At Law

AT LAW: “CHECKERBOARD” LANDS AND ADVERSE GRAZING

The West was a wilderness needing to be settled and developed.

ARTICLE BY THOMAS K. KELLY WITH TAMRA S. KELLY AND STEVEN D. PENDLETON

Waterhold on a ranch. Roosevelt County, New Mexico © Arthur Rothstein, Circa1936

My wife is the broker and owner of Ag Lands Southwest, a real estate brokerage firm specializing in the sale of working cattle ranches and other agricultural properties in Arizona and New Mexico. Unfamiliar with large working cattle ranches dependent on leased public lands, many out-of-state buyers have numerous questions regarding nature and dependency of grazing leases, water rights, access easements, carrying capacity, etc. requiring the specialized expertise of ranch real estate brokers. A question often asked is: “What is adverse grazing?” Related to this initial question is the follow up: “Does it add to the value of the ranch?” and, “What are my rights regarding the continued use of another person’s private land for grazing?”

These questions are difficult to answer. To a person not familiar with the interplay between public lands grazing, private property rights and open range laws adverse grazing of another person’s private property is a foreign concept. Answering the question requires a basic understanding of the history of the acquisition of private lands in the United States, the role of public lands agencies in the management of public lands and the interplay between public and private land and open range laws.

Railroad Land Grant Acts – Origin of “Checkerboard” Lands

To encourage development of the new nation, soon after the Revolutionary War, the United States government began transferring much of the continent into private ownership. Using a variety of congressional acts, more than a billion acres were granted to states for education and transportation purposes, given or sold to war veterans and settlers for homesteading, and to corporations to develop water, timber, and mineral resources for the nation.

As the western expansion of the nation began, laws were passed to transfer large tracts of public lands into private hands pursuant to land grant acts. The purpose of these land acts was to encourage and incentivize the development of the vast western wilderness. Prior to the advent of vehicular access by our interstate highway system, the most expedient, realistic and efficient means of access throughout the continent was by railroad.

The West was a wilderness needing to be settled and developed. Through a series of a series of federal and state acts between 1850 and 1871, the railroad land grants incentivized railroads to construct railways across the west. The purpose of the railroad land grants were to build the transcontinental railroad and telegraph systems which would help settle the West. Once conveyed, the railroads would then sell the land to settlers, and use the money raised to pay for the construction of the transportation and communication systems. The railroad land grants eventually covered ten percent of the continental United States and an even greater portion of the American West, where most of the railroad land grants were located.

Under the railroad land grants, the railroads would be granted every othersectionof land along the rail corridor. The land had already been divided into 640-acre numbered sections according to the Public Land Survey System. The railroad land grants typically extended 6 to 40 miles perpendicular from both sides of the track. In this subsidy, odd-numbered sections were given to railroad companies and the federal government kept evennumbered sections. The resulting alternating private/public sections of land appear on a map as a checkerboard.

Public Lands – Origin and Management

As the railroad land grant acts conveyed deeded land to the railroads, the General Land Office maintained control of the alternating sections of public lands in the checkerboard configuration. Throughout history of the west, much of the GLO lands transformed into public lands managed by State Land Departments, the United States Forest Service and Bureau of Land Management. With different legal origins and authority, each of these public agencies are saddled with the responsibility of managing the intervening parcels of public lands for a variety of purposes including cattle grazing.

Arizona State Land Department

The Territory of Arizona was established on February 24, 1863, by an Act of Congress. This Act granted sections 16 and 36 of each township for the benefit of the Common Schools. In addition, the Enabling Act of 1910 assigned sections 2 and 32 of each township to be held in trust for the Common Schools. After statehood in 1912, additional legislative acts increased the total acreage managed by the state to approximately 10,900,000 acres.

