Order Code RS21967
Updated August 30, 2007
Land Exchanges: Bureau of Land
Management Process and Issues
Carol Hardy Vincent
Specialist in Natural Resources
Resources, Science, and Industry Division
The Bureau of Land Management (BLM) typically completes dozens of exchanges
a year to acquire and dispose of land. The land exchange process generally has five
phases: development of an exchange proposal, feasibility evaluation, processing and
documentation (including appraisal), decision analysis and approval, and title transfer.
Land exchanges have been controversial periodically, with concerns regarding the
benefits to the public, determinations of market value, and contradictions in policies and
procedures. In response, BLM has implemented changes to the appraisal and exchange
processes. There remains a difference of opinion on the usefulness of land exchanges.
A land exchange, popularly viewed as a swap or a trade, is a real estate transaction
where the disposal (sale) and acquisition (purchase) of land are combined. The Bureau
of Land Management (BLM), in the Department of the Interior (DOI), is authorized to
exchange land or interests in land under the Federal Land Policy and Management Act of
1976 (FLPMA), as amended by the Federal Land Exchange Facilitation Act of 1988
(FLEFA).1 An interest in land is something less than full ownership, such as easements
or mineral, timber, or water rights.2 BLM implementing regulations are contained in 43
C.F.R. §2200. Additional information is contained in BLM’s Land Exchange Handbook3
and various agency instruction memoranda. Selected provisions of these sources are
summarized below. Additionally, Congress sometimes enacts legislation authorizing and
governing specific land exchanges. Legislated land exchanges generally follow the
process and procedures outlined in this report, unless the statute provides otherwise.
43 U.S.C. §§1715-1716. These statutes apply to the Forest Service in the Department of
Agriculture as well, but this report relates only to BLM. For information on acquisition and
disposal authorities of BLM and other land management agencies, see CRS Report RL32393.
Hereafter, exchange is used to encompass both exchanges of land and interests in land.
The Handbook is available at [http://www.blm.gov/nhp/what/lands/realty/tenure/links.html].
Exchanges can be used to change the “checkerboard” pattern of federal, state, and
privately owned lands in the West that resulted from early land grants. Land
consolidation can increase the efficiency of land management while decreasing
management costs. Exchanges allow for land transactions on a large scale; they can be
used to consolidate hundreds of scattered, isolated tracts that likely would have no chance
of sale to the same owner. Also, exchanges may be valuable for facilitating transactions
with private landowners who want land instead of cash, and for reconfiguring state lands.
BLM land exchanges have sometimes been controversial. Federal audits performed
earlier this decade criticized exchanges for short-changing the public and lacking in clear
and consistent authorities. They included audits by the DOI Office of the Inspector
General (OIG), the Government Accountability Office (GAO), and The Appraisal
Foundation (TAF). These audits received significant attention from Congress, DOI, the
media, and interest groups. In response, BLM and DOI implemented changes, perhaps
most notably the consolidation of appraisal functions in a new office (discussed below).
BLM typically completes dozens of exchanges each year under FLPMA and acts of
Congress. In FY2006, for instance, BLM issued 58 deeds or patents for exchanged lands,
totaling 28,397 acres in seven states with an appraised value of $14.4 million. In the same
period, BLM received 21 deeds for land, totaling 26,666 acres with a value of $6.9
million. BLM also acquired and disposed of lands under other authorities.
Basic Rules for Exchanges
Same State. FLPMA requires that the federal and nonfederal lands in an exchange
must be located in the same state.4
Public Interest. Land exchanges must be in the public interest. Public land may
be exchanged if the Secretary of the Interior determines that the public interest will be
“well served” (43 U.S.C. §1716(a)). BLM often trades land to achieve better federal land
management, for instance, by consolidating ownership and disposing of land that is
isolated or difficult to manage. Under BLM regulations, other considerations include
protection of fish and wildlife habitat, cultural resources, watersheds, wilderness, and
aesthetic values; enhancement of recreational opportunities and public access;
consolidation of lands to improve development; and expansion of communities. The
resource values and public benefits of the federal lands to be conveyed may not be more
than those of the nonfederal lands being acquired. Further, the intended use of the
conveyed federal lands should not conflict significantly with management of adjacent
federal and Indian trust lands (43 C.F.R. §2200.0-6(b)). In making an exchange, BLM is
to reserve any rights or interests that are needed to protect the public interest, and may
impose restrictions on the use of lands conveyed.
