Western Land “Wars”   Leave a comment

I was amazed a few weeks ago when a jury acquitted Ammon Bundy and six others in the trail over the armed occupation of Oregon’s Malheur Wildlife Refuge. Clearly from the comments section of many of the related articles, the case (and the acquittal) has elevated federal land issues to the national stage. Despite all the media attention, the underlying issues surrounding federal lands are mostly overlooked and not well understood by … well, a lot of people.

Most people know, at least in a rudimentary way, that the Bundy family has been wrangling with the federal government over grazing rights to public lands. They may sense that the Oregon “stand off” was somehow vaguely related. The public largely has no understanding why some ranchers are so upset with the federal government. Especially if the public lives back East in a big city, they really don’t understand these issues at all. This is because they don’t understand how federal grazing policy works and why it causes so much conflict.

The federal government owns a lot of land. Nearly half of the entire western United States is controlled by federal land agencies. In some states, more land is owned by the federal government than the state or residents combined:

  • Oregon is 53% federal land
  • Idaho is 62% federal land
  • Utah is 65% federal land
  • Nevada is 85% federal land

I’m skipping Alaska for this conversation because it’s a different discussion altogether and I’ve dealt with it in the past.

Some of this is federal property because it was set aside as a national park or forest reserve, but much of remains in federal ownership simply because it was never settled by homesteaders. To understand how public-land grazing works today, we have to understand how this homestead process worked.

In the late-19th and early-20th centuries, U.S. land policies encouraged settlers to venture westward, where they found vast range lands on which to graze their livestock. The problem was that the Homestead Act limited settlers to 160-acre claims. These proved too small for the dry conditions of the western range. Settlers needed much more land if they were to eke out a living and “prove up their homestead claims. Despite this, the federal government never amended its policies to issue land claims large enough to support livestock grazing in the arid West.

Such small homestead claims forced ranchers to rely on nearby public lands to sustain their livestock operations. The use of this unclaimed public domain for grazing was eventually formalized into law to control and prevent overgrazing when the 1934 Taylor Grazing Act gave the federal government the authority to create grazing districts on unclaimed public lands, issue permits, and charge fees. This essentially is the federal grazing system we have today.

Ranchers own very little private land, with most of their property value tied up in their ability to graze livestock on public grazing allotments

It’s more complicated than that, however. Ranchers only qualify for grazing permits if they own specific private properties that the government decided qualified for public-land grazing privileges. Those grazing permits are today still tied to private properties and they cannot be held by those who do not hold such qualifying properties.

In other words, a grazing permit deeply impacts the value of a rancher’s property. When these properties are bought and sold, the new owner pays for the grazing permit, which is capitalized into the value of the base property.

The value of these grazing permits can be significant. In many parts of the West, ranchers own very little private land, with most of their property value tied up in their ability to graze livestock on public grazing allotments. These grazing permits function like a form of private property. They are bought and sold along with the ranches they’re attached to. Banks collateralize loans on the value of permits. The government also taxes the value of grazing permits in capital gains and estate taxes.

So, Cliven Bundy’s ranch in Nevada is just 160 acres of private land. Before he stopped paying grazing fees and lost his grazing privileges, Bundy’s property had a grazing permit attached to it that gave him the ability to run livestock on a nearby 158,000-acre allotment. He was paying taxes on that as if he owned it.

Some people claim that ranchers receive large subsidies to graze livestock on public lands in the form of below-market grazing fees. If that’s true, why would ranchers revolt against such a huge handout? The reality is more complicated.Ranchers pay very little to graze livestock on federal lands. It was about $2.11 per “animal unit month” — which my research says is enough forage to feed one cow and one calf for a month.  That is substantially less than what it costs to run livestock on state or private lands.

Grazing fees are only part of the story. Because of the base-property requirement for federal-land grazing, most ranchers paid the market value of their federal grazing privileges up front when they bought their ranch. That’s not how it works with state or private grazing leases. Additionally, grazing fees on public and private lands refer to very different things. When private range land is purchased or leased, fences, water infrastructure and buildings are often already in place. Public land often comes without these necessities, the cost of which is born by the rancher leasing the land. So, public-land grazing is not actually cheaper for ranchers than private alternatives. In some instances, it is more expensive. Still, it’s a good deal … unless you’re an American taxpayer.

The Bureau of Land Management and U.S. Forest Service spent $143.6 million on grazing management in 2014, but collected just $18.5 million in grazing fees — a loss of $125 million. It’s estimated that the feds lost about 90 cents out of every dollar it spent on grazing management between 2009 and 2013.

All of this goes a long way toward explaining why these issues remain so contentious, and why many ranchers today are angry about regulations or legal actions that undermine their traditional public-land uses. As federal land policies have shifted toward conservation and recreation instead of grazing, ranchers have been gradually lost grazing privileges. Today, the BLM authorizes just half the amount of grazing it did in 1954.

When ranchers’ grazing privileges are reduced, it affects their livelihoods and the values of their private property. This is why various groups are calling for local control of federal lands. Ranchers feel threatened by federal regulations and the environmental groups who use them as the basis for litigation to take away their grazing privileges, often without compensation.

There are no simple solutions to this problem. The current system encourages conflict rather than peaceful negotiation. The rights that determine who gets to do what on public lands are poorly defined, and public-land use decisions are more likely to be settled by politics or litigation than by mutual cooperation or direct exchange. The federal government does not often offer to buyout ranchers’ grazing permits. It’s not considered imminent domain. Ranchers simply see their livelihoods go away and their ranches becomes unsaleable.

One possible solution is to create clearer property rights to grazing on public lands and then simply let groups trade. Environmental groups could then buy out ranchers’ grazing permits if the ranchers agreed. This already happens in a limited fashion, but regulatory barriers to not allow grazing permits to be used for conservation purposes, so there are some high transaction costs involved.

In recent years, several environmental groups have advocated grazing-permit buyouts as a practical and peaceable conservation strategy. Others say the federal government shouudl buy out ranchers’ grazing permits itself. Since public-land grazing loses so much taxpayer money, the argument goes, it would pay to have the government simply purchase ranchers’ permits and retire them. This is apparently what happened with Cliven Bundy in the early 1990s, but he declined the offer because he’s a rancher and didn’t want to stop doing that.

There are some folks who insist that ranchers never had formal “grazing rights” to begin with. The federal government refers only to “grazing privileges” rather than formal rights, and courts have generally held that they can be revoked at any time. This fact has been used by the government and some environmental groups to justify grazing permit reductions without compensation.

So why do we fight over western lands? Partially, because it is unclear who has what rights. Land-use decisions are often made in the political arena or in the courts rather than negotiated locally between competing groups. Courts are an adversarial setting that invited conflicts. The fights will continue so long as these rights are unclear.

While some of us sympathetic to the situation rejoiced to see the acquittal in the Oregon case, the fact is that until actually negotiation procedures are developed in which the ranchers are treated like equal parties to the conservationists and the government, these sorts of fights will continue.

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