Sierra Club v. Davies, s. 90-2639

Citation955 F.2d 1188
Decision Date05 February 1992
Docket Number90-2696,Nos. 90-2639,s. 90-2639
PartiesSIERRA CLUB; Arkansas Wildlife Federation, Inc.; and Friends of Crater of Diamonds, State Park, Inc., Appellees, v. Richard DAVIES, Acting Director of Arkansas Parks and Tourism; Arkansas Parks Recreation & Travel Commission; John Cook, Director, National Park Service, S.W. Region; Manual Lujan, Secretary, U.S. Department of the Interior. CAPRICORN DIAMONDS, LTD.; and Kennecott Corporation, (Intervenors/Third Party) Appellants, v. SIERRA CLUB; Arkansas Wildlife Federation, Inc.; Friends of Crater of Diamonds, State Park, Inc., Appellees. SIERRA CLUB; Arkansas Wildlife Federation, Inc.; and Friends of Crater of Diamonds State Park, Inc., Appellees, v. Richard DAVIES, Acting Director of Arkansas Parks and Tourism; Arkansas Parks Recreation & Travel Commission, John Cook, Director, National Park Service, S.W. Region; Department of Interior, Manual Lujan, Secretary, Appellants. CAPRICORN DIAMONDS, LTD.; Kennecott Corporation, Intervenors Below, v. SIERRA CLUB; Arkansas Wildlife Federation, Inc.; Friends of Crater of Diamonds State Park, Inc., Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Byron Freeland, Little Rock, Ark., argued for appellants, Kennecott Corp. and Capricorn Diamonds.

Jacques Gelin, Washington, D.C., argued for appellant, Dept. of Interior.

Walter Wright and Stuart Miller, Little Rock, Ark., on the brief for appellants.

James Stanley, North Little Rock, Ark., argued (Richard Lawrence, on the brief), for appellees.

Before McMILLIAN, WOLLMAN and MAGILL, Circuit Judges.

MAGILL, Circuit Judge.

This appeal concerns whether preliminary testing in a state park aimed at determining the feasibility of commercial diamond mining constitutes a conversion under the federal Land and Water Conservation Fund Act of 1965. The district court concluded that the initial testing was inextricably intertwined with mining and therefore constituted a nonrecreational use under the Act. Since we believe preliminary testing is distinct from the issue of whether commercial mining would constitute a conversion, we reverse in part. We affirm that portion of the district court decision denying damages to appellant mining companies.

I. Factual Background

Although he did not realize it at the time, John W. Huddleston opened this confrontation on August 1, 1906, when he unearthed a diamond on his property south of Murfreesboro in Pike County, Arkansas. Despite the diligence of successive owners, however, no one has profitably mined Huddleston's field. 1 By 1952, the various owners of Huddleston's land and the neighboring fields had turned the "Crater" into a tourist attraction. The land was consolidated into a single parcel in 1969 and the State of Arkansas purchased the 887.3 acres in 1972, dedicating the field as Crater of Diamonds State Park. The park contains a thirty-seven-acre, exposed, diamond-bearing, volcanic pipe, which represents the only site in North America where the public is invited to roll up its sleeves and hunt for diamonds. 2

Despite the mine's recent tranquility, however, intrigue into the commercial mining potential of the land never completely dissipated. The most recent attempt to study the viability of commercial mining surfaced in 1986, when a task force created at the behest of the Arkansas Parks, Recreation and Travel Commission recommended an exploration of mining potential at the reserve.

The task force specifically recommended legislation permitting the Commission to enter contracts for the commercial exploration of diamonds at the Crater of Diamonds State Park. The Arkansas Legislature in 1987 authorized the Department of Parks and Tourism to execute a lease for the exploration and production of diamonds at the park. Ark.Code Ann. § 22-5-817 (Michie Supp.1991).

Armed with legislation, the task force continued to study the issue, but concluded that it lacked sufficient verified information relating to the size and value of the preserve to make valid judgments as to the park's mining potential. It therefore recommended that the state undertake Phase I investigatory drilling of the reserve.

