[Senate Hearing 107-67]
[From the U.S. Government Printing Office]



                                                         S. Hrg. 107-67

                  DESERT TORTOISE HABITAT CONSERVATION

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                   FORESTS AND PUBLIC LAND MANAGEMENT

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   on

                                H.R. 880

TO PROVIDE FOR THE ACQUISITION OF PROPERTY IN WASHINGTON COUNTY, UTAH, 
   FOR IMPLEMENTATION OF A DESERT TORTOISE HABITAT CONSERVATION PLAN

                               __________

                              MAY 10, 2001


                       Printed for the use of the
               Committee on Energy and Natural Resources

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_______________________________________________________________________
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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico         JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma                DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho                BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado    BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming                RON WYDEN, Oregon
RICHARD C. SHELBY, Alabama           TIM JOHNSON, South Dakota
CONRAD BURNS, Montana                MARY L. LANDRIEU, Louisiana
JON KYL, Arizona                     EVAN BAYH, Indiana
CHUCK HAGEL, Nebraska                DIANNE FEINSTEIN, California
GORDON SMITH, Oregon                 CHARLES E. SCHUMER, New York
                                     MARIA CANTWELL, Washington
                    Brian P. Malnak, Staff Director
                      David G. Dye, Chief Counsel
                 James P. Beirne, Deputy Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
                                 ------                                

           Subcommittee on Forests and Public Land Management

                    LARRY E. CRAIG, Idaho, Chairman
                  CONRAD BURNS, Montana, Vice Chairman
PETE V. DOMENICI, New Mexico         RON WYDEN, Oregon
DON NICKLES, Oklahoma                DANIEL K. AKAKA, Hawaii
GORDON SMITH, Oregon                 TIM JOHNSON, South Dakota
CRAIG THOMAS, Wyoming                MARY L. LANDRIEU, Louisiana
JON KYL, Arizona                     EVAN BAYH, Indiana
RICHARD C. SHELBY, Alabama           DIANNE FEINSTEIN, California
                                     CHARLES E. SCHUMER, New York
                                     MARIA CANTWELL, Washington

  Frank H. Murkowski and Jeff Bingaman are Ex Officio Members of the 
                              Subcommittee

                 Mike Menge, Professional Staff Member
                David Brooks, Democratic Senior Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Anderson, Robert, Deputy Assistant Director, Bureau of Land 
  Management.....................................................     1
Thomas, Hon. Craig, U.S. Senator from Wyoming....................     1

                                APPENDIX

Additional material submitted for the record.....................     5

 
                  DESERT TORTOISE HABITAT CONSERVATION

                              ----------                              


                         THURSDAY, MAY 10, 2001

                           U.S. Senate,    
                            Subcommittee on
                Forests and Public Land Management,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 3:45 p.m., in 
room SD-366, Dirksen Senate Office Building, Hon. Craig Thomas 
presiding.

            OPENING STATEMENT OF HON. CRAIG THOMAS, 
                   U.S. SENATOR FROM WYOMING

    Senator Thomas. Senator Larry Craig, chairman of the Forest 
& Public Land Subcommittee, asked if at the close of this 
oversight hearing the Park Service would consent to a short 
hearing on this subcommittee to take testimony on H.R. 880. In 
the spirit of Senatorial efficiency, of course we agreed to do 
that.
    Forest & Public Land Subcommittee held a hearing on a 
similar piece in the 106th Congress and consequently reported 
the bill favorably to the full Senate. H.R. 880 is an act to 
provide for the acquisition of property in Washington County, 
Utah, for the implementation of a desert tortoise habitat 
conservation plan.
    The bill also provides for compensation to be paid to the 
owners of the property. We're delighted today to have witness 
from BLM, Mr. Anderson.
    Mr. Anderson. Appreciate that.
    Senator Thomas. And if you would go ahead with your 
testimony, sir.

