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

The United States Forest Service (USFS) (defendant) managed surface land in Pennsylvania’s Allegheny National Forest. Most mineral rights in the forest were privately owned. The USFS and mineral owners managed drilling operations through a cooperative process. Pursuant to this process, the owners provided advance notice to the USFS of their drilling plans, the parties negotiated details, and the USFS issued a Notice to Proceed (NTP) acknowledging receipt of notice and memorializing any agreements between the parties. The USFS did not consider the issuance of an NTP to be a major federal action requiring environmental review under the National Environmental Policy Act (NEPA), 42 U.S.C. § 4332(C), because the USFS’s rights as a surface owner were limited. Under § 9 of the Weeks Act (Act), 16 U.S.C. § 518, forest mineral rights retained by private owners were subject only to regulations expressed in and made a part of a written agreement conveying land title to the federal government. At the time of the Act’s enactment, USFS regulations did not require owners to secure a federal permit prior to drilling. In addition, Pennsylvania law provided that mineral owners were not required to obtain the surface owner’s consent to extract minerals. A settlement agreement in another case postponed the issuance of NTPs until the completion of a multi-year, forest-wide environmental impact statement. Minard Run Oil Company and other mineral owners (plaintiffs) filed suit to enjoin the USFS from implementing the NTP moratorium. The district court issued a preliminary injunction against the USFS, finding that the NTP moratorium infringed on property rights and threatened to bankrupt or close businesses. The USFS appealed, arguing that (1) federal case law authorized the USFS to regulate private land to preserve forests, (2) the Act did not prohibit regulations that were not referred to in land-conveyance agreements, and (3) temporary economic losses did not constitute irreparable harm.