Wayne Land & Mineral Grp. LLC v. Del. River Basin Comm'n

• Citation: 894 F.3d 509
• Decision Date: 20 November 2017
• Docket Number: No. 17-1800,17-1800
• Parties: WAYNE LAND AND MINERAL GROUP LLC, Appellant v. DELAWARE RIVER BASIN COMMISSION Maya Van Rossum; Delaware Riverkeeper Network
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

894 F.3d 509

WAYNE LAND AND MINERAL GROUP LLC, Appellant

v.DELAWARE RIVER BASIN COMMISSION

Maya Van Rossum; Delaware Riverkeeper Network

No. 17-1800

United States Court of Appeals, Third Circuit.

Argued November 7, 2017

November 20, 2017

Filed: July 3, 2018

Jeffrey Belardi, Belardi Law Office, 410 Spruce Street—4th Fl., Scranton, PA 18503, Christopher R. Nestor, Overstreet & Nestor, 1425 Crooked Hill Road—#62066, Harrisburg, PA 17106, David R. Overstreet [ARGUED], Overstreet & Nestor, 461 Cochran Rd., P.O. Box 237, Pittsburgh, PA 15228, Joseph R. Rydzewski, Spall Rydzewski Anderson Lalley & Tunis, 2573 Route 6, Hawley, PA 18428, Counsel for Appellant.

Mark L. Greenfogel, Kenneth J. Warren [ARGUED], Warren Environmental Counsel, 975 Mill Road, Millridge Manor House Suite A, Bryn Mawr, PA 19010, Counsel for Appellee Delaware River Basin Commission.

Mark L. Freed, Jordan B. Yeager [ARGUED], Curtin & Heefner, 2005 S. Easton Road—Ste. 100, Doylestown, PA 18901, Counsel for Intervenor-Defendant Appellees Maya Van Rossum and Delaware Riverkeeper Network.

Matthew H. Haverstick [ARGUED], Eric J. Schreiner, Joshua J. Voss, Kleinbard, 1650 Market Street—46th Fl., Philadelphia, PA 19103, Counsel for Not Party Amicus Appellants.

Before: JORDAN, HARDIMAN and SCIRICA, Circuit Judges.

OPINION OF THE COURT

JORDAN, Circuit Judge.

Wayne Land and Mineral Group, LLC, a company that wants to obtain natural gas by fracking reserves in Pennsylvania,¹ appeals from the dismissal of its complaint for failure to state a claim. Wayne sought a ruling in the District Court under the Declaratory Judgment Act that an interstate compact does not give the Delaware River Basin Commission authority to review Wayne's proposed fracking activities. The Commission argued in response that Wayne's claim was properly dismissed as unripe, that Wayne lacks standing, that there has been no final agency action, and that Wayne has not exhausted available administrative remedies. The District Court rejected those arguments but nevertheless denied Wayne's request for relief and dismissed the case under Federal Rule of Civil Procedure 12(b)(6), after determining that Wayne's proposed activities constituted a "project" subject to the Commission's oversight, according to the unambiguous terms of the interstate compact. Because we conclude that the meaning of the word "project" as used in the compact is ambiguous, we will vacate the order of dismissal and remand the case for fact-finding on the intent of the compact's drafters.

I. BACKGROUND FACTS ²

A. The Delaware River Basin, the Interstate Compact, and the Delaware River Basin Commission

The Delaware River Basin (the "Basin") is an area of land surrounding and draining into the Delaware River that extends through parts of Delaware, New Jersey, New York, and Pennsylvania (the "Basin States"). In 1961, the Basin States and the United States entered into the Delaware River Basin Compact (the "Compact"), which is an interstate agreement aimed at ensuring a unified approach to the conservation, utilization, development, management, and control of the water and related resources of the Basin.

The Compact created the Delaware River Basin Commission, comprising the Governors of the Basin States, as well as a commissioner appointed by the President of the United States. By its terms, it gives the Commission a broad range of powers to protect water quantity and quality within the Basin. Most relevant to this case are the Commission's general powers and duties, which are detailed in Article 3 of the Compact. Article 3 charges the Commission with creating "[a] comprehensive plan ... for the immediate and long range development and uses of the water resources of the [B]asin[.]" (Joint App. at 366, § 3.2(a).) That plan must "include all public and private projects and facilities which are required, in the judgment of the [C]ommission, for the optimum planning, development, conservation, utilization, management and control of the water resources of the [B]asin to meet present and future needs[.]" (Joint App. at 386, § 13.1.)

