Papco, Inc. v. United States

• Decision Date: 30 August 2011
• Docket Number: Civil Action No. 08–253 Erie.
• Citation: 814 F.Supp.2d 477
• Parties: PAPCO, INC., Plaintiff, v. UNITED STATES of America and United States Forest Service, Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

814 F.Supp.2d 477

PAPCO, INC., Plaintiff,

v.UNITED STATES of America and United States Forest Service, Defendants.

Civil Action No. 08–253 Erie.

United States District Court, W.D. Pennsylvania.

Aug. 30, 2011.

Matthew L. Wolford, Erie, PA, for Plaintiff.

Christy C. Wiegand, United States Attorney's Office, Pittsburgh, PA, for Defendants.

OPINION

MAURICE B. COHILL, JR., Senior District Judge.

Pending before the Court is the Defendants' United States of America and the United States Forest Service's Motion to Dismiss Plaintiff's Second Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) (ECF No. 23), and Plaintiff PAPCO, Inc.'s Cross–Motion for Summary Judgment (ECF No. 29). PAPCO, which is in the business of oil and natural gas drilling, production, and related development activities, seeks to quiet title to its oil, gas, and mineral rights acquisition pursuant to the Quiet Title Act, 28 U.S.C. § 2409a. Specifically, in Count I, PAPCO asserts that the Defendants are infringing on its ownership of sandstone located on tracts of land located within the Allegheny National Forest. In Count II, PAPCO claims that it has the right to the reasonable use of the surface estate by virtue of an easement incidental to its oil, gas, and mineral rights.

PAPCO initially filed a Complaint on September 9, 2008, followed by a Complaint that merely corrected typographical errors on September 23, 2008. On January 14, 2009, Defendants filed a motion to dismiss the Complaint. A briefing schedule was entered and briefs were filed by both sides. However, on March 4, 2009, PAPCO sought leave to file an Amended Complaint (ECF No. 22), in part, to address some of the concerns raised by Defendants. We permitted PAPCO to file the Amended Complaint. On March 25, 2009, Defendants again filed a motion to dismiss (ECF No. 23). Thereafter, the parties briefed the issues raised in the motion to dismiss. In addition to opposing Defendants' Motion to Dismiss, PAPCO filed a Cross–Motion for Summary Judgment (ECF No. 29) on April 24, 2009. Briefing concluded in September 2009. PAPCO filed notices of supplemental authority in February and March 2010 (ECF Nos. 43 & 45).

For the reasons set forth below we will grant summary judgment in favor of PAPCO.

I. Factual Background

PAPCO owns oil, gas, and mineral (“OGM”) rights for certain properties in the Allegheny National Forest, while the Defendants own the corresponding surface estates. Both PAPCO's OGM rights and Defendants' surface estates arise from properties conveyed to the United States by certain members of the Jamieson family. The details of the conveyances relevant to this case are as follows.

By deed dated March 10, 1930, the surface estate of certain real property located in Warren County, Pennsylvania was conveyed by the Jamieson family to the United States (the “Jamieson Deed”), pursuant to the Weeks Act, 16 U.S.C. §§ 515–21 (1976). Jamieson Deed, attached as Ex. A of Am. Compl. The Jamieson Deed was recorded in the Warren County Recorder's Office in Book 168, Page 433 on May 20, 1930.

PAPCO acquired certain oil, gas, and mineral rights reserved by the Jamieson Deed by deeds dated November 9, 1990, June 29, 2001, and August 24, 2001. Attached as Ex. B. to Am. Compl. The specific parcels of real property for which PAPCO purchased the OGM rights that fall under the Jamieson Deed are Warrants 2428, 2590, 2978 and 2674, Lots 14, 17, 18, 43, 44, 45, 48 and 61, and Tracts 42, 44, 47 and 49. The PAPCO Deeds were recorded in the Warren County Recorder's Office in Book 329, Page 34, Book 1075, Page 206, and Book 1082, Page 61.

Under the Weeks Act, the Secretary of Agriculture was authorized to “identify and purchase certain lands for the purpose of promoting or protecting the navigation of streams and promoting the production of timber.” 16 U.S.C. §§ 515, 516. The United States purchased only the surface estates pursuant to the Jamieson Deed, which reserved oil, gas, and mineral rights subject to specific restrictions. Specifically, the relevant section of the deed states:

This conveyance is made subject to all oil, gas and mineral rights, and rights of way incidental to such oil, gas and mineral rights outstanding of record, and to defined rights of way.

