The U.S. Forest Service airtanker scandal involved a scheme, officially called the Historical Aircraft Exchange Program, in which the U.S. Forest Service would acquire retired U.S. Air Force C-130A transport aircraft and U.S. Navy P-3 anti-submarine patrol aircraft, ostensibly for use as firefighting airtankers, but which ended up with the planes' ownership being transferred illegally to private companies and the aircraft themselves being used for other purposes or even sold for a profit. The issue resulted in two of the involved principals being sentenced to prison and a number of civil lawsuits.
The scheme was developed in December 1987 by Fred Fuchs, deputy director of fire and aviation, and the private aircraft broker Roy D. Reagan, a cousin of President Ronald Reagan. Reagan acted as a representative of the Hemet Valley Flying Service. Fuchs was eventually given responsibility for coordinating the exchange program for the Forest Service. He did not discuss the plan with the Forest Service's Office of General Counsel. The letter authorizing the program on behalf of the Forest Service stated that it complied with various provisions of the federal regulations, when it did not.The exchange agreements were supposedly made under authority of 41 CFR S 101-46.203; however, they were not authorized by that regulation, as the C-119s were not "historical items" as defined by 41 CFR S 101-46.001-4, and the C-130As and P-3s that were part of the program were obtained by the Forest Service solely for the purpose of exchange, a violation of 41 CFR S 101-46.202(b)(6). In addition, Fuchs provided bills of sale to the contractors, transferring actual ownership of the planes to the companies, in violation of the applicable regulations, as well as the provisions laid down by the GSA. Further, Fuchs told his USFS superiors that the transfer of ownership had been approved by the GSA, when it had not. In the ensuing criminal trial, three Air Force generals testified that they were not aware that the government would be losing title to the aircraft; if they had, they said, they would not have approved the program.
In 1989, the United States Department of Agriculture (USDA, the parent department of the Forest Service) began to look at the exchange program, which was quietly terminated in January 1990, after the assistant general counsel of the USDA concluded that the USFS did not have authority to conduct the program.In 1992, the OIG determined that the USFS did not have the authority to make the aircraft exchanges. Federal auditors determined that most of the C-130s given to the contractors were not being used for firefighting, and that the C-119s which were traded in were essentially "junk". Between ten and eleven (depending on the source) of the C-130s were never even converted into airtankers. Department of Agriculture Undersecretary Jim Lyons told the Los Angeles Times that some of the agency's actions were "clearly illegal" and "may have been criminal." On March 3, 1994, the Department of Defense's assistant inspector general for criminal investigative policy and oversight asked the Justice Department (DoJ) to investigate the Forest Service and the program. In 1995, GSA auditors determined that the U.S. had lost money on the deal, based on comparisons of aircraft values.After a 1997 trial in U.S. District Court in Tucson, Arizona which lasted five weeks, both of the scheme's main figures were convicted of the conspiracy charge, but were found "not guilty" on the conversion charge. Fuchs was sentenced to 2 years in prison, while Reagan was sentenced to 2½ years, with both also receiving an additional three years of probation. There were no fines levied. The men began serving their sentences on May 4, 1998.
Background The U.S. Forest Service (USFS) had traditionally relied on contracting with private companies to provide large airtankers for fighting forest fires, the majority of which had been retired World War II and Korean War-era transports, bombers, and maritime patrol aircraft. Such aircraft were relatively inexpensive to obtain and could carry the large loads of fire retardant needed to make their use effective. In the 1980s, the bulk of the airtanker fleet consisted of C-119 Flying Boxcars which had been obtained from the military. After concerns about safety, the aging C-119s were grounded in 1987. Because the available airtanker fleet was substantially diminished, the Forest Service needed to obtain additional aircraft for firefighting operations.
Exchange scheme In December 1987, the director of fire and aviation management for the USFS instructed Fred Fuchs, deputy director of fire and aviation, to request that the Department of Defense cooperate with civilian contractors in a plan to obtain surplus military transport aircraft stored at Davis-Monthan Air Force Base in Tucson, Arizona, which could be converted to airtankers. Besides replacing the grounded C-119s, this program was intended to modernize the tanker fleet to all-turbine aircraft.
At the time, Roy D. Reagan, cousin of President Ronald Reagan, was a private aircraft broker representing Hemet Valley Flying Service, one of the Forest Service's contractors, and an operator of C-119s. At a meeting on December 23, 1987, attended by both Fuchs and Reagan, the Air Force was presented with the idea of transferring retired U.S. Air Force C-130As to the National Museum of the United States Air Force, which would then exchange the C-130As with Hemet Valley's grounded C-119s, since the latter aircraft could be considered "historic" aircraft. However, at a subsequent meeting with representatives of the Air Force Museum, Air Force officials reacted negatively to the idea of such an exchange.
