CHAPTER 9 NOT CARVED IN GRANITE: STATE AND LOCAL EFFORTS TO REGULATE NATURAL RESOURCES PROJECTS ON FEDERAL LANDS

• Jurisdiction: United States

Natural Resources and Environmental Administrative Law and Procedure II
(Sep 2004)
CHAPTER 9
NOT CARVED IN GRANITE: STATE AND LOCAL EFFORTS TO REGULATE NATURAL RESOURCES PROJECTS ON FEDERAL LANDS
Edward S. Geldermann ¹
U.S. Department of Justice
Washington, D.C.
Barbara B. Fugate ²
U.S. Department of the Interior
Washington, D.C.

Edward S. "Jay" Geldermann is a Senior Trial Attorney in the Natural Resources Section, Environment and Natural Resources Division, U.S. Department of Justice. He has been with the Justice Department since 1999 practicing natural resources, energy and environmental law in cases involving the Minerals Management Service, Bureau of Land Management, USDA Forest Service, Department of Defense, and National Park Service. He has defended those agencies in a wide range of cases arising under (or implicating) the hardrock mining laws, Territorial Submerged Lands Act, OCSLA, FLPMA, Materials Act of 1947, Coastal Zone Management Act, Park Service Organic Act, Quiet Title Act, and the National Environmental Policy Act (NEPA).

From 1991 through 1999, Mr. Geldermann was an Appellate Attorney in the Solicitor's Office of the Federal Energy Regulatory Commission, defending FERC's electric, natural gas, oil, and hydropower licensing, ratemaking and rulemaking orders in the U.S. courts of appeals, primarily the D.C. Circuit.

Barbara B. Fugate is an attorney in the Branch of Onshore Minerals of the Division of Mineral Resources in the Office of the Solicitor, U.S. Department of the Interior, Washington, D.C. Ms. Fugate works in the areas of mineral materials, the Mining Law, and cost recovery.

She has a B.A. degree from Wellesley College. She received her J.D. degree from Boalt Hall School of Law, University of California, Berkeley, in 1982.

Ms. Fugate clerked for Judge Patel in the Northern District of California. She worked for a number of years at the Washington, D.C., Civilian Complaint Review Board before joining the Solicitor's Office in 1995.

I. Introduction

"The Property Clause gives Congress the power over the public lands 'to control their occupancy and use, to protect them from trespass and injury, and to prescribe the conditions upon which others may obtain rights in them ...."' Kleppe v. New Mexico, 426 U.S. 529, 540 (1976). "The police power of the state extends over the federal public domain, at least when there is no legislation by Congress on the subject." Omaechevarria v. Idaho, 243 U.S. 343, 346 (1918). There is nothing in the General Mining Law, FLPMA, the Forest Service Organic Act, or the Coastal Zone Management Act, that preempts the states from imposing at least reasonable environmental regulation over hardrock projects or from exercising that regulatory authority through a permit requirement. California Coastal Comm'n v. Granite Rock Co., 482 U.S. 572 (1987).

Can these principles be reconciled and applied to the federal government's proprietary natural resource development programs, to the same extent as the Supreme Court has applied them to hardrock mining on federal lands where the federal government's role is primarily regulatory in nature? Can state licensing authority over (at least) the environmental aspects of federal oil and gas leasing, timber sales, grazing rights, and mineral material sales coexist with federal control over those programs? Can years of potential state environmental review of a federal lease or sale of natural resource commodities so interfere with the efficacy of those programs and the marketability of those commodities as to trigger federal preemption of state environmental licensing requirements?

These questions all became apparent immediately in the wake of the Supreme Court's Granite Rock decision in 1987. Surprisingly, in terms of litigation, they lay dormant for 15 years until brought to the fore in CEMEX v. County of Los Angeles, California, an action in which a contractor authorized by the U.S. Dept. of the Interior's Bureau of Land Management ("BLM") to mine sand and gravel on a federal mineral estate, and the United States, both sued to preempt the County of Los Angeles (which by then had spent at least 11 years processing the contractor's local permit application, and had begun revisiting issues it had earlier resolved) from exercising any further control over BLM's mineral materials sale to the contractor. The CEMEX action recently culminated in a consent decree (requiring the County to issue a permit within 60 days) to which one party, the City of Santa Clarita, has objected and appealed to the Ninth Circuit. If the Consent Decree is sustained, it is unclear when the courts will have the next opportunity to resolve these important issues.

