Property Rights Foundation of America®

Pennsylvania Oil and Gas Producers Plan to Sue U.S. Forest Service
Mineral Development in Allegheny National Forest Being Obstructed

Oil producers are fighting back. The first productive oil wells in the world were drilled in northwestern Pennsylvania long before the area was declared the Allegheny National Forest. In fact, some of the land that is now part of the National Forest was donated by the oil producers. But in recent years, environmental efforts have begun to obstruct the producers, who can trace their lineage in the Bradford oil field back to the infancy of oil production. As a result of environmental restrictions on logging and mineral resource production, the economy of the region around the Allegheny National Forest is being squeezed.

After the issuance of new Forest Service regulations in April, the handwriting on the wall became vivid. The new rules issued by the Forest Service would intolerably impede the continuing development of the oil and gas wells. The angry producers came to hearings in the region in full force to complain about the potential impact of the regulations.

On June 3, the local daily, The Bradford Era, announced the intention of the local oil and gas producers and their allies to go to federal court.

A photo taken a few years ago of the entrance to the Penn-Brad Oil Museum, Bradford, Pennsylvania, not far from the New York State border. In 1881, the Bradford Oil Field produced 83 percent of the oil output in the United States. Over 90,000 wells were drilled there for the high grade oil. The museum, which now has its own board of directors, houses a wealth of information, equipment, and artifacts on the "oil patch" and the history of oil drilling. Photo: Mike Miller

The plaintiffs are challenging an April 8 settlement the Forest Service made with the Sierra Club, Allegheny Defense Project, and Forest Service Employees for Environmental Ethics over the rights to drill and access mineral rights in the Allegheny Forest. The environmental groups had demanded in their November 8 lawsuit that the Forest Service utilize the National Environmental Policy Act (NEPA) to analyze each proposed oil and gas well in many areas of the Allegheny National Forest.

The Forest Service has never required public comment for developments by oil and gas producers. Application of NEPA would mean that an expensive, drawn out environmental analysis would be required, which includes public hearings and sets the stage for lawsuits by environmental groups if they do not agree with the decision following the hearings. This process is a standard tool with the professional environmental groups that intend to shut down an industry in a particular geographical area. A telling detail of the settlement was that the Forest Service agreed to pay the environmental groups' attorneys fees of $19,221.60.

The Pennsylvania Oil and Gas Association, Minard Run Oil Co., Allegheny Forest Alliance, and Warren County are bringing the suit against the Forest Service, Forest Service Chief Gail Kimbell, Regional Forester Kent Connaughton, Forest Supervisor Leanne Marten, U.S. Attorney General Eric Holder, Forest Service Employees for Environmental Ethics, Allegheny Defense Project, and the Sierra Club.

Official Hearings and Meetings.
U.S. Representative Glenn W. Thompson (R, Howard) pressed the cause of the Pennsylvania producers at a hearing in Washington, D.C., before the Subcommittee on Department Operations, Nutrition and Forestry of the House Agriculture Committee on June 3. He requested that Deputy Undersecretary for Natural Resources and the Environment Jay Jensen of the U.S. Department of Agriculture have the Forest Service "acknowledge that the economic downturn around the Allegheny National Forest was due to actions of the Forest Service in regards to oil and gas development and timbering," according to The Bradford Era. Rep. Thompson complained of a shift of priorities from timbering to climate change, water issues, and encouraging children to enjoy the outdoors since Gail Kimbell took over the Forest Service.

Back in April, Rep. Thompson's office had expressed dismay at what he called a one-sided settlement.

"When the ANF was created some 86 years ago, the federal government made a conscious decision to leave the subsurface mineral rights in the hands of the private sector," the representative's communications director Patrick Creighton had said at that time, according to The Bradford Era on April 10.

The mineral rights within the Allegheny National Forest are a severed estate, owned by the oil and gas producers, whereas the surface is owned by the Forest Service. When the federal government purchased the 513,000 acres that is the Allegheny National Forest in 1923, it left 93 percent of the mineral rights in the hands of private owners. The oil and gas production does not affect the rights owned by the National Forest. NEPA applies only to projects to be undertaken by the federal government, not projects to be undertaken privately.

When the settlement was announced, Ryan Talbott, the "forest watch coordinator" for the Allegheny Defense Project, said "This important acknowledgment signals a new direction for regulating oil and gas drilling on the Allegheny," according to The Bradford Era.

After the settlement, the Forest Service immediately came down hard on the private oil and gas producers. On April 14, one hundred people crowded into the University of Pittsburgh at Bradford to hear Allegheny National Forest Supervisor Leanne Marten announce new rules. Ms. Marten told the oil and gas producers, who dominated the audience, that they had to submit four years' of oil and gas development plans to the Forest Service by May 8. Of course this would be impossible for the eighty producers who can operate in the national forest, because developments depend on a number of future events that cannot be predicted, such as the price of oil.

The Forest Service will conduct a specific analysis of each proposed well, considering the characteristics of the particular site. For wells that are not part of the 54 development packages that are grandfathered under the 1986 Forest Plan rules because they were submitted before the settlement, the Forest Service will not make a decision until April 2010, after which there will be a 105-day administrative and appeals period, meaning that the earliest that any of the developments submitted by May 8 will be cleared to proceed is to be August 2010. The environmental analysis applies to the land surrounding each well, plus the access route, for a total of 1.3 acres, according to Ms. Marten.

