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					                                                                             ID R5-2209.13-2003-1
                                                                             Page 1 of 60




                                     FOREST SERVICE HANDBOOK
                                     PACIFIC SOUTHWEST REGION
                                             VALLEJO, CA



        FSH R5-2209.13 – GRAZING PERMIT ADMINISTRATION HANDBOOK

                    CHAPTER 10 – PERMITS WITH TERM STATUS

Interim Directive No.: R5-2209.13-2003-1

Effective Date: February 15, 2003

Duration: February 15, 2004

Approved: JACK BLACKWELL                                    Date Approved: February 3, 2003
          Regional Forester

Posting Instructions: Interim directives are numbered consecutively by Handbook number
and calendar year. Post by document name at the end of the chapter. Retain this transmittal as
the first page of this document.

New Document(s):                ID R5-2209.13-2003-1                                60 Pages

Superseded Document(s):         NONE


Digest:

This interim directive (ID) to chapter 10 supplements WO Amendment FSH 2209.13-92-1
effective 8/3/92. The ID issues Regional direction on administering grazing permits with term
status. There are numerous small editorial changes throughout the handbook to improve
readability. Substantive changes are listed below.

12.3                   Adds guidance relating to implementation of a lower limit requirement.
                       Restates policy relative to Forest Service employees holding Term
                       Grazing Permits and removes obsolete reference to FSM.
16.13                  Clarifies policy on notification of permit modifications that result in
                       reduced numbers or seasons.
                       Clarifies Region 5 policy on mediation related to 36 CFR 251 appeal
                       process.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                 ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                 Page 2 of 60
DURATION: Expires on 02/15/2004

               FSH R5-2209.13 - GRAZING PERMIT ADMINISTRATION HANDBOOK
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16.21a-d               Adds guidance to the administration of permit violations. Provides
                       specific suspension and cancellation guidelines.
17.1                   Adds additional direction regarding Permittee Convenience nonuse to
                       make the Handbook consistent with the Term Grazing Permit (Form FS-
                       2200-10).

18.1-4                 Adds additional direction regarding Requirements and Conditions for
                       approval of Waiver of Term Grazing Permits and changes wording to
                       make this section consistent with the Term Grazing Permit (Form FS-
                       2200-10). Adds additional guidance on execution of Escrow Waivers.
                       Corrects name and acronym for Farm Service Agency (FSA).




JACK BLACKWELL
Regional Forester
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                                                          ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                                                          Page 3 of 60
DURATION: Expires on 02/15/2004

                      FSH R5-2209.13 - GRAZING PERMIT ADMINISTRATION HANDBOOK
                               CHAPTER 10 – PERMITS WITH TERM STATUS


                                                        Table of Contents

11 - GRAZING PERMITS WITH TERM STATUS (EXCEPT GRAZING AGREEMENTS)
        ............................................................................................................................. 6
  11.1 - Kinds of Grazing Permits With Term Status .................................................................... 6
     11.11 - Term Grazing Permit ................................................................................................. 6
     11.12 - Term Private Land Grazing Permit ........................................................................... 6
     11.13 - Term Grazing Permit with On-and-Off Provisions ................................................... 6
     11.14- Grazing Agreements. See FSH 2209.13-92-1, Chapter 20........................................ 7
  12.1 - Eligibility Requirements ................................................................................................... 7
     12.11 - Married Persons ......................................................................................................... 7
     12.12 - Minor Who Is Head of Family .................................................................................. 7
     12.13 - Minor Who Has Acquired Base Property or Permitted Livestock ............................ 7
     12.14 - Forest Officers ........................................................................................................... 8
     12.15 – Trusts......................................................................................................................... 8
     12.16 – Estates ....................................................................................................................... 8
     12.17 - Corporations and Partnerships ................................................................................... 8
  12.2 - Qualification Requirements .............................................................................................. 8
     12.21 - Base Property............................................................................................................. 9
     12.22 - Livestock Requirements ............................................................................................ 9
     12.23 - Permit Holders Having Agent or Manager Relationships ....................................... 10
  12.3 - Upper, Lower and Special Limits ................................................................................... 11
13 - ACQUIRING GRAZING PERMITS WITH TERM STATUS .................................... 11
  13.1 - Prior Use ......................................................................................................................... 11
     13.11 - On Added Lands ...................................................................................................... 11
     13.12 - Conversion in Kind or Class of Livestock............................................................... 12
  13.2 - Grant ............................................................................................................................... 12
     13.21 - Conditions................................................................................................................ 12
     13.22 - Grant Priority ........................................................................................................... 13
     13.23 - Related Considerations ............................................................................................ 14
     13.24 - History of Grant Permits.......................................................................................... 14
  13.3 - Changes in Ownership .................................................................................................... 14
  13.4 - Exchange of Permits with Other Agencies ..................................................................... 15
14 - APPLICATION FOR GRAZING PERMITS WITH TERM STATUS ....................... 15
  14.1 - Notice to Permit Holders ................................................................................................ 15
     14.11 - Preferred Applicant Status ....................................................................................... 15
  14.2 - Applications for Grazing Permits ................................................................................... 16
     14.21 - Number, Kind, and Class of Livestock and Period of Use ...................................... 16
     14.22 - Livestock to be Purchased ....................................................................................... 16
     14.23 - On-and-Off Provision .............................................................................................. 16
  14.3 - Supporting Documents ................................................................................................... 17
     14.31 – Corporations and Partnerships ................................................................................ 17
     14.32 - Trusts and Estates .................................................................................................... 17
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                                                      ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                                                      Page 4 of 60
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                      FSH R5-2209.13 - GRAZING PERMIT ADMINISTRATION HANDBOOK
                               CHAPTER 10 – PERMITS WITH TERM STATUS


      14.33 - Certificates of Brand ................................................................................................ 17
      14.34 - Records .................................................................................................................... 17
      14.35 - Certified or Sworn Statements and Document Examination ................................... 17
      14.36 – Information Revision and Updating........................................................................ 18
  14.4 - Action on Applications ................................................................................................... 18
      14.41 - Approval .................................................................................................................. 18
      14.42 - Disapproval .............................................................................................................. 18
15 - ISSUANCE OF GRAZING PERMITS WITH TERM STATUS ................................ 18
  15.1 - Issuance of Term Grazing Permits ................................................................................. 19
      15.11 - Validation ................................................................................................................ 19
      15.12 - Range Allotment Description .................................................................................. 20
      15.13 - Number, Kind, and Class of Livestock, Period of Use, and Grazing Allotment ..... 20
      15.13a - Changes in Number Because of Age Class ........................................................... 20
      15.13b - Variable Numbers and Seasons. ............................................................................ 21
      15.14 - Grazing Permit Terms and Conditions .................................................................... 21
      15.14a - General Terms and Conditions .............................................................................. 21
      15.14b - Special Terms and Conditions ............................................................................... 21
  15.2 - Issuance of Term Private Land Grazing Permits ............................................................ 22
      15.21 - General Guidelines .................................................................................................. 22
      15.22 - Qualification Requirements ..................................................................................... 23
      15.23 - Grazing Capacity of Private Lands .......................................................................... 23
  15.3 - Issuance of Term Grazing Permits with On-and-Off Provisions ................................... 23
      15.31 - General Guidelines .................................................................................................. 23
      15.32 - Qualification Requirements ..................................................................................... 24
  15.4 - Only Natural Units Included .......................................................................................... 24
16 - CHANGES IN GRAZING PERMITS ...................................................................... 27
  16.1 - Modification of Grazing Permits .................................................................................... 27
      16.11 - Methods of Modification ......................................................................................... 27
      16.12 - Modifications That Result in Increased Numbers or Period of Use ........................ 28
      16.13 - Modifications That Result in Reduced Numbers or Period of Use ......................... 28
      16.14 - Permittee Requested Modifications ......................................................................... 29
  16.2 - Suspension or Cancellation of Grazing Permits ............................................................. 29
      16.21 - Permit Violations ..................................................................................................... 30
      16.21a – Notice of Non-Compliance ................................................................................... 30
      16.21b - Exception to Written Notice of Non-Compliance and Remedy for Willful
           Conduct. ...................................................................................................................... 31
      16.21c - Exception to Written Notice of Non-Compliance and Remedy Regarding Matters
           of Public Health, Interest, or Safety. ........................................................................... 31
      16.21d – Region 5 Suspension and Cancellation Guidelines .............................................. 32
      16.22 - Cancellation to Devote Lands to Another Public Purpose ...................................... 40
      16.23 - Cancellation of Grazing Agreements or Association Permits for Noncompliance
           With Title VI of Civil Rights Act. .............................................................................. 40
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                                                           ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                                                           Page 5 of 60
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  16.3 - Changes Which Might Affect Lands Administered by Other Federal and State Agencies
           ..................................................................................................................................... 42
  16.4 – Mediation ....................................................................................................................... 42
  16.5 - Status of Grazing Permits During Administrative Reviews ........................................... 42
17 - NONUSE OF GRAZING PERMITS WITH TERM STATUS ................................... 43
  17.1 - Permittee Convenience ................................................................................................... 43
  17.2 - Resource Protection or Development ............................................................................. 43
  17.3 - Range Research .............................................................................................................. 44
  17.4 - Changes in Kind or Class of Livestock Grazed.............................................................. 44
18 - WAIVER AND ISSUANCE OF GRAZING PERMITS WITH TERM STATUS
       BECAUSE OF CHANGE IN OWNERSHIP ........................................................ 45
  18.1 - Transactions with Permit Waiver ................................................................................... 45
     18.11 - Sales with Waiver .................................................................................................... 45
     18.12 - Sales within Family ................................................................................................. 46
     18.13 - Contracts to Purchase With Waiver......................................................................... 46
     18.14 – Inheritance............................................................................................................... 46
     18.15 - Partnership Agreements ........................................................................................... 46
     18.16 - Division of Interests................................................................................................. 46
     18.17 - Changes in Ownership of Corporations and Companies ......................................... 47
     18.18 - Requirements and Conditions for Approval ............................................................ 47
     18.19 – Nonuse .................................................................................................................... 48
  18.2 - Escrow Waivers .............................................................................................................. 49
     18.21 - Execution of Escrow Waiver ................................................................................... 49
  18.3 - Foreclosures in Connection With Grazing Permits. ....................................................... 50
     18.31 - Foreclosure with Waiver of Term Grazing Permit .................................................. 50
     18.32 - Foreclosure with Escrow Waiver ............................................................................ 50
     18.33 – Redemption ............................................................................................................. 50
     18.34 - Foreclosure without Escrow Waiver ....................................................................... 51
  18.4 - Transactions without Permit Waiver .............................................................................. 51
19 – BANKRUPTCY ..................................................................................................... 57
     19.1 - Types of Bankruptcy Filings. .................................................................................... 57
     19.2 - Status of Permit. ........................................................................................................ 58
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                      ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                      Page 6 of 60
DURATION: Expires on 02/15/2004

               FSH R5-2209.13 - GRAZING PERMIT ADMINISTRATION HANDBOOK
                        CHAPTER 10 – PERMITS WITH TERM STATUS


11 - GRAZING PERMITS WITH TERM STATUS (EXCEPT GRAZING AGREEMENTS)

Grazing permits with term status are limited to authorizing the use and management of the
grazing resource for commercial livestock production purposes. Objectives and policy for
issuing grazing permits with term status are in FSM 2230.2 and 2230.3 and in 36CFR §222.3

11.1 - Kinds of Grazing Permits With Term Status

There are four kinds of term permits discussed in the following sections. Term status is also
provided through Grazing Agreements, which are covered in chapter 20.

11.11 - Term Grazing Permit

The permit is normally issued for a 10-year term and provides priority for renewal to the holder
provided the holder has fully complied with the terms and conditions of the expiring permit (36
CFR §222.3(c)(1)(ii)). See section 15.1 for term grazing permit issuance procedures.

The authorized officer shall issue permits for the full 10-year period, unless one of the following
situations exist:

       1. The land is pending disposal;

       2. The land will be devoted to non-grazing uses prior to the end of 10 years; or

       3. It will be in the best interest of sound land management to specify a shorter term. A
permit may be issued for less than 10 years under this provision if a project level decision
determines that a shorter period is necessary to provide for resource protection or improvement.

11.12 - Term Private Land Grazing Permit

A term private land-grazing permit may be issued to a qualified applicant who owns or controls
land in an allotment under Forest Service control. To receive this permit, the applicant must
waive exclusive grazing use of the private land involved to the United States for the full period
the permit is to be issued. In return, the applicant is authorized to graze livestock in the
allotment containing the waived private land. See section 15.2 for term private land grazing
permit issuance procedures.

11.13 - Term Grazing Permit with On-and-Off Provisions

A term grazing permit with provisions for grazing on-and-off National Forest System lands and
other lands under Forest Service control may be issued to a qualified applicant when a logical
grazing area contains both lands under Forest Service administration and lands controlled by the
applicant. See section 15.3 for term grazing permit with on-and-off provisions issuance
procedures.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                        ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                        Page 7 of 60
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                          CHAPTER 10 – PERMITS WITH TERM STATUS


11.14- Grazing Agreements. See FSH 2209.13-92-1, Chapter 20.

12 - ELIGIBILITY AND QUALIFICATION REQUIREMENTS FOR PERMITS WITH
TERM STATUS

Issue grazing permits only to private individuals, partnerships, corporations, trusts, estates or
tribal governments. Federal, State and local governments, or units thereof, are not eligible to
receive or hold grazing permits.

Subject to limitations contained within this handbook, the following are eligible to hold term
grazing permits.

          1. A citizen of the United States.

          2. A citizen of a foreign country who has filed a petition for naturalization in the United
States.

         3. A corporation, partnership or other business entity, including grazing associations or
districts organized under State law that is authorized to conduct business in the State where the
grazing activity is to be permitted regardless of the location of the entity's headquarters.

