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WillSource Enterprise LLC v. Interior Board of Land Appeals (IBLA)

Why We Fight:

Federal agencies must respect all private property rights, including those conferred to a owner of a federal oil and gas lease.


Summary:

WillSource, which owns seven federal oil and gas leases issued in 1996, has been cheated out of its right to develop its property by the delaying tactics of the U.S. Bureau of Land Management and the U.S. Forest Service for decades.

Legal Question:

Whether federal agencies may work openly on behalf of environmental groups to stop development of federal oil and gas leases where development has been diligently pursued?

Plaintiff:

WillSource Enterprise, LLC

Defendants:

Interior Board Of Land Appeals (IBLA), Ryan Zinke, in his official capacity as the Secretary of the Interior, and United States Department Of The Interior

Court:

U.S. District Court for the District of Colorado
Responsive pleading by federal defendants

WillSource Enterprise, LLC, a small Colorado oil and gas exploration company located in Denver, holds eight oil and gas leases in the White River National Forest in Mesa County, Colorado, just west of an area commonly referred to as the Thompson Creek Divide.  Some 80 federal oil and gas leases were issued throughout the Divide but environmental groups have used various political and legal tactics to prevent their development.

In 1995, WillSource was issued eight oil and gas leases, seven of which are in the Willow Creek Unit, which was approved in 2003 and consists of 8,643 acres of federal leases; WillSource is the designated operator.   Environmental stipulations limit drilling in the unit to five months each year.  In November of 2004, WillSource completed a well.  Applications for Permit to Drill (APDs) two other wells in the unit were approved in 2004; both wells were granted yearly extensions from 2004 to 2009 as a result of conflicting and shifting BLM and U.S. Forest Service regulations, primarily as to a Forest Road the agency required WillSource to reengineer and rebuild so as to be allowed to drill.  WillSource’s 2009 request for an extension was denied.     

WillSource sought a “paying well determination” and approval of a participating area (PA), which the BLM granted by determining “Little Beaver #1-20 well” was capable of producing energy in paying quantities.  The BLM made its determination in September of 2010, effective November of 2004. 

In 2011, the Forest Service imposed new requirements on WillSource, including the hiring of a third party, licensed, road engineer and obtaining a $500,000 bond, which required a $300,000 collateral, funds WillSource lacks. 

In November of 2011, the BLM wrote WillSource, “all lands not within the . . . [PA] . . . were automatically eliminated from the unit area effective November 11, 2009,” which invalidated three of WillSource’s seven leases.  In June of 2012, the BLM issued an official decision eliminating the three leases from the unit. 

WillSource immediately appealed the 2012 decision and made a formal presentation regarding its appeal in late January 2013.  In January 2014, the Colorado State Director of the BLM upheld the 2012 decision. 

On February 20, 2014, WillSource filed a notice of appeal and petition for stay to the IBLA.  On March 3, 2014, the BLM filed an opposition to WillSource’s petition for stay.  On March 19, 2014, Wilderness Workshop and the Natural Resources Defense Council filed a motion to intervene and a proposed opposition to WillSource’s petition for stay.  On April 1, 2014, the BLM filed an opposition to the motion to intervene.  On April 2, 2014, WillSource also filed an opposition to the motion to intervene.   A decision on the motion to intervene is pending.

On March 20, 2014, WillSource filed its statement of reasons, outlining in great depth the unequitable actions taken by the BLM in regard to WillSource’s leases.  On June 26, 2014, the BLM filed its answer and a motion to dismiss, in part, arguing that any attempt to challenge the original termination of WillSource’ s leases is untimely.  On July 11, 2014, WillSource filed an opposition to the BLM’s motion to dismiss in part.  The BLM filed a motion to strike WillSource’ s opposition, but, on August 26, 2014, the IBLA issued an order denying the BLM’s motion to strike.  On October 26, 2015, the IBLA issued an order denying WillSource's motion for hearing, granting Wilderness Workshop's motion to intervene, and denying the BLM's motion to dismiss.