However, at the hearing on June 2 at the University of Pittsburgh at Bradford, Harvey Golubock, president and chief operating officer of American Refining Group, pointed out the minimal potential impact of the drilling. According to the web edition of The Bradford Era on June 3, he said that even with the approximately 12,000 wells currently drilled in the Allegheny National Forest, only about three percent of the total forest is affected by drilling

State Representative Martin Causer (R, Turtlepoint) criticized the Forest Service for agreeing to terms that he said would have destructive effects on the region's economy. According to The Bradford Era on April 15, Ms. Marten said that the Forest Service was avoiding a "long, drawn-out costly legal battle." But Rep. Causer said, "The Forest Service is completely trampling the rights" of property owners.

Longtime oil producer Willard Cline of Bradford said at the June 3 hearing that only five companies submitted proposals and 75 others did not. He said, "It shows that what you are asking us to do is way out of proportion to what we can do," according to web edition of The Bradford Era on June 3.

Mr. Golubock of American Refining Group and Jack Hedlund of the Allegheny Forest Alliance urged that the Forest Service keep in mind the economic impact of their rules.

"I've spent the last twelve years building this refinery to a sustainable business when it was going to be shut down and torn down," Mr. Golubock said, according to the web edition of The Bradford Era on June 3. "And there may be people here that wish it were, but I can tell you there are 325 families that are dependent upon this refinery for their livelihood."

The threat posed by the new drilling rules was not in a vacuum. The Forest Service has drastically reduced the amount of timber cut from the Allegheny National Forest, which reduces payments to the localities that are part of the founding purposes of the national forest, to produce timber, from which revenues are paid to localities, and oil. At the hearing held by the House Republican Committee of the State Legislature on May 1 at the Warren Holiday Inn, Warren County Commissioner John Bortz criticized the Forest Service for failing to meet its allowable timber sale quantity at the Allegheny National Forest, according to the timesobserver.com the next day. He explained that the Forest Service's budget prevented it from meeting timber harvesting goals. State Representative Matt Gabler, one of the officials conducting the hearing, exclaimed, "How can the federal government say they can't afford to do something that is profitable?"

Historic oil well drilling derrick at the Penn-Brad Historical Oil Well Park, Bradford, Pennsylvania, near the Allegheny National Forest. Twenty-seven oil fields exist within The Allegheny National Forest, beginning with Tidioute, discovered in 1860. Photo: Mike Miller

Intimidation
In addition to the threat to their livelihoods and communities that they experienced as they were introduced to the new rules, the oil and gas producers felt that the Forest Service was trying to intimidate them, according to witnesses. At each of the hearings, the atmosphere had threatening overtones because armed members of the Forest Service were standing at guard. The Forest Service police were supplemented by armed university security personnel when the hearings were held at the University of Pittsburgh at Bradford.

Pennsylvania Oil and Gas Association director Craig Mayer testified to this outrage at the hearing held by the House Republican Policy Committee on May 1. According to the timesobserver.com, Mr. Mayer, who is a retired attorney, 1,500 jobs could be lost if oil and gas producers were not allowed to resume drilling in the Allegheny National Forest. As a Marine, he had studied military groups, he said, as he compared the Forest Service to a "nationalistic military group in a Third World country." He testified that the Forest Service was trying to intimidate the oil and gas producers and their families, including by showing up with side arms at public meetings about the new Forest Service rules.

The oil and gas industry and local government plaintiffs who announced their intention to challenge the Forest Service settlement are making a number of arguments. First, according to the report in The Bradford Era on June 2, the plaintiffs claim that the National Environmental Policy Act does not apply to their exercise of their mineral rights because their actions are taken by private companies which own the mineral rights to the land, not a federal agency.

In addition, under state law, the mineral rights are the dominant rights in a split estate, which means that the owners of the mineral right must be provided access to their resources.

Furthermore, Pennsylvania law provides for the due regard for the interests of surface owners such as the Forest Service, which gives these owners sixty days in which to work out their concerns about production. The Forest Service has complied with this rule. The system has been that the mineral rights owner submits a plan of operation to the Forest Service sixty days in advance, describing its intentions, such as forest clearing for roads and drill sites.

Congress upheld that system in the Energy Policy Act of 1992, which "conspicuously did not provide the Forest Service with regulatory approval authority over oil and gas development in the ANF," the lawsuit states, according to The Bradford Era. After the sixty-day review of the development plan by the Forest Service, the agency gives a notice to proceed, not a permit. However, the settlement would hold up the notice to proceed until after the lengthy environmental analysis.

It seems to this writer that the new procedure implementing the settlement would change the development of oil and gas rights in the Allegheny National Forest from a property right stemming from ownership of the mineral estate to a privilege, only to be exercised at the discretion of the Forest Service. - Carol W. LaGrasse

Appreciation is extended to Thomas A. Miller, member of the board of directors of Pennsylvania Independent Oil Producers, for his research for this article.

A typical present-day oil well in the Allegheny National Forest. This well is one of about 12,000 drilled in the Allegheny National Forest.
Photo: Mike Miller

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© 2009 Carol W. LaGrasse
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