Court Opinion

ID: 9788475
Source: CourtListenerOpinion
Date Created: 2023-08-31 00:54:58.303865+00
Date Added: 2024-06-11T07:37:11.481754
License: Public Domain

GERBER, Judge,
Dissenting.
¶ 47 I respectfully disagree with the majority. In my view, the Department’s rejection of the appellants’ grazing lease applications frustrated the Enabling Act’s mandate that trust land leases go only to the “highest and best bidder.” See Lassen, 385 U.S. at 461-62, 87 S.Ct. 584 (Enabling Act restrictions are “few and simple,” referring to the highest and best bidder requirement).
¶ 48 Who is the “highest and best bidder” continues to be a two-part inquiry. See Keith v. Johnson, 109 Ky. 421, 59 S.W. 487, 488 (1900) (“force is to be given to both the controlling words ‘highest’ and ‘best’ ” when interpreting the phrase “highest and best bidder”). The “highest” bidder offers the most money. See Brown v. City of Phoenix, 77 Ariz. 368, 375, 272 P.2d 358, 363 (1954). Here, the appellants, who bid two and five times as much as their competitors, were clearly the highest monetary bidders.
*522¶ 49 The “best” prong requires the Department to determine which lessee would best serve pecuniary and non-pecuniary interests, which include the welfare of the land itself. See Havasu Heights Ranch & Dev. Corp. v. Desert Valley Wood Products, 167 Ariz. 383, 392, 807 P.2d 1119, 1128 (App.1990) (maximizing revenue is not the sole consideration for leases). If the highest monetary bid does not serve the interests of the trust, the Department should accept the next highest bid that does.
¶ 50 Appellants’ applications more than satisfied the highest and best bidder requirement. The monetary advantage of their bids is undisputed. As to the “best interests,” our own court has noted that “factors such as ... environmental considerations may be significant.” Jeffries v. Hassell, 310 Ariz. Adv. Rep. 3, 5 n. 1, 197 Ariz. 151, 154 n. 1, 3 P.3d 1071, 1074 n. 1 (App.1999). Ceasing further damage to the land’s resources, coupled with their regeneration, serves the best interests of the trust because resting overgrazed land restores its value.
¶ 51 The majority faults the appellants for not presenting enough evidence that these lands are in such an ecological state that non-grazing serves their best interests. Appellants did present evidence that some of the trust land has become a “moonscape” from overgrazing. No more evidence need buttress the observation that land already damaged by grazing will •continue to suffer from further grazing. Furthermore, a bidder has no responsibility to demonstrate that its bid serves the best interests of the trust. Rather, the department, as trustee, must show that the best interests of the trust require preferring a particular bid over another, especially where, as here, the Department chose a lower monetary bid over a higher one. See Brown, 77 Ariz. at 375, 272 P.2d at 363 (one entrusted with the disposition of public property may award a lease to a less favorable bidder only after due investigation of the underlying facts and exercising a reasonable, honest, and prudent discretion).
¶ 52 On this record, the Department seems to care little about its fiduciary responsibility. It did not inspect or evaluate the conditions of these lands before denying appellants’ applications. It even argued that it was “irrelevant” that overgrazing had rendered some of its land a “moonscape,” surprising insensitivity for a trustee. Moreover, instead of granting these more beneficial applications, the Department renewed the former lessees’ leases, thereby allowing the very lessees whose cattle helped “moonscape” the land to continue doing so for another ten years. Renewing these prior leases cannot be reconciled with the department’s obligation to hon- or range stewardship. See Jeffries, 310 Ariz. Adv. Rep. at 4, ¶ 11, 197 Ariz. at 154, ¶ 11, 3 P.3d at 1074, ¶ 11.
¶ 53 To the Department, granting grazing leases for lands which will not be grazed violates A.R.S. section 37-281(D) and A.A.C. R12-5-502. The Department accordingly required appellants to apply for a more costly “commercial” lease, thereby squelching any beneficial competition for grazing leases.6
¶ 54 Implicit in the majority’s reasoning is the premise that “non-grazing” conflicts with “grazing,” a counterintuitive assumption unsupported in the Enabling Act. This same Department routinely allows ranchers to use their grazing leases for non-grazing purposes, sometimes for the entire duration of a grazing lease, without exacting commercial reclassification or commercial lease rates. It denies similar opportunities to conservationists.7 Under the current system, the identi*523ties of the applicant rather than the quality of the offer determine who gets a lease. The Department issues grazing leases to a rancher who can then immediately receive non-grazing permission for part or all of the lease duration. But it views a conservationist who wishes to rest the land at the lease inception as an impermissible non-grazer who, unlike the rancher, must request a more expensive “commercial” permit to rest tired land. The proposed uses for the land remain the same in both scenarios; only the applicants’ identities differ.
¶ 55 The majority finds comfort in Public Lands Council v. Babbitt, which does not address two elements in the present case. First, A.R.S. section 37-285(H), unlike the federal statutes at issue in Babbitt, expressly allows the department to “authorize non-use for part or all of a grazing use.”8 Second,' Babbitt involves neither our Enabling Act nor the fiduciary obligation of trusteeship, a higher stewardship than binds the Department of the Interior. Whether these applications violate statutes is a decidedly secondary consideration because the Enabling Act trumps all state statutes and internal departmental practices. Statutory fidelity must yield to fidelity to the Enabling Act. See Radish, 155 Ariz. at 486, 747 P.2d at 1185 (federal law is supreme).
¶56 The Department fears that if non-grazing were treated as grazing, the land would not be correctly appraised. But the Department let 90 non-grazing ranchers gain a benefit of the bargain by charging them grazing rental rates for non-grazing instead of the commercial rate. Appraisals imperfectly approximate fair market value; bids show true fair market value. See Ebke, 47 N.W.2d 520, 523 (appraised value of public land “is only an arbitrary method of fixing that value when there is no bid ...”).
¶ 57 The Department’s urging these appellants to apply for a more expensive commercial lease thrust them into a category as arbitrary as its grazing policies. Commercial lands are “used principally for business, institutional, religious, charitable, governmental or recreational purposes, or any general purpose other than agricultural, grazing, mining, oil, homesite or rights-of-way.” A.R.S. § 37-101(3) (Supp.1999).9 A “commercial lease” thus includes both revenue and non-revenue generating uses, a dichotomy producing discriminatory inconsistencies. A commercial lease holder could build a lucrative shopping mall under the same lease required of a conservationist who seeks to rejuvenate the land without generating any income at all. Because the Department does not distinguish between revenue and non-revenue “commercial” uses, it penalizes non-revenue uses which, as here, can better the land more than revenue-generating uses.
¶ 58 The Department seemingly fears loss of control over its leases by awarding them to groups like appellants. But allowing these appellants to rest the land for ten years under a grazing lease does not perpetually exclude ranchers. Nor would it result in trust lands being used inconsistently with current grazing use. At the end of their lease terms, appellants desiring to renew would compete with other applicants, possi*524bly ranchers, when further resting may well be less compelling because grazing may then be the highest and best use of the recovered land. Granting appellants’ non-use permits now hardly ties the Department’s hands in assessing future applications.
¶ 59 These considerations, coupled with the Department’s professed “irrelevancy” toward its uninspected, moonscaped land, raise economic considerations. The Department’s overbroad, higher priced commercial lease— required even for non-remunerative land resting — is predatory pricing forcing conservationists like these appellants not only out of the lease market but also out of the market pool protecting the land. Value maximizing land policy also suffers: lessee ranchers can ignore the costs they impose on other users and on the land itself when they “moonscape” instead of practicing sustainable range stewardship. Overgrazing both reduces cattle weights and hurts the land’s future utility. Moonscaping becomes truly “irrelevant” when the only incentive is to exhaust present resources of grass and water:
Government ownership of natural resources looks a lot like poorly defined property rights — everyone owns the national forests, so no one owns them____ Government managers do not have the incentive to maximize the value of the forest and ... are particularly susceptible to political meddling.
H. Butler, Economic Analysis for Lawyers 423 (1999). G. Hardin’s description of the “tragedy” of public stewardship matches the “irrelevancy” of the land condition. See G. Hardin, The Tragedy of the Commons, 162 Science 1243, 1244-45 (1968); Butler, supra at 423.
¶ 60 Nothing in the Enabling Act prefers grazing over conservation or ranchers over conservationists. The nostalgia and myth of pioneer history are irrelevant. See County of Skamania v. State, 102 Wash.2d 127, 685 P.2d 576, 580 (1984). Appellants’ willingness both to pay more money and to rest depleted land would maximize trust revenues and preserve trust assets for both short- and long-term uses. The Department’s devotion to its internal policies and statutes frustrates its primary fealty to the Enabling Act. A court which respected the Enabling Act’s precedence over lesser laws would order the Department to issue the leases in question.

