ALJDEC

99F-024-LAN · State Land Department · 2001-02-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 6, 2000; 9:05 A.M.; Phoenix, Arizona APPEARANCES: Applicant Appellant Jonathan Dale Tate: Timothy M. Hogan, Esq. Applicant Santa Margarita Ranch, Inc.: Scot C. Stirling, Esq. Arizona State Land Department: Theresa M. Craig, Esq., Assistant Attorney General ADMINISTRATIVE LAW JUDGE: George A. Schade, Jr.

This is an appeal from the denial of an application for a grazing lease on State trust land following a determination of conflicting applications. The application was denied pursuant to Arizona Revised Statutes (“A.R.S.”) § 37-284. Based upon the evidence presented at the hearing, Administrative Law Judge (“ALJ”) George A. Schade, Jr. submits this Recommended Decision and Order to the State Land Commissioner (“Commissioner”) of the Arizona State Land Department (“Department”). FINDINGS OF FACT PROCEDURAL BACKGROUND A. The Applicants 1. In December 1999, Mr. Jonathan Dale Tate (“Tate”) filed Grazing Lease Application No. 05-105399. 2. Until its lease expired in 2000, the Santa Margarita Ranch, Inc. (“Santa Margarita”) held the grazing lease for the trust land (“trust” or “trust land”) associated with Tate’s application. 3. Santa Margarita filed an application to renew its grazing lease (05- 3453) for the same land contained in Tate’s application. 4. Santa Margarita operates three separate but contiguous grazing units. Besides the parcel that is the subject of these conflicting applications, Santa Margarita operates the Las Delicias Ranch and the Santa Margarita Ranch. The Las Delicias Ranch was acquired in 1996, covers approximately 13,000 acres of land and carries from 150 to 175 head of cattle. The Santa Margarita Ranch was acquired in 1984, covers 36,000 acres of land and carries approximately 800 head of cattle. Both ranches include private and trust lands. 5. The trust land that is the subject of the conflicting applications covers 1,675.50 acres located in Sections 19, 20, 21, 22, 27, and 28, Township 19 South Range 8 East, G&SRB&M, in Pima County.[1] B. Proceedings at the Department 6. The Department sent notices of conflicting applications and requested statements of equity from Tate and Santa Margarita. 7. Santa Margarita submitted a statement of equity on February 19, 2000. On March 1, 2000, Tate submitted a statement of equity. 8. On June 1, 2000, the Department issued a Notice of Hearing “for the purpose of gathering additional information” from Tate “to assist in resolving the conflict with” Santa Margarita.[2] On June 15, 2000, the Department issued an Amended Notice of Hearing describing the “additional information sought by the Department,” which was the following: “1. The dollar amount Mr. Tate is willing to pay over and above the appraised annual rental rate.

2. What Mr. Tate’s intentions are with respect to grazing livestock.

3. What Mr. Tate proposes for a grazing management plan.

4. Information about Mr. Tate’s background and experience in grazing livestock.”[3]

9. On June 27, 2000, the Department held a 45-minute informational hearing. 10. At the informational hearing, Tate clarified his offer of additional rental. He stated that his offer was $7.84 per Animal Unit Month (“AUM”) and retracted the offer of $18.00 per AUM contained in his statement of equity. Tate could not indicate the timing for stocking the lease, maintaining that he would stock when the land was in condition to be stocked and as advised by his range consultant Professor Jerry Holechek, a professor of range science at New Mexico State University. He could not provide details about his management plan, which would be prepared by Professor Holechek. 11. At the informational hearing, Tate was asked questions regarding a prior application for a grazing lease and his intentions with respect to stocking and operating this grazing lease. Tate stated that his prior application for a grazing lease was made for the purpose of resting lands that had been damaged by overgrazing and had no relevance to this application, and he intended to stock fully this grazing lease, if awarded to him, consistent with the Department’s requirements. 12. On July 6, 2000, Mr. Stephen M. Williams, Manager of the Department’s Range Section, spoke by telephone with Professor Holechek. Professor Holechek stated that Tate had neither spoken with him nor retained him for consulting services. 13. The Department's Range Section recommended that Tate’s application for a grazing lease be denied and Santa Margarita’s application be approved but with an additional lease term stating that the lessee will pay a grazing rental of $4.00 per animal unit month (“AUM”) through the term of the lease, or the appraised rental, whichever is greater. 14. The Range Section determined the equities as follows: “FENCING IMPROVEMENTS Santa Margarita WATER IMPROVEMENTS Santa Margarita CONTROL OF ADJACENT FEDERAL LAND Neither applicant PRIVATE CONTROLLED LAND Santa Margarita LEGAL ACCESS Santa Margarita WILLINGNESS TO PAY MORE THAN THE APPRAISED RENT Both applicants COORDINATION/STEWARDSHIP/ CONSERVATION PLANS Neither applicant GRAZING MANAGEMENT PLAN Both applicants AVAILABILITY OF OTHER LANDS TO USE IN CONJUNCTION WITH THE SUBJECT LAND Santa Margarita EXPERIENCE Santa Margarita.”[4]

