State of Wyoming v. Zinke

871 F.3d 1133
CourtCourt of Appeals for the Tenth Circuit
DecidedSeptember 21, 2017
Docket16-8068, 16-8069
StatusPublished
Cited by16 cases

This text of 871 F.3d 1133 (State of Wyoming v. Zinke) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State of Wyoming v. Zinke, 871 F.3d 1133 (10th Cir. 2017).

Opinions

BRISCOE, Circuit Judge.

In these cases, we are asked to decide whether the Bureau of Land Management (BLM) acted beyond its statutory authority when it promulgated a regulation—43 C.F.R. § 3162.3-3 (2015)1—governing hydraulic fracturing (fracking) on lands owned or held in trust by the United States. The district court invalidated this regulation (hereinafter, the Fracking Regulation) as exceeding the BLM’s statutory authority. While these appeals were pending, a new President of the United States was elected. After that change in Administration, and at the President’s direction, the BLM began the process of rescinding the Fracking Regulation. Given these changed and changing circumstances, we conclude these appeals are prudentially unripe. As a result, we dismiss these appeals and remand with directions to vacate the district court’s opinion and dismiss the action without prejudice.

I

A

Fracking is a “well stimulation” technique that oil and gas producers use to extract greater volumes of oil and natural gas than is otherwise possible. During fracking, “oil and gas producers inject water, sand, and certain chemicals into tight-rock formations to create fissures in the rock that allow oil and gas to escape for collection in a well.” Industry Petitioners Aple. Br. at 2. Chemicals are added in the injection process to delay pipe corrosion and kill unwanted bacteria, as well as for other purposes. Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands, 80 Fed. Reg. 16,128, 16,131 (Mar. 26, 2015).

Although first used by the oil and gas industry in the 1940s, fracking became more effective and complex around 2000 once industry combined fracking with horizontal drilling. “A horizontally drilled well starts as a vertical or directional well, but then curves and becomes horizontal, or nearly so, allowing the wellbore [i.e., drilled hole] to follow within a rock stratum for significant distances and thus greatly increase the volume of a reservoir opened by the wellbore.” Aplt. App. at 43. Today, ninety percent of the oil and gas wells on federal lands involve the use of hydraulic fracking.

[1138]*1138In 1982, the Department of Interior (DOI) promulgated the predecessor to the Fracking Regulation. The predecessor regulation governed “the exploration, development, and production of oil and gas from onshore, Federal and restricted Indian leases.” See generally Oil and Gas Operating Regulations, 47 Fed. Reg. 47,758 (Oct. 27, 1982) (codified at 30 C.F.R. Part 221). The 1982 regulation did not address hydraulic fracking in great detail. Under that regulation, the BLM had to approve only “nonroutine fracturing jobs,” but, in practice, industry treated all fracking as routine and rarely sought BLM approval. The BLM last revised the predecessor regulation in 1988. See generally Minerals Management,' 53 Fed. Reg. 22,814 (June 17, 1988) (codified at 43 C.F.R. Part 3000, et. seq.).

As fracking became more common, public concern increased about whether frack-ing was contributing to or causing “contamination of underground water sources, whether the chemicals used in [fracking] should be disclosed to the public, and whether there [wa]s adequate management of well integrity and the ‘flowback’ fluids that return to the surface during and after [fracking] operations.” Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands; Rescission of a 2015 Rule, 82 Fed. Reg. 34,464 (July 25, 2017). The BLM responded by preparing to draft the current regulation in 2010. Oil and Gas, 80 Fed. Reg. at 16,131. The new regulation attempted to modernize the existing federal regulations governing fracking on lands owned or held in trust by the United States by increasing disclosure of the chemicals used in fracking fluid, updating the standards for wellbore construction and testing, and addressing the management of water used in the fracking process. Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands, 77 Fed. Reg. 27,691-92, (May 11, 2012) (discussing the proposed regulation).

On May 11, 2012, the BLM published its proposed regulation. As part of its rule-making, the BLM alleges it met with affected Indian tribes on at least four occasions from 2012 to 2014. At the public commenters’ request, the BLM extended the comment period for 60 days and received over 177,000 comments on the first draft of the proposed regulation. Oil and Gas, 80 Fed. Reg. at 16,131. It published a revised regulation bn May 24, 2013 and received another 1.35 million comments on this revised version. Id. The BLM published the final version of the Fracking Regulation on March 26, 2015 with an effective date of June 24, 2015.

The Fracking Regulation attempts to regulate fracking in four ways. It imposes new well construction and testing requirements, new flowback storage requirements (tanks, not pits), new chemical disclosure requirements, and also generally increases BLM’s oversight of fracking. The estimated cost to comply with the Fracking Regulation is “about $11,400 per well, or about $32 million per year. On average this equates to approximately 0.13 to 0.21 percent of the cost of drilling a well.” Id. at 16,130. The Fracking Regulation would impact an estimated 2,800-3,800 fracking operations per year. Id Although the Fracking Regulation expands the scope of federal regulation of fracking, most frack-ing regulation occurs at the state level. However, state regulation of fracking is relatively recent; before 2005, few States had fracking laws.

B

On March 20, 2015, shortly before the Fracking Regulation was to take effect, the Independent Petroleum Association of America (IPAA) and the Western Energy Alliance (WEA) (together: Industry Peti[1139]*1139tioners) filed a Petition for Review of Final Agency Action under the Administrative Procedure Act (APA) (No. 2:15-cv-00041-SWS). The States of Wyoming and Colorado filed separate Petitions six days later (No. 2:15-cv-00043-SWS). The district court consolidated these cases. North Dakota, Utah, and the Ute Indian Tribe intervened, opposing the new regulation; multiple citizen groups also intervened, defending the regulation (Citizen Group In-tervenors).

The Petitions for Review asserted that the Fracking Regulation violated two provisions of the APA: Petitioners alleged the Fracking Regulation was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” under 5 U.S.C. § 706(2)(A), and also was “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right” under § 706(2)(C). The Ute Tribe also raised separate, tribe-specific arguments.

Petitioners individually filed preliminary injunction motions. After a hearing on these motions, the district court postponed the effective date of the Fracking Regulation on the same day it was to take effect, pending the district court’s resolution of the preliminary injunction motion. On September 30, 2015, the district court granted the requested preliminary injunction. The court reasoned that Petitioners were likely to succeed on the merits on both APA grounds raised.

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871 F.3d 1133, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-of-wyoming-v-zinke-ca10-2017.