Federal Land Management: BLM and the Forest Service Have Improved Oversight of the Land Exchange Process, but Additional Actions Are Needed
Published: 2009-06-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Bureau of Land Management (BLM) in the Department of the Interior (Interior) and the Forest Service in the Department of Agriculture (USDA) manage millions of acres of public land. To enhance land management and fulfill other public objectives, they acquire and dispose of land using exchanges--trading federal lands for lands owned by willing private entities, individuals, or state or local governments. GAO and others have raised concerns about whether the public interest has always been served in these land exchanges. GAO was asked to (1) analyze the number, trends, and characteristics of BLM and Forest Service land exchanges and (2) determine the effectiveness of agency actions to address previously identified key problems. GAO interviewed and surveyed agency officials, analyzed agency data on recent exchanges, and reviewed documents on a nongeneralizable sample of 31 land exchanges representing at least 85 percent of the acres that agencies acquired, or plan to acquire, during the time of GAO's review.
section_title: What GAO Found
paragraphs: From October 2004 through June 2008, BLM and the Forest Service processed 250 completed, pending, or terminated land exchanges. Completion times for exchanges within this period varied widely, from 2 months to more than 12 years. These exchanges involved 628,429 federal acres and 621,588 nonfederal acres. According to agency officials, the number of exchanges since 2000 has generally declined because of the availability of qualified staff and funding and the lower priority given to land exchanges compared with other activities. Of the 250 land exchanges, 47 were facilitated by third parties, 9 were conducted in multiple phases, and 20 were specifically legislated by Congress. GAO, the agencies' inspectors general, and others identified problems in the agencies' land exchange programs and have made recommendations to correct them. The agencies have taken actions to address most of these problems, but the effectiveness of the actions has been mixed. Specifically: (1) According to most agency officials surveyed, headquarters reviews at least somewhat improved exchange quality; often ensured that exchanges complied with laws, regulations, and policies; and were processed properly. However, the reviews did not always document problems or indicate their resolution, making the process less transparent. (2) BLM stopped using interest-bearing accounts outside of the U.S. Treasury, according to agency officials, and issued new guidance on managing ledgers, which are used to track land value imbalances over time in multiphase exchanges. However, the agency is not always adhering to this guidance and, therefore, cannot fully know how much is owed. Specifically, BLM cannot be assured that the $2.6 million land value imbalance due to the United States, recorded in its ledgers as of June 30, 2008, is accurate. (3) Both agencies issued new guidance to require full disclosure of the relationship between a third-party facilitator and other parties to an exchange. But the guidance does not clearly define third-party facilitators and officials do not consistently apply the disclosure policy. Without consistent application, the agencies fail to obtain critical information and potentially risk losing the ability to control the exchange process. (4) The agencies updated their exchange guidance to provide clearer direction on exchanges and incorporated it into their training. However, staff generally are not required to attend this training, and the agencies do not systematically track staff participation. Therefore, the agencies cannot ensure that realty staff develop and maintain necessary skills. The agencies took steps to improve appraisal timeliness, but the process, particularly for BLM, continues to delay some exchanges, officials said. Neither agency has a national strategy to guide land transactions, nor does either track all costs of individual exchanges. Developing national strategies and tracking the costs of individual exchanges will enhance the agencies' ability to make informed decisions in pursuit of shared goals.

section_title: Letter
paragraphs: The Bureau of Land Management (BLM) and the Forest Service administer  millions of acres of public land, and they continue to acquire and dispose  of land in order to enhance federal land management, meet the needs of  the public, and fulfill other public objectives. To acquire and dispose of  lands, BLM and the Forest Service have long used land exchanges— trading federal lands for lands that are owned by private entities,  individuals, states, or local governments who are willing to trade. Although  BLM and the Forest Service have broad discretionary authority to conduct  land exchanges with nonfederal parties, some land exchanges are  specifically legislated by Congress.
Generally, exchanges follow several required steps, including, among  other things, assessing the public benefit, surveying the parcels,  conducting resource and environmental analyses, determining market  value, and assuring clear title to the land. In some cases, land exchanges  are terminated before completion for a variety of reasons, such as public  opposition. Agency realty specialists, assisted by many other experts, such  as cultural and natural resource specialists, are responsible for processing  these exchanges, and nonfederal landowners may hire third-party  facilitators to assist. After agreeing to initiate a proposed exchange with a  nonfederal party, the agencies must publish a notice of exchange proposal  that, among other things, identifies the parties, describes the lands, and  invites public comment. Exchanges can be straightforward—exchanging  one land parcel for another—or more complex, such as multiphase  exchanges where multiple parcels are exchanged over time to complete  the exchange. If these exchanges occur over time, BLM regulations require  the establishment of a land exchange ledger account to track the land  value imbalances.
The agencies’ land exchange programs have often been controversial, and  in the past, we and others have identified many concerns about how the  agencies manage these exchanges. For example, the agencies have not  always ensured that (1) the public interest was well served by the  exchanges and (2) a third party facilitating an exchange has fully disclosed  its interests in the exchange. The agencies have taken actions to address  these problems, such as establishing headquarters review teams for land  exchanges and revising policies and procedures. Although the agencies  have instituted a number of reforms, the effectiveness of these actions has  not been assessed.
In this context, you asked us to (1) analyze the number, trends, and  characteristics of BLM and Forest Service land exchanges, and (2)  determine the actions BLM and the Forest Service have taken to address  previously identified key problems and the effectiveness of these actions.
To conduct our work, we reviewed relevant documents and interviewed  BLM and Forest Service officials responsible for land exchanges at the  field, regional or state, and headquarters offices, and other interested  parties, including third-party facilitators and a state land trust official. To  determine the previously identified key problems the agencies faced in the  process of exchanging lands, we reviewed GAO reports, inspector general  reports from the Department of the Interior (Interior) and the Department  of Agriculture (USDA), The Appraisal Foundation, and BLM and Forest  Service reviews. In addition, at our request, the agencies provided  information on land exchanges processed from October 1, 2004, through  June 30, 2008, including those that were pending, completed, or  terminated. We reviewed a nongeneralizable sample of 31 exchanges,  primarily selected because they represented 85 percent of the acres that  the agencies have acquired or plan to acquire over the period we reviewed.  For each land exchange in the sample, we reviewed key agency  documents, such as headquarters and regional reviews of exchanges, to  assess the agencies’ actions to address previously identified key problems.  In addition, we surveyed the land exchange program managers (program  lead) in each of the 10 BLM state offices and the 9 Forest Service regions  that had processed land exchanges over the period we reviewed to better  understand the characteristics of land exchanges, previously identified key  problems, and the impact of agency actions to address these problems. A  more detailed description of our scope and methodology is presented in  appendix I.
We conducted this performance audit from March 2008 to June 2009 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Background
paragraphs: BLM and the Forest Service manage over two-thirds of the nation’s public  lands. Both agencies manage their lands for multiple uses, including  providing sustained yield of renewable resources, such as timber, fish,  wildlife, and forage for livestock, and supporting recreation.
BLM, within Interior, manages more land—265 million acres—than any  other federal agency. The land BLM manages is primarily located in 12  western states, including Alaska. With a total budget of about $1 billion,  BLM also administers 700 million acres of subsurface mineral estates  (rights) throughout the nation. BLM staff in headquarters, its 12 state  offices, and 144 field offices nationwide process land exchanges.
The Assistant Director, Minerals and Realty Management, in the BLM  headquarters office; the headquarters Lands, Realty, and Cadastral Survey  staff; and their counterparts in the state and field offices are responsible  for the land exchange program, among other activities. BLM has a  headquarters land exchange program lead who oversees the land  exchange program, and the BLM state offices have an exchange program  lead with oversight responsibility. In addition, the BLM Deputy Director  and Interior’s Office of the Solicitor have oversight responsibilities for  land exchanges.
BLM operates the National Training Center in Phoenix, Arizona, which, in  conjunction with the Forest Service, offers courses on land management  for both agencies’ staff. Three courses cover land exchanges in particular,  among other things, for the two agencies’ field realty staffs.
The Forest Service, within USDA, manages 193 million acres of public land  throughout the United States. Forest Service staff, located at headquarters,  9 regions, 155 national forests, and 20 grasslands, process land exchanges.
At headquarters, the Forest Service’s Director of Lands and Realty  Management, the Assistant Director for Land Ownership Adjustment, and  the National Program Leader for Land Adjustments (the headquarters  exchange program lead) are responsible for the land exchange program,  among other land transaction activities. Each region has a Director of  Lands and a land ownership adjustment program manager (the regional  exchange program lead) who oversee the work of realty staff at the forest  level. In some cases, forests have in-house realty staff who conduct land  exchanges; other forests have pooled realty staff from more than one  forest in order to provide special services, such as land exchanges in more  than one forest.
subsections: section_title: Statutory Authority
paragraphs: The Federal Land Policy and Management Act of 1976 (FLPMA), as  amended, authorizes both BLM and the Forest Service to exchange federal  land for nonfederal land, when certain conditions are met, including the  following:    The values of the federal and nonfederal lands to be exchanged must be  equal, or if they are not equal, the values must be equalized by a cash  payment so long as the payment does not exceed 25 percent of the federal  land’s value. The cash payment should be reduced to as small an amount  as possible and, in certain circumstances, can be waived.
The cognizant agency must determine that the public interest will be well  served by the exchange.
The lands to be exchanged must be in the same state.
Titles for the lands to be exchanged must be issued simultaneously (unless  all parties to the exchange agree otherwise).
Land acquired within the boundaries of the national forest system,  national park system, or any other system or area established by Congress  immediately becomes part of that system.
While BLM relies primarily on FLPMA to conduct exchanges, the Forest  Service has several other exchange authorities.
In addition to BLM’s and the Forest Service’s broad discretionary authority  to conduct land exchanges, Congress sometimes enacts specific legislation  that requires either agency to proceed with or provides authority to engage  in a particular land exchange. This specific legislation may include  provisions that alter the processing of the land exchange. For example, in  describing these legislated exchanges, BLM’s handbook advises that  special legislation may prescribe certain aspects of the exchange process;  allow for transactions not authorized under FLPMA (e.g., an interstate  exchange); or simply direct that an exchange transaction be completed.  The handbook states that transactions should be handled in a manner  consistent with the specific legislation and, where guidance is not  specified in the legislation, in conformance with nationally recognized  appraisal standards and the regulations to the extent they apply. The  Forest Service handbook also notes that legislated exchanges often  include provisions that conflict with standard exchange authorities or  regulations.
section_title: Types of Land Exchanges
paragraphs: A land exchange involves the conveyance of public land or an interest in  public land from a federal agency to a nonfederal party in return for  desired nonfederal land that serves the public interest. These exchanges  may be simple or more complex, such as a multiphase exchange.  Specifically, a simple exchange may be a two-party transaction involving a  single, nonfederal landowner. The agency provides a parcel of federal land  (or interest in land) in exchange for a parcel of nonfederal land (or interest  in land) in a single exchange transaction. The parcels are either of equal  value, or either party may provide an equalization payment.
BLM and the Forest Service conduct multiphase exchanges differently. At  BLM, land values exchanged in each phase do not necessarily need to be  equal, but at the final closing the land value must be equal or must be  equalized with a cash payment. BLM uses records, called land exchange  ledgers, to track the value conveyed by each party in the exchange and the  balance due to the federal government or the nonfederal party after each  phase. In contrast, the Forest Service requires that each phase of a  multiphase exchange stand alone as equal in value. Furthermore, Forest  Service regulations do not provide for the use of ledgers. Both agencies’  multiphase land exchanges can range from those that involve multiple  parcels under the same ownership, to those with multiple owners and  involving third-party facilitators—private or nonprofit individuals or  entities that assist nonfederal landowners by participating in the exchange  and negotiating with the federal government to complete the exchange.
In addition to exchanging land for land, the Forest Service has the  authority to exchange land for timber. In land-for-timber exchanges, the  agency acquires nonfederal land in exchange for the rights to federal  timber (the nonfederal party is authorized to cut and remove an equal  value of timber from a national forest). These exchanges may involve two  parties, the Forest Service and a nonfederal party, or in the case of  tripartite exchanges, three parties, when a timber sale contractor  participates in the transaction.
section_title: The Exchange Process
paragraphs: BLM and the Forest Service follow similar steps to process an exchange,  including receiving or making a proposal for an exchange, conducting a  feasibility analysis, signing a nonbinding Agreement to Initiate (ATI),  obtaining appraisals of the land, conducting resource and environmental  analyses, deciding on whether to complete the exchange, and preparing  title and closing documents. The National Environmental Policy Act of  1969 (NEPA) generally requires the agencies to conduct environmental  analyses. Under NEPA, agencies generally evaluate the likely  environmental effects of projects they propose using an environmental  assessment, or if the projects likely would significantly affect the  environment, a more detailed environmental impact statement is prepared.  However, if the Forest Service determines that an exchange falls within a  category of activities the agency has already determined has no significant  environmental impact—called a categorical exclusion—then the agency  generally need not prepare an environmental assessment or an  environmental impact statement.
BLM’s land exchange handbook outlines a series of 26 major steps in the  land exchange process. The Forest Service’s handbook provides a more  detailed series of implementation schedules for various types of  exchanges (i.e., a land for land exchange or a Sisk Act exchange for  cash), which include from 56 to 71 action items to reach completion.  Table 1 lists the major steps and who is responsible for each of them.
section_title: Number, Trends, and Characteristics of BLM and Forest Service Land Exchanges
paragraphs: BLM and the Forest Service processed 250 land exchanges from October 1,  2004, through June 30, 2008. Completion times for land exchanges within  this period varied widely, from about 2 months to more than 12 years.  Agency officials surveyed said the number of exchanges processed since  2000 has generally declined because of the availability of qualified staff,  changing priorities, and the availability of funding. Some of the exchanges  had unique characteristics because they were facilitated by third parties,  conducted in multiple phases, or were specifically legislated by Congress.  See appendixes III and IV for detailed information on the 250 exchanges  processed from October 1, 2004, through June 30, 2008, as reported by  BLM state offices and Forest Service regional officials.
subsections: section_title: Agencies Processed 250 Land Exchanges to Acquire about 621,600 Acres between 2004 and 2008
paragraphs: Of the 250 exchanges processed from October 1, 2004, through June 30,  2008, BLM processed 76 and the Forest Service processed 174. Table 2  provides information on the completed, pending, and terminated  exchanges the agencies processed.
As table 2 shows, 13 proposed land exchanges resulted in termination for  various reasons, according to agency officials, including withdrawal of  either party, changes in land values, legal action, and public opposition.
For example, according to a BLM official, the agency’s Mesa Mood  exchange in Colorado was terminated because of an appeal to the Interior  Board of Land Appeals by the adjacent landowner, primarily about the  appraised value of the federal land. Because of these actions, another  appraisal had to be conducted. However, the landowner involved in the  exchange decided to sell the property to another party because the  exchange process was taking too long.