          4. Tribal governments.

12.1 - Eligibility Requirements

12.11 - Married Persons

Consider husband and wife as an entity for permit purposes. Comply with State law concerning
community property. In the case of divorce, the term grazing permit will be allocated based on
the terms of the divorce settlement approved by the court of jurisdiction.

In some cases husbands and wives or other family members may be shown as "Joint Tenants
with Right of Survivorship (JTROS)". This is a legal entity.

12.12 - Minor Who Is Head of Family

A minor who is the head of a family and provides its principal support has the same status as an
applicant of legal age and is eligible to hold a term grazing permit.

12.13 - Minor Who Has Acquired Base Property or Permitted Livestock

A minor who is dependent upon parents or a guardian and who acquires base property or
permitted livestock from any source may be issued a grazing permit with term status. Require
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                       ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                       Page 8 of 60
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co-signature of the permit by a parent, guardian, or trustee who assumes responsibility for
compliance with terms and conditions of the permit.

12.14 - Forest Officers

No employee of the Forest Service may hold any type of a term grazing permit unless they have
received written approval from the Regional Forester.

12.15 – Trusts

The regulations and qualification requirements that apply to individuals also apply to trusts. The
trust must hold legal title to permitted livestock and base property.

Trusts are created in various ways and their purposes, management, and methods of termination
vary. Consequently, secure assistance of the Regional Office Range Management Specialists to
resolve questions regarding legality of a particular trust and its eligibility for holding a permit.

12.16 – Estates

The regulations and qualification requirements that apply to individuals also apply to estates. To
be eligible to hold a grazing permit with term status, the estate must hold legal title to permitted
livestock and base property. The Court appointed executor will sign for the estate.

In those States where ownership of base property and livestock automatically pass to the
surviving spouse under State law, the surviving spouse will continue to enjoy the privileges of a
grazing permit, including execution of waivers.

12.17 - Corporations and Partnerships

Regulations and qualification requirements applying to individuals also apply to corporations
and partnerships.

To qualify, corporations and partnerships must hold title to both permitted livestock and base
property. Normally, one corporation owns both the base property and the permitted livestock.
However, in cases involving estate planning, the ranching operation might be organized into two
corporations and/or partnerships. Require the corporation or partnership to have the same
persons make up each legal entity.

Resolve questions regarding the legality of a particular corporation’s or partnership's eligibility
to hold a permit by consulting with the Regional Office Range Management Specialist.

12.2 - Qualification Requirements
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                      ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                      Page 9 of 60
DURATION: Expires on 02/15/2004

               FSH R5-2209.13 - GRAZING PERMIT ADMINISTRATION HANDBOOK
                        CHAPTER 10 – PERMITS WITH TERM STATUS


To qualify for a grazing permit with term status, an applicant must own base property and
livestock to be permitted (with exceptions noted in subsequent sections). Ownership of base
property, livestock, and registered brands shall all be in the name of the same legal entity. State
authorized leasing of brands will not be recognized as ownership.

12.21 - Base Property

Base property is land owned and used by the permittee for a farm or ranch operation and cannot
be leased to another entity. Base property shall include basic livestock management facilities.
Base property requirements for grazing associations will be determined in the grazing agreement.

Base property requirements apply to term grazing permits and the on portion of on-and-off
permits. Base property is not required for term private land permits.

Forest Supervisors shall establish base property requirements for National Forests within limits
established by the Regional Forester. Forest Supervisor may consult with local livestock
organizations in determining requirements.

The authorized officer shall approve changes in base property proposed by the permittee if the
new base property meets the established base property requirements.

New applications for permits based on undivided ownership shall not be accepted. Each permit
shall stand on its own and be subject to waiver and issuance without the complication of multiple
ownership of an undivided base property.

12.22 - Livestock Requirements

The term grazing permit holder must own the mature livestock grazed on National Forest System
lands. Mature livestock are animals which are 6 months of age or older. Under a term grazing
permit with on/off provisions, the permittee must own mature livestock for the “on” portion.
Livestock ownership is not required for livestock grazed under term private land grazing permits
or for the "off" mature livestock of on-and-off permits.

All mature cattle shall be branded. The brand must be recorded with the California Department
of Food and Agriculture, Brand Inspection Service and the permittee must hold a valid certificate
of brand. Contact the State and the local Woolgrowers Association to determine branding
requirements and brand ownership for sheep.

If mature livestock placed on Forest Service administered lands do not bear the brand shown on
the permit application, refer to Section 16.21d (Item 10) for the appropriate administrative
action.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                    ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                    Page 10 of 60
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                        CHAPTER 10 – PERMITS WITH TERM STATUS


Only require brands registered to the permittee on mature animals. To facilitate marketing,
offspring may be branded with other brands registered to the permittee. The authorized officer
must approve all brands used in conjunction with the term grazing permit.

Permit holders may allow up to 50 percent of the livestock grazed to be owned by their children
or other immediate family members if they are establishing a livestock herd of their own with the
intent of acquiring the ranch operation, or are involved in a farm youth program such as FFA or
4-H. The permit holder must advise the authorized officer annually that livestock will be grazed
under this provision. The authorized officer shall approve the use of the children’s brands prior
to the grazing season.

The term grazing permit holder may waive the entire permit to a child or other immediate family
member, recognizing the child’s livestock as a portion of the permitted livestock, if the child’s
livestock were grazed during the last grazing season under the parent’s permit. This is to
encourage continuation of family operations. The permittee may not waive the permit to a non-
family member using this provision.

The requirements of ownership are not intended to interfere with routine marketing of livestock.
Annual sale and purchase of a portion of the base herd, offspring, or yearlings are acceptable so
long as there is a bona fide transaction as evidenced by the actual transfer of funds between
parties for the animals. The Forest Service does not consider a resale agreement or issuance of
notes or checks and subsequent return of the note or check, upon return of the livestock, to be a
bona fide transaction.

12.23 - Permit Holders Having Agent or Manager Relationships

The permittee may make legal arrangements with a second party to operate the ranch and
manage the permitted livestock under an agent or manager relationship. The permit holder shall
not lease base ranch property or livestock and allow the lessee to use and manage the grazing
permit. Under a managerial arrangement, the permit holder retains full responsibility for
compliance with the provisions and requirements specified in the grazing permit, the regulations
of the Secretary of Agriculture on which the permit is based, and instructions of the Forest
Officer.

An agent or manager relationship must comply with the following specific requirements:

       1. The permit holder shall retain ownership of both base property and livestock.

       2. Only graze permitted livestock owned by the permittee on National Forest System
lands. All mature livestock under permit must be branded or marked with the brand of the
permit holder.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                     ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                     Page 11 of 60
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       3. Ownership of base property and permitted livestock must be supported by deeds or
contracts to purchase, assessment records, and tax payments on both real property and livestock.

        4. The authorized officer must approve in advance an agreement made between a
permittee and manager or agent involving a Forest Service grazing permit. Copies of the
agreement must be filed with the authorized officer. The extent to which the agent or manager
can act for the permit holder in matters pertaining to the grazing permit depends on the scope of
the authority delegated by the permittee as shown in the agreement. Ensure that all
correspondence regarding the grazing permit is provided to both the permittee and the agent.

12.3 - Upper, Lower and Special Limits

There are no upper or special limits governing the total number of livestock, which an entity is
entitled to hold under a Term Grazing Permit. Lower limits are established for the Region from
authority delegated in FSM 2204.3.

Lower limits will be 25 head of cattle or 175 head of sheep. The lower limit applies to all
numbers under Permit, not just those authorized and billed for on a Term Grazing Permit (Form
FS 2200-10). Term grazing permit holders who are currently below these numbers will be
allowed to continue to hold a term grazing permit, but will only be allowed to waive their term
grazing permit to another term grazing permit holder who will as a result of this acquisition be at
or above the lower limit requirements. Forest Supervisors may set special lower limits on their
Forests with approval from the Regional Forester. Existing permits with less than 25 head of
cattle or 175 head of sheep may not be waived except to children or immediate family members
as provided under Section 12.22.

13 - ACQUIRING GRAZING PERMITS WITH TERM STATUS

Grazing permits with term status may be acquired in several ways as listed below.

13.1 - Prior Use

13.11 - On Added Lands

When the National Forest System acquires lands through purchase, donation, or exchange, term
grazing permits may be issued for the grazing capacity of the added lands in accordance with
stipulations contained in the acquisition document. In the absence of such stipulation, the
grazing capacity shall be available for grant (Section 13.2).

On lands added through other action such as proclamation, legislation, administrative order,
transfer, and interchange term grazing permits may be issued to those individuals who submit
proof of having used the added lands during at least the two consecutive years immediately
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                      ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                      Page 12 of 60
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preceding the year in which the addition is effective, or to individuals who are otherwise
provided for in the land transfer or interchange agreement, or in accordance with section 13.2.
The effects of livestock grazing on added lands must be disclosed in a National Environmental
Policy Act (NEPA) analysis and an allotment management plan must be completed prior to
authorizing livestock to graze on added National Forest Land (FSH 2209.13, Chapter 93 Project
Decisions).

13.12 - Conversion in Kind or Class of Livestock

Term grazing permits may be modified to permit a different kind of livestock at the authorized
officer's discretion. Modify the existing term permit to allow for trial changes in kind or class of
livestock to be grazed. Estimates of grazing capacities should be conservative and subject to
adjustment during the trial. Do not make commitments to change kind or class of livestock until
a final assessment of the proposal has been made.

The effects resulting from a conversion of livestock kind must have been disclosed in an existing
NEPA analysis, or the authorized officer must complete an analysis. The allotment management
plan must be updated to reflect the change in livestock (See FSH 17.4 for Changes in Kind and
Class of Livestock and non-use).

If the permittee requests a change in the kind of livestock that requires new range improvements,
the permittee will be responsible for all costs associated with the construction of the
improvements.

Authorized officers may develop local conversion factors to express differences in kind or class
of livestock and their forage consumption. Conversion factors that are locally derived should
reflect information developed from historic data or specific livestock breed forage consumption
intake rates.

Where community allotments are involved, consult with all affected permittees before approving
conversion in kind or class of livestock.

13.2 - Grant

If increased grazing capacity becomes available, the authorized officer may increase existing or
issue new grazing permits with term status provided the range resource can support increased
use. All eligibility and qualification requirements apply.

13.21 - Conditions

Grazing capacity is only available for grant after all the following conditions have been met:
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                      ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                      Page 13 of 60
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        1. The proportionate needs of other resources and values have been met in accordance
with land and resource management plan (LRMP) direction.

             a. Reasonable efforts have been made to use this and other vacant allotments to solve
             resource problems on other allotments.

             b. Issuance of a term grazing permit on a vacant allotment does not interfere with the
             ability to complete rangeland priorities on allotments that are stocked.

        2. An allotment management plan which meets land and resource management plan
direction and is NEPA sufficient exists for the allotment, including:

             a. Determination of forage availability based on monitoring and/or inventories, and

             b. Resolution of any conflicts between allocation of surplus forage and habitat
             requirements for wildlife species.

          3. Range improvements necessary for proper livestock control are in place (Section
13.13).

13.22 - Grant Priority

When a decision to grant additional grazing capacity is made, the authorized officer shall make
the grant based upon the following factors in descending order of priority:

       1. To permittees on the allotment under consideration for their proportionate share of any
increase in grazing capacity resulting from development programs to which they have
contributed or to restore reductions made for resource improvement purposes within the previous
10 years (Section 16.12).

       2. To relieve overstocking by permitted livestock on other allotments on the specific or
adjacent National Forest System unit.

          3. To present permittees on the allotment.

          4. To permittees on other allotments.

      5. To owners of livestock now on ranges administered by the Bureau of Land
Management (BLM) to the extent that the BLM ranges need adjustments provided for in the
Memorandum of Understanding dated November 5, 1966.

          6. To new applicants.

Grant of increased numbers of livestock and/or season of use to existing permittees will be made
by modification of their term grazing permit.
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13.23 - Related Considerations

Consider the following in addition to the priorities listed in section 13.22 when granting
available forage:

        1. Applicants' record of compliance with the terms and conditions of existing federal
grazing permits. Give first consideration for the allocation of additional available forage to
permittees who have complied with the terms and conditions of their permits, and have
consistently demonstrated good livestock management and accountability practices.

        2. Eligible applicants owning and operating a ranch as the sole source of their livelihood
shall have priority over applicants engaged in some other business and operating the ranch as a
sideline.

13.24 - History of Grant Permits

The authorized officer shall file a brief statement with the new term grazing permit giving its
history and justification.

13.3 - Changes in Ownership

See section 18 for requirements and procedures for issuing permits because of changes in
ownership. A term grazing permit may be issued to an applicant under the following
circumstances:

       1. The current permit holder has executed a waiver (FS-2200-12) to the United States in
favor of the applicant, who has purchased:

           a. The permitted livestock, including any replacement animals retained, that are
           currently grazing on the allotment or which grazed on the allotment the previous
           grazing season, and/or

           b. The designated base property.

       2. The applicant is a lender who holds a foreclosed mortgage and the authorized officer
has confirmed an escrow waiver identifying the applicant as the lender and the redemption
period under state law has expired.

       3. The applicant has inherited permitted livestock or base property.

      4. A term grazing permit holder wishes to change the livestock operation from individual
ownership to a partnership or a corporation.
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       5. The individual applicant was a member of a now dissolved partnership or a
corporation that held a grazing permit with term status.

13.4 - Exchange of Permits with Other Agencies

An exchange may be desirable when two or more permittees graze livestock under term grazing
permit or license on lands administered by the Forest Service, as well as lands administered by
another public land managing agency. Exchanges of this kind should consolidate all use by one
permittee on land administered by one agency. The exchange should result in issuance of new
grazing permits by each agency. The exchange must result in improved management and
administration of the resource and holders of Forest Service grazing permits must meet Forest
Service qualifications.

Grazing privileges may be exchanged between the Forest Service and Federal, State or local
government agencies. Such exchanges must be of mutual advantage to the Forest Service and
the other agencies. Document the exchange in a letter to all involved parties.

