An Arizona House committee recently passed a bill to compensate ranchers for losses in grazing land from wind and solar energy development in the state.
The Committee on Transportation and Infrastructure voted on Feb. 17 to move forward House Bill (HB) 2411, which stipulates any business that constructs a solar or wind project which reduces the size of a grazing lease must compensate the lessee for the loss of profits, loss in value, the cost to relocate and the cost to litigate losses due to the reduction of the lessee’s operation on federal and state land.
At the hearing, most commenters were against the bill as it was written, citing it singles out an industry, and ranchers would be paid in perpetuity for lost profits rather than just for improvements.
Stan Barnes, a lobbyist for Interwest Energy Alliance, said the solar industry is good economically for the state. Barnes noted when a farmer, rancher or any other person is outbid on state trust lands, they are already compensated for the costs they put in. Barnes noted that he is a fourth-generation farmer in Pinal County, AZ. If a homebuilder buys the property, they are only reimbursed for the infrastructure that was put into it, not “the perceived profit in the future.” Barnes said leaseholders already know there is a possibility their lease will not be renewed, or somebody will benefit the trust more than them and leaseholders will be removed.
Mike Gardner, a lobbyist for the Arizona Solar Energy Industries Association, said as worded, the bill creates a “slippery slope” and would require payments “in perpetuity,” and the bill is picking “winners and losers.” Gardner said if you are a rancher, you should hope that a solar or wind company takes over your lease because you would be paid forever. Otherwise, ranchers would only be paid once if it is another industry.
Sandy Bahr, Arizona chapter director for Sierra Club, said the organization opposes the measure from an economic standpoint. Bahr said grazing permits are not benefitting state trust lands and that commercial leases provided the best economic impact as the proceeds go to supporting public schools and other government functions. Bahr cited figures from the Land Department in 2022, which said it collected more than $54 million from leasing public lands. Of that total, Bahr noted only $2.2 million was from grazing, where leases cover nearly 88% of state trust lands.
Bahr said the bill singles out the solar and wind industry and would “hinder something that is now an important part of our economy.”
Rep. Marcelino Quinonez (D-AZ-11) also said the bill is singling out the solar and wind industry. Removing references to those industries would “level the playing field” of who reimburses ranchers, he said. Quinonez said ranchers should be compensated if grazing land is removed.
Jeff Eisenberg, a lobbyist for the Arizona Cattle Growers Association, said ranchers have come to him and are concerned that the energy development proposals will affect their operations and are concerned it will possibly force them to close.
“We’re responding to a human need, it’s not political, it’s not about solar,” Eisenberg said at the hearing.
Eisenberg stressed that while it is not about solar, if any development takes away people’s livelihoods, they should be compensated.
Mark Brawley, a fourth-generation rancher from Safford, AZ, told the representatives he is not against renewable energy, but it should be done “the right way, with the right technology and in the right location.” Brawley continued that business owners and ranchers should be compensated and given an opportunity at the table.
Brawley said a renewable energy company went to the Bureau of Land Management (BLM) and filed an application for a 35-year lease on 20,000 acres, which his family leased. Brawley noted that BLM did keep his family informed of the progress of the process, however, he never met with anybody from the company during the process. Brawley said he received a call from BLM that the application had been withdrawn.
Brawley said he thought a lot about the financial loss had the project proceeded, and said due to the ranch’s location to two transmission lines, it is a matter of time until there will be a new application. Brawley gave a financial analysis based on if the application had proceeded and said the losses for 35 years would be approximately $2 million. Brawley also noted the amount of water the solar industry would use compared to his operation, and said water is a precious resource within the state. Brawley continued the loss of that acreage, about 31% of their grazing, might make the operation no longer financially viable.
Rep. David Cook (R-AZ-07)—the bill’s sponsor—said there are still some issues that need to be worked out with the bill, including what is “credible evidence” of expenses and who will determine what that entails. Cook also said capping the payments may also need to be worked out.
The committee members who voted against moving the bill forward expressed the bill needs to be worked on and rewritten.
An amendment by Cook on the House floor on March 2 clarified ranchers would be reimbursed at fair market value for “loss of profits through the end of the lease term or for five years after the size of the lessee’s grazing operation is reduced, whichever is longer.”
An amendment by Rep. Alexander Kolodin (R-AZ-03) on March 7 would change the language from “whichever is longer” to “whichever is shorter.” — Charles Wallace, WLJ editor
