FOREST SERVICE:

As energy projects multiply, agency considers new regulations

In a sharp break from the past, the Forest Service is getting ready to write regulations for private drilling and mining operations in national forests.

The move comes as tensions grow in Eastern forests where the government owns above-ground resources but not rights to those below. Increasingly, companies are moving to tap oil and gas beneath the forest floor.

Environmentalists say the Forest Service has failed to apply environmental restrictions on road building and drilling on public lands. Industry counters by saying it has worked well with the agency for years and no changes in that relationship are needed. In fact, industry maintains that the Forest Service has no authority to write new rules.

The flashpoint: Allegheny National Forest in Pennsylvania, where at least four lawsuits are pending.

On Dec. 29, 2008, the Forest Service published a notice in the Federal Register saying it was "preparing to promulgate regulations to provide clarity and direction on the management of National Forest System surface resources when the mineral estate is privately held."

The notice said the rulemaking would also specifically address Allegheny, which has seen an exploration boom in the past two years as companies rush to drill the prolific Marcellus Shale (Land Letter, Feb. 12).

The agency was not proposing specific approaches, the notice said, but rather calling for public comment to help determine the extent and scope of the rulemaking. How the service ultimately acted would depend on the comments, court decisions and "practical options" using administrative tools, the notice said.

The comment period ended Feb. 27 but will be reopened. The Forest Service wanted to extend the period for 30 days but missed getting the necessary paperwork to the Federal Register on time, said Tony Ferguson, the agency's director for minerals and geology. But within a week, the agency will open another 30-day comment period.

Much confusion surrounds minerals rights in national forests, Ferguson said, and the regulations would address a whole series of issues and questions. "I can't really say what the complete next step will be," he said. "What we anticipate to do is to move forward with a rulemaking. A lot of it depends on the comments and analysis of the comments."

'A remarkably poor policy'

The Sierra Club last month submitted comments urging the Forest Service to more aggressively regulate oil and gas drilling through a new permitting system that requires environmental assessment of all drilling impacts, protection for forest habitats and wildlife and swift cleanups after work is done. The group also wants assurances that the public is an integral part of the decision-making process.

The group has also filed a lawsuit over the Allegheny situation, saying the Forest Service violated the National Environmental Policy Act by allowing development without an environmental analysis. Sierra Club officials say that Allegheny, in particular, needs better management because oil and gas companies own subsurface rights under more than 90 percent of the forest and that unregulated drilling threatens habitat and is damaging a popular tourist destination.

Public Employees for Environmental Responsibility (PEER) also filed comments calling for new regulations. "USFS has not imposed the slightest protection for its most ecologically sensitive lands or wildlife from damaging extraction operations," the group wrote. "This posture is both contrary to law and constitutes a remarkably poor policy choice for a federal resource agency."

The group added, "In essence, the Forest Service has had its head in the sand for the last generation. Unless it updates its approach, a federal court will step in to do the job for the agency."

Jeff Ruch, PEER's executive director, said the Forest Service has not dealt with the problems until now, when it has been forced to by the lawsuits. "In essence, it's going to be dropped in a tangled mess on the desk of whoever the next Forest Service chief is," Ruch said.

"The Forest Service, in contrast to its Interior sister agencies, has taken the position since the Reagan administration that private mineral rights trump all environmental laws, so the Endangered Species Act doesn't apply, NEPA doesn't apply," he added. "And you've had situations ... where the oil and gas company comes in and says, 'We're going to do the following things, and you can't stop us.'"

The group cited a confidential memo it obtained that was written by the Interior solicitor's office last year. The memo advised that the Forest Service had come to an "incorrect" conclusion in determining that an energy company wanting to put a gas well and access road in the Monongahela National Forest in West Virginia would not trigger NEPA or Endangered Species Act requirements, and that the Forest Service could impose "reasonable conditions and mitigation measures."

Ruch also noted that private mineral holdings exist even under wilderness areas and experimental forests. "You've got decades of field work that's going to be lost in order to satisfy the extraction interests," he said.

No legal basis?

But Steve Rhoads, president of the Pennsylvania Oil & Gas Association, filed comments disputing the Forest Service's right to establish new regulations.

"We basically said we don't think there's a need for new rules," he said. "They don't have the statutory authority to write new rules."

Rhoads cited the 1911 Weeks Act, which authorized federal purchase of forest lands in the headwaters of navigable streams, allowing many Eastern forests to be acquired.

The law "had provisions that state explicitly that the only regulatory authority that the Forest Service would have over underlying severed minerals are the regulations that are contained within the deeds for the property the Forest Service acquired," Rhoads said.

"In other words, if there's not provisions within the deed of acquisition of the surface to regulate the underlying minerals, then the Forest Service doesn't have the authority to do anything else."

Rhoads said the Forest Service is a co-owner of the property and shares the right of access to the surface. "Neither party has the ability to dictate to the other how the other party operates within those boundaries," he said. "We do have a joint responsibility to honor and respect each other's right."

Asked about the agency's legal ability to make new rules, the Forest Service's Ferguson said he couldn't comment because of ongoing litigation.

Rhoads also disputed that the Forest Service is proposing the regulations as a response to litigation. He said the problems began when the agency revised the Allegheny forest plan in 2007 with new design standards that "in effect require permit requirements on the use of the surface."

Historically, companies and the Forest Service "have gotten along rather well," he said. A company would inform the agency of development plans, and the Forest Service would review the properties. If an issue arose, there was an "open dialogue" to solve the problem, he added.

"It was a relationship of cooperation," Rhoads said. "With the new design criteria and standards that are written into the latest version of the plan, the Forest Service appears to have decided it no longer wants to act in a cooperative relationship, but rather, it wants regulatory control over the underlying minerals. This is a unilateral and arbitrary action by the Forest Service to essentially take control of underlying mineral rights."

But when it comes to the group's submitted comments opposing new regulations, Rhoads said, "We fully expect the Forest Service to ignore us."