14 - APPLICATION FOR GRAZING PERMITS WITH TERM STATUS

The authorized officer shall require a written application (FS-2200-16) for the issuance of
grazing permits with term status. Require any other documentation deemed necessary to assure
qualification of the applicant. Authorized officers may require an interim application at any
time, when there is reason to question a permit holder's qualification.

Permittees' successors must file an application and be qualified applicants in order to receive a
grazing permit.

14.1 - Notice to Permit Holders

Prior to the expiration of a term grazing permit, the authorized officer shall notify the permittee
of the time and place to apply for a new term grazing permit.

14.11 - Preferred Applicant Status

A preferred applicant is: an entity that purchased the permit holder’s base property and/or
permitted livestock; through an executed Waiver of Term Grazing Permit (FS-2200-12); and has
submitted an Application for Term Grazing Permit (FS-2200-16). The authorized officer shall
not issue a term grazing permit to a permit applicant until all qualification requirements are
satisfied (See Section 12.2). If the preferred applicant fails to satisfy the base property or
livestock ownership qualifications requirements, the authorized officer shall place the entity in
preferred status for up to one year to allow the applicant to qualify. A preferred applicant is not
authorized to graze livestock under a term grazing permit or execute a waiver. The applicant can
be issued a temporary grazing permit pending issuance of a term grazing permit.
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The preferred applicant is responsible for maintaining the range improvements, associated with
the term grazing permit unless another entity is authorized to graze and is assigned the
maintenance by the authorized officer.

Following the issuance of the term grazing permit, the permit must be validated during the first
grazing season following issuance (See Section 15.11).


14.2 - Applications for Grazing Permits

Application for grazing permits shall be on the forms specified below:

       1. Term Grazing Permit - Form FS-2200-16, Application for Term Grazing Permit.

      2. Term Private Land Grazing Permit - Form FS-2200-17, Application for Term Private
Land Grazing Permit.

      3. Term Grazing Permit with On-and-Off Provisions - Form FS-2200-16, Application for
Term Grazing Permit.

       4. Grazing Agreement. No official application form exists. See FSH 2209.13-92-1,
Chapter 20.

Only one application is necessary when an applicant files application for term grazing permits on
more than one allotment or administrative unit or with two or more kinds of livestock.

14.21 - Number, Kind, and Class of Livestock and Period of Use

Applications for a grazing permit with term status will show number, kind, and class of livestock
and period of use desired.

14.22 - Livestock to be Purchased

An application for permit issuance in connection with a waiver may be accepted even though the
applicant does not yet own the livestock. However, require satisfactory evidence of ownership
of the purchased livestock before issuing a term grazing permit. Notify the applicant that until
proof of ownership of livestock is supplied they will be considered a preferred applicant for the
period specified in their preferred applicant notification (Section 14.11).

14.23 - On-and-Off Provision

In applying for term grazing permits with on-and-off provision, only the "on" number should be
shown in Section A of the application. The total number of animals the applicant desires to
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graze under this provision is shown in Section A-9 of the application (FS-2200-16) and in Part
III of the Term Grazing Permit (FS-2200-10e).

14.3 - Supporting Documents

The authorized officer may require an applicant to furnish any information necessary to
determine whether that applicant meets qualification requirements.

14.31 – Corporations and Partnerships

When a corporation submits an application for a term grazing permit, the authorized officer will
request a list of officers and directors, a copy of the articles of incorporation, a list of the
shareholders, and the agent(s) authorized to act on the corporation’s behalf with respect to the
grazing activities that would be authorized by the permit.

When a partnership submits an application for a term grazing permit, it must include a list of all
partners, their relative interest in the partnership, and the documentation authorizing the
establishment of the partnership.

14.32 - Trusts and Estates

A trust or an estate filing an application must submit a copy of a certified will, deed, court order,
or other appropriate instrument establishing the trust or estate as a legal entity. This document
should also designate the trust's or estate's authorized representative.

14.33 - Certificates of Brand

Require that an applicant submit a copy of the certificate of brand registration from California
Department of Food and Agriculture, Division of Brand Inspection for the record. In the case of
sheep, if the state does not require registration of brands for sheep, obtain information indicating
the applicant from State or local Woolgrowers representatives uses the brand shown on the
application.

14.34 - Records

An applicant may be required to submit for inspection all books, papers, and records pertaining
to purchase, sale, or ownership of any livestock for which an application is filed. Such
information shall generally be considered confidential unless the interests of the United States
require its use in court or appeal proceedings. Requests for this information is subject to the
Freedom of Information Act and Privacy Act (FSM 6270 and FSH 6209.13).

14.35 - Certified or Sworn Statements and Document Examination
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The authorized officer may require the applicant to submit a sworn statement with the
application, setting forth all material facts. Deeds, leases, and other such documents submitted
should be carefully examined to determine their authenticity and whether they accurately
describe the lands included in the application.


14.36 – Information Revision and Updating

The permit applicant is obligated to ensure that supporting documents submitted as part of an
application for a term grazing permit remain current and valid. The permit applicant is
responsible to notify the authorized officer, within thirty days, of any changes to the information
set forth in these documents. Failure to do so may result in permit action by the authorized
officer (Section 16.21d, Item 6).

14.4 - Action on Applications

14.41 - Approval

When all information in the application is found to be correct and complete and the applicant is
qualified, the application may be approved and a grazing permit with term status may be issued
to the applicant.

Annual authorization of grazing permits with term status may be accomplished on Form 6500-
89, Bill for Collection. The bill will show number, kind and class of animals that are approved,
period of use, head months, rate per head month, allotment, payment due date, and total fees.

14.42 - Disapproval

In cases of disapproval of an application, the authorized officer shall provide written notice
stating the reason for disapproval.

15 - ISSUANCE OF GRAZING PERMITS WITH TERM STATUS

The permit is not valid until signed by both the permittee and the authorized officer. The
authorized officer shall not issue the permit until signed by the applicant. Do not issue the
permit if the permittee deletes, alters, or otherwise indicates in writing that any term or condition
is unacceptable.

After both the permittee and the authorized officer sign the permit, send a copy to the permittee,
and retain the original in the authorized officer's files and, if the livestock are to graze on more
than one Ranger District or National Forest, provide copies to the other District(s) or Forest(s).
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Each permit issued will have a unique identification number, which the authorized officer enters
on Part 1 and on each additional permit page. The Forest Supervisor is responsible for
developing the numbering system.

When the allotments to be used by the permittee are located on more than one Ranger District,
National Forest, or National Grassland a primary authorized officer, may issue and/or administer
the permit as determined through agreement with the other authorized officer.

Grazing permits authorizing use on multiple allotments may be combined on one term grazing
permit form (FS-2200-10) for administrative convenience. It is recognized that each allotment
authorized on the permit constitutes a separate permit for purposes of administrative action,
including the recognition of waivers and escrow waivers.

15.1 - Issuance of Term Grazing Permits

The term grazing permit shall be issued on Form FS 2200-10. Term grazing permits and
temporary grazing permits shall not be issued on the same permit form.

Authorize pack and saddle stock, pastured on NFS lands and used for the management of
permitted livestock, by either a term grazing permit or a paid livestock use permit. Including
these animals on the term grazing permit is the most efficient approach in most cases. When this
is done include the following clause in term grazing permit:

Pack and saddle stock authorized by this term grazing permit shall be for management of
permitted livestock and cannot be waived independently.

15.11 - Validation

Validation is a one-time occurrence when a new entity acquires a grazing permit with term
status. Validation is accomplished by the issuance of a Bill for Collection (Form 6500-89),
payment of the bill, and placement of at least 90 percent of the number of livestock shown on the
face of the permit in Part 1, Section 3 on the designated allotment the first grazing season
following issuance. Failure to meet this validation requirement subjects the term grazing permit
to partial or total cancellation in accordance with Section 16.21d, Item 9.

Placement of less than the permitted number of livestock on the designated allotments in the first
full grazing season following issuance will result in partial validation of the permit, up to the
number of livestock actually placed on the allotment. The authorized officer may initiate permit
cancellation proceedings regarding the permitted livestock numbers that were not validated.
These un-validated permitted livestock numbers may be available for grant in accordance with
Section 13.22.
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Permittee convenience nonuse is not available until after a permit has been validated. If an
applicant does not qualify for issuance of a term grazing permit or indicates they may not be able
to validate their grazing privilege as required under this section, consider them a preferred
applicant (Section 14.11). Term grazing permits cannot be waived until validated. Term
grazing permits shall not be issued until the applicant is fully qualified and cannot be waived
until validated.

The validation requirements of this section do not apply to the issuance of a permit to the same
permit holder to replace an expiring term grazing permit or to entities that re-organized into
corporations or partnerships composed of the same membership. Follow the nonuse
requirements in Section 17.1 in this situation.

15.12 - Range Allotment Description

Clearly delineate the grazing allotment on a map accompanying and made a part of the permit.
Closed rangeland and private lands, including "off", waived, and non-waived private lands
within the allotment should be shown on the map. Any map which is part of a grazing permit
should have a statement placed thereon to the effect that:

         This map shows the (name) Allotment designated for use on grazing
         permit Number           , issued to (name of permittee)     by
         (name and title)  on (date).

15.13 - Number, Kind, and Class of Livestock, Period of Use, and Grazing
Allotment

The number, kind, class of livestock, period of use, and allotment shown on the term grazing
permit are those permitted. For example:

               LIVESTOCK                          PERIOD OF USE                 GRAZING
  NUMBER          KIND           CLASS           FROM        TO                ALLOTMENT
    60            Cattle         Cow-calf         6/1        9/30               Elm Spring
    20            Cattle         Yearling         6/1        9/30               Elm Spring


15.13a - Changes in Number Because of Age Class

Annual changes in use permitted by a grazing permit with term status, such as adjustments in
class of livestock, and any changes for use of increased forage production may be authorized on
a Bill for Collection (FS 6500-89). Make permanent changes to a grazing permit with term
status by modifying the term permit.
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15.13b - Variable Numbers and Seasons.

A livestock operation may be following an approved plan of management that calls for
alternating the number grazed and season of use depending on the complexity of the plan. This
may occur on a year-by-year basis. In such variable management operations, the following
statement shall be written in Part 1, paragraph 2 of the term grazing permit in lieu of actual
numbers of livestock and periods of use:

         Variable numbers and periods of use are specified in the management plan
         that is part of this permit. The average use under this permit is equivalent
         to            head for            period of use.

In management systems described in this section, yearlong rest periods shall not be considered
nonuse.

The management system that allows for this type of management to occur should be shown in
Part 3 of the Term Grazing Permit.

Billing shall be for each year's authorized use, not on average use.

15.14 - Grazing Permit Terms and Conditions

15.14a - General Terms and Conditions

Standard terms and conditions in Parts 1 and 2 of FS Form 2200-10 shall not be altered.
Form FS-2200-10, Term Grazing Permit, Part 2, Paragraph 4, covers the effective period of the
permit. Permits will be issued for ten years, including the year the permit is approved (e.g.
March 14, 2002 – 12/31/2011), and will expire on December 31 of the last year, or as determined
by the authorized officer (Section 11.11).

15.14b - Special Terms and Conditions

Use Part 3 of the permit for those special terms and conditions not generally applicable to all
permits. In addition, in Part 3, the authorized officer shall include as terms and conditions of the
grazing permit those applicable standards and guidelines contained in the Forest Plan and/or
NEPA analysis and decisions that specify appropriate management requirements. Appropriate
standards and guidelines would include those relating to the management of vegetation, soil,
water and other resources that may be affected by livestock grazing.

In those instances where this requirement is met by incorporating the allotment management plan
by reference in Part 3; the authorized officer should use the following clause:
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         The Allotment Management Plan for the (name) Allotment, approved by
         (name and title) on (date) is hereby made a part of this permit.

Provide a copy of an approved allotment management plan to each permittee and place the
original copy in the official 2210 file.

The Regional Forester may prescribe special terms and conditions for Region-wide use.
Authorized officers may include any terms and conditions necessary to obtain compliance with
grazing regulations and to secure proper management of livestock.

The permittee may be required, as a condition of permit issuance, to monitor livestock operations
and undertake appropriate management actions annually to comply with the terms and conditions
of the grazing permit. The authorized officer may require the permittee to provide monitoring
information related to livestock operation compliance with terms and conditions of the permit,
including, but not limited to, actual livestock numbers grazed, time of grazing, livestock
distribution, structural and nonstructural improvement condition, maintenance activities
conducted, vegetation use, and other standards in the permit. These requirements shall be fully
discussed with the permittee prior to initiation and any training necessary to achieve desired
permittee performance should be offered.

Include special terms and conditions on FS Form 2200-10 (a) through 10(e) as appropriate.

15.2 - Issuance of Term Private Land Grazing Permits

15.21 - General Guidelines

The Forest Service has no obligation to issue private land permits solely for the convenience of
the applicant. Issuance is justified only on the basis of advantage to the United States. Optimum
management of the rangeland resource within an allotment is the primary consideration. Deny
applicants if:

       1. Offered land is not suited to the kind of livestock currently grazing on the allotment
where the land offered is located.

       2. Resultant grazing would reduce the value of some other National Forest System
resource.

       3. The applicant has previously demonstrated unwillingness or inability to observe
Forest Service grazing requirements.

The authorized officer cannot require a private landowner or lessee to waive the grazing use of
private land to the United States. If an applicant chooses to apply for a term grazing permit with
on-and-off provisions (Section 15.3) rather than a term private land-grazing permit, the
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authorized officer must determine if issuing the on-and-off permit is in the best interest of the
United States (15.21 - Exhibit 01). If the authorized officer determines that issuing an on-and-
off permit is not in the best interest of the United States, and the applicant determines that
applying for a term private land grazing permit is not in their best interest, then a permit will not
be issued for the grazing capacity of the private land. Instead, a term grazing permit may be
issued for National Forest portion only.