Equal Value. Under law, the value of the lands exchanged are to be equal, or if
they are not equal, they are to be equalized by the payment of money up to 25% of the
value of the federal lands conveyed in the exchange. The parties in the exchange may
agree to waive this payment, within limitations, including if it involves not more than 3%
of the value of the federal lands or $15,000. Another way of equalizing value is for either
Congress has provided for exchanges involving lands in more than one state.
party to add or remove lands. Further, the Secretary of the Interior may exchange lands
that are of “approximately” equal value under certain conditions, including if the value
of the federal lands does not exceed $150,000 (43 C.F.R. §2201.6 and §2201.5).
Costs. Typically, the BLM and other parties share equally in the administrative
costs of an exchange, for instance, the cost of the appraisal of lands, mineral
examinations, cultural resource surveys, and addressing deficiencies preventing highest
and best use of the land. However, the parties can agree that one party may bear costs and
responsibilities typically assumed by the other, subject to certain terms.
Assembled Land Exchanges. BLM regulations define an assembled land
exchange as consolidation of multiple parcels of federal or nonfederal land for the
purpose of one or more exchange transactions over a period of time (43 C.F.R. §2200.05(f)). An assembled land exchange may be used to facilitate exchanges and reduce costs,
for instance, by consolidating many federal parcels of limited value. In other cases, third
parties secure lands that BLM wants to acquire from multiple owners to facilitate
negotiations. Both profit and nonprofit organizations have facilitated assembled land
exchanges, typically functioning as brokers/agents for the exchange.
Management of Exchanged Lands. Lands acquired by BLM by exchange
become public lands and are to be managed under existing law, regulations, and land use
plans. Acquired lands that are within the boundaries of an area having an administrative
or congressional designation, such as a natural conservation area, become part of that unit
or area and are managed accordingly.
Overview of Exchange Process
In practice, exchanges may be proposed by BLM, private citizens, or state or local
government officials. BLM is to consider only proposals that conform with land use
plans. The Secretary of the Interior may determine that the mining laws and other public
land laws do not apply (for up to five years) to federal lands under consideration for
exchange, to the extent that such laws authorize the acquisition or possession of the public
lands, subject to valid existing rights. BLM advises that many exchanges take between
18 and 24 months, but the time depends on the complexities.
The exchange process typically occurs in five phases: (1) development of an
exchange proposal, (2) feasibility evaluation, (3) processing and documentation, (4)
decision analysis and approval, and (5) title transfer. BLM field offices take the lead in
negotiating and processing exchanges, but BLM headquarters must ultimately concur.
During development of an exchange proposal, the federal and nonfederal parties have
preliminary discussions to share information about goals and constraints and to screen
proposals. They develop a written exchange proposal that includes a legal description of
the lands to be conveyed and the responsibilities of the parties. BLM checks the title of
the nonfederal land to ensure its acceptability for acquisition and the survey and land
status of the federal land to ensure its availability for disposal.
A feasibility report documents the preliminary information on all aspects of the
exchange, including the public benefits, consistency with BLM’s land use plan, cost and
processing responsibilities, anticipated land uses, analysis of value, schedule for
completion, and alternatives. Exchanges involving federal lands valued at more than
$500,000 are subject to review by the House and Senate Committees on Appropriations.
At the feasibility stage, all exchanges require review and concurrence at several levels,
including the DOI Solicitor; BLM’s National Land Exchange Evaluation and Assistance
Team, lands program managers, and state directors; and ultimately the Deputy Director
of BLM. If the parties agree to proceed, they sign a nonbinding Agreement to Initiate an
Exchange that serves as a framework. The agreement is to address 17 items identified in
BLM regulations (43 C.F.R. §2201.1(c)-(g)), and, for exchanges involving third party
facilitators, is to include a full disclosure provision.
