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Economists: Transferring federal lands could generate revenue for Utah

First Published      Last Updated Jun 08 2016 07:53 pm

Economic analysis hinges on a lot of assumptions, including stable oil prices; critics say Utah’s environment would suffer from unregulated industrial development.

The accounting of a federal land transfer depends on a lot of assumptions.

Utah can afford to take over 31.2 million acres managed by the federal government, according to a long-awaited economic study, but only if oil and gas prices remain stable and energy production stays on pace with the recent boom years.

The balance sheet also relies on energy revenues that currently pay for road construction being diverted to fighting wildfires and other land-management obligations.

A cadre of researchers from three public universities released a 784-page report Monday that is intended to guide state leaders in their long-term quest to gain control of federal land administered by the Bureau of Land Management and U.S. Forest Service.

Gov. Gary Herbert's public lands advisers praised the report as "an optimistic, yet cautionary, examination" of the controversial move.

Environmentalists condemn the plan as an effort to throw open Utah's public lands to industrial development without regard for federal environmental-protection laws. They figure the transfer would result in a sell-off of public lands.

The economists' report says transferring federal lands would cost Utah $245 million a year, about a third of that associated with fire suppression and fuels management. That's in addition to the loss of $35 million in federal Payments in Lieu of Taxes to counties, which the state has pledged to offset.

The state could make up the costs with oil and gas revenues alone, according to the economists' model. But certain assumptions must hold true.

On average between 2008 and 2012, the federal government generated about $330 million a year in revenue from the acreage in play. More than three-fourths of that money comes from oil and gas development.

"The study shows there is clearly enough," said John Harja, one of Herbert's senior public lands advisers.

Or the state could spend less managing public lands, he added. "The Legislature can look at a variety of options."

But if the oil and gas boom doesn't hold out, prices fall or the federal government declines to hand over 100 percent of the royalties from thousands of existing wells, Utah could face a serious shortfall. Federal managers currently split a 12.5 percent mineral royalty with the state — money local governments depend on for roads and other civic infrastructure.

"This money is spoken for," said co-author John Downen, a researcher with University of Utah's Bureau of Economic and Business. "Those are no longer federal lease revenues. The state would have to rewrite the rules about how this money is distributed."

Herbert's public lands advisers claimed the study shows the state won't have to sell a single acre.

"It demonstrates that a transfer of the public lands can be an economically sound pathway to a more balanced public lands policy," the Public Lands Policy Coordination Office wrote in a summary. "The study demonstrates that this can be accomplished without sacrificing the beauty of our state, the quality of our life, or the attraction of Utah to tourists and recreationists from around the country and the world."

But critics of the land transfer reached the opposite conclusion.

The lands policy office, which commissioned the study under legislative direction, presents its own 28-page summary Wednesday to the Commission for the Stewardship of Public Lands.

Meanwhile, critics used the study's release to renew their opposition to a regional movement among Western conservatives to "take back" vast swaths of public lands within their states' borders. The new economic report confirms that the costs of state oversight far outweigh the benefits, they contend.

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By the numbers:

Economists from the University of Utah’s Bureau of Economic and Business Research, Utah State University and Weber State University released a 784-page report on the cost of transferring 31.2 million acres of federal land to the state.

Cost of the transfer: $280 million

— Average annual Bureau of Land Management spending on Utah public lands: $118.6 million (2003-2012)

— U.S. Forest Service costs (2012): $102 million ($51.1 million in wages)

— Average annual cost of wildfire suppression: $33.4 million (2003-2012)

Revenues raised (from oil and gas leases, grazing leases and recreation fees in 2013): $331.7 million

— Oil and gas royalties: $257 million

Federal lands’ impact on Utah

Jobs supported by federal lands recreation and development: 29,000

Earnings of federal employees and other workers: $1.6 billion

Gross state product: $3.6 billion

Tax revenue to state and local governments: $788 million. › XX