In a related but separate appeal regarding the BLM’s denial of WillSource’s request for Suspension of Operations (SOP), WillSource, on May 9, 2014, filed a notice of appeal and petition for stay to the IBLA.  Importantly, the IBLA must first determine the status of WillSource’s leases before it may issue further decisions relying on the cancellation of WillSource’s leases.  On June 10, 2014, WillSource filed its Statement of Reasons.  On June 12, 2014, WillSource filed a motion to consolidate this appeal with its earlier appeal.  On June 30, 2014, the BLM filed its opposition to the motion to consolidate.  On July 22, 2014, the IBLA denied WillSource’ s petition for stay but acknowledged that a decision in the earlier appeal is required before it will be able to issue a decision in the new appeal.  On August 8, 2014, the BLM filed its Answer.  Wilderness Workshop also moved to intervene.  On October 26, 2015, the IBLA issued an order denying WillSource's motion to consolidate its appeals, granting Wilderness Workshop intervention, and denying Wilderness Workshop's motion to dismiss.

Meanwhile, by a decision dated October 5, 2015, the Colorado State Director upheld the denial of WillSource’s SOP request; however, that decision failed to consider some of WillSource’s specific arguments.  On November 2, 2015, WillSource filed a notice of appeal to the IBLA.  On December 17, 2015, WillSource filed its Statement of Reasons, to which, on February 18, 2016, the BLM responded by arguing that WillSource is not entitled to the requested SOP because it has wells capable of production on two of its leases.  On March 3, 2016, WillSourece filed a reply brief.

In a related matter, on August 5, 2016, the BLM published its Notice of Availability of the Final EIS in which the BLM selected a combination of Alternatives 2 and 4 as its Preferred Alternative, which would cancel 25 undeveloped leases outright; would apply the stipulations from Alternative 2 to producing leases; and would apply the stipulations from Alternative 4 to non-producing leases.  On September 2, 2016, WillSource again filed comments in response to the Final EIS, urging the BLM not to cancel any leases or otherwise attempt to modify valid existing leases.  On November 17, 2016, the BLM issued the Record of Decision, which, surprisingly, does not attempt to cancel or otherwise substantively modify any of WillSource’s leases.

On May 10, 2017, and May 31, 2017, the IBLA administrative law judge ruled against WillSource.  On August 3, 2017, WillSource filed its complaint in Colorado federal district court.

No Status Updates
  • Family Owned Oil and Gas Company Sues for Unlawful Lease Cancellations

    Aug 3, 2017
    A small, family owned Colorado energy company that holds valuable federal oil and gas leases today sued the Interior Board of Land Appeals (IBLA) of the U.S. Department of the Interior, which in May rejected its two administrative appeals, Interior Secretary Ryan Zinke, and the department. WillSource Enterprise, LLC, an oil and gas exploration company owned by Reed Williams of Denver, holds eight oil and gas leases in White River National Forest in Mesa County, Colorado, west of the Thompson Creek Divide.
  • Oil and Gas Company Suffers Another Defeat by Administrative Judge

    May 31, 2017
    A small Colorado energy company that holds valuable federal oil and gas leases, but was denied its right to explore them, today suffered yet another defeat before a federal administrative judge who ruled in its administrative appeal of a case as to which the company sought consolidation with the case a judge ruled on days ago.
  • Oil and Gas Company Suffers Defeat by Administrative Judge

    May 10, 2017
    A small Colorado energy company that holds valuable federal oil and gas leases, but was denied its right to explore them, today suffered defeat before a federal administrative judge who ruled in its administrative appeal of the denial.
  • Oil and Gas Outfit Battles Attempt to Dismiss Energy Appeal

    Jul 10, 2014
    A small Colorado energy company that holds valuable federal oil and gas leases, but was denied its right to explore them, today filed pleadings opposing dismissal of its administrative appeal of the denial and seeking an evidentiary hearing before an administrative law judge (ALJ).
  • Oil and Gas Outfit Further Supplements Its Energy Rights Appeal

    Jun 11, 2014
    A small Colorado energy company that holds valuable federal oil and gas leases, but was denied its right to explore them, today filed additional pleadings in its administrative appeal of the denial.
  • Oil and Gas Company Supplements Appeal of Denial of Energy Rights

    Apr 22, 2014
    A small Colorado energy company that holds valuable federal oil and gas leases, but was denied its right to explore them, today filed its Statement of Reasons in its administrative appeal of the denial.
  • Oil and Gas Company Appeals Denial of Energy Rights

    Feb 20, 2014
    A small Colorado energy company that holds valuable federal oil and gas leases, but was denied its right to explore them, today filed an administrative appeal challenging that denial.



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