WEA, six independents sue BLM for not issuing leases

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 19 -- The Western Energy Alliance and six independent producers sued the US Bureau of Land Management on Oct. 15 for not issuing oil and gas leases within 60 days of receiving payment for them as required in the Mineral Leasing Act. The action involves 118 leases worth more than $4.5 million, some of which date back to 2005, WEA said on Oct. 18.

The suit in US District Court for Wyoming by Denver-based WEA, formerly the Independent Petroleum Association of Mountain States, and the upstream independents said US Interior Sec. Ken Salazar approved and directed a policy of not issuing leases for protested parcels to the highest bidders within 60 days as part of his onshore leasing reforms earlier this year.

Salazar and BLM Director Robert V. Abbey announced the reforms on Jan. 6 and issued them on May 17. At that time, Abbey issued an instruction memorandum which “makes clear that it is BLM policy not to issue a lease until all protests concerning that parcel have been resolved,” the suit said. “Although parcels that are not protested will not be ‘held up,’ the instruction memorandum implies that any protested parcels will be.”

It also said the congressional Government Accountability Office said in a July 30 report that BLM failed to issue awarded leases within 60 days more than 91% of the time in Utah and “up to almost 100% in Wyoming.” GAO also quoted BLM officials saying that as of May, the agency was holding more than $84 million in industry payments for unissued leases in Wyoming and more than $10 million in Utah, the suit said.

The independents in the lawsuit are Baseline Minerals Inc., Denver; Double Deuce Land & Minerals Inc., Aurora, Colo.; Nerd Gas Co. LLC, Casper, Wyo.; Wold Oil Properties Inc., Casper; Laramie Energy II LLC, Denver; and Samson Resources Co., Tulsa. Salazar and BLM’s spokespeople would not comment on Oct. 19 because it is a pending legal action.

WEA said it also plans to legally challenge BLM’s new policy regarding categorical exclusions (CXs) under Section 390 of the 2005 Energy Policy Act.

When the onshore leasing reforms became final on May 17, Abbey said that the agency would require an “extraordinary circumstances” review before applying the provision to oil and gas activities on land which it administers. Such reviews were required already for administratively-established CXs and now would apply to CXs established under EPACT, he said.

WEA said it considers the policy “an unlawful rewrite of the specific, limited categorical exclusions mandated by Congress for situations where the environmental impact is low and/or existing documentation has already been conducted in accordance with the National Environmental Policy Act.”

Kathleen Sgamma, WEA’s government affairs director, told OGJ by telephone on Oct. 19: “We decided to litigate after several years and over $100 million of leases on hold. That’s $100 million of economic activity and jobs not being created in the West because of Interior policies. After much back and forth and working over several years, we decided to litigate.”

Contact Nick Snow at nicks@pennwell.com.

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