Amicus Curiae Brief — Public Lands Council v. Babbitt

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No. 98-1991 pes 8

IN THE SUPREME COURT

OF THE UNITED STATES

PUBLIC LANDS COUNCIL, ET AL.,

Petitioners,

Ay

BRUCE BABBITT, UNITED STATES

DEPARTMENT OF THE INTERIOR SECRETARY, ET AL.,

Respondents.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

BRIEF OF AMICI CURIAE FARM CREDIT

INSTITUTIONS IN SUPPORT OF PETITIONERS

WILLIAM G. MYERs III MARCY G. GLENN

Counsel of Record Holland & Hart up

Holland & Hart ixp Suite 3200

Suite 1400 555 Seventeenth St.

101 South Capitol Bivd. Denver, CO 8020]

Boise, ID 83701-2527 (303) 295-8000

(208) 342-5000

Counsel for Amici Curiae Farm Credit Institutions

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TABLE OF CONTENTS

TABLE OF AUTHORITIES

STATEMENT OF INTEREST

SUMMARY OF ARGUMENT

TABLE OF AUTHORITIES

FEDERAL CASES

Amoco Production Co. v. Southern Ute Indian Tribe,

119 &. *}e. 1729 CRODPP. ....000ccccvcedecensnneueunasnmeeeneae y

Leo Sheep Co. v. United States,

440 U.S. 666 (1DFD) .......ccsecscsreccsscssncssecuneeeaeeenne 9

Oman v. United States, 179 F.2d 738

(1@tha Cie. 2DODD ....00ccccccccccssccesscecesesnensnnnsennennnnnannnnnn 6

FEDERAL STATUTES AND REGULATIONS

12 U.S.C. § 2OO2(a) ......00000s0rccsseeccccsssessesenensennennnnnnnnannnnns 10

12 U.8.C. § ZOCRGa) .....000000sc00ccessecsesesssensanecanenseenannnnnnnnnn 2

12 U.8.C. § ZBGI ...0000s0000ensesecccessesecsunensnneinninnnnnnnnnnnnnEEEE 2

43 VU.B.C. 8 BES ...0000.0cccccecesscecscacessonsennnnseenennnnannn passim

43 U.B.C. § S1SG..........000c0rsccccccsecesencesensensnneninnnnnnnnnnnnnEE 6

43 U.3.C. § SESW ..0.006000000000see0sereseensesssnnenenennneennnnnnnnn 5, 10

40 Bont. 1DGD ..s.cocessessoscssmmenmnn recsecesasassessvinesensinnnnannanannanl 6

43 C.P.R. § 4100.0-5 (1996) .......cccsoservcsssorsconesesesconssonsnenenns 4

MISCELLANEOUS

60 FED. REG. 9928 (1995) ........c.sccccccscccvecconrescsnsesssrssssesnesses 7

78 CONG. RBC. $371 (19346).......cccccsccccoscseessnssonsscsessnsnssnnen 8,9

STATEMENT OF INTEREST

With the written consent of the parties, reflected

in letters on file with the Clerk, the following farm credit

institutions (collectively, the “Farm Credit Institutions”)

submit this brief as amici curiae in support of

Petitioners Public Lands Council and _ others

(collectively, the “Public Lands Council”):'

INTERMOUNTAIN FEDERAL LAND BANK ASSOCIATION,

FLCA

INTERMOUNTAIN PRODUCTION CREDIT ASSOCIATION

SACRAMENTO VALLEY AGRICULTURAL CREDIT

ASSOCIATION

SIERRA-BAY FEDERAL LAND BANK ASSOCIATION, FLCA

SIERRA-BAY PRODUCTION CREDIT ASSOCIATION

FEDERAL LAND BANK ASSOCIATION OF UTAH, FLCA

UTAH PRODUCTION CREDIT ASSOCIATION

YOSEMITE FEDERAL LAND BANK ASSOCIATION, FLCA

VALLEY FEDERAL LAND BANK ASSOCIATION, FLCA

VALLEY PRODUCTION CREDIT ASSOCIATION

HAWAII FEDERAL LAND BANK ASSOCIATION, FLCA

- HAWAII PRODUCTION CREDIT ASSOCIATION

CENTRAL COAST FEDERAL LAND BANK ASSOCIATION,

FLCA

CENTRAL COAST PRODUCTION CREDIT ASSOCIATION

No counsel for a party authored this brief in

whole or in part. No person or entity, other than the amici

curiae and their members, made a monetary contribution to

the preparation or submission of this brief.

