A Political Solution to Public Lands Grazing: Voluntary Grazing Permit Buyout

Ecologically, economically, and socially-there is no case for continuing commercial livestock grazing on federal public lands. 1 While most conservationists (and an increasing share of the general public) would agree that grazing should not occur on inappropriate public lands, there has not been unanimous agreement on how to bring grazing to an end. For a variety of reasons, the National Public Lands Grazing Campaign (NPLGC) proposes that the solution include the creation of a federal voluntary grazing permit buyout program.

Voluntary Grazing Permit Buyout

The NPLGC is advocating for legislation to authorize (and fund) the federal government to buyout federal grazing permits from willing sellers. The legislation would require the government to permanently retire the permits and reallocate forage to wildlife and watersheds on the associated allotments, allowing them to recover from domestic livestock grazing. Participants in the program would still own their "base properties," the private lands to which the federal grazing privileges are attached, and could use their cash windfall for any purpose such as restructuring their ranch (including purchase more private grazing land), starting a new business (hunting guide service, bed and breakfast) or retiring.

Permit Buyout Generally Prohibited

Permanent permit retirement is prohibited under current law which requires agency managers to transfer grazing permits to new graziers upon the resignation or retirement of the previous permittee. (Permits are cancelled without permittee consent in rare cases where the associated allotment has been severely overgrazed, it is court ordered, or Congress so directs, such as within a national park). However, there are examples where conservation organizations, livestock operators, and federal proprietors have worked creatively, within the bounds of current law, to retire permits. In some cases Congress has also passed legislation that explicitly authorized permit buyout on specially designated land. These examples have demonstrated permit retirement as a politically expedient, administratively efficient, socially compassionate, and ecologically responsible way to end livestock grazing on public lands.2

Dynamics of Permit Buyout

Grazing permits issued under the Taylor Grazing Act of 1934 (TGA) allow permittees the privilege to use publicly owned forage. The permits do not convey a right in permittees to graze federal lands. This distinction was intended by Congress in the TGA,3 articulated in agency regulations,4 restated in federal grazing studies,5 confirmed by scholars,6 and upheld by the Supreme Court as recently as 2000.7 Federal grazing permits are revocable, amendable, non-assignable ten-year licenses that do not convey property rights.

Despite their indefinite (sometimes volatile) nature, grazing permits have carried a market value since the passage of the Taylor Grazing Act, which created exclusive grazing allotments out of the public commons. Permit value is recognized by the real estate market,8 Internal Revenue Service,9 banks,10 and economists 11 (and, of course, permittees). The value of grazing permits is sustained by a preference system that advises federal agencies to reissue grazing permits every ten years to the same permittee if they are in good standing. The expectation that public lands graziers will retain their grazing permits for as long as desired-and that such permits will be routinely transferred to any new owner of the base property (as long as the new owner agrees to graze the public allotment) - has encouraged them to rely on their value for financial planning purposes. Permits have thus become inextricably part of ranch value. Unfortunately for their owners, many public lands ranches are burdened by long-term debt, poor debt/equity ratios, and limited income.

To encourage participation in the voluntary permit buyout program, the NPLGC is proposing compensating grazing permittees and lessees at a generous rate of $175 per animal unit month, based on the average of the last ten years of grazing use as stipulated by the permit or lease and paid for by the permittee or lesee or their predecessor(s). Although this rate is more than the fair market value of an AUM,12 it still delivers tremendous savings to the federal treasury (taxpayers), financial liberation for many public lands ranchers-and incalculable ecological benefits. At this rate, the simple payback to the taxpayers would be seven years. Considered another way, if voluntary permit buyout legislation is enacted, livestock grazing can be ended for an average of $13.45 for each public land acre in the program.

Politics of Permit Buyout

Voluntary grazing permit buyout is attractive to various political interests.

Coming to Grips with Permit Buyout

Some conservationists are wary of permit buyout. They have these objections to compensating grazing permittees to end public lands grazing:

  1. Public lands grazing is a privilege, not a right. The federal government can withdraw it anytime-why pay for permits?
  2. Taxpayers should not have to pay permittees not to damage the public lands.
  3. It is morally repugnant to reward resource abuse on public lands by paying for permits.

