Foster Friess, the Jackson Hole-based mutual-fund mogul and philanthropist, has lately taken to calling himself the “underdog billionaire.”

It’s a reference to the fact that his ability to influence elections doesn’t quite measure up to those who use 11 digits to track their net worth, rather than a mere 10.

Friess has made national headlines in recent weeks thanks to his contributions to a super PAC that supports Republican presidential candidate Rick Santorum. Friess is the main benefactor of the Red White and Blue Fund, which spent $537,000 on ads to help the Pennsylvanian Republican win the Iowa caucuses. And Friess recently sent solicitations to 5,000 wealthy Republicans, promising to match any contributions they make to the Red White and Blue Fund up to $500,000.

Friess calls himself an underdog because he’s up against the likes of Sheldon Adelson, the casino magnate, whose personal wealth of $21.5 billion far exceeds Friess’s. Adelson has given $5 million to a super PAC supporting former House Speaker Newt Gingrich.

Unlike traditional political action committees, super PACs aren’t limited in the amount of money that they can raise or spend to support a candidate. They were made possible by the Supreme Court’s January 2010 ruling in Citizens United. The only catch is that the super PACs must operate independently from the politician’s own campaign.

Santorum has the best shot at taking down President Barack Obama in the general election, Friess believes. Friess, a born-again Christian, says the Obama administration has made decisions — such as funneling taxpayer funds into failing solar company Solyndra — that have hurt the economy.

In an email interview with WyoFile, Friess says he has known Santorum since the mid-1990s. Santorum is the only Republican candidate who “understands the plight of the blue-collar worker,” Friess says.

He believes Mitt Romney, the Republican frontrunner, can’t knock off Obama because his “patrician” background won’t play well with working-class voters.

Santorum, whose grandfather was a coal miner, has vowed to cut corporate taxes on manufacturing companies to allow U.S. firms to become more competitive with their Chinese counterparts.

“His positions are not only completely consistent with mine, but are consistent with the 80 to 90 percent of the America people who want to have a more fiscally responsible government,” Friess says.

He adds:  “I also like the fact that Santorum is 53 years old and he starts each day with 50 push-ups. It will be very hard for us to expect to win with the more mature candidates.”

Critics of super PACs say they give too much sway to conservative billionaires like Friess. “The goal of the top 1 percent is simple,” U.S. Senator Bernie Sanders, a Democrat from Vermont, wrote recently in a letter soliciting support for a a constitutional amendment to overturn Citizens United. “They will spend as much as it takes to elect candidates who support a right-wing corporate agenda.”

Leslie Peterson, a Democrat who ran unsuccessfully for Wyoming governor in 2010, agrees with Sanders, calling political funding in the U.S. a “disaster.”

She believes the super PACs could become just as big an issue in Wyoming as they have in national elections. “The minerals industry in Wyoming has huge resources to put into electing ‘their people,’ and they may very well do so,” says Peterson, who is also from Jackson.

Peterson notes, however, that Friess is acting within the law, and she adds that he and his wife, Lynn, have been “amazingly philanthropic” in Teton County. The Friesses have given away millions of dollars in Wyoming, to small humanitarian charities in Jackson, the National Museum of Wildlife Art, and the University of Wyoming, among others.

“They do a lot of stuff that I hate, but I also have to say they do a great deal that is good,” Peterson says. “I can’t condemn the man for doing what he believes in. I’m doing the same thing — I just don’t have the same wherewithal.”

Friess says he finds the recent concern about rich people influencing elections to be “quite humorous.”

Friess, who has long accused the mainstream media of having a liberal bias, notes that plenty of billionaires are in fact Democrats — and they’ve also been known to make huge contributions to influence elections.

The billionaires George Soros and Peter Lewis spent millions in 2004 through a 527 organization — the general category that super PACs now fall into — in an unsuccessful bid to derail former president George W. Bush’s re-election.

“It seems like these super PACs are only a problem if they’re operated by Republicans,” Friess says.

Jim King, a political science professor at the University of Wyoming, says the rise of super PACs could make it easier for the oil, gas, and coal companies that fuel the state’s economy to support Republican candidates, who are typically regarded as friendlier to the industry.

“There’s certainly the potential for the super PACs to make it more difficult for Democrats, unless they can get somebody to come in on their side,” King says.

But he notes that money is only one part of equation — and often not the deciding factor — in who gets elected. One of the biggest spenders in Wyoming election history was Democrat Bob Schuster, a Jackson lawyer, who spent $1.3 million in an unsuccessful 1994 bid for the U.S. House of Representatives, far more than Barbara Cubin, his Republican opponent. Cubin edged past Schuster with 53 percent of the vote and held the position for the next 15 years.

“It’s very, very difficult to actually buy an election,” King says.

Santorum built some early momentum with his surprising win in the Iowa caucuses, but he placed third behind Gingrich and Romney in the South Carolina primary on Saturday. He has vowed to stay in the race despite the weak showing.

Friess says he’ll switch horses if Santorum doesn’t win the nomination, and provide financial support to the GOP nominee in the general election.

He jokes that he’s ready to spend “$1 trillion” to defeat President Obama.

“We need to return our nation back to one that’s run on ethics and honesty and forthrightness,” he says.

— Also check out this Foster Friess profile originally published by WyoFile on January 25, 2011, “Wyoming Philanthropist Foster Friess; Hates taxes, opens wallet wide to those in need.”

Ben Gose is a Lander journalist who writes frequently for The Chronicle of Philanthropy and The Chronicle of Higher Education, and contributes to programs on Wyoming Public Television. He also coaches the sprinters on the Lander Valley High School track team.

If you enjoyed this article and would like to see more quality Wyoming journalism, please consider supporting WyoFile: a non-partisan, non-profit news organization dedicated to in-depth reporting on Wyoming’s people, places and policy.

REPUBLISH THIS STORY: For details on how you can republish this story or other WyoFile content for free, click here.

(Banner photo by Gage Skidmore)

Dianna and Dallas Engler of Gillette would love to offer healthcare benefits to the 18 or so employees who work at Value Villa, the retail consignment shop they own. But they can’t. No quality, affordable insurance package exists for a small business like theirs in Wyoming. “It’s very sad when people in this country cannot afford health care,” says Dianna, 63. She and her husband pay $2,400 every month for their private health insurance.

The Englers have owned Value Villa, which sells everything from clothing and books to furniture and motorcycles in Gillette, Wyo., since 1983. Over the years they’ve employed up to 34 people at a time. Their son, Scott Engler, 44, manages and runs the store. Dianna trains new employees during the summers.

Scott Engler, manager and son of the owners of Value Villa in Gillette. “It’s our civic responsibility to help people out,” says Engler. “But it just wasn’t affordable.” (Caiti Schuler/WyoFile — click to enlarge)

In the 80s and 90s, they offered good health insurance benefits to their employees. The package had a $500 deductible and Value Villa paid 85 percent of the premium while the employee paid 15 percent. In the early 2000s premiums started going up and Value Villa had to agree to higher and higher deductibles to afford the plans. Eventually, Value Villa could only pay half the premium for a plan with a deductible of $5,000. The employees, many of whom are young women, could not afford the other 50 percent of the premium, and the $5,000 deductible was too high to help them with routine healthcare needs.

That’s when, “Scott did research on every insurance known to mankind. We spent a lot of time looking into what we might be able to do,” Dianna says.

But they couldn’t find anything that would work. In 2004 Value Villa had no choice but to stop offering health insurance. A few of their workers get insurance through their spouses, but others are now uninsured. “It’s our civic responsibility to help people out,” Scott Engler says. “But it just wasn’t affordable.”

The Englers are typical of many small business owners whom a Wyoming Health Benefits Exchange, a requirement of federal health care reform, is targeted to help. The purpose of an exchange, supporters say, is to improve the accessibility, quality and cost of health insurance for individuals and small businesses by creating a regulated, transparent marketplace and pooling thousands of individuals and small businesses together to give them buying power. Under the federal Affordable Care Act, each state will have an operating exchange by January 1, 2014. States decide whether to design and run their own exchanges or let the federal government run it.

Wyoming has cautiously studied and is beginning to draft a bill to create a state-run exchange. Some say the state is foot-dragging, reluctant to engage because of political opposition to the federal healthcare reform law. Supporters believe that even if the Affordable Care Act crumbles under scrutiny of the Supreme Court this spring or if a Republican is elected to the White House next fall and repeals the law, uninsured individuals and small business owners in Wyoming would benefit from a robust exchange. Others say that controlling costs should be the first priority of fixing the healthcare system, and the state should look to solutions other than an exchange.

Glimpse of a Wyoming Health Benefits Exchange

Under the federal Affordable Care Act, every state will have an insurance exchange, a device meant to address the three pillars of healthcare reform – accessibility, quality and cost – for small businesses and individuals. Members of the U.S. Congress and their staff will also be required to get their health insurance through the exchanges.

To address the first of the three pillars, access, the exchange makes shopping for insurance easy. It also matches low-income buyers with federal insurance subsidies and directs those who qualify into Medicaid. It lets buyers clearly compare plans side-by-side, making insurance packages more transparent and competitive. Like Expedia or Travelocity (travel websites which compare airfare from several airline companies side-by-side to help shoppers make an educated purchase), the exchange will have a website that clarifies the differences between insurance plans so consumers know exactly what they are buying.

Employee Carol Foster shares a hug from a furry friend of a regular customer.. Value Villa is typical of many small businesses that a Wyoming Health Benefits Exchange, a requirement of federal health care reform, is targeted to help. (Caiti Schuler — click to enlarge)

To address quality of health insurance, the exchange defines minimum essential benefits that must be offered by each insurance plan and puts a cap on deductibles. States have some flexibility in deciding how rigorous the requirements will be. Side-by-side comparisons of plans are also expected to improve quality, in contrast to the current system where it’s very hard to tell what plans cover and how they differ.

To address cost, the exchange combines individuals and small businesses into a large pool of buyers who share risk and have buying power, much like a large corporation with thousands of employees. The Congressional Budget Office estimates that transparency in insurance plans, a competitive marketplace and reduced administrative costs for doctors and employers will drive premium costs down 7 to 10 percent.

In October of 2010, Governor Dave Freudenthal created the Wyoming Health Benefits Exchange Steering Committee, which continues under Governor Matt Mead, to study the feasibility of a Wyoming-run exchange. Wyoming received an $800,000 planning grant from the federal government to fund the study. The 17-member committee includes representatives from the state legislature, several state agencies, insurance providers and the business community.

Over its first year of operation, the committee hired Public Consulting Group, a Boston-based company working with several states on health care reform, to help them understand what a Wyoming-based health exchange would look like. Their market study determined that 83,000 Wyoming citizens – 15 percent – are uninsured.

Of the 208,000 people with individual insurance in Wyoming, half face a deductible of $3,000 or more. Insurance plans for individuals in Wyoming have an average actuarial value of 43 percent. The actuarial value is a measure of how good the insurance is, determined by the average percentage of medical costs the plan ends up paying as opposed to what the insured person pays. The national average is between 55 percent and 60 percent, and the minimum value allowed under the Affordable Care Act is 60 percent.

The small group market in Wyoming is better off than the individual market: almost two thirds of these plans have a deductible of less than $1,000 and the average actuarial value is 63 percent.

The study estimated that between 38,000 and 41,000 Wyomingites would enroll in an exchange, some individually and some through their small employer. About 61 percent of them would be people who are currently uninsured while 19 percent would be those who currently have employer insurance and 20 percent would be those who currently buy their own individual insurance.

The consulting group determined that a Wyoming-run exchange would cost about $4.2 million per year to maintain. To make the exchange self-supporting each enrollee must pay a monthly fee. For example, if 30,500 enroll, the fee would be $11.46 per month.. If more enroll, those monthly fees would go down. States also have the option to partner with neighboring states on some aspects of the exchange, which can cut costs a bit.

The steering committee took their findings to the state legislature’s Labor, Health and Social Services Committee in October 2011. In December, the committee voted to sponsor a bill with three parts. First, it would extend the deadline to create the exchange until after next year’s legislative session in April 2013. That doesn’t meet the federal government’s January 2013 deadline for states to show their plans for an exchange, but it’s the next chance for the legislature to consider a bill. Second, the committee’s bill excludes the governor or anyone else from creating an exchange without the legislature’s approval. And third, it provides $20,000 to pay expenses for the four legislators working with the Exchange Steering Committee on the exchange bill for 2013. The state will use federal funds to design the exchange.

“Our next step is to take the show on the road,” says state Rep. Elaine Harvey (R-Lovell), co-chair of both the Exchange Steering Committee and the legislative Labor, Health and Social Services Committee. Over the coming months, the Exchange Steering Committee will hold seven town hall meetings around Wyoming to learn about the concerns and needs of individuals and small business owners. The committee will use information gathered at the meetings as it writes a bill for Wyoming’s exchange.

The first meeting took place January 10 in Cody. The next town hall meeting is scheduled for Tuesday, January 17, 2012 from 6:00 p.m. to 8:00 p.m. at Central Wyoming College’s Wind River Room in Riverton. The meetings in Gillette, Casper and Cheyenne will occur in January, information to be released soon. There will also be town hall meetings in Rock Springs and Jackson later this winter. Check the “Latest News” tab on Governor Mead’s website for the schedule.

Existing exchanges

Two states – Massachusetts and Utah – were already operating exchanges before passage of federal healthcare reform. The Massachusetts exchange, called the Connector, provided the model for the federal law. The Connector is an “active purchaser” exchange, which means the state approves insurance providers, ensuring that the exchange sells only the best possible insurance packages. The Connector launched in 2007, where to date over 39,000 people buy their health insurance. More than 33,000 of them are individuals. As of August 2011, three different plans for small businesses within the Connector covered only 6,500 people through about 2,250 small businesses. In Massachusetts, 98.1 percent of residents have health insurance.

