American Dreams: Destroyed by Debt and a Constitution Denied

The latest installment of the long-simmering Sagebrush Rebellion erupted early this year in the form an emotionally-charged, armed occupation of the Malheur Wildlife Refuge in Harney County, Oregon. Controversial and well publicized, this standoff ended with the tragic death of a Mormon Arizona rancher by the name of Lavoy Finicum and the jailing of the remaining alleged perpetrators.

While extreme in its tactics, this replay of the age-old battle for a “piece of the pie” was, when distilled to its essence, not unlike similar battles being waged across the U.S. At issue are the increasingly complex ways our property ownership rights are being sliced and diced via “split-estates” – that is to say, who owns or has the rights to various elements of the same piece of property, and who gets to say how those separate rights can be exercised.

For example, property ownership today means that a private individual might hold his property in “fee simple,” absolutely – or portions of his title may have been split off into one or more “mineral estates” that are held by others, leaving the individual with surface rights only. And, since mineral rights supersede surface rights, the manner in which one holds title, as many are learning after the fact, will have significant impact on the use and enjoyment of a property. Adding another layer of complexity – particularly in the West – is the fact that the mineral rights (or estates) of both federal and state lands have been, beginning in the late 19th century, reserved for government and managed by its various agencies – which raises additional questions.

Do, for example, unelected federal or state agencies have the right to lease one or more mineral “estates” underlying protected wilderness lands to multinational mining corporations? Do these same agencies have the right to renege on grazing leases in order to satisfy conservationists – or, for that matter, land use master plans created by unelected stakeholders? ((For “Master Plans” See: Transforming Our World: the 2030 Agenda for Sustainable Development. United Nations. See also United Nations and the Rule of Law and G20 Financial Leaders Commit to Exploring Green Finance Options both from United Nations Environment Programs: Environment for development. Also see 2030 Agenda and Sustainable Development Goals sponsored by the World Federation of United Nations:  and Local Governments for Sustainability/By 2050, two thirds of all humans will be living in cities, subsection Our Development.)) Similarly, do unelected federal and state agencies, together, separately, or in concert with one or another international trade treaty, have the right to impose and enforce land use activities that are opposed by local communities, thus creating the potential for armed rebellions such as occurred in Harney County? ((For example, see here:  Excerpt: NAFTA contained 900 pages of one-size-fits-all rules to which each nation was required to conform to all of its domestic laws – regardless of whether voters and their democratically-elected representatives had previously rejected the very same policies in Congress, state legislatures or city councils. See also: Rep. Greg Walden (R.OR) Addresses Oregon Standoff, Hammond Injustice, Government Overreach. Walters, Charles. A Life in the Day of an Editor, published 1986.))

For good reason the founding generation attached great importance to property ownership, particularly land ownership. With absolute, fee simple title to his land, observed Charles Walters of Acres USA, the individual was “beholden to no lord or master. This sovereign, in fact, created the United States.” ((Walters, Charles. A Life in the Day of an Editor, published 1986.)) Unfortunately, the original vision of the founding generation has steadily eroded, almost as if by magic, over many generations.

Charles Walters penned his observations in a provocative, eye-opening book he titled A Life in the Day of an Editor, published in 1986 – at a time when hundreds of thousands of small farmers were being dispossessed of their land, their livelihood and their homes. The message then to small farmers was “go big or get out,” which is, not coincidentally, a key feature of our monetary system and a favored Wall Street strategy.

To a large extent farmers have had to go big, with average farm size today around 440 acres compared to 147 acres in 1900. Indeed, a large proportion of the farms now blanketing the Plains States are 1000+ acres, and operated under a corporate structure using industrial-style techniques. The vacuum left by small farms has also allowed large corporations such as Archer-Daniels Midland to increasingly dominate American agriculture.

But ranches in the American West often run into the thousands of acres – where, it should be noted, different forms of ownership have long prevailed. Some of these ranches had originally been homesteaded, with those homesteaders also obtaining grazing rights on adjoining federal lands together with split-estate land patent titles under which the federal government retained mineral rights. In other cases, all or most of a modern ranch may consist of land leased from private parties or from federally managed public lands, with federally leased surface land being shared with the rancher in a quasi split-estate arrangement. ((Laffer, Wm. G. and Shanahan, John. Why Grazing Fees on Federal Lands Should Not Be Raised, July 29, 1993. Archived document, The Heritage Foundation. Also see Storm Over Rangeland by Wayne Hage, often available in libraries, especially law libraries.))

