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DRILL BABY DRILL: AN ANALYSIS OF HOW ENERGY DEVELOPMENT

DISPLACED RANCHING’S DOMINANCE OVER THE BLM’S

SUBGOVERNMENT POLICYMAKING ENVIRONMENT

Robert Earl Forbis Jr.

A dissertation submitted to the faculty of The University of Utah

in partial fulfillment of the requirements for the degree of

Doctor of Philosophy

Department of Political Science

The University of Utah

August 2010

The University of Utah Graduate School

STATEMENT OF DISSERTATION APPROVAL

The dissertation of Robert Earl Forbis Jr.

has been approved by the following supervisory committee members:

Daniel C. McCool , Chair ------------~~~~~~~------------

June 10,2010 Date Approved

Richard T. Green , Member June 10,2010 -------------------------------------- Dale Approved

__________ P_e_r~eg'"'_r_i_n_e _S_c_hw __ a_rt_z_-S_h_e_a__________ ' Member June 10,2010 Date Approved

Daniel B. Levin , Member June 10,2010 -------------------------------------- Date Approved

Sandi J. Parkes , Member June 10,2010 -------------------------------------- Dale Approved

and by Matthew J. Burbank ------------------------------------------------

, Chair of

the Department of Political Science

and by Charles A. Wight, Dean of The Graduate School.

ABSTRACT

Academic literature analyzing the Bureau of Land Management (BLM) land-use

subgovernment stops at the Taylor Grazing Act and concludes that the historical

development of administering grazing on public lands led to the capture of the BLM by

ranching interests. Using a two-pronged methodological approach of process tracing and

elite interviews this dissertation seeks to advance our collective knowledge of

subgovernment theory by a) clarifying the impact executive decision-making has on

subgovernments and b) identifying the conditions under which strategically competitive

behavior between two competing subgovernment actors occurs. The dissertation seeks to

update the literature by explaining what has caused the BLM to shift from a rancher-

dominated agency to an energy dominated agency by identifying conditions under which

subgovernment actors strategically respond to a political conflict.

The research poses two questions: 1) how have executive actions disrupted an

existing balance of power in a so-called “strong corner” of an entrenched subgovernment

system and 2) what happens when conflict and competition break out between allied

members of the system? Analysis indicates that as the BLM responded to Executive

actions emphasizing domestic energy production, a conflict emerged between traditional

allies: ranching and energy.

Triggered by the unintended consequence of awakening long-dormant legislation,

split-estate energy development—where property rights are severed between private

surface and federal mineral estates—expanded across the West. In turn, this expansion

helped establish the conditions for conflict and in doing so disrupted the balance of power

between large public resource use interests in the relatively stable land-use

subgovernment of the BLM.

Indicative of energy’s emerging dominance of the BLM’s subgovernment, split-

estate energy development led ranching interests to seek the protection of their Western

state legislatures. This shift in domination led to a series of fiercely competitive political

responses between the formerly allied interest groups.

I argue that as political conflict intensified it is clear that the BLM’s land-use

policies are no longer dominated by ranching interests, but are now dominated by energy

development interests. The analysis concludes that this shift in domination disproves the

long accepted conclusion that the BLM is forever an agency captured by ranching

interests.

TABLE OF CONTENTS

ABSTRACT..................................................................................................................... iii

ACKNOWLEDGMENTS ...............................................................................................viii

ONE: INTRODUCTION .................................................................................................1

The Conflict .........................................................................................................2 Literature Review.................................................................................................4 Methodology ........................................................................................................13 Design and Approach...........................................................................................17 Conclusion ...........................................................................................................21 Chapters ...............................................................................................................22 References............................................................................................................26

TWO: LEGAL HISTORY ...............................................................................................31

History of Federal Land Management: Ranching................................................31 History of Federal Land Management: Mining ...................................................39 Dovetailed Federal Land Management: Ranching and Energy ...........................46 Split-Estates: Interests, Common Laws, and Contracts ......................................50 Conclusion ...........................................................................................................57 References............................................................................................................59

THREE: EXECUTIVE BRANCH ..................................................................................63

The Will-Power to Achieve a Political Objective................................................64 Asserting Political Control Over Administrative Decision-Making....................65 Executive Power and the Capacity to Affect Administrative Change .................68 The Election of President George W. Bush .........................................................71 President Bush’s Energy Related Political Appointments at DOI.......................72 Vice President Cheney’s Energy Task Force.......................................................75 Executive Orders 13211 and 13212 .....................................................................77 The BLM Responds to Change in the Executive Branch ....................................79 Policy Change Triggers Political Conflict ...........................................................83 Conclusion ...........................................................................................................85 References............................................................................................................87

FOUR: SUBGOVERNMENTS......................................................................................90

Networks Within Subgovernments ......................................................................90 Change Comes to Cowboy Country ....................................................................93 Regulating Split-Estate Energy Development .....................................................95 Energy Politics and Policy: Congressional Committees (2000-2008).................104 Disruption, Conflict, and Competition: Energy and Ranching............................107 Mending Fences? Western States’ Surface Owner Protection Acts ...................113 Conclusion ...........................................................................................................118 References............................................................................................................121

FIVE: GOVERNANCE ..................................................................................................127

The Voice of Government ...................................................................................127 Energy as a Policy Objective ...............................................................................129 The Cozy Relationship of Ranching and Energy Development ..........................134 Property Rights: Decision-Making ......................................................................137 Energy and Urban Development..........................................................................140 Administrative Procedure for the Development of Energy .................................143 Unregulated Surface Owner Agreements ............................................................146 Land Men and Split-Estate Property Owners ......................................................149 BLM Oversight and Federal Revenue .................................................................154 Conclusion: Disruption of a Subgovernment.......................................................161 References............................................................................................................164

SIX: ENERGY DEVELOPMENT .................................................................................165

The Voice of Energy ............................................................................................165 Shifting the BLM’s Energy Policies and Resources............................................167 Expanded Development of CBM Energy Resources...........................................171 The Federal Mineral Estate’s Legal Dominance .................................................174 Energy Developers and Ranchers: Stories from the Field ...................................179 The Intervention of Environmentalists ................................................................184 Surface Owner Protection Acts: Energy’s Perspective........................................188 Annexing the BLM’s Land-Use Subgovernment: Energy’s Perspective............................................................................................195 Conclusion: Dominance of a Subgovernment .....................................................198

SEVEN: RANCHING .....................................................................................................201

The Voice of Ranching ........................................................................................201 Expanded Energy Development Disrupts Ranching Operations .........................204 Split-Estate Surface Owner Agreements .............................................................209 A Handshake Deal Is Not What It Used To Be ...................................................215 Split-Estate Energy Development Reform: Ranching’s Perspective ........................................................................................217

vii

The Intervention of Environmental Organizations ..............................................220 Surface Owner Protection Acts: Ranching’s Perspective ....................................227 Annexing the BLM’s Land-Use Subgovernment: Ranching’s Perspective ........................................................................................238 Conclusion: Annexation of a Subgovernment ....................................................243 References............................................................................................................245

EIGHT: CONCLUSION..................................................................................................246

The Energy Industry Dominates the BLM...........................................................246 Presidential Control Over Subgovernments.........................................................249 Energy Developers-Ranchers-Environmentalists ................................................253 The Bureau of Land Management .......................................................................255 Modern-Day Capture of the BLM ......................................................................258 The Election of Barack H. Obama .......................................................................262 Conclusion: Stabilizing a Subgovernment...........................................................265 References............................................................................................................267

ACKNOWLEDGMENTS

This dissertation has benefited from the insights and criticisms of many people.

Early elements of the critique presented in this dissertation were submitted in a variety of

forms to a variety of professors, colleagues, and friends. All members and faculty of the

Department of Political Science, Public Policy and Administration program at the

University of Utah have generously supported me throughout this research project, and I

am grateful for their continued support as I wander down the perilous road of academic

exploration.

I am particularly grateful for the guiding insight of my dissertation committee

chair, Dr. Daniel McCool. I am equally grateful for the collective knowledge of my

dissertation committee members, Dr. Richard Green, Dr. Peregrine Schwartz-Shea, Dr.

Daniel Levin, and Dr. Sandi Parkes. Each of these remarkable professors has left the

distinct imprint as mentors and friends not only on this work, but on me as well.

I am very grateful to all the people who agreed to participate in this research

project. Thanks go to: Pat Shea, former Director of the BLM under President William J.

Clinton; Don Simpson, State Director of Wyoming BLM; Larry Claypool, Deputy State

Director of Minerals and Lands Wyoming BLM; Lynn Rust, Deputy State Director of

Minerals and Lands Colorado BLM; and Tony Herrell, Deputy State Director of Minerals

and Lands New Mexico BLM; Rebecca Watson, former Assistant Interior Secretary for

Lands and Mineral Management under former President George W. Bush; and an

Unnamed DOI political appointee under former President George W. Bush.; Colorado

State Representative Ellen Roberts (R-Dist.59); Kathleen Sgamma, Director of

Government Affairs for the Independent Petroleum Association of Mountain States; Bob

Gallagher, former President of the New Mexico Oil and Gas Association; Stan Dempsey,

President of the Colorado Petroleum Association; Bruce Hinchey, President of the

Petroleum Association of Wyoming (PAW) and former Speaker of the House, State of

Wyoming Legislature; Laurie Goodman and John Vincent of the Landowners

Association of Wyoming; Jim Magagna of the Wyoming Stock Growers Association and

Caren Cowen of the New Mexico Cattle Growers Association. Thanks go to all the other

folks, who at one time or another shared their thoughts with me as I sought greater

understanding and meaning for the research project.

Sincere appreciation and a special note of thanks to MPA graduate student and

APA expert Lindsay Heightman for taking the time and having the patience to review,

edit, and account for all my resources. Thanks to Dr. Donna Lybecker for early review

and editing of my work. Special appreciation goes to my new colleagues at Idaho State

University for their patience as I chased an ever-moving finish line.

Thanks go to my parents, Bob and Pat, for instilling in me the work-ethic to see

this dissertation through to its conclusion. Thank you to my brothers, Tim, Rick, and

Mike. Thanks go to members of my amazing PhD cohort, the newly minted Dr. Steve

Nelson, Dr. Jennifer Robinson, and Utah State Representative Jennifer Seelig, for their

continued support and friendship. Thanks to all my wonderful friends for patiently

listening to my endless rants as I attempted to clearly express my thoughts. Special

thanks go to my sons, Sean and Ian Forbis, for inspiring me to earn this degree. It is my

honor to dedicate this dissertation to them.

Thanks and prayers go to my late grandmother Pauline Buck; her love and the

values she instilled in me continue to motivate me to this day. Her belief in me never

wavered. Her unwavering confidence has sustained me throughout my life. Finally, I

must thank Lisa Natale, my wife, my friend, and my partner in all things academic and

otherwise, for her love, patience, and understanding. I do not believe I could have made

my life’s ambition a reality without her confidence, support, and sacrifice. Thank you

Lisa, and yes, I owe you.

I, of course, am solely responsible for any errors or shortcomings that may remain

in this dissertation.

CHAPTER ONE

INTRODUCTION

Academic literature analyzing the Bureau of Land Management (BLM) land-use

subgovernment stops at the Taylor Grazing Act and concludes that the historical

development of administering to grazing on public lands led to the so-called capture of

the BLM by ranching interests (Cawley, 1993; Clarke & McCool, 1996; Culhane, 1981;

C. Davis, 1997; Donahue, 1999; Foss, 1960; Klyza, 1996; Knight, Gilgert & Marston,

2002; Merrill, 2002; Nie, 2008; Smith & Freemuth, 2007; Starrs, 1998; Wilkinson, 1992).

The literature is in dire need of updating. This dissertation updates the existing literature

by arguing that the BLM has shifted from a rancher-dominated agency to an energy-

dominated agency. The research significantly advances the analytical power of

subgovernment theory and illustrates the methodological utility of process tracing.

The dissertation research tests three hypotheses: H1) changes in the Executive

Branch led to changes in domestic energy policy, H2) changes in domestic energy policy

triggered heightened conflict and competition between formerly allied, strong, and

resource-rich members in a public lands subgovernment, and H3) heightened conflict and

competition between former subgovernment allies led to a shift in policy control of a

public lands subgovernment.

In testing these hypotheses I hope to improve political science’s understanding of

subgovernment theory by advancing its analytical power in two ways: 1) clarifying the

impact executive decision-making has on subgovernments and establishing its potential

for detrimental effects on established subgovernment alliances, 2) identifying the

conditions under which a strategically competitive behavior between two competing

subgovernment actors seeking political and policymaking advantage occurs. My research

seeks to identify conditions under which subgovernment actors strategically respond to a

political conflict. Finally, I will illustrate the methodological utility of process tracing

by: 1) conducting a comprehensive review of archival documentation as a means of

indicating the causal relationship between executive action, the mechanism for disruption

and conflict, and the resulting shift in subgovernment dominance, and 2) conducting elite

interviews as a means to trace, contextualize, and confirm the causal processes,

mechanism, and shift in subgovernment dominance indicated by the analysis of the

archival documentation.

The Conflict

In 2000 as the BLM responded to the external pressures of Presidential pressure,

and often political appointee actions1 emphasizing domestic energy production, a conflict

emerged between traditional subgovernment interest alliance of ranching and energy

development. As an unintended consequence the expansion of domestic energy

1 Note: See The Wilderness Society, n.d.; See also Bureau of Land Management [BLM], n.d.(b) for information regarding Congress’s directive to BLM, as well as other information concerning federal action and split-estates, best management practices, rights and responsibilities. See also Energy Policy Act of 2005, Split-Estate Federal Oil and Gas Leasing and Development Practices, § 1835, 119 Stat. 594.

production, energy development expanded onto split-estates—where property rights are

severed between the privately owned surface estate and the federally owned and managed

subsurface mineral estate2—triggering conflicts that resulted in the disruption of the

traditional subgovernment alliance between ranching and energy interests (Hardin & Jehl,

2002; Miller, Hamburger & Cart, 2004). This conflict has grown as the energy industry

has displaced the ranching industry’s historical domination of the BLM and its land-use

policy subgovernment.

Evidence of energy’s emerging dominance of the BLM and ranching’s loss of

influence over domestic energy development since 2000 has expanded beyond the

traditional confines of public lands and increasingly encroached upon the surfaces of

privately owned ranchlands.3 If the ranching industry still dominated the BLM and its

land-use policies, those same interests could have relied on their control of the policy

subgovernment to protect their interests. Ample evidence suggests that this did not

happen.

Instead, as the energy industry’s emerging domination of the BLM’s land-use

policymaking became evident to ranchers, they began to form new organizations and

alliances and began to seek the protection of state legislatures.4 These actions led to

fiercely competitive political responses between members of the traditionally allied

ranching and energy groups for control of the BLM’s subgovernment of land-use

2 Note: See generally BLM, n.d.(b);Bureau of Land Management estimates 58 million western split-estate acreage (Non-Federal Surface/Federal Minerals) and 7 million acres of non-western split-estate acreage. See also generally: Environmental Working Group, 2004. 3 Note: See generally BLM, n.d.(b), for a summary discussion of energy expansion to private lands. 4 Note: See generally Earthworks, n.d.(b), for a summary description concerning previously implemented surface owner protection or damage compensation laws in Western states excluding Utah.

policymaking (Eilperin, 2006; Lofholm & McGuire, 2006). The legislative battles

suggest that, as the level of conflict and competition intensified, control over the BLM’s

land-use policymaking had shifted from ranching interests to energy development

interests.5

I chronicle and analyze these conflicts in three western state legislatures: New

Mexico, Colorado, and Wyoming. I will use these conflicts as an illustration of how the

strategic behavior of subgovernment actors competed for dominance of the administrative

agency’s policy subgovernment. Using my analysis of these conflicts, I will update the

existing literature of the BLM by demonstrating that a shift in agency control has

occurred. Subgovernment theory has been criticized as a simple descriptive device for

identifying causal relationships between actors and the strategies they employ to

dominate the policy setting (McCool, 1989, 1990, 1995, 1998). The research will

advance an analytical version of subgovernment theory by establishing clear causal

linkages among elite, politically powerful, decision-making actors in an established

policy subgovernment. I will explore how the BLM’s land-use subgovernment actors

responded to an unintended political conflict resulting from Executive Branch actions

that concluded with a shift in the control over the policymaking setting.

Literature Review

So-called iron triangles are the classic model for describing policy

subgovernments (Cater, 1964; Freeman, 1965; Lowi, 1979; McConnell, 1966; McCool,

1989, 1990, 1995, 1998). In the iron triangle model, relationships between interest 5 Note: See generally Western Organization of Resource Councils, n.d., “Supporting Declarations,” of first person accounts to the “Oil and Gas Industry Responsibility Petition” to the Dept. of Interior and BLM.

groups, agency bureaus, and congressional subcommittees are described as “mutually

supportive and harmonious” (Kelso, 1995). As suggested by the model’s name, the iron

nature of these mutually supportive and harmonious relationships means they resist the

influence of other actors. Academic research has long used natural resource policy as a

lens into subgovernment behavior (Cahn, 1995; Castelnuevo, 1998; Cawley, 1993; Hage,

1994; Merrill, 2002; Yandle, 1995). And as public policy research—particularly

environmental policy research—has grown more complex over time and these iron-clad

relationships are now described as “open systems” (Kelso, 1995) Previously closed

policy domains are now described as porous and susceptible to the influence of

competing players (Kelso, 1995). The increasingly complex relationships between policy

actors operating within such “open systems” have been conceived of and tested by

advocates of multiple models including: laissez-faire pluralism (Dahl, 1967; Truman,

1971), elite pluralism (Lowi, 1979), issue networks (Heclo, 1978), advocacy coalitions

(Sabatier & Jenkins-Smith, 1999), policy streams (Kingdon, 1984), and punctuated

equilibrium (Baumgartner & Jones, 1993).

The theoretical shift from the simplicity of iron-triangles to the complexity of

open-systems is illustrated in the historical domination of natural resource policymaking

by large user interest groups. Charles Wilkinson (1992) describes the dominance of

singular, large user interest groups in a variety of natural resource policy settings.

Critically assessing 19th and early 20th century natural resource laws, policies, and ideas,

Wilkinson argues that “natural resources are governed by what I have come to think of as

the ‘lords of yesterday’” (Wilkinson, 1992, p. xiii). Wilkinson notes that these laws,

policies, and ideas were not always irrational, but “arose for good reason” at the time of

their passage (Wilkinson, 1992, p. xiii).

In each of these natural resources settings, Wilkinson (1992) accounts for a

“compounding problem,” “the capture of large interests of the laws and policies that

comprise the lords of yesterday” and their ability to thwart reform through their

substantial political and financial muscle (p. 22). Thus our collective understanding of

subgovernment systems and how they operate within various policy settings benefits

from researching the historical development of government responses to the use of

natural resources. As Charles Davis (1997) notes,

…natural resource issues, including water (Ingram, 1990; McCool, 1987), energy development (Rosenbaum, 1993; Jones & Strahan, 1985), agriculture commodities (Browne, 1988), timber harvesting (Clary,1986), and hardrock mining (Heclo, 1978) …were developed within a distributive policy context….[that] also spawned a protective subgovernment that restricts participation in policy decisions to public agency administrators, legislators, and interest group representatives with shared programmatic concerns. (pp. 7, 87) Davis then asks, “How can we account for the continuing political strength of the

range policy subgovernment in the face of opposition from both environmental groups

and advocates of greater efficiency in government” (C. Davis, 1997, p. 87)?

According to Davis and others, the Taylor Grazing Act of 1934 made grazing the

“dominant use” on BLM lands protecting ranching interests. It is, Davis notes, not until

the passage of the Federal Land Policy and Management Act of 1976 (FLPMA)

amending the Taylor Grazing Act by “replacing the provision identifying livestock

grazing as the predominant use of public rangelands” with “the multiple-use management

scheme” that ranching interests were confronted with competing land-use interests (C.

Davis, 1997, p. 95). Like Wilkinson, Davis places the Taylor Grazing Act of 1934 in the

center of his critique of how ranching’s domination of the policy arena endures in the

face of FLPMA’s significant land-use reforms.

Davis argues that, since the adoption of FLPMA, prograzing interests have

maintained their policy dominance by maintaining their core support for grazing while

gradually expanding to represent the interests of other large resource use interests

including, among others, energy companies, and supporting the states’ rights and

property rights political movements. While Davis notes the role of environmental

organizations in advancing changes in rangeland-use policy since the passage of FLPMA,

he remains relatively silent on how these groups, as well as the other large resource use

interests, accommodate ranching’s continued effectiveness in protection grazing as the

dominant use of public range lands (D. Davis, 1997).

Literature focusing specifically on energy policy fares no better explaining the

cozy relationship between ranching and energy development interests. Academic

inquiries into energy development policy, like those into other public resource policy

areas, have been primarily concerned with the conflicting policy environments of energy

development interests and environmental protection interests. Rosenbaum (1993) argues

that “there is political symmetry to energy and environmental issues. Energy policy is

environmental policy by another name” (p. 188). David H. Davis argues that “Four

factors may explain the evolution of energy policy on federal lands: (1) interest groups,

(2) political partisanship, (3) bureaucratic routines, and (4) economics” (D. Davis, 1997,

pp. 122-124). Both Rosenbaum (1993) and D. Davis’s (1997) arguments are grounded in

the symmetrical relationship between energy and environmental issues. Unlike

Wilkinson or C. Davis’s inquiries, neither Rosenbaum nor D. Davis’s research explains

the effects of long-dormant legislation or the mutually supportive relationship between

ranching and energy development interests on the land-use policymaking subgovernment.

Rosenbaum (1993) concludes that “the risk remains great, as it always has, that

national political majorities and interest coalitions will dominate national energy policies

and override Western regional interests in the name of the greater national good” (p.

196). Here, he suggests the potential for energy development interests to overwhelm the

historic domination of grazing, or possibly the doctrine of multiple-use. D. Davis (1997)

makes no similar predictions of change but, instead, concludes that a relative stability,

even predictability, in the dynamics of energy policy has developed over time (pp. 146-

148). Both approaches are overly simplistic because they do not fully account for

variance in political conditions and relationship dynamics affecting the subgovernment

system of energy resource development.

Other authors describe how the cozy relationships within land-use policy

subgovernments have been formalized and institutionalized within government agencies.

This body of literature holds that, in order to fully understand public land politics and

policy, one must account for different resource management patterns, across

administrative settings, within the various resource-use policy domains. Here, the key to

better understanding the dynamics of resource policy subgovernments benefits from

comparing patterns of realignment across governing administrative agencies and their

respective resource-use subsystems.

Klyza (1996) argues that previous studies have not fully answered the puzzle of

“different policy patterns in the same policy area” (p. 6). Klyza (1996) notes that this

problem has been inadequately addressed by the previous literature for four primary

reasons, “First, some studies have been descriptive without being theoretical (p. 6,

commenting on Wilkinson, 1992) …some studies have made insufficient comparisons

across policy regimes, (p. 6, commenting on Clary,1986; Durant, 1992) …[some] studies

have focused on only specific agencies rather than the entire policy process (p. 6,

commenting on Culhane, 1981; Clarke & McCool , 1996), …[and] many such studies

lack a systematic historical perspective” (p. 6, commenting on Clary,1986; Durant, 1992).

Klyza (1996) suggests that “the key to understanding the puzzle of different policy

patterns in public-lands politics is in understanding the foundation of a policy regime

[subsystem] and the subsequent politics that emerge from this” (p. 7). Klyza (1996)

argues that new policy regimes embody privileged ideologies that guide and constrain the

actors within the policy regime. This ideology becomes institutionalized and becomes

“very difficult to dislodge, despite challenges from interest groups and agencies

supporting other ideas” (1996, p. 7). Yet, no one, including Klyza, has provided evidence

to illustrate this point.

Klyza (1996) also argues that “[t]his institutionalization is not forever” and that

given the right circumstances, “nonprivileged ideas can be victorious” in dislodging the

privileged idea that guides and constrains actors within the policy regime (p. 7). Klyza

notes that embedded ideas are extraordinarily difficult to dislodge, even when they are a

source of friction. Klyza, however, only suggests possible hypothetical scenarios for

triggering disruption. His likely scenarios range from social movements to the rise of a

new land-management professionalism, agency reorganization, or expansion in

administrative agency responsibilities like domestic energy development.

Klyza’s (1996) analysis of three cross-cutting privileged ideas and the responses

of agencies and interest groups is that “Despite [the] challenges and cracks, the embedded

idea has proved difficult to dislodge. In each of the policy regimes, the privileged idea,

though tarnished, is still in place” (pp. 141-160). Change, Klyza (1996) concludes, will

occur only when a “fundamental change in state and society” transforms prevailing views

on the role of government in managing natural resources (p. 159). As noted in the

previously reviewed literature, Klyza’s conclusions remain primarily focused on the

privileged oppositional interplay between resource development interests and

environmental interests.

Klyza’s (1996) provocative insights suggest a series of important, unanswered

questions. Are there cases that illustrate how, when the “right circumstances” exist,

“nonprivileged ideas can be victorious?” If such cases exist, does dislodging a privileged

idea require a fundamental change in state and society? Might something as simple and

direct as a change in the presidency, an executive order, or an executive appointment, or

some combination thereof dislodge a privileged idea? Are there cases that demonstrate

how events can provoke “oppositional interplay” between interest groups within the land-

use subgovernment? And, if such cases exist, might examining how political conflict

arising within that subgovernment, between formerly allied interest groups, advance our

knowledge of the behavioral dynamics of subgovernments? Could it be that focusing our

collective attention on the privileged conflict of development interests and environmental

interests has limited our ability to advance subgovernment theory? The dissertation

research I undertook sought to answer these questions.

My primary objective in the dissertation is to advance subgovernment theory. As

McCool (1989, 1990, 1995, 1998) has noted, “The phenomena of fragmentation and

accommodation, and related concepts, are common themes in much of the literature on

subgovernments and their principle participants” (McCool, 1989, p. 266). While much

has been written concerning the expansion of competition and activity within

subgovernments, the literature has not explored a number of external influences on

subgovernments (Klyza, 1996). McCool (1989) suggests a need for political science to

address four sets of questions in order to fully understand the role of subgovernments in

contemporary policymaking. These include: (1) “what are the factors that affect the

relative power of subgovernment participants, (2) what are the conditions and factors that

provoke change in subgovernments, and (3) what variables affect the level of integration

between subgovernments and their external environment, and (4) what are the democratic

implications of subgovernments” (pp. 280-281)?

McCool (1998) also argues that we know little about how subgovernments behave

during periods of conflict and proposes a framework through which researchers might

identify the functional characteristics of subgovernments during periods of political

conflict. McCool’s (1998) “hierarchy of conflict” framework “permits the development

of a typology of conflict, and an association between types of conflict and strategies” (p.

562). As McCool (1998) notes, shifting the research emphasis of subgovernments away

from structure and towards identifiable behavior “provides a new definition of a

sub[government]” as well as advancing the construction of subgovernment typologies

and the probability of strategic responses to differing kinds of conflict. McCool (1998)

offers three testable hypotheses that might “yield insight into the causal relationships

between elements of the political context, and the strategies employed by various kinds of

sub[governments]” (pp. 565-566).6

Based on McCool’s (1989, 1990, 1995, 1998) analysis two things are clear. First,

the essential questions concerning the dynamics of subgovernments when external factors

foster change remain unanswered. And second, the essential questions concerning the

dynamics of subgovernments when internal factors foster change remain unanswered.

Therefore, in order to advance subgovernment theory, both the external and the internal

factors that foster change must be addressed during a period of political upheaval.

My research seeks to identify conditions under which subgovernment actors

strategically respond to a political conflict. In doing this, I attempt to address McCool’s

(1989) four sets of questions and provide empirical evidence for McCool’s (1998)

analytical framework of a hierarchy of conflict to “improve the validity and usefulness of

the sub[government] model” (p. 566). The theory is advanced by explaining how

subgovernments behave during times of significant political conflict and how they are

affected by changes in presidential administrations.

6 Note: H1: As the relative power of opposing sub[governments] in a policy conflict approaches equity, the greater the probability that conflict will move up the hierarchy…the higher the conflict moves up the hierarchy, the greater the probability that sub[governments] will operate in the strategic context of pluralized or conflictual sub[governments]…Conversely, the lower the conflict on the hierarchy, the greater the probability that sub[governments] will operate in the strategic context of autonomous or dominant/dissident sub[governments]. H2: The more government largess is perceived zero-sum, the greater the probability that sub[governments] will operate in the strategic context of dominant/dissident or conflictual sub[governments]. Conversely, the more government largess is perceived as non zero-sum, the greater the probability that sub[governments] will operate in the strategic context of autonomous or pluralized sub[governments]. H3: As policymaking moves further down the conflict hierarchy, the greater the probability that the stronger sub[government] will protect the status quo. Conversely, as policymaking moves up the hierarchy, the greater the probability that all sub[governments] will work to alter the status quo in an effort to gain competitive advantage. From this it follows that if one subsystem is more successful improving its competitive advantage, then policymaking will start moving back down the conflict hierarchy.

Methodology

I employ a case study with a mixed methodological approach. A case study is an

appropriate approach because my central argument concerning change in

subgovernments is rooted in my analysis of how the BLM has shifted away from a

rancher-dominated agency and toward an energy-dominated agency. While the term

“case study” has multiple meanings, this research proposal will follow the approach of an

“instrumental case study” because my research is intended “mainly to provide insight into

an issue or to redraw a generalization” (Stake, 2003, p. 445). The BLM itself is of

secondary interest, but provides the setting necessary for my examination of changes in

subgovernments due to external factors and internal conflict. The BLM has a historically

robust subgovernment system that has been examined by a number of political scientists

to further their own theories of subgovernments.

The expansion of domestic energy production at the direction of the President,

Vice President, and administrative appointees provides the setting for disrupting the

relative stability of the BLM’s land-use subgovernment. The expansion of domestic

energy development challenged the deference to ranching interests that long typified the

BLM’s land-use policy. As noted earlier, researchers have been critical of the BLM

because of how the BLM has been dominated by ranching interests since the agency’s

creation. More recent research indicates that the BLM’s land-use subgovernment has

been more inclusive of other land-use interests in shaping land-use policy. This same

research also concludes that other land-use interests and government policymakers

remain deferential to ranching interests regarding alterations to the BLM’s land-use

policies. While previous findings suggest significant political tension between interest

groups, the general conclusion remains that ranching interests are the politically dominant

force in the BLM’s land-use policymaking subgovernment. In many respects, the

assumption that ranching is dominant over BLM land-use policy has limited the

advancement of subgovernment theory.7

Previous subgovernment research has focused on the dynamics between

conflicting land-use policy interests. Primarily, this has meant research focused on

environmental protection interests opposing ranching and other large resources use-

related interests. I investigate a significantly different case. I focus my exploration and

analysis on the conditions and dynamics of a political conflict that emerges between

formerly allied—not opposing—land-use interests: energy and ranching. While previous

research is correct in concluding that influence by environmental protection interests

helps shape the BLM’s land-use policymaking, the research also concludes that the BLM

remains deferential to ranching interests. Previous research has assumed that ranching

interests were so politically powerful and influential within the context of the BLM’s

land-use subgovernment, that even the energy development interests deferred to and

accommodated ranching.

The central thesis of the dissertation is that a change in presidential administration

can lead to a shift in the domination of the BLM’s land-use subgovernment. While

multiple indicators suggest that a shift has occurred, I show that the BLM’s land-use

policymaking now defers to, or accommodates, energy development interests. Finally,

by demonstrating how political control of a policy subgovernment long-dominated by

7 Note: The limited advancement of subgovernment theory is not necessarily limited to studies concerning the BLM, but that the BLM and its subgovernment is often used as an example for discussion of subgovernment theory. Simply stated the BLM’s subgovernment is a much studied subgovernment, but is hardly the only setting in which subgovernments are explored.

one interest group has been wrested away by a formerly allied interest group, the research

will contribute to subgovernment theory.

In developing this argument I explore a significant chain of events that resulted in

the disruption of control for an established, relatively stable, subgovernment. In

articulating the conditions for annexation of the subgovernment I (1) address how the

actions of the Executive Branch awakened long dormant statutes (Stock-Raising

Homestead Act of 1916, §291 et seq; Mineral Leasing Act of 1920, §§2319–2328, 2331,

2333 2338, 2344; General Mining Act of 1872, §91) that established the legal dominance

of energy development, which was, in turn, (2) manifested in the triggering mechanism of

split-estate energy development and the strategic, competitive actions of ranching and

energy interests (independent variables), that, (3) resulted in a shift in the domination of

the BLM’s land-use policymaking subgovernment (dependent variable). I show how this

causal process, in which an external change triggered a mechanism that led to policy

change and conflict that resulted in energy development interests gaining control of the

BLM’s land-use policymaking subgovernment.

My case study uses process tracing, a two-pronged approach of analysis. First,

the researcher utilizes archival materials to provide indicators in support of the argument

being developed. Second, the researcher supplements the archival analysis with elite

interviews to confirm his analysis of historical, governmental, and journalistic

documents. My choice of the process tracing method of inquiry is justified on three

counts.

First, qualitative analysis has been commonly used in previous research on

subgovernment theory. Oisin Tansey (2007) argues that, “Recent years have seen a

significant growth in the study of qualitative methods in political science…[and] one of

this literature’s strongest contributions has been to reinforce and further develop the idea

that robust causal analysis can be carried out through within-case analysis rather than, or

as well as, cross-case analysis” (p. 765).

Second, process tracing allows for the relatively robust empirical development of

the conditions, causal chains of events, and triggering mechanisms required of an in-

depth analysis of subgovernments. Alexander George and Andrew Bennett (2005) argue

that process tracing is the most appropriate means of uncovering causal mechanisms.

They describe process tracing as an approach to research that “examines histories,

archival documents, interview transcripts, and other sources” to establish “whether the

causal process a theory hypothesizes or implies is in fact evident in the sequence and

values of the intervening variables in that case” (George & Bennett, 2005, p. 6). These

authors further note that, “The process tracing method attempts to identify the intervening

causal process—the causal chain and causal mechanism—between an independent

variable (or variables) and the outcome of the dependent variable” (George & Bennett,

2005, p. 206). Or, as Tansey (2007) concludes, “At the heart of the [process tracing]

approach is a concern with developing and testing theory in ways that incorporates

attention to [a robust analysis of] the causal processes at work in political life—to the

causal mechanisms that link causes to effects” (p. 765).

Finally, this choice is strengthened by the addition of elite interviews, which are a

means of developing deeper analyses of the research and a more robust verifiability of its

findings. Tansey (2007) suggests that elite interviewing, specifically non-probability

sampling elite interviewing, is an essential methodological tool if process tracing is to

overcome the limited potential for theoretical generalization in its establishment of causal

processes (pp. 768-769). While a traditional large-N random sampling of interviews is

generally supported by a desire to establish behavioral and theoretical generalizability to

a study’s findings, I use the rather unorthodox approach of small-n elite interviews in the

dissertation. As Tansey (2007) argues, there are four uses for small-n elite interviews:

“1) to corroborate what has been established by other sources, 2) to establish what a set

of people think, 3) to make inferences about a larger population’s characteristics and

decisions, and 4) to reconstruct an event or set of events” (pp. 766-767).

Design and Approach

I provide an analysis of the following archival material and historical secondary

sources: 1) executive and legislative documents directing the BLM to administer the sale

and management of energy development leases on both public and private lands; 2)

primary government documentation of the impact of Executive Branch actions on the

BLM’s capacity to administer the energy leasing process, and the consequences for

policy favoring energy development, especially split-estate energy development; 3) news

sources and journalistic accounts reporting ranching interest responses to energy

development’s legal domination and split-estate energy development, and photographic

representation of the impact of expanded energy leasing and development on private

surface land; 4) archival documents and elite interviews documenting ranching interests’

strategy of seeking state legislative protection of their surface lands from energy

development; 5) archival documents and elite interviews documenting energy industry’s

strategic responses to ranching’s legislative initiatives; 6) archival documents and elite

interviews documenting state legislative responses to both ranching and energy’s

strategic legislative actions; and 7) archival documents and elite interviews documenting

BLM’s response to state legislation enacted to protect ranching interests from energy

development of the federally managed mineral estate.

Finally, I account for factors employed by previous research demonstrating

ranching’s dominance of the BLM’s land-use subgovernment. I believe the use of

common factors such as land mass, leasing, permitting, and drilling activity is important

for supporting the thesis that a shift in subgovernment domination has occurred. To this

end, I provide evidence documenting the interest-oriented leadership and membership of

various decision-making boards, commissions, panels, and working groups of the BLM’s

land-use policymaking subgovernment; I note the number and variety of resources of the

BLM dedicated or redirected away from ranching related interests and to areas of energy

development interest. The movement of agency resources away from ranching interests

and toward energy development interests clearly indicates energy development’s

emerging annexation of the BLM’s land-use policymaking subgovernment. I use this

evidence to identify and compare the conditions between the states of New Mexico,

Colorado, and Wyoming. These states are where the conflict between ranching and

energy development interests first emerged and where these powerful interests have most

openly competed for domination of the BLM’s land-use policymaking subgovernment.

I support these initial findings with a series of elite interviews of actors closest to

the conflict in these three states. In other words, it is insufficient to present archival

evidence that merely hints at the existence of conditions, causal chains of events, and

triggering mechanisms to a political conflict. A comprehensive causal explanation

becomes clearer by combining an analysis of documentary evidence with first-hand

accounts from elite participants closest to the events and outcomes in question.

Interviewing small numbers of executive decision-makers, rather than a larger

sample of participants, supports the process tracing methodological approach by

confirming the initial analysis of a very specific series of events or processes. Because I

provide initial evidence that ranching’s dominance of the BLM’s land-use

subgovernment has subsided, I support my findings by interviewing small groups of

executive decision-makers. These interviews are necessary because initial findings

indicate that most strategic decisions in the political conflict I investigate were made by

elites within a rather small set of groups across similar settings. The conflict between

ranching and energy interests is still evolving. Although this research has a starting

point, the conflict it analyzes is unlikely to end soon.

I interviewed a carefully selected set of elite decision-makers and collected first-

hand accounts regarding the critical conditions, events, and mechanisms as well as the

strategically competitive political relationships that exist among the actors. By virtue of

their positions and proximity to the competition for dominance of the BLM’s land-use

subgovernment, interviews of senior actors—decision-makers—are essential for

reconstructing the events and processes that are of interest (Tansey, 2007).

The criterion for selecting elites to interview is guided by two sampling methods.

First, “purposive sampling” where the researcher’s knowledge of the process and actors

under investigation guides the identification of the most appropriate individuals of

interest, and second, “snowball or chain referral sampling” where the intimate knowledge

among the principal actors of other, often more influential actors, are known only to

themselves and must be identified by the researcher’s asking the question: “Who else

should I be speaking to” (Tansey, 2007)?

Following Tansey (2007), I first selected elite interview subjects based on their

specific position and occupation within a small set of identifiable group(s) who are

central to the conflict and competition for control of the BLM’s land-use subgovernment.

Second, I selected others for interview based on those I initially interviewed who referred

me to others who are known for being influential, but who act behind the scenes. This

combination is appropriate in the context of the small number of interviewees selected for

the dissertation because “when using elite interviews as part of a process tracing method,

[I] contend that a combination of the two [interview selection] approaches is an optimal

method” (Tansey, 2007, p. 771).

I have identified members of three groups, in the three states, as the most

appropriate interview subjects. The three groups are: 1) government officials including

federal DOI appointees, state BLM administrators with decision-making authority

concerning the management, resources, and oversight of ranching and energy

development, and state legislators involved in the battles over state surface owner

protection acts; 2) state petroleum associations actively opposing the efforts of ranching

supported interest groups sponsoring state surface protection acts; and 3) ranching

supported interest groups actively sponsoring state surface owner protection acts.

Generally speaking, I did not encounter any serious issues concerning my gaining

access to any of the study’s participants. Having undertaken preliminary data gathering

and analysis, as well as preliminary discussions among a small, but relatively

representative, group of elites among the various groups I had proposed to interview, the

only elite actors I encountered difficulty in interviewing were state legislators. This may

be a result of the part-time nature of Western legislatures as the only legislative interview

I was able to secure was in Colorado. Simply put, I showed up at the Colorado

legislature and requested an interview. In the case of Wyoming and New Mexico

requests for interviews were made via e-mail and phone message. In both cases, those

requests went unanswered. In all other instances I was able to access key sources and

engage in discussions with actors closest to the conflict. Access to these actors was

secured through an established and reliable relationship with a so-called “gate-keeper.” I

trusted this person to help me gain access to his/her fellow elites for the purpose of the

dissertation research. I was not disappointed. I expected that elite interviews of similarly

situated individuals among similar groups in all three states would confirm and support

findings of conditions, causal events, mechanisms, political conflicts, and strategic

competition from my archival research.

Conclusion

In conducting the research for the dissertation, I have made six significant

contributions to the field of political science. First, I identify the conditions and factors

that affect the relative power within a “strong corner” of allied subgovernment

participants. Second, I account for how presidential action may create competition and

change in the control of subgovernments. Third, I identify variables affecting the level of

integration between subgovernments and their internal and external environments.

Fourth, I develop a more specific understanding of a very powerful subgovernment, its

capacity for change, and the democratic implications of that change. Fifth, I contribute to

an existing body of western land-use literature by providing a contextually deep analysis

of a causal process where the unintended consequence of an executive action released a

causal mechanism—split-estates energy development of western ranching lands—

triggering political upheaval, conflict, and competition between western landowners,

energy development companies, and government. Finally, I demonstrate that as a result

of a politically-induced upheaval to the BLM’s land-use subgovernment, a shift in control

over the BLM away from a rancher-dominated subgovernment to an energy development

dominated subgovernment had occurred.

Chapters

Chapter Two includes a review of previous literature and documentation to trace

the historic development of federal grazing and energy development legislation and

policies. It includes an analysis of the historical legislative record to demonstrate how

the federal government’s desire to manage the use of public lands during the late 19th and

early 20th centuries helped establish the subgovernment relationships between the federal

government, ranching interests, and the energy industry. Third, the chapter includes a

description of the developing relationships and dormant legal conditions that eventually

help enable the modern struggle for dominance of the BLM’s land-use subgovernment

between the formerly allied interests of ranching and energy development.

Chapter Three includes an analysis of how modern Executive Branch actions have

altered federal domestic energy policies and have affected the BLM’s domestic energy

policies and its resource allocation. In this chapter I analyze archival and government

documents describing Executive Branch actions that directed the BLM to favor the

energy development industry. These events are presented chronologically to illustrate

how the President and his executive appointees established, possibly unintentionally, the

conditions for an impending political conflict. The chapter also documents changes to

federal energy policies at the agency level that led to the reallocation of resources from

ranching and towards energy development. These changes resulted in increased levels,

numbers, and types of federal energy development projects in New Mexico, Colorado,

and Wyoming. Chapter Three concludes with a brief analysis suggesting that increased

split-estate energy development, under long dormant legislation, triggered conflict and

competition between the formerly allied interests of ranching and energy development.

Chapter Four contains data gathered from primary government documents and

journalistic sources across three settings, New Mexico, Colorado, and Wyoming, where

the vast majority of split-estate energy development and conflict between ranching and

energy development interests have occurred. In this chapter I describe how changes in

federal domestic energy policy resulted in increased split-estate energy development and

analyze the effects of that development. My analysis shows that increased split-estate

energy development increased the level of frustration among ranchers with the BLM. In

this chapter I document the spiraling conflict with firsthand accounts of ranchers

petitioning their state legislatures for protection from energy development. As ranching

interests turned to state legislatures for protection, formerly allied interests increasingly

competed for control of the BLM’s land-use subgovernment.

Chapters Five, Six, and Seven contain an analysis of the first-hand accounts

among the decision-making elites gathered from the four primary groups engaged in the

conflict: (1) government officials, (2) state petroleum associations, and (3) ranching

supported interest groups. The narrative analysis presented in Chapters Five, Six, and

Seven reinforces the previous chapters’ documentary analysis of how the changes to

domestic energy policy affected the internal stability of the established subgovernment

actors. The method of corroboration employs first-hand accounts and responses to open-

ended questions as an opportunity to clarify the impact executive decision-making has on

subgovernments and the executive’s potential for disrupting established subgovernment

alliances. The accounts of elites also lend a confirming voice to the conditions under

which strategic competitive behavior for dominance of the subgovernment occurs.

Additionally, the chapter contains an exploration of how external political upheaval and

internal strife may affect interest groups and their relationship with the established

subgovernment actors. Finally, the chapter concludes with a comparative analysis of

similarities and differences in the conditions, events, triggering mechanisms, political

strategies, and competition voiced by those elites who had directly engaged in the

political battles in Wyoming, New Mexico, and Colorado. The analysis presents these

findings as a means to contextualize the political conflict and provide deeper

understanding to the theoretical concept of subgovernment domination in policymaking.

Chapter Eight is the conclusion and contains a review of the evidence and

analyses presented in previous chapters, reaffirming the dissertation’s central argument:

The BLM has shifted from a rancher-dominated agency to an energy-dominated agency.

Moreover, Hypotheses H1-H3 are supported by evidence that a change in policy initiated

by the Executive Branch can trigger an unintended consequence that can establish

conditions for a political upheaval, conflict, and competition among allied interests

within a policy subgovernment. These findings equally support the point that annexation

of an agency’s policymaking subgovernment is possible. In this chapter I explain how

these findings advance our collective understanding of subgovernment theory by: a)

establishing the extent of presidential control over entrenched subgovernments, b)

providing implications for future political appointees and the land-management agencies

they direct, c) mapping the strategic behavior of subgovernment actors during periods of

political conflict, and d) discussing the democratic implications of energy development’s

annexation of the BLM’s subgovernment. Finally, the chapter presents a brief discussion

of why the unforeseen shift in domination of a resource management agency’s

subgovernment by another large resource interest presents a host of unanswered

questions that beg future research.