By contrast, the Utah model is an “open marketplace” exchange, where any insurer can sell. The state has less oversight than in Massachusetts. The Utah Exchange launched in 2009. About 160 small businesses were enrolled as of August 2011 covering 4,200 people. About 86 percent of Utah’s population is insured.

Scott Engler and Dakota Christiansen load up a large filing cabinet into the bed of a customer's truck. (Caiti Schuler/WyoFile — click to enlarge)

On the Utah Health Exchange, small business owners determine a set amount to pay toward each employee’s health benefits. Then the employee, who can add additional money if desired, goes to the exchange’s website and selects his or her insurance. If the employee changes jobs, he or she can keep the same insurance plan as long as the next employer is part of the exchange.

“The Utah exchange I find extremely interesting and intriguing,” says Al Harris, owner of a Green River-based radio broadcasting company and a business representative on the Wyoming Health Benefits Exchange Steering Committee, “but the Utah exchange does not meet the federal guidelines.”

“Nobody knows what ‘compliant with the Affordable Care Act’ means because the federal government hasn’t established those criteria yet,” says Norman Thurston, Utah’s Health Reform Implementation Coordinator. “We’re definitely still in development. We think we are on a trajectory to be certified when the time comes, but we’re not finished yet.” So far, small businesses, but not individuals, can purchase insurance through the Utah exchange, which creates a transparent marketplace, but doesn’t include some of the federally required mechanisms for improving access, ensuring quality or controlling costs.

“The lesson is that Utah’s health exchange as a model of health reform has not done anything for those three pillars,” says Judi Hilman, executive director of the Utah Health Policy Project, a nonprofit trying to improve healthcare access for Utah residents. She says for an exchange to work everyone available must participate, which will only happen with a mandate. “Those are the kinds of changes, the very levers that Utah – for political reasons, and I’m guessing Wyoming, which is more conservative than Utah – was not able to pull. So we are grateful for federal reform for pulling those levers for us.”

Several other states are designing their own exchanges, too. Among Wyoming’s neighbors, Colorado has passed legislation to create an exchange governed by a governor-appointed public board. Colorado’s exchange is scheduled to launch in October 2013, fifteen months before the federal deadline. Montana’s legislature created a committee similar to Wyoming’s to study an exchange. South Dakota’s governor created a large taskforce working on many aspects of the exchange. Idaho and Nebraska failed to pass legislation to create study commissions or start developing exchanges. Florida and Oklahoma have returned the federal planning grants they received and decided they will not actively participate in exchange design in their states.

The federal Health and Human Services Department will set up and operate exchanges in states that don’t create their own. If a state wants to run its own exchange, but isn’t ready by January 2014, HHS will operate the exchange until that state is ready.

Is a state-run exchange right for Wyoming?

Promoters of a Wyoming exchange hope it will make insurance accessible, quality and cost effective for the 15 percent of the population,  83,000 people, who are uninsured in the state – plus the tens of thousands more who have poor-quality, high-deductible, expensive insurance that doesn’t cover their healthcare needs.

“So what is concrete so far?” says Chairman Harvey. “We want a Wyoming market. We do not want to partner with the federal government. And we want as much flexibility in our plans as we can have so people can be insured appropriately.”

Essential health benefits, defined by states based on a benchmark plan, must at least cover everything listed above. (Click to enlarge)

She predicts the greatest challenge will be designing the “essential benefits” to balance meaningful coverage with affordability. The federal Health and Human Services Department requires that states set essential benefit standards based on the benefits and services provided by a benchmark plan. The benchmark plan is one of the three largest – as determined by enrollment – small group plans, state employee health plans, or federal employee health plans in the state. Every insurance plan must, at a minimum, offer the essential benefits and cover ten categories defined by HHS such as maternity and newborn care, mental health and substance use disorder services and prescription drugs.

Governor Mead has endorsed the Health Benefits Exchange Steering Committee’s work on a Wyoming-based exchange, writing last October that the state should, “establish some components of a state-run benefits exchange and that these efforts [should] be transparent and accountable. I advocate for an approach that gives Wyoming as much flexibility for as long as possible.”

Harvey believes that a state-level, quasi-governmental department made up of experts from around the state, comparable to the Wyoming Business Council, should govern a Wyoming exchange. She wants the Exchange Steering Committee to have a bill or series of bills designing a Wyoming exchange ready to present to the appropriate legislative committee(s) this year.

Harvey, who opposes the federal Affordable Care Act, says while the law triggered the state to work on its exchange, she believes individuals and small business owners could benefit from an exchange regardless of whether the law stands up in court this spring.

“I hope at the end of the day – this is just me speaking – that we have done our work well enough so we can hold our heads high and say we can do it,” she says. She emphasizes that covering the uninsured also benefits those who already have insurance, because hospitals and doctors don’t have to transfer the costs of caring for the uninsured to paying patients.

But state Sen. Charlie Scott (R-Casper), also co-chair of the Labor Health and Social Services Committee (though not a member of the Exchange Steering Committee), is not so sure. He questions the numbers presented by the exchange study and doubts the feasibility of an exchange in a state with such a small population. He believes, “the traditional marketplace has worked moderately well for Wyoming,” insisting that because Wyoming places few regulations on insurance companies, there is adequate competition. His primary concern for improving Wyoming’s healthcare system is controlling costs, and he doesn’t believe a Wyoming exchange would be large enough to do that.

Barb Rea, a consumer advocate for Wyoming Project Healthcare and the Equality State Policy Center, has worked for years to bring a better health care system to Wyoming. She also buys her own insurance. Her plan has a $5,000 deductible and rising premiums. And in 2009 she was diagnosed with kidney cancer.

“It was just a nightmare getting all of my expenses paid,” she told the audience at a public forum to explain pieces of the Affordable Care Act last September. “Now no one will write me a policy because I have a preexisting condition. I’m not satisfied with my product. I did everything right, paid all my bills, and there’s no place for me to go. That’s an example of something we are trying to fix.”

She wants to see an insurance exchange in Wyoming, but is not sure whether it’s better for Wyoming to run its own exchange or have the federal government run it. And while she’s glad to see Wyoming working on reforms, she’s not sure the Health Benefits Exchange Steering Committee is the best approach.

“It’s a politically appointed board,” she says. “It’s too hard for them to get the work done. It’s really a big task. It will take a lot of expertise to get this accomplished.” She adds that it’s important to have consumer input into design and governance of an exchange, but it needs to be run by people with lots of experience and technical expertise. “The states that are really moving forward and making changes to their systems and getting everyone covered have healthcare planning bodies at the state level. We could do that.”

She emphasizes that the first priority of any healthcare reform should be to get coverage for all citizens and turn them into paying customers, something the exchange is designed to help do. “Then, how do we make best use of money that is in the system to take care of what’s medically necessary in people’s lives? The exchange will be part of the answer, but we have more work to do and we need more data.”

The work continues

A customer peruses a clothing rack at Value Villa. Although rising costs forced Value Villa to cut health benefits, co-owner Dianna Engler says driving down costs won't help if the coverage is inadequate. (Caiti Schuler — click to enlarge)

Rising costs prohibited the Englers from providing insurance to their employees, but driving down costs won’t fix the problem if it results in a cheap product that doesn’t adequately cover healthcare needs, Dianna says. “The main crux for anybody would be the quality of the insurance plan itself,” she says. “It has to be affordable and worth having. If you pay a dollar for nothing, that’s too much.”

She was unaware of the Wyoming Health Benefits Exchange Steering Committee and their work, but suggests that it would be nice if employers could contribute to their employees’ health benefits, but leave selection of the plan up to each individual employee, much as the Utah exchange allows.

Meanwhile, “We have 83,000 people uninsured in Wyoming,” Harvey emphasizes. “We are still seeing them and we are taking care of them, but we’re doing it as uncompensated care. We’re seeing them in emergency rooms instead of doctors’ offices. Medical bankruptcy is happening all over the state. We have to do something.”

Emilene Ostlind was a High Country News editorial fellow in the winter of 2011 and now works as a freelance journalist in Lander, Wyo. 

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Cynthia Lummis first won election to the Wyoming House of Representatives in 1979. She was just 24 years old at the time, making her the youngest woman in Equality State history to serve in the legislature.

Since then, the Republican from Cheyenne has spent 24 years in elected office, climbing the political rungs through both chambers of the Wyoming Legislature to the state treasurer’s office, and then to the halls of U.S. Congress.

Cynthia Lummis' rise in Congress is preceded by her success as a businesswoman and investor. Her 2007-2008 financial disclosure forms reported an estimated net worth between $20 million and $75 million. (Photo from Lummis' Facebook — click to enlarge)

Though it is not widely known, Lummis’ rise in politics has been matched by her ascent as a businesswoman. While working as a lawyer and elected official in Cheyenne, she quietly built her personal wealth through a number of real estate ventures she pursued with her husband and law partner Alvin Wiederspahn, who has been a board member of several banks.

Even before Lummis began her political career, her family was known in Cheyenne for owning the Arp and Hammond Hardware Company, along with several large ranch properties southeast of town.

But election to the U.S. House in 2008 shed more light on Lummis’ personal finances, showing that the self-described rancher and small business owner may be one of the richest lawmakers in the Capitol.

In 2007-2008, Rep. Lummis’ financial disclosure forms reported a net worth between $20 million and $75 million, landing her spot No. 15 on RollCall.com’s list of the 50 wealthiest members in both houses of Congress.

Those numbers may make her net worth appear to be larger than it actually is, because the form used by Congress allows lawmakers to report their wealth within broad ranges; if an asset is over $1 million, there are only four boxes to check: $1-5 million, $5-25 million, $25-50 million, and over $50 million. (Click here to learn more.)

Lummis’ more recent disclosure forms have reported lower values, putting her total net worth for 2010 between $5.5 million and $24 million. Still, that ranks her as the 29^th richest member of the U.S. House.

On paper, Lummis’ reported wealth dwarfs that of her fellow Wyoming members of Congress: Senators Mike Enzi and John Barrasso, both Republicans. According to financial disclosure statements filed with the Clerks of the House and Senate in 2010, Barrasso’s net worth is between $2,713,015 and $8,747,000, and Enzi’s is between $440,067 to $1,878,000.  The Center for Responsive Politics ranked them as the 34^th and 66^th wealthiest senators, respectively.

Sen. Enzi’s biggest asset may be the three-story Washington D.C. home he bought in 1997 for $360,000, and which D.C. tax authorities valued at $874,000 in 2008.

The bulk of Sen. Barrasso’s money is his portfolio of Vanguard investment funds, valued between $2 million to $7.25 million in 2010. He earned a salary of $306,000 for his last year of work at Casper Orthopedic Associates in 2007.

If Lummis’ median estimated wealth of $14.75 million is accurate, she could be easily counted among the wealthiest 1 percent of all Americans who have more than $9 million in assets.

Lummis wrote about moving cows in Platte County during a weekend home from Washington in a recent press release. But it would be a mistake to cast her as an ordinary ranch woman. Her career trajectory and her financial balance sheet reveal an ambitious, intelligent woman from a wealthy family who gained political clout through her work on key state issues like tax revenue and the management of billions in state money.

Wealth in Property

Most of Lummis’ wealth is locked up in her shares of Arp and Hammond Company, Lummis Livestock Company, and Old Horse Pasture Inc. In 2007, she reported these three large family land companies to be worth between $5 million to $25 million each, which attracted the attention of Rollcall.com and other news outlets.

Lummis revised the values of the companies in her 2009 disclosure form,putting them between $1 million and $5 million, which dropped her out of the top 20 rankings of the wealthiest members of Congress.

Rep. Cynthia Lummis' financial disclosure form shows that a large portion of her income comes from businesses jointly owned by her and her husband Al Wiederspahn. (Form courtesy of Opensecrets.org — click to enlarge)

While the exact value of these companies is unknown, the real estate footprint is part of the public record. Records from the Laramie County Assessor’s office show that Lummis is part or full owner of over 14,000 acres in Laramie County assessed at $2,735,244 in 2011.

Lummis Livestock paid a distribution ranging from $48,000 to $50,000 to Cynthia Lummis from 2007-2009, but paid nothing in 2010. One parcel owned by Lummis Livestock contains a gravel pit that could be generating income.

With her husband Wiederspahn, a Cheyenne Lawyer and former board member of Rocky Mountain Bank and First National Bank of Wyoming, Rep. Lummis owns the Colony Building and the Carey Block in downtown Cheyenne, along with a warehouse at 1112 Dunn Street. Those three properties were assessed at $1,114,100 in 2011.

Wiederspahn also owns Equipoise Corporation, a real estate and historic preservation development firm valued between $1 million to $5 million. Through Equipoise Corporation, Wiederspahn owns a three-story apartment building with 11 bathrooms at 912 Country Club Avenue in Cheyenne, plus a lot at 410 Randall Avenue. The latter property was to be the site of The Irwin, a luxury condo building that has not yet been built. Those properties are valued at $618,253 in 2011.

A map of the property near Cheyenne owned by the Lummis Family. (Graphic by Guy Padgett with data from Laramie County Assessor — click to enlarge)

Equipoise also owns an 80-acre parcel at the foot of the Wyoming Range in Lincoln County, near the Star Valley community of Etna.

County tax assessment records show Wiederspahn and Lummis own 1,600 acres of ranchland in Platte County, located on Cooney Hills Road west of Wheatland near the Laramie Range. They own another 1,200 acres in Albany County.