Since the State Land Department’s inception in 1915, its missions have been to manage the Land Trust and to maximize its revenues for its fourteen beneficiaries. All uses of the land must benefit the Trust, a fact that distinguishes it from the management of federal public lands. Arizona has acquired lands in four types of transactions School Sections in Place, Indemnity in Lieu Selections, Quantity Grant Selections and Land Exchanges. The State acquired its School Sections in Place wherever the land surveys placed them. The State chose the lands acquired in the Indemnity in Lieu Selections, Quantity Grant Selections, and Land Exchange processes. Most of the selections were made in the 1915-1960 era, with the selection program being finally completed in 1982. Since the State was precluded by Federal laws from acquiring mineral lands, and since the homesteaders had already acquired most of the potential agricultural lands, the State focused on choosing the best grazing lands.

Most of the acreage chosen during the 1915-1960 era was in central and southeastern Arizona, and in the checkerboard land area along the railroad across north-central Arizona. Later selections were made in commercial and irrigated, agricultural lands as well as some of the better grazing lands in such areas as western Yavapai County. As a result, most of Arizona Trust lands are currently usable only for livestock grazing purposes. In the 88 years since statehood, the State has disposed of, or exchanged, about 1,628,079 acres of Trust lands. A total of 9,228,787 acres of Trust Land remains.

United States Forest Service

While the Forest Reserves were originally established to protect timberlands and watersheds, it was recognized early in the history of the Reserves (later National Forests) that grazing was a legitimate use. In 1897, the newly formed Forest Service was formed as an agency under the United States Department of Agriculture and was authorized to permit grazing as long as it did not injure forest growth. Since these early days of the agency, the Forest Service has supported controlled livestock grazing. In the earliest version

of published policy of the Forest Service (USDA Forest Service 1905), full grazing privileges for the livestock industry were provided. In the1936 edition of the policies, it was recognized that the “cattle and sheep which are grazed in the national forests bear an important relation to the supply of beef and mutton in this country, and represent an important industry and basis for established homes and every effort will be made by forest officers to promote the fullest possible use of grazing resources.” (USDA Forest Service 1936). Later, pursuant to the Multiple Use Sustained-Yield Act of 1960, grazing was identified as one of the established uses of Forest Service land: “It is the policy of the Congress that the National Forests are established and shall be administered for outdoor recreation, range, timber, watershed, and wildlife and fish purposes.”

The USFS recognizes that the modern history of the west is very closely tied to livestock grazing. Even though the early cattle and sheep “empires” declined after restrictions on grazing began to occur in the early part of the 20th century, much of the custom and culture of the rural west is still very closely tied to ranching. Many rural communities continue to be dependent upon ranching for their economic livelihood and most of these ranches rely on federal land grazing, either on BLM managed lands or on National Forests, for at least a portion of the grazing.

Bureau of Land Management

TheBureau of Land Management(BLM) is an agency within the United States Department of the Interiorresponsible for administeringpublic lands. With oversight over 247.3 million acres, it governs one eighth of the country’s landmass. President Harry S. Truman created the BLM in 1946 by combining two existing agencies: the General Land Office and theGrazing Service. Most BLM public lands are located in these twelve western states. The mission of the BLM is “to sustain the health, diversity, and productivity of the public lands for the use and enjoyment of present and future generations.” Originally BLM holdings were described as “land nobody wanted” because they had been passed over by homesteaders.

Today, BLM Arizona manages 12.2 million acres of public lands for a variety of uses including grazing. Arizona’s cattle and sheep ranchers use almost one-half of Arizona’s total land mass, some 72,750,000 acres managed by the United States Forest Service, Bureau of Land Management and Arizona State Land Department for livestock production.

