The world wants what Wyoming has; the 17 once obscure scientific curiosities found at the bottom of the periodic table. With names like europium, terbium and dysprosium, these chemically complex rare-earth elements have become essential in everything from wind turbines to smart phones, from flat-screen TVs to compact fluorescent light bulbs.

Related Story: China's rare earth role

Maybe, just maybe, this is a first date that might lead to something. Certainly, Rare Element Resources thinks it will. With plans for $400 million in infrastructure in and near the towns of Sundance and Upton, the mining company specializing in rare earth metals believes it has a rock-star project to compete with China’s near monopoly on these useful substances.

The deposit, nine miles northwest of Sundance on the fringes of the Black Hills, has rare earth in spades. It is especially blessed with the heaviest of the rare earths, the ones projected to be in highest demand during coming years for use in high-performance magnets and compact fluorescents, say company officials. One of the elements, dysprosium – which allows magnets to retain their effectiveness up to 250 degrees Fahrenheit, compared to 80 to 100 degrees for ordinary iron magnets – has fetched up to $1.2 million per ton in the last year. Analysts don’t expect that to last, but they do expect it to stay close to $300,000 to $400,000 a ton.

Jon Hykawy, clean technologies and materials analyst with Toronto-based Byron Capital Markets, says he expects the rare earth elements used in high-performance magnets will stay in high demand in coming years, especially as China, India and other populous countries seek to improve their transportation with highly efficient electric and hybrid cars.

Rare earth mining, however, isn’t likely to join the ranks of coal, natural gas and oil as Wyoming’s leading economic engines. The global market for rare earth minerals altogether runs only 130,000 to 140,000 tons annually, says Hykawy. The market has limits and, for some minerals, price sensitivities. Substitutes for lanthanum, for example, a rare earth element used in oil refining, can be used when prices climb.

No other company is believed to be in the hunt for rare earth minerals in Wyoming, but hundreds are at work around the globe. The handful left standing are likely to be those with the best minerals and the best supporting infrastructure – and the first to get on line, establishing relationships with manufacturers. In this happy intersection, Rare Element Resources believes it has great opportunity.

‘Rare’ opportunity to diversify

Legislators also see opportunity. This isn’t energy, Wyoming’s usual meal ticket. As economic diversification has become the Holy Grail, state legislators this year appropriated $200,000 to the Wyoming State Geological Survey to analyze prospective rare earth deposits, to be completed by June 1, 2013. No statewide comprehensive survey has ever been done, but it’s widely known that the rare earth elements are often found in higher concentrations with the radioactive elements of uranium and thorium. Wyoming has plenty of both.

A chart listing basic uses for rare earth minerals. (Courtesy of the Congressional Research Office — click to enlarge)

“We really have a jump on things and have lots of ideas about where we’re going to be collecting samples,” says Wayne Sutherland, gemstones, metals, and economic geology specialist with the Wyoming State Geological Survey. See sidebar at bottom. In addition, the Legislature this past winter carved out $700,000 for the University of Wyoming College of Engineering to conduct research into rare-earth materials. Also in the name of adding value to Wyoming’s natural resources, the Legislature appropriated another $100,000 to the university’s School of Energy Resources to evaluate the feasibility of using soda ash to manufacture glass and glass products in Wyoming.

“This is just seed money, to get people thinking about the future,” says one of the legislative sponsors, Rep. Donald Burkhart Jr., (R-Rawlins). “It puts Wyoming in a little different direction. Wyoming has always been an energy exporter. This will help allow us to produce something a little different than energy. And if the University of Wyoming comes up with a good way to process materials, more economical and novel, I would like to see materials from (elsewhere) come here for processing,” says Burkhart, who graduated from college in 1970 with a degree in physics from John Carroll University. State Senate President Jim Anderson, (R-Glenrock), similarly wants Wyoming to add value and diversity in processing. “Some of us feel that in light of this new discovery that we should look at ways Wyoming can add to its value through development of those rare earths,” he says. “This is not going to happen overnight,” he adds. “But we have a lot of soda ash, which is used in making glass, and also silicon. Now we have rare earth elements. We also have low-cost energy. It’s conceivable we could become a leader in the world in making silicon and glass, magnets, and other things.”

Rare earth’s international market

This graphic shows the global production and estimated reserves of rare earth minerals as well as the amount and direction of rare earth imports by the U.S. (Courtesy of the Congressional Research Office — click to enlarge)

Wyoming isn’t the only place with rare-earth deposits, however. Hundreds of companies have begun hunting for deposits since China, which produces 97 percent of the world’s rare earth elements, announced it would slash exports. Prices shot upward. For example, cerium, which is used in polishing flat-screen televisions, rose from $6 a pound in 2008 to $77 a pound before dropping back to $25 a pound last fall.

As the world’s biggest electronics factory, China itself uses 60 to 70 percent of the rare earth elements it mines. Most of our televisions and computers are made there, as are the millions of General Electric fluorescent light bulbs. Factories based in China get first dibs on the rare-earth resources.

This dependence on China’s near monopoly causes heartburn in Americans who are aware of the rare earth elements used in the manufacture of night-vision goggles, the latest generation of F-35 fighter jets, and just about every piece of high-tech equipment of the U.S. military. Global demand for rare earth elements has tripled in the last decade. As of 2010, global demand was 136,000 tons, according to a 2011 report by Marc Humphries of the Congressional Research Service. Demand is projected to grow to 185,000 tons annually by 2015.

China has only 30 percent of the world’s known economically recoverable deposits of rare earths. A representative of China at a recent conference in Washington D.C. also called on other countries to step up their own production. In time, China sees itself importing rare earths, just like it does oil. Just a decade ago, the country also exported oil. It expects to run out of a key rare earth mineral, dysprosium, within 15 years. (See China sidebar). Wyoming has it.

Wyoming operations

Rare Element Resources intends to be part of this evolving story with Wyoming’s untapped resources. The company is headquartered in Colorado at the edge of the foothills, nine miles west of downtown Denver. It concerns itself with both gold and rare earth elements. Both are found in the company’s 2,400 acres of mining claims on the Black Hills National Forest. However, rare earth elements are driving this proposal. Gold might lie in the future, but it’s not in current plans. The company plans a 500-foot deep open-pit quarry at its Bear Lodge project near Sundance. There, the ore would be pulverized to the consistency of sand. It expects to have a 900-acre footprint for mining operations. Waste rock would be deposited on land that will become private if a 640-acre state school trust parcel is obtained from Wyoming in a pending land exchange.

Employees of Rare Element Resources examine mineralization in one of the new Bear Lodge exploration trenches. The company is planning a 500-foot deep open-pit quarry. (Courtesy of Rare Element Resources — click to enlarge)

During the first 19 years, the company envisions producing 11,500 tons of rare earth oxides. Current U.S. demand is 15,000 to 18,000 tons. Planning for the site began in 2004, but George G. Byers, the company’s Rare Element Resource’s vice president for government and community relations, says continued exploratory drilling last year heightened the excitement. It is, he says, “perhaps the second best heavy rare earth deposit” in the Western Hemisphere. An ore body in Canada’s Northwest Territories is considered even better, but the remote location would impose sharply higher operating costs, according to Byers.

The Wyoming deposit is within two miles of a paved road and nine miles from Interstate 90. Upton, where the company plans a processing plant along the BNSF Railway line, is just 40 miles away.

In addition, the Sundance and Upton communities have electricians, diesel mechanics and other skilled labor all too ready to swap existing 100-mile commutes to jobs in the Gillette Powder River Basin coal fields for local jobs, says Byers. Some 80 jobs will be available at the mine, and another 70 at the separating mill in Upton. The company also thinks it has generally friendly regulatory environment in Wyoming. In a 2011 report, the Fraser Institute, a Canadian public policy research organization, found Wyoming the fourth friendliest jurisdiction for mining, behind two Canadian provinces and Finland. The Wyoming Department of Environmental Quality would be charged with regulatory overview of what is, by all accounts, a challenging and somewhat risky operation of mining and processing.

Winnowing the field

Analysts at recent conferences have predicted that the hundreds of companies now traipsing around the planet will dwindle to just six to eight within the next few years.

Nobody has ever done a comprehensive survey of rare-earth prospects in Wyoming before, but their existence has not gone unnoticed. Wayne Sutherland, gemstones, metals, and economic geology specialist with the Wyoming State Geological Survey, says they were noted in various studies in the 1950s and 1960s, mostly in conjunction with prospecting for uranium and thorium, two radioactive elements.

“It was a lot more difficult to have analysis of rare earth elements at the time,” says Sutherland.

To conduct the survey of rare earth elements in Wyoming, Sutherland’s team has started examining geological reports of the past. In the hunt for new discoveries, geologists know rare earth elements are more likely to be found in the geologically ancient Precambrian outcrops along the flanks of mountain ranges. Other more likely spots included older ranges that have eroded to hills, as is the case with the Granite Mountains north of Muddy Gap, in south-central Wyoming. There are other possibilities as well.

“We will look in the Bighorn Mountains, and also there may be some in conjunction with the phosphate deposits in western Wyoming,” says Sutherland.

Samples will be collected from public lands without need for permission. In the case of private lands, nothing will be collected without landowner permission.

“If it’s private surface or private minerals, we have a process we have to go through before we collect samples,” Sutherland explains. But whatever information that is collected will become part of the public domain, with results to be posted on a website.

Jack Lifton, a Detroit-based expert in rare earth metals, likens the 400 identified deposits of rare earth elements and 259 companies trying to develop them to aspiring rock stars and movie stars. Most have talent of some sort, but just one in a million will make it.

“It’s the same thing with rare earth,” says Lifton, a consultant who works for the Denver-based company two days a month. “You can find all the deposits you want, but they need to be the right kind of resources. Rare Element Resources has the right kind. They are of the right kind, and they are of a good grade, and they are so much easier to process than the stuff from (Mountain Pass) California.”

Rare Element Resources says it has $56 million in cash and no debt, and market capitalization of $270 million, positioning itself well to move forward as it checks off the laundry list of to-dos: a feasibility study, now updated, which shows great promise, along with financial documents required of mining stock exchanges. The company expects to apply to the U.S. Forest Service for a permit this year. It has already done baseline studies for wildlife, water, traffic and other impacts. It also needs a permit from the Wyoming Department of Environmental Quality. A permit may also be needed from the Nuclear Regulatory Commission. The company hopes to have these as well as local permits in hand by early to mid 2014, enabling production to begin in 2015.

However, additional financing will be necessary before the company moves into full development. Anne Hite, director of investor relations for Rare Element Resources, says the company has several options for raising money, and it will be a challenge – as it has for other companies. “But it’s certainly not insurmountable, and our goal is to do it in a way to avoid dilution to our shareholders,” she says.

A tedious process

As an extension of the gold-laden Black Hills, the Bear Lodge Mountains have been picked over since the 1880s. Interest in the current claims can be traced to the 1940s and the search for uranium. Later prospecting keyed in on the prospects of copper. In the 1950s, U.S. Bureau of Mines drilling in the Bear Lodge Mountains revealed rare earth mineralization. At the time, rare earth elements were considered a scientific curiosity, with little or no value. New uses for rare earths were found in the 1970s and 1980s, accelerating in the 1990s. Various rare earth elements are used not only in catalytic converters but also as agents in oil refining. Many conduct electricity well.

The drive to miniaturize electronics has been a boon to rare earth mining. Cell phones, computers and tablets are loaded with them. The ability to whisk through pages by plucking lightly on the screen of a cell phone or tablet is because of a rare earth element.

“They have a staggering wide number of applications,” says Dr. Alexander King, director of the Ames Laboratory at Iowa State University, one of the nation’s preeminent materials laboratories. Materials engineers have been trying to find substitute processes and materials to avoid full dependency on rare earths. They’ve achieved only small successes.

King sees a continued market for rare earths well into the future. But some of the rare earths are more valuable than others. That’s where the Bear Lodge deposit shines. It has dysprosium, neodymium, praseodymium and terbium, all of them used for high-performance magnets used in cars, disc drives and in the nacelles of giant wind generators. As normal iron magnets heat, their magnetic qualities tend to degrade. Dysprosium resists that degradation.

“It is a very, very important element, especially for these clean-energy applications,” says King.

A Toyota Prius, for example, has 30 pounds of rare earth elements, including 10 pounds of lanthanum, which allows the battery to pack more power in a smaller space. Even ordinary cars have rare-earths. For example, they are used in car motors, including the motors used to raise or lower your windows. Normal magnets would be much larger, and your car door would have to be wider. Europium and terbium, both found at the Bear Lodge site, are used in compact fluorescent light bulbs.

Processing rare earth elements is challenging. Chemically, they are almost identical in their atomic composition. They are far more common than gold, but gold concentrates naturally and further separation from ore is a relatively easy process. The trick with rare earths is to wean them from one another. To do this requires exacting, tedious processes involving acid. Ordinarily, the same process is used again and again, then again and again.

“It’s a very slow process. It takes a lot of steps,” says King. “It usually takes a lot of acid, which is environmentally challenging to deal with, and once you have it all separated, you still have to extract the rare earth metal from the solution, which is usually done by electro-magnetic techniques. That is an energy-intensive process, and it has a certain amount of environmental risk to it.”

Rare Element Resources estimates it will need four railroad tanker cars each day of boric acid and soda ash at its processing plant targeted for Upton. Wyoming’s low-cost electricity is an advantage. If the ore has radioactive elements, such as thorium and uranium, says King, “You need to separate them out. Separating them out is a well-established technology, but it’s not an easy technology.”

Environmentalists don’t immediately see red-flag issues, but they are cautious.

“Anytime you have a big open pit mine with potential for radioactive contamination, we have a concern,” says Erik Molvar, executive director of the Laramie-based Biodiversity Conservation Alliance. “When you have rare earth mining, you have some of the minerals that do have radioactivity coming along with the rare earth elements, so it’s important that you don’t poison streams.”

He says: “We haven’t been heavily engaged in this, but we will be engaged in this issue moving forward.”

Rare Element Resources describes radioactivity at the proposed Bear Lodge operations as consistent with background levels in the area, with no commercial-grade deposits of radioactive materials in the mining area. Just the same, the company two years ago decided to build the tailings facility at Upton to standards specified by the Nuclear Regulatory Commission for uranium mill tailings.

“Like every rare earth, we have a little bit of thorium and a little bit of uranium, but nothing at levels that constitute a human safety issue,” says Byers.

Molycorp's Mountain Pass rare earth facility reopened in late 2010, but the company plans to export its' minerals to China for processing. (Wikimedia — click to enlarge)

The most immediate competition to the Wyoming ores is from a quarry at Mountain Pass, California, located 60 miles southwest of Las Vegas. It operated from the 1980s until 2002 when its owners, Unocal, closed it down because of an inability to compete with the lower-cost rare earths from China and because of environmental considerations. Later spun off to private investors, Denver-based Molycorp has reopened the quarry but it exports the materials to China for processing. Mining experts say a new process being assembled will require less energy and will use safer materials.

For its separation process, Rare Element Resources is working with the  Australian Nuclear Science and Technology Organisation to develop techniques specific to the elements found at the Bear Lodge location. Mining companies often patent their processes, although sometimes companies just choose to be secretive, says Iowa State’s King.

Rare Element Resources is betting than it can deliver the prized materials at a lower price than other operators. But with China cutting exports, there’s also a time imperative.

“The way I see the market at the present time, he who gets into the market first wins the game,” says Sutherland, from the Wyoming State Geological Survey. “Nobody can predict what the demand will be 10 years from now. It may be stable, with steady or slow growth, or the demand may skyrocket beyond what we can imagine at the present time.”

(Banner photo courtesy of NASA)

Allen Best is a long-time journalist based in Colorado. He can be found at Mountain Town News.

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How China came to monopolize the rare earth supply chain is a complex story. Today, it delivers 97 percent of the world’s rare earth elements and uses 60 percent to 70 percent. The United States had a rare-earth mine until 2002 at Mountain Pass, California. It was closed partly because of environmental violations, but more so, say officials, because of the inability to compete with the lower-cost rare earth elements being delivered onto the world market by China.

Related story: Can Wyoming help serve world's hunger for rare earth minerals?

Molycorp, a company based in metropolitan Denver, recently bought the mine has now brought the mine back into production, but is sending the ores to China for processing while it readies its own processing.

China has used its rare earth deposits strategically. It has pledged allocation of resources to companies that are at least co-owned by Chinese. The policy had the practical effect of causing a substantial number of companies to move operations to China. China has been imposing tariffs on rare earth exports for several years, and has also begun cutting back exports.