Wiederspahn and Lummis’ primary residence is on Bent Avenue in Cheyenne, valued at $314,277 in 2010. Lummis also owns a condo on New York Avenue in Washington, D.C. valued at about $501,440 according to tax assessment records.

Lummis’ assets and those of her husband have not grown extravagantly since her election to Congress, though she did manage to pay off two ranch mortgages between 2008 and 2009 valued between $1.1 million and $5.25 million.

In 2010, Lummis reported between $115,000 and $250,000 in real estate income from the Colony Building, the Carey Block, and the warehouse at 1112 Dunn. Though not reported in the disclosure statement, she also earned a yearly salary of $174,000 as a member of Congress.

State Treasurer 1999-2007

Lummis’ power may have reached a peak during her years as state treasurer, when she was responsible for the investment and diversification of the massive windfall Wyoming saw during the natural gas boom.

During her two terms as state treasurer from 1999 to 2007, the state had received over $6 billion in revenue. Lummis oversaw the growth of the state’s investments from $3.5 billion to $8.6 billion, and led the conversion from mostly fixed income funds to a diversified portfolio.

As one of the five members of the State Land and Investment Board, she championed a strategy to put 50 percent of state investment funds into equities. Up to that point, the fiscally conservative state had kept most of its investments in fixed-income bonds.

During the course of Lummis’ term she helped choose fund managers like Cheyenne Capital Fund, which invested $257 million in state money, and State Street Global Advisors, which invested $952 million by December 2006.

Lummis’ treasurer’s report for 2006 shows other large investments were made through Fisher Investments and Capital Guardian Trust, which managed $350 million each. Western Asset Management and Lehman each managed over $330 million in fixed income funds. Friess Associates and GAMCO (Gabelli) each managed over $180 million in equities. Subsequently, donors connected to Lehman, Friess, and GAMCO all gave money to Lummis’ congressional campaign.

The array of new investments created a modernized growth portfolio that many hoped would help equalize the boom and bust cycles of mineral revenue that wreak havoc on the state’s budget.  As Lummis said in her closing treasurer’s report for 2006, “Perhaps no State Treasurer will have as unique an opportunity as I to effect such significant change on Wyoming’s investment portfolios using modern institutional portfolio theory.”

She later wrote a chapter called “Combating the mineral curse: the case of Wyoming” in the book Sovereign Wealth Management for the World Bank. The publisher, Central Banking Publications, flew Lummis on a one-night all-expenses paid trip to London, according to her 2010 financial disclosure form.

In Lummis’ 2008 run for Congress against Democrat Gary Trauner, her campaign materials touted her role in the state’s $4 billion investment growth that occurred during her two terms as treasurer. Gov. Dave Freudenthal told the Casper Star Tribune that the energy boom, not Lummis, should be credited for the growth.

Whether or not the credit can be given to Lummis, it’s clear that the state’s portfolio has been growing in the right direction overall. As of June 30, 2011, Wyoming’s investments had a market value of $14.4 billion.

The increased exposure to growth also brought increased risk, and there have been some setbacks. In 2009 the state portfolio declined in value from $11.5 billion to $10.9 billion, an unrealized loss of $600 million on paper.

Even so, the portfolio is up nearly $6 billion since Lummis left the state treasurer’s office. That growth has been good for Wyoming, but it has also been good for the fund managers. For example, Cheyenne Capital Fund initially collected a yearly management fee of $1.9 million when it was chosen to manage state funds in 2003. Cheyenne Capital Fund founder John Fitzgerald said the company’s formula for calculating management fees is complicated, but usually comes out to about 1.55 percent annually, which is in line with the industry average. His fund charged the state a $2.9 million fee in 2010.

Business and Politics

Over the course of her career Lummis has been involved in many major transactions and policy initiatives, and several of her efforts have resulted in criticism.

In particular, Lummis’ connections to royalty in kind have drawn media scrutiny. As reported by WyoFile, Lummis voted in 2005 to commit Wyoming’s 50 percent interest in mineral royalties from federal lands to the royalty in kind program in the Department of the Interior, an experiment that ended in controversy after a lack of oversight by the Minerals Management Service caused the government to lose hundreds of millions in royalties.

The accounting problems arose during the Clinton years, but were left uncorrected during Bush’s tenure when Wyoming’s Rejane “Johnnie” Burton was director of the federal Minerals Management Service. Burton resigned from that job in 2007, before reports of major corruption in of the service’s Lakewood, Colo. offices surfaced in September of 2008.

Rep. Lummis poses in front of a stack of government regulations. Questions surfaced after Lummis hired Johnnie Burton as a field representative in her Cheyenne office in January of 2009. Lummis had a long association with Burton, who served in the state legislature and chaired the Wyoming Department of Revenue from 1995-2002. (Photo courtesy of Cynthia Lummis' Facebook page — click to enlarge)

After the Lakewood scandal broke, Lummis hired Burton as a field representative in her Cheyenne office in January of 2009. Lummis had a long association with Burton, who served in the state legislature and chaired the Wyoming Department of Revenue from 1995-2002.

In June 2010 Lummis’ Democratic challenger David Wendt criticized her continued employment of the controversial former Minerals Management service director. Burton then defended her record in a July 2010 article in the Casper Star Tribune, saying the press had crucified her. She said that she had initiated an investigation of the Lakewood office in 2006, and that the royalty in kind program had made money for the government.

Lummis paid Burton a yearly salary of $50,000 for her work in Cheyenne in 2009 and 2010, but that was reduced to a salary of $19,000 for January to September 2011. As of this writing, Burton continues to work in Lummis’ Cheyenne office.

Lummis also attracted media scrutiny in June 2011 when the Associated Press reported that several fund managers hired by Lummis during her tenure as state treasurer had gone on to contribute to her congressional campaigns in 2008 and 2010.

As shown below, this was not illegal, and may have been a case of political fundraising as usual.

The Associated Press article noted that donors to Lummis for Congress included John Fitzgerald of Cheyenne Capital Fund and several of his associates. Contributions from the Fitzgerald family amounted to $15,800 from 2008-2010.

As treasurer and member of the State Loan and Investment Board, Lummis had made several moves that benefited Cheyenne Capital. She voted for an investment of $125 million in state money with Fitzgerald’s fund in 2003, and then voted to invest another $100 million with the company in 2004.

In both cases she argued that Cheyenne Capital was the best manager, and subsequently the fund has had an internal rate of return of over 12 percent. (See Cheyenne Capital Fund – Private Equity Commitments and Investments for more information on the fund’s performance.)

Gov. Freudenthal voted against investing with the fund both times, but the measures passed anyway.

Then in 2006, Lummis signed a confidentiality agreement with Cheyenne Capital Group, which sealed their records to the public to protect industry secrets. That agreement was overturned earlier this year by a Freedom of Information Act request made by the Associated Press.

Lummis originally met Fitzgerald in the late 1980s through her husband’s banking interests. Fitzgerald was a lawyer for Kirkland and Ellis when he represented a consortium of equity firms that was headquartered in Cheyenne. Wiederspahn was a board member of Rocky Mountain Bank at that time, and worked with the consortium as it looked for assets to purchase.

In an interview with WyoFile, Fitzgerald said he may have met Lummis once through Wiederspahn at that time, but that he didn’t do any business with her until years later when she called him as state treasurer looking for equity funds to invest in.

While she was treasurer, Fitzgerald invested state money allotted to Cheyenne Capital Fund with several other private equity managers. After Lummis left the treasurer’s office, many of those managers donated to her 2008 congressional campaign, including Paul and Paula Balser of Ironwood Partners in New York ($8,100 from 2008-2011), James Gordon of Edgewater Funds in Chicago ($2,300 in 2008), and J. Martin of Platte River Ventures in Denver ($2,300 in 2008).

Rep. Lummis speaks in Washington D.C. on the launch day of the 10th Amendment Task Force. Some of the biggest individual contributors to her campaign are managers of private equity and large-scale investment funds who she's been associated to in the past. (Photo courtesy of Cynthia Lummis' Facebook page — click to enlarge)

According to watchdog groups, managers of Wyoming’s larger investment funds also donated to Lummis, including the Jackson-based Foster Friess family of Friess Associates ($9,200 in 2008), Mario Gabelli of GAMCO ($3,300 in 2008 and 2009), and Theodore Roosevelt IV of Lehman Brothers and Barclays Capital ($3,157 in 2008 and 2009). In most cases, Lummis was only one among dozens of candidates that these fund managers contributed to at regular intervals.

Since Lummis left the state treasurer’s office in 2007, she had no authority to invest additional funds with the managers or change their compensation. Of the fund managers who made donations to her congressional campaigns after 2008, none of them donated to her campaigns for state treasurer in 1998 or 2002.

Contributions from all managers with ties to Cheyenne Capital totaled over $31,000, a small amount compared to the $1,530,454 total she raised for 2008.

Other sectors represented a much larger portion of her funding. For example, Lummis received over $177,000 from political action committees (PACs) and individuals connected with the energy and natural resources sector.

Aside from the stir caused by the fund manager donations, Lummis has had run-of-the-mill donors for a Wyoming candidate. In her fundraising efforts for her 2010 race she raised over $780,000. More than $279,000 of that came from individuals, while another $412,000 came from PACs.

Lummis held three fundraisers at the Capitol Hill Club in Washington. The events took place on March 11, June 17, and September 28, and helped net major contributions from oil industry and sugar industry PACs.

Notable donors who gave the individual limit of $2,400 included John Fitzgerald, manager of Cheyenne Capital Fund and Seneca Equity Partners; Diemer, Henry, David, and Susan True, all members of the Casper oil family; Jim and Mari Martin, Casper oil investors; Cheyenne businessman Tim Hu; Robert Model of Cody; and R. and Carol Holding of the Sinclair oil company.

Several of these individuals have a long history of supporting Lummis. In her 1992 race for Wyoming Senate, Lummis received contributions from Holding, Hu, and True.

PAC contributions for 1992 included Exxon, Arco, Texaco, Marathon, Burlington Northern, Chevron, Conoco, and many other interests.

Her list of campaign contributors for the 2002 treasurer race read like a who’s who of Wyoming Republican politics: Alan Simpson, Diemer True, Tom Stroock, Eli Bebout, Robert Peck, Judy Catchpole, Ray Hunkins, Cliff Hansen, Jim Geringer, and many others.

A Regular Wyoming Politician

Unlike Sen. Enzi, Cynthia Lummis does not appear to use her political connections or campaign funds to directly enrich her family.

As reported by WyoFile in September, Sen. Enzi’s campaign paid $70,910 to his son’s wife Danielle Enzi for her work as campaign manager from July 2010 to July 2011. Watchdog groups and some members of Congress frown on the practice of elected officials paying their relatives with campaign funds or otherwise, which can turn running for election into a way to build up family wealth. A Department of Energy stimulus grant paid Sen. Enzi’s son Brad $128,000 in consulting fees for his work on carbon storage study related to the slow-moving Two Elk power plant project.

Lummis speaks at a GOP Women's press conference on healthcare reform on July 24, 2009. Research shows that the finances of Lummis and her family are largely unconnected to her political activities. (Photo from Lummis' Facebook page — click to enlarge)

Campaign disbursement reports show that Rep. Lummis pays Wiederspahn $900 quarterly to rent an office space in the First National Bank of Wyoming Building at 2015 Central Avenue in Cheyenne, plus reimbursements like $300 for office expenses, and occasional large ticket items such as $1,000 spent on postage. Total rent and reimbursements paid to Wiederspahn were $10,592 for 2009 and 2010, according to the Center for Responsive Politics.

Lummis’ daughter Annaliese Wiederspahn served as deputy campaign manager for her 2008 House race, before taking on the role of campaign manager in 2010.

Lummis for Congress paid Ms. Wiederspahn no salary for her managerial work, though she received $14,603 in reimbursements for mileage and expenses in 2009-2010. Lummis’ campaign expenditure reports can be found here.

Lummis for Congress also spent $161,876 on a loan repayment to Cynthia Lummis for money she loaned to her own campaign in 2010, plus $15,000 to Lummis for an unspecified expense in 2009.

Alvin Wiederspahn’s wealth seems to be largely independent of his wife’s political activities. In 2003, he partnered with Mick McMurry of Casper and Robert Jensen of Cheyenne in restoring the historic Plains Hotel in downtown Cheyenne.

McMurry was a major early player in the discovery of the Jonah natural gas field near Pinedale, and Jensen was Chief Operating Officer of the Wyoming Business Council at the time.

Wiederspahn also served on the board of directors of the First National Bank of Wyoming. The company is based in Laramie, but has branches in Cheyenne and Fort Collins.

In 2004, Lummis and Wiederspahn purchased shares of First Capital West Bankshares, the holding company of First National Bank of Wyoming. The president of the corporation is Timothy Borden, a banker and small-engine foundry owner from Steamboat Springs, Colorado.

Rep. Lummis’ financial disclosure statements indicate that the debt to Timothy Borden is held by Lummis’ spouse, Alvin Wiederspahn. From 2009 to 2010 the amount owed to Borden dropped from a range between $500,000 and $1 million to between $250,000 and $500,000. So even amid the global economic downturn, Lummis and Wiederspahn have maintained their ability to pay down debts.

Despite WyoFile’s repeated attempts to reach Rep. Lummis’ offices for comment on this article, neither she nor her staff offered a response.

However, Tammy Hooper, Chairman of the Wyoming Republican Party, provided a statement on Lummis’ investment record as state treasurer: “We’re appreciative of her efforts and always have been. (Cynthia Lummis had) an intuitive ability to invest Wyoming’s money well when she was treasurer, to the benefit of the state and the citizens of Wyoming.”