NORTHERN CALIFORNIA FEDERAL LAND BANK

ASSOCIATION, FLCA

NORTHERN CALIFORNIA PRODUCTION CREDIT

ASSOCIATION

FARM CREDIT SERVICES-SOUTHWEST, ACA

FARM CREDIT SERVICES OF SOUTHERN CALIFORNIA,

ACA

NORTHWEST FARM CREDIT SERVICES, ACA

EASTERN IDAHO AGRICULTURAL CREDIT ASSOCIATION

AGAMERICA, FCB

WESTERN FARM CREDIT BANK

NINTH FARM CREDIT DISTRICT

FARM CREDIT BANK OF TEXAS

PRODUCTION CREDIT ASSOCIATION OF NEW MEXICO

Amici curiae Farm Credit Institutions are

twenty-five federal land bank associations, production

credit associations, farm credit banks, and agricultural

credit associations that comprise part of the Farm Credit

System of the United States and are chartered by the

Farm Credit Administration, an independent agency in

the executive branch of the federal government. See 12

U.S.C. § 2002(a); id. § 2241. Together they serve all or

a portion of fourteen western states, having 12,000 loans

outstanding to livestock producers with a value totaling

approximately $1.7 billion. A significant number of

those loans are to federal land ranchers.

For the past sixty-five years, Congress has

mandated the stabilization of the federal lands livestock

industry. For the past sixty-one years, the Farm Credit

Institutions and their predecessors have worked with

Respondents and their predecessors to comply with

2

congressional mandates by adequately safeguarding

grazing privileges for ranchers who utilize federal lands

as an integral part of their livestock operations on some

170 million acres under the jurisdiction of the Secretary

of the Interior.

That sixty-one year record of interagency

cooperation is founded upon a 1938 agreement between

the agencies. App. la-8a’ The Farm Credit Institutions’

long-term lending policies are still based upon this

agreement. The agreement, six decades of its

implementation, and today’s lending policies are gravely

threatened by the Secretary of the Interior’s violation in

1995 of both the letter and spirit of laws designed to

safeguard grazing privileges and stabilize the industry.

This brief opposes the judgment below as it relates to

the permitted use regulation.’

SUMMARY OF ARGUMENT

In 1995, Respondent United States Department of

the Interior Secretary Bruce Babbitt (the “Secretary”)

issued regulations that dramatically altered an

entrenched and sound principle of federal management

: Citations to “App.” refer to the Farm Credit

Institutions’ appendix, which is bound with this brief.

Citations to “Pet. App.” refer to the appendix that

accompanied the petition for a writ of certiorari in this

docket.

' The Farm Credit Institutions concur with the

Public Lands Council’s appeal of two other issues in the

judgment below: namely, title to structural range

improvements, and issuance of grazing permits to persons not

engaged in the livestock business. However, the Farm Credit

Institutions limit their argument as amici curiae to the

Secretary's unlawful elimination of the grazing preference.

of public lands: the “grazing preference.” Until the

Secretary’s action in 1995, the grazing preference

defined the maximum amount of forage available to

Bureau of Land Management permittees or lessees based

on animal unit months (“AUMs”)‘ which’ were

“apportioned and attached” to the property owned by

the permittee that was to serve as the base of the

livestock operation. This maximum amount of forage

had been historically adjudicated after the passage of the

Taylor Grazing Act, 43 U.S.C. §§ 315, ef seg. (the

“Act”), in 1934.

Under the 1995 regulations, the term “grazing

preference” was redefined to mean simply a superior

position against others for the purpose of receiving a

grazing permit or lease. The Secretary relegated the

allocation of forage to a newly-added term, “permitted

use,” which tied the available forage to applicable land

use plans rather than to the historical adjudication of

grazing levels under the Act.

