Forest Service Handbook 2709.11Special Uses

Forest Service Handbook 5409.12Appraisal Handbook

Environmental Impact

Regulatory Impact

No Takings Implications

Civil Justice Reform

Unfunded Mandates

Federalism and Consultation and Coordination With Indian Tribal Governments

Energy Effects

Controlling Paperwork Burdens on the Public
5. Text of the Final Directive
6. Table ISectionbySection Comparison Between the Proposed and Final Recreation Residence Directives

1. Background

A discussion of the history and development of direction and regulations for the administration of recreation residences is found in the final rule to Title 36, Code of Federal Regulations, part 251, subpart B, published elsewhere in this part of today's Federal Register.

Most of the changes required by the Cabin User Fee Fairness Act of 2000 (CUFFA) affect direction for administering recreation residences contained in the Forest Service Manual (FSM) and Forest Service Handbook (FSH) directives. Accordingly, the changes to recreation residence management identified in CUFFA will be implemented through revisions to the FSM and FSH pursuant to CUFFA. Table I at the end of this notice has been prepared as an aid to understanding the directive changes being adopted. Table I displays the recreation residence directive provision, its reference to the appropriate section of CUFFA, and a sectionbysection comparison of the proposed and final direction.

2. Purely Technical, Nonsubstantive Revisions

All references to enactment of CUFFA as having occurred on October 12, 2000 have been revised to reflect that CUFFA was actually enacted on October 11, 2000. In addition, Forest Service Manual 2347.12, governing caretaker cabin user fees, has been revised for clarity and for purposes of using the terminology in the corresponding provisions in CUFFA.
3. Public Comments and Responses To Proposed Revisions To Recreation Residence Directives

A discussion on the general nature of comments and a response to comments on the proposed rule are found in a final rule published elsewhere in this part of today's Federal Register.
Forest Service Manual

Chapter 2340Privately Provided Recreation Opportunities

2340.05Definitions. This section included a definition of a ``caretaker cabin'' and reference that a cabin needed to be occupying a lot within a recreation residence tract.

Comment. Many respondents commented that limiting the use of cabins to only those situated on a lot within a recreation residence tract is inconsistent with CUFFA.

Response. The Forest Service agrees with these comments. The final direction includes a revised definition for a caretaker cabin. The revised definition is more reflective of the definition of a caretaker cabin that appears in CUFFA and does not necessarily require that the location of a caretaker cabin be situated within a recreation residence tract. In making this revision, however, the Forest Service is not implying that it will consider authorizing the construction of new cabins outside of existing recreation residence tracts for the purpose of creating a caretaker cabin use. However, the revised definition will provide the authorized forest officer with the option to authorize an existing privatelyowned cabin on National Forest System (NFS) land to be used for caretaker cabin purposes in those rare circumstances where a privatelyowned cabin may already exist outside of a designated recreation residence tract. Examples might be existing privatelyowned cabins currently authorized by the Forest Service for use as an isolated cabin, a residence, or as part of a larger use and occupancy of NFS land, such as in conjunction with a grazing allotment or for mining purposes.

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The Forest Service also discovered a technical error in this section of the proposed direction. The coding should have been 2340.5, not 2340.05. The final direction includes this correction.

2347.1Recreation Residences. This section provided direction that the Forest Service would, to the maximum extent practical, manage the recreation residence program to preserve the opportunity for individual and familyoriented recreation.

There were no substantive comments received on this section. However, in the final directive, paragraph 7 has been added to address the concerns expressed by many respondents that community or associationowned improvements should not be authorized to an individual under the recreation residence term permit, but rather, should be authorized under separate permit and authority to the association or entity representing the recreation residence owners.

2347.12Caretaker Cabins. This section provided direction concerning the manner in which a caretaker cabin may be owned and authorized, the considerations that the authorized officer should take into account when determining whether to authorize caretaker cabin use, and the annual fee to be charged for caretaker cabin uses.

Comment. Many respondents commented that it was unclear as to how the proposed direction concerning caretaker cabin uses was different from current agency direction. Respondents suggested that the Federal Register notice should have included a discussion of those differences. These respondents also suggested that the proposed direction requiring that a caretaker cabin be authorized with an annual permit, Form FS 27004, as opposed to a term special use permit for a recreation residence, Form FS27005a, is discriminating against caretaker cabin uses.

Response. The Forest Service agrees that there was no discussion in the preamble to the May 13, 2003, Federal Register notice (68 FR 25751) of the differences between the existing and proposed policy on caretaker cabins. However, the proposed direction included a table (Table I) which provided a section by section comparison between the current recreation residence direction and the proposed revision.

The proposed revision to Forest Service Manual (FSM) 2347.12a, which included language directing the use of an annual permit (Form FS 27004) to authorize a caretaker cabin, was not a proposed change from current agency direction for authorizing caretaker cabin uses. A caretaker cabin, by its nature can be, and often is, used as a year round, primary residence to fulfill its purpose of maintaining the security of a tract. As such, the authorized use is significantly different than a recreation residence use. Likewise, if a caretaker cabin use is authorized for a cabin situated outside of a recreation residence tract, as will be provided with the previously referenced revision to the definition of a caretaker cabin, then not only the use, but the location of the cabin would be inconsistent with the agency's direction that a recreation residence use be located within a recreation residence tract. In addition, the primary purpose of use and occupancy of a caretaker cabin is sufficiently different from that of a recreation residence use, and it should be authorized with the type of special use authorization appropriate for that special use. Therefore, the final directive will remain unchanged with respect to the type of special use authorization used to authorize the use of a cabin as a caretaker cabin.

The proposed direction under Sec. 2347.12b includes the language which was intended to be reflective of section 607(b) of CUFFA, which directs that the fee for a caretaker cabin special use shall not exceed the fee charged for the authorized use of a similar typical lot in the tract. The final language in this part of the direction has been slightly revised to accommodate those situations where a caretaker cabin may not be located within a recreation residence tract. The revised language in the final direction provides direction for assessing an annual fee for a caretaker cabin that may be located neither on a recreation residence tract, nor on a recreation residence lot, by directing that the fee will be equal to a typical lot within the tract for which caretaker cabin services are being provided, that is most representative of the NFS land upon which the caretaker cabin is located.