Hooper noted that Lummis’ fiscal experience of balancing the state budget on a yearly basis has informed her current work in Washington: “She’s carrying that forward to how the government is spending the money, and where it’s spending its money, and she’s trying to tackle the deficit spending.”

While Lummis has a much higher net worth than the average Wyoming voter, Hooper said that distinction is irrelevant to how the representative does her job.

“I don’t think that her personal wealth determines or impacts her decision making to do what’s best for the country and for the people she represents in Wyoming. You’re elected to do the job, which is to represent the people,” Hooper said.

This story is part of an occasional WyoFile series about the finances, records and political work of Wyoming’s congressional delegation. Read the previous installment: Rising From the Right: Barrasso’s climb in senate follows increasingly conservative course

Gregory Nickerson is a University of Wyoming-trained historian and writer from Big Horn.  He has worked on documentary films in Nicaragua, Yellowstone, and Philadelphia, and held jobs as a museum curator and hunting guide.

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A Wyoming congressional representative is trying to resurrect a federal land sale act to reduce the budget deficit and help the National Park Service end a long quest to capture a Grand Teton inholding.

The Federal Land Transaction Facilitation Act (pronounced “flit-fah”) was enacted in July 2000 to allow federal agencies to sell off disposable lands identified prior to the bill and stash most of the profits for land purchases to preserve important cultural, wildlife or protected sites. (High Country News writer Zachary Smith wrote about the Bureau of Land Management’s interest in upping land transactions under the Act in 2004.)

Kimberly Hirai

The Act expired in 2010, but Congress resurrected it last July for an additional year through an emergency appropriations bill. It died a second time this summer. Flit-fah is now flitting its way back into Congress. Rep. Cynthia Lummis, R-Wyo., introduced a bill Nov. 4 to bring the act back. Lummis wants it to help close a lagging land sale from the State of Wyoming to the Department of Interior. The sale includes some 1,400 acres worth $107 million in Grand Teton National Park.  Money from land sales could be used toward the cost of that inholding.

“We have 33,000 federal buildings in this country that are not being used. We have tens of thousands — hundreds of thousands — of acres, federal land, BLM land that is on their disposal list,” Lummis said.

Negotiations between the Interior Department and the state over the Grand Teton property have limped on for years. The State of Wyoming is eager to sell—it only reaps $2,000-3,000 per year off the land from cattle grazing. Last year, former Gov. Dave Freudenthal gave the National Park Service an ultimatum meant to push the deal through, threatening to put the land up for sale if the federal government did not negotiate a trade that would give the state mineral rights, other land, or education money (some of the inholding lands are state school trust lands intended to generate funds for public education).  The two parties finally agreed that the Department of Interior would buy the parcels in a series of four purchases starting January 5, 2012.

Lummis says the act is a good alternative to Congress-dependent initiatives like the Land and Water Conservation Fund, the proposed method of payment for the Grand Teton transaction. The fund received a little more than $301 million for the 2011 fiscal year — a 33 percent cut from 2010 funding levels.

“In this financial environment, we have to expedite the conversion of surplus federal property to cash because we can’t appropriate it from taxpayer dollars. We’re broke,” Lummis said. The bill would reauthorize the land transaction act until 2018 and take another look at an inventory of properties eligible for sale.

The act seems to work— since 2000, the Bureau of Land Management has sold off 27,000 acres (mostly from Nevada bureau land transactions), generating a profit that paid for $94 million in land acquisitions for the BLM, National Park Service, U.S. Fish and Wildlife Service and U.S. Forest Service.

And Lummis’ plan shows promise. Energy and Natural Resources Chairman Sen. Jeff Bingaman, D-N.M., introduced a similar bill that was later put on the Senate calendar. Lummis’ bill has also garnered support from the Sierra Club, The Conservation Fund and Wyoming Outdoor Council among others. It was referred to the House Committee on Natural Resources.  Not surprisingly, although Lummis claims bipartisan support for her bill, “some in Congress, particularly Republicans, have shown a hesitance to appropriate scarce federal dollars to buy new lands,” according to Environment and Energy Daily.

Kimberly Hirai is an intern at High Country News.

(Banner photo by Frank Kovalchek/Flickr)

On July 18, Elizabeth Burns was on the first day of a backpacking trip in the Absoraka Range with Wilderness Ventures, a company based in Jackson. The two-week trip was a highly anticipated break from routine for the high-school junior from a Chicago suburb. She told friends she was looking forward to getting away from her cell phone and computer and meeting new people.

That afternoon, Ms. Burns likely experienced beautiful vistas, a good sweat, and the universal joy of dropping a heavy pack from her shoulders. But not long after arriving at the first night’s camp site, four miles east of the Turpin Meadows trail head, things went horribly wrong.

Related Story: Approaches to Safety

Few outdoor-recreation organizations have a finer reputation for safety and professionalism than the National Outdoor Leadership School (NOLS). Even so, the Lander-based nonprofit notched a sad milestone in September—its 12th death in the wilderness-education school’s 46-year history. Tom Plotkin, a 20-year-old from Minnesota, fell after twisting his ankle on a steep trail above the Ganges River in India and is presumed dead.

It’s a reminder that the inherent risks of outdoor recreation will catch up with even the best-prepared organizations.

The great outdoors is full of risks, but since they are risks that people enter into willingly, government regulators only rarely set minimum standards. No one tells NOLS, for example, how its student groups must proceed when traveling in grizzly country.

Click the image link to read more.

The Absorakas are prime grizzly country, and some members of the group went to hang food in “bear bags” in a tree. Beetles have killed many of the pine trees in Wyoming’s mountains, and the backpackers may have been limited in their options. It is unclear what guidance, if any, was offered by the trip’s two leaders. Someone made the fateful decision to hang the bags in a dead tree. (Mike Cottingham, who along with his wife, Helen, is a founder and owner of the company, declined to answer questions for this article.)

As the bear bags were hefted into the air, the 75-foot tall tree uprooted and fell, striking Ms. Burns some 66 feet away, according to a report by the Teton County Sheriff’s Office. She never regained consciousness and was pronounced dead two hours later.

Thrills, risks, and lawsuits

Wyoming’s rugged beauty makes it a big draw for outdoor-recreation enthusiasts, who come to ski, hike, raft, climb, hunt, fish, and ride horses. Tourism is Wyoming’s second biggest industry, after mineral extraction, producing more than $1-billion per year in revenue. Outdoor recreation is usually what the visitors are seeking.

But with the thrills come plenty of risks. Every year, people like Elizabeth Burns—clients of Wyoming companies—die or suffer serious injuries while recreating in the great outdoors.

And, not surprisingly, some of them sue. More often than not, an out-of-state visitor is suing a Wyoming company.

In 1989, the Wyoming Legislature addressed the litigation concerns, at the prodding of Jackson Hole Mountain Resort and other ski resorts. The Wyoming Recreation Safety Act makes clear that clients of recreation companies assume the “inherent risk” of the activity in which they’re participating.

The law has been described as the one of the strongest in the country at providing protections for outdoor-recreation companies, and lawmakers have bolstered it more than once. Courts have not only thrown out lawsuits in clear-cut cases—like the skier who died after willingly going off a 25-foot terrain-park jump at Jackson Hole—but have also rejected claims in less-obvious cases, including injuries resulting from slipping saddles and chair lifts.

Ask just about any personal-injury attorney in Wyoming, and they’ll tell you that the protections are so strong that they decline to take on many of the injured recreationalists who come to their door. The same attorneys say the Recreation Safety Act may have so successfully achieved its goal of deterring litigation that some struggling outfitters or recreation companies could be cutting corners on safety—thanks to the comfort that any resulting accidents might be whisked away by the “inherent risk” doctrine.

“It creates in providers a sense of security, and maybe some of them do not go as far as they would otherwise be inclined to go if they thought they were more exposed to the risks of litigation,” says Gary Shockey, a lawyer in Jackson.

To be sure, plaintiff’s attorneys are a biased group. But even some judges have expressed dismay at the law that they must uphold.

“Consumers in Wyoming are now faced with an entire industry whose economic and consequent legislative power enables them to conduct business with only a passing thought to the safety of those who utilize their services,” William F. Downes, a federal district-court judge, editorialized back in 1998, in his opinion that dismissed the claim brought by a man who was injured when his saddle slipped.

No one has suggested that Wilderness Ventures is that kind of company. Former employees and Jackson residents praise the company’s professionalism and safety record. The company, which has been in business for 38 years, notes on its Web site that it has helped 2,100 students climb Wyoming’s Grand Teton, and another 2,200 scale Washington’s Mount Rainier, all without injury.

Elizabeth Burns died less than four months ago, and her parents, Sally and Michael Burns, are still in mourning. Sally Burns and the family’s attorney, Thomas A. Demetrio, a prominent personal-injury lawyer in Chicago, declined to comment for this article.

If the case ends up in court, the outcome may help further illuminate how much protection the Wyoming Recreation Safety Act provides.

Falling trees are clearly a risk of hiking and camping in Wyoming—and one that will no doubt rise in the years to come. But any Wyoming company in the backpacking business would know why dead pine trees are known as “widow makers.” A 16-year-old from Lake Forest, Ill., might not share the same knowledge.

A court may ultimately have to decide if Wilderness Ventures did enough to keep Ms. Burns out of harm’s way—or if, in the case of a falling tree, the company had no obligation to do so.

“There’s a lot of ambiguity,” says Terry Mackey, a personal-injury lawyer in Cheyenne, “in the term ‘inherent risk.’”

A Chilling Effect

Steve Duerr is currently about as far away from recreation litigation as you can get—he’s the director of the Murie Center, a nonprofit in Grand Teton National Park that helps people understand the value of conserving wildlife and wild places. But in the 1980s, he was general counsel at Jackson Hole Mountain Resort—which was then, as now, among the biggest targets in Wyoming for recreation-related lawsuits.

Skiers beneath the Bridger Gondola at Jackson Hole Mountain Resort. The Wyoming Recreation Safety Act “does have a chilling effect on the types of cases that lawyers bring to court,” says Steve Deurr, who helped write the act as the resort’s general counsel in the 1980s. (click to enlarge)

Duerr wrote much of the Wyoming Recreation Safety Act. And he has retained an interest in recreation law, even as he has moved into the quieter nonprofit arena. In September, Duerr and several other lawyers participated in a panel discussion on the Recreation Safety Act at the Wyoming State Bar’s annual meeting in Cheyenne.

“The law does have a chilling effect on the types of cases that lawyers bring to court,” Duerr says. “That was the desired public policy.”

As Duerr noted in a presentation last month at the Cheyenne meeting, Wyoming’s law came into being at a time when other states were passing similar bills to grapple with the public’s increasing eagerness to sue. In 1978, a skier in Vermont tripped over some underbrush and broke his neck—and a jury ruled that Stratton Mountain Corporation owed him $1.5-million in damages.

A Time magazine piece at the time said such judgments were pushing up the cost of insurance and—hold your laughter—“raising the specter of $25 to $35 a day lift tickets.” To keep insurance rates for their ski resorts affordable, states like Vermont, Colorado, and Wyoming began passing laws that limited the liability of ski corporations.

Earlier court rulings lent historical precedent to the movement. In a 1929 case in New York, Judge Benjamin Cardozo, who later became a U.S. Supreme Court justice, ruled that when a man fell and fractured his knee cap on an amusement-park ride called “The Flopper,” he had assumed the risk of riding the moving belt.

“The timorous may stay at home,” Judge Cardozo wrote.

That sentiment plays well in Wyoming, which prizes self reliance and personal responsibility.

“If you ask people on the street what they think, they would tell you what the Recreation Safety Act has now codified: ‘You get on a horse, you strap on those skis, and you’re taking your chances,’” says Jim Lubing, a Jackson lawyer who has been defending Jackson Hole Mountain Resort from lawsuits for the past decade.

Kate Mead, another Jackson lawyer who defends outdoor-recreation providers, knows all too well about such risks. She is married to Brad Mead, the brother of Gov. Matt Mead. Their mother, Mary Mead, died in a horse accident in Grand Teton National park in 1996 while driving cattle.

Kate Mead says that in her most recent case involving the Recreation Safety Act, the plaintiff testified about how much fun he had been having until he was injured.

“That sums it up,” she says. “People really want to enjoy the adrenaline things in life—until they get hurt.”

The Legislature Strikes Back

Over the past 22 years, Wyoming courts and juries have grappled with the meaning of “inherent risk”—which may be among the fuzziest terms in Wyoming law. And when the answer has been unfavorable to recreation providers, the Legislature has been quick to take action.

Practicing horsemanship at the Teton Valley Ranch Camp. Riding a horse fast carries risks, says Tom Holland, the camp’s executive director, but “the special feeling students get will come from those risks being taken.” (Photo courtesy of Teton Valley Ranch Camp — click to enlarge)

In a 1995 case, Halpern v. Wheeldon, one of the first tests of the act’s strength, a man who severely broke his ankle after being bucked off a horse later sued the trail-ride provider. The trial court found that getting bucked off a horse was an inherent risk.

At the time, the act stated that recreation providers were “not required to eliminate, alter or control the inherent risks.” On appeal, the Wyoming Supreme Court deduced that an inherent risk is one that can’t be controlled or eliminated. The court said it was possible that the Wheeldons could have eliminated the risk of getting on the horse by helping Mr. Halpern mount in a different way. It said the trial court had erred in dismissing the case.

That wasn’t the kind of decision that ski corporations and dude ranches had envisioned when they helped shepherd the Recreation Safety Act into law. They hired lobbyists and went back to Cheyenne. In 1996, the Legislature amended the act, taking out the language about eliminating or controlling inherent risks.