The Heart of the Matter

In nearly all cases, however, and although they hardly compare to land moguls the likes of, say, Ted Turner, it seems clear that these modern ranches already ARE big. The problem for these ranchers as well as the rest of us, boils down to land use – who has the right to dictate how land is to be used, and who has the right to profit or benefit from said use.  The heart of the matter is all about money and the manner in which economic activity has been forced to develop around institutional arrangements that begin and end with misguided monetary and trade policy, thereby rupturing the internal price structure of the nation and allowing a “new legal regime” to take hold. ((See Unforgiven  by Charles Walters and The Two Faces of Money by Geraldine Perry and Ken Fousek.))

This new and constantly evolving legal regime is not just seriously impacting ranching income, it is also eroding property and many other rights (including the right to pursue happiness via a livable income) guaranteed by the founding documents. Charles Walters summed it up: absolute, fee simple ownership of property collided with debt and debt won by taking over the courts.

Shifting Property Rights: Who Owns What?

Today, roughly 9% of the 2¼ billion acres of total U.S. land area is owned by the states in the form of trust lands. In addition, the federal government, via a variety of agencies together with the Bureau of Land Management, owns, controls or manages about 700 million acres – or roughly 31% – of all land in the U.S. The federal government also retains mineral rights to all 700 million acres, with large tracts already leased to the oil and gas industry. ((Mineral and Surface Acreage Managed by the BLM, Bureau of  Land Management, U.S. Department of the Interior. Last updated 10-13-2011. and Mineral Rights and Fracking by Hannah Wittmeyer, Frackwire, June 17, 2013: and State by State Government Land Ownership. See also this recommendation to open more federal lands to shale oil exploration and production.))

Some 93% of this land is concentrated in just 13 Western states so it shouldn’t come as a surprise that split estate arrangements have, to date, had the greatest impact in this region. However, the recent boom in horizontal drilling and fracking is forcing growing numbers of Americans to come to terms with split estates regardless of whether they are able to cash out by leasing or selling off their mineral rights or whether they suddenly wake up one day to find a drilling pad in their backyard.

Today oil and gas drilling is taking place in residential communities from California to New York, and on cattle ranches from Wyoming to Texas. All is taking place under split estate ownership in which private parties are purchasing or leasing mineral rights either from other private parties or from federal or state governments. A 2014 analysis by the Wall Street Journal found that more than 15 million Americans now live within a mile of one of the drilling operations that have been established since 2000, and the accelerated pace of drilling is projected to continue, current oil prices and temporarily abandoned oil rigs notwithstanding. ((“Drilling vs. the American Dream: Fracking impacts on property rights and home values“, Resource Media. March 14, 2014.))

Amid a growing tide of local resistance, sometimes expressed – as in the case of New Jersey – through homeowner sponsored lawsuits, a plethora of pipelines are also either planned or being built across the U.S. ((New Jersey homeowners organize to block PennEast Pipeline. Bob Downing, January 22, 2016.)) The problem here is that so long as the proposed pipeline is transporting materials for interstate or intrastate commerce and is defined as a common carrier, then the pipeline operator can, upon approval of either the local state utility commission or the Federal Energy Regulatory Commission and barring “special circumstances,” indeed use eminent domain to dispossess unlucky homeowners. ((Pipeline Easements, Biersdorf & Associates: Your Source for Eminent Domain Law.))

Concurrently, the selected route for the hotly contested, currently blocked Keystone XL Pipeline extension, being built by the Canadian company TransCanada and subject to NAFTA trade laws, will sit above the massive and critically important Ogallala aquifer, which supplies drinking water to millions of people in eight states.  In an odd twist, and despite the fact that some ranchers and farmers have already signed leasing agreements with TransCanada, the “Cowboy-Indian Alliance” was formed to stop the Keystone XL. While TransCanada is pursuing a lawsuit against the U.S. government per NAFTA rules, the Cowboy-Indian Alliance is being forced to fight the proposed U.S. owned Dakota Access Pipeline which has already been approved by four states and whose blueprints indicate that this pipeline will cross the Missouri River – not once, but twice. Meanwhile the Canadian-owned Enbridge has quietly cloned its own Keystone XL pipeline.

Growing The Unelected Bureaucracy

The Bureau of Land Management, or BLM, which oversees all 700 million acres of federal land, was created in 1946 by merging the Grazing Service with the General Land Office. It had “no unified legislative mandate” until Congress, recognizing the value of this land, enacted the Federal Land Policy and Management Act declaring that public lands would remain in public ownership with a multiple use directive. ((Bureau of Land Management: a Long and Varied History, U.S. Department of the Interior.)) Created at a time when the environmental movement was gaining mass support, the FLPMA strengthened the BLM’s role in managing most of the West’s public lands, and brought what seemed to many ranchers and small raw materials producers a constantly shifting quicksand of new regulations governing the use of BLM lands.

