Changing Federal Priorities Midstream in Upstream Development: Federal Energy Development Lease Cancellations, Environmental Policy, Historic Preservation and Takings

By Wegener, Meredith A. | Environmental Law, Fall 2016 | Go to article overview

Changing Federal Priorities Midstream in Upstream Development: Federal Energy Development Lease Cancellations, Environmental Policy, Historic Preservation and Takings


Wegener, Meredith A., Environmental Law


I.   INTRODUCTION  II.  SIDNEY LONGWELL, THE UNITED STATES, SOLENEX AND A LEASE IN      MONTANA      A. The Early Years of the Lease--the 1980s      B. Additional Environmental and Cultural Considerations and         Secretary-Level Approval--the 1990s      C. The Fight Continued--the 2000s      D. Unreasonable Delay--2013-Present  III. SIMILARLY SITUATED PARTIES      A. White River National Forest, Colorado      B. NEPA Compliance in Osage County, Oklahoma  IV.  FEDERAL STATUTES AND REGULATIONS      A. The Mineral Leasing Act      B. The National Emironmental Policy Act      C. The National Historic Preservation Act      D. The Statutes as Applied         1. Solonex and NEPA         2. The Black feet Nation, Solonex and NHPA  V.   THE TAKINGS CLAUSE      A. Breach of Contract Claim  VI.  WHETHER A TAKING OCCURRED      A. DOI Lack of A uthority      B. Within DOI Authority         1. A Successful Takings Claim            a. Lucas Analysis            b. Penn Central Analysis         2. An Unsuccessful Taking Claim         3. Financial Viability of Federal Oil and Gas Leases  VII. CONCLUSION 

"[N]or shall private property be taken for public use, without just compensation" (1)

I. INTRODUCTION

In 1982, Sidney M. Longwell was forty-four years old when he successfully obtained a lease from the United States Government through the United States Bureau of Land Management for oil and gas exploration and production (upstream development) in the Lewis and Clark National Forest, Badger-Two Medicine area in Montana. (2)

Mr. Longwell is now in his late seventies, and after decades of wrangling through multiple lease suspensions, assignments, reassignments, environmental assessments (EAs), environmental impact statements (EISs), and now a district court case, the United States canceled the leases in 2016. (3) Against the backdrop of the National Environmental Policy Act (4) (NEPA), the National Historic Preservation Act (5) (NHPA), and the Mineral Leasing Act (6) (MLA), Mr. Longwell was never given the green light under the lease to drill a single well. (7)

The Longwell tale (now Solenex, his company) is long and woven in layers of law and policy. All involved--energy companies, investors, federal agencies, government leaders, local citizens, tribal members (including the Blackfeet Nation), and conservationists--are passionate about how this lease, and its corresponding property and contractual rights, should be resolved.

Oil and gas leases are not only agreements between parties like the United States and Solenex that delineate contractual rights, but are in and of themselves property with significant value. (8) Regardless of whether one stands on the side of continuing, ending, or curtailing fossil fuel development, lease cancellations--like the one currently challenged by Mr. Longwell--raise the question of whether the United States is taking valuable property and breaching contracts with little to no compensation.

This Article specifically examines whether a federal oil and gas lease cancellation is a taking as set forth by the Fifth Amendment of the United States Constitution, for which a party must be justly compensated. (9) The consequences of the Secretary of the Interior's recent cancellation of the Solenex lease will be historic if upheld. The financial viability of federal oil and gas leases as valuable assets with contractual and property rights would be significantly diminished, if not entirely shattered. In addition to the Takings Clause analysis, this Article will demonstrate the uncertainty and lack of continuity created when energy, environmental, historical, and cultural interests compete in federal oil and gas development. The finality and consistency lacking in the administrative system would make even the most courageous wildcatter (10) or tribal leader hesitant about the rules of the game and how to anticipate their application.

Parts II and III of this Article will detail the history of the Longwell/Solenex case and other federal oil and gas leaseholders similarly situated. …

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