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Potential for Public Land Transfers under the Trump Administration

May 31, 2017

The federal government owns or controls over 640 million acres of land in the United States. Approximately 92 percent of the federal lands are located in the twelve western states. Except for a few million acres that are managed by the Department of Defense, the federal landholding is managed primarily by four agencies; the U.S. Forest Service (USFS), the Bureau of Land Management (BLM), the National Park Service (NPS) and the U.S. Fish & Wildlife Service (FWS).  The extent of federal ownership varies by state, with Alaska having the largest federal landholding (223.8 million acres) and Nevada having the greatest degree of federal ownership (approximately 85 percent of all land.) 

In its 2016-17 platform statement, the Republican Party (GOP) called upon Congress to “immediately pass universal legislation providing for a timely and orderly mechanism requiring the federal government to convey certain federally controlled lands to states.” The GOP platform asks state and national leaders to exert their “utmost power and influence” to urge the transfer of federal lands to “all willing states for the benefit of the states and the nation as a whole.” On the first day of this Congressional session, the U.S. House of Representatives passed a new rule designed to facilitate the transfer of federal lands to states, local communities, and tribal entities.  The rule change eliminated a significant budgetary barrier to land transfer bills.1  Shortly after President Trump’s inauguration, Utah Republican Representative Jason Chaffetz introduced legislation that would have transferred 3.3 million acres of federal land in ten western states. Rep. Chaffetz promptly withdrew his legislation, facing significant protest and opposition from both his constituents and organized sportsman groups. In early March, Utah Representative Rob Bishop (Chairman of the House Committee on Natural Resources) wrote his colleagues stating, “it is time for a paradigm shift to our nation’s approach to federal land management” and called for a $50 million appropriation to facilitate the conveyance of federal lands to state, local, and tribal governments.

Statements by President Trump and Interior Secretary Ryan Zinke indicate the new administration may not be in-sync with either the Republican Congress or the GOP platform on the issue of federal land transfers. Both President Trump and Secretary Zinke have publicly indicated opposition to the transfer of public lands to the states.2  Recent actions taken by Secretary Ryan Zinke, suggest the administration may focus its efforts on legislative and regulatory reforms rather than the disposal of public lands. In an internal memorandum to the BLM acting Director, Secretary Zinke directed BLM to initiate rulemaking to identify redundancies and inefficiencies in current BLM land planning rules and to identify “inefficient processes” that should be eliminated.3 The Zinke memo directs BLM to coordinate federal land-use planning efforts with the states, reduce duplicative and disproportionate analysis and establish additional transparency in NEPA analysis.4  These recent executive actions raise questions as to whether the Trump administration is committed to supporting the GOP’s land transfer goals.

This article explores some of the current problems with federal land management and issues that will arise in connection with any proposal to transfer public lands to the states. An examination of the state land ownership model illustrates a variety of concepts that should be evaluated in connection with any future land transfer legislation.   

Issues with Federal Land Management

Beginning with the “Sagebrush Rebellion” in the 1970’s and 1980’s, opponents of federal land ownership and management have sought major changes to federal land use controls. Opponents contend that states and local governments can manage the public lands more efficiently and with greater responsiveness to local needs and interests. In general, they argue that the inefficiencies of the federal bureaucracy have created a land management system that is both economically wasteful and environmentally harmful. Federal land managers currently spend over $7 billion annually to manage lands designated by Congress for multiple use and sustained yield objectives.5  Records show the cost of federal land management far exceeds the revenues that are generated by user fees.6 Opponents of widespread Federal land ownership argue the current system deprives local governments of the industry and tax base necessary to fund local school systems, health care, police, fire and other necessary government services because Federal lands are exempt from state and local taxation. Critics believe federal land holding should be limited to unique areas of overriding national interest, such as our National Park system lands that are managed for the benefit of all members of the public. Using that test, millions of acres of lands currently managed for multiple use objectives would be transferred to the states where critics argue they would be managed more efficiently and cost effectively.