As figure 1 shows, BLM’s exchange activity occurred in 11 western  states. BLM’s Colorado State Office had the most activity, proces completed, pending, or terminated exchanges.
section_title: Land Exchange Completion Times Varied Greatly and Sometimes Exceeded Estimated Time Frames
paragraphs: Of the 250 exchanges processed from October 1, 2004, through June 30,  2008, 147 were completed, with completion times ranging from about 2  months to more than 12 years between the date the ATI was signed and  the date the titles were recorded. The time to complete BLM’s 38 land  exchanges averaged about 4 years, while the Forest Service’s 109 land  exchanges averaged about 2 years. A few of the completed exchanges had  processing times of over a decade. For example, BLM’s Eldorado  exchange in Nevada took 11 years and 3 months to complete, and the  Forest Service’s Trust for Public Land exchange in North Carolina took  about 12 years and 8 months. Conversely, some exchanges were  completed in a shorter time. For instance, BLM’s Blevins exchange in  Idaho took about 10 months to complete. BLM’s handbook provides an  estimated average completion time of 18 to 24 months but notes that times  vary widely. The Forest Service’s handbook does not specify an average  time to complete an exchange.
In examining the 31 land exchanges in our sample, we observed that the  agencies took much longer, in all but one case, to complete exchanges  than they had estimated in their ATIs. For 12 of the 15 completed  exchanges in our sample, we were able to obtain both estimated and  actual completion dates, as table 3 shows.
For the 11 exchanges that took longer to complete than estimated, our  analysis shows that they took from 1 to more than 9 years longer.
In explaining the reasons for these delays, BLM and Forest Service survey  respondents most frequently cited the lack of staff, the timeliness of  appraisals, and the lack of qualified appraisers. In terms of the lack of  staff, officials from both agencies have reported that owing to an  increasing number of retirements and the need to work on higher priority  activities—such as processing energy rights-of-way—staff may not be  available to process exchanges.  In commenting on a draft of this report,  Interior stated that BLM also believes that protests, appeals, and litigation  are reasons for delays in completing land exchanges.
BLM officials also told us that issues with the appraisal process could  inhibit the timely completion of exchanges. These issues include the time  needed for the appraiser to obtain information on encumbrances on the  land, the potential need for new appraisals every few months in a volatile  market when land values change frequently, and the limited number of  private appraisers with the necessary experience to appraise the  undeveloped lands involved in BLM exchanges accurately.
Forest Service regional officials cited the following other factors that can  impede the timely completion of land exchanges:    Adjacent landowners may have concerns about the impact of the  exchange on their property. Land exchange regulations require the  agencies to publish a notice of exchange proposal. Those opposed can  appeal or litigate land exchange decisions.
Land surveys to validate the legal description of land and environmental  analyses can cause considerable delays in the process. Forest Service  officials reported experiencing delays of 1 to 2 years for completing the  required surveys and cited the addition and subtraction of land included in  the exchange as delaying the exchange process. When land is added to the  exchange midway through the process, this piece of land is subject to all  of the steps in the exchange process, including notifying the public of the  exchange proposal, updating environmental analyses, and conducting field  inspections and other analyses. Land may also be subtracted from the  exchange for many reasons, including the identification of a cultural site,  unresolved title issues, and the nonfederal landowner’s decision not to  sell. If land is either added or subtracted during the exchange process,  then the need to balance federal and nonfederal land values after the  initial appraisals can increase the exchange processing time because new  appraisals have to be conducted.
If a landowner dies before an exchange is completed, agency officials will  have to work with new landowners.
section_title: Since 2000, the Number of BLM and Forest Service Land Exchanges Has Declined for Several Reasons
paragraphs: The number of land exchanges for the period we reviewed, October 1,  2004, through June 30, 2008, is lower than for the period we previously  examined, fiscal years 1989 through 1999. As we reported in 2000, the  Forest Service completed an average of 115 land exchanges annually from  fiscal years 1989 through 1999. In contrast, for the period we reviewed  through June 2008, the Forest Service completed an average of 29  exchanges annually. BLM did not provide information on the number of  exchanges completed for our 2000 report, but instead reported  transactions—that is, one parcel of land either conveyed or acquired. For  the earlier period reviewed, BLM reported 238 separate transactions  annually. For our current review, BLM reported completing 38  exchanges, or an average of 10 per fiscal year.
Fourteen of the 19 BLM and Forest Service officials we surveyed  confirmed this decrease in the number of land exchanges processed since  2000. In order of frequency, the officials cited the availability of qualified  staff, changes in the priority given to exchanges relative to other work,  and the availability of agency funding to process exchanges as the primary  reasons for the decline. More specifically:    Availability of qualified realty staff. Officials from both agencies stated  that they have experienced significant turnover in personnel, largely  because of retirements. In addition, they have been unable to replace such  staff because of declining budgets. This reduction in qualified staff limits  the agencies’ ability to perform lower priority work, such as land  exchanges. For example, according to Forest Service officials, the Tonto  National Forest in Arizona has experienced a 50-percent reduction in  realty staff, from four to two, in 2 years. When realty staff leave or retire  before the exchange is completed, the agencies are less able to maintain  consistency and effectiveness. In response to staff shortages, some Forest  Service regions have begun pooling realty staff across their region to work  on complex realty transactions, such as land exchanges, rather then  specifically assigning them to a particular forest or ranger district  exclusively. They refer to these pooled resources as “zone teams.”  According to BLM’s land exchange program lead, newly hired realty staff  require coaching and training on the exchange process because they often  lack experience handling complex land exchanges.
Changing priorities. Because exchanges typically are discretionary  activities, their processing often competes for staff time and attention with  other land transactions. In particular, the agencies have shifted focus from  processing discretionary land exchanges to processing energy rights-of- way, land acquisitions, administrative site sales, and special-use permits.  We found that BLM has focused more on sales under the Federal Land  Transaction Facilitation Act of 2000 instead of exchanges. Indeed, an  official from the BLM Nevada State Office told us the agency is not  currently pursuing any land exchanges in Nevada because it is focusing on  the sales program. As we reported in February 2008, as of May 2007, the  state accounted for 92 percent, or $88 million, of the revenue raised under  the Federal Land Transaction Facilitation Act through land sales. In  addition, Forest Service officials said that enactment of the Forest Service  Facility Realignment and Enhancement Act of 2005 caused a significant  priority shift to administrative site sales. According to Forest Service  officials, Regions 3 and 6 focus on administrative site sales instead of land  exchanges because these sales allow the agency to generate revenue.
Availability of agency funding. According to agency officials we  interviewed, the same appropriation account funds land exchanges and  other land management activities, such as processing special-use permits  and energy rights-of-way, sales and other land adjustments, and boundary  and title management. Therefore, officials said, processing land exchanges  competes for funding with other activities that currently have a higher  priority. To compensate for the decline in exchange funding, the agencies  have been relying more on nonfederal parties to pay exchange processing  costs. While the agencies’ guidance generally states that both the federal  and nonfederal parties should share the costs associated with processing  land exchanges equally, the agencies vary in the extent to which  nonfederal parties share the cost of processing exchanges. According to 4  of 10 BLM and 3 of 9 Forest Service officials we surveyed, the agencies  often give priority to exchanges in which the nonfederal party pays over  half of the processing costs. One of these BLM officials said that, in some  cases, when an exchange is supported by many different interest groups  and there is a clear benefit to many parties, BLM may be willing to pay the  majority of the processing costs. At the Forest Service, one survey  respondent said his region now conducts land exchanges only if the  nonfederal party pays 100 percent of the processing costs. According to  Forest Service headquarters officials, however, nonfederal parties can  never pay 100 percent of the processing costs of an exchange because they  would not pay for certain Forest Service costs, such as the Office of  General Counsel and regional reviews of land exchanges. One Forest  Service regional official cautioned that when nonfederal parties pay more  of the exchange costs, pressure increases on realty staff to complete  exchanges.
section_title: Some of the Land Exchanges Had Unique Characteristics
paragraphs: Some of the 250 land exchanges processed from October 1, 2004, through  June 30, 2008, had unique characteristics. Specifically, these exchanges  were facilitated by third parties, conducted in multiple phases, or  legislated. In some cases, exchanges had more than one of these  characteristics.
subsections: section_title: Forty-seven Facilitated Land Exchanges Involved Several Private and Nonprofit Facilitators
paragraphs: BLM and the Forest Service processed 47 land exchanges—16 and 31,  respectively—involving private and nonprofit third-party facilitators from  October 1, 2004, through June 30, 2008. The for-profit facilitators included  Clearwater Land Exchange, FLEX of Arizona, Summit Resources, and  Western Land Group. The nonprofit facilitators included the Conservation  Fund, the Wildlands Conservancy, and the Prickly Pear Land Trust. The 19  BLM state and Forest Service regional officials we surveyed most often  cited the third-party facilitators’ primary tasks as helping the agencies  work with the nonfederal parties participating in the exchange, identifying  nonfederal lands for the exchange, and submitting exchange proposals.  For example:    BLM’s Emerald Mountain exchange in Colorado involved BLM, the state,  and private landowners and was initiated in August 2004. The third-party  facilitator for this exchange, Western Land Group, worked with about 50  landowners to identify parcels available for disposal, obtained  commitments from private parties to purchase the parcels, and worked  with all parties to simultaneously close the exchange in February 2007. At  the closing, BLM and the private parties received land, and the state  received cash.
The Forest Service’s Mammoth Community Facilities exchange in  California involved the Forest Service, the Mammoth fire station, and a  hospital. To help process this exchange, the fire station and hospital hired  Western Land Group to identify and acquire parcels suitable for exchange  for 12.52 acres of Forest Service land. This facilitator identified about  3,000 acres, owned by four individuals, that the Forest Service was  interested in acquiring. The lands acquired were inholdings in three  national forests in California—Inyo, Eldorado, and Tahoe.
BLM state office and Forest Service regional officials surveyed most often  cited third-party facilitators as benefiting the land exchange process.  Specifically, BLM and Forest Service officials most often reported that  third-party facilitators assured the commitment of nonfederal landowners  to complete the land exchange, served as a knowledgeable party for the  nonfederal landowner to work with, and enhanced communications  between the agency and the nonfederal landowners.
Conversely, a few survey respondents reported that facilitators sometimes  have a negative impact on the exchange process. Three survey  respondents—two from BLM and one from the Forest Service—reported  that facilitators often increased the pressure to complete the exchange.  One Forest Service official reported that facilitators often inhibit agency  communication with the nonfederal landowners. Furthermore, a Forest  Service respondent reported that in the Blue Mountain exchange in  Oregon, the facilitator hindered the exchange process by being  uncooperative with both the Forest Service and the nonfederal  landowners, and the Forest Service terminated the exchange just before  the closing. In addition, a representative of a nonprofit organization that  monitors federal land exchanges said that facilitators might try to skew  appraisals in order to offset the costs they have incurred, and they can  create an unhealthy push to process legislated exchanges quickly, with  insufficient public scrutiny.
section_title: Eight of Nine BLM Multiphase Land Exchanges Used Ledgers to Track the Balance of Land Values
paragraphs: BLM processed nine multiphase exchanges during the period of our  review. Eight of these exchanges involved seven ledgers—three open and  four closed—to track land value imbalances from October 1, 2004, through  June 30, 2008. Two exchanges in New Mexico—Santo Domingo II and  Acoma/State Mineral —are both included on one ledger. The ninth  multiphase exchange in Idaho—Birch Creek—did not have a ledger for its  final phase. According to the ledgers associated with these exchanges,  nonfederal parties owe approximately $2.6 million to the federal  government, as documented in the open ledgers. Table 4 provides further  details on the nine multiphase exchanges.
Over the period we reviewed, BLM’s multiphase exchanges accounted for  63 percent, or 273,005 acres, of the total 432,210 acres BLM acquired or  planned to acquire. BLM’s largest multiphase exchange—the State of  California exchange—although still pending, consists of 123,423  nonfederal acres valued at $12.2 million and 2,290 federal acres valued at  $14.3 million.
Five of the 10 BLM state office officials surveyed used ledgers during the  period of our review. According to these officials, there are a number of  advantages and disadvantages to using ledgers to track land value  imbalances. In terms of advantages, among the five respondents who  provided comments, one BLM state official said a ledger allows a balance  to be carried over for up to three years from the date of the first  transaction closing before the values must be equalized with a cash  equalization payment. Another noted that it is critical to use a ledger when  the state is the nonfederal party because states may be constitutionally  prohibited from providing cash to equalize the values of the lands  exchanged. A third BLM state office official remarked that ledgers are  invaluable because they enable the agency to move forward with NEPA  compliance, hazardous materials assessments, surveys and other work  needed to exchange some of the parcels, rather than waiting for this work  to be completed on all parcels. In terms of disadvantages to using ledgers,  three BLM state officials provided comments. For example, one official  stated that multiphase exchanges are complex and convoluted and imply  that BLM may not have fully planned the exchange transaction. Regarding  the future use of ledgers, the responses were evenly split, with five saying  that they would definitely or probably use ledgers in future exchanges and  five saying they would not.
Although the agency policy allows for multiphase exchanges using ledgers,  BLM headquarters and state office officials told us that this practice is  discouraged, except for exchanges with a state as a nonfederal party,  because of past problems with these exchanges and their length and  complexity. Multiphase exchanges with states continue because states  have significant amounts of land and can act as long-term exchange  partners.
As previously stated, the Forest Service does conduct multiphase  exchanges, but only when each phase can be completed with the federal  and nonfederal values in balance. Furthermore, the Forest Service  regulations do not allow for the use of ledgers. The headquarters program  lead said that, even if allowed, the agency would not want to use ledgers  because of the risk that the exchange would not be completed, and the  Forest Service would be owed funds for lands already conveyed.
section_title: Processing the 20 Legislated Land Exchanges Sometimes Differed from Processing Discretionary Land Exchanges
paragraphs: From October 1, 2004, through June 30, 2008, BLM and the Forest Service  reported processing 20 land exchanges that were specifically legislated by  Congress. Of these, BLM processed 5 and the Forest Service processed 11.  The agencies processed the remaining 4 exchanges jointly because the  legislation involved lands under each agency’s jurisdiction. BLM and the  Forest Service have or are expected to acquire 276,000 acres of nonfederal  land and to convey 76,000 acres of federal land through these exchanges.
According to our analysis, 17 of the 20 legislated exchanges we reviewed  were not processed in the same way as BLM’s and the Forest Service’s  discretionary exchanges. Table 5 identifies select provisions contained in  specific exchange laws that differed from the discretionary exchanges  processed from October 1, 2004, through June 30, 2008. As shown in table 5,  the most frequent differences between processing legislated and discretionary  exchanges were (1) identifying specific lands to be exchanged, (2) requiring  the agencies to conduct exchanges if requested by the nonfederal party, and  (3) establishing time frames for the completion of the exchanges.
In addition, we found the following provisions of legislated exchanges that  differed from the discretionary exchanges processed from October 1, 2004,  through June 30, 2008.
The Lost Creek and the Campbell/Miles exchange legislation declared the  values of the federal and nonfederal lands and interests in land to be equal,  and the Sierra National Forest exchange legislation established the land  values, so the regular process of conducting an appraisal to determine  land values was not required.
The OSPG Timpanogos exchange legislation allowed the cash equalization  payment to exceed FLPMA’s cap of 25 percent of the total value of the  federal land conveyed.
