The Third Circuit Court of Appeals has determined that the U.S. Forest Service (Service) lacks the authority to impose a moratorium on oil and gas drilling in Pennsylvania’s Allegheny National Forest. Minard Run Oil Co. v. U.S. Forest Serv., Nos. 10-1265 and -2332. (3d Cir. 9/20/11). So ruling, the court affirmed the district court’s preliminary injunction enjoining the Service’s temporary ban on drilling in the forest pending the issuance of a multi-year, forest-wide environmental impact study (EIS ) under NEP A. The ban was the result of a settlement agreement the Service reached with environmental groups.

Mineral owners and related businesses affected by the ban, which effectively imposed a moratorium on new drilling, sought the injunction. The district court issued it after determining that the settlement resulted in a “sea change” in the Service’s policy, thus constituting “final agency action” that required the Administrative Procedure Act’s (APA’s) notice and comment procedures.  

The Service appealed, arguing that the district court lacked jurisdiction because there was no final agency action, but merely a change in policy that did not require an APA process. The appeals court held that the Service did not have broad authority over private mineral rights owners’ access to surface lands and that the ban on drilling pending completion of an EIS was a major action that has legal consequences for mineral rights owners—“they must stop all new drilling or face criminal penalties.” It therefore required public participation rulemaking under the APA.