Oil Industry Barred From California Fracking Fight

SAN JOSE, Calif. (CN) - A federal judge refused to let the oil industry intervene in a challenge to the sale of federal oil and gas leases covering thousands of acres of California land.

At issue are the federal gas leases that the Bureau of Land Management (BLM) sold on 17,832 acres of land in Monterey, San Benito and Fresno counties this past December.

The Center for Biological Diversity and Sierra Club sued the bureau and Secretary Ken Salazar in April, claiming that the government failed to conduct environmental study on the potential impacts of hydraulic fracturing, or fracking, in violation of the National Environmental Policy Act (NEPA).

Hoping to intervene in the case, American Petroleum Institute (API), a trade group for the industry, pointed out that one of its members, Occidental Petroleum, owns the winning bidder of the December gas lease, Vintage Production California.

API also emphasized its "members have a strong interest in fracking the Monterey shale formation and other impermeable formations ... [and] have already invested significant resources in developing oil resources, both in the Monterrey shale and elsewhere," U.S. Magistrate Judge Paul Grewal explained.

In shooting the institute down last week, Grewal disagreed that it has a protectable interest by virtue of Vintage's bid.

"As API admitted in oral argument, BLM has not actually issued any of the leases, and so Vintage currently holds no legal interest in the properties," Grewal wrote. "API never clarifies exactly what practical impairment Vintage will suffer regarding the oil and gas leases - this leaves the court to wonder, is BLM under any obligation to issue leases to API? Even though Rule 24 does not require the movant to show a strict legal or property interest, if BLM is under no obligation to issue the leases to Vintage, the court is hard-pressed to find that Vintage has any legitimate, protectable interest in the development and exploration of the leases. API thus has not satisfied its burden of demonstrating it will suffer a practical impairment that is sufficiently 'direct, non-contingent, and substantial."

Grewal also rejected the institute's claim that the litigation will harm its members' leases in other shale formations around the country, calling the assertion "tenuous at best."

"It would be a different case, with clear precedential effect, if API's members held leases within the Monterey shale formation that are governed by the same Hollister Field Office as the leases here," Grewal wrote. "As it stands, however, API has not shown that a decision in this case would have a clear and persuasive stare decisis effect on further litigation."

Without proof of a protectable interest in the matter, Grewal declined to consider whether the bureau adequately represents the institute's interests.

Grewal also struck down the Institute's argument that it should be allowed to permissively intervene.

"At this point, API merely has a generalized interest in developing federal lands within the Monterey shale formation, and its ability to offer an industry perspective of fracking that could aid the court in drafting a remedy, should the litigation progress to the that level," Grewal wrote. "Such an interest can be addressed through permission to file an amicus curiae brief."

The lawsuit over the December sale came on the heels of a settlement that the environmental groups reached in a similar case.

That action against the bureau and Salazar alleged NEPA violations in the September 2011 sale of four oil and gas leases covering 2,700 acres of land in Monterey and Fresno counties.

In addition to claiming that the government failed to study the effects of fracking, they also claimed that the environmental impact statement prepared for the leases made light of the impact to endangered species, including the kit fox and California condor.

After a federal judge granted the groups summary judgment, the parties fashioned a settlement instead of following directions to iron out a remedy for the bureau's violation.

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