Chapter 2720Special Uses Administration

There were no substantive comments received on this chapter of the Forest Service Manual. No revisions have been made in the final directive.
Forest Service Handbook 2709.11Special Uses Handbook

Chapter 30Fee Determination

33.05Definitions. This section included new definitions for terms used in CUFFA.

Comment. Numerous respondents suggested that the definitions of terms in the agency's directives mirror exactly the definitions of those terms as provided in CUFFA. Others suggested that the term ``market value'' should not be included in the final directive because it is a term of art which appraisers understand and that including the words ``giving due consideration to all available economic uses of the property at the time of the appraisal'' in the definition of market value was inconsistent with the provisions of CUFFA, is in conflict with the provisions defining Highest and Best Use in the appraisal specifications, and should be deleted.

Response. The Forest Service has reviewed the definition of all the terms included in the proposed directive revisions and has compared them to the corresponding definitions and the intent of CUFFA. A response to each definition is as follows:

Cabin. The definition has been revised to mirror the definition for a cabin as provided in section 604(4) of CUFFA.

Market Value. The term ``market value'' is not defined in CUFFA. However, the Forest Service believes that a definition for market value is necessary in agency direction. Section 605 of CUFFA directs the Forest Service, through the Secretary of Agriculture, to ensure, to the maximum extent practicable, that the basis and procedure for calculating cabin user fees results in a fee that reflects ``(1) the market value of the lot; and (2) regional and local economic influences.'' With this statutory mandate, the Forest Service believes that there is a need to clearly define the term ``market value,'' lacking any clear definition in CUFFA. The agency believes it would be remiss to simply rely on an assumption that market value is a term of art, which every appraiser understands and can articulate and apply consistently. Several definitions of market value have been utilized in appraisal publications and educational materials over time. The Forest Service believes it is important for all appraisers to utilize a current, common definition. Though other definitions may apply to transactions performed under other legal authorities, CUFFA directs that appraisals prepared under authority of the act be prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the Uniform Appraisal Standards for Federal Land Acquisitions (UASFLA). The two sets of appraisal standards have conflicting definitions, so the definition in the UASFLA takes precedence because those standards, though they are not themselves law, are based on Federal case law, legislation, and
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administrative rules. Providing for a definition in agency direction is designed to maximize consistency in the interpretation and application of the concept of market value.

Within the proposed definition of market value, use of the language ``giving due consideration to all available economic uses of the property at the time of the appraisal'' was also evaluated in response to the comments received. The phrase cited is an integral part of the definition. However, this part of the definition is mitigated by the requirement in the appraisal guidelines that the identified highest and best use shall be the authorized use: A lot suitable for use as a recreation residence. No other potential highest and best uses shall be considered or discussed in the appraisal report.

Natural, Native State. The definition of this term in the proposed direction was very similar to that used in CUFFA and was not changed in the final direction.

Recreation Residence. This term was not defined in CUFFA. However, CUFFA includes several references to the ``recreation residence program,'' and CUFFA defines the term ``cabin,'' as a subset of recreation residence (see the final direction defining the term ``cabin''). Therefore, the Forest Service believes that for consistency in management, and clarity for the public, the term ``recreation residence'' must be defined to distinguish it from other types of cabin uses on NFS lands, such as historic cabins, isolated cabins, and cabins used for mining or grazing operations. The definition, however, has been revised in the final direction to remove the words ``auxiliary buildings and improvements,'' so that the definition of a ``recreation residence'' is equal to the definition of a ``cabin,'' as cabin is defined in CUFFA and this section of the direction. However, a recreation residence special use commonly includes the use and occupancy of NFS lands with not just a recreation residence, but also with ``auxiliary buildings and improvements.'' The cumulative location and distribution of the recreation residence, or cabin, and the associated permit holder owned auxiliary buildings and improvements on NFS land comprises the recreation residence ``lot,'' as the term ``lot'' is defined in the final rule at 36 CFR 251.51, published in a separate notice in this part of today's Federal Register. Auxiliary buildings and improvements are not a part of the recreation residence or cabin and have therefore, been deleted from the final definition of the term ``recreation residence.''

Related Improvements. A definition of ``related improvements'' was not included in the proposed rule or proposed directives. However, due to the comments received on the definition of ``recreation residence lot'' in the proposed rule, the Forest Service is adding this definition to clarify what constitutes a related improvement in the context of a recreation residence lot.

For the purpose of defining a recreation residence lot (36 CFR 251.51), ``related improvements'' include not only the examples of facilities and uses owned and maintained by the holder identified at 36 CFR 251.51, but may also include holderowned facilities or uses of National Forest System lands operated or maintained by the holder in conjunction with the recreation residence use. For example, outbuildings, wood piles, retaining walls, picnic tables, driveways, parking areas, trails, boardwalks, campfire rings, seats, benches, the construction and maintenance of lawns, gardens, flower beds, landscaped terraces, and the manipulation and/or maintenance of native vegetation. Related improvements will not include native vegetation that is manipulated and/or maintained for the primary purpose of protecting property and mitigating safety concerns, such as the removal of hazard trees, and the treatment/management of vegetation, approved by the authorized officer, to reduce fuel loading and to create defensible space for wildfire suppression purposes, nor will it include tract association or communityowned facilities that are authorized under a separate authorization to the recreation residence tract association or some other entity representing the owners of the recreation residence. The list of items identified in the definition of ``related improvements'' in section 33.05 is not intended to be an allinclusive list.