15. On August 31, 2000, the Commissioner adopted the recommendation of the Range Section and issued Decision and Order No. 046-2000/2001 denying Tate’s application. 16. On September 27, 2000, Tate filed a Notice of Appeal. The grounds of appeal were: “1. The Department concluded that the equities of the competing applicant, Santa Margarita Ranch, including an offer to pay additional rent, are superior to the equities and offer to pay additional rent of Jonathan Tate. The Department’s conclusion is without basis in fact, is not supported by the record and constitutes a misinterpretation of the applicable statute, A.R.S. § 37-284(A).

2. If the Department’s interpretation of A.R.S. § 37-284(A) is correct then the statute violates the Enabling Act and the state’s duty as trustee.

3. The Department’s determination that it is in the best interest of the trust to retain Santa Margarita Ranch, Inc. as a grazing lessee is arbitrary and capricious and not supported by the facts in this case.”[5]

C. Proceedings at the Office of Administrative Hearings 17. On October 3, 2000, the Commissioner issued a Notice of Hearing setting a hearing on November 17, 2000, before the Office of Administrative Hearings. On October 19, 2000, pursuant to Tate’s unopposed motion to continue the hearing, the hearing was continued to December 6, 2000. 18. On December 6, 2000, a full day hearing was held. Tate, Santa Margarita and the Department presented testimony and submitted exhibits. Mr. Tate; Mr. Joseph Walter Lane, Santa Margarita’s ranch manager; Mr. Williams; and Mr. Mervin L. Mason, a manager at the Department and the Hearing Officer of the June 27, 2000, informational hearing, testified. Tate submitted seven exhibits; Santa Margarita submitted one exhibit; the Department submitted four exhibits; and, the ALJ took official notice of four exhibits in order to prepare this procedural history. 19. Pursuant to stipulation, the record of the hearing closed on January 19, 2001, in order to give legal counsel an opportunity to submit proposed findings of fact and conclusions of law. All the parties timely filed proposed findings and conclusions. THE APPLICATIONS A. The History of the Parcel 20. The parcel that is the subject of these conflicting applications (“the parcel”) was formerly leased to Kip Ripley and Cynthia Ripley, who in January 1998, assigned the lease and conveyed ownership of an adjacent 40 acres of private land (“40 deeded acres”) in the Southwest Quarter of the Southwest Quarter of Section 22, to Santa Margarita. 21. The parcel contains 1,675.50 acres of land, and the allotment of the lease is 23 cattle per annum. 22. The parcel is bounded on the south in Sections 27, 28, 29, 30, and by the Santa Margarita Ranch, which belongs to Santa Margarita. The parcel is bounded on the north, in Section 22, by privately owned property in Section 15, which is a part of the Las Delicias Ranch (also belonging to Santa Margarita). The parcel is also bounded on the north in Sections 19, and 21 by private land. The parcel is bounded on the east in Sections 22 and 27 by the Buenos Aires National Wildlife Refuge. 23. For about ten years before the lease was assigned to Santa Margarita, the Ripleys managed and used this parcel in conjunction with the deeded acres and with other privately owned land in Brown Canyon, located in Sections 17, 18, 20, and 21. The other privately owned land was subsequently sold and ceased to be used for grazing by the Ripleys several years before the Ripleys assigned their lease to Santa Margarita. 24. During the six to seven years preceding the assignment of their lease to Santa Margarita, the Ripleys operated the parcel and the adjacent deeded acres as an independent (or “stand alone”) grazing unit. 25. Since its separation from the other privately owned property in Brown Canyon, the parcel has had a single reliable source of water. This source is a windmill well located in the Southeast Quarter of the Southwest Quarter of Section 22. The other sources of water for cattle are seasonal surface water flows in Brown Canyon and ephemeral surface flows from precipitation. 26. The western portion of the parcel, namely, in Sections 19, 20 and 21, has hilly and steep terrain, does not have a reliable source of water, and is less hospitable for grazing cattle than the parcel’s eastern portion. A natural topographic barrier in the North Half of the Northwest Quarter of Section 28 impedes the movement of cattle into the western portion. 