For Western Pacific Timber and its then-President and CEO Tim Blixseth, the spring of 2006 promised big business. The company had recently purchased 39,371 acres in the Clearwater National Forest in the Upper Lochsa, on the Idaho-Montana border. The Lewis and Clark trail winds through here, and the rivers and woods are home to threatened steelhead, bull trout and Canada lynx. Foresters and conservationists had wanted to consolidate ownership of the checker-boarded territory for years, and Blixseth knew it.
So he gathered a handful of Forest Service managers in a corner office of Western Pacific's Boise high-rise and offered to exchange the Upper Lochsa for part of the Payette National Forest around McCall, a popular Idaho ski town.
Blixseth had reason to be optimistic. In the early 1990s, he and his partners threatened development and ultimately traded 101,000 private acres north of Yellowstone National Park for $25 million and 47,000 public acres of prime Montana timberland. Blixseth made tens of millions of dollars from subsequent timber and land sales and used a portion to build the Yellowstone Club, an exclusive resort that he later lost in a divorce.
But the climate for such swaps has changed since the early days. In the '80s and '90s, the Forest Service and the Bureau of Land Management lost money and crucial habitat in major land exchanges that favored private parties. Agencies are required to ensure that transactions 'serve the public interest,' with the new land's value at least equal to that of the land exchanged. But the statutes are ambiguous, and speculators can make huge profits from swaps; Tom Chapman, a notorious Colorado developer, made millions this way. Increased scrutiny from both the government and the public over the last decade has forced the feds to get better at vetting deals, and it's pushed those who initiate them to come up with more favorable proposals.
Now, six years later, Western Pacific is still slogging through the federal review process. Payette managers rejected its initial proposal, saying it didn't serve the public interest, and the company's had a hard time convincing people that it's a good idea to trade locally cherished hunting and fishing grounds for land elsewhere in the state. A final decision is expected in November but will probably be delayed. The era of easy land exchanges appears to be over.
'There's concern about giving up public lands because they're so important,' says Forest Service Chief Tom Tidwell. 'The public doesn't want to give up any part of the national forest even if there's strong acreage to gain.'
Large businesses or private landowners initiate most swaps to improve access, acquire property leased from the government, or simply consolidate holdings. Exchanges can be conducted through the local office of the relevant federal land agency, or through legislation. Administrative swaps are subject to the National Environmental Policy Act, which requires officials to review environmental impacts and allow public input. The legislative route rarely circumvents those hoops and doesn't necessarily speed up deals. Proponents draft a bill, find a congressional sponsor and hope for a favorable vote in D.C. But exchanges can be controversial, and politicians are often reluctant to sign on.
Swaps started getting stickier in 2000, when the Government Accountability Office (GAO), Congress' nonpartisan research arm, released a fiercely critical report. It discovered that although the Forest Service was getting more acres than it gave away, those acres were worth about half as much as the land exchanged. The BLM also traded for less valuable private parcels, and sometimes ignored the findings of its chief appraiser. In three 1998 exchanges, the agency acquired land in Nevada that was overvalued by $8.8 million. The GAO even found one private party who acquired federal lands and quickly sold them for two and six times more than their government-assessed value. The GAO concluded sternly, 'Congress may wish to consider directing both agencies to discontinue their land exchange programs.'
'For the most part, I think people were less aware that these deals were happening,' says Janine Blaeloch, founder and director of the Western Lands Project, a nonprofit that watchdogs land exchanges. The agencies 'treated these as real estate transactions, and even though they were supposed to follow NEPA, (private parties) were able to take advantage because nobody really paid attention to them.'