Fracking Crew

Mark Ingram, service leader with Halliburton, and Justin Slaugh, a service manager with Halliburton, show the details of trucks utilized at fracking facilities Thursday at a site west of Wright. A federal judge this week blocked the Interior Department’s proposed hydraulic fracturing ruling.

U.S. District Judge Scott Skavdahl’s decision this week to block the Interior Department’s proposed hydraulic fracturing rule set the stage for a fresh battle over Washington’s authority to manage public lands in the West.

Industry representatives and state officials called the ruling a victory in their battle against the Obama administration, saying the decision showed federal officials had strayed beyond the boundaries of their authority.

But environmentalists charged Skavdahl with disregarding decades of established law, arguing the decision undermines the U.S. Bureau of Land Management’s ability to meet its statutory obligations and threatens the government’s ability to protect the environment. They promised an appeal.

“What the judge has done here is open another front in the Sagebrush Rebellion,” said Fred Cheever, co-director of the Environmental Law and Natural Resources Program at the University of Denver’s Strum College of Law. “What he is really doing is questioning the federal government’s ownership of land in the American West.”

The decision represents a win for Wyoming and three other states, which had argued the Interior Department had overstepped the bounds of its legal authority.

Congress did not give BLM the power to regulate fracking, they said. Instead, it vested that authority with the U.S. Environmental Protection Agency under the Energy Policy Act of 2005, though even in that instance the EPA’s oversight was limited to a rare type of fracking.

Skavdahl agreed, writing in a 27-page decision, “The BLM has attempted an end-run around the 2005 EP Act; however, regulation of an activity must be by Congressional authority, not administrative fiat.”

The ruling has particular importance in Wyoming. While the majority of wells fracked in the United States are located on state and private land, roughly half the state’s production comes from federal land.

State officials had long maintained that the federal rules were duplicative. Wyoming became the first state to regulate fracking in 2010, and state officials argued their federal counterparts were merely creating unnecessary confusion for companies working on public land.

“The court got it right,” Gov. Matt Mead said in a statement. “This is of particular importance not only to Wyoming, but the country. I have and I will continue to aggressively assert Wyoming’s authority when threatened by federal overreach.”

Interior officials maintained the federal rules were out of date, having been put in place more than 30 years ago.

A department spokeswoman did not respond to a question about an appeal, saying instead, “the BLM’s modernized fracking requirements reflect today’s industry practices and are aimed at ensuring adequate well control, preventing groundwater contamination and increasing transparency about the materials used in the fracturing process.”

The 10th Circuit Court of Appeals is already considering a challenge to the preliminary injunction Skavdahl issued in the case last year, when he delayed the rule’s implementation. Observers said they expected that challenge to now be consolidated with appeals to Skavdahl’s recent ruling.

Michael Freeman, an attorney with Earthjustice, which intervened in the case on the government’s behalf, said the group intends to appeal the ruling.

But now there is potentially more at stake than just fracking. The BLM is set to finalize rules on flaring and venting, the practice of disposing excess natural gas from oil wells into the atmosphere, and industry representatives have already hinted at a coming legal challenge.

“This ruling foretells an uphill battle for the BLM in its proposed methane venting and flaring rules, which are similarly aimed at expanding BLM’s control over environmental factors typically controlled by Congress or the EPA,” said Jeffrey Reeser, an industry lawyer and partner at the law firm Sherman & Howard.

Environmentalists said the ruling would have sweeping consequences. The Federal Land Management Policy Act, which has long governed the BLM, gives the bureau broad powers to regulate land use on the properties it manages, said Mark Squillace, a professor of environmental law at the University of Colorado. More specifically, the law directs the BLM to prevent degradation to the land, he said.

“I don’t understand how the judge could reach the conclusion,” said Squillace, who once taught Skavdahl and is now a part of a group of law professors seeking to overturn the judge’s ruling.

Others went further still. The BLM’s fracking rule differs from other regulations in that it concerns land managed by the government, said Cheever, the University of Denver professor.

“The federal government’s decision’s to paint a ranger station in Yellowstone, repair a road or lease land for oil and gas development is fundamentally different from its authority to tell you to wear a seat belt or an employer pay a minimum wage,” he said. “One is based on ownership, one is based on regulatory authority.”

Congress cannot write a statute long enough to foresee all the challenges of land ownership. That is why federal agencies are given broad power to manage the land under their authority, he said.

Industry representatives, for their part, expressed doubts over such arguments. The ruling was blocked not because the BLM lacked regulatory authority, but because Congress specifically vested the power to oversee fracking with the EPA, they said.

Indeed, the challenge filed from industry groups charged the BLM with failing to follow the administrative procedure in implementing the rule. Industry never argued the BLM lacked general regulatory authority over oil and gas operations, said Mark Barron, an attorney with BakerHostetler who represented industry groups in the case.

“Opponents of the ruling have broadened the ruling bigger than it is,” he said. “We can both be right. BLM can have general regulatory authority. Congress doesn’t have to enumerate everything that is going to come up. It has to give some discretion for managing the land.” But of fracking, he added, “It just means Congress has spoken to this one specific technique expressly.”

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Follow energy reporter Benjamin Storrow on Twitter @bstorrow.