“Although the Constitution and specific federal statutes require ranchers be compensated for the value of their property interests when government officials cancel grazing permits in whole or in part (i.e. Federal Land Policy Management ActFLPMA, 1976), it is their range improvements (i.e. forage, stockwater, fences, roads, trails, corrals, and structural or nonstructural improvements) that ranchers are to be compensated for, not the permit.”

Video from Western Freedom Forum

Angus McIntosh PhD, a former federal employee-turned rancher, instructs other ranchers and landowners on the fundamentals of property rights and the redress of encroachments by federal agencies in Western states.

Although numerous authors have speculated about permit-value, leasehold interests, and production-input costs above grazing-fee costs, federal policy as to what constitutes property value on federal land ranches has never been fully examined.

Federal laws and policy were analyzed to determine what basis exists for property rights claims on Western ranches. Laws from the 1800s and 1900s granted split-estate interests in water rights, rights of way, improvements and grazing values. Later statutes provided for the issuance of permits authorizing development of additional improvements, water rights, and rights of way.

FLPMA repealed earlier statutes, protected prior rights, and required compensation for ranchers’ improvements, water rights, forage, and rights of way when grazing permits are cancelled. Conventional appraisal methods fail to consider highest-and-best use and replacement cost when evaluating split-estate ranches.

A five variable valuation vii Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. model incorporating: 1) water rights, 2) rights of way, 3) range improvements, 4) grazing value, and 5) patented lands, was developed. The model was applied using the case study approach to a controversial ranch in central Nevada.

The model, emphasizing highest-and-best use and the replacement cost depreciated approach, was compared to the conventional valuation method that emphasizes sales comparison and income capitalization. The model indicated a fair market value from 4.S to 150 times greater than that derived from the conventional valuation approach. The difference in values appears primarily due to the failure of conventional appraisal methodology to consider alternative highest-and-best use value of water rights (in this case for quasimunicipal use).

Conventional appraisal methods also fail to consider the value of ranchers’ range improvements and rights of way associated with the water rights, range improvements and patented lands. It also appears that government regulatory actions may be exerting undue stimulus to create artificially low market values.

Read the full dissertation here [PDF]

Free Range Report Admin.