On Monday the House Appropriations Committee worked until after 9 p.m. to make substantial revisions to House Bill 249 that enables Governor Mark Gordon and other members of the State Loan and Investment Board (SLIB) to examine and negotiate a deal for 1 million acres of surface and 4 million acres of mineral rights in southwestern Wyoming.
With only a few hours remaining for bills to be passed out of committee in their house of origin, in the end the committee gave the bill the green light on a 6-1 vote.
The revised bill bears little resemblance to the bill as originally filed. The ability for the legislature to tap into the Legislative Stabilization Reserve Account for the purchase was removed, replaced with a provision for the state to issue special revenue bonds to fund the deal to purchase assets from Occidental Petroleum (among other possible funding sources).
The bill gives members of the SLIB, and three appointed members from each house of the legislature, the ability to investigate the possibility of purchasing the properties, to conduct due diligence on the deal, and to make arrangements to purchase the assets.
This group will be required to report their findings to the legislature, outlining the methods used in determining the market value of the properties, including evidence of marketable title and any title defects that exit.
The committee will report to the legislature its recommendations on where the funding for the deal should originate, any legislation needed to complete the deal, and any changes to laws that are needed to best manage the assets.
The Attorney General would have to approve the deal, and the bill now includes a provision that even if the committee comes to a purchase agreement, the legislature would have to convene and adjourn prior to the deal being finalized.
Although the bill does not require any action of the legislature for the deal to be finalized (no up-or-down vote is currently included in the language), should the legislature decide against the deal, the state would not be bound to the negotiated purchase agreement and the state would incur no liability for its efforts.
There is considerable conflict and interest in what would guide state management of the acquired lands, and currently it appears that how the lands will be managed depends on where the money to fund the deal comes from.
If part of the purchase comes from money in the Common School Permanent Land Fund, those lands must be identified and managed similar to the rest of state trust lands, with the top priority as generation of revenue, or maximizing the return on investment.
But one amendment to the bill calls for other surface use of land purchased via other funding mechanisms to be managed for multiple use under another provision of existing statute.
Whether the state can, or should, identify specific parcels for purchase with funding from a specific account is at issue, or whether the state should use a more “proportional” method is still being debated.
Although no official numbers have been released, when discussing the possibility of issuing special revenue bonds, the committee used a hypothetical number of a $1.2 billion purchase price, and one committee member noted that it has been represented to the legislature that the lands involved in the deal currently provide an annual revenue stream of $130-150 million.
Representative Albert Sommers, a Republican from Sublette County, noted the bill’s lack of inclusion of a process to gain public comment, calling it “a glaring omission,” but in the end supported the revised bill.
“I have a lot of misgivings,” Sommers said, “but probably the only thing scarier than purchasing this is not examining it. It’s a huge swath of land that is kind of the essence of southwest Wyoming. Not knowing where that may go, in the end, for good or evil – I think we owe it to that chunk of land to take a look at it.”
Representative Andy Schwartz, who noted that the bill being reviewed Monday evening was the third version of the bill he’d read in about four days, cast the lone vote against the bill.
“I still have concerns about the structure of the bill itself,” Schwartz said. “It’s a leap of faith on our part.” Schwartz said that he doesn’t feel like he has enough information at this point, and cautioned that “things like this have a way of gaining momentum, which really concerns me.”
Gordon’s energy advisor Randall Luthi addressed the committee in its final minutes of deliberations, noting that the House bill is now substantially different from the bill filed in the Senate, “and we have full confidence that you’ll work it out.”
Luthi said while he’s supportive of House efforts to ensure the SLIB works toward due diligence on the land purchase, he cautioned about “unnecessarily tying the hands” of the governor and SLIB to conduct negotiations, and that the legislature should allow SLIB to “manage the lands different than what we are used to.”
Luthi also noted the importance of the Senate’s version of the bill that allows the state to receive gifts or donations toward the land purchase, while noting that such gifts may have “some strings attached to them” that would have to be considered.
Other state agencies provided input to the committee Monday night, including Deputy State Treasurer Dawn Williams who took issue with the overall attempt to give SLIB the authority to oversee this investment when it’s the State Treasurer that is charged with investment of state funds.
She suggested that “some duties are best performed” by the State Treasurer’s office, and when it comes to the SLIB, “this isn’t their wheelhouse.” She said her office needs to be involved in the deal and pointed to the discussion segregation of assets via its funding source, noting that wouldn’t pass the “prudent investor rule” to which state investments are bound.
State Treasurer’s Office Chief Investment Officer Patrick Fleming agreed, noting “We are focused on maximizing return; that is what we do.”
With the exception of Schwartz, all other committee members voted to pass the revised bill, including Sommers, Bob Nicholas, Mark Kinner, Lloyd Larsen, Jared Olsen, and Tom Walters. The bill is expected to be subject to numerous amendments on the House floor on Tuesday.
Cat Urbigkit is an author and rancher who lives on the range in Sublette County, Wyoming. Her column, Range Writing, appears weekly in Cowboy State Daily. To request reprint permission or syndication of this column, email firstname.lastname@example.org.