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

Letter

Background

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.

Statutory Authority

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.

Types of Land Exchanges

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.

The Exchange Process

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.

Number, Trends, and Characteristics of BLM and Forest Service Land Exchanges

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.

Agencies Processed 250 Land Exchanges to Acquire about 621,600 Acres between 2004 and 2008

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.

Land Exchange Completion Times Varied Greatly and Sometimes Exceeded Estimated Time Frames

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.

Since 2000, the Number of BLM and Forest Service Land Exchanges Has Declined for Several Reasons

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.

Some of the Land Exchanges Had Unique Characteristics

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.

Forty-seven Facilitated Land Exchanges Involved Several Private and Nonprofit Facilitators

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.

Eight of Nine BLM Multiphase Land Exchanges Used Ledgers to Track the Balance of Land Values

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.

Processing the 20 Legislated Land Exchanges Sometimes Differed from Processing Discretionary Land Exchanges

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.

Agencies’ Actions to Resolve Previously Identified Key Problems Have Been Somewhat Effective, but Issues Remain

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.

Agencies’ Reviews Help Ensure That Exchanges Meet Requirements and Agency Guidance, but They Lack Documentation and Forest Service Oversight Is Inconsistent

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.

Agencies Initiated Headquarters Reviews to Better Ensure Compliance

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.

Reviews Have Addressed Some Past Concerns but Were Not Always Well Documented

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.

Forest Service Oversight Has Not Been Sufficient

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.

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

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.

BLM Stated It Has Stopped Using Escrow Accounts, and Multiphase Land Exchanges Have Continued

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.

BLM Is Not Adhering to Its Guidance on Managing Land Exchange Ledgers to Track Value Imbalances in Multiphase Land Exchanges

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.

Statutory Authority for Some BLM Multiphase Exchanges with Ledgers Remains Unclear

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.

The Agencies Issued Guidance on the Use of Third-Party Facilitators, but Need to Clarify and Consistently Apply Disclosure Policies

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.

Agencies Enhanced Guidance and Required Full Disclosure from Third-Party Facilitators to Correct Past Problems

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.

Agencies Do Not Clearly Define Third-Party Facilitators and Are Not Consistently Applying Disclosure Policy

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.

BLM and the Forest Service Do Not Have National Land Tenure Strategies

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.

BLM Has Not Completed An Agreed-to National Land Tenure Strategy, but Three BLM State Offices Have Completed State-Level Strategies

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.

Forest Service Does Not Have a National Land Tenure Strategy

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.

Agencies Do Not Track the Costs of Processing Individual Exchanges

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.

BLM and the Forest Service Did Not Implement GAO’s Recommendation to Track Costs

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.

Agencies Do Not Have Cost Information to Help Manage Land Exchanges

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.

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

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.

Agencies Revised Guidance and Training to Address Past Problems

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.

The Agencies’ Enhanced Guidance and Training Has Helped Address Past Problems, but Participation in Training Is Generally Not Mandatory or Systematically Tracked

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.

Agencies Restructured Their Appraisal Functions, but BLM Officials Report Appraisals Continue to Delay Land Exchanges

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.

Agencies Restructured Their Appraisal Functions to Enhance Independence, and BLM Took Some Measures to Ensure More Timely Appraisals

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.

BLM Officials Report Appraisals Continue to Cause Problems with the Timeliness of Land Exchanges

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.

Conclusions

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: Prior Reviews and Audits of the BLM and Forest Service Land Exchange Programs

The Appraisal Foundation

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.

Department of Agriculture, Office of Inspector General

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.

Department of the Interior, Bureau of Land Management

Appraisal and Exchange Workgroup Final Report. Washington, D.C., May 2003.

Department of the Interior, Office of Inspector General

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.

Appendix III: BLM Completed, Pending, or Terminated Land Exchanges, October 1, 2004, through June 30, 2008

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)

Appendix IV: Forest Service Completed, Pending, or Terminated Land Exchanges, October 1, 2004, through June 30, 2008

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)

Appendix V: Comments from the Department of Agriculture

The following are GAO’s comments on the Department of Agriculture’s Forest Service letter, dated May 22, 2009.

GAO Comments

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.)

Appendix VI: Comments from the Department of the Interior

The following are GAO’s comments on the Department of the Interior’s letter, dated May 28, 2009.

GAO Comments

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.)

Appendix VII: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

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.