A propaganda film produced by Chesapeake Energy and shown on all the television channels in Arkansas tells a fetching story about the wealth that the gas exploration in the Fayetteville shale is spreading across the Arkansas countryside. It is the nature of things that the biggest beneficiaries are those who already are amply rewarded, but the film doesn’t tell you that.
The state government, it turns out, is not exempt from the stampede for wealth from mineral leasing and royalties. As luck would have it, the beneficiary of all the lagniappe — nearly $30 million now and tens of millions a year afterward — is also the government agency that already is the fattest and the least needful, the state Game and Fish Commission.
The commission announced that Chesapeake was leasing nearly 12,000 acres of pristine lands in the Ozark foothills that the agency now manages as wildlife habitat. It is getting $29.5 million for signing the leases and will get 20 percent of the royalties as Chesapeake completes scores of wells in the Petit Jean River and Gulf Mountain Wildlife Management areas.
Individual landowners who settled for 12.5 percent of royalties from gas sales may not cheer the agency’s good fortune in securing a payment rate that is higher than theirs by two-thirds.
The people of Arkansas have a couple of interests in this development that may not cause them to share the commission’s euphoria over landing a tank of new money that may last for another quarter-century, until the zone runs dry. The commission acquired these natural areas, with federal help, so that the wilderness might be protected from the ravages of development — a refuge for wildlife propagation and a resource for hunters and fishermen. Neither conservation groups nor state environmental regulators had any consultation in the leasing. Arkansas law assigns the task of negotiating mineral leases on public lands to the state land commissioner, but the Game and Fish Commission claims that it is constitutionally exempt from all such laws.
Chesapeake promises to use the best conservation techniques to restore the land as nearly as possible to its natural state, and it agreed not to drill during hunting seasons. But no one who has been around a horizontal drilling site and pipeline routes can doubt that the wildlife areas will never be the same until long after the gas has been pumped out and the wilderness can encroach again.
Government, like private enterprise, cannot pass up any opportunity to increase revenues no matter the environmental or social consequences. Taxpayers, however, may have a different priority for using the gas windfall than fattening the spending authority of the fish and wildlife agency, which has seen its budget triple in 10 years, owing mainly to a sales tax increase in 1997 that earmarked 45 percent of the proceeds forever to the Game and Fish Commission.
For as long as they have drilled for oil and gas and mined for minerals in Arkansas, the law has required leasing and royalty revenues to go into the general fund to be distributed according to the priority needs of the state. But the commission insists that Amendment 35 to the state Constitution exempts it from all such laws and entitles it to keep any revenues generated on its properties. Gov. Beebe, who now seems a little distressed about the commission hoarding all the leasing and royalty revenues, issued a legal opinion in 2006 while he was still attorney general pretty much affirming the commission’s argument.
But we think he was dead wrong. Amendment 35, which was supposed to insulate the wildlife agency from politics, intended to prevent the legislature from taking the license fees, permits and fines raised by the commission and diverting some of the revenue to other state programs in a crisis. The amendment says any funds arising from “the operation and transaction” of the agency pertaining to wildlife regulation had to stay with the agency.
Piping out oil and gas from 8,000 feet below ground has nothing to do with the commission’s wildlife regulatory work, and any independent court would recognize that simple constitutional principle. The legislature come January ought to distribute those proceeds fairly where the great needs are. Prison construction, school buildings, highways — who cannot think of many that exceed the needs of game and fish?
