The U.S. Court of Appeals for the Tenth Circuit has upheld a lower court’s ruling supporting the Interior Department’s arguments that it is not required to immediately issue leases to oil and natural gas producers following purchases.

The issue in the case is whether Interior must issue leases within 60 days of receiving payment from high bidders. Several energy associations and companies — Western Energy Alliance, Baseline Minerals, Nerd Gas Co., Samson Resources Co. and the American Petroleum Institute, among others — appealed to the appellate court that Interior Secretary Ken Salazar should have issued the 118 leases on which they were the high bidders within 60 days of payment to the Bureau of Land Management (BLM). The leases in question were offered during lease sales between 2005 and 2010.

The U.S. District Court in Wyoming, in its 2011 decision, construed the Mineral Leasing Act (as reformed in 1987) as imposing a mandate on the Interior secretary to “decide whether to issue” the pending leases within 60 days, rather than to actually issue the leases within that time period. The energy companies and association challenged the district court’s interpretation of the law.

The decision by a three-judge appellate panel in Wyoming cited a Government Accountability Office report, which found that 74% of the lease parcels during the fiscal years 2007-2009 that were subject to competitive bidding were protested by environmentalists, and 91% of these protested parcels were not issued within 60 days.

In justifying the lease delays, Salazar said BLM had not done a sufficient review of the lease impacts on wilderness, sage grouse and other potential environmental issues.

Energy companies contend that BLM’s practice of offering oil and gas leases for sale, accepting payment from the top qualified bidders, and then deferring issuance of those leases pending resolution of pre-bid lease protests can result in delays lasting for years and may ultimately result in stipulations being placed on the leases or the lands being closed to leasing entirely.

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