Exchange processing and documentation includes title review; public notice and
comment; identification and resolution of environmental issues (under the National
Environmental Policy Act of 1969 (NEPA));5 assessments of mineral, cultural, and other
resources; Native American and threatened and endangered species consultations; and
preparation and review of appraisals. The NEPA analysis and appraisal often are the most
challenging and time-consuming activities. During title review, BLM seeks to confirm
that it can acquire clear title to the nonfederal land. BLM gives public notice of the
exchange in local newspapers, and contacts authorized land users, state and local
governments, and the congressional delegation. The notice must invite the public to
comment on the exchange. BLM also must give public notice of its decision to approve
or disapprove an exchange.
NEPA Analysis. BLM must conduct an environmental analysis in accordance with
NEPA. The analysis documents the impact of completing the exchange on the resources,
taking into account the likely future uses of the lands. It includes evaluations of resources
on the federal and nonfederal lands. Ordinarily, the mineral potential of the lands is
evaluated; wildlife and vegetation species are identified; water sources, locations, and
rights are detailed; forestry resources are assessed; cultural and historic resources are
catalogued; recreational and other land uses are listed; and contaminants are inventoried
and the responsibilities of the parties may be addressed.
Appraisal. BLM regulations state that an exchange of lands shall be based on the
market value of the federal and nonfederal lands as determined by the Secretary through
appraisals, bargaining based on appraisals, or arbitration. In estimating market value, the
appraiser is to determine the highest and best use of the property — the most probable use
based on market evidence. Factors include historic, wildlife, recreation, wilderness,
scenic, cultural, or other resource values or amenities that are reflected in prices paid for
comparable properties in the open market. Interests in land — such as minerals or water
rights — also are considered to the extent consistent with highest and best use, according
to BLM regulations. In the absence of current market information, the parties may use
other methods to estimate market value. FLEFA provides that disputes over the appraised
values of lands can be resolved by arbitration, bargaining, or other methods.
A 2006 DOI Manual sets forth appraisal policies.6 Appraisals are to reflect
nationally recognized standards. Appraisers are guided by the Uniform Appraisal
42 U.S.C. §4321, et seq. The analysis also is governed by regulations of the Council on
Environmental Quality (40 C.F.R. parts 1500-1508) and DOI and BLM policies and procedures.
The manual is available on the website of the DOI National Business Center, Appraisal Services
Directorate, at [http://www.nbc.gov/Appraisalservices/].
Standards for Federal Land Acquisitions and the Uniform Standards of Professional
Appraisal Practice. Both federal employees and contractors may conduct appraisals. The
appraiser prepares a report estimating market value that describes the work conducted and
sets forth the information and analysis supporting the estimate. Each appraisal report is
to be reviewed and approved by a review appraiser.
At the decision analysis and approval stage, all proposed exchanges again require
review and concurrence at several levels, as at the feasibility stage. BLM is to publish and
distribute a Notice of Decision. After approval, title transfer is the final phase. It
involves reviewing the title evidence and land status, issuing the federal patent, and
closing the transaction. Also, the parties may sign an exchange agreement committing
them to completion, which is legally binding.
Exchange Controversies. BLM land exchanges have been controversial
periodically. Concerns prominent earlier this decade centered on the benefits to the
public, determinations of market value, and contradictions in policies and procedures. For
instance, a GAO report concluded that the BLM did not follow requirements to show that
“the public benefits of acquiring the nonfederal land in an exchange matched or exceeded
the public benefits of retaining federal land, raising doubts about whether these exchanges
served the public interest.”7 Audit reports also criticized BLM for valuing its land at far
less than market value, or for overvaluing nonfederal land to be acquired, to make deals
more attractive to nonfederal landowners. A report by The Appraisal Foundation
determined that there were political pressures to change or ignore qualified market value
opinions to create the appearance that exchanges were conducted at market value.8 TAF
also concluded that inconsistencies among BLM’s guidance and directives resulted in
inconsistent development of market value opinions, improper management of appraisal
efforts, and lack of compliance with laws and regulations.
BLM Reforms. In response, BLM took steps to increase oversight of exchanges;
demonstrate how exchanges serve the public interest; ensure that land is properly valued;
and ensure that exchanges are completed in compliance with law, regulation, and policy.