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CHAPTER TWO

LEGAL HISTORY

This chapter reviews previous literature and documentation tracing the historical

development of federal grazing and energy development legislation and policies. The

chapter includes a preliminary analysis using the historical record to demonstrate how the

federal government’s desire to manage the use of public lands during the late 19th and

early 20th centuries helped establish the subgovernment relationships between the federal

government, ranching interests, and the energy industry. The chapter also includes a

description of the developing relationships and dormant legal conditions that eventually

help enable the modern struggle for dominance between the formerly allied interests of

ranching and energy development of the Bureau of Land Management’s (BLM) land-use

subgovernment.

History of Federal Land Management: Ranching

For the first 200 years of American history, federal land policy centered on

facilitating the sale or transfer of public lands to states or private parties for the benefit of

the nation. The retention and management of public lands and their resources by federal

agencies is a relatively modern phenomenon. For instance, until 1976, federal land

policy still generally favored the disposition of public lands and resources to private

interests in order that the nation is “tamed, farmed, and developed” (Coggins &

Wilkinson, 1987, p. 47).

Federal land management policy can ultimately be traced to debates between

Alexander Hamilton, who advocated the sale of public lands to assist in the effort to pay

Revolutionary War debts, and Thomas Jefferson, who advocated the fostering and

development of an agrarian-based society by providing free land to frontier settlers

(Anderson & Hill, 1990). Three general public land disposal policies emerged from these

debates: (1) sale of the land to the highest bidder with no required residence or

occupation of the land, (2) title by first occupancy of the land, or giving squatters first

right of purchase at a minimum price, and (3) title to the land by homesteading, or

providing free or minimally priced land to any settler who satisfied specific requirements

of residency and/or improvements. Each of these land disposal policies emerged as a

result of differing opinions, and compromise, regarding the fundamental debate of how

best to settle the western frontier of an emerging nation. Each of these policies will be

discussed in turn.

For the first 50 years after the Revolutionary War, land policy was dominated by

the Hamiltonian position that the best interest of the nation was served by a land

management policy that encouraged western expansion by selling public lands to the

highest bidder. In turn, Hamilton also believed that the sale of public lands would

generate sufficient funds to satisfy the debt incurred by the war. The nation’s two

primary sources of revenue at the time were tariffs on imported goods, and the sale of

public lands.

The Land Act of 1797 was passed to facilitate the sale of public lands by means of

a survey system based on an auction system of 36 section rectangular units at a starting

minimum bid of $2.00 per acre. During this same period of time, land was sold to

individuals and companies acting as brokers for small groups or individuals seeking to

purchase land. Prices and terms of ownership were relatively uncomplicated as the

details were negotiated between those acting for the buyers of land and Congress.

Notably, during this period, railroad companies—the industrial mechanism of westward

expansion—purchased or were granted lands directly from the federal government. By

1812 land sales and purchases had reached a point where more formal administration of

the program was deemed necessary. As a result, Congress created the General Land

Office. This first federal land management office would, in 1946, be absorbed by the

BLM (Coggins & Wilkinson, 1987; Merrill, 2002).

Squatting was common practice in America in both the pre- and post-

Revolutionary War Eras. The practice created tension between the federal government’s

desire to accommodate settlement of the Western frontier, and its interest in protecting

the lawful purchase and legal title to lands of the Western frontier. According to Thomas

Jefferson in 1776, “they will settle the lands in spite of everybody” (Coggins &

Wilkinson, 1987, p. 88). The federal government’s frustration with the practice of

squatting is exemplified by the instances in which federal troops were sent to dispatch

squatters from land that was legally owned by either the federal government or private

speculators of federal lands (Merrill, 2002).

In 1805, with the national debt retired and more of the American population in

Western states expanding, pressure to accommodate squatters and the practice of

squatting on public lands grew. Thus, the federal government adopted a system known

simply as “preemption to squatters.” This land use policy recognized the right of

property as a result of labor or improvement to the land by occupation of the land.

Through a series of legislative acts in the first half of the 19th century, the federal

government implemented a policy that gave the preferential right of settlers-squatters to

buy their claims at modest prices without competitive bidding. The policy of preemption

to squatters continued as a retroactive response to the practice of squatting on public

lands until 1841.

In 1841, Congress passed the General Preemption Act, which reformed the

retroactive policy of preemption to squatters, to a prospective policy of preemption to

squatters only on lands previously surveyed by the federal government. This reform was

the result of many abuses of the retroactive nature of the pre-1841 land management

policy that gave preemption to squatters. Many abuses were reported at the time of the

legislation’s passing, especially reports of fraud and the somewhat common practice of

squatters occupying timberland just long enough to strip it bare of its resources, only to

move on to a new claim. Some 50 years later the preemption to squatters, regardless of

its retroactive or prospective nature, was deemed a policy badly in need of reform or

abolishment. In 1891, Congress repealed the Preemption Act of 1841, but the General

Land Office and its administration to the management of public lands remained in place.

At the close of the Civil War, two developments—one economic in nature and the

other social in nature—initiated a major reform in federal land management policy: (1)

revenues from the sale of public lands as a percentage of the total federal budget had

begun declining sharply, and (2) emigration and industrialization had created a class of

landless and unemployed workers in the Eastern United States. Speaking to the second

development, and arguing forcefully for a system of homesteading in the West, a

representative from Illinois remarked:

Unless the government shall grant head rights…prairies, with their gorgeous growth of flowers, their green carpeting, their lively lawns and gentle slopes, will for centuries continue to be the home of the wild deer and wolf; their stillness will be undisturbed by the jocund song of the farmer, and their deep and fertile soil unbroken by the ploughshare. Something must be done to remedy this evil. (Foss, 1960, p. 91) In order to remedy “this evil” Congress passed the Homestead Act of 1862

authorizing “entry onto 160 acres of any land subject to preemption, later extended to

unsurveyed lands where Indian title was extinguished” (Preemption Act of 1862, ch. 94,

§ 1, 12 stat 413). This statute governed the disposal of public lands for the very

Jeffersonian land management policy of providing public lands for free or at a minimal

price for the purpose of fostering and developing an agrarian-based society of frontier

settlers. Indeed, the concept of homesteading would guide the federal policy for

management of public lands and resources for the next 114 years (Coggins & Wilkinson,

1987; Merrill, 2002). Land acquired under the statute was free, except for filing fees.

The sole requirement of the settler was to occupy the land for 6 months in order to

establish clear residency after application had been made to the General Land

Management Office. By the 1880s homesteading on the American western frontier

constituted the majority of new farms in the United States, and between 1868 and 1904,

nearly 100 million acres of land were homesteaded by pioneers (Coggins & Wilkinson,

1987).

As Karen R. Merrill (2002) points out, while homesteading legislation was

enacted for the expressed purpose of expanding the agrarian vision of a nation of working

farms and families, legislation was also enacted as a policy solution for controlling the

unregulated grazing practices of “King Cattle.” Known as the “Texas System,” the

practice of open range grazing is rooted in herding traditions dates to the close of the 18th

century when cattle and cowboys of the Carolinas and Mexico roamed vast areas of open

space (Merrill, 2002, p. 18). Hence, grazing on the western frontier lands of the United

States was governed by a series of unwritten codes and informal laws by ranchers who

viewed the open range as a free resource for their use. In turn, free use of the open range,

unregulated by government authority, established the conditions for the expansion of the

western ranching industry. Overgrazing was problematic and the large cattle ranchers of

the West organized themselves in such a manner as to create almost government-like

institutions for the purpose of controlling grazing on the open range.

Undisturbed by government authority, ranchers created a rather simple system for

governing and enforcing the unwritten codes of behavior. For example, in order to

maintain control of grazing districts and account for their property (e.g., cattle) at the

time of roundups, ranchers devised a system of brand identification. These brands were

registered with stock growers associations, which were organized and managed by the

relatively few large barons of the cattle industry in the West. Unregistered brands, or the

alteration of brands, unapproved fencing of the open range, or the trespass onto the open

range by any stock other than branded cattle were considered offenses and enforceable by

the now infamous “Code of the West.” In fact, many of these conflicts were settled by

“hired regulators” who, under the direction of the cattle baron dominated stock growers

associations, killed suspected offenders and engaged in systematic harassment of farmers

and sheepherders taking advantage of federal homesteading laws that were designed to

encourage the agrarian settlement of the western range (Merrill, 2002,). The silence of

the Congress on the land use customs and codes that had grown out of these grazing

practices “was taken to be its most important policy statement, for that silence clearly

translated into permission” (Merrill, 2002, p. 26). Commenting on the customs,

traditions, and implied policy of unfettered use governing the use of the open range for

cattle grazing, the Supreme Court noted in Buford v. Houtz (1890) that:

There is an implied license, growing out of the custom of nearly a hundred years, that the public lands of the United States…shall be free to the people who seek to use them where they are left open and unenclosed, and no act of government forbids this use…The government of the United States, in all its branches, has known of this use, has never forbidden it, not taken any steps to arrest it. (Merrill, 2002, p. 26) Hence, arguments that spurred passage of homestead legislation by Congress

were motivated by two factors. First, Congress was motivated by a desire to establish

conditions that would encourage the creation of a western society of citizen-farmers.

Second, Congress and federal land managers were motivated by a desire to break the grip

of the relatively few large cattle barons who had taken control of the West’s open range.

While homesteading legislation proved successful in breaking the grip of the cattle

barons and their use of the open range, nonetheless, it was during the era of homesteading

that ranching and farming became effectively intertwined with each other (Merrill, 2002).

Simply put, grazing the land and tilling the land became nondistinct in the language of

agriculture as well as federal land-use management policy.

Even though the era of the federal government’s free frontier policy had come to

an end by 1890, Congress remained intent on further disposing itself of federally owned

lands. For example, by 1903 almost nine million acres of land in the State of Nebraska

had either not been claimed or had been abandoned. The most common claim for

abandoning previously claimed homestead lands was that the soil was not arable. In the

example referenced above, this meant that in one area of Nebraska homestead lands, 247

of the 250 claims were abandoned for being deemed unsuitable for agriculture. And, it

was not uncommon practice for ranching operations to stake claims of property using

federal homestead legislation. Once homesteading became available, ranchers took

advantage of the generous public land laws to “gain control of their public ranges”

Merrill, 2002, p. 27). Even though the practice of acquiring open range by ranchers did

not achieve the envisioned agrarian social unit Congress had hoped for (Gates, 1968;

Friedman, 1985), Congress remained undeterred and passed the Enlarged Homestead Act

of 1909 and the Stock-Raising Homestead Act of 1916 which extended, enlarged, and

established the land management policies associated with homesteading for the raising of

livestock or crops. These two homesteading acts authorized homestead entry to 640 acres

and 320 acres, respectively (Coggins & Wilkinson, 1987).

And while these last two homestead acts “spurred the greatest run on homesteads

since the passage of the Homestead Act” (Merrill, 2002, p. 43), it is significant that

passage of the Stock-Raising Homestead Act of 1916 also reserved, and legally

established, federal ownership of all the subsurface coal and mineral rights of all lands

homesteaded per the 1916 act and thereafter. In effect, the Stock-Raising Homestead Act

of 1916 legally severed the surface estate and its attendant property rights, from the

subsurface estate and its attendant property rights. Significantly, the Stock-Raising

Homestead Act of 1916 created an anomaly in American property law known simply as

“split-estates.

History of Federal Land Management: Mining

Mining claims on federal lands are not governed by homesteading acts as

discussed above. It should be recognized that, similar to cattle barons’ grazing operations

on the open range prior to the series of homesteading acts, mining camps of the Western

frontier also operated under a set of complex unwritten laws and informal codes of

behavior. Beginning with the discovery of gold at Sutter’s Mill in 1848, and throughout

1849, an onslaught of gold-fevered treasure-seekers converged upon California and the

open lands of the American West, seeking both fame and fortune with the extraction of

valuable minerals (Wilkinson, 1992). Hundreds of mining camps, settlements, and

collective encampments sprung up overnight serving as major forms of social units in the

mineral regions of the West (Wilkinson, 1992). Although mining camps often lay within

federal and/or state jurisdiction, like the cattle barons grazing their cattle within close

proximity of the mines, little if any formal law governed the practice of mining.

Fashioned out of necessity for structure and guidelines, the informal codes of

mining camps governed mining during the period of discovery until 1866. Charles F.

Wilkinson describes these informal codes as “…montages of Spanish rules transported

north by Mexican miners, regulations from the Midwest, improvisation bred of commons

sense, and local custom” (Wilkinson, 1992, pp. 38-39). The concept of “first in time,

first in right,” meant that the miner had exclusive right to that which the miner

discovered. Importantly, these exclusive rights also included exclusive use of the

resources available—most commonly water—for the purpose of extracting the mineral.

This informal code of discovery and claim, as well as the attendant property rights, is an

example of the unwritten rule of law frequently applied to miners and mining operations

during this period of time (Wilkinson, 1992).

The codes of the mining camps also helped establish procedures for the

acquisition of individual mining claims and the extraction-related work performed on the

claims. For example, in addition to being limited to a single claim, in order to establish a

claim to a particular piece of property, in keeping with the informal nature of the mining

codes all a claimant had to do in order to “stake their claim” was to post some manner of

written notice somewhere on the parcel of land or, place a more permanent monument

into the ground or, mark the surrounding trees with a blaze or a brand. In turn, a duly

elected recorder collected and maintained information relating to claims in a particular

area or region. Successful claimants—those confident enough that their stake was

properly vested and recorded with the proper authorizations—were required to maintain

their claim by regularly performing mining-related work on their claims. Typically, this

practice dictated that a claimant work their respective parcels of land at least 1 day per

month during the course of the mining season (Wilkinson, 1992).

The informal codes of the mining camps even included provisions for settling

disputes between competing claimants. Patterned after what is now commonly referred

to as “dispute resolution,” the two claimants would select an arbitrator who, in turn,

selected an additional arbitrator to assist in the hearing and settling of the dispute.

Arbitrators were typically required to be miners or residents of the nearest mining camp.

Third-party outsiders, no matter their expertise, were frowned upon. Wilkinson notes

that some camps actually prohibited lawyers from serving as arbitrators. For example,

the Union District Court of Colorado famously declared that lawyers seeking to engage in

the practice of arbitrating mining claims would suffer the punishment for engaging in

such activities, declaring that, “[N]o lawyer shall be permitted to practice law in any

court in the district under a penalty of not more than fifty nor less than twenty-five lashes

and shall be forever banished from the district” (Wilkinson, 1992, p. 39).

As Western territories gained statehood the informal codes of the miners and

mining camps, like the informal codes that had managed King Cattle’s grazing of the

open range, became the foundation for state and federal laws applicable to mining

activities on both private and public lands. In California, for example, early state mining

statutes proclaim that “the customs, usages or regulations established and in force at the

bar or diggings embracing such claims…when not in conflict with the Constitution and

laws of this State, shall govern the decision of the action” (Wilkinson, 1992, p. 39).

Commenting on the legislative statute and noting the transition between the informal to

the formal codification of mining practices, the California Supreme Court declared:

These customs…were few, plain and simple, and well understood by those whom they originated…And it was wise policy on the part of the legislature not only to supplant them by legislative enactments, but on the contrary to give them the additional weight of a legislative sanction…Having received the sanction of the Legislature, they have become as much a part of the law of the land as the common law itself, which was not adopted in a more solemn form…(Wilkinson, 1992, p. 39) The federal government, unlike the mining states which attempted to engage in a

more formal codification of mining customs, exercised little if any oversight of mining

operations during this period of time, even though the majority portion of mining was

taking place on federal lands and making use of federally owned resources in the process

of extracting minerals (Wilkinson, 1992). A small number of federal mining statutes did

exist at the time, but these statutes only provided for the sale of federally owned mineral

lands in the Eastern United States. With the exception of a very limited process of

leasing federal lands for mining activity, which had been adopted in 1807 and then

abandoned in 1846, no federal law governed mining activities in the Western United

States until 1866. Thus, during this period of time, miners openly trespassed on federal

lands and mining practices were essentially left unregulated despite the federal

government’s implied, if not complicit, approval of mining activities (Brown as cited in

Wilkinson, 1992).

Like grazing on the open range, mining had become a central activity of

American society in the Western United States well before 1866. An estimated 25,000

men worked the mines of California by the middle of the 1860s. Thirty percent of the

population of states like Nevada and Idaho, and as much as 25% of the population of

Montana were working as miners during this period of time. Moreover, these figures do

not reflect the number of individuals working to support the mining industry such as

“…assayers, equipment manufacturers, teamsters, and suppliers of clothing, housing, and

entertainment” (Brown as cited in Wilkinson, 1992, p. 38). In fact, during this period of

time, the only area of the West not centrally dependent upon mining was the Utah

territory, where farming still dominated the use of the lands and the activities of the

communities.

The federal government’s effort to regulate mining in the American West began

with the Mining Act of 1866 (Brown as cited in Wilkinson, 1992).1 The act declared that

“the mineral lands of the public domain, both surveyed and unsurveyed, are hereby

declared to be free and open to exploration and occupation by all citizens…” (Wilkinson,

1 Note: Mining Act of 1866 (repealed 1872). The official title of the 1866 act was “An act granting the Right of Way to Ditch and Canal Owners over the Public Lands, and for other Purposes.”

1992, p. 42). Although limited in scope to lode claims, covering only gold, silver,

cinnabar, and copper, the 1866 act established a zone encompassing close to an estimated

billion acres of federal public lands for mining (Wilkinson, 1992). Additionally, the act

not only allowed a claimant to explore a mineral discovery “to any depth, with all its

dips, variations and angles,” it also granted claimants access to “a reasonable quantity of

surface for the convenient working of the same” (Wilkinson, 1992, p. 252).

Despite the limited scope of the 1866 act, it is important to note that, not unlike

the General Preemption Act of 1841 that addressed the common practice of farming and

ranching on the open range, the act of 1866 represented the same implicit understanding

that a powerless federal government, recognized the legality of informal understandings

and customs regarding the unregulated private use of public lands. For example, the

1866 act provided mining would commence “subject…to the local customs or rules of

miners in the several mining districts,” so long as local customs or rules did not directly

conflict with federal law (Wilkinson, 1992, p. 252). The bill’s primary proponent,

Senator William M. Stewart of Nevada, a former forty-niner and mining attorney,

invoked images of the mining codes when he spoke in favor of the 1866 act:

The miner’s law is part of the miner’s nature. He made it. It is his own bantling, and he loves it, he trusts it, and obeys it. He is given the honest toil of life to discover wealth which when found is protected by no higher law than that enacted by himself under the implied sanction of a just and generous government (Wilkinson, 1992, p. 42). Because the act was so closely tied to the informal customs and codes of the mining camps of the American West, the 1866 act has been referred to as the Miner’s Magna Carta. (Martz as cited in Wilkinson, 1992) The general principles of the act were extended in 1870 to placer deposits, and

eventually became the basis for the General Mining Law of 1872, which survives largely

intact to the present day (Wilkinson, 1992).

The General Mining Law of 1872 was passed with the purpose of providing a

solution to problems associated with the unregulated mining claims and practices in the

American West. With its passage, Congress declared its policy to “promote the

development of the mining resources of the United States” (General Mining Act of 1872

amended by the Mining and Minerals Policy Act of 1970).2 And, while the act of 1866

only addressed a small number of minerals, the 1872 act provided mining access to “all

valuable mineral deposits in lands belonging to the United States, both surveyed and

unsurveyed.” The act established that all mining activities for all mineral resources “shall

be free and open to exploration and purchase, and the lands in which they are found to

occupation and purchase…under regulations prescribed by law, and according to local

customs or rules of the miners in the several mining districts, so far as they are…not

inconsistent with the laws of the United States” (General Mining Act of 1872 (relevant to

the 1872 act)).

At the time, “valuable” mineral deposits included “whatever is recognized as a

mineral by the standard authorities on the subject” (Copp, 1882, as cited in Large, 1986.

p. 50-51).3 While the act of 1872 still principally applies to hardrock minerals, such as

gold, silver, uranium, copper, iron, lead, aluminum, and gemstones, Congress amended

this section and removed several types of minerals with the intent of providing separate

legislation providing for their lease, extraction, development, and sale (Wilkinson, 1992).

These other minerals include resource commodities such as oil, gas, oil shale, coal and

other common materials including gravel, sand, and cinders (Wilkinson, 1992).

2 Note: The official title of the 1872 act is “An Act to Promote the Development of the Mining Resources of the United States.”

3 Note: Defining ‘valuable’ mineral deposits-A continuing quagmire.

Under the guidelines established by the General Mining Act of 1872, an

individual can obtain both surface and subsurface mining rights to a particular parcel of

land, called a “location” by the 1872 act (General Mining Act of 1872, §26 (1994)).

Even in the modern era, in order to establish a valid mining claim, a claimant must meet

the following requirements: (1) a distinct mark must be placed on the “location” to be

claimed, (2) the claim must be recorded at the local recorder’s office, and (3) a fee of

$100 must be paid annually to the federal government as means by which exclusive rights

to the “location” are retained. If a claimant holds an unpatented claim, a patent can be

secured for a fee as little as $5 per acre and submitting an annual statement certifying that

a minimum of $500 worth of labor has been performed on the site (General Mining Act

of 1872, §29 (1994)). And, when a patent is obtained by the claimant, a fee simple title

to the “location” is transferred from the federal government to the individual (Graf,

1997).

Given the immense financial resources of modern extractive industries and their

affiliate organizations, it might seem strange that the federal government still offers

mining rights—and the rights of property that come with them—at such remarkably small

prices. Viewed in the context of the historical development of mining laws, not unlike

the fees for grazing allotments on federal lands, the government’s economically grounded

justifications for such generosity did make a bit of sense in the 19th century.

In the late 19th century, with Hamiltonian visions of America’s Manifest Destiny

and Jeffersonian dreams of a nations filled with yeoman farmers still dancing in the

minds of federal legislators and other land-use policymakers, much of the public lands-

use policy relating to the American West remains centered on the federal government’s

effort to settle the great Western frontier west of the Mississippi River. As one

commentator has expressed, these visions, dreams, and aspirations remain with us to the

present day:

Legislators viewed it as their duty to distribute the lands of the West to individual settlers, railroads, and entrepreneurs, thus implementing the American ideal. The permanent federal landholdings that are today part of the western landscape were not on the nineteenth-century agenda; the predominant view was that the federal government would eventually distribute all of its holdings to the states and individual settlers. (Knight, 2002, p. 626) Legislative efforts regarding both homesteading and mining were efforts to

populate the West and make the region economically viable while diminishing the

problems associated with managing such large expanses of federally owned lands and

resources. Invariably, these governmental efforts involved convincing settlers to venture

into these dangerous and largely unknown areas. And really, what better way to

accomplish the policy goals associated with Manifest Destiny and streamlining

governmental management of problem areas than to entice an entire population with

inexpensive access to lands suitable to agriculture and mining?

Dovetailed Federal Land Management: Ranching and Energy

The homesteading and open range grazing era of federal land management policy

ended shortly after the passage of the Taylor Grazing Act of 1934. The act itself was

instrumental in effectively reversing the homesteading policies of federal land

management agencies. The Taylor Grazing Act’s is not noteworthy because it ended the

practice of homesteading; the act is noteworthy because it also sought to resolve the land

management problem created by homesteading acts as well as the unregulated practice of

grazing the open lands of the federal government. In doing so, the effect of the Taylor

Grazing Act of 1934 was to blur the distinction between the activities of farming with the

activity of raising and grazing cattle. It is also important to note that the Taylor Grazing

Act also placed the management of all federal grazing lands under the direction of the

Department of the Interior through the Bureau of Land Management. Previously,

responsibility for grazing lands policies had been divided among an array of federal

agencies such as the National Forest Service and the Department of Agriculture.

In the early period of the 20th century, the federal government began to develop

and implement sustainable public land use policies. On one hand, the Taylor Grazing Act

of 1934s was passed with sustainability of the surface estate’s open range in mind, while

on the other hand the Mineral Lands Leasing Act of 1920 was passed with sustainability

of the subsurface estate’s sustainability in mind (Merrill, 2002).4 It is also important to

note that the Mineral Lands Leasing Act also placed the management of all federal

mineral leases under the direction of the Bureau of Land Management within the

Department of the Interior. Like the previous responsibility for grazing lands policies,

previous mineral lands policies had been divided among an array of federal agencies that

included the National Forest Service and the Department of Agriculture.

In combination, these two acts of Congress, the Mineral Lands Leasing Act of

1920 and the Taylor Grazing Act of 1934, helped usher in the federal government’s early

20th century shift away from the dispersal of the public domain benefiting the individual,

and toward a land use policy of sustainability benefiting the public. It is important to

note that while the Taylor Grazing Act effectively repealed the practice of government

4 Note: The Mineral Lands Lasing Act of 1920 is commonly referred to as the Mineral Leasing Act of 1920.

sponsored homesteading, the act did not repeal the government’s ownership of the

subsurface minerals per the Livestock Raising Homestead Act of 1916. This appears a

rather curious side note to history because both these acts were sponsored by Edward T.

Taylor, who at the time was Colorado’s senior congressman (Merrill, 2002). As

mentioned previously, the conclusion of the federal government’s free frontier policies

gave way to the introduction and passage of government policies aimed at breaking King

Cattle’s control of the federally owned rangelands, as well as independent mining

operators’ (hereafter referred to as oil and gas, or simply as energy developers or

industry) control of federally owned minerals. In essence, part of the appeal for passage

of the Stock-Raising Homestead Act of 1916 was the severing of ownership and activities

into separate, manageable, split-property estates.

The Mineral Lands Leasing Act of 1920 as well as the Taylor Grazing Act also

establishes the federal government’s claim of sovereign right of ownership to all

remaining public lands and mineral resources. In addition to claiming proprietary

decision-making rights over federal property, these acts targeted oil producers and cattle

producers, respectively. These acts accomplished these goals by retaining the “nominal

fee” element of the federal government’s late 19th century disbursement policies. The

retention of the nominal fee elements of late 19th century legislation in early 20th century

legislation is reflected in the both the subsurface estate’s mineral lease policies of the

Mineral Lands Leasing Act and the surface estate’s grazing lease policies of the Taylor

Grazing Act. In either case, leases must be secured from the managing federal agency—

the BLM—before grazing or drilling permits are issued to the private user.

What this means is that the statutory requirement of securing grazing and mineral

leases and/or permits are the regulatory tools by which the agency fulfills its legislative

mandate to manage the public domain in the public’s best interest. Additionally, the

leasing and permitting process helps establish a contractual relationship between the

property’s owner—the federal government, and the lessee user of the property—the

rancher or mineral developer. In turn, the leasing contract becomes a means by which the

federal government’s general policy goal of sustaining federally owned resources for the

public’s welfare is achieved.

The contractual relationship instituted by the Taylor Grazing Act’s grazing

leasing process was the catalyst for the well-documented historical capture of the land-

use subgovernment of the BLM by organized ranching groups (Cawley, 1993; Clarke &

McCool, 1996; Culhane, 1981; C. Davis, 1997; Donahue, 1999; Foss, 1960; Klyza, 1996;

Knight, Gilgert & Marston, 2002; Merrill, 2002; Nie, 2008; Smith & Freemuth, 2007;

Starrs, 1998; Wilkinson, 1992). What is less well documented is the manner in which the

federal government similarly institutionalized energy minerals (hereafter referred to as

fluid minerals) leasing process, through the Mineral Lands Leasing Act of 1920, which

helped establish the strong relationship between ranching interest groups and energy

development interest groups. Further, what has been even less documented is how the

federal government’s policy of splitting the property estates of homestead properties,

through the Livestock Raising Homestead Act of 1916, helped develop the muddled and

tenuous legal, contractual, and regulatory relationships between the federal government,

state governments of the West, ranching interests, and energy development interests.

In essence, the splitting of the property estates and their attendant property rights,

combined with the regulatory leasing and permitting process, and the delegation of some

fluid mineral development management to the states, is a toxic stew of federal land-use

policies. The toxicity of this odd blending of property rights and federal land-use policies

eventually emerged as a trigger to a modern political controversy that ultimately led to

the annexation of the BLM’s land-use decision-making subgovernment from ranching to

energy development.

Split-Estates: Interests, Common Laws, and Contracts

So what is a split-estate and why is this peculiarity of American property law and

federal land-use policy of such tremendous concern to government policymakers,

ranching interests, and energy development interests? First, ranchers organized early and

exerted their collective influence on government land-use policies often. As mentioned

above, the record of academic research clearly articulates the historical record of

organized ranching groups’ early development and influence. These same accounts

convey the accepted conclusion of ranching’s domination of decision-making

subgovernments within governmental land-use agencies such as the BLM. These

academic investigations only provide a nodding acknowledgement of the almost parallel

historical development of the legal institutionalization of energy development. In the

literature regarding federal land-use what has been written is in general agreement that

organized energy development interest groups came at a much later time in American

history and political development. And, unlike ranching’s early efforts of organizing

prior to any passage of homesteading legislation, energy development interests organized

as a response to the passage of the Mineral Lands Leasing Act of 1920 (Bradley, 1996;

Committee on Onshore Oil and Gas Leasing, National Research Council, 1989; Durant,

1992; Engler, 1961, 1977; Fairfax. &. Yale, 1987; Flynn & Watson, 2006; Isser, 1996;

Mayer & Riley, 1985; McDonald, 1979). Consequently, ranching interests firmly

established themselves in the driver’s seat of federal land-use policy subgovernments

prior to the collective organization of energy development interests and their capacity to

influence governmental land-use agencies. Simply stated, due to their early organization

and capacity to control the BLM, energy development interests have historically deferred

to ranching’s domination of the land-use subgovernment within the BLM.

Second, common law doctrines favor ownership, management, and development

of public lands and resources. For instance, since the late 19th century, the United States

Supreme Court has recognized the common law doctrine that land owners may divide

their land horizontally into a surface and a subsurface estate for the purpose of economic

development.5 Once this horizontal separation occurs, legal title to the estates is vested in

different owners. Courts commonly refer to the subsurface estate simply as the “mineral

estate,”6 and recognize a number of implied property rights relating to the access and use

of the mineral estate as belonging to the mineral estate owner (Harris v. Currie, 1943, as

cited in Alspach, 2002).

Mineral estate owners, for example, have the implied property right to utilize “so

much surface as may be reasonably necessary for operation,” or “may use as much of the

5 Note: The Del Monte Mining & Milling Company v. Last Chance Mining Company, 1898, comments that “[u]nquestionably at common law the owner of the soil might convey his interest in mineral beneath the surface without relinquishing his title to the surface.” 6 Note: Courts commonly define that a horizontal severance of land creates two separate estates, including the mineral estate.

surface estate as reasonably necessary to produce the subsurface minerals.” Additionally,

mineral estate owners “have the right to enter, occupy, and make reasonable use of the

surface in order to produce subsurface minerals.” In terms of federal energy

development, it is important to note that leases convey access and user property rights to

the lessee. As one court has noted, “the reservation of the mineral estate carries the right

to use as much surface as necessary to enforce the conveyed mineral estate, because if not

able to use the surface lands to access the minerals below, the mineral estate would be

worthless” (Union Producing Co. v. Pittman, 1962; Placid Oil Co. v. Lee, 1951; &

Harris v. Currie, 1942 as cited by Merrill, 2002).

Exemplified by these rulings, neither federal nor state courts have typically sought

to balance the rights and interests of mineral estate owners and their lessees against the

rights and interests of surface estate owners, as long as the mineral estate owners’

conduct in the exploration and development of the mineral estate was reasonable (King et

al., 1992 as cited in Merrill, 2002; Polston, 1987). It must also be noted that conduct by

energy development entities has commonly been interpreted by the courts as being

reasonable if the conduct conforms to the generally accepted practices of the energy

development industry (Hunt Oil v. Kerbaugh, 1976 as cited in Merrill, 2002).7

Throughout the history of energy resource development, relatively few limits

have been placed on the exploration, drilling, and production operations occurring on

public or private surface estate lands (Hunt Oil v. Kerbaugh, 1976 as cited in Merrill,

2002). Typically, most mineral estate contractual agreements or federal leases are absent

7 Note: Common legal definition of reasonable is determined as, “the reasonableness of the use of the mineral estate may be measured by the usual, customary, and reasonable practices in the industry under like circumstances of time, place, and surface estate use.”

components that clearly recognize the rights and interests of the surface estate owner.

Federal mineral estate lessees, for example, have typically not been liable for damages to

the surface estate despite the fact that subsurface mineral extraction can be incredibly

damaging to the surface estate (Hunt Oil v. Kerbaugh, 1976 as cited in Merrill, 2002). In

fact, federal as well as private mineral estate energy developers have historically been

protected by one or a combination of the common law’s liberty of contracts, reasonable

access, and right of first-capture doctrines. The courts’ use of these doctrines, in addition

to precedent rulings establishing the legal privilege of the mineral estate’s dominance

over the surface estate, has shielded energy developers from liability unless there is clear

abuse of their right of reasonable access or their extractive operations have been

conducted in a negligently harmful manner (Hunt Oil v. Kerbaugh, 1976 as cited in

Merrill, 2002).

Historically, both federal and state administrative agencies and courts have treated

the mineral estate as dominant over the surface estate, imposing few restrictions on the

mineral estate (King et al., 1992 as cited in Alspach, 2002; Polston, 1987). The mineral

estate owner’s right to use the surface and available resources to develop the mineral

estate has been termed a “right of access,” and is treated by governmental agencies and

courts as an easement (Bergen Ditch & Reservoir Co. v. Barnes as cited in Alspach,

2002, p. 91; King et al., 1992, pp. 9-2). Additionally, from the perspectives of public

policy, because the legal evolution of mineral estate dominance is closely tied to

economics, throughout history, development of subsurface minerals—hard rock or fluid

energy—have been viewed as “essential to [the state’s] comfort and prosperity,” and

restricting the development of the subsurface resource has been seen as “a great public

wrong” (Berry, 1985; Chartiers Block Coal Co. v. Mellon, 1893). In short, subsurface

mineral development would not be feasible without certain inherent rights of property

and dominance found in the common law (Berry, 1985, as cited in Evans, 1996).8

At the peak of late 19th century, mineral exploration and early 20th century

industrial energy development, surface distress was typically limited to damage inflicted

by picks and shovels, and other items of limited technological development as such as

mule-drawn scrapers (Martin v. Kentucky Oak Mining Co, 1968, as cited in Wenzel,

1993).9 In other words, surface damages during this period of time were generally

accepted as more than a “trifling inconvenience” (Wentzel, 1993, p. 624). In fact, during

this same era, the Supreme Court went so far as to essentially sanction development of

the mineral estate in the center of towns if the desired mineral was located within town

boundaries (Steel v. St. Louis Smelting & Refining Co., 1882).10

Historically, and in terms of present day court rulings, the legal issues

surrounding split-estates have presented interesting dilemmas for courts and lawmakers.

Specifically, because large-scale, subsurface hard-rock mineral extraction efforts did not

begin in earnest until the latter part of the 20th century, and subsurface fluid-mineral

energy development of energy resources in the early part of the 21st century, English

common law, adopted via federal legislation and state constitutions upon their admission

8 Note: When Texas landowners strike water there is surface estate remediation and legislatively enhanced liability in the oil patch. The proposal is intended for optimum protection of groundwater resources from oil and gas exploration and production in Texas. 9 Note: The court described “‘usual, known and accepted’ methods around 1905 as including ‘picks, shovels, and slip-scrapers drawn by mules to remove the thin overburden.” Overruled on other grounds by Akers v. Baldwin , 1987.

10 Note: The court surmised that “to such mining claims, though within the limits of what may be termed the site of the settlement of new town, the miner acquires as good a rights as though his discovery was in a wilderness.”

to the Union, is ill equipped to deal with disputes arising under split-estates. As one legal

scholar notes, “[t]he simple reason for [the lack of oil and gas-related legal precedent

when oil and gas extraction efforts began in the United States] is that there had been no

significant oil and gas development anywhere in the world prior to the latter part of the

nineteenth century” (Martin, 1997, p. 312). This lack of legal guidance is in keeping with

the historical accounts of how oil development interests were spurred to formal

organization by the enactment of legislation directly affecting their interests. Describing

the dearth of legal precedent concerning issues related to fluid mineral energy

development in their 1926 treatise, Lawrence Mills and J.C. Willingham note:

On account of its recent development, [oil and gas law] has not undergone the smelting process of the common law, which has refined and purified those branches of the substantive law that have received the consideration of Bench and Bar through the centuries. As a result, its elements are not found in the mine of adjudicated cases in a state of purity, but combined and fused with many alien principles. It is the product of case-law at its worst. (Mills & Willingham, 1926, p. iii) Therefore, federal and state courts and lawmakers have been forced over time to

sort out the legal differences and emerging conflicts between competing estate

development interests with virtually little guidance from precedent rulings interpreting

the application of common law.

Because of, or in spite of, the lack of legal clarity, it is the economic benefit to

the developer and the state that remain a central tenet in the argument for retaining legal

dominance of the mineral estate. For example, a North Dakota Supreme Court described

the contemporary economic-based arguments in favor of retaining mineral estate

dominance over the surface estate:

The mineral estate is dominant in that the law implies, where it is not granted, a legitimate area within which mineral ownership of necessity

carries with it inherent surface rights to find and develop the minerals, which rights must and do involve the surface estate. Without such rights the mineral estate would meaningless and worthless. Thus, the surface estate is servient in the sense it is charged with the servitude for those essential rights of the mineral estate. (Hunt Oil Co. v. Kerbaugh, 1979) Despite substantial developments in the technology of mineral extraction, which

cause significantly greater distress to surface lands than picks and shovels, courts

continue to afford mineral estate owners and developers tremendous latitude in their

efforts to develop the resources within the estate. As one researcher has noted:

[M]ineral developers now have powerful earthmoving equipment that allows a single miner to extract tons of ore per hour; new mining techniques inject cyanide and other chemicals into the ground and allow old mines to be productively reopened; increased pressures for energy sources impel production of previously ‘worthless’ minerals such as oil shale, lignite, methane, and geothermal steam; and new materials such as uranium have been discovered. (Wenzel, 1993, p. 624)11 Surface owners—typically ranchers, farmers, or home owners—on the other

hand, while faced with increasing distress upon their property and resources, are left with

few remedies other than the required private contractual agreements of access and use

that are negotiated between surface owner and subsurface developer. This is because

modern regulation of fluid mineral development remains dependent upon the frequent

application of the common law doctrine of the “liberty of contracts” in early federal

legislative efforts to control the development of energy resources (Gillman, 1993).

Consequently, surface estate owners fair no better at defending their interests under

government regulatory remedies. As will be explored in later chapters, governmental

regulation of possible remediation of expected or unexpected harms done to the surface

estate and its resources remain extremely limited and ill-defined. As such, the surface

11 Note: Wenzel argues that “[a]ll of these changes impinge on surface rights to an extent unfathomable in the nineteenth century” (Wenzel, 1993, p. 624).

owner is at the mercy of industry in their capacity to hire sound legal representation in the

effort to guard against the unreasonable use of their estate by modern fluid mineral

energy developers.

Finally, as the only common ground between the two parties is typically a desire

for profit or the protecting of economic well-being, the contractual relationship between

surface and subsurface estate owners is inherently fraught with conflict (Evans, 1996).

Additionally, as in the case of federal mineral estate ownership, leasing, and permitting,

the two parties negotiating private surface access and use contracts do so under the

watchful eye of the government through the tinted lenses of the BLM. As noted by one

commentator, “the surface owner is often in a state of perpetual irritation at the presence

of [extraction] equipment on his or her property that reduces the amount of acreage

available to the owner for farming, grazing cattle, or other uses that are more desirable”

(Keffer, 1994, pp. 523, 525). An additional irritant, which is viewed with great distrust

by all parties engaged in the contract negotiation process, is the looming shadow of

federal authority and power.

Conclusion

Documenting the historical development of ranching interests with respect to

federal grazing, mining, and energy development provides the context in which a better

understanding a modern day clash of interests occurs. Additionally, analysis of the

legislative and legal manner in which these interests have, in almost parallel fashion,

developed over time suggests that the clashing of interests within the land-use

subgovernment of the BLM was inevitable. Understanding how federal attempts to

control the activities of these interests blur with government legislation and regulatory

policies establishes the conditions for the modern emergence of a political conflict is

important. The following chapters will discuss how the struggle between the contending

interests of ranching, energy development, and government will redefine the accepted

academic view that the era of iron triangles and agency capture has closed.

Analysis of the historical record clearly demonstrates how the federal

government’s desire to manage the use of public lands during the late 19th and early 20th

centuries helped establish the dynamic and always evolving subgovernment relationships

between the federal government, ranchers, and energy developers. And, it is in the

description of this context and these dynamics that political observers can discern how

these developed relationships and dormant legal conditions have come to enable the

modern struggle for dominance of the BLM’s land-use subgovernment.

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CHAPTER THREE

EXECUTIVE BRANCH

"Bureaucrats fear that political control may facilitate agency capture, and

legislators fear that agency independence may result in a bureaucracy out of control"(Spence, 1997).

This chapter presents an analysis of how modern Executive Branch actions have

altered federal domestic energy policies and have affected the Bureau of Land

Management’s (BLM) domestic energy policies and resource allocation. The chapter

includes an analysis of archival and government documents describing Executive Branch

actions directing the BLM to favor the energy development industry. These events are

presented chronologically to illustrate how a President and his executive appointees

established, possibly unintentionally, the conditions for an impending political conflict.

This chapter also documents changes to federal energy policies at the agency level that

led to the reallocation of resources from ranching towards energy development. These

changes resulted in increased levels, numbers and types of federal development projects

in New Mexico, Colorado, and Wyoming. This chapter concludes with a brief analysis

suggesting that increased split-estate energy development triggered conflict and

competition between the formerly allied interests of ranching and energy development.

The Will-Power to Achieve a Political Objective

Prior to being sworn in President-elect George W. Bush announced his first

nomination to oversee the federal energy-related administrative agencies. In December

of 1999, President Bush nominated Gale Norton as the administration’s new Secretary of

the Interior. He did so because, mindful of his campaign promise to reduce America's

dependency on foreign energy resources, President Bush and Vice President Cheney

required like-minded political allies who were supportive of their strategy for expanding

domestic energy development as a means of achieving national security. Thus, President

Bush appointed a cadre of political and policy loyalists to leadership positions within the

federal administrative units charged with the management and oversight of domestic

energy development.

These political loyalists were expected to take an executive-led energy task force's

recommendations, apply the President's executive orders, and increase the nation's supply

of domestic energy resources. If successful, the administration would fulfill the promise

of reducing the country’s dependency on foreign energy resources, achieve a measure of

national security, and secure a political victory for the administration. This is because

political appointments, like task forces and executive orders, are expressions of a

presidential will-power in their ability to wield direct influence on existing legislation and

administrative processes. As it turned out, the Bush Administration was exceptionally

adept at expanding and using executive power. And, over the course of Bush

Administration’s two terms in office, the administration’s political appointees would

faithfully carry through with the implementation of the Bush-Cheney domestic energy

plan.

With any alteration to federal land use management practices there is always the

potential to destabilize working relationships between stakeholders. This is particularly

true of federal land management agencies, ranchers and energy developers. What is also

true is that ranchers and energy developers have a long and storied history of being

closely allied in promoting and defending each other's use of federal resources for

economic gain. Indeed, the capacity to bring cattle, minerals, and energy resources to

market as public commodities is considered a legitimate and beneficial use of public

lands and resources. Despite this history of joint benefits, in 2001 the political-will of the

Bush Administration, clearly articulated in the early use of presidential powers,

emphasized the development of one commodity: Energy.

Asserting Political Control Over Administrative Decision-Making

Known simply as the "delegation problem," the efficacy of political control over

bureaucratic decision-making remains a debated topic among political scientists (Moe,

1993; Moe & Howell, 1999; Spence, 1997). While the majority of scholarship explores

congressional efforts to control the bureaucracy (Moe, 1993; Moe & Howell, 1999;

Spence, 1997), there is also a comprehensive body of literature devoted to exploring

presidential efforts of political control (Moe, 1993; Moe & Howell, 1999; Spence, 1997).

However, no matter the institutional location of politically-motivated efforts to achieve

bureaucratic control, attempts to measure the resulting efficacy with any degree of

accuracy have met with mixed results.

As David B. Spence (1997) argues, neither theoretical positivists nor quantitative

empiricists have "demonstrated that politicians can overcome the delegation problem" as

they have a tendency to "model the problem away" in one of two ways (p. 199).

According to Spence, researchers have a tendency to presume that political control is

exerted in either ex post or ex ante fashion. On the one hand, positive theorists tend to

over-emphasize political control as a matter of ex post political oversight of bureaucratic

agencies' procedures and processes. On the other hand, quantitative empiricists over-

emphasize the dependent variable of ex ante political control as a matter of the

bureaucratic agencies' enabling legislation. In either case, Spence (1997) argues, because

researchers "overestimate the degree to which political control occurs," they can offer

neither explanation nor prescription to the "delegation problem” (p. 215). The problem,

according to Spence (1997), is that in measuring the impact of political control,

researchers have missed the critical distinction between "policy making" and "policy

implementation” (p. 212).

Spence concludes his argument with the assertion that, "If the technologies of

social scientific investigation have trouble accounting for the complexity of agency

policy choice, we must improve existing technologies or find new ones” (Spence, 1997,

p. 215). While Spence's argument is justly critical of this body of work, his

recommendation for improvement relies on the hope of technological advancements in

the singular methodological realm of quantitative-based research. This rather narrow

approach ignores the promise and possibility of improving this area of scholarship via

other methodological means, including qualitatively-based methodological research.

