Well if its public land, can it be perhaps leased to him for 100 years? Or sold. Is there some important public infrastructure on that site? 
Yes. It is public land. But Bundy's family has been grazing their cattle on it for almost 150 years now. The BLM wants to convert the land in to a wildlife sanctuary for the desert turtles and ban the grazing there. May be they should give him a similar plot somewhere else as a compromise.. but I don't know whether the will agree or not.
Even if what you say is true, its irrelevant. Its the government's land. They can use it for any legal purpose. They don't have to get this guy's consent to use their own land as they see fit.
That would be the equivalent of me telling my neighbor he can't sell his house, because I store my lawnmower in his garage. Pretty ludicrous, eh?