Federal land management agencies depend upon Congress to appropriate their annual budgets. This forces agencies to respond to political pressures. As a consequence, management decisions and agency priorities are often contrary to long term stewardship of the federal estate. For example, critical forest operations such as harvesting, thinning, and prescribed burns are routinely cancelled or postponed when the federal land managers are faced with complaints or political pressure. The failure of agencies to conduct routine forest management activities results in overgrown forest conditions with high levels of forest fuels that are highly susceptible to catastrophic wildfire.  Some environmental groups endorse this “hands off management” as more natural and environmentally beneficial. Public opposition to fire has constrained the use of controlled burns as an effective management tool to protect forest health. Congress continues to appropriate significant funds for fire suppression purposes but provides limited resources to the USFS and BLM to conduct the ongoing forest management work that is necessary to limit the spread and impact of wildfire. After a century of fire suppression, federal forests are at a significant risk of catastrophic wildfire.7 High intensity “crown fires” destroy everything in their path, including valuable timber resources, fish and wildlife habitat, homes and public infrastructure. The resulting erosion impacts stream flows, water quality and water temperatures to the detriment of fish populations and wildlife.

Federal statutes and their implementing regulations impact the ability of federal land managers to quickly respond to changing environmental conditions on the public lands. Managers must comply with the stringent and often conflicting provisions contained in the Clean Air Act8, the Endangered Species Act9, the Federal Land Management Policy Act10, the Multiple Use and Sustained Yield Act11, the National Forest Management Act12, the National Environmental Policy Act13, the Public Range Improvement Act14 and others. While these laws are intended to protect the environment, delayed implementation can have the opposite effect. Public comment periods and citizen appeals delay land management decisions that are immediately necessary to protect the public lands.  Land managers are unable to timely respond to insect infestations, overgrazing, and other land use conditions that demand immediate management actions because of the overlapping and competing federal statutory mandates. The inability of agency managers to implement proper stewardship of the federal estate often works to the detriment of the public lands and associated natural resources.

The current system provides federal land managers with an insufficient incentive to provide the ongoing environmental stewardship needed to protect the public lands.15 Federal land managers are not required to generate revenues sufficient to cover the costs of managing Federal lands.16 Federal budgets are typically allocated on a “use-it or lose-it” basis with assurance that funds will be re-appropriated in subsequent years to sustain land management functions. As a result, agencies are encouraged to spend their full budgets in a given year and have no assurance that long term programs, goals and objectives will be supported in the future.17  Land managers have no incentive to cut costs or increase revenues because money saved will not be available to support agency goals and priorities.18 President Trump recently proposed significant cuts to the Department of Interior and Department of Agriculture budgets, illustrating the fiscal and planning challenges faced by federal land managers.19

The U.S. General Accounting Office (GAO) has reported a significant backlog of outstanding maintenance obligations on the nation’s public lands.  GAO testimony before an Appropriations subcommittee outlined over $12 billion in deferred maintenance needed on the federal lands.20 The system of annual congressional budgetary appropriations fails to provide agencies with the consistent funds necessary to address deferred maintenance issues. Without legislative reform, the problem of deferred maintenance will continue unabated with further deterioration in the quality of Federal lands.

The State “Trust Land” Model

In recent years, several western states have either passed or introduced resolutions demanding the transfer of federal lands to state ownership or management.21 Critics of federal ownership contend the state “trust land” ownership structure is a more efficient and productive model for public land management. “Trust lands” are a common form of ownership used in many different western states to manage the public land grants received at the time of statehood.  State trust lands are typically managed for the benefit of a specific intended beneficiary, such as the public school system, universities, public hospitals and mental health programs. Designated beneficiaries can hold trust managers accountable to manage lands in an efficient and cost effective manner that returns a long -term benefit to the trust. Trust agencies are required to generate revenues in perpetuity which results in management decisions that promote sustainable production. Trust beneficiaries have a vested stake in ongoing agency management decisions, resulting in a close connection between expenditures and revenues.    

