Land Exchanges: Bureau of Land Management Process and Issues

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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.

Introduc tion ............................................................................................................................... 1
Basic Rules for Exchanges........................................................................................................2
Same State...........................................................................................................................2
Public Interest.....................................................................................................................2
Equal Value.........................................................................................................................2
Costs.......................................................................................................................... .......... 2
Assembled Land Exchanges...............................................................................................2
Management of Exchanged Lands......................................................................................3
Overview of Exchange Process.................................................................................................3
NEPA Analysis....................................................................................................................4
Appraisal ............................................................................................................................. 4
Issues ......................................................................................................................................... 5
Exchange Controversies......................................................................................................5
BLM Reforms.....................................................................................................................5
Opposition and Support for Land Exchanges.....................................................................6
Author Contact Information............................................................................................................7

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 ¹
amended by the Federal Land Exchange Facilitation Act of 1988 (FLEFA). An interest in land is ²
something less than full ownership, such as easements or mineral, timber, or water rights. BLM
implementing regulations are contained in 43 C.F.R. §2200. Additional information is contained ³
in BLM’s Land Exchange Handbook 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.
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.

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FLPMA requires that the federal and nonfederal lands in an exchange must be located in the same ⁴
state.
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.
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 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).
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.
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

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time (43 C.F.R. §2200.0-5(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.
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.
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.
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.
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 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

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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.
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 ⁷
these exchanges served the public interest.” 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 ⁸
the appearance that exchanges were conducted at market value. 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.
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 ⁹
agency on changes needed to address problems with appraisals and exchanges raised in audits.
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.
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

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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.
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.

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