In some cases, the agencies’ interpretation of the enacted legislation led it  to implement the exchange differently from the typical process. BLM and  Forest Service survey respondents identified one and five exchanges,  respectively, in which the agency did not conduct NEPA analyses because  of their interpretation of the enacted legislation. The following illustrates  why the agencies either did not conduct NEPA analyses or did so to a  more limited extent:    BLM’s Boise Foothills/Northern Idaho exchange. The Solicitor’s Office  determined that BLM did not need to conduct NEPA analyses for this  exchange because the statutory language requiring the exchange removed  any discretion by the Secretary of the Interior to approve or disapprove  the exchange or impose additional terms and conditions. Under these  circumstances, courts have found no purpose in conducting the NEPA  analyses. Furthermore, the Solicitor’s Office found that “the strict and  short time frame provided by Congress to complete the exchange (180  days) precludes the Secretary from complying with NEPA.”
Forest Service’s Montezuma Castle exchange in Arizona. According to a  Forest Service official, the agency interpreted the enacted legislation as  requiring it to conduct limited environmental analyses, rather than full  NEPA analyses. The official said this ensured that the exchange could be  completed by the statutory deadline.
section_title: Agencies’ Actions to Resolve Previously Identified Key Problems Have Been Somewhat Effective, but Issues Remain
paragraphs: In the past, we, the Inspectors General for Interior and USDA, the agencies  themselves, and other organizations have identified problems that spanned  many aspects of the BLM and Forest Service land exchange programs, from  ensuring that the public interest was well served to providing appropriate  guidance and training. The agencies have taken actions to address most of  these problems. However, we found that the effectiveness of these actions  has been mixed. Table 6 summarizes previously identified key problems,  organizations identifying these problems, and agency actions taken to address  them. Appendix II lists the organizations’ reports that detail these problems.
subsections: section_title: Agencies’ Reviews Help Ensure That Exchanges Meet Requirements and Agency Guidance, but They Lack Documentation and Forest Service Oversight Is Inconsistent
paragraphs: As table 6 notes, BLM and the Forest Service instituted reviews to ensure  that exchanges meet requirements and agency guidance. The review  process appears to have addressed some of the past concerns by  correcting problems early in the process and filtering out undesirable  proposals. However, we found that the reviews were not always well  documented, and therefore, it is difficult to determine if all problems were  identified and resolved. Furthermore, the Forest Service headquarters has  not sufficiently overseen the regional reviews of land exchanges.
subsections: section_title: Agencies Initiated Headquarters Reviews to Better Ensure Compliance
paragraphs: In the past, we, the Inspectors General for Interior and USDA, and others  have identified a number of instances in which the agencies did not ensure  that land exchanges were in the public interest. For example, in 2000, we  reported that in BLM’s Cache Creek Management Area exchange, BLM  California officials did not specifically describe the parcels of land that  would be exchanged and did not specifically state the benefits of acquiring  the nonfederal parcels. We also noted that the Ninth Circuit Court of  Appeals found that, in processing the Huckleberry Forest exchange in  Washington state, the Forest Service did not adequately prepare its  environmental analysis.
To ensure that exchanges were meeting requirements and agency  guidance, both agencies established headquarters exchange review teams  in 1998 and required the teams to review most exchanges at two critical  stages during the exchange process—the feasibility and the decision  stages. At these two stages, agency field staff had to submit detailed  documentation supporting the exchange, such as a feasibility analysis and  draft decision. At first, the headquarters review teams only reviewed  exchanges that were controversial or valued at over $500,000. Review  thresholds changed over time.
Under current BLM policy, the headquarters review team and Interior’s  Solicitor review all exchanges. The BLM Deputy Director reviews and  renders a decision on every exchange. However, according to the BLM  headquarters review lead, the agency is considering delegating the review  responsibility to select BLM state offices. Although no details had been  worked out as of January 2009, the BLM lead said that headquarters might  delegate review responsibilities to states based on the value of the  exchange and other factors, such as the level of staff expertise in the state.
While BLM still maintains a headquarters review function, the Forest  Service began delegating this function to some of its regional offices  before March 2006, when the agency issued a new policy. According to  this policy, after 9 years of headquarters review, it was now appropriate to  shift the primary exchange oversight role from headquarters to the  regions. The policy further stated that the headquarters review of  individual exchanges would be replaced by a headquarters inspection of  regional exchange programs at least once every 3 years; a review  schedule proposed three reviews per year from 2007 through 2009.  Although the policy stated that the regional offices would oversee the  exchanges, it did not establish any specific guidance for regional reviews.
section_title: Reviews Have Addressed Some Past Concerns but Were Not Always Well Documented
paragraphs: As table 7 shows, 8 of the 10 BLM and 7 of the 9 Forest Service officials we  surveyed responded that the headquarters reviews have at least somewhat  improved the quality of exchanges their offices processed.
In addition to improving quality, survey respondents most often cited that  the headquarters review process ensured that exchanges (1) complied  with statutory and regulatory requirements and policy, (2) were processed  properly, and (3) met all documentation policies. For example, one Forest  Service respondent commented that the Forest Service headquarters  review had “significantly enhanced” oversight of the exchange program  and that this enhanced oversight, combined with other efforts, had  “generally resulted in better decision making and improved case  processing.” A BLM respondent remarked that BLM headquarters’  “oversight and exceptional guidance has resulted in a better process and  improved trust from the public.” In addition, 7 of the 10 BLM survey  respondents found that the Solicitor review at least somewhat improved  the quality of exchanges they had processed, and 2 of these said there was  great improvement.
Other officials from both agencies also told us that headquarters review  processes improved the quality of the exchanges. A BLM California official  said, “The mere existence of the  review has improved the  quality of land exchange packages.” Additionally, a Forest Service regional  official said that the reviews are often helpful in identifying technical  issues, such as incorrect title details, and in ensuring that exchanges  comply with policies that change over time.
Our analysis of feasibility and decision reviews for the 19 BLM and 12  Forest Service exchanges in our nongeneralizable sample of 31 exchanges  processed from October 1, 2004, through June 30, 2008, showed that  headquarters review teams did report problems with one or more of the  applicable statutory and regulatory requirements and policies.  Furthermore, the number of exchanges with problems documented was  significantly lower for decision reviews than for feasibility reviews,  suggesting that earlier problems were resolved. Table 8 summarizes the  number of exchanges with documented problems.
Although table 8 indicates that, in the 31 exchanges in our sample, the  Forest Service had more documented problems in its exchange program  than did BLM, this may not be the case because BLM officials do not  always document the identified problems. As the BLM exchange lead  explained, before a formal review, BLM reviewers generally identified and  addressed problems through conversations or e-mails with the staff  processing the exchange. Survey respondents and others we interviewed  concurred, with 9 of the 10 BLM officials surveyed saying that BLM  reviewers always, usually, or often provided substantive informal  comments by telephone, e-mail, fax, or visits that were not documented in  the formal review. Furthermore, in many cases, for the formal review  itself, field office officials prepared the reviews, which essentially  summarized the exchange proposal, and the review team would edit this  summary as necessary.
Table 9 shows the number of exchanges with problems documented in the  Interior Solicitor’s feasibility and decision reviews. In comparison to  headquarters reviews presented in table 8, the Interior Solicitor  documented problems it identified in more exchanges at the decision  review stage. According to a BLM headquarters official, the reason the  Solicitor may document more problems is because the Solicitor generally  reviews the exchanges before the headquarters review team.
Through our analysis of the agencies’ reviews, we found documentation of  37 problems. Some appeared, in our opinion, to be substantive, and others  seemed to be more technical. Examples of the apparent substantive  problems included the following:    BLM’s Central Washington Assembled Land Exchange II (CWALE).
Headquarters reviewers questioned, among other things, the use of bulk  discount value adjustments—an appraisal practice of grouping parcels at a  discounted value—for the federal lands but not for the nonfederal lands.  According to the reviewers, this bulk discounting would have resulted in a  28 percent decrease in the overall value of the federal lands—a loss of  $576,620 to the taxpayer. Another exchange in Washington state— Columbia Basin Shrubb Steppe—also proposed using bulk discounting.  Because of the bulk discounting and other issues, the BLM Deputy  Director suspended further action until the issues were resolved. The  Deputy Director eventually approved these exchanges for processing  without the use of bulk discounting, and both exchanges were completed  in 2008.
Forest Service’s State of Florida exchange. Headquarters reviewers found  that the field staff had not adequately explained why this exchange would  benefit the public. The reviewers also found that the proposed exchange  did not discuss how the future use of the conveyed federal land would be  compatible with the Forest Service’s management of adjacent lands. From  the documentation provided, it is unclear whether and how these  problems were resolved.
In contrast, examples of the apparent technical problems included the  following:    Forest Service’s DNRC-Lolo exchange in Montana. The Forest Service  found a minor error in the description of one parcel.
Forest Service’s Camp Tatiyee exchange in Arizona. The Forest Service  found some small inconsistencies in numbers in various documents.
BLM’s Dees exchange in Utah. BLM’s reviews found two minor problems  related to the draft ATI—lack of documentation on the potential  compensation to the nonfederal landowner for certain functions  performed and lack of action to ensure that a timetable and associated  responsibilities for processing were current.
In addition to finding that BLM documented problems less frequently than  the Forest Service, we found that both agencies (1) could not in all cases  provide copies of key documents, including the reviews, as well as the  documents subject to those reviews, and (2) did not always document how  problems were resolved.
First, neither BLM nor the Forest Service could provide all of the  feasibility and decision reviews associated with the 19 BLM and 12 Forest  Service exchanges we examined. As table 10 shows, key documents were  missing at both the feasibility and decision stages.
Based on our review, BLM’s guidance does not clearly state the retention  policy for land exchange documents and appears to provide some  discretion for how long such documents need to be retained.  The four  subsections pertaining to land exchanges do not always provide clear time  frames for how long documents are to be retained.  Furthermore, two  senior lands and realty officials provided different interpretations of the  policy. One stated that, in practice, completed exchange case files are  retained for 3 years and then sent to a Federal Records Center.  The  second official stated retention varies depending on the final disposition of  a proposal and he was unclear on certain aspects of the policy.  The Forest  Service guidance provides similar discretion for document retention. The  guidance states that general exchange files not specific to an exchange are  to be retained on-site for 3 years, while specific exchange files may be  “destroy after  title file is created and  administrative or legal  use ceases.” The Forest Service’s National Records Manager said that the  retention time frame is not specific and that the Forest Service planned to  review the policy this year and set specific retention periods that would be  implemented in fiscal year 2010.
Second, while we did find some instances in which the agencies  documented the resolution of problems identified in reviews, neither  agency documented all of the resolutions. We identified 37 apparent  problems cited in decision reviews within our sample—2 identified by  BLM and 35 identified by the Forest Service. Both problems cited in BLM  decision reviews refer to the use of bulk discounting in the CWALE and  Columbia Basin Shrubb Steppe exchanges. Although both reviews  approved the processing of the exchanges without bulk discounting, only  the CWALE review stated that the field office planned to implement this  recommendation. Because it was not clearly documented, we followed up  with field officials to confirm that bulk discounting was, in fact, not used.  For the Forest Service, we were unable to determine the resolution of the  four problems identified in the regional review of the Gray Wolf exchange  decision from the final decision and other documents provided. In  addition, we found the resolution of only a portion of the 16 apparent  technical problems identified in the headquarters review of the State of  Florida exchange.
section_title: Forest Service Oversight Has Not Been Sufficient
paragraphs: After delegating review responsibilities to its regional offices in March  2006, the Forest Service planned to continue national-level oversight with  reviews of regional exchange programs to be conducted once every 3  years. However, as of January 2009, the Forest Service headquarters  review team had completed only three of the six reviews scheduled for  completion by the end of 2008. According to a Forest Service official, the  team is behind schedule because of staff shortages, a lack of funds, and  competing priorities.
Of our sample of 12 Forest Service exchanges, 3 exchanges were being  processed after the Forest Service headquarters review had been  delegated to the regions. For these exchanges, the regional review teams  generally documented problems found. For example, the Region 3 review  of the Gray Wolf exchange in Arizona found that the public interest  determination needed to be added to a key document. Furthermore,  Region 5’s review of the Mammoth Community Facilities exchange in  California found that some wording on a geothermal reservation needed to  be verified with BLM before proceeding.
Only four of the nine regional offices—Regions 2, 3, 5, and 9—had formally  documented their review policy and process, according to regional  officials. However, these documents simply stated that the region would  review exchanges at the feasibility and decision stages. Of greater  concern, in some regions, reviewers were reviewing the feasibility and  decision documents they also were responsible for preparing or assisted in  preparing. This lack of independent review occurred about 2 years ago,  according to headquarters reviews of Regions 1 and 2. Specifically, the  reviews stated that the regions need to ensure that “adequate regional  office oversight is conducted when staffs with oversight responsibilities  are carrying out the subject work directly.” The reviews further stated,  “there must be a separation between the persons who conduct the activity  from the person that performs oversight of the activity” and that “true  oversight can not be self-performed.” Both reviews recommended that  either (1) an alternate headquarters or regional reviewer be identified to  review any work conducted by regional staff that would otherwise be  responsible for the oversight review of that work or (2) regional reviewers  limit their mission delivery work to coaching and instructing, rather than  conducting the activity themselves. More recently, in January 2009, a  Region 4 official told us that regional staff are responsible for both  preparing and reviewing all exchanges in the region.  In commenting on a  draft of this report, the Forest Service said that the region is organized in  such a way that there is separation between those preparing the exchange  documents and those that review them.
Asked how the Forest Service follows up on the implementation of the  headquarters review recommendations, the land exchange program lead  said they have not yet done any follow-up on the prior recommendations.  Therefore, they do not know if past headquarters review  recommendations have been implemented.
section_title: BLM Stated It Has Discontinued Use of Escrow Accounts in Multiphase Exchanges, but BLM Is Not Following Ledger Guidance, and Statutory Authority for Some Multiphase Exchanges Remains Unclear
paragraphs: In 2000, we reported that for multiphase land exchanges, BLM was  inappropriately depositing funds into interest-bearing escrow accounts  outside of the U.S. Treasury and later using those funds to acquire  nonfederal lands. According to BLM officials, the agency discontinued its  use of escrow accounts and issued new guidance on how to use land  exchange ledgers to track land value imbalances in multiphase exchanges.  While BLM officials told us that no funds currently were held in an escrow  account outside of the U.S. Treasury, we found that cash from at least one  multiphase exchange we reviewed was deposited in an escrow account  and later transferred to the U.S. Treasury.  We also found that the agency  is not adhering to its own guidance for maintaining land exchange ledgers  so that it can know how much is owed. As a result, BLM cannot be assured  that its total balance of about $2.6 million due to the United States, as of  June 30, 2008, is accurate. In addition, one BLM multiphase exchange we  reviewed presented problems similar to those we identified in our 2000  report. Specifically, the statutory authority for the exchange remains  questionable.
subsections: section_title: BLM Stated It Has Stopped Using Escrow Accounts, and Multiphase Land Exchanges Have Continued
paragraphs: As we reported in 2000, in conducting multiphase exchanges, BLM was  inappropriately selling land, depositing funds into interest-bearing escrow  accounts outside of the U.S. Treasury, and using these funds to acquire  nonfederal lands directly or through third parties. We further reported that  FLPMA did not authorize BLM to retain sales proceeds for land  acquisitions, but rather required BLM to deposit such funds into the  Treasury and to use appropriated funds to acquire nonfederal land. We  recommended that BLM end the use of nonfederal escrow accounts. We  further recommended that BLM identify and immediately discontinue  multiphase exchanges under which BLM was—either directly or through  third-party facilitators—following the unauthorized practice of selling  federal land, retaining the sales proceeds, and using these proceeds to buy  nonfederal land. BLM responded that multiphase exchanges are necessary  and permissible. BLM agreed with our recommendations on escrow  accounts and issued guidance in 2000 to, among other things, discontinue  their use and incorporated this guidance into its 2005 land exchange  handbook. Select provisions of the revised handbook include the  following:    A ledger is an accounting mechanism that may be used only for tracking  the differential in dollar value of lands conveyed in a series of  transactions.
