BLM Fracking Rule Dead—For Now

It was an interesting week for BLM’s hydraulic fracturing rule first finalized and then immediately challenged on March 26, 2015. On Monday (June 20, 2016), the BLM filed its final brief in the Tenth Circuit arguing that the Wyoming Federal District Court erred when it issued a nationwide injunction of the rule on September 30, 2015. On Tuesday (June 21, 2016), the Wyoming Federal District Court set aside the BLM’s fracking rule, finding “The BLM has attempted an end-run around the 2005 EPAct; however, regulation of an activity must be by congressional authority, not administrative fiat.”

The central question the court addressed was did Congress give BLM the authority to regulate fracking?

In addressing this question, the court examined the broad management authority granted to BLM/Interior in the several statutes relied on by BLM – Mineral Leasing Act (MLA), Federal Land Policy and Management Act (FLPMA) and two Indian mineral statutes—and then analyzed the more narrow authority granted to EPA in the Safe Drinking Water Act (SDWA) to regulate underground injections into drinking water and the specific exemption from the SDWA for non-diesel hydraulic fracturing in the Energy Policy Act of 2005 (EPAct 2005). Judge Skavdahl concluded that neither the MLA nor FLPMA give BLM specific authority to regulate fracking and that, further, neither statute gives BLM environmental regulatory authority.

In examining the MLA, the court found the statute was focused on protecting oil and gas formations—not groundwater— and “surface-disturbing” activities—not downhole activities. The court also rejected BLM’s argument that fracking falls directly within its “regulatory sphere” and that the Bureau had long-regulated fracking. “BLM’s only regulation addressing hydraulic fracturing worked to prevent any additional surface disturbance and impose reporting requirements and did not regulate the fracturing process itself.” The court next examined FLPMA and concluded the statute is a land use planning law and not an environmental law. “Congress delegated regulatory authority for environmental protection of underground water sources to the [EPA], not the BLM.”

Finally, the court looked to SDWA and EPAct 2005. CRS Report on SDWA/fracking. The court determined it was clear that “Congress intended to remove hydraulic fracturing operations (not involving diesel fuels) from EPA regulation under the SDWA’s UIC program.” The court’s decision to invalidate BLM’s fracking rule rested on the rationale that “it makes no sense to interpret the more general authority granted by the MLA and FLPMA as providing the BLM authority to regulate fracking when Congress has directly spoken to the ‘topic at hand’ in the 2005 EPAct.”

The decision is widely expected to be appealed by the BLM and the environmental group intervenors have already declared they will appeal. The BLM’s Tenth Circuit brief on overturning the preliminary injunction of the fracking rule is a likely preview of what those arguments will be. BLM understandably argues that the MLA and FLPMA have been read too narrowly by the court and that, rather, these federal statutes contain “capacious delegations” to BLM to regulate “all operations on federal leases.” BLM adds that, “FLPMA further enhances BLM’s authority to protect natural resources and the environment” and that authority is not limited to planning. Finally, in addressing the crux of the court’s analysis that the SDWA and the EPAct 2005 non-diesel fracking exemption are evidence of a congressional decision to exclude BLM from the regulation of fracking, the government points to legislative history of the SDWA that states, “The committee intends . . . that EPA will not duplicate efforts of the USGS [BLM’s regulatory predecessor] to prevent groundwater contamination under the Mineral Leasing Act.”  Good discussion of legal issues on appeal.

The government has 60 days to file an appeal, but given the importance of this rule, don’t be surprised if an appeal is filed in advance of 60 days.