Regulatory Developments

Court Determines Fracking Case Is Not Ripe

The Trump administration’s plan to wipe major environmental regulations issued by the Obama administration off the books has caused the courts to ponder how it should address petitions to either uphold or vacate these rules. Specifically, even if a rule has been lawfully issued by an agency (under Obama), why should the court bother to make a judgment on its legality if it is targeted for elimination by the same agency (under Trump)?

That is the question a three-judge panel of the U.S. Court of Appeals for the 10th Circuit had to consider in a case in which industry groups, several states, and the Ute Indian tribe battled with environmental groups over the legitimacy of the U.S. Bureau of Land Management’s (BLM) 2015 final rule governing hydraulic fracturing on federal lands (March 26, 2015, FR). For reasons described below, the 10th Circuit panel decided that the litigation is not ripe for a final ruling. The various sides in the case disagree over the implication of the panel’s statement and specifically over whether the BLM must now implement and enforce the fracking rule.

District court stopped rule

The 2015 rule attempts to regulate fracking by imposing new well construction and testing requirements, new flowback storage requirements, and new chemical disclosure requirements and also by generally increasing BLM’s oversight of fracking on public land.

The industry coalition sued in a U.S. district court in Wyoming to have the rule invalidated. In June 2016, the district court judge agreed with the petitioners, stating that the BLM exceeded its statutory authority in issuing the fracking rule and set aside the rule. As a result of the timing of the district court’s rulings, the fracking rule has never taken effect.

The BLM and environmental groups appealed to the 10th Circuit. While that appeal was pending, Donald Trump entered the White House. Barely a week after taking office, the president issued an Executive Order (EO) instructing the Department of the Interior (DOI), which includes the BLM, to review its regulations, including the fracking rule, “for consistency with the policies and priorities of the new administration.” In March, the president issued another EO, this one specifically instructing the Interior secretary to begin rulemaking to suspend, revise, or rescind the rule. The DOI/BLM has taken various steps to comply with the president’s EO, most recently a proposal that would rescind the rule in its entirety (July 25, 2017, FR).

Merits not addressed

It is in this context that the 10th Circuit panel issued its decision on appeals to vacate the district court’s decision. The vacatur derives entirely from the panel’s assertion that the appeals are not ripe.

“We are guided by our cases discussing mootness,” the panel states. “When an appeal becomes moot, we generally vacate the district court’s judgment to prevent it from spawning any legal consequences.”

The determining factor, according to the panel, is the current position of the DOI/BLM. While the DOI/BLM are listed as appellants in the case, vacatur of the district court’s decision was requested only by the environmental groups that originally intervened on behalf of the DOI/BLM. According to the panel, it “was the actions of [DOI] Secretary Ryan Zinke and the BLM that rendered these appeals prudentially unripe; namely, the issuance of Secretarial Order No. 3349 and the July 25, 2017 [FR], notice proposing a rule that will rescind in full the fracking regulation.”

The panel did not comment on the merits of the case.

Obligation not to decide

The panel notes its obligation under the Constitution to hear and decide cases within its jurisdiction. “Yet the prudential ripeness doctrine contemplates that there will be instances when the exercise of Article III jurisdiction is unwise,” the panel states. (Article III of the Constitution establishes and empowers the judicial branch of the federal government.) “Declining to exercise Article III jurisdiction is unusual but not unprecedented.”

In deciding not to issue an opinion on the merits of the case, the panel looked at two issues:

  • Fitness for review. While conceding that the appeals present a clear legal issue—whether the BLM had statutory authority to promulgate the fracking rule—the panel states that, given BLM’s stated intention to withdraw the rule, a review of the merits of the case “appears to be a very wasteful use of limited judicial resources.”

“It is clearly evident that the disputed matter that forms the basis for our jurisdiction has thus become a moving target,” the panel states. “These appeals present an ‘unusual circumstance’ that requires us to conclude that these appeals are unfit for review.”

  • Hardship to the parties of withhold review. The question here was whether withholding review would create adverse effects for the party seeking judicial review. These adverse effects typically include significant costs, financial or otherwise, and instances in which the defendant had taken some concrete action that threatened to impair—or had already impaired—the plaintiffs’ interests. The panel concluded that withholding review would not produce these consequences.

“Withholding review of the Fracking Regulation will not impose a hardship on the two parties seeking judicial review: the [environmental] Group Intervenors and the BLM,” said the panel. “The only ‘harm’ the [environmental] group intervenors will suffer is the continued operation of oil and gas development on federal lands, which represents no departure from the status quo since 2015. Nor will our withholding review create a hardship for the BLM. The BLM will be able to proceed with its proposed rule rescinding the Fracking Regulation. And, in these unique cases, the BLM would face more uncertainty if these appeals, which concern the scope of the BLM’s authority, were to remain under advisement, or if we were to rule in the midst of the BLM’s ongoing rulemaking process that the BLM had no authority to act. We conclude these appeals are prudentially unripe and thus unfit for judicial review.”

Both sides claim victory

Litigants in the case have opposite views of what the panel’s ruling means.

“This decision is two victories in one,” said Earthworks, one of the environmental appellants. “It means the BLM can start enforcing a rule to protect water, public health, and communities threatened and harmed by fracking on public lands. The second victory, no less important than the first, is that in the eyes of the court and the eyes of the Trump administration the public’s land managers have the authority to regulate drilling on the lands the public owns.”

The Independent Petroleum Association of America (IPAA), one of the industry litigants, saw it differently.

“Today’s court decision confirms what IPAA has advocated all along: Dismissing the appeal protects independent producers from the uncertainty of having to potentially comply with regulations that are certain to be revoked. All three judges ruled unanimously that it would be a waste of judicial resources to proceed with this case. The appellate court’s decision confirms IPAA’s consistent position that the hydraulic fracturing rule represented regulatory overreach and that the rulemaking process was flawed from the very beginning.”

The panel’s decision is here.