Methodological choices aside, qualitative researchers have not fared any better in

their attempts to describe fully and account for the effectiveness of elected officials to

politically control the bureaucracy. This is not to say that there have not been important

and significant qualitative contributions made in the institutional study of the relationship

between Congress and the bureaucracy or, for that matter, the Presidency and the

bureaucracy. Researchers have made significant strides in providing rich descriptive

narratives of these complex institutional relationships. Spence's critique of quantitative

research in this field of inquiry is equally applicable to similarly oriented inquiries of a

qualitative nature. This is because they too suffer from the same malaise articulated by

Spence in his criticism of theoretical positivists' and quantitative empiricists' inquiries.

The "delegation problem" debate and the issues associated with it will not be

resolved here. What follows instead is an attempt to provide a descriptive narrative

tracing the causal pathway through which the Bush Administration utilized the unilateral

nature of presidential power in order to politically control the BLM and alter its energy

policies. In essence, changes in the executive branch led to changes in domestic energy

policy. The changes described here do not underestimate the effect of technological

breakthroughs in domestic energy exploration and development, nor do they

underestimate the impact of economic conditions affecting the price of energy. These

effects will be discussed in later chapters. This chapter is, in a manner of speaking, a

narrative measure of how politically effective the Bush Administration was in its strategic

use of executive powers to politically control the BLM in the attempt to successfully

achieve its desired political objectives.

Executive Power and the Capacity to Affect Administrative Change

In his analysis of the Nixon and Reagan administrations, Richard P. Nathan

(1983) argues that "elected chief executives--presidents, governors, mayors--and their

appointees should play a larger role in administrative processes” (p. vii). The argument's

premise, "management tasks can and should be performed by partisans," hinges on

Nathan's (1983) belief in the executive branch pursuing implementation of its policy

objectives through the strategic use of executive power (p. 7).

According to Nathan (1983), the use of executive power is legitimate so long as

the executive's policy objectives are carried through within the confines of existing

legislation and administrative procedural processes. Nathan's (1983) prescription for the

realization of this strategy is one of political delegation. This means that strategic

delegation of executive authority is a manifestation of presidential influence. This

influence can affect a bureaucratic policy domain in a manner that "penetrates the

[domain's] administrative process (Nathan, 1983, p. 82). This type of political authority

is necessary because, as Nathan argues, "in a complex, technologically advanced society

in which the role of government is pervasive, much of what we would define as

policymaking is done through the execution of laws in the management process”

(Nathan, 1983, p. 82). The message to Presidents here is straightforward; in order to

successfully achieve executive policy objectives it is imperative that a president wield the

tools of executive authority within the confines of existing legislation and administrative

procedures in a manner that influences agency-level decision-making.

In a follow-up to Nathan's research, Robert F. Durant's (1992) account of the

Reagan administration is notable for its narrow focus on a single politically-oriented

policy objective: altering federal resource management in a manner favoring economic

development. Durant’s investigation of Reagan's strategic administrative efforts to effect

changes in how federal resources were managed by the DOI, and the BLM in particular,

finds that the Reagan administration's efforts were in the end highly ineffectual. Notably,

Durant's findings imply that one reason for the Reagan administration's failures is that

within the BLM, there existed a deeply entrenched and resourceful subgovernment that

sought to protect the agency's status quo. As Durant (1992) argues,

[The] political us[e] of the administrative presidency to reorient policy...to alter bureaucratic agendas substantially... [is] unlikely to find an agency's 'dominant coalition' predisposed to change. Coalition members are prone to buffer organizational cores from such 'turbulence' and to protect their organization's fragile political economy. Equally unsympathetic to change are clienteles accustomed to existing agency rules, relationships, and largesse. This, in turn, makes policy initiatives distinctly vulnerable to fire alarm oversight, with the type of agenda item pursued by [political officials] conditioning the nature, scope, and intensity of resistance mounted by opponents. (p. 238) Durant (1992) notes that any future attempts to untangle the dynamics of agency

subgovernments in the face of a sustained political effort to alter the existing policy

orientation of administrative agencies should embrace the "validity of the causal theory”

(Durant, 1992). Thus, clearly accounting for causal pathways between executive power

and administrative agencies will help clarify the means by which presidents pursue

political control of bureaucratic decision-making. In turn, clarifying the causal pathways

of executive influence will assist in capturing the dynamic of strategic actions among

subgovernment actors as they seek to sustain the decision-making status quo.

Durant (1992) concludes by cautioning that establishing bright-line causal

pathways of political control over administrative procedures in the course of

implementing policy objectives is dependent on the ability to account for the inherent

characteristics of "bureaupolitical dynamics during implementation” (p. 238). Here,

Durant argues that two characteristics of bureaupolitical dynamics condition any success

for politically controlling the implementation of executive policy objectives: 1) validity

of the novel policy initiative and 2) softening of policy communities and larger publics

over time (Durant, 1992). Durant (1992) argues,

In the real world, of course, these two variables can interact to produce distinct bureaupolitical dynamics...however, the bureaupolitical politics occasioned are not 'caused' by the interaction of the two variables...rather, their interaction either affords or constrains opportunities for challenge to those opposed to drastic policy reorientation. (p. 239) Both Nathan and Durant's research efforts illustrate the strategic use of broad

executive power and its potential to affect administrative decision-making and

subgovernment activity. Nevertheless, Nathan’s research remains a narrative prescriptive

bordering on a polemical treatise. And while Durant's research accounts for interest

group efforts to maintain the status quo in the face of the Reagan administration's attempt

to politically affect a shift in federal land use management within the BLM, his effort

focuses on finding the degree of effectiveness in the executive’s realization of favored

land management policy objectives. As such, the turbulence caused by Reagan’s

executive actions and their effect on the existing coalition of interest groups that

constitute the BLM's land-use subgovernment is never fully articulated. Thus, as Durant

(1992) himself notes, "the types of policy initiatives, bureaucratic responses, and political

dynamics outlined are hardly exhaustive, must be further elaborated, and require

empirical testing (p. 321).

Political science scholarship concerning the influence of the President is wide-

ranging. Beginning with Richard Neustadt’s (1960) argument that presidential power is

reflected in the ability to influence others political scientists have sought to extend our

understanding of presidential power and its impact. Since Neudstadt, researchers have

sought a better understanding of presidential power by investigating a variety of

presidential initiatives to strengthen their control over administrative agencies. They

have done so through a variety of means, e.g., personnel management, appointments,

White House staffing, reorganization, assertion of legal prerogatives, executive orders,

signing statements etc. (Pfiffner, 1999). The ability of President George W. Bush to

disrupt a relatively stable land-management subgovernment presents a unique

opportunity to understand the impact of presidential power.

The Election of President George W. Bush

With the election of George W. Bush in 2000 the government of the United States

undertook an ambitious approach in responding to the energy needs of the nation. From

the time of the presidential campaign to the election, President Bush promised the

American public a policy initiative to address the nation's growing demand for energy

and secure energy independence. The Bush Administration often premised its argument

for securing the nation's energy resources and independence on the basis of strengthening

national security. With the terrorist attack of September 11, 2001 the administration’s

argument gained substantial validity in the minds of elected officials, the policy

community, and the general public.1

1 Note: Gallup Poll of May 23, 2001 shows public support for the Bush Energy Plan at 44%. Public belief in the Bush Energy Plan’s success was 65%. Gallup Poll of June 5, 2001 shows public concern over energy resources as America’s most important and pressing problem at an historic high of 58%. Gallup Poll of April 3, 2002 shows overall public approval for President Bush’s handling of energy policy at 57%.

The Bush Administration utilized the increased level of support for its argument

and strategically wielded executive power in a manner that would advantage existing

legislation and administrative processes to achieve the objective of expanding domestic

energy resource development. The tragedy of September 11, 2001 was, in many ways,

simply a fortuitous event allowing the Bush Administration to successfully implement the

means for achieving its energy policy objectives. Thus, with the support of like-minded

congressional leadership, and over the course of their 8 years in office, the Bush

Administration successfully implemented a series of political and administrative

strategies that resulted in: 1) a shift in domestic energy policy, 2) the creation of a

political conflict between powerful interest groups, and 3) the disruption of a long static

subgovernment within the Bureau of Land Management.

President Bush’s Energy Related Political Appointments at DOI

President Bush’s choice of Department of Interior (DOI) nominees was a direct

reflection of his administration's desire to expand domestic energy. Most significant

among the President’s “energy nominees” was Gale Norton to head the Department of

the Interior. As the President’s nominee, Secretary Norton’s history of professional and

political accomplishments were notable for their consistent support and defense of

deregulation and free-market principles in the management of federal lands and

resources. A former DOI attorney under President Reagan’s controversial and short-lived

Secretary of the Interior James Watt, Norton’s nomination was met with great cheer from

conservative free-market thinkers as well as industry representatives of the timber, Gallup polling data (March, 2001-2003) shows public opinion that the U.S. will face critical energy shortages over the next 5 years, as 60% (March 2001), 48% (March 2002), 56% (March 2003).

mining, and energy development lobby (Jehl, 2000). To others, most notably members of

the environmental protection community, Ms. Norton’s nomination was greeted with

dismay. As the national spokesman of the Sierra Club, Allen Mattison, famously

remarked, “Our view is that she’s James Watt in a skirt” (Jehl, 2000).

Mentored by Watt during her tenure at the politically conservative Mountain

States Legal Foundation (MSLF), Norton was a true believer in the pro-development

management principle for public lands and resources. Other important Bush-Cheney

DOI political appointees had similar backgrounds. For example, following Gale

Norton’s appointment, President Bush nominated another Reagan-Watt Era alumni, J.

Stephen Griles. As undersecretary of the Interior, Griles was second only to Norton in

the chain of political authority being assembled at DOI. Under Secretary Watt’s tenure at

DOI and afterwards, Griles served as deputy director of the Office of Surface Mining,

and as Assistant Secretary and Deputy Assistant Secretary of the Interior for Lands and

Minerals Management. It is important to note that it was Mr. Griles who, in anticipation

of his Senate confirmation, served as the DOI’s representative during the course of the

Cheney Energy Task Force deliberations in 2001 (U.S. Department of Interior, 2001).

President Bush also nominated Rebecca Watson as undersecretary of the Interior

for Lands and Minerals Management. Having served as Assistant General Counsel for

energy policy at the Department of Energy (DOE) in the previous Bush Administration,

Ms. Watson was a former law school classmate of Secretary Norton’s and, at the time of

her nomination, a MSLF colleague of both Norton and Watt. With the Senate’s approval

of Watson’s appointment she was charged with administrative and managerial

responsibility for the Bureau of Land Management, the Minerals Management Service

and the Office of Surface Mining Reclamation and Enforcement (U.S. Minerals

Management Service, n.d.).

Finally, President Bush nominated Kathleen Clarke as Director of the Bureau of

Land Management. At the time of her appointment, Clarke served as Executive Director

of Natural Resources for the State of Utah under then Governor Michael Levitt (Gov.

Levitt would himself become President Bush’s nominee as Secretary of Health and

Human Services). Prior to her appointment as Utah’s Director of Natural Resources,

Clarke served as a member of Rep. James Hanson’s (R-UT) administrative staff. Rep.

Hanson, a conservative, was himself a fervent legislative advocate of developing

resources on public lands and vocal champion of “sagebrush rebels” (Spangler, 2001).

Senator Hanson would serve as Chair of the House Committee on Natural Resources

during the early years of the Bush Administration when the expansion of domestic energy

development was beginning to gain political and popular support (Neustadt, 1960).

Given the Bush Administration’s broad policy objective of achieving national

security by means of energy independence, these appointments were not the only political

appointments with professional ties to varied energy-related development entities.

Throughout the federal government, Bush-Cheney political appointees with ties to the

energy industry or other extractive industries dominated energy and environment-related

administrative agencies. The extent to which the administration’s appointees were tied to

the energy lobby was so profound that the administration is often referred to as the “oil

and gas administration” (Finley, 2003).

The administrative hierarchy of federal agencies charged with managing the

nation’s energy, environmental, and public lands and resource related policies from the

President and Vice President down were dominated by former fossil fuel energy

development executives, attorneys, and lobbyists. With the history of political defeat

suffered by previous administrations’ failure—most notably the Reagan administration’s

failure (Durant, 1992; Nathan, 1983)—to expand domestic energy development the

choice for the new Bush Administration was clear: use executive power to effect a shift

in the political leadership of administrative agencies, charge them with implementing

executive policy directives to facilitate change in existing energy policy, and expand

domestic energy resource development.

Vice President Cheney's Energy Task Force

Chaired by Vice President Cheney, meetings of the “National Energy Policy

Development Group” were by invitation only and conducted behind closed doors. Aside

from invited members from the newly elected administration and America’s leading

energy producing companies, no stakeholders participated in these strategic discussions.

Indeed, these discussions were so secretive in nature that the administration resisted

General Accounting Office (GAO) and nonprofit organizations’ attempts to force the

public release of the group’s member list and meeting transcripts. And, although almost

40 task force meetings with industry representatives took place, the Bush Administration

successfully resisted the official release of any information concerning task force

members or the closed-door policy discussions. The administration’s resistance was

validated in 2005 when the U.S. Federal Court of Appeals for the District of Columbia

ruled unanimously in favor of the administration's "executive privilege" argument for not

releasing any internal documentation regarding the energy task force (Abramowitz &

Mufson, 2007; Judicial Watch Press Office, 2005).

Controversy notwithstanding, the Bush-Cheney policy development group issued

its final report to the President and the public on May 16, 2001. The report, entitled

“National Energy Policy,” detailed the administration’s energy plan and offered strategies

for its implementation (National Energy Policy Development Group, 2001). Within 2

days of the report’s release, President Bush issued two Executive Orders (E.O. 13211 and

E.O. 13212) charging federal agencies to facilitate and expedite the means by which the

expansion of developing America's domestic energy resources would be achieved. In

essence, these executive orders signified that the report’s findings had been implicitly

accepted and strategies for its implementation had been adopted by the administration

(Mayer, 2001). 2 While the executive branch's overarching objective was to increase the

development of domestic energy resources, achieving that goal was a daunting task. As

suggested by Nathan (1983), in order to meet the overarching objective the

administration would have to directly engage existing legislation in a manner that would

affect change in the administrative processes of federal agencies to hasten the desired

expansion of domestic energy resource exploration and development.

A key element to the success of the political objective was the administration’s

ability to move the bureaucracy and expand access to federally administered lands and

resources. Moving the bureaucracy would require altering the procedural processes for

leasing public lands and issuing approved permits to drill (APD). Expanding access to

2 Note: Mayer argues that the presidential power to control the actions of executive agencies is manifest in the issuing of executive orders. Mayer finds that executive orders are an expression of political will in the face of an intractable or indecisive Congress, and that executive orders enhance bureaucratic accountability by creating a clear decision trail that leads directly to the president.

federal lands and resources required that the administration make a choice between two

political strategies (Howell, 2005).3 One political strategy was to simply send the

"National Energy Policy" to Congress for legislative deliberation and action.4 The other

was to wield executive power in a manner that would facilitate executive implementation

of the energy plan. Given the legislative history of defeat suffered by energy interests to

expand domestic energy development, the choice for the administration was clear: use

executive power to affect a shift in federal energy policy via political appointments and

then issue executive orders directing agencies charged with administering domestic

energy development to alter their administrative processes.

Executive Orders 13211 and 13212

As noted earlier, the Bush Administration issued Executive Orders 13211 and

13212 on May 18, 2001. These Executive Orders directed all federal land management

agencies—particularly the BLM—to expedite the leasing of federal lands for energy

development and the approval of existing—and future—Approved Permits to Drill

(APD). Executive Order 13212, entitled “Actions To Expedite Energy-Related Projects”

directed federal agencies—particularly the BLM—to “expedite their review of permits or

take other actions as necessary to accelerate the completion of such [energy-related]

3 Note: Howell argues that in order to “advance their policy agenda, presidents have two options. They can submit proposals to Congress and hope that its members faithfully shepherd bills into laws; or they can exercise their unilateral powers--issuing such directives as executive orders, executive agreements, proclamations, national security directives, or memoranda--and thereby create policies that assume the weight of law without the formal endorsement of a sitting Congress" (p. 417).

4 Note: The Bush Administration did eventually realize legislative success for their domestic energy strategies and policies. The Energy Act of 2005 was passed and signed into law by President Bush. As some have noted, the net effect of the Act was an affirmation of the administration’s actions to bring about the expansion of domestic energy development.

projects.” Executive Order 13212 also ordered the establishment of an interagency task

force, chaired by the chairman of the Council of Environmental Quality, “to monitor and

assist the agencies in their efforts to expedite their review of permits or similar actions, as

necessary, to accelerate the completion of energy-related projects, increase energy

production and conservation, and improve transmission of energy” (Executive Order

13,212, 2001).5 Finally, Executive Order 13212 directed the interagency task force to

“monitor and assist agencies in setting up appropriate mechanisms to coordinate Federal,

State, tribal, and local permitting in geographic areas where increased permitting activity

is expected” (Executive Order 13,212, 2001).

Entitled “Actions Concerning Regulations That Significantly Affect Energy

Supply, Distribution, or Use,” Executive Order 13211 required that all federal agencies

“prepare a Statement of Energy Effects when undertaking certain agency actions.” And,

as described in Executive Order 13211, these Statements of Energy Effects were intended

to:

…describe the effects of certain regulatory actions on energy supply, distribution, or use… [And] consist of a detailed statement by the agency responsible for the significant energy action relating to: i. any adverse effects on energy supply, distribution, or use (including a shortfall in supply, price increases, and increased use of foreign supplies) should the proposal be implemented, and ii. reasonable alternatives to the action with adverse energy effects and the expected effects of such alternatives on energy supply, distribution, and use. (Executive Order 13,211, 2001)

These two executive orders sought to comprehensively change existing federal

energy policy and administrative processes within land and resource agencies.

5 Note: Another Bush-Cheney appointment with ties to extractive industries, the Chair of the White House Council on Environmental Quality was James Connaughton, legal counsel for General Electric and Atlantic Richfield and their challenge to the EPA’s directive regarding responsibility for cleanup of Superfund sites. (Finley, 2003).

It has been argued that most executive-led strategic efforts to influence policy

change within administrative agencies or their decision-making subgovernments cost too

much political capital given the relatively modest levels of success of those efforts

(McCool, 1989). Still others have argued that, as executive orders go, most presidential

policy directives are relatively unnoticed as the change they affect is limited to the

administrative agency targeted by the President (Durant, 1992; Mayer, 2001). In the case

of Executive Orders 13211 and 13212 there was not much political capital to spend as the

President was just months from being sworn in and, the administration signaled the

opening move in its effort to control the BLM’s energy policies and administrative

procedures. Quite simply, Executive Orders 13211 and 13212 should be considered one

piece among the many political strategies employed as a means of achieving

administration’s domestic energy policy objectives. These executive orders are notable

because within the newly released National Energy Policy, 105 recommendations had

been designed specifically to increase domestic energy development, and among those

recommendations, 73 could be implemented via presidential directives to energy related

agencies, while the remaining 32 required Congress to pass new legislation or amend

existing laws (Longley, 2001, n.p.).

The BLM Responds to Change in the Executive Branch

The bureaucratic response to the unilateral use of executive powers was

immediate. Within roughly 2 years of President Bush’s political appointments being in

office and his issuing of Executive Orders 13211 and 13212, the BLM began the process

of changing its existing energy policies to reflect the political goal of expanding domestic

energy development. On August 8, 2003, BLM Director Kathleen Clarke notified state

and field offices that implementation of President Bush’s National Energy Policy would

begin immediately. The new administrative management policies instructed all BLM

offices and land-use planners to reduce or eliminate regulatory impediments to oil and

gas leasing and production on BLM lands. The Director’s order instructed BLM staff to

concentrate their efforts on what Clarke had designated as “focus areas” where the

potential for oil and gas development was high. The order also instructed BLM field

managers to prioritize work related efforts that would promote oil and gas planning,

leasing, and permitting (Longley, 2003).

In issuing the directive Director Clarke established the deadline of December 31,

2003 for BLM personnel to evaluate and report the need to change “existing land-use

plans to facilitate oil and gas exploration and development” in accordance with Energy

Policy and Conservation Act of 2000 (Longley, 2003, n.p.). In establishing new energy

policies, BLM land-use planners were instructed to act in a manner that would “not

unduly restrict access to federal lands, while continuing to protect resources when they

review[ed] oil and gas lease stipulations, especially in those cases where an unnecessary

stipulation could result in the abandonment or delay of a project” (Longley, 2003, n.p.).

Finally, Director Clarke’s order required all BLM state offices with significant energy-

related programs “to conduct at least one meeting with industry representatives” within a

year of the directive’s issuance to “share findings and discuss oil and gas related policy

changes” (Longley, 2003, n.p.).

Clearly, a change in the presidency led to a change in domestic energy policy

from within the DOI and more importantly, throughout the BLM. As most field offices

with significant oil and gas development projects are located throughout the Rocky

Mountain West, the directive had its greatest effect in the states of New Mexico,

Colorado, Wyoming, Montana, and Utah. As a result, the easing of oil and gas

development regulations and administrative oversight, as well as prioritizing oil and gas

activity, in 2003, triggered a modern energy boom throughout the states of the American

West. This was particularly true of energy resource development in the form of Coal-

Bed Methane (CBM) natural gas.

One example of how quickly the administration was realizing success in

achieving its policy objective is taken from the Wyoming State Office of the BLM and

the Wyoming Oil and Gas Conservation Commission. In 2003, 39,000 CBM Approved

Permits to Drill (APDs) were issued by the State of Wyoming. These 39,000 APD's

represented an average of 18 permits being approved per day and an average of seven

wells being drilled per day throughout the State of Wyoming. Additionally, the rate of

permit hearings in Wyoming increased that year as well. In 2003, the state’s oil and gas

commission held 814 area drilling permit hearings with 55% of those hearings

concerning the exploration and development of CBM. These hearings resulting in 900

individual parcel drilling permits being issued by the State of Wyoming. Respectively,

the state’s 814 area development permit hearings represented a 100% increase over the

previous 5 years with—what was at the time—an expectation that permit hearings would

again experience a 100% increase in 2004. Additionally, the 900 individual parcel

drilling permits issued in 2003 represented a 100% increase from the previous 30 years

and they too were expected to experience a 100% increase in 2004 (Likwartz & Parfitt,

2004).

The Wyoming Oil and Gas Conservation Commission and the Wyoming BLM

estimated in 2004 that the agency would, until the year 2014, issue an additional 71,000-

76,000 drilling permits for the exploration and development of oil and natural gas in the

State of Wyoming. At the time, those estimates stood in stark contrast to the documented

70,000 drilling permits the State of Wyoming had issued since its statehood in 1890

(State of Wyoming, n.d.; Bureau of Land Management, n.d.(c)). While these numbers

provide evidence only of the State of Wyoming's unprecedented level of oil and gas

exploration and development, the numbers were indicative of what was occurring

throughout the states of the Rocky Mountain West.

Expanded exploration and drilling were not the only energy-related activities

affected by the BLM’s change in energy policies. For example, the BLM also expanded

its energy leasing activities in accordance with the new administrative directives and

policies. One example of the early nature of expanding energy leasing is the Utah State

Office of the BLM’s June of 2004 energy lease auction for the exploration and

development of the subsurface energy resources across 281,000 acres in the State of

Utah. As was reported by the Salt Lake Tribune, “the federal government set a record

with its June oil and gas auction in Utah…as part of the Bush Administration’s push

toward domestic energy production…. Records were made to be broken, though…. The

next quarterly lease auction slated for September 8 easily outpaces the June sale, with

362,665 acres spread across 223 parcels” (Nailen, 2004, E1).

All across the West, record numbers of APDs were being issued by state energy

commissions and the BLM and a record number of acres were being offered by the BLM.

The observation among those most directly affected by the change in federal energy

policy was this: A change in the executive had led, successfully, to a change in domestic

energy policy.6 These executive-led changes to the BLM’s traditional energy policies

had the unintended consequence of establishing the conditions required to trigger a

political conflict between the industries of ranching and energy.

Policy Change Triggers Political Conflict

The exploration and development of energy resources occurs primarily on federal

public lands. As one would expect, most fluid mineral extraction has and continues to

take place on public lands administered by the BLM. It has been relatively well-

documented that the use of public lands for the extraction of energy resources is but one

of the traditional uses of public lands. And, it is also relatively well-documented that

grazing is also one of, if not the paramount traditional use of, public lands. As such, the

large industry users of public resources—ranching and energy—have a long and storied

history and tradition of cooperation in the West. The practice of both grazing and energy

development on public lands—while controversial to some—has not, generally speaking,

resulted in political conflict. Both industries, at their core, shared the belief that the

public lands were managed in such a manner that results in the greatest economic benefit

to the user. Access to public lands, like the use of the public domain, was an issue for

collaborative decision making between the interests. And, when it came to energy

development, it was an unstated agreement among the interested parties that the interests

of the rancher were respected. Essentially, the political history and traditions of the West

made it clear that when it came to energy and cattle, cattle came first. Not unlike the

6 Note: See generally discussion in Chapters Five, Six, and Seven.

manner in which ranchers view western water rights, ranchers believed that the principle

of “first in use, first in right,” also applied to Western public lands.

Despite this history, the Bush Administration’s objective of expanding domestic

energy development activity presented a challenge to the traditions and beliefs. Whether

that challenge was intentional or not may never be fully known. But what is clear today

is that by 2003, energy development activities had begun to substantially interfere with,

and disrupt, ranching activities. The subsurface development of domestic energy

resources had begun not only to encroach upon the traditional grazing areas of the public

domain, but it had also begun to encroach upon the privately owned ranches of the West.7

In the Western U.S., energy exploration and development can occur not only on

public lands, but also on private lands. The practice of developing the so-called “split-

estate” for energy resources has become commonplace.8 In turn, this practice

increasingly placed the interests of ranchers in conflict with the energy industry. As

industry more frequently sought access to develop federal energy leases located on

privately owned ranch lands, ranchers began to seek remedies that would prohibit

industry’s access and development activities on their property. In turn, ranchers and

ranching organizations sought relief from the BLM as the agency was responsible for

managing the energy leases as well as regulatory oversight of energy related activities.

7 Note: See generally discussion in Chapters Five, Six, and Seven. 8 Note: The practice of developing the split-estate energy resources is estimated to be 3-5% (1,740,000- 2,900,000 total acres) of all energy activity within the intermountain states that compose the Rocky Mountain West. Fifty-eight million acres across five western states: New Mexico, Colorado, Wyoming, Montana, and Utah. Each state has roughly 10-12 million split-estate acres. On average, each state would have 300,000-500,000 split-estate acres in development. The BLM does not keep specific data regarding split-estate energy development. See generally: Bureau of Land Management, 2007.

The aggressive nature of the Bush Administration’s domestic energy policies had

awakened the dormant, but inherently conflict-ridden federal legislation of homesteading,

mining, oil and gas, and grazing. The politically motivated expansion of modern

domestic energy resource development had the effect of creating conflict between the

principle actors—ranchers and energy—within the land-use subgovernment of the BLM.

Nothing less than control over the direction of the federal government’s land use policy

decisions was at stake. The stakes in the outcome of the conflict were enormous for both

interest groups, and depending on which side won, it was expected that the winner would

emerge as the dominate force over all other uses or future uses of the public domain.

Simply put, the conflict’s outcome held the potential to shift the operating paradigm of

the BLM’s decision-making subgovernment and, in turn, America’s public lands and

resources policy.

Conclusion

President George W. Bush and Vice President Cheney, former executive officers

of energy development companies from energy-producing states of Texas and Wyoming,

respectively, embarked upon an executive-oriented strategy to increase domestic energy

production from the time of their election to office. Prior to their inauguration, and in the

early years of their administration, they justified this strategy by arguing that without a

significant increase in domestic energy development, the nation’s national economy and

security were at risk. And, fortuitously, a series of events occurred during the course of

their first term that effectively solidified the administration's argument in the minds of the

American public.

Global conflict and the growing economic power of global rivals helped establish

conditions for unprecedented increases in the market price for global energy resources.

Combined with the tumultuous global events of the day, the steady increase in the price

of energy resources, particularly the market rate for a barrel of oil, profoundly affected

the American psyche. Indeed, America's military engagement in wide-spread global

conflict, as well as contending with emerging foreign economic powers and their

competition for energy resources, spurred an almost daily rise in the price of energy

resources.

As these events unfolded, they were daily fodder for all the major American news

outlets. In turn, the American public responded and viewed the administration's efforts to

expand domestic energy production as necessary for securing the nation’s economic and

national security interests. In essence, those who would engage in activism to slow the

Bush Administration's efforts to expand domestic energy development were effectively

marginalized.

With the benefit of hindsight, the public is now coming to reflect upon the

consequences resulting from the administration’s sustained efforts to expand domestic

energy production. As has been suggested, one consequence of these efforts was the

awakening of a long-dormant legislative history that would trigger an unexpected

political conflict. This political conflict, addressed in the next chapter, severely strained

the traditional alliance between ranching and energy development interests and

effectively altered the domination of the BLM's land-use decision-making

subgovernment.

References

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CHAPTER FOUR

SUBGOVERNMENTS

This chapter describes how changes in federal domestic energy policy resulted in

increased split-estate energy development and an analysis of the effects of that

development. Information for this chapter was collected from primary government

documents and journalistic sources across three settings, New Mexico, Colorado, and

Wyoming, where the vast majority of split-estate energy development and conflict

between ranching and energy development interests have occurred. Analysis of the data

shows increased split-estate energy development raised the level of frustration with the

BLM among ranchers and a spiraling conflict via accounts of ranchers petitioning their

state legislatures for protection from energy development. Overall, as ranching interests

turned to state legislatures for protection, formerly allied interests increasingly competed

for control of the BLM’s land-use subgovernment.

Networks Within Subgovernments

Subgovernments are composed of three networks of actors linked by a shared

interest in a policy domain (Cater, 1964; Davis, 2001; Freeman, 1965; Maas, 1949;

Ripley & Franklin, 1984). The composition of these subgovernment networks has

traditionally been described as an alliance between congressional committees, executive

departments or bureaus, and interest groups for the purpose of controlling policymaking

decisions. Over time, these alliances have been reformed in a manner that allows for a

broader array of interests to participate in the process of shaping policy decisions.

Despite this fragmentation, subgovernments have retained the basic structure of three

primary networks working in alliance to control the policy domain (Davis, 2001). A

subgovernment retaining its basic structure means that units of stakeholders operating

within the subgovernment network interact in response to fragmentation of the

policymaking environment. As units of stakeholders respond to fragmentation they

compete for control of the policy environment. As stakeholders compete for dominance,

a hierarchy is established within the networks of the subgovernment. Competition means

that power is then dispersed among the various units of policy stakeholders as one unit of

stakeholders, or a combination of stakeholders, establishes domination of the

policymaking environment (McCool, 1989, 1990, 1995, 1998).

Stakeholders’ response to fragmentation can range from cooperation to

competition. The choice to support greater cooperation or engage in competition is

dependent on two factors. First, the choice to cooperate or compete is dependent upon

whether or not fragmentation threatens to disrupt established network hierarchies within

the policy subgovernment and second, whether or not disruption to one network’s

hierarchy is supported by actors operating within the remaining two networks. While

none of the networks is immune to change, policymaking subgovernments as a whole are

notable for their stability over time. Simply put, minor changes happen relatively often,

but major disruptions occur infrequently: When a major disruption does occur, it is often

the result of considerable effort to legislate sweeping reforms to an entrenched hierarchy

within the subgovernment.

The vulnerability of established network hierarchies to change or disruption takes

on a variety of forms. For example, instability in a network of congressional committees

is most often the result of elections. Similarly, elections of a new executive

administration result in change to executive departments or bureaus. Nonetheless,

electoral results overwhelmingly favor incumbents in elections, and executive

departments or bureaus are noted for their ability to defend themselves from political

interference. As one might expect, hierarchies within these particular networks have

remained relatively stable over time. The same cannot be said, however, for the network

hierarchies of interest groups.

The hierarchy of interest group networks is vulnerable to political disruption.

This disruption is a result of the relative stability of hierarchies operating within the more

politically oriented networks of congressional committees and administrative departments

or bureaus. This is particularly true when political networks and their internal hierarchies

share a common policy objective whose success is dependent upon their political

intervention. In a sense, because these networks’ hierarchies are dominated by elected

officials who share a common objective, their strategic political action to achieve the

desired objective is united. The effect of this political unity destabilizes the existing

hierarchy within the remaining interest group-oriented network. For example, within the

land-use decision-making subgovernment, if it is the favored policy objective of the

political networks to expand domestic energy development, this form of political unity

would then effectively threaten to disrupt ranching’s long established dominance of the

interest group network.

The political leadership of natural resource congressional committees shared the

Bush-Cheney administration’s objective of expanding domestic energy development. In

turn, its decision-making activities were merged with those of the Bush-Cheney

administration. United by a common objective, the collective political decision-making

of elected officials instigated a major disruption to the hierarchical relationship between

ranching and energy development. Disruption to this relationship then triggered conflict

and competition between the formerly allied, strong, resource-rich members in the

BLM’s public lands subgovernment: Ranchers and Energy Developers.

What emerged from the disruption was a highly publicized political conflict

between ranchers and energy developers. As these two interest groups were historically

supportive of one another, disruption at the hands of elected political leaders was

particularly troubling to each group. Ranching and energy developers maneuvered for

dominance of the land-use policy domain, and as they engaged, it became clear that the

long and convenient marriage of ranching and energy was coming to an end.

Change Comes to Cowboy Country

Politically motivated changes in the BLM’s domestic energy policies resulted in

increased split-estate energy development. To effected ranchers, the economic losses

they were suffering as a result of developing their lands and resources for energy

extraction did not compare favorably to the economic gains being derived by a

government-sponsored energy industry. As the regulatory disparities and economic

inequities began to affect more and more ranchers across the West, the ranchers’

frustration intensified. Ranchers’ frustration was compounded by a perception that the

federal government was unwilling to consider legislative or regulatory reform. It did not

help matters that energy development interests were unwilling to support ranching’s

efforts at reforming split-estate energy development (Clifford, 2001; Hardin & Jehl,

2002; Mitchell, 2005).

Legally, the federal government has the right to access federally owned minerals

(Bureau of Land Management, 2007). That right is conveyed to private energy

development companies when companies purchase a federal mineral lease. The right of

the company to access the lease for development is implicit despite the fact that an

individual might own the property on which the mineral lease is located. In essence, the

land is split into two estates. One is known as the subsurface mineral estate, the other is

known as the private surface estate. At its modern peak, 3-5% of all energy development

in the Western states occurred on split-estate lands (Environmental Working Group,

2004). While some split-estate development occurred relatively peacefully, most split-

estate development met considerable opposition. Led primarily by Western ranchers

whose lands were being leased developed at what was, for them, an alarming rate (Hardin

& Jehl, 2002). As part of their opposition, ranchers first turned to the BLM for assistance

in helping them to understand why their lands were suddenly and swiftly being targeted

for energy development (Miller, Hamburger & Cart, 2004). However, the BLM’s ability

to assist ranchers was restrained by the legal and regulatory dominance of the mineral

estate. In the past, ranchers had worked amicably, and at their own pace, with energy

companies and the BLM in developing mineral leases (Mitchell, 2005). However,

spurred by their political masters, the BLM’s effort to rush forward with industry access

and development of energy leases was quite suddenly overwhelming to ranchers

(Clifford, 2001).

Regulating Split-Estate Energy Development

Access to the surface estate for the development of the subsurface estate is

regulated by Federal Onshore Order #1 (Public Lands: Interior. Minerals Management:

General, 2008; Parks, Forests, and Public Property, 1990; Bureau of Land Management,

2009). Known simply as the “Gold Book,” this body of formal rules and regulations,

operating standards and best management practices, last revised in 2007, requires that the

surface owner be notified of the company’s intent to explore and develop the mineral

lease prior to accessing the private property. The regulations also require that, upon

acknowledgement of having received notification of intent to explore and develop the

mineral lease, the company and the property owner should negotiate the terms of access

as well as any development activities that may take place. These contracts are known as

“surface-use agreements” (Bureau of Land Management, 2007).

Negotiation of surface-use agreements are unregulated by federal or state

administrative agencies. Surface-use agreements are considered private contracts. The

terms and conditions of these agreements are negotiated between the energy lease

developer’s representative—known simply as a “land man”—and the surface property

owner. Once negotiations are concluded, federal regulations require that a certified

notification with the BLM be filed to show a surface-use agreement has been reached and

when development activities are scheduled to begin. Governmental oversight of the

company’s exploration and development activities is on the private surface, unless

otherwise noted in the contract, the sole responsibility of the property owner (Bureau of

Land Management, 2007).

The surface use agreement between the surface owner and the operator is confidential. However, the APD Surface Use Plan of Operations must contain sufficient detail about any aspects of the agreement necessary for NEPA documentation and to determine that the operations will be in compliance with laws, regulations, Onshore Orders, and agency policies. When the operator submits its Surface Use Plan of Operations to the BLM, the operator must make a good faith effort to provide a copy to the surface owner. Following APD approval, the operator must also provide a copy of the Conditions of Approval to the surface owner. In addition, the operator must make a good faith effort to provide a copy of any proposal involving new surface disturbance to the private surface owner. (43 C.F.R 3104 and 36 C.F.R. 228 Subpart E as cited in Bureau of Land Management, 2007, p. 12) The legal precept known as “liberty of contract” guides surface-use negotiation

and agreement. Liberty of contract is a free-market principle where both parties enter

into negotiations free from government interference for the purpose of entering into

legally binding contracts (Buckley, 1999; Fitzgerald, 2009, 2008). Fundamentally, the

surface owner and industry representative negotiate in a manner that seeks to protect their

respective self-interests free from government intervention. To some, freely negotiating

terms of access and development, from the standpoint of protecting one’s self-interest, is

the preferred process (Buckley, 1999; Fitzgerald, 2009, 2008). However, self-interests

aside, these types of contracts essentially absolve the BLM from regulating what type or

form of compensation and/or mitigation should or should not be addressed in the surface-

use agreement. This means that unless surface owners have sufficient knowledge of

federal and state regulations of energy development processes or competent legal

counsel, split-estate property owners are left to their own devises in negotiating the

surface-use agreement.

The operator must make a good faith effort to notify the private surface owner before entering private surface to stake a well location and access road or to conduct cultural or biological surveys. The BLM will invite the surface owner to participate in the onsite and final reclamation inspections and will take into consideration the needs of the surface owner when reviewing the APD and reclamation plans and when approving final abandonment and reclamation. The BLM will offer the surface owner the same level of surface protection that the BLM provides on Federal surface. The BLM will not apply standards or conditions that exceed those that would normally be applied to Federal surface, even when requested by the surface owner. (43 CFR 3104 and 36 CFR 228 Subpart E as cited in Bureau of Land Management, 2007, p. 12) There are currently three different surface-use agreement contract forms

recommended for use by energy developers and surface owners (Western Governors'

Association, 2004). That there are so few, and that they vary so greatly in what is

recommended for negotiation, is an example of the unregulated nature of surface-use

negotiations and agreements. No statutory standard exist governing surface-use

agreements. This means that surface owners negotiate surface-use agreements from a

position of unequal footing. The potential risk is that serious harm befalls a surface

owner’s economic and environmental stewardship. Additionally, because terms of the

surface-use agreement are undefined by federal or state regulations—and remain ill-

defined by existing statutory language—there is substantial confusion over the exact

nature and scope of economic losses from surface energy development activity.

The operator must negotiate in good faith with the surface owner. Negotiating in good faith provides a forum through which the operator and surface owner can discuss the preferences and needs of both the surface owner and the operator. In addressing those needs, the operator may be able to modify the development proposal to both minimize damage to the surface owner’s property while reducing reclamation and surface damage costs. For example, operator costs can-might be [sic] minimized by

placing roads and facilities in locations that meet the surface owner’s long-term development plans for the property, thereby lessening the future reclamation obligations of the operator. (43 CFR 3104 and 36 CFR 228 Subpart E as cited in Bureau of Land Management, 2007, p. 12) In combination, lack of regulation, unequal footing, and confusion create tension

between surface owners (ranchers, farmers, and homeowners), subsurface developers

(energy companies), and the federal government (BLM).

The lack of a surface-use agreement does not mean that access to the surface by

the leaseholder can be denied by the surface owner. Access to the surface estate for the

purpose of developing the energy lease cannot be denied. If an agreement for access and

development cannot be reached, an appeal is filed with the BLM by the leaseholder. If

the appeal is upheld, the developer is then required to post a bond to financially

compensate for any foreseeable damages that may occur during the course of

development, and/or to cover the costs of surface reclamation after development is

concluded.

Prior to approval of the APD (or Sundry Notice to conduct new surface disturbing activities), the operator must certify as part of the complete application that a good faith effort had been made to reach a surface use agreement with the private surface owner and that an agreement was reached or that it failed. If the surface owner and operator fail to reach an agreement, the operator must file a bond with the BLM ($1,000 minimum) for the benefit of the surface owner to cover compensation, such as for reasonable and foreseeable loss of crops and damages to tangible improvements. Prior to approving the APD, the BLM will advise the surface owner of the right to object to the sufficiency of the bond and will review the value of the bond if the surface owner objects. The BLM will either confirm the current bond amount or establish a new amount. Once the operator has filed an adequate bond, the BLM may approve the APD. Following APD approval, the operator and the surface owner may appeal the BLM’s final decision on the bond amount. (Oil and Gas Leasing, 1988 & Parks, Forests, and Public Property, 1990 as cited in Bureau of Land Management, 2007, p. 12)

If a conflict between the surface owner and leaseholder does occur prior to an

agreement being reached, or during the course of the lease’s development—the cause of

which can take on multiple forms—a complaint is filed with the BLM requesting the

agency’s intervention and assistance in resolving the issue (Clifford, 2001; Mitchell,

2005). Thus, during the course of negotiating terms of surface-use agreements the parties

negotiate with the knowledge that access and development cannot be denied and that any

denial by the surface owner will be met with government intervention.

Regulatory authority of federal energy leases is delegated to the BLM. In turn,

the BLM has, over time, promulgated regulations ensuring the federal subsurface remains

accessible to the government’s development agents for the purpose of bringing energy

resources to market. Thus, an energy company’s vested property right is not simply

government’s enforcement of access to the surface, but it is also the result of

government’s protecting the energy lease’s economic development. As discussed in

Chapter Two, governmental property rights to the mineral subsurface are a product of late

19th century and early 20th century homesteading, mining, and energy legislation. The

legislation, therefore, conveys a property right with industry’s purchase of an energy

lease, developing the energy resource, and bringing it to market. In essence, with the

purchase and development of a federal energy lease, the property right of access and

economic benefit of ownership is conveyed to energy companies.

Thus, energy development regulations—Onshore Order #1—sustains property

rights and economic interests to multiple parties in the use and development of a split-

estate. Access and development of valued resources within the boundaries of a split-

estate property is essentially shared between surface owner, lease holder, and federal

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government. As one might surmise, these rights and interests are a tangled web. The

entanglement of these rights and interests is a result of general provisions in Title 43,

Chapter 7, Subchapter X, at Statute 299 entitled “Reservation of Coal and Mineral

Rights” of the Stock Raising Homestead Act of 1916 (SRHA):

All entries made and patents issued under the provisions of this subchapter shall be subject to and contain a reservation to the United States of all the coal and other minerals in the lands so entered and patented, together with the right to prospect for, mine, and remove the same. The coal and other mineral deposits in such lands shall be subject to disposal by the United States in accordance with the provisions of the coal and mineral land laws in force at the time of such disposal. Any person qualified to locate and enter the coal or other mineral deposits, or having the right to mine and remove the same under the laws of the United States, shall have the right at all times to enter upon the lands entered or patented, as provided by this subchapter, for the purpose of prospecting for coal or other mineral therein, provided he shall not injure, damage, or destroy the permanent improvements of the entryman or patentee, and shall be liable to and shall compensate the entryman or patentee for all damages to the crops on such lands by reason of such prospecting. Any person who has acquired from the United States the coal or other mineral deposits in any such land, or the right to mine and remove the same, may reenter and occupy so much of the surface thereof as may be required for all purposes reasonably incident to the mining or removal of the coal or other minerals… (Stock Raising Homestead Act of 1916, Title 43,299: Reservation of Coal and Mineral Rights) The entanglement of agricultural property and energy economics is an ill-suited

statutory vehicle for the development of energy resources in the 21st century. Regulations

are ill-suited because they do not seek to balance the rights and interests of the

government’s agent with those of the surface owner. This is due to the statutory language

that specifically limits compensatory damages to the surface estate resulting from energy

development activities. Consequently, modern energy development’s regulated

compensatory responsibilities remain minimal at best. The provision, “Reservation of

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Coal and Mineral Rights,” also establishes minimal compensation for losses suffered by

owners of split-estate surface lands and resources:

…first, upon securing the written consent or waiver of the homestead entryman or patentee; second, upon payment of the damages to crops or other tangible improvements to the owner thereof, where agreement may be had as to the amount thereof; or, third, in lieu of either of the foregoing provisions, upon the execution of a good and sufficient bond or undertaking to the United States for the use and benefit of the entryman or owner of the land, to secure the payment of such damages to the crops or tangible improvements of the entryman or owner, as may be determined and fixed in an action brought upon the bond or undertaking in a court of competent jurisdiction against the principal and sureties thereon, such bond or undertaking to be in form and in accordance with rules and regulations prescribed by the Secretary of the Interior and to be filed with and approved by the officer designated by the Secretary of the Interior of the local land office of the district wherein the land is situate, subject to appeal to the Secretary of the Interior or such officer as he may designate… (Stock Raising Homestead Act of 1916, Title 30,54: Liability for Damages to Stock Raising and Homestead Entries by Mining Activities) This means that neither the federal government nor its development agent—

energy companies—has legal responsibility to compensate for economic losses beyond

those that result in damage to crops or existing tangible improvements. Any additional

compensation is an instrument of the negotiated surface-use agreement or an appeals

process filed through the BLM. As part of the appeals process there is a statutory

requirement of a financial bond being secured against the potential for economic losses

resulting from damage to the surface and the cost of reclamation. This process is

commonly referred to as the practice of “bonding on.” Thus, in the bond, access to the

surface for the benefit of developing the energy resource is, once again, secured via

government intervention. The legislative intent for those requirements, and subsequent

administrative interpretation, is found in the statutory language of the Stock Raising

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Homestead Act of 1916 (SRHA) and the Mineral Leasing Act of 1920 (MLA) (revised in

2001).