Arizona’s Open Range Law

Historically, open range laws developed as a result of land ownership characteristics. Due to confined space in England, a common-law rule developed requiring a landowner to keep livestock enclosed on his private property. If not, and the livestock wandered on the land of another, the livestock owner, subject to certain exceptions, was liable for the trespass and ensuing harm to the property. This general rule was followed by most eastern states of the United States which are essentially devoid of any public lands. In the western U.S., with its large expanses of both private and public lands, this rule requiring a rancher to “fence in” his livestock was not historically used nor even practical to implement. Prior to enactment of the Taylor Grazing Act in 1934, the public lands were not managed and cattle ranchers enjoyed the unregulated use of public grazing lands. Cattle were simply identified by an authorized brand, but free to graze anywhere on public lands. After enactment of the Taylor Grazing Act, the public lands were subjected to a system of regulation by “permit’ allowing cattle ranchers a designated area of public lands for grazing by a specific permittee. Large tracts of land containing hundreds, if not thousands, of acres were identified by the public agencies as “grazing allotments” and were managed for livestock production with agency conservation principles. Fencing off private parcels of property within these grazing allotments is not practical, and at times, impossible. Accordingly, the courts of the western states refused to follow the “fence in” rules of the eastern states, adopting in its stead, the “open range law.” Under the open range law there is no liability, civil or criminal, for livestock wandering on to the lands of another. If a landowner is concerned about livestock, his remedy was to simply fence out the unwanted cattle. Given the realities of raising livestock on vast expanses of public lands, Arizona still adheres to the open range law.

Adverse Grazing

The vast expansive “checkerboard” public/private land arrangement in Arizona coupled with its open range law creates the existence of “adverse grazing.” A concept based on the premise that large tracts of private land existing in the checkerboard fashion with public lands permitted for grazing are rarely occupied, difficult to access and almost impossible to fence. Pursuant to an open range law, the cattle grazing on the properly permitted public lands adjacent to the private property are legally authorized to graze freely on the adjacent private lands. This concept is referred to as adverse grazing.

Initially, when the railroads began selling their private lands acquired through the land grant system, large corporations and ranchers acquired the vast expanse of private property. Corporations would, and still do, enter into grazing leases for the beneficial use of their private property. Some ranches have remained intact, owning large tracts of private property adjacent to the public lands leases in the checkerboard areas. After World War II many of these large tracts of private land have been sold to land speculators who then divided the large tracts into 40 acre parcel to be resold while avoiding stringent subdivision laws in Arizona. Fueled by misleading advertisement misrepresenting the nature and quality of the property, unscrupulous speculators were successful in selling the divided, checkerboard lands of Northern Arizona to unwary purchasers. The result has left a largely uninhabitable, scarred mess on the Arizona landscape. With no water, no utilities and poorly designed roads lacking drainage, these parcels are difficult, if not impossible, to inhabit. Although thousands of acres have been divided and sold, only a very few, hardy residents sparsely occupy these large subdivided tracts. Meanwhile, grazing cattle on these parcels of private lands under Arizona’s open range law continues to be authorized as adverse grazing.

As a rancher, there are several advantages to adverse grazing. As a financial benefit, there is no grazing permit or lease fee that must be paid. Also, there is no range manager specifying the number of cattle, pasture rotation and periods of use of the grazed lands. A rancher is free to manage his cattle, grass and water without input or interference from public lands managers. Moreover, due to the initial locating of the railroad, much of the adverse grazing on these checkerboard lands is in gentle terrain with excellent feed and water.

Likewise there are several disadvantages to adverse grazing. The “nesters” who occupy the 40 acre remote parcels are a diverse group of people. Ranging from retired folks simply seeking a peaceful existence by escaping the hustle and bustle of the big city to the outlaws - felons avoiding an arrest warrant or individuals engaged in various illicit activities contact these hardy occupants living “off the grid” are unique individuals. Most residents enjoy the presence of cattle on the open range and actually assist in the ranch management. Whether communicating the welfare of cows, working and maintaining access roads or providing and maintain water, their help alleviates many concerns of the rancher. Others, often unfamiliar with open range laws, harass, harm, chase or sometimes, kill cattle creating constant conflict with the rancher. Free ranging, aggressive dogs, dumped trash and debri, and poorly constructed wire fencing created unwanted hazards for the cattle rancher. Finally, at any time a resident can fence his private property precluding its use for cattle grazing. Unlike a deeded land ranch where the rancher is in total control of his property or a public lands grazing lease controlled by federal and state land managers, control in an adverse grazing area is less definite, more obtuse and, often unpredictable.

The availability of feed and water, condition of the range, geography, terrain and ability to access and manage your cattle are primary factors in determining the profitability of a livestock operation. As a result, parcels subject to adverse grazing present a financial opportunity to a rancher. Given the problems associated with adverse grazing on another’s private parcel, calculating a value presents a unique problem.

