Industry groups are mounting a legal challenge against the Obama administration’s move to crack down on hydraulic fracturing — or fracking — as congressional Republicans begin plotting ways to handcuff the rule through legislation.
The Independent Petroleum Association of America and the Western Energy Alliance, both industry-backed groups, quickly filed a lawsuit Friday in a federal court in Wyoming after the Interior Department finalized the long-awaited rule. The groups said the regulation is “a reaction to unsubstantiated concerns” about the health and environmental effects of fracking.
Meanwhile, Republican lawmakers are considering a fresh round of oversight through various committees and drafting legislation on the rules that they and their industry allies say are duplicative and could threaten U.S. oil and gas development.
After the rule dropped Friday morning, 27 GOP senators rolled out legislation to ensure states remain the primary regulators for fracking within their borders. And House Majority Leader Kevin McCarthy, R-Calif., also vowed to take aim at the regulation.
“The House will continue to explore legislative options to keep expanding America’s energy future by building on the achievements made on state and private lands,” McCarthy said.
Fracking is a drilling method that involves blasting a high-pressure mixture of water, sand and chemicals into tight rock formations to access hydrocarbons buried deep underground. The practice has unlocked a domestic energy boom to turn the U.S. into the world’s top oil and natural gas producer.
President Obama likely would reject any GOP-passed measure that overturns the regulations. The rules announced Friday set new requirements for constructing wells, storage of so-called “flowback” water and disclosing of chemicals used during fracking, an attempt to address public health and environmental concerns about water pollution.
“We really are upholding the public trust here, and I think it’s been pretty clear from this whole process that we’ve been going through for the past four years that there is a lot of fear and there is a lot of public concern particularly about safety and groundwater and the impact of these operations,” Interior Secretary Sally Jewell said in a call with reporters.
“We believe that these standards are essential and it is our charge to oversee them on public and tribal lands,” Jewell said. “And I don’t think anyone would say it is common sense to keep regulations in place that were created over 30 years ago.”
The legal path forward against the regulation is murky.
An industry source told the Washington Examiner that an agency “must establish a factual record supporting the need for the regulatory action” under the Administrative Procedure Act. A case could be made, the source said, that current state and federal regulations already sufficiently address fracking.
But the Obama administration has maintained that the current rules are outdated after technological innovations that have greatly improved the drilling method’s success and expanded its use. It also maintained that 19 of the 32 states in which the rule would apply lack fracking-specific rules.
“It has been very important to the United States in terms of energy independence and also bringing down the price of oil because of increased supplies. So it has been very important, but it also is out ahead of where regulations have been, and that is why we have chosen to put these regulations in place … where fracking has gone — the pressures, the horizontal drilling — all of that is new and our regulations have not kept pace,” Jewell said.
Litigation is typical for new energy and environmental regulations. But while some rules have questionable legal authority — the section of the Clean Air Act on which the proposed Environmental Protection Agency emissions rule for existing power plants relies, for example, has little case law under it — the fracking regulation is less ambiguous.
“I would agree on that,” Kathleen Sgamma, vice president of government and public affairs with the Western Energy Alliance, told the Washington Examiner. “It is hard to challenge regulation.”
Still, Sgamma said the Interior Department’s case is far from ironclad. Aside from the potential flouting of the Administrative Procedure Act, she noted Indian tribes have found fault with how the Obama administration consulted them during the rule-making process.
The rule would apply to energy development on tribal land as well as federal land. Oil and gas resources are a significant revenue source for tribes, accounting for $1.1 billion in federal royalty disbursements in fiscal 2014, according to Interior. That’s more than double the $534 million tribes received in fiscal 2008, before the U.S. drilling boom took off.
Janice Schneider, Interior’s assistant secretary for land and minerals management, said tribes were very much involved in the process.
“We held two sets of regional meetings [in 2012], which yielded substantive discussions on topics that included the applicability of tribal law, validating water sources, inspection and enforcement, well bore integrity and water management,” Schneider said. “Additional individual consultations and larger meetings with tribal representatives have taken place since that time.”
But Republicans on the House Natural Resources Committee said some tribes have told them that wasn’t the case. Committee staff said they’re reaching out to tribes to see if they have concerns about the final rule.
“Tribes with mineral resources were very unhappy when it was first proposed — especially because they were not consulted and since then they have weighed in. The tribes were also unhappy with the substance of the rule. Probably more than anything, what upsets them is that lands held in trust for Indians were being treated under the rule as if they were publicly owned lands,” committee spokeswoman Julia Bell told the Examiner.
