Wyoming Supreme Court Punts on Potential BLM “First in Time, First in Right” Interpretation of Competing Mineral Developers

A recent case before the Wyoming Supreme Court failed to clarify what, if any, remedies are available to conflicting developers of federal mineral rights on overlapping lands. Rather, the Court’s ruling in Berenergy Corporation v. BTU Western Resources, Inc.; School Creek Coal Resources, LLC; and Peabody Powder River Mining, LLC, and BTU Western Resources, Inc.; School Creek Coal Resources, LLC; and Peabody Powder River Mining, LLC v. Berenergy Corporation1 stated it could not decide the issue, while not so subtly asking the Secretary of the Interior and Bureau of Land Management (BLM), which could decide, to no longer “sit this one out.”

Berenergy Corporation (Berenergy) owned three oil and gas leases granted by the BLM. Berenergy originally filed for a declaratory judgment that the rights under its leases were superior to those under coal leases on overlapping lands that the BLM had issued later to affiliates of Peabody Energy Corporation (Peabody). Berenergy sought to prevent Peabody from shutting down Berenergy’s wells for fifteen to twenty years while Peabody mined areas in the overlapping land, and to prevent interference with Berenergy’s operations, including plans to water-flood oil-bearing formations covered in its leases.

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Interior Reins in the MBTA to Remove a “Domestic Energy Burden”

Mining, oil and gas, wind, solar and transmission companies who have struggled to comply with the Migratory Bird Treaty Act of 1918 (MBTA) received an early Christmas present from the U.S. Department of the Interior’s lawyer. On December 22, 2017, the Principal Deputy Solicitor issued a binding Memorandum Opinion, M-37050, to limit the reach of the MBTA to intentional, unlawful acts of hunting and poaching. In a 41-page legal analysis, the Solicitor concludes, “The text, history and purpose of the MBTA demonstrate that it is a law limited in relevant part to affirmative and purposeful actions, such as hunting and poaching, that reduce migratory birds and their nests and eggs, by killing or capturing, to human control. . . . Interpreting the MBTA to criminalize incidental takings raises serious due process concerns and is contrary to the fundamental principle that ambiguity in criminal statutes must be resolved in favor of defendants.” This action came in response to Executive Order 13783, Promoting Energy Independence and Economic Growth (March 28, 2017) and was a regulatory review specifically identified by Interior in the “Final Report: Review of the Department of the Interior Actions that Potentially Burden Domestic Energy,” (October 24, 2017) at pp. 32-33.

Why was addressing the MBTA a priority for the Trump Administration? For one, it was a “midnight rule” exemplifying the Obama-era regulation of the energy industry. On January 10, 2017, as the Obama Administration was drawing to a close, its Solicitor issued a legal analysis determining that the MBTA should be interpreted to cover “incidental take” (“apply broadly to any activity”) of migratory birds, and the U.S. Fish and Wildlife Service (USFWS) issued an implementing guidance document. “Incidental take” liability means that otherwise lawful actions like constructing a wind turbine, maintaining an oil and gas wastewater facility or constructing a transmission line could result in prosecutable take under the MBTA.1

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Gold King Mine Spill Exposes the Legal Hurdles to Cleaning up Mines

This blog post was written by Katherine "Kate" Sanford who worked with WSMT as a summer intern from June 1 through August 10, 2016.

On August 5, 2015, Environmental Protection Agency (“EPA”) contractors inadvertently broke through a retaining wall at the closed Gold King Mine, causing over 3 million gallons of acidic, metal-laden water to flow into the Upper Animas Watershed in Southwest Colorado. The garish orange plume, which was estimated to contain around 900,000 pounds of heavy metals, made its way from Colorado, through New Mexico, and into Utah’s Lake Powell. Along the way, arsenic, lead, cadmium, copper, mercury, and zinc settled along the riverbeds of the San Juan and Animas Rivers. See Gold King Mine Accident Highlights Risks Posed by Abandoned Mines.

In the weeks and months that followed, downstream communities suffered from the spill: Durango rafting companies lost hundreds of thousands of dollars, and the Navajo Nation shut off two of its major irrigation systems, severing a lifeline for many farmers in the area. Meanwhile, the EPA took full responsibility for the disaster and worked quickly to build a $1.5 million dollar water treatment plant at the mine. Today, the water downstream is clear, but the cleanup is not over. The EPA has already spent $29 million in disaster response and may spend as much as $50 million before the task is complete.

Throughout the past year, the Gold King Mine spill has not only exposed the existence of abandoned mines that are leaking toxic water, but also the legal impediments to cleaning them up. There are an estimated 23,000 inactive mines in Colorado and 500,000 around the West. Federal investigators from the Department of Interior’s Bureau of Reclamation have found that tens of thousands of these abandoned mines are contributing to continuing pollution. But most of the companies that built the mines over the past 150 years have been out of business for so long that no one is around to take responsibility. To make matters worse, environmental statutes are hindering ”Good Samaritans” from mine clean-ups by burdening them with crippling legal liability. Consequently, the EPA is left with the expensive and arduous task of cleaning up almost all of them.

