A federal judge in Erie, PA, last week said the U.S. Forest Service had overstepped its authority earlier this year when it settled with environmental groups and took more control over the development of privately owned natural gas and oil rights in the Allegheny National Forest.

The federal government owns the surface land in the Allegheny National Forest, which is Pennsylvania’s only national forest, but 93% of the underlying oil, gas and mineral rights are privately owned. With the advent of new technology to access shale gas deposits, the Marcellus Shale region has become a top drilling destination. More than 12,000 wells are operating in the forest; 984 wells were drilled in 2008 and 1,300 were drilled in 2007.

Last year the Forest Service Employees for Environmental Ethics group, Allegheny Defense Project and Sierra Club filed a lawsuit against the Forest Service for failing to comply with the National Environmental Policy Act (NEPA) before approving private drill wells in the national forest.

The lawsuit, filed in U.S. District Court for the Western District of Pennsylvania (No. 1:08-cv-323-SJM), argued that the Forest Service had to comply with NEPA and prepare appropriate environmental analyses, subject to public comment, before allowing drillers to build roads and drill well sites in the forest.

In April the opposing parties settled, and the Forest Service agreed to “undertake appropriate NEPA analysis” before authorizing “access to and surface occupancy of the forest for oil and gas projects on split estates including both reserved and outstanding mineral rights.” The NEPA analysis was to consist of “a categorical exclusion or the preparation of an Environmental Assessment or an Environmental Impact Statement (EIS).”

Under the settlement agreement, 54 leaseholds covering 588 oil and gas wells, one pipeline and one seismic line in the national forest were allowed to move forward without a NEPA analysis. However, hundreds of drilling plans then were put on hold pending a NEPA analysis.

The Pennsylvania Oil and Gas Association, known as POGAM, and the Allegheny Forest Alliance filed an emergency motion to stay the settlement just days before the settlement agreement was reached (No. 08-323 Erie). At that time Judge Sean J. McLaughlin denied POGAM’s motion and dismissed the lawsuit.

The Forest Service in June then proceeded to publish a Notice of Intent in the Federal Register to prepare a Forest-Wide Oil and Gas Development Transition EIS for Allegheny National Forest to analyze all proposed developments between now and 2013 (see Daily GPI, June 11).

A new lawsuit followed by POGAM, Minard Run Oil Co., Allegheny Forest Alliance and Warren County, PA, which claimed that the Forest Service had overstepped its authority by requiring environmental analyses to be done in the national forest.

Last week McLaughlin agreed, and he overturned the April agreement in his 53-page ruling. Among other things McLaughlin said the Forest Service can’t require a NEPA review before drillers are allowed to access their mineral rights beneath the forest.

A Forest Service spokesperson told NGI on Monday that the government agency has not made a decision on whether to appeal McLaughlin’s ruling. The spokesperson added that the effect of McLaughlin’s latest decision remains to be seen. Drilling work has continued on the 588 wells allowed in the April settlement agreement.

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