Public Land Ranching Is A Government Subsidized Legal Racket

Public land ranchers like to complain that they are treated unfairly by the federal land managers that oversee their operations. In 2014, Nevada rancher Cliven Bundy went so far as to claim that the Bureau of Land Management (BLM) violated his rights by not allowing him to graze his cattle for free on the federal land, and he provoked an armed confrontation with federal employees. But a closer examination of the federal government’s management of livestock grazing on public land reveals that U.S. taxpayers are the ones who are really being abused.

Grazing on public lands is primarily administered by two federal agencies. The U.S. Department of Agriculture’s (USDA’s) Forest Service oversees it on National Forest land, while the U.S. Department of the Interior’s BLM manages it on BLM land. The regulation of livestock grazing through the creation of separate grazing allotments on Western public lands was the result of the Taylor Grazing Act of 1934. In order to legally use a federal grazing allotment, a rancher must first obtain the permit for that allotment. It’s often claimed that ranchers can buy a grazing permit. But that’s not true. The federal courts have repeatedly found that grazing permits aren’t private property or a lease, but a privilege to be managed by the local federal land manager in the interests of the general public.

What ranchers are really getting when they buy a private ranch base property that’s associated with a public land grazing allotment is the opportunity to be the first in line to obtain the grazing permit for that allotment. The likelihood that the grazing permit will be reissued to the ranch’s new owner is so high that it inflates the market value of the base property. The difference in the property’s value with and without the grazing permit is considered the market value of the permit. This value is primarily a function of the maximum number of livestock that are listed on the permit. Most grazing allotments aren’t capable of supporting the maximum number of permitted animals, so the actual (authorized) numbers that are grazed are often much lower than the permitted numbers, frequently less than half. This common discrepancy between permitted and actual livestock numbers is the result of ranchers fighting to keep their permitted numbers as high as possible in order to inflate the market values of their private base properties.

Once a rancher obtains a grazing permit, they only have to pay a ridiculously low grazing fee per animal per month to graze their livestock on the allotment. (This amount is adjusted slightly every year. It was set at only $1.35 per head per month for 2019.) They only have to pay for the animals that are actually using the land, not the permitted number of animals. And the agencies usually take their word on the number they claim to have actually grazed.

The below-market grazing fee doesn’t come close to generating enough revenue to appropriately manage livestock grazing on federal lands. Arizona’s Prescott National Forest, for example, encompasses about 1.25 million acres, and the vast majority of it is permitted for livestock grazing. According to Forest Service officials, the Prescott only collects about $110,000 in grazing fees per year, and only half of that money, or about $55,000, is returned to the forest’s range betterment fund to help manage livestock grazing across the entire forest. But with the cost of a new livestock-watering site running at about $15,000, and new livestock fencing going for at least $1,000 per mile, it’s easy to see that the forest can’t afford to get a lot done.

Taxpayers Are Subsidizing Public Lands Ranching

The agencies try to split the cost of these range “improvements” with the ranchers. But few ranchers have the ability to spend a lot because many public lands ranches are only marginally profitable because of the unsuitability of most public land for grazing. The cost of implementing livestock management plans wasn’t as big of a problem in the bad old days, when public land ranchers were able to do pretty much whatever they wanted and get away with it. But the passage of the National Environmental Policy Act (NEPA), the Endangered Species Act and the Federal Land Policy and Management Act (FLPMA) in the 1970s created opportunities for conservationists to use the courts to force public land managers to start managing livestock grazing in the public’s interest. The application of these environmental laws resulted in significant improvements in the ecological health of the land. Still, it wasn’t until the late 1990s that compliance with these laws began to become the norm on public rangelands.

This overdue application of improved grazing allotment management plans created complaints from many ranchers because they were expensive to implement. And when ranchers didn’t have the money to pay for their portion of the costs, the agencies often required them to reduce the size of their herds. This simple strategy of reducing livestock numbers usually produced improvements in the health of the land that exceeded the results obtained from the implementation of intensive livestock management schemes. And it cost a lot less too. But ranchers complained and so Congress bailed them out. The 2002 Farm Bill allowed the USDA’s Natural Resources and Conservation Service’s (NRCS) Environmental Quality Incentives Program (EQIP) to start awarding financial assistance to public land ranchers for “conservation” measures. (They were historically ineligible for EQIP money.)

Since then, public land ranchers have been able to use EQIP assistance to help fund the cost of implementing improved livestock management plans. Tens of millions of dollars in EQIP funds have been given out to public land ranchers across the West. Most of the money has been spent to build livestock waters and fences to maintain or increase livestock numbers, despite the fact that the words “environmental quality” are in the program’s title. One of the most popular uses of EQIP money has been to build new livestock watering sites in little-used upland areas and claim they’re protecting riparian areas because they’re drawing cattle away from streams. There’s no evidence, however, that these upland waters draw enough cattle away from the streams to adequately protect them, unless the streams are also fenced off. Also, these new waters often bring livestock to dry upland areas that were rarely grazed before, sometimes creating new problems.

