OIL AND GAS

Court says BLM lacks authority to regulate fracking

The Obama administration does not have authority to regulate hydraulic fracturing on public lands, a federal judge decided yesterday.

In a major blow to the Bureau of Land Management and environmentalists who support stricter fracking oversight, the U.S. District Court for the District of Wyoming enjoined BLM's years-in-the-making fracking rule, blocking enforcement of the new regulation while the court considers industry and state challenges.

"One of the fundamental questions presented in this case is whether Congress granted or delegated to the BLM the authority or jurisdiction to regulate fracking," Judge Scott Skavdahl wrote, adding later: "At this point, the Court does not believe Congress has granted or delegated to the BLM authority to regulate fracking."

The decision sent shock waves through the Interior Department and environmental community. The rule's backers have consistently argued that BLM has broad authority to regulate oil and gas production on federal land and that increased fracking regulation is crucial to ensure safety and environmental protection.

"BLM has well-established authority to regulate hydraulic fracturing and other downhole aspects of drilling on federal lands," said Earthjustice attorney Michael Freeman. "The requirements in this rule are amply supported by the administrative record."

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The rule, released in March, would set new requirements for well construction, water management and chemical disclosure for fracked wells on public and tribal lands. BLM said it is consulting with the Department of Justice to determine how to respond to the preliminary injunction.

Freeman told EnergyWire that the environmental groups who intervened to help BLM defend the rule will continue fighting to ensure it takes effect. An appeal would go to the 10th U.S. Circuit Court of Appeals.

Challengers' arguments

Industry groups and several states, meanwhile, celebrated the decision as an affirmation that BLM had gone too far.

The plaintiff states -- Wyoming, Colorado, North Dakota and Utah -- were behind the first argument discussed in the decision that Congress intended for states to handle regulation of fracking.

"Today's decision supports Wyoming's position -- Congress has addressed hydraulic fracturing and precluded federal regulation of it," Wyoming Gov. Matt Mead (R) said in a statement. "Wyoming has sound and responsible rules for hydraulic fracturing -- those rules have been in place for years."

Industry groups celebrated the decision, too, as Skavdahl also relied on their arguments about procedural and technical problems with the fracking rule.

"Even if the BLM had the authority to promulgate the Fracking Rule, the Court is troubled by the paucity of evidentiary support for the Rule," the decision said.

The court found that public concern about fracking may have been sufficient to spur investigation of the issue but that public concern alone couldn't justify the final requirements. The agency did not adequately demonstrate the risks of fracking or how the rule would address them, the judge said.

"The BLM has neither substantiated the existence of a problem this rule is meant to address, identified a gap in existing regulations the final rule will fill, nor described how the final rule will achieve its stated objectives," Skavdahl continued. "Rather, the Fracking Rule seems a remedy in search of harm."

Barry Russell, president of the Independent Petroleum Association of America, a plaintiff in the case, said the decision confirmed what industry has been saying all along: that additional federal regulation is duplicative.

"Today's decision is consistent with IPAA's position that BLM's efforts are not needed and that states are -- and have for 60 years been -- in the best position to safely regulate hydraulic fracturing," Russell said.

The Western Energy Alliance's Kathleen Sgamma agreed, noting that the fracking rule was based on "unfounded claims" about fracking's harms.

Contentious logic

While the district court's opinion was multifaceted, critics were most concerned about the judge's interpretation of BLM's authority, or lack thereof.

In explaining his interpretation, Skavdahl relied heavily on an argument from the states challenging the rule: that the Safe Drinking Water Act specifically delegated fracking regulation to U.S. EPA and that the Energy Policy Act of 2005 subsequently exempted fracking from EPA oversight -- effectively removing it from the realm of federal oversight.

"Through the EPAct's amendment to the SDWA, Congress clearly expressed its intent that non-diesel hydraulic fracturing be removed from the realm of federal regulation, thereby lodging authority to regulate that activity within the States and Tribes," he wrote, citing a 2009 law review article from law school professor Hannah Wiseman.

But Wiseman herself disputes that interpretation of her article, which explored federal regulation of oil and gas (EnergyWire, Aug. 18). She testified before Congress earlier this year to clarify that her article addressed only a narrow exemption for hydraulic fracturing from Safe Drinking Water Act oversight -- not a broader exemption from public lands laws.

Wiseman told EnergyWire she was surprised the court decision cited her article in the first place.

"It's extremely surprising to see a court rely on a law review article for a ruling on whether a particular activity is exempt from federal regulation," she said. "I would have expected a citation to statute, regulation and case law.

"The government had pointed out that the article did not mean what the states said it meant," she added.

Reporter Mike Soraghan contributed.

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