U.S. Plan to Sell Public Land to Oil Firms Stirs Debate

In a controversial settlement, the Reagan Administration is planning to sell 82,000 acres of public land in Colorado at a nominal price to several oil shale developers, including Tosco Corp. and the parent firm of Union Oil Co. of California.

The negotiated court settlement has generated controversy within the Interior Department and drawn criticism from environmentalists. Top officials at the Interior and Justice departments contend it is the best deal possible, citing a court victory by the oil companies last year. But environmentalists and some congressmen fear the action could set a precedent, ultimately leading to the “giveaway” of 360,000 acres in the West, including public lands in Utah and Wyoming.

An oil company executive involved in the deal, who asked not to be identified, said the public eventually will benefit because “anything that can be done to encourage oil shale development is in the public’s interest.” But he acknowledged that “with the (low) price of oil these days, no one is going to be working too hard on shale for the time being.”

Energy Source for the Future

Mining oil shale deposits has long been considered economically questionable. But some industry experts believe that oil shale may be an energy source for the future if the right technology can be developed to extract the oil.

Besides Tosco and Unocal, other large energy firms involved in the settlement are Exxon and Phillips Petroleum.

Under the settlement drafted by the Interior Department, which Justice Department officials signed this week, the government would dismiss its challenge to the energy firms’ title to oil shale mining claims in Colorado’s Green River region that date back to the early 1900s. In return, the government would retain rights to other deposits of oil, gas and coal.

However, Brooks Yeager, Washington representative for the Sierra Club, called the land deal “outrageous” because “there is no guarantee this land will ever be used for oil shale development.”

“The companies will get title to it for the giveaway price of $2.50 an acre, and the government won’t get any royalties or rents,” Yeager said in an interview. “The companies could even fence it, divide it into subdivisions and put houses on it.”

Tim Locke, an Interior Department spokesman, said the $2.50-an-acre price was written into law years ago. Federal grazing leases and access to the land for hunting will be preserved, Locke said, and any non-shale commercial or residential use of the land will be forbidden for 20 years.

Locke said the government originally considered appealing a decision won by the oil companies last year that was handed down by U.S. District Judge Sherman Finesilver. The judge ruled in Denver that claims to the land had been obtained validly by the oil firms.

But F. Henry Habicht, assistant attorney general, and others decided that a negotiated settlement short of an appeal was the government’s best course, avoiding the risk that the government might lose all control over the lands. He also said it “dramatically limits the precedential effects” of the unfavorable court ruling.

However, some middle-level Interior Department officials, including Kannon Richards, Colorado state director of the department’s Bureau of Land Management, opposed a negotiated settlement and argued for a full appeal.

“The Colorado state office has participated in this litigation since 1962, and we are reluctant to allow this decision, with its far-reaching consequences, to go unchallenged,” Richards said in a memo dated May 10, 1985.

Last October, in another memo, he again opposed the draft settlement that was eventually signed.

“I feel that the energy industry, the public and state and local governments would not agree to this disposition of the public lands when we cannot defend the position that oil shale is commercially viable,” Richards wrote.

“In all probability . . . these lands would be developed for some other commercial uses. This would include town house-type recreational development and other enterprises which entail subdivision into small areas.”

Rep. John F. Seiberling (D-Ohio), who recently failed in an effort to block the settlement through an amendment to an appropriations bill, said: “This is worse than selling the public lands--it amounts to giving them away.”

Locke said all that remains for Interior officials to do is “go marching into court to finalize the settlement.” But an aide to Seiberling said the House Interior Committee is planning to conduct hearings because “we’re concerned about this issue and what it means both to western Colorado and adjacent parts of the West.”