These are valid criticisms, worthy of thoughtful consideration. We offer the following response:

  1. While federal land management agencies can reduce or eliminate grazing-and, in fact, are under a legal obligation to do so in case of ecosystem damage-they very rarely do. Where agencies have withdrawn grazing privileges, it is usually due to expensive litigation by conservation groups, a permittee who refuses to pay his grazing fee (usually the permit is simply reissued to another rancher), or where the agency manager knows that the bottom line of the permittee will not be harmed by the decision (coincidental compensation by a third party for permit retirement). In some cases, land managers have proposed reductions for ecological reasons, but have had their plans nixed by agency directors under Congressional pressure.
  2. Taxpayers are already paying permittees, through subsidized grazing fees and other assistance programs, to degrade the public lands. Permit buyout is a cheap and efficient way to rid public lands of domestic livestock. Moreover, it's just money. Is it more important to preserve the federal public lands or the federal treasury? Choosing is not necessary in this case, because permit retirement does both most effectively.
  3. To conserve and restore the Earth, sometimes one has to rise above principle. An excessive adherence to principled opposition to an injustice often interferes with ending the injustice.

Support for permit buyout is increasing, and not only in the conservation community. There is some interest in the Bureau of Land Management and upper echelons of the Bush administration. A few land managers are retiring permits now, although the law discourages it. Free-market think tanks are supportive of the concept, although conservationists and libertarians differ on the details. Recognizing the limited success of our past strategies regarding public lands livestock grazing, the NPLGC invites the conservation community to support legislation that acknowledges the market interest in federal forage for the sole purpose of extinguishing such interests through compensation-and ending grazing on those public lands permanently.

1. There are a few documented cases where livestock grazing has been used as a substitute for fire or to manage invasive species to benefit the environment and native fish and wildlife. These cases, however, are very few and in every circumstance not economically viable as part of a commercial grazing operation. Consequently, in the rare cases where livestock grazing is agreed to be environmentally warranted, it must be done in a non-commercial context to ensure that ecological and not economic objectives prevail.
2. See M. Salvo and A. Kerr. 2001. Permits for cash: a fair and equitable resolution to the public land range war. Rangelands 23(1): 22-24.
3. 43 U.S.C. 315b.
4. See, e.g., 36 C.F.R. 222.3(b).
5. USDI-BLM, USDA-Forest Service. 1995. Rangeland Reform '94 Final Environmental Impact Statement. USDI-BLM. Washington, D.C.: 125.
6. Donahue, D. 1999. The Western Range Revisited: Removing Livestock from Public Lands to Conserve Native Biodiversity. Univ. Oklahoma Press, Norman, OK: 38.
7. Public Lands Council v. Babbitt, 529 U.S. 728, 741 (2000).
8. Fowler, J. M. and J. R. Gray. 1980. Market values of federal grazing permits in New Mexico. New Mexico State Univ., Coop. Ext. Serv., Range Improvement Task Force. Las Cruces, NM. 23 pp.
9. Torell, L. A. and J. P. Doll. 1991. Public land policy and the value of grazing permits. West. J. Agric. Econ. 16(1): 174-184.
10. Salvo, M. 2002. Forest Service escrow waivers: collateralizing federal grazing permits for private debt in Welfare Ranching: The Subsidized Destruction of the American West (in press).
11. Winter, J. R. and J. K. Whittaker. 1981. The relationship between private ranchland prices and public-land grazing permits. Land Economics 57(3): 414-421.
12. Approximately $40 per animal unit month westwide. Torell, L. A., N. R. Rimbey, J. A. Tanaka, S. A. Bailey. 2001. The lack of profit motive for ranching: implications for policy analysis. Proc. Current Issues in Rangeland Resource Economics Symp. Western Reg. Coord. Comm. on Rangeland Economics WCC-55. New Mexico State University Res. Rep. Ser. 737. New Mexico State University. Las Cruces, NM (unpaginated) (reporting average permit value of $40/AUM on public lands in seasonal grazing states of Idaho and Wyoming, and $75/AUM in New Mexico, where yearlong grazing occurs (this would suggest an even lower capitalization rate in hot desert states).