Greiff: Federal land sale would be no bargain for ranchers, miners

By James Greiff

Bloomberg News

Sen. Ted Cruz, Republican of Texas and tea party favorite, wants to unload federal land by turning it over to the states or selling it to private buyers. To Cruz, this is one way to scale back the reach of the federal government into the lives of private citizens.

It's also an idea that should appeal to those who view the federal bureaucracy as either incompetent, out of touch or illegitimate — or all of the above. What's puzzling is that many of the potential supporters of the Cruz plan — ranchers, miners, loggers and others in natural-resources industries — are among the biggest beneficiaries of using federal land at below-market costs. It's like the man who demanded that the government keep its hands off his Medicare benefits. In other words, Cruz's plan might make them worse off.

Specifically, Cruz has sponsored an amendment to conservation legislation that would limit federal land ownership to no more than 50 percent in any state. (Of course, because this Congress can get almost nothing done, the bill probably is going nowhere this year.)

The reason federal ownership is higher in the West is because the territories turned over unsettled land as a condition of attaining statehood. The government, in turn, promoted economic development by building dams and aqueducts to generate electricity and provide water to farms and cities; constructing thousands of miles of roads to access timberlands; leasing mineral rights at prices now more than 100 years out of date; and charging nominal rates for cattle-grazing rights.

This story has played out before, during the so-called Sagebrush Rebellion in the 1970s and early '80s. Then, as now, those accustomed to using federal lands on the cheap raised a fuss when the government started imposing usage restrictions, often to protect endangered species such as the spotted owl. (One reason Nevada rancher Cliven Bundy recently clashed with the federal government was over restrictions on running his cattle on land set aside to protect the desert tortoise.) The clamor for government divestment waned when it dawned on proponents that the subsidies would dry up if federal ownership ended.

As Robert Nelson's 1984 history of the Sagebrush Rebellion noted: "The reality was that the West had until recently found the rewards of federal ownership to be worth the annoyances; in fact, it was still of two minds on the issue."

This reality set in when it came time to fill in the specific details of transfer proposals. Western ranchers, for example, benefit from the federal presence in various ways. Most important, informal understandings have evolved over 50 years or more that effectively give them the right to graze certain public lands at less than market rates. If the lands were transferred to the states, these arrangements would be up for renegotiation. What assurances would ranchers have that state land administrators would be bound by the de facto property rights embodied in past federal practices? Indeed, several western states now impose grazing fees on state-owned land that are significantly higher than federal grazing fees.

Determining just how big the various federal subsidies are isn't easy, partly because government ownership is scattered across many different agencies and departments.

Researchers and analysts who have tried to quantify the largess come up with big numbers. For example, a 2002 study concluded that letting livestock graze on public land costs the U.S. Treasury as much as $500 million a year and possibly as much as $1 billion.

The timber industry also benefits from federal generosity, which researchers have calculated at as much as $1 billion annually. The taxpayer's dime also is used for building access roads for loggers and support payments to localities where logging has been reduced or banned — or never occurred in the first place.

The story is the same for hard rock mining because of an 1872 law. Miners pay a maximum of $5 an acre — the price set when the law was enacted — for extraction rights.

If Cruz's proposal were to become law, disposing of public land might prove challenging. Some states, such as Idaho, have passed resolutions seeking to assume ownership of federal property based on the premise that they can manage the land more profitably than the feds can. What this overlooks is the scope of the federal subsidies. One study by the Idaho Conservation League concluded that losing these subsidies might cost the state more than $100 million a year.

As for selling, the Congressional Research Service suggests that the government already is doing what Cruz proposes, although in a manner more limited than he might like. Since 1990, according to the CRS, the U.S. has disposed of more than 18 million acres — an area about the size of South Carolina. But any of Cruz's supporters who hope for land bargains should think again: The Bureau of Land Management, historically the government's biggest seller, has warned that it doesn't offer "free" land and only sells at fair market prices.