It has also used its near monopoly on rare earth supplies as leverage in diplomatic disputes. For example, as the result of a territorial dispute involving a Chinese fishing trawler, the Chinese embargoed exports to Japan for two months in 2010. In March, President Barack Obama announced that the United States would join Japan and the European Union in a protest filed with the World Trade Organization (WTO) over the restricted exports. The complaint says the WTO rules forbid discrimination against foreign buyers.

Elliot Brennan, editor at the Institute for Security and Developing Policy at in Stockholm, Sweden, argues that rare earth elements, often reduced to the acronym REE, are likely to become “the new oil,” as he says China recognized 20 years ago. “It will be increasingly important for governments to secure national reserves of rare earth elements to support local high-tech industries and prevent future conflicts over the resource,” he wrote in Asia Times Online.

But the story has greater complexity than China simply wanting to have the world by the short hairs. China’s dominance in rare-earth resources is due in part to the flourishing of illegal mines whose output is smuggled. China now wants to clamp down on the rogue mines, consolidate ownership under a few corporations, and tighten up the environmental laxness. A compelling analysis of the international intrigue is offered by foreign policy analyst Peter Lee. In a March 24 essay, Lee argues that the complaints of other nations amount to a “China-bashing ball.”

“Not only were rare earth elements declared to be at the core of Western defense technology; enjoyment of the green marvel of the Prius and the high tech wonder of the iPhone were trained by the awareness that China, with its rare earth monopoly, could snatch them away at any time,” he wrote in Asia Times Online. Lee predicts that, “in a few years the dreaded Chinese rare earth monopoly will have collapsed, with the assistance of the Chinese themselves, and the free world can enjoy its hybrid vehicles, its smart phones, its Tomahawk missiles, and its night vision goggles free of the anxiety that China will make the rare earth world go dark.”

(Banner photo by Göran Kartläsarn/Flickr)

Allen Best is a long-time journalist based in Colorado. He can be found at http://mountaintownnews.net.

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In his February 13^th 2012 State of the State address, Wyoming Governor Matthew Mead lost little time talking about his state’s mineral prowess.

“We remain number one in trona production; we have 70 percent of the world’s supply of bentonite; we are number one in coal production; we are number one in uranium reserves; and year in and year out we rank first or second in natural gas production,” he said.

It wasn’t until the middle of the speech that Mead addressed a darker concern, one dear to the constituency of every legislator in the room: the price of natural gas. It’s at a 10-year low and Mead confessed he had to adjust his budget accordingly.

“Based upon the revised estimates, I reduced my original budget proposal by about $64 million dollars to take the latest forecast into account,” Mead said.

The governor gave no mention what-so-ever to a source of funding that was supposed to insulate Wyoming’s budget from the whipsaw of commodities: The Wyoming Permanent Mineral Trust Fund (WPMTF)

Created thirty-eight years ago this month, the WPMTF mandated that a minimum of 1.5 percent of Wyoming severance taxes on gas, oil, coal, and other minerals be placed in a constitutionally protected trust.

This chart shows how state revenue directed to Wyoming's Permanent Mineral Trust Fund has grown since it's inception in 1974. (Click to enlarge)

Speaking before his collogues in the State Senate on February 7, 1974, Malcolm Wallop, not yet elected to the hallowed halls of Washington D.C., urged passage of the measure that would create the WPMTF. “These are the resources of Wyoming that are our bank deposits now,” he said.

Since the law involved an amendment to the constitution, it required voter approval. They obliged in November 1974.

Interest from the WPMTF gave Wyoming what it never had: income to Wyoming’s General Fund, the state’s main operating account, independent of yo-yoing tax revenues, particularly important to a boom and bust energy state. (For example, from 2000-2010, natural gas prices bounced between $2 and $14.50 per thousand cubic feet [mcf]. Without the stabilizing force of a WPMTF, creating a biennium budget would be mostly guesswork)

Alaska, Texas, New Mexico, and Alabama have similar permanent funds, all of which derive income from minerals. The values of the funds range from $40 billion (Alaska) to $2.5 billion (Alabama).

Montana, North Dakota, and Utah have smaller permanent funds with holdings of under a $1 billion.

The WPMTF has a corpus of $5.4 billion and receives about 40 percent of all Wyoming’s severance tax collections.

The cumulative total of interest income to the general fund since 1975 is $3.1 billion, or roughly the same amount it took to run the entire state of Wyoming from 2011 to 2012.

It’s been a mixed blessing, however. The interest has kept Wyoming complacent in its quest for economic diversification. The percentage of revenue to the general  fund from WPMTF interest remains high – higher than any other state with a permanent fund – because there is no other revenue available to take its place.

Furthermore, the stream of interest struggles from its own volatility. On seven occasions there have been decreases in WPMTF interest from one year to the next, even though the corpus of the WPMTF continued to grow. Some of these drops were significant, like from 2002 to 2003 when interest to the general fund decreased from $90.5 million to $58.6 million.

This graph shows the growth of the corpus balance of Wyoming's Permanent Mineral Trust Fund. (Click to enlage)

The amount of interest usually bounces back the next year, but it adds a degree of instability that the WPMTF creators had hoped to avoid.

Hold the markets accountable, says Michael Walden-Newman, chief investment officer for Wyoming Treasurer’s Office.

In 1996 voters approved a constitutional amendment that allowed WPMTF investments to include equities, as long as the percentage of stocks did not exceed 55 percent of the portfolio.

“The changes in income, regardless in the growth of the corpus/investable funds, is the result of market conditions. The past decades have seen declining interest rates, which translate into less income in a fixed income/bond heavy portfolio like ours even if the amount of money to invest grows,” said Walden-Newman.

There have also been flush years when the legislature chose not to use all the interest. Ordinarily, up to 5 percent of all interest earned from the WPMTF goes directly into the state’s general fund. Beginning in 2000, however, the legislature created the WPMTF reserve account, a safety net for a safety net, which gave them the option of sticking away surplus interest income for tougher times.

Wyoming depends upon WPMTF to pay a significant proportion of basic operating funds. Other than Wyoming, only Alabama and New Mexico currently allow permanent funds’ interest to be delivered to the general fund.

Interest generated by Wyoming's Permanent Mineral Trust Fund between 1987 to 2011 has supplied an average of 18.6 percent of the general fund revenue. (Click to enlarge)

An analysis by WyoFile shows that from 1987 to 2011 interest from the WPMTF has supplied an average of 18.6 percent of the general fund revenue. WPMFT interest made up the lowest percentage of general fund revenue in 2003, with 9 percent. The highest percentage was in 1991, with 25 percent, followed by 2008, when WPMFT interest made up 24 percent of all general fund revenues.

Contrast this to Alabama’s Trust Fund, which, for the last six years, supplied between 4 percent and 11 percent per year of the revenue to the state’s general fund.

In New Mexico, 2011 interest from the severance tax permanent fund made up roughly 3.1 percent of the total revenues going into the general fund, according to Charles Wollmann of the New Mexico State Investment Council.

Moreover, unlike Wyoming, the New Mexico constitution does not stipulate the exact percentage of severance taxes going into their permanent fund.

As a result, severance taxes have been increasingly diverted to pay off state bonds. In 2006, $58.7 million in severance taxes went into NM Permanent Fund. In 2011, it had dropped to a mere $6.5 million.

Seventeen straight years of growth

For the first half of the WPMTF’s existence, income to the general fund grew every year, even in 1986 when oil prices hit $10 per barrel and severance tax collections slumped.

Then came 1992, when oil prices could not seem to climb above $2 per barrel.  In 1993, revenue from the WPMTF to the general fund dropped from $92.7 million to $88.3, a modest 4.7 percent.

It had been a good 17-year run. Then the volatility arrived.

No matter, according to those who had to cut thin slices of a financial pie. The income proved invaluable, says Mike Sullivan, who served as Wyoming’s governor from 1987 to 1995.

“Maybe the income wasn’t totally consistent but it was consistent enough. I don’t know what we would have done without it,” said Sullivan, who oversaw lean budgets and projected shortfalls.

Sullivan said during his tenure, WPMTF interest provided between 22 percent and 25 percent of general fund revenue. “Try contemplating a 25 percent cut in expenditures or raising taxes 25 percent,” he said.

The constitutional protection afforded the trust was vital, said Sullivan. “It was key that Governor Hathaway insisted that the legislature put the measure to the voters for approval. They had a say and got behind it. You can imagine the times I would have dipped into those funds if (the fund) hadn’t been constitutionally protected.”

Since its inception, the WPMTF has 5.6 percent trailing five-year return (returns that occur over the past 12 months) on investment, according to Walden-Newman.

Natural Gas: the essential wild card

Past the year 2000, the legislature’s need for WPMTF interest increasingly depended on the price of natural gas.  The general fund directly receives 62 percent of severance taxes not bound for the WPMTF. In theory, the higher the price of natural gas, the less the state needs interest money from the WPMFT.

In 1996, coal, oil, and natural gas delivered an equal amount of severance taxes to the state. A combination of strong prices and new discoveries in Sublette County’s Jonah Field and northeast Wyoming (coal-bed methane) changed that ratio.

From 2003 to 2006, severance tax collections jumped from $83.8 million to $406 million per year, mostly due to a boom in natural gas. That era included the 2005 hurricane, Katrina, which crippled gas production in the Gulf of Mexico, thus creating a shortage and a breathtaking increase in prices. Wyoming producers were ready to deliver.

By 2008, natural gas severance tax revenues to Wyoming were $720 million. The same year, oil contributed $153 million and coal $261 million.

Natural gas prices, however, are the manic-depressive of commodities. From 2000-2010, natural gas prices bounced between $2 and $14.50 per thousand cubic feet (mcf).

This added an even more bewildering element to the connection between energy prices and the amount of interest delivered from the WPMFT and the general fund.

For example, when natural gas prices spiked at $10 per mcf in December 2000 (it’s been averaging about $2.50 per mcf in February 2012), interest from the WPMTF corpus to the general fund from 2000 to 2001 dropped. From 2002 to 2003, the price of natural gas tripled from $2 per mcf to $6 per mcf, interest from the WPMTF corpus to the general fund fell by 50 percent.

In short, the ideals of a permanent fund (a well-funded trust produces stable investment income) got rattled by a world that suffers from increasing price unpredictability, both in equities and commodities.

Lack of Diversity: the Dark Side of the WPMTF Interest

A generation of Wyoming lawmakers has grown up counting on the bounty of the mineral trust fund. In 2005, legislators set a goal of boosting the corpus the WPMTF to $4 billion by 2010. They made it with time to spare, partially because they increased the percentage of the severance tax going into the WPMTF from 1.5 percent to 2.5 percent.

Wyoming severance tax distributions for 2009, a total of $878.7 million. (Wyoming Legislative Service Office — click to enlarge)

There’s a dark side of relying on WPMTF interest as a constant stream of revenue to the general fund: it reveals Wyoming’s nagging inability to diversify.

Bob Jensen, CEO of the Wyoming Business Council, says that diversity actually is occurring in Wyoming, it’s just that mineral financial contribution is so large is overwhelms everything else. “The growth rate of GDP for non-mineral industries in Wyoming over the past five years outpaces all of our neighboring states… We’re not satisfied with where we are but we are making progress,” he said.

But has the interest from the WPMTF kept Wyoming from diversifying, stifling ambition and creativity?

It’s a mixed bag, says, Bill Schilling, President of the Wyoming Business Alliance. Wyoming has made strides in diversifying its economy, he says, but not its tax structure. It’s also odd, says Schilling, that the interest from WPMTF gives additional funds to what most state legislatures are struggling to control: state and local government spending.

This is a tough dynamic to change. Big states with small populations are expensive to run, especially if viewed through the cost-per-capita lens. Government employees add stability to small economically marginal towns that find diversification difficult. Coincidentally, states with permanent funds are also the states with the highest percentage of public employees. A 2010 Center for Economic and Policy Research report lists Wyoming, Alaska, and New Mexico as having the top-three highest percentage of public employees.

What the WPMTF interest is doing, then, is maintaining the status quo. While no town wants to see its zip code erased from the map, the reality is that all communities have to innovate and change, a task rarely given to public workers.  As Mead said in his state of the state address, “Wyoming kids have to compete on a global scale.”

And on a global scale, few kids, especially small town kids, get the luxury of keeping things the same.

Wyoming Severance Taxes and Federal Mineral Royalties

Samuel Western is a freelance writer living in Sheridan.

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Living On The Edge | Safe Bet?

In southern Wyoming, in the path of winds barreling down toward Elk Mountain, weathering tombstones and eroding foundations mark the state’s first coal-mining town, Carbon City.

Related Story: Wyo officials weigh investment in DKRW's coal-to-liquids proposal

Like its surviving neighbors, Carbon City had a time of glory. It had a newspaper, a state-chartered bank and, at its peak, a population of more than 1,000 people focused on the task of delivering coal to the steam-powered locomotives that passed on the adjacent Union Pacific Railroad tracks.

Then, other coal deposits were discovered about 15 miles away, and a new town, Hanna, sprang up. A fire destroyed part of Carbon, then the Union Pacific bypassed Carbon altogether. By early in the 20^th century, Carbon was no more.

Today, the surviving communities of Medicine Bow and Hanna are trying to avoid the fate of Carbon. If Medicine Bow recently has been making a minor comeback, the larger story for both has been decades of shedding population and community assets. Many people foresee a time, still fuzzy in the future, when there will be too few people, the economy too thin, to keep going. To them, the proposal by DKRW Advanced Fuels to build a coal-to-gasoline plant offers salvation.

“There’s nothing here right now, there really isn’t,” says Bill Klemola, 74, a town councilman in Hanna who grew up there and returned to teach school for 35 years. “We’re having a hard time making ends meet.”

School enrollments tell part of the story. At the peak of the uranium- and coal-fueled boom of the late 1970s and early 1980s, Medicine Bow had a junior-senior high school with 100 students. School teams, known as the Wranglers, were the center of community identity. By tip-off time, the gymnasium was too packed for late-comers. Then, as the boom subsided, so did enrollment. The final senior classes graduated only six students. In the early 1990s, the school was closed, students re-assigned to the school in Hanna, 20 miles to the west. Just last year, the gymnasium, considered a threat to public safety, was razed.

Bleachers at Hanna High School, displaying their mascot, the Miners. In the early 80s, at the peak in coal strip-mining, the seventh-through-12th grade school had 200 students. Enrollment has now halved, even with the addition of students from Medicine Bow. (Allen Best/WyoFile — click to enlarge)

Hanna’s schools have struggled, too. In the early 80s, at the peak in coal strip-mining, the seventh-through-12^th grade school, where teams are called the Miners, had 200 students. Enrollment has now halved, even with the addition of students from Medicine Bow.

Bob Gates, superintendent of the Carbon County School District No. 2, says reduction in enrollment during his six years with the district, which includes the towns of Elk Mountain and Saratoga, has resulted in $1 million less annual state aid. So far, cuts have been made with no clear loss to education or programs, such as football games. This, he recognizes, cannot continue indefinitely.

“Is there some point when you can no longer provide meaningful secondary education?” he asks. Medicine Bow may have provided the answer when the graduating class dropped to six or seven, he adds. “We just hope it doesn’t happen here,” he says of Hanna.

Hope is a word used frequently these days in Hanna, and in Medicine Bow, too. Unspoken, but just as obvious, is another word: desperation. Sometimes, they’re in the same conversation.

“I think most people are really hopeful about this (coal-to-gasoline) plant, because it’s the only way out,” says Gary Jones, a local businessman.

Jones, with his wife, Jamie, meet me at a bead shop, a type of retail good usually found in only much larger communities. The further anomaly is that it  is Hanna’s only retail store. There’s no lodging, no conventional gas station, no hardware store. Even the grocery store closed last year. For food, residents must drive 40 miles to Rawlins or 70 miles to Laramie.

Their shop is located in a long, metal-sided building that in 2001, when the Jones arrived from Tyler, Texas, contained a series of businesses. By then, many of Hanna’s coal mines had closed, but the Jones were persuaded of opportunity. They haven’t been disappointed. They immediately bought a small, dilapidated four-unit apartment building for $18,000, repaired it somewhat, and began collecting rent at $350 a month. During the mini-booms, such as when wind farms have been constructed nearby, the rent goes up. They’ve done all-right. Now, they own five houses. “We saw what other people didn’t see,” says Gary Jones.

What the Jones say they found was a peaceful town, small but with a ready social fabric. It resembles an extended family, in that you’re not necessarily close to everybody, but you know them, says Gary.

That doesn’t make Jones the perfect pitchman for Hanna. At least when talking about Hanna and its troubles, he has a way of infusing drama into every sentence, every phrase. “I’m desperate for the plant,” he says of the DKRW coal-to-gasoline proposal. “The town is dying.”

