Federal Real Property: Inventory and Disposal Initiatives

This report provides background and discusses the inventory and disposal of public lands and other Federal property. For many years the Federal Government has operated under a statutory policy of retaining public domain lands and has disposed of the proceeds from the sale of surplus property other than by the reduction of the national debt. Under the present system, the Government disposes of some types of land when it is determined to be surplus to Government needs, or, in the case of public lands, when it is determined that the national interest would best be served by the sale or exchange of particular tracts of land.

FEDERAL REAL PROPERTY: INVENTORY AND DISPOSAL INITIATIVES ISSUE BRIEF NUMBER IB82051 AUTHOR: Malcolm Simmons Environment and Natural Resources Policy Division Pamela Baldwin American Law Division Keith A. Bea Government Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED 04/22/82 DATE UPDATED 01/27/83 FOR ADDITIONAL INFORMATION CALL 287-5700 0128 CRS- 1 ISSUE DEFINITION Although current laws provide for the inventory a n d disposal o f public lands and other Federal property, for many years the F e d e r a l Government has operated under a statutory policy of r e t a i n i n g public domain lands a n d has disposed of the proceeds from the sale o f surplus property other t h a n by the reduction of the national debt. Under t h e present s y s t e m , the Government disposes of some types of land when i t i s determined to be s u r p l u s to Government needs, o r , in the case of puSlic lands, when i t i s determined that the national interest would best be served by the sale or exchange o f particular tracts of land. The Reagan Administration and Members of C o n g r e s s have proposed a significant change in policy. They u r g e that t h e Federal G o v e r n m e n t vigorously inventory its holdings of l a n d , buildings, a n d f a c i l i t i e s ; a s s e s s the current value of this real property; a n d sell the property no longer needed at fair market value. This proposal would enable corporations and private citizens to acquire more Federal l a n d s and property and a l s o would rescind the discounts of up to 100% which State and l o c a l governments and nonprofit organizations presently receive o n surplus r e a l property used for certain purposes. The Administration has established a Property R e v i e w Board t o coordinate the identification and d i s p o s a l of surplus properties. S o m e of the many questions raised by the proposal include: Which Federal l a n d s and properties would be targeted for sale? W h a t a r e these l a n d s really worth? On what scale would the benefits of selling Federal r e a l property justify the costs? What legislation i s needed to i m p l e m e n t elements of the n e w policies? The only significant action of the 9 7 t h Congress affecting d i s p o s a l of real property was the imposition of requirements which must be met before Interior Department agencies may d i s p o s e of tracts of land. These requirements, effective f o r F Y 8 3 , are contained in P.L. 9 7 - 3 9 4 , the F Y 8 3 Interior Department appropriations enactment, and P.L. 97-276, the first continuing resolution. The requirements include official agency determination that it does not need a particular tract, determination o f the public benefit values of the tract, a n d proper notification of the proposed tract disposal. BACKGROUND A N D POLICY ANALYSIS Location and Use of Federal Real Property Approximately 750 million a c r e s , located mostly in t h e 1 1 far w e s t e r n m o s t contiguous States, plus Alaska, a r e owned by the F e d e r a l Government. The pattern of Federal land ownership in the United States i s depicted i n the table below. Federal real property can be divided i n t o three categories l a n d , buildings, and structures/facilities. -- CRS- 2 PERCENTAGE OF LAND OWNED BY THE FEDERAL GOVERNMENT IN T H E U N I T E D S T A T E S ( b y r e g i o n ) Acres Federally owned Region Alaska Western S. Atlantic, cent'ral, D.C. N o r t h e a s t e r n , N. Hawaii TOTAL 333.4 358.9 28.9 Central 22.3 0.6 744.1 -------Source: General Services Administration. (in millions) Total in S t a t e s Percent federally owned CRS- 3 IB82051 UPDATE-01/27/83 More than half o f federally owned land i s utilized f o r forests a n d wildlife. Other major uses include grazing (21.8%), parks a n d historic s i t e s (9.2%), and military/ airfields (2.6%). As of the end of F Y 7 9 , the Interior and Agriculture Departments together owned 710.7 million a c r e s , o r 95.5 percent of a l l federally owned land. Much of this l a n d i s "public d o m a i n w o r l f p u b l i c wlands. ~ h e s ea r e lands that were acquired by the F e d e r a l Government without first having been owned by a State or a private individual (the Louisiana Purchase, for example). The nearly 3 4 0 million acres of unappropriated land which has not been set a s i d e for a specific public purpose or program (a national wildlife refuge, f o r example), and which therefore is subject t o disposition under the operation of a l l public l a n d laws, i s the responsibility of the Bureau of Land Management (BLM). These l a n d s , plus 1 8 7 million acres administered by the Forest S e r v i c e , are managed for multiple-use/sustained yield (i.e., harmonious, coordinated management of all resource values on large areas o f land a n d the best combination of diverse land uses, both protective a n d developmental, to a s s u r e a permanent flow of resource values). Different laws a p p l y to Federal lands that a r e "public l a n d s , " and t h o s e that are "acquired" lands. " A c q u i r e d w lands may be defined generally as those purchased by the Government from a State o r person f o r a particular u s e or purpose. While public lands a r e disposed of by BLM typ.ically under the (FLPMA) of 1 9 7 6 , provisions of the Federal Land P o l i c y and Management Act "acquired" lands typically a r e disposed of by the General Services Administration ( G S A ) under the provisions o f t