What if you paid $38,000 to lease a house and were then told you cannot move in until some studies are done to determine if it is safe, but you do not get your money back? Years go by while the landlord is holding your money.
This is exactly what the Obama administration has been doing to the oil and gas industry since May of 2010. The same Obama who is crisscrossing the country touting “fair.”
On Friday, a US District Judge, appointed by Obama, decided that the administration wasn’t playing fair.
In October 2010, the Western Energy Alliance (WEA), representing more than 400 independent natural gas and oil producers in the western states, filed a law suit against the federal government to force action on oil and gas leases that companies had already paid for. The leases had been purchased at Bureau of Land Management (BLM) lease sales. But because of environmental protests and uncertainty over endangered species, the BLM has a backlog of leases needing additional examination.
The Energy Policy Act of 2005 encouraged domestic energy development by allowing wells drilled from a site that had been used within the last five years, and already had a full environmental analysis, to proceed without repeating the expensive, time consuming, and redundant studies. Additionally, in areas with extensive energy development—and therefore environmental impacts have been fully evaluated, permits could be expedited. Extraction and jobs could happen more quickly—helping America’s debt.
In May/June 2010, in response to an environmentalist lawsuit, the BLM/Forest Service (FS) adopted new rules for interpreting the Energy Policy Act. The rules were aimed at slowing down development by increasing environmental oversight of drilling on federal lands.
The WEA lawsuit focused specifically on 118 leases for which companies had paid $4.5 million—an average of $38,000 per lease—though hundreds of leases and more than $100 million were impacted by Friday’s decision.
U.S. District Judge Nancy Freudenthal ruled that the BLM and FS had failed to follow the correct procedures when they issued a memorandum and letter, respectively, changing the application of the 2005 Energy Policy Act. The Obama administration sought to introduce a screening process would have increased environmental oversight. Turning down the administration’s argument that the memorandum/letter were “policy statements,” Judge Freudenthal said, “They are rules which bind the agency and impose or affect individual rights and duties”—as such, notifying the public and engaging in proper rule-making are required. She threw out the 2010 rewrite of Section 390 of the Energy Policy Act of 2005 and reinstated expedited oil and gas drilling.