STATEMENT OF ROBERT ANDERSON, DEPUTY ASSISTANT DIRECTOR, BUREAU 
                       OF LAND MANAGEMENT

    Mr. Anderson. Okay, thank you very much, Senator Thomas.
    I appreciate the opportunity to appear before you today to 
testify on H.R. 880 which provides for all right, title, and 
interest to certain property in Washington County, Utah, to be 
vested in the United States.
    The administration supports the land transfer as provided 
for in H.R. 880 but cannot support some of the factors and 
procedures outlined in the bill to be used in determining 
compensation. The administration would be pleased to work with 
the committee to revise these provisions so that the 
administration could support the bill.
    H.R. 880 seeks to accomplish the Federal Government's long 
awaited and much desired acquisition of the last major block of 
private lands within the Washington County Habitat Conservation 
Plan area near St. George, Utah.
    At issue is the area known as the Red Cliffs Desert Reserve 
which provides critical habitat for the threatened desert 
tortoise.
    H.R. 880 provides for the acquisition by the BLM of 1,516 
acres of private property within the Red Cliffs Desert Reserve, 
and 34 acres of private property adjacent to the reserve.
    Since 1996, BLM has coordinated the acquisition of nearly 
4,400 acres of desert tortoise habitat worth about $35 million 
within this reserve. These Federal, State, and private 
acquisitions have included land exchanges, direct purchases at 
market value, and one donation.
    The administration has concerns regarding the language 
requiring the United States to take title 30 days after 
enactment. 30 days is not adequate time to ensure clear title, 
release of potential liens, and to satisfy property taxes that 
may be due on the property. We suggest the legislation be 
amended to state that the United States take title 60 days 
after the enactment.
    In addition, the administration objects to those provisions 
of H.R. 880 that deviate from standard land acquisition 
practices that provide compensation beyond that received by 
other landowners in previous acquisitions in this area.
    The administration supports the goal of acquiring this 
property for the Federal Government but not in the manner 
stated in the bill.
    The administration stands ready to work with the committee 
to amend the bill to effect a legislative taking without these 
objectionable provisions.
    In closing, Senator Thomas, the acquisition of these lands 
within the reserve is a high priority for the BLM and the Fish 
& Wildlife Service because there is no question this area is 
critical to the protection and recovery of the desert tortoise.
    We thank Senator Bennett for his efforts to resolve this 
difficult issue.
    This concludes my statement, and I would be pleased to 
answer questions that you may have.
    [The prepared statement of Mr. Anderson follows:]

