While the agencies’ grazing programs are similar  in that they offer private ranchers access to federal lands and vegetation for  their livestock, agencies manage their grazing programs under different  authorities and for different purposes. The agency uses grazing as a tool to manage habitat. Federal Agencies Spent at Least $144 Million on Grazing Activities, Although Some Agencies Do Not Track Expenditures for Grazing on Federal Lands

Federal agencies spent at least $144.3 million in direct and indirect  expenditures to support grazing activities on federal lands in fiscal year  2004. Federal Agencies Collected About $21 Million in Grazing Receipts in Fiscal Year 2004—Less Than One-Sixth of the Expenditures Needed to Manage Grazing

The 10 federal agencies collected a total of about $21 million from fees  charged for their grazing permits and leases in fiscal year 2004—less than  one-sixth of the expenditures needed to manage grazing; the largest  amount of funds, $17.5 million, was collected by BLM and the Forest  Service. BLM and the Forest Service Collected About $17.5 Million in Grazing Receipts in Fiscal Year 2004, Distributed About $4.8 Million to States and Counties, and Deposited About $3.7 Million to the General Fund of the Treasury and Almost $8.8 Million to Range Improvement Funds

BLM and the Forest Service collected about $17.5 million, or 83 percent, of  all grazing receipts federal agencies collected in fiscal year 2004. Grazing Fees Charged by Federal Agencies, Western States, and Private Ranchers Varied Widely, Depending on the Purpose of the Fee and the Approach Taken to Set It

Fees charged in 2004 by the 10 federal agencies, as well as state land  agencies and private ranchers, varied widely, depending on the purpose for  which the fees were established and the approach to setting the fee. As a result, the fee produced by the formula is generally  lower than the fees charged by the other agencies, states, and private  ranchers. In effect, the fee is adjusted to reflect  ranchers’ ability to pay. Of the 15 state agencies charging fees, 6 agencies used competitive  methods to determine the fair market value of their lands in fiscal year  2004; 6 used appraised prices or formulas to estimate the fair market value  of their lands; and 3 used only formulas that do not start with a market  price. The Purpose of the BLM and the Forest Service Fee in Western States Is Not to Recover Expenditures or to Charge Market Value; Different Purposes Would Result in Different Fees

As we noted in our 1991 report on the BLM and Forest Service grazing fee,  fees can vary depending on the purposes for which they are charged. If the purpose of the fee were to recover expenditures and if each agency  were to charge a fee that recovered its expenditures, BLM would have had  to charge up to $7.64 per AUM, and the Forest Service would have had to  charge up to $12.26 per AUM in 2004, according to our analysis of the  agencies’ estimated expenditures and the number of AUMs billed (7.6  million AUMs for BLM and 6.1 million AUMs for the Forest Service). DOE also did not  provide official written comments but provided technical comments, which  we incorporated as appropriate. Commerce and Justice did not have  comments on the draft report. In general, the department stated that the report accurately  recognizes that differences in resource conditions and legal requirements  can cause variations in livestock grazing fees and pointed out the difficulty  in capturing the costs of grazing programs. The Forest  Service neither agreed nor disagreed with the findings in the report. Objectives, Scope, and Methodology

We provided information on the (1) extent of livestock grazing on, and  program purposes for, land managed by 10 federal agencies; (2) amount  spent in fiscal year 2004 by these agencies and other federal agencies that  have grazing-related activities, to manage livestock grazing on public lands;  (3) total receipts collected for grazing privileges by the 10 federal agencies  with grazing programs and the amounts disbursed to counties, states, or  the federal government; and (4) grazing fees charged by the 10 federal  agencies, western states, and private ranchers, and the reasons for any  differences among the fees. Fish and Wildlife Service, and Bureau of Reclamation (Reclamation); the  U.S. Department of Agriculture’s (USDA) Forest Service; the Department of  Defense’s (DOD) Army, Army Corps of Engineers (Corps), Air Force and  Navy; and the Department of Energy (DOE). To determine the extent of grazing on land managed by the agencies, we  obtained agency data for 2004 on acres and animal unit months (AUM). Current Fee for BLM’s and the Forest Service’s Western States