Consistent with that planning responsibility, Article 3 gives the Commission the authority to review "projects" undertaken in the Basin if they will have "a substantial effect on the water resources of the [B]asin[.]" (Joint App. at 370, § 3.8.) The Commission has the power to promulgate rules "for the procedure of submission, review and consideration of projects[.]" (Joint App. at 370, § 3.8.) More fully, the Compact states the criteria for that review process as follows:

No project having a substantial effect on the water resources of the [B]asin shall hereafter be undertaken by any person, corporation or governmental authority unless it shall have been first submitted to and approved by the [C]ommission, subject to the provisions of Sections 3.3 and 3.5. The [C]ommission shall approve a project whenever it finds and determines that such project would not substantially impair or conflict with the comprehensive plan and may modify and approve as modified, or may disapprove any such project whenever it finds and determines that the project would substantially impair or conflict with such plan.

(Joint App. at 370, § 3.8.)

The Compact defines many of its key terms, including the word "project," which is said to be

any work, service or activity which is separately planned, financed, or identified by the [C]ommission, or any separate facility undertaken or to be undertaken within a specified area, for the conservation, utilization, control, development or management of water resources which can be established and utilized independently or as an addition to an existing facility, and can be considered as a separate entity for purposes of evaluation[.]

(Joint App. at 363, § 1.2(g).) The Compact then defines "water resources" to include:

water and related natural resources in, on, under, or above the ground, including related uses of land, which are subject to beneficial use, ownership or control.

(Joint App. at 363, § 1.2(i).) Finally, in sweeping language, the Compact defines "facility" as:

any real or personal property, within or without the [B]asin, and improvements thereof or thereon, and any and all rights of way, water, water rights, plants, structures, machinery and equipment, acquired, constructed, operated or maintained for the beneficial use of water resources or related land uses including, without limiting the generality of the foregoing, any and all things and appurtenances necessary, useful or convenient for the control, collection, storage, withdrawal, diversion, release, treatment, transmission, sale or exchange of water; or for navigation thereon, or the development and use of hydroelectric energy and power, and public recreational facilities; or the propagation of fish and wildlife; or to conserve and protect the water resources of the [B]asin or any existing or future water supply source, or to facilitate any other uses of any of them[.]

(Joint App. at 363, § 1.2(e).)

The Compact also gives the Commission power to address pollution within the Basin. Under Article 5 of the Compact, "[t]he [C]ommission may undertake investigations and surveys, and acquire, construct, operate and maintain projects and facilities to control potential pollution and abate or dilute existing pollution of the water resources of the [B]asin." (Joint App. at 372, § 5.1.) Article 5 provides the following:

The [C]ommission may assume jurisdiction to control future pollution and abate existing pollution in the waters of the [B]asin, whenever it determines after investigation and public hearing upon due notice that the effectuation of the comprehensive plan so requires. The standard of such control shall be that pollution by sewage or industrial or other waste originating within a signatory state shall not injuriously affect waters of the [B]asin as contemplated by the comprehensive plan. The [C]ommission, after such public hearing may classify the waters of the [B]asin and establish standards of treatment of sewage, industrial or other waste, according to such classes including allowance for the variable factors of surface and ground waters, such as size of the stream, flow, movement, location, character, self-purification, and usage of the waters affected. After such investigation, notice and hearing the [C]ommission may adopt and from time to time amend and repeal rules, regulations and standards to control such future pollution and abate existing pollution, and to require such treatment of sewage, industrial or other waste within a time reasonable for the construction of the necessary works, as may be required to protect the public health or to preserve the waters of the [B]asin for uses in accordance with the comprehensive plan.

(Joint App. at 372, § 5.2.)

It is plain that the Commission has broad rulemaking and enforcement powers. Under Article 14 of the Compact, the Commission may "[m]ake and enforce reasonable rules and regulations for the effectuation, application and enforcement of this [C]ompact[.]" (Joint App. at 389, § 14.2(a).)

B. Natural Gas Fracking and the Moratorium

Natural gas reserves underlie at least some of the land within the Basin. To extract natural gas from shale rock formations, energy companies use a combination of horizontal drilling and hydraulic fracturing. From an area on the ground called a well pad, companies employ fracking technology to inject a fluid composed of water and various chemicals into the ground to force the release of trapped gas. It is estimated that the fracking process may require up to five million gallons of water per well. Some of the water in the fracking fluid is consumed and will remain underground, while the rest will flow back to the surface where it is recovered and either disposed of or recycled.

The extraction and sale of natural gas may be profitable for those involved, and it certainly provides benefits to energy consumers, but fracking is not without controversy—in particular, concerns...