Reconsideration of lease adjustments is sign of oil-shale shift

The federal government has been given extra time to respond to lawsuits challenging Bush-era oil shale decisions, amid increasing signs of a shift in thinking on the issue under the Obama administration.

In the latest sign of change, the Interior Department is reconsidering a last-minute decision by the Bush administration to amend existing research, development and demonstration leases so new oil shale rules apply to them.

Shell, which holds three of those leases in Rio Blanco County, says the rethinking shows the government won’t fully defend its interests in two lawsuits filed by environmental groups, and Shell should be allowed to intervene in the cases. The government opposes letting Shell become involved in the suits, saying in court filings Shell has no direct interest in them.

Environmental groups that filed the suits also oppose Shell’s intervention. The groups filed the suits on Jan. 16, during George W. Bush’s last days in office. The lawsuits challenge regulations the Bureau of Land Management issued in November for commercial oil shale development and its earlier identification of 1.9 million acres of public land for potential oil shale development in Colorado, Wyoming and Utah.

The same day the suits were filed, the BLM announced it had revised the research and development leases so the November rules would apply to them. Those rules include a 5 percent royalty rate that grows over time to 12.5 percent.

In a March 5 court brief, the government cited the “regulatory certainty” provided by the lease amendment as being one reason there was no need to let Shell intervene in the legal action.

But on March 19 it filed a corrected brief eliminating that language, and saying little other than that the language was unnecessary to the government’s argument against Shell’s involvement.

Justice Department spokesman Andrew Ames declined to comment on the reason behind the correction other than to say the document “speaks for itself.”

BLM spokesman Matt Spangler said his agency will say only that the Bush administration’s lease amendment language is under review. But he also referred a reporter to Interior Secretary Ken Salazar’s

Feb. 25 news release announcing Salazar had delayed a January Bush administration decision to issue a second round of research and development leases. Among other concerns, Salazar said the leases would lock in low royalty rates that shortchange taxpayers.

The environmental groups also challenge the 5 percent royalty rate in their legal action.

A judge has granted the government’s request for a 60-day extension, until June 2, to respond to the lawsuits. The government asked for more time “to allow the new administration to determine the appropriate course of action,” it said in its request.

The American Petroleum Institute also is seeking to intervene in one of the oil shale cases.

Shell says in a court filing the government’s “remarkable and unexplained reversal” on the lease amendment makes certain that Shell would be impaired if a court threw out the BLM’s new oil shale regulations. Shell and API say criticism by Salazar of the Bush administration’s oil shale decisions, both as Interior secretary and previously as a U.S. senator, show the government can’t adequately defend Shell’s and API’s interests in the legal action.

Shell spokesman Tracy Boyd said he didn’t know if the government could legally revoke the amendment to the initial leases.


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