Energy outfits in Pennsylvania, after winning at the U.S. Court of Appeals for the Third Circuit in Philadelphia in September 2011, which upheld a December 2009 ruling by a Pennsylvania federal district court regarding their property rights, and then prevailing at the district court in September 2012, today defended their victories at the Third Circuit against three environmental groups. The energy operators sued the U.S. Forest Service for settling the groups’ lawsuit. In a 2009 ruling, the district court barred the agency from implementing its settlement agreement, prohibited it from doing studies on the use of privately owned oil, gas, and mineral rights beneath the Allegheny National Forest (ANF), and lifted the moratorium on oil and gas drilling in the ANF. The district court converted its preliminary injunction into a final declaratory judgment in 2012. Minard Run Oil Company and the Pennsylvania Independent Oil and Gas Association are represented by Mountain States Legal Foundation (MSLF), the District of Columbia law firm of Crowell & Moring, and the Wolford Law Firm of Erie. MSLF Vice President Steven J. Lechner appeared for the oral arguments.
“As one of the three-judge panel said in arguments, the court’s earlier holding could not be ‘clearer’,” 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.
Minard Run Oil Company v. United States Forest Service, No. 10-1265 (3rd Cir.)