. As the majority points out, the record currently before the court contains no evidence regarding the actual price that the department would have charged appellants for a commercial lease of the lands in question here. Nevertheless, common sense dictates that, in practice, the commercial lease rate for any given parcel of state trust land will always be substantially higher than the grazing lease rate for the same parcel. The reclassification requirement therefore stifles market competition for grazing leases by pricing conservationists out of the lease market and allowing existing rancher lessees to bid the bare minimum rental rate for their grazing leases. Given that the grazing lease uses proposed by appellants here are not inconsistent with those the department currently approves for existing grazing land lessees, it is difficult to see how the trust benefits by pricing conservationists out of the grazing lease market just because they will not stock their leased lands with livestock.

. The record shows that the Department granted grazing leases on at least two occasions to applicants who did not intend to use the land for grazing purposes. The U.S. Fish and Wildlife *523Service (“Fish & Wildlife") created a wildlife refuge on the land, and Raymond Buffalo Ranch grazed buffalo, not a range animal defined by the Department’s statutes and rules. The Department worked with both these applicants to change the category. Here the Department did not negotiate with the appellants at all but summarily denied their applications. The Department routinely grants permission to existing holders of grazing leases to rest all or part of the land, a permission also denied these applicants. plain language of the Taylor Grazing Act, Federal Land Policy and Management Act, and the Public Rangelands Improvement Act).

. The Babbitt court found that the Secretary could not promulgate a regulation allowing grazing permits to be issued for "conservation use” specifically because there was no language allowing a grazing permit to be issued for a purpose other then grazing in the controlling statutes. See Babbitt, 154 F.3d 1160, 1181 (referring to the

. At least one appellant here (Forest Guardians) expressed a desire to secure a grazing lease, in part, for "recreational purposes.” Arizona’s statutes do not define what "recreational purposes” are. But whatever "recreational purposes” may mean, the appellant’s bare desire to use his grazing lease land for such purposes was clearly not the primary reason for appellant’s attempt to secure a grazing lease. This desire hardly is sufficient to require appellant to apply for a commercial lease by operation of A.R.S. § 37-101(3). It would be an entirely different matter if it appeared that appellant was trying to obtain a grazing lease for a revenue-rich commercial campground or a ski resort.