h e F e d e r a l Property a n d Administrative Services Act of 1949. Land Disposal Policy -- P a s t and P r e s e n t There are precedents to the s a l e o f large a m o u n t s of F e d e r a l land. The primary goal of early public land p o l i c y , a s the nation acquired vast n e w territories, was the transfer of land from public t o p r i v a t e ownership t o encourage settlement a n d economic growth a s the Nation expanded westward. During its first 1 3 0 y e a r s , the F e d e r a l Government divested itself of o v e r half of its nearly 1.5 billion acres. Toward the end of the 19th c e n t u r y , however, a reaction against abuses of the disposal l a w s , a m o n g other t h i n g s , led to a shift i n public land policy t o o n e of conservation a n d permanent retention of some lands a s federally owned public lands. T h e land w h i c h remained, after lands valuable chiefly for t i m b e r , m i n e r a l s , and c r o p s had been claimed by settlers or reserved a s forest p a r k s , w a s essentially u s e f u l only for grazing and was neglected o v e r t h e years. Increasing deterioration of this land eventually prompted C o n g r e s s in 1 9 3 4 t o pass t h e Taylor G r a z i n g Act, (43 USC 315 et seq.) which established t h e f i r s t program of a c t i v e management o f the unreserved public l a n d s a n d required that they be classified. By the 1960s, concern f o r environmental values a n d o p e n space w a s in strong competition with development activities; a n d i n 1 9 6 4 , Congress passed three laws which established a policy of Federal retention o f unappropriated public lands. The Wilderness Act (16 USC 1131-1136) declared i t to be t h e policy of the Congress to establish a National Wilderness Preservation System to be composed o f federally owned a r e a s d e s i g n a t e d by C o n g r e s s a s "wilderness areas." The Public Land L a w R e v i e w Commission w a s established (43 U S C 1391-1400) to conduct a review of existing public l a n d l a w s a n d r e g u l a t i o n s , a s well a s of the policies and practices of Federal a g e n c i e s charged w i t h in 1964, the administrative jurisdiction over public lands. Also CRS- 4 IB82051 UPDATE-01/27/83 Classification a n d Multiple Use Act (43 USC 1411-1418) strengthened the power of the BLM by giving it authority to classify land for retention as well as disposal. U p o n expiration of the Act i n 1 9 7 0 , BLM had classified over 9 0 % of the land for retention. T h e s e enactments, plus PLLRC's recommendation that same year against wholesale land d i ~ p o s a l , may reflect a shift i n the attitude of t h e American public from disposal toward retention of national resource lands in Federal ownership but with private use by permit. Finally, a comprehensive statute that establisnes policies and management provisions for public l a n d s , including a n explicit Federal policy of retention was enacted i n 1 9 7 6 with the signing of the Federal Land P o l i c y and Management Act (FLPMA) (43 USC 1701-1781). Although the Government has not had a large-scale disposal program for some time, provisions i n l a w still exist for transfer o f title to some public property. (The property disposal practices of principal Federal land management a g e n c i e s are discussed in detail in CRS Report No. 81-156 ENR.) T h e BLM i s the Federal agency that makes public domain 1an.d available for sale o r other disposal. Criteria f o r sal'es and exchanges of BLM land are provided in Title I1 of FLPMA. Under F L P M A , BLM must inventory the public lands to determine their v a l u e s , including non-developmental v a l u e s , and their potential uses. A land use plan then is developed that provides for appropriate use of the lands.. Although FLPMA explicitly states a policy of retention, i t a l s o provides for the disposal of public l a n d s a t fair market (1) The tract i s difficult and value if any o f the stated criteria a r e met: uneconomic t o manage as part of the public l a n d s , and i s not suitable for management by another Federal department o r agency; (2) the tract is no longer required for the specific purpose f o r which i t w a s acquired or f o r any other Federal purpose; (3) disposal o f t h e tract will s e r v e important public objectives (such a s the expansion of a community) which outweigh other publi-c objectives a n d values. T h e regulations governing the s a l e provision o f FLPMA a l s o provide a way f o r individuals to recommend that specific tracts o f land be offered for sale. In g e n e r a l , the Sales take place a t public auction and a r e conducted through the State BLM offices. The sale o f a tract of public land i s t o be m a d e a t not less than fair market value. Certain public land i s available under other laws a s well. F o r example, s o m e irrigable arid and semi-arid l a n d s can be selected under the Desert Land Act (43 USC 321-323) a n d the Carey Act (43 USC 641). Persons holding valid mining claims under the 1872 Mining Act (30 USC 21-54) may a l s o receive title to the lands under claim. The Recreation a n d Public P u r p o s e s Act authorizes the conveyance of land t o States a n d local governments a s W e l l a s private parties under certain circumstances. Although the homesteading laws have been repealed with respect to most public l a n d s , repeal Will be delayed i n regard to Alaska until October 1986. However, because of land use planning and agricultural suitability requirements, it is unlikely t h a t many homesteading grants will be made i n t h a t State. Lands that h a v e been " a c q u i r e d w by t h e Federal Government are disposed of under a different system. T h e General Services Administration (GSA) disposes of acquired property (and a limited a m o u n t o f public domain land) which i s no longer needed by Federal agencies through procedures established by the (40 U.S.C. 484). Federal Property and Administrative S e r v i c e s Act of 1 9 4 9 Under these procedures, property i s f i r s t inventoried a n d declared excess by the holding agency: Once a property