Government land swaps: A bad deal for the rest of us?

Where private companies once made millions on land swaps with government, public citizens are now wising up, putting more pressure on these back room deals.

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Lochsa River

Where private companies once made millions on land swaps with government, public citizens are now wising up, putting more pressure on these back room deals.

For Western Pacific Timber and its then-President and CEO Tim Blixseth, the spring of 2006 promised big business.

The company had recently purchased 39,371 acres in the Clearwater National Forest in the Upper Lochsa, on the Idaho-Montana border. The Lewis and Clark trail winds through here. The rivers and woods are home to threatened steelhead, bull trout and Canada lynx. Foresters and conservationists had wanted to consolidate ownership of the checker-boarded territory for years, and Blixseth knew it.

So he gathered a handful of U.S. Forest Service managers in a corner office of Western Pacific's Boise high-rise and offered to exchange the newly purchased Upper Lochsa land for part of the Payette National Forest around McCall, a popular Idaho ski town.

Blixseth had reason to be optimistic. In the early 1990s, he and his partners threatened development and ultimately traded 101,000 private acres north of Yellowstone National Park for $25 million and 47,000 public acres of prime Montana timberland. Blixseth made tens of millions of dollars from subsequent timber and land sales, and used a portion to build the Yellowstone Club, an exclusive resort that he later lost in a divorce.

But the climate for such swaps has changed since the early days.

In the '80s and '90s, the Forest Service and the federal Bureau of Land Management lost money and crucial habitat in major land exchanges that favored private parties. Agencies are required to ensure that transactions "serve the public interest," with the new land's value at least equal to that of the land exchanged.

But the statutes are ambiguous, and speculators can make huge profits from swaps; Tom Chapman, a notorious Colorado developer, made millions this way. Increased scrutiny from both the government and the public over the last decade has forced the feds to get better at vetting deals, and it has pushed those who initiate them to come up with more favorable proposals.

Now, six years later, Western Pacific is still slogging through the federal review process. The federal Payette managers rejected its initial proposal, saying it didn't serve the public interest, and the company has had a hard time convincing people that it's a good idea to trade locally cherished hunting and fishing grounds for land elsewhere in the state. A final decision is expected in November but will probably be delayed.

The era of easy land exchanges appears to be over.

"There's concern about giving up public lands because they're so important," says Forest Service Chief Tom Tidwell. "The public doesn't want to give up any part of the national forest even if there's strong acreage to gain."

Large businesses or private landowners initiate most swaps to improve access, acquire property leased from the government or simply consolidate holdings.

Exchanges can be conducted through the local office of the relevant federal land agency, or through legislation. Administrative swaps are subject to the National Environmental Policy Act, which requires officials to review environmental impacts and allow public input. The legislative route rarely circumvents those hoops and doesn't necessarily speed up deals. Proponents draft a bill, find a congressional sponsor and hope for a favorable vote in D.C. But exchanges can be controversial, and politicians are often reluctant to sign on.

Swaps started getting stickier in 2000, when the Government Accountability Office (GAO), Congress' nonpartisan research arm, released a fiercely critical report. It discovered that although the Forest Service was getting more acres than it gave away, those acres were worth about half as much as the land exchanged.

The BLM also traded for less valuable private parcels, and sometimes ignored the findings of its chief appraiser. In three 1998 exchanges, the agency acquired land in Nevada that was overvalued by $8.8 million. The GAO even found one private party who acquired federal lands and quickly sold them for two and six times more than their government-assessed value.

The GAO concluded sternly, "'Congress may wish to consider directing both agencies to discontinue their land exchange programs."

"For the most part, I think people were less aware that these deals were happening," says Janine Blaeloch, founder and director of the Western Lands Project, a nonprofit that watchdogs land exchanges. The agencies "treated these as real estate transactions, and even though they were supposed to follow NEPA, (private parties) were able to take advantage because nobody really paid attention to them."

A chastened BLM moved its appraisers from district offices to the national office to encourage more objective decisions. The Forest Service, meanwhile, gave its national office more opportunities to scrutinize exchanges, and revised its handbooks to better guide managers through the complicated process.

By 2009, the GAO reported that land-swap management had improved significantly in terms of guaranteeing public benefits. Extenuating circumstances contributed, as budget cuts forced agencies to be more selective. During the '90s, for example, the Forest Service alone averaged 115 exchanges a year. Meanwhile from 2004 to 2008, the GAO noted just 250 "completed, pending, or terminated land exchanges" handled by both that agency and the BLM.