By defining the maximum forage allocation out of

the grazing preference, severing the historical tie of

AUMs to the Department of the Interior’s original

adjudication of preference, and apportioning the AUMs

to land use plans rather than base property, the

Secretary breached his fundamental duty under the Act

to adequately safeguard recognized and acknowledged

grazing privileges.

Despite the district court’s ruling that the

Secretary violated the Act, a divided panel of the Tenth

, An “animal unit month” means the amount of

federal land forage necessary to sustain one cow or its

equivalent for one month. See 43 C.F.R. § 4100.0-5 (1998).

4

Circuit reversed the district court’s invalidation of the

1995 regulations’ permitted use rule. The Farm Credit

Institutions urge this Court to reverse the judgment

below in order to assure the Secretary's compliance with

the Taylor Grazing Act and thereby stabilize both the

federal lands livestock industry and agricultural lenders

like the Farm Credit Institutions.

ARGUMENT

1. THE SECRETARY VIOLATED THE TAYLOR

GRAZING ACT BY FAILING TO ADEQUATELY

SAFEGUARD GRAZING PRIVILEGES

The Secretary’s grazing preference and permitted

use regulations affect every permittee and lessee under

his jurisdiction. As Judge Tacha noted in her dissent

from the judgment below, the permitted use rule ends

recognition of the grazing preference “across the board,

for all permittees, without reference either to their

individual circumstances or to the condition of the land

covered by their permits.” Pet. App. 62a.

The question, then, is whether the Secretary’s

effective elimination of the historically-based maximum

forage allocations from the grazing preference conflicts

with the requirement of the Taylor Grazing Act that he

safeguard grazing privileges. In arguments before the

Tenth Circuit panel, the Secretary acknowledged his

duty under Section 3 of the Act, 43 U.S.C. § 315b. Yet,

in truth, the Secretary did not adequately safeguard

grazing privileges and thus violated the Act and

undermined the stability of the industry.

As Judge Tacha stated:

Gone is recognition of the underlying

adjudication in which the Secretary made a

determination that, vis-a-vis other

applicants, the permittee was a member of a

priority group entitled to graze up to a

maximum amount of forage on a particular

allotment, and to which the Secretary

previously always referred in renewing

grazing permits.

Pet. App. 62a. Judge Tacha is correct. The Farm Credit

Institutions explain below the serious consequences of

the majority’s opinion.

Il. THE SECRETARY’S VIOLATION OF THE ACT’S

REQUIREMENT THAT HE ADEQUATELY

SAFEGUARD GRAZING PRIVILEGES

DESTABILIZES THE LIVESTOCK INDUSTRY AND

THE FARM CREDIT SYSTEM

Not only has the Secretary violated the letter of

the Taylor Grazing Act, he also has violated its spirit.

Section 2 of the Act requires the Secretary to “do any

and all things necessary to accomplish the purposes of

this Act....” 43 U.S.C. §315a; see also Oman v.

United States, 179 F.2d 738, 742 (10th Cir. 1949)

(Secretary has “an affirmative obligation to adequately

safeguard” ranchers’ grazing privileges). One of the

three enunciated purposes of the Act is stabilization of

the livestock industry. See Taylor Grazing Act

Preamble, 48 Stat. 1269 (uncodified), cited in Pet. App.

54a.

The majority considers industry stability to be a

secondary goal of the Act. Pet. App. 24a n.5. The

6

majority suggests that the Public Lands Council

represents only a small part of the national livestock

industry, even in the West. /d. These assumptions rest

on wholesale adoption of the Secretary's opinion that his

rules on permitted use would not decrease financial

Stability for grazing operations under his jurisdiction.

See 60 FED. REG. 9928 (1995) The Secretary reiterated

his position most recently in his brief in opposition to

the Public Lands Council’s petition for a writ of

certiorari in this case. See Opp. 14 (“The rules thus

should not adversely affect the stability of the livestock

or lending industries;”), 16 (“The issuance of the

amended rules thus should have no effect on the

predictability of grazing on public rangelands or

‘financial stability’ (Pet. 18) in livestock operations

(including policies affecting lending to grazing

permittees).”).