Simple Majority. Section 614(c)(2) of CUFFA requires that a new appraisal or peer review of an existing appraisal be made by a majority of the cabin owners in a group of cabins represented in the appraisal process by a typical lot. To assure that Forest Service managers consistently understand and apply this provision of CUFFA, the agency believes that there is a need to clearly define what constitutes a ``majority'' as used in this section of CUFFA. The proposed direction did so by providing a definition of ``simple majority.'' However, since CUFFA and other sections of the directive use the term ``majority,'' instead of ``simple majority,'' this term has been changed to ``majority'' in section 33.05. The proposed direction provided a definition of ``more than 50 percent,'' and that definition remains the same in the final direction. In the case where a typical lot represents a grouping of an even number of lots, and a request is made for a new appraisal or peer review pursuant to section 614(c)(2) of CUFFA, the majority of the holders within that grouping would be at least 50% of the permit holders in that grouping, plus 1. A request for a peer review or new appraisal by only 50 percent of the holders within a grouping comprised of an even number of lots would not by definition, constitute a majority.

Tract. The definition of this term in the proposed direction was very similar to that used in CUFFA, and was not changed in the final direction.

Typical Lot. The first sentence of the definition of this term in the proposed direction was similar to the definition in CUFFA. The Forest Service expanded the definition in the proposed direction to describe to Forest Service managers how typical lots are to be used for appraisal purposes. There have been no changes to the definition of this term in the final directive.

33.13Annual Adjustment of Recreation Residence Fee. This section prescribed the manner in which annual adjustments to recreation residence fees would be made and provided a series of examples for implementing the provisions of the proposed direction.

Comment. At least one respondent was critical of the Forest Service's proposal to continue to use the Implicit Price Deflator, Gross National Product (IPDGNP) index in making annual changes to fees, stating that section 608(b) of CUFFA directs the agency to use the ``Index of Agricultural Land Prices,'' published and maintained by the Department of Agriculture. One respondent stated that since the proposed direction has no provisions to adopt the use of the Index of Agricultural Land Prices, it must mean that the Forest Service intends to incur an unnecessary expense of updating this section of the direction when the transition period (as prescribed in section 614 of CUFFA) is over, or the Forest Service hopes to bury the Index of Agricultural Land Prices and not use it at all.

Response. The proposed rule and proposed directives clearly disclosed the intent to use current and future indexing factors for making annual adjustments to recreation residence special use permit fees in compliance with the provisions in CUFFA. Section 614 of CUFFA describes the transition as that period of time during which the final rule, direction revisions, and new appraisal guidelines are promulgated,
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adopted, and fully implemented, and a new base cabin user fee for all holders is established. Section 614(c) of CUFFA provides holders up to 2 years after the date of adoption of the final rule, direction revisions, and appraisal guidelines, to request a new appraisal or peer review. Additional time beyond the date of these requests will be needed for new appraisals and peer reviews to be conducted and a new base cabin user fee established. So it is conceivable that for some permit holders, the transition period described in CUFFA will continue for several years after the date of adoption of these final rules, direction revisions, and appraisal guidelines. During this transition period, section 614(a)(1) and (2) of CUFFA specifically direct that term special use permit fees for recreation residences shall be annually adjusted using the annualized 2nd quarter to 2nd quarter change in the IPDGNP. The Forest Service's direction at Sec. 33.13 of FSH 2709.11 reflects this provision of CUFFA.

In the preamble of the proposed rule (68 FR 25749), the Forest Service disclosed that it will begin to use the Index of Agricultural Land Prices to make annual adjustments to the base cabin user fee when the transition period (section 614 of CUFFA) ends. A notation on Table I, Sec. 33.13 (68 FR 25779) stated that approximately 2 years after adopting the proposed rule and direction revisions (including the new appraisal guidelines), the Forest Service would develop supplemental direction to implement the provisions of section 608(a) and (b) of CUFFA. By waiting approximately 2 years before proposing and establishing agency direction for use of the Index of Agricultural Land Prices for annualized changes in recreation residence permit fees, the Forest Service will be able to then provide holders and interested members of the public, clear and focused fee direction concerning the use of that index.

Comment. Several comments were received which cited that in Sec. 33.13 of the proposed directive, Example 2 displayed a year in which the annual fee increase could be in excess of 5 percent. At least one respondent who commented on this section of the direction suggested that it should be revised to result in situations where the annual fee will never increase by more than 5 percent because that is what is needed to comply with the limitation provision in section 608(d) of CUFFA.

Response. In Example 2, the increase in the fee from Year 2006 ($772) to the Year 2007 fee ($824) represented a fee increase of 6.7 percent. It appears, however, that the respondent's comment is based on an interpretation of the limitation provisions in section 608(d) of CUFFA, which suggests that the annual change in a cabin user fee can never exceed 5 percent. The Forest Service does not agree with this interpretation of section 608(d) of CUFFA. Section 608(d) directs that the Secretary shall:
(1) Limit any annual fee adjustment to an amount that is not more than 5 percent per year when the change in agricultural land values exceeds 5 percent in any 1 year; and
(2) Apply the amount of any adjustment that exceeds 5 percent to the annual fee payment for the next year in which the change in the index factor is less than 5 percent.

The Forest Service interprets this provision to mean that in any year in which the annual index amount exceeds 5 percent, the amount of the adjustment in excess of 5 percent will be carried forward in its entirety to the fee in the very next year in which the index factor is less than 5 percent, even if that results in a one year fee increase for that year in excess of 5 percent. Section 608(d) of CUFFA does not direct that there be a 5 percent fee increase limitation in the year in which the fee change in the index factor is less than 5 percent and the carryover adjustment(s) is applied. Example 2 in section 33.13 of the proposed direction was specifically designed with hypothetical index factors to demonstrate this interpretation of section 608(d) of CUFFA. Therefore, the Forest Service believes that the example is accurate, and disagrees with the interpretation of section 608(d) represented by the comment that agency direction should provide that an annual fee may never increase by more than 5 percent.

There were no revisions made to this section.

33.2Fees When Determination Is Made To Place Recreation Residence on Tenure. This section provided direction for implementing the provisions of section 607(c) and (d) of CUFFA, describing the manner in which an annual fee will be assessed in the event that a decision is made to discontinue a recreation residence use.

