i We used to get half, thanks to Wyoming’s last Democratic U.S. Congressman, Teno Roncalio, but the Bush administration’s 2008 Interior Appropriations Bill resurrected the old “net receipts sharing” plan that charges states for part of the administrative cost of the US royalties management program. Wyoming Republican Senator Mike Enzi called the net receipts sharing arrangement “stealing.”

ii Alaska, which seems always to outdo Wyoming in the energy revenue game (See, “Does Wyoming Get Enough for its Mineral Riches?” by Sam Western), gets to keep 90 percent of the federal royalties collected there.

iii In September 2008, Devaney reported wrongdoing by 19 current and former Minerals Management employees. According to the New York Times, officials in the royalty program “accepted gifts from energy companies […] including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game…. [Devaney’s] investigation concluded that several of the officials ‘frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.’” Paintball? Devaney said that the employees showed no remorse and claimed that federal government ethics standards and policies did not apply to them because of their “unique” role. “[T]hey felt that in order to effectively perform their official duties, they needed to interact in social settings with industry representatives to obtain ‘market intelligence,’” Devaney said, adding that one agency worker asserted that a goal of the Royalty-in-Kind program was to be “part of the industry.”

iv Leyshon sold sex toys on the side; her second profession may color her view of what is—and is not—personal. Devaney notes that Leyshon was overheard bragging in the Minerals Management office that she earned more from her sex-toy business than from her government salary.

v The bill was read twice and referred to Barrasso and Wyden’s Committee on Energy and Natural Resources, where it languished.

vi Which by 1990 had been amended 47 times. Once the Act opened federal lands to mineral extraction, corruption almost instantly followed, beginning with the blatant bribery of the Teapot Dome scandal of 1922 and continuing—surprise! —to the present.

vii The Biblical “stewardship” language so popular with Republican departments of the Interior seems to be a legacy of Reagan’s Interior Secretary James G. Watt, who told the US House Interior Committee in February 1981: “That is the delicate balance the Secretary of the Interior must have: to be steward for the natural resources for this generation as well as future generations. I do not know how many future generations we can count on before the Lord returns.” Later that year he told The Washington Post, “My responsibility is to follow the Scriptures which call upon us to occupy the land until Jesus returns.”

viii http://www.mms.gov/adm/ethics.html

ix He resigned October 9, 1983, some 18 days after describing the U.S. Commission on Fair Market Value Policy for Federal Coal Leasing as “a Black, a woman, two Jews and a cripple.” Watt said he meant the remark as a compliment, but public outcry forced him from office.

x Archconservative Republican brewer Joseph Coors (his brother William described him as “a little bit right of Attila the Hun”) created Mountain States Legal in 1976 to fight environmental constraints on shipping Coors beer cans across state lines. The foundation is closely associated with the Wise Use movement and is today, as ever, an aggressive litigator, suing and filing “friend of the court” briefs attacking gun control and environmental protections and promoting drilling, logging, mining, and other business interests on public land. Several foundation lawyers have risen high in the anti-environmental movement, including not only James Watt but also his staffer, Gale Norton, a former senior lawyer at the foundation who was George W. Bush’s Interior Secretary until March 2006, when she resigned, she said, so she and her husband could return to “the mountains we love in the West.” Then she took a job as general counsel to multinational oil giant, Royal Dutch Shell. Other Mountain States Legal lawyers who found jobs in Bush’s Interior Department include Bennett William Raley (Assistant Secretary for Water & Science) and Rebecca Watson (Assistant Secretary for Land & Minerals Management).

xi “Remarks on Receiving the Final Report of the Commission on Fiscal Accountability of the Nation’s Energy Resources,” January 21, 1982.

xii Michael A. Amundson. “Home on the Range No More: The boom and bust of a Wyoming uranium mining town, 1957-1988,” Western Historical Quarterly, Winter 1995

xiii Temporarily. For example, in 1980 some 1,000 people in Jeffrey City mined uranium there; by 1982, 95 percent had lost their jobs.

