INTERIOR

'Keep it in the ground' sparks legal debate over leasing

In the late 1920s, with the country awash in crude and prices plummeting, President Hoover ordered the Interior Department to cease all oil leasing.

The decision -- aimed at conserving the government's mineral bounty for boom times -- was legal, according to a 1931 Supreme Court ruling that found Interior is under no obligation to lease the federal estate.

That ruling resonates today as environmental groups and liberal politicians call on the Obama administration to again stop the sale of federally owned oil, gas and coal.

And this time, they want the ban to be permanent.

The Keep It in the Ground movement -- led by 350.org, the Center for Biological Diversity and WildEarth Guardians -- has rekindled a vigorous legal debate over whether the government is obligated to sell publicly owned minerals whose burning could intensify global warming.

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The question has split legal experts and vexed the Obama administration's top lawyers.

To be sure, Interior officials have made no indication that they are prepared to terminate the agency's nearly century-old leasing program. Secretary Sally Jewell has said fossil fuel leasing cannot be cut off overnight if people want to continue driving cars and living in comfortable homes.

The Bureau of Land Management sold more than 1,000 oil and gas leases last year covering more than 1 million acres, and the Bureau of Ocean Energy Management is floating a controversial proposal to open the Atlantic Ocean to leasing and drilling for the first time in decades.

Yet President Obama has also acknowledged warnings by scientists that some fossil fuels -- roughly 80 percent of the world's coal -- must be kept in the ground to avoid the worst effects of climate change.

Activists say Obama could burnish his climate legacy by ending, or at least greatly phasing out, the sale of new fossil fuel leases.

At the center of the debate is the Mineral Leasing Act, which Congress passed in 1920 to guide the orderly development of federally owned minerals. Climate activists say that despite many amendments, the law still offers clear authority for Interior to lease or not lease its minerals.

MLA says lands "known or believed to contain oil or gas deposits may be leased by the secretary."

"'May' means 'may,'" said John Leshy, who served as Interior's top attorney under the Clinton administration and now teaches at the University of California's Hastings College of the Law. Lands are "available if the secretary makes them available."

The Supreme Court's ruling on the issue was unambiguous, Leshy said. Interior can ban fossil fuel leasing everywhere except for lands with unique statutes such as the National Petroleum Reserve in Alaska (NPR-A).

"A blanket 'no' is politically risky because you invite congressional interference," he said. "But in terms of the legal authority, there's no question."

Here's what Supreme Court Justice James McReynolds wrote in the 1931 opinion:

"Certainly there is ground for a plausible, if not conclusive, argument that, so far as it relates to the leasing of oil lands, it goes no further than to empower the Secretary to execute leases which, exercising a reasonable discretion, he may think would promote the public welfare."

So the matter is settled?

Far from it, according to industry officials and BLM.

'Not a lot of discretion'

MLA was amended in 1987 to mandate that BLM hold lease sales in "each State where eligible lands are available at least quarterly and more frequently if the secretary of the Interior determines such sales are necessary."

"There's not a lot of discretion" over whether to hold lease sales, said former BLM Director Bob Abbey, who served from 2009 to 2012 and is now a public lands consultant. "BLM is responsible for holding quarterly lease sales based on what lands are available."

That's still BLM's interpretation, despite the agency's decision this week to postpone its second oil and gas lease sale in the past month in the face of protests from Keep It in the Ground activists.

In practice, the agency doesn't always offer four lease sales annually per state.

"The Mineral Leasing Act requires that each BLM office hold quarterly oil and gas lease sales if parcels are available for lease," BLM said in a statement Monday after deciding to postpone its Eastern states auction scheduled for tomorrow and consolidate it with a March sale.

But which parcels does BLM consider "available for lease"?

BLM makes that decision every 10 to 20 years in its resource management plans, the sweeping regulatory blueprints that govern energy development, wildlife protections and recreation on the agency's roughly 250 million acres of public lands. BLM maintains roughly 160 of these plans and updates them on a rolling basis.