Comment. Several respondents provided comments about particular provisions in the three options which call for a recovery of some of the foregone fees, in cases where the recreation residence use is going to be allowed to continue for at least 10 more years beyond the originally identified date of expiration and conversion to an alternative public purpose. The respondents noted that these provisions are not mandated in CUFFA, questioned the legality of requiring that a fee that includes as a ``surcharge'' a 10year recovery of previously foregone permit fees, and that a 10year recovery should not run with the lot and be made a part of the fee assessed to a subsequent owner of the recreation residence, should a change in ownership occur over the course of that 10year fee recovery.

Response. Although it was not stated in the proposed direction, the options identified are a reiteration of current direction that has been in place since 1994. No changes from existing direction were proposed. Providing the 10year recovery period was designed to benefit the owners of recreation residences, by preventing recreation residence owners from having to pay foregone fees in a single lump sum assessment. Rather, an economic impact to recreation residence owners has been mitigated in agency direction with the provision that allows owners to repay the foregone fees due the United States as an annual fee surcharge, in equal installments over a 10year period.

While the Forest Service understands the burdens this fee recovery surcharge may impose on a new owner of the recreation residence, it is the responsibility of the prospective buyer, or any successor in interest, to be aware of the terms and conditions of the recreation residence special use permit, including fee obligations due the United States at the time they consider acquiring a recreation residence. The current owner's fee obligation to the United States, including any annual fee recovery surcharge can then be taken into account by prospective purchasers as a consideration in negotiating a purchase price with the seller of the recreation residence.

There were no revisions made to this section.

33.4Establishing the Market Value of Recreation Residence Lot. This section provided general direction about the manner in which recreation residences are appraised and describes the basic concept of establishing groupings of lots having essentially the same or similar value characteristics.

Comment. Many comments were received concerning Sec. 33.4, paragraph 1, that provided direction for fee adjustments made for measurable differences among recreation residences lots within a grouping. These respondents stated that this could be implied to mean that appraisers would have the authority to make (base cabin user fee) adjustments for measurable differences among recreation residences [[Page 16626]]
within a grouping of lots, and to establish new groupings of lots and to select typical lots, and that giving this authority to appraisers violates the provisions of CUFFA. Other respondents stated that there should not be the need to make adjustments, because if there were measurable differences among recreation residence lots within a grouping, then that should trigger the need to establish a new grouping with a new typical lot. Some respondents suggested that one of the results of implementing the provisions of CUFFA, Departmental regulations, and agency policies may be the need to reconsider and reconfigure lot groupings, including the establishment of additional lot groupings and the corresponding selection of additional typical lots. Other comments suggested that recreation residence lots should be appraised in their native, natural state and suggested that the appraiser should be instructed to consider lots as inaccessible in the winter, unless snow is removed from the access road by either the Forest Service or a third party.

Response. The Forest Service agrees that as worded, paragraph 1 in Sec. 33.4 could be interpreted to mean that an appraiser has the authority to make adjustments to base cabin user fees in cases where there might be measurable differences among recreation residence lots within a grouping of lots. Therefore, the language in paragraph 1 has been revised to clarify that only the authorized officer may make adjustments.

The Forest Service disagrees, however, with comments that suggested that measurable differences among recreation residence lots within a grouping of lots always signals the need to establish a new grouping and a new typical lot. While that may be appropriate in some cases, it may not always be an efficient or economically justifiable approach to establishing a base cabin user fee, particularly in cases where only one or two lots within a grouping of lots might have a measurable difference that, while measurable, will result in only a minor change to the base cabin user fee. Therefore, the Forest Service will leave this provision as an option for the authorized officer to consider and use in accommodating measurable differences between lots within a grouping as an alternative to establishing a new grouping and corresponding typical lot. However, paragraph 1 will be revised to include the word ``values'' to clarify that this provision means that adjustments to a base cabin user fee may be made when there are measurable value differences among recreation residence lots within a grouping of lots. The requirement that the authorized officer seek the advice of the assigned Forest Service review appraiser will also be added to paragraph 1.

The Forest Service disagrees that this sentence could also be interpreted to mean that an appraiser has the authority to create a new grouping of lots and select a correspondingly new typical lot. The direction in Sec. 33.41 of the direction clearly directs that the establishment of groupings of lots, and the selection of a typical lot within each lot grouping, shall be made by the authorized officer with input from permit holders.

The comments that suggested that the appraiser should be instructed to consider the lots as inaccessible in the winter unless snow is removed from the access road may not have understood that this property characteristic is covered in Sec. 33.4, paragraph 3(b). The appraiser is directed to consider, and adjust if appropriate, any limitation on access attributable to weather and other factors. The appraiser will consider the lot's access condition. If the property is inaccessible in winter, the appraiser will search for sales with similar access limitations.

The Forest Service also agrees that as part of the implementation of CUFFA and the adoption and implementation of the Secretary's regulations and agency policies, there may be an occasional need in some tracts for the authorized officer to either reconsider the groupings of lots and the identification of typical lots or make adjustments to base cabin user fees for certain lots within a grouping of lots. The need to do so would most likely occur in cases where the inventory of facilities, utilities, and access servicing a tract are not comparable to the facilities, utilities, and access servicing the typical lot. In these cases, the authorized officer will have the authority to, at his or her discretion, consider implementing one of the following options:

1. Establish a new grouping of lots having clearly different attributes of access, utilities, and facilities servicing those lots from those which have been inventoried and are servicing the typical lot and:

a. Identify with the holders a new typical lot to represent that new grouping.

b. Prepare a new permanent inventory of utilities, access, and facilities servicing that typical lot (sec. 33.42).

c. Conduct a new appraisal of that typical lot pursuant to the provisions of CUFFA. The Forest Service and the holder(s) shall pay equally for the cost of the new appraisal.

2. Where feasible, assign lots having clearly different attributes with another typical lot that may have been established in the tract and which has attributes of access, utilities, and facilities that are comparable to those lots.

3. Make adjustments to the base cabin user fee for those lots having utilities, access, and facilities that are so different from the attributes of the typical lot that it creates a measurable difference in value.

These options have been added to Sec. 33.41.