“The law was changed by the Legislature to make it even more protective of providers,” says Mel Orchard, a partner with the Spence Law Firm in Jackson. “It changed essentially to say that the provider had no duty to alter the activity to reduce risk.”

One year later, in 1997, Howard Cooperman, a novice rider, injured his shoulder when his saddle slipped on a trail ride with Wyoming Rivers and Trails outside Pinedale. After an expert witness testified that slipping saddles were an inherent risk of horseback riding, Judge Downes threw out Cooperman’s lawsuit. Whether the company made an appropriate effort to cinch the saddle was irrelevant, the federal judge noted.

Judge Downes called it a “frightening prospect” that companies had no duty try to control such risks, but nevertheless stated that he would respect his place in the system.

“A court should not decimate the purpose of a legislative act, no matter how distasteful, when that purpose is clearly incorporated in the language of the act,” Judge Downes wrote.

The net result of such rulings is that Wyoming lawyers look long and hard before accepting clients who want to sue recreation providers, especially since lawyers often work on contingency, in which case they’re only paid if they win or settle the claim.

“If you take a case and put a lot of money and time into it, and the judge says you’ve got no case, then where are you?” asks William Fix, a lawyer in Jackson.

A 2005 article in the Suffolk University Law Review named Wyoming as the state that offers the “greatest protection” to recreation providers—a sentiment with which Mr. Fix and others agree. But there’s not unanimity on this topic.

James Moss, an attorney and professor in Colorado who specializes in recreation law, argues that Colorado’s Ski Safety Act (Colorado has sport-specific laws, rather than a broad act covering all recreation providers as in Wyoming) is stronger, because it names inherent risks like bare spots and lift towers that all skiers must accept.

“Wyoming’s act allows more litigation due to the fact that there’s less specificity in how it’s written,” Moss says.

But specificity can cut both ways. For example, after listing a slew of inherent risks, Colorado’s act states: “Nothing in this section shall be construed to limit the liability of the ski area operator for injury caused by the use or operation of ski lifts.”

Wyoming’s broader law, however, can give resorts cover even with ski lifts. In 2005, Sharon Muller suffered injuries to her leg and knee when her ski boot got caught under the Bridger Gondola at Jackson Hole Mountain Resort. When she sued, a federal jury sided with the ski resort, concluding that boarding a ski lift is an inherent risk of skiing. The ruling was later upheld by the Wyoming Supreme Court.

A Constitutional Challenge

Fix, who represented Muller, challenged the constitutionality of the Recreation Safety Act on appeal. Fix says Wyoming law treats people who buy a service from a recreation provider worse than those who buy a service or product from other types of companies.

“It’s singling out a class,” Fix says. “We are all supposed to stand equal under the law.”

In upholding the decision favoring the resort, the Wyoming Supreme Court didn’t rule on the constitutionality challenge.

Grant Larson, a Jackson resident and former state senator who helped introduced the 1996 amendments, says the Recreation Safety Act remains a “good law.”

“Surprise, surprise, the trial lawyers don’t like it,” Larson says. “Their job is to go sue people. That’s what the law was designed to prevent, particularly frivolous lawsuits.”

The most controversial claim some trial lawyers make is that the Recreation Safety Act is so strong in shielding providers from litigation that they may be cutting corners on safety.

“In my own experience in dealing with outfitters and other recreation providers, I believe that’s probably true,” says Mackey, the Cheyenne lawyer. “They probably don’t take things as seriously as they might otherwise if they didn’t have the solace of that statute.”

Mackey is on a legal team representing Christine Nodine, who sued Jackson Hole Mountain Resort after her husband, David, died in an in-bounds avalanche while skiing at the resort in December 2008. The resort argues that avalanches are an inherent risk of skiing.

Ms. Nodine maintains that the resort should have been aware of “unacceptably dangerous” conditions after another avalanche in the same area buried a snowboarder earlier in the day. Her lawsuit claims that the resort’s president, Jerry Blann, pressured the head of the ski patrol to open that portion of the mountain after two days of heavy snow for economic reasons. Blann has denied those allegations.

Mackey declined to comment on the Nodine case, since it is ongoing. (The case was recently dismissed on a technicality, but that ruling will likely be appealed.)

Jim Lubing, the resort’s lawyer, says the protections of the Recreation Safety Act would never factor into the resort’s decision-making about safety.

“I understand the argument, but certainly that reality does not apply to the Jackson Hole Mountain Resort,” Lubing says. “It’s a consummate professional organization, that ski patrol out there.”

Sacrificing safety?

Gary Shockey, the Jackson lawyer, says it is the companies that are just scraping by that may be most likely to sacrifice safety.

White-water rafting in Snake River Canyon with Barker-Ewing River Trips, a 48-year-old company that has never lost a client. “People really want to enjoy the adrenaline things in life—until they get hurt,” says Kate Mead, a Jackson lawyer. (Photo courtesy of Barker-Ewing River Trips — click to enlarge)

“It doesn’t take a genius to figure out that if you’re operating on a budget, or on a time schedule, and you know that you have this state protection in the event that something you don’t want to have happen happens anyway, then you have no incentive to go the extra mile or spend the extra money on the part of safety,” he says.

Kate Mead, the Jackson lawyer who defends recreation providers, acknowledges that such thinking is possible, especially in a business like whitewater rafting where the season is short and the competition for tourist dollars is intense.

“They start with the low water in May, and then it goes to high water,” Mead says. “They’re not about to close down the river because it’s dangerous–the white-water rafting companies really count on that income. In any case where you have business involved, they’re doing some cost-benefit analysis along the way.”

Many of the deaths on the Snake River in recent years have occurred during the run-off in June and July. While whitewater companies operate in Snake River Canyon south of Jackson, the scenic tours float north of town, in front of the Tetons.

In 2006, a scenic raft operated by Grand Teton Lodge Company hit a dead cottonwood snagged in the river, throwing the guide and 12 clients into the Snake. Three passengers died, and the lodge settled for an undisclosed amount three years later with relatives of the victims. Mel Orchard, who represented the relatives, argued that the company had downplayed the risks in its marketing materials.

“It’s human nature for people to do things differently when they think they have no way of being punished,” he says. But he says he doesn’t believe that many recreation companies are sacrificing safety thanks to the protections of state law.

“I want to believe that our Wyoming companies are trying to provide reasonable recreation activities, and just want make a living for their families and provide a living for their employees,” he says.

Steve Duerr says there are plenty of “sticks” to encourage Wyoming providers to take adequate safety precautions, including requirements from insurance companies and permitting agencies like the U.S. Forest Service. He says it’s hard to believe that any company or employee, including the guide of the ill-fated scenic raft trip, would knowingly put clients in harm’s way because they believed that their legal vulnerability was low.

“I’m sure the guide on the Snake didn’t have in his mind, ‘I’m going to be protected by the inherent-risk statute,’” Duerr says.

Catherine Hansen-Stamp, an attorney and the author of two Wyoming Law Review articles about the Recreation Safety Act, says she would be surprised if any Wyoming companies were cutting corners due to protections provided by the act.

“The act doesn’t include an elimination of the ability to sue for negligence,” says Hansen-Stamp, who advises recreation providers on legal issues and risk management. “It certainly behooves recreation providers to endeavor to run a professional and quality operation and engage in responsible risk-management practices. This concept is the philosophy of my practice.  If a provider is operating otherwise, they are making a huge mistake.”

Tom Holland is executive director of Teton Valley Ranch Camp, now based outside Dubois, which provides summer camps, including backpacking, non-technical climbing, fly-fishing and riflery, for students between the ages of 11 and 17. Part of his job is to travel to the living rooms of  the camp’s alumni in cities throughout the country and pitch the benefits of his camps to teens and their parents. He tries to address the risks head-on.

“We say the experience your child will get out of this will be because of the challenges that come throughout the summer, and that come with the inherent risks of riding horses fast, climbing mountains in the Tetons, and going to riflery,” Holland says. “The special feeling they get will come from those risks being taken.”

The camp retains Hansen-Stamp for legal and risk-management advice, so Holland is well aware of the Recreation Safety Act, but he says he doesn’t think about its protections as he plans activities and staffing for the summer camps.

“I hear people say, ‘We’ve got this law on our side,’ but that’s not my approach,” Holland says. “My approach is I’m going to do to the very best I can, no matter what.”

Even so, many Wyoming recreation providers are careful to stipulate in the release forms that clients and students sign that any dispute will be governed by the laws of Wyoming. The National Outdoor Leadership School, which is based in Lander and runs wilderness skills and leadership courses all over the world, has a line in its release that states that lawsuits shall “be filed only in the State of Wyoming.”

Twelve students have died in the school’s 46-year history, including a student who fell from a steep trail in India in September, 2011. The school has never lost a case in court, although it has settled some lawsuits.

Drew Leemon, the school’s director of risk management, says the Recreation Safety Act is helpful mainly in deterring frivolous suits. “You get a little bit of protection from people who didn’t have a good time,” he says. “If somebody really gets hurt, you’re still exposed. And you care about your clients and you don’t want to see people get hurt.”

Hansen-Stamp wrote an informal paper about the evolution of the Recreation Safety Act for the Wyoming State Bar session in September. Hansen-Stamp, who lobbied for Jackson Hole Mountain Resort when the act was passed, suggests in her paper that some other states have laws that give even greater protection to recreation providers.

“The Wyoming act hasn’t really panned out to be the kind of pre-trial summary dismissal tool that I thought it might be,” she says.

A Shocking Verdict

One of the biggest blows to recreation companies in recent years came in 2009, when a federal jury awarded $1.2-million to the family of Kristina Barkhurst, who died after being thrown from a horse in January 2006. Barkhurst had been receiving training in natural horsemanship from a company near Burns called Harmony Horsemanship. The provider argued that being thrown was an inherent risk of riding. But Gary Shockey, who represented the family, maintained that the horse had a history of bolting, and that the provider had failed to provide proper equipment to control the horse.

Bud Betts, owner of the Absoraka Ranch in the Dunoir Valley outside Dubois, which operates pack trips and hunting trips, says the Barkhurst verdict “sent a mild shockwave through the horse community.” The decision had many, including Betts, wondering for a time whether the law needed to be strengthened yet again to make judges more likely to dismiss lawsuits before they get to a jury.

More than two decades after passage of the Wyoming Recreation Safety Act, the “inherent risk” doctrine remains the wild card at the heart of nearly all recreation-related litigation.

Fly fishing in the Wind River Mountains. “The timorous may stay at home,” Benjamin Cardozo, a future Supreme Court justice, wrote in 1929. (Photo courtesy of Sweetwater Fishing — click to enlarge)

And if the Wilderness Ventures tragedy makes it to court, “inherent risk” will be at the heart of that case, too.

Bud Betts is of the view that it could have happened to anyone. On a pack trip he led this summer into the Washakie Wilderness, an aluminum kitchen box on top of a horse knocked over a dead lodgepole pine. The tree, 10 inches in diameter near the base, fortunately fell away at a 45 degree angle.

“It could have killed somebody, this tree,” Betts says. “You’re going to see more and more of that.”

But others say the facts of Ms. Burns’ death, if and when they come out, might demonstrate that human decision-making made her vulnerable.

“There are all kinds of inherent risks of backpacking,” says Gary Shockey, who is not involved in the case. “If I was going out with a guided group, I would not think that that list would include that the guide did not supervise things properly.

(Banner photo by Lincoln Smith)

— Ben Gose is a Lander journalist who writes frequently for The Chronicle of Philanthropy and The Chronicle of Higher Education, and contributes to programs on Wyoming Public Television. He also coaches the sprinters on the Lander Valley High School track team.

— If you enjoyed this article and would like to see more quality Wyoming journalism, please consider supporting WyoFile: a non-partisan, non-profit news organization dedicated to in-depth reporting on Wyoming’s people, places and policy.

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Few outdoor-recreation organizations have a finer reputation for safety and professionalism than the National Outdoor Leadership School (NOLS). Even so, the Lander-based nonprofit notched a sad milestone in September—its 12th death in the wilderness-education school’s 46-year history. Tom Plotkin, a 20-year-old from Minnesota, fell after twisting his ankle on a steep trail above the Ganges River in India and is presumed dead.

It’s a reminder that the inherent risks of outdoor recreation will catch up with even the best-prepared organizations.

Related Story: Enjoy Wyoming (at Your Own Risk)

The great outdoors is full of risks, but since they are risks that people enter into willingly, government regulators only rarely set minimum standards. No one tells NOLS, for example, how its student groups must proceed when traveling in grizzly country.

Recreation providers in Wyoming who aspire to a strong safety record say they must invest time and money to ferret out the best practices in their industry, and to teach those skills and lessons to their staff, clients, and students.

NOLS has its own risk-management team, headed by Drew Leemon.

“If we can articulate why we do certain things, and have sound practices for what we do, that will go a long way toward protecting our business,” Leemon says. “It’s worked for us for a long time.”

Few Wyoming recreation providers are as big as NOLS, but its commitment to continually updating its safety practices is something that any provider could emulate. NOLS maintains a list of “accepted field practices” that govern how students and trip leaders should manage significant risks, such as crossing swollen rivers.

In 2009, NOLS had a scare in Alaska when several students slipped while jointly fording the Talkeetna River, leaving some of the students with mild to moderate hypothermia. In reviewing the incident, NOLS found that the instructors hadn’t closely followed its accepted practices.

Months later, Leemon re-wrote the guidelines for crossing rivers, using input from field instructors. The school added some new methods for crossing, and introduced an acronym—WADE (Watch, Assess, Decide, Execute)—to help insure that instructors and students approach a river in a deliberate way.