"Land exchanges are discretionary, so just because someone walks into their offices with a great idea doesn't mean they're obligated to do anything," says Adam Poe, president of the Western Land Group, who has facilitated swaps for the last 30 years. "Getting their attention is tough."

Lawsuits and court rulings have added more oversight.

In 2010, for example, the 9th Circuit Court of Appeals, which has jurisdiction over half of the West, halted a deal in Arizona, in which the BLM had accepted 7,300 acres of private land from Asarco in exchange for 10,000 federal acres that contained valuable wildlife habitat. The BLM had decided that the mining company would have gained the mineral rights to the land anyway –– reasoning that the court dismissed because mining on public land is not guaranteed, especially when environmental impacts are involved. After 18 years, the swap is still hobbling along. The BLM is amending its environmental study of the deal in another attempt to get it through.

Underscoring this deeper bureaucratic and judicial scrutiny is citizen involvement, says Vicky Wessling, national land-adjustment program manager for the U.S. Department of Agriculture. "I have seen a significant change in public interest and response to federal actions due to mass media." Comment periods for NEPA have not changed, for example, but the number of comments has increased with a more informed local public, says Wessling.

Recent exchanges do show signs of providing greater public benefit.

The Nature Conservancy is trying to consolidate checker-boarded grasslands and protect black-footed ferret habitat in South Dakota through a swap with the Forest Service. In California, Poe's group is orchestrating a deal in which the Forest Service will receive about 1,550 acres of intact forest for giving 20 acres of national forest to a ski resort that has leased it since 1954. Residents of Colorado's Garfield and Pitkin counties, meanwhile, are circulating a petition on to stop the trading of public land that isn't already listed for disposal.

These days, says Blaeloch, "the Lochsa trade is sort of an anomaly. It's very reminiscent of the trades we were looking at in the beginning."

Objections to the Lochsa deal are numerous.

Eighty-three percent of Idaho County, which contains Western Pacific's land, is public land already, so losing more private land angers local politicians and their anti-government constituents. An option to trade land from the Clearwater's Palouse District, 200 miles west of the Lochsa, has drawn protest from a group of retired rangers, who resent giving a timber company land they once managed for wildlife habitat.

"'We've got cougars, turkeys, quail, you name it –– this district should be a shining example to educate people of what the Forest Service is capable of doing. That's why we got into it. We love this land," says retired forester John Krebs.

Critics of swaps have been quick to take advantage of technology. Ray Payton of Riggins, Idaho, who is fighting to keep nearby woods from the bartering table, funds a website for documents obtained through Freedom of Information Act requests. He also provides instructions for submitting comments to state legislators, county commissioners and the Forest Service.

Such efforts have borne fruit. The Rocky Mountain Elk Foundation withdrew support from the Lochsa exchange last December after protest from its Idaho members over the loss of prime elk habitat.

And Western Pacific has had to make concessions. After its Payette proposal was rejected, it approached the Idaho Panhandle National Forest about land around Lake Pend Oreille and was again spurned for the sake of the "public's interest." The Clearwater National Forest, however, still favored some kind of deal and began to consider other options. "We had the opportunity to acquire some very high-value public lands," says then-Supervisor Tom Reilly.

Finally, the Clearwater came up with five alternatives. Its preferred alernative would trade about 14,000 acres of the Clearwater, Nez Perce and Idaho Panhandle forests, accompanied by a cash payment to Western Pacific from the Land and Water Conservation Fund. But that still upsets Idaho County, so officials floated a sixth option that would trade Western Pacific an equal amount of land within Idaho County. Meanwhile, the company offered to give up development rights on the land it would receive to appease Payton and other locals.

"If people have this fear of Western Pacific Timber for whatever reason, we like to roll up our sleeves and address it," says General Counsel Andy Hawes. "We've got kind of a plan B, but we just want to be in the timber business in Idaho."

The deal continues to unfold in its unpredictable, tragicomic way.

If current Clearwater Supervisor Rick Brazell selects the Idaho County option, it will further delay the process. The private land involved in the acre-for-acre exchange is far less valuable than the timber-rich national forest land it would be swapped for, making it illegal to process administratively; only Congress would have the power to give it final approval.

If it gets that far and still doesn't work out, says Hawes, "then we can honestly say we gave it our best shot."

This article was originally published in the September 12, 2012 issue of High Country News.  


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