The Granite Rock case raised far more questions than it resolved. How broad is its applicability? Is Granite Rock limited simply to state authority over hardrock mining? Does it apply to federal proprietary programs such as mineral resource leasing and sales? Does it alter the intergovernmental immunity analysis that usually results in immunity of federal functions from state licensing authority? Is Granite Rock's holding that the states may exercise permitting authority over mining projects a greater threat to the federal mineral resource sales programs than a requirement that would only subject those programs to state environmental standards? Federal agencies are now struggling with these questions as their natural resource sales and leasing programs encounter interference by state permitting authorities.

This paper examines the history of federal-state regulatory conflicts involving natural resource development projects on public lands, the holdings of Granite Rock, legal commentators' reaction to Granite Rock, the recent case of CEMEX, Inc. v. Los Angeles County, and the potential limits of Granite Rock as precedent for state regulation of federal leases or sales of natural resource commodities owned by the United States. It concludes that the Granite Rock ruling does not render the doctrine of intergovernmental immunity inapplicable to federal proprietary, revenue-producing natural resource commodity programs and, alternatively, that federal agencies have authority, by regulation, to preempt state and local regulation of federal mineral resource leases or sales to the extent states attempt to obstruct or delay the implementation of such sales or leases by means of time-consuming state or local permitting processes or by imposing unreasonable conditions.

II. Federal Case Law Preceding Granite Rock

One of the earliest battles over dueling federal and state permitting authorities came to a head in 1946 when the Supreme Court decided First Iowa Hydro-Electric Coop. v. Federal Power Comm'n. ³ In that case, the FPC (predecessor to the Federal Energy Regulatory Commission) issued a hydropower license authorizing the licensee to divert virtually all of the flow of the Cedar River between two townships in Iowa. The State of Iowa intervened and claimed that a state permit was needed for the licensee's construction of the hydropower dam and diversion of flow. Without referencing preemption or the Supremacy Clause of the U.S. Constitution, ⁴ the Supreme Court ruled that the state assertion of permitting authority over the dam construction and flow diversion was invalid. The Court stated that a "dual final authority, with a duplicate system of state permits and federal licenses required for each project, would be unworkable." ⁵ As the Court explained:

the securing of an Iowa state permit is not in any sense a condition precedent or an administrative procedure that must be exhausted before securing a federal license. It is a procedure required by the State of Iowa in dealing with its local streams and also with the waters of the United States within that State in the absence of an assumption of jurisdiction by the United States over the navigability of its waters. Now that the Federal Government has taken jurisdiction of such waters under the Federal Power Act, it has not by statute or regulation added the state requirements to its federal requirements. ⁶

First Iowa involved the federal government's authority to trump state authority over water by virtue of its plenary jurisdiction over navigation. That the federal government had plenary authority to displace state regulation of public lands based on the Property and Supremacy Clauses was made clear in Federal Power Commission "FPC" v. Oregon ⁷ and Kleppe v. New Mexico. ⁸ In FPC v. Oregon, a state challenged the FPC's issuance of a hydropower permit on federal lands withdrawn from entry under the public land laws and reserved for power purposes without finding that the affected waters were, in fact, navigable and without requiring the licensee to obtain a state permit. Finding that Congress had ample authority pursuant to the Property Clause to reserve the public lands in question for hydropower purposes, regardless of the navigability of the affected river, ⁹ the Court ruled that "allowing Oregon to veto such use, by requiring the State's additional permission, would result in the very duplication of regulatory control precluded by the First Iowa decision." ¹⁰ In Kleppe, the Supreme Court rejected New Mexico's claim that Congress lacked authority to prohibit, by statute, the capture of unclaimed horses and burros on public lands contrary to state law authorizing control and capture of such animals unless the state assented to the federal prohibition. The Kleppe court, ruling that the Property and Supremacy Clauses sustained the challenged federal legislation, stated:

Absent consent or cession a State undoubtedly retains jurisdiction over federal lands within its territory but Congress equally surely retains the power to enact legislation respecting those lands pursuant to the Property Clause. And when Congress so acts, the federal legislation necessarily overrides conflicting state laws under the Supremacy Clause. ¹¹

The...