Lease process in TU’s crosshairs

LIVINGSTON - In the wake of a lucrative state oil and gas sale that saw tracts in and along the upper Yellowstone River sold to an Oklahoma energy development company, one group is calling for a change in Montana law.

Montana Trout Unlimited argues that current energy lease practices in the state put sensitive fish species in peril. How much the group can do is unclear, however, given the state's constitutional obligation to use its land to raise money for K-12 education.

The organization flew reporters over the Shields, Boulder and Yellowstone Rivers on Saturday to showcase the landscape it says is vital for the Yellowstone Cutthroat Trout's survival.

"What we're looking at now is a fairly intact eco-system," Tom Anacker, chairman of the Montana Trout Unlimited State Council, said as the 1973 Cessna he was in buzzed over the tawny foothills east of the Crazy Mountains, where small creeks form the Sweet Grass River and feed into the Yellowstone.

"The fish as adults may be living in the rivers, but when they spawn, they need to go up into that cold, clean water," Anacker said. "When you interrupt that, you interrupt the reproduction of the fish."

The main way oil and gas development can disrupt the fish is by sloughing sediment into the rivers as heavy machinery moves dirt, he said.

The Yellowstone Cutthroat Trout is a beige, spotted fish that lives only in the Yellowstone River basin, about 17 percent of its historical habitat. Efforts have been made to list the species as endangered, but the federal government has denied that request. Still, the federal government does consider it a "sensitive species" and Montana calls it a "species of concern," Trout Unlimited officials said.

The State of Montana owns the land beneath all of Montana's navigable rivers and beneath two square miles of every township, the 36-square-mile blocks of land the federal government carved its huge Western landholdings into more than a century ago.

The state owns the mineral rights to the land, and four times a year energy companies nominate parcels of land to go to auction, indicating an interest to develop the oil and gas the land may hold.

Parcels nominated for September's sale raised the eyebrows of many around Bozeman, when nominations showed up in the Bridger Canyon and in and around the Yellowstone and Boulder Rivers.

Faced with vociferous protest, Mary Sexton, director of the state agency that manages state land leases, postponed the auctioning of the Bridger Canyon leases to December and set quarter-mile river setbacks for leases in the Yellowstone and Boulder Rivers and their direct tributaries. There was already a ban against drilling in rivers.

In spite of the setbacks, Pacer Energy, a Tulsa, Okla.-based energy exploration company, dished out upwards of $300,000 for the exploration rights. And more state regulation can still be asserted if Pacer moves forward with drilling n by no means a guarantee in a business where many leases go untapped. Of 4,653 active state leases, 606 are active.

Still, Anacker said, the process is too liberal in handing out leases.

"The things go to the auction block, then there's a proposal to start drilling, then they start looking at the environmental impact," he said. "Getting a lease is a huge step."

The group said it's time for change.

"There are places you need to (explore) carefully, and there are places you can't do it at all," said Michael Gibson, outreach director for Montana Trout Unlimited.

Gibson could not say what sort of legislation his group might support in the upcoming Legislature, because elections are more than a month out. But, he said, changes must be made to make the leasing process more representative of all concerns.

But changing how leases are sold is tricky business in Montana. The land was granted to the state to raise money for educational institutions.

"How much of the lease process could be amended via legislation is ultimately a question of fact," Monte Mason, mineral management bureau chief at the DNRC, wrote in an e-mail. "The Montana Supreme Court can and has struck down legislation that violated the state's fiduciary duty to the school trust beneficiaries."

Before September's lease sale, the state had received $125.9 million in oil and gas state land revenues in the past five years. September's sale brought in another $10.9 million.

"If legislation were enacted for the benefit of other stakeholders, but to the detriment of the Land Board and department's ability to lease state minerals for the benefit of the various trusts, the result might raise constitutional concerns," Mason wrote.