Dear Public Lands Grazing Permittee/Lessee:
When I last wrote to you in April 2002, I told you about a new legislative
proposal by a coalition of conservation organizations - the National
Public Lands Grazing Campaign - to create a voluntary federal grazing
permit/lease buyout program. I am pleased to inform you that legislation
to authorize such a program has been introduced in Congress. The Voluntary
Federal Grazing Permit Buyout Act (H.R. 3324) has been introduced by
a bipartisan team of Rep. Christopher Shays (R-CT) and Rep. Raúl
Grijalva (D-AZ). As introduced, H.R. 3324 would:
* Allow any federal permittee/lessee to waive their interest in a
federal grazing permit/lease in exchange for compensation at a rate
of $175/animal unit month (AUM). Payment would be based on the average
of the last 10 years of actual grazing use under the permit/lease. Years
of non-use would be excluded from this average. To offer an example
- if this legislation becomes law - a permittee/lessee who grazed an
average of 300 cow/calf pairs on public lands for five months per year
over the last 10 years (300 x 5 = 1,500 AUMs) would receive $262,500
(1,500 AUMs x $175) under the voluntary buyout program. An on-line calculator
is available at www.permitbuyout.net to help you determine what your
buyout would be under H.R. 3324. The legislation does not affect any
private property or water rights you may have. The buyout price is set
high enough to compensate you for any developments you made on public
lands. In case Congressional appropriations fall short of demand for
buyout, permits/leases would be ranked by conservation priority, with
the highest ranked permits receiving buyout first.
* Require that the associated grazing allotment be permanently retired
from commercial livestock grazing. If a permittee/lessee elects
to waive their permit/lease for compensation, commercial livestock grazing
would end on the associated allotment(s). The forage would be reallocated
to wildlife and watershed health. If an allotment is jointly grazed
by multiple permittees/lessees, the legislation requires that all parties
elect a buyout at the same time. The exception would be when a permittee/lessee
demonstrates that an area of the common allotment could be secured from
livestock grazing proportional to the amount of grazing authorized by
This letter has been sent to every Forest Service and Bureau of Land
Management grazing permittee/lessee in the West. The proposed buyout
program would also be available to lessees who graze public lands managed
by the National Park Service, U.S. Fish and Wildlife Service, Department
of Defense and the Department of Energy.
Tax Treatment by the IRS
Since we first proposed this voluntary federal grazing
permit/lease buyout, many permittees/lessees have inquired how the Internal
Revenue Service (IRS) might treat the income received from permit/lease
buyout. The National Public Lands Grazing Campaign commissioned the
law firm of Perkins Coie to prepare a legal opinion on the matter. In
summary, tax attorneys at Perkins Coie believe that the IRS would generally
treat income from permit/lease buyout as long-term capital gains, making
it eligible for "Section 1031" exchanges. While you should
consult your own attorney and/or accountant on the matter, you may also
wish to download a copy of the Perkins Coie memo at www.permitbuyout.net.
If you do not have Internet access, please contact me and I will mail
you a copy.
An Equitable Way to Resolve Public Lands Grazing
For the following and other reasons, public lands grazing
is becoming increasingly problematic:
* Changing Needs and Desires of Permittees/Lessees. Since
devising this proposal, I have communicated with scores of grazing permittees/lessees
who are interested in the option of permit/lease voluntary buyout. Their
situations are as varied as the people themselves. Some want to continue
grazing for now. Some want to end their public lands grazing as soon
as practicable. Some have all their equity invested in their ranch and
associated federal permits/leases, so the buyout option would serve
to protect them from permit/lease reductions or cancellation in the
future. Many have heirs who are uninterested or unable to continue the
family's ranch operation. Some want to use the equity that is tied up
in their federal grazing permit/lease for retirement or to create a
legacy for their loved ones. Some are fed up with the increasing paperwork
and hassle associated with a federal grazing permit/lease. Some might
use a buyout to restructure their cattle operations to rely solely on
private lands, out of reach of federal overseers.
* Increased grazing conflicts. Environmental and recreational
conflicts with domestic livestock grazing are increasing. Under current
law, federal agencies are not required to compensate permittees/lessees
for lost grazing privileges when closing an allotment or reducing livestock
numbers to protect and restore natural resources. Federal law is clear
that no compensable property right is vested in federal grazing permits/leases.