Leemon says it’s too soon to tell whether NOLS will change its practices based on the death in India, or the highly publicized grizzly attack in July on a group of seven NOLS students in Alaska. Until this summer, NOLS had led trips in Alaska for 40 years—serving nearly 10,000 students—without a grizzly attack, by adhering to the practice of traveling in groups of four or more.

“We learn from experience,” Leemon says. “Every situation presents some new angle that we can incorporate into our practices.”
Other Wyoming providers are also learning from experience.

After record-breaking high-water years in 2007 and 2008, the eight whitewater rafting companies that operate in Snake River Canyon met to agree on some common safety standards. Among other things, the companies agreed that if the Snake is flowing at more than 16,000 cubic feet per second, they won’t use the smaller 8-person rafts, which are more likely to flip in high water than 16-person rafts, according to Heather Ewing, the owner of Barker-Ewing River Trips.

Barker-Ewing has also established its own practice of providing clients with free wet suits on cold days when the combined air and water temperatures do not exceed 100. (During the warmer periods in July and August—when wet suits are a convenience—Barker-Ewing rents the suits for a fee.) One of the biggest risks of rafting during run-off is hypothermia from exposure to the Snake’s frigid waters.
“The scariest thing for us in high water is how fast things move and how cold that water is,” Ewing says. “The wet suit is going to buy you more time.”

At the Absoraka Ranch, which operates pack and hunting trips near Dubois, owner Bud Betts runs through a Monday-morning checklist of safety information for clients. Wranglers conduct a horse-safety checklist every morning. And employees participate in annual safety and First-Aid programs offered by the Dude Ranchers’ Association, which is based in Cody.
“This is stuff that never happened 20 years ago,” Betts says.

Those systematic approaches to safety may save a life — or they may not.

“If I have a horse that I know bucks or has a propensity to run away, I can’t put a client on it,” Betts says. “But then again, any horse can buck or run away. They’re a horse. That’s the act of God aspect.”

Wyoming law states that clients of outdoor-recreation providers take on the “inherent risk” of the activity, but Catherine Hansen-Stamp, a lawyer who provides legal and risk-management advice to several outdoor-recreation companies in Wyoming, notes that the line between injuries that result from inherent risk and those that result from provider negligence can be a gray one.

That’s one reason why she says every company should consider having a well-crafted participant agreement that includes, among other things, an acknowledgment and assumption of risks and a release of liability for negligence. “Such an agreement provides important information to participants so they can make choices about whether or not to participate,” she says. (She notes that some federal agencies limit permittees in the use of these agreements.)

The agreements can also provide potential protections for the organization, she says.

“I’ve seen cases in which a plaintiff will argue, sometimes unreasonably, that an injury was caused by the defendant’s negligence,” she says. “The organization may instead believe the injury resulted from an inherent risk or some other cause – perhaps the plaintiff’s negligence. This gives the organization the opportunity to say, ‘Well, wait a minute. You signed this agreement.”

But some Wyoming recreation providers say too much talk about risks on the front end of a trip can take away from the fun and relaxation that the client is seeking, and possibly create tension between the provider and client before the trip even starts.

George Hunker, a former NOLS instructor, has run a fly-fishing guiding business focused on backcountry trips in the Wind River Mountains for three decades. During that time, his Lander-based company, Sweetwater Fishing, has had to evacuate two clients via helicopter. One had a torn quadriceps muscle, and the other a broken ankle.

Hunker makes sure his clients know what they’re getting into, but he doesn’t do a major safety briefing in advance. Instead, he doles out advice on a need-to-know basis. When heading through a boulder field, he might let a client slip on a small lichen-covered rock—“gain a little experience”—before he pipes up with a lesson about how to safely navigate the bigger boulders.

“You don’t want your clients to be so paranoid of risk that they don’t have a good time,” Hunker says. “My general philosophy is that the guide should be looking out for everything, and have a mental checklist, so that the clients are completely safe without having to worry about those sorts of things. They hire you as a guide because it makes things easier for them.”

For years, he fended off his insurance company, which wanted him to make clients sign a risk-acknowledgement form. Finally Hunker caved, but he put his own twist on it, with language that fit his philosophy more than the insurance company’s.

“I understand that risks, dangers, and hardships can never be completely eliminated,” the form concludes. “I realize I may be a long way from medical attention. I expect you to take care of me like I was one of your own children.”

In 2006, Dina Mishev of Jackson was diagnosed with multiple sclerosis. Her medications cost $4,000 per month. She’s had one problem after another with her health insurance company: rising deductible (it reached $10,000 before she was diagnosed), attempts to drop her coverage after the diagnosis (which she successfully appealed), and denied claims.

In 2006, Dina Mishev was diagnosed with multiple sclerosis. Her insurance company eventually dropped her. Last year, she signed up for the federal Preexisting Conditions Insurance Plan (PCIP), a relatively affordable option to insure people who've been denied coverage on the private market due to a preexisting condition. "I never thought I would say this, but I love my insurance company," she said. (WyoFile/Bradly J. Boner — click to enlarge)

Finally, in 2010, her insurer dropped her for good, saying she’d missed a payment even though the payments were made by automatic withdrawal from her checking account. This time she didn’t appeal. For the first time since her diagnosis she had another option: a new federal health insurance meant to cover people with pre-existing health conditions.

“I have to say, I love my insurance company now. I never thought I would say that,” Mishev, 36, says of the new pre-existing condition insurance plan.

Jane Ifland, 61 of Casper, has been without health insurance for 15 years. In the early 1990s she left the employer-based insurance she had in order to start her own business. She “tried like a dog” to buy private health insurance, but each company she approached turned her down because of a past diagnosis of depression. She also looked into buying insurance from the Wyoming state high-risk pool, but found the $1,600-per-month premium more than she could afford.

Her circumstances made her a perfect candidate for the new federal pre-existing condition insurance program. “When I first looked at it, I could not believe that I was understanding it. It was so simple,” says Ifland, who easily enrolled.

For the first time in 15 years, she now has health insurance, but unfortunately none of the Casper doctors and hospitals she goes to is “in-network” for the plan. That means she can either pay extra — twice the co-pay under a separate deductible that’s $1,000 more — to use an out-of-network doctor in Casper, or drive to Wheatland or Rawlins to use an in-network care provider.

“There is no way that it is fair for me to have to pay twice as much to have medical care in my town as they do in Wheatland. It pisses me off, frankly,” she says, mentioning both the inconvenience of the long drive and research showing people who get care closer to home respond better than those who travel to find care.

People involved with health policy in Wyoming report other residents have traveled to Billings or Denver rather than Casper to find care providers who would accept the federal insurance.

Insurance for people with pre-existing health conditions is a crucial piece of federal health care reform meant to reach people in 2010 and start boosting public support for the new law.

But the program has been very slow in implementation. Few people know about it; even fewer are benefiting from it.

The U.S. Department of Health and Human Services (HHS) has dragged its feet on marketing the new insurance, according to a Congressional study requested by U.S. Sen. Mike Enzi (R-Wyoming). The agency was concerned that the program would be so popular that hundreds of thousands of people would quickly enroll and use up all the funding allocated for the program.

Meanwhile, experience thus far shows the new program is most successful if state governments, who can tailor the program to their circumstances and needs, implement it rather than leaving it up to the federal government.

The program is one of the few parts of federal health care reform that Republican leaders would like to keep. Both of Wyoming’s two Republican U.S. Senators support the program.

But in Wyoming, both Wyoming’s past Democratic and current Republican governor declined to have the state take on implementation of the program. They left implementation to the agency in Washington, which not surprisingly adopted a “one size fits all” approach, which has not benefited rural states like Wyoming.

As a result, some Wyoming citizens like Mishev have seen the benefits of the insurance program, but others like Ifland are simply frustrated, unable to access its promise. Compared to other states, enrollment in Wyoming been relatively high. But figures indicate that sign-up in Wyoming could be higher — and Wyoming people could more easily access its benefits — if state government had taken on implementation.

That’s a lesson that could be significant for new health care debates in Wyoming, as more of the federal health care program comes into effect and state leaders must decide whether to administer them. In some states, that choice not to administer the federal insurance for people with pre-existing conditions, “there was an element of this being a political decision,” says one close observer.

“This was a creature of a Democratic administration and there are Republican counterparts who don’t like the health care reform that was passed,” notes Cecil Bykerk, who directs the state-administered version of the federal program in Montana and two other states. In some states where Republican leaders opposed the entire federal health care law, Bykerk says, “Clearly in some cases they felt it wasn’t correct, and said fine, let the feds do it.”

Wyoming’s leadership has opposed the federal health care reform law, and Wyoming is among 26 states that have filed suit challenging the constitutionality of the law. Federal courts have been split over the issue so far, and the U.S. Supreme Court is expected to take on review of the law next year.

The states that chose not to administer the federal pre-existing conditions insurance are not all the same states that have challenged the entire federal health care act in court. The experience with national health care reform thus far seems to indicate that — ideology aside — if the national law remains the law of the land, implementation by state governments will benefit local citizens more than if states leave implementation by default to the federal government.

The federal law meets a few stumbling blocks

The controversial federal health care reform act passed in 2010 is titled the Patient Protection and Affordable Care Act. It’s often known as the Affordable Care Act  (ACA).

Both Enzi and his colleague, U.S. Sen. John Barrasso (R-Wyoming), support the portion of the Affordable Care Act called the Pre-existing Condition Insurance Plan or PCIP.

They have been concerned since 2010, however, that PCIP is underfunded, enrollment requirements are too difficult to meet, and benefits have remained inaccessible for too many people who should be eligible.

PCIP was included in the 2010 health reform act with a funding cap of $5 billion. Many, including Enzi, were concerned that the cap was too low. Before PCIP started, the Center for Medicare and Medicaid Services estimated that the program would be so popular that 375,000 people would enroll within the first year and the program would run out of money by the end of 2013.

Enzi has kept a close eye on PCIP. Before passage of the bill, he requested an analysis of the program from the Congressional Budget Office, which estimated that if the $5 billion funding cap for the program were lifted, up to 700,000 people would enroll at a cost of $10 to $15 billion by 2014. In Wyoming, about 150 people have enrolled so far.

Also before the act was passed, Enzi joined 30 other senators in writing a letter of concern to the Secretary of Health and Human Services. Enzi’s statement at the time said, “Given the importance of the high-risk pool program and the reliance on this program of millions of Americans with pre-existing conditions and life-threatening diseases, it is crucial that this program be fixed and fully funded.”

Last winter, Enzi requested an investigation of the program from the Government Accountability Office  (GAO) — an independent nonpartisan agency sometimes called the “congressional watchdog” — which attributed the low enrollment to several factors:

First, the statutory requirement that applicants be uninsured for six months — designed to prevent private insurers from “dumping” high-risk people into the federal insurance program — makes it hard for some to enroll. Enzi told administration officials his constituents told him they “can’t afford to go without insurance for six months.”

Second, the premiums are too expensive for many uninsured people. That is the case despite the fact that the premiums are the same that healthy individuals pay for insurance on the private market in each state. In Wyoming, the cost per month ranges from $126 to $542 depending on age and which of three plans is selected.

Third, HHS, “intentionally limited initial marketing activities in order to avoid enrolling more people than the plan could support,” the GAO report stated.

This summer, HHS increased its marketing efforts and lowered premiums in some states to recruit more enrollees. Enrollment has been slowly and steadily climbing. By the end of August, 33,958 people — still only about 9 percent of the level predicted to enroll within the first year — had signed up. The program shows no indication of running out of money to help cover health care for individuals who are enrolled — only 2 percent of the funds had been spent within the first 10 months of the program, the GAO found.

While states have enrolled more participants in PCIP than federal health officials have, the GAO also found that premiums for state-run programs were 19 percent more expensive than for the federally-administered PCIP — $440 per month for a 50-year-old person compared to $370, respectively.

In 2010, Barrasso joined Sen. Tom Coburn (R-Oklahoma) to lament that more people do not have access to PCIP. They wrote, “Sadly for thousands of Americans with pre-existing conditions like cancer, diabetes, and lupus, who are already enrolled in [state] high-risk pools, they have discovered they will be denied access to a new system of [federal] high-risk pools that could offer better benefits at lower costs.” The comment came in an overall critique the two senators wrote of the federal health care reform: “Bad Medicine: A check up on the new federal health care law.”

Senators Enzi and Barrasso declined to comment to WyoFile for this story.

Wyoming leaves it to the feds

One analysis from the Commonwealth Fund — a private foundation that analyzes health care policy —  suggests over 9,000 Wyoming citizens have pre-existing health problems and no health insurance.

Some people with pre-existing conditions do have insurance. The legislature instituted the Wyoming Health Insurance Pool or WHIP in 1990 to cover high-risk health care consumers. About 750 Wyoming people purchase that insurance. The numbers of customers are kept down, observers of the system say, because WHIP premiums can reach as much as $2,000 per month for enrollees in their sixties. For catastrophic coverage, enrollees have to accept $25,000 in out-of-pocket expenses.

Jane Ifland, at her home in Casper. Despite being enrolled in the federal PCIP program, she has yet to see any benefits — a side effect of Wyoming's decision not to implement the program. (Dustin Bleizeffer/WyoFile — click to enlarge)

The federal PCIP program, with premiums one-quarter that high but a requirement that applicants be uninsured for six months prior to enrolling, covers only about 150 people so far. And some, like Ifland, are enrolled and paying but haven’t yet seen any benefits.

One reason PCIP is not benefiting more people in Wyoming is the state’s decision not to implement the program. The result has been that Wyoming’s PCIP participants have been left in the hands of an insurance company chosen nationally that has little activity here, and therefore few doctors, clinics or hospitals signed up to accept that insurance.

