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Tenth Circuit says lease cancellation challenge too late

By Michael P. Tremoglie | Sep 6, 2012


DENVER (Legal Newsline) - The U.S. Court of Appeals for the Tenth Circuit on Wednesday affirmed a decision that rejected a challenge to the U.S. Department of the Interior's cancellation of 77 Utah oil and gas drilling leases for environmental concerns.

The ruling said the challenge was too late. The three-judge panel found 2-1 that U.S. District Judge Dee Benson of Utah had correctly ruled that energy producers Impact Energy Resources LLC, Peak Royalty Holdings LLC and Questar Exploration and Production Co. had disputed the cancellations outside the 90-day window allowed.

Therefore, they cannot sue the federal government for the Obama administration rescinding drilling leases that were sold to them during the Bush administration, the ruling says.

A few weeks after President Barack Obama took office, his newly appointed Secretary of the Interior, Ken Salazar, rescinded 77 lease parcels for oil and gas drilling, denying them to winning bidders.

He announced his decision Feb. 4, 2009, and issued a memorandum to the Bureau of Land Management's Utah State Director.

On Feb. 12, 2009, a subordinate BLM official mailed letters to the high bidders indicating that the leases would not be issued. Exactly ninety days later, the Energy Companies filed a suit challenging the Secretary's authority to withdraw the leases. The district court dismissed their suit as time-barred under the Mineral Leasing Act.

Among the environmental activist groups granted intervenor status in the case were the Sierra Club, the Southern Utah Wilderness Alliance and the Natural Resources Defense Council. Some of them filed administrative protests of the proposed sales in 2008.

The groups went to court before the auction was held. They reached an agreement with lawyers to allow the auction to go ahead, but with the understanding a federal judge could issue a restraining order on parcels that were sold. That judge granted the request. Salazar followed up by freezing the leases indefinitely.

"This is really about the fact that the (Bush administration) offered leases in sensitive places such as the doorstep to Arches and Canyonlands national parks," said David Garbett, a staff lawyer for Southern Utah Wilderness Alliance.

QEP, the new name for Questar Exploration and Production, told The Associated Press that it will consider appealing the ruling to the full Tenth Circuit because of what it characterized as inconsistent reasoning by the two judges regarding what the deadline was for the appeal.

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