27. The boundary between the parcel and privately owned land in Brown Canyon (located on portions of Sections 17, 20 and 21) is not fenced. The other boundaries are fenced. B. Proposed Rental Payment 28. Both applicants offered to pay more than the appraised rental value of $2.00 per AUM through the term of the lease. Tate offered to pay $7.84 per AUM, and Santa Margarita offered to pay $4.00 per AUM. Both applicants are willing to pay full use rent through the term of the lease at the rates proposed in their applications. C. Access to the Parcel 29. Both Tate and Santa Margarita have legal access to the parcel from the East by an existing, non-exclusive right-of-way across the Buenos Aires National Wildlife Refuge. This right-of-way ends on the 40 deeded acres that Santa Margarita owns. 30. Santa Margarita also has access to the parcel (1) from the north through its adjoining private land in Section 15 of the Las Delicias Ranch, (2) from the south through the Santa Margarita Ranch, and (3) from the 40 deeded acres in Section 22. Santa Margarita has access to the Las Delicias Ranch on the north and to the Santa Margarita Ranch on the south. D. The Applicants' Ranching Experience and Management Resources 31. Tate is associated with a residential home builder in Tucson, Arizona (for the past three to four years). He has experience in managing, remodeling and reselling real estate properties. 32. Mr. Tate has no relevant academic education or working ranching experience, in his testimony, “nothing relevant” to range management. He has not taken animal science or range management courses, attended seminars on those subjects or any other subject related to a ranching operation, or sought informal or practical instruction in animal husbandry or range management in order to prepare himself to be a grazing lessee. He has not seriously investigated or made formal arrangements to obtain assistance in those areas from others. He has not spoken directly with Professor Holechek, a friend having been the person who spoke with Professor Holechek. 33. Mr. Joseph Walter Lane, Santa Margarita’s ranch manager, has been involved in the ranching business for more than thirty years, with the last eleven years in ranch management and sales. He has managed three ranches in Cochise County with both State and Federal grazing leases. Since 1994, he has managed the Santa Margarita Ranch. Mr. Lane has completed animal science and range management courses at the University of Arizona, a land grant educational institution. Mr. Lane received a Bachelor of Science Degree in Business Administration from the University of Arizona in 1983. 34. Mr. Lane is on the Santa Margarita Ranch, Las Delicias Ranch, and the parcel weekly. 35. Santa Margarita employs a foreman and two cowboys who live on the Santa Margarita and Las Delicias Ranches and actively manage and rotate the cattle on the three properties. E. The Applicants' Resources 36. When he submitted his statement of equity in March 2000, Tate had not made any formal arrangements to retain a range consultant. At the informational hearing held on June 27, 2000, Tate advised the Department of his intent to rely upon the advice of "his range consultant," Professor Holechek, but Tate had not made any arrangements with Professor Holechek to obtain consultation services or advice. As of the date of the hearing, Tate had not spoken with or entered into a written contract with Professor Holechek to provide range consulting services, advice or assistance. 37. Professor Holechek subsequently advised the Department that he had received an e-mail and a telephone message from Tate, and Tate testified that a friend had spoken by telephone with Professor Holechek. Professor Holechek advised the Department that he requires a contract for his services, and none existed with Tate. 38. Tate anticipates obtaining occasional advice from Professor Holechek by telephone, as Professor Holechek resides in New Mexico. 39. In his statement of equity, Tate stated that he had no ranching experience, "but plan to hire consultants to assist in the successful management of the subject property."[6] As of the date of the hearing, Tate had made no formal arrangements to hire any consultants. 40. Tate anticipates obtaining help and assistance from “friends and volunteers.” 41. Tate has spoken with an individual named Alberto Lopez about finding or being a ranch manager or foreman. Mr. Lopez is a concrete foreman for one of Tate’s construction subcontractors. Nothing definite has been established with Mr. Lopez. 42. Tate has not made any other arrangements to hire or contract with a ranch manager, foreman or cowboy. 43. Tate is not familiar with either the probable costs of hiring and retaining a ranch manager, foreman or cowboy or with the customary terms of employment for these positions. 44. Cowboys are typically compensated by providing residential housing on or near the property they work in addition to a salary and other compensation. For example, Santa Margarita provides compensation of $1,000.00 to $1,500.00 monthly, housing and beef for personal consumption. 45. There is no residential housing on the parcel available for a cowboy. 46. It is likely that a cowboy who commutes from another location and is not living in proximity to the parcel will not be able to keep the cattle from congregating around the single source of water on the parcel and consequently overgraze that area. 47. When Tate filed his statement of equity, he had not determined how he would rest the plant resources on the leased area. At the hearing, he proposed transporting the cattle from the parcel to an unspecified feedlot or to other unspecified pastures for a part of the year, without having investigated the economic feasibility or physical availability of such arrangements. 