Interior Secretary Ken Salazar “exceeded his authority” by withdrawing 77 oil and natural gas leases in Utah after the government held a competitive lease sale, but a federal judge nevertheless rejected the challenge of three independent producers and Utah counties of Salazar’s decision because they filed their lawsuit too late.

“In this case, the secretary exceeded his statutory authority by withdrawing leases after determining which parcels were to be leased and after holding a competitive lease sale during which the BLM [Bureau of Land Management] named the plaintiffs [producers] high responsible bidders. Ultimately though, the plaintiffs’ claims are time-barred. Faced with a strict statute of limitations, the plaintiffs failed to file their suit within 90 days of the secretary’s final decision” on Feb. 6, 2009, said U.S. District Court Judge Dee Benson in an 18-page decision.

The event triggering the statute of limitations was the final decision of the secretary to void the leases, an issue over which Interior and the producers were at odds. Producers claimed that Feb. 12, 2009 — the date that BLM notified producers of the lease withdrawals/refunds, and which was precisely 90 days before they filed their lawsuit — was the secretary’s final decision. However, Interior countered that Feb. 4, 2009 — when it issued a press release announcing the secretary’s final decision — was, in fact, the date of the final decision.

Benson disagreed with both sides, concluding that a Feb. 6, 2009 intra-agency memo in which the secretary directed the Utah BLM state director to withdraw the leases was the final decision. By the court’s estimation, the Utah producers/counties fell six days short of meeting the statute of limitations. “The plaintiffs’ counsel had ample notice of the secretary’s decision and sufficient time to comply with the statute of limitations,” she said.

In May 2009, Denver-based Impact Energy Resources LLC, Peak Royalty Holdings Inc. of Utah and Denver-based Questar Exploration and Production Co. filed lawsuits, claiming that Salazar violated the Mineral Leasing Act (MLA) and the Federal Land Policy and Management Act by withdrawing the Utah leases after they had been awarded to high bidders in a December 2008 auction. The Utah counties of Uintah, Duchesne and Carbon made similar claims in their complaint (see Daily GPI, May 18, 2009).

The leases were withdrawn and bids refunded nearly two months after Interior’s BLM declared the three producers the successful, qualified high bidders for their respective lease parcels at the December 2008 lease sale; accepted and cashed the producers’ statutorily required initial bonus payments, administrative fees and first-year rentals for the leases immediately following the sale; accepted and cashed checks for full payment of all bonus bids for each lease sold to the producer-plaintiffs; and mailed receipts to plaintiffs acknowledging that all payments had been accepted and that the high bids were accepted, the three independent producers said in their lawsuit. The three producers had nine lease parcels withdrawn.

Benson agreed that Interior had no right to withdraw these leases.”The court concludes that under the plain language of…the Mineral Leasing Act, the secretary did not have authority to withdraw any leases after the agency named the high bidders.”

In February 2009, Salazar withdrew leases on 130,000 acres of public lands in Utah (see Daily GPI, Feb. 6, 2009). He cited the leases “close proximity” to Arches and Canyonlands national parks, Dinosaur National Monument and Nine Mile Canyon as the reason. His action overturned the results of a final oil and gas lease auction held in the final days of the Bush administration.

Salazar said the environmental review of the disputed parcels “was from our point of view not complete…There are other important factors that should have been considered in that review, including the factors of air quality and impact of development on air quality in the vicinity of the parks. These are real issues and the U.S. District Court has agreed these are real issues.”

The day following the December auction, a federal judge in Washington, DC, granted a temporary restraining order to seven environmental groups. He ruled that Interior had not completed a sufficient environmental analysis, particularly on how air quality around Utah’s Arches and Canyonlands national parks and Dinosaur National Monument might become degraded because of drilling (see Daily GPI, Jan. 21, 2009).

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