Auditors: U.S. loses millions in ill-advised land swaps

Representative George Miller, D-California, says the Bureau of Land Management has been tricked in land exchanges 79K/07 sec. AIFF or WAV sound

July 17, 2000
Web posted at: 12:31 p.m. EDT (1631 GMT)

In this story: Land-swap moratorium urged Government denies exchanged land undervalued Property bought for $763,000 sold the same day for $4.6 million RELATED STORIES, SITES

From staff and wire reports

WASHINGTON -- Nevada's biggest landlord has lost millions of dollars from ill-advised land exchanges, often buying land for more than it is worth and giving up land for less than its market value, according to congressional auditors. That landlord is the U.S. government.

More than half of the deals criticized in detail by the 16-state audit were in Nevada. All but one of those were Las Vegas-area exchanges that were the focus of three earlier investigations by the U.S. Interior Department.

VIDEO CNN's Rusty Dornin hears from all sides of the allegations Real 28K 80K Windows Media 28K 80K     RESOURCES Click here to download the GAO report on land exchanges (Acrobat Reader required) Click here to download Adobe Acrobat Reader     MESSAGE BOARD Environmental issues

The General Accounting Office, the investigative arm of Congress, recommended that lawmakers halt land exchanges by the government's two principal land agencies -- the Bureau of Land Management and the U.S. Forest Service -- because it said the swaps often do not serve the public interest.

Officials from the two agencies said the exchanges often are the way to obtain desirable property near federal land when owners are unwilling to sell unless they get other land in return.

The agencies said they had taken steps to improve the monitoring of land exchanges and address some concerns about land values raised by auditors.

Nevertheless, Representative George Miller, D-California, said the GAO findings released last week were "very disturbing." He sought a moratorium on exchanges of land between federal agencies and private parties.

"The Bureau of Land Management and the Forest Service just flat got snookered by these people because they don't do the hard, investigative work," he said. The two agencies "are failing to protect the public's wallet and their environment."

Ray Brady of the Bureau of Land Management says the agency has "never underevaluated the federal lands" 167K/15 sec. AIFF or WAV sound

"Land deals are being cut behind closed doors with tremendous special-interest pressure and limited public input," Miller said.

Stopping land swaps could thwart developers' plans to obtain hundreds of acres of vacant BLM land in the Las Vegas area. The agencies hold about 53.7 million acres of Nevada land, or about 75 percent of the state.

Some conservationists are wary of a moratorium, fearing it could mean missed opportunities.

"Sometimes, you can get a really attractive piece of public property by trading it out. So, some land swaps have clearly been in the public interest, and you don't want to have a moratorium too long because you miss out on the ones that would be in the public interest," said Carl Pope, executive director of the Sierra Club.

Rem Hawes, a BLM spokesman, said the report "makes some points that we think are warranted," especially on the need for closer monitoring of land exchanges.

But, he said, exchanges are "very critical to effectively manage the public lands."

"They allow us to improve ownership patterns of public lands in the West," where private land often is mixed with federal land in a checkerboard pattern, Hawes said. He said the agency conducts 60 to 70 land exchanges a year and most are without controversy.

Ray Brady, manager of lands and realty for the BLM's Washington office, insisted the agency has "never underevaluated the federal lands that we have used in land exchanges."

"Those appraisals are fully reviewed to assure that they represent the appropriate values," he told CNN.

Sierra Club executive director Carl Pope says "some land swaps have clearly been in the public interest" 128K/12 sec. AIFF or WAV sound

The GAO examined 25 of approximately 2,000 or more exchanges the two land agencies have conducted since 1989. The agencies acquired an additional 1 million acres from land exchanges during that period, valued at more than $1 billion, the GAO said.

The report cited a case in which a person obtained 70 acres of federal land in Nevada as part of an unidentified land exchange for $763,000 and on the same day, land records show, sold the property for $4.6 million.

The GAO said the case was investigated by the Interior Department's inspector general but gave no more details.

Other cases, all in Nevada, cited by the GAO included:

  •  Three exchanges in 1998 in which the land acquired by the government appeared to be overvalued by a total of $8.8 million because the appraisals "did not meet federal standards" and "were not supported by credible evidence."

  •  A land exchange on Lake Tahoe where the BLM obtained 47 acres of private land valued at $38 million, or $10 million more than auditors later determined it was worth. The initial appraisal did not take into account that the Forest Service had management interests on the land, reducing its value.

At other times, the GAO questioned whether land exchanges served the public interest.

The report cited one case near Elko, Nevada, in which the BLM gave up 140 acres of land that included prime winter habitat for antelope. In return the BLM received land near its field office for additional parking and storage areas. The GAO report noted that the BLM's own policy said that unimproved lands should not be exchanged for land for administrative purposes.

While both agencies have made improvements, the GAO concluded, "There is reason to question whether land exchanges remain a viable tool for acquiring nonfederal land, especially in rapidly developing real estate markets."

CNN Correspondent Rusty Dornin and The Associated Press contributed to this report.

IRS falls short in its accounting, report finds
February 29, 2000
Huckleberry land exchange ruled illegal
May 24, 1999
Everglade land exchange finalized
March 30, 1999

The United States General Accounting Office
Bureau of Land Management
USDA Forest Service
Sierra Club
Group calls for land exchange moratorium, ENN Daily News -- 10/14/98

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