A 2015 report conducted by the Property and Environmental Research Center22 (the “PERC Report”) argues that federal lands currently managed for multiple-use and sustained yield objectives have the potential to generate significant revenues for the benefit of the public. Despite this potential, current federal policies result in a nearly a $2 billion annual net loss from operations. The PERC Report contends state ownership and management under a trust land model would facilitate the control of management costs and create substantial revenues.  Records show that state agencies currently manage nearly 40 million acres of trust land in the western states and generate profits from leasing, timber production, grazing, mineral development and recreation.23 The PERC Report cites evidence that federal land expenditures are more than six times higher than state expenditures and that state trust lands generate ten times more revenue per full-time employee than federal land agencies.24

The PERC Report argues that public timber resources could be managed more cost effectively under state control, contrasting net timber management losses by both the USFS and BLM with significant timber management revenues generated under the trust land model in Idaho and Montana.25 Similarly, proponents of state ownership argue that public grazing revenues could be significantly increased under the state trust land model. The PERC Report cites evidence that state trust lands earned significantly higher grazing revenues per management dollar expended.26 Several reasons are offered to support this fundamental difference in revenues. First, federal grazing fees have remained at or near the lowest level allowed by law for many decades.27 By contrast, leases on state lands are awarded based on competitive bidding, resulting in higher fees. Second, state trust managers are not required to award grazing leases to permittees that own “base properties” in the vicinity of the lease area.28 Third, state trust managers are free to award leases to conservation organizations that intend to restore riparian areas and provide wildlife habitat, whereas federal laws prohibit the USFS and BLM from leasing federal rangelands for conservation purposes.29  Based on these differences, state trust land managers are free to negotiate market lease rates for public rangelands resulting in higher net revenues for trust beneficiaries.

Similarly, state trust land managers have the flexibility to utilize market forces to obtain higher net revenues from both mineral leasing and recreational activities on the public lands. Evidence shows the western states command a higher share of production value than the federal government.30 In addition, many states structure their leasing rates to reflect the likelihood of mineral production.31 In contrast to federal rate structures, states can utilize escalating lease rates as a tool to encourage development and increase revenue from royalties.  Similarly, state land managers have been able to generate considerably more revenue from recreational activities on the public lands even with their checkerboard pattern of ownership.32  State land managers charge varied fees for different recreational activities, allowing trust managers to generate revenues from hiking, biking, camping, fishing and hunting. This allows the states to earn net revenues from activities that result in a net loss to the federal government.33

State trust managers have a number of management tools and revenue options that are not currently available to the federal government. State trust agencies can earn revenues from agricultural and commercial development or the outright sale of state lands. The ability of state managers to sell or trade isolated and fragmented lands that are difficult or expensive to manage provides a significant financial benefit to state governments.  Naturally, a transfer to the states of public land that ends up being sold by the states could be viewed as a net loss of public lands—but just as federal decisions are influenced by a host of stake holders, so too would state decisions to dispose of any public lands.

Limitations of State Management

Despite its success at the state level, the trust land model may have limited application to the large and diverse federal land holding. It is not realistic to dedicate the entirety of the federal public lands to a single or multiple trust beneficiaries. Designating the general “public” as the trust beneficiary would require state land managers to answer to a widely diverse constituent group, with conflicting goals, values and priorities. This result would place state land managers is precisely the same difficult position currently faced by federal managers. 

Conflicting studies also contend that state land managers may be no better or more efficient in the management of public land resources than their federal counterparts.34  State land managers are inherently subject to the same political influences that adversely affect federal land management decisions. A detailed policy analysis of state land management efforts by the Cato Institute has shown areas of both efficiency and inefficiency in state management efforts.35 State forests have been successfully managed in some areas, such as the Pacific Northwest, where timber values are high. Areas with lower timber values (including some western states) have not generated significant returns for state governments. State fish and wildlife agencies and state parks are typically operated at a net loss.36 The Cato analysis found that “most state natural resource agencies cost taxpayers far more than they return to the state general funds.” This analysis concluded that the “key to the profitability of state trusts is not that they are state but that they are trusts.” Thus, profitability is determined by the legislative incentives mandated by the governing legislative body- -whether that entity is a state or the federal government. The Cato analysis concluded that “state legislatures seem to be as prone as is the U.S. Congress to using resources to benefit selected users or interest groups such as ranchers or park recreationalists.”37

