Court hears arguments on last oil, gas lease

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A hiker looks over Buffalo Lakes in the Badger Two Medicine.

Oral arguments for the last standing oil and gas lease in the Badger-Two Medicine area were the focus of a hearing Tuesday before the U.S. Court of Appeals for the Washington, D.C. Circuit. At issue is a review of a lower court decision to reinstate the previously canceled 6,200-acre lease located south of Glacier National Park on lands the Blackfeet Tribe consider to be deeply sacred.

The lease, issued by the Bureau of Land Management in 1982, is held by Louisiana-based Solenex LLC. It has faced multiple delays and suspensions, more than a dozen appeals and other challenges over the last 37 years. And now, the U.S. Department of Interior and several environmental groups, including the Blackfeet Headwaters Alliance, seek to reverse a 2018 ruling in which District Judge Richard Leon reinstated the company's lease that had been canceled by the department in 2015.

According to Leon's ruling, “even if agencies have the power to rescind decisions made by their predecessors, they must still exercise that power within a reasonable amount of time.”

Solenex's license had been suspended for two decades before the Department of Interior was ordered to make its decision. The government's decision to cancel the lease and deem the drilling permit as invalid, Leon ruled, was “arbitrary and capricious” and that the two-decade delay was “unreasonable.”

Solenex's legal representation, David MacDonald, with Mountain States Legal Foundation, highlighted these findings during Tuesday's hearing. He described the two-decade delay in the government's decision as “significant” and said the hold-up should be considered at length as the litigation moves forward.

“Despite the attempts to minimize and trivialize harms here, cancellation after affirming its [the lease's] validity for 30-plus years is arbitrary and capricious in violation of their delegated authority. Because whatever authority agencies [Department of Interior] may have to reconsider their decisions, must be exercised within a reasonable period of time,” MacDonald said.

However, MacDonald also maintained the 2015 decision to completely cancel the lease was the first time — after more than three decades of off-and-on resistance — that the department had considered the lease to be invalid.

“It wasn't just the delay. It was the fact that the agencies have spent decades affirmatively stating that the lease was valid both explicitly and implicitly,” MacDonald said. “There was no indication that the agencies considered the lease was invalid.”

But Timothy Preso, an attorney with Earthjustice, who is representing various environmental groups in the case, pointed to the significant amount of public opposition Solenex has experienced throughout the years.

Preso brought up one example that dated back to the mid-1980s. He said the instance was a “public protest of the lease's invalidity” and that the “issue persisted through numerous subsequent approvals.”

Preso also highlighted how the department's decision to cancel the lease and revoke drilling rights is in line with what the interior secretary is authorized to do.

“The secretary has to have the power to protect the public's interest in the public lands. And that concern is front and center in this case,” Preso said.

The bulk of his argument was centered around what the lands mean to the Blackfeet Tribe, which has for many years alongside conservation groups, been a driving force behind the departure of more than a dozen gas and oil companies from the Badger-Two Medicine area.

“The challenged lease cancellation decision protects an area that the Blackfeet Tribe has described as its 'last traditional sacred territory.' It's an area that offers important habitat for grizzly bears, elk, and numerous other sensitive species adjacent to Glacier National Park,” Preso said. “Oil and gas development on this lease would inflict such a severe blow to the Blackfeet Tribe's cultural interests that their ability to practice their cultural traditions in this area would be lost.”

Preso also added that even with a lawful cancellation of the company's lease, Solenex has a lease contract in the federal court of claims against the United States for “damages that it has sustained through investments.” He said having this contract in place means Solenex has an option to protect its economic interests while “there is no such safety net” for the public and tribal interests in protecting the lands.

Three federal judges who heard the testimony took the matter under advisement.

Over the decades, more than a dozen leases in the Badger-Two Medicine have ended.

In a major win for the Blackfeet Tribe and environmental groups, Devon Energy retired its 15 separate leases in 2016 in return for sunk costs, or money that already has been spent and which cannot be recovered. And most recently, the Wilderness Society and Moncrief Oil Co. reached an out-of-court settlement to permanently retire the company's 7,640-acre oil and gas lease in late 2019.

The oil and gas giant said in a press release, “even though Moncrief Oil believes that this valuable oil and gas lease could have been developed while protecting and even benefiting the wilderness, the sensitivity to this special area outweighs development.”

Similar acknowledgments of the Badger-Two Medicine's significance to the Blackfeet Tribe and to various wildlife species have been shared by companies that have retired their longstanding oil and gas leases voluntarily.

The hardest-fought legal battle has come from Solenex.

“The only hold-out issue in terms of a contest to the cancellation of the lease in the area is the controversy before the court here today,” Preso said.

Kianna Gardner may be reached at 758-4407 or kgardner@dailyinterlake.com

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