June 8 (Bloomberg) -- The Bush administration's offer in 2002 to overpay a prominent Florida family for oil and gas rights on Everglades land by as much as $80 million was ``at best, foolish and, at worst, complicit,'' the Interior Department's inspector general said today.

In a report to the Senate Finance Committee, Inspector General Earl Devaney said the department nearly tripled earlier estimates of the value of the mineral rights. The agreement wasn't completed and lawmakers said today that Devaney's report would scuttle it.

Devaney said in an interview he found no evidence political influence affected the Interior Department's decision. Instead, he placed much of the responsibility on the land's owners, the Collier family, who had ``better lawyers and better negotiators'' than the government.

President George W. Bush announced in May 2002 that the federal government would pay $120 million in cash plus an undetermined amount in tax deductions to prevent the Collier family's privately held Collier Resources Co. from drilling for oil and gas on 400,000 acres of land it owns in what he called ``critical parts of the Everglades.'' Two previous government assessments valued the rights between $5 million and $68 million.

Devaney told the Finance Committee today that Collier Resources, which tried and failed to sell the rights to the Clinton administration in 1995, ``embarked on a public outreach effort to signal that it was about to exercise its rights to explore for subsurface oil and gas'' in an Everglades ``swamp'' between 1997 and 2001.

`Uproar'

``Not unexpectedly, this caused an uproar in the environmental community, which naturally captured the attention of the new secretary of the department,'' Devaney told the committee, referring to Gale Norton, named by Bush to head the Interior Department in his first term.

``The intentions behind the attempted acquisition have always appeared to be firmly grounded in the department's righteous desire to protect the environmentally sensitive Everglades from potential harm,'' Devaney said. ``The means by which these intentions were advanced, however, were very troubling.''

Devaney said the Bush administration's Interior Department crafted an arrangement to buy the rights from the Colliers that was ``careless'' and ``at best, foolish and, at worst, complicit.''

Bush Appointee

The report says that Ann Klee, a Bush administration political appointee, helped reach an agreement with the Collier family shortly after she was named in January 2001 to administer the transition at the Interior Department between presidential administrations.

Klee and two Interior Department lawyers, Barry Roth and Peter Schaumberg, relied on a private consultant's estimate that recommended the $120 million payment after soliciting several appraisals, all of which were lower, Devaney said. He also said at least one career Interior Department official contested the high estimate.

Tina Kreisher, communications director at the Interior Department, declined to comment yesterday on Devaney's findings, except to say, ``We were trying very hard to protect the Everglades.'' Department spokesman Hugh Vickery didn't immediately return phone calls today.

White House spokesman Taylor Gross said he was unaware of the report and that ``the issue is best addressed by Interior.''

Devaney's report also says the government may have already owned the mineral rights because the Colliers sold the government surface rights for the same land in 1988. In addition, it finds little evidence the rights had significant value and said Collier Resources never certified what percentage of the rights they owned.

`Outrage'

``This transaction is an outrage,'' said Montana Senator Max Baucus, the top Democrat on the Finance Committee. ``Apparently, the department allowed the taxpayers to be fleeced for $70 million to $80 million, and then authorized a tax deduction for the fleecing.''

Senator Charles Grassley, the Iowa Republican who heads the committee, said he would write to Norton to ask how the ``bad actors'' responsible for the transaction would be held accountable.

Funding for the transaction, which requires the approval of Congress, was removed from an appropriations measure in 2003 after lawmakers such as Baucus raised said the family may be ``bluffing'' the government and that it might gain ``abusive'' tax deductions to the family. The department began an investigation in September 2003.

Collier Resources General Manager Bob Duncan said the company would e-mail a statement about the report; no statement was received and follow-up phone calls yesterday and today weren't returned.

`Win for All Sides'

At the time it was announced, the agreement with the Naples, Florida, Collier family was hailed by Norton as ``a win for all sides.'' Environmental groups such as the World Wildlife Fund also backed it.

``The intentions behind the attempted acquisition have always appeared to be firmly grounded in the department's righteous desire to protect the environmentally sensitive Everglades from potential harm,'' Devaney said today. ``The means by which these intentions were advanced, however, were very troubling.''

`Looking Green'

Two weeks after the Oval Office announcement in May 2002, Republican Governor Jeb Bush, the president's brother, said he would run for re-election, leading critics to suggest he was seeking to burnish his environmental credentials through the Collier land transaction.

``They wanted to score some points for looking green before the election,'' said Keith Ashdown, who has tracked the case for three years as vice president of tax policy at Taxpayers for Common Sense, a Washington-based advocacy group that opposes government waste.

Members of the Collier family contributed more than $121,000 to Republican candidates in the last election cycle, including at least $5,000 to Jeb Bush, according to the Washington-based Center for Responsive Politics, which tracks campaign donations.

Devaney said in an interview after his testimony that he found no evidence that political influence played a role in the Bush administration's decision to make the arrangement with the Colliers. He said by the time Norton assumed office many career officials who objected to the negotiations during the Clinton administration had been ``pushed aside already.''

The report says the Colliers' dealings with the government date back at least two decades. Under the Reagan administration, the Colliers traded swampland in Florida for property in Phoenix. In the mid-1990s, the family attempted to exchange mineral rights for closed military bases in California and Texas. A deal to swap mineral rights for a closed base in Homestead, Florida, failed in 2000 because career officials in President Bill Clinton's Interior Department concluded the surplus base was worth more than the mineral rights.

Earlier Arrangements

The cash- and tax-break agreement announced by Bush in May 2002 is more generous than any of those earlier arrangements, Devaney's investigation found, according to the people who have read the 51-page report, which is accompanied by about 500 pages of supporting documents.

When Bush took office in January 2001, Klee, Roth and Schaumberg began reviewing Clinton-era appraisals of the Everglades rights, which ranged from a 1996 estimate of $154 million by the Minerals Management Service to $68 million by the same agency in 2000, the report says. The Colliers own about two- thirds of the mineral rights in the Everglades.

The officials ordered a new appraisal in 2001 from the Minerals Management Service, which again valued the cumulative rights at $68 million. They then turned to the National Park Service, which asked the U.S. Geological Survey for an estimate. The Geological Survey said the rights were worth between $5 million and $20 million.

New Estimate

Klee, Roth and Schaumberg finally hired Earth Science Associates, Inc., a Long Beach, California consultant to the oil and gas industry, to analyze the other estimates. The company's president, John Grace, concluded the rights were worth between $31 million and $140 million, according to the report.

Devaney said Grace was a reputable appraiser with experience valuing offshore mineral rights, though none in assessing underground deposits. ``He was being asked to do something he had never before,'' Devaney said in an interview.

Grace, reached yesterday, confirmed the report's account of his role.

``I was brought in as a reviewer,'' Grace said. ``There wasn't anything special about the work I did. I was a scientist they called to look over other scientists. It was technical and dry stuff.''

Range of Appraisals

The Interior Department used Grace's range of values to ``justify'' the $120 million appraisal, Devaney said. Klee, now the general counsel at the Environmental Protection Agency, didn't return a call seeking comment. The Interior Department didn't respond to a request to make Roth or Schaumberg available to comment.

The Collier family traces its fortune to the early 20th Century, when Barron Gift Collier sold advertisements on New York City street cars, according to the company's Web site. He moved to Florida in 1921 and bought 1.3 million acres that would later become Collier and Hendry counties.

The company has become one of the largest diversified firms in southwest Florida, according to its Web site. It owns more than 20,000 acres of citrus groves and vegetable farms, engages in real estate development and conducts oil exploration.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net;

Last Updated: June 8, 2005 14:52 EDT