The BLM state director must provide written approval of the establishment  of a ledger and a determination on the need to secure an imbalance. If  needed, the nonfederal party must provide a financial assurance to secure  the imbalance.
The difference between the value of federal and nonfederal lands cannot  exceed 25 percent of the federal land value conveyed up to and including  the current transaction.
The cash equalization waiver provision only applies to the final transaction  of the multiphase exchange.
Any funds being held by BLM as financial assurance are held in a “BLM  suspense account” in the U.S. Treasury.
Ledgers must reach zero balance every 3 years.
Lands acquired by means other than a land exchange transaction (i.e.,  acquisition or donation) are not to be reported on the ledger.
The ATI for a multiphase exchange should document how the exchange  will be processed using a ledger.
A standard ledger format must be used.
The BLM handbook does not call for ledgers to be submitted to the  headquarters review team as part of the exchange feasibility or draft  decision package, and therefore, ledgers are not regularly reviewed above  the state director level.
section_title: BLM Is Not Adhering to Its Guidance on Managing Land Exchange Ledgers to Track Value Imbalances in Multiphase Land Exchanges
paragraphs: Our review of the seven open and closed land exchange ledgers processed  from October 1, 2004, through June 30, 2008, found instances of  noncompliance in several areas: (1) documenting the decision to require  financial assurances, (2) balancing ledgers at zero every 3 years, (3)  documenting the use of a ledger in the ATI, (4) adhering to the standard  ledger format, and (5) using a ledger. While BLM reported nine multiphase  exchanges in our time frame, they also noted that two of the exchanges  were accounted for in a single ledger, and the office processing the ninth  exchange said they did not prepare a final ledger for one of the closed  exchanges. Together these omissions reduce the opportunity for  management to provide appropriate oversight of each transaction and help  ensure that exchange program objectives are achieved. Specifically:    Financial assurances. Three of the seven ledgers were still open and had  balances due to the federal government totaling about $2.6 million, but did  not have financial assurances to secure the balances due. Two of these  open ledger balances were owed by state agencies (California and New  Mexico). The 2005 handbook does allow exemptions from its financial  assurance provisions with the written approval of the BLM state director.  All three of these ledgers did have the written documentation as to why  financial assurances were not needed. However, for one of the open  ledgers with written documentation—the Pumpkin Creek exchange in  Montana—the justification was dated about 1 year after the imbalance was  created and after we requested the document. Three of these four closed  ledgers did have financial assurances, but the BLM state directors did not  document the determination on the need for financial assurances. One  state office reported a fourth ledger as closed, but the officials said no  final ledger document was prepared.
Balancing land exchange ledgers every 3 years. Six of the seven ledgers  were over 3 years old, and state office officials reported that none of the  six were balanced at zero at least every 3 years, as required. Officials  offered explanations for the failure to balance the ledger to zero every 3  years. Specifically, one state office program lead said that the requirement  to balance the ledger to zero is not realistic because there will never be a  time when a ledger can balance with exactly equal land value. In addition,  because multiphase exchanges tend to take longer than anticipated,  another state office program lead said that balancing ledgers to zero has  been deferred beyond 3 years. The seventh ledger was established in 2007  and was not due to balance until 2010.
Documenting the use of the land exchange ledger in the ATI. Of the  multiphase exchanges we reviewed, only four had documented an  agreement to establish a ledger in the ATI, as required.
Land exchange ledger format. None of the seven ledgers we reviewed had  followed the format that BLM had prescribed in the handbook. Since the  ledgers’ formats were inconsistent and not self-explanatory, and the  ledgers were not current, determining when balances were zero and when  ledgers were closed was not always possible from the document itself.  Based on our reviews of actual ledgers and prescribed format in the BLM  handbook, key facts about the exchange—that is, whether the balance was  at zero every 3 years or whether the ledger was closed—were not readily  apparent from the ledgers as prepared or as prescribed. We therefore had  to interview state program leads to obtain this information.
Use of ledgers. Although required, one multiphase exchange in Idaho— Birch Creek—did not have a final ledger.
In addition to noncompliance with guidance on how to manage land  exchange ledgers, we found the following problems with multiphase  exchanges using ledgers:    Large ledger imbalance and other concerns. The ledger for the ongoing  State of California multiphase exchange shows that the federal  government has been owed $2.2 million since 2003. Furthermore, this  exchange does not have a financial assurance in place to cover this  balance owed if the state does not pay. According to BLM officials, the  California Desert Protection Act of 1994 authorizes this exchange.  Because of the concerns about lands to be exchanged under the act, the  California State Lands Commission and the General Services  Administration (GSA) entered into a memorandum of agreement with  BLM, in lieu of an ATI. Under the memorandum and related agreements, if  the State Land Commission did not want the surplus federal property, GSA  was to sell surplus federal properties to third parties and deposit the sale  proceeds in a U.S. Treasury suspense account. After BLM received title to  the State Land Commission properties located within wilderness areas or  national park units, as identified in the 1994 act, GSA was to transfer the  money to the commission. According to BLM California State Office  officials, the exchange has been on hold since 2003, when the BLM  headquarters review team and Interior’s Office of the Solicitor raised  concerns about the memorandum of agreement. In commenting on a draft  of this report, Interior said that it would be more accurate to state that the  exchange has been delayed because BLM and the state have been unable  to reach an agreement on value after three appraisals, the latest in 2008.   None of the appraisals were acceptable to both parties, and the state and  BLM have been discussing ways to resolve the appraisal issue and balance  the ledger.  In March 2009, a GSA official reported that GSA was still  holding $7.8 million in a Treasury account for the purpose of acquiring  land under the California Desert Protection Act. This report does not  address questions relating to the underlying legal authority for these  transactions. We are exploring this issue separately with Interior’s  Solicitor and GSA’s Office of General Counsel.
Value imbalances not clearly shown. A recently closed ledger for a large  multiphase exchange processed by the BLM Oregon State Office—the  Central Washington Assembled Land Exchange II (CWALE), worth a total  of $5 million in federal and nonfederal land value—could not be used to  track the land value imbalances due to BLM because the numbers in the  document did not clearly show value imbalances. After we made inquiries  to the Oregon State Office program lead, we learned that there were errors  in the original ledger’s presentation. Although the program lead provided a  revised ledger, the revision did not show a zero balance on its bottom line.  Rather, a footnote stated that the $290,200 balance due to BLM had been  received and deposited in the U.S Treasury.
section_title: Statutory Authority for Some BLM Multiphase Exchanges with Ledgers Remains Unclear
paragraphs: One multiphase exchange we reviewed, CWALE, presented problems  similar to those we identified with the unauthorized exchanges discussed  in our 2000 report. Specifically, BLM conveyed federal land to various  private parties and received cash equal to the federal land’s fair market  value from those private parties. The cash was then deposited into an  escrow account for the purpose of closing and sometimes was later  transferred to a U.S. Treasury deposit fund account. BLM would then use  this cash to pay landowners the fair market value of the nonfederal lands  BLM acquired from them. These transactions appear to be similar to the  unauthorized exchanges discussed in our 2000 report.
BLM officials state that the CWALE multiphase exchange was conducted  pursuant to the applicable statutory and regulatory requirements.  However, as we said in our 2000 report, BLM was not authorized to sell  federal land, retain the proceeds, and subsequently use the proceeds to  buy other lands under the umbrella of a land exchange. In 2000, shortly  after we issued our report, Congress passed the Federal Land Transaction  Facilitation Act (FLTFA). Under FLTFA, the gross proceeds from certain  exchanges or sales carried out under FLPMA are deposited into a special  account, known as the Federal Land Disposal Account. Funds in this  account are available to BLM and other land management agencies  without further appropriation to purchase privately owned land meeting  certain qualifications, generally referred to as “inholdings.” While the  federal lands conveyed in CWALE meet FLTFA’s requirements, it appears  that the lands BLM acquired with the gross proceeds do not. Moreover,  instead of depositing the gross proceeds into the Federal Land Disposal  Account, BLM used some of the proceeds to acquire private lands that  were not FLTFA inholdings, and only later deposited the remaining  proceeds in the Federal Land Disposal Account.
BLM officials further maintain that any money received served as either a  cash equalization payment or a financial assurance to secure the ledger’s  imbalance. However, a cash equalization payment is intended to fulfill the  requirement that the values of the land exchanged be equal after all  reasonable efforts to equalize land by adding or excluding land from the  exchange. A payment from a nonfederal party that equals the federal land’s  value appears more likely to be a purchase price than a cash equalization  payment. With respect to the financial assurance characterization, the  documents we obtained from BLM are not consistent with this  characterization. BLM’s Land Exchange Handbook specifies the approved  methods for securing ledger imbalances. For cash or personal bonds, the  handbook says that BLM should obtain a personal bond, cash, and book  entry deposits form from the nonfederal party. BLM was unable to provide  us any such forms for the CWALE transactions. Furthermore, the escrow  instructions and related documents (1) refer to the cash BLM received as  “full consideration for the purchase of property,” (2) provide that the cash  would become federal funds once that transaction’s conveyance  documents were recorded, and (3) state that the money would be utilized  as payment for a subsequent transaction.
In addition to CWALE, other multiphase exchanges we reviewed  potentially appear to have resulted in transfers of cash that should have  been regarded as sale or exchange proceeds or payments for land  acquisitions. As such, each of these multiphase exchanges, including  CWALE, may have resulted in violations of fiscal laws, including the  Antideficiency Act and the Miscellaneous Receipts Statute, as well as the  Department of the Treasury’s policies and procedures for accounting and  reporting of receipts and disbursements of the U.S. government. We are  exploring these issues separately with Interior’s Office of the Solicitor.
section_title: The Agencies Issued Guidance on the Use of Third-Party Facilitators, but Need to Clarify and Consistently Apply Disclosure Policies
paragraphs: As internal agency reviews have reported, guidance on using third-party  facilitators was inadequate and facilitators did not always disclose  important information to the agencies during the course of an exchange.  As a result, some exchanges failed or were not in the public interest. Both  BLM and the Forest Service have issued new guidance that requires full  disclosure of the relationship between the facilitator and other parties to  an exchange. However, we found that the agencies do not clearly define  third-party facilitators in their guidance and are not consistently applying  disclosure policy to them. Moreover, agencies’ policies do not require  disclosures to be examined during the review process.
subsections: section_title: Agencies Enhanced Guidance and Required Full Disclosure from Third-Party Facilitators to Correct Past Problems
paragraphs: According to reports by a BLM workgroup, the USDA Inspector General,  and an internal Forest Service review, the agencies lacked guidance on  dealing with third-party facilitators, and facilitators withheld important  information on their relationships with landowners. For example, a 2003  BLM workgroup review highlighted the value of facilitators, but also  acknowledged the growing public perception that facilitators may have an  inappropriate level of influence over the exchange process. It  recommended that BLM develop policy and guidance related to  facilitators. In response, BLM revised its land exchange handbook in 2005  to expand its guidance and provide more detail on working with  facilitators. The earlier handbook had only called for facilitators to  disclose to the sellers their intent to transfer acquired lands and to  disclose to BLM their purchase price of nonfederal lands to be included in  an exchange.
In contrast, the 2005 handbook states that third-party facilitators must  disclose all agreements and additional fees, costs, or surcharges to be  added to the appraised exchange property values to cover the cost of the  facilitator’s participation in the exchange and must make these disclosures  before requesting an appraisal. In addition, the disclosure provision  ensures that BLM has the right to inspect the facilitator’s records for up to  7 years after an exchange is completed. BLM policy also includes a  template for full disclosure language that must be used in the ATI if a  facilitator is involved.
At the Forest Service, in 1998, the USDA Inspector General reported that  there were no guidelines for evaluating exchanges that facilitators had  proposed. Indeed, the report found that Forest Service staff at the  Humbolt-Toiyabe National Forest in Nevada had an “accommodating  relationship” with one facilitator, and gave the facilitator’s proposed  exchanges a higher priority than other proposed exchanges. Furthermore,  forest staff improperly bargained with this facilitator and the landowner it  represented, which resulted in a loss of $5.9 million to the federal  government. The Inspector General recommended that the Forest Service  develop additional direction for dealing with facilitators and instruct all  Forest Service lands staff on the new policies. To respond to these  problems, the Forest Service said it planned to issue national guidance  defining the roles and responsibilities of Forest Service staff and  facilitators in 1999. In addition, the agency said it would provide training  on the new policies.
The Forest Service’s problems with third-party facilitators continued,  however, as evidenced by the agency’s failed Blue Mountain exchange in  2006. The Blue Mountain exchange, initiated in 1998, involved a trade of  about 18,000 federal acres valued at $16 million for about 32,000  nonfederal acres valued at $15.7 million located in northeastern Oregon.  The nonfederal acres were owned by approximately 40 separate  landowners. Figure 3 shows the multiple parcels involved in this large  exchange involving three national forests and spanning six counties.
This large and complex land exchange failed for several reasons,  according to Forest Service officials and documents we reviewed. First,  the Forest Service worked only with the third-party facilitator and did not  communicate with the nonfederal landowners about their willingness to  participate in the exchange. Second, the facilitator and the Forest Service  could not agree on the appraised values. Third, in the final stages of the  exchange, as the appraisals were about to expire, the facilitator proposed  dropping several land parcels of high value to the government, opting  instead to pay a higher cash equalization payment. The facilitator  proposed this change because, as the Forest Service later learned, several  landowners represented by the facilitator were no longer willing to  exchange their property. The officials said that while the planned cash  equalization payment—$3.6 million—would have been within the legal  threshold of 25 percent of the federal land value, such a large payment  would have gone against FLPMA’s provision to keep such payments as low  as possible. Moreover, a regional official said that the exchange was  premised on the government receiving certain high-resource value lands  and when some of these lands dropped out, the agency decided the public  interest would no longer be served.
A subsequent Forest Service internal regional review of the Blue Mountain  exchange indicated a number of problems with the facilitator. Specifically,  the review stated that the facilitator (1) tried to work on passing federal  legislation without the Forest Service’s knowledge, (2) was very secretive  about its agreements with landowners, and (3) wanted to control the  outcome of the exchange instead of working as a partner with the Forest  Service to ensure an outcome that was in the public interest. In addition,  the review said that the facilitator never provided the Forest Service with  written documentation that landowners had granted Forest Service staff  permission to enter the landowners’ properties to conduct appraisals,  surveys, and other studies, which made it difficult for Forest Service staff  and others to conduct this work. While the Forest Service did not track the  costs of processing this land exchange, it estimated that it spent $1.4  million from 1998 to 2006. In June 2008, Forest Service officials told us  that they planned to salvage parts of this exchange by working directly  with landowners and they will not involve a third-party facilitator.
