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ANF drilling ban lifted in Tuesday ruling in federal lawsuit

(12/16/2009) -

Private oil and gas drilling on the Allegheny National Forest may resume, ruled a federal judge Tuesday, saying the U.S. Forest Service was wrong to institute a ban and insist an environmental impact statement be completed before drilling could continue.

U.S. District Judge Sean McLaughlin issued a 53-page memorandum opinion and order which prohibits the Forest Service from requiring an environmental assessment before drillers can access their mineral rights below the service in the ANF; ends the drilling ban; reinstates the previous rules; dismisses the actions brought by Warren County and the Allegheny Forest Alliance; and prohibits further implementation of a settlement agreement with several environmental groups.

The suit is Minard Run Oil Co., Pennsylvania Oil and Gas Association, Allegheny Forest Alliance and Warren County versus the U.S. Forest Service and numerous of its officers.

Steve Rhoads, president of the Pennsylvania Oil and Gas Association, said, “What the judge did effectively is enjoined the Forest Service from continuing to prohibit the development of private oil and gas rights in the boundaries of the ANF.”

Earlier this year, the Forest Service had changed its longstanding practices in dealing with owners of private mineral rights after an April settlement agreement in a suit brought by environmental groups Forest Service Employees for Environmental Ethics, Sierra Club and Allegheny Defense Project.

Part of the longstanding practice of the Forest Service was that the federal agency would receive a proposal from a driller, review it under previously established case law, and issue a Notice to Proceed within 60 days.

Since that settlement agreement, the Forest Service effectively stopped additional drilling on the National Forest, allowing a certain number of wells that had been in the approval process to proceed and requiring producers of new wells to complete an environmental impact assessment, under the National Environmental Policy Act, prior to drilling.

Rhoads said the judge ruled on Tuesday that NEPA didn’t apply. “The Forest Service’s assertion that NEPA pertains to their activities of Notices to Proceed is wrong. They’re not allowed. They made an error by assuming the authority to rule under NEPA.”

Since the settlement agreement was made, the Forest Service has been conducting a forestwide environmental impact statement. Rhoads said the environmental impact statement has been halted as well.

“They are basically enjoined from proceeding further with the environmental impact statement,” Rhoads said.

“You cannot prohibit drillers because NEPA is no longer valid,” Rhoads said. “The Forest Service is hereby told to start moving forward under the old rules.”

“We’re very, very grateful to the judge for this ruling,” he said. “It’s clear that he understands the serious impact the Forest Service’s actions have had over the past year. It’s been very damaging to our families and very damaging to local economies. We’re glad the judge understands that.

“We just want to get back to work,” Rhoads said.

Fred Fesenmyer, chairman of POGAM and owner of Minard Run Oil — the company behind the case — echoed Rhoads’ statements.

“With this decision, it will certainly allow us all to go back to work to do what we do best,” he said. “After almost a year of not being able to conduct new drilling on the forest, this is welcome news. It may be too late for some, but perhaps it will allow others to hire back or contract with other people.

“It’s the best Christmas present we in the industry could ever expect,” Fesenmyer said. “Ho ho ho. This is great news for big, small, whatever size the companies are — we welcome it and we’ll get back to work as fast as we can.

“The National Forest still owns the surface, but they cannot deny us access to our minerals without reasonable cause. They still have that right to do what is legally proper.

“We are scrutinized all the time for the way we conduct our business,” Fesenmyer said, explaining the industry is watched by the state Department of Environmental Protection. “We need to be good custodians of the surface.”

While McLaughlin’s order will allow the oil and gas producers to get back to work, Rhoads said the injunctions don’t necessarily mean the fight is over.

“What’s next? That remains to be seen,” Rhoads said. “You’ll have to talk to the Forest Service about that. The injunction merely sets the stage for it to move forward in court. What happens next is up to the Forest Service.”