The amount of monies required for these bonds varies and is defined by federal

regulation—Onshore Order #1. Essentially, the amount of the bond is dependent on the

level of energy development being proposed as well as the BLM’s interpretation of

legislative intent for the purpose of requiring the bonds. Under the SRHA, the bond must

exceed $1,000 and is intended to recover potential damages to crops or tangible

improvements existing on the surface at the time of development (Stock Raising

Homestead Act of 1916). However, this leaves open to administrative interpretation

compensation for potential loss of income or economic benefit in any future use of the

surface and its surrounding resources. Further, according to the revised MLA a

developer must secure a bond in the amount of at least $10,000 per lease to ensure

compliance with environmental protection measures (Mineral Leasing Act of 1920,

amended 1987; Oil and Gas Leasing, 1988 & Parks, Forests, and Public Property, 1990 as

cited in Bureau of Land Management, 2007). Bonds of this type are the result of modern

environmental and mining reclamations legislation such as the National Environmental

Protection Act of 1969 (NEPA) and Surface Mining Control and Reclamation Act of

1977 (SMCRA) (National Environmental Protection Act of 1969; Surface Mining and

Control and Reclamation Act of 1977, amended 1993; Department of Interior: Office of

Surface Mining Reclamation and Enforcement, n.d.). Administrative responsibility these

types of environmentally-oriented bonding requirements is delegated to the BLM in

keeping with the Federal Lands Policy and Management Act of 1976 (FLPMA). Federal

energy bonding regulations allow for literally hundreds of oil and gas wells being drilled

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on just one lease, or in one state, or for that matter, across multiple states within a region

containing energy resources.

Federal regulations allow energy developers to post what is known as a “blanket

bond” (Mineral Leasing Act of 1920; Lease of oil and gas lands, 1988). Blanket bonds of

up to $25,000 are required for all wells an energy company might drill in one state. A

company securing a bond in the amount of $150,000 allows energy developers to operate

in more than one state regardless of the number of wells it expects to drill.

The bond may be a surety bond or pledge backed by cash, negotiable securities, Certificate of Deposit, or Letter of Credit in the minimum amount of $10,000. In lieu of a $10,000 lease bond, a bond of not less than $25,000 for statewide operations or $150,000 for nationwide operations may be furnished. (Lease of oil and gas lands, 1988; & Parks, Forests, and Public Property, 1990 as cited in Bureau of Land Management, 2007, p. 13) Given the expected return from any one producing well—estimated at $20

million—these bond requirements are relatively easy to secure and, as some have noted,

do not begin to cover potential environmental damage and economic loss that might

result from energy development activities on split-estate lands (Sievers, 2004).

Therefore, while access and development is shared between stakeholders in a split-estate,

there is significant political and regulatory disparity in the stakeholders’ ability to derive

economic benefit from their shared use of a split-estate. These disparities helped

establish the conditions for a political conflict to emerge between ranchers and energy

developers.

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Energy Politics and Policy: Congressional Committees (2000-2008)

From 2001-2008 numerous congressional committee meetings were held to

address energy policy. The topic of most of these energy-related hearings was focused

on the nexus of national security and the programmatic expansion in developing domestic

reserves. While hearings were convened to address a wide range of topics, hearings held

to address problems associated with the expansion of energy development were few. The

record of committee hearings indicates that when complaints were heard, the testimony

of ranchers was often included but the focus of the inquiry was more concerned with

removing regulatory road-blocks to expand domestic energy development (Congressional

Hearings (107th-110th Congresses)). Thus, voices representing ranching operations

impacted by the rapid expansion of domestic energy development were secondary to

voices representing the interests of energy developers.

The testimony of ranchers often followed statements from the committee’s chair

expounding the virtues of expanding domestic energy development. Or, as was often the

case, ranchers’ testimony preceded the testimony of numerous energy spokespersons. A

review of the record of House Natural Resource Committee and Subcommittee hearings

between 2000-2008 clearly indicates that testimony from ranching interests were wedged

between articulations of political support from elected officials and the policy

recommendations of energy representatives (Congressional Hearings (107th-110th

Congresses)). While lone ranchers spoke on behalf of ranchers besieged by energy

development, elected representatives, state officials, energy scientists, and members of

the energy lobby spoke on behalf of speeding up the regulatory permitting process or

expanding energy leasing sales (Oversight Hearing on the orderly development of

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coalbed methane resources from public lands, 2001; Hearing on enhancing America’s

energy security, 2003). For example, during the 107th Congress, in an oversight hearing

before the House Energy and Mineral Resources Subcommittee, its subcommittee chair,

Barbara Cubin (R-WY) described the effect of split-estate energy development as

“unconventional” and the effects of split-estate development as “growing pains.”

As with any resource, such an explosion of activity comes with ‘‘growing pains’’ while individuals, communities, local and state government and public land managers attempt to plan for the costs and benefits associated with the extraordinary interest in CBM…Split-estate mineral development is often contentious - and when conflicts arise they grab the headlines. Steady royalty income to a fee mineral owner happy with his check is a ‘‘dog bites man’’ story. When a rancher gets cross-wise with a driller seeking to access his federal lease, or other fee mineral ownership from which the rancher does not financially benefit, then that becomes a ‘‘man bites dog’’ story. When a lot of ranchers without minerals get upset, that’s a [c]over story in Time Magazine…eastern media reporters have written tales of ranchers with new pick-ups paid for by CBM royalties, followed by tales of grazing lands ruined by the unregulated discharge of produced waters. On top of this are stories that Montana and Wyoming governments are ‘‘at war’’ with one another over surface water quality…Well, I live out there, and if there is a war going on, it’s about the federal government getting sufficient funding for the Bureau of Land Management to complete a cumulative impacts analysis of anticipated CBM development so that land-use plans can be updated, and mitigating measures drawn up, to allow federal lessees to drill and bring their gas to market… the real question is ‘‘how can we best mitigate these conflicts?’’ Do ranchers need a ‘‘surface owners’’ Bill of Rights’’, and if so, which level of government ought to be considering it? On the other hand, when surface owners acquired the title to their property did they not understand what it meant to have mineral rights reserved to the government or another individual? (Oversight Hearing on the orderly development of coalbed methane resources from public lands, 2001)

To further the indication of unequal footing of ranching interests, congressional

hearings to consider the administration’s proposal to expand domestic energy

development were held before committees chaired by political allies from the energy

producing western states (Congressional Hearings (107th-110th Congresses)). Thus, the

merits of the proposed expansion to domestic energy development as outlined in the

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report of the President’s Energy Task Force met with considerable political favor. This

was particularly true of committees whose oversight responsibilities concerned the

administration of public lands and resources.

Republican dominance of congressional committees helped the Bush-Cheney

administration achieve the objective of expanding domestic energy resource

development. In part, this is because the 2000 presidential election marked the return of

Republican control to both houses of Congress. This meant that political control of

congressional public lands and resource committees were dominated by members of the

President’s own political party (Congressional Hearings (107th-110th Congresses)). And,

once again, the events of September 11, 2001 would provide much needed justification

and public support to partisan committee chairs and members as they acted to support and

enact the administration’s energy policy master plan. For instance, a quick survey of

congressional hearings held during the 107th Congress (2001-2003) shows that roughly

30 hearings have been devoted to deliberations of energy policy in the context of national

security (Congressional Hearings (107th-110th Congresses)).

At the time of the 107th Congress, there was near unanimity among western

states’ congressional delegations in support of expanding domestic energy development

(Congressional Hearings (107th-110th Congresses)). Their support, however, was only

partially ideological in nature. If the rationale of self-interest among elected officials was

true, then support was primarily a result of political reality in their desire for reelection

(Douglas, 1990; Edelman, 1988; Habermas, 1975; Kelman, 1987; Kingdon, 2003; Levine

& Forrence, 1990; Offe, 1985). This is because, as elected representatives from the

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energy producing states of the West, they were very cognizant of the economic benefits

that result from increasing energy development in their home states.

The BLM is mandated by the Congress to hold quarterly energy lease auctions

(Competitive Leases, 1988). Monies from federal sales of these energy leases and

royalties from the energy’s development are shared with the states. Thirty-five percent of

monies collected from these auctions go directly to the state where the energy leases are

located (Oil and Gas Royalty, 1988). Thus, every 3 months in each of the energy

producing states of the Rocky Mountain West, energy leases are auctioned to the highest

bidder. However, some energy producing states, like Wyoming and Montana, regularly

offer energy lease sales on a bimonthly basis (Bureau of Land Management, n.d.(a)).

Once the development of the lease occurs, the royalty from the fluid energy mineral

produced is a 50%-50% split between the federal government and the state (Bureau of

Land Management, n.d.(a)). In the rush to extract domestic energy resources, these

financial incentives proved beneficial in industry’s ability to achieve federal and state

support for expanding their development activities.

Disruption, Conflict, and Competition: Energy and Ranching

The process of developing split-estate energy resources is disruptive. The

process, even when performed properly, negatively impacts the working environment of

most ranching operations in the West. The process of drilling for and extracting energy

resources, particularly CBM, “can turn ranches and prairies into sprawling industrial

zones, laced with wells, access roads, power lines, compressor stations and wastewater

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pits” (Hardin & Jehl, 2002). The long-term impact of these extractive processes can be

debilitating to surface owners.

…the artesian well on Roland and Beverly Landrey’s ranch has failed. After producing 50 gallons a minute for 34 years, the well, the ranch’s only source of water, stopped flowing in September. A well digger who examined it blames energy companies drilling for gas nearby, but the companies dispute that. So the couple—he is 83 and ailing; she describes herself as “no spring chicken”—hauls water in gallon jugs and rives 30 miles to town weekly to wash clothes and bathe…Dave Bullach, a welder who lives near Gillette, couldn’t take it anymore. For two sleep-deprived years, he endured the incessant yowl of a methane compressor, a giant pump that squeezes methane into an underground pipeline. There are thousands of these screaming machines in Wyoming, where neither state nor federal law regulates their noise. Mr. Bullach stormed out of his house at midnight last year with a rifle and shot at the compressor until a sheriff’s deputy hauled him off to jail. (Hardin & Jehl, 2002, n.p.) Energy resources, cheap energy resources, like those of CBM, had become

increasingly feasible for industry to extract, develop and market. This is because there

had been substantial and important breakthroughs in energy technology. A process

known as hydraulic fracturing, or “fracking,” where chemically treated water is forced

into tight seams of coal formations in the effort to loosen the methane gas for collection

had been perfected (U.S. Environmental Protection Agency, 2000). The engineering feat

of being able to collect and capture the methane gas from multiple-points at a single

location, a technique known as “directional drilling,” had also been perfected (Kennedy,

2000).1 Furthermore, fracking and directional drilling emerged just prior to the Bush-

Cheney administration taking office. In their infancy neither the process of fracking nor

the technique of directional drilling was widely used by industry; both were considered

cost-prohibitive. But by 2001, the cost of energy resources rose as rapidly and as steadily

as the energy-friendly political decisions being made by the Bush-Cheney administration 1 Note: Kennedy is commenting on: Summary and Analysis of Department of Energy Office of Fossil Energy Reports concerning the advancement of directional/horizontal drilling technologies.

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and Congress. In turn, fracking and directional drilling became cost-effective. While

these new means of extracting hard-to-get energy resources are cost-effective and

efficient, the process of fracking is problematic.

As it runs through Orin Edwards’s ranch, the Belle Fourche River bubbles like Champagne. The bubbles can burn. They are methane, also called natural gas, the fuel that heats 59 million American homes. Mr. Edwards noticed the bubbles two years ago, after gas wells were drilled on his land. The company that drilled the wells denies responsibility for the flammable river. (Hardin & Jehl, 2002, n.p.) Most CBM energy resources lie within very tight, close-to-the-surface seams of

coal. This fact is one reason why states of the Rocky Mountain West experience the

largess of the modern energy boom: its benefits as well as its problems. One problem

with the process of fracking is its effect on the water resources of a state, a community, a

subdivision, or a ranch. The water required for the CBM fracking process varies

depending a number of factors, including the depth and type of coal seam formation

being utilized. Nonetheless, in shallow seams, like those found in the Powder River

Basin of Northeast Wyoming, a typical CBM well will use 400 barrels (42 gallons/barrel)

of water per day (16,800 gallons/day) (United States Geological Service (USGS), 2000).

Throughout the CBM producing states of the West, energy development’s use of

water is a contentious issue for ranchers. One 2002 estimate expected that in the Powder

River Basin alone the energy industry would “pump out 3.2 million acre feet of water—

as much as New York City uses in two and a half years” (Hardin & Jehl, 2002, n.p.).

This water’s use is limited. For example, when treated properly, the extracted water can

be beneficial to ranchers. However, when not treated properly, much of the water is

riddled with saline which, if untreated and dispersed over pasture lands can turn grazing

lands into barren wastelands (Clifford, 2001; Hardin & Jehl, 2002; Mitchell, 2005). To

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make matters worse, wastewater is disposed by reinjection or spraying across pasture

lands, a common practice among energy developers. Additionally, most wells or clusters

of wells produce far greater amounts of water than any one rancher can use. Water use

aside, the fracking of the coal seam has the attendant effect of releasing un-captured

methane gas and transferring it to free-flowing water sources like irrigation streams or

water wells. Thus, surface property owners with Champagne-like irrigation streams

make a habit of documenting the effect of the fracking process by taking matches and

lighting the bubbles on fire (Anderson, 2009).

Water is not the only impact to surface owners from the process of extracting

CBM energy resources. The effect that energy development can have on a surface

owner’s property interests ranges from a simple nuisance like dust to depleting a water

aquifer to the point where water pumps burn out and fail (Clifford, 2001; Hardin & Jehl,

2002; Mitchell, 2005). Ranchers in particular bear the brunt of multiple impacts that

disrupt their stock raising operations: cattle and sheep killed by energy traffic, chemical

spills from poorly constructed drill holes, as well as erosion from newly cut and heavily

traveled roads, pipelines cutting across grazing lands, and drilling pads dotting the land

(Clifford, 2001; Earthworks, n.d.(b); Hardin & Jehl, 2002; Mitchell, 2005).

As split-estate energy development expanded and the problems became more

wide-spread, the frustration of ranchers began to escalate. In turn, the traditionally

friendly communication between ranchers and the energy industry began to rapidly

deteriorate. Battle-lines between these two interest groups were beginning to form. As

representatives sought to alleviate the anger of ranchers, the conflict grew ever-more

heated. For example, in Wyoming a group known as the Coal Bed Methane Coordination

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Coalition failed to keep the peace between ranching and energy producers. When the

energy industry charged the coalition with being too sympathetic to ranching and

environmental interests, it stopped funding the coalition. While the coalition still exists,

its director notes that “polarization and demonization are absolute hallmarks of drilling

for coal-bed methane” (Hardin & Jehl, 2002, n.p.). While the severity of rancher’s anger

is attributable to split-estate energy development, that anger reached its tipping point as

the BLM began “reducing the number of cattle it allows to graze on federal lands”

(Hardin & Jehl, 2002, n.p.). The likelihood of balancing the interests between the

ranchers and energy producers, as had been common in the past, is aptly described by the

BLM New Mexico’s Steve Henke, “Ranchers are losing out to the energy industry in

terms of their capability to grow grass…Stepping back though, what’s in the public

interest? It’s not that this area is unsuited to ranching. But we’ve got a world-class gas

resource here” (Hardin & Jehl, 2002, n.p.). To effected ranchers, it seemed as though the

BLM had turned a deaf ear to their complaints. However, in defense of the BLM, agency

administrators were limited in their capacity to offer affected ranchers mitigation and

remediation. This is because a shift in BLM policy and resources had occurred. BLM’s

new land-use policy emphasis was on increasing domestic energy development. Simply

put, the BLM was no longer primarily concerned with grazing or appeasing ranchers

(Wilkinson, 2005).

The unfettered pace of energy development in the West occurred on both public

and private lands and by 2003 energy development dominated western landscapes. In the

San Juan Basin of New Mexico alone, 19,000 producing CBM wells dotted the open

terrain where herds of grazing cattle had once roamed (Snell, 2003). In the rush to

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develop America’ domestic energy resources, pastoral scenes of grazing cattle on the

public domain had been replaced with the urban-like hustle-and-bustle of energy

development. The sights and sounds of energy development were unsettling to those who

had grown accustomed to serenity. Where ranchers had just a year earlier grazed their

herds, an infrastructure of active drilling rigs, thousands of concrete well-pads, miles of

pipelines, and tens of thousands of miles of roadways, where hundreds of vehicles—large

and small—rumbled throughout the day and the night, had taken their place. A modern

day tragedy of the commons in the form of energy development was beginning to unfold

across the Rocky Mountain West.

Unlike the earlier tragedy of unfettered grazing, however, energy resource

development had not been confined to the public domain. The effect on ranching

operations, some of which had been in existence for generations, elicited fierce responses

among members of the ranching community.

…ranchers like Velasquez—fiercely independent, sometimes cantankerous, and almost always politically conservative—are beginning to organize and fight back. Last year, for example, Velasquez and several other ranchers got so fed up with what they see as oil and gas development run amok that they locked the gates to their private land…The [energy] companies called official at the BLM; it was clear a rebellion was taking shape. (Snell, 2003, n.p.)

To affected ranchers, the impact of energy development went far beyond their

loss of peace and quiet. Ranchers’ list of grievances, like their anger and frustration,

grew with each new well being drilled. Toxic chemical spills, ranch gates being left

open, grazing lands scraped in 1-6 acre patches at a time, soil erosion from roads,

neglected reclamation, and the introduction of invasive weed infestations…and worst of

all, the death of cattle. The frustration and anger of ranchers, farmers, and homeowners

affected by split-estate energy development was palpable.

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In turn, ranchers sought the help of their traditional advocacy groups such as their

local Cattlemen, Stockgrower, and/or Woolgrower Associations, and Farm Bureaus.

What ranchers soon realized, however, was that while their traditional associations were

sympathetic to their plight, association advocacy on behalf of members seeking

assistance was moderated by the associations’ historical cooperation with energy

developers (Royster, 2004). As a result, effected ranchers, farmers, and home owners

began to form nontraditional advocacy organizations to confront the problems associated

with split-estate energy development. Organizations such as the San Juan Citizens

Alliance of New Mexico, the Powder River Basin Resource Council of Wyoming, the

North Fork Ranch Landowners’ Association of Colorado, and the Landowners’

Association of Wyoming began to appear across the West. In essence, ranchers began

forming nontraditional advocacy organizations with the purpose of lobbying elected

officials for assistance and reform of existing laws and regulations guiding split-estate

energy development.

Mending Fences? Western States’ Surface Owner Protection Acts

Not long after ranchers organized into their newly created advocacy groups, they

sought state legislative relief from the impact of federal split-estate energy development.

Ranchers did so by petitioning their respective state elected officials. And as tensions

rose and tempers flared, Western state legislatures began considering surface damage

statues in the form of Surface Owner Protection Acts (Earthworks, n.d).2 The central

2 Note: Surface owner protection acts are not uncommon to states where energy development is a major economic activity. For example, prior to 2000 the states of North Dakota, Oklahoma, Montana, South

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concern of the legislation is to mitigate surface damage to private lands while still

allowing for responsible energy development.

Generally speaking, most of this type of legislation had been passed in response to

the previous domestic energy boom of the 1970s and 1980s (Earthworks, n.d.). However,

in the energy boom of the 1970s and 1980s, most Western states’ energy development

had been mostly confined to public lands. Thus, by 2000, no western state other than

Montana had legislated statutory relief to offset private surface damage or economic

losses incurred by split-estate energy development. In the modern energy boom of the

late 1990s and 2000s, as the federal government pursued a course of expanding domestic

energy development, the states of New Mexico, Colorado, and Wyoming struggled to

pass their version of surface owner protection legislation (Colorado Surface Owner

Protection Act, 2007; New Mexico Surface Owner Protection Act, 2007; Wyoming

Surface Owner Accommodation Act, 2005 as cited in Earthworks, n.d.).

The newly formed landowner associations thought state protection of their surface

lands and resources was a reasonable request to make of their state elected officials.

However, state energy associations viewed state protection of surface estates a form of

unwarranted governmental interference that circumvented federal law, as well as being

economically burdensome (Associated Press, 2005a; Bleizeffer, 2004a; Bleizeffer,

2004b; Bleizeffer, 2004c; Farquhar, 2002). Energy development’s opposition was

viewed as a bit puzzling to surface owning ranchers because most surface damage

statutes are incredibly similar in that they provide state protection from unreasonable

damages to the surface estates of private landowners. Surface owner protection acts

Dakota, West Virginia, Tennessee, Illinois, Indiana, Kentucky, had all passed Surface Owner Protection Acts in one form or another.

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serve a threefold purpose: (1) to minimize harm to individual surface estate owners

affected by development of the mineral estate; (2) to minimize harm to the general public

suffered when agricultural lands, or public lands, are damaged by the development of the

mineral estate; and (3) to foster the reasonable development of the mineral estate through

the prevention of unsettled disputes between surface and mineral estate owners (Alspach,

2002).

Surface owner protection acts have the effect of altering the traditional

relationship between the surface estate owner and the mineral estate developer (Walker,

1983). On the one hand, surface owner protection acts are beneficial as they often extend

notification periods and increase liability for damage to the surface estate in excess of

existing federal regulation. On the other hand, because these state actions substantially

change the negotiating relationship between surface and subsurface estate owners,

protective legislation can have a detrimental effect on energy developers. This is because

requiring developers to address and account for potential harm specified by state

legislation is considered to have the effect of “calling into question the fiscal advisability

of oil and gas development” (Evans, 1996, p. 515). While extended deadlines affecting

surface owners are fairly common, the vast majority of surface owner protection acts

specifically prohibit damage assessments based on any speculation of real estate value

beyond established market price (Earthworks, n.d.). In their opposition to proposed

surface owner protection acts, representatives of energy producers confronted state

lawmakers with the argument that the legislative impact would have a chilling economic

effect on their ability to operate (Colorado Surface Owner Protection Act, 2007; New

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Mexico Surface Owner Protection Act, 2007; Wyoming Surface Owner Accommodation

Act, 2005 as cited in Earthworks, n.d.).

The majority of this type of legislation contains statements of legislative purpose

indicating that the legislation exists in order to further established and foreseeable state

interests.3 Thus, there is state interest in defending ranching operations as an established

economic activity, and a state interest in fostering an environment where future energy

development activity can take place. The legislative purpose sections of New Mexico,

Colorado, and Wyoming versions of surface owner protection acts also identify the use of

state police power to protect the public’s environmental welfare (Earthworks, n.d.).

Therefore, the energy development activity that does take place is performed in an

environmentally sound manner. Moreover, all western state surface owner protection

acts cite both the protection of economic interests of its ranching and farming

communities and ensuring compensation for those surface owners injured by mineral

development (Earthworks, n.d.). Finally, the legislation also contains expressions of the

state’s desire to foster a peaceful coexistence between oil and gas developers and surface

owning citizens (Earthworks, n.d.). In doing this, states employ surface owner protection

acts as means to protect the economic interests of both surface owners and energy

developers, while regulating the environmental impacts from commercial energy resource

development within their borders.

3 Note: There is no statement of legislative purpose included in the surface damage statutes of Indiana, Kentucky, Illinois, and Oklahoma.

117

While other states’ surface damage statutes have faced judicial scrutiny,4 there has

only been one test of the newly acted western states’ surface owner protection acts:

Wyoming’s. The test came months after Wyoming’s becoming the first among the

modern energy producing states of the Rocky Mountain West to pass surface owner

legislation (Associated Press, 2005b; Bleizeffer, 2005; “The split-estate,” 2006). When

surface-use negotiations between a rancher and developer broke down over a request by

the rancher for a reclamation bond of roughly $100,000, as per the new law, an appeal

was filed with the state Oil and Gas Conservation Commission. The lease’s developer

claimed the amount being requested by the rancher was “off base” and that his posted

state bond of $500, in addition to his other posted bonds with governmental entities was

“sufficient.” No matter the amount of the bonds, the energy developer claimed that

reclamation had and always would be taken care of no matter the amount of the bonds his

company had posted. The rancher disagreed and filed the appeal with the state

commission. After hearing from the party’s attorneys, the commission tossed the conflict

back to rancher and developer, encouraging them to resolve the issue of the bond’s

adequacy. A year later, the matter was resolved having been negotiated to a resolution by

the two parties. Neither rancher nor developer believed the new legislation had the

4 Note: The newly enacted surface owner protection statutes of the West are similar in construction to other states’ legislation. Therefore, to landowners advocating for state intervention on their behalf, there was every expectation to believe the newly enacted legislation would survive constitutional challenges. This is because in previous challenges, both state and federal appellate courts had declared surface damage statutes to be constitutional exercises of state powers. For example, the Eighth Circuit Court of Appeals, addressing a due process challenge to North Dakota’s surface damage act, declared the statute a constitutionally permissible exercise of state police power, in that the legislative protection of the state’s agricultural and economic well-being, as outlined in the act, is substantially related to legitimate state interests. Similarly, the Oklahoma Supreme Court rejected the assertion that the Oklahoma surface damage act was an arbitrary and capricious exercise of the state’s regulation of the public welfare. The court reasoned that, in passing its surface damage act, the Oklahoma legislature sought to balance the rights of surface owners with those of mineral owners, and that Oklahoma’s act declares that surface lands are a resource as vital to the public welfare as the minerals beneath the surface.

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intended effect of protecting their respective interests. The rancher believed that the new

law did not help him much. The developer believed the new law only benefited lawyers

(Associated Press, 2005b; Bleizeffer, 2005; “The split-estate,” 2006).

State action regarding split-estate energy development remains somewhat limited.

Not surprisingly, states’ surface damage statutes, and their modifications to common law

relationships, met with opposition from organizations representing energy development

interests. The interaction between newly created statutory remedies and pre-existing

common law remedies has been termed a “somewhat unholy alliance” (Keffer, 1994, p.

525). The primary purpose of the typical state surface damage act is to provide affected

surface estate owners with the financial means to restore their surface estate to its original

condition, or a condition as similar as possible to its pre-mineral extraction condition.

Unfortunately, the requirement of private negotiations between surface estate owner and

mineral estate owner undermines this goal. The prospect of complex and expensive

litigation results in an inequality in bargaining power between surface estate owner and

mineral estate owner (Hageman, 1993). Surface estate owners such as individual

ranchers or farmers, in other words, are typically less able to bear the economic costs of

litigation than corporate oil and gas companies. The mineral extraction industry, thus,

has little incentive to come to a nonlitigated agreement with a surface owner if the

agreement is not substantially beneficial to their interests.

Conclusion

The inability to reform federal legislation and ill-defined regulations is one of the

most troubling aspects of modern energy resource development. Specifically, reforming

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split-estate energy resource development is particularly difficult because the allied

interests of ranching and energy are firmly entrenched within the BLM’s land-use

subgovernment. Their policy partnership had grown so strong over time that each

interest had effectively entrusted their respective future to the other. Within the interest

group network of the BLM’s land-use subgovernment, the fate and future of ranching and

energy development had become inseparable. As a result, any attempt by ranchers to

reform split-estate energy development threatened the interests of energy developers.

In the fight to reform split-estate energy development, energy interests have the

legal and political upper-hand. Because law and politics favor energy development, if

ranching is ever to realize its desired reform of split-estate energy development, ranching

organizations are going to have to negotiate with their industry counterparts. Or,

alternatively, they must engage in full-blown political conflict if they are to secure their

interests.

Given the long history of ranching and energy development’s working

relationship, negotiation would seem, at first glance, the likely pathway to reform.

However, it is quickly apparent that energy is hesitant, even unwilling, to negotiate with

ranchers or ranching organizations as they had once before. This is because the energy

industry is secure in the knowledge that it has the legal upper-hand as well as the support

of elected government officials. In essence, energy developers have won over the very

same government decision-makers that ranchers had themselves once enjoyed. To say

that this is particularly galling to ranchers would be an understatement. As ranchers’

attempted conciliatory negotiation with energy and engage in political outreach to elected

120

officials, their efforts were repeatedly thwarted. In turn, their collective anger steadily

increased and their political conflict with the energy industry escalated.

As was discussed in previous chapters, the BLM, guided by existing laws,

regulations, the political mandate of a new administration, and the support of

congressional committees, began to emphasize the development of domestic energy

resources. Historically, ranchers had grown accustomed to working through the BLM

and with energy development companies to accommodate their competing interests.

However, the strategic deployment of executive powers, with the support of

congressional committees changed the domestic energy policy landscape of the BLM. In

turn, change to BLM’s domestic energy policies had the effect of disrupting the

historically friendly working paradigm between ranchers and energy developers. The

lasting effects of the modern American energy boom are illustrated by the impact split-

estate energy development had on the livelihoods of Westerners.

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Wyoming Surface Owner Accommodation Act, LB 0070, Laws of Wyoming, 2005.

CHAPTER FIVE

GOVERNANCE

“...yeah, it's a shame that the guy [energy developer] gets to come on your land, and it seems like a shame that you [surface owner] have to let him, and it seems like a shame he is really the predominant user, but you know, he really doesn't owe you anything other than to reclaim your landscape on the surface to what it was..."(Don Simpson, Director, State of Wyoming BLM).

The Voice of Government

The disruption of a subgovernment results from numerous conditions. From the

perspective of federal political appointees to the Department of the Interior (DOI), career

administrative officials within the Bureau of Land Management (BLM), and at least one

elected state representative,1 disruption of the BLM’s land-use subgovernment resulted

1 Note: (1)Bureau of Land Management (BLM) participants include Pat Shea, former Director of the BLM under President William J. Clinton; Don Simpson, State Director of Wyoming BLM; Larry Claypool, Deputy State Director of Minerals and Lands Wyoming BLM; Lynn Rust, Deputy State Director of Minerals and Lands Colorado BLM; and Tony Herrell, Deputy State Director of Minerals and Lands New Mexico BLM. (2)Department of Interior (DOI) participants include: Rebecca Watson, former Assistant Interior Secretary for Lands and Mineral Management under former President George W. Bush; and an Unnamed DOI political appointee under former President George W. Bush. (3)State Representative participation was, unfortunately, limited to one interview, that of Colorado State Representative Ellen Roberts (R-Dist.59). Numerous attempts were made and strategies employed to gain access and interview with legislative sponsors of surface owner protection acts in both the states of Wyoming and New Mexico. In either case, e-mails and telephone calls went unanswered. One reason for this might be that unlike legislators in Colorado, who are full time legislators, Wyoming and New Mexico legislators are part time legislators. Access to Rep. Roberts was gained by just showing up in her offices at the State Capital and working with her assistant to reserve a time for the interview. Even then, the time Rep. Roberts could spare was very limited and as a result, the interview is the shortest among all the

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from a variety of conditions. In the opinion of these government officials, energy

development spilled onto the privately owned surface lands of split-estate property across

the Western United States as the Bush Administration directed expansion of domestic

energy development. In turn, the leasing and permit granting of split-estate properties for

energy development disrupted the stability of the existing BLM land-use subgovernment.

Disruption of the BLM’s subgovernment effectively triggered a political conflict between

ranching and energy interests as each interest sought to protect its use of lands and

resources. Among the government officials interviewed for this research there is general

consensus that the political conflict generated competition between ranchers and energy

developers for control of the BLM’s land-use subgovernment. To these government

officials, the end result of the conflict and competition is clear: Energy interests have

displaced ranching’s dominance of the BLM’s land-use subgovernment.

Motivated by the executive and legislative decision-making referred to in

previous chapters, the BLM shifted its land management policies to emphasize domestic

energy development. Among the government actors interviewed here, each remains

deeply immersed in the evolving controversy of split-estate energy development in the

Rocky Mountain West. In the opinion of these governmental actors, the problems

associated with split-estate energy development remain complex, dynamic, and troubling.

The voices represented here are those of governmental elites; they are a select sample of

actors who interacted within the networks of the BLM’s land-use subgovernment at the

interviews conducted. Nonetheless, her viewpoint is reflective of journalistic accounts of the political battles and lobbying efforts undertaken by ranching and energy interests in the states of New Mexico and Wyoming.

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highest levels during the period of time in which domestic energy development expanded

across the Western United States.

Energy as a Policy Objective

The Bush Administration’s policy objective of expanding domestic energy

development was the result of an energy resource shortage, technological advancements,

and market costs associated with limited energy supplies. According to Rebecca Watson,

former Deputy Secretary of the Department of Interior for Lands and Minerals under

former President George W. Bush,

In 2002, 3, and 4 there was a natural gas shortage, I’m a firm believer in the market, and it was demonstrated that you had Chairman Greenspan testifying to Congress in 2003 about the impacts on the economy of natural gas shortage. Obviously, a shortage in our market economy drives up the price of natural gas. And so, natural gas was in short supply. There was a need to get it. That was something the Bush Administration was quite focused on ‘cause we were seeing the loss of chemical industries were going overseas, fertilizer industries, it was having a huge impact on the agricultural economy because all of those are heavily dependent on natural gas. Ethanol, heavily dependent on natural gas. So there was a drive, an important social goal to get more natural gas into the system. (R. Watson, personal communication, June 16, 2009) According to Ms. Watson, pursuit of energy resources increased and energy costs

were reduced by the advent of fracking and directional drilling. The difference,

according to Watson, between conventional and unconventional energy resource

development allowed for the administration to intensify domestic energy development in

areas where energy development had once been considered impossible. As Watson

notes,

The other thing that supported [development] was the Department of Energy had done research in the late 80s and early 90s on how you can

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release this unconventional natural gas. And unconventional natural gas was in tight sands, in coal, the coal-bed methane or coal-bed natural gas. And, that was something that was a huge resource, but it was not able to be developed. That began to be developed, fracking is fundamental to that, the ability of fracturing this tight rock to release the gas. And directional drilling really didn’t come until I would say 2004 or 5, that’s when they were really able to maximize the use of directional drilling. (R. Watson, personal communication, June 16, 2009) Prior to these technological advancements, development on the surface was

intense as the energy industry sought to take advantage of market prices for energy. In

essence, as government and industry responded to resource shortages in energy markets,

the pace of energy development was permitted to speed up prior to perfecting the

technology of directional drilling. As Watson observed, the combined effect of energy

markets and technological advancements led to energy development “on quite tight

spacing, lots, lots of straws to get the gas…and that intense surface development that was

different than what ranchers and surface owners were used to” (R. Watson, personal

communication, June 16, 2009).

From Watson’s perspective, it was the intensity of capturing energy resources

from unconventional areas led to the issue of split-estates. According to Watson, “The

thing that struck me the most after I left Interior was the difference between

unconventional natural gas development and conventional natural gas. And I think that

contributes to the issues of split-estate. Not so much the fact that estates are split,

because people have been dealing with that for a long time, but the fact that in order to

develop unconventional natural gas it’s much more intensive on the surface” (R. Watson,

personal communication, June 16, 2009). But, energy companies cannot drill without an

Approved Permit to Drill (APD), and, while energy development activity was on par with

the Clinton Administration, Ms. Watson notes that “what changed was the development;

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the actual issuance of permits to drill” (R. Watson, personal communication, June 16,

2009). According to Watson, “there were more permits to drill by quite a few, but again

that comes out of the fact that we’re dealing with unconventional natural gas. We, you

have to have a number of permits. For each well you need a permit. You don’t have a

permit for multiple wells until you get that directional drilling phase” (R. Watson,

personal communication, June 16, 2009).

In the early years of the Bush Administration, rising energy shortages and costs

were addressed by efforts to expand domestic energy development. This meant that

APDs had to be issued quickly. And this meant directing the BLM to expedite the APD

administrative process. In Watson’s opinion, if the Bush Administration was going to

effectively increase energy resources and lessen energy costs, the Administration would

have to increase the number of APDs being approved by the BLM. According to

Watson, “That’s why expediting energy permits was put in there. Because even with the

so-called expediting, which if you look at, it never got that expedited. It could never

meet; it could never match the demand for permits that was there in the industry. The

industry wanted permits” (R. Watson, personal communication, June 16, 2009). Legally,

the BLM is required to adhere to the National Environmental Policy Act’s (NEPA)

environmental and collaborative planning process. And as Watson notes, that process

takes substantive amounts of time with “no clock on it” and “goes for as long as it’s

needed” (R. Watson, personal communication, June 16, 2009). And, according to

Watson, “Industry never understood that. They wanted a tight clock and even though

permitting accelerated it never matched that demand. And, I don’t think I fully

appreciated [until some years into it] how unconventional gas changed things, the pace of

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development because of the permits you needed” (R. Watson, personal communication,

June 16, 2009).

The federal expansion of domestic energy development was driven by three

factors: energy markets, technological advancements, and political will-power. No

amount of political will, rising energy costs, or advancements in drilling technology

could have prepared government officials for the political conflict that emerged between

ranching and energy developers. According to a senior Department of Interior appointee

during the Bush Administration, who requested anonymity, this was particularly true of

the BLM as it responded to President Bush’s executive orders. As this political appointee

notes, “There’s no question, they [BLM] were under tremendous pressure to get these

APDs issued” (Unnamed DOI political appointee, personal communication, May 26,

2009). According to Rebecca Watson, the idea that the BLM would respond as desired

by the Administration regarding the APD approval process is “unrealistic” (R. Watson,

personal communication, June 16, 2009). In Watson’s opinion, “the idea that the

President writes an executive order and everyone snaps to and charges off, that’s just

unrealistic. But, yes energy was made a priority because the President and Cheney

thought it was a priority for our economy and our economic well-being. So that was

important and that message was clearly transmitted to people, that energy development

was a critical issue” (R. Watson, personal communication, June 16, 2009).

The scope and pace of domestic energy development would eventually lead to

increased leasing and development of split-estates lands. According to the unnamed DOI

appointee, given the historical nature of the ranching and energy alliance the fact that

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conflict arose between these two groups over split-estate energy development was

surprising. According to this DOI official:

I remember early on in 2001 that there were some landowners who were very concerned about the conflicts. I don’t think anybody was aware that there was going to be these kinds of conflicts and, too, I thought they [energy industry] would be good neighbors. From my perspective why would you go out and antagonize the ranching community which historically have been, conservative Republicans, and the oil and gas industry which has historically been conservative Republicans. Why would they [ranching and energy] go politically head-to-head and create the kind of conflict when they could resolve themselves by sitting down and working together? (Unnamed DOI political appointee, personal communication, May 26, 2009)

Creating conflict between ranchers and energy developers was an unintended

consequence of the Bush Administration’s effort to expand domestic energy

development. The origins of the conflict, as was discussed in Chapter Two, can be traced

back to the enactment of federal homesteading laws as well as federal minerals and

grazing laws. As the senior DOI official notes, “this fundamental conflict traces back to

the 1916 [Stock-Raising] Homestead Act and to the decision as to who retained the oil

and gas” (Unnamed DOI political appointee, personal communication, May 26, 2009).

Created by the Stock-Raising Homestead Act of 1916, the 58 million acres of Western

split-estate properties are emblematic of a decision made by the federal government to

retain the oil and gas. The decision to retain the oil and gas underlying the surface estates

of homesteaders was well-intentioned for its time. Good intentions notwithstanding, the

creation of split-estate properties and the federal government’s retention of the oil and

gas within the subsurface estates of those properties triggered conflict between ranchers

and energy developers in the 21st century.

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The Cozy Relationship of Ranching and Energy Development

The legislative origins of split-estates are the result of federal legislation intended

to secure mineral resources for the benefit of the public. According to Pat Shea, former

Director of the Bureau of Land Management (BLM) under President William J. Clinton,

the creation of ranching and energy development interests developed concurrently (P.

Shea, personal communication, June 2, 2009). The origin of ranching and energy’s

harmonious relationship merged into what is commonly referred to as the “strong corner”

within the BLM’s land-use subgovernment. The agreeable nature of this alliance is

reflective of each group’s vested economic interests in the public domain. The interest of

ranching and energy as well as their ability to control federal policy decisions is also a

reflection of federal efforts to regulate their dominant, but shared use of the public

domain. As Pat Shea notes,

It really strikes me that BLM reflects its (merging of ranching and energy development) origin. It really began in the 19th Century as the General Land Office and therefore, as they grew, [they] got dumped, so to speak for administrative purposes into the General Land Office. And then in 1948 when BLM was created there was an effort to consolidate. And then with FLPMA (Federal Lands Policy and Management Act of 1976) there was this sense that somehow you could put them together and in many areas that worked out quite well. (P. Shea, personal communication, June 2, 2009)

Shea also notes that the cozy relationship that emerged between ranching and energy

developers was a conflict waiting to happen as “the tension between the different

constituencies who have an economic dependency on BLM and its policies, ha[d] not

been worked out and the split-estate is legal, both by judicial decision and by statutory

legislation [and is now] a great example of that split” (P. Shea, personal communication,

June 2, 2009). The reality of split-estates is that between the competing economic

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interests of ranching’s surface-use and energy developer’s subsurface-use each interest

desires favorable political, legal, and administrative decision-making.

As was discussed in Chapter Two, from the perspective of history, governmental

decisions regarding the economic interests of ranching and energy developers

corresponded as laws, legal decisions, and regulations were developed. During the

period of time in which land-management laws were created, the economy of ranching

and energy were roughly equivalent, as was their respective use of the public domain, and

conflict was avoided. Conflict between ranchers and energy developers did not occur

until federal efforts to expand domestic energy development encroached onto private

lands where the economic interests of the two interests come into direct conflict with

each other. The conflict is perpetuated because of the vested economic and property

interests that are shared between property owning ranchers, energy developers, and the

federal government. In many instances, the types of conflicts that emerge between these

parties are the result of not having resolved the existing political, legal, and

administrative tensions inherent to split-estate energy development.

The contemporary conflict and competition between ranching and energy

development is based, therefore, upon unresolved legal, legislative, and policy questions

concerning split-estate energy development. These questions remain unresolved

because, from the perspective of administrative decision-making, regulation of split-

estate energy development is dependent on legal and administrative interpretations of late

19th and early 20th century land management legislation. Thus, the modern administrative

reality of regulating split-estate energy development is that, “in most split-estates of

competing or conflicting interests, nobody at the end of the day is going to be happy.

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The winner, if you will, is not going to be happy ‘cause they didn’t get everything they

asked for, and the loser is just going to say you made the wrong decision” (P. Shea,

personal communication, June 2, 2009). Additionally, more unhappiness results from

increased numbers of split-estate property owners throughout the Rocky Mountain West.

From the period of homesteading to the present time, most large tracts of private

ranchlands have changed hands numerous times. As ranchlands were subdivided,

mineral rights were often sold or retained independent of surface properties.

As a result of multiple exchanges of property there is little clarity regarding the

decision-making realities of owning private property in the Western United States. The

reality is that decision-making power regarding use of property, especially where the

surface and mineral estates have been split, is shared among multiple stakeholders. Once

the administrative decision has been made to develop energy on the split-estate and the

energy lease to develop the federally owned mineral estate has been sold at auction,

decision-making regarding the use of the privately owned surface is a matter of

negotiation between the surface owner and the energy developer. Here again, late 19th

and early 20th century land management legislation dictates that development of the

mineral estate is dominant over development of the surface estate. Federal and state

courts have consistently upheld the mineral estate’s dominance. As a result, the BLM has

promulgated rules and regulations that effectively shield energy developers’ vested

property interest in federal energy leases. The BLM enforces the legal dominance of the

mineral estate through administrative rules and regulations designed to protect the energy

lease as a property interest. The means by which the BLM protects the lease is by

allowing energy developers to post bond if an agreement for access and use of the surface

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estate cannot be successfully reached with the landowner. In the case of split-estates

then, mineral estates and energy leases take precedent over the private use and enjoyment

of the surface estate. Thus, while there are multiple economic and property interests at

stake in the development of a split-estate energy lease, the dominance of the mineral

estate is politically, legally, and administratively protected.

Property Rights: Decision-Making

Decision-making regarding one’s private property has never been absolute. But,

among the property owning public there is the reasonable expectation that decisions

regarding property access and development are theirs alone to make. When split-estate

energy development occurs, preconceived notions of property rights leads to the stunning

realization among the West’s property owners that shared ownership is, according to Don

Simpson, Director of the State of Wyoming BLM, “an accident [of] history” (D.

Simpson, personal communication, March 23, 2009). As Simpson notes,

When Farmer Jones or Homesteader Bob got their property and they got their 160 or their 320 or their 640 (acres), there was some reservation of in there to the United States for minerals. So now, all of a sudden, your great-granddad sells to his father, and his father sells to my friend, and then I buy half of it from him, well, I’m busy enjoying my 40 acres now instead of the 640. I don’t know your granddad that initially bought the property, and I think it’s safe to say that 9 out of 10 people who get that property, if there’s no mineral development occurring around it, probably have no clue that they’re not picking up the mineral rights. I’ll bet if you go ask a hundred people downtown or at the grocery store do they own the minerals or not, they’d probably go, “I don’t know. I have no clue.” (D. Simpson, personal communication, March 23, 2009)

Property owner confusion is compounded by what many BLM administrators call

the “urban interface” (L. Rust, personal communication, May 19, 2009). According to

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U.S. Census statistics, since the 1970s the states which comprise the Rocky Mountain

Region of the Western United States have experienced almost unfettered population

growth.2 The size of urban and rural population centers across the Rocky Mountain West

expanded as more people relocated to the Rocky Mountain West. One variable that

significantly contributed to the growth of the urban interface was the demise of large

family-owned ranching and farming lands. As generations of Americans left the life of

ranching and farming, formally large unified tracts of lands and resources were

subdivided and sold. The newly subdivided lands were then purchased by persons

relocating to the states of the West. Over time, this subdivision of land has had the effect

of confusing which estate is, and which is not, controlled by individual property owners.

