Nevada BLM Scandal
Picks Up Momentum

  by Steve Miller
  copyright 1996, Electric Nevada

Nevada's statewide federal land-swap scandal broadened this week as a confidential Inspector General audit was leaked to the press and Congressional hearings were scheduled for July.
First reported by Electric Nevada last Sunday, the land-exchange irregularities involve millions of dollars in land-sale profits which in-state Bureau of Land Management offices effectively diverted from taxpayers to two favored private land-broker organizations.
"The taxpayers have been swindled out of $12 million," Congressman John Ensign, Nevada Republican told a Las Vegas news conference Friday, citing a figure from the audit.
He asked Interior Secretary Bruce Babbitt Thursday to halt BLM land exchanges in Nevada until the controversial process has been investigated. Spokespersons for Babbitt indicated he would not stop the swaps.
Earlier in the week Ensign called for a congressional investigation, and Rep. Jim Hansen, R-UT, chairman of the Subcommittee on National Parks, Forests and Lands, scheduled hearings for July.
The Las Vegas Review-Journal published elements of the leaked audit report, including auditors' conclusion that the BLM had shortchanged taxpayers at least $12 million in four Nevada land swaps.
"The BLM failed to obtain fair-market value for prime development acreage, traded land it should have sold, did not always used independent appraisals and ended up swapping for some land it did not need," wrote Review-Journal reporters Jane Ann Morrison and Keith Rogers, quoting the audit report.
"While the government lost millions of dollars, brokers who specialize in swaps made millions by obtaining federal land in the Las Vegas Valley and reselling it to investors or builders hungry to expand."
Federal auditors found, said Morrison and Rogers, "that Olympic Group Inc., an Arizona-based land development company, received land from the BLM and in three sales quickly resold it for $5 million more than the exchange value. Twice, land was resold the same day of the exchanges; a third parcel was sold within two months."
The I.G. auditors also found that the BLM in Nevada:
  • did not consistently follow land exchange regulations or procedures and ensure that fair and equal value was received.
  • Lost $4.2 million by undervaluing
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land it was exchanging; Lost at least another $7.8 million by exchanging land it could have sold for more under the Santini-Burton Land Act; Exchanged some of the BLM's most valuable land for 2,461 acres the federal government does not need, at a cost of $2.7 million.
Federal auditors upheld many criticisms made of the recent BLM land swaps by the former chief appraiser for the bureau in Nevada, Reno's Charles Hancock, including the argument that the BLM should be selling the land competitively, rather than exchanging it.
Hancock believes the $12 million mentioned in the I.G. auditors' report is just the tip of the iceberg.
"That's minor when we get into the full big picture," he said.
He also points out that the exchanges not only shortchanged federal taxpayers but deprived state of Nevada taxpayers of millions in revenue.
Under the Federal Land Policy and Management Act, when federal land is sold rather than exchanged, the state where the federal land is situated gets 5 percent of the sale proceeds.
In just one example, he said, the state lost $2.2 million because BLM officials swapped the land instead of selling it.
A point-by-point letter from Hancock to the Department of Interior's Office of the Inspector General in late 1994 helped precipitate the statewide audit.
"Since ... your information indicates that problems persist with [Nevada land] exchanges," wrote Acting Inspector General Joyce N. Fleischman, "we plan to review the Nevada exchanges you cited. In that regard, a representative from our office will contact you to obtain further information."
Congressman Ensign also claimed credit for instigating the audits, saying he had asked the DOI inspector general to investigate all BLM exchanges after political operative Don Williams, a friend of former Rep. James Bilbray, D-Nev., tried an exchange in the Red Rock Canyon National Conservation Area near Las Vegas.
Williams' alleged land-exchange ploys were a major issue in the 1994 District 1 congressional election, which Bilbray lost to Ensign.

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