i s declared excess, GSA notifies the other Federal a g e n c i e s , t h a t this property may be transferred if i t i s needed. If no other F e d e r a l age'ncy indicates a need for the property, then GSA may declare i t t o b e surplus a n d may dispose of i t to non-Federal recipients. Federal officials have l i t t l e incentive to declare property excess. Once CRS- 5 property is declared excess, the holding a g e n c y relinquishes claim to it. I f , years l a t e r , the a g e n c y officials d e t e r m i n e that additional real property is needed f o r the a g e n c y f s ~ o p e r a t i o n s ,property would have to be repurchased or leased perhaps a t c o s t s higher than these of keeping t h e original piece of property which was declared excess. As the disposal procedure contains f e w rewards a n d potential penalties f o r administrators i n the position to declare property e x c e s s , some reluctance t o turn over large' quantities of property may be anticipated. According to F e d e r a l regulations (41 CFR 101-47.3), GSA notifies S t a t e and local public officials that property has been declared surplus. T h e State and local officials have 2 0 calendar d a y s to notify the disposal agency (usually GSA) that they a r e interested i n acquiring the property. Property to be used for historic monuments, public a i r p o r t s , o r wildlife refuges can be transferred to State a n d local governments without monetary consideration. Similarly, property to be used f o r p a r k s , recreation, health, or education purposes may be transferred to S t a t e o r local agencies or nonprofit organizations a t discounts of up t o 100%. If the public agencies do not express any interest i n obtaining the property, invitations for bids will be published. At that point, the bid judged to be "most advantageous to the Government" (41 CFR 101- 47.305-1) will be accepted. The more than 24,000 Federal installations i n the 5 0 S t a t e s and the District of Columbia include b u i l d i n g s . w i t h 2,653 million square f e e t of floor a r e a , a s well a s numerous other structures and facilities. Approximately 78% of t h e floor a r e a of F e d e r a l buildings i n the United States is used f o r housing, storage, a n d offices. T h e Department of Defense tops the list of a g e n c i e s Controlling the most federally owned building space. Structures and facilities include utility systems, r o a a s and bridges, railroads, monuments, airfield pavements, harbor and port facilities, reclamation and i r r i g a t i o n projects, a n d parking areas. Proposed Policy C h a n g e s Property Review Board On Feb. 2 5 , 1 9 8 2 , President Reagan signed Executive Order 12348, establishing a Property Review Board to coordinate Federal r e a l property management practices. T h e Board c o n s i s t s o f the Counsellor t o the P r e s i d e n t , (OMB), t h e President's the Director o f t h e O f f i c e of Management a n d Budget Assistant o n National Security, and other officials appointed by the President. Responsibilities of the Board include: reviewing a n d developing policies governing t h e acquisition, utilization, and disposal o f Federal real property; examining u s e of properties previously disposed of a t discount to determine whether l o c a l governments a n d communities a r e fulfilling statutory requirements; and setting targets for the a m o u n t o f property to be declared excess by each a g e n c y , among other functions. According t o the Executive O r d e r , the Property Review Board a n d the GSA a r e to perform complementary functions. T h e Executive Order a l s o , however, grants the Board considerable authority t o monitor the administration of the disposal program by GSA. The Executive Order charges t h e Board to a d v i s e the Administrator of GSA of "standards and procedures" to be used by the Executive a g e n c i e s in determining whether t o declare property excess. G S A , by extension, i s to CRS- 6 IB82051 UPDATE-01/27/83 i s s u e t h e s t a n d a r d s and procedures ( a f t e r c o n s u l t a t i o n w i t h t h e Board) t o t h e agencies, and i s t o conduct surveys t o ensure t h a t t h e agencies a r e declaring underutilized o r unused property excess. The P r o p e r t y Review Board is to r e c e i v e r ' e p o r t s ' f r o m GSA o n t h e p r o g r e s s o f t h e d i s p o s a l p r o g r a m a n d " p r o v i d e a t the g u i d a n c e " t o t h e A d m i n i s t r a t o r o f GSA b e f o r e p r o p e r t y i s d i s p o s e d o f authorized (but not required) public benefit discount t o S t a t e and local governments o r nonprofit organizations. On F e b . 1 0 , 1 9 7 0 , P r e s i d e n t The P r o p e r t y Review Board h a s i t s p r e c e d e n t s . 11508) to coordinate the N i x o n e s t a b l i s h e d a P r o p e r t y R e v i e w B o a r d (E.O. d i s p o s a l o f p r o p e r t y by a g e n c i e s . The d i s p o s a l p r o c e d u r e s followed i n the e a r l y 1 9 7 0 s by t h e f i r s t P r o p e r t y Review B o a r d w e r e i n large part oriented P a r k s w program. Under this toward o b t a i n i n g p r o p e r t y f o r t h e "Legacy of suitability for p r o g r a m s u r p l u s F e d e r a l p r o p e r t y was e x a m i n e d t o a s s e s s i t s not explicitly d i s p o s a l o r c o n v e r s i o n t o p a r k u s e . T h e d i s p o s a l p r o g r a m was intended t o generate revenues. ' The B o a r d d j d n o t h a v e a u t h o r i t y t o recommend p o l i c y c h a n g e s , h o w e v e r . In P r e s i d e n t Nixon i s s u e d E x e c u t i v e Order 11724 which established in the The C o u n c i l Executive Office of t h e President a Federal Property Council. s u p e r s e d e d t h e P r o p e r t y Review Board and had a u t h o r i t y t o r e v i e w p o l i c i e s a n d recommend p o l i c y c h a n g e s t o t h e P r e s i d e n t . P r e s i d e n t Reagan's Board h a s the a u t h o r i t y t o review p o l i c i e s , to recommend changes, and t o enforce the d i s p o s a l p r o c e s s by s e t t i n g t a r g e t s f o r e a c h a g e n c y t o m e e t i n d i s p o s i n g o f property. 