During its 2012 session, the Utah legislature passed a bill intended to facilitate the transfer of federal lands within its borders to State of Utah.38 A three-university academic study commissioned in connection with this bill concluded the proposed transfer would put a strain on the state’s funding priorities while the state adjusts to the loss of federal dollars, evaluates land resources and develops programs to replace those now managed by federal agencies.39 Despite the potential to generate significant revenues from the transfer lands (primarily from mineral leasing activity), the study found the federal transfer would only be profitable for the state if oil and gas prices remained high and the state negotiated a change in royalty revenues.40 Without a change in the revenue sharing formula, the report estimated land revenues would not be sufficient to cover state costs.41

The Utah study noted several important factors that could impact any potential transfer of federal lands to state governments. First, the Utah study outlined the significant financial benefit provided to the state from federal government jobs and purchases.42 Federal agency operations, federal payroll and related federal expenditures provide a significant and ongoing contribution to the state economy. Second, the activities currently undertaken on the federal estate provide jobs, generate earnings for residents and contribute substantially to the economy.43  The Utah study estimated a $7.1 billion net benefit to Utah residents based on the recreational use of BLM and USFS lands. Third, the Utah Study estimated it would cost the state $248 million to manage the federal transfer lands, an estimate characterized in the report as “very close to the amount federal agencies now spend.”44 An estimated 35 percent of such costs were attributable to the management of wildfire.45 The report also noted that the state would be required to address the combined backlog of deferred maintenance obligations on Utah BLM and USFS lands, estimated at nearly $100 million.

Concepts for Reform

The management of public lands is an extremely complicated puzzle. While the current inefficiencies in the federal land management system are well documented, there are significant obstacles facing any effort to transfer public land to individual states. Analysis shows that state governments may receive a net financial benefit from the current system of federal ownership. Moreover, the management costs incurred by the states could potentially exceed available revenues. The trust land model that has been successfully utilized in many western states may prove difficult or impossible to implement in the context of multiple use lands serving the needs of diverse constituent groups.  Public concerns regarding the potential for states or local governments to dispose of public land resources to address short term budgetary needs are likely to create significant political obstacles to any proposed land transfer.46

The high cost of federal land management is not necessarily linked to the inherent inefficiency of federal land managers. Rather, federal land managers are constrained by a complex system of conflicting federal laws and regulations. Federal laws direct both the use and protection of the public lands, leaving managers to strike the appropriate balance between resource extraction and protection. NEPA requires that the environmental impact of all land management decisions are to be assessed through public comment and participation.47 Decisions regarding the appropriate balance of multiple use objectives are inherently subjective and frequently result in litigation.  As a result of these factors, legislative changes will be a necessary component of any land reform proposal.

Despite significant challenges, the state ownership model may illustrate concepts that could be implemented in connection with regulatory and legislative reforms. Federal land managers could be provided with additional incentives to increase revenues, control costs and make decisions that provide for the long term stewardship of the public land resources. Congress could allocate longer term capital budgets to the land management agencies to address the backlog of deferred maintenance and to provide the funds necessary to implement long term management strategies and objectives. Statutory and regulatory changes could be implemented to allow federal agencies to negotiate market rates for mineral leasing, grazing activities, timber harvests and recreation.  

For more information, please contact Myles Conway in our Bend, Oregon office or any of the members of our Natural Resources or our Permitting and Environmental Review practice groups.

1 The revised rule provides that any bill, joint resolution or amendment authorizing the conveyance of federal land to a state, local government or tribal entity “shall not be considered as providing new budget authority, decreasing revenues, increasing mandatory spending, or increasing outlays.” The rule change eliminates the prior requirement that the Congressional Budget office account for all lost federal revenues and make corresponding budget cuts in connection with any federal land conveyance.