A typical street in Hanna, Wyoming. In good times, the town has prospered – by 1980, the population had surged to 2,288. But as of the last census, Hanna’s population was down to 841. (Allen Best/WyoFile — click to enlarge)

Of course, Hanna has survived tough times before. Hanna essentially replaced Carbon as a source of coal for Union Pacific. Then in 1903, and again in 1908, disasters struck. Three explosions in the underground mines claimed 228 men, leaving 88 widows and 134 fatherless children. Victims were a stew pot of ethnicities, as was Hanna overall. Each had its cluster of homes in the town: Finns, Japanese, Italians Swedes, Greeks, English, and African-Americans, among others.

Among the victims was the great-grandfather of Klemola, the town councilman. Born in 1938, Klemola has fond memories. “I couldn’t have been raised in a better environment,” he says. There was a movie theater, a confectionary, and other services. And then, kids made their own entertainment. In 1955, the year he graduated, Hanna won the state’s championship among six-man football teams. Among his classmates was a black student, who went on to become a doctor in Detroit.

Then around 1954, Hanna suffered another gut-wrenching punch. Union Pacific converted its fleet to diesel-powered locomotives. The population dwindled to 400 before a new demand for coal in power plants in Idaho and elsewhere spawned new mines, this time above ground, in the 1970s. By 1980, the population had surged to 2,288. But the coal here is more expensive to extract than that of the Powder River Basin. One by one, the mines have closed; the final one, operated by Arch of Wyoming, in December. Locals said they thought 20 to 22 people lost their jobs. An Arch Coal company spokeswoman in St. Louis said six positions had been eliminated. As of the last census, Hanna’s population was down to 841.

Up and down, up and down — so it has been in this hardscrabble town amid the desolate, high-desert beauty of southern Wyoming’s rumpled, sagebrush-covered hills.

Aspects of Hanna’s zigzagged history are manifested in the physical layout of the town. The original town was owned by Union Pacific, and the miners who lived there were required to buy their groceries in the company-issued script. To escape Union Pacific’s yoke, an alternative settlement, called Elmo, was set up to the east. Between the old nodes are the suburban-style three-bedroom houses built during the strip-mining boom of the 1970s. All of this is on a south-facing hillside above the original Lincoln Highway. The newer Lincoln Highway – today’s U.S. highways 30 and 287 – is about a mile away. Another 11 miles south is Interstate 80. There’s a reason Hanna is peaceful.

An abandoned house. Most houses remain in use, but many are boarded up. At last count, 19 homes in Hanna were in the process of foreclosure. (Allen Best/WyoFile — click to enlarge)

Hanna today has a sense of looking over its shoulder at better times – and perhaps times that weren’t all that good, either. In the old part of town, Main Street consists of several blocks and no discernible businesses normally found on a street of that title. Instead, it has two churches, one Episcopalian and the other Lutheran, both now closed. If most houses remain used, many are boarded up and lifeless, slowly giving way to the steady winds and desiccating sun.

Farther up the hill, to the east, sit several deteriorated structures still wearing siding of brown asphalt roofing material. These houses were created by laying down two railroad box cars on a foundation and then putting a roof over the top. They were, says Jones, the housing for the black miners and their families. Obviously unused for decades, they are slowly being dismantled by the elements and, if local lore is to be believed, home to occasional mountain lions.

Deterioration is not restricted to aging housing. While some suburban-style houses are kept up, others look frayed, needing attention. At last count, 19 homes in Hanna were in the process of foreclosure.

Brighter spots also exist. In 1980, a coal company built a large recreation center, with racquetball courts, an Olympic-sized swimming pool, and basketball courts. It’s underused today, and maintenance is an albatross on the town government. Town offices are nice, a hand-me-down from a departed coal company.

For real-estate buyers, which have included a few retirees, Hanna has some steals. “I had one go to auction a year ago. It was a modest three-bedroom, two-bath with 1,042 square feet. It was sold for $12,000. It probably needed $5,000 of repair work. But there have been some real bargains, that’s for sure,” says Will Speer, a co-owner of Century 21 Cornerstone Realty.

The market is sluggish, to say the least. Average selling price is $70,000 to $80,000 for homes that in Rawlins, 40 miles west, would fetch $150,000, says Speer. In Rawlins, homes stay on the market an average 186 days compared to 509 days in Hanna.

Such statistics breed despair. Among those who hope that DKRW turns the market around is David Dollase. Stooped and bent by what he reports was a hip-replacement that went awry, he feeds deer and foxes drawn by his handouts of bread, and in evening turns out at a local bar, the Nugget, operated by Hanna’s mayor, for a hamburger. “The regular,” he orders.

Dollase pines for the mountains of northern California, source of his life’s fondest memories. For that to happen, he needs to sell his house. To sell his house, he needs the new coal plant to happen. “I don’t want to die in Wyoming. Not that I’m all that particular. But it’s a dreadful thought, to die here,” he says.

But even those who have no plans to leave, growth would be good. “My hopes are 100 percent,” says Levi Nitschke, 32, while pausing on a street in Hanna during a rare January day of sunshine and no wind.

Originally from Minnesota, Nitschke has a beefy constitution, a shaved head, and a friendly manner. It isn’t always so. Like many in Hanna, he works at the state penitentiary in Rawlins. It’s the perfect commute. “I have 45 minutes in the morning to prepare myself to be dictator on death row, and then 45 minutes at night to decompress and be a parent to my children.”

He likes small-town living in Wyoming. “You couldn’t do this in a city,” he says, pausing in his car on a residential street to chat with Jones. But he also sees problems in Hanna. “It’s a poverty mindset,” he says.

Gates, the school district superintendent, also has noticed problems. Hanna’s high school was among those in Wyoming singled out under the Obama administration’s persistently underachieving schools, as measured by math and reading scores, plus other criteria.

It was, says Gates, “a big slap in the face.” He saw it as an opportunity to get federal money, but also to deliver a message to students and staff.

“I went to the school and said, ‘This is what they’re saying about you. Should you believe it is true? If you don’t want this, then we have to change.’”

The path for Hanna’s schools remains littered with ifs and maybes, says Gates, but he is encouraged by the initial response. Local high school students said they see the need to do well for others. “When high school kids talk like that, it’s definitely a step in the right direction,” he says. “We’re not there yet, but those kids took ownership” by recognizing they could help turn their school around.

A coal tipple and coal cars snaking through the hills. Hanna served as a source of coal for Union Pacific until it converted its fleet to diesel-powered locomotives. (Allen Best/WyoFile — click to enlarge)

If the coal-to-gasoline plant does get built, enrollment losses in the Hanna and Medicine Bow schools of recent years will be erased – but not the large losses since the last boom. DKRW has projected 2,215 jobs during the construction phase, then a few more than 400 jobs in operations. That translates to 25 to 50 new students spread among the elementary schools in Medicine Bow, Elk Mountain and Hanna, as well as the secondary school in Hanna. People, he observes, can also commute to other, more distant communities.

Hanna’s town government is OK for now. Sales tax collections dived 30 percent during the recession, says Pam Paulson, the town treasurer. “If this plant does not come in, we probably have enough in our savings to last a few years. And then what do we do? Who knows. But so far we’re hanging in there.”

Tony Poulos, the mayor, reports a hopeful but wait-and-see attitude for a proposal that has been hanging around for several years. “We want to see that it’s real before we invest time and money and whatever else,” he says.

Tall, thick and friendly, Poulos was wearing faded blue jeans and a gray, University of Wyoming football sweatshirt. He was a walk-on defensive lineman on the team in the mid-1970s, but decided that he couldn’t play football and get a degree, too. In the end, he did neither, instead returning to Hanna to run the family business, the Nugget. His family’s history in the town runs back a century. For hunters, fishermen and rock-hounds, Hanna is a wonderful place, he says. “I think the positives outweigh the negatives here.”

Hanna has a population of a little over 800, but Poulos claims the town has the water and other infrastructure to accommodate 4,000 people. “It will take some modification and updating, and some effort, but we are ahead of the game on those sorts of things,” he says. “We have room in the schools. Those were also built at the time of the boom.”

What Hanna hasn’t had much of since he became mayor, he reports, is contact with DKRW representatives. They stopped by once, he says, in November. “Most people would like to see something happen.”

Some people would like Poulos and Hanna to become more of a cheerleader for the coal-to-gasoline plant. Based strictly on track-records, Poulos is right to be skeptical. The plant was first scheduled to break ground in 2009. It didn’t happen. The federal government – and state, too – have seeded the Two Elk coal plant 40 miles southeast of Gillette. Two Elk’s chief executive may be living well in his homes in Denver and Southern California, but there’s no evidence of forward movement in Wyoming. Last year, General Electric abandoned its improved coal-gasification demonstration project near Cheyenne. And finally this big rain-on-the-parade fact: Nobody else in the United States is making gasoline from coal, despite the fact that the technology has existed since World War II. This is despite the ever-continuing pronouncements by corporations and politicians alike since the early 1970s of the need for “energy independence.” At the time, Poulos, 55, was still in high school.

Twenty miles east, Medicine Bow, population 270, has shovel-ready plans for improvements to water, sewer emergency services and other infrastructure needs. But it, too, awaits clear direction – and money.

Charlie George, Medicine Bow’s public works director. “We want to build. We want to grow. But we don’t want to throw a bunch of money out for something that may not happen.” (Allen Best/WyoFile — click to enlarge)

“We have been gearing up for it for five years. It’s always been in our thought process, but we can’t pull the trigger on some of our projects without them giving us a start date,” says Charlie George, the town’s public works director. “We want to build. We want to grow. But we don’t want to throw a bunch of money out for something that may not happen.”

Unlike Hanna, George reports conversations with not only DKRW representatives but also subcontractors and out-of-state people, and a sense that this is finally the year. Medicine Bow is located 11 miles from the proposed plant site. Medicine Bow – despite some dissent within the community – has clearly articulated wishes to have the plant. Being closest to the proposed plant, they expect to see the most significant impact.

The town boomed with uranium mining to its north, and has briefly boomed with the construction of wind farms. Antelope-hunting season is always busy, and summers can be lively. But winters are very, very quiet save for the almost constant, bitterly cold winds that rake the prairie. With the coal-to-gasoline plant, Medicine Bow leaders see a way to create a new steadiness in the economy for the next 30, 40 or 50 years.

“A lot of them would like to skip the construction part, but that’s not the way it works,” says Troy Maddox, a retired state trooper who now butchers game and herd animals at Maddox Meat Processing.

“We have a portion of the town that wants nothing, because they will lose their $100 a month rents, so they couldn’t just smoke their dope and drink their beer and do nothing,” Maddox continues. Older people who own their homes will survive a boom just fine, he thinks. Elderly who are renting will get pinched, though. But of the need, he has no doubts. Wyoming, he says, has been protectively hoarding its rainy-day fund. It is, he says, raining now.

At Medicine Bow’s landmark Virginian Hotel, co-owner Vernon Scott firmly supports the coal plant. “We haven’t had anything down here for 30 years,” he says. A native of the area, with roots to 1888, he’d like to see the town grow – just enough. His own children, all college-educated, have skittered to other communities. The perfect small town? It would be 2,000 to 3,000 people, he says, which is big enough for schools and other core assets, but not so big you couldn’t know most people.

Allen Best is a long-time journalist based in Colorado. He can be found at http://mountaintownnews.net.

Check out Wyoming Public Radio’s feature on DKRW’s Wyoming project and coal-to-liquids.

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Living On The Edge | Safe Bet?

A Houston Texas-based company that wants to build the nation’s first coal-to-gasoline plant in Wyoming has trimmed its request for state taxpayer-backed Industrial Development bonds from $300 million to no more than $100 million — an action that allows the company’s bid for the bonds to bypass legislative approval and rely only on approval of Carbon County, the State Treasurer and Gov. Matt Mead.

DKRW Advanced Fuels LLC announced its original $300 Industrial Development bond request last fall, and had a short window of time to pull together an independent technical and financial review to bring to the legislature for its short winter session, which began on Monday. Without that detailed analysis, Wyoming lawmakers were unlikely to approve the company’s original $300 million Industrial Development bond request, according to legislative leaders.

Related story: Two Wyoming towns wither while company asks for $100M to bring about salvation with coal-to-gasoline plant

“That’s where the rubber meets the road. None of us have ever seen the whole package put together,” says Rep. Jeb Steward, R-Encampment. Steward is a member of the Joint Appropriations Committee, responsible for guiding the curbing of state budgets to meet expected lowered revenues on weak natural gas prices.

DKRW also has a parallel request for another $245 million under a separate bonding mechanism (tax-exempt industrial revenue bonds) which requires approval from Carbon County and Gov. Mead. Unlike the Industrial Development bonds, the tax-exempt bond issuance requires no financial backing or liability from any of the local governments.

If both requests are approved, a total of $345 million in bonds would be issued toward DKRW’s $2 billion project located about 12 miles southwest of Medicine Bow in Carbon County. Wyoming’s State Treasurer would use funds from the state’s Permanent Mineral Trust to purchase the $100 million in Industrial Development bonds.

Industrial Development bonds are debt securities issued by a government to help private companies build projects in the hopes that they provide jobs and bolster the local economy. Tax-exempt industrial revenue bonds essentially work the same way, and their tax-exempt status provides an extra incentive for purchasers in the bond markets.

“We believe, and the State Treasurer will have to approve this, that there’s a very good rate of return,” DKRW chairman Robert Kelly told members of the Joint Minerals, Business and Economic Development interim committee on Saturday.

Carbon County commissioners have  already approved both bond requests. Now, the task of determining whether DKRW is a safe bet for taxpayer—backed bonds lies with the Wyoming Business Council and the State Treasurer’s office.

Kelly claims that Medicine Bow Fuel & Power LLC, a wholly-owned subsidiary of DKRW, will generate between $450 million and $500 million annually from sales of gasoline, carbon dioxide (for enhanced oil recovery) other refined products.

But there are skeptics who say coal-to-liquids is a risky bet due to the volatility of oil and gasoline markets. Additionally, some environmental groups see coal-to-liquids as a kind of sandtrap of continued impacts of mining, and American reliance on emissions-heavy transportation fuels, with no real progress towards energy independence using clean fuels.

Richard Garrett, the Wyoming Outdoor Council’s legislative and energy advocate, said his group does support coal-to-liquids as a concept, so long as CO2 from the operations is either used for enhanced oil recovery or permanent geological sequestration. Medicine Bow Fuel & Power’s emissions permit with the state, for example, does not prevent the plant from venting all CO2 emissions.

“What is going to happen to the CO2 if its marketability declines?” said Garrett.

Garrett also noted that there’s been frequent and serious spills and accidents at Wyoming’s large-scale industrial facilities, particularly the Sinclair refinery in Carbon County.

“We believe there are lessons that can be learned from other industrial scale plants around the state that can be applied to this plant as well, so we don’t repeat the same mistakes,” said Garrett.

As for DKRW’s request for $245 million in tax-exempt industrial revenue bonds, it must meet qualifying guidelines regarding “waste disposal.” The re-use of various catalysts used in the process help qualify specific equipment under the tax-exempt bond program. Other potential qualifications include the sale of slag that can be used in road-building. So far, DKRW has no contracts in place with potential buyers for the slag.

Wyoming long-tempted by coal refining projects

The first stage of Medicine Bow Fuel & Power’s coal-to-liquids plant, at a cost of $2 billion, would convert coal from Arch Coal’s adjacent Saddleback Hills and Elk Mountain mine properties into a daily output of 10,600 gallons of gasoline. Last year, DKRW signed a 25 year contract with international commodities trader Vitol Inc. to purchase 100 percent of the gasoline production, which will be transported by pipeline and sold into the Colorado Front Range market.

The coal liquefaction process proposed for the Medicine Bow plant. (Courtesy of NETL/DOE — click to enlarge)

In addition, the plant would produce about 100 million cubic feet (Mmcf) of CO2 per day to be sold for enhanced oil recovery — a burgeoning market in the Rockies given the high price of oil. Dunbury Resources Inc. is contracted to buy 100 percent of the plant’s CO2 sales.

If all goes according to DKWR’s plan, construction of the plant could begin late this summer. That would kick off a 4-year construction phase requiring some 2,200 workers at peak construction and support 415 direct full-time jobs. DKRW estimates the plant — essentially a coal refinery — would inject some $1.4 billion into Wyoming’s economy directly over the 30-year life of the plant, and trigger even more multiplier economic benefits throughout the state’s economy.

Kelly said DKRW hopes to incrementally increase the capacity of the plant after the initial phase is in operation, and it may come back to the state requesting additional bond issuances to support those efforts. Right now, it’s unclear how much it would cost to add a second or third train to the plant.

