Cow Punchers

In April, the state auditor general released a report saying that the State Land Department was asleep on the job, allowing ranchers to renew grazing leases without putting them out to competitive bid, and virtually giving away northeast Phoenix and north Scottsdale to developers.

Then, in late July, Superior Court Judge Michael Dann ruled that because of the department's cozy relationship with the ranchers, it is not living up to its mission of maximizing the financial return from state trust lands and, therefore, is letting down Arizona's schoolchildren, who are supposed to benefit from money the trust land generates.

Two days later, a group of environmentalists applied to the department for grazing leases for "unranching," that is, to fence cows off the land and let it recuperate. Ranchers fretted, and the State Land Department stonewalled, saying that if the environmentalists don't graze, they can't have a grazing lease.

"It's an example of how you just can't win with the land department," says Tim Hogan, the attorney for the Arizona Center for Law in the Public Interest who brought the suit against the department on behalf of Arizona schoolchildren. "The machinery has been carefully designed to support the ranching industry."

Hogan also expects to represent Forest Guardians, the environmental group seeking the grazing leases, which has promised to sue.

For several years, environmental groups and public advocates such as the Center for Law in the Public Interest, Forest Guardians and the Southwest Center for Biological Diversity, among others, have used the legal system to exert control over public lands and natural resources and the government agencies--state and federal--that have traditionally managed them on behalf of logging and ranching.

Increasingly, they are also attacking in the marketplace. For two years, the Southwest Center and Forest Guardians have held a stranglehold on the timber industry through federal court injunctions against logging--a dispute that last week was turned away from the U.S. Supreme Court. The center also has been trying for two years to buy timber sales in the national forests for the purpose of not cutting trees. It has received the same cold stares as the would-be "unranchers," an unofficial "I don't think so," while the agency heads try to figure a way out of a no-win predicament. Meanwhile, as the environmentalists threaten and the agencies stonewall, the rank-and-file ranchers and loggers watch their livelihoods turn into nostalgic memories of Americana.

"Rather than try to plead with the ranchers and the agencies about wildlife and environmental values that are difficult to quantify, [the environmentalists] are going right to the heart of the matter and trying to talk in terms more familiar to them, which is, 'Here's how much money we'll pay,'" says Rob Smith of the Sierra Club.

It's not so much that the environmentalists are trying to eliminate ranching and logging altogether. But those industries get such preferential treatment when it comes to regulation that they're practically subsidized by the state. Yet conservative Republicans, who often espouse privatization of government services, from prisons and fire departments to garbage collection and even toll roads, balk at even seriously discussing allowing a free market when it comes to grazing and logging. The environmentalists want to rock the boat to revamp the system.

"It's not just a free-market approach; it's recognition that a lot of our environmental problems have a real strong economic component," says Kieran Suckling of the Southwest Center for Biological Diversity in Tucson. "We've got an economic system designed to make money by destroying nature, whether it's timber sales or grazing allotments. A lot of groups, like ours, that traditionally did not deal with economics, are starting to look at ways to both expose and to take advantage of the economic system. Because the way it's set up now, they're just giving away trees and giving away grass to the ranchers and the loggers."

The grazing suit against the State Land Department was originally filed by Tim Hogan in April 1995, using the name of local activist Kay Jeffries, who has children in the Madison School District. Hogan notes that the Federal Enabling Act, which awarded the trust lands to the state, and the state constitution clearly state that grazing leases are not to exceed 10 years, after which they are supposed to be put up for bid on the open market. But only leaseholders are notified when a lease is about to expire and will be coming up for bid. There is no advertising, and the State Land Department has given such preference to leaseholders that, in 50 years, only once has a leaseholder been denied a renewal in the face of a competing bid. Hogan contends that this amounts to de facto long-term leases and a lack of competition that might bring higher prices for state land, which contradicts the department's mission of leasing or selling the land for the highest possible use to benefit the schools trust.

"Under the clear terms of the Federal Enabling Act, you've got to put them out to public auction," says Hogan.

Following the law, he continues, is simple. "One way to take care of this problem is to see that they're not long-term leases and thereby avoid public auction of every one of them. The way you do that is by making it a competitive system. You advertise, you take sealed bids. You don't let the preferences ensure automatic renewal, and you get a return off those subleases."

Last year the State Land Department collected $2.6 million for grazing on 8.45 million acres of state land, about 31 cents per acre--though that's not the way the department charges. Instead, ranchers are billed $2.09 per "animal unit month," a formula that takes into account the price of beef and the value of forage on the allotment. Arizona has one of the lowest grazing rates in the West, but in many parts of the state, the grass is so sparse that it can't sustain very many animals anyway.

The department also boasts that in fiscal year 1996, it paid out $63.5 million to the state's schools. But that's chump change given the actual cost of running schools across the state. The Phoenix Union High School District's budget for the 1996-97 school year was nearly $122 million, and the Paradise Valley Unified School District's budget for the same period was more than $132 million, for instance.