2 New Yorker, “What Will Become of Federal Lands Under Trump?” Michelle Nijhuis, January 31, 2017

3 E&E News, Scott Streater, April 18, 2017, “Zinke orders BLM ‘back to the drawing board’ on land use, NEPA.”  The Zinke memorandum immediately followed passage of the Congressional Review Act- which terminated substantial revisions to BLM’s planning rules initiated under the Obama administration.  

4 E&E News, Scott Streater, April 18, 2017, “Zinke orders BLM ‘back to the drawing board’ on land use, NEPA.”

5Divided Lands: State vs. Federal Management in the West,” Holy Fretwell, Shawn Regan, Property and Environmental Research Center, published March 3, 2015. Federal lands administered by BLM and the USFS are managed for multiple use and sustained yield objectives. BLM lands are governed primarily by the Federal Land Policy and Management Act (FLPMA) 43 USC 1701 et seq. and USFS lands are governed by the multiple use objectives of the National Forest Management Act (NFMA) 16 USC 1600 et seq.

6Divided Lands: State vs. Federal Management in the West,” at page 12.

7 See The Threat of Wildfire on Development in the West”, Myles Conway, Marten Law Newsletter, August 25, 2015

8 42 USC 7401 et seq.

9 16 USC 1531 et seq.

10 43 USC 1701-1785

11 16 USC 528-531

12 16 USC 1600-1614

13 42 USC 4321 et seq.

14 43 USC 1739 et seq.

15 The Federal Government’s Poor Management of America’s Land Resources, Alexander Annett, Heritage Foundation, May 17, 1999.

16 The Federal Government’s Poor Management of America’s Land Resources, Alexander Annett, Heritage Foundation, May 17, 1999.

17 Divided Lands, State vs. Federal Land Management in the West, Holly Fretwell and Shawn Regan, published by the Property and Environmental Research Center on March 3, 2015

18 Divided Lands, State vs. Federal Land Management in the West, Holly Fretwell and Shawn Regan, published by the Property and Environmental Research Center on March 3, 2015

19 “What Trump Cut in his Agency Budgets,” The Washington Post, Kim Soffen, Denise Lu, May 23, 2017.

20 Testimony of Barry T. Hill, Associate Director for Energy, Resources and Science, U.S. General Accounting Office, in Department of Interior and Related Agencies Appropriations for 1999.

21 In 2015, the State of Wyoming undertook an analysis of the costs and benefits associated with state management of the federal landholding. A report was commissioned to contrast the efficiency of federal land management practices with state management efforts under the state land “trust model.” The report noted that sizeable additional infrastructure and capital would be required to manage an additional 25 million acres of federal land in Wyoming and the transfer of management responsibility alone (without ownership rights or changes in federal law) would render the “trust model” entirely inapplicable.

22 Divided Lands, State vs. Federal Land Management in the West, Holly Fretwell and Shawn Regan, published by the Property and Environmental Research Center on March 3, 2015

23 Divided Lands, at page 11

24  PERC Report analysis provides that between years 2009-2013, the states of Montana, Idaho, New Mexico and Arizona earned a combined average of $14.51 for every dollar of management cost.  In contrast, federal agencies only generated $.73 cents for every management dollar spent during this same time period. See Divided Lands, page 9.

25 Divided Lands, pages 14-16.

26 Between 2009-2013, BLM and the USFS generated less than $.15 per rangeland management dollar expended while state trust lands earned $4.89 per dollar during this same period.  Divided Lands, Page 17

27 Divided Lands, Page 19.

28 Federal law provides that grazing privileges are determined without competitive bidding where the lessee owns what is characterized as a “base property” in the vicinity of the affected grazing allotment. See Divided Lands, page 18.

29 Divided Lands, page 19,

30 A Government Accountability Office Report from 2007 showed that the U.S. government receives one of the lowest shares of revenue from oil and gas production in the world. Western mineral production states (California, Colorado, Texas and Wyoming) all receive a higher share of production values than is received by the federal government.  Divided Lands, page 21.   

31 For example, Montana and New Mexico issue shorter leases with higher royalty rates in areas of known production deposits. Divided Lands, page 21

32 The PERC Report states that the USFS earned $.28 and BLM earned $.20 for every dollar spent on recreational management activities, which is considerably less than the $6.86 per dollar earned by state trust land managers. Divided Lands, page 21.