1973 President Ford a l s o supported t h e idea of establishing an e n t i t y which management system, but endowed i t w i t h less would i m p r o v e t h e p r o p e r t y authority. On J a n . 7 , 1977, President Ford "reconstitutedw the Federal The P r o p e r t y Council i n t h e Executive O f f i c e of t h e P r e s i d e n t (E.O. 11954). C o u n c i l ' s p r i m a r y a u t h o r i t y was t o r e v i e w r e p o r t s o n p r o p e r t y w h i c h h a d n o t been d e c l a r e d e x c e s s . On D e c . 1 5 , 1977, President Carter terminated the Council under E x e c u t i v e Order 12030. Inventory Efforts A t l e a s t t h r e e major q u e s t i o n s need t o be answered concerning t h e d i s p o s a l (1) Which p r o p e r t y does t h e Federal Government of F e d e r a l r e a l p r o p e r t y : w o r t h on today's market? (3) Is there own? ( 2 ) What i s t h a t p r o p e r t y s t a t u t o r y a u t h o r i t y t o d i s p o s e of p a r t i c u l a r p r o p e r t y i n t h e d e s i r e d manner? The G e n e r a l S e r v i c e s A d m i n i s t r a t i o n m a i n t a i n s d a t a on p r o p e r t y owned by t h e F e d e r a l Government t h r o u g h o u t t h e world (see Selected References i n this Data t o a n s w e r t h e s e c o n d q u e s t i o n , however, have not been Issue Brief). real c o m p i l e d , s i n c e t h e Government c u r r e n t l y m e a s u r e s t h e v a l u e o f Federal p r o p e r t y s o l e l y on t h e b a s i s of a c q u i s i t i o n costs, a t o t a l of w h i c h was r e c o r d e d a t $104.9 b i l l i o n as o f Sept. 30, 1979. This f i g u r e does not l a n d s which have n e v e r left Federal i n c l u d e t h e p u b l i c domain l a n d s ownership o r which were o b t a i n e d by t h e Government i n exchange f o r p u b l i c domain l a n d s o r f o r timber on such lands. The A d v i s o r y Commission on c u r r e n t value of Intergovernmental Relations (ACIR) recently estimated t h e including public domain Federal r e a l property (as listed i n 1978, and not The A C I R ' s valuation, however, refers to the l a n d s ) t o be $ 2 7 9 b i l l i o n . its present d o l l a r amount n e c e s s a r y t o replace existing property in secured c o n d i t i o n , a n d i s n o t n e c e s s a r i l y t h e a m o u n t o f money t h a t c o u l d b e i f t h e p r o p e r t y w e r e t o b e s o l d on t h e m a r k e t p l a c e . T h e r e f o r e , it should n o t be confused with t h e p r o p e r t y ' s market v a l u e . The A d m i n i s t r a t o r of the General Services Administration disposes property defined a s surplus, -- CRS- 7 including real property under provisions of the Federal Property and Administration S e r v i c e s Act of i949. This provision d o e s n o t , however, apply to most public d o m a i n lands. The Department o f the Interior can dispose of of surplus lands under FLPMA, a s described a b o v e , after a complex process review and study. Many Forest Service lands could not be disposed, because o f r e s t r i c t i o n s , without congressional authorization. T h e Forest Service a n n o u n c e d , in an Aug. 1 0 , 1 9 8 2 , news r e l e a s e , that i t is developing a legislative proposal for new authority t o sell excess lands. Under present authority only a b o u t 6 0 , 0 0 0 acres qualify for sale. Earlier, o n May 1 8 , the F o r e s t Service had announced that it was putting 54 properties totaling over 4 0 , 0 0 0 acres up f o r sale. After more detailed study, the Service determined that approximately 5 1 million a c r e s must be retained under congressional mandate. T h e r e m a i n i n g 1 4 0 million a c r e s will be studied f o r possible sale. Secretary Block estimated that 1 5 to 1 8 million acres would be identified for f u r t h e r intensive study leading to possible disposal. T h e Administration announced a n initial list of 307 properties, totalling 6 0 , 0 0 0 a c r e s , to be sold. These lands, mostly Corps of Engineers properties, will be sold a t f a i r market value. Some of the properties a r e of high v a l u e , such as prime beach front in Hawaii. The Administration and supporters of disposal believe these to be relatively non-controversial, while critics see some controversy i n selling s o m e of these properties. Lacd Review W i t h i n the Interior and Agriculture Departments T h e Federal l a n d sales and a s s e t management program a s proposed by the Administration w i l l include a review of lands administered by the Departments of the Interior a n d Agriculture and by the Corps of Engineers. It should be noted that Section 201 of FLPMA requires that an inventory be m a d e , on a continuing b a s i s , o f a l l public lands and their resources a n d o t h e r . values, and t h a t the p r e s e n t and f u t u r e use o f these lands be projected through a land use planning process. In testimony before the Senate i n February 1 9 8 2 , B u d g e t Director D a v i d Stockman stated that efforts to i m p r o v e the management of Federal holdings pose no threat to national treasures. The Property R e v i e w Board subsequently announced that national parks, fish and wildlife r e f u g e s , wilderness a r e a s , scenic traiLs, a n d Indian t r u s t lands will not be sold. The major f o c u s of a property management program would be o n residual BLM l a n d and limited Forest S e r v i c e lands with similarly patterned ownership problems. P r i m e candidates f o r disposal, according to Mr. Stockman, will be: (1) lands that c a n n o t be efficiently managed, due to the small s i z e a n d o r suburban areas location of the parcels; (2) parcels proximate to urban that would c o n t r i b u t e to l o c a l economic deve.lopment, ( 3 ) properties managed by the Corps of Engineers a n d Bureau of Reclamation that may no longer be needed for efficient project management but may have high value f o r private d e v e l o p m e n t , a n d (4) properties that may have potential f o r higher a n d better use i n private ownership. References