Arizona voters passed Proposition 303 in 1998 to fund the Growing Smarter Act with the belief that it would provide $20 million a year for communities and nonprofits to buy state land to preserve it as natural open space. But very few knew that the Arizona Legislature had secretly included a clause to divert up to 10% of the money to subsidize public land ranchers.
The Growing Smarter Act was a response to the increasing concern among Arizonans that the sales of state land parcels located near urban areas, especially metro Phoenix, were facilitating urban sprawl and destroying natural areas. The issue was complicated by the fact that the Arizona Constitution requires state land to be sold or leased for the highest possible price to maximize revenues for public education.
Republican Gov. Fife Symington attempted to address the problem and succeeded in getting his State Land Preserve Initiative passed in 1996. It was amended by HB 2303 in 1997, but it was still considered inadequate by most Arizona conservationists, so in 1998 they launched a petition drive to put the Citizens Growth Management Initiative on the fall ballot. It included strict limits on urban sprawl that scared land developers and prompted the Republican-controlled Legislature, with Republican Gov. Jane Hull’s support, to pass HB 2361, the Growing Smarter Act. The bill included urban planning and zoning reforms, but no funding for state land purchases.
Proposition 303
However, the same day the Legislature passed HB 2361, they passed a companion measure, HCR 2027, that put Proposition 303 on the 1998 ballot. If approved by the voters, the Arizona State Parks Board (ASPB) would receive $20 million a year from the state’s general fund for 10 years to purchase state lands for conservation purposes. But the language in HCR 2027 was deceptive. It ignored the fact that the Growing Smarter Act included a clause which said the ASPB could annually grant up to 10% of the money to ranchers. The clause stated that grants could be given:
“To an individual landowner or grazing or agricultural lessee of State or Federal land who contracts with the Arizona State Parks Board to implement conservation based management alternatives using livestock or crop reduction practices, or reduce livestock or crop production, to provide wildlife habitat or other public benefits that preserve open space.”
These provisions were the result of a backroom deal that Gov. Hull had made with Rep. Jake Flake, R-Snowflake, a cattle rancher, in order to get more support from rural legislators for the Growing Smarter Act. Many Arizona ranchers were worried the Growing Smarter Act might threaten their sweetheart grazing leases with the State Land Department. Also, long overdue enforcement of the Endangered Species Act (ESA) was leading to reductions in the number of cattle permitted to graze public lands managed by the Bureau of Land Management (BLM) and the Forest Service in order to protect important wildlife habitat from livestock.
The Proposition 303 Ballot Guide subsequently provided to the voters by Republican Secretary of State Betsy Bayless was deceptive too, because it failed to mention the provision to divert money to ranchers that was hidden in the Growing Smarter Act. Subsequently, when the voters passed Proposition 303 in the fall of 1998, very few of them knew they had also approved the distribution of millions of dollars of subsidies for ranchers.
The $20 million annual appropriations approved by Prop 303 were required to be deposited in the Growing Smarter land conservation fund, administered by the ASPB. The Board, however, was supposed to consider advice from the Conservation Acquisition Board (CAB) before awarding any type of Open Space Reserve (OSR) grants from the fund. The seven-member CAB had been created in 1997 by HB 2303, and was specifically tasked with making recommendations to the ASPB about approving grants from the land conservation fund.
Open Space Reserve Grants
The CAB began working on setting up the new Opens Space Reserve grant process in early 1999, and held several meetings to gather public input. Arizona’s competitive grant statutes required them to adopt official rating criteria in order to assess and prioritize the grant applications for approval. By the end of the year, however, they still hadn’t produced the application rating criteria for the grants to ranchers. Their lack of progress was understandable, because the language in HB 2361 that described the grants was indefinite and confusing, and they knew the grants would be controversial. Moreover, ranching subsidies were not an area of expertise for the five CAB members who weren’t ranchers.