33 Prior to 2004, recreational user fees were deposited in the federal treasury, with no direct benefit to federal land managers. While federal agencies are now allowed to keep a majority of recreation fees, those fees remain insufficient to cover the ongoing cost of management. Divided Lands, page 22.

34 Cato Institute Policy Analysis No. 276: Should Congress Transfer Federal Lands to the States?, Randal O’Toole, July 3, 1997.

35 Cato Institute Policy Analysis No. 276: Should Congress Transfer Federal Lands to the States?, Randal O’Toole, July 3, 1997.

36 State fish and wildlife agencies are typically funded by the revenues generated from fishing licenses and hunting tags. This revenue system can focus funding on game species, often to the detriment of non-game species whose habitat is diminishing. This has resulted in fish and wildlife agencies seeking additional taxation or revenue sources to make up for shortfalls in hunting and fishing revenues. Similarly, state park agencies are typically operated at a net loss. Cato Institute Policy Analysis No. 276: Should Congress Transfer Federal Lands to the States?, Randal O’Toole, July 3, 1997.

37 Cato Institute Policy Analysis No. 276: Should Congress Transfer Federal Lands to the States?, Randal O’Toole, July 3, 1997.

38 The State of Utah, Transfer of Public Lands Act (Utah H.B. 148) was intended to facilitate the transfer of millions of acres of federally land to the State of Utah and included all federal landholdings with the exception of national parks, most national monuments and specific congressionally-designated wilderness areas. The bill was signed into state law in 2012 and provides a framework for transferring federal lands into state ownership.

39 In connection with the State of Utah, Transfer of Public Lands Act, a team of economists from the University of Utah, Utah State University and Weber State University published a detailed analysis of the economic costs and benefits associated with the proposed land transfer. State of Utah, H.B. 148. Transfer of Public Lands Act and Related Study.

40 The Utah Report provided that in 2013, a total of $331.7 million was generated on lands managed by the USFS and BLM in the State of Utah. Mineral related revenues, including lease payments, bonus payments, rents and royalties, made up 93 percent of that revenue. Under a current revenue sharing arrangement, the state and federal government each retained a fifty percent share of mineral leasing royalties. The state would need to retain 100 percent of royalty revenues to insure the transfer was profitable.  

41 The report concluded it was “likely the State of Utah could take ownership of the lands and cover the costs to manage them.” However, a federal-state land transfer would “put a strain on the state’s funding priorities in the early years as the state adjusts to the loss of federal dollars, evaluates land resources and conditions, and develops programs to replace those now managed by federal agencies.” The study also noted the proposed transfer would result in a loss of the federal payments that are made to state and local governments as payments in lieu of taxes.

42 The report noted that the “operational purchases” of BLM, the USFS and the FWS support almost 5,000 jobs in the state and generate $236.2 million in earnings for Utah residents. In total, federal agency operations contributed nearly $200 million to Utah’s gross state product. The immediate impact of a land transfer to the state would be a loss of approximately $149.8 million in federal payroll.

43 In 2013, activities on federal lands supported 29,000 jobs, generated $1.6 billion in earnings and contributed $3.6 billion to the gross state product.

44 This estimate did not include the payments the federal government currently makes to local counties to offset foregone tax revenues for federal lands within their boundaries (“payments in lieu of taxes.”) If the state were to continue such payments to local governments, management costs would rise to $280 million annually.

45 Between 2003 and 2012, wildfire-related expenditures in Utah by the USFS and BLM averaged $85.6 million annually.  In addition to these costs, the report noted the state would lose access to key fire-fighting personnel and resources.

46 A recent poll by Washington D.C based Mason-Dixon Polling & Research, commissioned by environmental group Oregon Wild, found that 80 percent of survey respondents in the State of Oregon (including rural residents) said they would be less likely to support any politician who voted to sell the public lands. Reported in EE News, April 20, 2017.

47 40 CFR 1506(10)

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