48. Tate has not made a serious effort to investigate the economic and logistical requirements to operate a grazing lease as he proposed in the application and in his statement of equity. 49. Tate’s objectives for the parcel are, in order, hunting, conservation and cattle ranching. He applied for the lease because its proximity to Tucson (where he resides) would allow him to be near, and the parcel is a small enough unit for “a beginning rancher.” He wishes to obtain the lease to demonstrate that a grazing lease can be operated with a “non-profit motive” and that “ranching can coexist with hunting.” The conservation objectives are related to improving habitat for quail[7] and small birds. F. Quality of Range Management and Resources 50. During the several years that the Ripleys operated the parcel as an independent ranching unit, the condition of the land was adversely affected by cattle grazing in the eastern portion of the property, near the windmill well in Section 22, because of the inability to move or rotate periodically the cattle to other pastures in order to rest the plant resources in the vicinity of the well. 51. The hilly and steep terrain of the western portion of the parcel and limited availability of water there would make it difficult to conduct rest/rotation grazing management within the boundaries of the leased area. 52. One of the problems with continuous grazing is that livestock have preferred areas for grazing, generally in proximity to water and forage. These areas are affected not only by stocking rates but also by grazing periods. Even under light stocking rates, these areas may receive excessive use unless the cattle are periodically moved or rotated to other pastures. 53. Effective range management requires a rest/rotation grazing system and periodic movement of cattle to other pastures to give rest to grazed areas. The rotation of cattle and access to other water sources allows a uniform use of pasture, reduces stress on forage around water sources and allows vegetation around water sources to recover from the effects of grazing. This rest/rotation practice improves the use of forage between water sources that would otherwise be underutilized. 54. Since the parcel’s lease was assigned to Santa Margarita in 1998, the parcel has been operated in conjunction with Las Delicias Ranch, and has been managed by Santa Margarita together with the Las Delicias and Santa Margarita Ranches. 55. As a result of the joint operation of the parcel and the Las Delicias Ranch, cattle grazing on the parcel have access to other pastures and to other water sources on the Las Delicias Ranch, thereby allowing the implementation of rest/rotation grazing management on the parcel and the Las Delicias Ranch. Santa Margarita also has one well in the Santa Margarita Ranch that it uses when the cattle are rotated between pastures. The availability of water sources in the other two ranches facilitates a more uniform distribution of cattle than if the cattle was grazed solely within the leased area. 56. Since 1998, the suitable grazing area in the eastern portion of the parcel (West Half of Section 22, Northwest Quarter of Section 27, and North Half of Section 28) has been grazed in conjunction with the Diablo Pasture on the Las Delicias Ranch. 57. Santa Margarita's grazing management allows periods of rest for rejuvenation of plant resources on the parcel and on the Las Delicias Ranch. 58. Since Santa Margarita acquired the Ripleys’ lease for the parcel, the condition of the land has improved as a result of Santa Margarita's operation of the parcel in conjunction with the Las Delicias Ranch and, secondly, the management practices Santa Margarita has implemented. Mr. Lane testified that after the Ripleys had operated the lease on the parcel as a “stand alone unit,” the condition of the land was poorer than now because the land had not been allowed to rest. 59. Santa Margarita's ownership of the 40 deeded acres in Section 22 allows it to make more effective use of the parcel by expanding the area in which cattle may be grazed in the vicinity of the windmill well in Section 22. 60. There is no evidence showing that Santa Margarita has not registered its wells or that it has not complied with any requirements regarding documentation of claimed water rights. 61. Tate has not previously owned livestock or leased lands for livestock grazing. 62. Tate does not own or lease any adjacent or neighboring grazing lands. 63. In his statement of equity, Tate indicated that he anticipated grazing the parcel with "a winter use only with a utilization rat[e] of 25% or less and complete growing season rest each year."