Rep. Flake, however, was frustrated with the CAB’s lack of progress, and sent them a letter describing the legislative intent, as he understood it, of giving OSR grants to ranchers. He explained the primary objective was to provide financial assistance to those ranchers who grazed livestock on public land and had experienced mandatory reductions in their permitted livestock numbers. He claimed the grants would reduce the fragmentation of open space by reducing the economic pressure on the affected ranchers to subdivide their private base properties. (Ranchers with public land grazing permits usually run their operations from relatively small adjacent private parcels, called base properties.)
Then in January 2000 Flake introduced HB 2706 to clarify the legal description of the OSR grants to ranchers. The bill required the CAB to “give priority” to recommending grants to ranchers who were “lessees of state or federal land who are required to reduce livestock production to provide public benefits, such as wildlife species conservation or wildlife habitat.” This had the effect of directing all of the grants to public land ranchers, since the State Land Department rarely requires its grazing lessees to implement mandatory herd reductions. The bill passed in March and Gov. Hull signed it.
Meanwhile, at the November 1999 meeting of the State Parks Board the Arizona Department of Agriculture (ADA) had made a proposal to take over the administration of the OSR grants for ranchers. It was favorably received by the Board, and State Parks staff had subsequently worked on finalizing the plan with the ADA. The passage of HB 2706 likely provided some urgency to the matter, because on April 26, 2020, the ADA sent a memo to the CAB to formally propose their version of the OSR grants program. The CAB approved it and recommended that the Board approve it, with the following recommendations:
- offer the CAB an opportunity to review the proposed criteria for rating grants;
- report proposed grant awards to State Parks prior to awarding grant monies; and
- report to State Parks annually on the progress of completing grant projects.
At the Board’s subsequent May 18, 2000, meeting, State Parks staff reported that they supported the CAB’s recommendation. Board Member Michael Anable commented he believed “the intent was to recognize there is another agency with more expertise in the technical criteria.” Before the Board voted on the transfer of the grant program, Anable succeeded in adding a requirement that the program would be reviewed by the Board in two years. The Board then unanimously approved the motion to transfer the grants to the ADA. The arrangement was formalized on October 4, 2000, when the Board signed an intergovernmental agreement with the ADA. This was despite the fact that HB 2303 had designated the CAB as the official advisory committee for all OSR grant applications.
Subsequently, on December 20, 2000, the ADA presented its proposed grant application rating criteria to the CAB, and the CAB unanimously approved it. Later that day, the ADA sent a memo to the State Parks Department which described the rating criteria, and explained they had been approved by the CAB. State Parks staff added the consideration of the ADA’s grant criteria to the ASPB’s January 18, 2001, meeting agenda.
Before the Board voted on the criteria at their January meeting, the ADA’s Assistant Director, Nicole Waldron, explained them. She said her agency had worked with the Arizona Cattle Growers’ Association to develop “an equation that they are comfortable with.” She added that Rep Flake had approved them too, and was “100% supportive.”
The grant eligibility criteria formula, she explained was intended to estimate the financial loss a rancher had experienced due to mandatory herd reductions on public land over several years – based on a 10-year average price for cattle. The Board approved the ADA’s criteria on their first vote with just a single no vote from Board Member Anable. He explained that, instead of cash awards, he had hoped the grants could be used to fund a cost-sharing range improvement program for ranchers with state land grazing leases. He convinced Board Member Sheri Graham to change her vote. But the Board, led by Chairman Walter Armer, a rancher, still approved the ADA’s grant rating criteria on a 5-2 vote.
Still, no Open Space Reserve grants were issued to ranchers in 2001 because the ADA was working with the ASPB to develop the application process. That was finished by the end of the year so in January 2002 the ADA held grant workshops for ranchers in four rural locations across the state, cohosted by State Parks and the Arizona Cattle Growers’ Association. They distributed grant application manuals and packets to local ranchers, and set a submission deadline of March 1, 2002. The grant manual explained that 1995 was being used as the “base year” for applicants, meaning the currently permitted number of livestock on their federal grazing permits would be compared against the number permitted in 1995 – three years before Proposition 303 passed. The difference would be the size of mandatory herd reduction for which compensation could be awarded. There was no financial needs test.
