July 16, 1997
CRS Report for Congress
Received through the CRS Web
Construction and Financing
Ross W. Gorte
Economist and Specialist in Natural Resources Policy
Environment and Natural Resources Policy Division
Forest roads provide access for using national forests, but are often opposed to
prevent environmental damages, protect roadless areas, and avoid the cost of building
and maintaining them. New road construction has declined by 75% in the past decade,
and road reconstruction has declined by half. However, the principal purpose of most
roads is still for access to timber, and many feel that granting credits to timber purchasers
for construction is a subsidy; proponents argue that the current system is efficient and
effective. The Administration has proposed eliminating the credit system.
Forest road construction and financing have involved contentious legislative debates
for many years. Roads are used for access to the national forests, especially for timber
harvesting, but also for fire control, recreation, and other uses.1 Road construction is also
opposed by some, for three major reasons. First, both during and after their construction,
roads can and often have caused significant environmental damages, particularly to water
quality and wildlife habitat. Second, roads necessarily eliminate roadless areas that some
people want to retain as pristine wilderness areas. And finally, roads are expensive to build
and to maintain.
The debate has traditionally focused on the construction of new roads within the
national forests — new roads are far more likely to be opposed. However, sometimes
uses require that existing roads be improved, rebuilt, or moved, an activity known as
reconstruction. Reconstruction is less likely to be opposed, because rebuilding roads is
much less expensive (per mile) and might improve the environment (e.g., by reducing
stream sedimentation) without entering roadless areas.
Roads are also needed for access across the national forests to inholdings and intermingled
nonfederal lands, but such roads are generally not built and funded by the federal government.
Congressional Research Service ˜ The Library of Congress
Recent debates have differed. As part of the forest health issue, inadequate road
maintenance has been identified as a significant cause of watershed deterioration.2 More
recently, road financing, particularly granting credits to timber purchasers for required
road construction, has been attacked as “corporate welfare,” and the Administration
proposed terminating the use of this financing tool in its FY1998 budget request.
The Current Road System
There are 377,810 miles of roads within the National Forest System, including
arterial, collector, and local roads.3 Arterial roads (about 7% of the total) are typically
two-lane paved roads serving large land areas, and typically connect with public
highways.4 Collector roads (about 19% of the total) are usually single-lane gravel roads
connected to arterial roads or public highways. Local roads (about 74% of the total)
typically connect use sites (e.g., campgrounds, trailheads, and logging sites) with collector
roads, arterial roads, or public highways; except for those serving recreation sites, most
are built for high-clearance vehicles (e.g., pickups and trucks). To protect the public
and/or the environment and to reduce maintenance costs, local roads may be closed to
traffic or obliterated after the principal use is completed. In addition, timber purchasers
may build temporary roads to meet their needs for harvesting and removing the timber.
The mileage of new roads built in the national forests has declined over the past
decade, proportional to the decline in timber sales. More than 2,000 miles of new roads
were built annually in the late 1980s, but fewer than 500 miles have been built annually in
the past 2 fiscal years. (See table 1.) Reconstruction has also declined, but only to about
half of the late 1980s level. (Prior to FY1986, the Forest Service did not distinguish new
roads from reconstruction in its reporting on the road construction program.)
Timber harvesting is the primary purpose for most new roads and reconstruction.
Since the Forest Service began identifying road construction purposes in FY1990, timber
has been the primary purpose for 97% of new roads and 87% of road reconstruction. The
majority of road construction and reconstruction is by timber purchasers under the
Purchaser Credit Program (PCP).5 (The Forest Service is authorized to require timber
purchasers to build the roads specified in the timber sale contracts and are generally
compensated for their work; the details of this program are described under road system
financing, below.) Timber purchasers have accounted for 93% of new roads and 81% of
reconstruction. (See table 1.) The other timber access roads and the recreation and
general purpose roads are constructed via road construction contracts under the Forest
Road Program (FRP).
See: K. Norman Johnson, et al., Forest Health and Timber Harvest on National Forests
in the Blue Mountains of Oregon: A Report to Governor Kitzhaber. June 15, 1995.
U.S. Dept. of Agriculture, Forest Service. Report of the Forest Service, Fiscal Year 1995.
Washington, DC: June 1996. P. 129.
U.S. Dept. of Agriculture, Forest Service. FY 1998 Budget Explanatory Notes for the
Committee on Appropriations. Washington, DC: n.d. P. 159.
Construction and reconstruction under the Purchaser Elect Program (PEP) are typically
reported with the PCP, and are combined in table 1; PEP operations are described under road
system financing in this report.