Last April, Judge Dann denied a motion for summary judgment from Hogan, saying that the plaintiffs had failed to demonstrate actual damages or loss to the schools trust.

But the very next day, the auditor general released his report.
By state law, every state department must undergo "sunset review" every 10 years to make sure that the state government should continue that department, and, by coincidence, 1997 was the year the State Land Department came up for review. The report concluded that the land department was worth keeping, but that it could operate a bit more intelligently.

The audit suggested the department could put grazing allotments up for bid when they expired, for example, and provide public notification of lease expiration so that other interested ranchers could bid on a property. And furthermore, the state could collect some revenues from the 105 allotments that had been subleased to other ranchers by the leaseholders; currently, ranchers are not required to pay surcharges on fees they collect for subleases.

The sunset audit also suggested that the State Land Department was either being royally hosed by developers or was willingly selling public trust land on the cheap. The report detailed that the department was selling large chunks of north Phoenix and north Scottsdale to developers for as little as $12,000 to $14,000 an acre with the understanding that the developers would then have to put $30,000 or so per acre into each lot for infrastructure improvements. The developers, however, were then selling the lots for $97,000 to $226,000 per acre.

Hogan filed papers asking the judge to reconsider his decision, and, on July 24, the judge changed his mind. Dann decided that the plaintiffs did not have to prove actual damages so long as they could show a "reasonable likelihood" of a breach of trust to obtain relief.

The department's turning down only one renewal in 50 years amounted to a "de facto system of long term leases," he wrote, and he ordered the two sides to reach agreement on a timetable for the department's compliance with the law.

The ranching-industry spin started immediately.
A packet of literature from the Arizona Cattle Growers' Association that was distributed at the group's annual convention worried that loss of grazing allotments in local communities would amount to a loss of revenues for the state, as well as lead to unemployment, vandalism, fires, loss of wildlife and "family upheaval."

In fact, the literature warned, if ranchers lose grazing allotments, the "increased stress may lead to divorce, alcoholism, physical abuse, loss of self esteem and other social problems which come from loss of one's self of security and livelihood."

The Cattle Growers' Association also provided a "sample press release to be used by school board members or parents," a document with fill-in-the-blank, your-name-here attributions on quotes. One read: "'I cannot compete with foreign billionaires whose oil money can now be used to displace my family's ranch operation,' said ________, a rancher from _______."

It climaxed with this paragraph: "The uncertainty and turmoil which will be created by this ruling cannot be overstated. Arizona will become the wild, wild west once again as chinese businessman, indian tribes and wealthy oil interests out bid Arizona's ranch families on State Lands. 'People who care about Arizona's children and the School Trust lands must call for a reversal of this ruling,' said _______, a parent of children in the _______ school district." [sic]

On September 17, the Natural Resources Committees of the state House and Senate held a hearing on the auditor general's findings on the State Land Department. The legislative reaction to the audit could have been predicted by the tone of a video that began the ceremonies, a rosy picture of how more and more environmentalists were finally realizing how beneficial grazing is for the environment.

State Senator Gus Arzberger of Willcox drawled into his microphone at the head table in the hearing room, "I don't think there was enough research done on this for the auditor general's report to be reliable."

He got a round of applause from all the folks in the room decked out in cowboy hats and boots and jeans, which constituted the majority (and stood in stark contrast to the developers with their loafers and cell phones) who had come to take its own shots at the young bureaucrat from the Auditor General's Office.

State Representative Franklin Flake of Snowflake noted that the report was so negative as to color a judge's opinion and "destroy the ranching industry as we know it."

The joint committees then voted to reject the auditor general's remarks on grazing and set up committees to decide what to do next. Then, the legislators slipped away so that by the time the more serious questions about development came up, there was no longer a quorum left to make decisions about anything else.

Ranchers at the hearing worried not only about losing their leases to competition. They also fear marauding environmentalists taking over those grazing allotments that contain water, consequently jeopardizing entire ranching operations.

In fact, the cattlemen may have reason to worry about such things. Two days after Judge Dann's July ruling, Forest Guardians, an environmental group headquartered in Santa Fe, New Mexico, applied for grazing leases on three riparian areas in Arizona. Western Gamebird Alliance, a sportsmen's group from Tucson, also applied for a grazing allotment.

John Horning of Forest Guardians sent three checks totaling more than $6,000 to the State Land Department as payment in advance for the three allotments he wanted to lease; that represented two to five times what the current allotment lessees are paying.

One allotment of 162 acres is on the Babocomari River near Elgin, southwest of Tucson. The current lessee is paying $50.16 per year in grazing fees; Horning offered $250.80. The second allotment comprises 520 acres on a creek leading to the Gila River in Greenlee County. The current rancher pays $132 per year; Horning offered $501.60. The third lease covers 5,000 acres on Cataract Creek in northern Arizona which is currently ranched by the Babbitt family. The Babbitts pay $2,151 per year; Horning offered $4,303.73.