Issue term private land permits on Form FS-2200-11, Term Private Land Grazing Permit. A
term private land-grazing permit may be issued to a qualified applicant who owns or controls
land withiin an allotment under Forest Service control. This permit can be issued for ten years
on the basis of a lease as long as the permittee annually provides proof that the lease, if less than
ten years, has been renewed. Failure to provide this notification will result in cancellation of this
permit. In return, the applicant is authorized to graze livestock within the allotment associated
with the waived private land.

Term private land grazing permits may be issued to owners or lessees of private or state land
within grazing allotments who desire to waive livestock management on these lands to the
United States for the entire period of the permit. The permit term may not exceed 10 years or the
term of the lease, whichever is less.

Permit issuance will be based on and shall not exceed the estimated grazing capacity of the
offered lands, as determined by the authorized officer.

15.22 - Qualification Requirements

Holders of term private land grazing permits are not required to own base property, permitted
livestock, or the waived land (Section 12.2). The holder must have the right to use the waived
land for grazing.

15.23 - Grazing Capacity of Private Lands

Estimate the grazing capacity of lands offered as a basis for issuing a private land permit. The
estimated grazing capacity as well as advantages or disadvantages of issuing the permit must be
determined by field examination. However, the authorized officer will make the final
determination of the grazing capacity on the waived lands.

15.3 - Issuance of Term Grazing Permits with On-and-Off Provisions

15.31 - General Guidelines

A term grazing permit with provisions for grazing on-and-off National Forest System lands and
other lands under Forest Service control may be issued to a qualified applicant when a logical
grazing area contains both lands under Forest Service administration and lands controlled by the
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applicant. Permits with On-and-Off provisions are generally issued when a minor portion of a
logical grazing area is composed of NFS lands. The intent is to promote efficient use of
intermingled ownership, while at the same time achieving desired conditions on NFS lands.

A request for on-and-off provision must be reviewed carefully to determine if the land offered
can and should be managed with the Forest Service-administered land as a natural unit. The total
number of livestock approved must not exceed what the natural unit can support. Deny
applications if:

       1. The private land is only a small portion of the natural range unit,

       2. Livestock use would be concentrated on the National Forest System lands,

       3. Resultant grazing would reduce the value of some other National Forest System
resource, or

       4. The applicant has demonstrated unwillingness or inability to observe Forest Service
grazing requirements.

Permits with on-and-off provisions are the same as any other grazing permit with term status
with respect to "on" numbers shown. Issue the permit on Form 2200-10, Term Grazing Permit.
Show only the "on" number in Part 1 of the permit.

For example, in a permit where 100 head of livestock are allowed to graze on a natural unit with
30 percent of the grazing capacity on Forest Service-administered land and 70 percent of the
grazing capacity on lands controlled by the permittee, only 30 head will be shown in Part 1 of the
permit. Show the total number of 100 head as a special provision on form 2200-10e, Grazing
Permit, Part 3.

15.32 - Qualification Requirements

The permittee must meet base property and livestock ownership requirements for the "on"
numbers (Section 12.2). The permittee must provide the authorized officer with documentation
demonstrating control of use for the off portion of the term grazing permit.

15.4 - Only Natural Units Included

Issue a Term Private Land Grazing Permit or Term Grazing Permit with On-and-Off Provisions
only if livestock move between Forest Service-administered range and adjoining or intermingled
land of other ownerships (except BLM) and where lands under both ownerships form a natural
grazing unit best managed as a single unit.
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If the natural unit includes BLM administered lands, follow the provisions of the MOU regarding
interchange of grazing privileges between the Forest Service and BLM dated October 26, 1966.
(FSM 1531.12b)
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                                        15.21 - Exhibit 01

                                   Comparison Of
                        Term Private Land Grazing Permit and
                   Term Grazing Permit With On-and-Off Provisions

           Term Private Land Permit                     Term Permit with On-Off Provision
Private lands are waived to the United States     Private lands are not waived; however, the
for management of livestock grazing during        United States specifies season of use, numbers,
the term of the permit.                           and grazing area.
Forest Service is responsible for analyzing       Forest Service is not responsible for analyzing
environmental effects of grazing activities on    environmental effects of grazing activities on
waived private lands.                             private lands within the allotment.
Waived lands will not be grazed outside the       Off lands will not be grazed outside the
designated season.                                designated season.
United States determines private land capacity.   United States agrees to estimate of Off lands
                                                  capacity.
Private lands are managed with NFS lands to       Off lands are managed with NFS lands.
meet LRMP standards.
Term of permit is same as term of lease if        Term of permit is same as term of lease if Off
applicant does not own lands offered.             lands are not owned by applicant.
Improvement maintenance required in               Improvement maintenance required in
proportion to amount of permitted use             proportion to amount of permitted use
authorized on allotment.                          authorized on allotment.
Applicant must demonstrate control of land        Applicant must demonstrate control of Off
offered.                                          lands.
Applicant need not own waived land.               Applicant need not own Off land.
Applicant need not own livestock to be grazed     Applicant need not own livestock authorized
under permit.                                     for Off lands, but must own for the On lands.
Permitted animals are run in conjunction with     Off livestock are run in conjunction with On
other term livestock authorized on the            livestock.
allotment.
Waived lands cannot be claimed as base            Off lands cannot be claimed as base property
property for a term grazing permit.               for a term grazing permit.
No base property required.                         Base property required for on portion.
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16 - CHANGES IN GRAZING PERMITS

Changes in grazing permits may be made for the following reasons:

       1. To achieve resource management objectives identified in LRMP and/or NEPA
analysis and decisions through proper forage resource use by livestock.

        2. To comply with the requirements of or changes in laws, regulations, AMPs, policy, or
other legally binding documents.

       3. To adapt to changed resource conditions.

       4. To suspend or cancel grazing permits to insure permittee compliance with the
provisions and requirements of the permit.

16.1 - Modification of Grazing Permits

Discuss modification to a term grazing permit with a permittee prior to the modification. While
it is desirable that modification of a term grazing permit be signed by the permittee, it is not
necessary. Permit modifications can be made even though the permittee is not in agreement with
the change in accordance with 36 CFR §222.4(a)(7).

Grazing permits may be modified at any time during the term period to:

       1. Respond to permittee request.

       2. Increase or decrease livestock numbers or period of use.

       3. Change kind or class of livestock or area to be grazed.

       4. Change or include an allotment management plan.

       5. Modify other terms and conditions of the permit, including provision for construction
or reconstruction, and/or maintenance of range Improvements.

       6. Comply with laws, regulations, executive orders, or other resource needs.

       7. Devote lands to another public purpose when no change in permitted numbers or
season of use are anticipated.

16.11 - Methods of Modification

Make modification to permit by letter, a standard modification form, or (where significant
changes have occurred) issuance of a new Term Grazing Permit (form FS 2200-10).
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In modification letter make reference to the permit being modified and provide the permittee
with the opportunity to accept the modification, although permittee acceptance is not necessary.
The following statement may be used:

       This modification is hereby made part of your grazing permit number             issued
       (date) by (name and title). It should be attached to your permit as pages
       through     .

Furnish a copy of the letter to the permittee and attach a copy of letter to each copy of the permit.

When a significant modification occurs, such as changing the basic permit clauses, include a
statement in the letter of transmittal and Part I of the new grazing permit indicating:

       This permit supersedes and cancels grazing permit number             , issued
       (date) by (name and title).

16.12 - Modifications That Result in Increased Numbers or Period of Use

The number of livestock or period of use under a grazing permit may be increased to (see also
section 13.2):

        1. Authorize use of additional grazing capacity resulting from improvement work or
management improvement involving the direct permittee's participation in proportion to the
extent of such participation.

       2. Restore previous reductions made for resource purposes. Initial distribution of
increased capacity resulting from resource improvement reductions shall be among current
permittees on that allotment if the reduction occurred within the previous 10 years.

16.13 - Modifications That Result in Reduced Numbers or Period of Use

Authorized officers may modify numbers permitted, periods of use, or both as determined
necessary because of resource conditions. Permittees should be given as much notice as
possible, but not less than one year, of such modification, except in cases of an emergency or
unless the permittee waives this requirement. Such notice shall be by certified or registered
letter. The letter will notify the permittee of appeal provisions in 36 CFR §251.

If the permittee and the authorized officer agree to a program for making changes in a permit,
document such agreement. The provisions of the agreement may waive the advance notice
requirement.

The authorized officer should use every reasonable method to assure that the permittee is fully
informed concerning the action to be taken prior to making any adjustments in grazing use. Give
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the permittee an opportunity to inspect the range with local Forest officers. Reports of studies
and other pertinent records on which range conditions were judged shall be made available for
review by the permittee or an authorized representative.

Adjustments in livestock numbers or in the authorized season of use will be made when available
information indicates that changes should be made. Attempt to negotiate mutually agreeable
adjustments with the permittee. However, if a negotiated agreement cannot be reached,
concurrence is not mandatory before modifying the permit. Adjustments should not be delayed
until the expiration or waiver of a term grazing permit.

16.14 - Permittee Requested Modifications

Modifications of grazing permits, to include numbers, seasons of use, kind and class of livestock
allowed on the allotment are permissible providing they meet the land management objectives
prescribed for lands within the grazing allotment.

Changes involving kind or class of livestock will likely necessitate a change in permitted
numbers. If such a request results in a change in environmental effects that would require an
updated NEPA decision, the permittee may be required in whole or in part to pay the costs of the
analysis and document preparation.

Require permittee requests for modification in writing to show the modification was at the
request of the permittee. Document that the modification is consistent with land and resource
management plan direction.

16.2 - Suspension or Cancellation of Grazing Permits

Grazing permits may be suspended or cancelled, in whole or in part, for various reasons (which
are set forth in 36 CFR §222.4). Circumstances and prevailing conditions must be considered in
deciding the kind and extent of appropriate action. Suspensions or cancellations can be made in
the numbers of livestock permitted and/or in the season of use permitted.

Suspend a permit if a temporary change is necessary to accomplish a specific compliance
purpose. Suspensions may also be made as a penalty for violation of terms and conditions of a
grazing permit. Suspension of a grazing permit may be considered before taking cancellation
action, but it is not a necessary first step.

Suspensions, for a minimum of 2 years up to a maximum of 5 years, may be effective in
obtaining compliance with the grazing permit and allotment management plan. If violations
persist, partial to total cancellation is appropriate. Do not issue a temporary permit to the
permittee in lieu of the suspended term permit.
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Cancellation applies if a permanent change in the permit is necessary. Total cancellation may be
justified for first offense violations, depending on the circumstances of the case.

All written correspondence relating to permit violations shall be sent to permittees by certified
delivery – return receipt requested.

16.21 - Permit Violations

It should be recognized that some violations may be very minor in nature, inadvertent on the part
of the permittee, and easily corrected. It is not the intention of these guidelines to formalize
adverse permit action for every minor permit violation that may occur. Examples of such minor
violations could include a minor number of livestock being in the wrong pasture due to a gate
being left open or fence in need of repair, a minor number of livestock that may have wandered
off the allotment, or finding a few stray livestock that could not be found when a pasture was
cleared or at the end of the grazing season. In these cases, a verbal contact with the permittee,
followed by documentation to the file, is all that is necessary, provided the permittee takes
appropriate action and it does not become a continuing problem. Document this first contact,
notifying the permittee of the violation using a “Cautionary” letter and file a copy in the
permittees permit folder.

The Cautionary letter should include:

   1. Specific provisions of the Term Permit, AMP, AOI, or other document
      that are in non-compliance;

   2. Consequences for failure to maintain compliance.

If the permittee does not take appropriate action or it becomes a chronic problem, then it is
appropriate to formalize administrative action according to these guidelines.

16.21a – Notice of Non-Compliance

When non-compliance occurs, ensure that the permittee is provided with a clear, documented
explanation in a notice of non-compliance letter as to:
   1) Specific provisions of the Term Permit, AMP, AOI, or other document that are in non-
       compliance;
   2) Specific actions that are required of the permittee to remedy the non-compliance, and to
       what standard they must be performed;
   3) Timeframe the within which the action(s) must be performed; and,
   4) Consequences for failure to comply.
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When inspections document instances of non-compliance, notify the permittee and ensure that, to
the extent feasible, they have an opportunity to correct the situation and bring their permit back
into compliance. Conduct follow-up documented inspections to determine whether or not
compliance has been achieved. Document the findings in a Certified Return Requested Decision
letter to the permittee. The decision letter will notify the permittee of appeal provisions under 36
CFR §251. If a suspension or cancellation decision by an authorized officer is appealed under 36
CFR §251, implement the decision unless a stay is granted (36 CFR §251.91).



16.21b - Exception to Written Notice of Non-Compliance and Remedy for Willful
Conduct.

In cases where it can be determined that the permittee acted in a willful manner to violate
provisions of the grazing permit, the authorized officer may by-pass the written notice of non-
compliance and opportunity for remedy and issue a final decision suspending or canceling the
grazing permit in part or whole.

When the authorized officer makes a determination to bypass the written notice and opportunity
for remedy, based on a determination of permittee willfulness, the notice of permit action for
non-compliance letter must expressly make this finding and explain how that determination was
made.

Generally, a permittee who intentionally conceals or misrepresents pertinent information (for
example, ownership of base property or livestock) or who expressly rejects Forest Service
regulatory authority over National Forest System lands (for example, by refusing to pay grazing
fees or deliberately placing livestock on NFS lands without authorization) is more likely to be
found acting “willfully” than a permittee who acts (or fails to act) inadvertently even if it was
done “intentionally” or in “careless disregard” of the permit requirements (for example, failing to
maintain range improvements to standard or failing to pay grazing fees on time).


The “willfulness” exception should be used sparingly and only in the most serious cases.
Documentation of permittee behavior will significantly improve ability to prove “willfulness.”
Prior to making a determination to initiate permit action under the “willfulness” exception,
consult with regional range specialists and/or your regional contact in the Office of the General
Counsel.


