it is acting under business-type conditions, but it may not double charge for costs by setting a two-part fee in which one part is based on market value and the other based on costs. Both the Independent Offices Appropriations Act (IOAA) of 1952, codified at 31 U.S.C. sect. 9701, and section 3a of title 16 of the United States Code authorize NPS to charge a user fee. When providing commercial goods, services, or resources, NPS may charge a fee based on market value under the IOAA and, under section 3a, calculate its actual costs, deduct that amount from the fee collected, and credit that amount to the current NPS appropriation. Any fees collected in excess of costs must be deposited into the miscellaneous receipts of the Treasury. Alternatively, NPS may choose to set special park use fees to recover only its actual costs and retain those under section 3a.
B-307319, National Park Service--Special Park Use Fees, August 23, 2007
In February 2006, GAO reported that National Park Service (NPS) park units were not consistently implementing NPS special use permit guidance for fee-setting and cost-recovery. In the course of this work, we raised concerns about the underlying legal authority for NPS fee-setting guidance. We were concerned that park units, following NPS guidance, might charge fees higher than authorized. This decision addresses whether NPS has authority to charge fees for special park uses that may exceed agency costs for managing or supporting such uses. We conclude that NPS may base fees on market value, but may not charge a two-part fee based on both costs and market value. Current NPS guidance improperly permits park units to combine actual costs incurred by NPS and market value in setting the user fee.
NPS provides user fee guidance to park units in three key documents: first, NPS's Management Policies 2001, which provides agencywide guidance on a variety of topics, including special park uses and fees; second, Director's Order #53: Special Park Uses, which clarifies and supplements Management Policies 2001 by setting forth policies and procedures for administering special park uses on lands; and third, Reference Manual 53: Special Park Uses, which provides detailed guidance for carrying out the agency's special park use program.
Management Policies 2001 envisions a two-part fee: a cost recovery and a use charge. Management Policies 2001, sect. 220.127.116.11. It requires that [a]ll costs incurred by the Service in writing the permit, monitoring, providing protection services, restoring park areas, or otherwise supporting a special park use will be reimbursed by the permittee. When appropriate, the Service will also include a fair charge for the use of the land or facility.
NPS guidance cites two statutory authorities under which it charges special park use fees.
Reference Manual 53 cites 16 U.S.C. sect. 3a as authority for the recovery and retention of costs, and 31 U.S.C. sect. 9701 as authority for the imposition of additional charges for the value of the land or facilities used, or the services provided. Reference Manual 53 at C10-1. It also discusses the separate disposition of the amounts recovered under each authority, noting that funds recovered for costs may be retained while those collected for land or facility use must be deposited as miscellaneous receipts.
NPS guidance for imposition of special park use fees presents the following issue: whether IOAA authorizes NPS to charge fees set at market value for special park uses, and if so whether this may be done in addition to NPS's section 3a authority to recover agency costs for managing or supporting such uses.
Section 3a, by its own terms, does not permit NPS to recover amounts exceeding its costs. It provides, Notwithstanding any other provision of law, the National Park Service may . . . recover all costs of providing necessary services associated with special use permits, such reimbursements to be credited to the appropriation current at that time. 16 U.S.C. sect. 3a (emphasis added). This authorizes NPS to recover and credit to its appropriations a fee equal to its total costs. There is nothing in the language of the statute that authorizes NPS to charge a fee exceeding its costs.
The Office of the Solicitor has asserted that NPS's authority to impose additional fees above and beyond the costs authorized in 16 U.S.C. sect. 3a is provided by IOAA, commonly referred to as the User Charge statute. The Solicitor's Office argues that interpreting these two statutes in pari materia would permit imposition of a fee equaling costs (under section 3a) plus an additional fee equal to the value of the facility, land, or service provided (a market value calculation under IOAA).
Market value fees under IOAA
Before addressing the propriety of the two-part fee envisioned by the Solicitor's Office and NPS guidance, we will consider whether IOAA permits NPS to charge a fee based on the market value of the facility, land, or service provided.
