Opinion ID: 3053418
Heading Depth: 4
Heading Rank: 2

Heading: Lazy Y’s Bids

Text: In response to an IDL notice in early 2005, Lazy Y applied for leases on nine grazing lands. With one exception, the prior 13790 LAZY Y RANCH LTD v. BEHRENS lessees also applied for the new leases, as did some third parties. Given the competing applications, Defendant Tracy Behrens, who was then the IDL Range Program Manager, notified applicants that auctions would be held and that they should submit management proposals addressing various environmental concerns. Lazy Y obtained a “resource assessment” from the IDL to ensure that its proposals were consistent with IDL’s concerns, and timely submitted the proposals. The proposals indicated that Lazy Y would improve environmental conditions on the land. Lazy Y alleges that it first experienced unfair treatment on June 1, 2005, when Behrens told it that its management proposals did not adequately address IDL’s concerns and would need to be modified. According to Lazy Y, the IDL had routinely leased endowment land to other parties without requiring more specific grazing management proposals than Lazy Y’s. Lazy Y also alleges that the proposals of existing lessees would have led to land damage that IDL sought to avoid and that Lazy Y’s proposals addressed. Behrens singled out Lazy Y’s proposals, Lazy Y says, because the IDL and Land Board believed that Lazy Y was connected to conservationists who have sought to improve state land management. After Lazy Y submitted new proposals, the parties further disputed their adequacy, and Behrens at one point suggested that Lazy Y might not be familiar with the applicable procedures because it was “not from Idaho.” Lazy Y responded that its president was an Idaho resident and that it was fully licensed to do business in Idaho. Eventually, IDL accepted the proposals as complete. In August 2005, the IDL scheduled auctions for five of the leases.1 Lazy Y was the high bidder for all five. According to 1 No auction was scheduled for one lease because Lazy Y was the only applicant. Two other leases were initially not auctioned because they had “creditable improvements” such as fences or other infrastructure for which the prior lessee could claim a financial interest. The ninth lease was never set for auction despite a competing bidder. LAZY Y RANCH LTD v. BEHRENS 13791 Lazy Y, however, an agent for prior lessees named Wally Butler orchestrated efforts to deprive Lazy Y of the leases by appealing the auctions.2 The appeals allegedly were on the verge of being denied by IDL staff, but before staff could act, Defendant and IDL Director Winston Wiggins unilaterally invalidated the auctions. Wiggins said he did so because — as a result of an administrative error — IDL staff had inadvertently failed to circulate Lazy Y’s management proposals to competing bidders before the auctions. Lazy Y alleges that Wiggins’s justification was a pretext, again to cover discrimination based on Lazy Y’s perceived connection to conservationists and out of a desire to protect prior lessees from competition.3 After a delay of several months, during which the prior lessees continued to use the grazing lands, the Land Board ultimately approved Wiggins’s decision to void the auctions. In February 2006, the Land Board scheduled new auctions for the five leases, as well as a sixth for which no auction had previously been conducted because of disputes over improvements on the land. The six auctions were held in June 2006, and Lazy Y was again the high bidder on each one. Lazy Y’s winning bids totaled $5,825. This time, none of the competing bidders appealed the auction results. However, Wiggins put the leases on the Land Board’s agenda for August 8, 2006. Six days before the Land Board met, Behrens recommended that it deny Lazy Y’s leases because taking them from the prior lessees would pre- 2 Lazy Y’s complaint also included claims against Butler, but the district court dismissed them without prejudice, and those claims are not at issue here. 3 As evidence of the pretext, Lazy Y alleges that Wiggins voided the auctions without providing any notice to Lazy Y, and also that the circulation requirement does not appear in any statute, rule or regulation. These assertions are contradicted, however, by a June 2005 memo to Lazy Y that included an informal IDL policy established in 2001 that competing applicants would receive each other’s management proposals before bidding. 13792 LAZY Y RANCH LTD v. BEHRENS sent a “significant increase in administrative costs.” As stated in an IDL staff memo provided on August 2, 2006, the increased costs would result because the lands covered by the leases “constitute only a portion of larger grazing allotments” that were not divided by fences, and the previous lessees — in each case the second highest bidders — had grazing rights on the adjacent land. The memo cited increased costs associated with inspecting the sites to ensure that cattle from adjacent lands would not “drift” onto the unfenced endowment lands. The memo estimated that Lazy Y’s plans would entail increased administrative costs of approximately $45,000 over the ten-year terms of the six leases. This purported increase would dwarf the $675 total by which Lazy Y’s bids exceeded the bids of the second highest bidders. The August 2, 2006 memo was the first time the IDL had ever mentioned increased administrative costs associated with new lessees. According to Lazy Y, this justification was pretextual, and suggested that Defendants should never have opened the leases for public bidding since the only parties who could avoid increased management costs were the prior lessees. In attacking the assertion of increased administrative costs, Lazy Y claims:
administrative costs; (2) Defendants failed to establish that additional inspections would really be required; (3) Defendants’ assertion of increased costs for staff time was belied because they were not planning to hire additional staff; (4) The vast majority of endowment lands leased for grazing are isolated parcels within larger grazing allotments, so Defendants’ manage- ment costs already reflect that fact; LAZY Y RANCH LTD v. BEHRENS 13793 (5) Other than in connection with past efforts by conservationists to obtain state grazing leases, Defendants have rarely if ever cited similar concerns to deny a state lease; (6) The IDL regularly loses money on endowment lands because its administrative costs outstrip the modest revenues from leases; (7) The IDL rarely undertakes the supervision necessary to ensure that other grazing lessees com- ply with management requirements for land preservation; (8) Defendants ignored the possibility that the denial of Lazy Y’s lease would lead to litiga- tion costs. Lazy Y also alleges that the “administrative costs” rationale appeared after Behrens, Wiggins, and IDL Assistant Director George Bacon spoke with representatives of the local livestock industry in meetings that excluded Lazy Y. In response to the eleventh-hour assertion of administrative costs, Lazy Y wrote to Wiggins on August 3, 2006, offering to “provide additional fencing and/or pay for additional administrative costs incurred, up to $30,000 over the course of the new ten-year leases, or such additional amount as may be shown as reasonably necessary.” Notwithstanding Lazy Y’s additional offer, the Land Board denied Lazy Y all six leases at its August 2006 meeting, and instead awarded them to the second highest bidders. Lazy Y alleges that the Board members — Idaho Governor Jim Risch, Secretary of State Ben Ysursa, Superintendent of Schools Marilyn Howard, Attorney General Lawrence Wasden, and State Controller Keith Johnson — summarily dismissed its offer to cover increased costs, thus evidencing their discriminatory treatment of Lazy Y. 13794 LAZY Y RANCH LTD v. BEHRENS Lazy Y filed its complaint on August 28, 2006, and quickly amended it to include similar allegations concerning denial of a seventh lease in September 2006. The first amended complaint seeks damages and injunctive relief.