On June 21, 2016, a federal district court in Wyoming struck down the Bureau of Land Management’s (BLM) regulations governing hydraulic fracturing, well casing, and wastewater storage requirements – BLM’s “fracking rule.” Issued in March 2015, the fracking rule was challenged by Wyoming, Colorado, North Dakota, and Utah, along with the Ute Indian Tribe and industry trade organizations. The court ruled that BLM lacked statutory authority from Congress to regulate fracking on federal and tribal lands. The implications of this opinion extend beyond the fracking debate. This decision calls into question the extent of BLM’s authority to regulate oil and gas activities on federally managed lands. 

BLM argued that its authority to regulate fracking stemmed primarily from its broad authority to manage the federal and tribal lands, including oil and gas activities, pursuant to Federal Land Policy and Management Act (FLPMA), the Mineral Leasing Act (MLA), the Indian Mineral Leasing Act (IMLA), and the Indian Mineral Development Act (IMDA). 

Analyzing the grant of authority vested in each statute, the court found the MLA, FLPMA, IMLA, and IMDA simply did not contain a broad grant of authority to regulate all aspects of oil and gas operations on public and tribal lands. The court found that the grant of authority to BLM under the MLA did not include a “broad grant of authority to regulate for the protection of the environment”  and that the MLA’s specific mandate to regulate “all surface-disturbing activities” does not include authority “to address the supposed underground environmental effects of hydraulic fracturing.” Moreover, neither the IMLA nor the IMDA delegates any more specific authority over oil and gas operation on federal lands than the MLA.

Turing to FLPMA, the court characterized the statute as the establishment of congressional policy that BLM “manage the public lands under principles of multiple use and sustained yield. At its core, FLPMA is a land use planning statute.” Thus, FLPMA does not provide authority for broad environmental regulation. Rather, when considering requests for approval of specific projects, BLM must take action to prevent undue degradation to the environment. 

Relying upon the Eleventh Circuit’s opinion in Legal Environmental Assistance Foundation, Inc. v. EPA, the court further held that Congress had vested EPA with authority to regulate fracking under the Safe Water Drinking Act (SWDA). Such authority, however, was rescinded when Congress amended the SWDA in passing the Energy Policy Act of 2005. Thus, “it makes no sense to interpret the more general authority granted by the MLA and FLPMA as providing the BLM authority to regulate fracking when Congress has directly spoken to the ‘topic at hand’ in the 2005 [Energy Policy] Act.”

Finally, in addressing Chevron deference, the court made clear that deference allowed to agencies to interpret the extent of their delegated authority does not apply in a situation like this one—where the agency is not construing a specific statutory provision that clearly grants regulatory authority over a particular activity. In comparing this case to Chevron, the court states: “This case stands in contrast—Congress has not directed BLM to enact regulations governing hydraulic fracturing.  Indeed, Congress has expressly removed federal agency authority to regulate the activity, making its intent clear. If this Court were to accept Respondents’ and Intervenor-Respondents’ arguments, there would be no limit to the scope or extend Congressionally delegated authority BLM has, regardless of topic or subject matter.”

Given the court’s narrow construction of BLM’s regulatory authority over oil and gas operations, this case calls into question whether BLM can regulate other aspects of development. For example, the BLM is completing its rule-making process for new methane venting and flare rules, which like the fracking rule, are environmental regulation typically within the purview of Congress or the EPA. 

This case will certainly be appealed to the Tenth Circuit, which is already considering an appeal of the preliminary injunction imposed by the district court that prevented application of the fracking rule. While it is difficult to predict the actions of the appellate court, plaintiffs may face an uphill battle on appeal.  In 2011, the Tenth Circuit reversed a decision of the Wyoming District Court invalidating the United States Forest Service’s Roadless Rule. In that case, the Tenth Circuit held that the Forest Service’s broad authority provided by the Organic Act of 1897 and the 1960 Multiple Use Sustained Yield Act provided the agency with the power to enact the Roadless Rule. 

Finally, this case further clarifies that under current law the federal government lacks authority to regulate fracking, leaving this issue, at least for now, to the states.