   PREPARED STATEMENT OF ROBERT ANDERSON, DEPUTY ASSISTANT DIRECTOR, 
                       BUREAU OF LAND MANAGEMENT

    Mr. Chairman and members of the subcommittee, I appreciate the 
opportunity to appear before you today to testify on H.R. 880, to 
provide for all right, title, and interest in and to certain property 
in Washington County, Utah, to be vested in the United States.
    The Administration supports the land transfer as provided for in 
H.R. 880, but cannot support some of the factors and procedures, 
outlined in the bill, to be used in determining compensation. The 
Administration would be pleased to work with the Committee to revise 
these provisions so that the Administration could support H.R. 880.
    H.R. 880 seeks to accomplish the Federal government's long-awaited 
and much-desired acquisition of the last major block of private lands 
within the Washington County Habitat Conservation Plan (HCP) area near 
St. George, Utah. Specifically at issue is the area known as the Red 
Cliffs Desert Reserve which provides critical habitat for the 
threatened desert tortoise. The Bureau of Land Management (BLM) 
supports the important goal and desire to consummate the final, 
critical acquisitions in this unique and special place.
    H.R. 880 provides for the acquisition by the BLM of all right, 
title and interest to 1,516 acres of private property within the Red 
Cliffs Desert Reserve and 34 acres of private property adjacent to the 
Reserve. The Red Cliffs Desert Reserve was established in 1996 as part 
of the Desert Tortoise Habitat Conservation Plan (HCP) for Washington 
County, Utah. The County developed the HCP, with technical advice from 
the Fish and Wildlife Service, in order to receive a permit to allow 
for the incidental take (acceptable level of loss) of desert tortoises 
on about 12,000 acres of privately-held desert tortoise habitat and to 
mitigate that take by developing the Reserve to ensure the protection 
and recovery of the threatened Desert Tortoise and other listed species 
in the area. H.R. 880 provides compensation to the private landowner, 
Environmental Land Technology, Ltd. (ELT), as of the date of the 
approval of the HCP, with an initial payment of $15 million and any 
remaining judgment backed by the full faith and credit of the United 
States. Compensation by a judgment action would also include interest, 
reasonable costs, expenses of holding the property and attorney fees 
from February 1990 to the date of final payment.
    Since 1996, BLM has coordinated the acquisition of nearly 4,400 
acres of Desert Tortoise habitat, worth approximately $35 million, 
within the Red Cliffs Desert Reserve. These State and private 
acquisitions have included land exchanges, direct purchases at fair 
market value and one donation. BLM has expended $10.5 million in Land 
and Water Conservation Fund (LWCF) monies to date in completing land 
purchases and has an additional $1.5 million available to purchase high 
value habitat. BLM has completed five separate transactions with ELT, 
for a total of approximately 383 acres, including both exchanges and 
LWCF purchases.
    In addition, since 1997, the Fish and Wildlife Service has provided 
approximately $4.7 million in grants to the State of Utah for land 
acquisitions associated with the Washington County HCP; and the Service 
has obligated $6 million for the same purpose on FY 2001. These grants 
were provided through the Service's HCP Land Acquisition Program under 
the Endangered Species Act Section 6 Cooperative Endangered Species 
Conservation Fund. These transactions demonstrate a long-term record of 
successful accomplishments in meeting the goals and objectives of the 
HCP despite widely varying expectations by many landowners.
    The Administration has concerns regarding the language requiring 
the United States to take title 30 days after enactment. Thirty days is 
not adequate time to ensure clear title, release of potential liens, 
and to satisfy property taxes that may be due on the property. We 
suggest that the legislation be amended to state that the United States 
take title 60 days after enactment.
    In addition, the Administration objects to those provisions of H.R. 
880 that deviate from standard land acquisition practices and 
substitute procedures that provide compensation beyond that received by 
other landowners in previous acquisitions in this area. The 
Administration supports the goal of acquiring this property for the 
federal government, but not in this manner. The Administration stands 
ready to work with the Committee to amend the bill to effect a 
legislative taking without these objectionable provisions.
    In closing, Mr. Chairman, the acquisition of these lands within the 
Reserve is a high priority for the BLM and the Fish and Wildlife 
Service because there is no question this area is critical to the 
protection and recovery of the Desert Tortoise. The HCP has provided a 
mechanism to protect listed species and allow for continued economic 
opportunities in Washington County, Utah. Completion of the land 
acquisition goals within the Reserve is supported by State and local 
officials, the Utah Congressional delegation and the Administration. We 
fully support the concept of transferring title to the land inside the 
reserve to the BLM in a manner that compensates the landowner in 
accordance with existing Federal law. We thank Mr. Bennett for his 
efforts to resolve this difficult issue. This concludes my statement. I 
would be pleased to answer any questions at this time.