IOAA establishes a government policy that each service or thing of value provided by an agency . . . to a person . . . is to be self-sustaining to the extent possible. 31 U.S.C. sect. 9701(a). IOAA authorizes heads of agencies to prescribe regulations establishing charges for a service or thing of value provided by an agency, and requires that fees be fair and based on four factors: (A) the costs to the Government; (B) the value of the service or thing to the recipient; (C) public policy or interest served; and (D) other relevant facts. 31 U.S.C. sect. 9701(b). Judicial interpretation to date has applied IOAA to the government's exercise of its regulatory functions, and in that context courts have narrowed the application of these factors so that fees charged under IOAA are limited to the cost to the agency of a specific benefit rendered to a particular entity. Florida Power & Light Co. v. United States, 846 F.2d 765, 767 (D.C. Cir. 1988), cert. denied, 490
This understanding of IOAA is based on federal case law from the mid-1970s, beginning with two Supreme Court decisions issued on the same day in 1974. In National Cable Television Ass'n (NCTA) v. United States, 415 U.S. 336 (1974), the Supreme Court considered fees set under IOAA by the Federal Communications Commission (FCC) for regulation of community antenna television (CATV) systems. FCC had calculated fees based on FCC's total costs of regulating the CATV industry. NCTA, 415
In a companion case to NCTA issued the same day, the Supreme Court considered yearly assessments set under IOAA by the Federal Power Commission (FPC) to recoup a portion of its costs of regulating gas and power utilities. Federal Power Commission v.
In a follow-up to NCTA, the D.C. Circuit Court of Appeals addressed a revised annual fee scheme established by FCC under IOAA. National Cable Television
In doing so, the D.C. Circuit held that FCC was required to show the particular costs which they are assessing against the recipients so as to assure them that they are paying only for the specific expenses which are incurred in connection with the service of granting them their operating authority.
In that case, Judge Tamm included a concurring opinion arguing against what he viewed as the D.C. Circuit's undue narrowing of agency discretion by defining value to the recipient as including only costs and not also the value of the benefits bestowed on a regulatee.
The D.C. Circuit, in another decision issued the same day, summarized the requirements of the cost-based standard:
First, the [FCC] must justify the assessment of a fee by a clear statement of the particular service or benefit which it is expected to reimburse. Second, it must calculate the cost basis for each fee assessed. This involves (a) an allocation of the specific direct and indirect expenses which form the cost basis for the fee to the smallest practical unit; (b) exclusion of any expenses incurred to serve an independent public interest; and (c) a public explanation of the specific expenses included in the cost basis for a particular fee, and an explanation of the criteria used to include or exclude particular terms. Finally, the [FCC] must set a fee calculated to return this cost basis at a rate which reasonably reflects the cost of the services performed and value conferred upon the payor.
The D.C. Circuit has since applied the cost-based standard in reviewing fees assessed by the Interstate Commerce Commission in regulating motor carriers, the Nuclear Regulatory Commission (NRC) in regulating nuclear power licensees, and the Environmental Protection Agency in regulating engine manufacturers under the Clean Air Act. The Fifth Circuit Court of Appeals followed suit in a case considering NRC licensing fees.
These court cases involved agencies exercising their regulatory functions. No court has directly addressed the question facing us here; that is, may an agency, when acting not in a regulatory context but in a commercial or proprietary context, set fees based on market value rather than recovery of agency costs? Or should we read federal case law to require that even in a commercial or proprietary context, fees may only reflect the costs incurred by the agency in providing a service or thing of value to a recipient?
Special park uses, in many ways, are factually distinct from the regulatory activities contemplated to date in federal case law. Generally, there is a voluntary element present when a rancher, for example, approaches NPS to use park land for grazing that is not present when a television broadcast company approaches FCC for a license to use the public airwaves. If the rancher does not want to pay what NPS will charge, the rancher can decide whether to seek grazing rights elsewhere. The television broadcast company, however, cannot walk away from its transaction (unless, of course, it decides to walk away, also, from its broadcast business); the federal government is the only source for a broadcast license. Unlike grazing rights, a license to broadcast is not a commodity traded in an open market. The license has a very real economic value nonetheless—indeed, it could amount to the value of the company's broadcast business. This could obviously be quite high, and using it as the limit for user charges would give agencies extraordinarily broad authority. It is in this sense that we understand the D.C. Circuit's holding that basing a fee for a license on value derived would be in the nature of a tax. A fee based on the cost to the government of providing this economic value to the licensee reflects a balance between the IOAA policy that federal activities be self-sustaining to the extent possible and the Supreme Court's admonition that Congress, in IOAA, did not delegate taxing authority to agencies.
