Last week, an environmental non-governmental organization challenged the Bureau of Land Management’s (BLM) policy for approving horizontal wells sited on off-lease, non-federal surface. Particularly, on July 22, 2022, Western Watersheds Project filed a lawsuit in the U.S. District Court for the District of Columbia challenging the BLM’s Permanent Instruction Memorandum No. 2018-014 (IM 2018-014), which provides guidance on how the BLM permits horizontal wells drilled from off-lease pads sited on non-federal surface. These wells are more easily visualized than described:
IM 2018-014 is conventionally known as the “Fee/Fee/Fed IM,” which refers to a well sited on fee surface above fee minerals that is drilled into a federal oil and gas lease.
IM 2018-014 provides the BLM with three general sets of directions. First, IM 2018-014 affirms that the BLM lacks authority to require mitigation of surface disturbances on off-lease, non-federal lands. Second, IM 2018-014 identifies what materials the BLM will and will not require with applications for permits to drill (APDs) for horizontal wells drilled from off-lease pads sited on non-federal surface. For example, IM 2018-014 specifies that the BLM will not require surface use plans of operations or surface bonds with APDs. Finally, IM 2018-014 outlines the level of analysis that the BLM should perform under the National Environmental Policy Act, Endangered Species Act, and National Historic Preservation Act when approving wells drilled from off-lease pads sited on non-federal surface.
In the lawsuit, Western Watersheds Project challenges several directives in IM 2018-014. First, Western Watersheds Project objects to IM 2018-014’s assertion that BLM lacks authority to require mitigation of surface disturbances on off-lease, non-federal lands. Second, Western Watersheds Projects contests IM 2018-014’s directive that the BLM will not require surface use plans of operations for wells sited on off-lease, non-federal surface. Finally, Western Watersheds Project disputes IM 2018-014’s position that BLM will not require bonds to protect against surface impacts from wells sited on off-lease, non-federal surface and will not require reclamation of such surface impacts. Western Watersheds Project alleges that these directives conflict with the requirements of the Mineral Leasing Act of 1920, as amended, the Mineral Leasing Act for Acquired Lands, the Federal Land Policy and Management Act, and the BLM’s Onshore Order No. 1, and contradict BLM policies.
If successful, the lawsuit would upend BLM’s permitting of horizontal wells and add further delay to an already cumbersome federal permitting process. Western Watersheds Project has asked the court to declare IM 2018-014 unlawful and vacate it. This remedy could allow BLM to evaluate and require mitigation of surface impacts, including compensatory (i.e., offsite) mitigation, bonds, and surface use plans of operations associated with horizontal wells drilled from off-lease pads on non-federal surface.
Operators should monitor this lawsuit because of its potential to disrupt the BLM’s permitting processes. Operators should also communicate with local BLM offices to ensure that the BLM will not adjust its procedures in light of the pending lawsuit. If successful, the lawsuit could further burden development of federal oil and gas leases.