In 2004, the grazing fee for lands managed by BLM and the Forest Service’s  16 western states was $1.43 per AUM—or the amount of forage needed to  sustain a cow and her calf for 30 days. The department manages more than 9.3 million acres of land, of  which more than 8.3 million acres were allocated for grazing in fiscal year  2004. The board sets the grazing fee using a  formula based on livestock market factors. GAO/AIMD-98-11.
Why GAO Did This Study

Ranchers pay a fee to graze their livestock on federal land. Grazing occurs primarily on federal land located in the western states managed by 10 federal agencies. Generally, the fee is based on animal unit months (AUM)--the amount of forage that a cow and her calf can eat in 1 month. For most federal land, the fee per AUM is established by a formula. Advocates argue that grazing uses federal land productively and that the grazing fee is fair. Opponents argue that grazing damages public resources and that grazing fees are too low. GAO was asked to determine the (1) extent of, and purposes for, grazing in fiscal year 2004 on lands 10 federal agencies manage; (2) amount federal agencies spent in fiscal year 2004 to manage grazing; (3) total grazing receipts the 10 agencies collected in fiscal year 2004 and amounts disbursed; and (4) fees charged in 2004 by the 10 agencies, western states, and ranchers, and reasons for any differences. In commenting on a draft of this report, the Department of the Interior and the Forest Service neither agreed nor disagreed with the findings. The Forest Service stated that the report accurately described the purpose of the grazing fee. The Army and Air Force and the Department of Energy provided technical comments, which we incorporated as appropriate. The departments of Commerce and of Justice responded that they did not have comments.

What GAO Found

The 10 federal agencies managed more than 22.6 million AUMs on about 235 million acres of federal lands for grazing and land management in fiscal year 2004. Of this total, the Department of the Interior's Bureau of Land Management (BLM) and the U.S. Department of Agriculture's Forest Service managed more than 98 percent of the lands used for grazing. The agencies manage their grazing programs under different authorities and for different purposes. For BLM lands and western Forest Service lands, grazing is a major program; the eight other agencies generally use grazing as a tool to achieve their primary land management goals. In fiscal year 2004, federal agencies spent a total of at least $144 million. The 10 federal agencies spent at least $135.9 million, with the Forest Service and BLM accounting for the majority. Other federal agencies have grazing-related activities, such as pest control, and spent at least $8.4 million in fiscal year 2004. The 10 federal agencies' grazing fees generated about $21 million in fiscal year 2004--less than one-sixth of the expenditures to manage grazing. Of that amount, the agencies distributed about $5.7 million to states and counties in which grazing occurred, returned about $3.8 million to the Treasury, and deposited at least $11.7 million in separate Treasury accounts to help pay for agency programs, among other things. The amounts each agency distributed varied, depending on the agencies' differing authorities. Fees charged in 2004 by the 10 federal agencies, as well as state land agencies and private ranchers, vary widely. The grazing fee BLM and the Forest Service charge, which was $1.43 per AUM in 2004, is established by formula and is generally much lower than the fees charged by the other federal agencies, states, and private ranchers. The other agencies, states, and ranchers generally established fees to obtain the market value of the forage. The formula used to calculate the BLM and Forest Service grazing fee incorporates ranchers' ability to pay; therefore the current purpose of the fee is not primarily to recover the agencies' expenditures or to capture the fair market value of forage. As a result, BLM's and the Forest Service's grazing receipts fell short of their expenditures on grazing in fiscal year 2004 by almost $115 million. The BLM and Forest Service fee also decreased by 40 percent from 1980 to 2004, while grazing fees charged by private ranchers increased by 78 percent for the same period. If the purpose of the fee were to recover expenditures, BLM and the Forest Service would have had to charge $7.64 and $12.26 per AUM, respectively; alternately, if the purpose were to gain a fair market value, the agencies' fees would vary depending on the market. Differences in resources and legal requirements can cause fees to vary; however, the approaches used by other agencies could close the gap in expenditures and receipts or more closely align BLM and Forest Service fees with market prices. The purpose of the grazing fee is, ultimately, for the Congress to determine.