But the department sent his checks back, saying that he should have sent only applications. Furthermore, he was told in the letter accompanying the returned checks that his applications were "subject to rejection because, pursuant to your applications, you do not intend to put the lands to the use for which they are classified."

As Robert Yount of the State Land Department explains, "The problem is that the grazing lease is specific to the grazing of animals, and if you have any other use, you have another classification."

Yount insists that Horning needs to apply for a commercial lease, and if the department agreed to reclassify the land as commercial, then that "higher use" would take preference over grazing.

Horning refused, because he had no commercial plans for the land; he just wanted to rest it.

Tim Hogan, who will represent Horning and Forest Guardians if need be, says, "They're trying to suck us into a path where they can dictate."

And Horning protests, "Here's an institution that's legally responsible for maximizing revenue and they don't even want to know how much money you're offering."

Yount remains unimpressed. "If their interest is pure and they want to preserve certain riparian areas, there is a way to do that, and we would have to deal with that on its merit," he says. "If they want to get into the newspaper and cause a lot of controversy, then they may want to try to do something else."

But they had already done that something else in New Mexico. Last year the New Mexico state land department awarded Forest Guardians a lease on a 550-acre tract on the Rio Puerco in northwestern New Mexico, apparently the first time a western environmental group has succeeded in doing so. This spring the group's members planted 4,000 willows and a few hundred cottonwoods on the property.

"Six months of no grazing and a little jump-start on the restoration and it already looks dramatically different than the upstream and downstream," Horning says.

But to date, the Arizona State Land Department is not interested.
"Thus far it's been an unofficial response," Horning says. "They say unless you're engaged in the livestock business, you're not a valid leaseholder of an agricultural lease.

"We're definitely going to court."
Southwestern environmental groups are also trying to pioneer free-market tactics in Arizona's national forests to purchase trees to keep them from being cut. But their dealings with the U.S. Forest Service are as strained as with the Arizona State Land Department.

"We ran into the same thing when we tried to bid on timber sales," says Kieran Suckling of the Southwest Center for Biological Diversity. "The first response was that only timber operators are allowed to bid on timber sales. We said, 'Hey, our money is as green as theirs.' They said, 'No, it's not.'"

The U.S. Forest Service sells trees in several ways. One is in timber sales, in which it marks specific green trees over a large area for cutting and then puts them out to bid to the logging companies. But the agency also issues permits to smaller operators to harvest firewood and Christmas trees and vigas (the beams of New Mexico-style houses).

In 1995, the Southwest Center bought a permit to cut vigas from a salvage sale, that is, in an area that had burned in the Chiricahua Mountains. Then it chose not to cut the trees. But since the group didn't log, the Forest Service issued another permit to someone else who did.

"They cashed our check for $4,000 and then resold [the trees] to other people to log," says Suckling.

Since then, the Southwest Center has joined forces with environmental groups in the Pacific Northwest to petition the U.S. Department of Agriculture, which oversees the Forest Service, to rewrite its rules to allow "unlogging" organizations to buy timber sales. The groups filed their petition in February.

On May 12, Peggy Hennessey, the Portland attorney representing the environmentalists, received a letter from James R. Lyons, the Agriculture Department's Under Secretary for Natural Resources and Environment, flatly stating that the department had no intention of changing the rules to accommodate her clients.

Then, curiously, four days later, signs emerged that there was disagreement on the issue within the Agriculture Department. Lyons issued a press release denying that he had written or even authorized the letter to Hennessey.

"This issue is currently under review by the Forest Service," the official statement read, "and a decision regarding the petition has not yet been rendered. I did not authorize the release of the subject letter, nor was its release cleared by my office."

Meanwhile, back on Arizona's ranches, it remains unclear what Judge Dann's decision and the legislators' refusal to accept the auditor general's report mean for the future of ranching in the state.

Shelly Blackmore and her husband Terry are ranchers from Hillside, and they'd traveled to Phoenix for the hearings on the auditor's report. They're good, decent folks trying to make a living at what they know best.

"Most of the people here are fighting for their livelihoods. If they open grazing leases to public bid, it'll wipe out ranching," Shelley says.

"We can barely survive now," her husband adds.
They don't see themselves as buying grass at discount rates. They see themselves as paying to take care of the land for the state. They're already struggling with market fluctuations, droughts and the high cost of fencing and equipment.

Those are business variables, however, not government expenses.
As Tim Hogan, the attorney who sued the land department over its grazing policies, says, "The rancher doesn't get put out of business so long as he's got an economically viable operation. We're not going to subsidize the operation."

The Legislature may think otherwise. And the environmentalists' promised lawsuit to acquire grazing leases will not likely be quick and easy.

"So often the state lands have hidden behind the excuse that we'd love to manage for recreation and wildlife, but gosh, we've got to maximize the return to the schoolchildren of Arizona," says the Sierra Club's Rob Smith. "Well, here they have a chance, and suddenly it's more complicated when you aren't one of the traditional voices.

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Michael Kiefer