Comment. Section 33.4 of the proposed direction also directed that an appraiser shall not select sales of land within developed urban areas when identifying comparable sales to arrive at an appraised value of a typical lot. Some respondents commented that the word ``urban'' should be defined because it has a specific meaning in most land use ordinances and that (1) cabin owners are concerned that appraisers may select comparable lots from urban and suburbanstyle subdivisions in rural areas and that (2) use of comparable lots from these sources has the potential to dramatically distort the valuation of NFS lots.

Response. The Forest Service agrees with those respondents who expressed these concerns. Urban is defined in ``The Dictionary of Real Estate Appraisal, Fourth Edition,'' as:

Describes a mature neighborhood with a concentration of population typically found within city limits or a neighborhood commonly identified with a city.

A definition for ``urban'' has been added to section 33.05.

33.42Inventorying Utilities, Access, and Facilities. This section directed the authorized officer to identify and inventory utilities, access, and facilities that provide service to each typical lot within a recreation residence tract. It also provides criteria or guidelines for the authorized officer to use in making a determination as to who paid for the capital costs to construct those utilities, access, and other facilities servicing each typical lot

Comment. Many comments were received concerning this section of the proposed direction. One of the purposes of this part of the proposed direction was to further define the fundamental premise in CUFFA, which directs that ``the Secretary shall presume that a cabin owner, or a predecessor of the owner, has paid for the capital costs of a utility, access, or facility serving the lot being appraised, unless the Forest Service produces evidence that the agency or a third party has paid for the
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capital costs.'' Most who commented on Sec. Sec. 33.42, and 33.42(a) and (b) of the proposed direction said it was inconsistent with the provisions in CUFFA, or `` defective'' in that the direction (1) attempts to determine by definition that certain improvements are not paid for by cabin owners, or their predecessors, and that an approach is not equivalent to producing evidence (as is required in CUFFA); (2) attempts to put the burden of proof (as to who paid for utilities, facilities, or access) upon the cabin owners, rather than on the Forest Service; and (3) establishes standards which would allow an authorized officer to make assumptions as to who paid for utilities, access, or facilities without producing actual evidence of that fact. Some who commented said that all evidence demonstrating payment of capital investments in utilities, access, and facilities must be in writing. Many respondents commented that this section of CUFFA requires the Forest Service to prove payment of the capital investment in access, utilities, and facilities by either the Forest Service or a third party. Many comments suggested that any time a holder is paying a standard rate for a utility service, included in that rate are the costs of capital investments of the facilities needed to convey/provide the service or utility. Lastly, almost all who commented on this part of the proposed direction disagreed with that portion of Sec. 33.42(a) which specifically cited as an example, that the assessment of a tap fee or hookup fee charged by a utility provider to a permit holder or their predecessor does not constitute a payment of the capital costs of providing those facilities to the lot.

Response. The primary purpose for the direction in section 33.42 was to provide clarity and consistency for implementing the inventory provisions of section 606(a)(1) of CUFFA. In the proposed directive, the Forest Service provided direction through the use of examples. Lacking this direction, permit administrators and authorized officers would be guided only by nondescript provisions in section 606(a)(1) of CUFFA which lends itself to differences in interpretation. That was clearly evident by the significant number of comments that were generated by the Forest Service's interpretation of section 606(a)(1) and demonstrates that there is no single, agreeable interpretation of this section of CUFFA. Therefore, the agency will exercise its discretion in providing further definition and guidance in its directives to assure consistency in interpretation and application of this part of CUFFA.

Most of the comments that were submitted concerning the examples provided in the proposed direction in Sec. Sec. 33.42(a) and (b) disagreed with various elements of the proposed direction concerning evidence that constitutes payment for the capital costs of utilities, access, and facilities which provide access or services to a recreation residence lot. Those aspects of the comments received will be individually addressed, as follows:

1. Responsibility for Determining Evidence of Payment of Capital Costs. Many who commented interpreted the proposed direction in Sec. 33.42(a) as requiring cabin owners to provide evidence that either the cabin owner or a predecessor of a cabin owner directly paid, paid a lump sum fee, or paid a surcharge for the capital costs of an inventoried utility, access, or facility. Many cited that it is the intent of section 606(a)(1) of CUFFA that it is the responsibility of the Forest Service to provide this evidence.

The Forest Service agrees. Major revisions to this section have been made to more clearly articulate that intent. The caption for Sec. 33.42(a) has been revised to ``Types of Utilities, Access, and Facilities to Include in Inventories,'' and includes the list of itemized types of utilities, access, and facilities that were identified in the proposed direction under the general caption in Sec. 33.42 as items 1 thru 4. The caption at Sec. 33.42(b) has been revised to ``Criteria to be Considered in Determining Who Paid for Inventoried Utilities, Access, and Facilities,'' and revises the direction previously contained in Sec. Sec. 33.42(a) and (b) to provide greater clarity to Forest Service employees and cabin owners concerning criteria for determining who paid for capital improvements and to clearly identify the burden of the Forest Service to produce evidence that capital improvements were paid by a party other than the cabin owner or their predecessor.

However, the Forest Service disagrees with those respondents who commented that CUFFA directs the Forest Service to ``prove'' that capital costs for access, utilities, and facilities were paid for by the Forest Service or a third party. That is a standard much higher than the clear language in CUFFA which simply requires the authorized officer to have evidence of the payment of capital costs by either the Forest Service or a third party.

2. Hookup or Tap Fee. The proposed direction in Sec. 33.42(a) stated that a hookup fee or tap fee, which is commonly assessed by a utility provider when initiating service to a new customer, does not equate to payment of the capital costs of installment of the facilities that deliver or transport the utility service to the tract or lot being appraised. Many of the comments received disputed this statement, asserting that a hookup or tap fees are an expense to the cabin owner and, therefore, are assessed by the provider to pay for the capital costs to construct and install the improvements or facilities which deliver the utility or service.