[8] At the hearing, Tate testified that he plans to place the allotted number of cattle on the property for only a part of the year, but he “has not investigated it thoroughly” as to the costs or feasibility of removing those cattle to feed lots during the remainder of the year nor has he fully investigated the costs of selling and replacing cattle each year. 64. Tate has a registered livestock brand (“Sad 6”) but has never used it. 65. Tate testified he did not know the extent or ownership of the water sources available for this lease. 66. Tate does not know what breed of cattle he will graze, but possibly it might be Hereford. 67. Tate, who has visited the area “briefly,” testified that the parcel “is in pretty good condition…not overgrazed,” and Santa Margarita has done a “pretty decent job” and “is doing an excellent job” of managing the land. The “habitat is in pretty decent shape.” The present condition of the parcel is such that it “does not need to be rested;” some lands “need to be rested,” “but not this parcel.” 68. Tate testified he does not believe he can do a “better job” than Santa Margarita has done managing the leased area, but believes he “can do as well” as Santa Margarita. 69. Santa Margarita has paid full use rent every year for the expired lease and for its leases on the Las Delicias and Santa Margarita Ranches since the leases were acquired. Its record of paying rent and complying with lease terms is good. Under Mr. Lane’s management since 1994, Santa Margarita has not been charged with any lease violations. G. Lease Improvements 70. Existing improvements include a windmill well (Santa Margarita installed the windmill) with a replacement cost of approximately $15,000.00; cement storage tanks and wood corrals with a replacement cost of $2,500.00; and, five+ miles of fence with an estimated replacement cost of $5,000.00 per mile. 71. Santa Margarita paid the Ripleys for the lease improvements on the parcel when the Ripleys assigned their lease to Santa Margarita. 72. Santa Margarita has maintained the improvements. There is no evidence showing that the maintenance has been less than average or poor. 73. Santa Margarita is entitled to reimbursement for the range improvements, if the grazing lease is awarded to Tate. 74. Tate is willing to reimburse Santa Margarita for its range improvements. H. Administrative Oversight 75. The Department's experience is that the oversight of grazing lessees who do not comply with lease requirements causes the Department to expend greater administrative time monitoring those lessees to the detriment of other trust lands due to reduced staff availability. Mr. Williams expressed concern over possible errors of action or omission in the management and care of cattle that might occur because of Tate’s lack of training and experience. He testified that there is a need to respond quickly to problem situations on the ground, and the Range Section struggles to provide oversight of grazing leases because of limited personnel resources.[9] According to Mr. Williams, a lessee’s inexperience may cause the Department to divert resources from other trust management activities. 76. Santa Margarita, under Mr. Lane’s management, has a good working relationship with the Department. I. Prior Statements of Tate Regarding Grazing on Trust Land 77. The ALJ has not given substantive weight to the testimony and evidence[10] regarding prior statements made by Tate about grazing on trust lands as these statements were more closely associated with a prior grazing lease application of some three years ago, Tate testified that for this lease he would graze cattle as required by the Department, and the ALJ wishes to weigh the totality of the evidence on its pure merits. CONCLUSIONS OF LAW A.R.S. § 37-284 A.R.S. § 37-284 (Conflicting lease applications; preference rights) states: “A. A conflicting application for an existing lease shall be filed at least two hundred seventy days but not more than one year before the expiration date on the lease. When the department receives a conflicting application, the department shall give the existing lessee thirty days' notice to file an application for renewal pursuant to this section. If two or more applicants apply to lease the same land, the department shall approve the application of the one who, after investigation or hearing, appears to have the best right to the lease. The order of filing shall not be a controlling factor in deciding who is entitled to the lease. If it appears that none of the applicants has any right or equities superior to those of another that would outweigh an offer of additional rent, and if it is in the best interest of the trust, the department may, at a stated time and after due notice to all applicants, receive bids submitted in accordance with rules of the department. If one of the competing applicants is the existing lessee who has a preferred right of renewal pursuant to section 37-291, the department may extend the preferred right of renewal to the existing lessee if the existing lessee offers a bid matching the highest bid. The department shall approve the application of the bidder who in all respects is eligible to receive a lease upon the land and will pay the highest annual rental therefor, or the department may reject all bids.

