Under provisions of a mining law enacted when Ulysses S. Grant was president, the government in 1983 sold 160 acres near the Keystone, Colo., ski area for $2.50 an acre.
Its owners are now selling it for $11,000 an acre - or a 440,000 percent profit in six years - as part of a residential development.According to a General Accounting Office study released Wednesday, that is just one instance of the government selling off valuable land throughout the West at bargain-basement prices. It is supposed to help develop mining but often ends up simply helping land speculators make millions.
That has the chairman of the House Interior Mining Subcommittee, Rep. Nick J. Rahall, D-W.Va., fuming. "This is outrageous. At $2.50 an acre, these valuable federal lands are being transferred out of public ownership for fast-food hamburger prices."
As a country song writer might say - as far as the GAO is concerned - land speculators are getting the gold mine while the government gets the shaft.
The GAO said the Mining Law of 1872 allows people to file mining claims on federal land, and hold them by performing just $100 worth of mining improvements per year.
Once $500 worth of improvements have been made on such claims, the law allows the government to transfer title to the land for just $2.50 to $5 an acre - which back in 1872 was roughly the fair market value of grazing land in the West.
It is supposedly to help develop mining. But once someone gains title, he may use the land any way he desires - which the GAO said has included building housing near skiing or gambling resorts.
About 3.2 million acres of land - or an area the size of Connecticut - has been sold through the program, including 1,598 acres in Utah sold between 1978 and 1987.
At Rahall's request, the GAO investigated a random sample of recent sales. None of those inspected were in Utah, but the GAO said its sample likely shows examples of problems throughout the West.
The GAO recommends that Congress change laws so the title to such land is no longer sold, or "patented." It said the government should retain title, but allow mining claims - requiring annual fees to hold the claims and royalties on revenues from minerals extracted.
Rahall has promised a comprehensive review of the law. "The intent of the mining law is to facilitate mineral extraction, not to serve as a vehicle for land speculation and profiteering at the public's expense."
Getting a gold mine for pennies?
- An application for 1,280 acres adjacent to the Lake Mead National Recreation Area in Nevada that might be sold for $3,200. A real estate agent values it between $25.6 million and $32 million because it is within three miles of nine gambling casinos in Laughlin, Nev.
- Two applications for a total of 60 acres in a national forest near the Breckenridge, Colo., ski area that could be sold for $201 even though no recent mining activity is evident. The estimated fair market value of the land is $12 million.
- Twenty sales reviewed by the GAO where the government received $4,500 for land estimated to be worth up to $48 million. Also, 12 pending sales for land worth up to $47 million would be sold for only $16,000.