The Forest Service agrees that there may be cases where at least some of the hookup or tap fee assessment is based upon the provider's capital costs to install the utility or facility that provides that service. Therefore, the direction has been revised in Sec. 33.42(b) to instruct authorized officers that if evidence is produced to indicate that hookup or tap fee assessments were implemented to pay for the capital costs to construct and install the improvements or facilities which deliver the utility or service, then that will serve as the basis for the authorized officer to determine that the cabin owner or their predecessor who paid a fee have paid for the capital costs of the utility or facility providing service to the lot. In most cases, however, the amount of the hookup or tap fee assessed to a new customer is established primarily to pay for the utility provider's administrative costs incurred as part of activating a new customer, such as the establishment of a new file and account and expenses of a site visit to enable switches and install metering units owned and operated by the provider. In these instances, the hookup or tap fee will not be considered payment by the cabin owner or their predecessor for the capital costs of facilities. The final direction has been revised to reflect the fact that it is the responsibility of the authorized officer to seek evidence to make that determination.

3. Base User Fees. Many comments disputed the proposed direction that provided that if the capital costs of a utility or facility are paid for and attributable to the entire service base, then those capital costs are assumed to be neighborhood enhancing developments and the costs being borne by the provider of a service or utility, not the cabin owner or their predecessor. These comments suggest that in effect, all customers who are assessed a base rate and/or user fee for services provided by a utility company or service provider, such as an electric company, telephone company, water
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utility district, cable TV provider, and so forth are paying for the capital costs of utilities and facilities that provide those types of utility or service to a recreation residence lot. The logic of these comments would suggest that any cabin owner who is paying base rates and user fees for a utility service is paying capital costs to construct, operate, and maintain the facilities that provide or deliver that utility or service, even when those base rates and user fees are nothing more than that being assessed to every other customer in the service area.

The Forest Service disagrees with these arguments. Applying the logic of these comments would mean that only in the rarest of cases would there ever be a utility or facility that is providing service to a recreation residence lot that would be considered as having been provided by a third party, such as a utility or service company provider. If that had been the intent of the Congress in drafting this provision of CUFFA, then there would have been little purpose served to direct that the agency inventory and identify utilities provided by a third party. Rather, the Forest Service has interpreted CUFFA to mean that there clearly are circumstances in which utilities, access, and facilities can be identifiable as having been provided by a third party, and most commonly by the utility or service provider, without the customer directly incurring the capital costs of utilities, access, or facilities. It is the Forest Service's interpretation of section 606(a)(1) of CUFFA that if the capital costs of any utility, access, or facility were not directly paid by the cabin owner or their predecessor, then costs will be identified as having been paid for by a third party. The payment of a base rate and usage fee is not equivalent to direct payment of the capital costs of utility, access, or facilities delivering or providing a utility or service.

4. Tax Supported Roads and Highways. Similar to the issue raised in preceding paragraph 3, many respondents asserted that in those cases where a tract or lot is accessed by a Federal, State, or county highway or road, and where the cabin owner is paying a possessory interest tax to the State or county governmental entity who operates and maintains that road or highway, is proof that the cabin owner is paying for the capital costs of the highway or road through that tax.

The Forest Service disagrees. The only evidence demonstrating that the cabin owner or a predecessor of the cabin owner paid the capital costs for a road or highway would be evidence that a public road agency assessed a surcharge or lump sum assessment to the cabin owner or their predecessor, or a specific road or highway accessing their recreation residence.

Almost all who responded to this section of the proposed direction commented that simply making statements in agency direction does not equate to providing evidence that the capital costs of inventoried utilities, access, and facilities were or were not provided or paid for by the cabin owners or their predecessors, and that CUFFA requires evidence. The Forest Service agrees with those comments, but in doing so, the agency also wants to clarify that it is not the intent to have statements in agency direction satisfy the evidence requirements of CUFFA. Rather, as previously stated, the provisions in Sec. Sec. 33.42(a) and (b) of the direction were designed to provide internal agency guidance to Forest Service special use permit administrators and authorized officers for their use in conducting inventories and in making a determination as to who paid for utilities, access, and facilities providing services to a lot. Some of those provisions describe circumstances which the agency will consider as being prima facie evidence for use by an authorized officer in determining who paid for the capital costs of certain access, utilities, and facilities.

The final direction has been revised to more clearly articulate this purpose.

33.7Holder Notification of Accepted Appraisal Report and Right of Second Appraisal. This section directed the authorized officer to notify the affected holders when the Forest Service has accepted an appraisal report and has determined a new base fee based on that appraisal report.

Comment. A respondent suggested that the authorized officer should be required to provide the holders with written justification for his/ her decision for accepting an appraisal report.

Response. The authorized officer, as stated in section 33.6, may accept the estimated value of the typical lot or lots in the appraisal for establishing a new base fee for that recreation residence lot or lots. The justification for the decision is that the assigned review appraiser has determined that the appraisal meets the required standards and the value estimate is supported and approved. By law, the authorized officer is required to calculate cabin user fees that reflect the market value of a lot, including regional and local economic influences. Market value incorporates those economic influences. It would be redundant for the authorized officer to say his/her justification for the decision (determining a new base fee) is because he/she complied with law.

There were no changes made to this section in the final directive.

33.71bAppraisal Guidelines. This section of the proposed direction addressed the manner in which second appraisals may be conducted.

Comment. One appraisal organization suggested wording to clarify the intent of this section and to demonstrate why the recommended procedure does not present an ethical conflict in the context of the Uniform Standards of Professional Appraisal Practice (USPAP).

Response. The Forest Service agrees. Section 33.71b has been rewritten to more clearly articulate its purpose and explain how the procedure is in conformance with USPAP.

33.72Reconsideration of Recreation Residence Fee. This section provided direction for reconsidering a recreation residence base fee following the authorized officer's receipt of reconsideration based on the results of a second appraisal.

Comment. Many comments were received regarding the fact that this section of the proposed direction failed to provide guidance to the authorized officer on how a final base fee will be established in cases where a second appraisal might be materially different from the first appraisal. Respondents suggested that it may not be appropriate to, as the proposed direction stated, establish a base fee from within the range of values established by the first and second appraisals, particularly if one of the appraisals was poorly done. For the same reason, many who commented were concerned that this provision in the proposed direction might lead authorized officers to simply average the first and second appraisals, to arrive at an average between the two in establishing a new base fee, a practice which might also be inappropriate if one or both of the two appraisals were poorly done.

