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6 Things to Know When Buying a Ranch with a Public Land Lease

Buy a Ranch with a Public Land LeaseOne of the greatest benefits when you buy a ranch in the West, is the availability of grazing leases on public lands.

There are over 610 million acres of public lands in the United States and a majority of that land is located in the West. This number accounts for parcels owned by the:

  • Bureau of Land Management (BLM),
  • National Park Service (NPS),
  • US Fish and Wildlife (USFW),
  • US Forest Service (USFS),
  • State Land Boards

These leases generate substantial revenue through grazing, development, recreation, timber, and energy resources. Grazing leases are only offered by the BLM, USFS, and State Land Boards.

Recently, Mirr Ranch Group authored an article for the Rocky Mountain edition of The Land Report explaining public lands’ role in ranching. As an example we discussed the sale of the Sandy Ranch which we listed and sold. See excerpt below:

“A historic ranch in Utah right next to Capitol Reef National Park, the Sandy Ranch is a high desert outfit that runs about 1,000 head on 6,970 deeded acres. A cow-calf pair per every seven acres in the middle of the desert? This is where public lands takes a role. Sandy Ranch leases a total of 242,000 from the BLM and USFS, and suddenly the math makes more sense!”

We sat down with public lands experts and Mirr Ranch Group brokers, Ken Mirr, a former public lands and conservation attorney, and Jared Souza, a life-long cattle operator and formerly the assistant ranch manager of a large ranch in southeastern Wyoming, to discuss what a buyer should consider when purchasing a ranch with a grazing lease on public lands.

  1. Who manages the lease when you buy a ranch?

The BLM is managed by the Department of the Interior, the USFS leases are managed by the Department of Agriculture, and individual state land boards are overseen by the corresponding state. There are many similarities in how these agencies manage these leases but also some important differences.

  • BLM Leases: The BLM manages over 155 million acres of grazing land. Within the BLM, there are state and regional field offices. Each office identifies the regional goals and priorities based on available natural, cultural, and recreational resources, environmental health, and land productivity. The local field offices are typically the primary point of contact for local leases.
  • USFS Leases: The USFS manages over 193 million acres of grazing land. Their rules and regulations are similar to those of the BLM. Each allotment is managed by a ranger district within that specific National Forest.
  • State Leases: There are 46 million acres of state leases around the country. Of this 46 million, 40 million are located in the West (AZ, CO, ID, MT, NM, OR, UT, WA, WY).  These leases are managed by each state in accordance with state constitutional mandates that generally have various district offices within the state.

Antelope Springs Ranch

 

  1. How many AUMs are allowed on the lease? Can this number change?

Animal Unit Months (AUMs) are based on forage for one 1,000 pound cow with equivalent calf by her side per month. The number is dependent on management objectives, rainfall, forage use by other species, etc.

These units can change over time based on multiple factors:

  • range improvements,
  • environmental impacts on the rangeland and habitat,
  • drought,
  • the Endangered Species Act,
  • and lack of availability of water for livestock to name a few.

Generally, the only livestock allowed on the property are those owned by the permittee and this is especially true with the USFS. In order to keep your lease valid, the permittee must place 90% or more of the permitted AUMs on the allotment. Failure to do so, can result in the cancellation of the grazing permit.

Double R Ranch

 

  1. How long has the lease been associated with the base party? How long will it be associated?

When you buy land with a grazing lease, you should know how long the lease has run with the base property, and how many years are remaining on the current lease. Typically, USFS and BLM leases run with the base property for a term of 10 years.  A base property is a private property owned by the lessee that support the cattle on private land while not grazing on the leased land.

With the USFS, shorter term permits are available in the form of Temporary Grazing Permits and Livestock Use Permits. Temporary Grazing Permits are typically issued while a Term Grazing Permit is being processed and issued based on the needs of the Forest Service.  Livestock Use Permits are only issued for short periods for incidental livestock use.

 

  1. What time of year is the lease allotted for?

When can you place your cows on the leased land and for how long? Does it coincide with your deeded land management goals? For instance, if you have irrigated ground, can you move your herd on the leased ground to allow hay to grow? Review these terms to make sure they are aligned with your operating plans.

 

  1. What documents should you look at before purchasing a ranch with a grazing lease?

There are a few important documents one should review before purchasing a property with a grazing lease.

  • Grazing Permit: All permits will provide important allotment specific information including AUMs, type of livestock, grazing periods, range descriptions, carrying capacity, etc.
  • Environmental Assessments: These assessments are required by federal law on federal leases. They describe the area, generally including endangered species, grasses, soils, water, and other important environmental concerns related to the Property.
  • Management Plans: These are generally addendums to the lease/permit provided by the local grazing specialists describing:
    • Existing Condition: What is the condition of the rangeland at the time the permit was issued?
    • Desired Condition: What is the overall objective of this specific allotment?
    • Objectives: How will the final objective be reached?
    • Management Actions: What type of management will be allowed?(Rotation, Pasture Movement, Rangeland Improvements, etc.)
    • Proper Use Criteria: What methods will be used to insure proper utilization levels are being sustained?
    • Monitoring and Evaluation: How will the allotment be monitored over a ten year period?

 

  1. Transfer-ability, Operations, and Termination

When purchasing a property, you should understand the rules and procedures regarding transfer-ability and termination. The approval of any transfers and decisions to terminate is ultimately decided by the controlling agency.

  • Transfer-ability:
    • BLM Lease: A BLM grazing lease is one of the only grazing leases you can transfer or sublease. If you want to keep the lease with your base property, but don’t have your own operation, you can sublease to another owner.
    • USFS Lease:  You can relinquish or transfer a USFS grazing lease, but cannot sublease.
    • State Lease: A state lease can be assigned to another party, but the transfer will need to be approved by the District Manager.  
  • Termination: A lease can be terminated or withdrawn by land exchange, boundary modification, area devoted to public purpose that precludes grazing, new land management planning, and default on a lease by monetary means or non-utilization.
  • Non-Use: A permittee may apply for a non-use permit on a portion or all of the operator’s permit. There must be a valid reason for the request and the ultimate grant of the non-use permit is the decision of the authorized officer. Typically these are only granted for up to three years during a ten year term.

 

For a convenient recap of these considerations, watch the video below.

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