Following the failure of the Blue Mountain exchange in Oregon, in  December 2006, the Forest Service revised its guidance to its staff. The  revised guidance required staff to, among other things, obtain (1) written  permission to access properties for appraisals, inspections, and other  necessary activities; (2) written disclosure of the relationship between the  facilitator and nonfederal landowner; and (3) copies of purchase options,  agreements, or other financial arrangements affecting the value of the  appraised property. This documentation must be obtained before  processing a facilitated exchange.
section_title: Agencies Do Not Clearly Define Third-Party Facilitators and Are Not Consistently Applying Disclosure Policy
paragraphs: Although both agencies require disclosure from third-party facilitators on,  among other things, any interests the party might have in the exchange,  agency officials told us that disclosure is applicable only when facilitators  sign key documents, such as the ATI or the exchange agreement, and are  included on the title of lands exchanged. The officials added that it is more  common that facilitators do not sign such documents and serve more in  the capacity of a “consultant” or “advisor.” However, neither agency’s  handbook makes this distinction in applying the disclosure policy.
Both BLM’s and the Forest Service’s enhanced guidelines for third-party  facilitators appear to have had little impact on obtaining documentation  on third parties facilitating exchanges. Indeed, although the BLM exchange  program lead agreed that field offices must have the disclosure provision  in the ATI, he questioned whether field staff processing exchanges had to  actually obtain supporting documentation. Furthermore, because there is  no clear definition of a third-party facilitator, and because most entities  assisting landowners do not sign the key documents, the Forest Service  exchange program lead questioned the impact of the Forest Service’s  revised 2006 disclosure policy on avoiding problems with facilitated land  exchanges. In addition, two Forest Service regional officials we  interviewed stated that the Forest Service’s 2006 guidance has had no  impact on their work with facilitators because those entities do not sign  key documents. Absent specificity about who a facilitator is and, thus,  who should be complying with disclosure, BLM and Forest Service staff  processing exchanges have been determining when to apply the disclosure  policy.
One of the third-party facilitators we interviewed agreed with these  assessments, stating that the disclosure guidelines BLM and the Forest  Service issued have had no impact on his operations because his company  does not sign the documents. He added that his company’s relationships  are “open and clear” and that the agencies should have no questions about  whom they are dealing with. This facilitator worked on 17 of the 47  facilitated exchanges pending, completed, or terminated from October 1,  2004, through June 30, 2008.
In the absence of disclosure, a Forest Service official said that staff  recently experienced a problem completing the Montezuma Castle  exchange in Arizona. Specifically, the facilitator misrepresented its  ownership of the nonfederal land to be acquired in the exchange, stating  that it owned all the land. However, the facilitator only held a 1-year  option to purchase part of the nonfederal land. The option expired during  the exchange process, requiring additional negotiations with the  landowner to acquire that land. The exchange was eventually completed in  December 2007.
Thirteen survey respondents had worked with a third-party facilitator  during the period we reviewed—7 from BLM and 6 from the Forest  Service. These respondents worked on seven facilitated exchanges that  were subject to compliance with the disclosure guidelines. These  respondents reported that the facilitator in four exchanges did not comply  with the disclosure guidelines and two did comply, and in one case, the  respondent was not sure whether the facilitator complied. Of the two  cases where the facilitator was reported to have complied, BLM and  Forest Service officials provided incomplete supporting documentation.  Specifically, the BLM official provided us with an ATI that contained the  required provisions on disclosure but no documentation of the disclosure,  including agreements involving the facilitator and landowner, copies of  purchase options, or other financial arrangements affecting the value of  the appraised property. The Forest Service official provided us with a  letter from the landowner to the Forest Service outlining the role of the  facilitator in the exchange. The letter provides the name and role of the  facilitator and states that the facilitator has no ownership rights to any of  the nonfederal lands proposed for exchange. It further states that the  landowner would be signing all key documentation. Again, however, the  Forest Service official did not provide copies of any financial  arrangements affecting the value of the appraised property.
In addition to the agencies’ inconsistent collection of required  documentation, neither BLM nor the Forest Service guidelines call for land  exchange review teams to obtain and examine full disclosure  documentation.
section_title: BLM and the Forest Service Do Not Have National Land Tenure Strategies
paragraphs: Neither BLM nor the Forest Service has a national land tenure strategy.  According to a 2003 BLM report, BLM needs such a strategy to guide its  land transactions, and BLM agreed to develop a strategy but has not yet  done so. Internal Forest Service reviews have also noted that some Forest  Service regions lack proper planning documentation. As we have  previously reported, the most important element in results-oriented  management is an agency’s effort to define what it seeks to accomplish,  identify the strategies it will use to achieve desired results, and then  determine how well it succeeds in reaching results-oriented goals and  achieving objectives.
subsections: section_title: BLM Has Not Completed An Agreed-to National Land Tenure Strategy, but Three BLM State Offices Have Completed State-Level Strategies
paragraphs: According to BLM’s 2003 workgroup review, BLM lacks a national,  comprehensive policy or a statement of management direction that  addresses land transactions, including land exchanges. Furthermore, the  workgroup said it may be time to develop a policy to address public land  ownership patterns because of the complex land ownership pattern of  public lands and the potential influence of these patterns on local and  regional land use issues. To address these problems, the workgroup  recommended, among other things, that BLM establish a national land  tenure strategy and direct state offices to develop state-level strategies  based on the national strategy.
The BLM Director agreed to implement these recommendations, but BLM  has not yet done so. According to the BLM exchange lead, BLM staff  developed a national land tenure strategy and submitted it for review and  approval by BLM’s executive leadership team in 2003, but no action has  since been taken. As a result, BLM has not directed state offices to  develop state-level strategies and has not integrated the national strategy  into its land use planning handbook and manual. The BLM land exchange  lead said that the strategy has not been completed primarily because of  changes in agency priorities.
Although BLM headquarters had not provided direction to the state-level  offices, 4 of the 10 BLM state offices had developed, or were developing,  state-level strategies. Three of the offices responding to our survey— Arizona, Montana, and New Mexico—reported that they had completed a  strategy, and one, California, reported it was developing a strategy. From  our reviews of these strategies and interviews with BLM officials from  these states, we learned the following:    Arizona. The 2008 state office strategy’s primary goal is to better  administer public lands by acquiring lands with high-resource values and  disposing of lands that are difficult and uneconomical to manage.  According to the BLM Arizona exchange lead, prior to this strategy, BLM  Arizona staff made decisions in a “haphazard” way. For example, in some  cases, field office staff worked extensively on exchange proposals without  early state office input, only to later have these proposals terminated by  the state office for various reasons. Furthermore, this strategy establishes  a consistent methodology for evaluating land transaction decisions, helps  ensure decisions are properly made, and improves communication among  offices.
Montana. According to the BLM Montana exchange lead, because the state  office foresees considerable exchange opportunities with the state of  Montana, the development of a state exchange strategy, which was  completed in 2004, was “imperative.” The strategy established a  prescreening process for exchanges to ensure that BLM resources,  including staff and funding, are allocated to exchanges with the greatest  benefits.
New Mexico. The 2004 state office strategy states that because land  management goals had been established at the field office level, some  priority transactions from a statewide perspective were passed over. To  address this problem, the strategy established statewide priorities for land  transactions, among other things. It also created a statewide land tenure  steering committee to review all land transactions in the state, including  exchanges. The state director issued the committee’s charter in 2005 to  clarify how the committee will function.
According to BLM survey respondents in the remaining six states, two  states—Idaho and Oregon—had not started a strategy; one—Wyoming— did not know the strategy’s status; and three—Colorado, Nevada, and  Utah—said they did not need a strategy because they rely on land use  plans to make decisions.
Independent of actions taken in response to the BLM workgroup, in 2003,  a congressional committee directed the Secretaries of the Interior and  Agriculture to develop jointly a long-term national plan outlining the  acreage goals and conservation objectives for federal land acquisition. In  response, the agencies, including BLM and the Forest Service, issued a  National Land Acquisition Plan in February 2005. While this plan does  provide information on the various agencies’ goals, objectives, and land  acquisition strategies, among other things, it does not appear to offer a  specific strategy on making exchange and other land transaction decisions  on a national basis. In fact, the report states that BLM’s national land  tenure strategy, which is under development, will focus on a better  balance between land exchanges and disposal actions, acknowledging that  such a plan will offer more detailed planning with regard to exchanges.
section_title: Forest Service Does Not Have a National Land Tenure Strategy
paragraphs: Like BLM, the Forest Service does not have a national land tenure  strategy. According to the Forest Service exchange lead, the agency relies  on its agencywide strategic plan and policies to guide land exchange  decisions. The Forest Service’s policy manual does recognize the  importance of planning for land transactions by requiring the regions and  forests to prepare documents that can adequately guide the long-range (5  to 10 year) landownership adjustment program. These planning  documents, which supplement required forest plans, include, among other  things, more detailed guidance for making land exchange decisions and  are required if a region delegates certain responsibilities to forest staff,  such as signing off on key exchange documents.
Although these plans are required, only one of the nine regions reported  having a regional-level plan, and the official from that region reported that  the plan, completed in 2005, needs to be revised. Furthermore, according  to Forest Service headquarters reviews of land transaction programs in  Regions 1, 2, and 8 in 2007, these regions were delegating responsibilities  to national forests that did not have these plans. The reviews therefore  recommended that the regional directors of lands ensure that all national  forests receiving delegated authority either have adequate forest-level land  transaction plans or are using regional-level plans. As noted earlier, the  land exchange program lead said headquarters has not done any follow-up  on the prior headquarters review team recommendations. Therefore, they  do not know if the recommendations on planning have been implemented.
section_title: Agencies Do Not Track the Costs of Processing Individual Exchanges
paragraphs: BLM and the Forest Service did not implement our 1987 recommendation  to account for all costs associated with individual land exchanges.  Nevertheless, BLM’s guidance on land exchanges recognizes the  importance of monitoring and tracking costs to make informed resource  management decisions. The Forest Service’s guidance does not address  this issue. In our current review, we found that the agencies typically do  not track the largest cost associated with individual land exchanges— personnel costs—although they do track certain other costs. Without  complete knowledge of the cost of each land exchange, BLM and the  Forest Service cannot weigh the costs of processing land exchanges,  compare the benefits of land exchanges with other priorities, or provide  complete and accurate information to assist congressional oversight and  inform the public.
subsections: section_title: BLM and the Forest Service Did Not Implement GAO’s Recommendation to Track Costs
paragraphs: In 1987, we reported that neither BLM nor the Forest Service had reliable  and consistent information on the cost of individual land exchanges and  recommended that the agencies institute a system to account for all costs  associated with land exchanges. However, BLM disagreed because of  concerns about the need for, and the additional cost of, collecting this  information. The Forest Service did not express a position on the  recommendation, but stated that it had the necessary guidance for  recording exchange costs.
section_title: Agencies Do Not Have Cost Information to Help Manage Land Exchanges
paragraphs: The Chief Financial Officers’ Act of 1990 states, among other things, that  an agency’s chief financial officer should develop and maintain an  integrated accounting and financial management system that provides for  the development and reporting of cost information and systematic  performance measurement. The Statement of Federal Financial  Accounting Standards No. 4: Managerial Cost Accounting Concepts and  Standards for the Federal Government (SSFAS), effective in fiscal year  1998, establishes the fundamental elements for managerial cost accounting  in government agencies. Among other things, agencies are to gather and  report the cost of agency activities. This information can be used by  federal executives for budgeting and cost control; performance  measurement; reimbursement determinations; the setting of fees and  prices; program evaluations; and decisions that involve economic choices,  such as monitoring and comparing the costs of individual land exchanges.  Congress can also use cost information to determine how to fund  programs and monitor agency performance, as well as to analyze the  merits of proposals advocated by different parties. The public, in turn, can  benefit from greater transparency about program performance.
As we have reported, BLM has made more progress than the Forest Service in  implementing managerial cost accounting, but neither agency currently  tracks the cost of individual exchanges to provide useful management  information. BLM does have program elements, or codes, that BLM staff  charge when working on land exchange activities: one for all activities  associated with land disposals and one for all activities associated with  acquisitions. Although BLM cannot report how much it has spent on  individual exchanges, it reported that its lands and realty staff and other  involved units charged the disposal and acquisition program codes a total of  about $1.8 million for the land exchange program in fiscal year 2007. BLM  budget staff told us that while field staff could track the cost of individual  exchanges, they do not often do so because management has not asked about  the costs of individual land exchanges and Congress has not asked specific  questions regarding land exchange costs.
Nevertheless, BLM has emphasized the importance of estimating and  tracking the costs associated with an individual land exchange. According  to BLM’s land exchange handbook, processing land exchanges requires  substantial multiyear commitments of both funding and staffing.  Therefore, an accurate projection of these funding and staffing  commitments must be completed before initiating work on an exchange.  Managers will have to assess the costs of processing exchanges and  evaluate how the commitment to process an exchange will affect other  workloads, especially over several years. Furthermore, once staff starts to  process an exchange, the handbook states that it is important to track and  monitor the costs and time frame commitments to keep the exchange  moving and to document any midcourse adjustments to the projected time  frames or cost commitments.
The Forest Service’s manual does not discuss the importance of tracking  the costs of individual land exchanges. According to Forest Service  officials, the agency charges realty activities to a large appropriations  account—National Forest System Landownership Management, which  received $91.3 million in fiscal year 2008—and, therefore, cannot identify  the cost of individual land exchanges or the total spent on land exchanges.  This account funds many land management activities in addition to  exchanges, such as issuing special-use permits and maintaining  boundaries. However, according to the Forest Service program lead, more  cost information on land exchanges would be helpful because the agency  is asked by outside parties, including Members of Congress, their staffs,  and others, about individual exchange costs.
National forests report estimated exchange costs on completed exchanges  to headquarters, but headquarters officials said this information is of  limited use because it is an estimate and not the actual costs. Instead, a  headquarters budget official said the best estimate of how much the land  exchange program costs is based on the allocations made from the  National Forest System Landownership Management appropriation  account. Headquarters allocates the funds to the regions, and the regions,  in turn, establish workplans that distribute the funds to various activities  like land exchanges. However, this estimate does not inform officials  about the actual cost of land exchanges because allocations do not  necessarily represent expenditures. For example, while Forest Service  records show that regions planned $13.2 million for land exchange activity  in fiscal year 2008, the regions do not know the amount actually spent.
In response to our survey, 5 of the 10 BLM and 3 of the 9 Forest Service  respondents stated that information about the cost of each individual land  exchange is available to some extent. Most frequently, BLM and Forest  Service officials said they could provide the cost of contracted work and  the costs funded by nonfederal proponents for some exchanges.  However, the agencies do not typically track staff costs for an exchange,  and these are usually the largest costs in processing exchanges.
