Federal District Court: Feds May Not Regulate Fracking on Federal Lands

by Hannah Wiseman

June 22, 2016

In a merits opinion issued on June 21, 2016, the U.S. District Court for the District of Wyoming (Judge Skavdahl) held that the U.S. Bureau of Land Management--the agency tasked with protecting and preserving federal lands for multiple uses by the public--lacks the authority to regulate hydraulic fracturing ("fracking") on federally-owned and managed lands. Using a Chevron step 1 analysis (one standard used to review agencies' interpretation of the meaning of statutes that grant agencies authority), the court finds that "Congress has directly spoken to the issue and precluded federal agency authority to regulate hydraulic fracturing," with the exception of fracturing that uses diesel fuels. The court bases this erroneous conclusion on the Safe Drinking Water Act (SDWA)--an Act that governs Environmental Protection Agency and state authority over underground water sources. Under the SDWA, entities that inject substances underground must first obtain a permit from the EPA or a state to ensure that they will not endanger underground drinking water sources.

In 2005, Congress revised the SDWA to provide that the Act excludes non-diesel fracking from the definition of "underground injection" governed by the SDWA. Specifically, the SDWA provided, beginning in 2005: "For purposes of this part, [t]he term 'underground injection'-- . . . excludes . . . the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities" (emphasis added). Thus, as of 2005, the EPA could not regulate fracking under the SDWA. But this SDWA language--language that is only written "for the purposes" of this specific portion of the SDWA--says nothing about the other federal acts under which the EPA may or may not regulate fracturing.  Indeed, this is why the EPA has since been able to issue several fracturing regulations under the Clean Air Act. Moreover, the narrow exemption of fracturing from the SDWA says nothing about how other agencies may regulate fracturing underother acts, such as the Federal Land Policy and Management Act and Mineral Leasing Act, which govern the Bureau of Land Management's review of oil and gas activities on BLM lands. And many of the BLM's current fracking regulations--all of which the court has invalidated through its holding--have nothing to do with underground injection, the topic of the SDWA.  Rather, they address subjects such as requiring oil and gas operators to use tanks, rather than surface pits, to hold fracturing wastes.

The court's determination that Congress under the SDWA has "directly spoken" to the issue of whether the BLM may regulate fracking on federal lands is farfetched and lacks any reasonable legal basis. After all, how can an Act that applies to the EPA, and primarily to underground injection activities on private lands, "directly," or even impliedly, remove the BLM's authority to regulate fracking wastes--and related activities such as the surface handling of fracking wastes--on federal lands? Indeed, in the legislative history of the SDWA, Congress made clear that in passing the Act it did not intend to "limit the authority" of the BLM's predecessor agency.

The court's failure to find any case on point--and its twisting of the meaning of one of my old law review articles to support its Chevron holding--demonstrate the artificial contortions required to reach this poorly-reasoned holding. Indeed, in my article cited by the court, I indicate in a footnote that despite the exemption of fracturing under the SDWA, other federal acts can apply to fracturing. I specifically cite to an Endangered Species Act issue that arose in a BLM approval of a fracturing operation on federal lands, noting that the ESA and Clean Water Act could apply to the review of fracturing operations. Nothing in my 2009 article indicates that the exemption of fracturing from the SDWA, which is administered by the EPA, weakens the federal regulation of fracturing by other agencies under other acts. In Congressional testimony I gave last summer, which highlighted, among other things, state petitioners' misuse of my article in their district court filings, I stated: "[M]y article does not address the separate authority of the BLM to regulate fracturing on federal lands." Unfortunately, the court in both its preliminary injunction and merits opinion largely adopts petitioners' dishonest interpretation and use of my article.  Law review articles can provide useful history and can help illuminate the meaning of statutes and prior court opinions, but courts should not use them in place of direct legal precedent.  Here, it appears that the court could find no legal precedent directly on point and therefore resorted to misinterpreting an old article that I wrote when I was a visiting assistant professor in a two-year (untenured) fellowship position--an article that I have since built upon in much greater detail in more recent and more relevant work.

The court's erroneous determination that a Congressional exemption of one activity from one federal environmental act exempts that activity from all other federal statutes--including statutes that apply to activity on lands owned and managed for the benefit of the public--could have far-reaching consequences.  For example, the Clean Water Act exempts many agricultural and silvicultural (forestry) activities from its provisions. Under the court' s reasoning in the fracking case, this could suggest that the BLM and Forest Service may not review and regulate grazing and logging on federal lands under the Federal Land Policy and Management Act and other acts governing public agencies' management of public lands.

Beyond its core holding that the SDWA clearly and directly prevents the BLM from regulating fracturing on federal lands, the court also suggests that the BLM has not historically regulated fracturing much and therefore should not be able to now--a point largely irrelevant to whether an agency is now authorized to regulate a particular activity.  Even if an agency's historic choice to extensively regulate an activity (or to not regulate this activity) were relevant to a Chevron analysis, the BLM should win in this case. The BLM has long governed numerous aspects of oil and gas development on federal lands, including underground activities such as casing (lining) the well so that oil, gas, or other substances flowing through the well do not mix with underground water. Indeed, the BLM historically regulated certain aspects of fracking on public lands--not just conventional oil and gas development. An old regulation issued by BLM's predecessor agency required oil and gas operators to first submit a well casing program to the agency before engaging in well stimulation, which includes fracturing. 30 C.F.R. 221.21 (1942).

Congress in the Federal Land Policy Management Act, which directs the BLM's management of public lands, indicated that it was the express policy of Congress to protect "water resource . . . values" on federal lands and to require the BLM to manage public lands for "a combination of balanced and diverse resource uses" by current and future generations. 42 U.S.C. 1701(a)(8) and 1702(c). Without the ability to regulate fracking, which is used for most new oil and gas wells, the BLM will struggle to achieve this mandated balance.

Cross-posted at Environmental Law Prof Blog.

Tagged as: fracking courtwatch
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Hannah Wiseman is the Attorneys’ Title Professor at the Florida State University College of Law in Tallahassee.

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