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U.S. Forest Service Not In Contempt, Pennsylvania Federal Judge Rules

By William Perry Pendley

DENVER - A Pennsylvania federal district court on March 23 denied a motion by energy operators in Pennsylvania to hold the U.S. Forest Service in contempt of the district court's December 2009 ruling that requires the agency to process oil and gas lease development proposals in accordance with that ruling (Minard Run Oil Company v. United States Forest Service, No. 10-1265, 3rd Cir.).

In its 2009 ruling, the court barred the agency from implementing a settlement agreement with three environmental groups, prohibited it from conducting studies on the use of privately owned oil, gas, and mineral rights beneath the Allegheny National Forest (ANF), and lifted an agency moratorium on energy drilling in the ANF. Minard Run Oil Company and the Pennsylvania Independent Oil and Gas Association (PIOGA), which won the ruling, argue that the Forest Service has refused to adhere to the ruling and bars development of energy in the ANF. Both are represented by a legal team of Mountain States Legal Foundation (MSLF), the Washington, DC, law firm of Crowell and Moring, and the Wolford Law Firm of Erie. The district court held that the companies had not met the very high standard of presenting "clear and convincing evidence" of civil contempt.

"We are disappointed but believe the court's warning to the agency that compliance is required is helpful," said William Perry Pendley of MSLF.

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, Colorado.

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