On September 30, 2015, the US District Court for the District of Wyoming preliminarily enjoined the US Bureau of Land Management (BLM) from enforcing its final rule regulating hydraulic fracturing on federal and Native American lands, pending the resolution of a challenge to the rule under the Administrative Procedures Act (APA) brought by various industry, state, and Native American petitioners.   In doing so, the District Court strongly indicated that the petitioners’ underlying challenge to the rule would be ultimately successful, which could preclude BLM’s enforcement of the controversial rule indefinitely.

BLM’s final hydraulic fracturing rule was issued on March 26, 2015, but had not yet taken effect.  As previously reported on this blog, the stated purpose of the rule is to (i) provide disclosure to the public of chemicals used in hydraulic fracturing; (ii) strengthen regulations related to well-bore integrity; and (iii) address issues related to water produced during oil and gas operations.  However, as highlighted in the Court’s decision, industry groups are concerned that compliance with the rule will be costly and require operators to disclose proprietary hydraulic fracturing operational and design information. BLM estimates the cost of complying with the rule could equal approximately $11,400 per well.  There is also concern that the rule will create an overlapping federal regulatory regime that would interfere with States’ and Tribes’ sovereign interests in the regulation of hydraulic fracturing.

In granting the preliminary injunction, the Court held that petitioners’ APA challenge would likely succeed on the merits.  The Court focused on whether BLM has the authority to regulate hydraulic fracturing.  BLM alleged its authority is derived from numerous statutes, including the Federal Land Policy and Management Act of 1976, the Mineral Leasing Act of 1920, and the Indian Mineral Development Act of 1982.  However, the Court found that none of these statutes provide BLM with the specific authority needed to regulate hydraulic fracking.  The Court then looked to the Energy Policy Act of 2005, which explicitly removed US EPA’s authority to regulate non-diesel hydraulic fracturing under the Safe Drinking Water Act.  The Court reasoned that:

[t]hrough the [Energy Policy Act’s] amendment to the [Safe Drinking Water Act], Congress clearly expressed its intent that non-diesel hydraulic fracturing be removed from the realm of federal regulation, thereby lodging authority to regulate the activity within the States and Tribes.

Thus, the Court found that petitioner’s APA challenge would likely succeed on the merits because BLM lacked the authority to regulate hydraulic fracking and granted petitioners’ request for a preliminary injunction.  The Court could have ended its analysis there, but it went on further to explain why BLM’s final rule was also likely arbitrary and capricious.  Overall, the Court’s decision should be encouraging to the industry groups, states, and Tribes seeking to block BLM’s regulation of hydraulic fracturing on federal and Native American lands.