The Gallatin Land Exchanges

for more on the effects of the Gallatin Land Exchanges, see Phil Kinght's essay on Battle Ridge

 

an excerpt from

Commons or Commodity? The Dilemma of Federal Land Exchanges

by George Draffan and Janine Blaeloch

published by the Western Land Exchange Project in January 2000

the 104-page illustrated version with footnotes is available
for more information about Commons or Commdity? click here
to order a copy, send a check for $15 payable to
Western Land Exchange Project, PO Box 95545, Seattle Wa 98145-2545
or call (206) 325-3503 to place a credit card order

 

Corporate Proponent

Name

Year

State

Acres to Public

Acres to Private

Total Acreage

Big Sky Lumber

Gallatin I

1993

MT

37,752

16,278

54,030

Big Sky Lumber

Gallatin II

1998

MT

54,000

29,000

83,000

 

The Gallatin National Forest in southwest Montana encompasses 1,700,000 acres, of which-until the Gallatin Land Exchanges-about ten percent were private inholdings resulting from the 1864 Northern Pacific Railroad land grant.

In 1970, the Northern Pacific Railroad was merged into the Burlington Northern Railroad, which later spun off the natural resources that came with the land grant. In 1989, the timberlands were spun off into a new corporation, Plum Creek Timber.

In the early 1990s, the Nature Conservancy negotiated to buy Plum Creek Timber's Gallatin-area checkerboard land for $25 million, and billionaire and Montana landowner Ted Turner had pledged to contribute $10 million toward this effort. In January 1992, Plum Creek suspended negotiations with the Nature Conservancy, saying that the proposed deal was "unlikely to meet Plum Creek's dual objectives of maintaining jobs at our Belgrade sawmill and preserving the environmental quality of our lands." In April, 139,000 acres and the mill were sold instead to Big Sky Lumber (BSL) for $24 million. Plum Creek said BSL had committed to maintaining jobs at the mill, and following through on Plum Creek's already-planned Porcupine and Gallatin land exchanges with the U.S. Forest Service.

For decades, the Forest Service had had a strong interest in consolidating ownership in the Gallatin, and BSL offered to do a land swap with the Forest Service if the complications of public involvement and environmental analysis could be avoided. Half or more of the BSL land had been recently logged, and BSL wanted to retain ownership of the remaining timber on lands that it wanted to trade to the public. BSL also wanted a waiver of NEPA for the exchange.

BSL's offer entailed several contingencies and dubious elements. For one thing, some of the lands the company was offering for exchange had been acquired from the Forest Service in a 1992 exchange and subsequently cut over. One reporter later stated that "40 percent of the 100,000 acres the public got in the exchange had been logged-including nearly 2,000 acres the company got in an early phase of the transaction, cut, and then traded back."

But with BSL subdividing ten square miles of the ecologically important Porcupine drainage and threatening to develop it, Congress stepped in to make a deal. The Gallatin Range Consolidation and Protection Act of 1993 traded 16,278 acres of federal land for 37,752 acres of BSL land, and authorized the federal government to acquire by purchase or exchange additional lands in the Porcupine watershed.

Between 1994 and 1996, the public acquired another 8,100 acres of BSL land in the Porcupine and Cottonwood areas using $16 million in funds from the Land and Water Conservation Fund (LWCF), the Montana Habitat Acquisition Fund, and other public and non-profit monetary sources. The Porcupine's South Cottonwood Canyon south of Bozeman was the top priority in the nation for LWCF buyouts. The Forest Service requested another $6 million from the LWCF to acquire BSL land in the Taylor Fork, a critical wildlife habitat area also under threat of development by BSL.

Still, the dealing wasn't over. BSL had subdivided lands it still held north of Yellowstone National Park into 20-acre parcels, and was threatening to sell them to housing and resort developers. The rationale for a second exchange was for the government to acquire special lands near the Park, but the effect was to allow BSL to unload its cutover lands in the North Bridger Range. It also allowed continued timber cutting in the Battle Ridge/Bangtails, and gave Big Sky Lumber developable land near ski areas. 

 

This public land in the Bridger Range, traded to Big Sky Lumber
in the Gallatin I exchange in 1994, was clearcut and then traded back
to the public in Gallatin II in 1999. Photo credit: Phil Knight.

The second phase of the Gallatin land exchange was legislated in October 1998 as the Gallatin Land Consolidation Act of 1998, also known as the "Gallatin II." The Act mandated the trade of 2,000 acres of BLM land and 29,000 acres of Forest Service land (mostly in the Battle Ridge/Bangtail area northeast of Bozeman) for 54,000 acres of Big Sky Lumber land in the Gallatin, Taylor Fork, Bangtail, Bridger, Buck Ridge, Tobacco Roots, and Spanish Peaks areas. Local landowners opposed the trade until Big Sky Lumber and R-Y Lumber agreed to limit timber cutting on lands that it was going to trade to the public.

