SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Free Market Grazing Fees Act''.

SEC. 2. GRAZING FEES ESTABLISHED AT FAIR MARKET VALUE.

    (a) Fees Required.--Notwithstanding any other provision of law, the 
Secretary of Agriculture and the Secretary of the Interior, with 
respect to public grazing lands subject to their respective 
jurisdiction, shall establish an annual domestic livestock grazing fee 
equal to the fair market value of the grazing lease or permit 
concerned.
    (b) Commencement of Fees.--The grazing fees required by this 
section shall apply beginning with the grazing season that commences on 
March 1, 1998.
    (c) Factors.--In determining the fair market value of a grazing 
lease or permit, the Secretary concerned shall take into account the 
following:
            (1) The amounts and conditions under which neighboring non-
        Federal lands are leased or sold for grazing purposes.
            (2) The improvements provided or to be provided by the 
        lessee or permit holder.
            (3) The services to be provided by the United States.
    (d) Procedures.--In determining the fair market value of grazing 
permits, the Secretary concerned shall publish rules in accordance with 
chapter 5 of title 5, United States Code, which ensure that whenever 
practicable fair market value is established through competitive 
bidding.
    (e) Small Family Ranch Exemption.--
            (1) Certification for prevailing fees.--The holder of a 
        Federal grazing lease or permit as of the date of the enactment 
        of this section who makes a certification to the Secretary 
        concerned in accordance with this subsection shall be charged 
        the prevailing grazing fee on that date for the period 
        beginning on that date and ending on February 28, 2008.
            (2) Content of certification.--
                    (A) Annual income.--The holder of the Federal 
                grazing lease or permit shall certify that, for the 
                immediately preceding calendar year--
                            (i) the holder derived more than half of 
                        the holder's annual income from the ranching 
                        operation associated with the Federal grazing 
                        lease or permit; and
                            (ii) the holder--
                                    (I) if an individual, has an 
                                adjusted gross annual income (as 
                                defined in the Internal Revenue Code of 
                                1986) of less than $50,000; or
                                    (II) if a person other than an 
                                individual, has total assets of less 
                                than $1,000,000, including the value of 
                                Federal leases or permits of any kind, 
                                including the assets of any entity 
                                owned by, controlled by, or under 
                                common control of, directly or 
                                indirectly, the holder.
                    (B) Substantial labor.--The holder of the Federal 
                grazing lease or permit shall certify that, for the 
                immediately preceding calendar year, the holder--
                            (i) if an individual, performed substantial 
                        labor in the ranching operation either 
                        personally or using members of the holder's 
                        immediate family; or
                            (ii) if a person other than an individual, 
                        performed substantial labor in the ranching 
                        operation using the officers of the holder.
            (3) Submission of certification.--A certification under 
        this subsection shall be submitted to the Secretary concerned 
        before the beginning of each grazing season.
    (f) Definitions.--For the purposes of this section:
            (1) Public grazing lands.--The term ``public grazing 
        lands'' means the following:
                    (A) The National Forest lands (including the 
                national grasslands) in the 16 contiguous Western 
                States administered by the United States Forest Service 
                where domestic livestock grazing is permitted under 
                applicable law.
                    (B) The public domain lands administered by the 
                Bureau of Land Management where domestic livestock 
                grazing is permitted under applicable law.
                    (C) The lands within units of the National Park 
                System on which grazing is permitted under applicable 
                law.
            (2) Secretary concerned.--The term ``Secretary concerned'' 
        means--
                    (A) the Secretary of Agriculture, with respect to 
                public grazing lands subject to the jurisdiction of the 
                Secretary of Agriculture; and
                    (B) the Secretary of the Interior, with respect to 
                public grazing lands subject to the jurisdiction of the 
                Secretary of the Interior.
    (g) Effect of Failure to Establish Fees.--No grazing shall be 
permitted on any public grazing lands after March 1, 1998, unless the 
Secretary of the Interior and the Secretary of Agriculture each affirm 
to Congress that grazing fees for all public grazing lands have been 
established in compliance with this section.
Output: Free Market Grazing Fees Act - Directs the Secretaries of Agriculture and the Interior to establish fair market value grazing fees for use of their respective public lands.  Establishes a prevailing fee exception for current small family ranch leases or permits.