Forest Guardians v. Wells, 1 CA-CV 99-0258.

• Decision Date: 25 April 2000
• Docket Number: No. 1 CA-CV 99-0258.,1 CA-CV 99-0258.
• Citation: 4 P.3d 1054,197 Ariz. 511
• Parties: FOREST GUARDIANS, and Jonathan D. Tate, Plaintiffs-Appellants, v. J. Dennis WELLS, in his official capacity as Commissioner of the Arizona State Land Department and the Arizona State Land Department, Defendants-Appellees.
• Court: Arizona Court of Appeals

4 P.3d 1054

197 Ariz. 511

FOREST GUARDIANS, and Jonathan D. Tate, Plaintiffs-Appellants, v. J. Dennis WELLS, in his official capacity as Commissioner of the Arizona State Land Department and the Arizona State Land Department, Defendants-Appellees.

No. -0258.

Court of Appeals of Arizona, Division 1, Department D.

April 25, 2000.

Arizona Center for Law in the Public Interest by Jennifer B. Anderson, Timothy M. Hogan, Phoenix, for Appellants.

Janet Napolitano, Attorney General by Theresa M. Craig, Assistant Attorney General, Phoenix, for Appellees.

OPINION

VOSS, Judge.

¶ 1 In this appeal from the affirmance of an administrative decision, we consider whether the State Land Department and its Commissioner abused their discretion in denying grazing leases to appellants, who wished to rest the lands from grazing for conservation and recreation purposes. We conclude that the Commissioner acted within the law and his discretion and thus affirm the trial court judgment.

FACTS AND PROCEDURAL HISTORY

¶ 2 In August 1997, appellant Forest Guardians, a non-profit corporation, submitted bids to the Arizona State Land Department ("the Department") on the two grazing leases that are the subject of this appeal. In one, Forest Guardians applied for a ten-year lease on approximately 5,000 acres of state trust land located in Coconino County ("Coconino County land"). This land is bisected by an ephemeral drainage area known as Cataract Creek. The existing lessee of the Coconino County land paid a grazing rental fee of approximately $2,150 per year to graze 85 head of cattle on the land. In its application, Forest Guardians offered to pay twice the amount paid by the existing lessee. It stated on the application that it did not intend to stock the land with cattle; it contended that nongrazing would increase the value of the land to conservationists, prospective livestock interests, and trust beneficiaries. The existing lessee also applied to renew its grazing lease.

¶ 3 In its second application, Forest Guardians applied for a ten-year lease on approximately 162 acres of state trust land in Santa Cruz County ("Santa Cruz County land"). It was interested in this lease because a segment of the Babocomari River runs through the parcel. The existing lessee, who applied to renew the lease, paid $50.16 per year for the grazing lease. Forest Guardians offered to pay five times that amount, also indicating that it would not stock the land with livestock.

¶ 4 In a cover letter accompanying the applications, Forest Guardians requested, pursuant to A.A.C. R12-5-705(O), that the State Land Commissioner ("the Commissioner") authorize the use of the land "for purposes other than domestic livestock grazing." Forest Guardians noted that, based on its higher-than-minimum bids and the important recreational and biological values of the areas, allowing grazing non-use for ten years would enhance the corpus of the trust while also meeting the Department's legal obligation to maximize revenue from school trust lands.

¶ 5 In July 1997, appellant Jonathan Tate also applied for a ten-year lease on approximately 16,000 acres of state trust land in Pinal County. In his application, Tate offered to pay $4.20 per animal unit month, which was approximately twice the amount paid by the existing lessee. Tate also indicated that he did not intend to use the land for livestock grazing.¹

¶ 6 By letters to Forest Guardians and Tate, the Department advised them that their applications were subject to rejection because they did not intend to put the lands to the use for which they were classified. The Department informed them that, if they wished to lease trust land for habitat preservation or riparian restoration, they should apply for commercial leases, which would require reclassification of the lands to commercial use.

¶ 7 In a letter responding to the Department's correspondence, Forest Guardians stated that it was "not interested in either withdrawing [its] grazing lease application or in submitting a commercial lease application for the lands at question." Similarly, Tate wrote that he did not intend to graze livestock, was not interested in a commercial lease, would not withdraw his application for a grazing lease, and was requesting that the Commissioner grant him permission for nongrazing use.

¶ 8 The Department denied the lease applications submitted by Forest Guardians and Tate. The Department noted that the applicants' objective of preventing grazing on the properties directly contradicted the intent, policy, and language of the statutes and rules concerning grazing leases. Such an objective, stated the Department, would be consistent with a commercial lease, not a grazing lease, and nonconformance to the classification scheme might prevent the Department from receiving the full appraised value and compensation for the higher use. Thus, the Department concluded, it was "not in the best interests of the State Trust" to approve the applications.