Response. The language in this section of the proposed direction is nearly verbatim to the language provided in section 610(d) of CUFFA concerning the establishment of a new base fee pursuant to the results of a first and second appraisal. The comments suggest that the Forest Service direction restrict or qualify the manner in which the authorized officer may exercise discretion to establish a new base fee in an amount that is equal to the base fee established by the initial or the second appraisal, or is within the range of values, if any, between the initial and second appraisals. The Forest Service disagrees. The agency believes that this
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discretion is necessary, and yet is adequately prescriptive to assure an acceptable degree of consistency by authorized officers in exercising it on a case specific basis.

Regarding comments concerning the inappropriateness of the use of appraisals that are ``poorly done,'' the Forest Service notes that any appraisal that is presented to an authorized officer for consideration in the establishment of a cabin user fee must, pursuant to agency direction, first be reviewed by a Forest Service Qualified Review Appraiser. The Qualified Review Appraiser determines whether the appraisal has been conducted, and the appraisal report has been prepared, in a manner consistent with Federal and agency standards, and in the case of recreation residence lot appraisals, consistent with the appraisal guidelines for recreation residence lots in existence at the time that the appraisal was conducted. Only when a Forest Service Qualified Review Appraiser conducts a review and makes a determination that the appraisal is acceptable for agency use, is it declared acceptable for use in determining a recreation residence fee. The same review standards will be applied to any second appraisal. Therefore, if the term ``poorly done'' equates to not having met established Federal and agency standards and specifications for conducting appraisals and writing appraisal reports, then it is likely that the appraisal would never be approved for agency use and would, therefore, not be used by the authorized officer as either a first appraisal or a second appraisal in establishing a cabin user fee.

33.8Establishing a Recreation Residence Lot Value During the Transition Period of the Cabin User Fee Fairness Act. This section of the proposed direction addressed the manner in which a base cabin user fee would be established upon adoption of the final regulations, policies, and appraisal guidelines pursuant to CUFFA. It identified that one of three options to be used in establishing a base cabin user fee during the transition period: (1) Conduct a new appraisal pursuant to these final regulations, policies, and appraisal guidelines; (2) Commission a peer review of an existing appraisal that had been completed after September 30, 1995; or (3) Establish a new base fee using the market value of the typical lot that has been identified in an existing appraisal that was completed and approved after September 30, 1995.

Comment. Some who responded to this section of the proposed direction suggested that permit holders should also be provided with a fourth option, one that would give the holders an opportunity, after the completion of either a new appraisal (option 1) or a peer review (option 2), to request a second appraisal, in accordance with the provisions for second appraisals as described in Sec. 33.7.

Response. The Forest Service disagrees with those who interpreted CUFFA in this manner. The three options identified in section 33.8 of the proposed direction were intended to reflect the provisions of section 614 of CUFFA, which clearly provides that during the transition period, these are the only three means by which a new base cabin user fee may be established for permits for those lots which were appraised on or after September 30, 1995, but before October 11, 2000 (the date of enactment of CUFFA). Typical lots representing almost every recreation residence lot in the entire National Forest System were appraised between these two dates. The only part of section 614 of CUFFA that provides holders with the opportunity to seek a second appraisal is found in section 614(b)(1)(B), where it speaks to the right of a cabin owner to a second appraisal under section 610 of CUFFA. Section 610, however, only applies to lots which, at the time of enactment of CUFFA, had not been appraised after September 30, 1995. As stated above, typical lots representing almost every recreation residence lot in all of the National Forest System had been appraised between September 30, 1995 and the date of enactment of CUFFA (October 11, 2000). Section 610 of CUFFA, which provides for the right of a second appraisal, is interpreted by the Forest Service to apply to those lots which were not appraised between September 30, 1995 and October 11, 2000, but instead may have been appraised since October 11, 2000. There are only rare instances in which this has occurred. The provisions of section 610 of CUFFA, and as expanded upon in section 33.7 of the final policy direction concerning the right of a permit holder to a second appraisal will, of course, also apply to any and all appraisals of typical lots in the next regularly scheduled appraisal cycle, which will begin as early as 2006. The right of a second appraisal will not apply to the establishment of a new base cabin user fee during the transition period, as that period is defined in section 614 of CUFFA and in Sec. 33.8 of the final policy direction.

The direction in Sec. 33.8 has been revised in the final directive to make it clear that the options described in paragraphs 1 through 3, and explained in further detail in Sec. 33.81 through 33.83, are the only means by which a new base cabin user fee is established during the transition period for those lots which were appraised between September 30, 1995 and October 11, 2000. Holders who request a new appraisal or the commissioning of a peer review will not have the right to request a second appraisal as provided for in section 33.7.

33.83Requests for Peer Review Conducted Under Regulations. This section of the proposed direction addressed the manner in which peer reviews may be requested, conducted, and used.

Comment. One appraisal organization requested that the Department provide immunity or indemnification for its role in facilitating a peer review.

Response. The Forest Service consulted with the Office of the General Counsel and was advised that the government has no authority to provide either immunity or indemnification to the appraisal organization as requested. The Forest Service and Office of the General Counsel consulted with the appraisal organization staff and counsel to discuss alternatives the organization could take absent government immunity or indemnification. The appraisal organization agreed to pursue alternative means to address concerns about potential liability of its members.

There were no changes made to this section in the final directive.

Comment. Two appraisal organizations suggested wording to clarify the type of review intended in section 33.83.

Response. The Forest Service agrees. Section 33.83 will be rewritten to more clearly articulate its purpose and identify the type of review contemplated in conformance with Uniform Standards of Professional Appraisal Practice (USPAP).

Comment. Some who responded to this section of the proposed direction suggested that one of the products of a peer review is to recommend that the appraisal being reviewed is so seriously flawed that it be discarded for use.