to "higher and better use" occur in many of the Administration's clarifications of the new property initiative a n d a r e potentially in conflict with the non-developmental values protected i n legislation such a s FLPMA. Apparently, t h i s phase of the land disposal program would alter Interior Secretary Watt's e f f o r t , a s part o f his "good neighborw policy, t o transfer to t h e States t h e m o r e than 9 0 0 , 0 0 0 acres which have been requested by western governors. Under this revised a p p r o a c h , lands would be offered for s a l e f o r two y e a r s , then offered i n exchange if they haven't been sold. Every effort w i l l b e made t o realize i n c o m e from the disposal process, the Senate a c c o r d i n g to S e c r e t a r y Watt a t a recent workshop convened by CRS- 8 IB82051 UPDATE-01/27/83 Subcommittee o n Public Lands and Reserved Water. B e c a u s e of this change, a l l approval of transfers must now receive a final a p p r o v a l from t h e Property Review Board. By Apr. 1 , 1 9 8 2 , only about 1 2 , 5 0 0 a c r e s had been authorized for use or disposal under the Good Neighbor program. An initial r e v i e w , completed by the Interior D e p a r t m e n t in J u n e , showed that 2.7 million acres of land, worth slightly more t h a n $ 2 billion, could be disposed of immediately. This is considerably less t h a n the ~ d m i n i s t r a t i o n had estimated to be available. Land Use Plan a m e n d m e n t s , established a s part of the FLPMA land disposal process, could free a n a d d i t i o n a l 1.7 million acres worth $.5 billion over the next several y e a r s , according . t o Administration sources. Earlier Administration plans had assumed that BLM land sales would supply $4.8 billion over a 5-year period. Secretary W a t t had told the Senate Subcommittee workshop that only 1 4 % o f this potential has so far been identified a s BLM lands. Discounts and Transfers The Administration's proposal to modify the real property disposal policy contains two major changes. F i r s t , the current discount provided to S t a t e and local governments seeking surplus properties would be phased out. This c h a n g e , it is contended, would ensure that the a b u s e s associated with the discount program would terminate. State and local a g e n c i e s must u s e property received a t a discount for public purposes. In hearings before the Senate Committee on Governmental Affairs, Senator Percy noted a s o n e example of abuse the development of a mobile home park o n land donated to t h e city of R e n o , Nevada. Second, Federal agencies would have to pay fair market value f o r property declared excess by another Federal agency. T h e second policy change according to proponents, would g i v e Federal Administrators the i n c e n t i v e to acquire only that property which i s necessary to t h e agency's operation. Because the statutory language (40 USC 484k) confers discretionary authority to establish discount prices to the Administrator of t h e G S A , i t i s possible that this policy change could b e implemented without legislative amendents. Critics suggest, however, that such a total change in policy i s contrary t o the intent of Congress in enacting the discount programs, a n d that n e w legislation i s required. Prison Facilities The Administration has indicated its support f o r the concept of transferring surplus Federal buildings to State a n d l o c a l governments f o r use a s correctional institutions. T h e idea was proposed i n the f i n a l report issued by the Attorney General's Task Force o n Violent C r i m e i n A u g u s t , 1981. Senator Grassley introduced a bill to authorize such a transfer S. 1 4 2 2 , which has been reported o u t of t h e Senate Committee o n Governmental Affairs. (See Legislation section of this Issue Brief for d e t a i l s o n S. 1422.) -- According to the Task Force report, requests by S t a t e o r l o c a l governments f o r surplus property should be given priority over o t h e r r e q u e s t s for t h e same property. Citing overcrowding i n prisons a n d t h e high costs governments f a c e in constructing n e w prisons, the Task F o r c e recommended t h a t surplus properties be considered a s one way that the Federal Government c o u l d a s s i s t S t a t e and l o c a l governments with the violent crime problem. CRS- 9 IB82051 UPDATE-01/27/83 Rationale to Support the Policy Changes Proponents of the change i n the property disposal policy, i n c l u d i n g Senator P e r c y , Representatives Winn and Kramer, and David Stockman, a r g u e that correcting the past mismanagement practices of surplus Federal property will solve a number of problems. The reason cited before a l l others f o r accelerating the disposal o f surplus property i s to reduce the size of the national debt. At the present t i m e , according to statute, a n y funds received from the sale of surplus real property must be funneled i n t o the Land and Water Conservation Fund. The receipts cannot be used for general obligations. Legislation t o a m e n d this limitation was introduced by Senator Percy o n Sept. 29, 1982. (See description of S. 2973 in legislation s e c t i o n , below. ) T h e present g o a l of the program is to raise $ 1 billion next year a n d $4 billion per year f o r each o f the four subsequent years through these sales. H o w e v e r , other sources dispute this as too optimistic, and even the Administration has suggested different totals a t different times. The American Society of Appraisers has estimated that approximately $ 1 0 0 billion or more could be received from t h e sale of the property. G A O questions that figure. Mr. Stockman, a t t h e February hearing on Federal prope.rty s a l e s , projected t h a t , o n c e efforts of t h e Real Property Review Board a r e f u l l y implemented, the Government will begin to see receipts of a b o u t $ 2 billion annually from the s a l e of GSA-managed property. The Administration i s not projecting receipts from the Interior and Agriculture Department's phase of the program until F Y 8 4 , since efforts