Roan Plateau settlement has win-win potential
The Roan Plateau was destined to be a battleground. Not only is it home to wilderness-quality backcountry, featuring eagles, deer, elk, black bear, cutthroat trout and rare plants, it’s sitting on top of a sizable gas field.
In the final months of President George W. Bush’s term, the BLM auctioned off natural gas leases on lower and upper sections of the plateau, netting $114 million — the BLM’s most lucrative onshore gas lease sale ever in the lower 48. Roughly half of that money came back to Colorado, a portion of which the state awarded to local governments to deal with the impacts of an expected onslaught of drilling.
The money helped build an Interstate 70 exchange in Parachute and the 29 Road overpass in Grand Junction, among other things. But, as is so often the case, a lawsuit locked up the land before the drilling started. A coalition of environmental groups challenged the BLM’s scoping process. A federal judge’s ruling in 2012 resulted in the BLM undertaking a new environmental review of the resource management plan that led to the leases.
A proposed settlement, hailed as a win-win by many elected officials, would involve companies giving up some leases on the plateau top — a win for environmentalists — but would allow development to proceed on less controversial leases nearby. But here’s the rub: The federal government would have to refund the value of the vacated leases, creating considerable questions about what that means for the state and the local government entities that already received and spent proceeds from the original sale.
Settlement negotiations are confidential and nobody is talking. The Associated Governments of Northwest Colorado has gone on record as opposing any settlement that would cost local governments anything.
It’s unlikely the federal government would demand repayment of funds. It would simply reduce the state’s share of royalties and severance taxes over a three-year period to make up for the state’s $23.5 million stake in the payback. That would trickle down to the local government level because the state would have less in its Local Government Permanent Fund to disperse through Department of Local Affairs grants. But as production ramps up, gas wells would provide a steady stream of revenue that is currently nonexistent.
Rep. Scott Tipton says revenue from production on remaining, highest-prospect leases would “more than offset” the cost of refunding companies. But Scott McInnis, AGNC’s director, wants the local governments his group represents to be held completely harmless, meaning no withholding of future energy-related tax or grant distributions.
We think that’s shortsighted and probably not legally possible. A settlement can allow Bill Barrett Corp., WPX and other lease holders to begin drilling in the area, meaning future revenue and benefits to local governments.
Tipton, Gov. John Hickenlooper and Sen. Mark Udall have all characterized the settlement as a balanced solution that, over the course of 10 years or more, nets the state and impacted communities many millions more than any other viable option.
Moreover, the disbursement of DOLA funds is a political, rather than a statutory process. That gives Hickenlooper the latitude to acknowledge AGNC’s unique stake in this matter and provide some assurances that the temporary “haircut” the state is taking won’t result in fewer funds going to the communities most affected by the settlement. If drilling starts, so will the impacts on AGNC members.
We think a settlement is in the best interest of all parties, provided there’s no blowback on local governments. A win-win is possible in what has become a very tangled knot of a problem.