A proposed settlement that could free up some oil and gas leases within the Roan Plateau study area for drilling and do away with others should not come at the expense of future mineral lease payments to local governments, Gov. John Hickenlooper has pledged.
“The Hickenlooper administration believes a settlement that allows some energy development to proceed while protecting other areas of the Roan Plateau is in the interest of all parties,” Henry Sobanet, director of Hickenlooper’s Office of State Planning and Budgeting, wrote in a Friday letter addressed to state Rep. Bob Rankin.
Rankin, R-Carbondale, has been working with the governor’s office on a deal to prevent future federal mineral lease dollars from being withheld from local entities in order to refund about $28 million in “bonus” payments to Bill Barrett Corp. if the settlement goes forward.
The proposed settlement involving Barrett, environmental groups and the federal government has been touted as a potential “win-win” by those involved.
The exception has been local governments, including Garfield County and other members of the Associated Governments of Northwest Colorado, which have asked that they be held harmless in the deal.
Of particular concern is the state’s practice of withholding future federal mineral lease (FML) dollars, including royalties from producing wells, that would normally be distributed to local governments to help pay for impacts from energy development, instead of asking those entities to refund money that has already been paid out.
If it goes forward, the deal could end several years of litigation over natural gas drilling on the Roan Plateau northwest of Rifle, where the U.S. Bureau of Land Management has reopened the federal environmental impact review that led to leases being issued in 2008.
Under the proposed settlement, Barrett would be reimbursed for giving up some its federal leases in the more pristine areas atop the Roan Plateau.
In exchange, Barrett and other lease holders would be allowed to develop less-controversial leases, including several at the base of the Roan in areas that already have active gas wells.
“I think it’s important that we do get behind this, if in fact we think it’s a good deal going forward,” Rankin advised Garfield County commissioners Monday while presenting the state’s letter.
However, it will require a change in state law to commit general fund money or identify other revenue sources for such refunds. Rankin said he plans to carry a bill that would accomplish that in the next legislative session.
Rankin said the main concern has been that any further withholding of lease dollars would represent a “double hit” to local communities that already saw fewer dollars when the state decided to transfer FML funds to the general fund to help balance the budget during the recession.
“We agree,” Sobanet’s letter to Rankin stated. “We do not believe a ‘double hit’ to these revenue streams would be appropriate policy.”
Rankin, who has been critical of the state’s policy of paying out only 40 percent of FML dollars in direct distributions and grants to local governments and special mineral lease districts, said it’s a positive step.
“It’s something that has been on my mind since I got in the Legislature,” said Rankin, who is running unopposed for re-election to a second term this fall. “I think [40 percent] violates state law, which says that money should go to the communities that are impacted.”
Last week, the Garfield County commissioners heard strong words from Associated Governments Executive Director Scott McInnis opposing any settlement that could impact future lease payments to local governments.
Commissioner Tom Jankovsky said the governor’s position “gives us a better idea” as to whether the county and local municipalities and special districts would in fact be held harmless if the Roan settlement is accepted.
“It looks like, with your support and the governor’s support, we can get this done,” he said in thanking Rankin for his work with state officials.
“We have a potential settlement that allows some drilling to start on the valley floor, and a little on top” of the Roan, Jankovsky said. “It is a win-win that gives the environmentalists some of the things they want and industry some of what it wants so that we can have some drilling activity again.”
He said the negotiations involving the Roan could also provide a model for settlement of other disputed leases in areas such as the Thompson Divide and other U.S. Forest Service lands where leases are being reviewed by federal agencies.
In addition to reviewing the EIS and resource management plan that led to leasing on the Roan, the BLM is reviewing 65 leases on parts of the White River National Forest straddling the Garfield, Pitkin and Mesa county lines, including 25 within the controversial Thompson Divide region.
“In our resolution supporting the Thompson Divide Coalition, we did ask that they work together with the lease holders to reach some settlement,” Jankovsky said. “It’s happening on the Roan, and they are setting some precedent that the Thompson Divide could follow.”