Critics, including some Wyoming legislators, have already questioned some of DKRW’s figures. For example, the company’s projection of $1.4 billion in revenue to the state includes an estimated $307 million in oil severance tax based on expectations that Denbury Resources Inc. — which has contracted to buy 100 percent of CO2 sales from the plant — will use all of the CO2 for enhanced oil recovery in Wyoming. In fact, one of Denbury’s first targets for CO2-based enhanced oil recovery is its Bell Creek field just across the border in Montana.

Wyoming has consistently been the top producing coal state, with 2010 production of 442.5 million short tons — 41% of total U.S. production and approximately the same as the next seven largest coal producing states combined. (Courtesy of EIA — click to enlarge)

As the nation’s No. 1 coal-producing region, Wyoming has long supported such “value-added” fossil fuel conversion proposals, hoping to both harness more revenue from its vast mineral wealth and secure more market security in the face of impending regulatory carbon constraints that already diminish Wyoming coal’s traditional market among U.S. power plants. Despite the fact that converting coal to gasoline isn’t likely to create a vast new demand for Wyoming coal, DKRW has appealed to the state’s longing to feel a part of an “advanced coal technologies” future.

While speaking to Carbon County commissioners in December, Kelly said, “The benefits to the state, we think, are enormous. Not only to the state but the country. But this is energy independence. The state of Wyoming has an immense coal resource. This is a new market for coal. And if things keep going the way they are — I mean coal is now starting to exit the country. Why not keep it in the state, why not add the value here in Wyoming, build a new industry that’s clean, profitable and can be done and repeated elsewhere?”

Due diligence

Whether state leaders will approve DKRW’s bond requests depends on the results of a  technical and financial review of the project by Idaho National Laboratory, which has modeled similar coal conversion processes.

“The state will look at (INL’s) recommendations, compare it to what DKRW says, and make our own recommendation, then forward that to our board, and either forward a recommendation to the governor or stop the process at that point,” said Mike Martin, manager of business finance at the Wyoming Business Council.

DKRW will pay about $130,000 for the review, according to the company. DKRW officials said they were awaiting a decision by the Wyoming Attorney General regarding confidentiality of the financial forecast inputs they must submit, before the company will give INL the green light to begin the review. WyoFile, the Associated Press and other media outlets have requested access to all financial information related to the DKRW/INL review legally available under the Freedom of Information Act.

A favorable INL review might have helped the company win over legislators, but company officials said that even if they had gotten the INL review started already, it would not have been completed in time for the legislature to consider during its short budget session.

Timing wasn’t the only consideration for DKRW’s decision to request issuance of a lower amount of bonds. As Wyoming lawmakers begin their winter session this  week, they face trimming the state budget due to falling natural gas prices. Many say they were uncomfortable with the size of DKRW’s original $300 million Industrial Development bond request.

Rep. Jeb Steward represents constituents in the Carbon County region, and he said there’s been overwhelming support for the project ever since it was first proposed some six years ago. But DKRW’s request last fall for $300 million in Wyoming-backed Industrial Development bonds has shaken some of that confidence, according to Steward.

“There is some frustration here (in Carbon County). I’ve actually been somewhat surprised,” Steward told WyoFile. “As soon as DKRW appeared on the radar seeking public dollars, it’s amazing how much more negativity I heard from constituents and people from some of these towns.”

DKRW joins the ranks of Char Fuels of Wyoming Inc. and a handful of others who have found an eager audience among Wyoming politicians willing to invest taxpayer resources in so-called advanced technologies that add value to the state’s raw mineral resources. Wyoming — the nation’s largest coal producer — has put millions of dollars toward “advanced conversion” efforts at both the research and development stages in recent years. Yet, the complexity of building the nation’s first coal-to-gasoline plant, at an estimated total cost of $2 billion, has been some six years in the making. The long process has added to the anxiety among some lawmakers and citizens alike about making such a large investment of taxpayer dollars into a private endeavor.

“I have a problem with dealing with somebody who has the best of intentions but no real assets on the ground,” Rep. James Byrd, D-Laramie, told DKRW chairman Robert Kelly on Saturday, at the interim committee’s last meeting before the session begins.

Before Byrd’s comment, Kelly had told the committee, “Look, the state needs to do what it feels comfortable with.”

This powerline powers a water well drilled at the future site of the Medicine Bow coal-to-gasoline plant. (Courtesy State of Wyoming — click to enlarge)

Wyoming does have a track record of betting on so-called “advanced coal” proposals, and other large private business endeavors. Just a year ago Wyoming lawmakers agreed to raise the Industrial Revenue bond cap from $100 million to $600 million — stipulating that any amount over $100 million would require legislative approval. At the time, lawmakers expected a company to request the full $600 million amount for a project pending in Sweetwater County, but that request was never submitted. Many energy-based projects are in the works, too, such as a plan by Casper-based Nerd Energy to convert natural gas to liquid fuels.

The state’s Industrial Development bond program has been in existence for many years, but only used a few times. The Powell-based aviation company Hawkins & Powers received $4.6 million through the program in 2004, then defaulted on its loan after one of its firefighting planes crashed and the company’s fleet was grounded for safety concerns. The loan was eventually paid back with proceeds from the sale of the company, but $150,000 in interest was left unpaid.

Kelly said DKRW plans to win the state’s confidence the same way it believes it will win confidence among private investors; by proving its operational and profitability case with the INL review, pointing to its existing long-term contract to sell the gasoline, and securing long-term contracts for its coal feedstock and its C02 product.

DKRW is working with CitiBank to secure $800 million to $1.1 billion toward the project, according to Kelly. Even if the state were not to approve one or both of the bond requests, the company would still move forward with the project. Kelly said the state-approved bond packages will win more confidence from private investors. He believes investors – state or private – should be confident.

“Based on the oil price forecast, the off-take sales (gasoline, carbon dioxide and other products) add up to $450 million to $500 million per year,” said Kelly.

DKRW officials, at one point, also hoped to make use of federal loan guarantees to attract lenders, but decided not to take that route. The Energy Policy Act of 2005 authorized loan guarantees for renewable energy and advanced conversion (chiefly coal gasification) fossil fuel-based projects. DKRW’s Medicine Bow project was selected — among only a handful of fossil fuel projects — for up to $1.75 billion in federal loan guarantees, which could come in the form of federal money, or federally-insured private investment.

Although the federal program remains an option to help fund the Medicine Bow plant, Kelly said the U.S. Department of Energy under the Obama administration has shifted the program’s focus to renewables and away from fossil fuels.

“We decided a year ago we were not going to risk the project by depending on that,” Kelly told Wyoming lawmakers. “The project is designed to be financeable in the private sector.”

The collapse of solar-energy company Solyndra — a recipient of a DOE loan guarantee whose basis has since been questioned — only bolstered DKRW’s decision to rely on its private investment and public bond strategy, Kelly added.

Risk and reward

In recent years, Wyoming has launched the School of Energy Resources at the University of Wyoming, invested millions of dollars and attracted millions in matching grants to embark on advanced energy technologies in renewables, fossil fuels and nuclear. Eager to support private efforts such as DKRW’s Medicine Bow project and Nerd Energy’s interest in natural gas-to-liquids, the Joint Minerals, Business and Economic Development interim committee quickly offered up a draft bill that would put $10 million toward early-stage engineering and design requirements.

“My question is should we be doing $20 million or $30 million? Do we have enough money set aside to make sure we’re doing clean coal?” Rep. David Zwonitzer, R-Laramie, said during a committee hearing on Saturday.

That level of support exists among state leaders even after the state’s flagship coal project ran aground this past year. The University of Wyoming and GE Energy entered into a 50-50 partnership to build the $100 million High Plains Gasification-Advanced Technology research center in Cheyenne, which would have focused on lowering the cost of using Powder River Basin coal in gasification. GE shelved the project due to the lack of a national energy policy to give electric utilities clear emissions targets.

Despite major uncertainties in world energy markets and no clear policy on climate change, some leaders in Wyoming seem bullish on taking some risk in leading the nation on both energy technology and energy policy.

Speaking about the High Plains Gasification project, University of Wyoming president Tom Buchanan recently told Wyoming Public Broadcasting, “Without a clear national energy policy, it’s tough to find investors. They are uncertain whether this project will fit into a national energy policy, IF one is forthcoming. On the other hand, what better a time to take a risk, push ahead, and set the stage for what that policy ought to look like through your own actions as one of the largest corporations in the country.”

Medicine Bow Fuel & Power LLC’s project presentation to the Wyoming Infrastructure Authority

Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

Check out Wyoming Public Radio’s feature on DKRW’s Wyoming project and coal-to-liquids.

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CODY — With the nation’s unemployment rate stuck at 9.1 percent amid continuing signs of a faltering economy, President Barack Obama last week proposed a new round of up to $447 billion in tax cuts and federal pubic works spending aimed at putting millions of Americans back to work, as well as boosting his own future job prospects.

It is too soon to know what the proposal might mean to Wyoming. But everyone from contractors to program administrators say there are lessons to be learned — good and bad — from how federal stimulus dollars have been spent in the state since the February 2009 passage of the American Recovery and Reinvestment Act.

President Barack Obama speaks Thursday before a joint session of Congress to discuss his jobs bill, a $447 billion package of tax cuts and public works projects. (Photo courtesy of The White House - click to enlarge)

As of June 30, the most recent reporting period, the Recovery Act has pumped a total of $710 billion into state and local economies. More than $664 million in stimulus funds have been awarded to Wyoming, producing a total 1,017 jobs from April 1 – June 30, according to the most recent records from the federal government. Most of that money must be spent by Sept. 30, the deadline for many recipients nationwide to complete their projects or commit program funding.

Proponents of the stimulus plan in Wyoming say the money has employed local workers and allowed cash-strapped government agencies, nonprofits and businesses to address serious needs that otherwise would not get funding, all while staving off an even worse economic downturn.

“The sense that ARRA didn’t work is just really not founded once a person takes a little time to look into what it did,” said Dan Neal, executive director of the Equality State Policy Center, a Casper-based government accountability group that advocates for working families.

Neal said that stimulus spending “kept the wolves at bay” when the state was losing thousands of jobs, and that the program as it was carried out in Wyoming has been a model of how it was meant to operate.

Critics contend that too much of the money has gone to contractors in other states or been wasted on unnecessary projects, that reporting requirements are onerous, and the net result hasn’t produced enough jobs or other measurable economic benefits to justify the cost.

Sven Larson, research fellow for a libertarian Cheyenne think tank, Wyoming Liberty Group, said that stimulus spending has been “an incredibly inefficient way of producing jobs,” with government figures for late 2010 showing more than $400,000 spent for each job created.

“There is a great deal of misunderstanding or under-reporting of what the stimulus package actually meant when it comes to wasting money,” he said.

Stimulus funds in Wyoming have paid for a wide array of projects, programs and capital improvements. Examples include obvious and expected expenses like hiring additional police, making low-income housing loans and completing miles of highway and road improvements. Funds have also been used in Wyoming for such mundane needs as buying textbooks and office furniture, as well as more esoteric projects like traveling to Antarctica for atmospheric research and field work in Argentina to collect volcanic ash samples.

Road and highway projects throughout Wyoming benefited from federal stimulus funding, including resurfacing projects in Yellowstone National Park. (NPS photo by Nancy Ward - click to enlarge)

In some cases, funds that would have been spent on existing federal programs under normal circumstances were instead funneled through stimulus channels.

That was the case for nearly $1.4 million in stimulus funds awarded to Western Nuclear, Inc. of Golden, Colo., for groundwater monitoring and environmental consulting performed at the site of a former uranium mine in Jeffrey City.

Spending records at recovery.gov, the federal web site used to track stimulus spending, show the U.S. Department of Energy awarded $1,393,252 in stimulus funding in 2010 to Western Nuclear.

“We’ve been awarded money like that every year since 1994. It just fell under stimulus money this time,” said Ann Thomas, an outside contractor handling accounting work for Western Nuclear.

Every year for the past 17 years, the government has reimbursed Western Nuclear for reclamation work and water testing as part of a standard federal program that will eventually see the former uranium mine site turned over to DOE, Thomas said.

“No jobs were created and all our work for that period is done,” she said. “It hasn’t made any difference in anything we have done.”

Thomas said the company was not paid earlier than usual, and she did not know why the annual reimbursement for 2010 was routed through the Recovery Act.

Saving energy, saving money

Stimulus funding has been key to the success of two energy efficiency improvement projects in Cody, program managers say.

The Buffalo Bill Historical Center, a nonprofit museum and top tourist attraction in Cody, received $592,000 to upgrade and replace heating and cooling equipment, add additional insulation and install LED lighting in exhibit spaces.

“The timeliness of this grant was really fortuitous for us,” said Phil Anthony, operating engineer for the BBHC.

Steam boilers that were nearly 50 years old had rusted through, and the museum had been struggling for the past decade to develop a master plan for upgrading and improving the facility’s failing heating and cooling systems.

Working through the Wyoming State Energy Office, the museum pledged a 15 percent match and received stimulus funds allowing it to upgrade all of its heating and cooling systems at once.

“We were in desperate straits before we got the opportunity to get this money,” Anthony said. “This grant solved all that.”

Anthony said he expects the thousands of dollars in monthly energy savings already being realized to cover the museum’s matching pledge within two years, and to recoup the total system costs within 10 years.

Compliance and reporting requirements, while detailed, were not unreasonable, he said.

“One downside I saw to the concept of the ARRA program was that our contractors didn’t add jobs,” Anthony said.

Rather than hiring additional employees, contractors had existing crews work overtime, which caused minor inconveniences and delays in the project, Anthony said.

Bert Pond, left, head of Cody's Electric Division, displays a new LED streetlight. Cody city worker Devin Bult, who has been installing the new lights, shows the older model being replaced through a federal stimulus grant. (Ruffin Prevost/WyoFile - click to enlarge)

“The president has no control over how individual contractors manage their business,” he said. “I felt that our mechanical crews should have brought in new employees. This didn’t happen.”

The city of Cody is enjoying impressive savings from LED streetlights funded through the Recovery Act.

The light-emitting diodes use no filaments, burn cooler, last longer and use half the electricity of conventional streetlights, but are four times the price.

Lower maintenance and energy costs mean the city should save more than $110,000 per year, said Bert Pond, head of Cody’s Electric Division.

The last 40 lights out of a total of more than 1,000 will be installed this month, he said, bringing the project to completion.

The city applied for the competitive grant of $440,000, which included a 10 percent local in-kind match, because it wanted a to fund a project that would provide long-term savings that would lower future budget obligations.

Pond said the annual savings will allow Cody to hold the line for a longer period on eventual electric rate hikes for residents who buy power from the city-owned utility.

The city has received only a couple of complaints from residents who say they don’t like the new lights, while compliance, reporting and reimbursement went smoothly, Pond said.

That was not the case for a Jackson well driller who said he waited nearly 100 days, far longer than usual, to get paid for a job on public land near Pinedale.

“It seemed like we got the runaround so much. We dealt with people in Casper, Denver, Washington (D.C.) and Portland. It was just unreal,” said Jack Weber, owner of Weber Well Drilling.

Weber said he was contacted by specialists from the U.S. Bureau of Land Management who asked him to bid on a project to drill water wells at the Scab Creek Trailhead, about 24 miles southeast of Pinedale.

Funded through the Recovery Act, the $109,000 project was completed in September 2010, and involved installing a drinking water well near a campground and another well with a solar pump near a parking area used by backcountry horse riders.

Though he has worked well with the BLM on past projects during his 43 years drilling wells, Weber said the stimulus reporting and payment requirements were needlessly complex and time-consuming.

“We called everybody we could. After 30 days, we expect to get some money. We never did till the end of the year, so we were hurting pretty good,” Weber said. “We had to rob from Peter to pay Paul.”

Weber said he was unaware when bidding on the job that it was funded through the Recovery Act, and that he thought the horse watering well was unnecessary.

“They didn’t really need the damn thing to start with, because most of the people who go up there go with horses, and they ride on up the trail where there’s plenty of water,” he said.

Weber said he has had steady work since 2010, and that he would carefully consider working on future projects based on the Recover Act model.

University projects

The University of Wyoming received about $51 million in stimulus funds, with just over half of that going toward major maintenance, modernization and renovations, said Don Richards, UW director of governmental and community affairs.

Richards said the $27 million in maintenance funding was important for UW and the state’s community colleges because the legislature did not appropriate maintenance funding as part of its most recent higher education budget.

The Engineering Building at the University of Wyoming. The university received about $51 million in stimulus funds, which were spent on building maintenance and academic research. (Photo by

But there were numerous federal restrictions on how those maintenance funds could be spent, making it difficult to put together qualifying projects, and causing the university to select ones that it otherwise would not have chosen, Richards said.