    Senator Thomas. Thank you very much. Just as a question, 
this is--where is this generally in Utah?
    Mr. Anderson. This is southwestern Utah just outside of the 
town of St. George.
    Senator Thomas. And this thing then finally what do you 
call it, a reserve?
    Mr. Anderson. Yes.
    Senator Thomas. Will be 12,000 acres?
    Mr. Anderson. Well, actually, the whole reserve is about 
61,000 acres, the total reserve.
    Senator Thomas. What kind of reserve?
    Mr. Anderson. It's a desert tortoise reserve, and the 
desert tortoise is an endangered species.
    Senator Thomas. There's 16,000 acres for desert tortoises 
to frolic in?
    Mr. Anderson. It's a very important reserve because it's 
one of the most dense and healthiest areas in the whole world 
for the desert tortoise. As you might know, this desert 
tortoise encumbers Utah, Arizona, California, Nevada. So we 
have quite a habitat, but this is one of the best.
    Senator Thomas. Is it endanger listed?
    Mr. Anderson. Yes, it's listed.
    Senator Thomas. Where else is there protection for it, do 
you know?
    Mr. Anderson. Well, in California, Arizona, and Nevada.
    Senator Thomas. And there's spots there as well?
    Mr. Anderson. Yes. In fact, much of the desert, the 
California desert conservation area has desert tortoise.
    Senator Thomas. What, just generally, what other activities 
do they allow on the 16,000 acres?
    Mr. Anderson. Well, in the reserve they're not going to 
allow any development at all.
    Senator Thomas. Can you ride your horse out there?
    Mr. Anderson. Yes, there will be recreation opportunities, 
and, as I understand it, in this reserve they'll be studying 
that. There is a State park within the reserve too.
    Senator Thomas. I see. Do they hunt whatever there is to 
hunt out there, or maybe there isn't anything?
    Mr. Anderson. Generally they can hunt in these areas. It's 
mostly BLM land, and we, of course, allow hunting on BLM land.
    Senator Thomas. Thank you, sir. I understand that I said 
16. It's 61,000, I'm sorry. I'm sure this will be discussed 
some before the committee mark up next week, and we appreciate 
very much your being here, sir. Mr. Anderson. You're welcome. 
Thank you.
    Senator Thomas. There are, I think, 6 days for open record, 
if someone wants to submit a statement for the record. We are 
adjourned.
    [Whereupon, at 3:50 p.m., the hearing was adjourned.]

                                APPENDIX

              Additional Material Submitted for the Record

                              ----------                              

                             Western Land Exchange Project,
                                          Seattle, WA, May 8, 2001.
Honorable Members,
Senate Energy and Natural Resources Committee, Dirksen Senate Office 
        Building, Washington, DC.

