Fish, Wildlife & Parks is scrambling to resolve a land issue that could threaten federal funding, but its efforts could now be delayed by a legislative audit.

FWP may need to come up with about $7 million, either in cash or property value, to trade for part of West Shore State Park, FWP Chief of Staff Paul Sihler told the legislative Environmental Quality Council on Wednesday. If that’s not possible, the department could lose as much as $27 million in federal Pittman-Robertson money, according to the U.S. Fish & Wildlife Service.

The issue was discovered in 2011 when the Legislature was considering splitting State Parks off from Fish and Wildlife. But it harkens back to when FWP acquired the northern part of West Shore State Park in 1966.

The state park originally occupied about 67 acres along Goose Bay on Flathead Lake, but the agency accidentally built facilities on the private property to the north. FWP decided to acquire the additional 70 acres to the north by trading away 285 acres along the edge of the Blackfoot-Clearwater Game Range.

The problem is FWP used $85,000 of federal Pittman-Robertson money to help acquire the Blackfoot-Clearwater Game Range. By law, land bought with those funds must be managed for hunting and cannot be sold or transferred without prior approval of the USFWS. But over time, FWP employees had forgotten that the game-range property had those restrictions, Sihler said.

Sihler said the 1966 land trade transferred those requirements or “encumbrances” to the West Shore State Park parcel. But a 2011 evaluation noted the state park isn’t being managed for hunting.

In April, FWP asked the USFWS for guidance and was told that the northern half of the West Shore State Park had to meet the Pittman-Robertson requirements or FWP could provide or buy land of equal value and transfer the encumbrance to that. Otherwise, the agency would be in violation and would receive no other Pittman-Robertson money. The Pittman-Robertson Act takes taxes guns and ammunition to provide matching funds for state wildlife management.

But finding a property equal in value to a piece of Flathead Lake property could put FWP in a financial bind.

In June, FWP did a limited appraisal and learned the property is currently worth between $6.5 million and $7.5 million.

“That’s in the low range of what is being looked at, which makes this easier for us to try to resolve. The appraiser indicated that there’s a pretty large inventory of properties right now on Flathead Lake that aren’t selling,” Sihler said.

Armed with that knowledge, a working group met in July to brainstorm solutions. Sihler said the West Shore property has some birds and deer but otherwise doesn’t have high wildlife value, so it might be better to transfer the encumbrance to an inholding in a wildlife refuge.

State Parks vice chair Mary Sexton said other alternatives included removing the facilities from the northern half of the park so it could be managed for wildlife or partitioning the land so FWP could compensate for a smaller portion.

“We’re paying for the sins of 50 years ago. Now we’re trying to untangle that, and it’s kind of an expensive entanglement,” Sexton said.

Sen. Bradley Hamlett, D-Cascade, said he questioned whether a problem really existed and his skepticism of the whole affair prompted him to join with Sen. Pat Connell, R-Hamilton, to request a performance audit of the West Shore State Park.

Because the property has such a high value, Hamlett suggested that maybe a private individual wanted to buy it, so FWP was creating the situation.

“Could be an agenda here, maybe not. That’s what the audit will find out,” Hamlett said.

Hamlett said he wanted two things in particular: An appraisal of the Blackfoot Clearwater property that was traded – it’s now home to Stoney’s Kwik Stop at Clearwater Junction and Hamlett questions whether it’s worth $6.5 million; and an analysis of why it’s so difficult to transfer state land among various state agencies.

“It’s all about property ownership and control,” Hamlett said. “One thing the legislature needs to do, in my estimation, is start to deal with land issues between agencies. Because for the citizens of Montana, it’s the state of Montana’s land. And I’d think you could easily transfer one parcel of land to another agency for supervision or work, and back and forth. But these lines on paper become virtual walls when you try to do anything.”