Response. The Forest Service disagrees with these comments. Paragraphs ``a'' and ``b'' in section 33.83 of the proposed direction identified actions that will be taken, or could be taken, as a result of the findings of a peer review. They identified that when a peer review results in a finding that the appraisal being reviewed was not conducted in a manner consistent with the regulations, policies, and appraisal guidelines, the authorized officer shall either establish a new base fee that reflects consistency with CUFFA
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regulations, policies, and appraisal guidelines, or provide the opportunity for the holders to request a new appraisal, in accordance with the provisions of CUFFA and these regulations, policies, and appraisal guidelines. If a new appraisal is requested and conducted, it would replace the existing appraisal and be used as the basis for establishing a new base cabin user fee. The Forest Service believes that these provisions in the proposed direction are consistent with the provisions for conducting and utilizing a peer review identified in section 614(c)(4) of CUFFA.

Comment. Some respondents suggested that one of the purposes or outcomes of the peer review should be to allow peers to recommend that the appraisal being reviewed be thrown out as just an incompetent appraisal. The provisions at Sec. 33.83 don't provide for that, and instead identify that the results of the peer review are only to determine whether the appraisal was conducted in a manner consistent with regulations, policies, or the appraisal guidelines being adopted pursuant to CUFFA.

Response. The two situations described above are not in conflict. If a peer review results in a determination that the appraisal was not conducted in a manner consistent with the regulations, policies, and appraisal guidelines pursuant to CUFFA, the authorized officer shall either establish a new base fee to reflect consistency with the regulations, policies, and appraisal guidelines or conduct a new appraisal. Either of these options has the practical effect of ``throwing out'' the original appraisal because it is no longer the basis for the fee determination.

Comment. Many comments were received concerning those provisions which outlined the manner in which a peer review will be conducted, and that it will be based upon the membership in a professional appraisal organization of the appraiser who conducted the appraisal being reviewed. The direction went on to identify criteria for identifying the assignment of an appraiser to conduct the peer review and whether the appraiser who conducted the appraisal being reviewed was or was not a member of one or more appraisal sponsor organizations of The Appraisal Foundation. Those who commented on these criteria said that this constitutes a bias in favor of The Appraisal Foundation, and that given the history of the role of The Appraisal Foundation in the creation of CUFFA, there is no reason in preferring The Appraisal Foundation over any other appraisal organization.

Response. The Appraisal Foundation has no individual appraiser members, only sponsor organization members. Therefore, no appraisal may be referred to TAF for peer review.

There were no revisions made to this section.
Forest Service Handbook 5409.12Appraisal Handbook

Chapter 60Appraisal Contracting

Section 66, Exhibit 03Required Specifications for Appraisal of Recreation Residence. This section containing exhibits 06 and 07 was coded in a single digit coding scheme when published for notice and comment. The section is now coded in a two digit coding scheme (sec. 66) to conform it to the other sections in FSH 5409.12, chapter 60, which were revised on February 23, 2005. The exhibits for recreation residences are now enumerated as exhibit 03 (previously exhibit 06) and exhibit 04 (previously exhibit 07) respectively.

This section contained the technical appraisal provisions and guidelines enumerated in section 606 of CUFFA. More than 1,500 comments were received addressing various provisions of the proposed appraisal specifications. Approximately 400 comments addressing specific sections of exhibit 06 were submitted via a fillintheblank standard form. Each of those issues raised on the standard form are addressed in the order in which the subject of those comments appears in the appraisal specifications in exhibit 06.

General Comment on Exhibit 03

Comment. There are inconsistencies in definitions and the use of language throughout the specifications, and they will invite problems in the future. The language should mirror CUFFA and there should be no repetitions.

Response. The specifications were developed to incorporate direction found in CUFFA and mirror the language found there. However, there are areas where either CUFFA was silent on a particular aspect of the appraisal process or additional clarification and direction were necessary. These specifications were developed to be as clear and concise as possible, yet provide consistent guidance for appraisers preparing recreation residence lot appraisals. If the purpose of agency rule making and developing agency direction and guidelines were to simply repeat statutory language, then it would serve no purpose at all. Doing so would only establish unclear and ambiguous rules, policies, and guidelines, adding confusion and frustration to the appraisal process. Therefore, where some of the language in CUFFA may be subject to varying interpretations or applications, the department's rules and the agency's directives and guidelines serve to further refine and define that language as needed to preclude inconsistency in exercising CUFFA's direction and authority.

Section C2.1(e) of Section 66, Exhibit 03. This section required that upon request by the government, during the 2year period following the date of the appraisal report, the Contractor will update the value as of a specified date.

Comment. Those who commented suggested that the value of the typical lot being appraised should be as of the date of the inspection of that typical lot and it should not change for 2 years. The comments suggested that CUFFA does not provide for this.

Response. CUFFA is silent regarding the need for an update within a specified period of time. Generally, the date of value will remain constant. However, there may be a need to retain this option to accommodate unforeseen circumstances. For example, if there is severe timber blow down, fire, or flood, it may be necessary to reappraise the typical lot affected by the natural disaster to recalculate the fee if a decision is made to reauthorize the permit. If this occurs, the date of value may change to reflect the negative impact of the natural disaster upon the permitted lot.

There were no changes made to this section.

Section C2.1(g) of Section 66, Exhibit 03. This section references appropriate places to find the definitions of terms.

Comment. Those who commented on this section suggested that the language in CUFFA should be included here, as an additional reference for definitions.

Response. The Forest Service agrees. Section C2.1(g) will be modified to read, ``Unless specifically defined herein or in CUFFA Section 604, USPAP, or UASFLA, definitions of all terms are the same as those found in ``The Dictionary of Real Estate Appraisal'' (Appraisal Institute), current edition. UASFLA shall take precedence in any differences among definitions.''

Section C2.2(b)(1) of Section 66, Exhibit 03. Item 7 in this section contained the language ``the adoption of an uninstructed assumption or hypothetical condition that results in other than `as is' market value will

FOR FURTHER INFORMATION CONTACT Julett Denton, Lands Staff, (202) 205- 1256.