It goes without saying that the BLM, like most governmental agencies, was the target of lobbying efforts by special interest groups, both large and small. This is precisely how regulatory agencies, ostensibly created to serve the public interest, end up advancing the commercial or political interests that are able to dominate the sector the agency in question is charged with regulating. True to form and as soon as the FLPMA was enacted, a flurry of regulations began to emanate from the BLM. The nature and scope of these regulations led many ranchers to suspect – not without justification – that many of these regs had been created with the specific purpose of pushing them off their land.

A large share of these new regulations stemmed, initially at least, from conservationists pushing for what they imagined to be better grazing and forestry practices on federal lands. These efforts were quickly followed by efforts to save endangered species such as the sage grouse and desert tortoise from extinction. Too few, including the ranchers themselves, realized that ad hoc grazing reductions actually result in desertification, reduction of watersheds, increased wildfires and species extinction. ((To understand how it is that “intensive grazing” and not grazing reduction, per se, will save the land and the environment, see video on this page, then explore website. Also read about Joel Salatin, and articles appearing in Acres USA and similar sources. And see Don’t forget to say Thank You, posted in Opinion, July 14, 2015 (concerning source of wildfires).))

Revenue And Profit Over People And The Planet

There is a new threat looming that may unite ranchers and conservationists against a common foe: the leasing of mineral rights to large, usually transnational mining operations. In this case it appears that a few short years after the FLMPA mandate, the BLM’s shifting policies were responding to yet another interest group active in Utah – and this time it wasn’t the environmentalists. It seems that “In 1979 and 1980, even as the BLM’s wilderness inventory was under way, a half dozen major energy companies were pushing new roads into the wilderness lands. Instead of blocking this development, as required by law, the BLM seemed to be encouraging it. By 1986 the BLM was claiming that the value of potential mineral development outweighed the wilderness value of large tracts in the Tavaputs Plateau.” ((The book, Cliffs-Desolation Canyon, Southern Utah Wilderness Alliance.))

Acting upon the BLM’s new directive, Utah’s Division of Oil, Gas and Mining issued a permit in July of 2015 to PRSprings, which is owned by a Canadian Company called U.S. Oil Sands, paving the way for the opening of the country’s first commercial tar sands mine. A spokeswoman for the Utah School Institutional Trust Lands Administration, which is leasing the land to the Canadian interest, defended the action by saying that “these mines are generating money for our public schools. That is our legislative mandate.” ((Protesters halt road work near eastern Utah tar sands mine, by Christopher Smart, The Salt Lake Tribune, July 29, 2013 (archived).))

Similarly, the southeastern quarter of Oregon, specifically Harney and Malheur Counties, which have been at the epicenter of the latest incarnation of the Sagebrush Rebellion, is particularly rich in uranium. ((Uranium Energy: Bureau of Land Management, U.S. Department of the Interior.  Also see: Minerals and Aggregates,  Oregon Department of State Lands.))  Like the Taviputs Plateau in Utah, this land is co-managed by applicable state agencies together with either private parties or another government agency, which is usually the BLM.

The pattern is proving to be a familiar one, as events have been playing out in Oregon and across the U.S. As Barb Peterson of FarmWars frames the eventual, predictable outcome in Oregon terms:

The question then becomes – who will get the land – the sage grouse or uranium miners. In either case, the ranchers are out and the cattle can be consigned to your friendly neighborhood CAFO (concentrated animal feeding operation). . . Inasmuch as a decision was made to not list the sage grouse as an endangered species in 2015, guess which interests won? ((Peterson, Barbara H. “A Tale of Cattle, Sage Grouse, and Uranium in Oregon“, Global Independent Analytics, January 21, 2016.))

Reshaping The U.S. Constitution

The nation’s first federal regulatory agency was the Interstate Commerce Commission, created in 1887 by a group of prominent railroad moguls together with steel magnate Andrew Carnegie, the notorious New York banker J.P. Morgan, and the obligatory outlier George W. Perkins, who later became the 1912 chairman of the national executive committee of the Progressive Party. Considered to be a successful ‘model’ commission, the ICC became a template for the next dozen or so regulatory agencies, effectively establishing the U.S. regulatory system. ((Morris, Jane Anne. Sheep in Wolf’s Clothing: ICC established in 1887. POCLAD. See also: U.S. Legal: Administrative Agencies: “Administrative agencies are lawmaking bodies with limited powers delegated by Congress. . . The agencies help in the speedy disposal of cases, both minor and complex and thus are a big aid to US courts. . . The states also have administrative agencies to take care of state specific issues like transportation, education, public health, labor law, etc.”)) Under this model, regulatory agencies have become what they were designed to be: the tools of big corporations against small business and local government. ((Morris, Jane Anne. Gaveling down the Rabble, note 162, page 163.))

