Houston (Platts)--3Apr2009

A US Department of the Interior spokesman on Friday said a group of
producers fighting Interior Secretary Ken Salazar's decision to withdraw 77
parcels from the Bureau of Land Management's December Utah state oil and gas
lease sale press their case before a federal court.

"We believe that his was a secretarial decision and secretarial decisions
are not appealable under the normal appeals process to the Interior Board of
Land Appeals," spokesman Frank Quimby told Platts.

Attorneys for 13 exploration-and-production companies had filed a notice
of appeal with IBLA on March 13, challenging the withdrawal of 77 of the 116
lease parcels sold at the December 19 sale.

The withdrawals were announced in a series of letters Utah BLM Deputy
State Director Kent Hoffman sent on February 12 to high bidders on the
withdrawn parcels. Hoffman also authorized the reimbursement of the high
bidders' bonus payments for leases on the withdrawn parcels.

The 13 producers involved in the appeal were the high bidders on a total
of 53 of the 77 withdrawn parcels.

Hoffman's actions followed Salazar's February 4 announcement of his
decision that that the parcels be withdrawn from the sale, saying the
properties were too close to National Park Service land. In a February 6 memo,
he ordered the withdrawal.

Although the winning bidders had submitted funds covering the bonus
payments for the leases they had won, BLM had not finalized the results of the
sale.

On March 24, BLM attorneys filed a motion to dismiss the producers'
appeal, stating that "the board has long held that it lacks jurisdiction to
review decisions that are made or approved by the secretary or assistant
secretary."

The following day, the producers' attorneys asked the board to rule
whether Salazar's February 6 memo represents a final decision on the issue.

Quimby said "the secretary directed the state director in Utah
to withdraw the 77 parcels and therefore it was a secretarial decision."

But Bret Sumner, an attorney for the producers, on Friday told
Platts that "based upon what little information that we knew, it did not
appear that his action was final."

He said that pursuing the appeal before the IBLA was "just something that
we need to do to make sure that we've covered our bases with IBLA before we
pursued something in federal court, although at this time there hasn't been a
determination made as to whether the companies want to go to federal court."

He added that all of the lease parcels that were withdrawn are located
next to exiting valid leases.

"In some instances there are lease parcels in an exiting natural gas
field," Sumner said. "These lands and these lease parcels have been open to
leasing for the past 30 years under prior land use plans as well as the new
land use plans."

The Utah December lease sale has generated a great deal of controversy
since it was announced in November. Representatives of the National Park
Service complained that BLM had not conducted sufficient consultation with
their federal agency prior to the announcement of the sale.

The BLM subsequently pulled a number of tracts in the disputed areas out
of consideration in the weeks prior to the sale.

At the sale itself, an environmental activist attempted to disrupt the
bidding process by submitting phony bids on a number of tracts. The sale
saboteur, Tim DeChristopher, was indicted on two federal felony counts on
Wednesday.

Then on January 17, a federal district court issued a temporary
restraining order enjoining BLM from issuing oil and gas leases on 77 of the
parcels won, the same parcels that Salazar later said should be withdrawn from
the sale.

--Jim Magill, jim_magill@platts.com