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:

Suspensions of operations and production: When a BLM decision approving a request for a suspension of operations and production states a date on which the suspension will expire, the suspension will expire on that date, even if the lessee could have obtained an extension of the suspension – which was warranted by the circumstances – through a timely request, but did not file such a request on verbal advice from BLM staff that it was not necessary; and even if BLM itself could and should have directed an extension of the suspension, but did not actually do so. (As the Board makes clear, written advice from BLM, in an official decision, possibly might, but probably would not, have led to a different outcome, given the Board’s virtually-insurmountable threshold for estoppel.) Knight Technical Services, LLC, 195 IBLA 333 (2020). Note: This case serves as a reminder that, in any transaction with BLM, a party that wants to preserve its rights must abide by all applicable requirements, even when BLM staff says otherwise.

Unit agreements; standing: Where an appellant had requested State Director Review of a BLM decision approving a unit agreement, the Board, in Southern Utah Wilderness Alliance, 195 IBLA 315 (2020), affirmed BLM’s dismissal of the SDR request for lack of standing. Although the appellant, having protested BLM’s approval of the unit agreement, was a party, and thus met one of the criteria for standing, the Board found that the appellant failed to meet the other criterion: it was not adversely affected because its interest was not likely to be substantially injured by BLM’s decision. Comparing the potentials for injury from unit approval and from lease issuance, the Board recognized a higher bar for standing in the former case, stating (at 325-326), “Unlike lease issuance, unitization does not create a risk of development where none existed before. It is even speculative whether unitization increases the risk of environmental harm. While unitization facilitates and may ultimately expedite development, it also ‘is likely to minimize surface disturbance across the unitized leases, because the cooperative development structure encourages the shared use of roads, well pads, and other infrastructure.’ This stands in stark contrast to leasing in the first instance, or to extending a lease where the record shows likely and imminent development as a result of the extension. . . . [T]he creation of a development risk is sufficient to confer standing when BLM issues a lease, [but] its mere continued existence is not sufficient.” In other words (at 329), “while unitization could ultimately result in the extension of individual leases that might not have otherwise been extended, and possible development on those leases, this possibility is too speculative to serve as a basis for standing to challenge BLM’s decision to approve a unit agreement.”

Standing: In an appeal from BLM decisions dismissing requests for State Director Review, the Board found it necessary to follow a circuitous route to arrive at a correct result. Even where an appellant had no standing to seek SDR in the first place, the Board found that such an appellant, having made the SDR requests, would be a party that is adversely affected by BLM’s dismissals of those requests, and thus can have standing to appeal the dismissals to the Board. But, because the appellant had not in fact been eligible to request SDR, the Board then affirmed the dismissals on the merits. Center for Biological Diversity, 195 IBLA 298 (2020).

Appeals: The regulations, 43 CFR 4.411(a), require a notice of appeal to the Board both to be filed in the office that made the decision being appealed, and to be filed within 30 days (subject to a 10-day grace period under certain circumstances) from when the decision was served on the appellant. Where a notice of appeal that would otherwise be timely was filed in a BLM field or district office, rather than in the BLM State office that issued the decision, the Board does not have jurisdiction to consider the appeal. New Mexico Wilderness Alliance, et al., 195 IBLA 242 (2020).

Surveys; choice of law: Federal title to a tract of public domain lands bordering on a navigable river extends to the ordinary high water mark of the river. Where (a) it becomes necessary, following changes in the course of the river, to identify an ordinary high water mark that differs from the ordinary high water mark shown on the official survey (specifically, the ordinary high water mark that existed at the time the river was dammed, which then became the fixed boundary of the federal tracts that were inundated), and (b) federal law and State law establish different criteria for identifying the ordinary high water mark, the ordinary high water mark at the relevant time is to be determined by federal law. As a choice-of-law matter, the federal law that is applicable in this situation is express federal law, and not State law that might instead be borrowed as federal law. North Dakota Office of the State Engineer & North Dakota Board of University & School Lands, 195 IBLA 194 (2020).

Standing: A decision granting a lease extension (in the context of an oil shale research, development, and demonstration lease) may adversely affect a party opposing that decision, and thus give that party standing to appeal. Such a decision is an irreversible and irretrievable commitment of resources, similar to a decision issuing a lease in the first place, and unlike a decision granting a suspension of a lease that merely maintains the status quo. Southern Utah Wilderness Alliance, et al., 195 IBLA 164 (2020).

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.