Report No. 1 -------------------------------------------------------------------March 5, 1990
Idaho's
Endowment Lands:
A Matter of Sacred Trust
by
Jay O'Laughlin
Director, Idaho Forest, Range and Wildlife Policy Analysis Group
Table of Contents
The Idaho Forest, Wildlife and Range Policy Analysis Group (PAG) was created by the Idaho legislature in 1989 to provide Idaho decision makers with timely and objective data and analyses of pertinent natural resource issues. A standing nine-member advisory committee suggests issues for the PAG to address, and the priority of the issues. Committee members are identified on the inside cover of this report. Results of each analysis are reviewed by a technical advisory committee selected separately for each inquiry (see the page immediately following this report). After technical review, results are made available in a policy analysis publication series.
This particular report is the first to be published by the PAG. The advisory committee recommended this topic for analysis because of recent debate and discussion focusing on Idaho's state lands. Many individuals and groups either disagree with or do not understand the guiding principle of law that Idaho's state lands must be managed "... in such manner as will secure the maximum long term financial return to the institution to which granted ..." The market-based lease fees resulting from this policy have, in some cases, increased steeply and may limit opportunities to attain other worthwhile public benefits. Examples of recent endowment land issues include the lease of state land to a Girl Scout camp on Payette Lake, the University of Idaho's forestry field camp, also on Payette Lake, and individual recreation site leases on Priest Lake as well as Payette Lake.
The "maximum long term financial return" language comes from a 1982 amendment to the Idaho Constitution designed to clarify and replace earlier vague language defining the disposition of state lands that read, "... in such manner as will secure the maximum possible amount therefor ..."
When the advisory committee suggested this issue for the group's attention in December, 1989, legislation to initiate a referendum calling for a constitutional amendment to modify the "maximum long term financial return" language was anticipated. Many people feel that new language to allow the attainment of the greatest amount of public benefits as an objective for state lands would better serve the people of the state.
The intent of this report is to help clarify the underlying purpose that serves as the basic guideline for the management and administration of Idaho's state lands. Our hope is that the information will be useful to policy makers, administrators, and citizens who are concerned about managing these lands in the best interests of the people of Idaho.
John C. Hendee, Dean
College of Forestry, Wildlife and Range Sciences
University of Idaho
Five members of the faculty of the University of Idaho were asked to provide technical review of an earlier version of this report. Their efforts are hereby gratefully acknowledged:
David L. Adams, Professor, Department
of Forest Resources
Dale Goble, Professor, College of Law
Robert L. Govett, Associate Professor, Department of Forest
Products
Charles C. Harris, Jr., Associate Professor, Department of
Wildland Recreation Management
Allen C. Turner, Visiting Associate Professor, Department of
Geography
For guidance, advice, and comments on earlier versions of this report, thanks are extended to John C. Hendee, Dean, College of Forestry, Wildlife and Range Sciences; Stan Hamilton, Director, Idaho Department of Lands; and Steven J. Schuster, Deputy Attorney General, Idaho Department of Lands. Mark Patterson, graduate assistant, Department of Wildland Recreation Management, provided research assistance.
In spite of the considerable amount of help offered by all of the above individuals, any errors in this report are those of the author.
A distinction must be made between the management objectives established by law for federal public lands in Idaho and the objectives for Idaho's state lands. State lands were acquired from the federal government under a trust agreement whereby proceeds from the disposal or use of the lands would exclusively benefit certain designated public institutions, primarily public schools. This trust arrangement is clearly defined in law and has stood many legal challenges. However, certain individuals and groups tend to either confuse or ignore the fundamental difference in the management objectives of these two categories of public lands. They contend that Idaho's state lands should be managed for a variety of purposes to benefit a variety of groups and individuals, much as federal land is managed.
The review of pertinent law in this report indicates that the notion of managing the grant lands for a wide variety of purposes and public benefits seems to violate both federal and state law. These lands were granted to the state for the purpose of establishing a perpetual endowment for specific beneficiaries, mainly the public schools. As a matter of trust, the state is obligated to sell, lease, exchange, or manage the grant lands, producing full value (now defined as "maximum long term financial return") from them only to benefit the specific institutions designated by law as trust beneficiaries.
