Federal Court rejects PIOGA’s Contempt Motion – But Cautions Forest Service

In July 2011, PIOGA filed a motion in the U.S. District Court for the Western District of Pennsylvania seeking to hold the United States Forest Service in contempt of court for allegedly failing to adhere to the Court’s December 2009 preliminary injunction order in the Minard Run, et al. v. United States Forest Service, et al. litigation. That order prevented the Forest Service from requiring mineral owners to prepare a NEPA document before the development of oil and gas rights in the Allegheny Forest. It also required the parties to revert to a drilling proposal process that they had used from 1980 until the litigation began in 2009.

PIOGA alleged (on behalf of member company SWEPI), that since the order, the Forest Service had (1) refused to allow SWEPI to utilize groundwater located on Allegheny National Forest lands and (2) engaged in “a pattern of unwarranted and increasing delays” before issuing notices to proceed for development of split estates. The Court rejected PIOGA’s motion, holding that it had failed to present the requisite “clear and convincing evidence” of civil contempt. While the Court expressed concern about the “evidence to suggest that delay has replaced diligence as the hallmark of the Forest Service’s processing of drilling proposals,” it also noted that in a few instances, certain delays – such as failure to sign a timber contract, failure to stake the location of a well or failure to apply for the requisite permits – were actually caused by the mineral owners rather than the Forest Service. Thus, PIOGA failed to carry its burden of proof that the Forest Service has contemporaneously violated the preliminary injunction order. The Court also denied PIOGA’s motion with respect to SWEPI’s proposed groundwater use on the grounds that the underlying preliminary injunction order “did not address or consider any issues relative to groundwater…”
Despite the Court’s rejection of PIOGA’s motion, the Court reminded the Forest Service that the 2009 directive to revert to the prior drilling proposal process was not “an aspirational goal” but a requirement. Should the process be met with unreasonable delay on the part of the Forest Service, the mineral owners would have the right to commence drilling activities before the completion of the process.