Funds could not be used for administrative or office buildings, he said, and compliance and reporting was time-consuming and difficult.

UW also received $5.2 million for library expansions and enhancements and an estimated $2.5 in additional Pell grants for students, Richards said

Federal funding helped UW meet its goal of maintaining a top-tier library system, he said, while Pell grant funding allowed the university to delay a tuition rate increase.

Another $16.4 million was allocated to various UW research projects, including: $458,171 to study the hydrology of the Greenland Ice Sheet; $273,064 to analyze carbohydrate structures in insect cells; $586,581 for the continuation of ozone and stratospheric cloud measurements in Antarctica begun in 1986; and $326,140 to study underground geologic processes in Argentina.

According to reports filed at recovery.org for the most recent reporting period, about 13 jobs were created during that time by the $16.4 million in basic research funding, provided primarily by the National Institutes of Health, the National Science Foundation and the Department of Energy.

Richards defended the role of basic research and said that more than $11 million, or roughly two-thirds of the funding for those programs, went to study carbon capture and sequestration, a process that could play a major role in the future of Wyoming’s energy economy.

Quarterly reports offer only a snapshot of the overall employment picture, he said, and the University benefits any time it can show “its ability to compete nationally for prestigious awards.”

Larson, the libertarian research fellow, said it didn’t make sense to address unemployment by using stimulus funds for costly research.

“How many jobs does it create in Wyoming if we send some government bureaucrats or researchers to Antarctica to study ozone?” Larson said.

He said that private markets could produce more jobs at less public cost if the federal government would cut corporate taxes and reduce regulations.

“You have to give the private sector everything it needs in terms of confidence in the future,” he said.

Public parks

But the private sector typically doesn’t fund improvements in public parks, including road maintenance, new buildings and other infrastructure in Yellowstone and Grand Teton national parks.

Yellowstone received $14.7 million in stimulus funding, while Grand Teton got $18.8 million. Both parks have extensive backlogs in deferred maintenance not covered by their annual budgets. Stimulus projects include road resurfacing, new maintenance buildings in Colter Bay and Moose, a new wastewater treatment plant at Madison Junction and a hydroelectric power plant at Mammoth Hot Springs.

Suzanne Lewis, then superintendent of Yellowstone National Park, listens to remarks from Vice President Joe Biden, who visited Yellowstone in July 2010 to discuss federal stimulus spending on projects at national parks across the country. (Ruffin Prevost/WyoFile - click to enlarge)

The new $9 million wastewater treatment plant will replace a facility that has been operating far beyond its original design life, said Yellowstone spokesman Al Nash. The aging wastewater plant has long given park officials “serious concerns” about its ability to perform adequately in the park’s harsh environment, he said.

“We have had that project on the books and had been unable to come up with funding to date,” Nash said.

During a July 2010 speech near the base of National Park Mountain in Yellowstone, Vice President Joe Biden said the Madison wastewater project was an example of the unglamorous but important role of stimulus spending in Yellowstone and other national parks.

“The single greatest jewel we had was always the last item on the agenda,” Biden said during that visit, and repairs were “kicked down the road” to be addressed in future budgets.

But despite the vice-presidential hype, the Madison project remains unfinished. It is slated for completion in July 2012, Nash said, while the Mammoth hydro-electric project — the only other uncompleted Recovery Act project in Yellowstone — should wrap up in the spring.

Nash said Yellowstone’s short construction season and difficult operating environment makes it a tougher place to build compared to other places.

“This is not a run-of-the-mill kind of place to do work in,” he said.

Federal contracts in Yellowstone and Grand Teton do not allow for a 5 percent Wyoming contractor preference, as is mandated by state law with state-funded work. Much of the work in the parks has been done by contractors in Montana, Idaho and Utah, as well as Wyoming.

Bob Moberly, president of Think Wyoming First, a local business advocacy group, said that “it obviously would have helped Wyoming contractors” if stimulus spending in the state could have included a 5 percent local preference.

“If you want the profits from these jobs to stay in Wyoming, that resident preference is important,” he said.

Richards, from UW, said that federal stimulus spending rules also prevented the university from extending the 5 percent preference to Wyoming contractors.

He said that the detailed reporting required as part of stimulus funding produced lots of information, but not necessarily in a form that is meaningful for the public.

Richards said the methodology for tracking “jobs created” did not offer the best insight on how stimulus funds were putting people to work. Federal stimulus reporting standards have eventually changed to more closely match UW preferences for showing “hours worked,” Richards said.

Federal research grants outside the stimulus program are beginning to adopt similar reporting requirements, but without making the proper context and background information available to the public, such data often “raises more questions than it answers,” he said.

Larson, of the Wyoming Liberty Group, said that concerns about transparency and financial reporting were “not limited to the stimulus, but cut across almost everything the government does.”

Both Larson and Richards said they had potential concerns about any new federal spending that may result from Obama’s jobs bill.

“One area of public policy worth reviewing is that the original stimulus bill gave incentives to — and in fact required states to — cut portions of their (education) budgets to be eligible,” Richards said.

If future federal spending follows similar “perverse incentives,” Richards said, it’s likely that Wyoming and other states with fiscally conservative budget practices would receive a proportionally smaller share of available funds compared to states that have spent more freely in recent years.

Larson said that if the country enters another recession “and the federal government decides it wants to repeat this, we could be in for quite a ride if there is more heavy-handed and inefficient spending.”

Neal, the Casper worker advocate, said it was “clear that the recovery act poured millions of dollars into the state’s economy and it helped things from being worse.”

Focus on infrastructure

Jerimiah Rieman, a policy advisor to Gov. Matt Mead who has continued to oversee the state’s stimulus spending since he began that role during former Gov. Dave Freudenthal’s tenure, said infrastructure spending has yielded the best results.

Stimulus spending on roads, bridges, water projects and other public works “had the most direct and quickest impact on unemployment in Wyoming,” Rieman said.

Contractors in 2009 resurface part of an 11-mile stretch of road in Yellowstone National Park between the Lewis River Bridge and the park's South Entrance. The $1.2 million project was funded with $14.7 million in stimulus funds allocated to Yellowstone projects. (NPS photo by Jim Peaco - click to enlarge)

Though most stimulus spending will wind down in the state by the end of the month, the team of state agency workers who helped shape stimulus spending remains in place, and could resume work to allocate additional federal funds.

But that depends on the extent to which the governor wants to participate in any spending programs that may result from a federal jobs program, Rieman said.

During a press conference Thursday before Obama’s jobs speech, Mead said that relatively low labor and material costs make it an attractive time for the state to focus on improving roads, landfills, high-speed telecommunications and other infrastructure and maintenance projects.

“If we don’t spend the dollar today to take care of some of those maintenance costs, they don’t get any less expensive,” he said.

As for his specific priorities for any potential new federal spending, Mead said road and highway projects remain high on the list.

“I think we need a good plan for funding highways, not just in Wyoming, but across the country,” he said.

Federal transportation spending under the Recovery Act includes billions allocated for high-speed rail projects, but that doesn’t do much to help rural states like Wyoming, Mead said.

“Roads are absolutely critical to Wyoming,” he said.

Wyoming’s all-Republican Congressional delegation voted against the Recovery Act, but funds allocated to the state have been spent with relatively little fanfare or controversy.

Despite regular and staunch opposition from many in Wyoming to myriad forms of federal spending, the state has long received more in federal benefits than it pays in taxes.

From 1990-2009, Wyoming was returned an average of $1.19 in federal spending for every dollar it paid in federal taxes, according to U.S. Census figures.

For some in state government, closer federal cooperation and coordination through stimulus spending efforts has been an unanticipated but beneficial side effect of the Recovery Act.

“There were some glitches here and there,” Rieman said, “but if anything good happened out of the Recovery Act, it did increase communication between federal and state agencies.”

Contact WyoFile special correspondent Ruffin Prevost at ruffin@yellowstonegate.com or 307-213-9818.

Doug Cooper stands on a ridge looking east across the grassy swales of the 7 L Livestock Company ranch just north of Casper. One hundred and fifty years ago, his family came to Wyoming from Scotland and, after moving around the state for a couple of decades, his great-grandmother homesteaded here in the 1890s. His grandfather and father later added their own homesteads to the ranch base. The family ran sheep and cows for over 100 years. Now Cooper and his son, who works for him, have several hundred head of cattle. With a kind, clean-shaven face and oval wire glasses, a checkered button-up shirt, worn jeans and lace-up cowboy boots he’s at ease on this spread of more than 50,000 acres.

Related Story: Clock ticking on sage grouse listing

The big ranch his family has pieced together over the generations is also valuable habitat for the imperiled greater sage grouse. “When I was a boy we had thousands. Now we have a few hundred,” he says of the grouse. The species could become the “spotted owl” of the Intermountain West. If listed as endangered, the grouse would halt resource extraction — from cattle grazing to oil and gas drilling — over more than half of Wyoming, much like listing of the owl did to old-growth logging in the Pacific Northwest.

Cooper has been caught in the middle of efforts to keep that production halt from happening, and in the course of things, he’s lost a valuable development opportunity on his land. He pulls a wind energy lease marked with scribbled question marks and notes from a folder. A few years ago, he started talking with a wind turbine manufacturing company called Clipper Windpower about leasing a portion of his ranch for a wind farm.

Cooper hired an attorney to help him work through the lease and took Clipper staff on tours of his ranch. And he invested not only in the negotiations with Clipper, but also paid a premium for a piece of land he’d recently added to the ranch, entering a contract with the previous landowners to split those wind rights. He stood to make as much as $6,000 to $8,000 per turbine per year, and he calculated a conservative ten turbines would rope his family up to $2.4 million over the estimated 30-year life of the project.

But before the lease was finalized, Clipper Windpower stopped discussions with him. Then-Gov. Dave Freudenthal (D) had just issued an executive order updating Wyoming’s sage grouse core area map and forbidding wind development in those designated areas. A new piece of core area on the updated map exactly covered the part of Cooper’s private ranch land Clipper had wanted to lease. State lands he leases for grazing were outside the core area. The state would still be able to lease for wind development while Cooper could not. Clipper walked away from negotiations with Cooper before signing anything.

Doug Cooper, president of his family's 7 L Livestock Company ranch north of Casper where sage grouse habitat conflicts with potential wind development. (Emilene Ostlind/WyoFile - click to enlarge)

“I don’t feel they have right to take property without due process of law,” Cooper says of the governor’s plan, arguing that he can’t find out how the boundary was drawn because the groups designing the core areas didn’t keep minutes of their meetings. He believes the sage grouse core area boundaries were gerrymandered to cut him off while benefiting his neighbor, and that the governor overreached his authority by prohibiting private land development.

“My opportunities are restricted so someone else can have opportunity elsewhere. It’s a transfer of opportunity,” Cooper says. “It’s like finding out that people on your side of the street can’t get mail or go to work or something.”

Cooper’s case highlights potential flaws in Wyoming’s sage grouse conservation strategy. It shows that core areas trace economic or even political as well as biological boundaries, while individual landowners — those who’ve protected sage grouse and their habitat so far and ended up inside the core areas — are asked to make development sacrifices. But Cooper’s situation may provide just the kind of test the core area strategy needs to prove its merit. His case could give Wyoming a chance to show how firm it will be about protecting core areas from new development, thereby protecting existing activities and future development from a possible listing of the sage grouse. And Cooper’s situation, ironically for him, illustrates the care and attention to detail that has gone into core area planning so far. More than 80 percent of the state’s grouse breed and nest inside the core areas.

Meanwhile, Gov. Matt Mead is preparing to take Wyoming’s sage grouse conservation strategy — hailed as “groundbreaking” — to other states around the West. Even the Bureau of Land Management is looking to Wyoming for guidance as the agency starts to design its own range-wide conservation plan for the grouse. (See the accompanying story, “Clock ticking on sage grouse listing.“)But exactly how Wyoming’s and other conservation plans will be implemented remains to be seen. And while a listing decision looms, it will take thorough application of the conservation measures throughout the species’ range to ward off an ultimate listing, which would shut down everything from grazing and wind development to oil and gas drilling and coal mining across most of Wyoming.

Wyoming’s plan more than a decade in the making

“People would like it if we could do x, y or z to solve the sage grouse issue,” says Tom Christiansen, sage grouse program coordinator for the Wyoming Game and Fish Department. “There is no silver bullet. More or less the problem is human impact, and there’s not an easy answer.”

Bob Budd, chairman of the governor's sage grouse implementation team. (Emilene Ostlind/WyoFile - click to enlarge)

Wyoming’s comprehensive sage grouse conservation strategy started when former Gov. Jim Geringer appointed Bob Budd to lead the effort way back in 2000, and Budd has been at the helm ever since. From a longtime Sublette County ranching family, with a past that includes working not only for the Wyoming Stock Growers’ Association but also The Nature Conservancy, Budd is quick talking, firm and gruff, with friendly, bright eyes and a tidy moustache. His philosophy, he says, has been to work transparently with people representing various interests in the state, and to let locals make as many decisions as possible. Because he doesn’t work for a regulatory agency and doesn’t rely on votes, Budd says he can be just as harsh with agencies as he can with industry or agriculture. “Everybody understood it was a fair setting,” he says.

Back in the early 2000s, Budd’s team examined a range of threats to sage grouse from parasites and disease to predation and habitat loss. They determined that habitat fragmentation, largely from energy development, was a major threat to sage grouse in Wyoming, and wrote a statewide sage grouse conservation plan published in 2003. The plan called for extensive sage grouse mapping to prioritize places for conservation and for establishing local working groups to implement regional, on-the-ground conservation measures. Over the next few years, the state implemented this plan. Then, in 2007 Gov. Freudenthal convened a state sage grouse summit and created a state-level sage grouse implementation team with Budd at its head. The governor asked Budd for realistic things the state could do to prevent a sage grouse listing.

Later that year, Budd’s sage grouse team presented Gov. Freudenthal with a list of 21 recommendations for ways to protect grouse. The next year, the team followed up with a rough map of sage grouse core areas, and the governor adopted the map and some, but not all, of the team’s recommendations as his first sage grouse executive order in August of 2008. For example, he included a call for more mapping and for suppression of wildfires, but did not include incentives to minimize the footprint of housing developments. The order required state agencies — and requested other landowners and land managers in Wyoming — cooperate on efforts to keep sage grouse off the endangered species list by concentrating conservation efforts in the designated core areas. Those areas, identified on the map, cover about 15 million acres or roughly 24 percent of the state’s land area and are home to an estimated 80 percent of Wyoming’s sage grouse.

Still, Budd knew the map needed more precision, so he took it to the local working groups and asked them to scrutinize the core areas in their regions and modify the maps. In the Bighorn Basin, for example, the local working group added areas where leks — breeding grounds where sage grouse congregate in the spring to strut — had been left out. In other areas, existing infrastructure, like a uranium mine and a town, were carved out of the core areas. Meanwhile, the state had completed half a million dollars worth of mapping, which also added precision to the core areas. The updated version of the map, which did a much better job than the first of both including key sage grouse habitat and excluding existing development, was finalized and implemented with a second executive order in August of 2010. It added roughly 400,000 new acres to the sage grouse core areas, including a piece over Cooper’s ranch.

“What Doug Cooper got caught in is the only reasonable metric we could use of whether something was developed or not, is if it had a permit,” says Budd, explaining why the core area traces the edge of the ranch. “We’d literally get 30 wind companies coming in and saying, ‘I’m going to develop that. I’m going to do this. I’m going to lease that.’ I’d go check with the landowner. They didn’t have a lease. They’d never heard of the company. We needed something that was realistic. We needed a lease, a plan of development, something more.”

Notably, adding to Cooper’s frustration, the state had finalized leases with Clipper Windpower on trust land within Cooper’s ranch in April of 2009. So the state trust land was outside the protected core area, while Cooper’s private land was inside, even though the current quality of the sage grouse habitat on both sides of the core area boundary is comparable.

Many landowners in Wyoming, so far, have accepted the restrictions of the core areas in hopes of avoiding the more severe restrictions of a possible endangered species listing. “My frustration with Mr. Cooper arises from the fact that he never attended a meeting,” says Bruce Lawson, an industry representative on the Casper region local working group. Budd’s sage grouse implementation team and the local working groups invited public input about the core area revisions. Lawson attended half a dozen local working group meetings in different regions of the state for the bentonite mining company he works for. He didn’t see Cooper at any of those meetings. “He didn’t attend, didn’t participate. Now he cries foul. I felt that was wrong. He had plenty of opportunities to participate.”