In 1969 Gordon C. Trombley, Commissioner of the Idaho Department of Public Lands, described a still-troubling land management policy problem:
Evidence strongly suggests a lack of public knowledge and understanding of the term "state lands." These lands are, at times, referred to as, "public lands," "grant lands," "school lands," "endowment lands," etc. Irregardless of the term used to describe them, there appears to be a general wide-spread misconception as to how they were acquired, their purpose and dedication, and their disposition.1
It is sincerely hoped that this publication will help dispel some of the misconceptions that surround the administration of these grants, and further, that it will be of some significant use to the citizens at large, the law makers, and administrators.2
This report is intended to serve the same purpose as Trombley's long out-of-print report3 on Idaho's land grants: to provide a clear understanding of the fundamental purpose of Idaho's state lands. As used in this report, the term "public lands" when referring to state lands (or grant lands or endowment lands) means those lands received from the federal government at the time of statehood, other than the beds and banks of navigable waters.
The basic problem stems from perceptions of either what "public land" is or what it ought to be. The misconception is that state lands are managed under the same concept as federal lands. Perhaps in recognition of this confusion, in 1974 the agency responsible for the management and administration of Idaho's state lands dropped the adjective "public" from its name, and became the Idaho Department of Lands. In spite of the name change, the agency is still responsible for managing "public lands" belonging to the state of Idaho.
Determining who gets the benefits from public lands (however defined) is a significant issue in Idaho, where almost two-thirds of the state (65%) is federal land, and 4.5% of the land is owned and managed by the state. If all the parcels of Idaho's grant lands (now totalling 2.4 million acres) were aggregated together, the area they cover would be slightly smaller than the state of Connecticut, or slightly larger than Delaware and Rhode Island combined. Determining who gets what from the almost 70 percent of Idaho's lands in public ownership is a matter of policy. Federal policy concerning land management objectives is quite general; state policy is quite specific.
Federal lands are managed under a variety of policies that promote the attainment of maximum benefits for the public.4 These policies -- specifically the National Environmental Policy Act of 19695, National Forest Management Act of 19766, and Federal Land Policy and Management Act of 19767 -- all mandate comprehensive planning processes that include impact analysis and extensive public review.8 Although the attainment of maximum benefits is a feature of federal policy, those benefits are not to be measured solely in financial terms. For example, the National Forest Management Act of 1976 requires "... analysis of environmental and economic impacts, coordination of multiple use and sustained yield opportunities as provided in the Multiple-Use Sustained-Yield Act of 1960, ..."9 The Multiple-Use Sustained-Yield Act10 states: "`Multiple use' means the management of all the various renewable surface resources of the national forests so that they are utilized in the combination that will best meet the needs of the American people; ... with consideration being given to the relative values of the various resources, and not necessarily the combination of uses that will give the greatest dollar return or the greatest unit output."11 [Emphasis added.]
In sharp contrast, Idaho's state lands are to be managed "... in such manner as will secure the maximum long term financial return to the institution to which granted ..."12 The fundamental difference between the management objectives and policies for state and federal lands in Idaho stems from the historic purpose of federal land grants to the states for educational purposes.
At one time or another the federal government has held title to 82.5% of the land in the United States.13 Today 32% of the land still remains in federal ownership; title to the remaining 50% of America's land, once held by the federal government, has been transferred to private entities and state institutions for a variety of purposes. In some way, those grants of land were provided as incentives to encourage or support the settlement of the American frontier.
In total, the largest divestiture of federal land was made when states were admitted to the Union. The grants to the states were part of a political compromise under which newly admitted states agreed not to contest or tax the federal land holdings within their borders in exchange for school and other grant lands.14 Grants to the states totalled 328 million acres,15 almost 15% of America's land. One type of grant to the states (totalling 77.6 million acres,16 almost 3.5% of America's land) was for the specific purpose of supporting public education in the "common schools."
In an attempt to promote equity and harmony among the new states and the old, each state was given 1/36 of the land in the territory as school lands -- specifically section 16 in each thirty-six square mile township. With the admission of California in 1850, grants of 1/18 of the land (sections 16 and 36) were made to the new western states in appreciation of their vastness. Idaho was granted these two sections per township at statehood in 1890 for its common schools. Later, Utah (1896) and New Mexico and Arizona (1912) received four sections per township17 because of the arid, and presumably less valuable, land in those territories.18
The concept of federal land grants to the states for the purpose of maintaining public schools may be traced back to Thomas Jefferson's strong belief that an educated populace is the foundation of democracy.19 These ideals were put into operation with the Northwest Ordinances of 1784, designed to admit territories as states on equal footing with the original thirteen colonies. The Land Ordinance of 1785 provided for rectangular surveying of the public lands into townships to aid in dividing the land.20 According to Handy's 1989 comment,21 Theodore Roosevelt described the school land grants as having been "the basis for the whole system of public education" in the western states.22
Today the states must continue to abide by the original purpose of the grant lands -- to benefit the common or public schools within the state and the other specifically designated beneficiaries of the land grants. The land was given only for specific purposes defined in federal statutory laws and state constitutions and now firmly supported by case law, as summarized in the concluding section of this report.
