Interior Prepares to Issue Rule on Fracking on Federal Land

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By Alan Kovski

The Interior Department may soon issue a proposed rule to rescind and replace the Obama administration’s rule governing hydraulic fracturing for oil and natural gas on federal and Indian lands.

Interior is acting under time pressure from the U.S. Court of Appeals for the Tenth Circuit, where the department has requested that a legal contest over the Obama administration’s fracking rule be held in abeyance pending a new rule ( Wyoming v. Zinke, 10th Cir., No. 16-8068, 6/27/16 ).

Interior’s Bureau of Land Management sent the notice of proposed rulemaking to the White House Office of Management and Budget June 17 for review. In a May 5 court filing, Interior based its request for abeyance on its intent to start a new rulemaking that could reverse the previous administration’s approach to regulating fracking.

Federal attorneys representing Interior must file their next brief at the appeals court no later than June 20. Having the proposed rule at OMB—albeit a week later than intended—will allow the attorneys to say the BLM followed through and now needs the court to halt the litigation to await the outcome of the new rulemaking (RIN:1004-AE52).

Industry Wants New Rule

No date is set for the three-judge panel to decide whether it will halt the case or allow it to play out. The federal government appealed to the Tenth Circuit in 2016 after a district court ruled the BLM has never been given authority to regulate fracking.

The Independent Petroleum Association of America, one of the litigants who took the Obama administration rule to court, does not know what is in the proposed rule at OMB but expects to participate in an extensive rulemaking procedure, Dan Naatz, IPAA’s senior vice president of government relations and political affairs, told Bloomberg BNA.

Naatz said he did not want to guess what the three-judge panel of the Tenth Circuit will decide. But he expressed a hope that a new rule will give states the flexibility to regulate fracking. It would need to be genuine flexibility, not undercut by a complicating overarching federal scheme, he said.

“There’s a lot of ways to do this,” Naatz said.

Fracking involves the injection of water, sand and chemicals into the ground under pressure to create fractures through which oil or gas can flow to a well. The district court ruled the BLM’s role in leasing federal land is to apportion the use of surface land fairly, not to regulate an underground process.

BLM Authority Defended

OMB can take as long as it wants to review a proposed rulemaking, but a fast review is always possible if advance preparatory discussions have been held to speed the work. Interior has not said whether there has been such discussion.

Interior mostly has addressed the subject through court filings. In those, the government defended the authority of BLM to regulate fracking but said it needed time for the Trump administration to decide what it will do.

The government has not changed its position with respect to its authority to regulate fracking, an attorney involved in the case told Bloomberg BNA.

Environmental activist intervenors in the case have urged the appeals court to keep the case going to decide precisely that issue. Those intervenors included Earthworks, the Wilderness Society and others.

Four former Interior officials filed a joint amicus brief arguing that the appeals court should recognize the BLM’s authority to regulate fracking on federal land under the Mineral Leasing Act and the Federal Land Policy and Management Act. A group of law professors filed an amicus brief that made a similar argument.

Public Can Have Its Say

The Trump administration has argued it would not be a good use of the court’s time to continue considering a case when the government’s policy on fracking may be reversed.

A rulemaking would be open to all members of the public wanting to comment, notably including the litigants.

“The anticipated rulemaking will be an opportunity for the petitioners below to convince BLM to change its mind on the subject of regulation of hydraulic fracturing,” the government said in its May 5 brief.

Neither the BLM nor the court can lawfully pre-judge the outcome of the rulemaking process, the government said.

Petitioners include the states of Wyoming, Colorado, North Dakota and Utah, the Ute Indian Tribe, and two industry groups, the Independent Petroleum Association of America and Western Energy Alliance.

To contact the reporter on this story: Alan Kovski in Washington at akovski@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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