In a Friday surprise, Wyoming Governor Mark Gordon today vetoed Senate File 0138 (Senate Enrolled Act No. 0069) Investment of State Funds-2. The bill was brought by Senators Eli Bebout, Dan Dockstader, Ogden Driskill, Mike Gierau, Larry Hicks, Dave Kinskey, Drew Perkins, and Chris Rothfuss to study the purchase of approximately 1 million acres of surface and 4 million acres of underground mineral rights from Occidental Petroleum Corporation.
The potential purchase had been a personal project of the Governor and legislative leadership, and the bill ultimately passed both houses of the Legislature near the end of the 2020 Budget Session.
“Members of the Legislature and my office worked tirelessly crafting a process to provide the ability to conduct due diligence on the land and assets being offered for sale to the State of Wyoming,” Gordon said in his letter accompanying the veto.
Gordon’s administration had been in conversations with Occidental Petroleum prior to the session about the company’s desire to sell the lands. Wyoming was considered one of few players who had the cash on hand to complete such a large transaction, which as reported by WyoFile, was estimated to cost between $400 million and $2 billion. The purpose of the study was to arrive at a value for the purchase and to make recommendations as to whether Wyoming should move forward with it, subject to later approval by the Legislature.
“Unfortunately, owing to the rapid changes of the waning hours of the session, the final bill was flawed. The original concept of the legislation was to establish a process to conduct due diligence and provide the funding to do so, as well as bless the authority to enter into a transaction of this magnitude. The end result is a vehicle so heavily laden with legislative baggage that the ability to conduct thorough and appropriate due diligence takes a back seat to mandated reports and recommendations,” the Governor explained in his letter.
The lands were originally transferred by the U.S. Government to Union Pacific Railroad (UP) during President Lincoln’s administration as an incentive for construction of the Transcontinental Railroad. UP received every other 640-acre section for 20 miles on either side of the track, plus the applicable mineral rights. Because of the nature of the original land grant, management of the land grant assets has been considered difficult for many owners.
Though tasked to the Wyoming State Loan and Investment Board, many expected the board to utilize private expertise, including investment banks, in the valuation of the property. In his letter, Gordon addresses the Legislature’s failure to enact a Capital Construction measure during the Budget Session as one reason for vetoing the bill. Funds for due diligence analysis of the purchase were to come from the State Building Commission Contingency Account, which because of the lack of agreement by the two houses, did not receive any additional funding and already has existing obligations and priorities.
Gordon’s letter also drew significant attention to the rightful roles of the legislative and executive branches of Wyoming government.
“As ultimately passed, the act contemplates giving final decision making-authority over an executive branch function to the legislative branch. […] I also believe this legislation anticipates what is not yet clear. I do not have the option to selectively implement the legislation,” he said. “In taking this action, I want to stress my stance is consistent with my strong support of the State of Wyoming having the opportunity and ability to explore unique opportunities such as these when they arise. I commit to the Legislature and citizens of Wyoming that we will continue to find ways to take steps to explore this opportunity.”
Gordon’s letter provided a process and outline for a report to be conducted by his office and the Office of State Lands, should progress on the transaction be made, and committed to reporting any findings to the Legislature.
Gordon stressed, however, the roll of the executive branch in reaching any potential “agreement in principal” and stated, “It is the Legislature’s role to decide whether and how to fund a potential purchased based on the Agreement in Principle.”
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