Minard Run Oil Co. v. U.S. Forest Serv.

• Decision Date: 06 September 2012
• Docket Number: C.A. No. 09–125 Erie.
• Citation: 894 F.Supp.2d 642
• Parties: MINARD RUN OIL COMPANY, Pennsylvania Oil and Gas Association, Allegheny Forest Alliance, and Warren County, Plaintiffs, v. UNITED STATES FOREST SERVICE, et al., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

894 F.Supp.2d 642

MINARD RUN OIL COMPANY, Pennsylvania Oil and Gas Association, Allegheny Forest Alliance, and Warren County, Plaintiffs,

v.UNITED STATES FOREST SERVICE, et al., Defendants.

C.A. No. 09–125 Erie.

United States District Court,

W.D. Pennsylvania.

Sept. 6, 2012.

Matthew L. Wolford, Erie, PA, R. Timothy McCrum, Crowell & Moring, Washington, DC, Steven J. Lechner, Mountain States Legal Foundation, Lakewood, CO, for Plaintiffs.

Ruth Ann Storey, United States Department of Justice, R. Timothy McCrum, Crowell & Moring, Sara C. Porsia, Dept. of Justice, Environment and Natural Resources Div., NA, Washington, DC, Albert W. Schollaert, United States Attorney's Office, Pittsburgh, PA, for Defendants.

MEMORANDUM OPINION

McLAUGHLIN, SEAN J., District Judge.

This matter is before the Court upon a Motion for Summary Judgment and for Permanent Injunction filed by Plaintiffs Minard Run Oil Company (“Minard Run”) and the Pennsylvania Independent Oil and Gas Association (“PIOGA”) (collectively, “Plaintiffs”) and a Motion for Summary Judgment filed by Defendants Allegheny Defense Project, the Sierra Club, and the Forest Service Employees for Environmental Ethics (“FSEEE”) (collectively, “the FSEEE Defendants”). This Court has jurisdiction pursuant to 5 U.S.C. §§ 701–706 and 28 U.S.C. § 1331.

I. PROCEDURAL BACKGROUND

The original complaint in this action was filed on June 1, 2009, followed by a motion for preliminary injunction on June 2, 2009. (Dkt. 1, 2). After a three-day evidentiary hearing, this Court granted the Plaintiffs' request for preliminary injunctive relief by memorandum opinion and order dated December 15, 2009. See Minard Run Oil Co. v. U.S. Forest Service, 2009 WL 4937785 (W.D.Pa.2009) (“ Minard Run II”). The Third Circuit affirmed the grant of the preliminary injunction on September 20, 2011. See Minard Run Oil Co. v. U.S. Forest Service, 670 F.3d 236 (3rd Cir.2011) (“ Minard Run III”). In order to place the Plaintiffs' and FSEEE Defendants' motions for summary judgment in the appropriate context, a more in depth review of the history of this litigation is warranted.

At its core, this lawsuit involves a dispute between the FSEEE Defendants and private owners of mineral and oil rights in the Allegheny National Forest (“ANF”) concerning the procedure by which the private mineral owners exercise their rights to extract oil and gas in the ANF. These mineral estates exist in two distinct categories: “reserved” mineral rights, and “outstanding” mineral rights. See Minard Run II, 2009 WL 4937785, *3. “Reserved mineral rights were created when the fee owner transferred the surface estate to the federal government and retained the mineral estate,” whereas outstanding mineral rights “were created when the surface estate and the mineral estate were severed from one another in a transaction between private parties prior to the federal government's acquisition of the surface estate.” Id. at *3–4.

Prior to the events which precipitated this litigation, access to private mineral rights in the ANF (both reserved and outstanding) had traditionally occurred as the result of a cooperative process between private mineral owners and the United States Forest Service (“Forest Service”). The genesis of this cooperative approach was the district court decision in United States v. Minard Run, 1980 U.S. Dist. Lexis 9570 (W.D.Pa.1980) (“ Minard Run I ”), wherein the court concluded that, under Pennsylvania common law, an owner of private mineral rights has an “unquestioned right” to enter a property to access and extract his minerals, but must do so in a manner which exercises “due regard” for the rights of the surface estate. Id. at *13. In order to balance those interests, the court ordered oil and gas drillers to provide the Forest Service with several specific pieces of information concerning any drilling proposal “no less than 60 days in advance” of commencing drilling operations. Id. at *13, 19–20. The Forest Service, upon receiving this information, would review the proposal and, if necessary, address any concerns with the driller to so as to prevent unnecessary or harmful surface use. See Minard Run III, 670 F.3d at 244 (describing the mechanics of the so-called “ Minard Run framework”). Thereafter, the Forest Service would issue a “Notice to Proceed” (“NTP”) acknowledging that notice had been properly given and memorializing any agreements between the parties concerning the proposed drilling operation. Id. The Minard Run framework became standard practice in the ANF and governed relations between drillers and the Forest Service from 1980 until approximately 2009. Id.

