Interior Board of Land Appeals
The following are some notable recent decisions by the Interior Board of Land Appeals relating to oil and gas leasing and public lands:
State Director review: A BLM letter with regard to royalty accounting, which merely requires an operator to contact the BLM office to “resolve” accounting discrepancies, does not take an action adversely affecting the operator, and thus is not a decision that would be subject to State Director review under 43 CFR 3165.3(b). Bruin E&P Operating, LLC; Petro-Hunt, LLC, 195 IBLA 101 (2020).
Protests; surveys: To be timely, a protest must be filed with BLM before BLM has taken the action that is being objected to. However, BLM may, in its discretion, consider a protest that is filed untimely. If BLM chooses to consider an untimely protest of a survey, the protest will be denied on the merits unless it establishes, by a preponderance of the evidence, that the survey was grossly erroneous or fraudulent. Rudolph Hillstrom, 194 IBLA 355 (2019).
Void vs. voidable leases: The Board’s ruling in Southern Utah Wilderness Alliance, et al., 194 IBLA 333 (2019), is important as an affirmation that, where an environmental analysis which led to the offering of lands for competitive leasing is legally deficient, the resulting leases are not necessarily void, but may merely be voidable. The distinction drawn by the Board is between a lease that was “improperly issued” and is subject to cancellation, and a lease that could be issued properly but had a “procedural flaw” occur during the leasing process: “[W]hen the land is otherwise available for mineral leasing, and the lease ‘has been issued in violation of established procedures,’ the ‘lease is considered voidable rather than void.’” 194 IBLA at 336-337, citing Clayton W. Williams, Jr., 103 IBLA 192 (1988). The deficiency in such a situation may be cured by suspending the leases pending the conduct of a proper environmental analysis, and then either lifting the suspension or cancelling the leases depending on the outcome of that analysis.
Environmental review: The case of Owyhee County Board of Commissioners, 194 IBLA 316 (2019), while it does not involve oil and gas, still may have implications for federal oil and gas leasing. In that case, a State request to place a memorial marker in a wilderness area was approved by BLM following an environmental review; but in fact the State already had placed the marker before completion of BLM’s review process and the ensuing 30-day comment period. The County, zealously seeking to defend the wilderness area, challenged BLM’s action. The Board, while stopping short of directing the removal of the marker, set aside BLM’s decision and remanded the matter to BLM. The Board found that the environmental assessment and decision violated the requirements of the National Environmental Policy Act because they were erroneously premised on approving an action that already had been taken; that the deficiency could not be cured by completion of the EA after the fact; and that the violation of NEPA did not constitute harmless error. Although somewhat fact-specific, this decision may add fuel to the fire of efforts to challenge oil and gas leases based on assertions of long-ago technical deficiencies in the NEPA review process that preceded lease issuance. (But see the Southern Utah Wilderness Alliance decision above.)
Surveys: In determining that lands were added to a private tract in a river through avulsion, thus retaining their character as federal public domain that had been omitted from a prior survey, rather than through accretion, thus becoming a part of the privately-owned tract, BLM is required by the Manual of Surveying Instructions to support its determination with positive evidence of avulsion that is not subject to a different interpretation. A determination that meets this standard will be upheld except where a material error in BLM’s analysis can be shown by a preponderance of the evidence. Battle Creek Island Ranch, LLC, 194 IBLA 214 (2019).
Drilling without approved APD; trespass: The Board’s decision in Zavanna, LLC, 194 IBLA 206 (2019), is as interesting for what it did not decide as for what it did. This case concerned a well that was drilled directionally from a non-federal tract on one side of a river, through lands under the river and a second tract, to be completed under a non-federal third tract. The second tract comprised federal lands under the most recent official plat of survey (which was over 100 years old); and BLM had issued a lease covering that tract; but in fact the course of the river had shifted long since, eroding the entire federal tract and accreting a portion of it to the non-federal tract on the opposite side of the river. BLM issued a notice of an incident of noncompliance (INC), citing the well operator for drilling through the ostensible federal lease without an approved application for permit to drill. The Board resolved the matter by ruling that BLM could not issue an INC to a party that had no connection to the federal lease and thus was not subject to the applicable federal regulations; and that BLM’s only recourse against such a party would be a proceeding for trespass, under 43 CFR Part 9230. The decision did not reach the issue of title to the lands in question, or BLM’s issuance of a lease covering an apparently-nonexistent tract (which BLM asserted could only be addressed through an action in federal district court under the Quiet Title Act).