The U.S. Bureau of Land Management (“BLM”) issued a final rule to regulate HF on federal and tribal lands in March 2015. The rule was challenged by two industry groups, the states of Wyoming, North Dakota, Colorado and Utah, and the Ute Indian Tribe of the Uintah and Ouray Reservation. Several environmental groups intervened in the lawsuit on behalf of BLM. The court issued a preliminary injunction (“PI”) in the case on September 30, 2015, staying the rule’s effectiveness nationwide until the issuance of a final decision. The decision granting the PI was appealed to the U.S. Court of Appeals for the Tenth Circuit, while the district court litigation over the rule continued. On July 13, 2016, the Tenth Circuit vacated the PI with no reasoning provided. In the meantime, on June 21, 2016, consistent with its prior PI ruling, the district court struck down the rule on the grounds that BLM had no authority to enact it. Adopting the argument advanced by the state petitioners, the court essentially found that through the Safe Drinking Water Act Congress originally granted EPA – not BLM – the authority to regulate HF operations on all lands, including public lands, and that Congress subsequently removed that authority from EPA (except when diesel fuels are used in HF fluids) in the Energy Policy Act of 2005. As a result, the court found, BLM (and EPA) have no authority to regulate the actual HF process, which instead is left to the states. The decision stated, “BLM has attempted an end-run around the 2005 EP Act.” The decision is now on appeal before the Tenth Circuit. Opening briefs were filed in mid-August, response briefs in mid-September and reply briefs in early October. Many parties have filed amicus briefs, including the state of Texas, the U.S. Chamber of Commerce and a bipartisan group of former top Department of Interior (“DOI”) officials.
Meanwhile, the Southern Ute tribe and BLM have reached a settlement under which the tribe has obtained a variance from the BLM rules that allows it to implement its own HF rules on the Southern Ute tribal lands in Southwest Colorado. The Southern Ute rules require post-completion disclosure to FracFocus and allow service providers to withhold trade secret information from disclosure to operators, provided that the trade secret owner provides a signed affidavit to the tribe. According to the tribe, the rules were effective April 5, 2016. The settlement between BLM and the tribe will now be submitted to the U.S. District Court for the District of Colorado for approval.
Oral arguments before the Tenth Circuit are scheduled for January 17, 2017. The court is expected to issue a final decision in the case sometime in 2017. A decision reversing the district court’s ruling and reinstating the BLM rule would mean that the rule could go into effect immediately.