In fact, contrary to the Secretary’s opinion, the

change in rules affecting vested, adjudicated grazing

preference will seriously destabilize a very important

segment of the livestock industry. As Judge Tacha

understood, before the Secretary’s pronouncements in

his 1995 regulations, the grazing preference fulfilled the

requirements of the Taylor Grazing Act by stabilizing the

industry and promoting the orderly use of the range. It

did this by guaranteeing permittees the right to graze a

maximum amount of forage subject to yearly fluctuation

depending on actual forage availability. The preference

remained in, place, not only during the ten-year term of

the typical permit, but also from permit to permit.

Like Judge Tacha, the district court condemned

the Secretary’s action as a violation of his duty under

the Taylor Grazing Act:

With a mere stroke of his pen, the

Secretary has boldly and blithely wrested

away from Western ranchers the very

certainty, the definitiveness of range rights,

and the necessary security of preference

rights that their livestock operations require.

Congress gave Western ranchers these rights

by enacting the Taylor Grazing Act, and

many decades of satisfactory operations and

the course of case by case adjudications

have confirmed these rights. The Court

cannot ignore the Secretary’s disregard of

his congressionally imposed duty; it must be

stopped before it wreaks havoc with the

ranching industry that Congress has tried to

preserve.

Pet. App. 79a-80a. The district court further recognized

the importance of the historical grazing preference to

both ranchers as borrowers and to lenders such as the

Farm Credit Institutions and heid, “[bJank loans are

often based on carrying capacity. A permittee without a

definite and certain grazing preference may be unable to

obtain necessary financing and be forced out of the

livestock industry.” Pet. App. 79a, (citing 78 CONG.

REC. 5371 (1934) (congressional debate before passage

of the Taylor Grazing Act)).

The legislative history of the Taylor Grazing Act

directly refutes the panel majority’s suggestion that

stabilization of the industry was merely a secondary

purpose of the Act. In fact, stabilization of the livestock

industry was of paramount concern to Congress at the

time of the Taylor Grazing Act and the establishment of

the grazing preference. While the conditions of the

West in 1934 may have differed from this Secretary's

desire for future conditions, public lands statutes must

be interpreted in light of the condition of the country

when the acts were passed and their purposes declared.

See Amoco Production Co. v. Southern Ute Indian

iribe, 119 S. Ct. 1719, 1725 (1999) (citing Leo Sheep

Co. v. United States, 440 U.S. 668, 682 (1979)).

Industry stabilization was a central purpose of the

legislation as stated in its title: “To stop injury to the

public grazing lands by preventing overgrazing and soil

deterioration, to provide for their orderly use,

improvement, and development, fo stabilize the livestock

industry dependent upon the public range, and for other

purposes.” See 78 CONG. REC. 5371 (1934) (emphasis

added).

Congressman Taylor of Colorado, after whom the

bill would be named, quoted this title to the bill and

remarked that “[aJll three of those purposes are of the

greatest and highest possible importance... .” Jd. He

argued that without assurance of the amount of forage

available, ranchers “would not be safe; they would have

no credit with the banks for securing money... .” Jd.

Senator Adams, also of Colorado, commented during

debate on the bill that the then-existing lack of assurance

and certainty as to grazing land and forage had

interfered with the rancher “in many ways, among others

with his capacity to borrow money, because, lacking the

assurance of feed for his animals, it has been more

difficult to procure necessary loans.” Jd. at 11,140.

Congress was not content to express the

importance of long-term tenure, as captured by the

grazing preference, in the title and purposes of the bill.

It safeguarded preference from administrative

termination in Section 3 of the Act by mandating that,

“no permittee complying with the rules and regulations

9

laid down by the Secretary of the Interior shall be denied

the renewal of such permit, if such denial will impair the

value of the grazing unit of the permittee, when such

unit is pledged as security for any bona fide loan.” 43

U.S.C. § 315b.

Sixty-five years after passage of the Taylor

Grazing Act, the Farm Credit Institutions continue to

rely upon ranchers’ long-term access to the grazing

preference when considering loans and accepting

security for those loans. The Secretary’s duty to

adequately safeguard ranchers’ historical maximum

forage allocations under the grazing preference works

hand in hand with the policies underlying the Farm

Credit System, which the Farm Credit Institutions must

implement:

It is declared to be the policy of the

Congress, recognizing that a prosperous,

productive agriculture is essential to a free

nation and recognizing the growing need for

credit in rural areas, that the farmer-owned

cooperative Farm Credit System be designed

to accomplish the objective of improving the

income and well-being of American farmers

and ranchers by furnishing sound, adequate,

and constructive credit... .

