Federal officials are considering trading away a government-owned town in Daggett County started nearly 40 years ago as a camp for workers building the Flaming Gorge Dam.

Under a proposal outlined to Gov. Norm Bangerter Tuesday by representatives of the U.S. Forest Service, the town of Dutch John would be exchanged for parcels of private property within the boundaries of national forest land in the state.No decision has been made whether to make the town site on the Utah side of the Flaming Gorge National Recreation Area about 45 miles north of Vernal available for private ownership.

But the "privatization proposal" by the Flaming Gorge Ranger District is being circulated among both Utah and Wyoming officials, and public hearings are being planned.

The deal is supposed to save the federal government the more than $1 million spent annually to run Dutch John and expand the tax base of Daggett County, since residents and businesses would have to begin paying local taxes.

There are 22 federal employees working in Flaming Gorge who live in Dutch John. The entire population of Daggett County is less than 700, down 10 percent from 1980.

"Our tax base is very small," Daggett County Clerk Gene Briggs said during the meeting with the governor. Besides boosting tax collections, Briggs said the trade would also create new employment opportunities.

The jobs would come from an expected increase in tourist services for visitors to Flaming Gorge, most of whom spend their time just minutes away from Dutch John.

The town offers only a gas station and a combination convenience store and fast-food restaurant that is open only part of the year even though the nearest communities are more than an hour's drive over steep mountain roads.

"This will provide an opportunity for private enterprise to offer services," said District Ranger Steve Sams. "People want more of the kinds of creature comforts than we can provide."

Flaming Gorge employees are eager for Dutch John to be transformed from a town "owned lock, stock and barrel by the federal government," according to Sams.

Although they are required to live in Dutch John, about one-third of the Flaming Gorge work force has received waivers to live elsewhere, he said, adding that the requirement makes recruiting new workers difficult.

The governor said he likes the idea. "On the surface, to me, it looks like a rational thing to move toward," Bangerter said. "I think it's an interesting concept."

Other towns created by the federal government to house workers during the construction of dams along Western rivers, such as Boulder City, Nev., near Hoover Dam, have successfully made similar transitions.

A decision on the fate of Dutch John is expected within a year. If the town site is indeed traded, the Bureau of Reclamation has promised to transfer utilities, roads and other infrastructure to the local government for free.

The 50 or so buildings and the utilities in Dutch John are managed by the Bureau of Reclamation. The Ashley National Forest administers the land as part of the Flaming Gorge National Recreation Area.