inv.olved in the identification and then sale of appropriate properties w i l l be very complex. GAO reports that the average BLM sale over the l a s t 5 years brought $20,000 per acre. Senator Laxalt, w h o , according to Public Land News (Jan. 2 1 , 1982), believes that the s a l e should include s o m e of t h e commodity-rich BLM l a n d s and possibly some of the lands managed by t h e Forest S e r v i c e , has estimated that a significant reduction in the national debt around $200 billion could be made through increased revenues. In his resolution, Senator P e r c y estimates that $1.3 billion i s a modest f i g u r e for the sale of surplus lands. -- -- T h e modified property disposal program would a l s o , it is a r g u e d , lead to improved management of Federal a s s e t s and a resultant decline in management costs. The quality and availability of information is likely to improve i f the inventory system i s updated t o provide data more current than 2 y e a r s old. Another benefit from con-ducting a more current inventory a n d disposing of surplus property would b e more efficient use of the land a n d structures. Operations n o w conducted on prime residential o r commercsal property might be conducted at less c o s t to the Government o n other property i n a rural area. A more efficient, faster sale procedure could a l s o result. T h e process today can take a s long a s 5 years f o r certain parcels of l a n d , according to f i n d i n g s of the Better Government Association. A fourth benefit which may be derived from the n e w program i s that the Federal Government could improve i t s oversight responsibilities t o determine if the recipients of discounted property have actually used the property for the specified purposes. some o f the T h e r e i s evidence a t the S t a t e and local levels that "Sagebrush Rebels" (see IB80050), who have been calling f o r title transfer of western public l a n d to the S t a t e s and have long argued that their i s s u e w a s one o f States' r i g h t s , a r e leaning in favor of privatization o f lands. Recently, the States' Rights Coordinating Council, a g r o u p composed of calling f o r privatization. western State legislators, passed a resolution This policy i s appealing to the r e s o u r c e users who would a c h i e v e security of l a n d t e n u r e w i t h a d d e d f r e e d o m t o p u r s u e t h e i r own p l a n s f o r t h e l a n d , a n d t o t h e l o c a l o f f i c i a l s who w o u l d s e e t h e l a n d a d d e d t o t h e i r t a x rolls. state and l o c a l governments c u r r e n t l y r e c e i v e payments i n l i e u of t a x e s (PILT) from t h e F e d e r a l Government, w h i c h does n o t pay p r o p e r t y taxes on the land it owns. The I n t e r i o r D e p a r t m e n t h a s e s t i m a t e d , a c c o r d i n g t o P u b l i c Land News were r e d u c e d in (Feb. 18, 1982), t h a t i f funding under t h e PILT p r o g r a m p r o p o r t i o n t o t h e amount of a c r e a g e removed f r o m t h e p u b l i c domain, local g o v e r n m e n t s would g a i n more from a d d i t i o n s t o t h e i r t a x b a s e ' t h a n t h e y would l o s e i n payments i n l i e u of t a x e s . Impacts O r g a n i z a t i o n s o f two t y p e s s t a n d t o be m o s t a d v e r s e l y affected by the proposed changes. The f i r s t t y p e i n c l u d e s S t a t e a n d l o c a l governments and discount in the n o n p r o f i t o r g a n i z a t i o n s w h i c h have r e c e i v e d p r o p e r t y a t a would be past for public benefit. Under p r e s e n t p o l i c y , a b u i l d i n g . w h i c h used p r i m a r i l y f o r education o r h e a l t h could be t r a n s f e r r e d t o a S t a t e f r e e , a s c o u l d l a n d t o b e u s e d f o r a p a r k , h i s t o r i c monument o r r e c r e a t i o n a l area. Faced with c u t s i n domestic a s s i s t a n c e programs and F e d e r a l funding, State for a n d l o c a l g o v e r n m e n t s would b e h a r d p r e s s e d t o pay t h e f a i r market v a l u e Federal properties. agencies. From The s e c o n d g r o u p t o b e m o s t a f f e c t e d would be t h e F e d e r a l t h e A d m i n i s t r a t i o n ' s p e r s p e c t i v e , p r o p e r t y d e c l a r e d e x c e s s c o u l d no l o n g e r b e t r a n s f e r r e d f r e e of c h a r g e from one agency t o a n o t h e r , b u t would have to be This p u r c h a s e d a t f a i r m a r k e t v a l u e by t h e a g e n c y which n e e d e d t h e p r o p e r t y . keep r e q u i r e m e n t would, i t i s a r g u e d by p r o p o n e n t s , s e r v e as a n i n c e n t i v e t o a g e n c i e s from a c q u i r i n g p r o p e r t y t h a t i s n o t needed. The b u d g e t a r y problems o f F e d e r a l a g e n c i e s may b e e x a c e r b a t e d , h o w e v e r , b y f o r c i n g them t o absorb additional costs. F e d e r a l s o c i a l s e r v i c e a g e n c i e s may n e e d to open branch The costs o f f i c e s t o meet i n c r e a s i n g d e m a n d s f r o m t h e p u b l i c f o r a s s i s t a n c e . s i z e of agencies' budgets are o f p u r c h a s i n g p r o p e r t y a t a t i m e when t h e s t a b i l i z i n g o r s h r i n k i n g may f o r c e m a n a g e r s t o m a k e c o s t l y s a c r i f i c e s . The GAO h a s i d e n t i f i e d f o u r a r e a s o f maj'or i m p a c t o f l a r g e - s c a l e and s a l e of F e d e r a l r e a l p r o p e r t y : disposal (1) F o r m u l a t i o n o f a new F e d e r a l l a n d p o l i c y would be necessary since s u c h a d i s p o s a l program would d e v i a t e from t h e c u r r e n t n a t i o n a l policy of p e r m a n e n t r e t e n t i o n a n d m a n a g e m e n t o f p u b l i c l a n d s , a s s e t f o r t h i n FLPMA. (2) Increased resources and s t a f f i n g l e v e l s f o r t h e administration of a l a r g e - s c a l e d i s p o s a l program, would be r e q u i r e d a n d t h e time necessary to d i s p o s e o f l a r g e q u a n t i t i e s o f p r o p e r t y c o u l d e x t e n d o v e r many years. The the p r o