The ICC came into being at a time when the Supreme Court had just embarked on its own transformation of the Constitution by using the 14th amendment to selectively “incorporate” the Bill of Rights. It did this by applying selected clauses in the Bill of Rights to the states, thus striking down many laws that sovereign citizens had directed their states to enact. Thus, “incorporation increased the Supreme Court’s power to define rights, and changed the meaning of the Bill of Rights from a series of limits on government power to a set of rights belonging to the individual and guaranteed by the federal government.” ((The Fourteenth Amendment and Incorporation. Documents of Freedom: History & Economic Through Primary Sources.))

The unalienable rights of the Constitution began to fade into memory as the Court began, over a 75 year period, to hammer out a narrowly defined set of rights that would be guaranteed by the federal government. In the end, the 14th amendment has failed to protect the rights of all citizens, black and white, though it did manage to provide protection for corporations by defining them as “persons.” This slow-motion process has, to our eternal detriment, “drastically malformed the federal nature of our republican government.” ((Manion, Clarence. (Dean Emeritus, College of Law, University of Notre Dame). A Cancer on the Constitution. 1972.))

After 1937, the Supreme Court began reversing decisions which had heretofore served to block legislation related to FDR’s New Deal programs. It accomplished this reversal by altering the meaning of the Necessary and Proper Clause to allow Congress to regulate any economic activity even remotely affecting interstate commerce. ((Natelson, Robert G. Tempering the Commerce Power, 68 Mont. L. Rev. 95 (2007) Available here.  (Conclusion) Also, per Natelson: The Supreme Court never enlarged the core meaning of the Commerce Clause. . . .The innovation of the modern era has been the change in the incidental, implied part of the Commerce Power – the part implied by the Commerce Clause but memorialized textually in the Necessary and Proper Clause.)) This shift effectively expanded the original legal meaning of the word “commerce” in the Commerce Clause. Congress, in its effort to cope with its new power to essentially regulate anything and everything, immediately set about expanding the federal bureaucracy – and with it the modern regulatory state. ((Lawson, Gary. The Rise and Rise of the Administrative State. 107 Harv. L. Rev. 1231. Harvard Law Review, April 1994, available here.)) No longer could it be imagined that federal powers were “few and defined” as Madison and his generation had envisioned. “Within the space of a decade, a federal government with clearly limited economic powers became a government of almost plenary economic powers.” ((Natelson. Tempering the Commerce Power.))

The Constitution grants Congress an express power to govern the traditional “Law Merchant” through the Commerce Clause. As explained by Constitutional Law expert Robert Natelson, this express power as originally intended did NOT include all gainful economic activities. Rather, for the founding generation, “Commerce” embraced the actions of merchants, factors (commodity brokers), carriers, traffickers with foreign nations, and consignees. Commerce benefited agriculture and manufacture by circulating their products, but “Commerce” did not include agriculture or manufacture – or land use. . . Nor did it include activities that merely “substantially affected” commerce. ((Natelson. Robert G. The Legal Meaning of “Commerce” in the Commerce Clause. St. John’s Law Review: vol. 80: No. 3, Article 1. 2012: available here.    Also see “A Response to John Balkin” for definitions of Merchant included in the 1762 edition of Giles Jacobs popular law dictionary: Merchant, (Mercator) is one that buys and trades in any Thing . . . But every one that buys and sells is not . . .a Merchant; only those who traffick in the Way of Commerce. . .Those that buy Goods, to reduce them by their own Art or Industry . . . are Artificers and not Merchants.)) And yet, today, land use rules anchored by an expanded definition of commerce will govern the outcome of the New Jersey homeowners fighting the establishment of a pipeline in their community – pretty much sealing the fate of not just those homeowners, but millions like them across the United States.

Eco-agriculturalist Charles Walters explains that the origin of the Law Merchant, or Lex Mercatoria, “was the law of the high seas, the law of the international market – the law of no nation in particular, but the law only of the traders and the corporations.” Walters goes on to explain that after Lord Mansfield became the Lord Chief Justice of the King’s Bench in 1756:

It was under his sway that profound changes were made affecting the rights of Englishmen. Then as now, these changes were used to create the legal grounds needed for corporations to plunder the earth. In Mansfield’s era, the law was structured to give immunity to the East India Company for all it would do to enrich the firm and the King. In order to do this, Mansfield incorporated into the ancient common law of England the body of international law called the Law Merchant . . . Laws made on the basis of Mansfield’s decisions brought the American colonists to revolution. They permitted search and seizure, denied jury trial, and imposed taxes that were repugnant then, and were ruled repugnant later on when the revolting colonies declared their independence. And it is the very same concept of law the power barons of commerce continue to impose on all of us in the name of one world. ((Walters, Charles. A Life in the Day, pages 206-208.))

