Getty Oil Co. v. Clark

• Decision Date: 18 July 1985
• Docket Number: No. C84-0320-B.,C84-0320-B.
• Citation: 614 F. Supp. 904
• Parties: GETTY OIL COMPANY, Plaintiff, v. William P. CLARK, Secretary, United States Department of the Interior, Defendant.
• Court: U.S. District Court — District of Wyoming

614 F. Supp. 904

GETTY OIL COMPANY, Plaintiff, v. William P. CLARK, Secretary, United States Department of the Interior, Defendant.

No. C84-0320-B.

United States District Court, D. Wyoming.

July 18, 1985.

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Jerome C. Muys, Susan L. Smith, Holland & Hart, Washington, D.C., Marily S. Kite, Holland & Hart, Cheyenne, Wyo., for plaintiff.

Richard A. Stacy, U.S. Atty., D. Wyoming, Cheyenne, Wyo., Robert P. Schuster, Jackson, Wyo., Karin P. Sheldon, Sierra Club Legal Defense Fund, Inc., Denver, Colo., Steve Jones, Asst. Atty. Gen., Cheyenne, Wyo., Henry Phibbs, II, Jackson, Wyo., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

BRIMMER, District Judge.

This matter came on regularly for hearing before the Court on December 6, 1984 upon cross motions for summary judgment. Counsel appearing were Jerome C. Muys, Esq., Susan L. Smith, Esq., and Marilyn S. Kite, Esq., for plaintiff; Richard A. Stacy, Esq., United States Attorney for the District of Wyoming for defendant, and Karin P. Sheldon, Esq., Steve Jones, Esq., Robert P. Schuster, Esq., and Henry C. Phibbs II, Esq., for Intervenor Defendants. The Court has carefully reviewed the pleadings and the administrative record, considered the arguments of counsel, and being fully advised in the premises, issues its Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

Plaintiff, Getty Oil Company, seeks judicial review of a decision of the Board of Land Appeals of the Department of Interior in Sierra Club, et. al., (On Judicial Remand), 80 IBLA 251 (May 2, 1984), vacating the approval of Getty's Application for Permit to Drill (APD) an exploratory well on Lease No. W-20472, and remanding the application to the Wyoming State Office of the Bureau of Land Management for further action. Jurisdiction of the Court is invoked under 28 U.S.C. § 1331 and the Mineral Leasing Act of 1920, 30 U.S.C. §§ 181, et seq. (MLA), the Federal Administrative Procedures Act, 5 U.S.C. §§ 701-706, the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202 and the Mandamus Act, 28 U.S.C. § 1361. Venue is properly in the United States District Court for the District of Wyoming under 28 U.S.C. § 1391(e).

Plaintiff, a Delaware corporation, is the unit operator of the Bear Thrust Unit located in the Bridger-Teton National Forest in northwestern Wyoming, and holds federal leases in that unit. Defendant, William P. Clark, was, at the time this action was filed, and at the time the relevant decision was entered by the IBLA, the Secretary of Interior for the United States and was responsible for administration of the federal oil and gas leases involved in this action pursuant to the provisions of the MLA cited above, and was sued in his official capacity only. Intervenor defendants were parties to the administrative proceedings out of which this controversy arose, and have standing to assert the claims presented herein.

Lease No. W-20472 is located in the Bridger-Teton National Forest, Sublette County, Wyoming, and was issued effective October 1, 1969 for a primary term of ten (10) years. The current lessee thereof is Northwest Exploration Company, holding it subject to rights accruing to plaintiff under an agreement between Northwest and Reserve Oil, Inc., plaintiff's predecessor in interest.

The beauty and environmental values of this area have long been recognized. Since August 15, 1947 this area has been subject to restrictions upon oil and gas drilling activities established in a 1947 memorandum of then Secretary of Interior Julius A. Krug, 47 F.R. 8091, (hereafter Krug Memorandum). Lease W-20472 covers property located south of the eleventh standard parallel which was not fully withdrawn from leasing activities, but any leases issued in that area were required to contain several conditions and environmental protection stipulations. The lease as originally issued does not contain stipulations authorizing the Secretary to deny totally any drilling activities upon the property. The lease was issued before the adoption of the National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321 et. seq., (NEPA).