The region that covers Cooper’s ranch had a working group that met in Gillette, more than 100 miles from Cooper’s ranch. Cooper says he didn’t go to the local working group meetings because he’d seen an early draft of the sage grouse map and believed his ranch would fall outside the core areas.

Even though it has caused hassle for some landowners, the long and involved core area process has set a benchmark for widely coordinated and comprehensive species conservation plans. Pat Deibert, national sage grouse coordinator for the U.S. Fish and Wildlife Service, the agency that will ultimately decide whether to grant sage grouse endangered species protection, is impressed by Wyoming’s approach. “They’ve been incredibly proactive. It’s amazing they have taken this on and accomplished this.”

After the core areas were first designated in 2008, the state and local sage grouse working groups made revisions. In 2010, Gov. Freudenthal issued his second sage grouse executive order, implementing this updated map, which Gov. Mead has kept unchanged.

Putting the core area strategy to the test

None of Wyoming’s sweeping plans to protect sage grouse offer Doug Cooper peace of mind.

“The Wyoming constitution says you can’t lose property right without due process of law,” he says. “It’s shocking to me that we would lose our wind rights.”

He’s met with Gov. Mead seeking due process. “I want them to start over and do it the right way,” he says. Cooper doesn’t believe the process that created the core areas was legitimate, and says the governor has no authority to restrict development rights on private property through executive order. “We never had an ‘orderly proceeding’ or any of those things. It’s kind of a Kafkaesque thing where you know you’re in trouble, but you don’t know exactly why and there is no procedure that works,” he says.

Cooper argues that if the core areas had been adopted as a regulatory mechanism through the Game and Fish Department, there would have been public review and comment period. He is working with an attorney to build his case.

Landowners who find themselves in core areas do have avenues to seek support. This year the U.S. Department of Agriculture Natural Resources Conservation Service made over $27 million available to private landowners in Wyoming for sage grouse conservation efforts such as purchase of conservation easements, habitat improvements and infrastructure like bird ladders to help grouse escape from stock tanks. And the U.S. Fish and Wildlife Service has been working with Wyoming to develop a programmatic Candidate Conservation Agreement with Assurances, a contract landowners can voluntarily enter wherein they promise to undertake specific conservation measures for sage grouse on their land in exchange for relief from some Endangered Species Act restrictions should the grouse be listed. The programmatic agreement should be ready for landowners to sign up by early next year.

Meanwhile, the U.S. Fish and Wildlife Service emphasizes that Gov. Mead’s sage grouse executive order can only be effective if it is fully implemented, even on private land. One thing the agency looks for in making its listing decision is presence of adequate regulatory mechanisms to protect the species from threats. Wyoming’s plan “is not quite regulatory,” says Mark Sattelberg, supervisor of the Wyoming field office for the U.S. Fish and Wildlife Service.

“But I think it’s probably the best we’re going to get in the near future,” Sattelberg says.

Deibert of the Fish and Wildlife Service is watching closely to see how Wyoming will react the first time the sage grouse core areas are challenged, such as by a wind company seeking to develop in a core area. “How the state reacts will be an important litmus test for how good a regulatory mechanism it is,” she says. “They have not been challenged yet.”

Still, Deibert says, Wyoming’s plan “is a huge step forward. They absolutely have laid the railroad tracks for everybody else.”

Budd calls it, “one of the greatest citizen triumphs I have ever seen. People sat down, they were civil, they were honest, they tried to figure out ways to make things work, but they never lost sight of their objective, which was conservation of sage grouse.”

NOTE: Information regarding property boundaries and sage grouse core area boundaries was clarified at 1:45 p.m. August 9.

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JACKSON — Investors, fund managers and other heavyweights from the financial world spent much of Friday morning at Snow King Resort lamenting newly released, unexpectedly weak economic growth figures from the first half of the year. They spent much of the afternoon reassuring each other that the United States would not default on its financial obligations — while at the same time wondering what to do if that happened.

“There’s nothing the fed can do to remedy a failure to raise the debt ceiling,” President of the Federal Reserve Bank of St. Louis James Bullard told nervous investors attending a panel discussion on economic policy at the Rocky Mountain Economic Summit.

Technicians set up for a cable TV news interview during the Rocky Mountain Economic Summit on Friday in Jackson. (Ruffin Prevost/WyoFile - click to enlarge.)

It was exactly those nervous investors congressional leaders and the White House sought to reassure Sunday evening as they announced a debt ceiling deal had been struck — just in time to stave off what could have been a punishing drop in the early-opening Asian financial markets.

The House on Monday voted 269-161 in favor of a final compromise bill to raise the debt ceiling. The Senate approved the measure today in a 74-26 vote, and President Obama quickly signed it, narrowly averting what could have been a financially disruptive default if an agreement was not reached by midnight tonight.

“While not perfect, the Budget Control Act of 2011 is the result of the changing debate in Washington,” Rep. Cynthia Lummis said Monday in a statement released on her web site after she voted in favor of the measure. “This bipartisan compromise takes steps to bring accountability to Washington by cutting up the credit cards, putting in place future spending controls and decreasing the size of government.”

Sen. John Barrasso released a statement after voting for the measure saying the debt ceiling debate was “the first round in a 15-round fight on spending.” He called the bill a small victory over “more wasteful Washington spending.”

Sen. Mike Enzi also voted in favor of the bill, but did not post a statement online immediately after the vote.

The compromise deal would increase the debt limit in stages over several months by between $2.1 trillion and $2.4 trillion, while establishing a bipartisan congressional committee to study additional spending cuts and new tax reforms meant to reduce deficit spending by an additional $1.5 trillion. It does not raise taxes or cut entitlements in the short term, and enacts 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction, spread across defense and non-defense spending. It enacts triggers for deep spending cuts in cherished programs like defense and Medicare if Congress fails to reach consensus on a plan for additional cuts and revenues, providing a strong incentive for bipartisan cooperation.

The members of Wyoming’s congressional delegation, all Republicans, have each said for months that federal spending must be sharply curtailed as part of any deal to raise the debt ceiling. But they have differed somewhat in which ideas they said they would consider as part of any final deal.

Sen. Mike Enzi speaks July 21 in support of passage of the Senate version of the Cut, Cap and Balance Act. (click to enlarge)

Enzi, a member of the Senate Budget and Finance committees, offered preliminary backing for the so-called Gang of Six plan. The proposal, crafted by a bipartisan group of six senators who served on Obama’s budget deficit commission, would have trimmed $3.7 trillion from the deficit over the next decade.

“This plan could be the way out of all the angry rhetoric coming from both sides,” Enzi said after meeting with a bipartisan group of about 50 senators July 19, according to a statement released on his web site.

“I’m sure there is not 100 percent agreement on all the decisions, but they realize that something has to be done. It sounds like a positive effort at a passable solution,” Enzi said, adding that he would have to review the plan in detail before making a final decision. But the plan lacked sufficient backing to advance.

The Gang of Six plan was largely based on the final recommendations made last year by the presidential deficit commission co-chaired by former Sen. Alan Simpson, of Cody. The Gang of Six plan called for about $1.4 trillion in savings from discretionary appropriations — a broad category that includes everything from highway projects to military spending, for example, and accounts for about one-third of the total budget. It proposed nearly $740 billion in cuts, caps or restrictions on entitlement spending, including Social Security, Medicare and Medicaid. It would have raised an additional $1.2 trillion or more through tax reforms that would lower overall rates, but eliminate many loopholes, deductions and other tax expenditures.

House Speaker John Boehner looks on as Rep. Cynthia Lummis speaks during a September 2009 Republican leadership press conference on regulatory reform. (click to enlarge)

Lummis voted for an earlier bill backed by House Republicans that would have trimmed $111 billion from the 2012 fiscal year budget and capped annual spending as a percentage of gross domestic product. The bill also called for raising the debt ceiling only after Congress had approved a Constitutional amendment requiring a balanced budget, a change that would eventually require ratification by three-fourths of the states.

Sen. John McCain (R-Ariz.) said the idea that a divided Congress could pass a balanced budget amendment by Aug. 2 was “foolish” and “bizarro,” and read on the Senate floor from a Wall Street Journal editorial that ridiculed some House Republican Tea Party members as “hobbits” striving to defeat Mordor.

“The attention is not on the House any more,” Lummis said during a July 22 Republican leadership press conference after House passage of the Cut, Cap and Balance Act, which later failed in the Senate. “Go stick your microphones in the faces of the senators and the president and say, ‘We want to see your plan.’ The House is done.”

Just days earlier, in a July 11 op-ed published on Politico.com explaining why she opposed raising the debt ceiling, Lummis acknowledged that “all major solutions that pass the House are dead on arrival in the Senate.”

Rep. Cynthia Lummis speaks during a July 22 press conference after House passage of the Cut, Cap and Balance Act. (click to enlarge)

The Senate and White House had failed to put forth a credible plan, Lummis wrote.

“Consequently, should the debt ceiling vote fail to include significant front-end loaded spending cuts and, more important, structural reforms, I will continue to vote ‘no,’” she wrote.

Lummis wrote that financial markets lacked confidence that Congress and the president would fix the nation’s structural deficits.

“Citing the unlikelihood that Washington can reach agreement, Standard & Poor’s outlook on Treasury bond is now negative. Bill Gross of PIMCO has dumped all Treasuries from the world’s biggest mutual fund,” she wrote.

‘Don’t mess with the debt ceiling’

Gross manages the $241 billion Pimco Total Return Fund, and has long wielded considerable influence as the one of largest buyers of government bonds.

But just two days after Lummis’ op-ed, writing in the Washington Post, Gross explicitly warned Congress not to risk financial default — or even a downgraded credit rating — by failing to raise the debt ceiling.

“The debt ceiling must be raised and not be held hostage by budget negotiations. Don’t mess with the debt ceiling, Washington. Bond and currency vigilantes will make you pay,” he wrote, referencing the virtual certainty of increased interest rates on Treasury securities in the event of default.

Gross’ stance on the issue was hardly new information. He had been warning Congress for months not to forgo raising the debt ceiling as a forced means of deficit spending reform.

“It’s the wrong way to do it,” Gross told the Associated Press in January. “Obviously, I’m all for a move to a balanced budget over time. But this is like imposing the death penalty for shoplifting.”

“The signal it gives to countries that hold Treasurys is that their assets are hostage to a rogue Congress,” Gross also said. “That’s the message it sends. It’s unacceptable.”

That same day, July 13, Lummis dismissed concerns about the financial repercussions resulting from failing to raise the debt ceiling, telling Wyoming Public Radio that the federal government could find a way to pay its bills without borrowing more money.

“The United States has over two trillion dollars in financial assets, including stock in General Motors, as well as other financial assets,” she said.

In her July 11 op-ed, Lummis said she would rather instruct Treasury Secretary Timothy Geithner to pay principal and interest on government-issued bonds, pay combat troops and make social security payments “than add to the weight of our debt burden and send America plunging into the ravine – with our children and grandchildren on board.”

Sen. John Barrasso speaks July 22 on the Senate floor during debate on whether to raise the debt ceiling. (click to enlarge)

Barrasso did not publicly express the same openness to the Gang of Six Plan as Enzi. But he did, along with Enzi, co-sponsor a Republican-backed Senate version of Cut, Cap and Balance. He opposed a plan put forth by Senate Democrats and backed by Obama. He criticized the plan from Senate Majority Leader Harry Reid, telling Fox News’ Greta Van Susteren on July 26 that the proposal contained “a lot of budget gimmicks, a lot of accounting tricks.”

But he also warned against the dangers of default, or even a credit downgrade.

When asked by Van Susteren why America is “held hostage” to Moody’s and other credit rating agencies, Barrasso warned that the consequences of default would be dire.

“If we do get downgraded on our ratings, that means that interest rates are going to go up,” he said.

“If interest rates go up a percentage point on $14 trillion of debt, you know, you’re talking $140 billion a year of additional debt payments that we would have in this country,” he said.

Political football

There would have been virtually no chance of having a less rancorous vote on the debt ceiling sometime next year, said Jim King, a political science professor at the University of Wyoming.

“If they approve a six-month ceiling, in five months, we’ll be doing all this again,” King said last week, when a short-term fix was being considered. “That’s why some participants are arguing in favor of getting a big deal done now.”

There is no Constitutional mandate that requires Congress to set a limit on how much money the U.S. Treasury may borrow, and almost every other democracy operates without one.

The idea of a debt ceiling was first adopted in 1917, King said.

It was initially used as a way for Congress to set broad limits on executive branch spending. Though the president still submits an annual budget, Congress must vote on the final federal budget, and has for decades exercised close control and statutory authority over appropriations and spending.

The debt ceiling has typically been raised by the president and his fellow party members in Congress, with opposing party members voting against the move — a process played out dozens and dozens of times over the last 70 years.

“In the past, this has been handled as a more routine matter,” King said. “This time around, some members of Congress have insisted that it be linked to other budgetary decisions.”

Many Democrats have said they offered Republicans almost everything they’ve wanted in negotiations, including trillions in spending cuts without any tax hikes. Some Republicans have said that simply raising the debt ceiling at all is a compromise, and that proposed budget cuts don’t go deep enough, while planned tax reforms that would raise revenue are actually tax hikes in disguise.

Simpson, a Republican who represented Wyoming in the Senate from 1979-97, said the only long-term path to eliminating deficits and taming the national debt is to decrease spending and raise taxes, a conclusion the deficit commission spelled out last year in its final report. An alternative deficit reduction plan released last year by the Bipartisan Policy Center reached a similar conclusion.

Grover Norquist, president of Americans for Tax Reform, speaks at the 2010 Conservative Political Action Conference. (Gage Skidmore photo - click to enlarge)

But so many Republicans have signed a “no new taxes” pledge initiated by Grover Norquist, president of Americans for Tax Reform, that Congress appears able to consider only spending cuts, Simpson said. The group’s web site lists Enzi and Lummis — but not Barrasso — as signers of the pledge.

Likewise, many Democrats are ideologically opposed to any cuts in entitlement programs like Social Security or Medicare, he said, a position that is at odds with the reality of their unsustainable long-term fiscal prospects based on current and projected revenues.

“They act as if they are in thrall — slaves to some ideology,” Simpson said Friday. “If this nation’s representatives are in thrall of Grover Norquist and the AARP, then we haven’t got a prayer.”

“What can Grover do to you? He can’t murder you. He can’t burn your house down. He might hurt your shot at reelection. But if that means more to you than your country, you shouldn’t be in (Congress) anyway,” he said.

Though partisans on both sides of the debt ceiling debate have expended plenty of rhetoric explaining their positions, those positions have often been reversed under different administrations.

Barrasso and Enzi both voted in January 2010 against a resolution under the current administration to raise the debt ceiling. But they both voted in favor of a September 2007 bill signed by then-President George W. Bush to increase the debt limit by $850 billion to $9.8 trillion.

Likewise, while he was a senator from Illinois, Obama voted against raising the debt ceiling in 2006.

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” Obama said during debate on the 2006 measure. “It is a sign that the U.S. government can’t pay its own bills. It’s a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies.”

A failure of leadership is what investment manager Robert Grady said Obama has shown by not backing the plan developed by Simpson and the rest of the debt commission the president appointed.

“The president could have started the debate by endorsing that plan, but instead he has made no specific proposal, which is very unusual,” said Grady, speaking by phone last week. He is managing director of Cheyenne Capital Fund, a Denver-based private equity firm that manages about $225 million in investments by the state of Wyoming.

Robert Grady

Born in New Jersey but now based in Jackson, Grady also heads the New Jersey Investment Council, which manages $75 billion in public investments for that state. He previously served as a senior official in the Office of Management and Budget under President George H.W. Bush.

In a panel discussion during Friday’s economic summit, Grady told investors he was confident a debt ceiling deal could be struck, but he also saw a “likelihood” of some kind of downgrade to the nation’s credit rating.

“One thing the drama of the last month or two has revealed is there is no consensus” on tackling the major debt and budget issues beyond the debt ceiling, he said.

Grady said during the discussion that he disagreed with Norquist — his friend and college classmate — that reforms to the tax code resulting in greater revenues should be rejected as harmful tax hikes.

The tax reform plan proposed by Simpson and the deficit commission “would see us go to three rates that are radically lower,” but it would generate additional revenue for the U.S. Treasury and “be good for growth,” he said.

Wyoming well-positioned

With a continuing sluggish economy and uncertainty among some investors about buying additional U.S. debt, Wyoming is well positioned among the states to attract businesses, Grady said.

A favorable tax climate, business-friendly regulatory environment and recent state budget surpluses bolstered by strong energy prices means Wyoming is better able to handle fiscal uncertainty and the higher costs of debt financing that could come with a credit downgrade, he said.

