One third of the Nation's land : a report to the President and to the Congress / by the Public Land Law Review Commission.

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must place full reliance and faith in the administrator to renew periodically the authorizing instrument, interjecting an unnecessary risk and uncertainty into the user's plans and operations. Such insecurity may make it difficult for users to obtain financing for development or improvement. In many situations, even where substantial investments will be made, Federal agencies have made a practice of permitting occupancy uses under an annual permit system in which the permits are generally renewed every year. The permittees frequently have come to treat the rights to use the land as virtually perpetual, so long as conditions of the permit are met. This practice results in the permit taking on a value which is included in the price upon any sale of the privately owned improvements. Government attempts to retrieve the property by nonrenewal of annual permits are plagued with controversy and claims for compensation which the permittees believe is due them. The Commission recommends that legislation be enacted to provide statutory authority for all Federal land managing agencies to issue permits and leases for terms which will assure a reasonable time for amortization of the related investments, and that the Federal agencies should be encouraged to fix terms adequate for each purpose. The Commission has also found that certain existing acreage authorizations are not adequate to accommodate some occupancy uses on public lands. For example, the 80-acre limitation on occupancies authorized under term permit on national forest land 3 are unrealistic and inadequate to encompass ski slopes and other areas directly related to a single integrated operation. Existing law should be revised to make the agencies' authority more flexible or eliminate the acreage limitations altogether. However, Congress may wish to provide that where a proposed project exceeds a specified dollar or acreage amount, or the proposed term exceeds a specified length of time, it should be referred to Congress for approval. This would permit Congress to consider each phase of a particularly large project, such as the Mineral King project in Sequoia National Forest, in order to protect environmental values. Where a permit, lease, or other interest is terminated for the Government's convenience before the expiration date, compensation should be provided. This issue is illustrated by the controversy over whether compensation should be paid when vacation home permits are terminated. Consideration must be given to the distinction between "term" and "annual" permits. We consider that a term permit is in effect a lease, in that it is a right to use land for a stated period 3 16 U.S.C. §497 (1964). 222 of time, after which the property is fully recovered by the lessor. Consequently, the permittee should amortize the cost of his improvements over the period of his term permit. The Forest Service has followed a policy of compensating for the termination of recreation residence term permits at the full appraised value. With respect to the nonrenewal of annual permits, however, the Forest Service, which issues virtually all such permits, cannot under existing law compensate for improvements. Permittees have been offered term permits which would qualify them for compensation if they were terminated. Many persons have accepted, but many also have refused, believing that the annual permit which has been renewed from year to year gives them a more permanent tenure than would a term permit. The Commission believes that it is equitable to provide compensation when a term permit is terminated before its expiration date for the convenience of the Government. However, because it would be unfair to the national public, as taxpayers, we do not favor compensation at full appraised value. Rather, we think such compensation should be adjusted in proportion to the time remaining in the permit period. Occupants using public lands under permit or lease, and who are dependent on such lands, should be given preference to purchase the land if it is offered for sale. The Townsite Laws and the Small Tract Act give varying kinds of preference purchase rights to current occupants.4 The nature of the occupancy use made of the land varies greatly in the level of investment, the length of time the land is needed by the user, and the im- 4 43 U.S.C. §§711-731, 682a-682e (1964).