The Clean Water Act (“CWA”) is one example of a well-intentioned environmental law that poses a major hurdle to cleaning up abandoned mines. It affixes liability and responsibility to anyone who attempts to address a leaking mine, even if the owner had no role in creating the pollution and is working to clean it up. Similarly, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) imposes retroactive strict liability, meaning that current owners are liable even if the pollution was not their fault and even if the site was polluted before CERCLA was enacted. As a result, people are reluctant to try to clean up abandoned mining sites.

In the last year, several bills were introduced in Congress in response to the Gold King Mine spill to address these legal deterrents. Several of the bills are new versions of Good Samaritan legislation, which seek to reduce the liability of those who work to clean up abandoned mines. For example, senators from four different states introduced the Hardrock Mining Reform and Reclamation Act, which would reduce liability by amending the CWA so that Good Samaritans can obtain special permits. The Act would require mining companies to pay a 2% to 5% royalty for extracting mineral resources from public lands – a probable deal killer for an industry that pays no royalty. The Act would also create a reclamation fund to help pay for cleaning up abandoned mines. Similarly, the proposed Abandoned Mine Reclamation Safety Act would direct the Secretary of the Interior to create new regulations to facilitate the safe and environmentally responsible cleanup of abandoned mines.

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“Balanced Prosperous Energy Future” on Public Lands?

On March 17, 2015, Secretary Jewell presented what was billed as a “major speech” to describe her vision of a “balanced prosperous energy future” at the Center for Strategic and International Studies. Directly tying the U.S. “energy transformation” to the recovered U.S. economy, she noted, “The energy revolution we experienced in the past six years helped spur the recovery, but it has also been accelerated by the policies our country [read: the Obama Administration] has put in place.”

Secretary Jewell said that since 2008, U.S. oil production grew from 5 million to 9 million barrels per day and U.S. dependence on foreign oil is at the lowest point it has been in more than 30 years. She continued, “The amount of solar energy has increased ten-fold, and wind energy has tripled since 2008 . . . Families are driving farther than ever on a tank of gas . . .These shifts in U.S. energy markets aren’t marginal or temporary: They are tectonic shifts.”

But, she added, “you can’t talk about energy without talking about climate change.” She posed this question to the audience, “How do we modernize our energy programs to anticipate the new energy future?” Her prescription for meeting this challenge is interesting.

According to the Secretary, we “modernize” U.S. energy policy by increased federal regulation of fossil energy and federal promotion of renewable energy. To achieve this energy future, she highlighted these Obama ongoing and new reform efforts:
 Continuation of the 2010 onshore oil and gas leasing reforms that added two new layers of NEPA review before lease sales and reduced annual lease sales in any one state to one a quarter in geographic rotation. Results to date: BLM leasing at an historic low in last 25 years.
 Increased regulations for off-shore oil and gas drilling post-Macondo including: well design, production systems, blowout prevention and well control equipment.
 New fracking rule for oil and gas on federal and tribal lands—out this month.
 New methane controls for onshore oil and gas to cut “emissions and wasted gas that result from venting and flaring.”
 New stream protection regulations for coal mining operations.
 New off-shore oil and gas rule to “raise the bar on blowout preventers and well control measures.”
 New rules for off-shore Alaska oil and gas exploration.
 New reforms of the federal coal program to ensure a “fair return,” to federal and state governments and greater transparency and competitiveness.
 New coal regulations to answer this question: “How do we manage the coal program in a way that is consistent with our climate change objectives?”
 New oil and gas royalty policy - BLM will be taking comments on raising oil and gas royalty rates.
 New inspection fees for oil and gas (Congress needs to okay this request.)
 New legislation to eliminate oil and gas “tax credits and incentives” and invest instead in wind and solar incentives.
 More use of planning efforts like Master Leasing Plans “to open up access to resources in the right places” and close access to oil and gas leasing by “identifying places that are too special to drill.”
 Continue planning and policy efforts to promote on and off-shore renewable energy in order to expedite permitting times for renewable energy.

The Secretary concluded her list of regulatory reforms by stating that as a “grandmother,” she is “determined to make energy development safer and more environmentally sound in the next two years.”
Will this prescription of more federal regulation for fossil energy support the “tectonic shift” in U.S. energy production or act as a brake on the U.S. energy revolution? That is not a difficult question to answer.

Link to text of Secretary Jewell’s remarks:  http://www.doi.gov/news/pressreleases/secretary-jewell-offers-vision-for-balanced-prosperous-energy-future.cfm

 

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