12 U.S.C. § 2001(a).

The importance of this issue to the Farm Credit

Institutions is reflected in the history of their

relationship with the Department of the Interior, their

comments during rulemaking, and their current lending

practices. Institutions under the authority of the Farm

Credit Administration recognized from the outset the

importance that long-term grazing preference would play

10

in their ability to provide loans to and obtain security

from federal land ranchers. Four years after passage of

the Act, the acting Governor of the Farm Credit

Administration wrote to the acting Secretary of the

Interior:

[I]t is our feeling that a definition of policy

and an agreement on _ procedure,

coordinating the activities of the two

Organizations, are necessary in order to

carry out more fully the intent of Congress

pertaining to our respective fields of

activity. In this connection, representatives

of the Farm Credit Administration have

carried on discussions during the past few

weeks with ... your office, as to the

method of setting up the safeguards, implied

and provided under the Taylor Grazing Act,

for the protection of a lending agency of the

Farm Credit Administration holding a

mortgage on the base property of a

permittee or lessee as security for a loan.

App. la. That correspondence incorporated a

memorandum of understanding between the Department

of the Interior and the Farm Credit Administration

regarding the need to safeguard the grazing privileges

and preferences of federal land ranchers and thereby

safeguard the federal land banks as well. /d. at 7a.

The Secretary prepared a Final Environmental

Impact Statement as part of the 1994-1995 rulemaking

process, a portion of which addressed comments

submitted by lending institutions. For example, the

Federal Land Bank Association of Southern Colorado

and the Farm Credit Services of New Mexico described

more than 500 loans totaling about $90 million to public

11

land cattle ranchers.” App. 12a. Those lending

institutions commented that the ranches would not

remain viable without the use of federal lands and that

the regulations would force ranchers out of business,

devastating ranchers and lenders alike. /d.

If the opinion of the court of appeals panel is not

reversed, and the Secretary is allowed to undertake a

wholesale revision of historical forage allocations, the

Farm Credit Institutions fear that the devastation they

predicted will come true. The financial health of the

amici curiae relates directly to the financial health of

their borrowers. Loss of the historical grazing

preference will immediately devalue federal land ranches.

As ranchers default on or fail to qualify for loans, the

Farm Credit Institutions’ financial stability will suffer as

well. This, in turn, will impact a// farmers’ and

ranchers’ ability to obtain credit at competitive rates.

In sum, the Secretary’s abdication of his

paramount duty to adequately safeguard grazing

privileges will not only harm the ranchers, it will make it

. In 1998, amicus curiae Federal Land Bank

Association of Utah, FLCA serviced 233 loans totaling over

$30 million, forty-seven percent of which relied on ranchers’

access to public lands for at least some of their annual

grazing needs. Fifty-nine percent of the loans of amicus

curiae Utah Production Credit Association, totaling over $25

million, were to ranchers who rely on federal lands for some

of their annual grazing needs. In a letter dated October 21,

1998, to Counsel of Record for the Farm Credit Institutions,

the Chief Credit Officer for these associations stated plainly:

“If the ranchers are unable to demonstrate that they have a

high probability of continued access to these resources, their

ability to obtain financing could be severely restricted.”

App. 10a.

12

virtually impossible for the Farm Credit Institutions to

do their congressionally-defined job of providing

“sound, adequate, and constructive credit” to ranchers

dependent on public lands.

CONCLUSION

Congressman Taylor stated during debate on the

Taylor Grazing Act that stabilization of the federal land

livestock industry was of the greatest and highest

possible importance. Congress declared with the

passage of the Farm Credit Act that a prosperous,

productive agricultural sector is essential to a free

nation. For sixty-one years, the Farm Credit Institutions

and their predecessors worked with the Department of

the Interior to comply with the Taylor Grazing Act by

adequately safeguarding grazing privileges recognized

and acknowledged as the grazing preference and thereby

stabilizing the industry. That symbiotic relationship

ended abruptly in 1995 with the Secretary’s regulatory

assault on the grazing preference.