But the low grazing fee and the EQIP financial assistance aren’t the only subsidies provided to public land ranchers. In fact, there might be too many for anybody to know them all. But they include the millions the USDA’s Animal Services spends to kill predators and “pest” animals for ranchers. And the Environmental Protection Agency funds grants to reduce nonpoint source water pollution that ranchers can use to temporarily convert woody ecosystems to grasslands which provide more forage for cattle. The BLM has spent millions through its Healthy Lands Initiative for similar projects. These vegetative manipulations are justified by calling them watershed improvement projects. There’s also the USDA’s Livestock Forage Disaster Program that doles out feed assistance payments to ranchers during drought – even when they graze their livestock in a desert. Ranchers can also receive drought compensation payments by buying highly subsidized crop insurance policies from the USDA’s Noninsured Crop Disaster Assistance Program (NAP). And the 2018 Farm Bill created the USDA’s Livestock Indemnity Program (LIP), which provides payments to ranchers for livestock deaths caused by predators (endangered wolves) reintroduced into the wild by the federal government, along with several other mortality causes.

The myriad of federal agricultural subsidies obviously creates opportunities for abuse. In response to a drought in Arizona, for example, NRCS State Conservationist Michael Somerville disbursed more than $11 million in 1999 to over 300 Arizona ranchers from the Emergency Watershed Protection (EWP) Program. The USDA’s Auditor General responded to a whistleblower complaint and conducted an audit which found the complaint was correct and the NRCS state office’s documentation was not “adequate to support the implementation of the EWP.” The ranchers, however, got to keep the money. (Recipients of Federal social welfare programs are required to payback all overpayments they receive – even when they are caused by agency errors.)

Ranchers Receive State Subsidies Too

The federal government, of course, isn’t the only source of subsidies. Western states also provide an array of subsidies that support public land ranchers. The most widespread ones are the open range laws wherein ranchers aren’t required to fence their cattle in, while everybody else, including local highway departments, must fence them out.

In Arizona, many ranches are a mixture of public, state, and private land. Public land ranchers with state grazing leases benefit from the sweetheart leases they get from the Arizona State Land Department. Arizona public land ranchers also benefited from the Livestock & Crop Conservation Grant Program (LCCGP) that was administered by the state Department of Agriculture. And the Arizona Game & Fish Department helps ranchers with their Habitat Partnership Committee (HPC) grants, and also their Landowner Relations Program (LRP) grants. The Arizona Water Protection Fund Commission also dispenses grants that sometimes benefit ranchers.

The Bottom Line

Most of the government subsidies available to ranchers are cost-sharing programs, wherein a rancher is required to contribute a portion of the project’s cost. This requirement is often met in the form of the estimated cost of labor contributed by the rancher. However, when that arrangement is used, the rancher has no out-of-pocket expenses to deduct against the taxable income created by the financial assistance. So ranchers often contract out the labor to create a deductible expense. And there’s nothing to prevent them from hiring a neighboring rancher to do the work. In fact, some public land ranchers make more money building fences than they do raising cattle. Also, if a couple of neighboring ranchers both get cost-sharing grants, they can hire each other to do the work and both of them get to claim a deduction.

Sometimes, regional nonprofit organizations, like the Coronado Resource Conservation & Development Area, Inc., in southeast Arizona are set up to solicit and manage the government financial assistance. The money is still used to benefit local ranchers, but the taxable income can be minimized. Furthermore, Arizona’s rural Natural Resource Conservation Districts, which are administered by the Arizona State Land Department, also solicit and manage government assistance. The membership of the NRCDs is composed of local landowners, primarily ranchers, and the money is used to benefit them.

Moreover, there is nothing to prevent a rancher from receiving multiple subsidies from several government financial assistance programs simultaneously – and many do. Additionally, there are no financial needs tests for these programs, so even millionaires are eligible.

As you can easily see, it’s difficult to understand how any sane person could describe the administration of public land grazing as being unfair towards ranchers. Unless, of course, you believe that public land ranchers should be exempt from environmental laws and are entitled to generous government subsidies. The money these ranchers are getting from the taxpayers is even more inexplicable if you consider the relative insignificance of the economic impact of public lands grazing. The Department of the Interior’s FY2012 Economic Report, for example, showed that grazing on all Western public lands accounted for only about 1.6% of livestock receipts in the 17 Western states. It would make a lot more sense for Congress to create a fund to compensate public land ranchers who are willing to voluntarily relinquish their grazing permits. Then the associated grazing allotments could be permanently retired and taxpayers wouldn’t have to keep throwing good money after bad.

Updates

On January 30, 2020, U.S. Rep. Adam Smith, D-WA, introduce HR 5737, the Voluntary Grazing Permit Retirement Act.

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