The Department of the Interior has been funneling millions of dollars into the coffers of environmental groups through a process that appears to be ethically improper. That's the conclusion of an audit report by the department's inspector general.

Since 1986 Interior has spent almost $1 billion to buy new land. Much of that money has been paid to environmental groups, including the National Audubon Society, the Trust for Public Land, and the Nature Conservancy.

But the inspector general found that different departmental bureaus had paid more than the appraised value of the land in 64 of 130 audited purchases from these groups. The amounts of overpayment ranged from a few thousand to several hundred thousand dollars.

For example, the Fish and Wildlife Service paid $1 million in 1987 to the National Audubon Society for 777 acres along California's San Joaquin River. The audit found that was $700,000 more than the market value of the land.

In addition, the audit found that in 71 cases the department violated policy by using old appraisals that did not accurately reflect the value of the land—when local land-use boards learn that Interior considers land sensitive, they often slap on zoning restrictions that drive its value down—and by allowing the nonprofit groups to appraise the land themselves.

In typical bureaucratic language, the report concludes that "the Government's interests were not always adequately protected" and that the environmental groups "benefited unduly from some of the land acquisition transactions."