The Combined Hydrocarbon Leasing Act of 1981 allows lease holders who have permits to use the land for oil and gas extraction to convert those permits to CHLs (combined hydrocarbon leases). Such a conversion would enable the lease holder to produce oil from tar sands, a process that requires an external energy source to separate heavy and viscous crude oil from the sedimentary rock in which it is attached or combined. The Bureau of Land Management (BLM) has the authority to accept or reject applications from lease holders to convert land to this use.
In the recent case of Southern Utah Wilderness Alliance v. Palma, 707 F. 3d 1143 (U.S. Ct. App. 10th Cir. 2013), several environmental groups formed an alliance to sue the BLM and the Department of Interior among other groups in order to stop the approval of any such applications. At the time these groups (known as “SUSA” filed their suit, the decision of the BLM was being reviewed by an appellate body, the the Interior Board of Land Appeals (“IBLA”) whose very role is to conduct such appeals. At that point, SUSA had no knowledge of the disposition of that appeal. The BLM had agreed to extend the length of certain leases pending determination under its authority to “suspend” the leases. Lease holders who have ten year leases, as an example, can have that lease extended by the time it takes the BLM to make such a decision so that the lease holders do not have their leases shortened as a result. SUSA sued BLM for making this decision to suspend and for approving some of the conversions.
The problem for SUSA arose from the fact that the IBLA had yet to render a ruling on the appeal at the time SUSA initiated the civil action. Afterward, when SUSA learned that IBLA had, in fact, rendered a ruling, SUSA amended its original complaint to reflect the new development. However, the District Court ruled – and this appellate court affirmed that SUSA lacked standing at the time they originally filed suit because the matter was still involved in a regulatory appeal. SUSA should have waited until the IBLA had finalized its decision before bringing suit. The fact they subsequently filed an amendment to the original complaint did not cure this defect. Although the 10th Circuit Court of Appeals did not address this in their opinion, it is conceivable that SUSA could have just dismissed their case and refiled a new action after the IBLA was released.
The lesson from this appellate opinion is that parties need to be careful not to rush to court until after they ensure that legally-prescribed regulatory processes have been exhausted. On one hand this decision seems unfair in that the plaintiffs did revise their original lawsuit to recognize the outcome of the IBLA review. But it does reassert a bright-line rule that parties should not file a suit until the regulatory bodies reach finalized decisions.
For advice on land use or farming matters before making any purchase or transaction, contact the attorneys at Giddens & Gatton Law, PC Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico. Call the office at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com should you have any questions concerning the use of any land for farming or other purposes.