Roan leasing, revenues in question |

Roan leasing, revenues in question

Phillip Yates
Glenwood Springs correspondent
Aspen, CO Colorado

RIFLE, Colo. ” The Bureau of Land Management estimates its Aug. 14 lease sale of about 55,100 federal acres on the Roan Plateau in western Colorado for natural gas drilling will bring in $100 million to $300 million.

Industry groups and some others believe the sale could bring in even more money, potentially showering Colorado with cash. That’s because the federal government shares about half of what it receives from development of its federal-land leases with the states.

But there are several lingering issues surrounding the BLM’s lease sale and any potential revenue that Colorado stands to receive. Those problems – which include possible litigation to block the sale – should come into sharper focus as Aug. 14 draws nearer.

The specter of natural gas drilling over vast tracts of the Roan Plateau, northwest of Rifle, has been a source of controversy for the last several years. Several environmental have fought for years to combat drilling in the Roan Plateau area, citing the area’s wildlife, which includes genetically pure native cutthroat trout. Sportsmens groups recently took up the fight, too.

Another little-known complication: if the secretaries of the U.S. Department of Energy (DOE) and Department of Interior do not certify the cleanup process at the Anvil Points Oil Shale Superfund site near Rulison, Colo. before Aug. 14, the state will not immediately bank its share of the lease sale.

However, Steven Hall, a spokesman for the BLM in Colorado, said the agency “fully expects” that the certification will occur before the Roan Plateau lease sale.

“We have a plan in place and significant money in place to execute that (cleanup),” Hall said. “That is what we believe will happen before the August lease sale.”

If the certification of the cleanup does not come before the sale, revenues would flow into a trust fund set up to pay for the cleanup of the Anvil Points research station, Hall said. That fund currently contains about $96 million and accumulates about $1 million to $2 million each month.

The DOE Anvil Points site is a former oil shale research station. What remains is a pile of spent shale and other material, including arsenic and other heavy metals, from oil shale mining and processing. The pile is considered to be a threat to ground and surface water, including the Colorado River.

A 1997 federal law that transferred lands in the Roan Plateau Planning Area to BLM control stipulated that money generated from federal mineral leases or royalties in the area would go into the trust fund and would be targeted specifically for the cleanup of the station. No money would be returned to the state prior to certification of the station’s cleanup.

Once the cleanup is certified, said Hall, all money generated from current and future natural gas production in the Roan Plateau Planning Area would be split between the federal government and Colorado.

But language in a $555 billion spending bill late last year altered the revenue-sharing between the feds and the states ” the split went from 50-50 to 52-48, with the federal government keeping the greater share.

That change, which altered the sharing agreement the federal government has had with the states since the 1920s, means Colorado could lose out on about $2 million if the low BLM estimate for Roan Plateau leases comes to pass. If the BLM’s high estimate occurs, Colorado would lose out on $6 million.

Both U.S. Sen. Ken Salazar, D-Colo., and U.S. Sen. Wayne Allard, R-Colo., along with others in Colorado’s congressional delegation, have announced efforts to change that language.

Evan Dreyer, a spokesman for Colorado Gov. Bill Ritter, said the state would like to see legislators work to return the sharing of federal mineral revenues back to its traditional 50-50 split. He also noted that there is a possibility the Aug. 14 lease sale may not even go forward as scheduled.

That’s because several environmental groups have signaled that they plan to launch litigation to block it, saying a lawsuit is the last possible tool they have to stop large-scale development in the Roan Plateau. Those groups also plan to formally protest the inclusion of Roan Plateau leases in the sale.

If protests are filed, the BLM tells those who acquire leases that development cannot occur until those protests have been resolved.

Dreyer said that no decision has been made about whether the state plans to protest the lease sale.

Although Roan lease money is not expected to flow into the Anvil Points trust fund, any money left in that fund after the station’s cleanup is completed will be lost unless there is a “legislative remedy,” said Steve Wymer, a spokesman for Allard.

About $30 million for the cleanup and another $39 million to the DOE for infrastructure the agency developed at the research station will have to come out of that trust fund.

A bipartisan effort earlier this year by Allard, Ken Salazar, and Rep. John Salazar, D-Manassa, would seek to split the balance in the trust fund, following certification of the cleanup, evenly between the state and the federal government. The bulk of the cost of the cleanup and money reimbursed to the DOE would come out of the federal share.

Stephanie Valencia, a spokeswoman for Ken Salazar, said the senator is still working to move that bill, along with other efforts to restore the 50-50 split, forward in the Senate and is “looking forward to opportunities to do so.”

Language in the bipartisan bill would allow Garfield and Rio Blanco counties to each receive 40 percent of the expected millions returned to Colorado from the trust fund, while Moffat and Mesa counties would each receive 10 percent of that money.

“We are pleased that Senator Salazar was able to come on board with us earlier this year, and we continue to look for any vehicle to use to pass this legislation,” said Wymer, noting the senator has been advocating bringing money in the trust back to Colorado before anyone else. “We face an uphill battle. There will be a lot of competing interests in the short time we have here in Washington. We face a lot of legislative challenges.”