Judge rules Salazar exceeded authority in canceling Utah leases

Correction: This online story was corrected Sept. 8. The original version incorrectly identified Peak Energy Resources LLC of Dorango, Colo., as one of the parties named in a lawsuit against the US Department of the Interior. The party involved in this case is actually Peak Royalty Holdings LLC of Heber City, Utah.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Sept. 2 -- US Interior Sec. Ken Salazar exceeded his authority when he order 77 federal oil and gas leases in Utah withdrawn in early 2009, a federal court judge ruled on Sept. 1 in Salt Lake City. But US District Judge Dee Benson also ruled that plaintiffs waited too long to challenge Salazar’s action.

Commissioners from three eastern Utah counties and three area independent producers who brought the suit indicated that the judge’s decision keeps an unacceptable precedent from being established.

Salazar ordered the leases canceled early in 2009, soon after he became Interior secretary, after the US District Court for the District of Columbia issued a temporary restraining order on Dec. 22, 2008, preventing the US Bureau of Land Management from issuing them. The tracts were among 116 parcels sold at a regularly scheduled lease sale on Dec. 19. The Southern Utah Wilderness Alliance had sued 2 days earlier to block their being offered.

Salazar said resource management plans that formed the basis for offering the 77 tracts, which environmental organizations said were too close to national parks and other federally protected areas, were inadequately developed. More study was needed, he maintained.

In his decision, Benson said the federal Mineral Leasing Act’s plain language mandates that the US Interior secretary accept bids and issue oil and gas leases as part of the competitive leasing process. The mandate limits discretion which the secretary generally possesses to determine whether to issue a lease, he said.

Went too far
“In this case, the secretary exceeded his statutory authority by withdrawing leases after determining which parcels were to be leased and after holding a competitive lease during which the BLM named the plaintiffs high responsible bidders,” said Benson.

“Ultimately, though, the plaintiffs’ claims are time-barred,” he continued. “Faced with a strict statute of limitations, the plaintiffs failed to file their suit within 90 days of the secretary’s final decision.”

Three independent producers—Impact Energy Resources LLC, Denver; Peak Royalty Holdings LLC, Heber City, Utah; and Questar Exploration & Production Co., Denver (which became QEP Exploration Inc. on June 30 when it was spun off from Salt Lake City-based Questar Corp.)—sued to obtain the leases they had been awarded as high bidders. Officials from Carbon, Duchesne, and Uintah counties joined the action because they claimed an economic interest in the withdrawn tracts.

Kathleen Sgamma, government affairs director at the Western Energy Alliance in Denver (formerly the Independent Petroleum Association of Mountain States), said on Sept. 2 that Benson’s decision clearly stated that Salazar’s order to have the 77 leases withdrawn was not justified.

“We respectfully request that Secretary Salazar acknowledge the merits of the case and reinstate all 77 leases to the companies that legitimately purchased them,” she said.

Contact Nick Snow at nicks@pennwell.com.

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