President Barack Obama signed the Affordable Care Act in March 2010, and in April 2010, states were allowed to decide whether to administer the program in-state or leave it to the HHS.

In Wyoming, Gov. Dave Freudenthal (a Democrat) decided to leave administration of the program to HHS, writing that he believed the guidelines weren’t clear and that the $8 million grant that would accompany the three and a half years of the program to Wyoming was not enough. In addition, the state already had its own high-risk insurance plan (funded by the legislature at $3 million a year).

Freudenthal wrote to HHS, “the state’s involvement would be an unnecessary addition to the process that would result in redundant administrative costs and unnecessary delays.”

Freudenthal did not choose to have the state challenge the entire new federal health care reform act in court.

Republican Gov. Matt Mead, by contrast, made joining that court challenge one of his first acts as governor when he was sworn in, in January 2011. He continued Freudenthal’s decision to have Wyoming not implement the PCIP provision of the federal law. Mead said he has not heard complaints from constituents about the difficulties of accessing PCIP. Instead, his administration is focusing on issues of implementation of other components of federal health reform that have upcoming deadlines.

HHS therefore has implemented the PCIP portion of the law in Wyoming since 2010. For the 23 states that chose to let the federal government run PCIP, HHS invited private insurance companies to bid on the opportunity to administer the program. Fourteen companies made bids, but several of them did not meet the basic statutory requirement that they be not-for-profit.

Chart created by WyoFile using number of people enrolled in PCIP as of Aug. 31, 2011 from www.healthcare.gov and number of uninsured per state as of 2009 from www.statehealthfacts.org. Pennsylvania actually has 3 people enrolled in PCIP per 1,000 uninsured, but the chart was compressed for clarity. (click to enlarge)

HHS ended up selecting the Government Employees Health Association (GEHA) to administer the program from Delaware to Texas and from Florida to Wyoming. GEHA, the second-largest insurer of federal employees nationwide, is a private, not-for-profit insurance company. Some Wyoming providers, such as the hospital in Rawlins, already accepted GEHA insurance – they were “in-network” with the company, as the insurance industry says.  Other areas of Wyoming, including many communities in the 12 counties served by the Wyoming Medical Center in Casper, have few providers in-network for GEHA.

Nonetheless, Wyoming has done better than most states where the federal government is in charge of implementing the PCIP program. More of Wyoming’s uninsured are enrolled in PCIP than in any other state where HHS administers the program.

A case study: Montana v. Wyoming

Despite the funding concerns up front, 27 states did elect to administer their own versions of the program, including four of Wyoming’s neighbors — Colorado, Utah, Montana and South Dakota.

So far, across the country, the 27 states that administer PCIP on their own have enrolled more than twice as many applicants (23,370) as HHS has in 21 states (10,588). (Two states — Vermont and Massachusetts — have no enrollees because residents of those states with pre-existing conditions already had access to insurance.)

People who enroll in PCIP in the 27 state-administered states have much better access to providers. States that administered PCIP themselves contracted with familiar, active insurers in their states, rather than relying on GEHA.

Montana is one of the states that decided to administer its own version of PCIP. The decision was made by the state’s insurance commissioner. She had the authority to so because she is elected, unlike Wyoming’s commissioner who is appointed by the governor.

Like Wyoming, Montana is a “medically underserved area,” meaning there is a shortage of doctors. (In 2008, Wyoming had 19 doctors per 10,000 people and Montana had 22. The national average was 26.) And like Wyoming, Montana already had its own state-run high-risk pool created by the state legislature and administered by Blue Cross Blue Shield. Like Wyoming, Montana was concerned about funding for the program. Montana, with a population almost twice that of Wyoming, got twice as much federal money for the program: $16 million.

Insurance and consumer representatives in Montana wondered, “What happens if the $16 million runs out?” says Bykerk, executive director of the state-administered federal high-risk pools in Montana, Iowa and Alaska. The state brought its concern to HHS, which assured Montana officials that it would shut down enrollment, find more funding or otherwise make certain Montana would not have to pay for the program if funds ran short.

So Montana created its own version of PCIP, following the federal guidelines, which they call the Montana Affordable Care Plan. The insurance company for the plan is Blue Cross Blue Shield of Montana, which has been building its network of providers in the state for more than 25 years.

In Montana, both the state’s own high-risk pool and the new federal high-risk pool are in the hands of Blue Cross Blue Shield. The same board of directors and executive director oversee both.

But the funding sources remain separate and they fulfill slightly different needs.

People who have just lost coverage from an employer or other source are eligible for the state’s high-risk pool in Montana, just as they are in Wyoming. People who enroll in the state’s program, however, can’t get coverage for treatment of pre-existing conditions for a year, in either Montana or Wyoming, unless they’ve had continuous insurance provided by their employer for the previous 18 months or longer. This is meant to avoid having people wait until they get sick before enrolling.

People with pre-existing conditions can get immediate coverage for treatment of that condition under the federal program, but they can’t enroll in the program unless they’ve been without insurance for 6 months. This is meant to avoid insurance companies “dumping” customers into the federal plan when they get sick.

Both Montana and Wyoming have information about the federal high-risk insurance available online, and the insurance departments in both states direct potential applicants to both programs.

“If we get a call and somebody says, ‘How do I get a hold of this thing?’ we’ll give them information,” says Wyoming Insurance Commissioner Ken Vines of the federal high-risk insurance. “There is a link on our website, but we have no responsibility or oversight on how it’s run.”

Montana’s insurance commissioner has spread the word about PCIP through public talks and radio advertisements. Montana has enrolled a greater percentage of its uninsured in PCIP than any other state except Pennsylvania.

Improving the Wyoming picture

Last April, Ifland nominated her doctor at the Sage Medical Group in Casper as a PCIP provider and asked an administrator at the Wyoming Medical Center to enroll the hospital in the network for PCIP. Seven months later, neither provider has joined.

Mary Lynn Shickich, chief strategy officer for the Wyoming Medical Center, says there is no particular reason for the delay. “It’s a circumstance of a large hospital looking at all potential contracts,” she says. The process has started, but it’s taking months for GEHA to negotiate rates with the Wyoming Medical Center.

According to GEHA’s contract to administer PCIP, the company “must have the ability to immediately contract with state-wide provider networks.” But GEHA doesn’t expect providers in medically underserved areas like Wyoming to enroll in their network for a temporary program like this, according to a customer service agent at who answered GEHA’s PCIP provider network hotline.

Wyoming Insurance Commissioner Ken Vines says care providers in places like Wyoming won’t easily give a discount to an insurance company for letting them join the network, and that discourages the insurance company from trying.

Instead, GEHA set up a care management department within the PCIP program to review appeals. People in rural areas can go to an out-of-network provider if no in-network providers are available. In Wyoming, because the network is so sparse, GEHA reviews appeals of every claim, a lengthy process.

In Jackson, Mishev’s care providers are not in-network. “When I needed an MRI a couple of months ago, they wanted me to drive to Riverton when I literally live right next door to St. John’s Hospital and can get the MRI there,” she says. With plenty of experience dealing with troublesome health insurance companies, Mishev has been appealing her claims. “My appeal has always gone through and they treat the people I have seen as in-network.”

Meanwhile at the Wyoming Medical Center, Shickich says negotiations with GEHA have been going well. “I think they’re very fair,” she says of the company. “We actually feel it’s very important as the primary care giver for folks in Natrona County to make sure that we provide care to individuals with pre-existing conditions. We see that as part of our community responsibility.”

The target date for the hospital to finalize its contract with GEHA is mid- to late-October. The plan won’t be available to patients until January 1, 2012, according to the hospital.

In the meantime, Ifland is still paying her $403 monthly insurance premiums and waiting. She has still not seen a doctor for tests she was told ten months ago that she should get.

Wyoming’s health coverage debate

When Gov. Mead in January 2011 had Wyoming join 25 other states in a lawsuit seeking to strike down the Affordable Care Act, the governor said, “If it [the federal health reform law] is all thrown out and they start over, I think that would be an improvement.” Six district courts and three federal courts of appeals have come to differing conclusions about the constitutionality of provisions in the Affordable Care Act.

Mead has stated, “I think the better course of action is for [health care reform] to be state-led rather than from the federal government.”

But Barb Rea, a healthcare consumer advocate based in Casper, says Wyoming has, “been trying for decades to expand coverage and change the reimbursement system and collect more data and do all the things we need to do to reform our system, but it’s politically too contentious because someone is going to make less money in a reformed system. Their lobbyists get out there and wreck whatever it is you put in front of our legislators. It’s a political football.”

Mead wrote to WyoFile in an email: “It is my belief that the ACA is not only unconstitutional, but it takes a cookie-cutter approach to health care. Essentially the law is too big and ignores the fact that what works in California does not work in Wyoming. This is why I think states are in the best position to formulate health care policy changes. I do not think it is enough to say no to the federal government, we have to seriously engage in state-led efforts. My commitment is to work on solutions in Wyoming that provide greater access to high quality, affordable care for every citizen of the state.”

As early as 1994 the Wyoming Health Reform Commission, chaired by former Natrona County Republican state Sen. Tom Stroock, recommended that Wyoming establish universal health coverage, including coverage for high-risk individuals, by 2002. That 18-year-old vision has never been realized in Wyoming. At a health reform forum in Casper, Gov. Mead’s health policy advisor told the audience she and the governor have never discussed universal health coverage for Wyoming citizens.

In 2003 a federally-funded Wyoming task force published their report, “Covering Wyoming’s Uninsured: A Strategic Plan for Improving Health Insurance Access” in which they made seven recommendations for providing health care coverage to Wyoming’s uninsured. Since that time, the number of uninsured in Wyoming has increased from about 70,000 to more than 78,000.

The lawsuit over the constitutionality of the Affordable Care Act to which Wyoming is party is expected to go before the U.S. Supreme Court in the next year. “If the entire bill is thrown out, we haven’t really been advised what to do,” says Bykerk, director of Montana’s federal high-risk pool. “I suppose programs could shut down immediately.”

If that happens, people like Mishev and Ifland will go back to being uninsured and uninsurable.

— Emilene Ostlind grew up in Big Horn. She earned her degree in creative nonfiction writing and environment and natural resources at the University of Wyoming.

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For more information:

• Overview of PCIP with links to programs in each state.
• Page for states that elected to let the Department of Health and Human Services administer PCIP (including Wyoming), where you can enroll for PCIP coverage, find providers, nominate providers for the network and learn more about how PCIP works for Wyoming citizens.
• Wyoming’s consumer advocate organization providing facts, data, information and resources explaining the Affordable Care Act.
• Kaiser Family Foundation provides data on healthcare in all 50 states. For facts about Wyoming, click on the state at www.statehealthfacts.org.
• Information about implementation of the federal health reform law from the George Washington University’s Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation.

WORLAND — Elected officials, members of the news media and others are working this summer to reach consensus on a broad plan to reform Wyoming’s public records and open meetings laws. Among the issues being debated are whether the public will continue to have access to officials’ emails during the early stages of drafting municipal laws, reasonable and equitable access to online records and a timely response to records requests.

After a set of bills addressing meetings and records backed by the Wyoming Press Association failed during the 2011 legislative session, the Joint Judiciary Committee has heard testimony from government officials and reporters who are working to find common ground on changes to the laws.

A working group of editors, publishers, elected officials, state agency staffers and others has invited interested parties to a July 7 meeting in Riverton to discuss changes in the law. Additional committee meetings are planned for August and October.

Not all public records are available online, particularly older documents which are not easily digitized. (Ruffin Prevost/WyoFile - click to enlarge)

The result of that process is likely to be a consensus bill sponsored by the committee for consideration in 2012, with any divergent issues left to be addressed later as part of separate legislation.

Both sides say the state’s public records law has not kept pace with technology, an issue that has also come up in county clerks’ offices around the state as local record-keepers wrestle with decisions about how much information to release on the Internet, and what fees to charge for online access to those databases.

Municipal officials across the state are seeking a change in the law that would roll back public access to e-mails sent as part of discussion and debate leading up to the drafting of local ordinances.

The so-called “deliberative process” exemption sought by the Wyoming Association of Municipalities would mean that many e-mail messages that are currently considered public records would no longer be available for public scrutiny.

Emails to and from public officials that are part of the deliberative process, for instance, in drafting a new ordinance, “should be treated no differently than a telephone call,” Mark Harris, legislative director for WAM, told the committee during an April meeting in Worland.

Harris said email exchanges have largely taken on the same role formerly held by telephone calls in relaying casual discussions between public officials, constituents and staff members about nascent policy or legal issues.

Jim Angell, WPA executive director, opposed such an exemption, telling the committee that emails are a written record, while a phone call typically doesn’t exist in recorded form.

The Wyoming Supreme Court last year ruled that then-governor Dave Freudenthal wrongly withheld draft budget figures from The Wyoming Tribune-Eagle by claiming the records were part of state government’s deliberative process.

Harris said that municipal leaders should be free to discuss broad issues “at that very early stage” without public scrutiny.

“The public should not be removed from that early deliberative process,” Angell said.

D. Reed Eckhardt, executive editor of the Wyoming Tribune-Eagle and WPA president, said after the meeting that he had seen cases where the public became aware of important factors influencing a local ordinance only after emails and other records were uncovered through public records requests.

Without the context provided by such records, “you don’t know what’s been traded and what’s been compromised along the way, and you don’t always know the motivation for it,” Eckhardt said.

Harris and others said the law doesn’t address some electronic records like text messages or voicemail recordings, issues no one seemed anxious to debate.

