Pa. Oil & Gas Ass'n v. U.S. Forest Serv., Civil Action No. 1:08-cv-0162 Erie

CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
Writing for the CourtMark R. Hornak
Docket NumberCivil Action No. 1:08-cv-0162 Erie
Decision Date21 February 2014


Civil Action No. 1:08-cv-0162 Erie


Dated: February 21, 2014

Judge Mark R. Hornak


Mark R. Hornak, United States District Judge

This case represents the latest skirmish in a sprawling series of litigation between the United States Forest Service ("Forest Service") and private owners of mineral and gas reserves located within the Allegheny National Forest ("ANF"). In the instant action, the Pennsylvania Independent Oil and Gas Association ("PIOGA") and the Allegheny Forest Alliance ("AFA") contend that the 2007 Revised Land and Resource Management Plan ("2007 Plan") for the ANF must be vacated because it violates the National Environmental Policy Act, 42 U.S.C. § 4321 et seq. ("NEPA"), the National Forest Management Act, 16 U.S.C. § 1600 et seq. ("NFMA"), and the Administrative Procedure Act, 5 U.S.C. § 551 et seq. ("APA"). For the reasons set forth below, the action will be dismissed without prejudice for want of live justiciable case or controversy.

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Plaintiffs instituted this action by way of a complaint filed on May 27, 2008, naming the Forest Service, the Deputy Chief of the United States Forest Service, and the Regional Forester of the Eastern Region of the United States Forest Service as defendants.1 ECF No. 1. At that time, the Forest Service, supported by environmental groups such as the Sierra Club and the Forest Service Employees for Environmental Ethics ("FSEEE"), was attempting to significantly alter the procedures through which owners of private mineral and gas interests in the ANF access and extract those resources. This is one of several actions filed by private oil and gas companies challenging those changes.2

By way of background, over 93% of the mineral estates in the ANF are privately owned. See Minard Run Oil Co. v. U.S. Forest Service, 670 F.3d 236, 243 (3rd Cir. 2011) ("Minard Run III"). Prior to 2008, access to private oil and gas holdings within the ANF traditionally occurred as the result of a cooperative process known as the "Minard Run framework," derived from the district court's decision in United States v. Minard Run, 1980 U.S. Dist. Lexis 9570 (W.D. Pa. 1980). Pursuant to this framework, oil and gas drillers were required to supply the Forest Service with detailed notice concerning proposed drilling activities at least 60 days before commencing drilling operations. Minard Run III, 670 F.3d at 244 (describing the mechanics of the so-called "Minard Run framework"). This notice period provided the Forest Service with an opportunity to review the drilling proposal and request any modifications or revisions that it

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deemed necessary in order to protect the integrity of the surface estate. The parties would then enter into cooperative negotiations to address and mitigate any potentially unnecessary or harmful surface use. Id. Once an agreement was reached, the Forest Service would issue a document styled a "Notice to Proceed" ("NTP") to confirm that the driller had given proper notice and memorialize any agreements between the parties concerning the proposed drilling operation. Id. This cooperative framework "governed relations between drillers and the Forest Service from 1980 until approximately 2009." Id. at 245.

On November 20, 2008, several environmental groups filed an action against the Forest Service seeking a declaration that the practice of issuing NTPs without first conducting an appropriate environmental review was contrary to NEPA. See FSEEE v. U.S. Forest Service, 2009 WL 1324154 (W.D. Pa. May 12, 2009). In early 2009, the Forest Service settled the action by agreeing to "undertake appropriate NEPA analysis prior to issuing Notices to Proceed, or any other instrument authorizing access to and surface occupancy of the Forest for oil and gas projects on split estates . . ." Minard Run III, 670 F.3d at 245. In support of this change in policy, the Forest Service took the new position that the issuance of an NTP was a "major federal action" subject to NEPA because "mineral rights owners were required to obtain an NTP prior to making any changes to land in the ANF." Id. at 245-46 (emphasis added).

