by Erin Potter Sullenger
as published by Journal Record
In March 2015, the Bureau of Land Management, a federal administrative agency that regulates certain activities on federal and Indian lands, finalized its most recent rule on hydraulic fracturing.
The rule has three goals: ensure that wells are properly constructed to protect water supplies; ensure flowback fluids are managed in an environmentally responsible way; and to provide public disclosure of the chemicals used in hydraulic fracturing fluids in operations on federal and Indian lands.
This marked an attempt by the BLM to expand its authority and tighten regulations on oil and natural gas development on federal lands. However, on June 21, the U.S. District Court of Wyoming set aside the rule finding that the BLM did not have authority to regulate in such a manner.
The BLM tried to persuade the court that it had authority to regulate under the general authority of several statutes. The court disagreed. It found that while the BLM did have broad authority to regulate certain activities on federal and Indian lands, including preventing excessive surface disturbance associated with fracking operations, that authority did not extend so far as to include regulation of the actual hydraulic fracturing activities themselves and was not sufficient to overcome the express prohibition of regulation in the 2005 Energy Policy Act.
When Congress passed the 2005 Energy Policy Act, it amended the definition of “underground injection” to prohibit the U.S. Environmental Protection Agency from regulating any injection associated with hydraulic fracturing operations, except those that use diesel fuel. The Wyoming District Court found this to be an unambiguous expression by Congress to remove federal agency authority to regulate non-diesel hydraulic fracturing activity. The court’s action leaves the previous rule in place (regulation of excessive surface disturbance and reporting requirements) pending the Department of Interior’s appeal to the 10th Circuit Court of Appeals.
This case highlights three important national issues. First, it highlights the limited authority federal agencies have to regulate hydraulic fracturing activities, even on federal or Indian lands. Second, it illustrates the many legal battles waged between the federal government and the western states over management of federal lands. Finally, it highlights the general pushback by many states and industries against federal regulations promulgated by the Obama administration.
Erin Potter Sullenger is a Crowe & Dunlevy attorney and member of the firm’s Energy, Environment & Natural Resources Practice Group.