g r a m w o u l d b e s u b j e c t t o many r e q u i r e m e n t s u n l e s s t h e a c t a u t h o r i z i n g d i s p o s a l p r o g r a m w a i v e d t h e m o r made s o m e o t h e r p r o v i s i o n for them. The F e d e r a l Land P o l i c y a n d Management A c t a l o n e would r e q u i r e l a n d u s e p l a n n i n g , coordination with S t a t e and l o c a l governments, and compliance with the w i l d e r n e s s s t u d y review p r o c e s s . Procedural r e q u i r e m e n t s , such as cadastral survey, land a p p r a i s a l , a d j u d i c a t i o n , and mineral e v a l u a t i o n would a l s o be mandated. (3) A new r e a l e s t a t western S t a t e s where t h e Possible adverse effects i n a b i l i t y of t h e p r i v a t e t h e market a t once. e m a r k e t would l i k e l y - be created--especially in F e d e r a l Government i s t h e l a r g e s t s i n g l e l a n d o w n e r . m i g h t be a d r o p i n p r i v a t e land values and an s e c t o r t o a b s o r b l a r g e amounts of property put on (4) If the Government were t o dispose of properties which generate income through such activities a s sale of t i m b e r , grazing r i g h t s , a n d mineral leases and permits, there would be a significant loss of revenue. In F Y 7 9 a l o n e , onshore receipts from these and other activities on the public l a n d s totaled $775.6 million. For recreationists a n d conservationists, land privatization raises the fear that the country's last great open spaces will b e released for development. The questions asked are: What compensation or special options, if a n y , would be given those with prior existing rights to use the public lands? How would traditional rights a n d uses be guaranteed i n t h e future, if a t all? Repeated references to "higher and better uses" for the lands rings of pro-development and f a i l s to recognize any of what might be called intrinsic values o f the lands -- values which a r e recognized in some existing laws. Skeptics of the current proposals a r e not convinced t h a t the effort disposition of public lands. Colorado's will not develop i n t o a massive Governor Lamm foresees conflicting land and resource patterns developing throughout the public land States i f large-scale disposal should take place, leading ultimately to political chaos; he suggested to the S e n a t e Committee in its hearings o n privatization that public domain lands be exempt from any liquidation process. Governor Herschler of Wyoming expressed concern that State residents could not successfully compete i n the marketplace with companies and non-U.S. investors for many of these lands. Senator Jackson has also recommended to Senator Percy that the applicability of S.Res. 231 be limited to real property a s defined in the Federal Property and Administrative Services Act of 1949. Alternatives Opponents of large-scale public land disposal, such a s the Sierra Club, contend t h a t , rather than "selling our birthright to the highest bidder," a more appropriate alternative would be for the Government t o control more strictly its land management business. They charge in their national news report (Feb. 2 , 1982) that present management permits giveaway o f minerals o n public lands, routine cheating o n o i l a n d gas leases/royalties, leasing o f grazing lands a t l e s s than fair market value, and subsidy of the logging industry's timber harvest. Other groups, such a s the Wiiderness Society, have recommended that the Government raise revenues o n F e d e r a l lands by increasing royalties on oil/gas leases and by replacing t h e claim/patent system for hardrock minerals with a leasing system. Another alternative to wholesale land disposal is the sale of land uses rather than of the land itself. Surface grazing rights could be sold while retaining subsurface rights or while granting permanent recreation privileges to t h e public. This would a l s o constrain the pattern of land development. Still a n o t h e r concern i s whether a l l receipts derived from these sales should be used to lower the national d e b t , or whether a portion of the receipts should be credited to the Land a n d Water Conservation Fund to support Federal and S t a t e parkland acquisition. Environmental groups (Conservation L a w Foundation, the Natural Resources Defense Council, a n d the National Wildlife Federation) filed a lawsuit o n Sept. 3 0 , 1 9 8 2 , seeking to halt the Administration's plan to s e l l 3 5 million acres over t h e next f i v e years a n d use the proceeds to offset t h e national debt. Specifically, the lawsuit charged: (1) Failure to give State and local governments and nonprofit organizations a n opportunity to before offering i t f o r bid. acquire surplus property for public (2) Diverting t h e proceeds t o a special fund to help d e f r a y the (Federal l a w requires that proceeds be set a s i d e for the purchase parkland). (3) Reversing t h e Principle that national lands ownership except i n very limited circumstances. (4) be kept use deficit of new under public Failure to hold a hearing o r invite public comment o n t h e new policy. (5) Violating the National Environmental P o l i c y Act by n o t environmental impact of the program. (6) Violating N E P A 1 s mandate that the g o v e r n m e n t a c t a s natural resources. studying trustee of the our \ A s noted a b o v e , legislation h a s been issue raised in this litigation. introduced to address the second Outlook While Secretary Watt's "good n e i g h b o r w policy toward the W e s t has so f a r been viewed a s a positive s t e p toward relieving s o m e o f that a r e a ' s dissatisfaction with Federal land management, i t h a s been s u g g e s t e d that " t h e very large landed presence of e v e n a benevolent Federal Government w i l l (Wall S t r e e t increasingly be regarded a s a political and economic a n o m a l y w Journal, Feb. 5, 1982). At this point, however, i t remains unclear whether any form of privatization, let a l o n e massive F e d e r a l land d i s p o s a l , has m o r e prospect f o r realization than t h e