Victory claimed by both sides in legal dispute over gas and oil leases

Published: Wednesday, June 29 2011 3:34 p.m. MDT

CHEYENNE, Wyo. — Both sides are claiming victory in a Wednesday ruling by a federal judge that dealt with when or if the Interior secretary has to issue oil and gas leases won at auctions.

Representatives of the oil and gas industry say the ruling by U.S. District Judge Nancy Freudenthal clearly sides with their cause — that the federal government must follow its own 60-day deadline on issuing leases won by bidders at Bureau of Land Management auctions.

"We are happy with a victory and we are glad the court recognized the industry's desire for more certainty in the leasing process," said Kathleen Sgamma, governmental affairs director of the Western Energy Alliance, which filed the lawsuit against the federal government last year.

She noted, however, that Fruendenthal's decision did not go far enough, only ordering the Interior secretary to make a decision, and not necessarily to issue the held-up leases.

"It certainly reduced the unlimited discretion the government was arguing for," she added. "But she did not order the leases to be issued, only the government to make a decision."

Steve Bloch, attorney with the Southern Utah Wilderness Alliance, said that component of the ruling represents a victory for the agency and environmentalists in that the judge  soundly rejected the premise that the BLM must "lease first, think later."

The ruling, he said, is consistent with oil and gas reforms being carried out by Salazar.

"The plaintiffs were after a decision that the BLM had to issue a lease that was sold at an oil/gas lease sale, even if it decided doing so was not appropriate. What the judge said is that the BLM has the ability to review a protest after a lease/sale, which is a good thing," Bloch said.

The lawsuit stemmed from leases that were not issued after Utah and Wyoming BLM auctions, even though the federal government received payment for them. In one instance, the company Baseline paid more than $1.3 million for Wyoming leases and nearly $545,000 for Utah leases. At the time of the lawsuit's filing, Baseline had only received some of its leases in Wyoming and none of the Utah leases. The Utah leases were won during auctions held as long as six years ago.

Many of the leases were held up as the BLM worked to address a flurry of protests filed by environmental groups.

The oil and gas industry argued that the decision whether to award oil and gas leases to winning bidders needs to come before they are ever offered at auction — not afterward.

"Petitioners are neither challenging the rights of individuals or groups to protest leases nor the rights of the secretary to duly consider the merits of each protest," Western Energy Alliance argued in brief filed before the court.

But the group asserted, and the court agreed, that the language in the Mineral Leasing Act "clearly and unambiguously" mandates that leases shall be issued within 60 days following payment of a successful bidder.

Attorneys for the government, however, argued that the 60-day time frame does not kick in until the Interior secretary actually decides that the land will be leased — and that may hinge on addressing unresolved protests.

A report from the U.S. Government Accountability Office found that as of May 2010, the BLM held $84 million in accounts for unissued leases in Wyoming and $10 million for unissued leases in Utah.

The Interior secretary has yet to make a decision in 38 leases in Utah covered in the Wednesday ruling. The judge indicated that Interior Secretary Ken Salazar most likely would be required to make a decision within 30 days of her ruling.

Sgamma, however, said that decision does not address other oil and gas leases that remain in limbo.

Contributing: Associated Press

E-mail: amyjoi@desnews.com Twitter: amyjoi16

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