State Of Wyoming V. U.S. Department of the Interior Confused Agency Overlap with Preclusion: BLM Had Authority to Promulgate the Fracking Rule for Public Lands, Not Tribal Lands

Abstract

Hydraulic fracturing (“hydrofracking”) is an increasingly used form of “clean energy” production, but, like anything in life, it has associated costs. Associated costs include potential groundwater contamination caused from chemicals used during the hydro-drilling and fracking process. In December 2016, the EPA released a study, which found that hydrofracking is associated with the “contamination of underground sources of drinking water and surface waters resulting from spills, faulty well construction, or by other means.” At first glance, it would appear that the most direct source for regulating groundwater contamination caused by hydrofracking would be the Underground Injection Control Program (“UICP”) of the Safe Drinking Water Act (“SDWA”). In 2005, however, Congress expressly excluded hydrofracking from the Environmental Protection Agency’s (“EPA”) UICP authority in the Energy Policy Act. Public and legal commentary refers to this exclusion as the “Halliburton Loophole.” Given the regulatory gap that the Halliburton Loophole created, on March 25, 2015 the Bureau of Land Management (“BLM”) promulgated the “Fracking Rule.” The Fracking Rule amends 43 C.F.R. Part 3160 of the Federal Land Policy and Management Act of 1976 (“FLPMA”) to create a comprehensive regulatory scheme for managing hydrofracturing and groundwater contamination caused by such drilling and well operations. The Fracking Rule’s regulatory scheme attempts to address three areas of hydrofracking on federal and tribal lands: (1) wellbore construction; (2) chemical disclosures; and (3) water management. The BLM argues that promulgating the Fracking Rule is a part of its “regulatory sphere.” BLM claims this regulatory sphere is created by comprehensively reading several statutes together, which include the FLPMA, Mineral Leasing Act of 1920 (“MLA”), Indian Mineral Leasing Act of 1938 (“IMLA”), and the Indian Mineral Development Act of 1982 (“IMDA”). The BLM used both the FLPMA and MLA for its authority to regulate hydrofracking on federal lands, whereas the BLM used the IMLA and IMDA for its authority to regulate hydrofracking on tribal lands. Because the Fracking Rule has the potential to change the fracking industry, several states—including Wyoming, Colorado, North Dakota, and Utah—along with several gas companies and the Ute Indian Tribe, sued the Department of the Interior challenging aspects of the rule.11 In State of Wyoming, Judge Skavdahl held that the BLM violated the scope of authority granted to it by Congress in promulgating the Fracking Rule. In setting aside the Fracking Rule, the court provided three connected, yet independent, reasons for reaching its holding. First, the court held that since both the FLPMA and MLA are silent as to hydrofracking, the BLM exceeded its congressionally delegated authority in adopting the rule. Second, the court reasoned that the EPA has regulatory authority over hydrofracking, which precluded the BLM from promulgating the Fracking Rule. Finally, the court asserted that administrative structure created by Congress restricts the BLM authority to land use planning; rules relating to environmental protection are solely under the jurisdiction of the EPA. State of Wyoming does not discuss the BLM’s authority under IMLA or IMDA for regulating hydrofracking on tribal lands at all. This is curious since, in the September 30, 2015 Wyoming decision, Judge Skavdahl did examine the Ute Indian Tribe’s contention that the BLM breached its fiduciary duty to Indian tribes when promulgating the Fracking Rule. Specifically, Judge Skavdahl held that IMDA requires meaningful efforts to involve tribes in the regulatory decision-making process, which the BLM breached. This article argues that the U.S. District Court of Wyoming improperly decided State of Wyoming, and the Tenth Circuit should confirm the validity of BLM’s Fracking Rule on appeal. Specifically, State of Wyoming mistakenly assumed that the EPA’s SDWA authority and the Halliburton Loophole precluded the BLM’s authority under FLPMA. But when Congress created the Halliburton Loophole in 2005, it only intended to alter the EPA’s regulatory authority under the SDWA and not BLM’s authority. With the FLPMA and MLA, the BLM has broad authority to prevent public lands from being unnecessarily degraded by mineral extraction. By providing regulatory checks on hydrofracking through the Fracking Rules chemical disclosure requirements and other requirements—such as sufficient cement casing for hydrofracking wells, the BLM is acting within its broad authority. Nevertheless, the BLM lacks authority under the IMDA and IMLA to apply the Fracking Rule to tribal lands. Tribal lands are unique, and the BLM owes tribes special fiduciary duties under the IMDA and IMLA.18 Specifically, the government must act in the best interest of the tribe when promulgating a rule that affects tribal economic activities and mineral leases. This article first establishes the current scientific and public understanding that hydrofracking does adversely impact ground water quality. Second, BLM’s Fracking Rule is discussed, and the 2015 State of Wyoming decision is critiqued in light of well-established administrative principles. Third, I outline the statutory controls for regulating hydrofracturing fluid. Fourth, I argue how the Fracking Rule squarely fits within this statutory framework. Finally, I argue that the BLM improperly failed to consider the special jurisdictional limitations when extending the Fracking Rule to tribal lands.