Bill Barrett Corp. v. U.S. Dept. of Interior

• Citation: 601 F.Supp.2d 331
• Decision Date: 11 March 2009
• Docket Number: Civil Case No. 09-19 (RJL).
• Parties: BILL BARRETT CORPORATION, Plaintiff, v. UNITED STATES DEPARTMENT OF the INTERIOR, et al., Defendants, and BTU Western Resources, Inc., Intervenor-Defendant.
• Court: U.S. District Court — District of Columbia

601 F.Supp.2d 331

BILL BARRETT CORPORATION, Plaintiff, v. UNITED STATES DEPARTMENT OF the INTERIOR, et al., Defendants, and BTU Western Resources, Inc., Intervenor-Defendant.

Civil Case No. 09-19 (RJL).

United States District Court, District of Columbia.

March 11, 2009.

L. Poe Leggette, Fulbright & Jaworski LLP, Washington, DC, Joel W. Cantrick, Ducker Montgomery Aronstein & Bess, Denver, CO, for Plaintiff.

Romney Sharpe Philpott, U.S. Department of Justice, Washington, DC, for Defendants.

Marc Bernard Dorfman, Foley & Lardner LLP, Washington, DC, for Intervenor-Defendant.

MEMORANDUM OPINION

RICHARD J. LEON, District Judge.

Plaintiff Bill Barrett Corporation ("BBC") has filed suit under the Administrative Procedure Act ("APA") challenging the U.S. Bureau of Land Management's ("BLM") grant of a coal exploration license to BTU Western Resources, Inc. ("BTU"). BBC claims that the exploration license must be set aside because it lacks sufficient stipulations to protect BBC's rights to extract coalbed natural gas ("CBNG") under preexisting licenses should BBC's wells be contaminated by BTU's coal exploration drilling. Presently before the Court is BBC's motion for a preliminary injunction enjoining the government from allowing coal exploration under the license to proceed pending resolution of the case on the merits.¹ Because BBC has failed to establish the requisite likelihood of irreparable harm to warrant a preliminary injunction, its motion is DENIED.²

BACKGROUND

Under the Federal Land Policy Management Act of 1976, it is the United States' policy that management of public lands "be on the basis of multiple use and sustained yield." 43 U.S.C. § 1701(a)(7). Consistent with that policy, BLM regulations provide that the grant of a permit or lease to develop any one mineral on public land "shall not preclude" the issuance of other permits or leases for the development of other minerals on the same land, so long as there exist "suitable stipulations for simultaneous operation." 43 C.F.R. § 3000.7. One such form of multiple use— and the form at issue in this case—is the simultaneous extraction of both natural gas and coal from a resource-rich tract of public land. See id. § 3400.1(b).

BBC operates approximately 108 CBNG wells in the "Porcupine Field" in Wyoming's Powder River Basin pursuant to numerous federal oil and gas leases. (Mot. for Prelim. Inj. [Dkt. #3], Ex. A, Tracy Galloway Aff. ¶ 2, Sept. 12, 2008.) Neighboring BBC's CBNG operation is BTU's coal-mining operation, which extracts coal from the North Antelope Rochelle surface mine. In February 2007, BTU submitted an application to BLM for a federal coal exploration license to allow BTU to explore the coal reserves underlying the Porcupine Field and collect certain geologic data. (Defs.' Mem. In Opp. [Dkt. # 5], Ex. A, Michael J. Karbs Decl. ¶ 2, Jan. 6, 2009.) Such exploration entails drilling numerous small core holes into the field's coal bed and is a necessary precursor to a competitive bid process for a coal lease, as the data collected enables BLM to meet its responsibility to ensure that the public receives fair market value for the coal.³ (Karbs Decl. ¶¶ 5-6); 43 C.F.R. § 3422.1(c)(1). BTU sought the exploration license in order to advance its effort to secure a coal lease.

BBC, while ostensibly not objecting to multiple use of the Porcupine Field, claims that exploratory drilling will irreparably harm its CBNG operation. BBC uses a vacuum technique to produce CBNG, employing two compressors that create negative pressure in the coal reservoir. (Galloway Aff. ¶ 2.) The compressors are sensitive to the presence of oxygen in the gas stream, which can render the CBNG unmarketable. If either compressor detects oxygen exceeding 10 parts per million for a period of ten minutes, the compressor will automatically shut down. (Id.) To rectify such so-called "oxygen contamination," BBC must vent and flow all of the gas lines leading to the compressor, purging the CBNG in the lines to the atmosphere. (Id. ¶ 3.) This is a time consuming and costly procedure, compounded by the loss of the purged CBNG's sale value. (Id.) BBC contends that due to the Porcupine Field's geologic makeup, specifically the permeability and porosity of the coal, exploratory drilling will cause oxygen contamination to occur. (Compl. [Dkt. # 1] ¶ 22; Pl.'s Mem. In Supp. at 1.)

