# Amicus Curiae Brief — Public Lands Council v. Babbitt

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0283%3A17

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2000
- **Citation:** 529 U.S. 728

## Text

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0283%3A17. Public record. Not legal advice.