States' c l a i m s t o ownership of the public lands. LEGISLATION Through Dec. 2 2 , 1 9 8 2 , a t t h e l a t e s t , n o Continuing Resolution for FY83. lands "with national environmental o r economic Value" may be disposed o f until they a r e inventoried, u n t i l G S A provides t h e opportunity for p u b l i c comment, and until 3 0 d a y s 1 n o t i c e i s provided t o Members o f Congress f r o m the State i n which t-he property i s located. Adopted a s S e n a t e a m e n d m e n t H.J.Res. 599. Approved by the President o n Oct. 2, 1982. P.L. 97-394 FY83 Interior Department appropriations enactment. Imposed f o r F Y 8 3 requirements that t h e Interior ~ e p a r t m e n ta g e n c i e s must meet before i t may dispose o f Federal tracts. T h e s e requirements include official a g e n c y determination that i t d o e s not n e e d a particular t r a c t , determination of t h e public benefit values o f the t r a c t , a n d proper notification o f the proposed tract disposal. HEARINGS U.S. Congress. House. Committee o n Government Operations. Subcommittee o n Government Activities a n d Transportation. Surplus Federal Property for Correctional Facilities Hearing. Hearing, 9 7 t h Congress, 2d session. (Not yet printed.) Hearing held Apr. 2 1 , 1982. U.S. Congress. Senate. Committee o n Governmental Affairs. Proposed legislation o n GSA surplus property. Hearing, 97th Congress, 1st Session. (Not y e t printed.) Hearing held Oct. 1 5 , 1981. ----- Management of Federal assets. H e a r i n g , 97th Congress, 2d session. (Not yet printed.) Hearings held Feb. 2 5 and Mar. 1 8 , 1982. U.S. Congress. Senate. Committee on Energy and Natural Resources. Subcommittee o n Public L a n d s and Reserved Water. Workshop on Land protection a n d management. Hearing, 9 7 t h Congress, 2d session. (Not yet printed.) Hearing held J u n e 1 4 and June 1 5 , 1982. ----- Land Conveyances, Exchanges, and P r i v a t e Relief Bills and Acts. Hearings, 9 7 t h Congress, 2d session. Hearings held Feb. 1 1 , 1982. Publication No. 97-64. REPORTS AND CONGRESSIONAL D O C U M E N T S A new idea f o r a new beginning. In Extensions of Remarks of Ken Kramer. Congressional record (daily ed.) v. 1 2 6 , Nov. 6 , 1981: E5197-E5198. Management of Public Lands. In remarks of Henry Jackson. Congressional record (daily ed.) v. 1 2 7 , May 1 9 , 1982: S5585-S5587. Senator Jackson addresses t h e Washington S t a t e Environmental Council. In remarks of D a l e Bumpers. Congressional record (daily ed.) v. 1 2 7 , May 2 6 , 1982: S6175-S6178. Some budget assumptions c a n n o t be believed. In Remarks of John Burton. Congressional record (daily ed.) v. 1 2 7 , Feb. 9 , 1982: H256. U.S. Congress. House. Committee on Government Operations. Subcommittee o n Government Activities a n d Transportation. Disposal o f surplus property. Hearing, 94th Congress, 1st session. U.S. Govt. Print. Off., 1975. 1 2 6 p. Hearing held Oct. 2 2 , 1975. U.S. Congress. Resources. Senate. Committee o n Energy and Natural Workshop o n public land acquisition a n d alternatives. 97th Congress, 1 s t session. U.S. Print. Off., 1981. 1029' p. Publication No. 97-34. Govt. CHRONOLOGY OF EVENTS 06/11/82 -- House Committee on Interior, Subcommittee on Public Lands, held hearings on public land transfers. 05/20/62 -- House Committee on Government Operations held hearings on public land disposal. 04/21/82 -- House Committee on Government Operations held hearings on the transfer of surplus property to State and local governments for correctional facilities. 03/18/82 -- Senator Percy chaired hearing on the management of Federal assets. Senator Biden, Alan Greenspan, and wildlife and recreation interest representatives testified. 02/25/82 -- President Reagan signed Executive Order 12348 establishing the Property Review Board. 02/25/82 -- Senator Percy chaired hearing on the management of Federal assets. Better Government Association, David Stockman, and National Taxpayers' Union testified. 11/05/81 -- Representative Winn submitted H.Res. 265, identical to S.Res. 231, to provide for better management of surplus Federal property. 10/20/81 -- Senator Percy submitted S.Res. 231 to the Senate, calling for an inventory of Federal property and improved management of Federal assets. ADDITIONAL REFERENCE SOURCES Conservation Foundation. Programs t o sell Federal lands sets off alarms. Washington, April 1972. 8 p. Davis, Joseph A. Congress decidedly cool to Reagan land-sale plan. Congressional Quarterly. July 1 7 , 1982: 1687-1690. Gordon, Gregory. Uncle Sam: a bungling realty dealer caught over a pork barrel. Hollywood sun-tattler (Hollywood, Florida), Feb. 22-26, 1982. Various pages. Hagstrom, Jerry. Crowded prisons pose a budget problem for this law-and-order administration. National Journal, VOl. 13, Oct. 1 0 , 1981: 1821-23. Stoler, Peter. Land sale of the century. 16-22. Aug. 23, 1982: Time Magazine. S t r u c k , Myron. Washington ----- Panel Post, expected Feb. 1 9 , t o speed property disposal. 1982: A19. Board s e t i n d r i v e t o s e l l e x t r a p r o p e r t y . P o s t , Feb. 26, 1982: A19. Washington " U.S. Department of J u s t i c e . A t t o r n e y G e n e r a l ' s Task F o r c e on Violent Crime, f i n a l report. W a s h i n g t o n , U.S. G o v t . P r i n t . Off., 1981. p. 94. U-S. Misuse o f a i r p o r t l a n d General Accounting Office. W a s h i n g t o n , U.S. a c q u i r e d through f e d e r a l assistance. G o v t . P r i n t ; O f f . , LCD-80-84, 1980. p. 39. ----- Numerous issues involved i n large-scale s a l e s of f e d e r a l real property. P r i n t . Off , 1 9 8 1 . (CED-82-18) . U.S. disposals and Washington, p. 45. U.S. Govt. Library of Congress. Congressional Research Service. Land d i s p o s a l p o l i c i e s of t h e p r i n c i p a l f e d e r a l l a n d management a g e n c i e s , by Cynthia E. Huston. Washington, 1981. 57 p. White House. S t a t e m e n t o f E d w i n L. H a r p e r , A s s i s t a n t f o r P o l i c y DevelopmenZ, Chairman, P r o p e r t y Review Board. (A p r e l i m i n a r y i n v e n t o r y of s u r p l u s p r o p e r t y t o be sold) 22 p. undated