Remarkably the Law Merchant is slowly being integrated into the Uniform Commercial Code (UCC) body of law, which has been adopted by the states, and which allows every sale or lease of personal property to be governed by the UCC. ((See: What is the Uniform Commercial Code? Brown & Welsh, P.C. Attorneys at Law – Business Lawyers.  Excerpt:  “Commercial law (as a general topic) is the law of commerce, lex mercatoria (sometimes called the law merchant in civil law countries). . .  [In the U.S.] Every sale or lease of personal property is governed by the Uniform Commercial Code. All promissory notes and drafts are generally governed by the Uniform Commercial Code.  Commercial finance transactions are usually done under the Uniform Commercial Code.”)) In its zeal to “make uniform the law among the various jurisdictions” the UCC is increasingly relying on the expanded Commerce Power to effectively create a “free trade” zone within the U.S., at the expense of local and state governments.  In similar fashion, the modernized version of the Law Merchant or Lex Mercatoria, often going under the rubric of international commercial law, endows international trade treaties explicit authority under international law to decide which local and national laws are in violation of its trade rules. ((Davidson, Matthew T. Lex Mercatoria in Transnational Arbitration: An Analytical survey of the 2001 Kluwer International Arbitration Database. Pace Law School Institute of International Commercial Law, May 8, 2002. Available here.  Excerpt: “The lex mercatoria, or “law merchant,” first emerged as a concept during the late medieval period, as trade once again expanded across the territories of the former Western empire. . . . While many of its principles were [subsequently] integrated into the common law doctrines and civil law codes of modern Europe, these principles no longer developed autonomously, outside the national legal systems. The twentieth century, though, saw the re-emergence of merchants’ law, in theory and in practice. . . .While hard numbers are simply impossible to come by, there is a consensus among those in the field, both academics and practitioners, that the “new” lex mercatoria (often identified under the rubric of “generally accepted principles” of commercial law or international trade) is increasingly serving as the foundation for arbitral awards. . .” See also Michaels, Ralf, The True Lex Mercatoria – Private Law Beyond the State. Indiana Journal of Global Legal Studies Vol.14: #2 (Summer 2007). Excerpt: “That the new lex mercatoria is not autonomous from the state but rather contains both state and non-state norms and institutions becomes even clearer if we view it from the perspective of international commerce itself. Here, it is obvious that the law of international commerce is not limited to law without a state. Rather, market participants choose freely between state courts and arbitrators as adjudicators, and between state norms and non-state norms as applicable norms. . . We should . . . devote our attention to the law that transcends these boundaries and presents a more credible candidate for globalization and a functionally differentiated global legal system: law beyond the state.”))

Natelson reminds us that the “Framers did enumerate separately from commerce certain other powers that the legal tradition considered part of commercial regulation. Among these was the power to regulate weights and measures together with a grant of authority to ‘coin Money, regulate the Value thereof, and of foreign coin’.” ((Natelson, opcit, Legal Meaning, page 46-47.)) “Money” in the original sense did not have to be gold or silver or any other commodity. Money, as a legalized abstraction, could come in the form of paper but money, whatever the form, was not meant to represent debt. ((Natelson, Robert G. Paper Money and the Original Understanding of the Coinage Clause. (September 5, 2008).))

Right out of the gate, the expansive-thinking Hamilton put forth a sweeping program that, among other things, allowed credit (or debt) to serve the purpose of money and encouraged a trade policy that did not “discriminate” against British merchants who were able to manipulate prices that were injurious to American producers. This monetary schematic has persisted largely unchecked to this day, allowing ever greater concentrations of wealth, and concomitant power, in ever fewer hands and ever-increasing levels of debt and loss of political power for ever increasing populations.

Although an admittedly uphill battle, a far more equitable system – one that protects and nourishes the nation’s internal economy and her citizens while at the same time dealing fairly with other nations – can be established. All it takes is proper monetary reform to get the ball rolling. ((Major Historic Progress, American Monetary Institute, page with link to the NEED Act proposal with short video available here.))

Geraldine Perry is the co-author of The Two Faces of Money and author of Climate Change, Land Use and Monetary Policy: The New Trifecta. Read other articles by Geraldine, or visit Geraldine's website.