Homesteading laws were designed to encourage population growth in the West.

Federal officials could not have anticipated how the West would eventually be settled.

Larry Claypool, Deputy State Director of Minerals and Lands for Wyoming BLM,

comments that “It’s interesting because you look back through history and I don’t think

the Stock Raising Homestead Act really foresaw the subdivisions and what happened in

the future. You start dividing all that stuff up and selling to each and every person and

you know, you see what’s on the surface, but what’s underneath it is lost. It just doesn’t

carry that same weight in the historical times as it does now. It just wasn’t as important”

(L. Claypool, personal communication, March 23, 2009). The subsurface mineral estate

of western ranchlands was unimportant at the time because energy sources were located

elsewhere, relatively plentiful, and more easily developed. Economically and

technologically, Western energy resources developed during the early 20th century did

2 Note: U.S. Census Bureau, 1970- 2009; Population census figures and estimations of New Mexico, Colorado and Wyoming (1990-2010) retrieved from www.census.gov.

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not overtly intrude upon public or private lands suitable for grazing livestock or growing

crops.

During the early 20th century cattle grazing dominated the economy of the West.

It is during this period of time that grazing leases were economically beneficial to the

federal government as a source of revenue. Simply put, federal revenue generated from

grazing leases outperformed revenue generated from the sale and development of energy

leases during this period of time. The economics of cattle and energy, however, only

partially help explain why energy development did not, until the present time, conflict

with ranching interests. The technological challenges associated with developing energy

resources of the time must also be considered as an additional explanation for why

ranchers and energy developers did not come into conflict for such an extended period of

time. Technologically, developing easy-to-reach domestic energy resources was

economically advantageous to the bottom lines of the oil and gas industry. This remains

true today.

Domestic energy resources that were once easy to access and develop are now

played out. The domestic energy resources that remain are sources that have remained

relatively off-limits in terms of the economy and technology of developing untraditional

energy resources such as coal-bed methane (CBM). Because of limited energy resources,

developing these nontraditional energy resources is now economically advantageous to

the energy industry. Technological advancements have been made and new, previously

undeveloped sources of energy are now available to the energy industry, and energy

developers sought to take advantage of favorable market conditions, and new

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technologies came online at roughly the same time. This turn of events allowed drillers

to develop nontraditional energy resources in previously inaccessible places.

The economics and technological advancements of 21st century energy

development coincided with political willpower favoring expanded domestic energy

development. In essence, the modern energy boom of the late 20th and early 21st century

created a “perfect storm.”3 The sale of grazing leases as a means of generating federal

revenue could no longer sustain itself in the face of the revenue generated by energy

development. As more and more nontraditional sources of energy were opened to

development, federal revenue generated by the sale of energy leases—as well as the

federal royalties derived from their development—far outpaced revenue generated by

grazing leases. From the perspective of economics, the energy boom that had begun in

the late 1990s had overtaken grazing as a means of generating revenue by the start of the

Bush Administration. And, as more areas were opened to energy development, that

development spilled over and onto the split-estate lands of Old-West ranchers and New-

West homeowners.

Energy and Urban Development

Domestic energy development is cyclical. Energy development in the West is as

infamous for its episodic energy booms as it is for the certainty in its eventual energy

busts. The boom and bust of the West’s energy cycles played a significant role in

property owner confusion over who owned what as 21st century domestic energy

3 Note: Numerous governmental and nongovernmental participants used the phrase “the perfect storm” as they responded to questions regarding the confluence of the energy market, technological advancements in energy development, and Bush Administration activities aimed at expanding domestic energy development.

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development expanded across the West. As is noted by Don Simpson, “If there’s no

mineral development occurring around it, [property buyers] probably have no clue that

they’re not picking up the mineral rights” (D. Simpson, personal communication, March

23, 2009). The West’s previous energy boom of the 1970s did not see similar conflicts

emerge between surface owners—primarily ranchers—and energy developers. One

explanation for low ratios of conflict is that during the 1980s and the better part of the

1990s, domestic energy development had waned as energy markets slumped.

Coincidently, this was also the period of time when populations across the West

experienced their most significant growth. Thus, an extended period of low rates of

energy development coincided with an extended period of population growth and urban

development. This pattern of low rates of energy development and high rates of

population growth continued throughout the first decade of the 21st century. According

to Lynn Rust, Deputy State Director of Minerals and Lands for Colorado BLM,

I’ve been in this business since 1977, so over 32 years of now of regulation of federal oil and gas and other minerals also. I’ve seen it [Western energy development] swing back and forth. In the late ‘70s oil and gas activity was very high, then you had the crash that started in the early’80s, continued through the mid ‘80s for sure, just crashed bad, its economy, people flooded out because of drop in prices, and the industry kind of went into the hole, and then it started coming back, and so it is a very cyclical industry. (L. Rust, personal communication, May 19, 2009) Thus, when contemporary population growth occurred, a new pattern of land

ownership interfaced with the historic pattern of energy development. The urban

interface referred to by BLM administrators and the rise in land-use conflict is a result of

this changed pattern of growth and development. Lynn Rust comments that “What has

changed in a lot of aspects, it used to be we, the BLM, were dealing primarily with

ranchers and the ranchers didn’t have as big of concerns, but as the West is growing more

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populated, the urban interface issue is really growing, and more and more the split-estate

issue involves private surface owners that aren’t ranchers. Out there with what I call

ranchettes, maybe 10, 20, 30, 40 acres, their little paradise. Maybe they earn their living

as an Internet cowboy right from their home” (L. Rust, personal communication, May 19,

2009). While the face of Western landownership has changed over time, homesteading

legislation reserving the right to develop the mineral estate has not.

The federal mineral estate remained legally dominant during the period of time

when the number of split-estate property owners increased. And because the mineral

estate remained dominant, the administrative rules and regulations that guide the process

of split-estate energy development remain unchanged as well. That split-estate energy

development has not been reformed by the federal government should not come as a

surprise. This is because split-estate property ownership increased during a bust-cycle in

domestic energy development. Simply stated, limited domestic energy development

meant little if any conflict with split-estate property owners. Conflict between surface

owners and energy developers does not occur until the boom-cycle of domestic energy

development returns in the late 1990s.

As the 21st century boom-cycle of domestic energy development took hold,

conflict with split-estate property owners increased. Conflict between split-estate

property owners and energy developers increased as the number of wells being drilled on

ranchlands increased. This time, however, energy developers were not just dealing with

Old-West ranchers; they were also dealing with New-West ranchers. As domestic energy

development expanded under the Bush Administration, the antiquated nature of split-

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estate energy development was ill-equipped to avoid triggering conflict between ranchers

and energy developers.

Administrative Procedure for the Development of Energy

Today when parcels of land are nominated for sale by energy interests, a detailed

process of land management planning is begun by the BLM. Once the land management

plan has been approved the auction and sale of the energy leases takes place. Prior to the

lease sale the BLM is required to give 45-day public notice of the impending lease sale in

order for any protests to be weighed by the BLM’s field office. The cut off for filing a

protest is 15 days prior to the lease sale. However, BLM notification of individual

landowners affected by the lease sale is not required. This means that owners of split-

estate properties where energy development has been proposed are not contacted directly

by the BLM prior to the auction and purchase of energy lease(s).

According to Lynn Rust, “We [BLM] publish it in the Federal Register. We post

the list in our public room(s). We put out press releases. We mail individual booklets to

anybody. They cost five bucks. Who wants one? We also send a letter to each county

commission that has parcels for sale, notifying them. We also notify each Oil and Gas

Conservation Commission liaison in each county and they post them to their website. So,

we [Colorado] go quite a bit beyond what we’re required to do as far as trying to get

notification out there” (L. Rust, personal communication, May 19, 2009). Consequently,

split-estate landowners must be attentive to BLM public notifications of impending lease

sales should they wish to file a protest. Again, according to Lynn Rust, “As far as the

split-estate issue, there is still concern. Some of the property owners are calling for [is

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that] they want to be individually notified that parcels under their property are going to be

put up for sale. But at this point, that’s not required” (L. Rust, personal communication,

May 19, 2009). According to Rust, “[That] would be a difficulty on us because we don’t

track private property transactions. In other words, if somebody owned 640 acres out

there and decide to subdivide it to 40-acre ranchettes, we don’t know that: We only know

there’s still one guy who owns 640 acres” (L. Rust, personal communication, May 19,

2009).

Unless new property owners throughout the Rocky Mountain West understand the

history of their property’s ownership, and are attentive to any potential energy lease sales

occurring in their area, they would likely be unaware of their subsurface estate being sold

at auction for the purpose of developing energy resources. These property owners remain

unaware of their property’s potential for energy development until, as required by law, a

representative of the company, commonly referred to as a “land-man,” contacts the

property’s owner by certified letter. Once contacted, property owners have 45 days to

respond to the company’s notice of intended exploration and development. At the same

time, the company seeks the required Approved Permit to Drill (APD) from the BLM if

the mineral estate is federally owned. Once the APD has been approved, an onsite pre-

drill inspection occurs where the surface owner is invited to attend either by the BLM or

the developer.

It is during the predrill inspection that a surface owner can express any concerns

to the BLM administrator regarding the proposed development activity (L. Rust, personal

communication, May 19, 2009). In addition to predrill inspection the BLM also requires

that either a signed Surface Owner Agreement or a certification that there is an agreement

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in place, be filed with the agency. The BLM “encourages the industry [to] get a Surface

Owner Agreement worked out [because] we don’t want to have to go to the bond on

process” (L. Rust, personal communication, May 19, 2009). As was discussed in Chapter

Four, if a Surface Owner Agreement cannot be reached, energy developers can simply

post a bond to access the privately owned surface estate.

The consensus opinion among BLM administrators is that “bonding on,” as the

process is commonly referred to among those familiar with the process, is rare. And

while DOI appointees and BLM administrators expressed concern over how surface

owners were being treated by energy developers, BLM administrators were adamant in

expressing that they had “no role” in the negotiation process (R. Watson, personal

communication, June 16, 2009). Thus, when it comes to negotiations over Surface Use

Agreements, BLM administrators do not engage outside the legal boundaries of mandated

legal oversight because, “The regs follow the law, fair or not. If somebody needs to

change it, the law needs to be modified” (D. Simpson, personal communication, March

23, 2009). Until the law is reformed BLM administrators will continue to be “good

soldiers” as they respond to the “political agendas of Congress and of whatever

administration, whoever is in the White House. [Because] each administration looks at

things in their own way” (L. Rust, personal communication, May 19, 2009). Or, as

Rebecca Watson quipped, “Yeah, they [BLM administrators] don’t want to be involved

in blessing or cursing people’s ills” (R. Watson, personal communication, June 16, 2009).

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Unregulated Surface Owner Agreements

The conflict between surface owning ranchers and energy developers is most

apparent during the period of negotiation to secure a Surface Owner Agreement. In the

past, ranchers and developers had amicably resolved differences, creating the conditions

for energy development to occur. Because the BLM had been politically directed to

emphasize domestic energy development during a period of rising energy market prices

and technological advancements in energy resource extraction, developers urgently

sought to take advantage of the favorable conditions. In doing so, some companies and

their representatives were overly aggressive in their approach to negotiating Surface

Owner Agreements with split-estate property owners. Often companies sent land-men

from other states such as Oklahoma and Texas to Western states to negotiate the terms of

the agreement. Energy development in Oklahoma and Texas differs from the West in

that split-estate federal ownership is a rarity, so these representatives were unfamiliar

with federal requirements as well as Western traditions regarding energy development on

privately owned ranch lands.

Unlike previous time periods when the traditional alliance of ranching and energy

development worked well, there is now a cultural difference that divides ranchers and

energy developers. According to Tony Herrell, Deputy State Director of Minerals and

Lands for New Mexico BLM, “There’s a cultural difference” (T. Herrell, personal

communication, May 20, 2009). From Herrell’s perspective of oil and gas developers,

“It’s fast-paced; they have so many things to put in place. It’s a very complicated

process. Between the environmental permitting government agencies like ours, and the

bureaucracy that goes with it, it’s very frustrating for them. And so they feel kind of

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blocked from it [energy resource], so it does feel like a real battle from their perspective”

(T. Herrell, personal communication, May 20, 2009).

From Herrell’s perspective, energy developers are more likely to be concerned

with “permits, lawsuits, and not being able to develop here, or actually being in court” (T.

Herrell, personal communication, May 20, 2009). As Herrell has observed, when

negotiations begin “[Industry is] talking usually about money and costs, the survivability

of the company.” Ranchers, on the other hand, have different concerns, “[They] usually

talk about family; they talk about your family; they ask how you are doing, and then

eventually they’ll get down to business” (T. Herrell, personal communication, May 20,

2009). In Herrell’s opinion, “When you sit down at the table with different groups of

folks, you can see the train wreck that can happen. They’re [industry] feeling desperate;

they need to get some cash flow, and if they have a known resource that they know they

can make some money off, they’re wanting to get in there and get the deals signed, and

the rancher wants to think about it for a while, and so you can see the train wreck. You

can feel it when you’re around them” (T. Herrell, personal communication, May 20,

2009).

Most split-estate surface landowners are treading across unfamiliar legal and

regulatory territory. The less experienced the ranch owner is the less likely he or she is to

be intimately acquainted with the legality and regulatory requirement of energy

extraction. As Rebecca Watson notes, “[Ranchers] are sophisticated. They understand

their land, what mineral rights they have and don’t have. These ranchette buyers aren’t

sophisticated” (R. Watson, personal communication, June 16, 2009). Unfamiliarity with

the law is problematic for split-estate property owners because compensation for

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nuisance issues or economic losses associated with energy development activities is not

regulated with any specificity.

Specific compensation remains unregulated because, as was argued in Chapter

Two, Surface Owner Agreements are composed from the liberty-of-contract legal

paradigm where the property interests of the parties are theirs to protect through

contractual negotiation and agreement. For example, in the opinion of Rebecca Watson,

That’s the big question. The rule of law is what our country was founded on. The other thing our country was founded on was property rights…that ability to own a piece of land gave [people] power and liberty as a citizen. They could make their fortune. They had a voice in government. And those are very fundamental, important, concepts. If we lose those then anything can happen and so I think that, yes, you enter into contracts with people, but I think that anyone would agree in a contract situation that you need information; you need understanding of the laws in order to do that properly. But I think on both sides of it, both sides again have property rights. Those property rights are protected via a contract and you should be bargaining together, have the information you need and come to an agreement that works for both sides of it. And then that agreement should be respected. I think it’s fundamental for our country and what makes us different than a despotic regime in other places where government can decide to take property or to destroy contractual relationships. (R. Watson, personal communication, June 16, 2009)

Defense of one’s interest is dependent on familiarity with the law and most split-estate

landowners, when first approached by the energy developer, lack any understanding of

the laws or regulations that guide split-estate energy development. The advantage then

goes to the party who best understands the law and, as is most often the case; the

advantage in negotiating Surface Use Agreements is with the energy developer’s

representative: the land man.

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Land Men and Split-Estate Property Owners

Unfamiliarity with western social traditions among land men from other parts of

the country created animosity with ranchers. As noted by Rebecca Watson, “I think that

in the rush to develop natural gas, the bringing in of some of these people that were not

familiar with the culture of the West from Texas and Oklahoma, people’s toes were

stepped on, people were treated poorly and people talk in small western states and that

created some problems” (R. Watson, personal communication, June 16, 2009). While

energy developers were at times their own worst enemies when it came to approaching

split-estate landowners, Watson still believes that “By and large the oil and gas industry

tries to have a very good relationship with ranchers.” Given the pace and scope of energy

development occurring on split-estates the historical relationship between ranching and

energy is at risk if land men, representing the interests of the energy company, do not act

in a responsible manner when negotiating Surface Use Agreements with property owners.

According to Watson, “Most companies, responsible companies, understand and work

hard at [maintaining the relationship]” (R. Watson, personal communication, June 16,

2009). BLM administrators are quick to note that erosion of the traditional notion of who

is a rancher and who is not a rancher has made it difficult for energy developers to

maintain the friendly nature of their relationship with ranching communities.

If the pace of domestic energy development continues to steadily increase, energy

developers are going to have to account for how their representatives interact with

landowners. As Lynn Rust notes,

First of all, there’s always room for improvement, and again, your smart companies, they figure it out pretty quickly, the best way to be operating. Obviously you’re going to interact with an old rancher who has been out there, you know, since Christ was a corporal as you are with a fairly new

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subdivision of 20-acre ranchettes of basically urbanites who wanted to escape the city and live out in their paradise. If I were a major corporation, say wherever, based out of Houston, I would never send people out of Houston to go talk to these people, never…As far as dealing with the United States, it would be don’t lie to us, which, you know, I’ve had that done to me. ‘Oh, yeah, we’ve got this [Surface Use Agreement]; no problem.’ Then you find out that’s not the case. I’ve been met with a gun before because the operator said, ‘oh yeah, we’ve got a Surface Owner Agreement, yeah, yeah.’ We [BLM] go out there and it’s like ‘who the hell are you? Wait a minute.’ So….. (L. Rust, personal communication, May 19, 2009)

In the opinion of others, the animosity cuts both ways. Often, because of the unregulated

nature of Surface Owner Agreements, a relative minority of split-estate property owners

will attempt to take advantage of a developer’s desperation to develop the energy

resource prior to a drop in market price. For example, according to Don Simpson, other

than the “5 people [that] squawk [among] the other 5,000 [that] don’t,” or the “5 percent,

or whatever, that were kind of thinking I want more than that saying ‘My God, this

company comes on my land and they’re making millions of dollars, and I get, you know,

they replace my gate and build a pond for me.’ So I think there was a vocal minority”

(D. Simpson, personal communication, March 23, 2009).

To other BLM administrators and at least one state elected official, the term

“minority” is a relative term. In some instances, animosity and conflict is relative to the

scope and pace of the energy’s development within a particular area. These areas are

where the nature of the energy’s development is in direct conflict with ranching interests

and, as a result, where animosity is most palpable. For example, in Colorado, where the

urban interface is greatest, the level of conflict depends on where the energy development

is taking place. Colorado State Representative Ellen Roberts (R-District 59) noted that,

“La Plata County is the largest producer of natural gas in Colorado [and] most of the

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production has been on private lands” (E. Roberts, personal communication, March 25,

2009). In her experience, conflict between ranchers and energy developers was not

limited to a relative minority of constituents. When asked whether she agreed with the

assessment that conflict was limited to just a small, rather vocal, group of dissatisfied

persons, Rep. Roberts responded, “No, no, I don’t agree. Whether it’s the noise, the dust,

the trucks on the road, whatever, there will be a day when they leave, and my concern

was the public health and the historic background that the mineral owner had the

dominant power, and things that people were willing to sacrifice 100 years ago, I don’t

think people who live here today are willing to sacrifice that” (E. Roberts, personal

communication, March 25, 2009). Residents of the West are unwilling to sacrifice the

benefits they derive from their lands to benefit energy companies. The perception of

inequity is particularly true regarding the energy industry among residents impacted most

directly by intensified energy development.

There are pockets where conflict between energy developers and ranchers is more

widespread (D. Simpson, personal communication, March 23, 2009). In New Mexico,

animosity is relative to the personalities and belief systems of the persons interacting with

each other, and, when agreements cannot be reached amicably the conflict oftentimes

gets “personal” and “emotional” as the issue “usually comes down to control of the land”

(T. Herrell, personal communication, May 20, 2009). According to Tony Herrell, “85

percent of land management is emotion management.” For example, Herrell notes that,

Usually, they [energy developers] get a landowners agreement. It’s worked out. When it’s not, a lot of times it’ll be a surface owner saying, ‘this company here can come in my land, or this company here can come in my land, but that company can’t. Or sometimes it gets so personal that this person cannot come; your company is okay but these two or three, they can never step foot on my property again, and…what I’ve honestly

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come to believe is land brings out emotion in people, and control of the land is something that they’ve always had range-wars over, and we’re still having modern-day range-wars, whether it be through split-estate or through the court system. The real issue is about control of the land and what happens on it. (T. Herrell, personal communication, May 20, 2009)

In controlling for the emotions of conflicting interests in how the land is going to be used

and with whom the greatest control over those decisions is kept, according to Pat Shea,

BLM administrators who are adept at balancing the interests and decision-making are

essential. In Shea’s opinion, if the political conflict between ranching and energy

developers is to be avoided and the stability of the relationship within the BLM’s land-

use subgovernment maintained, BLM administrators must be “really, really good in terms

of balancing out the interests and keeping everybody around the table” (P. Shea, personal

communication, June 2, 2009).

In former Director Shea’s opinion, balancing the interests in use and decision-

making is lost when administrators favor one use over another. As Shea notes, “Literally

in 2001, it [APDs] went from 800 for Sublette County [Wyoming] up to 2,000 and 4,000,

and then in just one area the high number was 9,000 per year. So it just blew everything

apart and when that happens the other responsibilities of both statutory and regulatory

integrity go out the window. The feeling of the other constituencies be they ranchers or

recreationists is, ‘we don’t count at all’” (P. Shea, personal communication, June 2,

2009). Shea’s claim is supported, in part, by how some administrators interpret the

dominance of the mineral estate in relation to the interests of surface owners. Generally

speaking, all BLM administrators express concern with how surface owners are treated

by industry representatives. Their concern, however, is tempered by the legal dominance

of the mineral estate. As Don Simpson noted,

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When the law tells us what’s the dominant estate, then we write the regulations, we have to protect that, that dominant estate. I don’t know if protect is the right word, but we have to honor it or recognize it. But what we also want to do is not have them run over the surface owners. What does the public think; what does the livestock, landowner think [about the fairness of the mineral estate’s dominance over the surface estate]? All we want to know is did you [energy developer] make a deal with the landowner, and if they say ‘yes,’ we’re good, either that or bond. (D. Simpson, personal communication, March 23, 2009) Federal law and regulation of split-estate energy development favors energy

development interests. If the balancing of ranching and energy interests is to be retained

in land-use decision-making the BLM must have the capacity to protect the interests of

the surface owner as well as those of the energy developer. Currently, the scope of the

BLM’s protective oversight of split-estate surface properties is limited to pre-site

inspection and post-development monitoring. Monitoring and enforcement beyond the

federally mandated environmental protection and reclamation laws—most often

addressed during the proposed energy development planning period—BLM oversight of

split-estate energy activity is sporadic. Generally speaking, administrative oversight

beyond what is required by federal law only occurs at the request of the surface-owner.

Legal protection of the mineral estate’s development as the preferred use of the

land makes balanced administrative oversight of split-estate energy development difficult

if not impossible. The role of a BLM administrator prior to energy activities taking place

on split-estates is very limited. The assistance of a BLM administrator is most often

requested only when energy activities have already begun and something goes wrong.

This is problematic because problems that might have been addressed by the surface

owner during the Surface Use Agreement negotiation, or in the pre-site inspection, do not

benefit directly from BLM administrative expertise. In turn, when problems do occur,

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BLM administrators are held responsible for assisting in resolving the conflict that

emerges between rancher and energy developer.

BLM Oversight and Federal Revenue

As domestic energy development expanded, administrative resources of

the BLM strained to comply with their mandated oversight of energy activities.

The preferred policy objective of the Bush Administration was to expand

domestic energy development. BLM resources, however, did not increase as

energy development expanded. As a result, while the number of acres under

development increased to historical levels, BLM oversight of energy development

activities declined. Having been directed by the President and his political

appointees to expedite the APD approval process, BLM administrators found

compliance with mandated oversight responsibilities difficult to achieve. In the

opinion of BLM administrators, operating under the context of a political mandate

to expand energy development, BLM lacked sufficient resources to expand

administrative oversight of energy activities.

Disbursement and designated use of federal resources by federal agencies

is a matter for Congress. If a shift in policy direction is to take place, budgets

must shift along with the objective being sought. According to Don Simpson,

We shift all the time, but we don’t shift the money. Congress gives us line items, so I would say in the last 10 years, or some period like that, [funding for] range [management] has gone down; recreation has gone down; oil and gas has gone up. Those were line items from Congress, they reprioritize our money, then our boss, the Secretary of the Interior, passes them down to the [state] director and says ‘Here’s the priorities,’

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and they [priorities] just kind of bounce around, so it depends on what’s going on. (D. Simpson, personal communication, March 23, 2009)

Larry Claypool, Simpson’s assistant director, clarifies that the shift in resources that

occurred during the Bush Administration was “the shift, in the APDs, the big shift in the

APDs, the major shift is probably our pilot offices4 in that we hired additional people to

take care of that extra workload in the permit area” (L. Claypool, personal

communication, March 23, 2009). Shifting the administrative priorities of the BLM to

expedite APDs had the effect of creating a backlog of regulatory compliance oversight in

the field. In part, this is because agency budgets are created in years prior to any

politically mandated shifts in policy priorities. There is a significant lag-time between

BLM submitting a budget based on projected needs and requesting funding to meet

immediate needs should a shift in administrative priorities occur.

Budget lag-time worked against BLM administrators’ capacity to monitor energy

activities. A June 2005 Government Accountability Office (GAO) noted that energy

permitting activities tripled from 1999-2004 (Government Accountability Office Report

(GAO-05-418), 2005). BLM permitting in 1999 accounted for 1,803 APDs being issued.

By 2004 the number of approved APDs numbered had risen to 6,399 per year and was

climbing. GAO noted that “BLM officials in five out of eight field offices that GAO

visited explained that as a result of increases in drilling permit workloads, staff had to

devote increased time to processing drilling permits, leaving less time for mitigation

activities, such as environmental inspections and idle-well reviews” (Government

4 Note: The pilot offices Mr. Claypool is referring to are offices within close proximity to fields where the greatest energy development activity is occurring. The BLM pilot offices are unique features of land management agencies in that they are devoted to no other administrative function other than that of oil and gas development.

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Accountability Office Report (GAO-05-418), 2005, p. 1). The report further noted that

four of the eight BLM field offices “reported that the most significant impact of policies

to expedite and manage oil and gas development was the increased emphasis that some of

these policies placed on processing permits, which in turn resulted in shifting staff

responsibilities away from mitigation activities” (Government Accountability Office

Report (GAO-05-418), 2005, p. 1). Thus, a change in the presidency and the support of a

friendly Congress led to changes in BLM’s management of domestic energy policy.

The BLM’s response to executive branch directives emphasizing the expansion of

domestic energy development altered the agency’s administrative priorities. In response

to Executive Orders # 13211 and 13212, APD backlogs and new APD application were

being addressed by BLM administrators. In turn, a backlog in the monitoring and

inspection of energy activities was created. While the executive branch had effectively

shifted the energy policies of the BLM, Congress was slow to respond in allocating funds

to balance BLM workloads. As Don Simpson notes, “Okay, so you’ve [Congress] got

enough money here and you’ve told us this should account for some number of APDs.

Well, guess what? It does, but as we add 5,000 more APDs per year to manage the

compliance workload is going up by that amount. So we run back and say, ‘Well, that’s

not enough money. You’re funding the front part, but not the back part’” (D. Simpson,

personal communication, March 23, 2009). The lack of funding was not, however,

simply the result of the BLM responding to executive branch policy objectives. Congress

too had a role to play in creating the administrative imbalance.

A Republican-dominated Congress reacted favorably to Bush energy policy

objectives. According to Rebecca Watson,

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You have to remember how the federal government works. Congress, in the Constitution, is given authority over public lands and Congress also, of course, controls the budget. So, Congress and the White House were in concert in their belief that natural gas supply was diminished and we needed more natural gas. Congress reacted by focusing on energy and the Energy Policy Act. The Bush Administration, from the very beginning was focused on energy and the need to supply domestic energy. And then the budget reflected that and the Bush budget drives policy and it’s the budget that reflected the need for more money to develop natural gas and other energy and Congress passed those budgets. (R. Watson, personal communication, June 16, 2009)

Political control of both the BLM’s administrative activities as well as their budget, in

part, helps explain how the BLM shifted resources toward energy development activities.

It is common that elected officials, and particularly appointed officials, understand

controlling the budget means controlling the agency. As former BLM Director Pat Shea

notes “I came away from my experience in the department [Department of Interior] and

in BLM absolutely convinced that the only way a political appointee can make a

difference is by the control he or she took of the budget. You could make all sorts of

administrative changes, and there would be temporal victories, but the real sustainable

victories were the ones that you put into the budget” (P. Shea, personal communication,

June 2, 2009). If a political appointee’s control of an agency’s budget sustains policy

change, it can be surmised that in carrying out President Bush’s executive orders, BLM’s

policy and budgetary priorities shifted away from ranching activities and toward energy

development activities.

There is greater economic return to government on developing domestic energy

resources than from ranching activities. While Rebecca Watson insisted that “There was

no directive [to the BLM] to raise money” she also notes that as a result of market forces,

government’s economic gain from developing energy resources is “just the byproduct”

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(R. Watson, personal communication, June 16, 2009). According to Ms. Watson, the

Bush Administration’s message was not “go out and drill gas to raise money” because

federal revenues from energy activities, when compared to other sources of revenue are

relatively minor. As Watson notes, “Yes, natural gas and oil and coal and other mineral

resources bring in billions of dollars to the Federal Treasury, but that’s a pimple

compared to the money that’s raised through taxes” (R. Watson, personal

communication, June 16, 2009). While decision-makers were mindful of the impact of

raising monies through energy development, DOI appointed officials laid significant

blame at the feet of the Office of Management and Budget (OMB) for the inequitable

distribution of financial resources between ranching and energy. According to the senior

DOI appointee,

You’ve got to remember, you had the Office of Management and budget that absolutely detested grazing on public lands. I mean, they do not like it. They never have. They don’t think ranchers pay fair market value. So you’ve got an OMB that’s going ‘Fuck them. I’m not going to increase the budget for them. They’re not paying fair market value. They want us to give them more money and to graze more and do more damage to the land.’ So even though Interior would always ask for more money, the OMB would cut it back. (Unnamed DOI political appointee, personal communication, May 26, 2009)5

Rebecca Watson also noted those problems with OMB and the allocation of resources to

the BLM for sustaining ranching activities is difficult to achieve. As Watson echoed, “I

mean there’s a whole other story about OMB and their role and what they do and who the

people are at OMB and what kind of decisions they make on all manner of issues. That’s

a whole other debate” (R. Watson, personal communication, June 16, 2009). In some

instances, according the unnamed DOI appointee, OMB baulk at funding energy

5 Note: Fair-market value regarding monies paid by industry for energy leases averages $2.00 per acre.

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development as well. The appointee notes that “The Buffalo [Wyoming] field office was

predicated on the fact that if you [BLM] give them [energy developers] more APD

approvals, you’ll [government] get more royalties, so OMB are you stupid? The state’s

[Wyoming] out there draining the hell out of you producing oil and gas from their state

lands, and their draining the federal reserves, and your losing as much as 80 million

dollars a year by not granting more APD reviewers to get these wells permitted so that

you don’t get drained by the state” (Unnamed DOI political appointee, personal

communication, May 26, 2009). BLM administrators did not take a position on the OMB

debate, but they too regarded energy market forces as a significant factor in creating

resource disparity between ranching and energy. BLM administrators were, however, as

mindful as their DOI counterparts about the desirability of raising federal revenues from

domestic energy development.

BLM administrators are mindful of their role in raising federal revenue from

energy activities. If energy companies can extract and develop energy resources when

prices are high, elected officials seek to take advantage of the market price as a means of

deriving revenue. As Lynn Rust notes, “Price is a big thing with it. So many people

talked about well, the Bush energy policy. It’s all about price. If companies can make

money out there, they’re going to go out there and drill and produce. If they can’t,

they’re going to go elsewhere” (L. Rust, personal communication, May 19, 2009).

Administrators like Rust are also mindful of the effect of elected officials seeking to pad

the bottom-line and make up for any budgetary shortfalls that might befall them in the

future. As Rust comments, “There’s a lot of revenue that they [federal agencies] know

the federal government is dependent upon particularly in the current [2009] budget

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situation that’s occurring, they’re really looking carefully at it. They’re [elected officials]

looking for every dime they can find” (L. Rust, personal communication, May 19, 2009).

In states where energy resource development is greatest, such as Wyoming, the

emphasis on the subsurface estate’s capacity for raising revenue is particularly acute. For

example, Larry Claypool notes that from the perspective of history, which estate derives

more governmental revenue has changed. The surface estate is no longer viewed as the

revenue producer it had once been. In Claypool’s opinion,

You [government] own the land. Poof [Stock-Raising Homestead Act of 1916]. The rancher owns the surface. The surface, it’s there, but it just didn’t carry the same weight in historical times as it does now. It just wasn’t important. And it is interesting that back in the early 1900s the government saw at that time the start of the production of oil and gas. I was really surprised they [federal elected officials] thought this [federal government retaining ownership of the mineral estate] was a wise move; let’s keep those minerals for the government, and kudos to them [federal elected officials] that they foresaw that and took the steps to put that [mineral estate] back in the government’s hands. It was a good move. (L. Claypool, personal communication, March 23, 2009)

Currently, and for the foreseeable future, expanding domestic energy development will

produce greater governmental revenues than will ranch activities. And, when the

political objective is altered to take advantage of economic opportunity, the BLM shifts

its policies as it responds to the political objective being sought. As Don Simpson notes,

We have congressmen, we have senators, we have the president, and they all dictate through funding, through priorities, through executive orders, through laws, through regulations, how it is that we should behave. Well, and the forefathers reserved it [mineral estate] for all of us, and those that have passed laws since then said, ‘Use it.’ I mean, the laws mostly say ‘use it.’ They don’t say ‘hang on.’ So, I think it’s pretty clear that for a couple of hundred years that’s kind of been the marching orders and we’re [BLM] the intermediary, I guess, to stand back and step in when asked. (D. Simpson, personal communication, March 23, 2009)

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In the modern energy economy the political, legal, and administrative behavior of

governmental entities will continue to favor the development of domestic energy

resources over the economic interests of ranching. And as the BLM responds, the

interests of energy within the subgovernment of the BLM will become further

entrenched. That energy interests will be the focus of governmental entities at all levels

of the federal government does not bode well for the future interests of the ranching

community.

Conclusion: Disruption of a Subgovernment

Disruption of the BLM’s land-use subgovernment was triggered by the Bush

policy of expanding domestic energy development. In response, the BLM shifted their

policies and resources in a manner that favored the interests of energy developers. The

expansion of domestic energy development then spilled onto split-estate lands in a

manner favoring energy interests. In turn, conflicts began to emerge as more split-estate

lands were developed for their energy resources. Simply stated, as split-estate energy

development multiplied it triggered conflict and competition between ranching and

energy.

As most government officials note, the dominance of the federally owned

subsurface mineral estate in the context of federal land management is legally protected

and problematic. Federal regulations guiding split-estate development reflect the legality

of federal leasing and permitting of the subsurface. Due to the legal and regulatory

protection of the mineral estate’s dominance, animosity between ranchers and energy

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developers emerged. Thus, conflict over control of the land and its use established the

conditions for a political conflict to emerge between ranchers and energy developers.

Multiple factors affect the development of energy resources. Thus, while

disruption of the BLM’s subgovernment is the result of Executive Branch actions, the

conflict between ranching and energy is the result of where and how the energy is

developed. In this case, the conflict between ranching and energy centers on split-estate

energy development. The ability to access large, undeveloped, untraditional, energy

resources such as Coal-Bed Methane (CBM) coincided with the unified political will of a

Republican-controlled federal government and spilled onto split-estate lands across the

Rocky Mountain West. In the rush to develop energy resources, the federal government

enforced and defended the mineral estate’s dominance over the privately owned surface

estate. In turn, ranching interests wrestled with the new reality of energy development’s

ability to affect the politics of land-use decision-making.

While government officials recognize that “there are a lot of forces at work on

grazing” (R. Watson, personal communication, June 16, 2009), the general consensus

among this group of actors is that the legal dominance of the mineral estate and its

exploitation for energy resources has had a detrimental effect on ranching’s once-

formidable influence on the BLM’s subgovernment. The depth and breadth of power

wielded by ranchers is illustrated by Rebecca Watson’s comment, “They have a voice

that is still listened to even though economically they don’t play the same role. They

play an important role in the West’s culture. They have a strong voice, they wear the

white hat. They mean something to a lot of people.” There was also general consensus

among government actors that ranchers could, should they choose to organize with other

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interests, gain the upper hand in reforming the dominance of the mineral estate in split-

estate energy development (Interviews collectively).

Another dimension is that government officials also believe that energy

developers have a difficult task made more difficult with “the complexities, the issues, all

the things they have to consider” (L. Claypool, personal communication, March 23,

2009). Pat Shea notes that “there’s no mutuality of economic interests” between ranching

and energy, and in many ways this economic reality allows, even encourages, energy

development to retain their upper hand within the BLM’s subgovernment (P. Shea,

personal communication, June 2, 2009). Finally, there is general consensus among the

governmental actors that the political conflict that eventually emerged between ranching

and energy could have been avoided if the trust between the two groups had not broken

down (Interviews collectively). The conflict and competition between ranching and

energy interests, addressed in the next two chapters, is an exploration into how the

interests strategized and deployed resources as they sought to control the land-use

subgovernment of the BLM.

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References

General Accountability Office. (2005, June). Oil and gas development: Increased permitting activity has lessened BLM’s ability to meet its environmental protection responsibilities (GAO-05-418).

CHAPTER SIX

ENERGY DEVELOPERS

“…industry [energy] confuses the heck out of the BLM. I mean, it’s government. It can’t stay ahead of all that’s going on.” (Kathleen Sgamma, Director of Government Affairs, Independent Petroleum Association of Mountain States).

The Voice of Energy

Changes in domestic energy policy triggered heightened conflict and competition

between the formerly allied, strong, and resource-rich members of the Bureau of Land

Management’s (BLM) public lands subgovernment: Energy and Ranching. From the

perspective of energy industry representatives across the states of New Mexico,

Colorado, and Wyoming, the heightened conflict and competition with ranching resulted

from variety of conditions.1 In the opinion of these industry representatives, the

expansion of domestic energy development was the result of political will-power, energy

market forces and technological advancements. There are, however, differing opinions

1 Energy Industry participants include: (1) Kathleen Sgamma , Director of Government Affairs for the Independent Petroleum Association of Mountain States (IPAMS); (2) Bob Gallagher, former President of the New Mexico Oil and Gas Association (NMOGA); Note: Bob Gallagher was dismissed from his position following his 2009 interview (confirmed by NMOGA on January 28, 2010). His dismissal was not the result of comments made during the course of the interview as neither the recorded interview nor its transcript has ever been made public before now. (3) Stan Dempsey, President of the Colorado Petroleum Association (CPA); (4) Bruce Hinchey, President of the Petroleum Association of Wyoming (PAW) and former Speaker of the House, State of Wyoming Legislature.

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regarding the extent to which split-estate energy development triggered conflict and

competition between itself and the ranching industry. For example, while there is general

consensus among industry representatives that expanding split-estate energy development

did impact the stability of the energy-ranching alliance, there is disagreement concerning

the extent to which the alliance has been strained. There is also disagreement regarding

how or why the conflict with ranchers became as heightened as it did as split-estate

energy development expanded across the Rocky Mountain West.

Representatives of the energy industry clearly believe that split-estate energy

development triggered conflict with their ranching brethren. Their opinions, however,

are mixed concerning how the conflict happened. They have equally varied opinions

regarding the degree to which the conflict has impacted the energy industry’s control of

the BLM’s land-use subgovernment. Some industry representatives are of the opinion

that problems associated with split-estate energy development are complex, dynamic, and

troubling. They also share the opinion that the conflicts created by those problems are

infrequent, emotional, and exploited by other interests. Finally, there is no agreement

among industry representatives over the question of whether, as a result of their conflict

with ranchers, their industry achieved dominance of the BLM’s land-use subgovernment

away from ranching.

The voices represented here are those of energy industry elites who offer their

perspective on the conditions that led to conflict with the ranching industry. They are

defined as elites because they are a select sample of actors who interact regularly with

other interest groups and government entities that compose the networks of the BLM’s

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land-use subgovernment. These elites were active representatives of their industry’s

interests at the height the energy industry’s conflict and competition with ranching.

Shifting the BLM’s Energy Policies and Resources

Conflict and competition among interest groups interacting within a

subgovernment is not unusual. What is unusual, however, is when the interests of two

elements of an historical alliance within the subgovernment collide. In the case of the

BLM’s land-use subgovernment, the historically allied interests of the energy and

ranching industries collided as the BLM shifted its policies and resources away from

ranching and toward energy. The shift in the BLM’s energy policy was, in part,

politically motivated. As was previously discussed, energy markets and technological

advancements in the extraction of nontraditional energy resources also played a

significant role in shifting the BLM’s energy policy. According to Bob Gallagher, former

President of the New Mexico Oil and Gas Association, “Just previous to the 2001 [Bush]

executive orders, the eight years of the Clinton Administration were tough, tough years

for the industry. [After the 2000 election of Bush] there was a more determined effort to

see the domestic oil and gas industry come out of the ashes, and come out strong, and

[energy development] just needed the political will, and that was provided by the

administration” (B. Gallagher, personal communication, May 21, 2009). Gallagher

further notes that prior to the 2000 election, energy markets as well as technological

advancements aided in expanding domestic energy development and he refers to the

combination of those conditions as “the perfect storm” (B. Gallagher, personal

communication, May 21, 2009).

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Other industry representatives do not necessarily agree with the assessment of the

scenario as a “perfect storm.” Other industry representatives discount the effect of

President Bush’s political will-power on the expansion of domestic energy development.

According to Kathleen Sgamma, Director of Government Affairs for the Independent

Petroleum Association of Mountain States,

There was certainly was an effort by the administration to encourage production of domestic resources. [But], in no way do I think that was a catalyst for what occurred with the growth of industry. You saw in the late 1990s the ability with technology to start going after unconventional reserves that we weren’t able to go after before. Coupled with that [were the] rising commodity prices that occurred, we had a converging of forces. That technology came online at the same time that commodity prices were taking off. So, the catalyst was not the Bush Administration issuing that executive order, because, you know, you can order an executive order all you want. What company is going to spend millions of dollars to lease lands and go after something if they don’t have the technology or they don’t have the price to make it economic? So, I mean, certainly the Bush Administration encouraging domestic production was helpful to a certain point, but it was really those forces. They’re [energy companies] not going to put money in if they’re not getting money out. I mean, nobody wants to drill holes for the point of drilling holes. (K. Sgamma, personal communication, March 24, 2009)

Stan Dempsey, President of the Colorado Petroleum Association, suggests that

President Bush’s political will-power was more akin to the political messaging one

receives with every electoral change in administration. The Bush message was clear.

According to Dempsey, there was certainty in that, “The Bush Administration had a

different view of extraction and resources” S. Dempsey, personal communication, March

24, 2009). In Dempsey’s opinion, like that of Ms. Sgamma’s, “two factors [were] very

important,” and more directly related to the expansion of domestic energy development:

Energy Markets and Technological Advancements (S. Dempsey, personal

communication, March 24, 2009). And finally, according to Bruce Hinchey, President of

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the Petroleum Association of Wyoming, President Bush’s political will-power had

nothing to do with the expansion of domestic energy development. In Mr. Hinchey’s

opinion, the Bush Administration was more onerous in “attacking” and “regulating” the

energy industry than had been the Clinton Administration. According to Hinchey, “I

thought well here is the Bush Administration supposedly opening up the gates and yet,

we’re [industry] seeing all these regulations just coming out of ears. Stips [stipulations]

dealing with more reclamation stips, bird stips, you name it. Winter drilling stips [were]

just coming out our ears during the Bush Administration” (B. Hinchey, personal

communication, June 12, 2009).

According to most energy industry representatives, President Bush’s executive

orders did not have the effect of shifting the BLM’s energy policies or procedures. In

their collective opinion, if any shift occurred, it was in the allocation of BLM resources to

meet the needs of the energy industry as development of non-traditional energy resources

expanded. According to Mr. Hinchey, the BLM “added people because they had to get

out more Approved Permits to Drill (APD)” (B. Hinchey, personal communication, June

12, 2009). He adds that “They [BLM] couldn’t do it. So we [industry] helped fund that”

(B. Hinchey, personal communication, June 12, 2009). As discussed previously, the

intent of President Bush’s executive orders was to expedite the APD process. But,

according to Mr. Hinchey, while the number of APDs being issued rose steadily to an

average of around “2,500” per year, the issuance of APDs “never hit their 90 day”

regulated deadlines. In some instances, “they [APDs] were 180 days even after the

executive orders came out” (B. Hinchey, personal communication, June 12, 2009).

Consequently, according to Hinchey, “they [Presidents] can issue all the executive orders

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they want. It doesn’t mean anything” (B. Hinchey, personal communication, June 12,

2009). Thus, the impact of a President Bush’s exercise of unilateral executive powers on

the BLM’s energy policies is disputed among representatives of the energy industry.

Industry representatives believe that energy markets and technological

advancements were more directly related to growth in the energy industry. In turn,

industry representatives are of the opinion that the BLM was hard-pressed to meet

industry’s demand for APDs as energy developers sought to take advantage of favorable

market and technological conditions. The phenomenon of domestic energy development

expanding across the Rocky Mountain West is then analogous to a row of falling

dominoes. As the price of energy rises, the requested number of APDs increases, and as

the number of APDs issued increases, energy development activity expands across the

West. In turn, BLM administrative resources strain to meet the rise in energy

development activity. Therefore, any redistribution of the BLM’s administrative

resources shifts when the procedural requirements of energy development activity

increase. As Bob Gallagher notes, “The proof is in the pudding. In January of 2000, the

first couple of years were dominated by just battling the BLM. There were 145 day

waiting periods for APDs to be approved and you have to do this, and you have to that.

