Marathon Oil has filed an appeal in federal court in Wyoming seeking to overturn a ruling by the Interior Department’s Board of Land Appeals (IBLA) that found three Marathon-owned leases for coalbed methane (CBM) development in the Powder River Basin were illegally awarded by the federal government in early 2000.

Marathon asked the U.S. District Court for the District of Wyoming in Cheyenne to review the IBLA’s decision issued in late April, which reversed and remanded an earlier action by the Bureau of Land Management, also an Interior agency, on the grounds that it failed to carry out the required analysis under the National Environmental Policy Act (NEPA) before offering the leases for sale. The BLM wrongly relied on outdated environmental documents that were issued in 1985, which “failed to even identify, much less independently address, any of the relevant areas of environmental concern or reasonable alternatives to the proposed action,” the IBLA said at the time.

“We believe that the BLM did properly review the environmental effects prior to awarding the leases,” and that the agency’s actions conformed with the NEPA law, said Marathon spokesman Paul Weeditz last week. The company filed its petition for review on June 20.

Two environmental groups, the Wyoming Outdoor Council (WOC) and Powder River Basin Resource Council, had challenged the initial BLM decision, claiming that the environmental analysis of the leases was defective and did not assess the impacts of CBM extraction (See Daily GPI, May 1). The leases covering more than 2,500 acres in Wyoming were owned by Pennaco Energy Inc., which was acquired by Marathon Oil.

Tom Darin, WOC’s director of public lands and lead counsel, hailed the IBLA decision at the time, saying it sent a “direct jolt” to the entire coalbed methane industry nationwide, given that many of the Powder River leases were based on the same outdated (1985) environmental analyses, and would thwart the BLM’s current plans to allow more than 50,000 methane wells to be drilled and producing in Powder River by 2010. But the BLM and Powder River producers doubted the IBLA ruling would have a wide-ranging effect.

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