LAW

Court delays federal fracking rule

The Obama administration's long-awaited hydraulic fracturing rule will not take effect as scheduled today, thanks to a federal judge's eleventh-hour decision to stay the rule until August.

Judge Scott Skavdahl, of the U.S. District Court for the District of Wyoming, issued the decision after more than six hours of courtroom arguments yesterday in Casper, where attorneys representing the oil and gas industry and affected states pushed for a preliminary injunction of the rule.

Skavdahl declined to issue an injunction but ordered that the rule's rollout be delayed until the Bureau of Land Management files its administrative record in the case and both sides explain how the record supports their arguments.

The administrative record -- essentially a paper trail showing the agency's decisionmaking process in crafting the rule -- is due in July. Attorneys for industry, states, environmental groups and the government will then comb through the documents and cite support for their arguments for or against injunction.

The court is expected to issue a decision in August. Unlike the judge's temporary stay of the regulation, a preliminary injunction would block the rule for the duration of the trial.

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Industry groups took a victory lap last night, arguing that Skavdahl's decision supports their position that the rule would do more harm than good.

"BLM was ill-prepared to implement an extremely complex rule in a short period of time," said Western Energy Alliance's Kathleen Sgamma in a statement. "We highlighted how the BLM Washington Office has not given sufficient guidance to the state and field offices that are implementing the rule, and as a result they were issuing confused instructions to companies on how to comply."

Environmental groups that have taken BLM's side in the case noted that the bigger decision on preliminary injunction is still pending.

In the meantime, the agency will process permit applications using existing criteria.

"While the matter is being resolved, the BLM will follow the court's order and will continue to process applications for permit to drill and inspect well sites under its pre-existing regulations," the agency said in a statement.

Ballooning litigation

Litigation over the stricter fracking standards has ballooned since the rule's unveiling in March. The Independent Petroleum Association of America and Western Energy Alliance fired the first shot, filing suit immediately after the rule's release. Wyoming was quick on industry's heels, and North Dakota joined the Cowboy State's suit soon after.

Since then, Colorado and Utah have joined the consolidated litigation in Wyoming, and a coalition of environmental groups has intervened on the government's side. The Southern Ute Indian Tribe has also filed suit in federal court in Colorado.

The lawsuits allege that the rule, which regulates well construction, wastewater management and chemical disclosure for fracked wells on public and tribal lands, steps on states' regulatory turf and prevents drillers from doing business.

In arguments supporting their injunction request, attorneys for Wyoming and Colorado argued that Interior's Bureau of Land Management exceeded its authority in drafting the fracking rule. They say Congress used the Safe Drinking Water Act and Energy Policy Act of 2005 to give states authority over fracking.

Industry, meanwhile, argued that the rule is contrary to BLM's mission to manage public lands for multiple uses and that the agency failed to adequately consider costs industry would incur to comply with the new standards.

"Requiring oil and gas operators to comply with the unsustainable regulations would impose costs that cannot be recovered and discourage development that would benefit the public, without any demonstrable environmental or administrative benefits," IPAA and WEA said in court filings.

Government attorneys have countered that BLM has full authority through the Mineral Leasing Act and Federal Land Policy and Management Act to regulate industry activities on public lands.

"This authority is premised on the unexceptional notion that BLM, the federal agency charged with management and stewardship of those lands, would be able to set terms and conditions for their use," the attorneys told the court in a written response to the injunction request (EnergyWire, June 16).

Environmental attorneys added that any delay of the rule would lead to inadequate oversight of fracked wells.

Another tribe heads to court

Also on the busy docket this week is news that a second American Indian tribe is joining the fray in the fracking litigation.

The district court in Wyoming yesterday granted a request from northeastern Utah's Ute Indian Tribe to join industry and Western states in their lawsuit challenging BLM's new rule. The tribe filed the request Monday, just after southwestern Colorado's Southern Ute Tribe filed its own challenge to the rule in U.S. District Court for the District of Colorado.

The Utes echoed many concerns voiced by the Southern Utes, arguing that the BLM rule encroaches on tribal sovereignty and threatens to derail economic development spurred by oil and gas production on tribal lands.

"The Tribe's economy will be irreparably harmed if the Rule takes effect," attorneys for the Utes said in a filing Monday. "Increased costs and administrative delays will eliminate the incentive for oil and gas operators -- typically, a favorable rate of return -- to assist tribes in developing their tribal minerals. As a consequence of operators shifting resources away from the Reservation, the Tribe will struggle to replace high paying jobs and economic development opportunities associated with oil and gas development."

The Utes also asked the court to issue a temporary restraining order (TRO) to block enforcement of the fracking rule. The court has not yet issued a decision on the motion, and the tribe was not included in yesterday's hearing.

A similar TRO request by the Southern Utes was rejected in Colorado on Monday (EnergyWire, June 23). The court will hear arguments in October on requests for preliminary injunction and declaratory judgment in that case.

Twitter: @ellengilmer | Email: egilmer@eenews.net

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