Energy, Sean Paige

Colorado energy royalties hostage to DC’s game of sequestration chicken

In yet another act of sequester sadism, Uncle Scam is shorting Colorado $8.4 million in energy royalties that are owed to the state. It’s our share of $110 million Washington is withholding, as a means of maximizing pain in the ongoing game of sequester chicken. But these aren’t like other sequester-related cuts in some important ways, which ought to raise loud and persistent objections from our governor, senators and representatives in Congress.

What makes these cuts particularly punitive, and outrageous, is that these aren’t appropriated funds drawn from the general treasury. They are royalty payments – revenues generated from energy activities on federal lands – which the state is owed as part of its sometimes-lopsided public lands “partnership” with Washington. It’s not welfare. It’s not pork. It’s part of a longstanding contractual relationship between governments, in which Washington cuts states in on a share of energy revenues, as compensation for any burdens or consequences these activities impose on state or local governments.

These dollars aren’t just handed-out, based on Washington’s political whims, but distributed according to formula, which is directly tied to energy production in the impacted states. They are in that sense earned, not given or granted as part of an “entitlement” program. And royalty payments to states can’t be said to be contributing to the deficit, or the debt crisis, since they are just a share of the billions of dollars in deficit-reducing revenues generated by productive activities on federal lands. Energy royalty payments are better than “budget neutral” – they are budget-beneficial, helping to close yawning gaps in Washington’s ledger sheets. The state share of these payments adds nothing to the federal deficit, since it amounts to skimming-off a little of the gravy energy development brings in.

That, it seems to me, arguably sets these dollars apart from other federal funds, which might open the door to political, rhetorical or even legal challenge if Colorado’s leaders had the cojones to battle back. But thus-far, as usual, Washington is doing just as it pleases in Colorado, with nary a peep of protest from those charged with defending this state’s vital interests. This hit on Colorado, which trickles-down to local communities, ought to be raising a storm of protest from Gov. Hickenlooper, Sens. Udall and Bennet and other top Democrats in the state. Instead, they quietly stand-by while Coloradans are screwed-out of energy royalties that should have nothing to do with sequester cuts.

Washington is running a similarly-nasty gambit regarding so-called timber county payments, which is the portion of logging revenues many rural Western counties traditionally received as compensation and impact-mitigation for harvests taking place on nearby federal lands. The feds are demanding that counties return funds already distributed (and in some cases spent), hitting many already-hard-hit counties below the belt. And this already is generating loud (and bipartisan) objections from states where most of these payments go.

But timber county payments are different from royalty payments in one crucial way. Though timber payments at one time were self-funding, and budget-neutral, since they were pulled from a pot of money the feds collected from timber sales, the demise of the U.S. wood products industry, at the hands of anti-logging fanatics, the Clinton administration and the spotted owl, years ago severed any direct link to actual payments, which were plummeting right alongside harvest numbers. These payments ever since then have been a direct, deficit-fueling drain on the U.S. Treasury, which modestly strengthens the argument for making them subject to sequester cuts – though this still seems a petty and punitive action on the administration’s part.

But I digress.

While much of the rest of the intermountain West is experiencing a sagebrush rebellion revival, with state legislators and governors challenging our distant and detached federal landlord in various ways, Colorado remains compliant and complacent in the face of anything Washington throws our way. Endangered species listings? No complaint from Colorado. War on coal (and coal workers)? No complaint from Colorado. Access restrictions on federal lands? Shelved energy leases? Reductions is the scope of oil shale areas? Raids on our energy royalty revenues? Still no complaints from Colorado.

Whatever Washington decides, whatever it dictates, on these and other critically-important issues is just fine with Colorado — at least judging from the silence of the Dems. Why we’re such a willing doormat for Uncle Sam is something I’ll explore, in-depth, some other time. But the two most obvious explanations are that 1.) top Colorado Democrats are simpatico with all these policies, no matter their impacts on the state’s economy, or 2.) party loyalty prevents them from rising to Colorado’s defense against a fellow Democrat in the White House.

Party loyalty evidently trumps defending Colorado’s vital interests for these Democrats. Washington, in their eyes, can do no wrong, even when what it’s doing is hurting Colorado. How else to explain the passivity, and the silence, with which these lamb-like “leaders” greet Washington’s predatory actions?

I’m no attorney, so I’m just playing a hunch when I wonder aloud whether this raid on energy royalty payments would withstand legal challenge if taken to court. But I would hope it’s something that someone in Attorney General John Suthers’ office is at least researching. Perhaps, if all else fails, the attorney general will take note and intervene. Somebody in state leadership has to confront Washington when Washington does Colorado wrong.

Former Colorado Springs Gazette editorial page editor Sean Paige is now Colorado Deputy Director of Americans for Prosperity.  This op-ed originally appeared at MonkeyWrenchingAmerica.com

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