Decision on leases expected
U.S. District Court Judge Dee Benson told attorneys last week that he would decide within a month on the issue of the 77 leases withdrawn by Interior Secretary Ken Salazar after the December 2008 oil and gas lease sale. The ruling could reinstate the leases canceled by the Salazar early last year. Plaintiffs for the case are a group of three energy companies and three counties (Uintah, Duchesne and Carbon), who contend that the Interior Secretary exceeded his authority in canceling the leases. “Judge Benson asked Justice Department attorney Tyler Welti when is a lease issued, as the statute says the secretary ‘shall’ award the lease (in a sale) to the highest responsible bidder,” said Mike McKee, a Uintah County commissioner who attended the hearing. “He was never able to answer the question, in my opinion.” Arguing before the judge, Welti said that it was within the secretary’s reach to decide when to release a parcel for leasing The plaintiffs filed court documents alleging that the decision to withdraw the leases after the sale was arbitrary, capricious and an abuse of the secretary’s discretion. Robert Thompson, representing the three companies, argued that by accepting the bids the government has a contractual obligation to honor the sale. He said that the Bureau of Land Management lease sale already accepted bids for around 130 leases on parcels located in Utah. “It comes down to a question about the extent of the secretary’s discretion,” said David Garbett, Southern Utah Wilderness Alliance attorney. “And, there’s plenty of case law on this point that says the secretary has a significant amount of discretion whether to lease public lands at all.” SUWA, along with 11 other conservation groups, filed a protest and joined with the federal government to block sales on 77 of those potential leases prior to the sale. “The BLM moved forward with the sale but blocked the issuance of leases until the administrative protests to the sale were resolved,” said Meg Parrish, Earthjustice co-counsel. “Bidders were informed of the parcel’s status before going into the sale.” However, before the cancellation of the leases, the District Court of the District of Columbia issued a temporary restraining order prohibiting the BLM from issuing the contested leases. When the Obama Administration came into office, the secretary held back the 77 leases until “more adequate environmental impacts to the land could be assessed,” Parrish continued. Parrish said the money was returned to the successful bidders after the sale was canceled, but the lawyers for the counties argued that the government was obliged to complete the sale. “Contract regulations say that the competitive bid is an offer and that the secretary retains authority over the parcels until the issuance of any lease on public lands,” said Parrish. Parrish and others argued that “concern for environmental protection of certain parcels led the secretary to take action.” Benson asked the attorneys for the government whether environmental concerns for some parcels wouldn’t be the same for all? National environmental protection regulations were adhered to, said attorneys for the counties, as was indicated in Interior Department’s Inspector General’s December 2009 report, motioning that the report be entered as part of the record during the hearing. “The motion will likely be denied in Benson’s judicial review as (his decision) will look at what the secretary used to make his decision to cancel the lease sales. And, the IG’s report was issued almost a year after the withdrawal,” said Garbett. Benson has promised litigants that he will make his decision known by the end of August. On Monday, McKee took exception to suggestions that the cancellation of the 77 leases had no direct effect on the regional economy, saying, “The cancellation sent a message to oil and gas companies and, since that time, very few leases have been approved, which has affected our economy immensely.” A local private leaseholder told the Express confidentially that he is landlocked by federal and state lands. “As long as the process is in limbo, I’m out completely. I can’t develop my mineral leases and that’s money out of my pocket everyday,” said the landowner. —mbernard@vernal.com
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The following is excerpted from the "Notice of Lease Sale, Oil and Gas" published by the BLM on November 4, 2008 (the day that it announced its December 19, 2008, oil and gas lease sale):
"If BLM receives a timely protest of a parcel advertised on this Sale Notice, how does it affect bidding on the parcel?
We (BLM) will announce receipt of any protest at the beginning of the sale. We will also announce a decision to either withdraw the parcel or proceed with offering it at the sale.
If I am the high bidder at the sale for a protested parcel, when will BLM issue my lease?
We will make every effort to decide the protest within 60 days after the sale. We will issue no lease for a protested parcel until the State Director makes a decision on the protest. If the State Director denies the protest, we will issue your lease concurrently with that decision.
If I am the successful bidder of a protested parcel, may I withdraw my bid and receive a refund of my first year's rental and bonus bid?
If we uphold a protest and withdraw the parcel from leasing, we will refund your first year's rental, bonus bid and administrative fee."
Thus, pursuant to the express terms of the lease sale, all prospective bidders were on notice that, even if their bids were successful and they paid their first year's rental and bonus bid, BLM could refuse to issue a lease if a protest were filed and BLM upheld the protest.
In early December, SUWA and five other environmental/historic preservation groups protested 90+ of the parcels to be included in the lease sale. Notice that those lease parcels had been protested was provided to the bidders at the December 19 sale.
Secretary Salazar cancelled 77 of the the leases on February 4, well within the 60 days following Dec. 19 in which BLM was committed to "make every effort to decide the protests". His publicly-stated rationale was not that the Bush administration had subjected the leases to a "fire sale" (that was SUWA's terminology), but that the 77 lease parcels were too close to "American iconic treasures that we need to make sure are protected." He also questioned the adequacy of the environmental analyses that had gone into developing BLM's resource management plans, on which the lease sale was based.
The Inspector General's report said NOTHING about whether the lease parcels are too close to Canyonlands, Arches and Dinosaur and impair their scenic values. It said NOTHING about whether adequate environmental analyses were used to develop BLM's Utah resource management plans. Instead, it focused exclusively on whether Bush administration officials exerted undue influence on State BLM personnel to rush through the sale, and found that there was no evidence to establish that it had.
By contrast, the federal court in D.C. that enjoined BLM from issuing the leases way back in January found that there is a "substantial likelihood" (a legal standard) that SUWA, Earthjustice and other environmental groups challenging the leases WILL establish that BLM did not adequately consider air quality degradation when it decided to offer the lease parcels for sale. The court also found that the public's interest in having an air quality that meets or exceeds federal standards (which the Basin's does not for much of the year, a fact that's not well publicized) outweighs our pecuniary interest in having 17 (in Uintah County) additional parcels leased for oil and gas development (many of which, if history repeats itself, will sit idle).
Regardless of what Judge Benson does, the parties in the D.C. litigation (SUWA, Earthjustice, Uintah, Duchesne and Carbon Counties, etc. [but not Grand County, where a majority of the 77 cancelled leases are located]) stipulated in February, after Secretary Salazar withdrew the leases, that the injunction would remain in effect until Interior makes a final decision regarding the 77 leases. So, whatever Judge Benson does, there will be no immediate relief for the Basin's extraction-focused economy. (As if re-instatement of the leases would bring back the boom times when West Texas crude sold for around $140/bbl. Even during the boom, more than a quarter of the leases issued by BLM in Utah had not been drilled.)
Instead of bemoaning an administration that values the unparalleled scenery of Canyonlands, Arches, Dinosaur and other mystical places, not to mention the quality of air that WE breathe, maybe we should spend some time planning a celebration to open of the new Quarry Visitor Center and capitalizing on the boom that that historic event should bring to our tourism industry? The last time I checked my dictionary "diversification" was not a four-letter word.