The plans are crafted pursuant to the Federal Land Policy and Management Act of 1976, a seminal law that requires BLM to manage lands for multiple uses, including energy development. That's where this debate gets really messy.

While the law doesn't explicitly require BLM to facilitate oil, gas and coal development, many believe that was Congress' clear intent.

"They have a multiple- and sustained-yield mandate," said Kathleen Sgamma, vice president for government and public affairs for the Western Energy Alliance, a Denver-based oil and gas trade group.

Keep It in the Ground is incompatible with the 1976 law, she said.

"That's why the secretary was so quick in saying, 'Not going to happen.'"

Bob Comer, a partner at Norton Rose Fulbright US LLP who served as an Interior solicitor in the George W. Bush and Obama administrations, said BLM is arguably already violating the law with its newly imposed drilling restrictions within sage grouse habitat and a presidential memo mandating mitigation for the loss of wildlife habitat. A leasing ban would push the legal envelope further, he said.

"There's a tendency under the current administration to only look at preservation resources," he said. "FLPMA is calling for more balance."

Critics of the Keep It in the Ground movement argue that if BLM can administratively strike fossil fuel development from its multiple-use agenda, what's to stop a future administration from deciding that renewable wind and solar permits on public lands are also no longer in its bailiwick?

The statutes "strongly suggest the federal government is in the business of exploiting mineral resources," said Fred Cheever, a professor of environmental and natural resources law at the University of Denver's Sturm College of Law.

New leases at issue

Yet that should not prevent the administration from shuttering fossil fuel leasing, a move that would be politically bold but legal and would strengthen the nation's hand against climate change, activists said.

Michael Saul, a senior attorney for public lands at the Center for Biological Diversity, said oil, gas and coal companies already hold more than 67 million acres of public lands and oceans under lease that offer many years of potential production.

Keep It in the Ground is not calling for existing leases to be nixed, he said. But it does oppose issuing new leases that would lock the nation into burning oil, gas and coal from federal lands for decades to come.

Fossil fuels from those lands currently account for more than a fifth of domestic greenhouse gas emissions, according to a report earlier this year by the Center for American Progress and the Wilderness Society.

And a report commissioned by CBD estimated that half of all remaining U.S. potential greenhouse gas emissions from fossil fuels are federally controlled and yet to be leased to private industry.

A moratorium on federal mineral leasing would simply require the Interior secretary to declare that no eligible lands are available in a particular state, Saul wrote in a September report titled "Grounded," which offers a legal defense of Keep It in the Ground.

"The real question here is, what is the meaning of 'available'?" Saul said. MLA says "it's available if the secretary says it's available."

The 10th U.S. Circuit Court of Appeals in a 2013 ruling appeared to concur when it found MLA "continues to vest the secretary with considerable discretion to determine which lands will be leased."

With close to 90 percent of BLM lands currently open to oil and gas development, according to a recent analysis by the Wilderness Society, closing them would be time-consuming and costly.

BLM would need to perform exhaustive National Environmental Policy Act reviews to amend each resource management plan to take those resources off the table, as it recently did for sage grouse across 10 Western states.

An alternative route would be for Interior to issue an immediate, short-term ban on leasing through FLPMA's mineral withdrawal provisions, climate activists said.

Coal

Interior's authority to end coal leasing is less ambiguous, legal experts said.

The leasing law says the secretary "is authorized" to divide lands identified for coal development into leasing tracts and shall "in his discretion" offer them for sale.

Jeremy Nichols, climate and energy program director at WildEarth Guardians, said Interior regulations allow coal leasing applications to be rejected due to environmental concerns or other sufficient reasons that make them not in the public's interest.

"The secretary could technically say she's in a bad mood and say, 'No,'" Nichols said.

Since taking office, the Obama administration has approved eight new coal leases in Wyoming's Powder River Basin totaling more than 2.1 billion tons of coal and is considering approving 11 more leases that would allow the same tonnage of mining, according to a WildEarth analysis.

