On March 20, 2015, the Bureau of Land Management (BLM) released its final rule regulating hydraulic fracturing activities on federal lands. As written, this precedent-setting rule will be difficult and costly to comply with for industry and will likely discourage investment and job creation in the West. BLM has never made a compelling case that this rule is necessary or identified a state that has insufficient regulations in place to properly regulate hydraulic fracturing activities on federal lands in their states. In fact, states have successfully regulated more than 1.2 million hydraulic fracturing operations spanning nearly 70 years and many have recently strengthened their regulations as production has increased and technology has improved.
IPAA, along with Western Energy Alliance and the states of Colorado, Wyoming, North Dakota, and Utah, and the Ute Indian Tribe challenged the rule in the federal district court of Wyoming, characterizing the federal government’s rulemaking as duplicative of states’ efforts and unsubstantiated. The rule is unnecessary and would add another layer of burden to independent producers already struggling to navigate the complex and confusing regulatory program governing federal lands. At a time when the U.S. oil and natural gas industry is facing incredible cost uncertainties, these new federal mandates make it more difficult for independent producers to invest, to produce, and to help keep this American energy renaissance moving forward.
U.S. District Court Judge Skavdahl heard IPAA’s motion for a Preliminary Injunction and, on June 23, 2015, agreed that a temporary stay would be put in place until the Administrative Record was closed and all documents could be reviewed. On September 30, 2015, Judge Skavdahl granted IPAA’s motion for the preliminary injunction, stating, “Congress has not authorized or delegated to the BLM authority to regulate hydraulic fracturing and, under our constitutional structure, it is only through Congressional action that the BLM can acquire this authority.”
On June 21, 2016, shortly after the Preliminary Injunction appeal case was fully briefed, Judge Skavdahl struck down the BLM final rule. The Judge agreed with IPAA that BLM does not have the congressional authority to regulate hydraulic fracturing on federal lands. Read the Judge’s full ruling here. This decision makes the appeal for Preliminary Injunction as null since the case on merits is decided. This is a big and hard-fought win for independent producers.
As expected, the federal government and environmental parties involved in the lawsuit filed an appeal with the Tenth U.S. Court of Appeals. All parties submitted opening briefs and the appellate case was scheduled to be heard March 2017. Shortly before the hearing, the Tenth Circuit Court issued an order requesting confirmation from the Department of Justice on whether the arguments presented in the appeal of the case remain consistent with the new administration’s current position. The federal government responded that the administration’s priorities had shifted and it released an Executive Order instructing the Department of the Interior to suspend, revise, or rescind a number of energy regulations that became final in the previous administration, including the finalized rule governing hydraulic fracturing on federal lands. A Circuit Court in September 2017 dismissed an appeals case, protecting producers from the business uncertainty of having to potentially comply with a regulation that is certain to be revoked by the new administration. The Associations’ court case on the final rule remains ongoing.