Table 1. New Roads Built and Roads Reconstructed
in the National Forest System (in miles)
Source: U.S. Dept. of Agriculture, Forest Service. Budget Explanatory Notes for Committee on
Appropriations. Washington, DC: annual series.
Road maintenance allows continued use of roads over time. Some maintenance
results from traffic use, but some (e.g., clearing culverts and roadside brush, removing
fallen rock, and repairing signs and bridges) results simply from the passage of time. Only
38% of the national forest road system (144,973 miles) was maintained at levels consistent
with current uses in FY1996; this is a decline from 47% of the system fully maintained in
FY1990. As of FY1994, 20% of the system (75,348 miles) was closed to use, of which
40% (29,888 miles) was fully maintained. The remaining roads (both open and closed) are
maintained at less than necessary to provide for current uses. Although this suggests a
maintenance backlog, no backlog has been identified in either the annual Report of the
Forest Service or the agency budget requests.
Road System Financing
The principal authorities for financing forest road construction and maintenance were
enacted in the 1964 National Forest Roads and Trails Act.6 The two primary financing
mechanisms for construction activities, from §4 of the Act, are annual appropriations and
requirements on timber purchasers with amortization in contracts. (For financing
purposes, new road construction and road reconstruction are essentially indistinguishable,
and will be combined as “construction activities” in this section.) These two mechanisms
can also be used for road maintenance, although requiring deposits to a special account
by timber purchasers for their share of road maintenance is authorized in §6 of the Act,
and is widely used.
Act of Oct. 13, 1964; P.L. 88-657; 16 U.S.C. 532-538.
Annual Construction Appropriations. The Forest Service receives annual
appropriations for road construction. This funding is used in two ways: for construction
activities through direct contracts, and administering such contracts (FRP program); and
for administering timber purchaser construction activities (PCP program). Total annual
appropriations for road construction have declined significantly — by nearly 50% — over
the past decade, as shown in table 2, but the decline in appropriations has been less than
the decline in the mileage of new roads and reconstruction, shown in table 1.
Table 2. Financing for Road Construction and Maintenance
in the National Forest System (in millions of dollars)
Source: U.S. Dept. of Agriculture, Forest Service. Budget Explanatory Notes for Committee on
Appropriations. Washington, DC: annual series.
The mix of funding — for construction contracts, and for administering both FRP and
PCP construction — has fluctuated widely over the past decade, although the general
trend has been downward. The substantial expenses for administering purchaser (PCP)
construction — nearly $15,000 per mile (for construction new roads plus reconstruction)
— occur because the Forest Service plans, designs, and surveys the construction, and then
inspects the purchasers’ work to ensure that the standards have been met. Road planning
is typically done during the integrated land and resource management planning required
for the national forests by the National Forest Management Act of 1976 (NFMA).7
Detailed planning, designing, and surveying then occur as part of the planning and
preparation of specific activities, such as a timber sale contract.8
Act of Oct. 22, 1976; P.L. 94-588. Actually, NFMA was primarily an amendment to the
Forest and Rangeland Renewable Resources Planning Act of 1974 (RPA; Act of Aug. 10, 1974;
P.L. 93-378; 16 U.S.C. 1600-1614); RPA required the plans, while NFMA provided substantial
guidance on how to do the planning.
In contrast, access roads across the national forests are planned and designed by the person
Purchaser Credit Program (PCP). The Forest Service is authorized by §4 of the
1964 Act to acquire, construct, and maintain forest roads “(2) by requirements on
purchasers of national forest timber and other products, including provisions for the
amortization of road costs in contracts ...”. (The extent to which this authority is used for
road maintenance, if at all, is not reported by the Forest Service.) To implement this
authorization, the Forest Service grants credits to timber purchasers equal to the estimated
cost of building the specified roads. The purchasers can then generally use the credits to
pay for the timber being harvested, although some credits may be unusable (ineffective).9
The use and treatment of purchaser credits has varied over time. Until 1974, there
was no congressional restriction on the agency for granting road credits. Then, Congress
required annual appropriations for the credits, by defining them as requiring “budget
authority.”10 This requirement was altered in the FY1982 Interior Appropriations Act by
deleting the reference to “budget authority” and replacing it with a direction to establish
limits on the amount of credits which can be obligated in annual appropriations acts.11 The
authorized level for FY1982 was $242.5 million; in recent years, the authorized level has
only been $50 million annually. As shown in table 2, purchaser road credits actually used
(excluding ineffective credits) have declined by about half over the past decade.