Subject: Testimony in opposition to H.R. 880, federal buy-out of lands 
        in Washington County, Utah
    Dear Committee Members: I write as director of the Western Land 
Exchange Project, a non-profit, public interest organization that 
monitors federal land exchanges and transactions. We strongly oppose 
H.R. 880, which would effect an inflated ``down payment'' on private 
lands within the desert tortoise reserve in Washington County, Utah. 
This bill is ultimately intended to hand over tens of millions of 
dollars to James Doyle, a land speculator operating as Environmental 
Land Technologies who owns land within the reserve.
    The bill was referred to your committee on March 14, 2001 after 
having passed in the House. We opposed this bill last year (then H.R. 
4721), and were grateful that it did not move in the Senate. We hope 
that you will again refrain from advancing this proposal.
    The Western Land Exchange Project is a non-profit organization that 
monitors federal land exchanges and is working for long-term, 
substantive reform in the exchange process. We have had grave concern 
about land exchanges and other transactions within Washington County, 
Utah that appear to yield huge profits to private landowners while 
costing the American public millions of dollars. H.R. 880 continues in 
that tradition.
    In the early 1990s, after the desert tortoise had been declared a 
threatened species, planning began for the preservation of critical 
habitat in the Washington County Habitat Conservation Area (HCA), and 
the BLM began a series of land exchanges to acquire private inholdings 
within the HCA. Private lands within the HCA were valued under the 
established appraisal conventions long accepted as the standards for 
these transactions.
    However, some Washington County landowners were not satisfied with 
these standards, because--as would occur with any type of zoning or 
constraint on development--limits on development within the HCA lowered 
the market value of their lands. Utah Rep. Hansen accommodated this 
handful of citizens by placing a special provision in the Omnibus Parks 
Bill of 1996 (P.L. 104-333) mandating that lands within Washington 
County acquired through federal trade be appraised ``without regard to 
the presence of a species listed as threatened or endangered.'' This 
provision has been applied to every land transaction in Washington 
County since passage of the 1996 Omnibus Parks bill.
    This is entirely counter to the established standards of land 
valuation, and is flagrantly unfair. As outlined in a series of news 
articles published in the Deseret News last year, Washington County 
landowners have been handed a huge windfall, funded by the American 
taxpayer.
    Jim Doyle, the beneficiary of H.R. 880, has already completed 5 
land exchanges in Washington County, trading to the government 383 
acres valued at $5.6 million. He now seeks as much as $50 million for 
his remaining 1,550 acres in the desert tortoise preserve. Mr. Doyle 
claims to have been victimized by the federal government because the 
presence of the desert tortoise has reduced the development potential 
(and thus the value) of his land.
    Mr. Doyle began leasing this land from the State of Utah in 1983 
and bought it from the State in 1990. Mr. Doyle was the beneficiary of 
a preferential sale by the State of Utah that was later declared 
illegal.
    The desert tortoise was first listed as a threatened species in 
1980; it received emergency endangered listing in August of 1989, and 
final listing as threatened in April 1990.
    Mr. Doyle did not make a down payment to the State on his land 
purchase until June 1990, well after the tortoise was first listed. The 
listing of the Mojave population of the desert tortoise had been 
anticipated for years--it did not occur in a vacuum or without ample 
warning. Mr. Doyle did not go blindfolded into this land purchase, and 
for him to portray himself as an innocent victim of federal regulation 
is grossly misleading.
    It seems clear that by the time he made his first payment to the 
State, he had long understood the potential impact the tortoise's 
listing would have on that land. Mr. Doyle originally bought the 
property from the State for about $330 an acre. Because the original 
preferential sale was later declared illegal, he reached a settlement 
with the State requiring that he pay the State a percentage of his 
proceeds from selling or exchanging the land. It was estimated that his 
final purchase price would end up at about $6 million, or $2,500 per 
acre.
    H.R. 880 proposes to make an initial payment of $15 million to 
Doyle--about $9,600 per acre, or nearly four times his purchase price.
    The ultimate payment to Mr. Doyle would consist of any balance 
beyond $15 million ``owed'' him based on the determination of the land 
value and costs. If Mr. Doyle's claims regarding the value of his land 
are upheld, he could eventually receive a total of up to $50 million. 
Not only would he make a huge windfall profit from the passage of H.R. 
880, but the State of Utah also stands to benefit mightily by the 
inflated federal purchase price--again, at huge cost to American 
taxpayers.
    Because of his trouble with the State of Utah, Mr. Doyle was not 
even able to present clear title to the land until 1997, so it was not 
until that year that the BLM began negotiating with him over the land 
value. Since then, disagreement over the value has delayed the 
purchase. Doyle claims the value should be based on the potential for 
maximum development and the presence of adequate infrastructure--
neither of which exists. He has also threatened to sue Washington 
County for ``inverse takings.''
    Under H.R. 880, Mr. Doyle would be paid ``just compensation'' for 
the land based on its value at the time it vests in the United States 
(upon the bill's passage). He would also receive compensation for the 
costs and expenses of having held the property since February 1996, 
plus other costs and attorney fees.
    H.R. 880 is just the latest in a long series of dubious land deals 
and taxpayer rip-offs to have come out of St. George and Washington 
County, Utah. The Department of Interior Inspector General has recently 
finished an investigation of land exchanges in Washington County, 
prompted by evidence that the appraisal process for land trades in that 
area has been flagrantly manipulated by private landowners like Mr. 
Doyle. The General Accounting Office, too, has targeted St. George as a 
problem area in the Bureau of Land Management's exchange program.
    This bill amounts to a scandalous bilking of American taxpayers for 
the benefit of one landowner and the State of Utah. Not only is the 
public being asked to pay a hugely inflated price for Mr. Doyle's land, 
but in doing so we would be rewarding him for his sharp land deals, 
cynical manipulation of the system, and posturing over ``inverse 
takings.''
    There are far better ways to spend taxpayers' money than to 
subsidize and encourage land speculators like Mr. Doyle. We strongly 
urge the Committee to once again reject this bill.
            Thank you for your consideration.
                                           Janine Blaeloch,
                                                          Director.
                                 ______
                                 