While BLM and the Forest Service do not track all land exchange costs,  both agencies’ land exchange handbooks call for the ATI to specify the  division of costs between the agency and nonfederal partners of the  proposed exchange. All but one of the 29 ATIs that were available for our  review specified the costs to be borne by the agency and by the nonfederal  partner. However, the breakdown of agency and nonfederal costs in ATIs  are for specific tasks or steps before the work is done and typically do not  break out agency personnel costs. For example, the 2006 ATI for the Santo  Domingo II exchange—which involved the New Mexico State Land Office,  the Pueblo of Santo Domingo, BLM, and a nonprofit organization—listed  16 major tasks for processing the exchange and the division of costs for  these tasks among the four parties. Costs totaled $190,250, of which BLM  was to fund $37,500, including $15,000 toward the preparation of the  environmental documentation, $8,000 toward the final appraisals, and  $3,000 toward title documents.
section_title: BLM’s and the Forest Service’s Revised Guidance and Training Have Helped Address Past Problems, but Participation in Training Is Generally Not Mandatory or Systematically Tracked
paragraphs: Internal agency reviews found that BLM and the Forest Service needed to  improve guidance and training on the land exchange process for realty  staff in order to ensure that exchange requirements, such as determining  the public interest, were adequately documented. In response, BLM and  the Forest Service updated their guidance and incorporated this guidance  into relevant training courses. While the agencies’ revisions to the  guidance provided clearer direction, staff are generally not required to  participate in training, and the agencies do not systematically track staff  participation.
subsections: section_title: Agencies Revised Guidance and Training to Address Past Problems
paragraphs: In past reports, BLM’s 2003 workgroup, USDA’s Office of the Inspector  General, and others found that BLM and the Forest Service provided  limited guidance and training on the land exchange process. The 2003 BLM  workgroup confirmed that BLM was not adequately documenting why  proposed land exchanges were in the public interest. Furthermore, the  workgroup found that BLM’s guidance and policy did not discuss how to  exchange lands with some state governments that had legal restrictions on  conducting land exchanges.
The BLM Director agreed to implement some of the workgroup’s  recommendations. Table 11 shows these recommendations and the  actions taken.
The Forest Service has also experienced problems in providing adequate  land exchange guidance. In 2002, USDA’s Inspector General reported that  although Forest Service headquarters staff had drafted numerous revisions  to the exchange manual and handbook, none of those revisions had been  made final. The report recommended these revisions be made final to  expand direction and guidance on the exchange program. In response, the  Forest Service incorporated interim policy changes addressing past  problems into the agency’s 2004 handbook. Specifically, the revised  handbook provides new guidance on (1) developing a land exchange  proposal, (2) preparing feasibility analyses, and (3) conducting oversight  and reviews associated with exchanges.
In general, BLM’s 2005 Land Exchange Handbook is more comprehensive  than the 1999 version of the handbook. Specially, the 2005 handbook  provides realty staff with more detailed instructions.  For example, the  handbook provides detailed guidance on how the public interest  determination should be supported.
To incorporate new guidance on processing land exchanges, BLM and the  Forest Service revised three training courses offered to BLM and Forest  Service realty staff—Lands and Realty Academy, National Lands Training  for Line Officers and Program Managers, and Complex Land Tenure  Adjustment. The courses alert students to past problems with the land  exchange program, provide students with an overview of the new land  exchange handbook directives, and raise awareness of potential problems  when processing an exchange, according to Interior training officials.
section_title: The Agencies’ Enhanced Guidance and Training Has Helped Address Past Problems, but Participation in Training Is Generally Not Mandatory or Systematically Tracked
paragraphs: Asked about the usefulness of the agencies’ revised written guidance, the  majority of survey respondents—9 of the 10 BLM state officials and 7 of  the 9 Forest Service regional officials—reported that the guidance  provides at least moderately useful information on how to process land  exchanges, and a few offered suggestions for improvement. For example:    BLM respondents suggested providing more examples of relevant  exchange documents and examples of exchange success stories on BLM’s  internal land exchange Web site.
Forest Service respondents thought the exchange handbook could be  updated to (1) improve the format of exchange documents, such as the  ATI and the exchange agreement, and (2) provide guidance on how to  work with third parties when they work with more than one region. In  addition, the respondents said that the Forest Service should add more  timely updates on agency guidance to ensure consistency among the  regions.
With regard to training, we have reported that training is essential to  developing the knowledge and skills needed to administer agency  programs properly. Therefore, encouraging employee participation in  training can go a long way toward ensuring effective program  management. The agencies’ guidance does encourage BLM state and  Forest Service regional officials to provide realty staff with training, as  needed, in order to ensure staff develop the necessary skills to effectively  and efficiently process land exchanges.
While both agencies encourage participation in training, none of the three  available training courses on land exchanges are mandatory for BLM staff,  and the Forest Service only requires participation in the National Lands  Training for Line Officers and Program Managers once every 5 years. As a  result, agency staff may be processing land exchanges without completing  training.
Asked about the availability of the three training courses, the officials  surveyed reported the following:    Lands and Realty Academy. Nine of 10 BLM and 5 of 9 Forest Service  respondents said that this class was readily available.
Complex Land Tenure Adjustment. Nine of 10 BLM and all 9 Forest  Service respondents reported that this course was readily available.
National Lands Training for Line Officers and Program Managers. All  10 BLM and 8 of 9 Forest Service respondents reported that this training  was readily available.
While these officials reported that the training was readily available, other  factors may affect attendance. According to a BLM official we spoke with,  the agency restricts the number of staff from each state office that may  attend the training annually. In addition, a Forest Service regional official  told us that staff may be reluctant to attend lengthy out-of-town training  courses for personal reasons. For example, the Lands and Realty Academy  is an 18-week course, in one 10-week segment and two 4-week segments.  Furthermore, in April 2009, a Forest Service headquarters official said that  there is limited travel funding for training.
The agencies are not required to systematically track staff participation in  training courses, but 6 of the 10 BLM and all 9 Forest Service officials  surveyed reported that they informally monitor participation in each of the  training courses. Generally, the BLM and Forest Service respondents  stated that because they are responsible for nominating participants for  the courses, they keep internal records showing staff participation in the  courses. However, it may be difficult to maintain these records. For  example, one Forest Service regional official said that he tracks staff  participation in training, but the region’s line officers frequently change  positions, making it difficult to know who needs training. Although the  National Training Center can determine which staff have attended training  courses through an online system, it does not maintain a list of staff that  should enroll in any given training course.
section_title: Agencies Restructured Their Appraisal Functions, but BLM Officials Report Appraisals Continue to Delay Land Exchanges
paragraphs: As we and others have reported, problems with the appraisal process  produced appraisals that shortchanged taxpayers and were not timely. The  agencies restructured their appraisal functions to assure the independence  of appraisers and BLM took steps to improve appraisal timeliness, but the  appraisal process, particularly for BLM, continues to delay the completion  of some land exchanges. The agencies must rely on timely appraisals to  complete exchanges on schedule.
subsections: section_title: Agencies Restructured Their Appraisal Functions to Enhance Independence, and BLM Took Some Measures to Ensure More Timely Appraisals
paragraphs: As far back as 1987, our reports and others issued by Interior’s Inspector  General and the Appraisal Foundation found that BLM and others used  procedures that did not comply with recognized appraisal standards. For  example, Interior’s Inspector General reported in 2003, that for a BLM land  exchange, BLM officials negotiated away a substantial interest in  potentially valuable resources and improperly valued other federal and  state lands. According to the U.S. Office of Special Counsel, BLM’s own  internal estimates showed that the federal government stood to lose  between $97 million and $117 million on this exchange. In a different  report on this exchange, the Appraisal Foundation concluded that  appraisers at BLM lacked the institutional independence necessary to  conduct objective appraisals and faced heavy political pressure from their  realty managers to conduct appraisals that would expedite land  transactions. Interior’s Inspector General reports have reached similar  conclusions about appraiser independence, and our reports have  highlighted multiple cases of land transactions that inappropriately valued  land.
In response to these problems, Interior reorganized its appraisal function.  Before November 2003, appraisals for land transactions in BLM and other  Interior land management agencies were conducted by staff reporting to  realty managers in each of these management agencies. Beginning in  November 2003, Interior removed appraisers from the realty offices in  each of the agencies and consolidated them in a new office, the Appraisal  Services Directorate (ASD). Interior took this action primarily to insulate  appraisers from institutional pressure. Under this new organization,  appraisers report to, and receive performance evaluations from, other  appraisers, rather than managers responsible for completing land  transactions in their respective land management agencies. Interior also  shifted administrative functions associated with appraisals—previously  conducted by each land management agency’s realty office—to other units  within Interior. Contracting for land appraisals was one such function.
In 2006, we reviewed ASD to determine, among other things, (1) the extent  to which Interior’s appraisal policies and procedures ensure compliance  with recognized appraisal standards and (2) what, if anything, affects  ASD’s working relationships with its client agencies and its overall  efficiency in providing appraisal services. We found that although the  quality of appraisals had improved since ASD’s inception, Interior needed  to take several other steps to ensure that land transactions are based on  appraised values that adhere to recognized appraisal standards and to  establish a better accountability framework for ASD to help meet Interior  agencies’ appraisal needs. Table 12 describes our recommendations on  quality and timeliness and the actions Interior has taken to address them.
As table 12 shows, Interior has taken steps to act on our  recommendations. However, it has only recently acted on our  recommendation to establish dates for completing appraisals and to hold  ASD accountable for meeting these dates. We will monitor BLM’s  implementation of this recommendation because we continue to believe  that appraisals need to be timely to meet schedules for completing land  exchanges.
The Appraisal Foundation also reviewed the Forest Service’s appraisal  policies and procedures in 2000. It found that, like BLM, Forest Service  staff appraisers lacked independence. Specifically, the foundation stated  that staff appraisers reported to line officers, who also control hiring,  advancement, and other personnel decisions. As a result, the staff  appraisers were not independent of the line officer to whom he or she  reports. Moreover, the line officer is in a position to influence or overrule  an appraiser’s professional judgment. The report recommended that  appraisers report directly to the regional appraiser, and the regional  appraiser report to the chief appraiser.
The Forest Service did not fully agree with the recommendation, stating  that implementing this recommendation would require it to create an  independent organization within the Forest Service that would be difficult  to administer, to establish work priorities, and to hold accountable.  However, in 2000, the Forest Service did partially implement this  recommendation by placing all staff appraisers within the regions under  the direct supervision of the regional appraiser and by placing the regional  appraiser under the direct supervision of the regional director with land  program responsibilities. Moreover, the Forest Service charged the chief  appraiser with completing the annual performance evaluations for  regional appraisers and providing these to the regional director. According  the Forest Service Chief Appraiser, as of April 2009, he does not complete  an annual performance evaluation for regional appraisers, but rather  provides comments to the regional director, who prepares the evaluation.  The Chief Appraiser added that he does complete a Valuation Compliance  Inspection of each regional appraiser once every 3 years.
section_title: BLM Officials Report Appraisals Continue to Cause Problems with the Timeliness of Land Exchanges
paragraphs: Eight of the 10 BLM officials, but only 1 of the 9 Forest Service officials,  surveyed found the timeliness of appraisals to be problematic. As noted  earlier, officials had cited the timeliness of appraisals as one of the most  commonly cited reasons for delays in completing land exchanges.
In terms of the valuation process itself, BLM and Forest Service survey  respondents most frequently cited problems with the contracting process  for appraisals, the unavailability of contracted appraisers, and the  unavailability of in-house appraisers (5 of 19 in each case) as problems  their office had experienced with the valuation process. Again, BLM  respondents accounted for four of the five in each case.
BLM and Forest Service survey respondents elaborated on these  problems. For example, two BLM respondents called the ASD contracting  process “cumbersome,” and one of those respondents further  characterized the ASD process as “significantly more costly and very  delayed.” Another BLM respondent reported that ASD staff “did not work  well with our agency” and that the process is “ambiguous and confusing.”  Forest Service respondents also commented on the problems with the  valuation process that affect appraisal timeliness. For example, one Forest  Service respondent commented that appraisers are “overcommitted and  rarely meet delivery commitments,” and another reported that the  availability of qualified appraisers “remains somewhat limited.”
ASD appraisals may not be timely, in part because ASD has difficulty  identifying qualified contractors. ASD officials we interviewed cited  several reasons for this difficulty, including the limited number of  contractors qualified to conduct specific appraisal requests and qualified  contractors’ lack of interest in conducting government appraisals. On the  second point, the ASD officials stated that contractors might not be  interested in conducting appraisals for ASD because of the long time  frames associated with exchanges and the resulting delay in receiving  payment for services, the high level of public scrutiny surrounding  exchange appraisals, and the opportunities of more lucrative  nongovernment appraisal assignments.
section_title: Conclusions
paragraphs: The federal land management agencies hold a public trust: to manage and  preserve millions of acres of land in pursuit of multiple national goals.  While land exchanges can be an effective tool for acquiring lands in the  public interest, the process is complex and may be lengthy and costly. It is  important, therefore, that BLM and the Forest Service effectively manage  and oversee the land exchange process to ensure that they are using their  limited resources wisely.
Responding to criticisms that their land exchanges have not always served  the public interest or returned fair value to the federal government, BLM  and the Forest Service have taken actions intended to make the land  exchange process more transparent and accountable in order to better  assure that U.S. taxpayers are well served. Increased oversight of the land  exchange process has resulted in problems being identified and resolved  earlier in the exchange process. Furthermore, BLM’s policy to discontinue  use of escrow accounts and the two agencies’ revised guidance and  training have contributed to better management of the land exchange  programs. However, these actions have not always been fully implemented  or are not fully adequate to ensure the agencies are adhering to their  requirements and policies and effectively using their resources to serve the  public interest.
Given the complexity of the land exchange process, recent policy changes,  and staff turnover in both agencies, it is critical that the agencies continue  to take actions to effectively oversee and manage land exchanges.  Improvements to the agencies’ reviews would provide for a more  transparent decision-making process and provide critical information for  management and new staff on how past problems were overcome.  A  clearly stated records retention policy and adherence to that policy would  help manage and oversee land exchanges.  Furthermore, Forest Service  headquarters oversight of regional review programs will better ensure the  regions provide adequate review of land exchanges. In addition, better  management and oversight of BLM ledgers would help ensure that they are  complying with agency policy and are accurate. Clearly defining third- party facilitators, consistently applying disclosure policies to them, and  including them in the review process will provide more incentive for realty  staff to obtain required disclosure documentation, thereby helping the  agencies maintain control of the exchange process. Developing national  land tenure strategies at BLM and the Forest Service could help clarify  organizational priorities and unify agency staff in the pursuit of shared  goals for land exchanges. We continue to believe that better data on the  cost of land exchanges will help the agencies decide whether a proposed  land exchange is affordable and worthwhile. Finally, by making select  training mandatory and developing a formal system to track individuals’  training, the agencies can better ensure that realty staff develop and  maintain the skills necessary to process exchanges.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of the Interior and the Secretary of  Agriculture take the following 15 actions in order to build on the  improvements to the land exchange programs BLM and the Forest Service  have made.