Grazing rights, on the other hand, do have a value that can be determined by the open market. In such a commercial transaction, as in the regulatory context, it is possible that the government may incur very little cost, and the economic value of the government's action may exceed the government's costs. In that case, a fee that is designed merely to recover the government's costs could very well interfere, however inadvertently, with a competitive marketplace by having the government selling below the market rate. A fee based on the market price of the transaction would reflect a balance between the IOAA self-sustaining policy and a healthy respect for the marketplace.
We see nothing in IOAA to prohibit an agency from setting a fee in a commercial or proprietary transaction that reflects the market price. In IOAA, Congress directed agencies to base fees on four factors, including the value of the service . . . to the recipient and public policy or interest served. 31 U.S.C. sect. 9701(b)(2)(B), (C). While, as the Supreme Court explained, this does not permit an agency to tax, we believe that at least in a commercial transaction, an agency may fairly decide that it should set its fees in reference to prices that arise out of competition in open markets. Therefore, we believe that IOAA permits agencies to appropriately weigh the statutory factors in accordance with executive branch policies, and with respect to commercial transactions, to set fees based on market price.
This distinction was broached by the Court of Claims while referring to IOAA in Yosemite Park & Curry Co. v. United States, 686 F.2d 925, 932--34 (Ct. Cl. 1982). Yosemite involved a contract dispute between NPS and a concessioner in
In referring to IOAA, the Court of Claims acknowledged the line of federal cases interpreting IOAA to mandate a cost based fee schedule and establish that cost must be the ultimate basis of fees, but found that those cases were not apposite to NPS's authority under 16 U.S.C. sect. 1b(4).
We conclude that in a commercial transaction, an agency may set its fees under IOAA based on market price. However, consistent with IOAA, we recommend that NPS establish its special park use fee structure through the rulemaking process and in accordance with executive policy as reflected in OMB Circular A-25.
NPS guidance, as described above, contemplates a two-part fee, including both a market value charge and a cost-based charge. As explained below, we find that even under business-type conditions, the NPS two-part fee for special park uses is inconsistent with OMB Circular A-25. In addition, we do not think that the two applicable statutes may reasonably be read as authorizing the two-part fee, which double counts costs.
First, OMB Circular A-25 does not support charging a two-part fee as delineated in the NPS guidance. Rather, it sets out alternative methodologies for calculating the appropriate user fee: (1) full cost recovery, which should be used when the government is acting in its capacity as sovereign, and (2) market price, which should be used under business-type conditions, such as when leasing or selling goods or resources.
The Circular states that under these conditions, user charges need not be limited to the recovery of full cost and may yield net revenues.
Second, NPS asserts authority to charge a two-part fee (market price plus full cost) by citing both IOAA and 16 U.S.C. sect. 3a. We do not think this is a reasonable reading of these two fee-setting statutes because it fails to read them harmoniously as part of an overall statutory scheme. IOAA is the predominant federal user fee statute, and it is the only governmentwide authority. In 1993, more than 40 years after enactment of IOAA, Congress enacted 16 U.S.C. sect. 3a, which, as stated, authorizes NPS to recover its costs of providing necessary services associated with special use permits and to credit those costs to its current appropriation. See Department of the Interior and Related Agencies Appropriations Act, 1994, Pub. L. No. 103-138, title I, 107 Stat. 1379, 1387 (
While the NPS guidance acknowledges the two statutes, the two-part fee system described in its guidance essentially construes them as allowing for recovery of the same costs under each. Specifically, the guidance defines market value as the value of the land being used as determined by the market price (Reference Manual 53 at C10-5) plus NPS costs incurred.  Director's Order # 53, sect. 3.6. Calculating market value in this manner essentially double counts the costs to the government that may be recovered as part of the fee, a result clearly not supported by any reasonable reading of the underlying statutes.
Under IOAA, NPS may charge fees for special park uses based on market value when it is acting under business-type conditions but may not separately charge an additional fee for its costs. Consistent with IOAA, we recommend that NPS establish its fee structure through the rulemaking process and in accordance with executive policy as reflected in OMB Circular A-25. NPS may charge a fee based on market value under IOAA and, under section 3a, calculate actual costs to the government, deduct that amount from the fee collected, and credit that amount to the current NPS appropriation. NPS should deposit into the miscellaneous receipts of the Treasury any amounts collected that exceed the actual costs to the government. We suggest that NPS inform the relevant congressional committees of its actions and keep them informed throughout the rulemaking process.