Wenlin Liu, senior economist with the state’s Division of Economic Analysis, agreed.

“Right now, our state government’s finances are among the best in the nation,” Liu said.

Wyoming has not incurred the same level of debt as other states, has relatively low unemployment and a comparatively stronger housing market, he said.

But while a credit downgrade might not hit Wyoming government as hard as other states, consumers would feel the pinch, Liu said.

The sinking value of the dollar would likely translate to higher energy prices, costing drivers more at the gas pump and adding to home heating costs, he said. Home mortgage interest rates and credit card rates would also climb if U.S. credit ratings take a hit.

King, the political science professor, said that Wyoming’s state and local government entities are constitutionally required to balance their budgets, but that doesn’t mean they don’t borrow money.

“A city does not build a new water treatment plant with cash on hand. It floats bonds,” King said.

And passing a balanced budget amendment won’t mean the federal government won’t continue to incur debt.

President Barack Obama meets with National Commission on Fiscal Responsibility and Reform co-chairs Erskine Bowles, left, and Alan Simpson in the Oval Office, Feb. 18, 2010. (Pete Souza/White House— click to enlarge)

“Deficit spending is a part of almost every government operation in every way,” he said.

Simpson said that voters are “in absolute disgust” from the long deadlock over raising the debt ceiling, but they should be even more horrified about the national debt of more than $14 trillion.

“It’s a monstrous figure,” he said. “And whatever they do over the debt ceiling will be like a mountain giving birth to a mouse.”

“The American public knows that Amy Winehouse died, and they know Lindsay Lohan had the cuff removed from her ankle. But they were asked if they know the difference between the debt and the deficit and 70 percent didn’t,” he said.

Simpson said the most viable option for starting to tame the nation’s deficits and long-term debt is, not surprisingly, the Gang of Six plan based on his own recommendations and from others on the president’s deficit commission.

Though the bipartisan group of six senators were unable to convince their colleagues to back that plan, Simpson said that if he were still in Congress, he would pitch it to his fellow legislators in the simplest terms.

“I’d get them all together and I’d say: ‘Here’s your choice. Do you want to be members of the Democratic Party or the Republican Party? Or do you want to be Americans?”

Contact Ruffin Prevost at 307-213-9321 or ruffin@wyofile.com.

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LANDER — The first sign that something was wrong came Monday, April 18, when Walker Kuhl, a Salt Lake City federal bank examiner, failed to show up for work.

Kuhl, 27, and his climbing buddy, Montana emergency room doctor Gregory Seftick, 31, had gone on a weekend backcountry ski trip to Grand Teton National Park, intending to explore the Teepe Pillar and Teepe Glacier features of 13,770–foot Grand Teton.

More than a week later, after what is believed to be the most expensive search and rescue operation in Grand Teton National Park history, Kuhl and Seftick’s bodies were found still tucked in their sleeping bags, crushed by a massive April 16 Garnet Canyon avalanche that buried them under 13 feet of snow.

According to Teton County Deputy Coroner David Hodges, the two men, both superbly fit and experienced mountaineers, died of asphyxiation within minutes of the avalanche. Rangers at the scene found no ice crystals near the men’s faces that would have indicated they had been breathing for any significant period of time after the slide. At that depth, the weight of the snow on their bodies was between 195 and 260 pounds per square foot. Hodges believes the immense pressure on their diaphragms prevented them from drawing a breath.

“I don’t think that they had a conscious thought of their impending death,” said Hodges. “Death was rapid if not instant.”

Jason O'Neil and his dog, Murphy, with the Grand Targhee Resort ski patrol and canine team, board a helicopter April 23 to search for lost skiers in Garnet Canyon. (National Park Service photo by Jackie Skaggs - click to enlarge)

But back on the morning of April 18, when Kuhl’s girlfriend reported him missing, park officials were uncertain about the skiers’ whereabouts.

Imbued with a proud National Park Service tradition of saving those who can be saved and recovering the bodies of those who can’t, personnel from the Jenny Lake Ranger Subdistrict launched an extensive search that was often complicated by difficult weather and technical problems.

Three more feet of snow fell on the searchers as they hunted for the two missing men, probing the snow with standard 10-foot telescoping metal poles. Under the new layer of snow, however, the Kuhl-Seftick campsite was now well below their reach.

“I’m sure we probed right over the top of these guys’ bodies,” said Jenny Lake Subdistrict Ranger Scott Guenther.

The Teton County Search and Rescue helicopter that the Park Service leased for the search — at a cost of $33,000 — was grounded repeatedly by bad weather. According to park spokeswoman Jackie Skaggs, the rescue-recovery operation cost $115,000 — more than double any previous search on record at Grand Teton.

A tradition of rescue and recovery

America’s national parks have a tradition of coming to the rescue of visitors in trouble and recovering the bodies of those who die on park grounds. In 2009, the most recent year for which national records are available, Park Service workers conducted 3,568 search and rescues that cost a total of more than $4.8 million.

“We average about $5 million a year taken from our general funds,” said Jeffrey Olson, a Park Service spokesman in Washington, D.C.

Most search and rescues are relatively simple matters: a child wanders from a campsite in Yellowstone National Park; boaters have too much to drink in New York City’s Gateway National Recreation Area; an elderly visitor gets disoriented in Yosemite National Park.

Rescuers use poles to probe an avalanche debris field while searching for two lost skiers April 19 in Garnet Canyon in Grand Teton National Park. (courtesy photo by Jay Pistono - click to enlarge)

But in some of the more remote and rugged parks, searches are very costly. In the past five years, for example, Alaska’s Denali National Park has had three prolonged searches that cost taxpayers $127,000, $132,000 and $118,000 respectively, according to Denali spokeswoman Maureen McLaughlin. Neither the people rescued nor the families of those whose bodies were recovered were charged for the Denali operations.

Nor were the families of Walker Kuhl and Gregory Seftick at Grand Teton.

In light of the national budget crisis, Denali and other parks are exploring the idea of charging additional “special use” fees for particularly hazardous adventures. Denali recently proposed charging a $500-per-climber fee to scale Mount McKinley.

Climbing organizations such as the American Alpine Club and Access Fund accept “special use” fees in principle but contend $500 is too high.

“The question is whether people who are engaged in high-risk activities pay more,” said Alpine Club executive director Phil Powers.  Powers said his non-profit organization has recently begun offering climbing insurance to its members that covers up to $5,000 in rescue costs.

On May 17, Powers himself was seriously injured in a fall outside Golden, Colorado that required rescue by the Golden Fire Department and evacuation by helicopter to Denver. (For more on this incident see Pitch).According to Alpine Club spokesman Luke Bauer, the rescue would be covered by the membership insurance.

As yet, nothing similar to the Denali fees has been proposed for Wyoming’s Grand Teton and Yellowstone National Parks.

Some national park policy experts have proposed reforms in the search-and-rescue accounting system.

Travis Heggie, Recreation and Tourism Studies professor at the University of North Dakota, in 2009 published an article in the Wilderness and Environmental Medicine journal, examining search and rescue operations in all the national parks from 1992-2007.

A former risk assessment officer with the Park Service in Washington, D.C., Heggie contends that the actual cost of search and rescue operations in the parks is underreported.

“I think if all the dollar figures were added — such as hidden equipment wear-and-tear and medical costs — there would be a doubling of the true search and rescue figures,” Heggie said in an interview with WyoFile.

The problem, said Heggie, is not the money, which in 2009 averaged $1,345 per incident. Even at the $10-million-a-year figure that he thinks is a more realistic total, the annual cost of search and rescue in the 394 national parks is a tiny fraction of the Park Service’s $2.75 billion annual budget.

Moreover, search and rescue efforts save hundreds of lives each year. In 2009, the Park Service reported 370 “saves” — defined as a rescue where “death or serious harm” would have occurred without Park Service intervention.

But Heggie said that paying for search and rescue by taking the money out of the Park Service general funds — as is the current practice — “pilfers” resources from other valuable programs.

“Trust me,” said Heggie, “it really comes out of the interpretive division that is on the front lines of the people coming into the park. These are the people who greet you at the visitor center and the ones who give you the guided tours.”

A helicopter heads toward Garnet Canyon in April during a search for two lost skiers in Grand Teton National Park. (National Park Service photo by Jackie Skaggs - click to enlarge)

The solution, said Heggie, would be to have “a designated search-and-rescue fund at the highest administrative level.”

“We know it [search-and-rescue] is happening every year,” said Heggie, “so it would be better to have a fund rather than just stick a hand in the bag and take it from someone else.”

Another way to tackle the cost of search and rescue, Heggie said, would be to borrow a page from European countries, where alpine mountaineers and other adventurers are required to have private travel insurance that pays for search, rescue and medical treatment.

“Maybe people like these guys going into the Teton ought to be carrying some kind of insurance,” Heggie said.

Unlike Europe or South Asia, where Pakistan and other Himalayan countries require climbers to post security bonds, the United States as a rule does not charge people for searches or rescues in its national parks. About the closest we’ve come to it are park officials citing someone for creating a public nuisance.

Oppose billing for rescue

Most experienced park rangers, in fact, are opposed to the idea of sending a bill to those they rescue.

“I absolutely do not think that people should be charged for rescues based on the experience of these high-risk users,” retired longtime Grand Teton National Park ranger Renny Jackson told WyoFile. “Are you going to charge for kids lost in a campground?”

Said Olson, the Park Service spokesman and a budget expert: “Our policy is that if we start charging for search and rescue, people would not ask for help or would delay asking for help. We could see that it would easily drive up the cost. When somebody is in trouble we want to go out there and bring them back alive. We like to sleep at night.”

Rescuers set up a temporary heliport on Teton Park Road to transport people and rescue dogs to Garnet Canyon during the April search for lost skiers. (National Park Service photo by Jackie Skaggs - click to enlarge)

Searches like those for Walker Kuhl and Gregory Seftick, which cost more than $100,000 — a Park Service trigger point that requires approval in Washington— are rare.

“Last year,” said Olson, “we had 3,849 search and rescue efforts and only 832 of those cost more than $500. That means that 79 percent of search and rescue operations last year cost less than $500.”

According to Skaggs, Grand Teton National Park “averages” 15-30 major search-and-rescues a year. But even in a busy year like 2003, which included a daring rescue of 13 climbers who had been struck by lightning on Grand Teton’s Friction Pitch, the search and rescue bill for the entire year was $160,000. The bill for just the Kuhl-Seftick search was $115,000, including $18,000 in wages for park employees reassigned to help in the effort.

National parks are not legally required to conduct search-and-rescue operations, although Park Service management policy does instruct employees to “make reasonable efforts to search for lost persons and rescue sick, injured, or stranded persons.”

In addition, a landmark 1991 federal appeals court decision found that park rangers have almost complete discretion in deciding whether to order a search and rescue operation. The case, Johnson v. United States, involved an inexperienced climber named Ben Johnson, who in 1987 became separated from his friends after climbing Buck Mountain in Grand Teton National Park.

Rangers found Johnson’s body the next morning in a melt pool near Timberline Lake where he had died from hypothermia the previous night.

Johnson’s parents sued the Interior Department, alleging that park rangers failed to “adequately regulate climbing in the park”; failed to launch a prompt rescue effort after a companion of Johnson reported him missing; and failed to conduct a reasonable search when they finally went looking for him.

The case drew considerable national attention among outdoors enthusiasts fearful that a ruling in favor of the parents would greatly restrict public access to potentially or — as in the case of climbing — obviously dangerous wilderness areas. To avoid liability, the government would have to curtail risky activities in which safety could not be assured.

In dismissing the claim on the grounds of subject matter jurisdiction and policy discretion, the 10th U.S. Circuit Court of Appeals in Denver said ruling otherwise would “jeopardize the Park rangers’ autonomy to make difficult, individualized search and rescue decisions in the field. We seriously doubt Congress intended to expose these decisions to the second guessing of courts far removed from the exigencies of the moment.”

Current and former park rangers are well aware of the decision and its implications. The Johnson decision grants rangers authority similar to that of a captain at sea when it comes to rescue or recovery missions. Among other things, the decision meant that rangers could put the hazards faced by the rescuers first and foremost in deciding whether to make a rescue.

Recovery an easier decision

The decisions are easier when rangers know the object of their search is already dead. In 2009 there were 151 fatalities in national parks.

“On the one hand,” said Renny Jackson, “you like to return people to their loved ones. However, putting your life at risk for the return of a dead body is not something you want to do.”

Jackson recalled a case in the 1980s when a rescue team spotted the body of a fallen climber in a couloir— or steep, narrow opening— below a Teton formation known as Molar’s Tooth. Searchers decided the risk of ongoing rockslides made it too dangerous to make a recovery. The body, said Jackson, is still there.

According to deputy coroner Hodges, Walker Kuhl and Gregory Seftick had been dead nearly two days before rangers began their search on April 18. But until their bodies were found a week later, the rangers diligently went about their work in hopes the campers were still alive.

“Until we actually lay hands on the dead bodies, I’m not ready to write anyone off,” said Guenther, who commanded search operations.

Timeline of search for lost skiers. (graphic by Kathryn Palagonia/Jackson Hole News&Guide - click to enlarge)

The first ranger assigned to the case on April 18 was incident duty officer Chris Harder, who found the missing skiers’ two vehicles at the Taggart Lake trailhead. A check that afternoon with the ranger office in Moose revealed that the two men had obtained the necessary backcountry permits and told the staff they were headed to Garnet Canyon in hopes of exploring Teepe Pillar and Teepe Glacier. (Ironically, the features were named for Theodore Teepe, an early mountaineer who died in a climbing accident in 1925).

Other skiers reported seeing two men resembling Kuhl and Seftick in the area on Saturday.

“Another party of four had seen them,” said Guenther. “Now we had them in Garnet Canyon. By Monday night we really ramped up and knew we were going to have a big search.”

The rangers managed to get the leased helicopter into the Garnet Canyon area during a brief window on the evening of April 18, but erratic winds and poor visibility hampered their efforts.

On Tuesday, April 19, four-person teams skied into Garnet Canyon and the helicopter made another sortie in hopes of spotting the two men or their campsite.

As weather cleared on Wednesday, April 20, the searchers mounted their biggest effort yet, with more than 60 people on the ground. Rescue teams with avalanche transceivers, probe poles and sonar devices were joined by two canine search teams.

Because of the difficult weather, continuous threat of avalanche and generally hazardous conditions, Guenther deployed a mixture of trained park employees and professional searchers, paid $27 to $37 an hour, to do most of the work. The teams included trained rescuers from Teton County Search and Rescue; Teton Interagency Fire; Bridger-Teton National Forest and Bridger-Teton National Avalanche Center; Jackson Hole Mountain Resort Ski Patrol; Wyoming K-9 Search and Rescue; Grand Targhee Resort Ski Patrol and canine teams and mountaineers from Exum Mountain Guides and Jackson Hole Mountain Guides.

Driven to continue

Guenther said he felt driven to continue the search because of an experience he had in 1995 when he was working as a seasonal climbing ranger in the park. A 25-year-old climber from Oregon named Aaron Gams disappeared near the summit of the Middle Teton as a winter storm swept into the range.

Searchers are briefed before using probe poles to search an avalanche debris field in Garnet Canyon. (National Park Service photo by Mike Nicklas - click to enlarge)

“We spent two days out there looking for him and I was sure he was dead,” recalled Guenther. “But I was standing on the summit of the Middle Teton and here was this guy sitting on a ledge. Ever since then, I’ve been reluctant to give up hope.”

Guenther said the mounting cost of the Kuhl-Seftick operation was never a major factor in his decision.

“We look for efficiencies but in my time as a ranger we have never made a determination to go out based on cost,” he said.

But by Friday, April 22, still with no sign of the missing men, Guenther talked to the men’s families, informing them the search would scale down to a “limited continuous response.”

“I told them that we would do the most thorough search we could on Saturday, but that after Saturday we are probably going to be scaling back,” said Guenther. “But on the eleventh hour of that last day we finally found something — a beacon hit by one of the searchers.”

On literally the last sweep of the day, Saturday April 23, ranger Nick Armitage picked up a signal on his avalanche transceiver. Although most backcountry skiers turn off their avalanche beacons in the campsites, Kuhl and Seftick had left theirs on.

The search teams “dug like heck” through the dense snowpack and picked up a second signal before it became too dark for the helicopter to land. They returned on Sunday, April 24, and found the two men’s bodies.

In a website created to honor Walker Kuhl, an Iraq war veteran who studied Arabic upon his return to college, the families posted a thank-you notice:

“We thank the National Park Service and all the people involved in the rescue efforts of our sons Greg Seftick and Walker Pannell Kuhl. We recognize that the rescue mission required hard work under trying conditions over many days. We appreciate the professional and caring manner in which the mission was carried out.”

