United States: Wyoming District Court Grants Preliminary Injunction Enjoining BLM From Regulating Hydraulic Fracturing

On September 30, 2015, the U.S. District Court for the District of Wyoming ("District Court") granted motions for preliminary injunction filed by various states, tribes, and industry members ("Petitioners") seeking to enjoin the Bureau of Land Management ("BLM") from regulating hydraulic fracturing under its final hydraulic fracturing rule ("Final Rule"). In granting the preliminary injunction, the District Court held that (1) the petitioners were likely to succeed on the merits because the BLM acted without Congressional authority, the Final Rule was arbitrary and capricious, and the BLM failed to adequately consult with certain Indian tribes; (2) affected states, tribes, and industry members would suffer irreparable harm without the preliminary injunction; and (3) balancing interests between the Petitioners and the BLM and intervening environmental groups favored the Petitioners.

On March 26, 2015, the BLM issued its Final Rule, which states its intended aim to (1) ensure that oil and gas wells are properly constructed to protect water supplies, (2) ensure that the fluids that flow back to the surface as a result of hydraulic fracturing are managed in an environmentally responsible way, and (3) provide public disclosure of the chemicals used in hydraulic fracturing fluids. In response to the Final Rule, the Petitioners filed motions for preliminary injunction. On June 22, 2015, the District Court issued a stay of the Final Rule pending an examination of the administrative record and its ruling on the motions.

In the order granting the preliminary injunction, the District Court held that the Petitioners were likely to succeed on the merits because the BLM acted without Congressional authority. Specifically, the District Court held that, when the Energy Policy Act of 2005 revised the Safe Drinking Water Act to exclude hydraulic fracturing operations (not including diesel fuels) from the U.S. Environmental Protection Agency's underground injection control program, Congress intended to remove non-diesel hydraulic fracturing from the realm of federal regulation, and the BLM's land use statutes did not authorize hydraulic fracturing regulation. Furthermore, the District Court held that the Petitioners were likely to succeed on the merits because the Final Rule was arbitrary and capricious. According to the District Court, the Final Rule was arbitrary and capricious because, among other reasons, the BLM relied on the potential impacts that hydraulic fracturing may have on water sources and thus did not adequately substantiate the existence of the problem the Final Rule was meant to address. Finally, the District Court held that the Petitioners were likely to succeed on the merits because the BLM did not provide meaningful efforts to involve the affected tribes in the decision-making process.

In addition, the District Court held that the Final Rule caused irreparable harm to the Petitioners because it (1) interfered with the States' and tribes' sovereign interests, (2) would cause delay or avoidance of drilling operations that would likely lead to economic losses by the states and tribes that could not be recovered due to sovereign immunity, (3) imposed compliance costs on industry members that could not be recovered due to sovereign immunity, and (4) required the disclosure of confidential trade secrets. Furthermore, the District Court ruled that any harm to the BLM's or the intervening environmental groups' interests was outweighed by the harm to the Petitioners.

A copy of the order is available here.

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