Court strikes down drilling moratorium

Date: September 21, 2011
Posted In: DLP Law


The oil and gas development industry has won against an appeal filed by the U.S. Forest Service in regard to drilling on the Allegheny National Forest.

Article was orginally published in the September 21, Times Observer.

The oil and gas development industry has won against an appeal filed by the U.S. Forest Service in regard to drilling on the Allegheny National Forest.

The U.S. 3rd Circuit Court of Appeals in Philadelphia issued a decision on Tuesday that upholds an injunction put in place in December 2009 by U.S. District Court Judge Sean McLaughlin.

“We affirm the preliminary injunction entered by the District Court against appellants,” Judges Julio Fuentes, Michael Chagares and Jane Richards Roth wrote in their decision on the case. “In sum, the Service does not have the broad authority it claims over private mineral rights owners’ access to surface lands. Its special use regulations do not apply to outstanding rights and the limited regulatory scheme applicable to the vast majority of reserved rights in the ANF does not impose a permit requirement.”

For the most part, the Forest Service owns only the surface rights on the forest. Private owners hold more than 90 percent of the subsurface mineral rights.

“Although the Service is entitled to notice from owners of these mineral rights prior to surface access, and may request and negotiate accommodation of its state-law right to due regard, its approval is not required for surface access,” they wrote. “An NTP (Notice to Proceed) is an acknowledgment that memorializes any agreements between the Service and a mineral rights owner, but it is not a permit. Accordingly, on the record before it, the District Court properly concluded that issuance of an NTP is not a ‘major federal action’ under NEPA and an EIS need not be completed prior to issuing an NTP.”

McLaughlin’s ruling was against a Forest Service “moratorium” on drilling in the forest.

The stoppage was based on a settlement agreement between the Forest Service and environmental groups that had filed a previous suit. According to the settlement, the Forest Service would implement the appropriate level of analysis under the National Environmental Policy Act (NEPA) before approving any new drilling proposals.

A forest-wide environmental impact statement (EIS) was deemed a necessary part of NEPA analysis by the Forest Service before individual drilling proposals could be evaluated. Development companies argued that such a study would take multiple years to complete.

“The indefinite suspension of NTPs for several years goes far beyond the type of delay contemplated…” in previous rulings, the appeals court judges wrote.

Also, the act that allowed the government to purchase the land that is now the national forest worked against the Forest Service, according to the judges. “The language of the Weeks Act indicates that… the Service is bound by the terms of outstanding rights and cannot simply invoke its regulatory authority to override any private use of outstanding rights that it considers inconsistent with the purposes of the Weeks Act.”

Similarly, state law did not uphold the Forest Service’s position, according to the judges. “Pennsylvania law is flatly inconsistent with the authority asserted by the Service,” they wrote in the decision. “In a case very similar to this one, the Pennsylvania Supreme Court rejected a claim by the Pennsylvania Department of Conservation and Natural Resources that, as surface owner, it could ‘impose conditions restraining those exercising their rights to the subsurface.’ The Court explicitly held that a surface owner has no right to determine what constitutes reasonable use in the first instance, and a mineral rights owner is under no obligation to obtain the surface owner’s approval prior to accessing the surface to extract mineral rights.

Part of the court’s explanation of how the Forest Service policy would cause irreparable harm was that a delay in drilling operations on the national forest would allow companies drilling on nearby land on which drilling was permitted to capture oil and gas from a “single reservoir lying beneath adjoining lands.”

“The adjoining owner’s only remedy against such drainage is to ‘go and do likewise,'” the judges wrote. “The Service’s moratorium on new drilling deprives mineral owners in the ANF of this remedy and will cause them to lose oil and gas to other landowners drilling on private lands adjoining the ANF.”

Finally, the court ruled that “the balance of the equities and public interest” did not sway their decision to the Forest Service.

“While the Service has an important statutory duty to protect and maintain the natural resources of the ANF…” McLaughlin’s injunction did not prevent it from doing so, they wrote. “The District Court noted that the Service had successfully completed an EIS in 1986 without imposing a moratorium on new drilling… also conceded that this framework had adequately protected its interest in preserving the environmental resources of the ANF.”

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Joe Price
Attorney Joe Price is a seasoned Trial Lawyer serving Northeast, Central and Southeast Pennsylvania for the past forty (40) years. He has handled serious personal injury cases in courts throughout the Federal system including New Jersey and New York. Attorney Price is A.V. Rated by Martindale Hubble. He is Board Certified in Civil Practice by the National Board of Trial Advocacy since 1996.