Use of mineral-lease funds questioned

A state auditor told legislators on Tuesday that Utah's top oil- and gas-producing counties shouldn't receive additional funding they've requested for roads, based on the manner in which they've used federal mineral lease monies over the past five years.

Janice Coleman told members of the state Legislative Audit Subcommittee that Duchesne and Uintah counties have each allocated only 42 percent of all the federal mineral lease and state severance tax monies they received for fiscal years 2003 to 2007 toward transportation projects.

"Since the Uintah Basin has been saying that they need more money for roads, we expected to see a heavy weighting of mineral-related funding toward transportation, but we didn't see that," Coleman said. "We reached the conclusion that their assertions for more road money weren't very compelling."

Uintah County leads the state in natural gas production and generated $234.2 million in mineral lease money for Utah during the audit period. Duchesne County leads the state in oil production and generated nearly $27 million in mineral lease money for Utah during the audit period. Both counties, and the Ute Indian Tribe, also receive state severance tax money through the Uintah Basin Revitalization Fund.

County leaders in the Uintah Basin have appealed to the Legislature in recent years for more money to help with road construction and maintenance. They argue that their budgets can't keep up with the damage done by the increase in heavy truck traffic related to the booming energy industry in the region.

Utah accepts its share of federal mineral release monies — collected from oil and gas exploration companies drilling on federal and tribal lands — through two entities: the state Permanent Community Impact Fund and the Utah Department of Transportation.

The money in the PCIF is distributed in the form of low-interest loans and grants by the state Permanent Community Impact Board to counties and cities that apply for funding and are approved. UDOT though merely receives the money and passes it on to counties, which in turn allocate the money to single-purpose special service districts established to mitigate the various impacts of energy development.

Utah has identified 14 areas, besides transportation, for which mineral lease-funded special service districts can be created, including water, sewer, recreation, health care and fire protection.

However, Coleman noted that there is "intent language" attached by the state Legislature to the money that passes through UDOT indicating that it "shall be used for improvement or reconstruction of highways" in impacted counties. The audit recommends that the Legislature mandate that federal mineral lease monies channeled through UDOT be prioritized toward transportation projects.