Energy Exploration in Pennsylvania Emerges Victorious

Energy Exploration in Pennsylvania Emerges Victorious

 William Perry Pendley

September 20, 2011 - DENVER - Energy operators in Pennsylvania celebrated today's decision by the U.S. Court of Appeals for the Third Circuit in Philadelphia that affirmed a ruling by a Pennsylvania federal district court (Minard Run Oil Company v. United States Forest Service, No. 10-1265, 3rd Cir. [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law]).

 In December 2009, the federal district court barred the U.S. Forest Service from implementing a settlement agreement with three environmental groups, prohibited the agency from conducting studies on the use of privately owned oil, gas, and mineral rights beneath the Allegheny National Forest (ANF), and lifted a moratorium by the agency on oil and gas drilling in the ANF.  Minard Run Oil Company and the Pennsylvania Independent Oil and Gas Association (PIOGA) won the ruling after the June 2009 filing of a lawsuit, a three-day hearing in Erie, Pennsylvania in August, and post-hearing briefs.  Both are represented by a legal team of Mountain States Legal Foundation (MSLF), the Washington, D.C., law firm of Crowell and Moring, and the Wolford Law Firm of Erie; they argued that the settlement agreement, following a 2008 lawsuit, to do National Environmental Policy Act (NEPA) studies, is illegal.

"We are pleased with the ruling by the three-judge panel; the judges understand that the illegal sweetheart deal we overturned upset thirty years of legal precedent," said William Perry Pendley, MSLF president.

The ANF, which covers 500,000 acres in Elk, Forest, McKean, and Warren Counties in northwestern Pennsylvania, comprises lands that were once privately owned and were purchased under the 1911 Weeks Act during the 1920s.  Because the United States bought only the surface estate, most of the mineral rights in the ANF are privately owned.  Thus, there is no contractual basis for any federal government regulatory authority over outstanding oil, gas, and mineral (OGM) rights in the ANF.

Although, under Pennsylvania law, owners of OGM estates have the right to go onto the surface to access their property and to use as much of the surface as necessary to remove it, the law provides for accommodation; therefore, OGM rights must be exercised with "due regard" for the interests of surface owners.  That the United States owns the surface does not change the law.  In accordance with the Forest Service Manual, the Forest Service has only limited rights as to the use of OGM rights within the ANF.  This was recognized by a Pennsylvania federal district court in a 1980 ruling.

For decades, the Forest Service adhered to the law and its policy and responded to an operator's 60-day notice of its plans with consultations and a notice to proceed.  A notice to proceed, however, is not a decision to allow oil and gas development because the Forest Service has no regulatory power over OGM rights.  In 2007, the Forest Service began to reverse this policy.

Mountain States Legal Foundation, founded in 1977, is a nonprofit, public-interest legal foundation dedicated to individual liberty, the right to own and use property, limited and ethical government, and the free enterprise system.  Its offices are in suburban Denver.

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