Last week’s surprising acquittal of Ammon Bundy and six others in the trial over the armed occupation of the Malheur Wildlife Refuge in Oregon has once again elevated federal land issues to the national stage, and many questions remain. But despite all the media attention on the trial, many have overlooked the underlying issues that make federal lands so contentious in the first place.

Nearly half of the entire western United States is controlled by federal land agencies.

If you’ve followed the news about western lands at all recently, you’ve likely heard of the Bundy family. Cliven Bundy’s ranch in Nevada was the site of a 2014 standoff with the federal government over grazing rights to public lands, and earlier this year two of Bundy’s sons led the 41-day occupation of the wildlife refuge in Oregon — a dispute that ended with the death of one of the occupiers and the arrest of several others on federal conspiracy charges.

But why are some ranchers so upset with the federal government? Much of it is the result of federal land policies that encourage conflict instead of cooperation. So let’s take a step back to understand how federal grazing policy works, and why it’s the source of so much conflict in the American West.

How the West Was Settled

The federal government owns a lot of land . Nearly half of the entire western United States is controlled by federal land agencies. And in some states, more land is owned by the feds than the state or residents themselves: Oregon is 53 percent federal land, Idaho is 62 percent, Utah is 65 percent, and Nevada is 85 percent federal property.

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 for another simple reason: It was never settled by homesteaders. To understand how public-land grazing works today, we have to understand how this homestead process worked.

Western Lands

Western Lands

In the late 19th and early 20th centuries, U.S. land policies encouraged settlers to venture westward, where they found vast rangelands on which to graze their livestock. But there was one problem: The Homestead Act limited settlers to 160-acre claims, which were too small given 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. Yet throughout the homestead era, the federal government never issued land claims large enough to support livestock grazing in the arid West.

With such small homestead claims, ranchers were forced to rely on nearby public lands to sustain their livestock operations. The use of this unclaimed public domain for grazing was later formalized into law to control and prevent overgrazing. In 1934, the 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

But here is where it gets complicated: The government required that grazing permits could only be held by ranchers who owned specific “ base properties ,” or private properties that the government deems qualified for public-land grazing privileges. Even today, grazing permits are tied to private properties , and they cannot be held by those who do not hold such qualifying properties.

This means that a grazing permit can have a significant effect on the value of a rancher’s property. When these properties are bought and sold — as most of them have at some point — 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. For instance, Cliven Bundy’s ranch in Nevada — the site of the high-profile standoff in 2014 — 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.

What’s more, in many ways public grazing permits function like a form of private property. They are bought and sold along with ranches. Banks collateralize loans on the basis of permit values. And the government even taxes the value of grazing permits in capital gains and estate taxes.

Pay to Graze

What about the grazing fees paid by ranchers? Some have claimed that ranchers receive large subsidies to graze livestock on public lands in the form of below-market grazing fees, which raises the question: Why would ranchers revolt against the same government that grants them such a big handout?

The reality, it turns out, is more complicated. It is true that ranchers pay very little to graze a livestock on federal lands (in 2016, only $2.11 per “animal unit month,” or the amount of forage it takes to feed one cow and one calf for a month). That is far less than what it costs to run livestock on state or private lands. But 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. This is not the case with private or state grazing leases.

In addition, grazing fees on public and private lands refer to very different things. When other factors are considered — such as the costs of building and maintaining fences, supplying water, and providing other infrastructure on public lands (which are often already included on private rangelands) — public-land grazing is not much cheaper for ranchers than private alternatives. In fact, it can even be more expensive in some cases.

Today, the BLM authorizes just half the amount of grazing it did in 1954.

There is, however, one group that gets a bad deal from public-land grazing: U.S. taxpayers. 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. And in our own study at PERC, we found 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. Ranchers have been gradually losing grazing privileges as federal land policies have shifted toward conservation and recreation

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