Litigation over alleged wilderness areas has become a major obstacle and impediment to oil and natural gas development on federal lands, with key decisions from the District Court of Utah and the Federal Court for the Northern District of California raising doubts about the ability of the energy industry to economically develop natural resources on federal lands, according to the latest report on energy trends by the law firm Fulbright & Jaworski LLP.

Fulbright's "Trends in Energy Litigation 2007" is the third report in a series that the law firm began in 2002, which compiles analyses of major trends in various energy practice areas on matters encompassing litigation, tax, environmental, regulatory and corporate energy issues. The current report summarizes key developments since 2004 and focuses on current and future trends.

In its review of upstream issues, the Fulbright report noted that federal land access issues have led to a plethora of cases over perceived "wilderness."

"Environmental groups are using procedural violations of the National Environmental Policy Act (NEPA) as a vehicle to obstruct development on Bureau of Land Management (BLM) and Forest Service lands," a trend that is accelerating, the 150-page report noted.

"A recent decision in the U.S. District Court for the District of Utah has opened the floodgates for new legal challenges to BLM oil and gas lease sales in the Intermountain West, particularly in Utah, Colorado and Wyoming," the report stated. In the case of South Utah Wilderness Alliance (SUWA) v. Norton, 457 F. Supplement 2d 1253 (D. Utah 2006), SUWA challenged Utah BLM's decision to offer 16 parcels in its November 2003 oil and gas lease sale that purportedly contained "wilderness characteristics."

The court held that BLM violated NEPA and therefore BLM had to supplement its existing NEPA analyses before leasing, "despite evidence in the record that the 'new information' was in reality the same information analyzed before, except the new subjective definitions of 'roads' were utilized to provide a new 'spin' on old information" (see Daily GPI, Aug. 7, 2006).

The Department of the Interior and a coalition of oil and gas lessees have appealed the decision to the U.S. Court of Appeals for the Tenth Circuit, and the case is pending.

"Although the federal defendants and a coalition of oil and gas companies have appealed this decision, the short-term ramifications are significant," the report said. "BLM has suspended additional leases and is deferring lease parcels in future sales on lands with wilderness characteristics. In other states, environmental organizations are using the case to pattern similar legal challenges to BLM oil and gas lease sales."

Another area of growing litigation is in the "road wars," the Fulbright report said. To protect Forest Service roadless areas and restrict great swaths of land from any development, the Clinton administration enacted the Roadless Area Conservation Rule, which created de facto wilderness in that it prohibited road building, logging and other devleopment on about 50 million acres (or about one-third) of U.S. Forest Service lands. The rule was enacted in 66 Code of Federal Regulations 3244 on Jan. 12, 2001, as Clinton was leaving office.

In 2005, the Bush administration finalized the Roadless Area Devleopment Rule, which added to the original rule and allowed individual states to petition the Forest Service regarding the nature of development to occur on inventoried roadless areas of their state.

The lawsuits have been unending, the report noted. Included is a lawsuit by four states and about 20 groups challenging the rule, contending that it violates NEPA and the Endangered Species Act. These groups, led by The Wilderness Society, argued that the Forest Service violated NEPA by failing to conduct an environmental analysis (i.e., prepare an environmental impact statement) in connection with the rule.

The Forest Service argued that the change in the rule was merely procedural and contended that each state would conduct a state-specific NEPA analysis. Judge Elizabeth Laporte disagreed with the Forest Service and struck down the 2001 Roadless Area Development Rule because the Forest Service failed to conduct an environmental analysis of the effects of removing the Clinton rule protections on the national forests and endangered species.

In its decision, the court asked the parties to propose and confer regarding the extent of the injunction to be issued. Last September, Laporte enjoined all projects, including all oil and gas development, on inventoried roadless areas approved after Jan. 12, 2001 (see Daily GPI, Sept. 21, 2006). The Forest Service has indicated its intent to appeal to the U.S. Court of Appeals for the Ninth Circuit.

"This decision, and a potentially similar ruling from the Ninth Circuit, would set up a heated debate before the U.S. Supreme Court on roadless areas," the report noted.

To read the report, visit www.fulbright.com/pdfs/energytrendsreport2007.pdf.

©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.