Still in Jackson Hole after his 1995 brush with death, Aaron Gams, now 40 and a massage therapist, recalled his own gratitude to Guenther and the Jenny Lake rangers. Gams, whose core temperature dropped to 86-degrees before he was rescued, lost eight of his toes to frostbite.

“I put all those guys in a precarious place. There were more than 40 people looking for me,” Gams said. “I was in late-stage hypothermia. I was hallucinating and believing all the hallucinations. I don’t think I would have lived for another hour if they had not found me.”

Gams said his medical care after the incident cost him more than $20,000 but that, for him, the national park rescue was free.

“I would have been glad to pay for the rescue if they had asked me,” Gams said. “But at the same time I’m really glad they didn’t give me a bill.”

WyoFile consulting editor Rone Tempest is a former Los Angeles Times national and foreign correspondent who lives in Lander. Contact him at rone@wyofile.com

Fund supports Grand Teton search and rescue efforts

To create a way for people who have been rescued or their families to support search and rescue, several national parks have created non-profit funds where citizens can make tax-deductible contributions.

The Grand Teton Association, the nonprofit organization that runs the park bookstores and other enterprises that benefit the park, recently created the Jenny Lake Ranger Fund so people can donate money for additional training and equipment.

“This gives people like grateful families a place to donate and support search and rescue without giving directly to the government,” said association executive director Jan Lynch. Donors can send checks to the Jenny Lake Ranger Fund, c/o Grand Teton Association, P.O. Box 170, Moose, WY 83012.

DOWNLOAD a high-resolution .PDF graphic detailing the lost skier search timeline.

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The Jobs Machine of Campbell County is the second of a three-part WyoFile series, Hispanic Wyoming, looking at changing immigration trends in the Cowboy State, and how Wyoming’s Hispanic population has become more diversified.  A Shift From Agriculture ran on April 26 and ‘A Good Place to Live‘ appeared on May 10.

GILLETTE — In Campbell County, Hispanic migrants originally come from all over Mexico, plus Honduras, Guatemala, El Salvador and even Puerto Rico and Argentina.

They come to Gillette for the money, but stay for sense of security and the schools.

Energy-based jobs provide the primary draw. A booming economy based on the troika of coal, oil and gas development, and major industrial construction (most related to energy) has turned Campbell County into an employment machine.

Between 2000-08, Campbell County’s unemployment hovered between 3.1 percent and 2.0 percent. In Wyoming only Sublette County had a lower rate, 1.7 percent in 2008, according to Wenlin Liu, senior economist with the Wyoming Economic Analysis Division.

The Powder River Basin produces roughly 40 percent of the coal mined in America. The number of miners needed to produce that coal has doubled in the past decade to nearly 6,000, according to information provided by the U.S. Mine Safety and Health Administration.

Carlos Ortiz, a baker at El Ranchito in Gillette, prepares dough to make specialty bread that is popular with local Hispanics and others. (Adam Jahiel/WyoFile - click to enlarge)

In addition, since 2005, Campbell County has seen the construction of two major power plants: the $1.3 billion, 385-megawatt Dry Fork Station coal-fired power plant (which required 1,300 workers) and the $224 million, 110-megawatt WyGen III power plant.

In fact, a February 2010 report issued by the City of Gillette estimates that from 2000-09, companies and municipalities invested $3.2 billion in Powder River Basin infrastructure, including commercial development, power generating stations, coal mine improvements, upgraded or new public facilities, roads and upgrades to the railroad network.

In 2005 and 2008, natural gas prices spiked to over $13 per thousand cubic feet, driving up Power River Basin coal-bed methane gas production. In 2000, Campbell County produced 10.5 billion cubic feet of gas per month from coal-bed methane wells. By 2005, the industry was producing 25 billion cubic feet per month.

All this growth provided opportunity not only for transient, poorly educated laborers, but for people with different skill sets: equipment operators, educators, managers, retailers and merchants. Hispanics with those skills were among those who have come to Campbell County to work and make a home.

“I am here for the work,” said Carlos Ortiz, a professional baker who recently moved from Colorado with his wife and two children, age five and two. “Too much competition in Denver,” he said.

Ortiz operates a bakery for the Rosiles family, who own a grocery store/bakery in downtown Gillette called El Ranchito. The store caters to Hispanics seeking what they can’t find in Smiths or Albertsons: menudo, brown sugar cones, coconut juice, Mexican baked good, spices, corn meal, cookware, piñatas and the big seller, telephone cards to various Central American countries.

Marco Rosiles walks outside El Ranchito in Gillette, a store that caters to local Hispanics and others. (Adam Jahiel/WyoFile - click to enlarge)

Co-owner Marco Rosiles said he moved to Gillette from Yakima, Wash., in 2010.

For Hispanics, most work in Campbell County is found boca a boca, word of mouth. Labor officials agree.

“They (Hispanics) have a network already established,” said Vermona Petersen of the Gillette branch of the Wyoming Department of Workforce Services.

“It was easy to find work. I had friends,” said Jose Miranda-Ramirez, a builder for Pro-Built Homes of Gillette.

Miranda-Ramirez and his wife, Judith, their children Noel, Cristobal and Brianna moved to Gillette three years ago from a town in the eastern-central Mexican state of Hildalgo.

Hispanics have the reputation as hard workers, an appreciated attribute in Gillette. The former slave and writer Fredrick Douglass once observed, “There is nothing like the lash and sting of necessity to make a man work.”

This urgency might also apply to Hispanics working in Wyoming.

“We have to work,” said Berta Nava. “You know those men dressed in Carhartts and coveralls out there working at 20 below zero? Many times their skin is brown,” said Nava, who owns a grocery, La Casita, which operates just around the corner from El Ranchito.

Filing for unemployment is out of the question for most Hispanics, said Nava, unless they are citizens. The majority, who have work permits – the “green cards” officially known as a U.S. Permanent Resident Card — can’t file for unemployment. U.S. Citizenship and Immigration Services issues green cards on the basis that a company can employ an immigrant on a permanent basis. A claim of unemployment proves otherwise.

Furthermore, most Hispanics have financial obligations in their home country. No figures are available for Wyoming’s Hispanic out-of-country remittances. But in 2009, Mexicans alone working in the U.S. sent remittances worth $21.2 billion, according to the Bank of Mexico.

Georgianna Lopez Hernandez, a Spanish-English translator, is married to Juan Lopez, a migrant from Jalisco, Mexico. He and other Hispanics work for United NRG, one of the dozens of companies that builds, or helps build, pipelines around the Powder River Basin.

The crew of United NRG is biding time, working inside as they wait for better weather and the lifting of seasonal regulations concerning the sage grouse. In order to protect the diminishing sage grouse population, state and federal regulations prohibit oil and gas development activity in certain areas during certain times of the year.

The pre-fab building where Lopez and others are working resonates with the din of off-season repairs: hammers bang out dents, compressors roar and paint guns hiss. Even though it’s bitter cold outside, the men keep an overhead door open to provide adequate ventilation. In a relatively quiet cubbyhole of an office, safety manager JD Eickbush, tries to settle his 6-foot, 5-inch frame into a chair.

“There was a time, say five years ago, when if you had a heartbeat, you get hired. I’ve been here 18 years and I’ve never known the economy to be bad,” said Eickbush. “It’s just one of those rare places. Last big bust we had was in the 1980s.”

About 70 percent of the applicants for labor jobs at United NRG are Hispanic, said Eickbush.

Pipeline companies like United NRG will hire migrant labor, employ them for as long as it takes to get the job done, usually four to six months, then let them go. But usually a worker can get another job. “They rotate from one place to another,” said Eickbush.

Still, there are slow periods. United NRG is down to a skeleton crew of 11 men. At peak time, they have about 40 employees.

Lopez says he’s grateful for his job at United NRG. He’s climbed his way up to pipeline work from tending sheep and cattle (mostly around Douglas), irrigating, landscaping, tree trimming and landscaping. He cannot read or write, either in Spanish or in English. Although he works fairly steadily, he still worries about finances. Two years ago, he went seven months without a job.

“I showed up every day (at various pipeline companies) looking for work. Eventually I got re-hired,” he said.

United NRG equipment operator Victor Quiñones first came to Wyoming from Chihuahua in 1993 and worked sugar beets and beans in Torrington. Then, following energy development, he moved to Douglas and, in 1999, to Gillette. Throughout the years, he acquired skills as a trackhoe and excavator operator and rarely has trouble finding work.

“I came here legally and never came here to take someone’s job,” he said.

Quiñones is not sympathetic to illegal immigrants, especially those who run afoul of the law. “Give them the boot,” he said.

Quiñones’ intolerance of immigrants who don’t play by the rules creates a curious dynamic.

“Most of the reporting to the authorities of illegal immigrants are called in by other immigrants, some of whom are illegal themselves,” Hernandez said.

Marco Rosiles stocks the shelves at El Ranchito in Gillette, a store that caters to local Hispanics and others. (Adam Jahiel/WyoFile - click to enlarge)

Mexicans have some camaraderie with fellow expatriates from various states such as Jalisco, Nayarit, Durango, San Luis Potosí, and Chihuahua, but there’s not necessarily friendship among between all Spanish speakers, she said. Mexicans accuse Hondurans of acquiring fake Mexican papers so, if they are apprehended and deported, they end up just on the other side of the U.S. border, not 1,000 miles south in Tegucigalpa.

Both Quiñones and his wife have green cards. They have four children, ages 18, 15, 12 and 10, in the Gillette schools, which he says, “are the best.” His daughter won an essay on “why we celebrate Martin Luther King day” and, as a reward, got to spend the day tagging along with then-Governor Dave Freudenthal.

“I’m inside the American dream,” he said. “Go back to Chihuahua? Never.”

Fighting the Stereotype

And what of prejudice? Older Hispanics who grew up in Torrington or the Bighorn Basin recall unvarnished discrimination. Inez Ontiveroz, a 70-year old Latino who grew up in Lovell, said each morning the school bus driver would tell any Hispanic student, “get to the back of the bus.”

Carlos Donjuan, another laborer with United NRG, says he’s never felt the crush of blatant discrimination. “Naw,” he said, “and I’ve worked all over Wyoming. Sometimes, I feel Hispanics have got to put in more effort. But that’s it. I want to be just like anyone else.”

While rarely overtly hostile, some in Gillette did not put out the welcome mat. When Nava and her husband moved up from El Paso in 2001, they were not warmly received by all quarters.

“The second day we were here, we were moving into a house trailer when the police showed up. They said someone in the trailer court had reported a stolen TV and had seen Mexicans driving in a truck with Texas license plates and assumed we had committed the crime,” she said.

“But Gillette is getting used to us,” said Nava.

Ten years ago, Nava’s sister invited her to visit Gillette. Nava, a legal U.S. resident, lived in San Antonio, and struggled to make ends meet. “I was making minimum wage and could barely pay the rent.”

Marco Rosiles stands behind the counter of El Ranchito in Gillette, a store that caters to local Hispanics and others. (Adam Jahiel/WyoFile - click to enlarge)

After her visit, she and her truck-driver husband decided to move to Gillette permanently.

Nava said it wasn’t easy at first. She got a job at Walmart. People stared at her and made rude comments when she spoke in Spanish on her cell phone. In 2007, she started a bodega-style Mexican grocery, La Casita, in downtown Gillette, and has had to move once because demand for her products required expansion. She sells mostly groceries, but also clothing that Hispanics can’t find elsewhere in Gillette, such as men’s white jeans, and children’s outfits for first communion or quinceañera, the celebration of a girl’s 15th birthday.

Nava says she appreciates the schools in Gillette. Her son goes to Meadowlark Elementary, a school that, until last year, had 131 Hispanic children out of a total student body of 301. “My son loves that school,” said Nava.

In contrast to previous generations of migrant Hispanics who saw education as a luxury, this generation sees schooling as critical.

“They are hyper-concentrated on taking advantage of the opportunities before them. They expect a lot of their kids,” said Barry Jankord, principal of Meadowlark Elementary. “People respect that.”

Meadowlark became so heavily weighted toward Hispanics that in 2010 Jankord asked for a de facto integration, sending some Hispanic students to Hillcrest and Rawhide Elementary schools.

“They were overwhelming our ESL (English as a second language) teachers. Plus, they were not getting the opportunity they deserved to mix with the other kids,” he said.

The Hispanic concentration tends to be in the elementary grades, said Jankord. Hillcrest Elementary now has 96 Hispanics out of 705 students; Rawhide Elementary has 61 out of 291. The entire Campbell County school district has 705 Hispanics out of 8,499 total students.

“New immigrants have zest for learning,” said Jankord. “It creates some interesting motivation. You might have a white kid from a comfortable family, smart enough, but not really that interested in school, sitting next to a Latino kid who’s really busting his tail. Chances are that white kid is not eager to see himself get surpassed by the new kid in town.”

The writing is on the wall, said Jankord, citing a January 2009 Education Week article titled Immigration Transforms Communities.

The article detailed the community of Springdale, Ark., which, like Campbell County, once had few English-language learners, but then the good economy began drawing new immigrants. By fall 2008, Springdale’s “English-learner population alone stood at 7,000 children — roughly 40 percent of the total enrollment of 17,400 students,” wrote author Lesli A. Maxwell.

Some Hispanics have taken education as a career. Adriana Gutierrez moved to Gillette in 1997, barely able to speak English. Now she is a teacher’s assistant for English as a second language at Twin Spruce Junior High. Educated (she was an accountant for a construction company in Mexico), motivated and endowed with surplus energy and enthusiasm, she has taken a liking to Gillette.

“It’s a little town with people who really care,” she said.

Gutierrez is not afraid to tackle political issues, making her a very visible Hispanic immigrant in Wyoming. In a space of less than 10 years, she moved from someone functionally illiterate in English to an advocate for Even Start, a state- and federally-funded program aimed at academic achievement for young children and their parents who are learning English as a second language.

When the 2010 state Legislature wavered over funding all five Wyoming Even Start centers, Gutierrez began writing letters and successfully campaigned to prevent any center from closing.

“They (Even Start) gave me an opportunity. I did not want to see that denied to anyone else.” And now, she says, her mission is clear. “I am here for a purpose: to help Hispanic children learn English.”

More Than Hustle and Cheap Labor

The temperature outside shrivels the mercury in the glass to minus 21. Yet, step in the door of the La Frutería De La Cruz, and the smells and colors of Mexico greet visitors. The tang of oranges and tomatoes mixes with the earthy odors of yucca. Pale green chayote, a squash, lie beside a shade of aqua belonging to the prickly leaves of aloe vera.

Francisco Delacruz Jr. unloads tomatoes La Frutería De La Cruz, a Gillette specialty store that carries hard-to-find fruits and vegetables sought by local Hispanics and others. (Samuel Western/WyoFile - click to enlarge)

La Frutería De La Cruz specializes in fresh produce. The store has no refrigeration system, not that they need to worry keeping vegetables cooled on a day like this. The problem is too much chill.

Worried about possible damage, Francisco Delacruz and his father, Francisco Sr., hurry to unload a truck they drove up from Denver the previous night. Each Wednesday, father and son drive to Denver and visit various fruit and vegetable wholesalers, and fill up their truck with specialty items like fresh tortillas. They return by Thursday afternoon to get ready for Friday sales, their busiest day.

“Nothing here comes from a greenhouse,” said Francisco Delacruz Jr., 18, a partner in this family business. “It comes from the dirt.”

Francisco Sr. sold fruit in Mexico, moved to California and, eventually, ended up working in the oilfields of Wyoming. Injured while on the job (he declined to talk about the incident), he had time on his hands during recovery. Two summers ago, he began roasting chilies in downtown Gillette. This led to selling produce, two or three boxes at a time. He consistently sold out and began prowling the produce sections of the chain grocery stores in Gillette, including Smiths and Walmart, and thought he could sell produce “a little lower” than anyone else and make money.

Delacruz said his mother Maria is the brains behind the operations. “She keeps the whole place together.”

La Frutería De La Cruz is small (one room) and located on the west side of Gillette, out of the commercial mainstream. Still the customers, both brown and white, come for the unique products. The patronage of the store, even in sub-zero weather, might be seen as another acknowledgement by Gillette that Hispanics can bring more to a community than hustle and cheap labor. Delacruz says they are not getting rich. “It pays the bills. But what more do you want?”

Yet with typical ambition, Delacruz aspires to not only sell produce. He wants to grow it.

“You know what I’d really like to do? Start our own garden. Not too big, maybe an acre. If we have enough water, we could do it, even here in Gillette. Wouldn’t that be something?”

Samuel Western is a freelance writer living in Sheridan.

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