The Krug Memorandum required unitization of leases within the relevant area in order to minimize the impact of oil and gas drilling activities upon surface resources in the area. Reserve Oil, Inc., on February 2, 1979, nine years and four months after the lease in question was issued and a mere eight months before the end of the primary term upon the lease, submitted an application for the formation of a unit, including Lease W-20472, to the United States Geological Survey (USGS) Conservation Division. The USGS Conservation Division subsequently was redesignated as the Minerals Management Service, and merged into the Bureau of Land Management. However, the agency was called the USGS during most of the events relevant to this proceeding, and has been referred to by the parties, and will be referred to by the Court, as USGS throughout to avoid confusion.

The USGS, pursuant to the requirements of the Krug Memorandum, forwarded Reserve's application to the United States Forest Service to obtain its concurrence and recommendations concerning additional stipulations to be added to the proposed unit agreement. Four months later, on June 6, 1979, the Forest Service notified the USGS that it concurred in the formation of the unit as a logical unit, and specified additional stipulations to be added to the unit agreement in order to reduce adverse impacts upon the surface values. The terms of the unit agreement, which was issued in standard form pursuant to Department of Interior regulations, stated that Reserve as unit operator was given power to suspend all of the committed leases and to act on behalf of all lessees in proceedings concerning the unit before the Department of Interior.

On June 29, 1979 USGS designated the Bear Thrust Unit as a logical unit and approved the form of the unit agreement as modified to include the stipulations recommended by the Forest Service. Reserve proceeded to seek joinders from thirtythree (33) holders of working interests and overriding royalty interests in the twentyfive (25) leases comprising the Bear Thrust Unit. On September 17, 1979, less than fifteen (15) days before the expiration of the primary term of Lease No. W-20472, and nine (9) years and over eleven (11) months after such lease issued, Reserve submitted the Bear Thrust Unit Agreement with required joinders to the USGS for final approval. The agreement was approved by USGS on September 19, 1979, and Reserve was designated as the Unit Operator.

On August 14, 1979, a month before Reserve submitted the unit agreement with necessary joinders for final approval, Reserve requested permission from USGS and the Forest Service to stake a well on Lease No. W-20472. That same day the Forest Service notified USGS that it was concerned about the environmental impacts that staking could have, and requested that the application be denied until it had an opportunity to consult with its regional office. USGS then denied staking of the well on that basis. On October 2, 1979, Forest Service notified USGS that staking would be acceptable, and an order permitting staking was issued. Getty then undertook staking which was completed, and approved by an interdisciplinary team and representatives of USGS on November 6, 1979.

When USGS approved the unit agreement covering the Bear Thrust Unit on September 19, 1979, it requested Reserve to submit an abbreviated or "skeleton" APD. The application for a permit to drill was submitted and received by USGS on September 24, 1979, only a few days before the expiration of the primary term of Lease No. W-20472. However, it was determined that an extensive environmental review, including the preparation of an Environmental Impact Statement (EIS), would be necessary. It was apparent that a decision upon Reserve's APD could not be completed prior to the expiration of Lease No. W-20472, as well as many other leases committed to the Bear Thrust Unit.

Because of these impending time constraints, on September 21, 1979, less than ten (10) days prior to the expiration of Lease No. W-20472, Northwest submitted a request for suspension of that Lease as well as several other leases committed to the unit. It also sought from the Secretary an automatic suspension of other leases committed to the unit upon application when their lease terms approached termination. That request was consistent with the terms of the unit agreement and applicable regulations which provided that suspension orders relating to operations upon a single lease committed to the unit would be deemed applicable to obligations imposed upon the remaining leases committed to the Unit, and that operations, such as drilling upon one lease in the unit, would be attributed to the remaining leases, for purposes of extensions for two years beyond the primary terms of the leases pursuant to 30 U.S.C. § 226(e). Approval was recommended up through the chain of command in USGS, and the request was ultimately approved by the Director of USGS on May 7, 1980. Northwest and Getty, which had acquired Reserve and succeeded to its rights under the leases and Unit Agreement, were notified of the decision on May 30, 1980. The suspension was made retroactive to September 1, 1979, over eight months before the time the decision was made, and twenty (20) days prior to the time the request for suspension was filed. The suspension order had the effect of extending Getty's lease term under Lease No. W-20472.

Two grounds were given for the decision granting the suspension: (1) delays imposed upon Reserve due to environmental concerns, such as delays resulting from the initial denial of the staking request, which had the effect of denying Getty "timely access" to the property; and (2) environmental concerns resulting from the fact that the property was being considered for...