The Farm Credit Institutions objected then and

object now to this violation of both the letter and the

spirit of a law designed to safeguard grazing privileges

and to stabilize the industry. They agree with the

district court that the Secretary’s disregard of his

congressionally imposed duty must be stopped because it

is wreaking havoc with both the ranching industry that

Congress has tried to preserve and the lending

institutions that Congress established to help the

industry prosper.

13

rserrrereeenneeereeerererreceaaccsassccsaacccaacacaaasasscasaassccaccccscs——aP_ppepp p——:

For all the foregoing reasons, this Court should

reverse the judgment of the United States Court of

Appeals for the Tenth Circuit.

Respectfully submitted,

WILLIAM G. MYERs III

Counsel of Record

Holland & Hart LLP

Suite 1400

101 S. Capitol Blvd.

Boise, ID 83701-2527

(208) 342-5000

MARCY G. GLENN

Holland & Hart LLP

Suite 3200

555 Seventeenth St.

Denver, CO 8020]

(303) 295-8000

December 3, 1999

14

June 7, 1938

Hon. E. K. Burlew,

Acting Secretary of the Interior.

Dear Mr. Burlew:

Reference is made to the provision of the Federal

Farm Loan Act, as amended, relating to the availability

of grazing privileges on public lands for the period of a

loan if the base property securing the loan depends upon

the reasonable assurance of continued use of such public

lands to maintain its income at the level upon which the

loan is based. While it seems that the general provisions

of the Taylor Grazing Act imply “reasonable assurance”

of continued use by permittees and lessees, subject, of

course, to compliance with the rules and regulations, it

is our feeling that a definition of policy and an agree-

ment on procedure, coordinating the activities of the two

organizations, are necessary in order to carry out more

fully the intent of Congress pertaining to our respective

fields of activity. In this connection, representatives of

the Farm Credit Administration have carried on discus-

sions during the past few weeks with Messrs. Carpenter,

Terrett and Havell, of your office, as to the method of

setting up the safeguards, implied and provided under

the Taylor Grazing Act, for the protection of a lending

agency of the Farm Credit Administration holding a

la

mortgage on the base property of a permittee or lessee

as security for a loan.

The cooperation on the part of the representatives

of your office in the consideration of the problems aris-

ing in connection with the matter is greatly appreciated.

It was fully understood by the representatives of this

office that, while the grazing privileges should be ade-

quately safeguarded, no right, title, interest, or estate in

or to the public lands shall be created as a result thereof,

nor shall the authority or responsibility of the Secretary

of the Interior be limited or restricted in connection with

the proper administration for the protection of the public

lands within or without grazing districts.

It is felt that circular W-129 (dated May 24,

1938), recognizing the right of mortgagees, under the

circumstances stated, to file applications before June 28,

1938, for land and water classification, and designating

the manner for notifying the regional grazier of a

lender’s interest in a permittee’s or licensee’s base

property, covers satisfactorily those aspects of the

matter which were of immediate concern. It is the

consensus of the conferees that a confirmation of (a) the

steps that should be taken by a lending agency, and

(b) our understanding of the safeguards flowing from the

administration of the public lands within and without the

boundaries of a grazing district, will adequately cover

the points which this office regards as necessary to meet

the “reasonable assurance” requirement, and at the same

time not be in conflict with the provisions of the Taylor

Grazing Act regulating the proper administration of the

public lands.

The points discussed, the action to be taken and

the procedure to be followed respectively by the lending

agency, the Division of Grazing, and the General Land

2a

Office, together with our understanding of the effect

thereof, as they relate to (1) the Division of Grazing and

the General Land Office jointly; (II) the Division of

Grazing only; and (III) the General Land Office only, are

set forth in the above order as follows:

I. (1)Before a loan is made to a permittee or

lessee holding a grazing privilege on the

public lands, the lending agency shall be

able to ascertain definitely from the

Regional Grazier or the General Land

Office the status of the grazing privilege

and the degree, if any, to which the graz-

ing privilege may be involved. The

Regional Grazier will be instructed to

State specifically, upon written request,

also the status of the grazing privilege

with respect to each class of property

constituting the permittee’s base. Similar

pertinent information with respect to

grazing leases shall, likewise, upon

request, be furnished by the General Land

Office.

