Potential for Public Land Transfers under the Trump Administration
By Myles Conway
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.
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