The ADA received 71 OSR grant applications and deemed 66 of them to be eligible. Assistant ADA Director Brett Cameron sent a recommendation letter to the ASPB on April 18, 2002, asking the Board to approve the 66 grants at their May meeting, and to also approve the ADA’s decision to implement a $90,000 per rancher maximum annual grant amount. The ASPB placed the ADA’s grant recommendations on their May 16, 2002, meeting agenda.
The meeting was held in the small town of Patagonia, in rural Santa Cruz County. Before the Board voted on approving the grants, two ADA representatives explained the grant application process they had used. The biggest criticism came from Board Member John Hays, a rancher and former Arizona legislator. He complained that the list of grants recommended for approval included some that would go to ranchers who weren’t “serious cattle people” but just “hobby ranchers.” He was likely referring to the following grant recipients:
- Hal Earnhardt, son of millionaire auto dealer Tex Earnhardt – $90,000
- Rex Maughan, millionaire owner of Forever Living Products – $32,196
- Metz Trust – Forrest Metz, founder of Urban Engineering in Tucson $82,789
- Boyd P. Drachman, owner of Drachman Insurance in Tucson – $7,870
Board Chairman Suzanne Pfister noted the administration of the grants was “clearly an evolving process.” She said she was personally concerned about enforcement of the terms of the grant contracts. The ADA representatives explained that the grants would be primarily enforced by an “honor system,” as their agency didn’t have the staff to do monitoring. They said they would have to rely on local federal land managers to notify them if the recipients weren’t complying with the mandatory herd reductions for which they were being compensated. Eventually, the Board voted to unanimously approve the ADA’s recommendation, and awarded just under $2 million in 66 Open Space Reserve grants to Arizona public land ranchers.
I was one of the many Arizonans who didn’t know that public land ranchers would receive grants from Proposition 303 money until the ADA released the grant applications and the ASPB approved the grants in 2002. I disagreed with the premise that the grants would help preserve open space from development by making public land ranchers less likely to subdivide their private base properties. There were too many holes in argument. First of all, the grant recipients weren’t required to sign promises not to sell their property. Also, most public land ranches in Arizona are comprised primarily of public land, which can’t be sold because it’s owned by the federal government. Furthermore, the fear that ranch base properties might get developed was exaggerated, because ranch base properties are already “developed,” as they typically include a house, at least one barn, some sheds, a junk pile, and denuded corrals and holding pastures. And, there was also no financial needs test, which ignored the fact that many public land ranchers aren’t really “in business” but engaged in a lifestyle choice or hobby. It seemed obvious to me that the grants were just financial compensation for public land ranchers whose grazing permits had been cut to protect important wildlife habitat, and I didn’t believe that people should be paid for complying with the law.
Perhaps my biggest criticism about the grants was that their eligibility criteria weren’t drafted using Arizona’s official public rulemaking process. I thought more people than the Arizona Cattle Growers’ Association should have had meaningful input. So on October 15, 2002, I used my legal right under A.R.S. § 41-1033 to submit a Petition for a Rule or Review to Arizona State Parks Director, Kenneth Travous, that asked him to initiate the state’s official rulemaking process to draft new eligibility criteria for the 2003 round of OSR grants to ranchers.
Democrat Janet Napolitano Elected Governor 2002
Soon after that, Democrat Janet Napolitano won the governor’s race in the November election. I hoped her administration would be less enthusiastic about the OSR grants to ranchers program. The ASPB may have been worried about that too, because on December 11, 2002, before Napolitano took office in January, State Parks Chief of Grants, Andrea Madonna, sent me a letter in response to my petition. It explained that the Board had voted during their November meeting to bypass the state’s regular rulemaking process and engage the emergency rulemaking process for the grants, as per A.R.S. § 41-1026.
