"The Organic Act" of 1897 (30 Stat. 34-36; codified U.S.C. vol. 16, sec. 551), amendment to the Sundry Civil Appropriations Act, stated that the purpose of the forest reserves was for "watershed protection and timber production." Lands primarily valuable for mineral ores and agriculture were to be excluded from forest reserves. The Act states:
"...but it is not the purpose or intent of these provisions of the Act Providing for Such Reservations to authorize the inclusion therein, of lands more valuable for the mineral contained therein and for agricultural purposes, than for Forest Reserve purposes..."
Settlers were allowed to cut firewood, fencing and building material, and mining and prospecting were specifically authorized within their boundaries, but grazing was not mentioned.
Statutes at Large, vol. 30, p. 36; U.S.C. vol. 16, sec. 478 provided that nothing in the act would "prohibit any person from entering upon such national forests for all proper and lawful purpose, including that of prospecting, locating and developing the mineral resource thereof.... such persons must comply with the rules and regulations covering such national forests." The section also provided that the Secretary of the Interior to "make such rules and regulations...as will insure the objects of such reservations, namely, to regulate their occupancy and use and to preserve the forests thereon from destruction."
Less than one month after passage, the General Land Office promulgated regulations that allowed grazing in reserves.
In 1896, restrictive Forest Rules regarding sheep grazing were challenged in United States v. Tygh Valley Co., 76 F. 693. The Forest Rules were upheld on the basis that closely herded sheep were damaging the resources; (see also Dastervignes v. United States, 122 F. 30; 1903; and Dent v. United States, 76 P. 455, reversing 71 P. 920; 1904.) According to Colorado Judge Ethelbert Ward, The Legal Aspect of the Grazing Problem, these were essentially civil cases by injunction to prevent damage to property "and would apply as well to the individual as to the United States. They are founded on the law of the land, and do not depend on rules and regulations." (Forest Service Law Office Correspondence RG 49, Drawer 16, National Archives.)
The grazing system devised by the Bureau of Forestry in 1902 issued the first grazing permits for sheep. A circular issued by the department of Interior on January 8, stated livestock on the forest reserve would receive preference in the following order: 1) Stock of residents within the reserve; 2) Stock of persons who own permanent stock ranches within the reserve, but who reside outside of the reserve; 3) Stock of persons living in the immediate vicinity of the reserve, called neighboring stock and 4) stock of outsiders who have some equitable claim.