Private mineral owners promptly challenged the settlement agreement in federal court, contending that an NTP is an informal document, rather than a mandatory precondition to the exercise of oil and gas rights, and maintaining that the Forest Service lacked sufficient regulatory authority over the dominant mineral estate to restrict or bar drilling activities for the length of time required to complete the proposed environmental analysis. See Minard Run Oil Co. v. U.S. Forest Service, 2009 WL 4937785 (W.D. Pa. Dec. 15, 2009) ("Minard Run II"). On December

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15, 2009, Judge Sean J. McLaughlin granted the plaintiffs' request for a preliminary injunction and enjoined the Forest Service from "requiring the preparation of a NEPA document as a precondition to the exercise of private oil and gas rights in the ANF." Id. Following an appeal, the Third Circuit affirmed Judge McLaughlin's injunction order in its entirety, agreeing that the Forest Service "[did] not have the broad authority it claim[ed] over private mineral rights owners' access to surface lands." Minard Run III, 670 F.3d at 254. The preliminary injunction was subsequently converted into a final declaratory judgment on the merits and, following another appeal, the Third Circuit again affirmed. See Minard Run Oil Co. v. U.S. Forest Service, 894 F.Supp.2d 642, 654 (W.D. Pa. 2012) ("Minard Run IV"), aff'd, 2013 WL 5357066 (3rd Cir. 2013) ("Minard Run V").

While Minard Run II was winding its way through the federal courts, the Forest Service was concurrently engaged in the process of revising the 1986 Allegheny National Forest Plan ("1986 Plan").3 Throughout the time that the 1986 Plan was in effect, the Forest Service had uniformly adhered to the cooperative management approach embodied in the original Minard Run framework. A preliminary draft of the revised forest plan issued by the Forest Service in 2006 was consistent with this long-standing approach. AR 11266, 12080. However, when the Final Environmental Impact Statement ("FEIS") and Record of Decision ("ROD") for the 2007 Plan was approved by the Regional Forester on February 2, 2007, it contained several new measures and design criteria intended to restrict and regulate private oil and gas development in the ANF. AR 12816. As a result of these changes, Plaintiffs administratively appealed the 2007

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Plan, arguing that the new criteria had been inserted without any opportunity for public comment and that the Forest Service lacked the regulatory authority to implement the proposed restrictions on the extraction of privately owned minerals. AR 8125-8136. By way of relief, Plaintiffs requested, inter alia, that the challenged design criteria be stricken from the 2007 Plan and that "the 1986 Plan be reinstated as the Forest Service plan with respect to oil and gas development in the ANF." AR 8132-8133.

On February 15, 2008, the Chief of the Forest Service issued an appellate decision in which he affirmed and finalized the 2007 Plan, but agreed with Plaintiffs that the FEIS and ROD contained procedural violations with respect to the new oil and gas criteria. AR at 4803-4806. The Chief issued three mandatory instructions designed to address those deficiencies:

Instruction 1:
I find the public was not provided the opportunity to comment on substantial changes made to the design criteria as it applies to private oil and gas development (OGD). The application of all forest-wide standards to private OGD was a change from the preliminary Land and Resources Management Plan (LRMP). Further, the design criteria specific to private OGD in Section 2800 was changed. These changes occurred between the Draft Environmental Impact Statement (DEIS) and the FEIS. This does not fully comply with 40 CFR 1502.9(c)(1). I instruct you to provide the public the opportunity to comment on these changes in accordance with FSH 1909.15, Chapter 18.2. Until that time, applying the use of the Revised Plan design criteria to private OGD is suspended. During that time, in order to carry out our surface management responsibilities, I expect you to follow the site-specific authority as provided in the 1986 ANF Plan to administer private OGD.
* * * * * * * *
Instruction 2:
Based upon my review of the appeal record, I instruct you to incorporate language in the ROD, Revised Plan and FEIS to clarify the Allegheny NF's authority to manage oil and gas activities. This includes:

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Identifying the roles and responsibilities of the Forest Service, State of Pennsylvania and the private oil and gas operator for the purpose of protection of surface resources from oil and gas development.
Distinguishing between reserved and outstanding rights and how the management of these two distinct private mineral estates may vary depending upon language in individual deeds and/or the USDA Secretary's rules and regulations.
Reviewing and clarifying, where appropriate, the process identified in FEIS Appendix F (p, F-5).
* * * * * * * *
Instruction 3:
I find that the disclosure of cumulative effects of OGD on Allegheny NF air quality as well as impacts to regional air quality

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