Federal law became implicated in the decision to explore commercial mining because in 1976 Arkansas received a federal matching grant from the National Park Service for $723,808. The grant--part of an acquisition and development project at the Crater of Diamonds State Park--was made through the Land and Water Conservation Fund Act (L & WCFA), 16 U.S.C. §§ 460l-4 to 460l-11 (1988). The Act requires all states that receive grants to maintain the benefited land as public outdoor recreational space forever. Id. at § 460l-8(f)(3). Any conversion of park land to nonrecreational use must be approved by the Secretary of Interior and can come only after the Secretary: (1) finds the conversion in accord with the existing comprehensive statewide outdoor recreation plan, and (2) is assured that the state will substitute other recreational properties of at least equal fair market value and of reasonably equivalent usefulness and location. 3 Id.

In light of L & WCFA restrictions, Arkansas sought an opinion from the regional office of the National Park Service as to whether Phase I testing would constitute a conversion. 4 Phase I testing would consist of drilling twenty-five to thirty holes--with each core measuring 1 and 7/8 inches in diameter--to a maximum depth of 1,000 feet. Each hole that is drilled would be refilled before researchers move on to the next hole. The drilling process would require fencing off a fifty by one hundred foot section in the public digging area for a period of not more than twelve weeks. After the test drilling is complete, the park area would be returned to its normal state.

On May 24, 1989, the acting regional director of the National Park Service rejected the Phase I testing, concluding it would convert a portion of the area from public outdoor use to nonpublic commercial use. The acting regional director said the testing "could have the potential of progressing into a full-blown commercial diamond mining operation." 5

The following day--May 25, 1989--the Interior Department urged its regional field solicitor to withdraw a legal opinion on which the decision to reject Phase I testing was partially based. The Interior Department letter stated that the Park Service's rejection was premature since the state sought only to make limited tests to determine the feasibility of commercial mining. Even though commercial mining "would certainly constitute a conversion under the Act," it was possible that commercial mining may never take place at the park. 6 After the Interior Department's regional field solicitor withdrew the legal opinion, the Park Service's acting regional director on July 18, 1989, reconsidered the initial decision and approved Phase I testing.

Appellees filed suit in January of 1990 to stop the testing and mining. 7 After the mining companies were allowed to intervene, the district court rejected a motion to enjoin the testing. Although the court found that appellees had shown a substantial likelihood of success on the merits, the court ruled that irreparable harm would not result from Phase I testing. Testing began on July 8 and continued until August 6, when the district court permanently enjoined Phase I testing. The mining companies appeal this judgment.

II. Discussion

The heart of the L & WCFA is found in § 6(f)(3). The rather straightforward section provides:

No property acquired or developed with assistance under this section shall, without the approval of the Secretary, be converted to other than public outdoor recreation uses. The Secretary shall approve such conversion only if he finds it to be in accord with the then existing comprehensive statewide outdoor recreation plan and only upon such conditions as he deems necessary to assure the substitution of other recreation properties of at least equal fair market value and of reasonably equivalent usefulness and location.

16 U.S.C. § 460l-8(f)(3). Appellees argue that Phase I testing constitutes just such a conversion under the Act. The acting regional director determined that Phase I testing would not constitute a conversion, but would be permitted as a "temporary non-conforming use." The agency's decision was emphatically limited to Phase I testing. Contrary to assertions by appellees and the determination of the district court, the agency's decision in no way ushers in a parade of horribles culminating in full-blown commercial mining. The director's letter explicitly stated that approval was made "separate from subsequent testing or mining actions." The director went on: "This approval in no way commits the Federal government to making a similar finding for any testing beyond Phase I. Any future proposal will require rigorous review and analysis." Moreover, the director stated that any subsequent testing proposals would have impact inseparable from actual mining and would, therefore, have to comply with the procedural substitution requirements of § 6(f)(3), as well as the National Environmental Policy Act. 42 U.S.C. §§ 4321 to 4347. 8

It is difficult to hypothesize a statement by the director that would more clearly state that his decision rested entirely on the limited Phase I testing and did not contemplate or permit any subsequent testing or mining activity. Appellees contend, nonetheless, that the state's elaborate planning as well as the funding by the mining companies indicates that Phase I testing is just a precursor to the inevitable commercial mining of the park. Even if the link in planning between Phase I testing and mining is shown to be ironclad, and even if it is shown that commercial mining would constitute a conversion, our review is limited to the agency action. No matter what the evidence shows might happen in the future, it is beyond this court's power to render a speculative...

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