Opinion ID: 159335
Heading Depth: 2
Heading Rank: 1

Heading: BLM Decision

Text: 17 On October 22, 1992, the Deputy State Director, Lands and Minerals, of the BLM New Mexico State Office rejected Yates/Pogo's bid by letter decision. The decision focused on the statements by Mr. Warnock, on behalf of Yates/Pogo prior to the lease auction, asserting that IMC is the only company that can mine the tenth ore zone. The BLM stated: 18 We conclude the area can be mined. Not mining this area for potash would result in undue waste of potash. 19 . . . The statement by Mr. Warnock on behalf of the applicants, that the lessee does not intend to develop the deposit exhibits bad faith. . . . Despite the applicants' interest in acquiring the lease, the applicants have expressed no desire to mine, joint venture or otherwise promote potash development. 20 Appellants' App. Vol. I at 246. 21 Yates/Pogo requested reconsideration of the BLM decision; submitted supplementary information, including maps, reports, and notes of consultants Lammers and Hutchinson; and met with BLM officials to show Yates/Pogo's good faith to develop the potash lease. The BLM rescinded its October 22, 1992, decision so that it could consider the supplementary materials. In the materials, Yates/Pogo argued to the BLM that their bid on the potassium lease was made in good faith with every intention of allowing potash development to occur simultaneously with oil and gas development should the potash resources therein be determined to exist in economic quantities and quality. Letter from Gregory J. Nibert, Yates/Pogo attorney, to Larry L. Woodard, BLM State Director 4 (Nov. 19, 1992), Appellant's App. Vol. I at 281. Yates further explained to BLM that: 22 Frustrated by the regulations that unilaterally allowed potash mining companies and BLM representatives to arbitrarily withdraw oil and gas exploration areas from use by the oil and gas lessees as well as the requirements that hold all potash exploration and mining information confidential, Yates and others embarked on a program to develop potash mining information from public sources. The knowledge developed from this program would allow Yates to make an independent determination as to whether oil and gas exploration could be safely and economically conducted in the same area as potash mining. 23 Pursuant to that endeavor, Yates hired independent consultants, lawyers and experts knowledgeable in both mining and oil and gas operations to determine the feasibility for both industries to coexist in the [potash area]. 24 . . . . 25 . . . The result of the evaluation of potash potential in the lease sale area was a strong recommendation by Yates experts to bid on [the potash lease]. 26 Appellants' App. Vol. II at 355-57. On January 5, 1993, the BLM again rejected the Yates/Pogo bid. The Decision stated that: 27 we conclude that the bid was made in bad faith and not in the best interest of recovery of the potassium resources. 28 . . . . 29 [Yates/Pogo] demonstrate[] two incompatible positions . . . when dealing with appeals of oil and gas APD's to IBLA and when obtaining potassium leases. 30 . . . . 31 . . . We find the conflicting statements as evidence of bad faith in that neither company, being oil and gas companies by nature, seriously intends to develop the potassium resources. We also find these statements to be contradictory to the general policy of the [1986 Order], insofar as a company attempts to obtain a potassium lease for the purpose of developing oil and gas resources. 32 . . . . 33 . . . Simultaneous development of both resources disregards safety of individuals working in an underground mining environment. . . . During the production life of the [oil and gas] well, petroleum products can migrate into the potash bearing formation and remain in place long after the well is plugged and abandoned. . . . 34 A significant hydrocarbon release would prompt the . . . Mine Safety and Health Administration (MSHA) . . . [to require] the added expense of equipment, ventilation, testing, and training [that] would place an undue economic hardship on affected potash operations . . . . 35 Appellants' App. Vol. I at 236-39.