(2)Where a production credit association

holds a mortgage on the livestock and the

land bank holds a mortgage on the real

estate of the same party (including

assignment of leases where such consti-

tute part of his base property), the Divi-

sion of Grazing and the General Land

Office will regard the units of the Farm

Credit Administration as one agency,

when necessary for the protection of the

Federal interests.

: a Il. (6)If a state files an application for an

(3)In case any base property with grazing | exchange of lands under the provision of

privileges is acquired by any agency of the

Farm Credit Administration through fore-

closure or otherwise, such agency or its

tenant thereon, if qualified, shall be

recognized in lieu of the original permit-

tee or lessee, by assignment or otherwise.

(4) Where a lending agency of the Farm

Credit Administration acquires a base

property with a grazing privilege on the

public lands, and sells such property, the

grantee, if qualified, shall succeed to all

the rights and privileges and upon appli-

cation shall be accorded the status of any

eligible permittee or lessee, subject, how-

ever, to the rules and regulations applying

to permittees or lessees generally. If, in

making such sale, the lending agency car-

ries back a mortgage on the property, it

shall be entitled, as mortgagee, to the

same consideration as in the case of an

original loan.

(5) In the case of an application for exchange

of privately-owned lands for public lands

on which a borrower of any lending

agency of the Farm Credit Administration

holds a permit or lease, it is recognized

that it may not be in the public interest,

except in unusual circumstances, to make

such an exchange unless the permittee s

or lessee’s grazing privilege and the

lending agency’s interest can be otherwise

adequately safeguarded.

4a

section 8 of the Act, the Division of

Grazing shall cooperate with the lending

agency, whose security may be adversely

affected through such exchange, by:

(a) Notifying it in order that a protect

may be filed, or negotiations under-

taken with the state making the

selection; or

(b) Issuing an in lieu permit on the lands

received in exchange, if conveniently

accessible to the permittee; or

(c) Issuing an in lieu permit on adjacent

grazing district lands for the number

of livestock lost through the

exchange of lands, if the grazing

capacity of such adjacent lands will

permit and the privileges of other

permittees will not be prejudiced

thereby; or

(d) Bringing about a shift, if feasible and

practicable, among the permittees to

the end that those more conveniently

Situated to the lands received in

exchange may use them instead,

thereby providing for the permittee

who may have been adversely

affected by the exchange.

III. (7) Before a loan is made to a lessee or an

existing loan to a lessee reamortized by an

agency of the Farm Credit Administration,

Sa

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if such agency confers with the General

Land Office regarding the status of the

lesses [sic] and, if the records of the

General Land Office justify such action,

upon the request of the borrower-lessee,

the General Land Office, with depart-

mental approval, will extend the lease for

a period of ten years from the date of the

loan, provided that:

(a) There is no pending application by a

state for an exchange under authority

of said section 8 involving the public

lands upon which the lease is held;

and

(b) After five years from the date of any

extension, and if no state application

under said section 8 for exchange is

pending, the borrower-lessee may,

subject to compliance with the terms

of the lease, have the existing lease

extended for a period of ten years.

In the event of acquirement of the

base property, the mortgagee lending

agency, through its tenant, may con-

tinue to use the lease under assign-

ment from the original lessee subject

to the approval of the Secretary of

the Interior.

While the Federal Farm Loan Act permits real

estate loans for a maximum period of forty years, we

have felt it desirable to limit real estate loans to live-

stockmen to not more than twenty years, especially

where they depend upon the use of Federal lands for part

of the year to round out the operation.

6a

The Division of Grazing and the General Land

Office have indicated that it would be helpful to have a

confidential statement from the lending agencies of the

Farm Credit Administration showing the number and

kind of livestock using the public domain under permit

or lease, where known, upon which a lien is held as

security for a loan. The necessary steps will be taken to

have this information furnished in accordance with the

wishes of these two agencies.

It is our understanding that the foregoing safe-

guards apply to existing as well as future loans coming

within the category defined herein.