The Gallatin II exchange was supported at various times by the Sierra Club, Wilderness Society, Greater Yellowstone Coalition, Montana Wilderness Association, Alliance for the Wild Rockies, and Friends of the Wild Swan, contingent upon certain areas being kept intact and upon not exempting the deal from environmental review. The director of the Alliance for the Wild Rockies criticized Gallatin I for having been decided behind closed doors without the benefit of NEPA procedures, and urged that Gallatin II not "evolve into another corporate privatization and deregulation scheme."

Other environmental groups opposed Gallatin II, saying that proponents had learned to gather support by "dangl[ing] something out that an environmental group really wants." As details of the trade came into view, eighteen groups in the Gallatin area (including the Greater Yellowstone Coalition and the Wilderness Society) signed a set of principles urging that there be no logging in roadless areas or grizzly bear habitat, that all timber sales meet current national forest plan standards and guidelines, and that direct acquisition be given priority over exchange.

The Clinton Administration supported Gallatin II but opposed the section of the bill that would waive NEPA. In the end, the act did not explicitly waive NEPA. Almost 5,000 acres of Big Sky Lumber land in the Taylor Fork was to be purchased by the federal government for $4,150,000, but Gallatin II included another twist: trading public timber for the private proponent's land. Additional lands in the Taylor Fork for which funds were not available were to be acquired by providing BSL with timber sale receipts from timber sales in the Gallatin and other eastside national forests (Beaverhead, Deerlodge, Helena, Custer, and/or Lewis and Clark). It was estimated that the deal could be completed with fifty million board feet of timber that would generate $10 million. The Forest Service would administer the timber sales, and BSL would market them and keep the proceeds.

BSL's attorney wrote an op-ed piece for the Bozeman Daily Chronicle in which he outlined the advantages of this timber-for-land exchange over a traditional land-for-land swap. Access and management problems with fragmented ownership would be resolved without creating new problems elsewhere. The federal land from which the timber came would not only be retained in the public domain, but the public would also retain water and mineral rights. BSL could offer the timber for sale through competitive bidding as the market dictated, and the timber could come from forests throughout western Montana, without cutting more timber than was sustainable.

But there was more to it than the sunny picture painted by BSL, and the company stood to gain far more than the public. The High Country News reported that "Big Sky Lumber would be making something like $75 million on its reported investment of $26 million. When the dust settled, Big Sky Lumber would still hold 75 square miles in solid blocks in the Gallatin, including more than 35 square miles near the Bridger ski area, worth at least another $50 million to $100 million."

The legislation required the Forest Service to fund the necessary timber sales, and it is estimated that this will cost the Gallatin National Forest $1 million per year for five years, gutting the regular timber program budget for that Forest. The usual payments to counties and schools will also be reduced, because the revenues will be going to BSL. The timber will apparently be going to R-Y Timber.

Meanwhile, the Gallatin II legislation recognized that Big Sky Lumber's overcutting on the lands it was trading to the public had caused damage that would require restoration. The bill required the Forest Service to implement a restoration program "including reforestation and watershed enhancements to bring the acquired land and surrounding national forest land into compliance with Forest Service standards and guidelines." Because Montana has no state forest practices regulations, appraisal values in the exchange could not be reduced to reflect the fact that the BSL lands had not been replanted and restored. The restoration costs won't be borne solely by the federal government; whenever "practicable," the Forest Service was directed to use partnerships with state and local agencies such as the Montana Conservation Corps. It is likely that the restoration of cutover BSL lands will cost the public several million dollars.

The need to cut timber to meet Big Sky Lumber's demands has run into legal problems. In April 1999, the federal district court in Missoula ruled that the Gallatin National Forest had violated the National Environmental Policy Act by ignoring the potential cumulative impacts of the Hyalite II timber sale combined with the Gallatin II land exchange. The Hyalite II timber sale would have removed almost three million board feet from 348 acres. In addition, one of the exchange sales (the Darroch-Eagle Timber Sale near Jardine, Montana) has been appealed by the local Bear Creek Council and others.

Because it has been ordered to do so by Congress, the Forest Service continues to implement the Gallatin II exchange. In June 1999, the agency declared its intent to prepare an environmental impact statement (EIS) to disclose the effects of logging, reforestation, and road construction for the proposed Westlake Project, one of several projects planned to support the public buyout of BSL. This project includes the roading and logging of 1,325 acres in the South Madison mountain range.

 

Blixseth and BSL

Big Sky Lumber is a joint venture partnership among Tim Blixseth, Mel and Norm McDougal, and Charles Holliman. Blixseth was one of the original partners in Crown Pacific Ltd., a timber corporation that has implemented its own controversial land exchange in Oregon. Blixseth was also a beneficiary of the Cave Mountain land exchange between the Beaverhead-Deerlodge National Forest and Blixseth's Moonlight Basin Ranch, a residential ski resort being developed next to the Cave Mountain Research Natural Area. [CORRECTION: Moonlight Basin Ranch, L.P. is not owned by Blixseth. The owners are natives Lee Poole and Joe Vujovich, and Keith Brown] The property was appraised during the exchange at $224,500, but the "Ranch" plans to sell more than a hundred building lots priced at $225,000 to $270,000 each.

