State Trust Lands: Static Management and Shifting Value Perspectives

By Pounds, Erin | Environmental Law, Fall 2011 | Go to article overview

State Trust Lands: Static Management and Shifting Value Perspectives


Pounds, Erin, Environmental Law


  I. INTRODUCTION

 II. A BRIEF HISTORY OF STATE TRUST LANDS

III. THE TRUST FORMED BY THE ARIZONA-NEW MEXICO ENABLING ACT
     A. Elements of the Trust
     B. Early Cases Recognizing the Trust.

 IV. RECENT STATE TRUST LAND LITIGATION
     A. Changing Management Through Constitutional Amendment
     B. Obtaining Fair Market Value for Grazing Leases
     C. Considering High Bids from Environmental Interests
     D. Strictly Enforcing the Duty to Obtain Full Market Value
     E. Managing Trust Lands for Long-Term Values

  V. THE FULL MARKET VALUE REQUIREMENT AND GRAZING LEASES

 VI. ECONOMIC MAXIMIZATION AND MANAGING FOR LONG-TERM VALUES

VII. CONCLUSION

I. INTRODUCTION

At statehood, the federal government granted lands to each state to manage for various purposes such as supporting public education and other important public institutions. (1) State trust lands now comprise approximately 46 million acres of land in twenty-four states, located primarily west of the Mississippi River. (2) States hold these lands in a perpetual, intergenerational trust to support a variety of beneficiaries, and it is the states' responsibility to actively manage these lands for the benefit of the trust. (3) State trust lands are one of the most commonly overlooked categories of trust land. (4) Decisions regarding the use and disposition of these lands have greatly influenced the development of the United States, particularly in the western states, where land managers have leased many lands for grazing and agricultural uses. (5)

Early statehood grants of federal land issued under the General Land Ordinance of 1785 (6) and the Northwest Ordinance of 1787 (7) vaguely described the purposes of the grants. (8) Under these loosely worded grants, the states lost a large percentage of the granted lands due to decisions to sell the lands as rapidly as possible, often below market value, to encourage westward settlement and to support the early schools. (9) In response to these perceived misuses of the grants, Congress began placing more restrictive language in the statehood acts for those states admitted to the Union after 1850, particularly New Mexico and Arizona. (10) These new specifications included 1) directing the states to manage lands for income production, 2) proscribing the disposition of trust lands except when full value is received, and 3) often imposing procedural safeguards such as public notice and auction sales. (11)

The dominance of trust principles in the management of these lands did not become clear until after the Arizona and New Mexico accession in 1912, under the Arizona-New Mexico Enabling Act. (12) Arizona and New Mexico entered the Union under the same enabling act, which contained "uncharacteristically lengthy" management requirements by comparison to preceding enabling acts. (13) In 1966, the United States Supreme Court relied on the restrictive language in the Arizona--New Mexico Enabling Act in Laden v. Arizona ex tel. Arizona Highway Department, (14) holding that the requirements in the Act established an enforceable trust relationship between the State and the intended beneficiaries of the land grant--the state school fund. (15) Lassen established the notion of a trust in state-managed federal land grants, and state courts from all over the West relied on the Supreme Court's reasoning to find a trust in other statehood grant lands, (16) even in states whose enabling acts did not contain the restrictive language of the Arizona-New Mexico Enabling Act. (17)

As a result of this enforceable trust in statehood land grants, there has been a fair amount of litigation over whether state management of the trust lands satisfies the conditions established by the various statehood acts. (18) The Supreme Court's Lassen decision raised several issues concerning natural resource management activities on state trust lands, (19) which have since included whether statehood acts require the state to obtain fair market value for natural resource management, and whether a state may take into account the long-term value of activities when malting land management decisions.

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