However, as you know, financial and real estate markets do place a monetary
value on such permits/leases. H.R. 3324 recognizes the investment that
permittees/lessees have made in public lands grazing by compensating
those who voluntarily relinquish their permits/leases to the government.
* Changing economics. Foreign beef imports, increased
efficiency in domestic production, the changing American diet, fears
over mad cow disease and other factors have combined to render public
lands grazing increasingly difficult and, in most cases, unprofitable.
For many permittees/lessees, voluntary permit/lease buyout could be
a timely tool for managing these economic realities.
Voluntary grazing permit/lease buyout is a fair and equitable way to
resolve grazing conflicts and aid permittees/lessees in economic transition.
The average westwide market value of a federal AUM is $35-$75. (Your
banker or a realtor can tell you what an AUM you currently possess is
worth.) The fixed price of $175/AUM in H.R. 3324 is generous and independent
of market value to avoid expensive appraisal costs for each grazing
permit/lease, putting more money in the pockets of grazing permittees/lessees.
The $175/AUM would also cover any taxes on permit/lease retirement and
any improvements a permittee/lessee may have made to an allotment.
Why Conservationists Support H.R. 3324
Most conservationists believe that public lands livestock
grazing is extremely harmful to watersheds, ecosystems, and native flora
and fauna. Scientific studies support this position. Traditionally,
conservationists have filed litigation to enforce federal environmental
protection standards for public lands and wildlife. They are successful
tools and we will continue to use them when the laws of the land are
broken. However, conservationists also seek a new, voluntary and equitable
way to resolve disputes over public lands livestock grazing that avoids
the acrimony of traditional conservation strategies. We believe that
the Voluntary Federal Grazing Permit Buyout Act is a win-win solution
We Can Agree to Disagree as Long as We Agree on One
Conservationists and permittees/lessees will never agree
on the environmental impacts and economic contributions of public lands
grazing. We don't need to. Most coalitions that successfully persuade
Congress to enact a new law do not always have the same reasons for
wanting the new law. Conservationists and federal grazing permittees/lessees
only need to agree that if you ever want to relinquish your federal
grazing permit/lease, you should be paid $175/AUM for doing so.
Many Permittees/Lessees Support H.R. 3324
Since my last letter to you, I have received many calls,
letters and e-mails from federal grazing permittees/lessees around the
West. Most were positive. Some were not. One permittee from Utah noted
that the voluntary federal grazing permit/lease buyout proposal had
all his neighbors talking and dividing into two camps: "those who
want to be able to sell their federal grazing permit, and those who
don't want their neighbors to be able to sell their federal grazing
permit." One Idaho permittee and his banker called to see how soon
this proposal would become law. I was sorry to have to tell them it
wouldn't be soon enough to help them out of their immediate bind.
Press reports, as well as informal conversations with members and leaders
of the public lands grazing industry, suggest that a majority
of permittees/lessees favor the voluntary grazing permit/lease buyout
Most of the Public Lands Grazing Industry Leadership
Currently Opposes H.R. 3324
I admit that I was initially surprised by the opposition
of the public lands grazing industry leadership to the concept of voluntary
grazing permit/lease buyout. How could the American Farm Bureau Federation,
Public Lands Council, National Cattlemen's Beef Association and its
various state affiliates oppose giving federal grazing permittees/lessees
the option to voluntarily sell their interest in a federal
grazing permit/lease for much more than market value? As I visited
informally with many permittees/lessees and formally with several public
lands grazing industry leaders, I began to understand the reasons for
their opposition-and why the interests of most of the industry's leadership
are different than those of most of the industry's membership.
In general, those holding leadership positions in the public lands grazing
industry are deeply vested in its continuation. Most who volunteer for
leadership positions or serve as paid lobbyists are committed to a continuation
of the status quo. They do not wish to see the public lands grazing
industry decrease. They fear the loss of dues-paying members that may
result from a permit/lease buyout program (even though public lands
ranchers comprise only 3 percent of the livestock industry). These leaders
also fear the proposed $175/AUM compensation rate, which effectively
becomes the new price for a federal AUM. Such a price could thwart their
own business survival plans - which often depend on their getting bigger
by buying out their neighbors go broke or retire.
