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Sunday, May 14, 2000
Deseret News

Edition: All
Page: A01

Are Utah land deals ripping off the U.S.?

Ex-appraiser at BLM says trade values not equal
By Jerry D. Spangler and Donna M. Kemp, Deseret News staff writers

Two massive land deals between the state and federal government -- trumpeted by Utah
Gov. Mike Leavitt and Interior Secretary Bruce Babbitt as models of state-federal
cooperation -- have become the target of two federal investigations.
And another land deal, the recently proposed exchange involving West Desert wilderness
areas, could fall under similar scrutiny.Federal investigators with the Interior Department's
Solicitor's Office and the General Accounting Office, the investigative arm of Congress, are
looking into whether American taxpayers were or may be left holding the bag for deals
whereby the state received or will receive hundreds of millions of dollars in federal assets in
return for state lands worth only a small fraction of that.
"Regardless of the goal, the end result should never justify unethical or illegal means in our
society, especially when the true costs of the lost public assets are so terribly disproportionate
to the benefits of the project," said Jack MacDonald, the recently retired chief appraiser for
the Utah office of the Bureau of Land Management.
MacDonald prompted the federal investigations, alleging that American taxpayers were
shafted in state-federal land deals that skirted federal laws and regulations.
According to Allen Freemyer, staff director for the House subcommittee on national parks
and public lands, the Utah investigations are extensions of a much larger probe into deals
for federal land in the Las Vegas area.
"It was a natural extension for those teams of investigators to come up to Utah," he said,
At issue is the value of hundreds of thousands of acres of state school trust lands that
were or may be traded for cash, minerals and federal land as part of three separate and
much-publicized land trades. The deals involve:

16,000 acres of private and state lands in Washington County to be acquired by the
federal government for habitat preservation for the endangered desert tortoise.

250,000 acres of state school trust lands isolated inside national parks, forests and Indian
reservations, and another 200,000 acres within the recently created Grand Staircase-
Escalante National Monument.

107,000 acres of state trust lands locked inside proposed West Desert wilderness areas.

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MacDonald was a BLM insider during the first two of those deals, and he has, over the
course of his three-decade career as a federal appraiser, conducted appraisals on many of the
parcels involved in the third deal. He says the BLM and the state of Utah are embraced in a
conspiracy -- one where the state is walking away with assets worth as much as 50 to 100
times the lands it gave up.
Interior Department and state officials have dismissed MacDonald's claims. In fact, they
have characterized MacDonald as a malcontent who single-handedly brought major land
trades to a standstill because of his intransigent appraisals. Once he completed an appraisal,
neither hell nor high water would change his mind.
And, until he was pulled off the land trades, his was the last word.
Remembers one conservationist involved in negotiating the desert tortoise exchange,
"Everybody knew if you didn't get Jack MacDonald to sign off on the appraisal, the deal was
dead in the water. His word was final."
In fact, MacDonald's approval could make a deal happen as much as his disapproval
would kill it, much to the frustration of those involved in negotiating the trade. That
frustration boiled over when one deal after another was stymied.
Those involved in trying to make the deals happen -- state and federal officials,
conservationists and local county commissioners -- became increasingly outraged. Letters
were written to Rep. Jim Hansen, R-Utah, and Sen. Bob Bennett, R-Utah, pleading for help
to break the logjam.
And political fingers were pointed at MacDonald as the reason why the deals had stalled.

Law and disorder

MacDonald insists he was only trying to follow the law and balked when his supervisors
asked him to "falsify" appraisals to support the land trades. When he refused, he and his
BLM staff of three appraisers were removed from any involvement in the land swaps.
In fact, MacDonald said then-BLM State Director Bill Lamb told them not to go anywhere
near Washington County, where they had questioned the appraisals being done for the
Desert Tortoise Habitat Conservation Plan.
"He was a good appraiser, but he was highly opinionated," said Lamb, who retired as the
state director of the BLM and now is a consultant to the state School and Institutional Trust
Lands Administration. "He wasn't willing to change his opinion on appraisals."
And when he wasn't willing to compromise, he and his team of appraisers found
themselves on the outside looking in.
"I knew my career was over at that point," MacDonald said. "After 17 years of working in
the St. George area, we were excluded. They told us they were hiring outside appraisers and
sending the appraisals out of state for review."
MacDonald retired recently from the BLM but not before turning over reams of files to the
Inspector General's Office and the General Accounting Office supporting his contention that
American taxpayers were paying an exorbitant cost for the land trades. There are memos
detailing the political pressure being put on BLM staffers to go along with the trades.
The allegations have been confirmed by officials within the BLM, some of whom witnessed
efforts by top BLM officials in Washington, D.C., to persuade the Utah BLM appraisers to
be, as MacDonald remembers, "more creative" with their appraisals.
MacDonald says he has seen preliminary drafts of the inspector general's report that
validate his claims that the values of the exchanged lands were not equal, as is required by
federal law. That report, as well as the GAO report, have not yet been released. Both offices
refused to comment about ongoing investigations.

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The accusations are also being investigated by Janine Blaeloch with the Western Land
Exchange Project, a Seattle-based watchdog group that monitors land exchanges in 11
Western states. The group was organized to probe questionable land transfers involving U.S.
Forest Service deals with timber companies but has since expanded its focus to examine all
of the more than 300 government land trades conducted every year in the Western states.
"The Utah exchanges are the worst" of any in the country, Blaeloch said. In fact, she says
Utah is "making out like a bandit" in deals where it gives up relatively worthless lands in
exchange for high-value, high-potential lands owned by the American public.
"There is so much anti-government sentiment it is easy for politicians to make these quick
deals to resolve conflicts. And frankly, the Clinton administration has been very amenable to
placating those sentiments in doing those deals knowing full well the American public is
being ripped off. Yet it is a price they are willing to pay to resolve these conflicts."
The conflicts are being resolved at the expense of the public, Blaeloch said.
Not only were appraisals not done in the case of the Grand Staircase-Escalante exchange
(nor for the pending West Desert trade), but the public was excluded from any participation.
No analyses were conducted of environmental impacts, no surveys were conducted to
determine what resources were present on the lands and no Utah public hearings were
held, she added.