Now all that has changed, in two of the largest out of the top four top oil and gas offices

in the United States of the BLM, we are still paying for the archeological surveys and

reports from a third-party and handing them in because the BLM can’t do it” (B.

Gallagher, personal communication, May 21, 2009). Consequently, government

resources, even when distribution of administrative resources shifted, remained

inadequate for the BLM to fully address their mandated procedural and regulatory

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oversight of industry activities as domestic energy development expanded across the

Western United States.

Expanded Development of CBM Energy Resources

Nontraditional energy resources became economically feasible for industry to

develop (K. Sgamma, personal communication, March 24, 2009). From the perspective

of industry, the growth of coalbed methane (CBM) development across Western states

was not a response to political will-power; growth was a response to market demand and

the technological capacity to inexpensively develop CBM energy resources.

Consequently, growth in CBM energy development was rapid. As Stan Dempsey,

President of the Colorado Petroleum Association notes, growth in CBM activity is the

result of “technology and the ability the companies have had to develop in tight sand

formations and the ability to drill up to 30 to 33 wells off a single pad, to develop this

kind of resource” (S. Dempsey, personal communication, March 24, 2009). Prior to the

technological capacity of the energy industry to extract CBM as a resource, CBM was

considered by industry as too expensive to develop. Therefore, when the technological

challenges of developing CBM had been overcome, CBM became an inexpensive and

highly sought after new energy resource.

In the late 1990s the technological capacity to develop CBM became

commonplace among energy developers, and CBM activity spread rapidly. This

occurred because, over time, CBM emerged as a new and plentiful energy resource. The

energy industry’s newly increased technological capacity allowed it to develop and

market CBM. As a result, CBM activity spread rapidly across states of the Rocky

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Mountain West. This is because some of the largest and most easily accessible fields of

underground coal seam formations—where CBM is found—are located within the states

of New Mexico, Colorado, and Wyoming. As CBM development grew, pockets of

intense CBM energy development appeared across the states of New Mexico, Colorado,

and Wyoming. As Bruce Hinchey, President of the Petroleum Association of Wyoming

notes, “We have pockets of development. If you look at the Pinedale/Jonah [Wyoming]

Area, it’s around 30,000 acres, and then you’re gonna’ drive 60, 70 miles to Rock

Springs [Wyoming] and not see a well. So, there’s pockets of development” (B.

Hinchey, personal communication, June 12, 2009).

As more CBM became available for development, split-estate energy

development intensified across the West, increasing interaction between energy

developers, the surface owning ranchers, and homeowners of the West. As discussed in

the previous chapter, the interaction between these two groups was not unusual as most

Western landowners, particularly old-school ranchers, are familiar with energy

development. This time, however, the level of energy development activity surpassed

anything even those most familiar with previous energy booms had ever experienced.

The effect was that interaction between energy developers and surface owners increased

as levels of split-estate energy development increased. Often, the interaction was with

surface owners who were unfamiliar with energy development. In either case, conflict

between energy developers and surface owners intensified. As Bob Gallagher notes, “It

[conflict] then obviously ballooned into something that I don’t think the BLM was ready

for, and something that I don’t think any of us thought truly would occur that quickly

where all of the sudden you were having conflicts with other users of public and private

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lands, and it happened overnight” (B. Gallagher, personal communication, May 21,

2009).

Within pockets of intense split-estate CBM energy development, conflict between

energy developers and surface owners was especially intense. As Mr. Gallagher

describes the spread of conflict, it was as if a fuse had been lit and as the fuse burned, it

ignited animosity and distrust between energy developers and ranchers across the West.

Conflict over energy development booms is not unusual, but in the case of CBM

development the growth of the conflict was different. As Gallagher suggests, “most of

the time [controversy] will maybe start in New Mexico and the next year or two will

trickle to Wyoming and trickle to Colorado, or vice versa,” but, according to Gallagher,

“in this case it didn’t” (B. Gallagher, personal communication, May 21, 2009). Gallagher

adds that, “All of a sudden, the entire West seemed to be engulfed, if you will, in that

problem and how slow it took people to respond, how arrogant both sides were.

Certainly it led to a prolonged period before anybody was really ready to collectively to

sit down and figure out what we [energy developers and ranchers] could do” (B.

Gallagher, personal communication, May 21, 2009).

As split-estate CBM energy development expanded, the growth of conflict was

difficult for energy companies to manage. In the relationship between ranchers and

industry, Dempsey notes that the intention of industry was to manage the conflict as split-

estate energy development grew. In Dempsey’s opinion, the growth of the conflict with

ranchers can be attributed in part to,

Some companies grew very quickly. I’m not going to say they grew too quickly; they grew very quickly, and there are companies out there who have strong public affairs who acknowledge that they grew very quickly and they had a difficult time, and I use the word manage. I think there

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have been companies in Colorado that as they ramp up their activity, there isn’t a concerted effort by the company to best manage the whole scope of their operations. There have been some well-documented cases of perhaps companies running roughshod, but I think that’s when companies are growing quickly and they don’t have complete control over all aspects. The biggest problem sometimes, I think, is the relationship in management of their subcontractors. That’s probably the best way to look at it. Are the companies really exerting and supervising, and it’s not just treatment of the surface owner, it’s the neighbor, it’s, gosh, these trucks are driving, they ran me off the road, [they] killed my sheep. (S. Dempsey, personal communication, March 24, 2009) As split-estate energy expanded across the West, energy companies not only

struggled to contain conflict with ranchers, but they also struggled to manage their own

growth. In turn, conflicts between energy developers and split-estate property owners

multiplied. Conflict is, according to Dempsey and other industry representatives, a result

of industry’s inability to manage its growth. Or, as Dempsey notes, conflict is a result of

some companies’ inability to exert control over the behavior of their representative land-

men or subcontractors.

The Federal Mineral Estate’s Legal Dominance

The legal and regulatory dominance of the federal mineral estate influenced the

behavior of energy developers toward split-estate property owners. Within pockets of

split-estate energy development where development is most intense, conflicts between

energy developers and landowners has been “hotter” (S. Dempsey, personal

communication, March 24, 2009). Furthermore, underlying the heightened conflict is the

dynamic interaction between energy companies and ranchers. The interaction is shaped

equally by industry’s reliance on the dominance of the federal mineral estate, and

ranchers’ dislike of the mineral estate’s dominance. Simply stated, the legal dominance

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of the federal mineral estate affects the negotiation process of Surface Owner

Agreements. As Stan Dempsey notes, “I’m sure there are a lot of surface owners that

aren’t jumping up and down, thrilled to death, especially if they don’t own the minerals,

to have oil and gas activities on their land” (S. Dempsey, personal communication, March

24, 2009).

Successfully negotiating a Surface Owner Agreement with split-estate property

owners is dependent on a number of factors. Among industry representatives there is

general consensus that the more knowledgeable landowners are regarding the severed

nature of their property, the greater likelihood they understand that energy development

is a possibility. Similarly, the more experienced landowners are with energy

development, the greater the likelihood of their having better information and

understanding the process of negotiating a Surface Owner Agreement. According to

energy representatives, landowners who lack similar knowledge of the full nature of the

mineral estate’s dominance, or have never experienced energy development on their

surface estate, are often caught off-guard. According to Kathleen Sgamma,

They’re [energy developers] used to dealing with the issue [Surface Owner Agreement] on a regular basis and your mom and pop rancher all of a sudden gets a knock on the door in a new situation, right off the bat, it’s something that they [rancher] don’t know much about, perhaps, or they don’t understand what’s all going to happen, so, the situation would start off, forget all the lawyers, there’s a learning curve that anyone would have to kind of get over. But, in general companies will sit down with the owners, their land-men will go out, or whoever they [company] have designated, sit down and arrange something and come up with an agreement. They’ll explain the situation and come up with an agreement, come up with monthly or yearly payment, whatever they kind of work out, you know, you really don’t hear much about it. (K. Sgamma, personal communication, March 24, 2009)

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Knowledge of one’s property rights and the land’s potential for energy

development activity is the responsibility of the landowner. Bruce Hinchey argues that

Surface Owner Agreements regarding the potential disturbance of energy activities on the

surface estate must be worked out and ranchers must be compensated for the disturbance

(B. Hinchey, personal communication, June 12, 2009). But Hinchey also argues that

energy companies should not be held responsible for a split-estate property owners’ lack

of understanding of an energy company’s ability to access and develop the mineral estate

(B. Hinchey, personal communication, June 12, 2009). In Mr. Hinchey’s opinion, “I

gotta’ say, you gotta’ be really stupid if you don’t know that you don’t own the minerals

because anybody that owns land knows up front whether or not they own the minerals.

Unless you’re out in Neverland or came from Planet X and moved to Wyoming and don’t

understand that, then maybe you didn’t know that. But, I think anybody that’s a savvy

rancher knows whether or not they own the minerals” (B. Hinchey, personal

communication, June 12, 2009). The assertion is that there are two groups of split-estate

property owners with whom energy representatives must negotiate: Those who have

owned their land for extended periods of time and are intimately familiar with the legal

dominance of the federal mineral estate, and those who have neither knowledge of the

mineral estate’s dominance, nor of their property’s potential for energy development

activity.

Informed or not, split-estate landowners opposed to energy activity occurring on

their property must acquiesce to the entry of the energy developer. Bruce Hinchey argues

that even among the better informed and experienced split-estate property owners, there

are those who flatly oppose the entry of energy companies onto their lands (B. Hinchey,

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personal communication, June 12, 2009). Referring to surface owners attempts at

prohibiting access to the mineral estate, Hinchey states, “That’s not gonna’ happen” (B.

Hinchey, personal communication, June 12, 2009). According to Hinchey, opposition to

access and development results, “Because it’s private property, it’s their surface, they’d

never had oil and gas development on it, and they didn’t want anybody on their land.

And yet you’ve got the mineral estate that is dominant and it has to be dominant.

Otherwise you couldn’t get in there and develop your minerals and it would be a taking

[compensable taking of property by government under the 5th Amendment to the

Constitution]” (B. Hinchey, personal communication, June 12, 2009). Kathleen Sgamma

adds that,

I think the split-estate issue; it’s obviously a tricky one because the mineral rights take primacy. So, nobody wants, you know, there’s a concept of property ownership that ‘this is my land’; I can do whatever I want, and people don’t often understand the whole concept of the severed rights. It’s a situation fraught with, you know, the potential for conflict. Nobody wants to be told, ‘well, you only own the property to a certain point.’ (K. Sgamma, personal communication, March 24, 2009)

According to Sgamma, the dominance of the federal mineral estate and the ability of the

industry to access and develop energy serve the greater good. In Sgamma’s opinion,

“But, if you think about kind of a greater good, these are minerals owned by all

Americans, so to me the law is fairly sensible in that those mineral rights take primacy

over the surface” (K. Sgamma, personal communication, March 24, 2009).

Landowners’ displeasure with the federal mineral estate’s dominance is tempered

by the energy industry’s insistence that companies amicably negotiate with split-estate

property owners. According to the majority of industry representatives, conflict with

split-estate property owners is rare. There is a general consensus that conflicts did arise,

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but that the causes of those conflicts were the result of numerous variables. For example,

in Colorado, according to Stan Dempsey, the urban interface of housing development

with energy activity was a primary cause for conflict (S. Dempsey, personal

communication, March 24, 2009). This is opinion is shared among industry

representatives. Colorado, in comparison to New Mexico and Wyoming, is where the

urban interface of small ranchettes and energy development was greatest (Interviews

collectively). Dempsey adds, “It was more people buying their 35 acres and never

knowing that they had minerals underneath their estate. Yeah, we certainly have people

coming in and complaining about, you know, their farms being impacted but not as

much. This last go-round, I mean, this decade has all been about the ranchettes” (S.

Dempsey, personal communication, March 24, 2009).

In New Mexico and Wyoming, conflict occurred primarily between energy

developers and ranchers. In New Mexico, according to Bob Gallagher, the primary cause

for conflict was ranchers’ emotional response to the rapid growth of energy development

(B. Gallagher, personal communication, May 21, 2009). In this case, conflict over split-

estate energy development was the result of the rural interface of farming and livestock

with energy activity. In Wyoming, according to Bruce Hinchey, the primary cause of

conflict was a combination of “Old, long time big ranchers, some other people that had

moved into the state that were pretty wealthy, [as well as] environmental activists” (B.

Hinchey, personal communication, June 12, 2009). Industry representatives as a whole

conclude that among the primary causal variables creating conflict between their industry

and ranchers was the behavior of individual participants: energy developers and ranchers

alike.

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Energy Developers and Ranchers: Stories from the Field

Conflict heightened as energy developers and ranchers interacted, due in part to

the interaction of land-men unfamiliar with the cultural traditions of Western ranchers.

On the flip-side of that coin, ranchers unfamiliar with the fast-paced culture of energy

development clashed with energy company land-men. As Bob Gallagher notes, politics,

the energy market, and technological advancements aside, the clash of cultures

heightened the conflict between energy and ranching. Gallagher comments that,

[It was] the attitudes on both sides. I mean, the attitude of oil and gas firms saying, instead of saying ‘good morning Mr. Jones, how are you?’ It was ‘you need to know the mineral estate is dominant over the surface estate and, you know, blah, blah, blah, and then on the other side having the show up at the gate with a gun and just saying, ‘I don’t need to talk to you.’ So I think it was actually what I like to term as bad actors on both sides, and it’s unfortunate because although that may have only been at that time 5 or 10 percent, those [conflicts] are the ones that got the [press] coverage. (B. Gallagher, personal communication, May 21, 2009)

Mr. Gallagher’s perspective is shared among his energy industry colleagues. For

example, Stan Dempsey notes that negotiations between land-men and ranchers rarely

failed to amicably reach Surface Owner Agreements (Interviews collectively). Dempsey

comments that “very rarely do companies throw their hands up and say ‘I can’t reach a

Surface Use Agreement. I’m going to post a bond” (S. Dempsey, personal

communication, March 24, 2009). Dempsey further comments that “this is a long-term

relationship that’s going to exist between the operator and the surface owner, and you’ll

find in many cases the company spending more, a lot more than they have to, to move a

road or to provide some kind of support for some activity completely unrelated to what is

in the Surface Use Agreement to accommodate the needs of the surface owner” (S.

Dempsey, personal communication, March 24, 2009). As Dempsey and others note, the

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reputation of the industry and its relationship with ranchers is at stake. Therefore, any

accommodation required of an energy developer in order to satisfactorily reach an

agreement with ranchers is of paramount importance. Subsequently, representatives of

the energy industry attempt to manage the behavior of their land-men toward split-estate

property owners.2

The energy industry, however, holds an advantaged position in negotiating

Surface Owner Agreements. This is because split-estate property owners often lack

adequate information and knowledge of an energy company’s ability to lease and access

their land. As a consequence of this lack of knowledge, landowners are often

disadvantaged in the negotiation process because they cannot adequately address

accommodation or compensation for energy-related activities. And, as most industry

representatives note, land owners’ collective lack of knowledge allows bad actors within

the industry to behave badly toward landowners. Most split-estate property owners

“strike the best deal possible and still aren’t happy about it, but sometimes that’s often the

result of good negotiation” (S. Dempsey, personal communication, March 24, 2009). As

industry representatives are quick to point out, “there are very sophisticated surface

owners,” but they also add that no matter the level of sophistication “surface owners

should avail themselves of the best legal counsel that they can obtain” (S. Dempsey,

personal communication, March 24, 2009). This should be done, according to industry

representatives, in order to avoid the possibility of being treated poorly by a bad actor

energy company (Interviews collectively). As Bob Gallagher notes, energy companies

have “gone from a handshake of ‘yeah, we’ll grade your road to the barn in exchange for

2 Note: The BLM does not report the number of times bonds are posted when Surface Owner Agreements are not reached.

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this, to legal documentation as it’s being dictated by, the land man hands it to you, and if

you’ve got a question he says, ‘well, you’ve got to call the attorney in Houston or you’ve

got to call the attorney in Denver’” (B. Gallagher, personal communication, May 21,

2009). Gallagher also notes that as a result, “[industry] did a good job of alienating the

people we should have actually been talking to” (B. Gallagher, personal communication,

May 21, 2009). Gallagher further comments that, “there [are] companies that get it, who

absolutely understand and continue to have great relationships with landowners” (B.

Gallagher, personal communication, May 21, 2009). Thus, it is the perspective of energy

representatives that most energy development companies amicably negotiate Surface

Owner Agreements with landowners. From the perspective of the energy industry, it is

rare when a company does not negotiate fairly with a landowner.

The relationship between energy developers and ranchers is driven by two

dynamics: Energy companies who treat surface owners well and those companies who

don’t treat them well. Energy companies that earn the reputation of behaving badly are,

according to most industry representatives of small, out-of-state, companies, whose land-

men and subcontractors have no understanding of the ranching culture of the West. They

are, as most industry representatives note, those companies or persons least familiar with

the energy industry’s long tradition of working with ranchers to reach a “handshake deal

across the kitchen table” (Interviews collectively). As Bruce Hinchey argues, “Yeah, a

lot of the cases it’s because they, depending on who you’re dealing with you can get

these Texas boys that come up here and just try to run roughshod over ya’. And then

pretty quick they get into it with a few ranchers and they find out that’s not how it works”

(B. Hinchey, personal communication, June 12, 2009). The implication among industry

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representatives was that the quick lesson learned by those who clashed with ranchers was

learned at the end of a gun or, if that failed, in a court of law. It was not often that a

company’s land-man or its subcontractors would be met with the threat of armed

confrontation. But, as Bob Gallagher and Bruce Hinchey both confirm, ranchers would,

from time-to-time, actually pull the trigger a time or two (B. Gallagher, personal

communication, May 21, 2009; B. Hinchey, personal communication, June 12, 2009).

More often than not, incidents of armed confrontation were avoided.

Industry representatives acknowledge that bad behavior among individuals or

individual operators within the energy industry does exist. The shared opinion among

energy representatives is that the truly horrible incidents are “very rare.” And

representatives acknowledge that when the bad incidents occur, those incidents “give the

industry a “black-eye” in terms of their relationship with landowners and the public

(Interviews collectively).

The same bad actor behavior is found among “recalcitrant landowners” (S.

Dempsey, personal communication, March 24, 2009). According to industry

representatives, these bad actors are individuals who seek to punish energy companies by

denying access as a means of extorting money or beneficial treatment from the company.

Bruce Hinchey argues that the bad actor scenario is a two-way street in that “you also

have ranchers that absolutely don’t want you on their land. And it doesn’t matter what

you pay ‘em, it’s not gonna’ be enough. So it goes both ways” (B. Hinchey, personal

communication, June 12, 2009). Among this group Hinchey suggests there are factions,

stating there is “a faction of people that wanted huge amounts of money for the Surface

Use Agreements and for whatever action was gonna’ be taken on their ranch” and, “there

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was others that the money wasn’t, had nothing to do with it, it was just a matter of we

don’t want you on our land, period” (B. Hinchey, personal communication, June 12,

2009). Another faction among ranchers is a group who, according to Bob Gallagher,

“[just] want enough information to be able to assess the impact, short-term and long-

term, on their property” (B. Gallagher, personal communication, May 21, 2009).

Gallagher adds that energy companies, and the industry as a whole, could benefit from

once again developing a working relationship with ranchers by sharing their expertise and

information. Gallagher asks, “You [land-man] have all this information, okay? So if you

have this information, why aren’t you sharing it with the people who are actually going to

be impacted by this” (B. Gallagher, personal communication, May 21, 2009)? In

Gallagher’s opinion,

If this would have happened early on, if we [industry] truly would’ve understood that 95 percent of those landowners that we’re dealing with truly just want information to assess the impact, I think it would’ve gone a lot smoother. There’s going to be some ranchers out there and they’re going to make a living off of us. It happens all the time. I mean, if you killed, unfortunately, if 10 cows died from one ranch, and they have a thousand head of cattle, I can promise you all 10 of those were the blue- ribbon winners at the last county fair. But, you’re going to have that on either side. But I truly think that is they [ranchers] were given, if they were communicated with from the start, and given the information they needed to do a true assessment of the impact on their land, I don’t think we would have had any problems. (B. Gallagher, personal communication, May 21, 2009)

The incidents in which energy developers clashed with ranchers were the

exception to the rule as energy developers and ranchers interacted. As has been noted,

incidents where conflict occurred were the result of a variety of underlying factors. Most

often those conflicts were driven by “bad actors” (Interviews collectively). Bad actors,

according to energy representatives, were distributed equally among energy companies

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and split-estate property owners. Industry representatives share the view that bad actors

exist among large, multinational energy companies, as well as small, independent, energy

companies. And, as discussed previously, industry representatives also share the view

that among split-estate property owners, there exist “bad actors” as well. Additionally,

there is also a shared belief among energy representatives that managing conflict is an

essential element to sustaining industry’s relationship with ranching.

These assessments, descriptive as they are, do not fully explain how conflict and

competition between energy and ranching interests heightened. If incidents were as rare

as has been described, why did ranchers, often collectively, seek the assistance of their

respective state legislatures in defending their interests from the harm of energy

development? It is the shared opinion among industry representatives within the states of

the Rocky Mountain West that the rare egregious incidents were exploited by outside

interests seeking to divide the energy-ranching alliance: Environmentalists.

The Intervention of Environmentalists

The conflict and competition between energy development and ranching interests

would not have heightened had it not been for the interference of environmental

organizations. According to energy representatives, the conflict between energy and

ranching interests heightened because the conflict itself “started to be fueled by East

Coast liberal organizations that have pumped millions on millions on millions of dollars

into the West” (B. Gallagher, personal communication, May 21, 2009). According to a

majority of industry representatives, as problems associated with split-estate energy

development began to gain publicity, environmental organizations exploited those

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problems to create and heighten conflict and competition between energy and ranching

interests. According to Bruce Hinchey, as ranchers began seeking the assistance of state

legislators and demanding the enactment of protective legislation—referred to as Surface

Owner Accommodation Acts3—“You had environmental activists that was really pushing

that you never had before” (B. Hinchey, personal communication, June 12, 2009). It is

the shared opinion among all but one energy industry representative the intervention of

environmental activists was the primary cause for heightening industry’s conflict and

competition with ranching over Surface Owner Protection Acts. Hinchey adds that,

Absolutely, there’s no doubt about it. They [environmental activists] were orchestrating and organizing and they still are and, it’s way different than it was back in the ‘80s. You didn’t see that. You didn’t have those groups out there like that. And, they were really orchestrating and pushing this to, as much as they can and it’s not just because they were activated out of Wyoming because they’re activated out of a national network. That’s what caused a lot of it [conflict and competition]. It’s associated with the environmental movement. And, those organizations have thousands of oil and gas members and most of our oil and gas members don’t even know that they’re [environmental organizations] doing that. It’s all a coordinated effort because if you look back into where their [environmental organizations] meetings were and who they were talking to, it’s been the environmental extremists and they were pushing it [conflict and competition]. (B. Hinchey, personal communication, June 12, 2009)

And, as Bob Gallagher adds, “We don’t need an East Coast liberal organization telling us

[energy and ranching] how we’re going to live or do business in New Mexico” (B.

Gallagher, personal communication, May 21, 2009). Kathleen Sgamma echoes these

sentiments when she argues that “I think they’ve [environmental organizations] exploited

that [industry-ranching conflict] to hammer industry. They’ve certainly found a way to

3 Note: Surface Owner Protection Acts, or Surface Owner Accommodation Acts, were addressed or introduced in the states of New Mexico, Colorado, Wyoming, Montana and Utah (2000-2009). In the State of Montana, existing legislation was reformed. In the State of Utah, legislation was introduced, but failed in committee. The States of New Mexico, Colorado, and Wyoming passed differing versions of the Acts.

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get in with landowners, disgruntled landowners and raise that [legal dominance of the

mineral estate] as an issue. [To] just raise the issue [split-estate energy development] as

if this was a huge problem, as if the majority of people were being walked all over by big

oil and gas. So I think they’ve been pretty successful in exploiting that” (K. Sgamma,

personal communication, March 24, 2009).

The belief that East Coast liberal environmental organizations heightened the

energy-ranching conflict is not supported by the pattern of conflict in Colorado. The

difference in Colorado, according to Stan Dempsey, is that while environmental

organizations did participate during the legislative debates over Surface Owner Protection

legislation, the primary cause for heightening the conflict was the intervention of

homebuilder associations. Dempsey notes that while there was a short-lived alignment of

commercial and housing developers with environmental organizations during the course

of the debate, the intervention of environmental organizations was tempered by the fact

that “homebuilders are inherently more conservative and had no interest in getting

involved in what was viewed as a complete attack on the industry in Colorado,” and

“because homebuilders and environmental communities don’t like each other at all” (S.

Dempsey, personal communication, March 24, 2009).

Environmental organizations exploited the conflict with the intent of dividing the

energy-ranching alliance, according to industry representatives, heightening the conflict

between the energy and ranching industries serves the purpose of environmental

organizations to “divide and conquer” their respective industries (K. Sgamma, personal

communication, March 24, 2009; B. Gallagher, personal communication, May 21, 2009;

B. Hinchey, personal communication, June 12, 2009). This argument suggests that

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ranchers are being duped into aligning themselves with environmental interest groups

bent on ranching’s destruction. As Kathleen Sgamma notes,

I think a lot of ranchers; certainly some ranchers have joined forces in that respect. A lot of ranchers are very wary of environmental groups because they see them as, ‘all right, we’ll get rid of the energy companies and then we’ll go after the ranchers.’ You know, quite frankly, there’s plenty of history of environmental groups trying to go after grazing allotments and drive them [ranchers] off. So, I think there’s a built in mistrust, so sometimes these alliances get a little overblown. You see that with hunting organizations as well. It’s hard to argue that something like a TRCP [Theodore Roosevelt Conservation Partnership] or a Trout Unlimited is truly just a hunting organization; they’re more of an environmental organization. You know, their agenda is to really stop oil and gas. They want us out of here. They don’t want to deal with energy development. So anything that they can do to stop energy development and anybody they can team up with to make that happen is great with them. I think some ranchers are, again, wary of those types of organizations. There are groups that clearly have an agenda of let’s get rid of coal mining and then let’s get rid of oil and gas and then let’s get rid of the ranchers. I think sometimes the ranchers see through that. (K. Sgamma, personal communication, March 24, 2009)

The alignment of ranchers with environmental organizations is worrisome to the energy

industry. Ranching’s alignment with environmental interest groups is, among energy

representatives, faulted with driving mistrust between energy developers and ranchers.

The ranching-environmental alignment is also faulted with heightening the conflict

between energy and ranching as the two interest began to debate the merits of enacting

Surface Owner Protection Acts (K. Sgamma, personal communication, March 24, 2009;

B. Gallagher, personal communication, May 21, 2009; B. Hinchey, personal

communication, June 12, 2009).

Despite industry’s failure to manage problems associated with the growth of split-

estate energy’s development, the attitude of the industry’s behavior and interaction with

landowners, the individual carelessness of bad actors, or the exploitation of

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environmental organizations, it is clear there exists a heightened level of animosity and

mistrust between energy developers and ranchers. And, as the debate over the enactment

of Surface Owner Protection Acts took place, mistrust drove animosity. It is mistrust and

animosity that drove split-estate landowners, ranchers and homeowners alike, to their

state legislatures. As will be discussed, the hierarchical relationship between energy and

ranching within the interest network of the BLM’s land-use subgovernment has been

altered by those legislative battles over Surface Owner Accommodation Acts. Simply

stated, as legislative debates ensued across the states of the Rocky Mountain West, it was

clear that the formerly allied interests of energy and ranching had grown wary of each

other.

Surface Owner Protection Acts: Energy’s Perspective

Frustrated and angry split-estate property owners sought the enactment of Surface

Owner Protection Acts. In doing so, property owners sought the attention of their state

elected officials. As legislation was introduced, split-estate property owners sought the

assistance of organizations in which they were members. And because the most powerful

individuals among them were ranchers or wealthy landowners who ran small agricultural

operations, landowners sought the lobbying assistance of state Stockgrower associations.

In turn, state petroleum associations similarly began to lobby state elected officials in

opposition to the proposed Surface Owner Accommodation Acts. The elite

representatives of the energy and ranching lobbies began to engage in a battle for control

of land-use.

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Conflict and competition heightened as energy and ranching organizations

clashed over state legislation. The interest groups clashed because, as discussed

previously, the BLM could not adequately respond to problems associated with split-

estate energy development. And because the BLM could not always resolve the

problems associated with split-estate energy development, landowners sought resolution

to their problems with energy developers via the intervention of state legislators. The

conflict between energy developers and ranchers heightened because, in seeking the

state’s intervention, ranchers were requesting that the state enact legislation that

oftentimes superseded federal law and regulation of energy development activities. Their

legislative requests for extended notification, explicit accommodation and compensatory

damages, increased bonding requirements, and in particular, the request for compensating

for loss of property value, did not sit well with the energy industry. As these issues were

debated, energy and ranching organizations lobbied their state elected leaders. In turn,

the conflict and competition between the two interests intensified.

To some, the mutual trust that had long benefitted the energy-ranching alliance

was shattered. As Bob Gallagher notes, the situation in New Mexico intensified when the

first Surface Owner Protection Act was introduced. Gallagher argues that, “We

[industry] felt that the trust was lost the very first year when the bill all of a sudden shows

up and there hadn’t been any conversation about it” (B. Gallagher, personal

communication, May 21, 2009). Gallagher also argues that as the debate moved forward,

mistrust heightened. Gallagher notes that “Then, the second year, it’s okay you came to

the table, but there’s no trust” (B. Gallagher, personal communication, May 21, 2009).

Mistrust, according to Gallagher, led both sides to push each other into corners neither

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wanted, but because the stakes were so high, the emotional response of each interest

group was to further entrench itself into opposing camps. According to Gallagher,

At the end of the day, when you get pushed, at some point you’re going to feel like you’re in a corner, and what you’re going to do then is you’re going to react like a caged animal or whatever, and that’s when the tensions and emotions got to the point where it was terrible. I mean there wasn’t any conversation going on, and the problem is when the main people aren’t talking, then what you got here is all these people, these wannabes getting in here and putting other things in here [legislation] that really shouldn’t have been in the conversation. (B. Gallagher, personal communication, May 21, 2009)

This view is echoed by Stan Dempsey as he notes that negotiations among stakeholders

grew tense during discussions of the first Surface Owner Protection Act introduced in

Colorado. According to Dempsey, “During the Curry [Rep. Curry] bill, there were

private negotiations outside the capital between some parts of industry and the

homebuilders, and they worked for many months to try and come up with something and

it was all done quietly. She [Rep. Curry] agreed to carry a bill for the environmental

community and the homebuilders, well, that’s the first caution, to carry a bill for [them].

And then, she was trying to work with industry. So she was torn apart three different

ways. Um, we had some pretty harsh words” (S. Dempsey, personal communication,

March 24, 2009). Bruce Hinchey notes that things grew “bitter” as the conflict over split-

estate energy development reached the Wyoming legislature (B. Hinchey, personal

communication, June 12, 2009). Hinchey comments, “I think in the end, as the bill

worked forward there was a lot of emotion initially, of course, with some of those folks

[ranchers]. We [energy industry] thought it [law and regulation] was fine the way it was”

(B. Hinchey, personal communication, June 12, 2009). State legislative intervention was,

in the opinion of industry representatives, unwarranted. Surface Owner Protection Acts,

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according to representatives of the energy industry, were in response to a minority of

landowners whose experience with split-estate energy development had become over-

sensationalized.

The energy industry opposed enactment of state Surface Owner Protection Acts.

Industry was opposed because it believed that Surface Owner Protection Acts would

impose new, unnecessary requirements on industry’s ability to develop split-estate energy

resources. From the perspective of the energy industry, Surface Owner Protection Acts

that sought to impose new requirements of industry were overly burdensome. In the

opinion of industry representatives, the Acts are disproportionate responses to the few

ranchers and landowners whose problems with energy activities have been blown out of

proportion. As Kathleen Sgamma notes, “In the cases where they [energy developer and

rancher] can’t some to an agreement, those are the stories that get blown up. It doesn’t

take many people making a fuss to catch the media’s attention. It only takes one or two

[ranchers] to organize and raise a huge fuss” (K. Sgamma, personal communication,

March 24, 2009). Bruce Hinchey adds, “Yeah that’s what was reported, just like

anything, you’ve got a handful of people doing all the complaining. There’s a handful

that are not [happy] and those were the ones doing the complaining. And they’re the

ones that made all the press and that’s what you read about. And, it’s just like any law.

Any law that gets passed you got a handful of people that are complaining and usually

that’s the way it goes. They’re the ones that’s gonna’ get the wheel greased if you get

something passed” (B. Hinchey, personal communication, June 12, 2009). In a similar

vein, Bob Gallagher refers to Surface Owner Protection Acts as “Bad Actor Acts” (B.

Gallagher, personal communication, May 21, 2009). Gallagher notes, “I think we need to

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rename it the Bad Actor Act because it surely is for bad actors. It’s for the oil and gas

companies that want to run roughshod over you [rancher], or it’s for the rancher at the

gate who says ‘I don’t care what you say or what you’re offering, you’re not coming on

[to the land]” (B. Gallagher, personal communication, May 21, 2009).

The energy industry opposed any legislation that would give split-estate property

owners the right to veto an energy company’s access to the mineral estate. According to

Bob Gallagher, “I buy into that the mineral must be allowed to be produced. I think the

bottom line is you just can’t be denied. Denied or delayed, and that was our philosophy

from the very start when we went into any negotiations. If you have a partnership and

it’s 50/50 and it’s two guys, what happens when it’s a tie vote” (B. Gallagher, personal

communication, May 21, 2009)? The federal mineral estate and the dominance it carries

“covers a lot of ranchland” (K. Sgamma, personal communication, March 24, 2009).

Kathleen Sgamma notes that the primacy of the mineral estate should remain absolute (K.

Sgamma, personal communication, March 24, 2009). She believes that if the estate were

on equal legal footing, the access of energy companies would be denied. Sgamma argues

that, “It’s problematic if that primacy is taken away because if you don’t have that

primacy of the mineral estate, [what rancher] is going to say, “Oh, yeah, come on to my

land. I don’t own the minerals. I’m not going to get anything out of this except maybe

some surface damage money” (K. Sgamma, personal communication, March 24, 2009).

Additionally, the energy industry opposed legislation that would have allowed

compensation for the loss of real estate value or its potential for development value. As

Bruce Hinchey notes, “When you have landowners that want, for example, land that’s

worth $100 an acre and he wants $25,000 an acre, then that’s a little absorbanent [sic].

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And part of it was they [ranchers] also talked about at one point, well I might want to

build a hotel out here in the middle of nowhere. I might want to build an amusement

park. Of course those are exaggerations, they wouldn’t do that, but those are ways to say

the land could be worth way more than what you’re currently valuing it for” (B. Hinchey,

personal communication, June 12, 2009). Finally, the energy industry opposed

legislation that would have increased bonding requirements and fees. Bruce Hinchey

offers the example of “a guy out of Pavilion [Wyoming] that wanted basically his entire

ranch value” (B. Hinchey, personal communication, June 12, 2009). Hinchey adds that

the request for the ranch’s value as bond was that “he was asking for, what was being

offered is then, his ranch was for sale, and I thought, ‘geez I could buy his ranch and in

20 years pay the whole thing off with just the lease agreement. Things like that go on”

(B. Hinchey, personal communication, June 12, 2009).

Industry representatives are united in their opposition of the surface owner

accommodation issues listed above. Initial proposals for Surface Owner Protection laws,

in one form or another, included these elements. And because of this, the energy industry

opposed their enactment. This is because the energy industry viewpoint is that unlimited

access to develop the federal mineral estate is paramount to their economic interests.

Additionally, industry representatives view compensation for real estate value or its

potential value as overly speculative and, therefore, too expensive a burden for their

industry to bear. The same economic viewpoint applies to proposed increases to bonding

requirements and fees. Increasing bonding requirements and fees, in the shared opinion

of industry representatives, would make development of energy resources too costly. In

turn, Surface Owner Protection Acts proposing to implement such measures were resisted

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by the energy industry. Measures such as these would accommodate split-estate property

surface owners, but because they would impose economic burdens on energy companies,

the energy industry sought to prevent their inclusion in the Surface Owner Protection

Acts initially proposed by ranching organizations. The differing views regarding the

level of accommodating surface owners and the cost of those accommodations are at the

heart of the contention between energy and ranching over enactment of Surface Owner

Protection Acts.

Issues of access, compensation, and bonding were stumbling blocks to the

passage of Surface Owner Protection Acts. Bruce Hinchey argues that state legislative

intervention to accommodate a few ranchers doesn’t make sense. Hinchey argues, “Well,

that mineral belongs to me and every other citizen of that state and you’re gonna’ give

something to some rancher that bought some land that didn’t own the minerals in the

place? That doesn’t make sense. You’re [government] taking away. They bought the

land knowing they weren’t going to get minerals” (B. Hinchey, personal communication,

June 12, 2009). Issues of accommodation contributed to the general lack of

communication between the energy and ranching industries. In turn, debates over access,

compensation, and bonding heightened the competition for control of land-use

policymaking. Simply stated, these legislative debates were proxy wars as each interest

sought control of the BLM’s land-use subgovernment.

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Annexing the BLM’s Land-Use Subgovernment Energy’s Perspective

Energy industry officials have varied beliefs regarding whether their industry has

taken the BLM’s land-use subgovernment away from ranching. Opinions regarding the

ranching industry’s deference to energy development interests within the BLM’s land-use

subgovernment were nuanced. In the opinion of industry representative, the answer to

the question of whether or not a shift in control of BLM land-use decision-making favors

the energy industry is unclear. Many believe that if ranchers have a dispute, the dispute

is not with energy as much as it is with the BLM. In Bruce Hinchey’s opinion,

I always thought there’s been equal footing. And I thought ranchers got along quite well with industry. ‘Least the vast majority. I still think that’s the case and think there’s mutual respect because it’s their land. It’s not our land. And we’re gonna’ be there for a short period of time to use it. And then when we’re gonna’ be gone. They’ll still have their land. We go back in and we reclaim it [the land], and in a lot of cases what is interesting is the ranchers are mad at the BLM. Because when we go in to reclaim we have to reclaim to their [BLM] standards and not the standards of the ranchers. (B. Hinchey, personal communication, June 12, 2009)

Bob Gallagher also notes that ranchers’ complaints should rest with BLM

decision-makers regarding land-use conflicts. Gallagher argues that, “If you’re a

landowner, and if you [BLM] gave a permit to that guy to graze on your [federal]

land, then if that guy’s [rancher] got a problem, he ought to come to you [BLM].

If the BLM gave a permit to graze and we cut a road through there and we

produced and all of a sudden they can’t have a thousand head grazing, they can

only have eight hundred, well, they have a legitimate concern. Why is the beef

with us? We have the same type of permit to be out there as they do. Their beef

needs to be with the BLM, but yet they want it to be with us” (B. Gallagher,

personal communication, May 21, 2009).

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The energy industry’s dominance of the BLM’s land-use decision-making

is limited by the BLM’s bureaucratic entrenchment. Gallagher argues that, “For

someone just to say blanket-wise, ‘oil and gas dominate that, and they [BLM]

really don’t care over here [grazing],’ I agree somewhat in part, but it hasn’t gone

full-circle, and I think that the reason it hasn’t gone full circle is because of what I

call the ‘BBs,’ and those are the bureaucrats, and those are the guys that when the

political appointees come in, the guy sits behind his desk and the bureaucrat will

say ‘I’ll be here when you get here and I’ll be here when you gone” (B. Gallagher,

personal communication, May 21, 2009). Gallagher concludes that, “They [BLM

bureaucrats] still have that thought process that the BLM was really created for

range and wildlife and this and that. It’s [domination] shifted, but I don’t think to

the point where it’s [grazing and wildlife] totally ignored. When you look at it

now we’re [energy industry] not even waiting 30 days on permits [APDs]. How

did that happen? There’s more money put into that, there’s no doubt about it” (B.

Gallagher, personal communication, May 21, 2009). Additionally, Kathleen

Sgamma regards the conclusions that “the relative rise or fall of ranching power,

vis-à-vis, the BLM” is a conclusion that must be tempered through the lens of the

BLM’s bureaucratic decision-makers (K. Sgamma, personal communication,

March 24, 2009). Sgamma concludes that, “I think BLM obviously has a tough

job. I mean, they’re never going to satisfy everybody. They’re getting beat up by

environmentalists for whatever they do, allow ranching, allow oil and gas, any

other mineral development, so there’s that constituency that is always pounding

on them to do nothing with the land” (K. Sgamma, personal communication,

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March 24, 2009). Thus, representatives of the energy industry do not agree with

the presumptive conclusion that their industry has come to dominate the BLM’s

land-use subgovernment. As representatives of their industry’s interests, they

believe that control of the decision-making process is tempered by the democratic

engagement of the multiple interests at stake in governmental decisions regarding

land-use.

If change or reform is desired, the democratic decision-making process

will reflect the public’s desire for alteration of industry primacy in land-use.

From the perspective of the energy industry, BLM decision-makers are following

the law and existing rules and regulations. As Kathleen Sgamma notes, “You talk

to the oil and gas people at the BLM, and they’re just following the law; they’re

doing what the law says now, and getting criticized by all quarters for it. But, if

you don’t like the law, there’s a democratic process in place to change it (K.

Sgamma, personal communication, March 24, 2009).

Split-estate landowners used the democratic process in seeking to protect

their interests from harm, but change or reform to existing law was met with

resistance by the energy industry. Simply stated, debates over states enacting

Surface Owner Protection Acts were democracy in action. However, state

legislation sought to reform existing federal laws and regulations guiding split-

estate energy development. As Bruce Hinchey suggests, “Well, I think it’s the

same as it was. I never saw a change from the time before the bill was passed,

after the bill was passed, till now. There hasn’t been, nothing’s changed as far as

I’m concerned” (B. Hinchey, personal communication, June 12, 2009).

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Therefore, the impact of the states’ legislative efforts to protect split-estate

property owners—primarily ranching or agricultural interests—from the harm of

energy development was limited on the one hand by federal law, and on the other

hand, through the lobbying efforts of the energy industry. As Bob Gallagher

notes,

There were two or three years in a row that they [ranchers] attempted to pass a Service Owner Protection Act in New Mexico and not include oil and gas around the table when they did it, and we [industry] had to kill it. We killed it two years in a row. All of a sudden, the next year it was obvious to us that something was going to happen, and I love to say, ‘if you’re getting ready to get thrown out of town, get in front and make it look like a parade.’ (B. Gallagher, personal communication, May 21, 2009) Ranchers and energy developers have a history of resolving their differences

amicably without the intervention of either state or federal governments. As these

organizations have interacted within the BLM’s land-use subgovernment for decades,

tradition holds that a rancher’s request for resolution of a problem with an energy

developer is handled by a representative of the energy company quickly and quietly. The

expansion of split-estate energy development, however, altered the traditional manner in

which ranchers and energy developers resolved their differences.

Conclusion: Dominance of a Subgovernment

The expansion of domestic energy development encroached upon the privately

owned split-estate surface lands of ranchers and homeowners across the West. As split-

estate energy development expanded, conflicts between energy and ranching interests

multiplied. The conflict was particularly problematic in areas where development of

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non-traditional energy resources, such as CBM, spiraled to record numbers. As drilling

increased, problems increased, and with them, complaints among surface owning

landowners increased. As a result, ranchers began taking their complaints to the BLM.

As noted by BLM administrators, the agency is confined by law and regulation regarding

domestic energy development in its capacity to resolve the conflicts that may occur

between a surface owner and an energy developer. Simply stated, the BLM is not in the

business of conflict resolution.

As the energy industry took advantage of the favorable conditions for energy

development, the complaints of split-estate landowners gained the attention of state

lawmakers. Split-estate landowners sought the attention of their state lawmakers because

the BLM is restrained in its ability to address and resolve conflicts between energy

developers and landowners. As complaints over split-estate energy development reached

state lawmakers, the conflict between energy developers and ranchers heightened.

Among those complaining loudest were ranchers who believed that the transgressions of

energy developers were not being adequately addressed by either the energy development

industry or the BLM. In turn, organized groups of ranchers and landowners petitioned

their state elected officials for protection from the unlimited access of energy developers

and the harm that split-estate energy development was creating. Motivated by constituent

complaints, state lawmakers across the Rocky Mountain West introduced bills known as

Surface Owner Protection Acts.

Surface Owner Protection Acts further heightened the conflict between energy

and ranching. Unlike their past experiences with government intervention, energy and

ranching interests were no longer aligned in protecting the legal and regulatory status quo

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regarding their shared land-use. Instead, energy development and ranching interests were

now competing with each other as each interest sought to protect itself from the harm of

the other interest. On the one hand, ranching and landowner organizations sought to

protect themselves from harm by advocating reform of the legal and regulatory status quo

concerning split-estate energy development. On the other hand, energy development

organizations sought to defend the legal and regulatory status-quo of split-estate energy

development from being reformed.

As energy and ranching organizations disagreed over state legislation they

interacted with each other in an increasingly hostile manner. As a result, the traditional

alliance of energy developers and ranchers became increasingly strained. This is because

each interest recognized the stakes in securing a successful outcome from state

lawmakers were high. As their legislative battles unfolded across the Rocky Mountain

States of New Mexico, Colorado, and Wyoming, energy developers and ranchers sought

the same end: Dominance of the BLM’s land-use subgovernment.