xiv According to Wyoming law, the state severance tax is “an excise tax imposed on the value of the gross product extracted upon the privilege of severing” the mineral from the land. The county tax is a property tax on the fair market value of the mineral produced, an ad valorem tax. Ad valorem taxes, as opposed to unit excise taxes, vary according to both price and quantity; unit excise taxes depend only on the amount of mineral produced, as these taxes are fixed money charges per unit of product. Both taxes are imposed on the value of the extracted mineral. Legal definitions of “value” are always key—and controversial— in taxation.

xv For example, companies can take the cost of Wyoming’s state severance tax off their federal corporate income taxes. Thus, a low rate of severance taxation in Wyoming just means Washington gets more.

xvi Stroock, a somewhat rowdy member of a distinguished East Coast family, came to Wyoming in 1948 to work as an oilrig roughneck after graduating from Yale and serving three and a half years in the Marines in World War II. He started his own oil and gas firm in 1952 and today, still president and CEO of Alpha Development Corporation, has a record of state, national and international public service as long as your arm.

xvii Lack of auditors continued to be a Wyoming problem. In 2000, the state employed 16 people, including clerical staff, to monitor the state’s 25,000 oil and wells, plus all its other minerals.

xviii Union Pacific Resources Group, Inc. now known as RME Holding Company, was acquired by Anadarko Petroleum Corp. and became an Anadarko subsidiary on July 14, 2000.

xix He was also heavily into uranium and was—along with Republican newspaper publisher Senator Robert Peck of Riverton—a member of the founding board of directors of New Energy West Corporation, which aimed to create a high-level nuclear waste dump in Fremont County. In 1991, although 80 percent of Wyoming opposed it, Bebout tried to get a federal Monitored Retrievable Storage facility—a nuclear dump—located in the Owl Creek Mountains. Gov. Sullivan quashed the effort by withdrawing Wyoming from the list of potential sites in 1992. In 2002, Bebout was the Republican candidate for governor, losing the race to Democrat Dave Freudenthal. Today, Bebout is in the state Senate, and also serves as a regional director of the petro-lobby group, the Independent Petroleum Association of America.

xx Like so many retired public servants, Sullivan today sits on the boards of numerous corporations—a couple of banks, a big defense contractor, and Cimarex Energy Co., a Denver-based oil and gas exploration and production company—as well as non-profit think tanks and educational institutions. He is a partner, practicing in Casper, of the Denver law firm of Rothgerber Johnson & Lyons LLP, a firm very big in energy resources litigation and negotiation.

xxi Today, Karen Kennedy, of Kennedy Oil in Gillette, is the chairman of the board of directors of Mountain States Legal Foundation based in Lakewood, Colorado

xxii Guy C. Burton, Jr. died in 1995. According to the Bureau of Land Management, Burton/Hawks, Inc. changed its name to Hawks Industries, Inc. in 1989.

xxiii For a short time, Ryan said, his auditors were able to use Minerals Management information to double-check pricing reports to the state Department of Revenue. The auditors got the information by making federal Freedom of Information Act requests, but that ended when Minerals Management decided FOIA access had to be approved by the companies that were the subjects of the requests. Unsurprisingly, the companies did not approve.

xxiv The appeal to the Board of Equalization was decided in 2005; the company then successfully appealed to the state Supreme Court.

xxv Chevron also called Dan Sullivan as a witness in this hearing, but the Board of Equalization observed that in late 1990, he had left public office to become a lobbyist for oil and gas companies. “We find these longstanding business affiliations unavoidably introduce an element of bias in Sullivan’s testimony,” the Board concluded.

xxvi The oil companies did not give up, and in January 2007 won a round in the Wyoming Supreme Court (150 P.3d 673), which found the Board in error. In 2008, the state legislature revisited the issue, passing HB-54 to change the way taxable value is calculated on producer processed natural gas from “proportionate profits” to “modified netback,” eliminating the absurd result of allowing producer-processors to take deductions greater than costs.

xxvii Quarterman resigned in 1999 and today is a partner in the Washington, D.C. office of Steptoe & Johnson LLP, specializing in energy, environment and natural resources.

Laton McCartney

Laton McCartney was born in Denver, Colorado and grew up on cattle ranches in Colorado and Wyoming. He is the author of the national bestseller, Friends in High Places: The Bechtel Story—The Most Secret...

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