Value of Adverse Grazing

An informal, uncertified method of appraising the value of a cattle ranch is simple. Assign a value to the carrying capacity on the lands available for grazing, add the value of range improvements plus the value of private land conveyed in the transaction to equal the total value of the ranch. The problem in assessing the value of adverse lands subject to grazing relates to the uncertainty of its carrying capacity. As mentioned above, at any time a landowner could fence out your cattle. Given the typical sparse population and size of these tracts, it is usually unlikely enough fencing would take place to impact the number of cattle grazed. However, theoretically if this happened with a large number of landowners, the carrying capacity on the adverse private lands could be significantly reduced impacting the value of the ranch. Regardless, Southwestern Ag Services, Steve Pendelton, a certified general real estate appraiser with over 20 years experience in rural land appraising opines that you need to consider the contribution of surface or adverse grazing rights, whether it’s a standalone value or an added contribution to the other land components. Steve Pendelton considers the following factors in assigning a contribution to the adverse grazing: 1. The mount of development within the area, 2. The current sales activity within the developmet, 3. Any recent development in the area, 4. The physical layout of the adverse grazing land, 5. The land mix of the ranch, i.e. percentage deeded, leased, adverse, etc., 6. Range improvements on the surface grazing, and 7. Other area ranch sales with adverse grazing. It is a difficult concept to consider a contribution without an ownership interest or long term lease. However the potential increased capacity beyond the private land and government leases is a positive benefit. For instance, if you could double the capacity of the ranch with surface grazing rights, wouldn’t you be apt to pay

Range cattle behind fence on grazing land near Birney, Montana © Marion Post Wolcott, Circa1941

more than you would for a ranch without additional grazing? Especially when you consider there are typically no significant additional cost, such as taxes, rent and grazing fees on surface grazing rights. As Arizona rapidly expands, the value of deeded land cattle ranches has greatly increased due to the potential to be developed into residential communities. As a result, justifying a purchase based solely upon the ability of a deeded ranch to produce income based only from cattle is becoming increasingly difficult. Even with inherent concerns of public lands leases, BLM, USFS and State Land Leases are perhaps more reasonably priced opportunities to purchase a viable cattle operation. Parcels of land subject to adverse grazing located adjacent to an operating cattle ranch helps a ranch “pencil out” when evaluating its income productivity to its purchase price.

Article Resources: 1. Arizona State Land Department, https://land.az.gov/ about/history 2. Bureau of Land Management, https://www.blm.gov/ about/history 3. Chavez, Merry J. (1987). “Public Access to Landlocked Public Lands”. 39. Stanford Law Review:

1373–1401. JSTOR 1228850. 4. Draffan, George (1998). “Taking Back Our Land” (PDF). United States: www.landgrant.org. Retrieved 28 February 2011. 5. Kelly, Thomas K. (2018), Examining Arizona’s Open Range Law, Western Ag Life Magazine, Summer Ed., pp. 28-29. 6. Poli, Adon (1956). “Ownership and Use of Forest Land in Northwestern California”. 32. University of Wisconsin Press: 144–151. JSTOR 3159757. 7. Walton, Gary M.; Rockoff, Hugh (2005). “Railroads and Economic Change”. History of the American Economy (10th ed.). United States: South-Western. pp. 313–4. ISBN 0-324-22636-5. 8. United States Forest Service, https://www.fs.fed.us

rangeland-managementgrazing/allowgrazings.html

ABOUT THE AUTHOR: Thomas K. Kelly is a retired attorney who now manages family cattle ranches and works as a consultant for Ag Lands Southwest, LLC. Tamra Kelly, Owner and Designated Broker of Ag Lands Southwest, LLC a real estate agency representing both buyers and sellers of working cattle ranches and other agricultural properties in Arizona and New Mexico. Steven D. Pendleton is certified appraiser and the designated broker of Southwestern Ag Services, a full service real estate firm providing brokerage, appraisals and consulting services in Arizona.