16.21c - Exception to Written Notice of Non-Compliance and Remedy Regarding
Matters of Public Health, Interest, or Safety.
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Another exception to the written notice of non-compliance and opportunity for remedy deals
with cases in which “public health, interest, or safety requires otherwise.” The purpose of this
exception is to facilitate the prompt termination of permits held by individuals whose misconduct
causes immediate danger to the public. In exercising this exception, the agency must balance the
harm to the permittee resulting from the permit cancellation against the harm to the public
resulting from the time needed to complete the notice and opportunity to cure requirements.
Because this exception applies only when immediate action is required, its applicability to
grazing permittees on National Forest System lands may be limited. For example, it may be
reasonable to assert the “public interest” exception to cancel a grazing permit based on violations
of permit terms and conditions that adversely impact species listed under the Endangered Species
Act or their critical habitat.

As with “willfulness” determinations (16.21b above), the exception is for public health, interest,
or safety be used sparingly and that authorized officers consult with regional range managers
and/or the Office of the General Counsel before making such a determination, and that
justification for the determination be set forth in the letter which institutes the suspension or
cancellation proceedings.

16.21d – Region 5 Suspension and Cancellation Guidelines

Forests shall not supplement the following guidance for consistent actions in grazing permit
administration for the categories listed. The objectives are: to obtain consistency on
administrative actions taken on non-conformance with the terms and conditions of the term
grazing permit; to ensure consistency with recent Court decisions (Anchustegui) and guidance;
and, to provide a firm but fair approach. If non-conformance with the permit terms and
conditions occurs, these guidelines provide recommended actions deemed appropriate, while
recognizing that situations and circumstances can vary. These guidelines are not all inclusive of
potential situations. Questions should be directed to regional rangeland management specialists.

Non-compliance with the term grazing permit terms and conditions are generally cumulative.
This means that any and all recent prior occurrences of non-compliance with permit terms and
conditions should be considered in determining second and third offenses. Permit non-
compliance instances in year 1 should be considered in actions taken on non-compliance
situations occurring in year 2 or 3. However, do not consider an isolated non-compliance
situation that occurred a number of years previous as evidence of a recurrent history of
violations.

In addition to cancellation or suspension action, require the permittee to pay the unauthorized use
rate for excess use where appropriate. Excess use is grazing livestock in greater numbers, or at
times or places other than authorized by the permit or the bill for collection.
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The letter of non-compliance shall contain an offer from the authorized officer to hear the
permittee’s viewpoint. This opportunity for the permittee to be heard may take the form of a
written letter or a personal meeting between the permittee and the authorized officer.

Follow guidelines below for determining the extent of suspensions and cancellations unless the
authorized officer determines a different action is appropriate due to the specific circumstances
of the violation.

1. Excess Use. Any livestock, owned by the holder of a National Forest System (NFS) grazing
permit, grazing on NFS lands in greater numbers, at times, or in places other than permitted in
Part 1 of the grazing permit or authorized on the annual Bill for Collection, including any
modifications made by the Authorized Officer is excess use. This includes, but is not limited to,
failure to remove livestock at the end of the grazing season or when instructed by the Authorized
Officer. Reference: Term Grazing Permit, Part 2, clause 8(c), 8(d), and 8(e).

   Action.   Contact permittee by phone or in person to notify them of the
             violation and require livestock removal in 72 hours or less. Follow-
             up this contact with a Cautionary letter for the first violation or
             minor infraction if the permittee complies as instructed. If the
             violation is significant, follow-up the permittee contact with a
             certified Notice of Non-Compliance letter documenting the
             violation, compliance requirements, timeframe required for
             compliance, and possible 25% suspension of permitted numbers or
             cancellation of the permit for continued non-compliance. If the
             permittee does not become compliant by the due date, issue a
             certified Decision letter implementing the cancellation and include
             appeals provisions. Bill the permittee at the unauthorized use rate
             for excess use.

   Repeat Violation.

               Contact permittee by phone or in person to notify them of the
               violation and require livestock removal in 72 hours or less. Issue a
               certified Decision letter implementing the 25% suspension or
               cancellation of the permit and include appeals provisions. Bill the
               permittee at the unauthorized use rate for excess use.

               If the permittee continues to not comply, issue a certified Decision letter
               implementing permit cancellation. Include appeals provisions. Bill the permittee
               at the unauthorized use rate for excess use.


2. Failure to follow Management Requirements or Operating Instructions.
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The allotment management plan, annual operating instructions or other management instructions
for the land described on Part 1, clause 1 are part of the permit. The permittee will carry out the
permit provisions, other instructions or both as issued by the Authorized Officer for the area
under permit and will require employees, agents, contractors and subcontractors to do likewise.
Reference: Term Grazing Permit, Part 2, clause 8(a).
   Action.     Contact the permittee by phone or in person to notify them of the
               violation and require correction of the problems within 72 hours or
               less. Follow-up this contact with a Cautionary letter for the first
               violation or minor infraction if the permittee complies as
               instructed. If the violation is significant, follow-up the permittee
               contact with a certified Notice of Non-Compliance letter
               documenting the violation, compliance requirements, timeframe
               required for compliance, and possible 25% suspension of permitted
               numbers or cancellation of the permit for continued non-
               compliance. If the permittee does not become compliant by the due
               date, issue a certified Decision letter implementing the 25%
               suspension of permitted numbers and include appeals provisions.

   Repeat Violation.

               Contact permittee by phone or in person to notify them of the
               violation and require correction of the problems within 72 hours or
               less. Issue a certified Decision letter canceling the suspended
               numbers, suspend 25% or more of permitted numbers or
               cancellation of the permit, and include appeals provisions. Issue
               new Term Grazing Permit reflecting new permitted numbers or
               changes because of the Decision letter.

               If the permittee continues to not comply, issue a certified Decision letter
               implementing permit cancellation. Include appeals provisions.


3. Failure to Maintain Improvements. The term grazing permit is issued and accepted with
the provision that the permittee will maintain all range improvements, whether private or
government owned, that are assigned to them for maintenance in the grazing permit. Reference:
Term Grazing Permit, Part 2, clause 8(i) and Part 3.
   Maintenance Inspection.

               After inspection of range improvements, contact the permittee by
               phone or in person to notify them of the results. Document the
               inspection, with photographs if possible, and permittee
               conversation. If maintenance has not occurred or is not up to
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               standard, require the permittee to keep livestock off or remove
               livestock from the allotment, until maintenance is completed to
               standard.

   Action.    Follow-up this contact with a Cautionary letter for the first violation
               or minor infraction if the permittee complies as instructed. If the
               violation is significant, follow-up the permittee contact with a
               certified Notice of Non-Compliance letter documenting the
               violation, compliance requirements, timeframe required for
               compliance, and possible 25% suspension of permitted numbers
               for 2 years.

               If the permittee does not become compliant by the due date, issue a
               certified Decision letter implementing the 25% suspension of
               permitted numbers. Include appeals provisions.

   Repeat Violation.

               Issue a certified Decision letter canceling the suspended numbers
               and suspend 25% or more of permitted numbers or cancel the
               permit. Include appeals provisions. Modify the existing permit or
               issue new Term Grazing Permit reflecting new permitted numbers
               or changes because of the Decision letter.


               If the permittee continues to not comply, issue a certified Decision letter
               implementing permit cancellation. Include appeals provisions.


4. Nonuse without Approval. Permits may be canceled, in whole or part, if the term permit
holder fails to graze at least 90% of permitted numbers without obtaining approval for nonuse.
Reference: Term Grazing Permit, Part 2, clause 9.
   Action.     Send a certified Notice of Non-Compliance letter to the permittee
               explaining the violation, compliance requirements, timeframe
               required to become compliant, and suspend for one (1) year or
               more, the number equal to the authorized number not placed on the
               permitted area. If the permittee does not become compliant by the
               due date, issue a certified Decision letter implementing the
               suspension. Include appeals provisions.

               Do not allow credit or refund of grazing fees paid.
   Repeated Violations or Failure to Stock Permitted Areas when
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   Permittee Convenience Nonuse has been exhausted.

               Issue a certified Decision letter canceling the suspended numbers
               and suspend the number equal to the number not placed on the
               permitted area above that cancelled, include appeals provisions.
               Issue new Term Grazing Permit reflecting new permitted numbers
               or changes because of the Decision letter.

               If the permittee continues to not comply, issue a certified Decision
               letter implementing permit cancellation. Include appeals
               provisions

               Do not allow credit or refund of grazing fees paid.

5. Failure to Pay Grazing Fees. The permittee will not allow owned or controlled livestock
to be on Forest Service administered lands unless the fees specified in the Bill for Collection are
paid. Interest, penalties and administrative costs shall be charged on any payment not made in
accordance with 31 U.S.C. §3717 and 7 CFR Part 3, subpart B. Reference: Term Grazing
Permit, Part 2, clauses 3 and 5.
   Action.     Permittee allows their livestock to enter NFS lands before paying
               grazing fees.

               Contact permittee by phone or in person to notify them of the
               violation and require livestock removal in 72 hours or less. The
               Authorized Officer shall send a certified Notice of Non-
               Compliance letter to the permittee explaining the violation, request
               that the permittee pay grazing fees and bill for excess use at the
               unauthorized rate, require livestock removal in 72 hours or less and
               do not allow livestock onto NFS lands until fees have been paid
               and cleared through Lock-Box. Cancellation is the penalty for
               non-compliance.

               If the permittee fails to comply, the Authorized Officer shall issue a certified
               Decision letter implementing the cancellation. Include appeals provisions. Bill
               for excess use at unauthorized use rate.


6. Failure to Notify Authorized Officer of Change in Qualifications to Hold Term Grazing
Permit Within a Reasonable Time (60 days).
Reference: Term Grazing Permit Part 2, clause 11(c).
   Action.    Send a certified Notice of Non-Compliance letter to the permittee
               explaining the violation, compliance requirements, timeframe
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               required to become compliant, and possible suspension 25% or
               more of the permitted number for two (2) years or more penalty. If
               the permittee does not become compliant by the due date, issue a
               certified Decision letter implementing the cancellation with
               appeals provisions.

   Repeat Violation.

               Issue a certified Decision letter canceling the suspended numbers and suspend
               25% or more of permitted numbers for two (2) years or more, include appeals
               provisions. Issue new Term Grazing Permit reflecting new permitted numbers or
               changes because of the Decision letter. If the permittee continues to not comply,
               issue a certified Decision letter implementing permit cancellation, include appeals
               provisions.


7. Conviction for Failure to Comply with Federal, State or Local Laws.
In cases where the permittee or the permittee's agent or affiliates are convicted for failure to
comply with Federal laws or regulations or State laws relating to protection of air, water, soil and
vegetation, fish and wildlife and other environmental values when exercising the grazing use
authorized by the permit. Reference: Term Grazing Permit Part 1, clause 3.

    Action.    Contact the permittee by phone or in person to notify them of the
               violation and require correction of the problems within 72 hours or
               less. Follow-up this contact with a Cautionary letter for the first
               violation or minor infraction if the permittee complies as
               instructed. If the violation is significant, follow-up the permittee
               contact with a certified Notice of Non-Compliance letter
               documenting the violation, compliance requirements, timeframe
               required for compliance, and possible 25% suspension of permitted
               numbers for two (2) year or more penalty. If the permittee does not
               become compliant by the due date, issue a certified Decision letter
               implementing the 25% suspension of permitted numbers and
               include appeals provisions.

    Repeat Violation.
               Issue a certified Decision letter canceling the suspended numbers and suspend
               25% or more of permitted numbers for two (2) years or more, include appeals
               provisions. Issue new Term Grazing Permit reflecting new permitted numbers or
               changes because of the Decision letter. If the permittee continues to not comply,
               issue a certified Decision letter implementing permit cancellation, include appeals
               provisions.
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8. Failure to Conform with Base Property Requirements. The permittee must notify the
Authorized Officer if they dispose of the base property on which the permit is based. The
Authorized Officer shall provide written notice to the permittee that they have 1 year from the
date that they ceased to have base property to acquire replacement base property. Reference: 36
CFR §222.3, (c) (v); FSH 2209.13, 16.22.

    Action.    Send a certified Notice of Non-Compliance letter to the permittee explaining the
               violation, compliance requirements, timeframe required to become compliant, and
               possible permit cancellation penalty. If the permittee does not become compliant
               by the due date, issue a certified Decision letter implementing the permit
               cancellation. Include appeals provisions.

9. Failure to Validate the Grazing Permit. The issuance of a Bill for Collection, payment of
fees and turning on at least 90 percent of permitted livestock the first grazing season after the
permit is issued will validate the permit for the number, kind and class of livestock, grazing
allotment and period of use for the particular year. Reference: Term Grazing Permit Part 2,
clause 1.

Validation requirements will be explained in the certified letter transmitting the new permit to
the holder. The letter will include a discussion of the consequences of a failure to validate.
    Action.    Send a certified Notice of Non-Compliance letter to the permittee explaining the
               violation, validation requirements, timeframe required to become compliant, and
               cancellation of the permit for continued non-compliance. If the permittee does
               not become compliant by the due date, issue a certified Decision letter
               implementing the cancellation. Include appeals provisions.

10. Grazing Unowned Livestock. Only livestock owned by the permittee are authorized to
graze under the permit. Livestock purchased and subsequently sold back to the original owner,
within a 24-month period, will not be considered evidence of valid ownership of livestock.
Reference: Term Grazing Permit, Part 2, clause 7(a).

   Action.    Contact permittee by phone or in person to notify them of the
              violation and require removal of the livestock within 72 hours or
              less. Send a certified Notice of Non-Compliance letter, validation
              requirements, timeframe required becoming compliant, and
              possible cancellation of the permit for continued non-compliance.
              If the permittee does not become compliant by the due date, issue a
              certified Decision letter implementing the cancellation and include
              appeals provisions.
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               In cases where fraudulent documents have been submitted, cancellation is
               mandatory.

