In a decision sending shockwaves across the nation’s oil and gas industry, the U.S. District Court for the District of Wyoming yesterday set aside the Bureau of Land Management’s rule to govern hydraulic fracturing on federal and tribal lands. Judge Scott W. Skavdahl held that Congress did not authorize BLM to regulate hydraulic fracturing.

Issued in March 2015, BLM’s “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands; Final Rule” (43 CFR Part 3160) sought to set standards for wellbore construction, chemical disclosure, and water management for hydraulic fracturing on federal and tribal lands. The rule was set to become final on June 24, 2015.

Colorado and Wyoming challenged the rule in the District of Wyoming, and the states of North Dakota and Utah, along with the Ute Indian Tribe, intervened on behalf of petitioners. Sierra Club and other environmental groups intervened on behalf of the government. The court subsequently enjoined BLM from enforcing the rule.

In its June 21 decision on the merits, the court rejected BLM’s reliance on a number of longstanding, general land management statutes as authorizing the rule. Rather, the court looked to Congress’s most recent pronouncement regarding hydraulic fracturing in the Energy Policy Act of 2005. There, Congress deprived the Environmental Protection Agency from regulating hydraulic fracturing under the Safe Drinking Water Act (SDWA) unless diesel fuels are used.

The court reasoned that it made little sense to imagine that Congress had conferred far broader authority on BLM via general land management statutes than it did on the EPA:

Although the BLM does not claim authority for its Fracking Rule under the SDWA, a statute administered by the EPA, it makes no sense to interpret the more general authority granted by the MLA [Mineral Leasing Act] and FLPMA [Federal Land Policy and Management Act of 1976] as providing the BLM authority to regulate fracking when Congress has directly spoken to the "topic at hand" in the 2005 E[nergy] P[olicy] Act.

Slip op. at 22.

The United States has not announced whether it will appeal Judge Skavdahl’s ruling, but it seems likely that one of the parties or intervenors in this matter will challenge it. In the meantime, regulation of hydraulic fracturing on federal and tribal lands will remain largely in the hands of the states and tribes.