CHAPTER SEVEN

RANCHING

“If you take the microcosm of Wyoming, and you talk about the Bureau of Land Management since the late ‘90s, if you’re going to dub it anything, it’s going to be the Bureau of Energy Development.” Jim Magagna (Director of the Wyoming Stockgrowers Association)

The Voice of Ranching

The BLM has shifted from a rancher-dominated agency to an energy-dominated

agency. The expansion of domestic energy development across the states of the Rocky

Mountain West, coupled with an increasing demand for energy, caused the BLM to shift

its policy emphasis and resources away from grazing and ranching to energy

development. As energy development expanded and BLM energy policies and resources

shifted, ranching operations across the West were negatively impacted. These negative

impacts are particularly acute among ranchers whose operations are located on split-

estates. As energy developers sought to develop the federal mineral estates underneath

the surfaces of ranching operations, split-estate energy development triggered conflict

between ranchers and energy developers. In turn, ranching organizations sought to

protect their interests by petitioning their state legislatures to enact Surface Owner

Protection Acts.

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Surface Owner Protection Acts, clearly opposed by energy development

organizations, were favored by most, but not all, ranching organizations. As deliberation

of state legislation took place, factions of ranchers emerged, who, like their energy

development brethren, opposed enactment of Surface Owner Protection Acts. It became

clear that among ranchers there are differing opinions regarding the extent to which

ranching’s interests were negatively affected by the expansion of domestic energy

development.

Ranchers are not unified in their hostility toward energy developers. Among

ranchers, there are those who favored the legal and regulatory status quo of split-estate

energy development and those who favored reforming current policies. Among ranchers

favoring the status quo are those who believe that legislative intervention would negate

their ability to negotiate terms with energy developers seeking to access and develop the

federal mineral estate. Among ranchers favoring reform, most believe that legislative

intervention would enhance their ability to negotiate terms with energy developers. In

either case, the central focus of State Surface Owner Protection Acts was reformation of

the negotiation process wherein ranchers entering into contractually binding Surface

Owner Agreements with energy companies.

Representatives of ranching organizations1 express the opinion that Surface

Owner Protection Acts are beneficial to all of their members. Unlike energy

representatives, however, representatives of ranching are uniform in their opinion of how

1 Note: Ranching participants include: (1) Jim Magagna, Director of the Wyoming Stock Growers Association (WSGA); (2) Caren Cowen, Director of the New Mexico Cattle Growers Association (NMCGA); (3) John Vincent, Legal Counsel to the Landowners Association of Wyoming (LAW), Mayor of Riverton, WY; (4) L. Goodman, Chief Legislative Lobbyist for the Landowners’ Association of Wyoming (LAW).

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the ranching-energy conflict heightened. Representatives of ranching believe that energy

markets and technological advancements gave the energy industry its capacity to develop

nontraditional energy resources. They also believe that the Bush Administration’s

exercise of wielding executive power greatly influenced the expansion of energy

development. Additionally, representatives of ranching share the opinion that the

behavior of energy developers toward split-estate property owners, as well as the

damages that resulted from energy development, are primary causes for heightening their

conflict and competition with the energy industry. They also share the belief that the

energy industry’s opposition of to Surface Owner Protection Acts negatively impacted

the historical solidarity of the ranching-energy alliance.

Ranchers’ land-use interests remain intertwined with those of the energy industry.

Environmental interest groups, primarily conservation-oriented interest groups, were a

factor in ranching’s legislative battles with the energy industry. Ranching’s alignment

with environmental organizations was a source of tension as ranchers and energy

developers tangled over the enactment of Surface Owner Protection Acts.

Representatives of ranching express that their alignment with conservation-minded

environmental organizations will continue to develop. However, they also express the

conviction that ranching’s continued alignment with energy developers is in the best

interest of ranchers. Finally, representatives of ranching organizations are united in their

belief that, due to a variety of factors—not the least of which is the expansion of

domestic energy development—ranching’s former dominance of the BLM’s land-use

subgovernment has been annexed by the energy industry.

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The voices represented here are those of ranching elites. They represent the

perspective of both traditional ranching organizations, and the splinter groups that

emerged from those organizations as each these groups of ranchers engaged in the

legislative battles over Surface Owner Protection Acts. These splinter organizations are

known simply as “landowner” organizations. They are defined as elites because, as

stated previously, they are a select sample of actors who interact routinely with other

interest groups and governmental entities that compose the networks of the BLM’s land-

use subgovernment. These elite actors were, at the height of ranching’s conflict and

competition with the energy industry, active participant representatives of ranching’s

interests.

Expanded Energy Development Disrupts Ranching Operations

Split-estate energy development triggered conflict and competition between

ranchers and energy developers. As domestic energy development activities on split-

estate ranchlands increased, ranchers became dismayed with the behavior of energy

development companies toward landowners. Ranchers also grew increasingly angry over

damages to their ranchlands that were the result of increased levels of energy

development activities. Caren Cowen, Director of the New Mexico Cattle Growers

Association remarks that, “Our folks have been concerned about the damages of oil and

gas production on their land for probably 40 years. But, over the last 10 or 12 years as

the price of energy has increased, and there’s been more pressure put on the land to

produce more energy, it’s become a bigger and bigger issue for members across the state”

(C. Cowen, personal communication, May 21, 2010). Ranching’s anger with energy

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developers heightened as problems associated with split-estate energy development went

unresolved. Jim Magagna, Director of the Wyoming Stock Growers Association adds,

“That’s what caused me to get more and more calls from my members saying, ‘You

know, we are willing to work with these companies but there are some things happening

out there that are just in total disregard to our interests, and they need to be addressed” (J.

Magagna, personal communication, March 23, 2009). Therefore, as a result of energy’s

growth and its inattentiveness to ranchers’ concerns, the trust that had been the hallmark

of the alliance between ranchers and energy developers began to deteriorate.

Rancher mistrust of energy developers increased as split-estate energy

development activities increased. In particular, ranchers grew increasingly suspicious

over the earnest-nature of energy developers in their negotiation of Surface Owner

Agreements. As Jim Magagna notes, suspicion was often the result of a company’s

unfamiliarity with ranchers and their culture. Magagna comments that,

As Wyoming began to experience rapid growth in mineral [energy] development in the late ‘90s and early 2000s, and particularly as we [Wyoming] moved away from just the traditional large mineral operators in the state, you know, the companies that had been here and done business every year and had a presence, we began to have more and more new companies coming in with coalbed methane [CBM] development. We saw a lot of what have sometimes been termed fly-by-night companies. I think some of them fit that description well; some were very reputable companies, but smaller operators who had not operated in Wyoming before, and frankly, had not operated in an area where split- estate is so dominant. (J. Magagna, personal communication, March 23, 2009)

In addition to new energy operators’ unfamiliarity with ranching culture, another

source of tension was the subdivision and sale of once-large tracts of ranchlands created

tension within the ranching community. Most property sales conveyed only the surface

rights. Thus, there are more split-estate property owners today than there were during

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previous periods of increased energy development. Caren Cowen comments that “part of

the complexion of things [is that] the land is getting split up more and more.” She notes

that the parceling of large ranch acreage and selling those parcels for their real estate

value has occurred “probably more in Colorado than here [New Mexico], but probably

more here than in Wyoming” (C. Cowen, personal communication, May 21, 2010). The

shift in western landownership resulted in the previously discussed increased “urban

interface.” Urban interface is cause for conflict because persons migrating to the West,

hopeful of owning a bit of western tranquility, were instead confronted with the fast-

paced reality of energy development.

Energy developers unfamiliar with the culture of ranching are interacting with

landowners who are just as unfamiliar with culture of the energy industry. One cause of

landowner unfamiliarity stems from their presumption that it is unlikely their property

will be developed for its energy. Cowen adds that “somebody would buy 5 or 10 acres,

build their dream house on it, and then all of a sudden one day have somebody [land-

man] knock on the door that says ‘we’re going to take your two back acres or three acres

for an oil pad, and we’re going to build a road right here beside your house, and we’re

going to pay you $5,000 for this, or you know, whatever, and we [Cattle Growers

Association] heard a lot of those kind of stories” (C. Cowen, personal communication,

May 21, 2010). Landowners such as those described by Cowen are residents of a New

West. Cowen reasons that part of what has shaped the ranching-energy conflict is that

“people come out here [West]; they don’t understand mineral estate and dominance and

all that stuff. They bought a piece of property; they didn’t know enough to see who

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owned the mineral under what they’re buying, so all of a sudden, they’re extremely

upset” (C. Cowen, personal communication, May 21, 2010).

New West landowners’ unfamiliarity with their property rights is a common

theme among representatives of both ranching and energy organizations. There is,

however, a difference of opinion regarding who is ultimately responsible for knowledge

and understanding of the mineral estate’s legal dominance over the surface estate. As

discussed in the previous chapter, representatives of the energy industry believe that

landowners are responsible for knowing who controls the mineral estate. Representatives

of ranching organizations believe that information regarding who controls the mineral

estate should be made clear when prospective buyers are considering the purchase of

property. Unlike their energy counterparts, representatives of ranching suggest that there

exists the possibility that real-estate brokers underemphasize the possibility of energy

development occurring on or within proximity of a property being sold. Potential

landowners presume that because they are purchasing such small amounts of acreage it is

implausible that energy development will impact their property. To which Cowen

responds, “Yeah, Wrong!” (C. Cowen, personal communication, May 21, 2010).

When energy development occurs, the intensity of the activity is often

overwhelming to landowners. John Vincent, legal counsel to the Landowners

Association of Wyoming, observes that “what happened is that technology changed, so

instead of having one gas well per 640 acres [the original homestead acreage], it [well-

spacing] went to 160 acres and then to 40 acres and then the last rule change I think is 1

well to at least every 20 acres, and it may now be down to 5 or 10 [acres per well]” (J.

Vincent, personal communication, March 16, 2009). Vincent argues that “the

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development not only became more intense, just in terms of the number of wells allowed

per section, it became more intense in the sense that you didn’t necessarily have to drill

them all on centers [center of the acre from the section-line]. So you could have an area

[of surface property] that was just flooded with wells” (J. Vincent, personal

communication, March 16, 2009). He uses the example of “wells piling on” top of a

surface property to such a degree that the property itself became unusable as the owners

had intended (J. Vincent, personal communication, March 16, 2009). Vincent describes

that “[overlay documents illustrating changes to the property over time] show the ranch

when they [the landowners] first bought it. Actually, this was a big hay farm that they

used in conjunction with the ranch, but it had maybe four wells. We [law firm] had

overlays that just showed how these wells kept piling on and basically it ruined the farm

as a farm. It was such that you couldn’t irrigate it, you couldn’t run equipment on it and,

[as a result] they no longer own the farm” (J. Vincent, personal communication, March

16, 2009).

The legal dominance of the mineral estate development comes at the expense of

the property owner’s development of the surface estate. Unless the owners of the surface

estate understand the legal preference of the mineral estate’s use and the regulations that

guide that use, they are not in a position to deter access. Unable to deny access,

landowners are limited in their ability to mitigate the harm that may result from energy

activity. As is required by law, access to the mineral estate is negotiated between the

landowner and the energy developer’s representative. As part of the use agreement,

compensation for foreseeable disruption of the surface estate and the harm that may result

from energy activities are negotiated with energy development companies.

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Split-Estate Surface Owner Agreements

Split-estate property owners lack equal footing in their ability to negotiate terms

of access and compensation. The legal dominance of the mineral estate over the surface

estate influences the bargaining position of split-estate property owners. Ranchers

acknowledge the legality of the mineral estate’s dominance over the surface estate.

Ranchers, however, do not like the term “dominance” (Interviews collectively).

Representatives of ranching organizations contend that their conflict with the energy

industry stems from the mineral estate’s legal dominance. In turn, they regard the

concept that ranching’s development of the surface estate as being subservient to

development of the federally owned mineral estate as fundamentally unfair. They argue

that when the conditions of political will-power, energy markets, and technological

advancement aligned in a manner establishing energy development as the preferred use of

the land, any power ranchers might have once held in their ability to negotiate with

energy developers was diminished.

President Bush’s unilateral use of executive power disrupted the equal-footing of

ranchers and energy developers. The Bush Administration’s ability to shift the energy

policies of the BLM affected the ability of landowners to conduct ranching or agricultural

operations. In ranching’s parlance, the effect of the administration’s meddling with the

BLM’s energy policy and the subsequent expansion of domestic energy development

affected surface use to such a degree that it became increasingly difficult to “run cattle.”

Caren Cowen remarks that, “we were very concerned and disappointed that equal

consideration wasn’t given to the surface when those executive orders came out because

that just sort of turned everything loose. You began to see such concentration on energy

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production that we can’t get things done on grazing allotments. Everybody [BLM] is tied

up doing whatever they had to do to get the next energy project going, and us [ranchers]

who were having problems on the grazing end of it are just left hanging out to dry” (C.

Cowen, personal communication, May 21, 2009). Cowen confirms that as a result of the

Bush-Cheney emphasis on expanding domestic energy development, ranching

organizations witnessed a shift in BLM “personnel and budget” (C. Cowen, personal

communication, May 21, 2009). Jim Magagna echoes Ms. Cowen’s observations as he

argues that a shift in BLM policy and resources were the result of multiple factors.

Magagna concludes that,

There was the Bush administration that was friendly to mineral development, and that certainly fostered it [shift in BLM policy and resources]. I wouldn’t disagree, but I think that eliminates a number of steps in between. Certainly the Bush action led to the intensity of the desire to develop. But other things have played in there that were very important. Well, technology. You look at the massive Jonah Field in Western Wyoming. Twenty years ago there was not technology to produce that. You look at all the coalbed methane development in the Powder River Basin [Northeast Wyoming]. Twenty years ago no one envisioned coalbed methane as being a source of natural gas. The technological changes and the political atmosphere sort of came together as a point in time, I think early 2000s, late ‘90s, and chicken and egg thing. I don’t know which came before the other, but I think that what happened would not have happened without the concurrence of both. (J. Magagna, personal communication, March 23, 2009)

Finally, John Vincent adds that with the 2000 election of the Bush Administration “we, of

course, saw the energy development really ramp up. And what we saw at that time

around here locally [Wyoming] was the development of natural gas fields” (J. Vincent,

personal communication, March 16, 2009). The expansion of energy, therefore, caused a

shift in BLM policy and resources, redistributing the BLM’s balanced approach to land-

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use. In turn, there was a redistribution of negotiating power between ranchers and energy

developers.

The inequity in negotiating power is compounded by energy development’s

expansion onto split-estate properties. The inequity of negotiating power between

ranchers and energy developers is reflected in the difficulty split-estate property owners

have in negotiating the terms of access and accommodation with energy developers. One

reason for the disparity in negotiating power is the economic power of energy. The price

of a barrel of oil is no longer equal to a pound of beef on the hoof (Interviews

collectively). In market terms, this directly affects a rancher’s ability to negotiate terms

of a Surface Owner Agreement. Therefore, the legal, political, and economic equity

ranchers once enjoyed in their ability to negotiate with energy developers is greatly

diminished. As Jim Magagna summarizes,

In my mind when you’re talking about split-estate you’ve got two property rights. One is as valid as the other, but I also accept that it’s pretty well established, certainly in Wyoming, that the mineral estate is a dominant estate. Now, I hate that terminology because I think it’s asking for a fight when you say, ‘I dominate you.’ But the reality is that properly interpreted, there is the dominant estate, which means an absolute right to come on your property as needed in order to produce the mineral. So in that sense you’d like to think that it’s two property rights. The reality is you’ve got two property interests: one is dominant; one is also more powerful, and more knowledgeable. I mean, knowledge is power, and part of it is not that they’re [energy developer] ruthless or that they are bad people, it’s that they may be doing thousands of these [Surface Owner Agreements], and here I am as a landowner or rancher doing my first one or one of a handful. So, sure, are there mineral companies that are just ruthless? Yes. Are there ranchers that are equally ruthless? Yes. And so, if you are going to just say I don’t want to get along, it’s just as easy for one side or the other to say that. But when you say I do want to get along and I want to negotiate, then obviously the party with more experience, more resources can be a little more heavy handed in the negotiations. (J. Magagna, personal communication, March 23, 2009)

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The party with the most legal, political, and economic power has the upper hand

in negotiating the terms of access and accommodation in Surface Owner Agreements.

Having greater knowledge and information is also beneficial in controlling the course of

the negotiations concerning the manner in which access will occur or the type of

accommodations being made. Often, as Caren Cowen notes, surface owner’s lack of

knowledge and information is the cause for friction between a rancher and developer. As

Cowen remarks, “Yeah, somebody enters into an agreement and then calls after the fact

and says, ‘what should’ve I asked for?’ You know we all are busy, we all think we can

handle our own business, and we don’t ask for help early enough often enough. So that’s

a continuing problem, and people don’t share information with each other” (C. Cowen,

personal communication, May 21, 2010). One reason why information is not

communicated is that the negotiation process and the deal struck from those negotiations

are private.

Problems associated with surface owners’ lacking knowledge and information

arise in part because the conditions of Surface Owner Agreements are not standardized.

As discussed, the reason Surface Owner Agreements are not standardized is that

conditions of the contractual agreement remain unregulated by government. This means

that issues of access and compensation for any foreseeable surface disruption and/or

damage are privately negotiated between the individual parties. In cases where split-

estate landowners cannot afford competent legal counsel to represent their interests, they

are at the mercy of the well-armed energy company’s representative. As is often the case

in negotiations such as these, split-estate landowners are left to make the “best deal they

can get” (Interviews collectively).

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The best deals are often struck between ranchers and energy development

representatives most familiar with the expectations of each side in the negotiation of

Surface Owner Agreements. Jim Magagna adds that, “A lot depends on who the land-

man is and who the rancher is” (J. Magagna, personal communication, March 23, 2009).

Generally speaking, representatives of the ranching industry concede that conflict can be

avoided if land-men were to approach landowners in a manner that highlights cooperation

rather than confrontation. Magagna adds that the approach taken by land-men within the

same company can differ. He remarks that, “I’ve had a rancher tell me that the last land-

man that company had was [the] worst company I’ve ever dealt with, and the current

land-man they have, that’s the best company I’ve ever dealt with. So, it [conflict or

agreement] depends on the approach” (J. Magagna, personal communication, March 23,

2009). Magagna’s remarks underscore ranchers’ frustration with the legal dominance of

the mineral estate. Caren Cowen argues that each side’s lack of familiarity with what is

expected during the course of negotiating Surface Owner Agreements stems from the

frustration of ranchers over the issue of mineral estate dominance. Cowen adds that

frustration with the legal dominance of the mineral estate, in part, is related to the

approach taken by BLM administrators in defense of the mineral estate’s development.

She remarks that, “We [ranchers] understand that that’s federal law. It’s frustrating that it

appears that the BLM thinks that an oil and gas lease is a right where grazing is a

privilege. We don’t see it that way, obviously, but the BLM does” (C. Cowen, personal

communication, May 21, 2009). The implication is that the privilege of grazing one’s

livestock is deferential to the right of access and development of the oil and gas lease.

Therefore, because the BLM views oil and gas leases as having a property interest, the

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surface owner cannot legally deny an energy company’s right of access and development

of the mineral estate. According to John Vincent, the inability to deny access and

development places landowners in a precarious bargaining position (J. Vincent, personal

communication, March 16, 2009). Vincent notes that, “The predicament of ranchers and

farmers [is] that they just absolutely don’t have a bargaining position; even enough of a

position to insist that things like, ‘if you can directionally drill a well from the side of a

hay field, do that rather than plopping a well right in the middle of the field” (J. Vincent,

personal communication, March 16, 2009).

The BLM’s defense of the energy lease as a property right is reflected in the

ability of its allowing energy companies to post a bond if a Surface Owner Agreement

cannot be reached.2 Posting a bond guarantees an energy company’s right to access the

mineral lease. As noted previously, all that is required of an energy company to develop

the energy resource is the purchase of a federal mineral lease, an APD, and provide

notice that a Surface Owner Agreement has been reached with the landowner. The

assumption of BLM administrators is that within the Surface Owner Agreement contract,

sufficient accommodation and compensation is made to the landowner. The presumption

that landowners are sufficiently compensated for the energy industry’s use of their

surface lands harkens back to days when ranchers and energy developers reached

handshake agreements.

2 Note: See generally discussion in Chapters Four and Five.

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A Handshake Deal Is Not What It Used To Be

As split-estate energy development intensified, problems associated with its

development multiplied and ranchers sought to protect themselves from the harms of the

energy activities. In particular, ranchers were growing increasingly concerned over the

unfettered access and development by energy companies on their surface lands. Sensing

that greater harms were forthcoming if they did not begin to address the inherent inequity

of the law, ranchers sought the protection of their state legislators. As ranchers sought to

defend their interests through the legislative process, their relationship with the energy

industry worsened. Each interest began to compete for control of land-use policies

relative to split-estate energy development. As each of the interests sought to defend its

position to state legislators, the conflict and competition between ranchers and energy

developers heightened. Simply put, viewing the conflict and competition through the

lawmaking process, it is clear that the historical alliance of ranching and energy

unraveled.

Mitigating the impact of the mineral estate’s legal dominance over the surface

estate was of primary legislative importance to ranchers. As mentioned previously,

ranchers do not like the term “dominance,” but energy developers came to rely on the

mineral estate’s continued legal dominance to develop energy resources. Jim Magagna

regards the mineral estate’s dominance as a “boiler-plate” issue (J. Magagna, personal

communication, March 23, 2009). Magagna explains, “Yeah, [ranchers] don’t like the

term, but on the other hand, I kid my friends in the mineral industry that we’re just going

to start putting [a clause] in every bill, it doesn’t matter if it’s about health care or what it

is, that says the mineral estate is dominant because they’re almost paranoid about

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repeating that as often as they can legislatively” (J. Magagna, personal communication,

March 23, 2009). The question of legally protecting access and development of the

mineral estate is, according to John Vincent, a matter of which party is behaving

reasonably. In Vincent’s opinion, the legal defense of the mineral estate should be

balanced with the legal defense of the surface estate (J. Vincent, personal

communication, March 16, 2009). Vincent notes that if defense of the estates were

balanced, “Nobody would have the upper hand. The question then is, whether the

landowner is being unreasonable and refusing to let the oil company do anything, or is

the oil company being unreasonable? What that [balance] does is drive people to a

position where they have to negotiate fairly because nobody has a whip hand” (J.

Vincent, personal communication, March 16, 2009). Vincent argues that “the fact of the

matter is that the oil companies have the whip hand” (J. Vincent, personal

communication, March 16, 2009). The legal and regulatory dominance of the mineral

estate, and the BLM’s defense of its dominance as a use of the land, provides energy

industry leverage in its negotiations with split-estate landowners.

The leverage to dictate terms to split-estate property owners limits the adequacy

of Surface Owner Agreements to address and mitigate surface disturbance and harm. If

the conditions of the Surface Owner Agreement are agreed upon, the terms of the

agreement are unassailable. Bound by the agreement, should harm result from an energy

development activity unaddressed in the contract, energy companies are under no legal

obligation to compensate the landowner for that damage. And, because conditions of the

negotiated agreement are unregulated, unforeseen damages are often not addressed in the

final Surface Owner Agreement. John Vincent uses the example of an oil company’s

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subcontractor denial of a landowner’s demand of $500 for the repair of a fence to

illustrate the nature of a harm being unaddressed in the Surface Owner Agreement. As a

result of the company’s denial for compensation, the landowner brought suit against the

company. Vincent notes that by his estimation the company spent at least $50,000 in

legal fees in “just a good, old-fashioned bloodletting over $500” (J. Vincent, personal

communication, March 16, 2009). Agreements over the $500 needed to repair a fence, or

similar types of quid-pro-quo arrangements, according to representatives of ranching,

were commonplace deals struck between ranchers and energy developers (Interviews

collectively). Representatives of ranching organizations lament that the days of sitting

down with the land-man and hammering out an equitable agreement over a cup of coffee

at the kitchen table are now a thing of the past (Interviews collectively).

Split-Estate Energy Development Reform Ranching’s Perspective

Ranchers experienced in conducting informal negotiations opposed enactment of

Surface Owner Protection Acts. Ranchers who were largely unfamiliar with how to

conduct negotiations with energy developers favored Surface Owner Protections Acts.

As a result, factions of ranchers developed within traditional ranching organizations.

These factions, in turn, helped shape the competition between ranching and energy

developers. The factions of ranchers who sought to retain the status quo aligned

themselves with the lobbying efforts of their traditional ranching organizations. Ranchers

favoring reform developed grassroots organizations such as the Landowner Association

of Wyoming (LAW). In New Mexico, ranchers favoring reform gravitated between their

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traditional ranching organization, the New Mexico Cattle Growers Association

(NMCGA), and other grassroots organizations such as the Oil and Gas Accountability

Project (OGAP). In all cases, because members of ranching’s traditional organizations

such as the Wyoming Stock Growers Association (WSGA) and the New Mexico Cattle

Growers Association (NMCGA) retained membership in their parent organizations, they

were able to influence these organizations to wield their considerable lobbying influence

in their respective state legislatures. The influence of traditional ranching organizations

assisted in ranching’s effort to enact Surface Owner Protection Acts in New Mexico,

Wyoming, and to a lesser extent, Colorado.

Splinter groups of ranchers sought to sever the ties of their traditional

organizations with the energy industry. According to Laurie Goodman, Chief Legislative

Lobbyist for the Landowners’ Association of Wyoming, one of the strategies employed

by ranchers favoring reform was to “sever the historical alliance of agri-business and the

energy industry by allowing the voices of their [ranching] own members to articulate

their problems” directly to members of the legislature (L. Goodman, personal

communication, March 23, 2009). Goodman argues that “empowering individual

landowners, members of their [ranching] organizations, to express how the fundamental

values of their organizations were not aligning with protecting them from the threats

posed by industry [energy], caused them to sever, at least temporarily, from their parent

organizations” (L. Goodman, personal communication, March 23, 2009). John Vincent

adds that the traditional alliance of ranchers’ parent organizations with the energy

industry wields tremendous influence on state lawmakers and their decision-making (J.

Vincent, personal communication, March 16, 2009). Vincent argues that the collective

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influence of the traditional organizational alliance of ranching and energy in Western

legislatures is “almost as though those lobbyists feel that any legislation that the

legislators feel should pass has to be properly vetted with them” (J. Vincent, personal

communication, March 16, 2009).

Ranchers favoring reform confronted their parent organizations’ entrenched

alliance with the energy industry to effect reform. Their direct confrontation created

what Ms. Goodman refers to as a “shift in motivating the political scene” (L. Goodman,

personal communication, March 23, 2009). Goodman views this shift as the result of a

grassroots movement within the parent organizations of ranchers (L. Goodman, personal

communication, March 23, 2009). In ranching’s legislative battle to protect their

interests, Goodman notes that the more knowledge ranchers gained of the energy

industry’s treatment of split-estate energy development and the harm development

activities created for their fellow ranchers, some ranchers began to reassess their alliance

to the energy industry (L. Goodman, personal communication, March 23, 2009). As Ms.

Goodman observes, “enviros were beginning to be viewed as ‘not the enemy’ in this

battle, but rather, the enemy was now seen as ‘one of their own: The oil and gas industry”

(L. Goodman, personal communication, March 23, 2009). John Vincent adds that

dislodging ranchers’ “us versus them” mentality toward environmentalists happened

because “you find members that really don’t espouse or follow the views of their [parent]

organization, and that caused some conflict” (J. Vincent, personal communication, March

16, 2009). Ranchers who did not espouse the traditional views splintered off from their

traditional ranching organizations. In doing this ranchers began to form some

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traditionally unimaginable alliances for the purpose of enacting Surface Owner Protection

Acts.

The Intervention of Environmental Organizations

The triumvirate powers of ranching, energy, and environmental organizations that

compose the BLM’s land-use subgovernment’s network of interests were scrambled

during the legislative debates of Surface Owner Protection Acts. Prior to their legislative

competition, ranchers and energy developers “were still entrenched in the ‘us against the

enviros argument’” (L. Goodman, personal communication, March 23, 2009). Prior to

employing the strategy of shifting the political scenery, ranchers seeking state legislative

intervention sought out the respective power brokers of their parent organizations to cut a

deal with their fellow energy industry power brokers. As John Vincent and Laurie

Goodman both contend, “But those brokers were the ones benefitting the most from the

status quo. They were seeking to protect their benefits at the expense of smaller

landowners. They were the ones with political access because they had the largest

interests invested through land, energy, and mineral ownership” (L. Goodman, personal

communication, March 23, 2009; J. Vincent, personal communication, March 16, 2009).

Entities of ranchers, however, “began to break free from the influence of these big

shadows,” and organize themselves into a grassroots movement separate from their

parent ranching organization (L. Goodman, personal communication, March 23, 2009).

As Ms. Goodman suggests, “We sought to build a grassroots movement through

education and empowerment that was unique in that the issue of split-estate energy

development was the issue itself. It [split-estate energy development] was the focal point

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that attracted people with similar values to our cause. We sought to build the parade” (L.

Goodman, personal communication, March 23, 2009).

Unlike Wyoming ranchers, ranchers in New Mexico who favored reform

remained largely aligned with their parent organization. This is because the New Mexico

Cattle Growers, unlike their Wyoming counterpart, took the position of favoring reform

efforts early on (C. Cowen, personal communication, May 21, 2010; L. Goodman,

personal communication, March 23, 2009). The organization’s support of reforming

split-estate energy development stems from what Caren Cowen refers to as member

frustration with the mindset of the energy industry (C. Cowen, personal communication,

May 21, 2010). She argues that members remained largely unified because “It was just

some extreme frustration with what was happening to the surface. I mean there are some

in the oil and gas industry that just feel the surface is in the way for them to get what they

want and need, and what they feel is their right” (C. Cowen, personal communication,

May 21, 2010). Cowen does note that some of the organization’s ranching members did

splinter off, stating that members held pretty firm, but “we’ve had some members that

joined OGAP” (C. Cowen, personal communication, May 21, 2010). Ms. Cowen

describes these members as being “terribly upset” or being “unhappy with a lot of our

policies” (C. Cowen, personal communication, May 21, 2010). The parent organization

of New Mexico ranchers, to a lesser degree than their Wyoming counterpart, joined

forces with environmental organizations, including the aforementioned OGAP. Cowen

adds that the alliance was initially uncomfortable for New Mexico ranchers due to the

entrenched “us versus them” lens through which ranching organizations have

traditionally viewed environmental organizations (C. Cowen, personal communication,

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May 21, 2010). Cowen adds “It’s formed interesting alliances that made me real

uncomfortable to begin with. But then, you know, you learn that these people (OGAP)

really don’t have horns. Some of that stuff. So it was a growing experience for me in

that direction” (C. Cowen, personal communication, May 21, 2010).

The Wyoming Stock Growers Association (WSGA) did not initially support

reform efforts. Prior to the introduction of Wyoming’s reform legislation, the WSGA

“sat down and developed a plan…in partnership with the mineral industry” (J. Magagna,

personal communication, March 23, 2009). According to Jim Magagna, “we put together

a task force and developed a set of split-estate protocols, and there was a set of

guidelines, both for the landowners and for CBM developers to say ‘here are some steps

you can take, didn’t provide the answers, but to enhance the communication, to enhance

the understanding, to help them through the process. We provided mediation services as

part of that to try and help these people work out some of these things [problems

associated split-estate energy development] as much as possible on the front end” (J.

Magagna, personal communication, March 23, 2009). In its effort to provide guidance to

its members, the WGSA attempted to emphasize the building of relationships between

CBM operators and ranchers prior to energy activities taking place (J. Magagna, personal

communication, March 23, 2009). Efforts such as these, however, failed to appease some

WGSA members’ anger and frustration with what was occurring away from the task

force. As John Vincent contends,

The reason I think that you see these two groups [WSGA and energy] still working together is the oil and gas industry complains that they can’t drill wherever they want to, whenever they want to, and the ag industry says we can’t run sheep and cattle wherever we want to, whenever we want to. What happens, though, and where the disconnect happens is when you get down here actually on the ground. If you’re not in the little club, so to

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speak, then you really are on the outside looking in, to the extent that a landowner tries to assert himself or herself, then you become a problem to the BLM and, you know, the other side of the equation. (J. Vincent, personal communication, March 16, 2009)

Vincent argues that the disconnect between members who were asserting themselves in

their call for legislative intervention were left frustrated by what they viewed as the

rhetorical appeasement of the energy industry by their parent ranching organization (J.

Vincent, personal communication, March 16, 2009). As a result of their frustration, these

ranchers splintered off and began to align themselves with environmental organizations.

The entrenched positions of the ranching-alliance are difficult to dislodge. As

more ranching alignments were created, and more legislators began receiving calls from

their constituents complaining about split-estate energy development, even Wyoming’s

traditional ranching organization, the WSGA, began working with environmental

organizations. Ranching organizations’ choice of which environmental organizations to

work with remained limited to organizations ranchers did not perceive as a threat to their

interests. Generally speaking, environmental organizations considered to have a

conservation-oriented mission were those favored by the ranching industry.

Environmental organizations viewed as being preservation-oriented were still considered

the enemy by ranching organizations in Wyoming and New Mexico (J. Magagna,

personal communication, March 23, 2009; C. Cowen, personal communication, May 21,

2010). Jim Magagna and Caren Cowen both argue that because environmental

organizations run the “spectrum,” ranching must be selective in their alliance with

environmentalists (J. Magagna, personal communication, March 23, 2009; C. Cowen,

personal communication, May 21, 2010). Magagna comments that,

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I always want to distinguish the term ‘environmentalist’ from what I view as true conservationists, those who want to see the resource properly managed and cared for, as opposed to those who don’t really want mineral development out there, [and] don’t really want, at least public land, grazing, don’t really want commercial recreation, the list could go on, but those are the three big ones. Whether it’s formal groups or just individual citizens who think that locking up the land, or this notion of restoring to pre-European settlement conditions, which you hear about periodically, any of that, in a bigger scheme of things, is a far greater threat to our industry than what’s happening with the mineral people. (J. Magagna, personal communication, March 23, 2009)

Caren Cowen reinforces this position by adding that in New Mexico, her organization,

the NMCGA, takes the position that “OGAP is not the same as the Sierra Club. We don’t

view OGAP as somebody that’s trying to get rid of grazing, where the Sierra Club is. So

even we make those kinds of distinctions, but we have learned that it’s our job to sit

down with those people, whether we like it or not. You cannot expect us as an

organization to go have them suing to get us off of the land on one hand and go hold

hands with them on the other hand. It just doesn’t work that way” (C. Cowen, personal

communication, May 21, 2010).

The support of environmental organizations in ranching’s efforts to implement

legislative reform was difficult for ranching organizations to comprehend. As Caren

Cowen notes, “Sometimes you kind of have to take a deep breath and scratch your head

and say what did I miss in that? That this set of players that we’re all on the same side”

(C. Cowen, personal communication, May 21, 2010)? Jim Magagna argues that the

working relationship with environmental organizations has, over time, proven beneficial

to ranchers. Magagna comments that, “It’s kind of interesting because yeah, as the shift

started to take place, we were the beneficiaries of the fact that for awhile we were the

target of the environmental community and then, suddenly, mineral development became

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the target, and we, in recent years, found ourselves to be the party that’s being courted by

both sides” (J. Magagna, personal communication, March 23, 2009). Mr. Magagna’s

suggestion that ranching is now courted by both environmental and mineral organizations

was not the case, however, at the height of the legislative competition between ranching

and energy.3

Assistance given to ranchers and their respective organizations by environmental

organizations was done quietly. This is because, as Laurie Goodman argues, among

members of LAW, “there is a truth of environmentalism as it relates to property and to

our cause. But if casting our effort in environmental terms were to occur it would have

killed us” (L. Goodman, personal communication, March 23, 2009). Casting the effort to

reform split-estate energy development in environmental terms is different than casting

those efforts in private property protection terms. This is because the protection of

private property rights resonates with ranchers, while the environmental protection values

of preservation-oriented environmental organizations remain unacceptable to ranchers.

This means that the ranching-environmental alliance is subjective to the land

management policy issue at hand. Ranchers have retained their traditional wariness of

environmental organizations, even those environmental organizations whose missions are

considered by ranchers as relatively moderate.

From the perspective of the energy industry, the support of environmental

organizations given to ranchers is unacceptable. As such, energy representatives used the

newly formed ranching-environmental alliance in their opposition of ranching’s efforts to

reform split-estate energy development. The lobbying and negotiation activities of the

3 Note: Surface Owner Protection Acts were debated from 2005-2007. As of 2010, Utah remains the only Western State without a Surface Owner Protection Act. The latest defeat for Utah’s bill was in the 2010 legislative session.

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ranching and energy industry were competitive. As tensions rose, a mutual state of

mistrust took hold and communication broke down. Simply put, the conflict heightened

to a point where ranching and energy organizations were no longer communicating with

each other. Thus, discussions between representatives of ranching and energy

development organizations that occurred during this period illustrate the degree to which

the conflict between ranching and energy had heightened. For example, Caren Cowen

tells the story of how the energy industry’s representative used the ranching-

environmental alliance as a weapon in his industry’s opposition to NMCGA’s support of

New Mexico’s Surface Owner Protection Act. Ms. Cowen relates that, at the request of

the Governor of New Mexico, Bill Richardson, the two opposing sides were asked to

close themselves off in a meeting room in the New Mexico state capitol building and

begin communicating with each other. At the appointed time of the meeting,

[The energy representative] leaned over the desk and got in my face and said, “Just wait till your members find out you have brought in an out-of- state environmental group to carry your water.” I mean, he totally ignored the fact that [environmental representative] was even sitting there, and I blew up. I mean, I don’t lose my temper very often. I lost my temper really bad. It’s those kinds of things. I mean, it was totally unnecessary. I mean, you just, you don’t treat other human beings that way. You may be mad that you’re having to sit across the table from somebody, but you know, he knew how to push my button, and he did really well. I stormed out of the office and slammed doors that you could hear three floors down. (C. Cowen, personal communication, May 21, 2009; B. Gallagher, personal communication, May 21, 2009)4

During the course of debating State Surface Owner Protection Acts,

representatives of the energy industry sought to use the alliance of environmental groups

against ranching organization seeking to implement legislative reform. In the opinion of

ranching organizations, the energy industry’s opposition of their reform efforts left them 4 Note: Unprompted, Gallagher, former Director of the New Mexico Oil and Gas Association (NMOGA), retold the same story and confirmed that it was he who had invoked Cowen’s wrath.

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no choice but to seek the assistance of the more conservation-oriented environmental

organizations. The controversial strategy of seeking out the assistance of environmental

organizations remained covert known only to ranchers who had organized themselves

outside their parent organizations.

Surface Owner Protection Acts: Ranching’s Perspective

By 2003-2004, energy activities had displaced ranching activities as the

predominant use of land and resources in states of the Rocky Mountain West. During the

course of energy development’s expansion, ranchers were hindered in their efforts to

adequately respond to energy’s ability to access their surface lands. Ranchers could not

adequately address the problems associated with split-estate energy development because

the right of developing the federally owned mineral estate is protected. Ranchers were

frustrated by the BLM’ response to requests for assistance in resolving problems

associated with split-estate energy development and with the energy industry’s lack of

accountability as split-estate energy activities began impacting their ability to conduct

ranching activities. Unable to resolve their problems amicably with the BLM or the

energy industry, ranchers focused their efforts on enacting Surface Owner Protection

Acts in order to protect their interests.

Ranching and energy organizations competed to protect their respective interests

as Surface Owner Protection Acts were debated in Western states legislatures. On the

one hand, energy officials believed the types of reforms being sought by ranchers were

unnecessary. Ranchers, on the other hand, believed that the types of reforms they sought

would restore equity and balance to their competing interest in land-use. As John

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Vincent notes, the competition between the ranching and energy industry over these

reforms “was out and out war” (J. Vincent, personal communication, March 16, 2009).

Ranchers sought four types of reform in order to restore their equal footing with

energy developers. First, ranchers requested that state legislators extend the notification

time-frame in excess of the federal standard. Second, they asked that guidelines be

imposed on the types of accommodation and compensatory damages required by Surface

Owner Agreements in excess of those required by federal law. Third, they requested that

the state increase required bonding fees in excess of federal standards. And finally, they

asked for the requirement that energy development companies offer fair compensation for

any loss of ranchers’ potential property value (Interviews collectively).

Ranchers’ willingness to confront energy developers is not the norm. A

confrontation with the energy industry, in the opinion of most ranching representatives, is

not in the best interest of the ranching industry. For ranchers who were determined to

confront the energy industry, this meant having to separate themselves from their fellow

ranchers. According to Jim Magagna, it was not that most ranchers lacked the

willingness to engage in a fight; it was that “they are not able to” engage in a fight (J.

Magagna, personal communication, March 23, 2009). Magagna argues that ranchers are

unable to engage in expensive confrontations with a more fiscally resourceful industry

like that of energy. Magagna also notes that “it’s not in their [ranchers] nature to want to

spend time in court or the halls of the legislature” (J. Magagna, personal communication,

March 23, 2009). Ranchers would, according to Magagna and other ranching

representatives, rather be running their stock or engaging in other ranch activities

(Interviews collectively). Magagna believes that while decision-makers “are going to be

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a little inclined toward the rancher as the little guy unless it is some big, huge, powerful

person [energy]” (J. Magagna, personal communication, March 23, 2009). Magagna uses

the analogy of a court hearing to illustrate ranchers’ David-like position in the fight with

the Goliath-type position of the energy industry when he suggests, “If the mineral

company was able to bring in three high-powered lawyers to present a good case, and the

rancher had to hire the neighbor, who’s only been practicing for two years and isn’t

involved in oil and gas litigation and says, ‘well, I can only afford to give you $2,000 to

do the best you can for me,’ it’s pretty hard for a sympathetic judge to necessarily favor

the rancher” J. Magagna, personal communication, March 23, 2009). The same disparity

holds true for ranching’s ability to challenge the energy industry in the halls of state

legislatures.

Today the ranching industry does not have the ability to strongly influence state

elected officials. This is because, as Caren Cowen contends, “We [the ranching industry]

had a lot more boots in the legislature [in the past] than we have today. That’s just the

bottom line” (C. Cowen, personal communication, May 21, 2010). This does not mean

that state legislators are unsympathetic to the plight of ranchers, but as Cowen notes,

“Their [the legislators] ox wasn’t being gored at this point, so they don’t know how much

blood was on the floor to get it [conflict] where it was” (C. Cowen, personal

communication, May 21, 2010). Legislators and ranchers were hesitant to confront

energy development because of the tremendous financial benefits that Western states

derive from the production of energy. Jim Magagna comments that

Even if you compare Wyoming with some of our neighboring states, Wyoming derives tremendous value for our minerals. And I think, generally speaking, we have been friendly to mineral development. It is certainly not something we have been opposed to because we as

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agriculturalists benefit from that in numerous ways. Not only in terms of government services, but in terms of low taxes and other benefits as well. (J. Magagna, personal communication, March 23, 2009)

Ranching’s ability to derive benefits from the development of energy

notwithstanding, ranchers believe that federal laws favoring energy development create

disparity between their ability to derive personal economic benefit from their surface

activities. In the opinion of ranching representatives, that disparity is the direct result of

the federal government’s protection of energy development activities as an inherent

property right. Ranchers oppose the disparity of energy leases having the rights of

property, while grazing leases are not recognized as having the rights of property. Caren

Cowen argues that ranchers understand the property right of an energy lease assures that

the energy resource will be developed and brought to market, but that “as we were

fighting to get this bill [Surface Owner Protection Act] passed there was a lot of

conversation that went on that it [mineral estate] was the dominant estate, and that we

couldn’t do anything to change that because it would harm the federal law. In other

words, we could not flatly deny access” (C. Cowen, personal communication, May 21,

2010). Ranchers could, however, attempt to enact measures that would extend or exceed

federal guidelines regarding mandates of providing surface owners with a notification of

access, accommodation and compensation for surface disturbance, and bonding fees.

Federal regulations require that 45 days notice be given to landowners of a

company’s intent to access the surface estate and conduct energy activities. It is common

practice to provide notices via certified mail. Once delivered, the 45-day clock begins to

run. If the landowner does not respond to the notice, the permission to access and begin

energy development activities is implied. Caren Cowen confirms that these types of

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notifications were often put aside by ranchers with the understanding that the land-man

with whom the rancher had always dealt with would eventually show up at the door and

work a deal out for access and accommodation (C. Cowen, personal communication,

May 21, 2010). Cowen verifies that it was often the case that the land-man would not

show up, and that that the 45 day time limit for a response would pass (C. Cowen,

personal communication, May 21, 2010). The result was, according to Cowen, that

instead of the land-man coming to the ranch, the rancher would, eventually, be met by

trucks coming through the gate and across the surface of the ranch (C. Cowen, personal

communication, May 21, 2010). Jim Magagna adds that energy development’s rapid

expansion led “to more shortcuts being taken by the mineral companies in their effort to

get out there and get a lot done in a hurry” (J. Magagna, personal communication, March

23, 2009).

The increasingly regular occurrence of these types of instances motivated

ranchers to request that the state enact statutes that would extend the time-frame in which

ranchers could respond to the access and development notification. Jim Magagna

describes the issue of adequate notification of access and the intent to develop as being

one issue among many in “some of this head-to-head [argument between ranchers and

energy developers] on specific issues, on some of the issues that were eventually

addressed in split-estate” (J. Magagna, personal communication, March 23, 2009). In

this sense, ranchers requested that, in addition to extending the time-frame of a

notification, states require energy companies to notify split-estate property owners of

their intent to purchase an energy lease if the lease was located within the boundaries of a

split-estate property holding. The purpose of asking for advanced notification of an

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energy developer’s intent to purchase a lease was, according to Ms. Cowen, to give the

rancher a “time frame to bid against them” (C. Cowen, personal communication, May 21,

2010). The response of the energy industry to these proposals was that “they got really

angry” (C. Cowen, personal communication, May 21, 2010). Cowen remarks that the

energy industry’s stance was that additional notice requirement “doesn’t do anything” to

alleviate problems associated with inadequate notification (C. Cowen, personal

communication, May 21, 2010). Cowen relates that when her organization inquired “if it

doesn’t do anything to you, then why enter into this fight” (C. Cowen, personal

communication, May 21, 2010)? Cowen notes during the course of a meeting with a

representative of energy the response to her question was that, “energy got really mad

and turned around and walked off” (C. Cowen, personal communication, May 21, 2010).

