GAO Blast Forest Service and BLM Land Exchange Program, Reveals Major Scams

Michael Johnsen

7/13/00

The General Accounting Office released a blistering attact on the Bureau of Land Management (BLM) and Forest Service Land Exchange Program in their report entitled "BLM and the Forest Service: Land Exchanges Need to Reflect Appropriate Value and Serve the Public Interest" (GAO/RCED-00-73, June 22) Wednesday, July 12, 2000 (www.gao.gov/new.items/rc00073.pdf).

The government auditors charge great mismanagement and abuse through the program, designed to improve national wilderness and recreation areas by trading "expendable" public land for desirable private property. Instead, the report demonstrates numerous examples where the program has shortchanged taxpayers by millions of dollars so egregious that the GAO concludes that Congress should ban the trades altogether.

What's occuring, instead of gaining valuable lands and clean up messy ownership boundaries, developers, timber companies and other business interests benefit at the public's expense from the manipulatiuon of complex real estate deals. A couple of examples:

* A private buyer obtained 70 acres of federal land for $763,000, and then sold the parcel the same day for $4.6 million. In another case, the same buyer acquired another 40 acres with a supposed value of $504,000 and sold it the same day for $1 million.

* The Forest Service gave Weyerhaeuser Co. a valuable, mature Douglas fir forest in exchange for a large, clear-cut parcel near Seattle. A couple of the private parcels had already been traded to Weyerhaeuser in an earlier deal, clear-cut then traded back to the Forest Service. The deal was stopped when a local Indian tribe and an environmental group challenged it in federal court.

* A deal between BLM and the Nevada development company, Del Webb in which the BLM accepted a the company's appraisal of 4, 776 acres of federal land at $43 million while removing a BLM appraise who protested the value. When the Department of Interior's inspector general announced plans to invesitgate the exchange, BLM contracted for a new, independent appraisal that set the value $9 million higher.

* A deal in which the Forest Service acquired an environmentally desirable $50 million parcel on Lake Tahoe in an exchange with developers who received large tracts of valuable federal land prime for development outside Las Vegas. When the developers broke two separate promises to find a buyer for unwanted buildings on the land, the Forest Service faced getting stuck with $300,000-a-year maintenance costs on the buildings, which it could not afford. A USDA investigation found that the developers had lied to the Forest Service about the nature of the water rights on the land, which were more restrictive than officials were told by the company.

* The government traded valuable federal land in the booming Las Vegas valley to developers for several private parcels, including the 46-acre Zephyr Cove estate on Lake Tahoe, Nev., but a combination of legal tactics by the developer and oversight by the Forest Service led to the signing away of the rights to a 10,000-square-foot mansion and other buildings on the newly acquired land. The developers then quickly resold the buildings to another buyer who fenced off the area with "private property" signs and proposed its own development plans expanding further onto Forest Service property. An investigation by the Agriculture Department found that the building purchaser gave the developers $300,000, exclusive use of the mansion for seven weeks of the year and two 20-year memberships to a Lake Tahoe golf club. The deal has since been mired in expensive legal proceedings.

* One of the most high profile trades involve land adjacent to Joshua Tree National Park in California, which has been cited as the number one "endangered national park" due to the proposed wast sump to be sited on this parcel of land. It would be the nation's largest garbage dump, just outside the park, and has faced repeated legal challenges due to the impact on the environment of the park and surrounding areas. The developers needed 3,500 acres of adjacent public land to build the dump. Through the Land Exchange prgram, the BLM traded that land to the developers for 10 parcels of private land, which were supposed to provide crucial habitat for the threatened desert tortoise, the endangered pup fish and other sensitive desert species. But all 10 parcels are bisected by the rail line that will be used to carry 20,000 tons of garbage a day to the dump. In addition, dump opponents have gathered evidence that at least some of the land traded by the developers to the public falls within a live bombing area of the federal Chocolate Mountain Gunnery Range. There are currently a couple of lawsuits to reverse the deal.

This is not the first time the program has been slammed by government investigators, but this report goes further than previous attempts to draw attention to the problem. Rep. George Miller (D-Calif.), who released the report, called on the Clinton administration to impose an immediate moratorium on land exchanges.

Specifically, the report points to several indications of a corrupt process which should be scrapped:

* Over the past 10 years, the Forest Service and BLM have traded 2 million acres of public land for 3 million acres of moslty private land, but despite a net gain of real estate, the public was ripped off because the government undervalued the public lands, overvalued the private lands or made trades which benefited the private holders more than the public.

* The BLM broke the law by selling public lands outright and keeping the money rather than returning it to the federal treasury as required.

* The agencies were found in violation of their own regulations which require that the private and public land in a trade must be of equal market value with the transaction benefiting the public and environment. Due to the relatively little experience with real estate on the federal side, the private property brokers, developers and corporations are able to scam the government with the public often losing out.

Of course, officials from the Forest Service and the BLM state than most of the transactions are not controversial and the prgram is too important to abandon especially because they do not have the money to buy land outright in a time of rising land prices. Agency officials site improved appraisal proceedures and training and reviews of land deals, but this still falls short for environmentalists who claim the report doesn't go far enough.

Representatives from the Seattle-based Western Land Exchange Project (WELP) environmental group, which has successfully challenged the Weyerhaeuser deal and other trades across the country, says the moratorium should be extended to land exchanges that are legislated by Congress at the request of private landowners. The trades can legally circumvent the environmental and public review process that the agencies are required to follow. Many of these land deals goes to Congress, where it is almost impossible to stop. WELP suggests that public lands should not be traded to private parties until these, and other issues, are resolved.