BBC contacted BLM in October 2007 to notify the agency of its concerns. BBC and BLM thereafter traded multiple letters over the next nine months as BBC provided BLM with additional technical information, at BLM's request. Upon consideration of BBC's submissions and protests, BLM recognized that a risk of oxygen contamination existed, but concluded in a decision issued August 12, 2008 that the risk was too uncertain to warrant denying BTU's application altogether. (Mot. for Prelim. Inj., Ex. B, BLM Decision at 2, 6.) BLM instead crafted a phased drilling approach and stated its expectation that, pursuant to the standard simultaneous-use stipulations to be included in the license, BTU would be obligated to compensate BBC for any verified damage as a result of its exploratory drilling.⁴ (Id. at 5-6.) Not satisfied, BBC filed an appeal with the Interior Board of Land Appeals ("IBLA"), but the IBLA failed to act within the regulations' allotted time period, rendering BLM's decision on the license effective and final in late October 2008.⁵ BLM formally issued BTU the coal exploration license on December 30, 2008, and BBC filed the present suit and motion for a preliminary injunction January 7, 2009. BBC's primary contention is that BLM's decision was arbitrary and capricious, an abuse of discretion, not in accordance with law, and in violation of BBC's lease because the exploratory drilling will unreasonably interfere with BBC's CBNG operation and the license's stipulations do not adequately prevent such harm or compensate BBC for any damages incurred if oxygen contamination should occur.⁶ (Pl.'s Mem. In Supp. at 9-22.)

DISCUSSION

I. Legal Standard

"A preliminary injunction is an extraordinary remedy that should be granted only when the party seeking the relief, by a clear showing, carries the burden of persuasion." Cobell v. Norton, 391 F.3d 251, 258 (D.C.Cir.2004) (citing Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997)). As recently articulated by the Supreme Court, in order to obtain a preliminary injunction a movant must demonstrate: (1) that he is likely to succeed on the merits; (2) that he is likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, ___ U.S. ___, 129 S.Ct. 365, 374, 172 L.Ed.2d 249 (2008); see also CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir.1995). While these factors interrelate on a sliding scale, CityFed Fin. Corp., 58 F.3d at 747, the movant must, at a minimum, "demonstrate that irreparable injury is likely in the absence of an injunction," Winter, 129 S.Ct. at 375 (citing Los Angeles v. Lyons, 461 U.S. 95, 103, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983)) (emphasis in original). Indeed, because "the basis of injunctive relief in the federal courts has always been irreparable harm," a movant's failure to establish irreparable harm is grounds for denying a motion for preliminary injunction without considering the other factors. CityFed Fin. Corp., 58 F.3d at 747 (citation omitted). For the following reasons, the Court finds that BBC's motion fails on this basis.

II. Irreparable Harm

Our Circuit has set a high standard to establish irreparable harm. Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C.Cir.2006). First, the injury "must be both certain and great; it must be actual and not theoretical." Id. (quoting Wis. Gas Co. v. FERC, 758 F.2d 669, 674 (D.C.Cir.1985) (per curiam)). The moving party must show "[t]he injury complained of is of such imminence that there is a `clear and present' need for equitable relief to prevent irreparable harm." Id. Second, the asserted injury must be beyond remediation. As stated by the D.C. Circuit:

Mere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay[,] are not enough. The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation[,] weighs heavily against a claim of irreparable harm.

Wis. Gas Co., 758 F.2d at 674 (quoting Va. Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C.Cir.1958)). Indeed, it is well-settled that monetary loss constitutes irreparable harm "only where the loss threatens the very existence of the movant's business." Id.

To support its position that oxygen contamination is likely to occur, BBC points to three pieces of evidence: its experiences with oxygen contamination in connection with the clean-out of CBNG wells at the nearby Pronghorn Field, (Mot. for Prelim. Inj., Ex. A, Dec. 12, 2007 Letter at 1-5); oxygen contamination that occurred as a result of the drilling of a water well in the vicinity of the Porcupine Field, (Id., Apr. 1, 2008 Protest Letter at 19-21); and a three-page technical report prepared for BBC by petroleum engineer J. Craig Creel (the "Creel Report"), which analyzed the water well incident and concluded that "[i]f any of the ten proposed core holes are drilled, oxygen will be introduced into the producing coal seam reservoir and subsequently, into the BBC gas gathering system," (Id., Minimum Safe Core Hole Drilling Distance Report at 3). BLM, however, determined that the Pronghorn Field evidence, while somewhat analogous, entailed significantly different field conditions. (BLM Decision at 2.) BLM similarly determined that the water well incident also entailed significantly different circumstances, including that the...