In 2003, BLM formed The Appraisal and Exchange Workgroup, composed of staff from
federal and state agencies, to advise the agency on changes needed to address problems
with appraisals and exchanges raised in audits.9 BLM chose to implement many of the
group’s recommendations, including those to strengthen management of exchanges; build
public confidence; develop new authorities; enhance training and skills; facilitate
exchanges with states; strengthen the ability to reach agreement on value; define the role
of facilitators; and develop guidance for processing legislated exchanges.
U.S. General Accounting Office, BLM and the Forest Service: Land Exchanges Need to Reflect
Appropriate Value and Serve the Public Interest, GAO/RCED-00-73 (Washington, DC: June
2000), p. 4.
The Appraisal Foundation, Evaluation of the Appraisal Organization of the Department of
Interior Bureau of Land Management (Washington, DC: Oct. 9, 2002), p. 9-10.
Appraisal and Exchange Workgroup Final Report, presented to the Bureau of Land
Management, U.S. Dept. of the Interior, May 2003.
A significant change involved consolidating real estate appraisal functions from
several DOI bureaus into a new Appraisal Services Directorate (ASD), effective
November 12, 2003. An independent appraisal office, to protect appraisers from possible
political pressures, had been recommended by audit reports for decades. Under the
reorganization, to separate the appraisal function from realty decisions, appraisers report
to the ASD rather than to DOI realty personnel. A 2006 GAO report found that this
consolidation “vastly improved” the objectivity of appraisers, but that some problems
remained. For instance, some of the appraisals did not appear to comply with industry
standards, making their accuracy uncertain. The extent to which any such problems
applied to BLM exchanges is unclear, as they were not separately identified in the
analysis.10 In other changes, the ASD developed a web-based system for DOI agencies
to submit and track requests for appraisals, DOI issued a consolidated handbook for
appraisals, and BLM revised its Land Exchange Handbook.
Opposition and Support for Land Exchanges. Some critics have suggested
discontinuing exchanges on the grounds that they have been problematic and are
inherently difficult. GAO, among others, has recommended that Congress consider
ending exchanges in favor of buying and selling land for cash. The agency has observed
that exchanges can be complicated, because a landowner must find another who is willing
to trade, wants to acquire what is being offered, and owns a desired parcel of about the
same value. With cash sales, sellers could sell unwanted parcels and use the cash to buy
parcels they prefer. Advocates believe that this approach takes the subjectivity out of
estimating value through appraisal, procures the best price, and simplifies transactions
because there is no requirement to equalize value or act within the same state.
Some observers assert that newer BLM authority to sell or exchange land and keep
the money in special accounts for subsequent acquisitions has superseded a need for
FLPMA exchanges. Specifically, the Federal Land Transaction Facilitation Act (43
U.S.C. §2301) provides for the sale or exchange of land identified for disposal under
BLM’s land use plans. The proceeds are available to acquire certain lands containing
exceptional resources. A second law is more limited. The Southern Nevada Public Land
Management Act (SNPLMA, P.L. 105-263) allows BLM to sell or exchange land around
Las Vegas, with proceeds available to acquire environmentally sensitive lands in Nevada.
Advocates prefer these authorities because land values can be determined through the
market and agencies can purchase lands independent of annual appropriations.
BLM, among others, supports exchanging land under FLPMA for the many uses
noted above under “Introduction.” Exchange supporters claim that controversies over
valuing properties with unique attributes or in high-growth areas are as likely to occur for
land that is sold or acquired as for land that is exchanged. Further, BLM contends that
the majority of exchanges are not controversial. Exchange advocates also contend that
BLM has had limited and steadily decreasing funding for land acquisitions over the past
several years, and that BLM thus needs exchange authority to acquire additional valuable
land. Finally, exchange proponents assert that reforms have addressed concerns with
exchanges and appraisals.
U.S. Government Accountability Office, Interior’s Land Appraisal Services: Actions Needed
to Improve Compliance with Appraisal Standards, Increase Efficiency, and Broaden Oversight,
GAO-06-1050 (Washington, DC: Sept. 2006), p.13 and p. 15.