Much of the public lands grazing industry membership, on the other hand,
is simply trying to survive. Many depend on non-ranch income to sustain
their public lands grazing operations. Voluntary permit/lease buyout
would provide welcome relief to those who are looking to move on or
restructure their operations.
This is a case where the interests of an industry's leadership is in
conflict with those of the industry's membership. Although the majority
of federal grazing permittees/lessees do not belong to any industry
association, these associations still purport to represent them anyway
and currently oppose H.R. 3324.
You may be interested to read the following confidential memorandum
from Jeff Eisenberg, director of the National Cattlemen's Beef Association's
Public Lands Council, to his fellow industry leadership:
Federal Support For Permit Buyouts 7/30/03
I learned this a.m. that the NWF [National Wildlife Federation] is
going to hold either hold a press conference or issue a press release
this coming Friday announcing the buyout of the grazing permit of
the Walton Ranch, Blackrock/Spread Creek allotment, which is NE of
Jackson Hole in Wyoming. While the transaction involved a willing
buyer and seller in the private market, the deal wouldn't have been
completed unless the FS [Forest Service] facilitated it by saying
it would close the allotment. The area is in "situation 1 or
2" (?) grizzly bear habitat, but my understanding is that the
bears were doing fine with the cows there. The bears, on the other
hand, caused some loss to local livestock.
Similar deals were recently closed in the Targhee NF in Idaho
and the Gallatin in MT, another recent one in Wyoming, not to mention
the Grand Staircase Escalante in Utah.
PLC/NCBA supports choices made by individuals in a free market.
On the other hand, none of the deals would have happened if this administration
had not stepped in to facilitate them through some guarantee about
the retirement of the subject allotment.
Industry opposes this role of the government. We oppose dismantling
the infrastructure needed for public land ranching, here the elimination
of allotments. On the other hand, there is undeniable widespread activity
of environmental groups buying out permittees and a noticeable number
of agreements from ranchers.
Do we need further elaboration of our policy? I think it's
entirely appropriate for us to just say no. The problem is the activity
is going forward anyway, even in a friendly administration. Do we
need a broader policy that would try to counteract this, shape this?
I seek input and guidance from our members. In the meantime (a
few weeks), we're going to have a meeting on the hill with all the
offices of western republicans to discuss the question of a broader
strategy and proactive approach.
Let me know what you think.
What Must Happen to Enact H.R. 3324
Convincing Congress to enact a voluntary permit/lease buyout program
will require the joint efforts of conservation and related organizations,
taxpayer watchdog groups, and public lands grazing permittees/lessees
interested in the buyout option (either now or in the future). Expressions
of support from individual permittees/lessees will be crucial to the
Much work must be done to enact the Voluntary Federal Grazing Permit
Buyout Act into law. In my last letter, I promised you that conservationists
would get the legislation introduced in Congress, and we have. The next
step is to expand the list of the legislation's co-sponsors to show
political support for hearings in the House Resources and/or Agriculture
Committees and, ultimately, a full vote in the House of Representatives
(and then it is on to the Senate). The conservation community is working
to secure the support of environmentally inclined Democrats and Republicans.
The National Public Lands Grazing Campaign is also working to round
up the support of fiscally conservative members of Congress in both
parties who are concerned that the federal grazing program costs taxpayers
at least $500 million annually and returns no more than $7 million to
the U.S. Treasury each year.
However, conservationists have less influence with many Congressional
members from the rural areas of the West who generally listen to the
livestock grazing industry. These representatives and senators must
hear from individual grazing permittees/lessees who are interested in
voluntary grazing permit/lease buyout, as they are currently being advised
to oppose H.R. 3324 by the public lands grazing industry leadership.
While a majority of permittees/lessees favor the voluntary grazing permit/lease
buyout option, a silent majority is not worth anything in Washington,
DC. Eighty percent of democracy is showing up and making yourself known
and your voice heard. Fearing controversy within their industry and
among their neighbors, some permittees/lessees may be tempted to seek
a "free ride" by laying low and letting other permittees/lessees
do the work of passing a permit/lease buyout program. If too many do
that, H.R. 3324 will not become law.
