Federal Grazing Permit Buyout Win All Aroundby Andy Kerr & Mark Salvo
Guest Opinion, Capital Press - December 14, 2001
Livestock grazing has caused more environmental damage than bulldozers and chainsaws. While most readers won't agree with this contention, we can probably agree that livestock grazing on federal public lands is increasingly controversial.
The environmental community is escalating its campaign against abusive public lands grazing, including litigation to enforce environmental protection standards. The Endangered Species Act is changing management on public lands. Livestock grazing is a factor in the decline of 22 percent of all species on the endangered species list. For comparison, species affected by mining and logging total 21 percent. ESA actions to protect the mountain plover, sage grouse, yellow-billed cuckoo and other species will dramatically affect grazing on public lands.
In addition to hard-core environmentalism, some environmental organizations known for their litigious nature are proposing through National Public Lands Grazing Campaign federal legislation to compensate public lands grazing permittees who relinquish their permit to the government.
We are lobbying Congress to compensate permittees at the rate of $175 per animal unit month. This is a generous offer since the average westwide market value of a federal AUM is $75. Environmentalists propose this price point to encourage permittee participation while still providing fantastic taxpayer savings.
Federal grazing costs taxpayers at least $500 million annually, or $26.64 for each of the 18,768,177 AUMs provided. While the federal permittee pays only $1.35/AUM, the average fees on Western state and private lands are $12.30 and $11.10, respectively. Even worse for the taxpayer, most of the $1.35/AUM isn't even deposited to the general treasury, but is ranked off to further subsidize livestock grazing.
The total value (the cost of the future obligation to taxpayers) of the federal grazing program is between $501 (official Office of Management and Budget 5.3 percent nominal interest rate) and $830 (OMB 3.2 percent real interest rate). Thus it's a great deal for taxpayers and ranchers to pay generously to relieve themselves of the ongoing financial obligation of the federal grazing program. A fixed price of $175/AUM, independent of market value, also avoids appraisal costs, which can eat up much of the money a permittee would receive.
Looking at the big picture, if every federal AUM were bought for $175, the total outlay by taxpayers would be $3.3 billion, while the net savings would be $5.5 billion (5.3 percent nominal interest) to $11 billion (3.2 percent real interest).
To enact a permit-buyout program, Congress will require political pressure not only from environmental organizations and taxpayer-watchdog groups, but from the public lands grazing industry, if not initially from trade associations, then from individual permittees who prefer to sell their permits.
Courts have found public land grazing is a privilege, not a right. Federal land agencies can revoke a permit without having to compensate the permittee. However, the IRS and real estate and loan markets recognize the permittees' financial interest in federal grazing permits. Environmentalists are proposing that federal land agencies acknowledge this financial interest, but only for the buyout.
Participation would be voluntary. A permittee can reject the offer and continue producing beef in a world of declining market share, chronically low prices, increasing foreign competition, increasing public land conflicts and other factors. A permittee who opted to sell could retire, pay off bank loans, acquire private land to continue their operation without the difficulties of public lands management and/or leave a cash legacy to heirs who don't intend to return to the ranch.
A federal grazing permit buyout program can be a win-win-win. It's good for the environment, public lands grazing permittees and taxpayers.
Permit Buyout proposal at www.publiclandsranching.org
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