11. Making False Statements. If at any time after issuing a grazing permit, it is discovered
that it was secured or maintained by deliberate misrepresentation of material facts, the permit
may be canceled. When a term grazing permit was issued as a result of purchase of base
property or livestock later found to be fraudulent or defective and the new permittee had no
knowledge of fraud or defect, a later discovery of defect shall not be cause for suspension or
cancellation. Reference: Term Grazing Permit Part 1, clause 3.

   Action.     If at any time, an Authorized Officer has reason to believe the
               grazing permit was secured or is being maintained by deliberate
               misrepresentation or suppression of material facts. The Authorized
               Officer should send a certified Notice of Non-Compliance letter to
               the permittee explaining the violation, request that the permittee
               supply a new application to allow the Authorized Officer to
               confirm the permittee qualification, timeframe required to become
               compliant, and possible cancellation of the permit.
               If the permittee fails to provide the information, or the information
               provided and any related investigation demonstrates to the
               Authorized Officer that the permit was secured or is being
               maintained by deliberate misrepresentation or suppression of
               material facts. The Authorized Officer shall issue a certified
               Decision letter implementing the cancellation with appeals
               provisions.


12. Refusal to Accept Permit Modification. The permit can be canceled, in whole or part, or
otherwise modified at any time during the term to conform with needed changes brought about
by law, regulation, Executive Order, allotment management plans, land management planning,
numbers permitted or seasons of use necessary because of resource conditions, or the lands
described otherwise being unavailable for grazing. Reference: Term Grazing Permit Part 1,
clause 3.

    Action.    Send a certified Notice of Non-Compliance letter to the permittee explaining the
               violation, compliance requirements, timeframe required to become compliant, and
               possible cancellation penalty. If the permittee does not become compliant by the
               due date, issue a certified Decision letter implementing the cancellation with
               appeal provisions.
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13. Leasing the Permit. The permittee may not transfer, assign, lease or sublet the permit in
whole or in part, including the lease of base property or permitted livestock to someone else to
allow the lessee to use NFS grazing privileges. Reference: Term Grazing Permit Part 2, clause
11(e).

    Action.    Send a certified Notice of Non-Compliance letter to the permittee explaining the
               violation, compliance requirements, timeframe required to become compliant, and
               possible cancellation penalty. If the permittee does not become compliant by the
               due date, issue a certified Decision letter implementing the cancellation. Include
               appeals provisions.

The illustration, Administration Action Process on the following page shows a decision matrix
from the time an alleged violation occurs until the time it is resolved.

16.22 - Cancellation to Devote Lands to Another Public Purpose

Grazing permits on lands that are to be devoted to another public purpose may be canceled in
whole or in part. Examples of devoting lands to another public purpose are actions such as
military withdrawals or land exchanges. Decisions in Land and Resource Management Plans or
project level decisions which eliminate or reduce grazing for purposes of resource protection or
other resource uses are not considered devoting lands to another public purpose.

A 2-year notification is required (36 CFR §222.4(4)(1) unless the permittee waives the time
requirement in writing. Provide such notification in all cases where reductions in permitted
number and/or season of use is anticipated. Changes that do not require reduction in permitted
number or season of use do not require the 2-year notification.

See FSH 2209.13-92-1, Chapter 70 for policy concerning compensation for permittee interest in
range improvements.

16.23 - Cancellation of Grazing Agreements or Association Permits for
Noncompliance With Title VI of Civil Rights Act.

Term grazing association permits or grazing agreements may be canceled for noncompliance
with Title VI of the Civil Rights Act of 1964 and Department of Agriculture regulations
promulgated there under.
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                                            16.21d - Exhibit 02
                          ADMINISTRATION ACTION PROCESS


                                                        Determine violation and
        Alleged violation occurs.                       livestock ownership. Contact
                                                        owner and stop on-the-ground
                                                        violations.




            Permitted Livestock                                     Non-Permitted Livestock



Investigate cause & determine responsibility.                        Consult law enforcement.



                                                                  Take appropriate enforcement action.




    Permittee is responsible.
                                                                  Permittee is not responsible.


    Permit action required?
                                                              Document incident, identify prevention
                                                              measures and institute them.




        NO. Minor
        violation and                                   Yes. Repeated violation or severe infraction.
        can handle
        with
        notification to
        permittee.                                       Issue “Notice of Non-Compliance” letter.
        Document in
        files and
        Issue
        “Cautionary”                                    Issue Decision letter with appeals provisions.
        letter.
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16.3 - Changes Which Might Affect Lands Administered by Other Federal and
State Agencies

If needed changes on National Forest System lands may affect grazing on ranges administered by
the Bureau of Land Management, the authorized officer shall notify the BLM representative
about what is being planned or considered. Give notice well in advance of proposed changes.
The representative of the Bureau of Land Management should be asked to notify the authorized
officer of similar prospective changes on lands the BLM administers. The same instruction
applies in principle to lands administered by other Federal and State agencies.

16.4 – Mediation

California has no state mediation program certified by the State Secretary of Agriculture,
therefore there is no opportunity for mediation under 36 CFR §251.103.

In other states, where applicable, Section 282 of the Federal Crop Insurance Reform and
Department of Agriculture Reorganization Act of 1994 (P. L. 103-354) amended section 501 of
the Agricultural Credit Act of 1987 to expand the number of issues in Department of Agriculture
(USDA) programs that are subject to mediation under State Mediation programs that have been
established. One of the areas included as being subject to mediation is grazing on National
Forest System lands. A State Mediation Program certified by the Secretary of Agriculture must
conduct this mediation program.

Mediation is a part of 36 CFR §251.103 appeal process and an appeal of the decision in question
must be filed before mediation can be undertaken. When mediation is undertaken, the appeal
process is stayed until mediation is concluded. The regulations require that mediation be
completed within a 45-day period unless the deciding officer and appellant believe that a
mediated resolution can be reached with an extension. In this circumstance, an additional 15
days can be granted to conclude the agreement; 60 days is the maximum period that can be
allowed for the mediation process. If mediation is successful, the appellant will request that their
appeal be terminated. If mediation is not successful, then the appeal filed will be reviewed as
indicated in 36 CFR §251.

All mediation conducted is confidential between the decision maker, the mediator, and the
permittee. There are no interveners in this process. The mediation process is non-binding on the
Agency.

16.5 - Status of Grazing Permits During Administrative Reviews

Procedures for Administrative Review of decisions made concerning grazing are covered in FSM
1570 and 36 CFR §251.80 or 36 CFR §215.
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17 - NONUSE OF GRAZING PERMITS WITH TERM STATUS

Non-use is measured in numbers of animals grazed. See FSH 2209.13, Chapter 31, Temporary
Grazing Permits for direction on use of temporary grazing permits to fill in behind permittee
convenience non-use.

17.1 - Permittee Convenience

Application for nonuse of grazing permits with term status must be made in writing. The
authorized officer must approve nonuse for permittee convenience by term grazing permit
holders in writing on a year-to-year basis. While approval of nonuse is not automatic and
reasons for the nonuse request should be discussed with the permittee.

Requests for nonuse must be submitted sufficiently in advance of the grazing season to allow the
authorized officer time to consider other use alternatives. Failure to place livestock on NFS
lands without approved nonuse will subject the permit to suspension or cancellation (Section
16.21).

The authorized officer may approve no more than three (3) years of non-use for permittee
convenience in a 10-year period. A fourth year of non-use may be authorized by the Forest
Supervisor for special circumstances.

Approve partial or total nonuse by letter on an annual basis. The approval letter must inform the
permittee of the non-use years for personal convenience used. The letter should also inform the
permittee of the requirement(s) concerning waiver of term grazing permits in nonuse for
permittee convenience based on the sale of base property or permitted livestock, and that
assigned improvements must be maintained. In addition, show approved partial nonuse in the
bill for collection.

The letter approving the last year of either partial or total nonuse must contain notice to the
permittee that they must graze at least 90% of the permitted livestock numbers the next grazing
season to retain the permit in total. A copy of this letter will be sent to holders of Escrow
Waivers.

The policy for granting nonuse is more liberal for permit holders who enter the Armed Forces.
They may be granted nonuse during the period of first enlistment or obligated active duty.
Following completion of the first enlistment or obligated active duty, act on an application for
nonuse in accordance with the regular policy.

17.2 - Resource Protection or Development
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The authorized officer if necessary to facilitate the protection or development of National Forest
System lands and resources may implement non-use. Depending on the scale of the rangeland
resource needing protection or development, this nonuse maybe on an allotment, watershed or
landscape scale.

A decision to implement resource protection nonuse may be made immediately without prior
notification to the permittee. The notification shall be made in writing to the permittee(s) and a
copy to the escrow waiver holder (FS-2200-10 Part 2 Item 8b).

A decision to implement nonuse for resource development requires a minimum of one year prior
notification to the permittee(s). The decision shall be incorporated as an amendment to the term
grazing permits of the permittee(s) involved and is an appealable decision under 36 CFR §251.
The notification shall be made in writing to the permittee(s) and a copy to the escrow waiver
holder (FS-2200-10 Part 2 Item 8b). Resource development nonuse on allotments where the
permittee(s) have agreed to participate in the development activities, may not require a one year
notice. The letter shall specify the period of nonuse, not to exceed the term of the grazing
permit(s) involved, shall describe the objective(s) to be accomplished by the nonuse, and shall
include the monitoring requirements which will be implemented to determine if the nonuse is
effective in accomplishing the objective(s).

Resource protection and development nonuse shall not extend past the permit expiration date.
Nonuse periods may be continued if the authorized officer determines that additional protection
or development nonuse is necessary as a condition of a new term grazing permit.

At the end of the resource protection and development nonuse agreement period, the authorized
officer shall determine whether the objectives have been achieved. If necessary, make
adjustments in permitted numbers or seasons of use, as warranted.

See Section 18.11 for policy on waiver of a grazing permit when nonuse has been approved for
resource protection and development.

17.3 - Range Research

Occasionally, a fact-finding institution or organization uses an allotment as a study area and
grazes it with livestock not owned by the permittee. This may be done with consent of the
grazing permit holder under agreement (MOU) between the Forest Service and other involved
parties and under guidelines established by the Regional Forester.

Term permits in nonuse for research purposes may be waived in the same manner as permits that
are in nonuse status for resource protection and development.

17.4 - Changes in Kind or Class of Livestock Grazed
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Do not approve nonuse in conjunction with requests for changes in kind or class of livestock to
be grazed. Instead, modify the existing term permit to allow for trial changes in kind or class of
livestock.

18 - WAIVER AND ISSUANCE OF GRAZING PERMITS WITH TERM STATUS
BECAUSE OF CHANGE IN OWNERSHIP

18.1 - Transactions with Permit Waiver

18.11 - Sales with Waiver

The authorized officer, upon knowledge of a pending purchase related to a term grazing permit,
shall inform a prospective purchaser of the term permit application process and availability of
current allotment information.

Upon request, the prospective purchaser of permitted livestock and/or base property will receive
available information concerning the status of the permit and affected grazing allotment(s).
Before confirming a waiver and issuing a permit, the authorized officer shall provide the seller
and purchaser with an explanation of the requirements for approval. Notify the purchaser about
range conditions including estimated grazing capacity and plans for foreseeable modifications or
changed management requirements. Inform the prospective purchaser in writing that the permit,
if issued, will be subject to any or all of the following:

       1. Modifications previously planned, including planned changes in grazing management
systems.

        2. Changes that future allotment monitoring might show are necessary.

        3. Land management planning direction and requirements of the allotment management
plan.

        4. Existing nonuse agreements for resource protection and development.

        5. Other changes that may become necessary as the result of changes in law, regulation,
land and resource management plans, NEPA analysis and decisions, biological opinions, or other
similar requirements.

In cases of a sale consummated before the authorized officer receives notification, provide the
purchaser the above information in writing before the authorized officer issues the permit.

If data about carrying capacity of the allotment(s) is not available, but the authorized officer has
reason to doubt the ability of the allotments(s) to carry the full permitted number, the purchaser
shall be informed in writing. However, this estimate should include a clear statement that it is an
estimate and is subject to revision when more reliable information is obtained.
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18.12 - Sales within Family

Minor children who purchase or otherwise acquire base property or permitted livestock from
their father or mother may be issued a permit under the provisions described under Section
12.13. To qualify, minor children must own both base property and livestock.

18.13 - Contracts to Purchase With Waiver

Issuance of a permit in connection with contract to purchase base property or permitted livestock
may be allowed in the same manner as term grazing permits issued because of sale and purchase
of base property or permitted livestock. However, terms of the contract should be examined to
ensure they are a bona fide transaction. The terms should require at least partial payment for the
livestock and/or base property prior to grazing occurring under the term grazing permit issued
based on the transaction.

18.14 – Inheritance

Term grazing permits may be issued in connection with inheritance of base property or permitted
livestock. Recognize such permits in the same manner as term grazing permits issued because of
sale and purchase of base property or permitted livestock.

The authorized officer need not require strict compliance regarding qualification requirements
for up to 3 years during the settlement of an estate. After 3 years, an estate will be required to
meet qualification requirements, unless the Administrator of the estate provides a written
explanation of unusual circumstances and furnishes a Court approved timetable for completion
of estate settlement.

18.15 - Partnership Agreements

Holders of term grazing permits may pool their interests and form partnerships. The holder of a
term permit may enter into partnership with a person who is not a permittee. Formation of such
a partnership will require issuance of a new permit. The partnership must own both base
property and livestock. Formation and documentation of partnerships must be in accordance
with California State regulations.

18.16 - Division of Interests

Partnership or corporation permits may be dissolved by execution of a waiver. Individual term
grazing permits may then be issued to each shareholder in proportion to the share of each in the
partnership or corporation permit. Each individual permittee must meet ownership requirements
for base property and livestock.
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18.17 - Changes in Ownership of Corporations and Companies

When change in ownership involves actual sale or purchase of permitted livestock and/or base
property, handle the transaction as a sale with waiver.


