Industry Update: Federal Court Threatens Wyoming Leases

Following a federal judge’s approval of a trio of settlement agreements in response to lawsuits brought on behalf of climate activist organizations such as WildEarth Guardians, President Biden’s Department of the Interior will review and reconsider decisions to sell oil and gas leases on public lands in Colorado, New Mexico, Utah, Montana, and Wyoming. More than 2,000 oil and gas leases sold between 2015 and 2020, during the Trump administration, which cover nearly two and a half million acres in Wyoming now hang in the balance—and may be vacated if the Interior concludes that the leases cannot be reconciled with efforts to address climate change and other environmental considerations.  

The court’s decision raises the bar to uphold lease sales, finding that the National Environmental Protection Act requires the Interior to assess the direct, indirect, and cumulative effects of new leases on the environment and the climate. The settlement requires the Interior to reassess the disputed leases sold during the Trump administration for compliance with this standard, including all of the federal leases held in Wyoming. As a result, the large portion of Wyoming’s economy supported by the oil and gas industry now depends on the Interior’s retroactive justification of consummate lease sales.  

At a foundational level, the retroactive recission of these leases would set an alarming precedent for the federal oil and gas program moving forward. Industry supporters feel that the settlement reflects unfair targeting by executive action and global pressure to respond to climate change and reduce emissions. The situation illustrates industry worry that the White House may exercise greater control over national energy policy and the success of domestic oil and gas exploration and production. Ryan McConnaughey, Communications Director for the Petroleum Association of Wyoming, expressed concern to local news outlets over the use of “backroom court settlements” and executive actions to improperly distort laws like NEPA to the industry’s disadvantage without legislative involvement. If that is the case, the future of Wyoming’s energy sector remains uncertain while out of Congress’ hands. 

Kuiper Law Firm, PLLC specializes in oil and gas, and will continue to monitor and provide industry updates; if you have any questions about the information in this article, and how it may affect your operations, do not hesitate to contact us.