We recommend that the Secretary of the Interior and the Secretary of  Agriculture direct the heads of BLM and the Forest Service to strengthen  the review process by    assuring that key problems identified and their resolutions are    clarifying the retention policy for key exchange documents and ensuring  staff follow the policy.
We further recommend that the Secretary of Agriculture direct the Chief of  the Forest Service to improve the review process by    making it a priority for the headquarters land exchange review team to  review regional exchange programs and follow up on implementation of  their recommendations, and    ensuring that the regions provide consistent oversight of land exchanges.
We also recommend that the Secretary of the Interior direct the Director  of BLM to better manage value imbalances in multiphase exchanges and  protect federal funds by    ensuring that BLM state offices document their decision and supporting  rationale for whether and how to secure land exchange imbalances;    ensuring that an ATI documents how the ledger will be used to process a  multiphase exchange;  revising the standard format for ledgers prescribed in the exchange  handbook to assure that each ledger clearly demonstrates that the ledger  (1) is balanced at least every 3 years and (2) is either open or closed;    ensuring that offices prepare ledgers and follow the ledger format,  including revisions cited above;  including ledgers in feasibility and decision reviews to ensure quality; and    providing copies of ledger updates to agency headquarters for tracking of  balances due to the United States.
Finally, we recommend that the Secretary of the Interior and the Secretary  of Agriculture direct the heads of BLM and the Forest Service to    clarify the definition of a third-party facilitator, ensure that disclosure  guidelines are consistently applied to all third-party facilitators, and  include disclosure documentation in the review process;    develop and issue national land tenure strategies for each agency and  encourage the BLM state and Forest Service regional offices to develop  their own plans to help guide land exchange decisions;  track the agencies’ costs of processing individual land exchanges;    determine the elements of current training that should be mandatory to  ensure that staff are able to process exchanges in conformance to agency  guidance, create a formal system to track attendance at training, and  determine how often training should be retaken; and    ensure that staff have completed this mandatory training before working  on land exchanges.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USDA for review and comment.  In written  comments, the Chief of the U.S. Forest Service generally agreed with the report  and 6 of the 9 recommendations for the Forest Service; it partially agreed with  the other 3 recommendations.  First, the Forest Service agreed in part with our  recommendation to develop and issue a national land tenure strategy, stating  that the department’s National Land Acquisition Plan and agency’s Strategic  Plan provide sufficient overarching guidance in the development of regional  and forest plans.  It did agree that some of the regional or forest plans on land  adjustment activities were out of date or inadequate.  We maintain that the  Forest Service’s guidance does not include national strategies that could help  clarify organizational priorities and unify staff in the pursuit of shared goals.   Second, the Forest Service partially agreed with our recommendation to track  the cost of individual exchanges because it recognizes that tracking the costs of  individual exchanges may provide some benefit.  However, it stated that the  cost of developing and implementing a tracking system would outweigh the  benefit.  The Forest Service added that it is planning to test a database designed  to centralize information on the rough costs of individual land exchanges to  help make decisions, track changes, and report to stakeholders and Congress.   We commend the Forest Service for taking steps to collect data on the cost of  land exchanges.  However, it is unclear from the Forest Service’s comments  whether this proposed database will enable tracking of costs as we have  recommended.  We continue to believe that better data on the cost of land  exchanges will help the agencies decide whether a proposed land exchange is  affordable and worthwhile.  Finally, the Forest Service agreed in part with our  recommendation to ensure that its staff has completed training before working  on land exchanges.  It stated that it agrees with the intent of the  recommendation to clearly describe and implement training and supervisory  requirements.  However, it did not believe that the recommendation gave it the  flexibility to allow inexperienced employees to work on exchanges with  supervision.  While we acknowledge the need for flexibility, we believe that the  Forest Service will ensure that realty staff develop the necessary skills to  process an exchange if it selectively makes training mandatory and requires the  training to be completed before handling land exchanges.  Appendix V provides  the Forest Service’s written comments, along with our detailed evaluation of  those comments.  In addition, the Forest Service provided technical comments  on the draft report, which we have incorporated as appropriate.
We also provided a draft of this report to Interior for review and comment.   In written comments, the Acting Assistant Secretary for Land and Minerals  Management did not directly comment on whether the department agreed  or disagreed with our recommendations.  It did state that the department  does not concur with some of the report’s findings.  Interior’s letter  highlighted two areas of concern:  (1) the document retention policy and  (2) the use of ledgers to track value imbalances.
Interior disagrees with our finding that BLM’s guidance does not clearly  state the document retention policy for land exchange documents.  We  continue to believe that the BLM policy for records retention is not clear  regarding land exchange records.  The four subsections pertaining to land  exchanges do not always provide clear time frames for how long  documents are to be retained.  In response to Interior’s comments, we  revised the report to highlight the different interpretations of this policy by  two senior lands and realty managers.  We believe these differing  interpretations underscore the confusion inherent in the current policy.   Our assessment of the policy, along with program officials’ differing  interpretations, support our conclusion that the retention policy is unclear.
Although we found that the agency is not adhering to its guidance for  maintaining ledgers, Interior stated that BLM believes that the land  exchange case files as a whole document the values of lands conveyed and  any resulting imbalances.  Nevertheless, BLM’s land exchange handbook  states, and we concur, that ledgers should completely and accurately  reflect the balances due so that values owed are easily identified.  Indeed,  as Interior stated, BLM cannot now verify the cumulative imbalance.  We  continue to believe better management and oversight of BLM ledgers  would help ensure that the ledgers are complying with regulations and  policy and that the imbalances reported are accurate.
Interior also provided technical comments.  Most significantly, it disagrees  with our statement that the authority for certain multiphase exchanges cited  in the draft report remains questionable and that these exchanges appear to  have resulted in transfers of cash that should have been regarded as sale or  exchange proceeds or payments for land acquisitions.  We are exploring these  issues separately with Interior’s Office of the Solicitor.
Appendix VI presents Interior’s letter and our detailed response.
We are sending copies of this report to the Secretary of the Interior, the  Secretary of Agriculture, the Director of Bureau of Land Management, the  Chief of the Forest Service, and other interested parties. In addition, the  report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your offices have questions about this report, please contact me  at (202) 512-3841 or nazzaror@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report are listed in appendix VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This appendix details the methods we used to examine the Department of  the Interior’s (Interior) Bureau of Land Management (BLM) and the  Department of Agriculture’s (USDA) Forest Service land exchange  programs. We were asked to (1) analyze the number, trends, and  characteristics of BLM and Forest Service land exchanges, and (2)  determine the actions BLM and the Forest Service have taken to address  previously identified key problems and the effectiveness of these actions.
For both of our objectives, we reviewed relevant documents and  interviewed BLM and Forest Service officials responsible for land  exchanges at headquarters, state or regional offices, and field offices, and  an official from the Colorado State Land Board. We also interviewed  officials from two for-profit, third-party facilitators—Western Land Group  based in Denver, Colorado, and Summit Resources based in Phoenix,  Arizona—as well as officials from the Western Lands Project, a nonprofit  organization that tracks land exchanges. To learn about the exchange  process in detail, we visited with BLM state and Forest Service regional  officials in Arizona, Colorado, and New Mexico. We also met with BLM  officials at the Royal Gorge Field Office in Colorado and with Forest  Service officials at the Tonto National Forest in Arizona and the combined  Grand Mesa, Uncompahgre, and Gunnison National Forests in Colorado.  We primarily selected these sites because they were processing many land  exchanges. We attended several sessions of the Complex Land Tenure  Adjustment training course at the BLM National Training Center in  Phoenix, Arizona, in June 2008.
To address both objectives, we also conducted a Web-based survey of 10  BLM state land exchange program managers and all 9 Forest Service  regional program managers. The BLM managers were located in Arizona,  California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah,  and Wyoming. The nine Forest Service managers were located in Regions  1, 2, 3, 4, 5, 6, 8, 9, and 10. We surveyed these managers because their  offices were processing land exchanges during the period we reviewed. In  this survey, we asked program managers about trends and reasons for  overall exchange activity, legislated land exchanges, third-party  facilitators, BLM and Forest Service land exchange proposal reviews, the  land exchange ledgers and financial assurances BLM uses to account for  land value imbalances, BLM’s land tenure strategy plans, the timeliness of  land exchanges, the valuation process, land exchange training and  guidance, and the cost of exchanges. To develop the draft survey, we  obtained and incorporated comments from the BLM and Forest Service  land exchange program leads as appropriate. We also pretested the survey  with BLM state office and Forest Service regional office land exchange  program leads and made changes in the survey’s questions as appropriate.  Information about accessing our survey was provided via e-mail for all  survey participants. We provided survey respondents access to the survey  via e-mail in December 2008 and encouraged them to use all available  resources in their office to provide the most complete and accurate  answers possible. To ensure security and data integrity, we provided all  participants with a user name and a personal password that allowed them  to access the survey and ensure that no one else could edit the answers.  We achieved a 100 percent response rate for our survey.
For our first objective, to analyze the number, trends, and characteristics  of BLM and Forest Service land exchanges, we requested that the  agencies’ headquarters land exchange program leads collect information  on the universe of pending, completed, or terminated land exchanges  processed from October 31, 2004, through June 30, 2008. The data  collected included the identity and vital statistics on the exchanges, which  encompassed the number of federal and nonfederal acres, parcels, and  landowners; the appraised land values; the cash equalization payment; the  type of interests to be exchanged; the Agreement to Initiate (ATI) date; the  current exchange status; the completion date (if applicable); the third- party facilitator involved; specific legislation (if any); and BLM land  exchanges with ledgers. We assessed the reliability of these data by  reviewing them for inconsistencies and missing information, and then  followed up with BLM state and Forest Service regional contacts as  necessary to make corrections. From the data provided, we calculated the  average time to complete exchanges using the date the ATI was signed and  the completion date. Furthermore, to determine the reasons for any  trends in land exchanges, we interviewed agency officials at each level and  used our Web-based survey to ask BLM and Forest Service land exchange  program leads about the overall trends in exchanges since 2000 and the  reasons for these trends. In addition to our survey, we gathered more  detailed information from agency officials on selected characteristics of  these exchanges: (1) multiphase exchanges, including those using a ledger;  (2) exchanges assisted by a third-party facilitator; and (3) specifically  legislated exchanges. For specifically legislated exchanges, our Office of  General Counsel summarized the provisions of the laws, and then we  compared the provisions with exchanges conducted pursuant to the  agencies’ broad discretionary authority to determine how they differed, if  at all.
See appendixes III and IV for selected information on BLM and Forest  Service land exchanges processed from October 1, 2004, through June 30,  2008.
For our second objective, to determine the effectiveness of actions BLM  and the Forest Service have taken to address previously identified  problems, we determined the (1) previously identified problems, (2)  actions agencies took in response to those problems, and (3) effectiveness  of those actions.
First, we reviewed GAO reports issued since 1985, Interior and USDA  inspector general reports, Appraisal Foundation reports, and BLM and  Forest Service internal reviews (see app. II for a list of these reports). For  each of these reports, we identified the problems cited and  recommendations. We placed these problems and recommendations into  seven categories: (1) assure that certain requirements are met, (2) use of  escrow accounts, (3) work with third-party facilitators, (4) planning, (5)  guidance and training, (6) cost of exchanges, and (7) appraisals. Of the 115  problems identified in the past reports, we choose to follow up on 34  problems—each of which fell within one of the seven categories. We  selected these problems for follow-up based on the frequency of the  problem cited, and whether they were related to statutory and regulatory  requirements. Although the category with the most problems—50—was  the appraisal category, we conducted limited work on appraisals because  we reviewed Interior’s Appraisal Services Directorate in September 2006.
Second, to identify actions taken in response to the seven categories of  problems, we interviewed land exchange program managers at BLM and  the Forest Service and obtained and analyzed related documentation on  the actions these officials cited. We also obtained and reviewed agency  responses to the recommendations and agency status reports.
Third, to determine the effectiveness of the agencies’ actions to address  the key problems earlier reports had identified, we analyzed the available  key documents for a sample of land exchanges processed from October  2004 through June 2008 to determine (1) whether the previously identified  problems were addressed, (2) whether internal BLM and Forest Service  reviews documented these problems, and (3) the resolution of the  documented problems. We selected a nongeneralizable sample of 31 land  exchanges out of the 250 exchanges processed from October 2004 through  June 2008, comprised of 27 exchanges that accounted for 85 percent of  acres that the agencies have or plan to acquire, and 4 others that we  reviewed during the course of our site visits. We based our selection on  acreage rather than land value because values were not available for all of  the exchanges and because acreage is a better indicator of land area  affected. We added the remaining 4 exchanges—1 by BLM and 3 by the  Forest Service—because they were available for our review during our site  visit with the BLM state office and Forest Service regional office in New  Mexico. Of the 31 exchanges in our sample, 19 were BLM and 12 were  Forest Service exchanges. We then developed a data collection instrument  to record the results of our review of key documents associated with each  exchange.
To examine the sample of 31 exchanges in detail, we identified the  following nine key documents for our review:    Five documents pertinent to the exchange, including the feasibility  analysis, the ATI, the draft decision, the final decision, and any land  exchange ledgers used in BLM multiphase exchanges.
Four agency reviews of the exchange documents at two stages, including  BLM or Forest Service headquarters or regional review team reviews at  the feasibility and decision stages, and Interior’s Office of the Solicitor  review of BLM exchanges at the feasibility and decision stages.
The BLM and Forest Service exchange program leads confirmed that these  were the key documents in processing a land exchange.
The data collection instrument we developed to record our review of the  31 exchanges focused on six requirements or guidelines selected on the  basis of our and other prior reports citing problems in meeting these  requirements or guidelines, interviews with the BLM and Forest Service  land exchange leads and other agency staff, document reviews, and the  information provided in the land exchange training sessions we attended.  The six requirements or guidelines were to (1) properly describe the lands  subject to an exchange; (2) ensure that the proposed exchange conforms  with the land use plan; (3) determine that the public interest will be well  served; (4) determine the dollar values of the lands to be exchanged,  including whether the values are within 25 percent of each other; (5)  ensure parties provide title to the properties involved; and (6) ensure  compliance with the National Environmental Policy Act.
In addition to our review of land exchange documents, we surveyed BLM  and Forest Service officials about the effectiveness of certain actions  related to the categories of past problems we identified: (1) assure that  certain requirements or guidelines are met, (2) use of escrow accounts, (3)  work with third-party facilitators, (4) planning, (5) guidance and training,  (6) cost of exchanges, and (7) appraisals.
Finally, for the 31 exchanges in our sample, we obtained and reviewed (1)  documents on third-party facilitators’ compliance with certain  requirements or guidelines to disclose their relationships with nonfederal  landowners involved in the exchanges, and (2) seven land exchange  ledgers used within our time frame to determine how ledgers were  implemented and conducted follow-up interviews with the BLM state  offices responsible for managing the ledgers.
We conducted this performance audit from March 2008 to June 2009 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
section_title: Appendix II: Prior Reviews and Audits of the BLM and Forest Service Land Exchange Programs
subsections: section_title: The Appraisal Foundation
paragraphs: Evaluation of the Appraisal Organization of the Department of Interior  Bureau of Land Management. Washington, D.C., October 9, 2002.
