BLM: Problems exist with some Divide gas leases

by Tim Mutrie, Special to the Aspen Daily News

CARBONDALE — The Bureau of Land Management sold at least 82 natural gas leases on public lands of the greater Thompson Divide area in violation of federal environmental protocols, agency officials have acknowledged, and to remedy the missteps — some of which are 10 years old — the agency is initiating a new round of environmental analyses on the lands that gas industry players say will surely forestall their development plans in the near-term and potentially quash them altogether.
 
Though the issue has been looming since at least mid-October, last week BLM officials acknowledged that problems with the leases — “NEPA deficiencies” is the BLM’s term for it, referring to the National Environmental Policy Act — extend to a broader geographic area than the gas industry previously believed, including all federal leases on more than 45,000 acres of the Pitkin, Garfield and Mesa county sections of the controversial Thompson Divide zone.
 
Leases with so-called “NEPA deficiencies” also reach into other areas of the White River National Forest farther west of the proposed Thompson Divide conservation boundary, near Divide and Mamm creeks, south of Silt in Mesa and Garfield counties, according to the BLM. And in this respect, fears in the gas industry that whatever is afoot in the Thompson Divide might be triggering a kind of regulatory domino effect on public lands — with the potential for what one industry player called “Rockies-wide impacts” — are beginning to be realized, an investigation has learned.
 
The core problem with the leases is not that environmental analysis work wasn’t performed to protocol on the lands, according to officials from the BLM and the White River National Forest. NEPA work on the lands had been performed by the White River National Forest, in 1993, but the BLM did not formally adopt that work before it sold the 82 leases at auction to private operators in the mid-2000s, according to David Boyd, a spokesperson from the BLM’s Colorado River Valley Field Office in Silt.
 
At the time, Boyd said, the agency believed that it was following the correct protocols under NEPA — he characterized the practices of the era as standard operating procedure within the state — but a 2007 decision by a panel of land judges from the Department of Interior found the practice to be out of step with the law.
 
“We didn’t follow the right procedure. There was NEPA work done, but we didn’t adopt that NEPA work,” Boyd said. “So we’re acknowledging that there was a NEPA deficiency.
 
“In terms of illegal or legal, that’s something a court would determine, but for us it’s a procedural issue and we need to do this additional NEPA work now,” he continued.
 
Lawyers from the Pitkin County attorney’s office and Wilderness Workshop — both active opponents of gas development in the zone — have characterized the agency’s acknowledgment of the NEPA deficiencies as a clear-cut admission that the leases were issued illegally; it is an accusation that local gas opponents, including Pitkin County and the Wilderness Workshop, have been making since the mid-2000s.
 
The gas industry has an alternative view of the developing situation, and one industry lobbyist, David Ludlam, described it as a “class and demographic issue masquerading as an issue about the environment.”
 
“We’re talking about a precedent that as far as we can tell we’ve never seen before. So trying to make sense of this new process is a fool’s errand, because that’s not what’s driving it. It’s process being reverse-engineered by power and politics,” said Ludlam, the executive director of the West Slope Colorado Oil & Gas Association.
 
Whether or not NEPA deficiencies amount to a kind of technicality, the revelation introduces a volatile new dynamic to an already complex and impassioned fight over natural gas development in the Thompson Divide zone. It also highlights the at-times complex interplay between the BLM and the U.S. Forest Service, the two federal agencies that work together in a joint role as regulatory referee of gas development on public lands.
 
The revelation also comes at a particularly sensitive time for the Thompson Divide area, as negotiations between gas operators and the Thompson Divide Coalition — a Carbondale nonprofit that has been attempting to “buy out” the leases in order to shield the zone from gas development — have been gaining traction, according to multiple sources, including sessions that have included U.S. Senator Michael Bennet at the table.
 
And there are also interconnected legal challenges already underway: Pitkin County and Wilderness Workshop have filed separate appeals related to the BLM’s decision in April to extend the life of 25 of the problematic leases in the area. Both groups acknowledge the tactic is aimed at triggering a sequence of events by which federal gas leases hamstrung by identical NEPA deficiencies have in the past been canceled by the BLM. One such case, Boyd confirmed, prompted the BLM to cancel three leases in the Thompson Divide area in 2007, in the wake of the 2007 Interior Board of Land Appeals decision.
 
The issue is further complicated because the Thompson Divide area — a collection of 15 rugged creeks and twisted ridges originating from a single crest west of the Crystal River roughly between McClure Pass and Carbondale — is a kind of borderlands that entrains multiple local and federal jurisdictions. This includes five counties (Pitkin, Gunnison, Garfield, Mesa and Delta), two national forests (the White River National Forest and the Grand Mesa, Uncompahgre and Gunnison National Forest, or “GMUG”), the territories of two different BLM field offices (the Uncompahgre Field Office in Montrose and the Colorado River Valley Field Office in Silt), and eight different federally-inventoried roadless areas. There are also two different maps of the proposed conservation boundary.
 
The total acreage of leases with identified NEPA deficiencies could not be confirmed by the BLM on Friday, but it is believed to be in excess of 100,000 acres and includes the 33,000 acres of leases that the BLM recently extended past their standard 10-year terms along South, Middle and North Thompson Creek, Coal Creek and Four Mile Creek.
 
All affected leases are located within the White River National Forest, including some that are already producing natural gas, according to Boyd. It was not immediately clear how many private gas operators may be affected by the developing scenario, but SG Interests, Wilsource Enterprise and Ursa Piceance are among them, according to Boyd.
 