If the definition of “non-use” in the rules and

regulations now being promulgated, covering the public

lands within the boundaries of a grazing district, shall

have reference to other than the period for which pay-

ment of the fees may not be made, we would like an

opportunity to discuss its application. If a loss of graz-

ing privilege may result because of the failure actually to

use the public domain for a specified period, it would be

essential that the regulation in this particular be applica-

ble to agencies of this Administration only after title to

and control over the base property has been acquired

through foreclosure or otherwise.

If the procedure to be followed is approved, and

our understanding regarding the foregoing aspects is

confirmed by you, it is felt that the interests of the lend-

ing agencies of this Administration (especially the Fed-

eral land banks and the Federal Farm Mortgage Corpo-

ration) will be safeguarded to such an extent that the

legal requirements of our Act will be met. Since there

are several pending inquiries regarding our lending

policy where permittees or lessees on the public lands, as

7a

Farm Credit Services of Utah 408 W. South Jordan

referred to in the Taylor Grazing Act, are the applicants, Utah Production Credit Parkway (10600 South)

we will appreciate your early consideration and reply. Association Suite 500

Federal Land Bank P.O. Box 870

Sincerely,

Association of Utah, FLCA Riverton, Utah 84085-0600

F. F. Hill

Acting Governor. October 21, 1998

, Mr. Bill Myers

COPY :BHoffman:2/5/54 Holland & Hart

FAX (208)343-8869

Dear Mr. Myers:

Frank Bishop had requested that I send you some

information on the volume of livestock loans in the Utah

Associations and the dependence on public grazing.

Sorry it took a day longer than I had expected to get this

together, but I wanted to make sure that it is accurate.

The Federal Land Bank Association of Utah,

FLCA has 233 loans for $30,674,781 to range cattle and

range sheep operations. Of those loans 110 (47%) rely

on Public Lands for at least some of their annual grazing

needs. Those 110 loans make up $21,301,635, or 69%

of our total volume to these livestock producers. Within

those 110 loans are 24 loans for $8,036,018 to ranchers

who rely on Public Lands for over fifty percent (50%) of

their annual carrying capacity.

The Utah Production Credit Association has 226

loans for $30,296,544 to range cattle and range sheep

operations. Of those loans 133 (59%) rely on Public

Lands for at least some of their annual grazing needs.

Those 133 loans make up $25,132,485, or 83% of our

total volume to these livestock producers. Within those

9a

133 loans are 29 loans for $10,662,281 to ranchers who

rely on Public Lands for over fifty percent (50%) of their

annual carrying capacity.

It is quite evident that the ranching industry

financed by the Federal Land Bank Association (FLBA)

and the Production Credit Association (PCA) is heavily

dependent on continued access to the Public Lands for

livestock grazing under reasonable terms. If the

ranchers are unable to demonstrate that they have a high

probability of continued access to these resources, their

ability to obtain financing could be severely restricted.

Some of the above loans include the grazing per-

mits as part of the collateral for the loans. The FLBA

has a lien on grazing permits to secure 28 loans with a

total value of the grazing rights of over $6,200,000.

The PCA has liens on grazing permits to secure 9 loans

with a total value in excess of $1,600,000 If the

renewal preference were eliminated, the value of those

permits would likely be reduced to zero. This would

significantly reduce the amount of collateral these bor-

rowers, and others who utilize Public Lands grazing,

would have available to pledge to a lender when they

apply for financing.

We believe that that [sic] above statistics are

representative of most lenders [sic] livestock portfolios.

Farm Credit is the largest single agricultural lender in

the state of Utah.

10a

Fal

‘

If you need any further explanation of these num-

bers, or if there is anything else I can provide, please let

me know.

Sincerely,

LaMar Barrington

Chief Credit Officer

lla

RANGELAND REFORM ‘94

Final Environmental Impact Statement

Prepared by

THE DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

IN COOPERATION WITH

THE DEPARTMENT OF AGRICULTURE

FOREST SERVICE

Comment: The Federal Land Banks Association

of Southern Colorado and the Farm Credit Serv-

ices of New Mexico (FLBA) have more than 500

loans, totaling about $90 million, to public lands

cattle ranches. Most of these ranches could not

remain viable without the use of federal lands. As

a lender, we must conclude that forcing many of

these ranches out of business would not only be

devastating for them but also for us, as financial

institutions, and to the communities of the rural

West. ;

p

12a