Deadline discussions

Sally Henderson, a deputy clerk in the Park County Clerk's Office, addresses envelopes in the records vault. (Ruffin Prevost/WyoFile - click to enlarge)

Angell said parties were close to an agreement on determining a fixed deadline by which agencies must grant or deny a records request and state a timeline for providing the documents. The law currently mandates no timeframe for responses.

Cindy DeLancey, executive director of the Wyoming County Commissioners Association, told the committee that there is a vast difference in staffing, expertise and technology between state agencies, county departments and small governing boards, “so we’re trying to come up with some language on how you cover that whole range of the continuum to make sure it’s not unduly burdensome.”

Wyoming has more than 400 special districts governing public hospitals, cemeteries, conservation districts and other entities, often with small staffs that may include volunteers or officials paid only a modest stipend.

Bobbie Frank, executive director of the Wyoming Association of Conservation Districts, said that some districts have only one full-time employee, making it difficult to meet deadlines for fulfilling records requests.

“This isn’t just about access from the press, but also about third-party groups,” Frank said.

Environmental groups and other organizations involved in public land planning have made broad records requests “that have created quite a workload, to the point they’re struggling to get out into the field to get their work done,” she said.

The press association has called for stiffer penalties, including jail time, for those who violate records and meetings laws, noting that charges are almost never brought for such offenses.

“The law traditionally has made a distinction between volunteer board members and compensated board members in terms of liability,” said Rep. Kermit C. Brown (R-Laramie), co-chair of the committee.

Brown said he worried about volunteer board members facing criminal penalties for inadvertent violations.

“Only a fool would serve on one of these boards under that front-loaded liability,” he said.

Jeani Stone, county attorney for Campbell County, told the committee that she would like to see the meetings law changed to make it easier to win a conviction against violators. Stone brought charges last year against members of the Campbell County Cemetery Board, alleging that they failed to give proper notice of upcoming meetings. No one was convicted as a result of those charges, partly because the law makes it difficult to prosecute alleged violations, she said.

“We’re not out there looking for people to prosecute, only when it becomes an issue over and over again,” Stone said.

Rep. Bob Brechtel (R-Casper) said he worried about crafting a statute that protected “people that really have good intentions from still getting dragged into court.”

“How in the world are people going to protect themselves from the thought police?” Brechtel said.

Online information

In Park County, concerns about the release of personally identifying information on the Internet prompted County Clerk Jerri B. Torczon to cut access to an online database of public records that had become a vital tool for local realtors, bankers, attorneys and appraisers.

Torczon said in an April meeting with Park County commissioners that she also wanted to recoup the $3,500 annual cost of maintaining the online database by charging a fee to users. The previous clerk had made the database available for free.

Park County property tax records can be accessed without charge though an online database. (Click to enlarge.)

Clerks in some Wyoming counties charge fees for access to similar systems, while others offer free access. Not every county offers online access to such records.

Torczon said last week that county clerks across the state are struggling to decide which documents to put online and how much to charge for access, and that guidance or an updated statute from the Legislature would help standardize the process and clarify the law.

“It’s not your right for me to put it on the Web,” Torczon said during the meeting. “You’re certainly welcome to come in to my office — that’s public.”

Torczon said in the meeting that death certificates made available online by the Park County database contained social security numbers, and she feared that identity thieves might illegally exploit that information or other personal data.

In fact, the U.S. Social Security Administration maintains a database of names and Social Security numbers for most individuals who have died since 1936. The public database can be searched at a number of genealogy research websites.

After making updates to protect personal information, Torczon later restored online access to a more limited set of county records. But many of the excluded online records containing personal information are still available in paper form to visitors to the clerk’s office.

Users of the Park County online database must pay a $100 annual fee and sign a contract agreeing to “indemnify and hold harmless Park County and anyone involved in storing, retrieving, or displaying this information for any damage that may be caused by accessing this information over the internet.”

Many users of the database told commissioners in April that they didn’t mind paying a nominal fee, while others said they saw no reason to pay for access since the clerk’s office already charged fees to record documents.

“The system may cost $3,500 per year, but in my opinion, it will save the county more money than that,” Cody realtor Johnny Hannah told commissioners. “It just creates more workload at the clerk’s office if everyone who uses the system has to come to the courthouse and stand in line.”

Park County Assessor Pat Meyer has offered the public free access to a newly available online database of property ownership and valuation maps. (click to enlarge)

Park County Assessor Pat Meyer said a newly available online database of property ownership and valuation maps has greatly reduced his staff’s workload, giving them more time to travel the county and audit oil and gas properties and document new additions and un-permitted construction.

“I think we’re going to make more money,” said Meyer, a longtime Assessor’s Office employee who had been developing the system while serving under the previous assessor.

“Everything we’ve got online is the same thing we’ve been giving the public for the last 20 years. It’s all public information, we’ve just been emailing or faxing it to people or they come in all the time for it,” Meyer said.

Meyer has connected his property ownership records with a companion online database provided free by the Park County Treasurer’s Office so users can easily look up property tax and payment records using the two systems.

“Now we have so many less calls in here, and we’re able to get so much more work done,” he said.

If you go…

Members of the press, government officials and others will meet at 9 a.m. July 7 at the Riverton City Hall to discuss changes to state open meetings and public records laws.

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

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The first thing Roger Muggli learned about irrigation was that water runs downhill.  His grandfather managed an irrigation district near Miles City, Mont., and together they tended the ditch. From the fields they would trace the water’s passage to an oxbow on the Tongue River. Now, Muggli, 62, works the same job alone, patching pipes, scouring the canal and cutting debris from the banks.  When the soil thaws and alfalfa sprouts, he opens the headgates, and water rushes into the main ditch. There, it meets smaller ditches and seeps into the furrows like blood across a weathered palm.

Muggli has seen dry years, but never like 2004 and 2006, when his irrigation district had only half its water right fulfilled. A normal season yields 100 barley bushels per acre, but he threshed no more than 45. Where the Tongue River crosses into the state from Wyoming, a reservoir that often overflowed never even filled. “It was a logistical nightmare,” says Muggli. “People don’t like you turning off their water.”

Meanwhile, in Wyoming, water commissioners fielded calls from senior water-rights owners who weren’t seeing their share. In response, they cranked headgates closed, shutting off newer rights first in accordance with basic water law. In one drainage in 2006, the only user left operating had rights dating to 1890. But along the main stem of the Tongue, a few junior water rights holders operated all season. There was nobody downstream to complain, but Montanans.

“First in time, first in right” guides how water is divvied up within states but doesn’t always apply across borders. Wyoming and Montana instead rely on the 1950 Yellowstone River Compact, which governs how the states share four Yellowstone tributaries — the Powder, Tongue, Bighorn and Clarks Fork — in times of scarcity. It guarantees both states continued access to any rights issued before 1950. To satisfy later rights, the states are promised fractions of each river’s remaining flow.

The Compact’s drafters suspected that the Yellowstone’s tributaries were already fully allocated in 1950. They hoped the agreement would satisfy Montana’s older water rights in dry years, even if Wyoming kept issuing new ones. But post-1950 rights were not Montana’s only trouble. Over time, water use changed: Irrigators swapped ditches for center-pivot sprinklers, and energy companies drilled the first coalbed methane wells, pumping vast amounts of water from deep aquifers.

For years, water was plentiful, so Montana didn’t worry. Only when the state’s senior water users received less than ever before did they begin to wonder where their water had gone. In both 2004 and 2006, Montana asked Wyoming to release water from storage to satisfy the pre-1950 rights it thought were guaranteed. Wyoming refused. In 2007, Montana sued Wyoming for violating the Yellowstone River Compact. The case landed in the Supreme Court this January.

Montana attorneys can’t say for sure where their state’s water went those years. But they suggested four possibilities that made Wyoming liable: groundwater extraction; excessive water storage; new uses like coalbed methane; and advances in irrigation technology that allowed farmers to consume more of their water right than before. (Wyoming’s explanation was simpler: drought.) The special master — a water-law expert appointed to review the case and advise the Supreme Court — sided with Montana on the first three claims, but with Wyoming on the fourth. Montana objected on that last count, so the question was put to the High Court itself, which on May 2 decided in Wyoming’s favor. The decision allows Wyoming farmers to switch to advanced irrigation technology even if it means consuming water that otherwise would flow back to the river for another user.

Irrigation efficiency has its merits, but it’s created unexpected downstream shortfalls that Montana farmers may now be forced to live with. Unlike many similar agreements in the West, the Yellowstone Compact never quantified the minimum amount of water Wyoming must deliver to Montana each year.  And it was written at a time when gravity, not pumps, governed water use. “People don’t always anticipate what’s going to happen over time,” says Barbara Cosens, professor of law at the University of Idaho. “The older compacts did not account for groundwater development. Nor did they anticipate that irrigation efficiency works very different in practice than in theory.”

When an irrigator applies water to a field, some of it transpires through the plants, and some evaporates. The rest — the return flow — seeps across the floodplain or through the aquifer to recharge the river’s loss.  One farmer’s backwash becomes another’s water source.

But from an upstream farmer’s perspective, water that evaporates, percolates or runs back to the river is a loss — one that modern technology is designed to curtail. In 1997, when the Farm Bill began providing financial incentives for efficiency upgrades, Tongue River farmers replaced flood-irrigation systems with center-pivot sprinklers, which promised higher yields and water savings. Sprinklers applied water evenly, and crops flourished. In theory, irrigators were conserving water: The plants absorbed more of what was applied, so they didn’t need to take as much from the river.

In practice, it wasn’t so simple. Flood a field with 100 units of water, the plant takes 40. Sprinkle it with 80, the plant takes 60. More water stays in the river initially, but more is also consumed in the field. And when less returns to the river, in the long run, the basin sees a loss.

Both Montana and Wyoming know how much water irrigators take, but not how much crops are consuming or what volume returns to the river. Agencies, in turn, regulate the quantity of water a user diverts from a source, not the amount consumed. “If water rights were based on water depleted rather than water applied, then there wouldn’t be this problem,” says Frank Ward, professor of water resource economics at New Mexico State University. “But depletion is really tricky to measure.”

Sprinklers have grown popular in both Montana and Wyoming. But the federal subsidies that lubricated the switch were given with different conditions. In Montana, farmers must agree to return saved water to its source or take less from the river. In Wyoming, if farmers have water left, they can use it on a field they may have neglected during drier years, leaving less for downstream users.

“A general rule in water law is that you can’t force someone to not improve efficiency,” says Cosens. “If they do a better job on the acres they irrigate, you can’t do anything about it.” That’s been true within states. But now the Supreme Court has stretched this rule across borders; if Wyoming farmers have a right to a certain amount of water, who is to tell them they can’t consume it all?

Montana attorneys are at least relieved to have won on coalbed methane, which poses a greater water sharing problem than sprinklers. A year ago, near the Powder River headwaters in Wyoming, L.J. Turner’s well went dry; the aquifer beneath his ranch had dropped five feet. Nearby, the drawdown was more than 600 feet. “In the summertime, you used to hear the frogs crying for rain.” he says. “Now there isn’t anything.” There are more than a dozen coalbed methane wells on Turner’s ranch. Down slope, a tawny haze hangs over Campbell County’s gas rigs. Drilling began here in earnest in the mid-’90s, and in the last few years, companies have pumped between 20 and 30 billion gallons of groundwater annually.

If groundwater pumping reduces surface flows, the special master concluded, then those wells must be considered post-1950 uses under the Yellowstone River Compact. But in order to force Wyoming to curtail groundwater pumping for coalbed methane in times of scarcity, Montana will have to prove that Wyoming’s deep aquifers do, in fact, feed its rivers. That won’t be easy. Groundwater flow, guided by local geologic formations, is tricky to map. And water takes time to move underground, making it difficult to demonstrate cause and effect.

In the absence of data, the debate has pivoted more on faith than fact. “My sense is that coalbed methane aquifers are deeper aquifers. I do not believe that they’re affecting surface water flows,” says Harry LaBonde, Wyoming’s deputy state engineer. His logic may stem from the fact that water law and hydrologic science have not advanced at an equal pace. Most Western states still appropriate surface and groundwater separately, under the assumption that aquifers are disconnected from streams — an idea hydrologists dispute. But even Wyoming is starting to see flaws in this thinking. “As water tables drop more and more, that’s when conflicts arise between users,” says LaBonde. “And that’s when we become very concerned.”

In the spring of 2009, Muggli went looking for irrigation records in the old file cabinet on his grandfather’s porch. He found a bundle of letters, more than 100 pages in all, thin and delicate, on carbon paper. They were all addressed to members of the Yellowstone River Compact drafting committee, of which his grandfather was a part.

“It was just a treasure trove of stuff,” he says. The letters gave Muggli a sense that the drafters left some things unwritten because they trusted the states to interpret the Compact fairly. But what Muggli sees as trust could have been a simple lack of foresight — that as water grew scarcer and technology more advanced, irrigators would scramble to make the most of their rights.

The precedent set by the Supreme Court’s ruling may not reach far, particularly not to downstream states whose water allotments are quantified in interstate compacts. (The Colorado River Compact, for instance, appropriates 7.5 million acre-feet a year each to groups of upper and lower basin states.) But in states like Montana, where compacts are less specific, the decision could become problematic.

“Nobody complains in good years,” says Montana Assistant Attorney General Jennifer Anders. “But what’s going to happen five years down the road if Wyoming keeps consuming more without regard for downstream users?” The Supreme Court’s interpretation still guarantees Montana its pre-1950 rights, at least on paper, but Anders will be watching closely when the next dry year comes. “We have a lot at stake,” she says.  “It’s the ability of our farmers to make a living off the land as they’ve done for generations.”

Reprinted by permission from High Country News, not available for free republication by Wyoming news outlets.