A. The Original FSEEE Action ( “FSEEE” )

On November 20, 2008, the FSEEE Defendants filed suit against the Forest Service in this Court seeking a declaration that the practice of issuing NTPs without conducting an appropriate environmental analysis or filing an environmental impact study (“EIS”) pursuant to the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq. (“NEPA”), was contrary to federal law. See FSEEE v. U.S. Forest Service, No. 08–323, 2009 WL 1324154 (W.D.Pa.2009). The FSEEE Defendants also sought to enjoin the Forest Service from issuing any further NTPs without first conducting the proper NEPA analysis. Id. On April 9, 2009, the Forest Service and the FSEEE Defendants entered into a Settlement Agreement containing the following provision:

[The Service] agrees that it shall undertake appropriate NEPA analysis prior to issuing Notices to Proceed, or any other instrument authorizing access to and surface occupancy of the Forest for oil and gas projects on split estates including both reserved and outstanding mineral interests. Appropriate NEPA analysis shall consist of the use of a categorical exclusion or the preparation of an Environmental Assessment or an Environmental Impact Assessment.

Minard Run III, 670 F.3d at 245. On the following day, April 10, 2009, former (then current) Forest Supervisor Leanne Marten issued a statement (the “Marten Statement”) indicating that the Forest Service would not authorize activity on any new drilling proposals until it had completed a “forest-wide site-specific environmental analysis.” Id.

B. The Preliminary Injunction Action ( “Minard Run II” )

On June 1, 2009, Plaintiffs, along with the Allegheny Forest Alliance (“AFA”) and the County of Warren, filed the instant action challenging the Settlement Agreement and the contemporaneous Marten Statement and seeking to enjoin the Forest Service from restricting or barring drilling activities during the preparation of a forest-wide EIS. As a procedural matter, Plaintiffs argued that the Settlement Agreement and the Marten Statement constituted final agency action subject to review pursuant to the Administrative Procedure Act (“APA”) because they represented a dramatic change in the manner in which the Forest Service and oil and gas drillers had historically interacted in the ANF. Substantively, Plaintiffs asserted that the issuance of an NTP was not a “major federal action” that triggered the requirements of NEPA because the Forest Service lacked the regulatory authority over the drilling proposals which it claimed. Finally, Plaintiffs argued that the Settlement Agreement and Marten Statement had created a de facto multi-year drilling moratorium in the ANF that would cause irreparable harm to mineral rights owners, local business entities affiliated with drilling, and the local community surrounding the ANF.

A hearing on Plaintiffs' preliminary injunction motion was conducted between August 24th and August 26th, 2009. At the hearing, several former ANF employees and officers testified as to the Forest Service's historical practice with respect to privately owned mineral interests. Ernest Rozelle, a “land staff officer” in the ANF from 1986 to 1999, testified that Minard Run I was “a landmark decision” which provided the Forest Service with a target for completion of their analysis relative to individual drilling requests. See Minard Run II, 2009 WL 4937785, *8. Rozelle also testified that the Forest Service had not traditionally applied NEPA to individual drilling requests and that the Service typically processed 90–95% of such requests within 60 days of receipt. Id. at *8. Similarly, David Fredley, a mineral specialist in the ANF, and David Wright, the ANF Forest Supervisor from 1987 through 1992, each testified that the Forest Service, during their respective tenures within the ANF, had viewed the 60–day framework set forth in Minard Run I as a commitment between the Service and the private oil and gas industry to process drilling proposals cooperatively and expeditiously. Id. at *9–10. This practice was also reflected in the Forest Service's 1984 ANF Handbook which incorporated each element of the Minard Run I framework into its “standard operating procedures.” Id. at *6.

The court also heard testimony at the hearing concerning the impact of the so-called “drilling ban” on private oil and gas interests in the ANF. Several business owners “testified that, as a result of the Service's ban on new drilling, they were prevented from drilling new wells, causing significant losses to their business and harm to the community.” Minard Run III, 670 F.3d at 246;Minard Run II, 2009 WL 4937785, *15–19.

Former ANF Supervisor Marten and Forest Ranger Anthony Scardina provided testimony in support of the Forest Service's decision to implement a forest-wide drilling ban while conducting an environmental impact study. Scardina testified that the number of drilling proposals received by the Forest Service had increased substantially in recent years, necessitating a new approach to forest management. Minard Run II, 2009 WL 4937785, *14. Scardina averred that the Forest Service's previous, individualized approach to processing drilling proposals had resulted in unnecessary surface degradation, such as duplicative roadbuilding and facility...