The Department of the Interior's Land Appeals Board has upheld an earlier ruling to void three Powder River basin leases owned by Marathon Oil Corp.
Last April, the board said Interior's Bureau of Land Management neglected to follow proper environmental review protocols when it granted the coalbed methane (CBM) leases.
Environmental groups, led by the Wyoming Outdoor Council, heralded the decision, saying they will use the ruling as part of a campaign to block further CBM drilling throughout the Rockies. The council and other environmental groups say CBM production creates brackish water that harms wildlife and limits crop irrigation.
The council initiated the original challenge of the Marathon leases, successfully arguing that BLM relied on outdated environmental information to justify exploration.
Industry view
Producers, meanwhile, continue to defend their methods. They say that when wells are drilled, they follow all local and federal safety and environmental standards so that water from the wells is clean and suitable for irrigation. Water from fractured coal seams is usually discharged to the surface but is drinkable and can be used for crops, they say.
Within the Powder River basin there are already more than 10,000 active CBM wells, and industry hopes to have 51,000 wells drilled within the decade.
Industry officials said that, while the land board's decision was disappointing, it would not necessarily preclude other future CBM leases because each application is crafted to address specific land management issues.
But in its latest decision, the appeals board signaled that the ruling could nevertheless complicate future leases.
"While our decision could affect future competitive oil and gas lease sales, such a result is not an extraordinary circumstance justifying the granting of the petition and the overturning of our decision," Deputy Chief Administrative Judge Bruce Harris wrote in the Oct. 15 decision.
BLM petition 'troubling'
In a concurring opinion, Administrative Judge James Burski said he found "most troubling" that the essential thrust of BLM's petition "would inevitably lead to the abandonment of all environmental analysis prior to leasing."
BLM, if it wishes, could ask Interior Sec. Gale Norton to overturn the ruling of the independent board. If BLM opts not to seek Norton's help, Interior then is put in the awkward position of defending in federal court a ruling it does not support. Marathon, meanwhile, has already sought legal redress outside of Interior.
"We believe BLM acted appropriately when they approved these leases," a Marathon spokesperson said.