On December 17, 2002, I replied with a letter to Board Chair Suzanne Pfister in which I pointed out that, according to A.R.S. § 41-1026.A, the emergency rulemaking process can’t be used, “if the emergency situation is created due to the agency’s delay or inaction and the emergency situation could have been averted by timely compliance with the notice and public participation provisions.”
I didn’t receive a response, so I decided to attend the Board’s February 20, 2003, meeting in Phoenix to get some answers. During the public comment period at the beginning of the meeting I explained my concerns about the existing grant eligibility criteria. Then I stayed through the rest of the meeting and was pleased when State Parks staff reported to the Board that the emergency rulemaking process couldn’t legally be used to draft eligibility criteria for the grants. They also explained that, because of the need to conduct the regular rulemaking process, there wouldn’t be time to issue grants for 2003. Director Ken Travous responded by telling the Board that, “We are working with Mr. Flake to get this grant program exempted from the rulemaking process and having it transferred over to the Department of Agriculture.” I wondered who he meant by “we.” So on February 23, 2003, I sent another letter to Board Chair Pfister asking if he meant the Board, since the director serves at the pleasure of the Board. I never received a response.
During the Board’s subsequent meeting on March 20, State Parks Assistant Director Jay Ziemann reported to the Board that he’d met with Rep. Flake, who was the new House Speaker, and also with ADA staff, some ranchers, and Gov. Napolitano’s office. They were working on legislation to transfer the entire program, including its $2 million per year appropriation, to the state Department of Agriculture.
The story of the Open Space Reserve grants for ranchers finally made the news in May 2003. On May 7 the Arizona Republic newspaper ran a front page article titled, “Arizona Grazing grants Draw Criticism.” The subtitle was, “$2 mill in tax money paid to cut herds.“ House Speaker Flake defended the grants, and said their main purpose was to keep ranchers “in business.” And when he was asked about the $90,000 OSR grant his cousin Gaylan Flake had received in 2002, he responded, “Boy, I’d be surprised if it was only one cousin. Most of my family is in ranching.” Flake also dismissed criticism that the language of Proposition 303 hadn’t mentioned the grants to ranchers, explaining that its passage had “triggered” the grants for ranchers clause in HB 2361. I took that as an admission of an intention to deceive the voters. The article also mentioned that Gov. Napolitano was working to improve the grant guidelines.
The Arizona Republic followed the article with an editorial on May 14 titled, “Whoa! Hold On,” and the subtitle, “Arizona needs tighter control on money given to ranchers.” It mentioned there was a bill pending in the Legislature that offered, “some hope of turning this into a system that does more to promote conservation and less to simply dole out money.”
Grants Transferred To Arizona Department of Agriculture
Then on May 19 the Republican-controlled Legislature passed a strike-all Senate bill, SB 1071, that transferred the grant program to the ADA. Gov. Napolitano signed it. The minutes from the State Parks Board’s July 17, 2003, meeting reported that the transfer of the grants for ranchers program to the ADA “made staff very happy.”
Under the new law, the $2 million annual appropriation for the grants would be deposited in the ADA’s new Livestock and Crop Conservation Fund. The ADA would be required to develop eligibility criteria for the grants, but the program would be uniquely exempt from the state’s rulemaking process. Instead, the ADA was required to provide the public with a 60-day comment period on the “annual grant guidelines and criteria, including public hearings.” Also, each grant recipient was required to submit “a written report detailing how the grant monies were used.” According to the ADA’s FY 2005 Annual Report, they didn’t issue any grants from the new Livestock & Crop Conservation Grant Program (LCCGP) in 2004 because they were busy setting it up. They did, however, hold four public hearing across the state to collect public comments on the proposed guidelines and criteria.