18.18 - Requirements and Conditions for Approval

When a document that purports to assign or transfer a grazing permit is received, write a letter to
the seller, purchaser, lending agency, or other agent stating:

           "Documents offered as evidence of the purchase of livestock or base property are
           unacceptable to the extent they purport to assign or transfer a grazing permit. The
           United States does not consider purported assignments of grazing permits to be of any
           legal consequence so far as the United States is concerned."

The proposed transaction must conform to the regulations and all instructions there under. The
authorized officer must have satisfactory evidence that the transaction was in good faith before
issuance of the permit because of sale of permitted livestock or base property. An applicant must
present at least the following documents:

      1. A waiver of the grazing permit with term status to the United States on Form FS-
2200-12, Waiver of Term Grazing Permit, signed by the current permittee and purchaser.

       2. An Application for Term Grazing Permit on Form FS 2200-16.

        3. A properly executed and recorded bill of sale, with canceled check or receipt and copy
of the brand inspection to document sale of permitted livestock, and/or properly executed and
recorded deed or contract to purchase base property. Multi-party transactions must be presented
as a package.

       4. Any additional documents needed as evidence of the transaction.

        5. Information regarding the location of base property that is the basis for qualification
for a grazing permit with term status.

Failure to comply with the following requirements, without prior approval of the authorized
officer may result in disapproval of the grazing application or cancellation of the permit.

       a. Livestock purchased in connection with the application for the issuance of a term
          grazing permit must be livestock that were permitted at the time of purchase.
          Permitted livestock are defined as:
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       (1) Those livestock including offspring designated as replacements grazing on NFS lands
           at the time of purchase, or

       (2) If the purchase took place outside the grazing season, those livestock that grazed
           under the term grazing permit during the season immediately preceding purchase,
           including any offspring retained for herd replacement. Yearlings grazed as a part of
           the normal livestock operation may be considered permitted livestock.

       b. A new purchaser may not desire to graze the purchased livestock on Forest Service-
          administered range during the season following purchase. If so, the purchaser must
          furnish the authorized officer with valid reasons, such as the need for greater than
          normal replacement, beef or lamb sales, culling, disease, or change in class of
          livestock. If this occurs and the applicant will not have sufficient livestock to validate
          the term grazing permit, a term grazing permit will not be issued and the applicant
          will be notified of their Preferred Applicant status in a letter (Section 14.11).

       c. The purchaser must actually use base property purchased in connection with issuance
           of a grazing permit with term status as base property during the year immediately
           following the purchase.

       d. Livestock and/or base property purchased and subsequently sold back to the original
          owner, or to an agent, assignee, or anyone representing or acting in concert with the
          original owner, within 24 months of the sale on which a waiver is based, does not
          satisfy the ownership requirement. Evidence of any such transaction will result in
          cancellation of the permit.

       e. Transactions involving sale of base property or permitted livestock under contract to
           purchase, including deeds in escrow and mortgages of base property and livestock,
           must be legitimate and the contract terms must be met progressively.

18.19 – Nonuse

Permits in total nonuse for permittee convenience can be waived only on the sale of base
property after the beginning of the next grazing season since livestock in nonuse are no longer
permitted livestock after the beginning of the next authorized grazing season on an allotment.
Permits in partial nonuse for permittee convenience can only be waived to the extent of the
numbers placed on NFS lands during that grazing season, unless the waiver is based on the sale
of base property.

Permits in nonuse for resource protection or development may be waived based on either sale of
livestock or base property in their entirety. Permits in nonuse for research are considered the
same as those for resource protection or development.
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18.2 - Escrow Waivers

An escrow waiver is a document in which a permittee who mortgages permitted livestock and/or
base property waives all privileges to the United States except the privilege of continuing to
graze livestock. Such waiver recognizes the mortgage holder as the lien holder. To be valid,
originals of Form FS-2200-13, Escrow Waiver of Term Grazing Permit Privileges, must be
confirmed by and filed with the authorized officer until released.

If National Forest System lands are under a grazing agreement with a grazing association that
issues permits to individual users, escrow waiver arrangements must be between the grazing
association and the lender.

18.21 - Execution of Escrow Waiver

Form FS-2200-13, Escrow Waiver of Term Grazing Permit Privileges, may be executed in
connection with the mortgage of land, livestock, or both if a lending agency or individual makes
or discounts a loan. An Escrow Waiver will not be executed, accepted, and confirmed until a
Term Grazing Permit has been issued and validated. When the permittee has executed an escrow
waiver in full and the original is filed with the authorized officer, consider the permit privileges
as held in escrow. However, the permit is subject to the same administrative action as any other
permit.

The term grazing permit privileges should be released from escrow upon receipt of a written
statement from the lending agency or individual that the escrow arrangement is no longer
necessary. This should normally be accomplished by completing the required information on the
reverse of Form FS 2200-13.

It is expected that the lending agency ascertain from the authorized officer the status of the term
grazing permit.

Recognize only one escrow waiver against a grazing permit (see Section 15) at any one time.
The authorized officer shall recognize no other escrow waivers until release of any prior escrow
waiver. Because of past actions, there may currently be more than one escrow waiver against a
grazing permit or portion of a permit. If so, allow the multiple escrow waivers to continue to
expiration. New escrow waivers must be in compliance with current instructions.

An escrow waiver can recognize a second lien holder only if the second lien holder is the Farm
Service Agency (FSA), which is the only federal government agricultural lending agency.
Consider the second lien holder a preferred applicant only after the first party is satisfied.

Procedures for escrow waivers are in accordance with the Memorandum of Understanding
(MOU) between the Department of Agriculture and the Farm Credit Administration, dated
February 15, 1938 (Section 18.32, ex. 01) and the MOU between the Farm Credit Banks and
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Forest Service, United States Department of Agriculture, dated December 21, 1990 (Section
18.32, ex. 02).

As a courtesy, the authorized officer shall notify all lenders on the escrow in any case when, it
becomes necessary to issue, discontinue, modify, cancel, or suspend, in whole or in part, a term
grazing permit for which a permittee has executed an escrow waiver in connection with a loan.
However, it is not necessary for the authorized officer, to delay making such a change because a
term grazing permit is held in escrow.

18.3 - Foreclosures in Connection With Grazing Permits.

18.31 - Foreclosure with Waiver of Term Grazing Permit

A mortgagee at a forced sale who presents the authorized officer a waiver of the grazing permit
with term status on form 2200-12, Waiver of Term Grazing Permit, signed by the mortgagor,
shall have use of the permit for one full grazing season after assuming control of the livestock
operation, regardless of the status of the mortgagee's other qualifications. Thereafter, the
mortgagee must qualify fully in order to retain the permit.

18.32 - Foreclosure with Escrow Waiver

Procedures for all escrow waivers conform to the Memorandum of Understanding between the
Department of Agriculture and the Farm Credit Administration dated February 15, 1938 (ex. 01)
and the Memorandum of Understanding between the Department of Agriculture and the Farm
Credit Administration dated December 21, 1990 (ex. 02). The word "preference" as used in
exhibit 02 has the same meaning as "term grazing permit" under present instructions. Form FS
2200-13, Escrow Waiver of Term Grazing Permit Privileges, replaces Special Form 763(a).

Escrow waivers are only invoked through the completion of the foreclosure process. This means
that foreclosure has to include a sheriff’s sale. Contact your Regional rangeland management
specialist for further assistance.

18.33 – Redemption

Redemption is a legal process that allows the individual who is foreclosed upon to redeem their
property within a specified period. This is accomplished by paying the Sheriff or other law
official who conducted the Court ordered sale of the property the total funds that were the basis
of the sale within the specified period. When this occurs, the property is returned to the
individual who was the subject of the sale and they resume their operation. This period of time
is usually either 6 months or 1 year, but Forest Service grazing permit administrators will need to
contact Regional Range Management Specialists or the local Office of the General Counsel to
determine the appropriate redemption period.
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One other feature of redemption is they are considered to be rights, which may be sold or granted
to another individual who could then exercise them, by making the required payment. For this
reason, when a foreclosure occurs, it is advisable for the authorized officer to delay issuing a new
term grazing permit to the individual who acquires the property through a foreclosure until the
redemption period has expired to assure that a new permittee will be authorized.

18.34 - Foreclosure without Escrow Waiver

An entity that acquires livestock or base property through foreclosure proceedings without an
escrow waiver shall receive no special consideration over an ordinary purchaser.

Repossession by the seller through legal foreclosure is not considered a sale. Consequently, do
not apply the provision that a purchaser of livestock or base property purchased in connection
with issuance of a term grazing permit must not sell livestock or property back to the vendor
within a 2-year period.

18.4 - Transactions without Permit Waiver

A buyer who purchases base property or permitted livestock from a term permit holder who does
not execute a waiver shall receive no special consideration over other applicants.
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                                            18.32 - Exhibit 03

        THIS MEMORANDUM of understanding between the Secretary of Agriculture and the
Governor of the Farm Credit Administration, dated February 10, 1938, is for the purpose of encouraging a
maximum degree of cooperation and stating the policy regarding the limitation of the use of the grazing
preference by a permittee when he secures a loan from, or whose loan is discounted by, a credit agency
under the supervision of the Farm Credit Administration, pledging as security therefore his livestock or
ranch unit, or both.

         In amending the instructions under the caption "Renewal in Case of Purchase at Forced Sale,"
page 29G of the National Forest Manual, permitting the execution of a special waiver of the preference to
the United States to be held in escrow, it is with the distinct understanding that there shall be no
limitation, restriction, or impairment of the authority of the Forest Service to dispose of the escrowed
preference as circumstances justify.

        This memorandum is further based upon the following stipulations:

        1. It is mutually understood, agreed, and recognized that (a) the grazing preference is not a
property right, and (b) no vested right may or shall be created by reason of this cooperative agreement.

        2. It is recognized by the Farm Credit Administration that such a limitation as is proposed herein
meets the "reasonable assurance" of continued use required under the Federal Farm Loan Act as amended
where loans are made to livestock men who rely upon outside grazing for part of the year.

         3. Before a loan is made to a national forest grazing permittee, the loan agency shall definitely
ascertain from the local Forest Supervisor the status of the grazing preference and the degree, if any, to
which it is involved in any other transaction, waiver, etc. The Forest Service will state specifically the
status of the preference and the probable effect on that preference of applying the provisions of the
regulations and currently approved policies.

         4. If the permittee elects to qualify temporarily his personal privilege by the execution of a
waiver in negotiating a loan on his livestock or land, or both, he may do so by surrendering to the United
States on special Form 763(a), all preference heretofore carried by his permit, except the privilege of
continuing to graze his stock on National Forest range under the provisions of his grazing permit, pending
satisfaction of the mortgage or a written statement by the credit agency that it no longer relies upon the
escrow arrangement. When the waiver, thus executed on such a special form provided for the purpose,
has been filed with the Forest Supervisor, no waiver subsequently presented will be recognized.

        5. If for any reason it should become necessary to discontinue, in whole or in part, further use of
the range by a permittee-borrower, through his noncompliance with the regulations or otherwise, the
matter will be discussed with the loan agency and at least one year allowed for possible adjustment before
the stock are removed.
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                                     18.32 - Exhibit 03--Continued

        6. Should it become necessary for a Federal loan agency to liquidate a loan, in connection with
which a preference has been waived to the government, the Forest Service will, subject to its regulations
and general administrative policy, recognize the loan agency as the logical successor to the preference,
and will accord the loan agency the same consideration with respect to cuts, renewals, and range
allotment as would customarily be accorded individual local permittees, recognizing, however, that after
obtaining possession of the commensurate ranch properties there may be some instances when disposition
may require a longer period than to the beginning of the second season. The credit agency of the Farm
Credit Administration mentioned in Form 763(a) or receiver or liquidator appointed under foreclosure of
its mortgage may qualify for an active permit if any agency of the Farm Credit Administration owns or
controls the commensurate property or the livestock that will be run on the Forest lands by virtue of this
permit. It is recognized that the maximum limit allowed a permittee through the acquirement of
mortgaged commensurate ranch properties will not be applicable to the accumulation of grazing
preferences by a Federal Credit Agency where such accumulation is only incidental to the liquidation of
mortgage loans through foreclosure or otherwise.

         7. Questions pertaining to the handling of permittee-borrower cases, not specifically provided for
in this agreement, will be governed by the regulations and instructions of the Secretary of Agriculture, as
set forth in the National Forest Grazing Manual, and by currently approved policies.

        8. This agreement shall continue in full force and effect for an indefinite period unless terminated
by written notice by either party to the other. Provided, however, that it is understood and agreed that any
renewal of a term or annual permit shall be in the discretion of the Forest Service and made subject to the
current policy with respect to reductions and other conditions deemed necessary for the proper
administration of the range on the part of the Forest Service; and provided further that in case the
agreement is terminated, it is understood and agreed that any outstanding loans in connection with which
the grazing preference has been escrowed with the United States will continue to be covered, and the
arrangement shall continue in effect until the mortgage is satisfied or the lending agency formally
indicates that it no longer relies upon the escrow arrangement.

       Approved by the Department of Agriculture on the day and date first above written and by the
Farm Credit Administration this 15th day of February 1938.

                                          The United States
                                       Department of Agriculture

                                    By /s/ H. A. Wallace, Secretary

                                    The Farm Credit Administration

                                       By /s/ F.F. Hill, Governor
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                              ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                              Page 54 of 60
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                                            18.32 - Exhibit 04

                          MEMORANDUM OF UNDERSTANDING
                                     between the
                                FARM CREDIT BANKS
                                       and the
                                  FOREST SERVICE
                     UNITED STATES DEPARTMENT OF AGRICULTURE

This memorandum of understanding between the United States Department of Agriculture, Forest Service
(hereafter Forest Service), and the undersigned Farm Credit Banks for and on behalf of themselves, the
direct lending Farm Credit associations in their respective districts, and other financing institutions as
described in Section 1.7(b)(1)(B) of the Farm Credit Act, as amended (12 U.S.C. 2015(b)(1)(B)) with
respect to loans that are discounted by or pledged to the Bank under Section 1.7(b)(1) of the Act (12
U.S.C. 2015 (b)(1)) (hereafter collectively referred to as Lender), dated December 21, 1990, is for the
purpose of encouraging a maximum degree of cooperation and stating the policy regarding the limitation
of use of the grazing privilege by a permittee when he secures a loan from or whose loan is discounted by
a Farm Credit Bank, association, or other financing institution, pledging as security therefore his livestock
or ranch unit, or both.