A fair deal?
"I can't honestly believe someone is saying the federal government is being screwed," said
Brad Barber, deputy director of the governor's Office of Planning and Budget, as well as
Leavitt's chief negotiator in the land trades.
"If it was not a fair deal, it was not going to happen," he added. "Was it a fair deal?
Absolutely."
But what is a fair deal?
Barber insists a fair deal comes about when both sides sit down at a table and negotiate a
middle ground between what each side thinks the land is worth. And both sides came out
of the Utah land negotiations feeling good about the deals that were reached.
In the case of the 200,000 acres of state lands traded out of the Grand Staircase-
Escalante National Monument, Barber admits that no official appraisals were conducted. Nor
were they done for the West Desert wilderness deal announced May 4.
But what negotiators in both cases looked at was value, both in terms of "comparable sales"
and the value of the state lands as developable cabin sites if they had been sold by the state
vs. the value to the federal government to preserve those lands as park or wilderness values.
It's something called "public interest value," and in the parlance of land traders it means
that lands that may appear worthless because they seem to have low development potential
actually have very real scenic and wilderness values.
"We have people protesting in Washington saying what great value these lands have to the
people of America as wilderness," Barber said. "Then it should be worth something (to the
American people) not to have these lands developed."
But was it an equal trade?
MacDonald has estimated the value of the 450,000 acres of school trust lands involved
in the Grand Staircase exchange to be $70 million to $80 million. But Leavitt boasted at the
time of the trade the school trust could see a return of as much as $1 billion from the deal
over the next 30 years.
"Who came up with the determination that that was of approximate equal value?"
MacDonald said.
At the time, Babbitt even joked he should fire his negotiators because the state got such a
good deal -- a joke opponents of the deal point to as tacit acknowledgment that the

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exchange was not an equal trade.

MacDonald bristles at the notion that Americans in general should be asked to pay the tab
for Utah schools. And as a licensed appraiser, he scoffs at the notion that "public interest
value" is something that can be -- or should be -- quantified in an appraisal. In fact, the law
specifies the lands should be appraised "as is," not for what could be or what should be.
It was that kind of attitude that got MacDonald crossways with his bosses at the BLM.
MacDonald said officials from Washington, D.C., even tried to persuade him to change his
approach to appraisals. He was told to be more open-minded.
"I told (them) that it was not only unethical but probably illegal," MacDonald said.
He said the law is very specific, and it was not being followed.
Others have a different view.
Land trades of the size and complexity of the deals being done in Utah involve
negotiation. Appraisals are a guide to those negotiations, Lamb said, not the determining
factor.
"To me an appraisal is an educated guess," he said.
Barber is even less complimentary of the appraisal process. "We didn't do exchanges in
Utah for ump-teen decades because no one could agree on appraisals," he said.
He remembers discussions about swapping a parcel of state land inside Arches National
Park. Federal appraisers said the parcel was worth $35 an acre. State officials suggested
developers would pay several thousand dollars an acre to have their business smack dab in
the middle of a national park.
"Thirty-five dollars an acre? That's ludicrous," he said, noting the state was already moving
toward litigation over the issue at the time the land deals were negotiated, rendering the
lawsuit unnecessary.

Breaking the stalemate

Barber insists the land deals were consummated because both sides were willing to
negotiate -- something absent from the administrative process that characterized decades of
failed land deals. And with any negotiated settlement, both sides had to give up something
to get what they wanted.
"Congress is the ultimate determiner of fair value," Barber responded. "Do I think the state
got a good deal? Yes. Did the state take the federal government to the cleaners? No way."
Even if the state got a sweet deal in the land trades, Barber points out the deals did not
violate federal law despite the absence of appraisals.
In the case of the Washington County habitat deal, Hansen pushed through a provision
allowing appraisers to reach a determination of fair market value as if the endangered species
did not exist on the land being appraised.
That means the state and private landowners would get the going rate for developable
lands in Washington County, not the "pennies on the dollar" amount that would have been
paid for lands that could never have been developed because of the endangered tortoise.
Appraisals may not have been done on the Grand Staircase lands being exchanged, but
Barber notes that Congress ratified the deal. And Congress is not bound by provisions of
federal law that require appraisals.
"Congress asked the same questions and came to the conclusion that it was a fair deal,"
Barber said.
As specified in the land swap legislation, the deal represented an exchange of assets
"approximately equal in value." Blaeloch has filed Freedom of Information requests with the
federal government to acquire documents supporting that contention but has been told no
such documents exist.
"Nowhere is there any solid evidence to uphold this assumption" that the exchange was

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fair, she said.

State and federal negotiators are now going back to Congress with the West Desert
exchange, again avoiding appraisals that would be requiredif the state were negotiating a
trade directly with the BLM or other federal entities.
Blaeloch and MacDonald are dumbfounded that both sides of the deal are calling it "value
for value" considering the state is giving up lands of minimal value for lands with
development potential.
"I've appraised much of those lands and no, they are not equal value for equal value,"
MacDonald said. "It just isn't. It can't be."

E-mail: spang@desnews.com and donna@desnews.com

Words: 2268
Section: Local
Illustration: (Caption #2: James MacDonald)

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