Gary L. Kepplinger
 GAO, National Park Service: Opportunities Exist to Clarify and Strengthen Special Uses Permit Guidance on Setting Grazing Fees and Cost-Recovery, GAO-06-355R (
 Our practice when rendering decisions is to obtain the views of the relevant federal agency to establish a factual record and to elicit the agency's legal position on the subject matter of the request. GAO, Procedures and Practices for Legal Decisions and Opinions, GAO-06-1064SP (
 At the time of our February 2006 report, NPS was operating under Management Policies 2001. On
a short-term activity that takes place in a park area, and that: [p]rovides a benefit to an individual, group, or organization rather than the public at large; [r]equires written authorization and some degree of management control from the Service in order to protect park resources and the public interest; is not prohibited by law or regulation; [i]s not initiated, sponsored, or conducted by the Service; and [i]s not managed under a concession contract, a recreation activity for which the NPS charges a fee, or a lease . . . .
Management Policies 2001, NPS D 1416 (Dec. 2000), at sect. 8.6.1 (internal citations omitted), available at www.nps.gov/refdesk/mp (last visited
 A few of the types of special park uses contemplated under Director's Order #53 are agricultural or livestock uses; special events such as regattas, pageants, or large group camps; and filming and photography activities. Director's Order #53, sections 11–14 (
 Reference Manual 53:
 See also Management Policies 2006, sect. 18.104.22.168 (When appropriate, the Service will also collect a fee for the use of the land or facility based on a market evaluation.).
 The Solicitor's Office states, The NPS is entitled to utilize both 16 U.S.C. sect. 3a and the IOAA in determining and charging fees for special use permits. Solicitor's Letter at 2.
 Statutes in pari materia are those on the same subject; relating to the same matter. Black's Law Dictionary 807 (8th ed. 2004).
 Central & Southern Motor Freight Tariff Ass'n v. Interstate Commerce Commission, 777 F.2d 722 (D.C. Cir. 1985). The court found in this instance that some of the ICC's cost based calculations were not adequately precise, or adequately explained.
 Florida Power & Light Co. v. United States, 846 F.2d 765, 767 (D.C. Cir. 1988), cert. denied, 490
 Engine Manufacturers Ass'n v. Environmental Protection Agency, 20 F.3d 1177 (D.C. Cir. 1994). In this case, the court stated a slightly broader proposition that [a]n agency may not charge more than the reasonable cost it incurs to provide a service, or the value of the service to the recipient, whichever is less.
 Mississippi Power & Light Co. v. U.S. Nuclear Regulatory Commission, 601 F.2d 223 (5th Cir. 1979), cert. denied, 444
 One commentator referred to the economic value in circumstances such as this as the benefits of exclusive use. Clayton P. Gillette and Thomas D. Hopkins, Federal User Fees: A Legal and Economic Analysis, 67 B.U.L.Rev. 795, 862–63 (1987).
 See generally B-124195, Apr. 15, 1973 (the Alaska Railroad, owned and operated at that time by the federal government, should ascertain the fair market value of the property it leased to private concerns and establish a rental rate in accordance with sound business management principles and comparable commercial practices).
 We recognize that this is an inexact science and at times there may be no comparable private sector supplier.
 The Office of Management and Budget (OMB) adopted the court's distinction between the government acting as a sovereign and the government acting commercially in a 1993 revision to its Circular A-25. OMB Cir. No. A-25, User Charges, 58 Fed. Reg. 38142 (
 The Circular lists grazing lands in the general vicinity of private ones as an example.
 Under the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), agencies must deposit user fees charged under IOAA into the general fund of the Treasury as miscellaneous receipts. See, e.g., 49 Comp. Gen. 17 (1969).
 Valuing the land by reference to its market price incorporates a cost component into the formula since comparable prices in an open market will presumably be determined, at least in part, based on cost. We note, however, that it is conceivable that market value in some circumstances may have little relation to actual costs or be less than actual costs.
 It is possible that NPS inartfully drafted its guidance and does not intend to double charge for costs in its two part fee. Nevertheless, this is the effect of separately allowing for the recovery of both market price and actual costs. In establishing a fee structure consistent with this decision and OMB Circular A-25, NPS should ensure that when NPS is leasing or selling goods or resources under business conditions, and the fee charged is based on market value, an additional recovery of costs is not permitted.
 See, e.g., Grazing Fees on National Forest System Lands in the Eastern States, 55 Fed. Reg. 2646 (