WASHINGTON – A controversial deal between the federal government and Plum Creek Timber Co., the nation’s largest private landowner, could increase residential development of forests around the country, according to congressional investigators.

The proposed agreement between the U.S. Forest Service and Plum Creek would allow the company to use roads on national forests in Montana to develop its adjacent private property for subdivisions. Such easements often only allow the company to use public roads for logging or forest management.

Plum Creek has a development plan for 975 house lots, two large resorts and hundreds of thousands of acres of land conservation in the Moosehead Lake region of Maine.

The Government Accountability Office, in a letter sent Friday to the two Democratic senators who requested an investigation, said the Montana deal could set a precedent and allow other private landowners to use forest roads to build subdivisions. The private negotiations deprived the public of any chance to weigh in, investigators said.

“This report sounds all sorts of alarms about the way the Forest Service is doing business,” said Sen. Jon Tester, D-Mont., who asked for the probe along with Sen. Jeff Bingaman, D-N.M.

Negotiations began after a Forest Service ranger in Seeley Lake, Mont., in 2006 told a potential buyer of Plum Creek land that the roads leading up to the property were not for residential use.

Forest Service officials overruled the ranger after talking with Plum Creek, the report says. The agency determined that the company could use certain Forest Service roads for any purpose, and the proposed agreement includes specific language that allows the company to use Forest Service roads to access residential subdivisions that may be built on property in the future.

Montana county officials say the proposal would make it easier for Plum Creek to sell timberland for houses or other development.

The GAO agreed, saying “many of Plum Creek’s lands in western Montana would have a substantially higher value if the amendment is carried out.”

Agriculture Undersecretary Mark Rey, who oversees the Forest Service, and a spokeswoman for Plum Creek both said that they are now engaging county officials in the process. Rey also denied the proposal would set a precedent nationwide, saying easements already are in place elsewhere.

Kathy Budinick, spokeswoman for Plum Creek, said the company will not implement the amendment in any county that doesn’t wish to have it.