In January 2005 the ADA released the new grant eligibility guidelines for a public comment period. They were better than the ones that were used for the 2002 OSR grants. Instead of just handing out cash payments to ranchers, they allowed the applicants to use the grants to fund on-the-ground “conservation” projects. Some of the projects, such as building riparian area protection fences, were truly about conservation. But others, like constructing new livestock waters, and killing woody vegetation to grow more grass for cattle, were primarily subsidies.
Another major difference in the new LCCGP guidelines was that they allowed ranchers to use the grants as their personal contributions in order to be eligible for cost-share grants from other government agencies. In fact, in October 2004 the ADA had signed an Inter-Governmental Cooperative Agreement with the USDA’s Natural Resources Conservation Service (NRCS) that setup coordination between the two agencies in order to help ranchers use LCCGP grants in this manner in order to receive Environmental Quality Incentives Program (EQIP) awards from the NRCS. In other words, the LCCGP grants could be used to facilitate the distribution of other ranching subsidies, and there would be little, if any, out-of-pocket expenses for a rancher who could get a project funded using this arrangement.
The ADA released the finalized 2005 LCCGP grant Manual & Application Package to ranchers on May 29, and the set an application submission deadline of May 13, 2005. In the meantime, they held five application workshops during April for ranchers in rural communities across the state.
First LCCGP Grants Issued 2005
There wasn’t any press coverage when the ADA announced the issuance of the first LCCGP grants on September 15, 2005. But the agency’s website showed they awarded 56 grants from 101 applications. The grants totaled about $3.4 million and they were reportedly used to leverage another $3.62 million in various matching grants from other government agencies. The descriptions of the LCCGP projects showed that 37 of the grants, about two-thirds, were used to construct new livestock waters.
The ADA subsequently issued LCCGP grants on a bi-annual cycle, so the next grants weren’t dispersed until 2007, and then not again until 2009. Ranching supporters in the Legislature were unhappy with that schedule, so they got SB 1441 passed in 2006 to create the Wildlife Habitat Restoration & Enhancement Fund (WHREF), with a one-time appropriation of $3.5 million to be administered by the Arizona Game & Fish Department. The WHREF 2007 final report shows that the funds were used much the same as LCCGP grants. (The Legislature’s ranching supporters also proposed SB 1300 in 2006 to appropriate $5 million to the HREF annually for another three years, but it didn’t pass.)
Proposition 303 had only authorized 10 years of appropriations, so the $2 million a year for the LCCGP program stopped coming in 2011. Still, the ADA had enough money available to issue LCCGP grants from 2005 through 2016.
Since then, the Legislature hasn’t appropriated any more money to the Prop 300 fund. That’s partly because the Voter Protection Act, passed by the voters in 1998, prevents the Legislature from amending voter-approved initiatives, including Proposition 303, unless the changes are approved by at least three-fourths of the members of both houses. That’s a super majority that’s difficult to achieve, and the Legislature doesn’t like appropriating money to programs they can’t control. Furthermore, there are always concerns about state spending, and many conservationists would oppose providing more government subsidies to public land ranchers.
It’s difficult to assess the effectiveness of the grants now, especially since state law requires all state agencies to destroy public records, as per A.R.S. § 41-151.19, unless it’s determined they are important enough to be considered a “permanent” record, and OSR and LCCGP grant application records apparently weren’t given that status. (The law is intended to help foil lawsuits against state government.)
Updates
The Arizona Department of Agriculture didn’t issue any LCCGP grants after 2016, when the money from Proposition 300 was supposedly exhausted. But on August 1, 2024, they explained in a proposed new LCCGP Grant Manual, that they were able to scrape together $200,000 from “unused grant funds” and “interest” to issue another round of grants. These grants will be for a minimum of $10,000 and maximum of $20,000, until the remaining money is expended.
On October 1, 2024, the Department announced that the LCCGP Grant Manual had been finalized and they were accepting new applications for LCCGP grants through the end of the month.
On November 15, 2024, the Department extended its LCCGP grant application deadline to December 6, 2024.
In January, 2025, the state Department of Agriculture reported they had not yet approved any new LCCGP grants.