Recent Hydraulic Fracturing Rule Invalidated

Originally published by Barclay Nicholson (US) and Johnjerica Hodge (US).

Last year, the United States Bureau of Land Management (BLM) issued a rule heightening the requirements placed on hydraulic fracturing operations on federal and tribal land. Specifically, the BLM heightened the rules for well casing and wastewater storage and required the disclosure of chemicals used in the fracking process. The BLM’s hydraulic fracturing rule was challenged by Wyoming, Colorado, North Dakota, Utah, the Ute Indian Tribe of the Uintah and Ouray Reservation, the Independent Petroleum Association of America, and the Western Energy Alliance. In September 2015, U.S. District Judge Scott Skavdahl stayed the implementation of the rule pending the result of the legal challenges to the BLM’s rule. Earlier this week, Judge Skavdahl struck down the rule.

Judge Skavdahl concluded that the BLM did not possess the requisite authority to implement the rule. The BLM argued that it had authority under a number of statutes, such as the Mineral Leasing Act of 1920, the Federal Land Policy and Management Act of 1976, the Indian Mineral Leasing Act of 1938, and the Indian Mineral Development Act of 1982. None of those statutes, in Judge Skavdahl’s opinion, bestowed upon the BLM the authority to regulate hydraulic fracturing or to impose reporting responsibilities. In particular, Judge Skavdahl was persuaded by Congress’s clear withdrawal of federal regulation of hydraulic fracturing in the Energy Policy Act of 2005 (2005 EP Act). Judge Skavdahl reasoned that the BLM could not derive authority to regulate hydraulic fracturing from the general statutes it relied on when the 2005 EP Act was targeted at removing federal regulation of hydraulic fracturing.

In addition, Judge Skavdahl rejected the BLM’s argument that it was entitled to Chevron deference—that is, that courts should defer to agency’s reasonable interpretation of a statute. According to Judge Skavdahl, the BLM was not entitled to Chevron deference in this lawsuit because Congress did not authorize the BLM to regulate hydraulic fracturing. Supporters of the BLM’s rule have indicated that they will appeal Judge Skavdahl’s decision.

Click here to read Judge Skavdahl’s opinion.

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