NEPA deficiencies have not been identified in the southern portion of the Thompson Divide zone, in Gunnison and Delta county areas, which are part of the GMUG National Forest and the BLM’s Uncompahgre Field Office territory.
 
To remedy the so-called “NEPA deficiencies” on the 82 leases, Boyd said, the agency in partnership with the White River National Forest will be undertaking the most rigorous kind of environmental review at its disposal, the kind, according to multiple sources, that typically takes several years to complete and is usually only performed on public lands before they are made available for sale for gas development purposes in the first place.
 
Said Scott Fitzwilliams, supervisor of the White River National Forest: “I’ve never dealt with this before and I’ve dealt with oil and gas leasing a lot. I’ve just never seen a situation where we have leases issued and then the BLM has to go back and issue a new decision on those leases that are already leases. It’s complicated, very confusing, very weird.”
 
There are three possible outcomes of the new environmental review process, Boyd said.
 
“One would be the no-action alternative, so things stay the way they are but the analyses would be updated,” he said. “Then we’ll look at an alternative where the leases would be canceled, and we’ll look at an alternative where the lease stipulations would be enhanced or modified.”
 
The new process will also invite public comment, he said.
 
Reed Williams, president of Wilsource Enterprise, one of the gas operators believed to be holding more than 10,000 acres of problem leases, said Thursday he had “no idea” what was happening.
 
“They’re proposing that all decisions previously made by authorized agents of the federal government can be reversed under challenge of the National Environmental Policy Act. And all private funds invested in good faith are then decimated. So if that’s possible, then it’s possible,” he said.
 
“What all this comes down to is, does commerce have a place at the table?” he continued. “And if they’re going to do it in the Rockies, then they better do it in the whole country, private lands, too. Are they going to try and make Texas do this too? It’ll be in front of the Supreme Court before you can blink.”
 
Peter Hart, staff attorney at the Wilderness Workshop, meanwhile, said the BLM’s acknowledgment of the NEPA problems was long overdue.
 
“The BLM’s been on notice about this very problem since 2004,” he said. “And they’ve done nothing. Nothing. They’ve just sat on their hands.”
 
He added: “If the BLM is admitting to these problems, which it seems they are, this is the first we’ve heard of it.”

 

Power politics in Pitkin County?

 
The NEPA problems began being identified after SG Interests filed an application to create what is known as a federal exploratory unit on a belt of 18 leases totaling more than 21,000 acres in far northwestern Pitkin County. A unit effectively enables operators to develop neighboring or adjacent leases as a single cohesive development, and the Houston-based energy company filed its application with the BLM’s state office for the proposed Lake Ridge Unit in May 2011. But the application just languished at the agency, according to Robbie Guinn, vice president of SG Interests, such that the company began to regard the BLM’s non-decision as a “defacto denial.”
 
In October, Guinn said he demanded a meeting with BLM officials at the state office in Lakewood for an update on the status of the Lake Ridge Unit proposal. He was told, he said, “Something to the effect that the NEPA was deficient, and so that it would need to be cured before development. And of course there were a zillion questions that went along with that, and they were unable to answer any of them,” Guinn said at the time.
 
Guinn described the situation in a series of interviews late last fall, but until recently BLM officials from the local, state and federal level declined to corroborate his narrative or comment on the NEPA deficiencies issue of the greater Thompson Divide. More recently, BLM officials at the state and federal offices directed inquiries about the matter to Boyd, the Silt field office spokesperson. Meanwhile, the agency first acknowledged the NEPA issue publicly in its April decision to suspend all 18 of the proposed Lake Ridge Unit leases owned by SG Interests and seven other leases controlled by Ursa Piceance, totaling about 33,000 acres.
 
More recently, Guinn declined to comment on the developing situation, but he confirmed last fall that SG Interests’ proposal for individual applications for permits to drill amounted to the company’s plan B — a tactical response to the BLM’s non-decision on the Lake Ridge Unit proposal, he said. And, beginning later on in October, SG Interests started filing individual applications for permits to drill on six of the leases in the area. Two of those applications are now considered to be complete by the BLM, according to Boyd.
 
“Without the Lake ridge Unit we were left with proposing to drill — and drilling each lease — in order to save them,” Guinn said last fall. “That’s our only option. It just means that we have to accelerate drilling more wells than we otherwise would have, had the Lake Ridge Unit been approved.
 
“If you want my opinion, there’s a lot of people that live in Aspen or the surrounding areas that give a lot of money to those in power right now and they’re listening to them,” Guinn said. “This whole process is becoming politicized. What used to be administrative functions of the BLM are now getting some political litmus test and everything is seized up. Nothing is happening.”
 
Going forward, one particularly thorny issue, according to gas industry players, will be dealing with leases — all outside the Thompson Divide boundary area — that are already producing gas. But Ludlam suggested that the writing is already on the wall.
 
“The ones they’re gonna let slide are the ones outside the boundary,” he said. “And the ones they’ll cancel or put heavy stipulations on are inside the Thompson Divide boundary.
 
“You can see where this is going: Pitkin County is one of the wealthiest places in the world, with a high concentration of influential aristocrats, with senators who are weighing in, and when you have that kind of political power weighing in it just pushes gas development downvalley to people who don’t have the money and power to fight it,” he continued. “The state offices are just getting run over, the local field offices are getting run over, and the bureaucrats who are trying to do their jobs and follow the processes are just going to be getting thrown to the wolves trying to explain this stuff.”

 
Tim Mutrie is a freelance journalist working on the Thompson Divide Reporting Project, an independent investigation of the players, places and processes at thompsondivide.com. Contact him at tim.mutrie@gmail.com.