When Idaho achieved statehood in 1890, almost 3 million acres of land were granted to the state by the federal government expressly for the purpose of benefitting the public schools.23 Another 672,000 acres were given to Idaho for the benefit of eight other public institutions, including the University of Idaho,24 the Agricultural College, the normal schools (now Lewis-Clark State College and Idaho State University), and the state penitentiary.25
In 1889, the framers of the Idaho Constitution faced a dilemma. Statehood required a formal constitution that, among other things, had to address the disposition of the federal land grant. How should Idaho go about using the land endowment given to the state to support its public schools and other institutions? Lively discussion at the Constitutional Convention focused on this matter.26
Some argued that the state should sell the land, invest the principal and use the interest to support the schools and institutions:
Now if this land could be sold at what would be a fair price, if it could be converted into money, we would get something from it, and further than that, it would pass into the hands of those who would have to pay taxes, for which we get no taxation now.27
Others argued that the state should hold the land forever, and obtain benefits by leasing the agricultural, grazing and mineral lands, and by selling timber from time to time. Debate also focused on the difficulty of determining the value of the grant lands:
[T]hese school lands should remain to perpetuate the school fund, preserving a nucleus around which we may collect something for not only ourselves who live now, but for those who shall come after us.28
[T]his territory seems so wide, and there is so much vacant and unoccupied land lying all around us, that we despise the possessions which Uncle Sam in his liberality has given us to hold in trust for our children. I say that neither I nor you have any definite idea of what this land is worth today which lies under the sun of Idaho or what it is going to be worth in the future.29
The dilemma faced by the framers of the Idaho Constitution was resolved through compromise -- up to a specified amount of land could be sold annually at a price exceeding an established minimum, the rest would be retained and managed by the state, with leases and sales of severable assets such as minerals and timber allowed.30 A provision for the exchange of land was ultimately included, but not until almost a century later.31
During the deliberations at the Constitutional Convention, the term "sacred" was used to refer to the school trust fund:
[N]o fund is more sacred than the school fund, and perhaps there is no other fund so sacred; it should be guarded in every manner possible, and by having this provision in here, the children will always be made sure there will be that much money to their credit, and we will have that much at stake in our schools. But if there is no provision for making this fund good in every way, it may be squandered, and the first thing we know our school fund will be so small that we can only maintain the schools by local taxation. I think the legislature can provide for making good any losses which may occur. They will probably be more careful in making investments if it is known that the state has to make good.32
"Sacred trust" has become a convenient phrase33 used to describe the obligations on the part of the state that stem from the Idaho Admission Bill,34 and the Idaho Constitution,35 even though the term is not used in either law. "Sacred trust" continues to be used to describe the obligation on the part of the state of Idaho with respect to school grant lands and the proceeds from school lands that are held in the "sacred trust fund."36 Indeed, "the Fund is a trust of the most sacred and highest order."37 Furthermore,
[a]dministration of endowment lands and monies derived from them has been termed a sacred trust by the high courts.... Endowment lands have truly become a sacred trust to be managed and perpetuated for the benefit of Idaho's youth and institutions.38
Although the term "sacred trust" may be unique to Idaho, the underlying concept is not. Two federal cases concerning the disposition of school land grants help to define the "sacred trust" obligation. First, in Andrus v. Utah,39 the United States Supreme Court in 1980 held that Utah could sell trust lands for the benefit of the schools. According to one interpretation of this case, the Court characterized the school land grants as a "solemn agreement" between the U.S. Congress and the state.40 According to another interpretation, "The school land grant and its acceptance by the state constitutes a solemn compact between the United States and the state for the benefit of the state's public school system."41 Second, in a 1968 case in eastern Washington,42 the federal district court stated:
There have been intimations that school land trusts are merely honorary, that there is a "sacred obligation imposed on (the state's) public faith," but no legal obligation. These intimations have been dispelled by [the U.S. Supreme Court in] Lassen v. Arizona.... This trust is real, not illusory.43
Regardless of the phrase used to describe it, the trust agreement -- as statutorily defined in state admission acts and constitutions and reaffirmed by subsequent case law decisions -- obliges the state to limit its actions concerning the endowment trust lands and to treat the proceeds from those grant lands with extraordinary care.