¶ 9 Forest Guardians and Tate appealed from the denial orders. Following hearings, the administrative law judge ("ALJ") recommended that the Commissioner uphold the Department's denials of the grazing lease applications. The ALJ reasoned that the Commissioner did not violate his duty to the trust and trust beneficiaries by denying the applications because the applicants' intended use of the lands did not meet the criteria for grazing leases, and they declined to seek commercial leases. The ALJ concluded, as a matter of law, that A.R.S. section 37-285(H) "does not allow the Commissioner to waive grazing and authorize nongrazing use for an applicant who has no intention of ever using the lands for ranging livestock." Furthermore, stated the ALJ, appellants' offers to pay more than the existing lessees were paying did not give appellants a superior right to use the lands because the value of the proposed conservation and recreational uses could not properly be established solely by an offer to pay more than the estimate of forage usage, which is the basis for annual grazing lease rentals. He noted that, under statutes and Department rules, conservation and recreational use of state trust lands fall under the appraisal process for commercial lease classification. The ALJ also concluded that the Commissioner did not breach his statutory and fiduciary duties by not reclassifying the parcels to commercial lands because Forest Guardians and Tate were the only parties interested in using those lands for other than grazing, and they had stated that they would not apply for or accept commercial leases.

¶ 10 The Commissioner entered an order adopting the recommendation of the ALJ. Forest Guardians and Tate sought judicial review of the decisions.² The trial court affirmed the administrative decisions, finding that the applicants had to comply with statutes and regulations in order to exclude the grazing of livestock on grazing lease lands and that they did not ask for reclassification of the parcels in the appropriate manner. Forest Guardians and Tate timely appealed from the trial court judgment.

DISCUSSION

A. Standard of Review

¶ 11 When we review the superior court's judgment in an appeal from an administration decision, we must reach the underlying issue whether the administrative action was illegal, arbitrary, capricious, or involved an abuse of discretion. See Havasu Heights Ranch & Dev. Corp. v. Desert Valley Wood Products, Inc., 167 Ariz. 383, 386, 807 P.2d 1119, 1122 (App.1990)

. Neither the superior court nor this court weighs the evidence; instead, we determine whether there was substantial evidence to support the administrative decision. See id. at 387, 807 P.2d at 1123. We review de novo any questions of law involved in the administrative proceedings. See id.

B. Review of Grazing Lease Denial

¶ 12 In 1910, the United States Congress passed the Arizona-New Mexico Enabling Act ("the Enabling Act"), which authorized citizens of the territories of Arizona and New Mexico to form state governments. See Kadish v. Arizona State Land Dep't, 155 Ariz. 484, 486, 747 P.2d 1183, 1185 (1987),

aff'd, ASARCO, Inc. v. Kadish, 490 U.S. 605, 109 S.Ct. 2037, 104 L.Ed.2d 696 (1989). Under the Enabling Act, the United States granted almost ten million acres of land to Arizona; this land could be used only for the support of the common schools of the state (school trust lands) and for internal improvements to the state. See id. Voters in Arizona accepted the land grants by ratifying article 10, section 1 of the Arizona Constitution. See id.

¶ 13 The Enabling Act is one of the fundamental laws of Arizona and is superior to our state constitution. See Gladden Farms, Inc. v. State, 129 Ariz. 516, 518, 633 P.2d 325, 327 (1981)

(citing Murphy v. State, 65 Ariz. 338, 181 P.2d 336 (1947)). Thus, neither the Arizona Constitution nor laws may conflict with the Enabling Act or alter or amend the trust provisions in it without congressional approval. See id.; Kadish, 155 Ariz. at 486,

747 P.2d at 1185.

¶ 14 Section 28 of the Enabling Act requires Arizona to hold the lands in trust for the beneficiaries and specifies that the property can be disposed of only as authorized in the Act. This section further provides that the trust lands may not be sold or leased "except to the highest and best bidder at a public auction" after notice by advertisement. However, pursuant to a 1936 act of Congress, the legislature may prescribe procedures for leases of ten years or less. See Kadish, 155 Ariz. at 491,

747 P.2d at 1190,

citing Act of June 5, 1936, Pub.L. No. 658 (ch. 517), 49 Stat. 1477. The 1936 act "gives the legislature power to regulate the overall manner of the making of the lease, and the general terms of the lease, so long as there is substantial conformity to the restrictions of § 28." Id.

¶ 15 Given the restrictions on dealing with school trust lands, it is clear that "[t]he duties imposed upon the state were the...