Federal appeals court denies BLM gate keys to inspect oil, gas sites in Colorado

Federal appeals court denies BLM gate keys to inspect oil, gas sites in Colorado

• Tom Ramstack
• Jan 21, 2019 Updated 6 hrs ago

A pump jack.
(Photo by RondaKimbrow, istockphoto)

A federal appeals court ruling Friday sided against the Bureau of Land Management in a dispute with a well operator and landowners over access to oil and gas lease sites in western Colorado.

The BLM has broad authority to inspect drill sites, but the agency has no right to put its own locks on gates or force landowners to turn over their keys, the Denver-based U.S. Tenth Circuit Court of Appeals ruling says.

“Requiring the provision of a key or lock access is, without question, a drastic measure that would, at a minimum, require express congressional approval,” Circuit Judge Mary Beck Briscoe wrote in the unanimous opinion. “Because no such approval appears in the relevant statutes or regulations, defendants’ arguments must be rejected.”

The court’s decision reverses a lower court ruling that upheld BLM citations against Maralex Resources Inc. on four of its Colorado drill sites. The oil and gas company operates several wells in western Colorado.

The dispute arose when a petroleum engineering inspector from the BLM’s Tres Rios field office in Dolores notified Maralex in 2013 that he planned to inspect the wells.

The wells sit on private property subject to an agreement between the landowners, Maralex and the Southern Ute Indian Tribe. The tribe owns the mineral rights for part of the land.

The landowners, Alexis O’Hare and Mary C. O’Hare, refused to allow the BLM to inspect the property. The agency’s inspector then issued Maralex four notices of noncompliance.

The notices gave Maralex one month to either turn over a key to the BLM to locked gates on the drill sites or allow the agency to put its own locks on the gates.

Maralex contested the citations to the BLM under an administrative procedure. The agency not only upheld the citations but also warned they could carry penalties for noncompliance. The penalties could include fines, lease cancellations and criminal prosecution.

After failing in its administrative appeals, Maralex filed a lawsuit in 2015 in U.S. District Court in Denver.

The company’s attorneys argued Fourth Amendment privacy rights meant the BLM has no legal authority for unannounced inspections on private property when the owners are not present. They agreed the BLM could lawfully inspect drill sites but that “there are limits to such inspections.”

Attorneys for the BLM argued the government could inspect drill sites on private land any time they believe it is necessary under authority of the Federal Oil And Gas Royalty Management Act, which governs the BLM's inspection rights.

The Act gives the U.S. Interior Department authority to enforce oil and gas lease regulations on federal or Native American property.

BLM’s attorneys said the request for keys to the gates was reasonable considering its legal rights to inspect oil and gas wells.

The U.S. District Court upheld the BLM’s demand for keys to inspect the property.

But the federal appeals court overturned the ruling.

The court’s written opinion agreed the BLM has “the right to conduct unannounced inspections” on drilling sites, regardless of whether they are on public and private land.

The agency normally performs inspections at least once per year, but there is no limit on the number of them. However, federal regulations say inspectors must depend on property owners to give them access. Moreover, the regulations do not say government agencies have rights to keys, the appeals court said.

The case is Maralex Resources Inc. et al. v. Ryan Zinke et al.