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Wyoming Supreme Court Defers on Oil-Coal Land Dispute

In a case in which oil interests clash with coal development, the Wyoming Supreme Court has remanded the issue for federal agencies to resolve.

Justice Michael Davis refused to decide whether coal giant Peabody Energy Corp. or Denver-based exploration and production company Berenergy Corp. had the superior rights to the same piece of land for mining or drilling. The companies have overlapping federal leases, and they each cannot economically use the land simultaneously.

In the 12-page ruling, Davis concluded that the leases and regulations overseeing them indicate that Congress intended for designees of the Department of Interior or Bureau of Land Management (BLM) to decide the issues raised by Berenergy, not the court. He remanded the case to the district court to determine if the federal agencies may participate in the case.

Davis said it wasn't clear the issue could be resolved in court, given that the court could not make a binding decision for a federal agency.

"If it cannot be made a part or does not choose to participate, which is very likely, the district court must dismiss the case," he ruled.

Berenergy produces oil from three leases granted by BLM. The surface area of the leases overlaps with Peabody's BLM-granted coal leases on which it wants to strip mine.

The E&P filed its initial lawsuit in 2015, and subsequently there have been cross-filings with Peabody. Berenergy appealed an October 2016 court order, challenging parts that required it at times to stop production and cap wells below the projected coal seam so that Peabody could "mine through" the overlapping areas.

Peabody cross-appealed, balking at paying a required $13 million in escrow to cover Berenergy's added costs to potentially directionally drill an offsite well for advanced water-flood oil production.

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