Federal law only stipulates that split-estate landowners be compensated for the

loss of crops—including plants and grasses associated with grazing—and existing

structures. As noted earlier, if accommodation and compensation for losses resulting

from energy activities disturbance of the surface are not addressed in the Surface Owner

Agreement, energy companies are not required by law to compensate the landowner after

the damage has occurred. This type of issues was most problematic to ranchers. As

noted earlier, split-estate property owners were often unfamiliar with the types of

accommodation and compensation issues they should be addressing with the energy

company’s representative. Hindered by their lack of knowledge and the inadequacy of

the information that was made available, split-estate property owners’ sustained damages

of one type or another that resulted from energy development activities not addressed in

Surface Owner Agreements. As a result, the most common problems associated with the

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development of split-estate energy development were those associated with unaddressed

issues of accommodation and compensation.

Ranchers employed three justifications for their request that state legislatures

enhance energy developers’ monetary accountability to ranchers for inconvenience and

losses. The first justification ranchers made concerned their request that the state impose

specific guidelines regarding the types of accommodation and compensation issues that

energy developers were required to address in Surface Owner Agreement contracts. As

John Vincent argues,

The type of conflict that typically arose wasn’t so much that the farmer or rancher wanted to stop the drilling; they weren’t opposed to the idea that the oil company was there improving their estate or developing it or any of those types of things. Where the rub always occurred was pretty much always in the drilling location. The disputes that typically occurred were: Why are you [company] putting it in the middle of the field rather than on the edge of the field? Why aren’t you hauling out all of those cuttings from that reserve pit and getting them out of here? Why aren’t you locating your production facilities off to the side of the field? Those kinds of issues. (J. Vincent, personal communication, March 16, 2009)

The ranching industry’s justification for states enacting a requirement that energy

companies address issues such as these during the course of negotiating Surface Owner

Agreements was intended to off-set the lack of specificity in federal laws and regulations

regarding issues accommodation and compensation. Vincent adds that “you can try to

determine damages, but then the rub became that the damages that were permitted under

the law were so miniscule that basically it was a taking without compensation.

Outbuildings and crops, and irrigation improvements” (J. Vincent, personal

communication, March 16, 2009). Vincent contends that the energy industry’s response

to ranching’s request of clarifying the types of accommodations and compensation

addressed in their negotiations with split-estate property owners was met with stern

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opposition (J. Vincent, personal communication, March 16, 2009). Vincent comments

that “the oil companies fought hammer and tong about the notion that you [rancher] could

have a determination of or recover damages in the difference in the value of the land

before and after entry. Of course, the oil companies are trying to limit that determination

to just that acre, or whatever they say is involved by their activity” (J. Vincent, personal

communication, March 16, 2009).

Caren Cowen suggests that uniformity of the types of accommodations made and

the compensation amounts considered in a Surface Owner Agreement should act as a

“guideline” for the negotiation process (C. Cowen, personal communication, May 21,

2010). She argues that because “there’s always what ifs that nobody can anticipate,”

uniformity should guide the course of the negotiation process, and that “having some

guidelines would be very helpful for people” (C. Cowen, personal communication, May

21, 2010). Cowen clarifies that “if it’s a guideline, I don’t think that it would be good to

have something that there’s no deviation from. I’ll get calls [from split-estate landowners

asking] what do I need to do? Do you have a kind of template? Where do I start” (C.

Cowen, personal communication, May 21, 2010)? Jim Magagna concludes that “really

taking the time to sit down and negotiate, some of the things that in an earlier day the

mineral operator and the landowner worked out over the kitchen table. There wasn’t that

kitchen table atmosphere anymore; it was here’s an agreement, sign this. The drilling rig

will be here day after tomorrow-type approach” (J. Magagna, personal communication,

March 23, 2009).

The second justification ranchers made concerned their request that the state

impose higher bonding fees for energy development activities. Federal law limits the

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amount of required bonding fees for energy developers to access and develop energy

resources. As previously discussed, federal bonds range from site bonds of $1,000, to

blanket bonds of $150,000 for nationwide energy development projects.5 Ranching

organizations consider these bond fees inadequate to recover potential economic losses

they may suffer, or the costs of reclamation they may incur once energy activities

conclude. Ranchers are particularly concerned about the inadequacy of federal bonding

requirements because of their legal incapacity to prohibit energy companies from

accessing and developing the energy leases located on split-estate properties.

Ranching’s justification for the state’s imposing higher bonding fee requirements

from energy companies seeking to engage in energy development activities was intended

to offset the low dollar bond amounts established by the federal government. Caren

Cowen suggests that ranchers feel as they can neither prohibit energy development

activities from occurring, nor can they negotiate the terms of a bond (C. Cowen, personal

communication, May 21, 2010). Cowen argues that, “they [energy companies] were just

[posting bond with the BLM] and coming on” (C. Cowen, personal communication, May

21, 2010). In turn, according to Cowen, “They [ranchers] feel like they’re negotiating

with one hand tied behind their back” (C. Cowen, personal communication, May 21,

2010). Ranchers, Cowen notes, believed that “the bonding was too low and it [lack to

negotiate the price of a bond] handicapped them in that way” (C. Cowen, personal

communication, May 21, 2010). Cowen suggests that ranchers would “prefer that the

bond be $200,000 as opposed to $25,000 because outside of the BLM there is nobody to

hold them [the energy industry] back” (C. Cowen, personal communication, May 21,

5 Note: See generally discussion in Chapter Four.

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2010). Jim Magagna adds that “It’s the federal mineral, and certainly they [energy

developer] can bond on. But beyond that, I guess arguably from the federal perspective,

at one time, the federal government had it all, and through the Stock Raising Homestead

Act they issued me [rancher] a patent for the surface and so if they issued it, it’s subject

to terms and conditions under which they issued it, or at least now claim that they issued

it, which [in terms of the severed mineral estate] is an absolute right to develop the

minerals” (J. Magagna, personal communication, March 23, 2009). Magagna concludes

that given the limits of federal law and regulation,

One of the things we really preach to ranchers is if you’re in an area where CBM development is likely or inevitable, develop a plan looking 5, 10, 20 years down the road for your ranch; what you want. And then when the land-man comes knocking on your door, instead of he has a plan; he knows his plan of development for the well, for the coalbed methane, and you don’t know what your plan is, so you’re at his mercy. But if you’ve got a plan to put on the table and say, ‘well, hers what my ranch plan is for the next 20 years, and how can you, through your CBM development, help me achieve that, or at a minimum, not hinder my reaching that goal, that you and I can do some positive things together? (J. Magagna, personal communication, March 23, 2009)

The third justification ranchers made concerned their request that the state require

energy development companies to offer fair compensation for any loss of ranchers’

potential property value. Ranchers justified their request by advocating that the state’s

legal requirement for the compensation for any loss of potential property value was

intended to protect their ability to divide, or parcel, their property holdings in order to

derive economic benefit from the land’s value as real estate (Interviews collectively).6

The energy industry, in the words of John Vincent, fought this proposal “hammer and

tong. (J. Vincent, personal communication, March 16, 2009). Representatives of

6 Note: See generally discussion in Chapter Four.

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ranching agree that their proposal to hold the energy industry accountable for the loss of

the ranchland’s potential value as a real-estate holding was a “non-starter” (L. Goodman,

personal communication, March 23, 2009). Representatives of the energy industry

viewed ranching’s request for the potential of economic loss of value in the land as being

“speculative,” and they opposed the notion each time the topic of real estate value was

brought to the negotiating table (L. Goodman, personal communication, March 23, 2009).

When the dust settled, the states of New Mexico, Colorado, and Wyoming did

enact Surface Owner Protection Acts.7 Jim Magagna concludes that at the end of the

legislative competition, ranchers provided legislators the opportunity to create a “better

balance” between ranching and energy developers. Magagna adds that, “there was a

place for policymakers to step in and create a little better balance and avoid these

individual negotiations so frequently ending up in courts, or if they do end up in the

courts, giving the courts a little something in order to allow them to provide some

balance” (J. Magagna, personal communication, March 23, 2009).

The conflict and competition that occurred between ranching and energy

established unprecedented wariness between the two interests. The ranching-energy

alliance has been disrupted as the two industries went “eyeball-to-eyeball” with one

another as each interest sought to defend their industry’s interests (Interviews

collectively). The legislative battles ranching and energy’s organizational representatives

had engaged in were fights to control the future destinies of their respective members.

On the one hand, the energy industry—relying on the legal dominance of the federally

owned mineral estate—sought to defend the status quo of split-estate energy

7 Note: Wyoming Surface Owner Accommodation Act (2005); New Mexico Surface Owner Protection Act (2007); Colorado Surface Owner Protection Act (2007).

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development. In doing so, they sought to control ranching’s ability to reform split-estate

energy development. Ranchers, on the other hand, had sought to protect themselves from

what they viewed as a fundamental unfairness that was greatly impacting their ranches

and their communities.

Annexing the BLM’s Land-Use Subgovernment Ranching’s Perspective

Representatives of ranching are uniform in their belief that the BLM’s land-use

subgovernment has been superseded by the energy industry. Their opinions demonstrate

ranching’s deference to energy development interests within the hierarchical structure of

the subgovernment’s network of interests. As ranching’s representatives all note, they

believed that their industry’s displacement within the BLM’s land-use subgovernment

was only a matter of time. Representatives of ranching organizations are not shy in

expressing the opinion that the federal government, and in particular the BLM, as well as

environmental organizations, are not friendly to their interests. They remain collectively

dismayed at the energy industry’s assault on their attempt to protect their interests from

harm. But that does not stop them from agreeing that the interests of ranching remain

intertwined with those of the energy industry. Ranching representatives concede that

times have changed for their industry and that a number of variables have, over the

course of time, played a role in their fall as the predominant voice within the BLM’s

land-use subgovernment.

Energy derives greater political, economic, and social benefits than does ranching.

Ranching’s deference to energy development occurs because as Caren Cowen argues,

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“It’s been a long, long time since grazing was the most economically valuable piece of

that [subgovernment] because nobody puts a value on the stewardship and the care of the

land” (C. Cowen, personal communication, May 21, 2010). Cowen’s argument is

premised on the belief that “the BLM is tasked with making as much money as they can”

(C. Cowen, personal communication, May 21, 2010). Ranching representatives

acknowledge the important role domestic energy development plays in the political,

economic, and social well-being of the United States. But they also view the legal and

political protection of the energy industry is at their expense. Among the ranching

organizations of the Rocky Mountain West, the view is that the legal and political

defense of energy development is unbalanced. Cowen concludes that the BLM takes its

marching orders from its elected political masters: “We think at this juncture that the

BLM does pay a lot more attention to the oil and gas industry, and that’s said with all due

respect to the good people I work with in the BLM every day. I think the mandate from

D.C. down is that way” (C. Cowen, personal communication, May 21, 2010).

Western states’ revenues are dependent on energy development. The economic

return of energy development far exceeds the return ranching revenues to state budgets.

The economic benefits created by the expansion of domestic energy development are

important to governmental decision-makers. It can, however, lead to the development of

cozy relationships that are not beneficial to ranching’s or the public’s interests when

conflict occurs. As John Vincent argues, “I just think that when you have an industry that

grosses 34 Billion dollars, self-reports 34 Billion dollars in revenue in a state like

Wyoming where there are five or six hundred thousand people it’s kind of like ignoring

the elephant standing in the living room. That industry is going to have an influence on

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local government, county government, state government, the BLM” (J. Vincent, personal

communication, March 16, 2009). Vincent notes that the energy industry’s influence on

people, like that of government entities, can be “overwhelming” (J. Vincent, personal

communication, March 16, 2009). Vincent comments that, “they [energy industry] can

hire rafts and rafts of lawyers and lobbyists, whatever, that are just up in people’s faces

all of the time. They’re in their stroking them, they’re in there, you know, let me help

you help us get that permit. What the oil and gas industry does is curry favor with the

people they think will be their allies” (J. Vincent, personal communication, March 16,

2009). Vincent concludes that when those persons or groups, such as disgruntled

ranchers, begin to complain to their elected officials the result is “the legislature sitting

there thinking, ‘what do I do now” (J. Vincent, personal communication, March 16,

2009)?

Energy’s annexation of the BLM’s land-use subgovernment away from ranching

began as domestic energy development increased. Ranching’s loss of land-use decision-

making control within the BLM’s subgovernment coincided with the impact political

willpower, energy markets, and technological advancements on the energy industry’s

capacity to expand their operations across the Rocky Mountain West. Caren Cowen

argues that, “I look back to [Secretary of the Interior] Babbitt’s8 Range Land Reform and

some of the stuff that he did. When they [federal government] did away with grazing

advisory boards basically, we lost a voice that we had through all of this [conflict with

energy] and I tend to believe that had we still had those grazing advisory boards that we

might have had more voice in what went on” (C. Cowen, personal communication, May

8 Note: Cowen is commenting on Secretary of the Interior Bruce Babbitt under former President William J. Clinton.

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21, 2010). Cowen considered the BLM’s grazing board replacement with Regional

Advisory Councils (RAC) as being effectively “ceremonial” (C. Cowen, personal

communication, May 21, 2010). 9 But, she is also quick to point out that the ceremonially

nature of the RAC decision-making process does not deter ranching from taking its seat

at the table because “at least there’s a process, at least there’s a voice if you really have to

do something. If you don’t go, they say, ‘you didn’t want to play. You had an

opportunity to play and you chose not to’” (C. Cowen, personal communication, May 21,

2010). Cowen also contends that ranching’s lack of resources hinders its ability to more

fully engage in BLM Resource Management Planning (RMP) (C. Cowen, personal

communication, May 21, 2010).

Ranching at one time dominated the network of interests within the BLM’s land-

use subgovernment. Ms. Cowen regards ranching dominance as a thing of the past when

she comments “You know, back in the ‘30s or ‘40s maybe, in the very beginning

perhaps, but in my lifetime? No” (C. Cowen, personal communication, May 21, 2010).

Jim Magagna responds that ranching’s dominance was diminished, if not lost, with the

enactment of the Federal Lands Management Policy Act of 1976 (FLPMA) (J. Magagna,

personal communication, March 23, 2009).10 Magagna hastens to add that viewing

ranching through the lens of a pre-FLPMA iron-triangle, “Grazing was very powerful at

one point in time. I’m not sure that back at that time I ever thought of grazing and

minerals as being together because minerals were simply less of a factor” (J. Magagna,

9 Note: Under the Federal Land Management and Policy Act of 1976 BLM Regional Advisory Councils (RAC) were created to replace the grazing commissions of the General Land Office and U.S. Grazing Service. 10 Note: See generally discussion in Chapters One, Two, and Three.

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personal communication, March 23, 2009). Magagna comments that, “Prior to the

creation of the BLM, grazing on these lands existed. Most of the policy centered around

grazing because that’s basically all there was out here on most of the BLM lands. There

wasn’t anything else. So certainly in that sense there was a dominance” (J. Magagna,

personal communication, March 23, 2009).” Magagna adds that in the face of energy

development’s expansion across the West “livestock grazing has clearly been allowed to

continue, but pretty much at a low level of attention from the Bureau [BLM] itself, a low

level of importance. I mean few people outside the ranching community know what

you’re talking about when you talk about the Taylor Grazing Act today” (J. Magagna,

personal communication, March 23, 2009). As a result of the employment of FLPMA

and the mandate of multiple-use, ranching’s dominant position within the interest

network of the BLM’s land-use subgovernment eroded.

The BLM does not direct the same amount of resources toward ranching as it

does energy development. It is the shared opinion among representatives of the ranching

industry that a shift in the subgovernment led to a shift in BLM policy and resources.

Representatives of the ranching industry comment that “the mineral industry has the

disproportionate amount of attention of the BLM” (Interviews collectively; J. Magagna,

personal communication, March 23, 2009). According to ranching representatives it’s

not just the attention of the BLM favoring the energy resources, but more of the BLM’s

administrative resources are directed at energy development as well (Interviews

collectively; J. Magagna, personal communication, March 23, 2009). The ranching

industry’s loss of prominence within the BLM is attributable in part to what Jim Magagna

refers to as “a totally different historic setting that doesn’t repeat itself today. Because

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when we had so-called control of it, it wasn’t that we were demanding their [BLM]

attention, their resources. It was, some would argue, it was sort of a free pass”

(Interviews collectively; J. Magagna, personal communication, March 23, 2009).

Conclusion: Annexation of a Subgovernment

Ranchers never wished to halt the development of domestic energy resources

(Interviews collectively). This is a common theme repeated among representatives of

ranching’s interests. However, as domestic energy development spread across the Rocky

Mountain West, more and more ranchers were affected. The negative effect of domestic

energy’s expansion was a particularly onerous on ranchers who own split-estate

properties. With increasing numbers of split-estate energy properties being developed,

the short-term impact to ranchers was the disparity in their ability to fairly negotiate

terms of access and development with energy developers. The long-term impact to

ranchers was their inability to recoup economic losses from increased development

activities occurring on their surface lands. Because impacts such as these were not being

addressed by the BLM or the energy industry, problems associated with split-estate

energy development triggered conflict between ranchers and energy development

interests.

With each new report of a problem occurring, tensions between the ranching and

energy industries heightened. In turn, because ranchers’ problems with split-estate

energy development centered on the inequities that had been created by federal laws and

regulations guiding split-estate energy development, ranchers and their traditional

lobbying organizations sought the protection of their state legislatures.

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Ranchers seeking protection of state law advocated for the reform of split-estate

energy development by petitioning their state governments to enact Surface Owner

Protection Acts. In the legislative battles that ensued, each industry sought to control and

protect its industry’s predominant use of the land and resources. Ranching and energy

development organizations lobbied their states’ elected officials in a manner that would

prove most valuable to their members’ interests.

At the conclusion of these legislative battles it is clear that the alliance that had

existed between these two powerful and resource rich stakeholders in the BLM’s land-use

subgovernment had been disrupted. Policy control of the BLM’s public-lands decision-

making subgovernment has shifted. Policy over the manner in which governmental

decisions are crafted regarding the use of federally managed public lands is now

controlled by the energy industry.

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References

Colorado Surface Owner Protection Act, LB 1252, Laws of Colorado, 2007.

New Mexico Surface Owner Protection Act, LB 0827, Laws of New Mexico, 2007.

Wyoming Surface Owner Accommodation Act, LB 0070, Laws of Wyoming, 2005.

CHAPTER EIGHT

CONCLUSION

The Energy Industry Dominates the BLM

Fluctuations in three principal factors led to the expansion of domestic energy

development in the Rocky Mountain West. First, shortages in energy resources created

greater demand for energy supplies, which led to a rise in the price of energy supplies.

Second, technological advances furthered the ability of energy companies to develop

hard-to-access energy supplies, including nontraditional energy resources such as coalbed

methane (CBM). As energy prices increased, and the use of better technology became

widespread, development of energy resources was again profitable for energy companies.

Energy companies sought to profit from traditional and nontraditional energy resources

and creating a desire among energy developers to expand domestic energy development.

Third, elected officials, responding to the need for expanding domestic energy

development, took steps to improve the ability of energy companies to expand their

energy resource development activities. Therefore, fluctuations of energy markets,

energy technology, and political will-power converged to facilitate rapid expansion of

domestic energy development.

The Bush Administration’s succeeded in its use of executive power in strategic

pursuit of its expanding domestic energy development. They were able to shift the

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energy policy of the Bureau of Land Management (BLM). This is because the BLM, in

response to the President’s political directives, shifted its energy policy by implementing

changes to the administrative procedures that guide the development of domestic energy

resources. Congress responded to this shift by increasing the administrative resources of

the BLM in support of the President’s policy objective of expanding domestic energy

development. Therefore, (H1) changes in the Executive Branch led to changes in

domestic energy policy, is supported by this research.

Domestic energy development activities increased in states of the Rocky

Mountain West. Three to five percent (3-5%) of all domestic energy development from

2001-2009 took place on split-estate property in the states of New Mexico, Colorado, and

Wyoming. A split-estate is defined by federal law as a parcel of private property where

rights of the privately owned surface estate are severed from the rights of the federally

owned mineral estate. As energy development activities on split-estates expanded,

problems associated with those activities negatively affected split-estate property owners:

ranchers and homeowners. In turn, as energy development-related problems between

split-estate landowners and energy developers multiplied, landowners—particularly

ranchers—sought to protect their interests by lobbying state lawmakers for enactment of

Surface Owner Protection Acts. During deliberation of Surface Owner Protection Acts

by state lawmakers, organizations representing the interests of ranchers and energy

developers competed for control of the federal land-management policy environment.

Therefore, (H2) changes in domestic energy policy triggered heightened conflict and

competition between formerly allied, strong, and resource-rich members in a public lands

subgovernment, is supported by this research.

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Surface Owner Protection Acts were eventually enacted by the states of New

Mexico, Colorado, and Wyoming. These acts were intended to heighten the

accountability of energy developers in the development of split-estate energy resources.

The legislation increased federal notification standards and bond fees. Ranching

organizations supported these measures. Energy development organizations opposed

these measures. The confrontation between ranching and energy development over the

intent of the legislation and the means proposed to achieve the legislation’s intent divided

the formerly allied interests of the ranching and energy industries. Evidence suggests that

as the confrontation between ranching and energy unfolded in state legislatures, conflict

and competition between the two interests heightened. Evidence also suggests that as the

conflict and competition heightened over the enactment Surface Owner Protection bills,

the central concern of each side was to reform or protect federal law and regulation

concerning split-estate energy development. Therefore, (H3) heightened conflict and

competition between former subgovernment allies led to a shift in policy control of a

public lands subgovernment, is supported by this research.

Surface Owner Protection Acts did not reform federal laws establishing the

mineral estate’s legal dominance over the surface estate. While energy developers are

held more accountability in some states, the BLM’s administrative procedures guiding

split-estate energy development is unchanged. Federal laws and regulatory procedures

are unchanged because federal energy policy is largely unaffected by state Surface Owner

Protection Acts. The inability of states to reverse or affect change to federal energy

policy suggests that central administrative authority for split-estate energy resource

development and its activities still rests with the BLM. Therefore, based on the findings

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of this research I conclude that the BLM is no longer a rancher-dominated agency, but is

now an energy-dominated agency.

Presidential Control Over Subgovernments

Evidence indicates there are three principal coalitions of stakeholders interacting

within the interest network of the BLM’s land-use subgovernment: energy, ranching, and

environmental. These interests comprise what might be referred to as the triumvirate

powers of the BLM’s land-use subgovernment. These three powerful and resources rich

interests have, over time, competed for control of the federal land management policy

environment which resulted in the establishment of a hierarchical relationship within the

interest network of the BLM’s land-use subgovernment. Over time, this hierarchy of

interests became entrenched. Ranching retained its influence among the two

corresponding networks of actors (executive agencies and congressional committees) that

compose the BLM’s subgovernment. In doing this, ranching controlled land-

management budgets and policies. Simply put, the ranching industry managed to defend

its domination of the BLM’s subgovernment for decades and in doing so it retained

control over the policymaking environment from the years of Western Expansion to

election of George W. Bush and Vice President Richard B. Cheney in 2000.1

My analysis of archival historic documents combined with investigative

interviews of elites indicates that the 2000 election of the Bush Administration resulted in

1 Note: This conclusion does not imply that the 2000 election of the Bush Administration was the only factor in the demise of ranching’s power over the BLM’s subgovernment. Other factors such as the Taylor Grazing Act of 1934, the Federal Lands Management and Policy Act of 1976, along with generational movement of ranching families from rural ranchlands to metropolitan population centers are just a few among the many factors that have led to ranching’s inability to be the dominant force in BLM land-use decision-making.

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a change in the BLM’s energy policy. This change disrupted the established

subgovernment of the BLM’s land-management policy environment. The analysis also

indicated that, in its current manifestation (2010), the established hierarchical order

among the principal interests in the BLM’s network of interest groups is: energy first,

ranching second, and environmental third. This disruption is indicative of the Bush

Administration’s pursuit of expanding domestic energy development. Therefore, based

on the evidence presented here, I conclude that unilateral actions taken by the President

can have the impact of disrupting established subgovernments.

The finding that a President can disrupt established subgovernments is based on

three conditions. First, a President must unilaterally exercise executive powers in

strategic pursuit of a policy objective. Second, a President who exercises executive

powers in this manner must have the support of Congress. Finally, a President must also

have the support of congressional committees charged with oversight of the

policymaking environment in which the policy objective is being sought.

Analysis of the development of energy policy during the Bush Administration

provides compelling evidence that these three conditions promote and facilitate

substantial shift in policy and subsequent change in a land-management agency

subgovernment. In the case of energy development policy, the first condition was met

when President Bush exercised his executive powers unilaterally in strategic pursuit of

expanding domestic energy development. The second condition was met when the

Republican-controlled Congress supported the administration’s policy objective of

expanding domestic energy development. The third condition was met when

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congressional subcommittees overseeing the land management policies of the BLM

supported the objective of expanding domestic energy development.

The implication is that with every change of administration, there can be a

corresponding change in pursuit of a different policy objective. The success changing

direction, however, is dependent on the three conditions described above. Should any of

the three conditions not be met, an administration’s ability to achieve its preferred policy

objective is substantially diminished. All three conditions must be present in order to

disrupt an entrenched policymaking subgovernment. Policy objectives not favored by a

subgovernment’s dominant interest group will meet with failure unless that interest group

is displaced.

The implication for a public-lands agency like the BLM is that change in the

Executive Branch can affect a corresponding shift in land-management policy. More

generally, shifting an administrative agency’s existing policy environment is dependent

on the desire and willingness of a newly elected administration to strategically employ

executive powers in order to initiate that change. In doing this, the President must focus

efforts on the existing body of federal law and administrative procedures relative to the

policymaking environment the administration targets for change. Finally, the policy

environment targeted for change by the President, as well as the President’s objective for

effecting that change, must have the support of a like-minded Congress and the

subcommittees that compose the congressional network of actors of the policy

subgovernment.

This research is primarily concerned with developing a better understanding of a

President’s ability to impact an established subgovernment’s policymaking environment.

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The objective of this line of inquiry was to answer the question of whether or not it was

possible for a President to disrupt a subgovernment and if so, to what effect? The

objective was to determine the degree of effect a President’s unilateral use of executive

powers in strategic pursuit of a political objective has on a policymaking environment.

As noted in the research, by his actions, President Bush impacted a relatively stable land-

management agency subgovernment. The degree to which his action impacted the

policy-making environment is measured by his administration’s ability to dislodge the

dominant interest within the subgovernment and replace it with another interest more

suitable to achieving the President’s political objective. President Bush’s impact on the

policymaking environment of the BLM could not have occurred without the support of

Congress and congressional subcommittees.

Questions remain concerning the level of effect the supportive actions of

Congress and congressional subcommittees had on the President’s ability to impact the

BLM’s policymaking environment. This is a line of inquiry needs further investigation.

Conducting a research effort of this type would assist political science researchers to

develop a better understanding of the impact the congressional network of actors has on

subgovernments. Future research findings may lead to a better understanding of the

degree to which Congress and, in particular, congressional subcommittees have for

effecting political control over a subgovernment. One possible path of inquiry might be

the role the budgeting process plays in disrupting a relatively stable subgovernment

policy environment in a period of political disruption, conflict, and competition.

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Energy Developers-Ranchers-Environmentalists

The forged alliance of ranching-energy is unlikely to completely unravel.

Retention of commodity-oriented use of federal lands and resources is important to both

groups. Additionally, both industries view organizations with environmental or

recreation-oriented uses of federal lands and resources as interlopers. They view these

outside interests with suspicion and hostility.

Many ranching and energy interests share the opinion that environmental

organizations are meddlesome. This opinion is premised on the suspicion that if ranchers

should become too allied with environmental organizations, environmental organizations

would “divide and conquer” (Interviews collectively). The shared belief among ranching

and energy interests is that the issue of split-estate energy development activities might

be “the wedge issue” environmentalists have been longing for (Interviews collectively).

Thus, the ranching-energy alliance’s shared belief that environmental organizations are

the enemy is relatively intact. However, among some ranching interests the entrenched

argument of “us against them” has begun to weaken. This finding suggests that should a

stewardship issue like split-estate energy development emerge, ranching interests would

be hard pressed not to forge stronger alliances with most environmental organizations.

Therefore, I believe a new alliance could take shape within the BLM’s land-use

subgovernment. This is of course dependent on the steady decline of ranching in the

West, and thus the gradual weakening of their influence generally.

Based on the research I conducted for this research, it is my opinion that the

struggle for policy control of BLM’s policymaking environment weakened the ranching-

energy alliance. However, the interests of ranching-energy alliance remain intertwined

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because representatives of ranching and energy frame their relationship generally as

being “mutually beneficial” (Interviews collectively). This positive orientation suggests

that even during times of disruption the forged alliances that compose the strong-corners

of subgovernments are never fully disentangled. Thus, I conclude that permanent

displacement of an existing hierarchical array of actors within a relatively stable

subgovernment is difficult to achieve.

The research findings lend support to the argument that during times of political

upheaval typologies of conflict are identifiable and definable (McCool, 1989, 1990, 1995,

1998). Furthermore, it lends support to the argument that during a period of political

upheaval a pattern of conflict emerges (McCool, 1989, 1990, 1995, 1998). Evidence and

findings of this case study account for: 1) the factors affecting the relative power of the

BLM’s subgovernment’s participants, 2) the conditions and factors that provoked change

in the BLM’s subgovernment, 3) the variables that affected the level of integration

between the BLM’s subgovernment and its external environment, and 4) uncovered the

democratic implications of the finding that the BLM’s subgovernment policy

environment is controlled by the energy industry.2 The ability to account for these

factors, conditions, variables, and implications lends validity to use of the subgovernment

model as a lens of inquiry.

The validity of this conclusion is, however, limited because the analysis of

subgovernment participants is limited. One limitation, mentioned previously, is the

absence of state lawmakers from the study, who were affected by expansion of split-

estate energy development in their respective states. Another limitation is the absence of

homeowner and home development associations who were affected by the expansion of 2 Note: See generally McCool, 1989, 1990, 1995, 1998.

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domestic energy more generally, and split-estate energy specifically. Finally, a more

significant limitation to these conclusions is the absence from this study of environmental

organizations who participated in the conflict and competition over control of the BLM’s

policymaking environment. The roles and actions of these groups of actors represent

further lines of inquiry that require more research in validating the findings of the

research as well as the usefulness of the subgovernment model.

The Bureau of Land Management

Federal law formally restrains the discretionary decision-making power of BLM

administrators. Historically, administrative discretion is restrained because development

of the federal mineral estate is the preferred use of federal lands and resources.

Contemporary government’s preference in developing the mineral estate stems from the

economic benefits government derives from energy resource development. Simply put,

the economic benefits that federal and state governments derive from energy

development outweigh the economic return from surface development activities such as

grazing or recreation. The legal and economic disparity between mineral and surface

estate development activities make balanced use of federal lands and resources difficult

for BLM administrators to sustain. This difficulty suggests that the formal culture of the

BLM is rule-bound. This condition undercuts the authority of BLM administrators to

intervene on behalf of split-estate property owners. This finding suggests that by

restraining the discretionary decision-making authority of BLM administrators, the legal

dominance of the mineral estate undermines the public’s expressed desire for multiple-

use approach in the development of public lands and resources.

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The informal culture of the BLM has shifted as well. This unexpected finding is

supported by evidence that BLM personnel were no longer largely representative of

Western cultural or agricultural backgrounds. This sentiment was articulated repeatedly

by government, energy, and ranching actors. For example, a senior DOI appointee

commented that, “When you go to BLM today, you don’t find native westerners in many

instances in these key BLM slots. For instance, the guy who was in charge of the oil and

gas development in Wyoming was from New York or Vermont” (Unnamed DOI political

appointee, personal communication, May 26, 2009). John Vincent confirms the shift in

BLM personnel and notes that the shift has implications for nonenergy related interests

interacting with the BLM, noting:

At least on a local level in terms of getting a drilling permit issued that really is done between two or three people: A permitting analyst from the company and a supervising engineer over in Lander. Those two people have to trust one another. They have to believe that the information that the company guys are providing is reliable, and … and so what happens is that the, the landowner doesn’t have a place at the table. I mean they’re not even there to say wait a minute, you need, did you think about this, or did you think about that? And the guy that you’re talking to in the BLM is probably a petroleum engineer. (J. Vincent, personal communication, March 16, 2009)

This finding needs further investigation. Further research would assist in developing a

better understanding of the impact nonwestern natives have on the informal culture of

BLM field offices. It would also help uncover how administrators interact with various

interests who use federal lands and resources, and the effect of those interchanges on

citizen participation in the BLM decision-making process. Finally, a research effort of

this type would be a helpful investigation of the corporatization of the BLM. One

possible line of inquiry into a question of this type might be an exploration into the

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educational and professional backgrounds of BLM personnel or the types of services

contracted out by the BLM.

Collectively, BLM administrators express that their land-management policy

decisions are directed and shaped by federal law. BLM administrators interviewed for

this research were uniform in emphasizing that federal law dictates that the development

of the mineral estate is the preferred use of lands and resources. Bound by those laws,

BLM administrators are restrained from intervening when conflicts arise from split-estate

energy development. BLM administrators’ repeatedly expressed their disengagement

with the negotiation process concerning Surface Owner Agreements. The perspective of

BLM administrators stems from their inability to intervene legally on behalf of either

party involved in the negotiation process. However, if an agreement cannot be reached,

government regulations allow for the energy developer to “bond on” accessing the

privately owned surface to drill.

The practice of bonding on with the BLM allows unfettered access to the mineral

estate. Thus, surface owners cannot exercise the property right of exclusion. Within the

bundle of sticks that compose property rights, one of the most important is the right of

exclusion. And because split-estate property owners cannot wield the stick of exclusion,

energy developers have run roughshod over landowners. Simply stated, with the stick

comes respect. Additionally, because federal law prohibits split-estate property owners

from excluding energy developers, the intervention of government in the negotiation

process occurs by default. The implicit nature of government intervention is illustrated

by wide-spread mistreatment of split-estate ranchers and homeowners. The evidence

suggests that the practice of bonding on is rare, but landowners are faced with the

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inevitability of energy development activities taking place. Faced with the knowledge

that they cannot prohibit or prevent energy development, split-estate landowners are

resigned to making the best deal possible. Government, energy, and ranching interests all

described that split-estate property owners as negotiating the best deal possible, and

failing that, energy developers could simply bond on with the BLM and access the

property. Therefore, evidence supported by this research points to the conclusion that the

BLM is dominated by the energy industry.

Modern-Day Capture of the BLM

The concept of agency’s capture is considered by political science as an outdated

phenomenon. The case study of split-estate energy development presented here suggests

that political science has been too hasty in its dismissal of capture. Agency capture

accounts for the centrally important conditions by which the energy industry is able to

dominate the policymaking environment of the BLM. While it was clear to previous

researchers and commentators that grazing interests had captured the BLM, their capture

could last only as long as grazing remained its primary regulatory responsibility (Cawley,

1993; Clarke & McCool, 1996; Culhane, 1981; C. Davis, 1997; Donahue, 1999; Foss,

1960; Klyza, 1996; Knight, Gilgert & Marston, 2002; Merrill, 2002; Nie, 2008; Smith &

Freemuth, 2007; Starrs, 1998; Wilkinson, 1992). The enactment of the Federal Lands

Management Policy Act of 1976 (FLPMA) disrupted the grazing interest iron-triangle of

the BLM. Thus, an agency’s capture by its most historical definition should not occur

again. Thus, the traditional conceptualization of agency capture implies that

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administrators, no matter the policy domain, act in a manner beneficial to the entity being

regulated at the expense of the public good.

The public good becomes expendable as cozy relationships develop between

regulated and regulator. The beneficial nature of the cozy relationship between the BLM

and the energy industry represents the absence of broader democratic involvement in the

decision-making process. An agency’s proclivity to utilize democratic principle of civic

engagement in the government’s decision-making process is of central importance in

making the determination of whether or not that agency has been captured or not.

An agency’s “modern-day capture” is defined as the administrative emphasis of

one regulated interest over all other regulated interests. The concept of modern-day

capture recognizes that administrative emphasis is beneficial to the regulated entity’s

activities at the expense of the broader public good. Like the traditional

conceptualization of agency capture, modern-day capture also recognizes that a regulated

entity’s cozy relationship with regulators benefits the regulatory decision-making

process. When combined, administrative emphasis and regulatory treatment represents

the voices of other interests being drowned out by the most dominant interest. Thus,

determination of an agency’s modern-day capture suggests that there are degrees by

which a regulated entity’s benefits come at the expense of all other regulated activities.

By definition then, a modern-day capture of an agency is determined by evidence of the

agency’s being overtly dominated by a regulated entity at the expense of all other

regulated activities. Simply stated, modern-day capture of an agency is empirically

recognizable.

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Industry and elected officials commonly characterize development of domestic

energy resources as a public good. As this study indicates, governmental officials and the

energy industry articulate that domestic energy development is the “greatest public good”

among all other public goods derived from the land. This position suggests that all other

use or development of the land is inferior to that of using and developing the mineral

estate for its energy resources. This position undermines the economic and social

benefits derived by other uses of the surface estate. The view that developing domestic

energy resources is the “greatest public good” is a direct reflection of how government

officials and the energy industry have come to define what the “greatest public good”

means to citizens of the United States.

The view that energy development serves a greater public good is a direct

reflection of federal law. In the context of split-estate energy, the legal protection of the

mineral estate establishes conditions of unequal footing between the energy industry and

those who would make use of the surface estate. The unequal footing, as discussed in the

research, is also reflected in the BLM’s rules, regulations, procedures, and oversight of

split-estate energy development activities. Thus, when the BLM is politically mandated

to shift its resources in order to expand domestic energy development, development of

those energy resources comes at the expense of the surface-owning public.

Until federal law and regulation are reformed in a manner that restores the legal

balance between the use of the mineral estate with the use of the surface estate, energy

development interests will retain the upper hand in the policymaking environment of the

BLM. Because ranchers did not fully achieve the reforms they were seeking, energy

interests continue to control the BLM’s land-use subgovernment policy making

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environment. This finding implies that the BLM is a land-management agency whose

policy environment is in a legally defensible state of modern day capture by the energy

industry.

Analysis of federal law and regulation combined with investigative interviews of

elites of domestic energy development provides evidence of dominance. Analysis of

federal law and regulation shows that the legal dominance of the mineral estate over the

surface estate was a significant factor in the ability of the government to shift BLM

policy and agency resources favoring energy development. Analysis of evidence tracing

the administrative actions taken by President Bush illustrate that his use of executive

powers to shift the BLM’s energy policy heavily influenced the energy industry’s ability

to expand its domestic energy activities. Finally, interpretive analysis of interview data

demonstrates that the expansion of domestic energy development was at the expense of

split-estate landowners. Therefore, because the BLM policy environment currently

favors the development of domestic energy resources, a modern-day capture of the BLM

by the energy industry has occurred.

Other research efforts in the relationship between government agencies and

energy development will likely confirm that modern-day capture remains a useful lens of

inquiry to political scientists. One possible avenue for research would be an inquiry into

the relationship between the Minerals Mining Service and the energy industry. Research

of this type would also prove useful as a more general inquiry into the relationship of any

public agency having any administrative responsibility for conducting onshore, offshore,

or international energy development. Generally speaking, pursuit of an energy research

agenda is beneficial to political science and its subfields of study.

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The Election of Barack H. Obama

The 2008 election President Barack H. Obama and Vice President Joseph R.

Biden evidence indicates that another shift in BLM energy policy is underway. Prior to

being sworn in to office, President Obama announced the appointment of Sen. Kenneth

L. Salazar (D-CO) as Secretary of the Interior. Immediately following his confirmation,

Salazar announced steps to reform BLM energy policy. Secretary Salazar used a

Secretarial Order to establish an Energy Reform Team to identify and oversee energy

reforms and issued immediate directives to the BLM, announcing to federal

administrators that “the BLM will ensure that they, not industry, will determine where,

when and how oil and gas leasing will occur” (Dickson, 2010). Following these actions,

Salazar declared that the BLM would no longer be the energy industry’s “candy store”

(“No more,” 2010). Secretary Salazar also announced that the administration was taking

the necessary steps to “conduct more rigorous reviews of proposed energy leases and

permits to drill, increase its consultation with other public agencies, and allow for more

public input in future drilling decisions” (“No more,” 2010). In its actions and

pronouncements concerning reform of BLM energy policy, the Obama administration

was making clear that a new policy objective was being strategically pursued by the

newly elected president: expanding alternative energy resource development.

Analysis of the evidence gathered for this research uncovered collective concern

among all groups of interview participants that the new direction in energy policy was

troubling. Governmental officials noted that the newly elected administration’s pursuit of

expanding alternative energy development would have profound impact on their ability to

balance multiple-use of the land and resources. Their collective unease over expanding

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alternative energy development is best expressed by Lynn Rust, “The next generation of

politically-oriented land use management mandates will take the form of solar arrays,

wind farms, geothermal extraction facilities, and mirrored solar towers” (L. Rust,

personal communication, May 19, 2009).

During his campaign, Obama announced that once elected, his administration

would expand alternative energy development. In making this promise, President Obama

was, like his predecessor, announcing his intentions to shift the BLM’s energy policy. As

noted earlier, a president’s unilateral exercise of executive powers within an existing

body of federal law and administrative procedures to achieve a political objective impacts

the policy environment and, in turn, disrupts the subgovernment. Should President

Obama follow the path taken by President Bush to achieve his own political objective,

shifting the BLM’s energy policy will again disrupt control over the BLM’s

policymaking environment. Under these hypothetical circumstances, conflict and

competition among the triumvirate interests of energy, ranching, and environment is

likely because, as Lynn Rust remarks, “If you use up 64 square miles of public lands to

develop a solar farm, do you think that ranchers will be able to graze their cattle, or that

energy companies will be able to drill on those same public lands? Not likely.” (L. Rust,

personal communication, May 19, 2009). In turn, preferential treatment of the alternative

energy industry could result in renewed competition for control over the BLM’s

policymaking environment. In this scenario, alternative energy industry’s displacement

of traditional energy development’s dominance would again result in the modern-day

capture of the BLM. Tony Herrell argues that, “the potential for alternative energy

projects impacting public lands and resources are even greater than the traditional uses of

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grazing and energy development. If that is what is on the horizon, then this creates a

scenario where again, the big guy resource user knocks off the little guy resource user”

(T. Herrell, personal communication, May 20, 2009).

Using President Obama’s promise as a means to exemplify how conditions for

disrupting a policy subgovernment can repeat itself, BLM administrators are expecting

that President Obama will act to affect a shift in the BLM’s energy policy. Should the

Obama administration affect a significant shift in the BLM’s energy policies, President

Obama will have: 1) unilaterally wielded executive power to pursue the policy objective,

2) gained the support of a Democratic-controlled Congress, and 3) established the support

of key subcommittees overseeing the energy policies of the BLM. If all of these

conditions are met, President Obama will disrupt the BLM’s policymaking

subgovernment and displace the dominant interest within it. If this hypothetical scenario

were to occur, it would be notable because the evidence of the causal chain of events to

achieve the policy objective would mean that: 1) the degree that Presidents can impact

change in a policy environment is greater than expected, 2) the rigor and methodological

utility of process tracing and interpretative analysis of elite-actor interview data is

validated, 3) the findings of this research effort are generalizable and, therefore, are

replicable across land-management subgovernment policy environments, and 4) the

change in interest group domination of a subgovernment policy is cyclical; therefore, the

dynamics of a subgovernment can be modeled. It would follow then, that if the dynamics

of a subgovernment can be modeled during periods of political upheaval, change to

subgovernment policy environments are predictable.

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Conclusion: Stabilizing a Subgovernment

Legal protection of the mineral estate is disproportionate to the legal protection of

the surface estate. This disparity is the result of a body of federal legislation, most

notably the Stock Raising Homestead Act of 1916 (SRHA). Enforcement of the mineral

estate’s dominance over the surface estate is furthered as federal regulations guiding

split-estate energy development. These regulations, such as those within Onshore Order

#1, were promulgated in response to the SRHA of 1916 as well as the Minerals Leasing

Act of 1920 (MLA). This body of federal laws and regulations guides the BLM’s

management and oversight of split-estate energy development. It establishes the federal

government’s prevailing interest in developing the federally owned mineral estate. This

body of law and regulation also mandates the BLM protect the government’s interest in

developing the mineral estate. It is a mandate that reflects the intent of government to

serve the public welfare by protecting its ability to provide energy resources to the nation.

The findings of this research indicate that the government’s legal and regulatory

protection and development interests in split-estate energy resources contradict

fundamental principles of property ownership and environmental stewardship. These

findings establish the conclusion that the unless legislative reform of the mineral estate’s

legal dominance occurs, governmental attempts to balance and protect the interests of the

privately owned surface estate in the face of split-estate energy development is

categorically impossible to achieve under the current legal environment. The antiquated

nature of federal law and regulation controlling the development of split-estate energy

resources are at odds with the legal, political, economic, and technological realities of

modern-day domestic energy development. The shared understanding expressed by

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government, energy and ranching officials supports this conclusion. Development of

non-traditional energy resources such as coalbed methane would not have been possible

without a “perfect storm” of legal, political, economic, and technological conditions all

coming together within a relatively short period of time. These events established the

conditions for political upheaval in the BLM’s land-use subgovernment. I argue that if

the BLM and federal and state governments are to avoid similar upheaval, conflict, and

competition, it is necessary to reform federal law. Reform of the Stock Raising

Homestead Act of 1916 (SRHA), the Minerals Leasing Act of 1920 (MLA), and Onshore

Order #1 are required if the government desires to ensure stability in BLM land-

management policy.

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