Fuchs and Reagan then met with representatives of the General Services Administration (GSA) who suggested that the exchanges be conducted without going through the Air Force Museum, and instead have the Forest Service become directly involved. In this version of the plan, the Air Force would declare that the aircraft were "excess property" and transfer them to GSA, who could then legally make the planes available to other government agencies, but with the provision that any agencies receiving them would be required to retain ownership. This plan was agreed upon, and Fuchs was given responsibility for coordinating the exchange program for the Forest Service. He did not, however, discuss the plan with the Forest Service's Office of General Counsel. The letter authorizing the program on behalf of the Forest Service stated that it complied with various provisions of the federal regulations, when in actuality it did not.The exchange agreements were supposedly made under authority of 41 CFR S 101-46.203; however, they were not authorized by that regulation, as the C-119s were not "historical items" as defined by 41 CFR S 101-46.001-4, and the C-130As and P-3s that were part of the program were obtained by the Forest Service solely for the purpose of exchange, a violation of 41 CFR S 101-46.202(b)(6). In addition, Fuchs provided bills of sale to the contractors, transferring actual ownership of the planes to the companies, in violation of the applicable regulations, as well as the provisions laid down by the GSA. Further, Fuchs told his USFS superiors that the transfer of ownership had been approved by the GSA when in fact it had not. In the ensuing criminal trial, three Air Force generals testified that they were not aware that the government would be losing title to the aircraft; if they had, they said, they would not have approved the program.
Initially, four airtanker operators were represented by Reagan and participated in the exchange program: Hemet Valley Flying Service, Aero Union, TBM, Inc., and Hawkins and Powers. Because only a select number of contractors were provided aircraft, and because the program was not publicized nor were the contracts and aircraft put up for bid, accusations of favoritism followed.
T&G Aviation of Chandler, Arizona became aware of the program from one of its competitors (T&G was operating eight older Douglas DC-7s at the time). Concerned that this gave its competitors an unfair advantage in obtaining Forest Service firefighting contracts, T&G officials contacted Fuchs, who told them that no more aircraft were available. The company then contacted several congressmen for assistance, and eventually received three C-130s. In exchange, T&G provided a DC-7B to the Pima Air & Space Museum, an SNB-5 to Planes of Fame and a UH-19B to the Milestones of Flight museum at Fox Field.
The aircraft, ultimately 22 C-130As and six P-3s, ended up being distributed to six contractors. Twelve of the C-130s came from the "ready-reserve national air fleet" stored at Davis-Monthan Air Force Base in Tucson, Arizona, and 16 were retired from Air Force Reserve units and delivered to Pinal Airpark in Marana, Arizona, where they were processed out and transferred through the exchange program. As part of the deal, since Reagan acted as broker on behalf of the companies, he was paid a commission by them in the form of ownership of four of the C-130As, which he subsequently sold for personal profit. The contractors paid nothing for the aircraft, but agreed to perform the conversions and install the fire retardant dispersal equipment at their own cost. The operators then had to competitively bid for the contract at a low enough price to be awarded a year-long contract for fire suppression missions.
Investigations and accusations
USDA and Forest Service In 1989, the United States Department of Agriculture (USDA, the parent department of the Forest Service) began to look at the exchange program, which was quietly terminated in January 1990, after the assistant general counsel of the USDA concluded that the USFS did not have authority to conduct the program.
In 1993, Forest Service Chief Dale Robertson testified before a House subcommittee, stating, "This has been poorly managed by the Forest Service." Fuchs was demoted in the Forest Service, and retired in 1996.
Gary Eitel Gary Eitel, a pilot, aviation consultant, and aircraft broker, found out about the program and contacted the Forest Service in 1991 to try to obtain C-130s for his clients, who had not been in on the initial deal. He was told by the agency that there were no more aircraft available, and that only three planes had been involved. Suspecting that he was not being told the truth, Eitel began his own investigation, obtaining documentation on the program through the Freedom of Information Act. Eitel took on the role of whistleblower, and reported his findings in testimony before several congressional subcommittee hearings.
Other federal investigations As a result of Eitel's personal investigations, he filed several "hotline" complaints to the USDA and the Office of the U.S. Inspector General (OIG), leading to the initiation of a number of investigations. In 1992, the OIG determined that the USFS did not have the authority to make the aircraft exchanges.
Federal auditors determined that most of the C-130s given to the contractors were not being used for firefighting, and that the C-119s which were traded in were essentially "junk". Between ten and eleven (depending on the source) of the C-130s were never even converted into airtankers. Department of Agriculture Undersecretary Jim Lyons told the Los Angeles Times that some of the agency's actions were "clearly illegal" and "may have been criminal."
On March 3, 1994, the Department of Defense's assistant inspector general for criminal investigative policy and oversight asked the Justice Department (DoJ) to investigate the Forest Service and the program. In 1995, GSA auditors determined that the U.S. had lost money on the deal, based on comparisons of aircraft values.