                              Environmental Policy Project,
                                      Washington, DC, May 15, 2001.
Hon. Larry E. Craig,
Chairman, Subcommittee on Forests and Public Lands, Senate Energy and 
        Natural Resource Committee, Dirksen Building, U.S. Senate, 
        Washington, DC.

Re: H.R. 880, An Act to Provide for the Acquisition of Property in 
        Washington County, Utah
    Dear Chairman Craig: Please accept the following comments for 
inclusion in the hearing record for the above-referenced bill. The 
Environmental Policy Project takes no position either in support of or 
in opposition to this legislation. The following comments are provided 
to assist the Subcommittee in assessing (1) whether and to what extent 
the bill departs from the usual procedures and standards for 
acquisition of interests in land for conservation purposes, and (2) 
whether and to what extent the amount to be paid by the public for the 
property may exceed fair market value as conventionally understood.
    I. The proposed legislation departs from the usual procedures and 
standards for acquisition of land for conservation purposes in a number 
of respects.
    First, a legislative taking for land conservation purposes is 
itself quite unusual. Congress has pursued this approach to the 
acquisition of conservation lands in fewer than half a dozen cases over 
the last several decades. The effect of this approach is to remove a 
particular acquisition from the agency priority-setting process and the 
congressional appropriations process, making it more difficult to 
ensure that limited financial resources are dedicated to the highest 
priority projects.
    Second, the proposed legislative taking would require the public to 
pay for the property without regard to the effect on the property's 
value of restrictions on the use of the property imposed by the 
Endangered Species Act. See bill section 1(b), referencing section 
309(f) of the Omnibus Parks and Public Lands Management Act of 1996. So 
far as we are aware, this valuation approach has not been adopted in 
any other legislative taking bill. This valuation approach also departs 
from the usual standards of the appraisal profession, which require an 
appraiser to consider existing legal constraints on the permitted use 
of the property in estimating fair market value. See Appraisal 
Standards Board, Uniform Standards of Professional Appraisal Practice, 
Standard Rule 1.3(b) (2000 Edition).
    Third, the proposed legislation provides for payment of several 
items not ordinarily including in legislation authorizing a legislative 
taking. Section 1(b)(2) of the bill provides that the public, in 
addition to paying ``just compensation'' for the actual taking, would 
pay the owner's ``reasonable costs and expenses of holding . . . [the] 
property from [the date of creation of the Red Cliffs Desert Reserve] 
\1\ to the date of final payment, including damages, if any, and 
reasonable costs and attorneys fees.'' Compare P.L. 104-333, section 
817 (mandating a legislative taking, but without requiring payment of 
these items). Payment of these additional items, the cost of which 
could potentially run into many millions of dollars, is ostensibly 
justified by the long delay in government acquisition of the property. 
However, according to testimony on the bill, questions concerning 
Environmental Land Technology, Inc.'s title to the property precluded 
acquisition of the property for a number of years. In any event, if the 
``fair market value'' of the property has increased over the last 
several years, as seems probable (see below), appreciation in the 
property's value may already have compensated the owner for its 
``holding costs.''
---------------------------------------------------------------------------
    \1\ The bill as passed by the House uses a 1990 date; the date 
should probably be 1996.
---------------------------------------------------------------------------
    Fourth, testimony on the proposed legislation suggests there may be 
some outstanding questions about the scope of the property interests 
held by Environmental Land Technology, Inc. and about whether the State 
of Utah or other third parties may hold separate interests in the 
property which could potentially conflict with the management of the 
property for species conservation purposes. A legislative taking of the 
interests of one owner will obviously fail in its intended conservation 
purpose if other owners continue to hold interests that are 
inconsistent with conservation objectives.
    II. The proposed legislation would require taxpayers to confer a 
large windfall on Environmental Land Technology, Inc., perhaps 50-plus 
