10th Circuit Declines to Rule on Defunct Fracking Rules

CHEYENNE, Wyo. (CN) — The 10th Circuit on Thursday declined to rule on a challenge to fracking regulations enacted in 2015, because President Trump has issued an executive order rescinding the rules.

Though fracking, or hydraulic fracturing, has been used since the 1940s, only in the past two decades have large-scale fracking operations become viable, combined with horizontal drilling to greatly increase the output of oil and gas wells. Ninety percent of the oil and gas wells on federal lands today involve fracking.

In 1982, the Department of Interior passed regulations governing “exploration, development, and production of oil and gas from onshore federal and restricted Indian leases.” The regulation did not address fracking in great detail, and under it the Bureau of Land Management had to approve only “nonroutine fracturing jobs.”

But the 10th Circuit found that “in practice, [the] industry treated all fracking as routine and rarely sought BLM approval.”

The BLM began working on revised fracking regulations in 2012, and spent three years developing the new rules. More than 1.5 million public comments were submitted for consideration.

The 10th Circuit found that the BLM’s 2015 fracking regulations attempted to control fracking in four ways. The rules “impose[d] new well construction and testing requirements, new flowback storage requirements (tanks, not pits), new chemical disclosure requirements, and also generally increase[d] BLM’s oversight of fracking. The estimated cost to comply with the Fracking Regulation is ‘about $11,400 per well, or about $32 million per year. On average this equates to approximately 0.13 to 0.21 percent of the cost of drilling a well.’” The new regulations were projected to affect 2,800 to 3,800 fracking operations per year.

But before the new regulations were to take effect, in June 2015, numerous lawsuits were filed, challenging the BLM’s authority to regulate fracking at all.

Plaintiffs included the states of Wyoming and Colorado, the Independent Petroleum Association of America and the Western Energy Alliance, and multiple intervenors and appellees, including the Ute Indian Tribe. They claimed the BLM had exceeded its statutory authority by passing the regulations, which were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The U.S. District Court for Wyoming agreed in June 2016, and set aside the BLM’s fracking regulations as exceeding the bureau’s statutory authority. That being so, the court declined to address whether the BLM regulations initially were arbitrary and capricious in violation of Administrative Procedure Act.

While the appeal to the 10th Circuit was pending, President Trump issued Executive Order No. 13,771, on Jan. 30, ordering the Department of the Interior to review its regulations, including the fracking regulation, “for consistency with the policies and priorities of the new administration.”

Trump issued another Executive Order, No. 13,783, directing the secretary of the interior “as soon as practicable” to “publish for notice and comment proposed rules suspending, revising, or rescinding” the fracking regulation.

Secretary of the Interior Ryan Zinke did so on March 29, ordering the BLM to “proceed expeditiously with proposing to rescind the final rule entitled, ‘Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands.’”

Since the regulations have been rescinded, 10th Circuit Judge Mary Beth Briscoe, writing for the three-judge panel, dismissed without prejudice and remanded with directions to vacate the district court’s opinion.

Tenth Circuit Judge Harris Hartz wrote in a partial dissent that while he agreed with the ruling as a whole, he “would affirm the permanent injunction with respect to the Ute Indian Tribe. The Tribe has adequately raised the issues specific to it both in district court and in this court. Yet the other parties have failed to challenge the Tribe’s reasoning. I would treat that failure as a waiver and affirm judgment for the Tribe with respect to Indian lands.”

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