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Industry Sues BLM Over Quarterly Lease Sales, Transparency

Lawyers for the Western Energy Alliance (WEA) filed a lawsuit Tuesday alleging that the Interior Department's Bureau of Land Management (BLM) has failed to meet federal obligations to hold quarterly lease sales and conduct them in a transparent manner.

According to the complaint, filed in U.S. District Court for the District of New Mexico, BLM offices representing several states -- including Colorado, Montana, New Mexico, North Dakota, South Dakota, Utah and Wyoming -- violated the Mineral Leasing Act by failing to hold lease sales on at least a quarterly basis.

The complaint also lists several instances where the WEA, under the federal Freedom of Information Act (FOIA), requested information from various BLM offices. Under the FOIA requests, WEA asked BLM to provide information on the schedule and timing of oil and gas lease sales, any cancellation, postponement or rescheduling of lease sales, and provisions for hosting and conducting lease sales. WEA also inquired into the process by which each BLM office picks the parcels that will be included in upcoming lease sales.

Mark Barron, an attorney for Baker & Hostetler LLP, which filed the lawsuit, conceded that ongoing low commodity prices and regulatory uncertainty have caused many producers to sour on seeking permits to drill on federal land.

"I think it's fair to say that there is a decrease in interest in federal lands, which is representative of the overall decrease in the market, generally," Barron told NGI on Thursday. "But I also think that the market-based restrictions exacerbate some of the problems that the leasing restrictions have caused.

"You have situations, particularly in the major Western states, where once you go any meaningful distance it's virtually impossible not to intersect at some point [with] some sort of federal parcel. You may need a particular individualized federal parcel in order to complete a drilling spacing unit, or to make your lateral as economically efficient as possible. So while people may not want to take the same volume of federal parcels they would taken in the past, sometimes getting access to an individual or a specific federal parcel is even more important than it ever has been."

In a statement announcing the lawsuit, Baker alleged that environmental and special interest groups, including the "Keep It in the Ground" campaign, have influenced Interior and the BLM.

"Without doing anything, activists could achieve the same goal just by leaving BLM to its own devices," said Kathleen Sgamma, WEA vice president for government and public affairs. She added that WEA "is simply asking the courts to compel BLM to follow decades-old law and hold quarterly lease sales in every oil and natural gas state."

Sgamma cited a lease sale in Colorado scheduled for Thursday that was cancelled because BLM "can't get through the bureaucratic process in time. Likewise, in New Mexico only two lease sales were held in 2015 and one planned in 2016, despite the requirement to hold four every year.

"Bureaucrats are simply not doing their job," she said.

According to Baker, the New Mexico office of the BLM held only two lease sales in fiscal year (FY) 2015, and plans to conduct no more than three in FY2016 or FY2017, while the Wyoming office will hold no more than three lease sales in FY2016. Meanwhile, the BLM office responsible for Montana and the Dakotas is planning to hold no more than two lease sales in FY2016.

Baker said the Colorado and Utah offices each conducted only three lease sales in FY2015, and they plan to each conduct no more than two lease sales in FY2016. The Eastern States office -- which exercises jurisdiction over Arkansas, Iowa, Louisiana, Minnesota, Missouri and all of the states east of the Mississippi River -- held only two lease sales in FY2015 and will hold no more than two lease sales in FY2016.

Baker is also representing WEA and the Independent Petroleum Association of America in a separate lawsuit against BLM over its proposed rule governing hydraulic fracturing on public and tribal lands (see Shale DailyJune 22).

BLM manages mineral rights across 700 million acres of public and split-estate lands.

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