Governor eyes Roan lease fight
A legislative solution supported by the administration of Gov. John Hickenlooper could resolve concern about the potential local cost of a proposed legal settlement over oil and gas leases on the Roan Plateau.
The solution would address the desire of Associated Governments of Northwest Colorado that local governments not be held financially liable for reimbursement of any federal leases canceled under a settlement.
Henry Sobanet, Hickenlooper’s director of the Office of State Planning and Budgeting, indicated last week in a letter to state Rep. Bob Rankin, R-Carbondale, that preventing such liability would require a change in law, something the administration would support. And Rankin told Garfield County commissioners Monday that he probably will sponsor such legislation, and work to shepherd it through the legislature’s Joint Budget Committee, on which he serves.
“I’m optimistic. I certainly don’t think it’s a done deal,” he said.
The legislation would pertain to efforts to settle a lawsuit by conservationists over the Bureau of Land Management plan leading to the 2008 leasing of about 55,000 acres on the plateau west of Rifle. A judge in 2012 ruled against the BLM on aspects of that plan, which the BLM is now redoing.
The settlement reportedly would result in Bill Barrett Corp. giving up some of its leases on the plateau top, which conservationists want protected from drilling. Vantage Energy acquired those and nearby leases for $57.6 million, and BBC later acquired a 90 percent interest in them for $60 million.
Colorado received $28 million in federal mineral lease revenues from the Vantage leases, and under the proposed settlement would repay revenues through a reduction in future mineral lease distributions.
The state shares some federal mineral lease revenues with local governments, and AGNC has objected to the possibility of its members losing out on some future lease distributions under a settlement.
Another concern of local governments is that federal mineral lease revenues intended for energy-impacted communities were instead used by the state during the Great Recession to help balance its budget, and diminishing future revenues would serve as what’s being called a “double hit” for these communities.
“We agree,” Sobanet wrote. “… We do not believe a ‘double hit’ to these revenue streams would be appropriate policy.”
He added that the Hickenlooper administration supports a settlement that would allow development of some of the Roan leases while protecting other parts of the Roan Plateau. But for the state to commit money from a source such as the general fund so the flow of federal mineral lease revenues to local governments isn’t impacted would require a change in law, he said.
He wrote that if a settlement is reached and mineral lease dollars must be refunded, the administration would include in its budget proposal a plan to protect that flow of funds through the mineral lease revenue formula. And if Hickenlooper is re-elected in November, his administration “will actively support passage of such a plan,” Sobanet wrote.
Rankin told Garfield commissioners the administration is optimistic about the chances of such a measure passing. He said the outcome potentially could differ depending on the election, “but I think we’re OK either way.”
Hickenlooper faces Republican nominee Bob Beauprez in that election.
Rankin plans to return to Garfield commissioners later to seek their formal support for the proposal.
“I think it’s the best we could do. I think it’s a really good outcome to have it going forward as part of the budget plan,” he said.
He said the proposed settlement is far better than a cancellation of all the Roan leases, which would require paying back twice as much money. Under the settlement, development of leases below the rim could occur, resulting in revenues that would be shared with Colorado and local governments.
“Where we can support a negotiated outcome, I think we should,” he said.
Garfield Commissioner Mike Samson, who also is chairman of AGNC, said he applauds the effort being undertaken after AGNC expressed its desire for local governments to be held financially harmless in any settlement.
“I’m actually astonished at the outcome,” said fellow Garfield Commissioner Tom Jankovsky, who said he thinks the budget proposal should satisfy AGNC’s concerns.
He said he hopes the settlement that is emerging in the case of the Roan is an example that might be followed in the case of the Thompson Divide west of Carbondale, where efforts also are underway to try to protect from drilling areas that are under lease.