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 Rhoades, executive director 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.