Minard Run Oil Co. v. United States Forest Serv.

670 F.3d 236

73 ERC 1932

MINARD RUN OIL COMPANY; Pennsylvania Independent Oil and Gas Association; Allegheny Forest Alliance; County of Warren, Pennsylvania,

v.UNITED STATES FOREST SERVICE, an agency of the U.S. Department of Agriculture; Tom Tidwell, in his official capacity as Chief of the U.S. Forest Service; Kent P. Connaughton, in his official capacity as regional Forester for the U.S. Forest Service, Eastern Region; Leanne M. Marten, in her official capacity as Forest Supervisor for the Allegheny National Forest; Attorney General of the United States of America; Forest Service Employees for Environmental Ethics; Allegheny Defense Project; Sierra ClubForest Service Employees for Environmental Ethics, Allegheny Defense Project, Sierra Club, Appellants.(Pursuant to Fed. R.App. P. 43(c)(2)).(Amended Pursuant to the Clerk's Order of June 18, 2010).

Nos. 10–1265

10–2332.

United States Court of Appeals, Third Circuit.

Argued on Jan. 27, 2011.Opinion filed: Sept. 20, 2011.

Brian J. Sonfield, Esquire, Assistant General Counsel, United States Department of Agriculture, Ignacia S. Moreno, Esquire, Assistant Attorney General, Aaron P. Avila, Esquire, Ruth Ann Storey, Esquire, Lane N. McFadden, Esquire, Robert P. Stockman, Esquire (Argued), United States Department of Justice, Environment & Natural Resources Division, Washington, DC, for Federal Appellants.

Timothy M. Bechtold, Esquire, Bechtold Law Firm, Missoula, MT, Marianne Dugan, Esquire (Argued), Eugene, OR, for Environmental Appellants.

R. Timothy McCrum, Esquire (Argued), J. Michael Klise, Esquire, Daniel W. Wolff, Esquire, Crowell & Moring LLP, Washington, DC, Matthew L. Wolford, Esquire, Erie, PA, Steven J. Lechner, Esquire, Mountain States Legal Foundation, Lakewood, CO, for Appellees.Before: FUENTES, CHAGARES and ROTH, Circuit Judges.

OPINION

ROTH, Circuit Judge:I. Introduction

This appeal concerns a dispute between the U.S. Forest Service (the Service) and owners of mineral rights in the Allegheny National Forest (ANF). Although the Service manages the surface of the ANF for the United States, mineral rights in most of the ANF are privately owned. Mineral rights owners are entitled to reasonable use of the surface to drill for oil or gas and from 1980 until recently the Service and mineral owners had managed drilling in the ANF through a cooperative process. Mineral rights owners would provide 60 days advance notice to the Service of their drilling plans and the Service would issue owners a Notice to Proceed (NTP), which acknowledged receipt of notice and memorialized any agreements between the Service and the mineral owner about the drilling operations. However, as a result of a settlement agreement with environmental groups, the Service dramatically changed its policy and decided to postpone the issuance of NTPs until a multi-year, forest-wide Environmental Impact Study (EIS) under the National Environmental Policy Act (NEPA) is completed.

Mineral owners and related businesses affected by this new policy sought to enjoin the Service from implementing the policy, which would halt new drilling in the ANF. After holding a hearing and carefully considering the evidence, the District Court issued a preliminary injunction against the Service, prohibiting it from making the completion of the forest-wide EIS a condition for issuing NTPs and requiring it to return to its prior, cooperative process for issuing NTPs. The Service, the Attorney General, and several environmental organizations appeal the preliminary injunction, contending that the District Court lacked jurisdiction and erred in issuing a preliminary injunction. For the reasons that follow, we affirm in all respects the District Court's thorough, well-reasoned opinion.

II. Background

In the 19th century, all the land now comprising the ANF was privately owned. In 1891, Congress authorized the President to designate federal lands as forest reservations in order to preserve valuable timber resources and ensure protection of watersheds. Act of March 3, 1891 § 24, 26 Stat. 1095, 1103, codified at 16 U.S.C. § 471 (repealed) (the 1891 Act). In 1897, Congress passed the Organic Act authorizing the Secretary of Agriculture to regulate “occupancy and use” of forest reservations designated under the 1891 Act. 30 Stat. 11, 34, codified at 16 U.S.C. § 475. These Acts, however, did not authorize the purchase of land to establish federal forest reservations—they were limited to land already owned by the federal government or acquired for other purposes. After considerable controversy and a decade of campaigning, see S.Rep. No. 60–459, at 13 (1908) (describing history of forest preservation bills), Congress passed the Weeks Act in 1911. Pub.L. No. 61–435, 36 Stat. 961. The Act set aside funds for purchase of private land by the Secretary of Agriculture to serve as forest reservations under the Organic Act. Id. §§ 4–8, 36 Stat. at 962. Before purchasing land in a State, the Act required the Secretary to obtain the State's consent. Id. § 7, 36 Stat. at 962. In the decades following the Act, the Secretary purchased large tracts of forest land, and in 1923, President Coolidge designated the lands acquired in Pennsylvania as the Allegheny National Forest. 43 Stat.1925.