Rhoads said that just getting a judge to issue a preliminary injunction against a federal government policy is a “very high bar to hurdle. We’ve surmounted the bar. We did it. Yahoo!”

U.S. Rep. Glenn Thompson, R-Pa., was also vocal in his appreciation at McLaughlin’s decision.

“I’ve had confidence all along in the state’s ability to take care of the environment in the Allegheny National Forest — confidence in the local industry and the citizens of the four-county area, who have been exceptional stewards of the environment for decades,” Thompson said. “The local stakeholders have taken care of the forest for 86 years with the state Department of Environmental Protection providing some of the best enforcement in the nation.

“This also is a victory for the hard-working people of northwest and northcentral Pennsylvania, who anxiously have been waiting for the opportunity to go back to work in the forest they love, and where they have supported their families for several generations.”

Memorandum and opinion spells out reasons behind the judge’s decision

The 53-page memorandum and opinion issued Tuesday by federal judge Sean McLaughlin spells out the reasons behind the judge’s decision against the practices of the U.S. Forest Service in regards to private mineral rights on the Allegheny National Forest.

The judge found that Minard Run Oil Co., along with Pennsylvania Oil and Gas Association members Belser Hale, Ristau Drilling, Dyne Excavating, PGE, Seneca Resources, East Resources and American Refining Group were able to demonstrate at a July hearing that they “have experienced significant adverse economic impacts directly attributable to the drilling ban in the ANF.”

The judge found the damages suffered by those in the oil industry to be “concrete and irreparable,” and said that a return to the Forest Service’s previous practices “would not pose a threat to the ability of the Forest Service to adequately protect its surface estate.”

McLaughlin detailed the impact of the drilling ban on the National Forest, as was given as testimony in the July hearing in Erie. Belser Hale, a Bradford company, had a 47 percent decrease in revenue for the beginning of 2009 as compared to the previous year. A 25 percent workforce reduction was the result. The owner of Ristau Drilling LLC, of Warren, estimated a two-thirds drop in revenue, along with a 40 percent reduction in the workforce.

The estimated loss for Seneca Resources was approximately $7.3 million for being unable to drill on the ANF in 2009 and 2010. Minard Run Oil of Bradford had been looking at the possibility of laying off workers if the ban continued.

ARG would have had to reduce its output, producing a significant impact on the local economy.

The judge ruled that two plaintiffs in the lawsuit — Warren County and the Allegheny Forest Alliance — had not suffered injury as a result of the ban on drilling.

Also in the memorandum, McLaughlin explained why the National Environmental Policy Act did not apply in this case. “A project conducted by non-federal actors, such as oil and gas drilling by private parties, will only trigger NEPA if it requires a federal agency to undertake ‘affirmative conduct’ before the non-federal actor may act,” the judge explained.

Since the settlement agreement earlier this year with environmental groups Sierra Club, Allegheny Defense Project and Forest Service Employees for Environmental Ethics, the Forest Service had been operating under the assumption that NEPA did apply, and halted drilling while an environmental impact statement was being prepared.

McLaughlin said the Forest Service does not have the authority to say whether or not the drilling for private mineral rights would proceed, and their approval is not legally required. Therefore, the process does not constitute a major federal action requiring NEPA compliance.

The judge also explained that the Forest Service, under the Administrative Procedure Act, was required to follow specific guidelines when introducing a new legislative rule such as the NEPA compliance; the Forest Service had argued no final agency action was involved, and public notice and comment procedures weren’t necessary.

The judge disagreed, saying the Forest Service should have published a notice of the new rule in the Federal Register and allowed time for public comment.

Regarding public interests, McLaughlin said, “The ANF is a unique and valuable resource that offers a host of recreational activities for the public. There is a clear public interest in preserving it for present and future generations. There is also a clear public interest in preventing unreasonable interference with private property rights.”

The judge said both could be achieved using the guidelines under which the Forest Service had operated prior to the settlement.

Source: The Bradford Era

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