B. Any person residing upon contiguous land for which the person has an allowed United States homestead entry or for which the person has received a patent from the United States upon a homestead entry shall, upon application, have a preferred right to lease the amount of contiguous state land necessary for personal use.

C. Any person lawfully occupying any lands, the title to which is acquired by the state by operation of law, shall have a preference right to lease the occupied land provided application to do so is made within thirty days from and after written notice by the state land department to such occupant of the acquisition of title.”

CONCLUSIONS OF LAW 1. Appellant Tate has the burden of proof.[11] 2. The standard of proof on all issues is the preponderance of the evidence A “preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[12] It “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.”[13] 3. The applications of Tate and Santa Margarita are "conflicting lease applications” subject to determination pursuant to A.R.S. § 37-284. [14] 4. When conflicting lease applications are submitted, the Department "shall approve the application of the one who, after investigation or hearing, appears to have the best right to the lease."[15] 5. In determining which competing applicant appears to have the best right to the lease, the Department considers "any right or equities superior to those of another that would outweigh an offer of additional rent."[16] If none of the competing applicants has any such right or equities “and if it is in the best interest of the trust,” the Department is permitted to “receive bids submitted in accordance with [its] rules” for the award of a lease.[17] 6. The “‘best interest standard’ does not require blind adherence to the goal of maximizing revenue at the cost of contracting with” an inexperienced or unprepared lessee.[18] Although the Department “has the duty to maximize revenue to the trust [citation omitted]…immediate revenue is not the sole consideration in determining the best interests[19] of the trust.”[20] It follows that an offer of additional rent by a competing applicant for a grazing lease “is not the sole consideration” for the Department to approve a conflicting application. 7. An applicant’s training and experience in cattle ranching and range management are legitimate factors for the Department to weigh when deciding which of two competing applicants has the better right or equities to a grazing lease. 8. In determining which competing applicant “has any right or equities superior to those of another,” the Department may consider other factors such as ownership of contiguous lands, leases held on adjoining lands, a parcel's leasing history, a lessee's financial investment in the land, and an applicant’s history of range management and lease stewardship. These factors are germane and relevant in the Department’s “investigation or hearing” of competing lease applications.[21] As the Arizona Supreme Court has held, “[t]here are many factors to be considered in addition to the rental value,”[22] and the Arizona Court of Appeals has stated that the “Legislature chose a broader, ‘best interest’ standard that permits other considerations.”[23] 9. The equities presented in Santa Margarita’s application are superior to those presented in Tate’s application and outweigh the offer of additional rent. To resolve these applications, the experience of the applicants is important. Tate’s cattle ranching and range management experience are nonexistent. Tate is not educated, trained, experienced, or prepared to implement his own plans, has not made a serious or concerted effort to obtain the knowledge or experience needed to run a grazing lease, and has not made appropriate efforts or arrangements to obtain the assistance of others with the knowledge and experience required to operate a grazing lease. Tate’s statements that he would rely on others to manage and operate the grazing lease belie a lack of a minimum level of technical knowledge, entrepreneurial preparation and business acumen to operate a grazing lease. A grazing lessee should be reasonably competent, experienced, knowledgeable and serious about the business of operating a ranch on trust land. An applicant falling short of these requisites would not serve the best interest of the trust. Tate falls short. Tate offered $7.84 per AUM for full carrying capacity for the full term of the lease. Santa Margarita offered $4.00 per AUM but has more cattle ranching and range management experience than Tate. Tate has not investigated the economics of the grazing operation he seeks to establish, does not have definite plans regarding its management, and lacks experience in managing a cattle operation. Santa Margarita’s equities in experience and range management and its offer of $4.00 per AUM are superior to Tate’s equities of intent to manage for sustained use and health of the land without knowledge and experience of costs and management issues and his offer of $7.84 per AUM. Due to its ownership and control of adjacent lands combined with its superior ranching experience and resources, Santa Margarita has superior equity because of its ability to implement a rest/rotation grazing system that produces optimal use of the parcel for plant reproduction and growth. 10. The Department’s denial of Tate’s application was not arbitrary, capricious or an abuse of discretion.[24] The Department properly considered the respective cattle ranching and range management experience and abilities of Tate and Santa Margarita and all the factors listed above and determined that Santa Margarita's application has the best right to the lease. 11. “Any lease of trust lands must serve the ‘best interest of the trust’.”[25] It is in the best interest of the trust to award the grazing lease to Santa Margarita, the applicant who has the best right to the lease. RECOMMENDED ORDER It is recommended that the Commissioner deny the appeal of Mr. Jonathan D. Tate and affirm the denial of the application. SUBMITTED this 7th day of February, 2001.