If you support the voluntary federal grazing permit/lease buyout option,
your elected officials in Washington, D.C. - as well as those officials
within the livestock industry - need to hear from you. Your letters,
e-mail, faxes and phone calls will help H.R. 3324 become law. Here are
three crucial actions you can take today:
- Tell your federal elected officials that you want the right
to be bought out. If the voluntary permit/lease buyout option
is attractive to you, now or possibly in the future, please contact
your elected representatives to inform them of your support for H.R.
3324. You can write to your elected federal officials at:
United States Senate
Washington, DC 20510
U.S. House of Representatives
Washington, DC 20515
If you have Internet access, you can e-mail or find the fax number
of your elected officials by visiting www.house.gov
or www.senate.gov. If you do not
know who your U.S. representative or senators are, you can find out
by entering your zip code at www.house.gov,
checking www.senate.gov or by
contacting your county election office or local library. Your U.S.
representative can also send you a copy of H.R. 3324.
- Tell your public lands grazing industry leadership that you
want the right to be bought out. Elected political leaders
tend to respond to interest-group leaders, and interest-group leaders
tend to listen to their membership, or neither remain leaders for
long. Besides contacting your local livestock industry leaders, you
may also wish to contact:
Jeff Eisenberg, Director of Federal Lands
National Cattlemen's Beef Association
1301 Pennsylvania Ave. NW, Suite 300
Washington, D.C. 20004
(202) 347-0228 voice
(202) 638-0607 fax
- Stay informed on the progress of H.R. 3324, the Voluntary
Federal Grazing Permit Buyout Act. You may wish to subscribe
to our Voluntary Grazing Permit/Lease Buyout e-mail list service.
You'll receive periodic updates on the status of voluntary grazing
permit/lease buyout and what must to be done to move H.R. 3324 through
Congress. If you subscribe, your e-mail address will not
be used for any other purpose. To subscribe, visit www.permitbuyout.net
or send an e-mail to "firstname.lastname@example.org."
Please include your zip code in the message body. If you do not have
an e-mail address, perhaps a friend or family member does who can
print out the updates for you.
Arizona Leading the Way
I want to close by telling you about a cooperative effort between federal
grazing permittees/lessees and conservation organizations in Arizona.
After we first announced the voluntary federal grazing permit/lease
buyout proposal, a group of Arizona permittees/lessees and conservationists
began to develop a statewide permit/lease buyout proposal specifically
for Arizona. Since then, these permittees/lessees and conservationists
organized the Arizona Grazing Permit Buyout Campaign (www.azbuyout.org).
This alliance could well result in the creation of a voluntary grazing
permit/lease buyout program just for Arizona. Rep. Grijalva (D-AZ) has
already introduced H.R. 3337, the Arizona Voluntary Grazing Permit Buyout
Act. So far, no other members of the Arizona Congressional Delegation
have co-sponsored the legislation. (If you are from Arizona, you will
want to express support to your congressional delegation for both H.R.
3324 and H.R. 3337.)
If you have questions or comments about H.R. 3324, H.R. 3337 or the
voluntary federal grazing permit buyout concept, please visit our website
at www.permitbuyout.net, e-mail
me, write me, or give me a call.
Thank you for your time and consideration of the Voluntary Federal
Grazing Permit Buyout Act (H.R. 3324) and the Arizona Voluntary Grazing
Permit Buyout Act (H.R. 3337).
P.S. It will take some time to persuade Congress to enact a comprehensive
voluntary permit/lease buyout program. If you are interested in proceeding
more quickly, as permittees/lessees and conservationists have in Arizona,
it may be possible to work with local conservation groups to draft legislation
for a site-specific buyout program that could be jointly proposed to
your congressional delegation. To begin this process, please contact
the organization below that works in your state:
- Martin Taylor, Center for Biological Diversity (Arizona, California)
- John Horning, Forest Guardians (Arizona, New Mexico, Nevada)
- Ronni Egan, Great Old Broads for Wilderness (Colorado, Utah)
- Bill Marlett, Oregon Natural Desert Association (Oregon, Washington)
- Jon Marvel, Western Watersheds Project (Idaho, Montana, Nevada,
North Dakota, South Dakota, Utah, Wyoming)
If you do not find a local contact here, please contact me and I will
connect you with the appropriate people.