Fracking rule may see jumbled comeback as court tosses case

By Ellen M. Gilmer | 09/22/2017 07:00 AM EDT

Confusion and mixed messages dominated the conversation yesterday as court watchers unpacked a major ruling on the Obama administration’s embattled hydraulic fracturing rule.

A drilling rig sits on public land in New Mexico.

A drilling rig sits on public land in New Mexico. Ellen M. Gilmer/E&E News

This story was updated at 9:31 a.m. EDT.

Confusion and mixed messages dominated the conversation yesterday as court watchers unpacked a major ruling on the Obama administration’s embattled hydraulic fracturing rule.

The 10th U.S. Circuit Court of Appeals dismissed litigation over the Interior Department’s fracking rule without directly weighing the core legal question of whether the federal government has authority over the oil and gas extraction process.


But the panel of judges also scrapped a lower court’s 2016 ruling that struck down the regulation, clearing the way for the rule to take effect — however briefly — even as the Trump administration works to rescind it. The court has not yet issued a final mandate in the case, and the rule won’t be revived until then.

Supporters and opponents of the fracking rule pushed dueling messages in the wake of the decision yesterday, each declaring victory.

Environmental groups celebrated the revival of the rule, claiming vindication after a yearslong legal battle (E&E News PM, Sept. 21). Sierra Club attorney Nathan Matthews said the ruling "reinstates much-needed protections."

Industry groups, meanwhile, cheered the 10th Circuit’s conclusion that it would be a waste of the court’s resources to answer the underlying legal question of fracking authority.

"Today’s court decision confirms what IPAA has advocated all along: Dismissing the appeal would protect independent producers from the uncertainty of whether it was necessary to comply with regulations that are certain to be revoked," Independent Petroleum Association of America President Barry Russell said.

But the legal tug of war is likely far from over.

The Trump administration, backed by industry and several Western states, is expected to move quickly to block implementation of the fracking rule. Any such effort by Interior’s Bureau of Land Management will face legal pushback from environmentalists that have defended the standards since their unveiling more than two years ago.

New litigation will likely follow any attempt by the Trump administration to avoid implementing the rule. And separate lawsuits are expected once Interior finalizes its official rescission of the rule.

The 10th Circuit’s judgment doesn’t officially take effect until the court issues a mandate. For cases involving the U.S. government, courts have 52 days after a ruling to issue the mandate. That would give the Trump administration until mid-November to delay the regulation or finalize its rescission before having to implement it.

In a statement this morning, Interior said, "We are expeditiously working on a new rule that will fulfill the President’s and Secretary’s vision of good jobs for hardworking American families and are continuing to take comments on the proposed rescission of the 2015 hydraulic fracturing rule."

The fallout

Widespread uncertainty over what the court’s ruling means and what happens next stems from procedural and timing complexities in the litigation. The Obama administration released the regulation in March 2015, but a Wyoming district court quickly blocked it and ultimately found that Interior has no authority over fracking. The rule has never taken effect.

The Obama administration and environmental groups appealed the Wyoming decision to the 10th Circuit, but while the case was pending, President Trump took office, and the new administration announced plans to roll back the rule. Trump lawyers urged the court to freeze the case in light of the rescission plans.

Instead, the court scrapped the case entirely and nixed the underlying Wyoming decision — putting pressure on the Trump administration to take quick action on its rollback plans. The opinion noted that it’s unclear how much time BLM will need to complete its proposal to rescind the fracking rule.

"Here, the BLM stated at our very recent oral argument that the 60 day notice and comment period could be extended, to say nothing of how many additional months or years would be needed to issue a final rule rescinding the regulation," wrote Judge Mary Beck Briscoe, a Clinton appointee.

Judge Jerome Holmes, a George W. Bush appointee, joined the opinion. Judge Harris Hartz, another Bush appointee, joined in the determination that the court should dismiss the case but opposed scrapping the lower court’s decision.

Vacating the Wyoming decision means there is no legal mechanism in place to stop the fracking rule from taking effect. Earthjustice attorney Mike Freeman, who argued the case for a coalition of environmental groups, said the bottom line of the decision is that the government’s authority to regulate fracking is no longer in question.

"We’re happy that the court reached the result it did," he told E&E News. "Vacating the lower court’s decision takes us back to the legal status quo before the [Wyoming] court’s ruling, which was that there’s a century of case law and precedent that makes clear that BLM has the authority to do what it did here."

Freeman added that the environmental community is eager to see the fracking rule finally take effect.

Other lawyers in the case expressed uncertainty over whether the court intended to revive the fracking rule, noting that the opinion includes language that seems to contemplate a continued "status quo" that does not include the regulation.

"The only ‘harm’ the Citizen Group Intervenors will suffer is the continued operation of oil and gas development on federal lands, which represents no departure from the status quo since 2015," the opinion says.

Hartz’s partial dissent included the most explicit acknowledgement of the immediate implications of the court’s decision, noting that the majority was "giving effect to the Regulation." Hartz parted from his colleagues, arguing that the panel lacked sufficient information to do that.

Kathleen Sgamma, president of the industry group Western Energy Alliance, dismissed the uncertainty over the rule’s status as "technicalities" that will be worked out quickly.

"We’re pleased that after today, IPAA and Western Energy Alliance are even closer to finally putting BLM’s ill-conceived fracking rule to bed," she said in a statement. "As with the royalty valuation rule that was recently completely rescinded, there are some technicalities to work through in the short term, but just as the court recognizes that it is not worthwhile to expend judicial resources on a rule that is being overturned, it is clear that implementing the rule in the short term is likewise a waste of industry and government resources."

For BLM’s Obama-era valuation rule, a federal court ruled that the Trump administration was unlawful in its attempt to freeze the rule, but the court declined to take further action in light of the agency’s recently finalized rescission of the rule (Greenwire, Aug. 31).

The Trump administration is in the middle of its effort to unwind the fracking rule. BLM released a proposal to rescind it in July. Public comments are due next week, and the agency will then reach a final decision. It is unclear whether BLM plans to eventually replace any elements of the rule.

An unpredictable path

Yesterday’s decision is the latest twist in the unpredictable path of the Obama administration’s fracking rule.

The years-in-the-making rule — President Obama’s marquee effort to address concerns about the spread of high-volume fracking — was released in March 2015 and created a federal approval process for fracking on public and tribal lands. The rule set new standards for well construction, wastewater management and chemical disclosure for fracked wells.

It immediately faced legal challenges from industry groups, several Western states and American Indian tribes that saw it as an overly expensive and unworkable regulatory overreach. Wyoming and other states argued that it was beyond BLM’s authority because the Safe Drinking Water Act put EPA in charge of fracking, and the Energy Policy Act of 2005 subsequently assigned that power to state overseers.

The U.S. District Court for the District of Wyoming promptly blocked the rule and eventually accepted the states’ argument that the federal government lacks authority to regulate fracking.

The Trump administration has walked a fine line in legal briefs, defending its authority over fracking even as it seeks to scrap the regulation. Government lawyers urged the court to freeze the case while that rescission process plays out.

The 10th Circuit heard oral arguments in Denver in July (Energywire, July 28).