George A. Schade, Jr. Administrative Law Judge

The original Recommended Decision and Order of the Administrative Law Judge was mailed on February 7, 2001, for distribution to the parties, to:

Michael E. Anable, State Land Commissioner Arizona State Land Department 1616 West Adams Street Phoenix, Arizona 85007

George A. Schade, Jr. ----------------------- [1] The parcel is outlined and colored in blue on the map admitted as ASLD Exhibit No. 2, where it is identified as "Brown Canyon (05-3453).” For convenience, the township and range descriptions will be omitted in subsequent findings of fact. [2] See ASLD Exhibit No. 1. [3] Id. [4] ASLD Exhibit No. 3, p.10. [5] ALJ’s Exhibit No. 2. [6] Tate’s Exhibit No. 1, p. 2. [7] One of the purposes of the neighboring Buenos Aires National Wildlife Refuge is to restore and promote habitat for the Masked Bobwhite Quail. [8] Id., p. 1. [9] According to Mr. Williams, there are 1,291 current grazing leases (102 are in Pima County). [10] See, for example, ASLD Exhibits No. 4 and 5 (letters exchanged in August 1997, between Tate and the Department relative to Grazing Lease Application No. 05-103404). [11] A.R.S. § 41-1065; Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996), review denied (1997); Rule R2-19-119(B)(1), Ariz. Admin. Code (“The party asserting a claim, right, or entitlement has the burden of proof.”). [12] Udall, Morris K., Arizona Law of Evidence, § 5 (1960). [13] BLACK’S LAW DICTIONARY 1182 (6th ed. 1990). [14] A review of the history and purposes of trust land is omitted as this information is available in the cases cited in these conclusions. [15] A.R.S. § 37-284(A). [16] A.R.S. § 37-284(A). [17] Id. [18] Jeffries v. Hassell, 197 Ariz. 151, 154, 3 P.3d 1071, 1074 (1999), review denied (2000), quoting from Havasu Heights Ranch and Dev. Corp. v. Desert Valley Wood Prods., Inc., 167 Ariz. 383, 392, 807 P.2d 1119, 1128 (App. 1990), review denied (1991); see also Campana v. Arizona State Land Dep’t, 176 Ariz. 288, 291, 860 P.2d 1341, 1344 (App. 1993), reconsideration denied (1993). [19] The statutory term is the singular “best interest.” A.R.S. §§ 37- 284(A) and 37-313(A). [20] Campana, 176 Ariz. at 291, 860 P.2d at 1131. [21] A.R.S. § 37-284(A). [22] Williams v. Greene, 95 Ariz. 378, 384, 390 P.2d 907, 913 (1964). [23] Havasu Heights, 167 Ariz. at 392, 807 P.2d at 1128. [24] See Havasu Heights, 167 Ariz. at 386, 807 P.2d at 1122. [25] Jeffries, 197 Ariz. at 154, 3 P.3d at 1074; A.R.S. § 37-284(A).

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826