Halting coal leasing now -- at a time when slumping coal markets have prompted companies to back away from federal coal leases -- would lessen the political damage, Nichols said.

No leases have been issued in the basin since 2012, a sign of the industry's financial pain. In contrast with BLM's oil and gas program, in which BLM plans lease sales in response to industry nominations, coal leases are typically reviewed at an individual company's request under a process known as "lease by application."

"Interior has the opportunity to turn the spigot off and not have blood on their hands," Nichols said.

Abbey said MLA does give the secretary "more discretion" on whether to lease coal, particularly since there is no similar obligation to hold quarterly lease sales.

Luke Popovich, a spokesman for the National Mining Association, said such discretion doesn't exist.

"I've never heard it proposed that the department would have the legal authority to do this," he said. "I've never heard this argument made, and I've been watching this issue for a long time."

Interior's mineral leasing obligations appear to be under some debate internally.

"A lot of these statutes were passed a long time ago when the idea was to utilize those mineral resources, to encourage the use of those mineral resources," said Janice Schneider, the agency's assistant secretary for land and minerals management. "I think it's something we're sorting through."

So far, the Obama administration has yet to cite climate change impacts as a reason to cancel, postpone or scale back any federal mineral leases.

But Keep It in the Ground activists insist climate change is becoming a more prominent factor in the White House's lands agenda. The Council on Environmental Quality a year ago issued revised draft guidance for how federal agencies should account for climate change in their environmental reviews, including how to quantify the cost of emissions due to property damage, health care costs, lost agricultural output and other factors.

Obama recently borrowed a line from the movement in his speech announcing the rejection of the Keystone XL pipeline.

"If we're going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we're going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky," he said.

A study published in January in the journal Nature found that, globally, a third of oil reserves, half of gas reserves and 80 percent of coal reserves should be left undeveloped through 2050 to keep global temperatures from rising more than 2 degrees Celsius, a threshold that scientist fear would bring catastrophic consequences.

'Ultimate arbiters'

BLM's decisions to postpone oil and gas lease sales scheduled for Nov. 17 in Utah and today in Washington, D.C., sowed speculation that the White House is seeking climate credibility in Paris as it looks for a global agreement to reduce greenhouse gas emissions.

BLM claims both postponements were to secure a larger venue that could accommodate protesters.

Activists weren't buying it.

"I've never seen a lease sale postponed for anything other than a blizzard in the West," said Nichols. "Something big is happening. It happened, and it's still happening. This is unprecedented."

If BLM were to reject a mineral lease and cite climate change, it could be a slippery legal and policy slope. How would it decide how far to curtail leasing? And how could it justify canceling one sale but not another?

"It's a huge existential issue for them," Nichols said.

Abbey said that he's "sympathetic" to Keep It in the Ground and supports an aggressive transition to renewable energy, but that he believes the movement is "somewhat naive and irresponsible."

The debate "should be focused primarily on which lands are available for leasing and which are not," he said. "This nation's still going to be dependent on fossil fuels for many, many years."

Interior's hands may be tied. Consider a 1980 ruling by the U.S. District Court for the District of Wyoming: "The Secretary of the Interior must administer the Mineral Leasing Act to provide some incentive for, and to promote the development of oil and gas deposits in all publicly owned lands of the United States."

That interpretation doesn't seem to allow room for an outright ban.

Courts may soon be asked to update their interpretation of MLA and what it means for BLM to manage for multiple use, said Rebecca Watson, who was the agency's assistant secretary for land and minerals management during the Bush administration.

"As climate activists continue to press the government to transform federal leasing or simply keep federal fossil fuels in the ground, we can expect 'policy forcing' litigation to follow," she said in a Dec. 2 blog post for her law firm Welborn Sullivan Meck & Tooley P.C. "Courts and possibly Congress will be the ultimate arbiters of this movement."

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