In providing instructions for escrow waivers of the term grazing permit privilege to the United States to
be held in escrow, it is with distinct understanding that there shall be no limitation, restriction, or
impairment of the authority of the Forest Service to dispose of the escrowed privilege as circumstances
justify.

This memorandum is further based upon the following stipulations:

        1. It is mutually understood, agreed, and recognized that: (a) the grazing privilege is not a
property right, and (b) no vested right may or shall be created by reason of this cooperative agreement.

        2. It is recognized by the Lender that such a limitation as is proposed herein meets the
"reasonable assurance" of continued use required under the Federal Farm Loan Act and an acts
amendatory thereof or successor thereto where loans are made to livestock producers who graze on
National Forest System lands.

         3. Before a loan is made to a National Forest System grazing permittee, the Lender shall
definitely ascertain from the authorized Forest Officer the status of the grazing privilege and the degree, if
any, to which it is involved in any other transaction, waiver, etc. The Forest Service will state specifically
the status of the privilege and the probable effect on the privilege of applying the provisions of the
regulations and currently approved policies.

        4. If the permittee elects to qualify temporarily his personal privilege by the execution of a
waiver in negotiating a loan on his livestock or land, or both, he may do so by surrendering to the United
States on "Escrow Waiver of Term Grazing Permit Privileges", all privilege heretofore carried by his
permit except the privilege of continuing to graze his stock on the National Forest System range under the
provisions of his grazing permit, pending satisfaction of the mortgage or a written statement by the
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                              ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                              Page 55 of 60
DURATION: Expires on 02/15/2004

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                                     18.32 – Exhibit 04--Continued

Lender that it no longer relies upon the escrow arrangement. When the waiver, thus executed on such a
special form provided for the purpose, has been filed with the authorized officer, no waiver subsequently
presented will be recognized.

         5. If for any reason it should become necessary to cancel or suspend, in whole or in part, further
use of the permittee-borrower's permit to graze, the permittee and the Lender will be given written notice
of the reason(s) and the action against the permit being considered. Such notice will give the permittee
and Lender a specific period to respond before the Forest Service makes its decision to cancel or suspend
the permittee's permit to graze.

If the cancellation or suspension is a result of the permittee's noncompliance with the permit or
regulations, the action against the permit will be effective on the deadline specified in the decision.

         6. If a permit is modified for resource protection as determined by the Forest Service, the action
against the permit will be effective 1 year from the date of the Forest Service decision. This will allow
time for the permittee to adjust his operation.

         7. Should it become necessary for a Lender to liquidate a loan in connection with which a
privilege has been waived to the Government, the Forest Service will, subject to its regulations and
general administrative policy, recognize the Lender as the logical successor to the privilege and will
accord the Lender the same consideration with respect to cuts, renewals, and range allotment as would
customarily be accorded individual local permittees, recognizing, however, that after obtaining possession
of the base ranch properties or permitted livestock there may be some instances when disposition may
require a longer period than to the beginning of the second season. The Lender mentioned in the "Escrow
Waiver of Term Grazing Privileges" or receiver or liquidator appointed under Foreclosure of its mortgage
may qualify for a permit if any institution of the Farm Credit System owns or controls the base property
or the livestock that will be run on the Forest lands by virtue of this permit. It is recognized that a
"special limit" will be approved when base ranch properties and associated grazing privileges are
accumulated by a Lender where such accumulation is only incidental to the liquidation of mortgage loans
through foreclosure or otherwise.

         8. Questions pertaining to the handling of permittee-borrower cases not specifically provided for
in this agreement will be governed by Secretary of Agriculture regulations and Forest Service policy and
instructions, as set forth in their manual and handbooks.

         9. This agreement shall continue in full force and effect for an indefinite period unless terminated
by written notice by either party to the other. Provided, however, that it is understood and agreed that any
renewal of a term or annual permit shall be in the discretion of the Forest Service and made subject to the
policy with respect to reduction and other conditions deemed necessary for proper administration of the
range on the part of the Forest Service; and provided further that in case the agreement is terminated, it is
understood and agreed that any outstanding loans in connection with which the grazing privilege has been
escrowed with the United States will continue to be covered, and the arrangement shall continue in effect
until the mortgage is satisfied or the Lender formally indicates that it no longer relies upon the escrow
arrangement.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                          ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                          Page 56 of 60
DURATION: Expires on 02/15/2004

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                                    18.32 – Exhibit 04--Continued

        Approved by the United States Department of Agriculture, Forest Service, and the undersigned
Farm Credit Banks, for and on behalf of themselves, the direct lending Farm Credit Associations in their
respective districts, and other financing institutions as described in Section 1.7(b)(1)(B) of the Farm
Credit Act, as amended (12 U.S.C. 2015 (b)(1)(B), with respect to loans that are discounted by or pledged
to the Bank under Section 1.7(b)(1) of the Act, on the day and year first above written.

                                        UNITED STATES DEPARTMENT OF AGRICULTURE
                                        FOREST SERVICE

                                        By /s/ George M. Leonard                                .
                                        F. DALE ROBERTSON, Chief                  (Title)

                                        FARM CREDIT BANK OF OMAHA

                                        By /s/ Frank J. Hutfless                            .
                                        Frank J. Hutfless, Sr. VP &              (Title)
                                        General Counsel

                                        FARM CREDIT BANK OF SPOKANE

                                        By /s/ Doyle L. Cook                                    .
                                        Doyle L. Cook, President and             (Title)
                                        Chief Executive Officer

                                        FARM CREDIT BANK OF SPOKANE

                                        By /s/ Raymond A. Johns                             .
                                        Executive Vice Pres.                     (Title)

                                         FARM CREDIT BANK OF TEXAS

                                         By /s/ J. E. Lewis                                 .
                                        J. E. Lewis, Sr. Vice President          (Title)

                                         FARM CREDIT BANK OF WICHITA

                                        By /s/ R. S. Carpenter                                  .
                                        RICK CARPENTER, Acting President          (Title)

                                        WESTERN FARM CREDIT BANK

                                        By /s/ George D. Beitzel, C.E.O                         .
                                                                                  (Title)
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                      ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                      Page 57 of 60
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19 – BANKRUPTCY

If unable to pay its debts, a term permit holder may file a petition with the United States
Bankruptcy Court under one of the chapters of the Bankruptcy Code to gain relief from the
collection of these debts.

When a permittee files a petition for bankruptcy, the Bankruptcy Court will appoint a trustee in
bankruptcy (or the permittee will be designated by the court as the Debtor-in-Possession) to
administer the permittee’s estate during the proceedings. (Generally, the Debtor-in-Possession
has all of the rights and duties of a trustee in bankruptcy. This term is defined in 11 USC
§1101.)

Once a petition for bankruptcy is filed and a trustee (or debtor in possession) is designated, the
authorized officer should direct all correspondence regarding the administration of the
permittee’s term grazing permit to the attention of the trustee (or debtor in possession). The
trustee’s duties include, among other things, collecting and reducing to cash the assets of the
estate, operating the debtor’s business to preserve the value of the business assets, examining the
debtor at a meeting of creditors, filing inventories and making periodic reports to the court on the
financial condition of the estate, examining the debtor’s financial affairs, examining proofs of
claims and objecting to improper claims, and furnishing information to related to the bankruptcy
to interested parties.

The filing of a petition for bankruptcy by a permit holder generally results in the following :

            1. The permittee’s property becomes an "estate" under the jurisdiction of the
            Bankruptcy Court (11 USC §1471 and §541).

            2. Creditors and other persons are prevented from taking action directly against the
            permittee and his/her property by an automatic stay. Violation of the stay may be
            treated as contempt of court by the Bankruptcy Court.

            3. Actions by the Forest Service to collect grazing fees or to cancel, suspend, or
            modify a permit may require approval of the Bankruptcy Court because the permit
            action could have a significant effect on the value of the permittee’s estate.
            Approvals of such requests may be granted by the Clerk of the Bankruptcy Court in
            the form of a "Relief from Stay" order. Bankruptcy is a highly specialized field and
            specific questions should be directed to the appropriate attorneys in OGC.


19.1 - Types of Bankruptcy Filings.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                        ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                        Page 58 of 60
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Bankruptcy filings are made under various Chapters of the Bankruptcy Code. Specifically,
those chapters are

      a.     Chapter 7. This chapter provides for liquidation (selling of assets) of the debtor's
              estate. In Chapter 7 proceedings, a trustee is appointed to handle the sales of the
              estate and to distribute the proceeds to the creditors. After administration costs
              for the liquidation of the debtor's estate are paid, the trustee pays all or part of the
              creditors claims against the estate.

      b.     Chapter 11. This chapter provides a means for Debtors to reorganize their business
              operations and be restored to economic health. Generally, the the Debtor is in
              charge of this effort and is referred to as the "Debtor-in-Possession." The Debtor-
              in-Possession may be authorized by the Bankruptcy Court to deal with the Forest
              Service on all issues pertaining to grazing of livestock on NFS lands. Consult the
              Clerk of the Bankruptcy Court to determine who the authorized officer should be
              dealing with in regard to grazing of livestock on NFS lands.

      c.     Chapter 12. This chapter provides a special procedure for the reorganization of
              agricultural debts of a family farmer with regular annual income. This chapter
              has features resembling both Chapters 11 and 13. The treatment of the eligible
              "family farmer" is substantially similar to Chapter 13, and the protections and
              remedies afforded to creditors are essentially similar to Chapter 11. As in Chapter
              11 cases, there is a presumption that the debtor will continue as the Debtor-in-
              Possession with respect to the farming and/or ranching operation.

      d.     Chapter 13. This chapter provides a procedure for persons with regular income to
              adjust their debts. As in chapters 11 and 12, the debtor usually remains as the
              Debtor-in-Possession. If this is not clear, the authorized officer should check with
              the Clerk of the Bankruptcy Court to determine what authority the Debtor-in-
              Possession has to deal with the Forest Service.


19.2 - Status of Permit.

The term grazing permit does not automatically become a part of the bankrupt’s estate. Neither
the debtor, the Debtor-in-Possession, or Trustee is bound to perform the terms and conditions of
the permit after a petition in bankruptcy is filed with the Bankruptcy Court. A definite action
must be taken by them to assume the requirements of the permit. If the permit is not assumed by
the Trustee or Debtor-in-Possession, neither the estate nor the debtor have any remaining
privileges under the permit.

It should be understood that the Forest Service’s responsibility to administer livestock grazing
activities on NFS lands according to applicable law and regulation exists regardless of whether a
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                        ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                        Page 59 of 60
DURATION: Expires on 02/15/2004

                FSH R5-2209.13 - GRAZING PERMIT ADMINISTRATION HANDBOOK
                         CHAPTER 10 – PERMITS WITH TERM STATUS


permit holder has filed a petition for bankruptcy. As a result, the authorized officer must be
willing to take appropriate action to administer grazing on the permittee’s allotment(s) after the
bankruptcy petition is filed even if to do so might result in a reduction in the value of the estate.

During the course of bankruptcy proceedings, it may be necessary to explain to the court that
term grazing permits are privileges issued by the Federal Government to the permittee and not
contracts. The Bankruptcy Court may attempt to treat these relationships as contracts. Constant
reminders to the Bankruptcy Court of the difference between rights and privileges may be
necessary to ensure that mistakes in dealing with the bankrupt estate are not made due to a
misunderstanding.

All correspondence concerning the term grazing permit and actions required to maintain it in
good standing must be addressed to the Trustee or the Debtor-in-Possession. The name and
address of this individual can be obtained from the clerk of the Bankruptcy Court.

The United States is represented in Bankruptcy Court by the United States Attorney in the State
where the bankruptcy is filed. All actions involving the Bankruptcy Court must be coordinated
with the Regional Range Management Specialist, who will work with the Office of the General
Counsel and the U.S. Attorney to ensure the interests of the United States are protected.

19.3 - Actions by the Authorized Officer.

Listed below are a series of actions which should be taken when the authorized officer learns of
the possibility of bankruptcy by a term grazing permit holder:

      a. Confirm that a bankruptcy proceeding has been filed by contacting the permittee or the
Clerk of the appropriate Bankruptcy Court The Clerk can provide information about:

      i. The date bankruptcy was filed.

      ii. The Chapter the bankruptcy was filed under.

      iii. The name and address of the trustee in bankruptcy or Debtor-in-Possession.

      iv. Whether the term grazing permit(s) is listed as one of the assets of the debtor's estate.

       b. The authorized officer shall determine the amount of any outstanding debts owed to the
Forest Service by the bankrupt and should notify the regional range management specialist of the
bankruptcy filing. The regional range management specialist will contact the Office of the
General Counsel which will initiate discussions with the Office of the United States Attorney in
the state in which the bankruptcy was filed. The U.S. Attorney will assure the interests of the
United States are protected.
PACIFIC SOUTHWEST REGION INTERIM DIRECTIVE                                       ID R5-2209.13-2003-1
EFFECTIVE DATE: 02/15/2003                                                       Page 60 of 60
DURATION: Expires on 02/15/2004

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                        CHAPTER 10 – PERMITS WITH TERM STATUS


       c. The authorized officer should determine if the Debtor-in-Possession or the Trustee
wants to assume the term grazing permit as a part of the debtor's estate or if they have rejected it.
If the latter situation occurs, the authorized officer should notify the Bankruptcy Court of the
consequences of this action and also that, with the permission of the Bankruptcy Court, the
authorized officer may take actions to permit livestock grazing on the allotment(s) by another
party.

				
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