Oil Drillers Spared More Misery by U.S. Judge's Fracking Ruling

  • Judge says U.S. land management bureau lacks regulatory power
  • States, industry groups fought federal rules as unnecessary

A U.S. judge in Wyoming has blocked new rules that tighten controls over fracking on federal lands, granting a measure of relief to producers who would have faced higher costs at a time when profits already are strangled by low crude prices.

The order by U.S. District Judge Scott Skavdahl puts a temporary hold on the most closely-watched effort by the Obama administration to ensure that hydraulic fracturing doesn’t contaminate water supplies. While the rules apply only to federal lands, they are designed to spur states to follow suit, magnifying the impact and potentially slowing development of oil and natural gas resources.

Skavdahl said the government’s Bureau of Land Management lacks the authority to control fracking.

Republican Rob Bishop, chairman of the House Committee on Natural Resources, approved of the ruling as “the right decision because it stops the Obama Administration from shoving this harmful policy down the states’ throats,” in a statement issued by his office. Bishop said the federal rule would cause “major harm” to the industry and to states if implemented.

There are more than 100,000 wells on federal land, making up 11 percent of the nation’s natural gas production and five percent of its oil. About 90 percent of the wells rely on hydraulic fracturing, or fracking, the pumping of sand, water and chemicals to free natural gas and oil within subterranean rock.

Environmental Concerns

While fracking has catapulted the U.S. to world leadership in oil production, it’s also been blamed for air pollution, tainted groundwater and even earthquakes.

The challenged rules were announced in March, and Skavdahl’s preliminary injunction comes in a pair of lawsuits, one pressed by the states of Wyoming, North Dakota, Colorado and Utah, and another by the Independent Petroleum Association of America and the Western Energy Alliance.

Those suing argued the rules duplicated state regulations and increased costs of extracting resources from oil-rich shale formations in the U.S.

The government responded that the land management bureau would work closely with states and native American tribes to avoid duplication. Blocking the rules, the government argued, could leave a regulatory gap on some federal and Indian lands. The judge rejected the government’s rationale, finding that those suing had a good chance of winning their case and getting a permanent order barring enforcement.

No Authority

“Congress has not authorized or delegated to the BLM authority to regulate hydraulic fracturing and, under our constitutional structure, it is only through congressional action that the BLM can acquire this authority,” he said in a 54-page decision.

Spokesmen for the Western Energy Alliance and Independent Petroleum Association applauded the decision. The Interior Department said in an e-mailed statement that it would follow the court’s order and “continue to process applications for permits to drill and inspect well sites under its pre-existing regulations.”

The cases will proceed to a final resolution probably early next year, unless Skavdahl’s ruling is reversed on appeal.

The cases are State of Wyoming v. U.S. Department of the Interior, 15-cv-43, and Independent Petroleum Association of America v. Jewell, 15-cv-41, U.S. District Court, District of Wyoming (Casper).

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