Fed judge strikes down BLM rule

James Fenton
Kathleen Sgamma, vice president of government and public affairs for Western Energy Alliance, spoke at the Four Corners Oil and Gas Conference in May.

FARMINGTON — Local operators are celebrating a ruling this week by a federal judge who halted implementation of U.S. Bureau of Land Management rules governing hydraulic fracturing, or fracking, by the oil and gas industry on public and tribal lands.

On Tuesday, U.S. District Court of Wyoming Judge Scott W. Skavdahl sent a rebuke to the Obama administration, the BLM and environmental groups by concluding the agency lacks sufficient authority from Congress to regulate the drilling process.

Skavdahl sided with petitioners — Western Energy Alliance, the Independent Petroleum Association of America, four western states and the Ute Indian tribe of the Uintah and Ouray Reservation in northeast Utah — over the legal challenge.

Skavdahl, nominated by Obama in 2011, turned to the Constitution, saying it was clear to him that Congress has not given the BLM the authority to make rules governing oil and gas operations like hydraulic fracturing.

 "The constitutional role of this court is to interpret the applicable statutory enactments and determine whether Congress has delegated to the (Department of the Interior) legal authority to regulate hydraulic fracturing," Skavdahl wrote in the order. "It has not."

Tom Mullins — CEO of Synergy Operating LLC, a Farmington independent oil and gas company, and northwest vice president of the New Mexico Independent Petroleum Association — said he was a member of the committee that considered the issue in New Mexico.

The committee was made up of industry and BLM officials who were in negotiations over how to proceed with the pending BLM rule since New Mexico — unlike Colorado, Wyoming, North Dakota and Utah — opted not challenge the fracking rule.

Skavdahl's decision was a "good piece of news for our industry," Mullins said.

The rule was going to be burdensome on all operators, adding several thousand dollars in compliance costs per well without any environmental benefit, he said.

"To me, New Mexico already has regulations and I felt that the state regulations were sufficient and the federal regulations were very onerous and unnecessary," Mullins said. "Hopefully, it sets a good precedent for additional regulations, such as the (BLM's venting and flaring) rule, so we can put a hold on those as well."

John Roe of Dugan Production Co., another Farmington independent oil and gas company, agreed with Mullins.

"We're very glad because there are plenty of regulations from the (state Oil Conservation Division) that tell use what we can or cannot do," Roe said.

He said he believes the environmental community has twisted the argument against the industry using lies and distortions about what happens when an oil and gas well is drilled. The advances of horizontal drilling and multistage hydraulic fracturing have actually made oil and gas operations safer, he said, because with the latest drilling and well-stimulation techniques, the land is disturbed less and as many as 16 or more wells can be fracked from the same well pad. That used to mean 16 wells drilled through the water table, but not any longer, he said.

"When we hear from these radical people that we're destroying the environment, it just burns me up," Roe said. "I chose to live in Farmington. I enjoy clean water and the outdoors. We live and work in the same environment. As a prudent operator, we do what we can to do what's right, no matter if there are rules or not."

Kathleen Sgamma, Western Energy Alliance's vice president of government and public affairs whose group was a petitioner in the lawsuit, was happy with Tuesday's order.

“We're overjoyed with the ruling. The judge determined that the federal government lacks the authority to regulate fracking, period. He decided exclusively on statutory authority, so there's nothing to remand, no do-over. He didn't even rule on BLM appeals to the circuit court," Sgamma said. “States have shown they’ve successfully regulated fracking with no incidence of contamination in ... 70 (years). The BLM failed to show any gap in state regulation. In fact, the agency couldn’t point to a single incident on public lands to justify the new rule.”

But Mike Eisenfeld, San Juan Citizens Alliance energy and climate programs manager, said in an email that Tuesday's decision raises the issue of how much regulatory power federal agencies have to oversee the fossil fuel industry.

"The judge’s decision would perpetuate marginal oversight of industrial hydraulic fracturing activities on public lands where the BLM is the primary permitting agency," Eisenfeld said. "I’m sure that this decision will be rightfully appealed with an emphasis on identifying regulatory responsibilities that must be upheld to counter adverse impacts to public land."

Camilla Feibelman — director of the Rio Grande Chapter of the Sierra Club, one of the intervenor-respondents in the case — said in a statement that the judge's order was a mistake she hopes the 10th Circuit Court will remedy.

"The BLM’s fracking rules would protect our public lands from groundwater contamination, surface spills, and other accidents and build more transparency into extraction of a resource that belongs to all Americans," Feibelman said. "The agency has clearly established legal authority to regulate all aspects of oil and gas development on our public lands and this does not exclude hydraulic fracturing.   We respectfully disagree with the district court’s ruling ... and hope the 10th Circuit Court will uphold the rule."

On March 26, 2015, the BLM issued the final version of its hydraulic fracturing regulations, "the culmination of four years of extensive public involvement to bring onshore oil and gas drilling regulations into the 21st century," according to a March 20, 2015, Interior Department press release.

U.S. Secretary of the Interior Sally Jewell said in the release that the existing rules failed to account for technological advancements in drilling by the oil and gas sector and lacked sufficient environmental protections.

“Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today's hydraulic fracturing operations,” Jewell said in the release. “This updated and strengthened rule provides a framework of safeguards and disclosure protocols that will allow for the continued responsible development of our federal oil and gas resources. As we continue to offer millions of acres of public lands for conventional and renewable energy production, it is absolutely critical the public have confidence that transparent and effective safety and environmental protections are in place.”

The federal agency's fracking rule focuses on three aspects of oil and gas development — well bore construction, chemical disclosures and water management. The rule was scheduled to take effect on June 24, 2015.

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.