Feds to review Bush-era oil shale rules

Seeking to settle two lawsuits, the federal government agreed to reconsider decisions during the Bush administration establishing commercial oil shale rules and designating 2 million acres for possible development.

Interior Secretary Ken Salazar announced the settlement in a teleconference Tuesday. Thirteen conservation groups had filed lawsuits challenging the rules and the land allocations.

Salazar said the Bureau of Land Management previously “put the cart in front of the horse” in establishing commercial royalty rates and other rules when oil shale technologies remain in the research and development stage.

With companies saying commercial development is still years away, “We have time to update the development rules and get them right,” Salazar said.

BLM director Bob Abbey said the agency isn’t sure 2 million acres should be allocated for oil shale development but is willing to revisit the issue. The agency will consider exclusion of some areas due to potential wilderness characteristics or importance as habitat for the imperiled sage grouse, among other factors.

In coming months, the public will have the opportunity to provide input on oil shale rules and land allocations. Any changes the BLM makes will be based on the latest research and technology related to considerations such as water demand and the need to make sure shale development provides a fair return to taxpayers, Abbey said.

Salazar previously said the royalty rate set in 2008 is too low. It is fixed at 5 percent a year for the first five years, rising a percent a year thereafter to a cap of 12.5 percent. Conservation groups contend the rate is low enough to encourage development of marginal leases.

The BLM previously revised numerous land-management plans to identify potential areas of oil shale development in Colorado, Wyoming and Utah.

During the Bush administration, the BLM also issued six research and development leases, five of them in Colorado in Rio Blanco County. The BLM currently is considering issuing three more such leases. Salazar and Abbey said Tuesday’s announcement doesn’t affect the existing or proposed leases, which are needed to continue investigation into whether oil shale development is commercially viable and can contribute to the nation’s energy needs. Those leases include provisions for conversions under certain conditions to commercial leases covering more acreage.

Shell, which holds three of the existing leases in Rio Blanco County, had intervened in both lawsuits, and the American Petroleum Institute in one of them. Both indicated they intended to oppose the settlement agreement, but they don’t have the power to stop the agreement, and Shell’s mineral rights aren’t affected by it, the government and plaintiffs said in their joint motions filed Tuesday to administratively close the cases.

U.S. District Court Judge John L. Kane agreed Tuesday to the case closings, but the parties won’t seek dismissal of the suits until the settlement terms are met.

Ted Zukoski, an attorney with Earthjustice who helped represent the plaintiffs, said in an e-mailed statement, “The settlements give the Interior Department the chance to better balance oil shale development against what is most valuable here in the West — our water, our communities, our wildlife, and scenic landscapes found here and nowhere else.”

The Interior Department said Tuesday that in accordance with recommendations last fall by the Government Accountability Office, the U.S. Geological Survey will analyze baseline water-resource conditions to help understand the possible impacts of commercial-scale oil shale development.

Colorado’s U.S. senators, Michael Bennet and Mark Udall, both Democrats, welcomed the news that the Interior Department will look anew at past oil shale decisions.

However, U.S. Rep. Doc Hastings, a Washington state Republican and chairman of the House Natural Resources Committee, released a statement blasting Salazar’s announcement.

“This redundant step is yet another example of the Obama administration proactively stopping American job-creating energy projects before they can begin,” he said.


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