The parties of the first part hereby except and reserve from and out of this conveyance unto themselves, their successors, heirs and assigns, all the oil, natural gas, glass sand and minerals of every kind and description whatsoever, together with the rights of egress, ingress, and regress into, upon and from the same at all times for the purpose of exploring, operating for, producing, storing and transporting the same; also all rents and royalties, whether in cash or in kind, under any and all existing leases or similar agreement for the extraction of oil, gas, sand and other minerals from the said premises; also any and all springs of a certain kind commonly called “paint springs”, situate [sic] upon such premises, and the water, fluid, paint or paint-like material (whether mud, clay, mineral or other similar substance), springing or to be obtained or produced from said paint springs or from the immediate vicinity thereof;....

Jamieson Deed at 438–439 (emphasis added).

The exercise of the reserved oil, gas, and mineral rights under the Jamieson Deed is subject to the regulations of the Secretary of Agriculture as stated in the Jamieson Deed. Specifically, pursuant to Section 9 of the Weeks Act, the Jamieson Deed set forth the following “Rules and Regulations” prescribed by the Secretary of Agriculture:

1. Every person claiming the right to prospect for minerals, oil or gas, or the products thereof, or to mine, drill, develop or operate in or upon lands acquired by the United States under the provisions of the Act of March 1, 1911 (36 Stat. 961), with a reservation to the grantor of mineral rights, including oil and gas, must, on demand, exhibit to the Forest Officer in charge satisfactory written evidence of the right or authority from, through or under the said grantor.

2. In prospecting for, and in mining and removing minerals, oil and gas, and in manufacturing the products thereof, only so much of the surface shall be occupied, used or disturbed as is necessary for the purpose.

3. In underground operations all reasonable and usual precaution shall be made for the support of the surface and to that and tunnels, shafts and other workings shall be subject to inspection and examination by the Forest Officers, Mining Experts or Inspectors of the United States.

4. Payment of the usual rates charges in the locality for sales of National Forest timber, and timber products of the same kind or species shall be made to the United States for all timber, undergrowth or young growth, cut, destroyed or damaged in prospecting, mining, drilling or removing minerals, oil or gas, or in manufacturing products therefrom, and in the location and construction of buildings or works of any kind for the use in connection therewith. All slash resulting from such cutting or destruction shall be disposed of as directed by the Forest Officer, when inflammable in his judgment. No timber, undergrowth or reproduction shall be unnecessarily cut, destroyed or damaged.

5. All buildings, camps, equipment and other structures shall be removed from the Forests within six months after the completion or abandonment of the operations, otherwise such buildings, camps, equipment and other structures shall become the property of the United States.

6. All destructible refuse caused by the operations hereunder, which interferes with the administration of the forest growth shall, within six months after the completion of said operations, be disposed of.

7. While operations are in progress, the operators, contractors, and subcontractors and employees of contractors and subcontractors at work on the National Forest shall use due diligence in the prevention and suppression of fires, and shall be available for service in the extinguishment and suppression of all fires within the particular locality.

Jamieson Deed at 439.

Thus, the United States and the Forest Service own the surface estates of certain properties while PAPCO owns the reserved OGM rights within these same properties. The issue is who owns the sandstone. PAPCO maintains that the sandstone is a “mineral” within the OGM reservation of the Jamieson Deed. The Defendants argue that the sandstone is part of the surface estate, or in the alternative that the Forest Service asserted its interest in the sandstone as early as late 1990, and therefore PAPCO is now barred by the statute of limitations (twelve years by the terms of the Quiet title Act, 28 U.S.C. § 2409a(g)) from bringing this lawsuit. Defendants rely on several different documents produced in 1990 and 1991, as well as two general Forest Service publications, in support of their argument that the Forest Service asserted an adverse claim to the sandstone in late 1990.

PAPCO places stone on oil and gas access roads and well sites within the Allegheny National Forest to stabilize the areas and for erosion and sedimentation control, and has removed stone from the Jamieson Tract. The term “stone” is also commonly referred to as “shale” and “sandstone.” PAPCO asserts that sandstone for road surfacing increases weight bearing capacity of the roads, reduces road maintenance, increases traction, and preserves vehicles and equipment. The use of stone for access road surfaces is a common and accepted practice within the Allegheny National Forest. Sandstone is typically removed by surface mining, which involves the removal of the soil and vegetation above the stone by a bulldozer or excavator.

The Forest Service developed a 1.3 acre stone pit in 1991 on Lot 45 in Warren County as part of the Forest Service's “West Wind Project.” PAPCO owns the reserved OGM rights pursuant to the Jamieson Deed for Lot 45. At the time of its acquisition, PAPCO had a title...