One significant aspect of the purchaser credit program is that the credits used are now
counted as revenues, for the purpose of 25% revenue-sharing. Using the credits does not
result in cash revenues, however; rather, it is an exchange of timber assets for the
construction of road assets. The counties argued that Forest Service decisions to give
timber to purchasers for road construction was reducing timber sale revenues, without the
counties’ being a party to those decisions; Congress agreed, and in 1976 (§16 of NFMA)
directed that purchaser road credits be counted as timber sale revenues. Thus, revenuesharing is actually more than 25% of cash revenues.12
or organization proposing the road. The Forest Service has the authority to approve or deny the
proposal, or to suggest modifications (including changes for cooperative locations and funding for
mutual benefit); however, the only agency cost for such roads is the expense to review the permit.
The credits cannot be used when the cash payments for the timber would be below the cash
minimum (the “base rates”) for the timber. (Unusable credits are called ineffective.) This situation
is complicated by another Forest Service program, known as stumpage rate adjustment, under
which the agency adjusts timber prices in existing contracts based on changes in lumber prices.
If lumber prices fall, some credits may become ineffective on relatively low-priced sales (including
credits which have already been used, thus requiring additional cash payments); on the other hand,
if lumber prices rise, previously ineffective credits might become effective.
This was done in §10 of RPA (P.L. 93-378) by reference to the Act of July 12, 1974 (the
Congressional Budget and Impoundment Control Act of 1974; P.L. 93-344).
Act of Dec. 23, 1981 (Dept. of the Interior Appropriations, FY1982); P.L. 97-100; 95 Stat.
Under the Act of May 23, 1908, the Forest Service is required to return 25% of revenues
to the states for use on roads and schools in the counties where the national forests are located.
This payment was intended to substitute for property taxes for the tax-exempt national forests.
NFMA expanded the definition of receipts to include purchaser road credits and deposits to the
Knutson-Vandenberg (K-V) Fund; deposits to the Salvage Sale Fund were added later. Because
Purchaser Elect Program (PEP). This program was created in 1976 (§14(i) of
NFMA) to allow small business (except in Alaska) to elect to have the Forest Service build
the roads specified in the timber sale contracts. In such cases, the purchasers’ payment for
the timber includes cash payments equal to the credits; these funds are deposited in a
special account which the Forest Service can use (without further appropriation) for
contracting the road construction. The program has typically accounted for about 10%
of purchaser credits, and the accomplishments are usually reported with purchaser credit
work; in table 2, PEP funding is included in PCP funding.
Annual Maintenance Appropriations. The Forest Service receives annual
appropriations for road maintenance. This funding has been stable for the past several
years, but is more than 15% below the peak appropriations of $96.4 million in FY1990.
Because cooperative deposits have declined by a greater percentage, annual appropriations
have become relatively more important, accounting for nearly 2/3 of road maintenance
financing in the past 3 years. In addition, the proportion of the road system that is fully
maintained has been declining. Although the road system grew 4% between FY1990 and
FY1995, the fully-maintained mileage declined by 16%, from 47% of the system in
FY1990 to only 38% of the system in FY1995.
Cooperative Deposits. Under §6 of the 1964 National Forest Roads and Trails Act,
the Forest Service is authorized to require purchasers to make deposits to a special
account that is used for road maintenance after the timber sale is completed.13 As shown
in table 2, the use of cooperative deposits over the past 3 years is substantially below the
average use in the late 1980s and early 1990s; this is probably related to the decline in
timber sales, although the timber sale decline began earlier. Unless timber sales increase,
it seems likely that cooperative deposits by purchasers for road maintenance will either
stabilize or continue to decline.
Road Closure and Obliteration. In addition to road construction and maintenance,
the Forest Service closes some roads to vehicular traffic (seasonally, temporarily, or even
permanently), usually for environmental or resource protection (e.g., to protect wildlife
habitat). The Forest Service also obliterates some roads after the relevant use has been
completed. Obliteration not only returns the area to resource production (e.g., timber
growth), it also eliminates the need for further maintenance. Obliterating roads is
expensive, however, apparently costing about as much (per mile) as road reconstruction;
data on the extent and cost of road obliteration are not reported.
revenue-sharing payments are based on non-cash “revenues” (road credits) and on unavailable cash
revenues (K-V and Salvage Fund deposits), the payments often exceed the available cash on some
national forests (effectively requiring transfers from other forests with sufficient cash revenues).
See: U.S. General Accounting Office. Forest Service: Distribution of Timber Sales Receipts
Fiscal Years 1992-94. GAO/RCED-95-237FS. Washington, DC: Sept. 1995.
Under various other authorities, dating back to 1913, cooperative deposits can be used for
a variety of purposes, including timber scaling, fire protection on non-national forest lands, and
other purposes. However, road maintenance deposits by timber purchasers are the principal source
and use of cooperative deposits.