times what the company originally paid for the property. According to 
testimony on the bill and newspaper accounts, the company paid 
approximately $1 million for the property, apparently with full 
knowledge that the presence of the desert tortoise imposed constraints 
on the development of the property. The BLM has reportedly made an 
offer of $28 million for the property, which the owner has rejected. 
The proposed legislation provides for the immediate payment of $15 
million to Environmental Land Technology, Inc, which the bill 
characterizes as an ``initial payment'' for the property. The bill 
envisions that the balance of the acquisition price would be determined 
through negotiation or in judicial proceedings.\2\
---------------------------------------------------------------------------
    \2\ Apparently as a result of litigation between the company and 
the State of Utah, the company would be required to share some portion 
of any eventual payment with the State. While not reducing the burden 
on the federal taxpayer, this might reduce the size of the actual 
windfall received by Environmental Land Technology, Inc.
---------------------------------------------------------------------------
    There are several factors contributing to this potential windfall 
at taxpayer expense. First, the provision in the legislation requiring 
that the effect of the ESA on land value be disregarded would require 
the public to pay in excess of fair market value as that term is 
normally defined. It is well recognized that legal constraints on the 
permissible uses of property are a major consideration influencing the 
valuation of property in the marketplace. In this instance, the 
company, apparently knowing of the constraints the ESA placed on 
development opportunities, purchased the property at a price that 
reflected the ESA constraints. Under the proposed legislation, however, 
the government would be required to disregard the effects of the ESA on 
value in purchasing the property. Successful investment proceeds 
according to the familiar maxim: buy low; sell high. The twist in this 
case is that the swing in price has been brought about largely if not 
entirely by a change in government policies applicable to the property.
    Second, basic economic reasoning indicates that the owner is likely 
to reap a financial reward from the already large federal investments 
in land conservation in the St. George area. The St. George area is 
subject to heavy development pressures, which explains why ESA 
conflicts and the need for conservation action arose in the first 
place. The BLM has already acquired thousands of acres in the St. 
George area for conservation purposes. The effect of these acquisitions 
has been to limit the supply of developable land in the area and, in 
turn, to increase the market value of land in the St. George area that 
remains available for development. (See the attached EPP study, 
explaining how government policies creating a scarcity of development 
opportunities increase the value of development opportunities which 
remain.) \3\ In this case, the federal acquisition of thousands of 
acres of conservation lands, together with a congressional mandate to 
value the property as if there were no ESA constraints, apparently have 
combined to create a severely inflated ``fair market value'' for the 
property.
---------------------------------------------------------------------------
    \3\ The study has been retained in subcommittee files.
---------------------------------------------------------------------------
    Third, newspaper accounts of this proposed transaction (and other 
land purchases and exchanges in the St. George area) suggest that BLM 
appraisers, in addition to disregarding the effects of ESA constraints 
on land value (in accord with the 1996 parks bill), may have produced 
inflated appraisals of property values in order to expedite the 
completion of the Red Cliffs Desert Reserve. A former BLM appraiser 
with responsibility for the St. George area has charged that his 
superiors at the agency overrode his appraisals and disregarded 
established appraisal methods. These charges have in turn prompted 
ongoing investigations of land acquisitions in the St. George area by 
the Department of the Interior Inspector General. A draft of the IG's 
report in public circulation appears to reveal systematic violations of 
appraisal standards in the St. George area.
    Thank you for the opportunity to submit these comments.
            Sincerely,
                                        John D. Echeverria,
                                                          Director.