Evaluation of the Appraisal Organization of the USDA Forest Service.  Washington, D.C., March 28, 2000.
section_title: Department of Agriculture, Office of Inspector General
paragraphs: Forest Service National Landownership Adjustment Team, Washington,  D.C. Report No. 08601-27-SF. Washington, D.C., March 28, 2002.
Forest Service Siuslaw National Forest Land Adjustment Program,  Corvallis, Oregon. Report No. 08003-7-SF. Washington, D.C., September  10, 2001.
Forest Service Pacific Southwest Region Zephyr Cove Land Exchange,  Lake Tahoe Basin Management Unit, South Lake Tahoe, California.  Report No. 08003-6-SF. Washington, D.C., July 14, 2000.
Forest Service Pacific Southwest Region Thunderbird Lodge Land  Exchange, Lake Tahoe Basin Management Unit, South Lake Tahoe,  California. Report No. 08801-5-SF. Washington, D.C., April 30, 1999.
Forest Service Humboldt-Toiyabe National Forest Land Adjustment  Program, Fiscal Years 1990-1997, Sparks, Nevada. Report No. 08003-02- SF. Washington, D.C., September 11, 1998.
Forest Service Pacific Southwest Region Title To Physical Improvements  On The Zephyr Cove Land Exchange, Lake Tahoe Basin Management  Unit, South Lake Tahoe, California. Report No. 08003-4-SF. Washington,  D.C., August 26, 1998.
section_title: Department of the Interior, Bureau of Land Management
paragraphs: Appraisal and Exchange Workgroup Final Report. Washington, D.C., May  2003.
section_title: Department of the Interior, Office of Inspector General
paragraphs: Land Exchange and Acquisitions, Bureau of Land Management Utah  State Office: Independent Review Will Help Protect Integrity of Appraisal  Process. Report No. 2001-I-413. Sacramento, CA, July 31, 2001.
Nevada Land Exchange Activities, Bureau of Land Management. Report  No. 96-I-1025. Washington, D.C., July 15, 1996.
Interior’s Land Appraisal Services: Actions Needed to Improve  Compliance with Appraisal Standards, Increase Efficiency, and  Broaden Oversight. GAO-06-1050. Washington, D.C.: September 28, 2006.
Federal Land Exchange: Assessment of Mount Hood Land Appraisal  Reports. GAO-06-1135R. Washington, D.C.: September 26, 2006.
BLM and the Forest Service: Land Exchanges Need to Reflect Appropriate  Value and Serve the Public Interest. GAO/RCED-00-73. Washington, D.C.:  June 22, 2000.
Federal Land Acquisition: Land Exchange Process Working But Can Be  Improved. GAO/RCED-87-9. Washington, D.C.: February 5, 1987.
section_title: Appendix III: BLM Completed, Pending, or Terminated Land Exchanges, October 1, 2004, through June 30, 2008
paragraphs: West King Min Estate  Completed  Agua Caliente Band  of Cahuilla Indians  (Santa Rosa/San  Jacinto NM’s)
7 completed, 5  pending  $423,652 (9)  Equalization  payment  (10) Date  ATI  (11) Date  exchange  completed, if  (13) Average time  to complete  exchange from  date ATI signed to  date completed  by U.S. (12) Third-party  facilitator name, if any  (in years)
Smith Creek Mesa  Phantom Canyon  High Rollin’ Ranch   Completed  Morley Cooper Mtn.   Completed  Great Sand Dunes  NP/Baca NWR   8 completed, 7  pending, 3  terminated  $245,600 (10) Date  ATI  (11) Date  exchange  completed, if  (13) Average time  to complete  exchange from  date ATI signed to  date completed  by U.S. (12) Third-party  facilitator name, if any  (in years)
1/25/2008  Western Land Group, Inc.
Western Land Group, Inc.
Western Land Group, Inc.  2/22/2007  Western Land Group, Inc.   0  (2) Exchange name  (3) Status:  completed,  pending,  terminated  (4) Number of  (6) Equalization  payment by  (5) Total value of  nonfederal  interests acquired  7 completed, 2  pending, 1  terminated  2 completed, 2  pending, 1  terminated  326,000 (9)  Equalization  payment  (10) Date  ATI  (11) Date  exchange  completed, if  (13) Average time  to complete  exchange from  date ATI signed to  date completed  by U.S. (12) Third-party  facilitator name, if any  (in years)
Inman (real)
Intrepid Mining  (Mississippi Potash)
Rock Creek Ranch  (Gary Miller)
Berry Rock (Boehm)  Pending  Columbia Basin  Shrub Steppe  (CBSS) Assembled  Land Exchange  1 completed, 5  pending, 1  terminated  $0 (9)  Equalization  payment  (10) Date  ATI  (11) Date  exchange  completed, if  (12) Third-party  facilitator name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed  by U.S. (in years) $51,474 (2) Exchange name  (3) Status:  completed,  pending,  terminated  (4) Number of  (6) Equalization  payment by  (5) Total value of  nonfederal  interests acquired  3 completed, 3  pending  The P&M Coal exchange is a joint exchange with BLM and the Forest Service. Since BLM is the lead  agency, this exchange is listed here. However, the acres and values benefiting the Forest Service are  listed in appendix IV. (9)  Equalization  payment  (10) Date  ATI  (11) Date  exchange  completed, if  (13) Average time  to complete  exchange from  date ATI signed to  date completed  by U.S. (12) Third-party  facilitator name, if any  (in years)
section_title: Appendix IV: Forest Service Completed, Pending, or Terminated Land Exchanges, October 1, 2004, through June 30, 2008
paragraphs: U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party  facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Denver Water  Board (Round Hill)
ATAH I/  Catspaw/  Navajo Headwaters  (Banded Peak)
Lisenby & Nearburg  (Rio Oxbow)
Campbell (Miles)
Needmore Ranch II,  Ltd (Big Creek)
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Group, Inc.
Group, Inc.
Associates, Inc.
Group, Inc.
Group, Inc.
Group, Inc.
Group, Inc.
Chihuahua, LLC &  Town of  Breckenridge  (Snake River)
State of Nebraska  (Middle Loup)
Harlow/Hartog/  Finley (Greyhound)
Home-stake, et al.  (Grizzly)
Dakota Partnership  (Indian Creek)
Dull Center (Dilts)
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Group, Inc.
Group, Inc.
Group, Inc.
Group, Inc.
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Estate and  Development,  Inc. $0 (3) Status:  completed, pending,  terminated   (4) Number of  (5) Total value of  nonfederal  interests acquired  (6) Equalization  payment by  6200 South  (FSFREA Authority)
Bogus/Thompson  Creek (Tripartite)
Moody (Tripartite)
WLT-Middle  Boulder (Tripartite)
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Group, Inc.
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Blue Mountain  (Clearwater Land  Exchange-Oregon)
Chad M. Thompson  DDS Profit Sharing,  Plan and Trust  (Yellow House)
McMahon  (Nahahum Canyon)
U.S.
Kenneth Kelly, Et  Ux   DeSota Land &  Timber (Double A  Firewood, Inc)
U.S.
American Land  Holdings of IL, LLC  Braun, Michael K.
Wright, Ronald E.
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
Allen, Everett et. al.
Campbell, Kenneth  (Trust)
Cook, Ron & Judy  Poe, Robert (Estate  of)
Turnbough, Minnie  (Trust)
U.S.
Mittersill-Sentinel  Mtn.
Heirs of Jimmie A.  George, Sr.
The P&M Coal exchange is a joint exchange with BLM and the Forest Service. Since BLM is the lead  agency, this exchange is listed on the BLM exchange appendix (app. III). However, the acres and  values benefiting the Forest Service are listed here.
U.S. (11) Date  exchange  completed, if  applicable  (12) Third-  party facilitator  name, if any  (13) Average time  to complete  exchange from  date ATI signed to  date completed (in  years)
section_title: Appendix V: Comments from the Department of Agriculture
paragraphs: The following are GAO’s comments on the Department of Agriculture’s  Forest Service letter, dated May 22, 2009.
subsections: section_title: GAO Comments
paragraphs: 1.  We revised the report to reflect the fact that regional staff, not  necessarily reviewers, both process and review all exchanges in the  region.  We also added a sentence to acknowledge that there is an  intentional separation between regional staff who process exchanges  and those who review them. (Now on p. 35.)  2.  We continue to believe that the Forest Service needs a more detailed  national plan to guide its land exchange activities.  The 2005 National  Land Acquisition Plan does not, in our opinion, offer a specific  strategy on making exchange and other land transaction decisions on a  national basis.  We believe a specific strategy could help clarify  organizational priorities and unify staff in the pursuit of shared goals.  (Now on p. 66.)  3.  Although the Forest Service agrees in part with our recommendation  on tracking costs and recognizes that tracking costs for individual  exchanges may provide some benefit, it does not provide any support  for its position that the effort to track the costs would exceed the  expected benefit, such as a cost-benefit analysis.  Furthermore, Forest  Service officials had told us during our review that they would need  only to establish a specific project code in their accounting system to  track such costs, and therefore the Forest Service would not need to  develop and implement a new system to track exchange costs.  We  commend the Forest Service’s effort to develop a centralized database  to collect the rough costs of exchanges it does collect, but we believe  that better data on the cost of land exchanges will help the agencies  decide whether a proposed land exchange is affordable and  worthwhile. (Now on p. 66.)  4.  We slightly modified our recommendation by replacing “this” with  “mandatory” to more closely align this recommendation with the prior  one calling for the Forest Service to identify and make certain training  mandatory.  We believe, however, that by ensuring that realty staff  working on exchanges have taken the proper training, the agency can  help these staff develop and maintain the skills necessary to process  exchanges.  Moreover, our recommendation for the agencies to  determine which elements of the current training courses to make  mandatory and how often they should be taken provides the agencies  with necessary flexibility. (Now on p. 66.)
section_title: Appendix VI: Comments from the Department of the Interior
paragraphs: The following are GAO’s comments on the Department of the Interior’s  letter, dated May 28, 2009.
subsections: section_title: GAO Comments
paragraphs: 1.  We continue to believe that the BLM policy for records retention is not  clear for land exchange records.  The four subsections on land  exchanges do not always provide clear time frames for how long  documents are to be retained.  In response to Interior’s comment, we  revised the report to state that two senior lands and realty managers  provided different interpretations of the policy. One stated that, in  practice, completed exchange case files are retained for 3 years and  then sent to a Federal Records Center.  The second official stated that  retention varies depending on the final disposition of a proposal, and  he was unclear on certain aspects of the policy.  While we did not  contact a BLM records management official, we believe that our  assessment of the policy, together with the differing interpretations of  program officials, support our conclusion that the retention policy is  unclear. (Now on p. 33.)  2.  BLM believes that the land exchange case files as a whole document  the values of lands conveyed and any resulting imbalances.  While this  may be the case, BLM’s land exchange handbook states, and we  concur, that ledgers should completely and accurately reflect the  balances due in order that values owed are easily identified. In its  comment, BLM states that it is not currently able to verify the  cumulative imbalance.  We continue to believe that better management  and oversight of BLM ledgers would help ensure that ledgers comply  with regulations and policy and that imbalances reported are accurate.  (Now on p. 38.)  3.  We revised the report text and accompanying footnote to clarify how  the two agencies conduct multiphase exchanges and how these relate  to the agencies’ separate definitions of assembled land exchanges.  (Now on p. 6.)  4.  We revised the report to clarify that categorical exclusions apply only  to Forest Service.  (Now on p. 7.)  5.  The statement in this paragraph is based on the frequency of responses  to our survey, and the additional reason the comments cited was not  among the most frequent.  However, two respondents did cite protests,  appeals, and litigation as reasons for delays in completion of land  exchanges.  We revised the text to reflect Interior’s comment. (Now on  p. 15.)  6.  As the Interior letter states, a ledger was not prepared for the fifth and  final phase of the exchange and therefore could not be provided to us  for review.  Although Interior states that the case file clearly  documents that the values of the federal and nonfederal lands  exchanged were equalized in the final phase of this exchange, as stated  earlier, this information should be maintained in the ledger.  We  revised the text to clarify that we are referring to the final phase of the  Birch Creek exchange. (Now on p. 20.)  7.  As stated above, a ledger was not prepared for the final phase of the  Birch Creek exchange.  We retain the ledger status as “none” and  clarified the footnote. (Now on p. 21.)  8.  We appreciate the updated figures for acreage and value in these two  exchanges. However, the numbers we list are based on BLM data  provided as of June 30, 2008.  Since we do not have updated acreage  and value data for the other 248 BLM and Forest Service land  exchanges, we will not incorporate these updated numbers for only  two exchanges in our report. (Now on p. 21.)  9.  The law addressing the State of California exchange calls for the  exchange of certain state school lands for certain public lands under  Interior’s jurisdiction and any federal land which is or becomes surplus  to the needs of the federal government, but does not identify specific  parcels of land. All of the other legislated exchanges with this column  checked had specific parcels identified for exchange. We revised the  report to clarify this distinction. (Now on p. 23.)  10. We reported that BLM officials believe that the Central Washington  Assembled Land Exchange II (CWALE) multiphase exchange was  conducted pursuant to the applicable statutory and regulatory  requirements. As we stated in the report, we are pursuing the issue of  whether certain multiphase exchanges, including CWALE, are  authorized with Interior’s Office of the Solicitor. (Now on p. 36 and 40- 41.)  11. We added this explanation to the report regarding the reasons the  exchange has been pending since 2003. (Now on p. 39.)      12. We reported that BLM officials believe that the CWALE multiphase  exchange was conducted pursuant to the applicable statutory and  regulatory requirements. As we stated in the report, we are pursuing  the issue of whether certain multiphase exchanges, including CWALE,  are authorized with Interior’s Office of the Solicitor. Interior’s  comments state that funds BLM received during the CWALE  multiphase exchange and placed into a deposit fund account (which  the comments erroneously call a suspense account) were for financial  assurance purposes. However, BLM was unable to produce any  documentation that the monies BLM received were financial  assurances when we requested such documentation. Most notably,  BLM was unable to provide us with the completed form that the  agency’s handbook says should accompany financial assurances of  cash or personal bonds. (Now on p. 40-41.)  13. While the handbook provides guidance and land use plans provide  management direction for a specific resource area, neither offers a  national strategy on making exchange and other land transaction  decisions.  We continue to believe that developing a national land  tenure strategy at BLM could help clarify organizational priorities and  unify agency staff in the pursuit of shared goals for land exchanges.  (Now on p. 48.)  14. There is no change required because this is a direct quotation. (Now on  p. 49.)  15. We revised the text to reflect this comment.  We continue to believe  that developing a national land tenure strategy at BLM could help  clarify organizational priorities and unify agency staff in the pursuit of  shared goals for land exchanges. (Now on p. 49.)  16. There is no change required.  (Now on p. 60.)  17. We revised the text as suggested. (Now on p. 60.)
section_title: Appendix VII: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Andrea Wamstad Brown  (Assistant Director), Eric Charles, Rich Johnson, Mark Keenan, Emily  Larson, Sheila Rajabiun, John Scott, Rebecca Shea, Carol Herrnstadt  Shulman, Jeanette Soares, John Warner, and Michelle Woods made key  contributions to this report.