A. Mineral Rights in the Allegheny National Forest

Coal mining was common in the Allegheny Plateau and oil had been discovered in the area in 1859. To acquire as much land as possible with limited funds, the Secretary of Agriculture purchased large tracts of surface estate in the ANF while leaving valuable mineral rights in private hands. As a result, over 93% of the mineral estates in the ANF are privately owned. The mineral rights in the ANF are of two kinds: reserved rights and outstanding rights.

Reserved rights are those reserved by the fee owner in the deed conveying surface ownership to the United States. The Weeks Act authorized the Secretary to acquire surface estates with a reservation of rights to the grantor and provided that the exercise of reserved rights would be subject to the “rules and regulations” promulgated by the Secretary and included in the instrument of conveyance. 16 U.S.C. § 518. Reserved rights are usually referred to by the year of promulgation of the regulations in effect at the time of federal acquisition, i.e., 1911, 1937, 1947, or 1963 reserved rights. About 48% of the mineral rights in the ANF are reserved rights and the vast majority of these are 1911 rights. (J.A. 157, 254–55.) The 1911 regulations were quite minimal, and generally required mineral rights owners to use no more of the surface than reasonably necessary, pay for any timber cut down when clearing space for wells, take appropriate measures to prevent fire, and remove all facilities or refuse when drilling operations cease.¹ The 1911 regulations did not require mineral rights owners to obtain a permit from the Service in order to exercise their mineral rights.

Outstanding rights are those that were severed from the surface estate prior to its conveyance to the United States. The Weeks Act was amended in 1913 to permit acquisition of severed surface estates with outstanding mineral rights, provided that the National Forest Reservation Commission concluded that these rights would not hinder administration of the forest reservation. 37 Stat. 828, 855 (1913). Until recently, the Service maintained that its regulations did not apply to outstanding mineral rights.² Rather, because outstanding mineral rights were reserved prior to conveyance to the United States, these rights are governed by the terms of the earlier conveyance severing the mineral rights and Pennsylvania property law. See United States v. Minard Run Oil Co., No. 90–12, 1980 U.S. Dist. LEXIS 9570, at *14–15 (W.D.Pa. Dec. 16, 1980) ( Minard Run I ).

Under Pennsylvania law, the mineral estate is the dominant estate and entails the right to use of as much surface land as reasonably necessary to extract minerals. Belden & Blake Corp. v. DCNR, 600 Pa. 559, 969 A.2d 528, 532 (2009). Although the mineral owner must show “due regard” to the rights of the surface owner, the mineral owner need not obtain consent or approval before entering land to mine for minerals. Id. at 533; see also Minard Run I, 1980 U.S. Dist. LEXIS 9570, at *13 (mineral rights owner has an “unquestioned right” to enter the property, subject to “minor restrictions which ... should not seriously hamper the extraction of oil and gas”). Minard Run I concluded that “due regard” to the Service as surface owner required owners of outstanding mineral rights to provide information regarding drilling plans to the Service “no less than 60 days in advance” of commencing drilling operations. Id. at *22.

The Service's 1984 ANF Handbook incorporated the Minard Run I framework into its “standard operating procedures” for outstanding mineral rights in the ANF. Congress codified the notice provisions of Minard Run I in the Energy Policy Act of 1992, Pub.L. No. 102–486 § 2508, 106 Stat. 2776, 3108, codified at 30 U.S.C. § 226( o ). Until the change in policy that is the subject of this litigation, the Service and mineral rights owners in the ANF had relied on the Minard Run I framework and taken a cooperative approach to oil and gas drilling in the ANF. Under this framework, mineral rights owners who planned to conduct drilling operations would provide the Service with the required notice and the two parties would then negotiate the details of drilling operations, such as the location of wells or access roads, so as to prevent any unnecessary surface use. At the end of this process, the Service would issue a Notice to Proceed (NTP) to the mineral rights owner, which acknowledged receipt of notice from the mineral rights owner and memorialized any agreements between the parties regarding drilling operations. ³

B. The Service's Policy Regarding NEPA and Split Estates

The National Environmental Policy Act of 1969, Pub.L. No. 91–190, 83...