Blixseth has been involved in a string of timber and land ventures, some more successful than others. Several of Blixseth's companies went bankrupt, defaulting on at least ten timber contracts on the Umpqua National Forest in Oregon, leaving almost $7 million owed to the Forest Service. In August 1989, the Pacific Northwest Region of the Forest Service recommended the "suspension and debarment of Little River Lumber Products, Klamath Wood Products, Capitol Veneer, Capital Log Sales, Timothy L. Blixseth, Edra D. Blixseth, Crown Pacific Ltd... and any other businesses with which the Blixseths may be associated."

But Blixseth is no common failed businessman. He serves on the board of directors of Empower America, along with luminaries such as Newt Gingrich, Trent Lott, William J. Bennett, Jeane J. Kirkpatrick, and Jack Kemp. Empower America describes itself as "an advocacy organization whose mission is to steer public policy in favor of individual freedom and opportunity, responsibility and excellence" by "implementing our free-market, entrepreneurial policies into law." The group practices "strategic intervention" to achieve its goals by "reaching out through the media, communicating directly with legislators and political leaders, sponsoring solution-finding or consensus-building forums, or mobilizing public opinion at the grassroots level." Empower America's "victories are attributable, in large part, to our ability to focus on the right issue, at the right time, with maximum impact."

Some of that impact derives from the political contributions Blixseth and his associates make. From 1990 through May 1998, the principals of Big Sky Lumber made campaign contributions totaling almost half a million dollars:

Blixseth Group, Tim and Edra Blixseth

$184,260

Charles & Janet Holliman

$13,000

Norman, Melvin, Sharon, Sidney McDougal

$16,600

Ed Regan

$1,700

Ron and Linda Yanke

$245,060

In October 1995, Blixseth, who is a noted conservative Republican, gave $20,000 to the "Senate Victory in '96" committee dedicated to the election of Democratic Senators. The committee contributed over $39,000 to the re-election fund of U.S. Senator Max Baucus (D-MT). Additional contributions from the Big Sky partners were given to Baucus in June 1995, just after he introduced the Gallatin land exchange legislation. The Blixseths gave Baucus $3,000; the Hollimans contributed $4,000, and the McDougals gave $6,000.

Big Sky Lumber's political largesse is not limited to Congressional allies. The company gave a $20,000 scholarship to the Montana State University forestry department for an endowed chair in honor of Bob Denee, the Forest Service negotiator in the Gallatin exchange.

Blixseth's personal projects and business ventures are also substantial. He is building a private 18-hole golf course in Rancho Mirage, California, a minor plaything compared to his Yellowstone Club, a "private recreation community" on 13,000 acres at Pioneer Mountain near Big Sky, Montana. Here's how one news story described the Yellowstone Club's membership set-up:

"The cheapest means of entry is the purchase of one of the 100 national memberships, which go for $250,000 plus $16,000 in annual fees. People who want to own an abode on the mountain must dig much deeper. There are 900-square-foot suites for $500,000. They have no kitchens, but there is valet parking and maid service with fresh sheets every day. Then there is 3,500-square-foot duplex for $1.2 million to $1.8 million. Vaulted ceilings, decks, marble, ski in and ski out. Log homes are in the same price range. People who want a few acres around their homes should be prepared to spend up to $5 million. How much they spend on the house is up to them. In all, Blixseth anticipates 864 dwellings and lots, offered at a total well over $1.5 billion... 'What we're selling is privacy and exclusivity,' Blixseth said. 'And limited growth.'"

 

The Gallatin land exchange facilitated Tim Blixseth's development of the Yellowstone Club,
a private luxury resort being built on formerly public lands.

 The Yellowstone Club will have seven ski lifts, hiking and biking trails, a golf course, swimming pool and tennis courts, facilities for riding horses, a health spa and fitness center, a fly fishing lake, remote cabins, private jet service, a chapel-and the new town of Big Springs.

Partners in the Yellowstone Club include Tim Blixseth, ski film producer Warren Miller, master planned residential community builder David Marriner, ski resort manager Jon Reveal, U.S. Secret Service veteran Bruce Bales, who will guarantee the members' privacy and security, former football quarterback and congressman Jack Kemp, golf pro Annika Sorenstam, and sports medicine surgeon Richard Steadman.

The Yellowstone Club's web site claims that "[Blixseth's] early years as a songwriter and producer instilled a respect for nature, and he is dedicated to keeping the environment within this area unspoiled," but exclusive private access across national forest land has been granted to BSL and partners, and local activists claim that the area to be developed includes critical grizzly bear habitat.