State v. U.S. Dep't of the Interior

136 F.Supp.3d 1317

State of Wyoming, State of Colorado, Petitioners,

State of North Dakota, State of Utah, and Ute Indian Tribe, Intervenor–Petitioners,

v.United States Department of the Interior; Sally Jewell, in her official capacity as Secretary of the Interior; United States Bureau of Land Management; and Neil Kornze, in his official capacity as Director of the Bureau of Land Management, Respondents,Sierra Club, Earthworks, Western Resource Advocates, Conservation Coloardo Education Fund, the Wilderness Society, and Southern Utah Wilderness Alliance, Intervenor–Respondents.

Independent Petroleum Association of America, and Western Energy Alliance, Petitioners,

v.Sally Jewell, in her official capacity as Secretary of the United States Department of the Interior; and Bureau of Land Management, Respondents.

Case No. 2:15–CV–043–SWS (Lead Case)

Case No. 2:15–CV–041–SWS

United States District Court, D. Wyoming.

Signed September 30, 2015

Jeremy A. Gross, Michael James McGrady, Andrew J. Kuhlmann, Wyoming Attorney General's Office, Cheyenne, WY, Frederick R. Yarger, Colorado Attorney General's Office, Alexander Karl Obrecht, Lyle Poe Leggette, Mark S. Barron, Baker & Hostetler, Denver, CO, for Petitioners.

Andrew C. Emrich, Holland & Hart, Greenwood Village, CO, Hope Hogan, Matthew A. Sagsveen, Wayne Stenehjem, North Dakota Attorney Generals Office, Bismarck, ND, Lauren R. Caplan, Holland & Hart LLP, Washington, DC, Paul M. Seby, Holland & Hart, Denver, CO, Christopher J. Reagen, Jeffrey S. Rasmussen, Jeremy J. Patterson, Fredericks Peebles & Morgan LLP, Louisville, CO, Scott P. Klosterman, Williams Porter Day & Neville, Casper, WY, for Intervenor–Petitioners.

Michael S. Freeman, EarthJustice, Denver, CO, Nathan Douglas Matthews, Sierra Club Environmental Law Program, San Francisco, CA, Nathan Maxon, Maxon Law Office, Lander, WY, for Intervenor–Respondents.

David A. Carson, Department of Justice, Denver, CO, Jody H. Schwarz, Stephen R. Terrell, William E. Gerard, United States Department of Justice, Washington, DC, Nicholas Vassallo, US Attorney's Office, Cheyenne, WY, for Respondents.

ORDER ON MOTIONS FOR PRELIMINARY INJUNCTION

Scott W. Skavdahl, United States District Judge

This matter comes before the Court on the motions for preliminary injunction filed by the various Petitioners and Intervenor–Petitioners: Motion for Preliminary Injunction of Petitioners Independent Petroleum Association of America ("IPAA") and Western Energy Alliance ("Alliance") (hereinafter "Industry Petitioners") (ECF No. 11 in 15–CV041); Wyoming and Colorado's Motion for Preliminary Injunction (ECF No. 32),¹ in which the State of Utah has joined; North Dakota's Motion for Preliminary Injunction (ECF No. 52), in which the State of Utah has joined; and Motion for Preliminary Injunction filed by the Ute Indian Tribe (ECF No. 89).

The Court, having considered the briefs and materials submitted in support of the motions and the oppositions thereto, including the Administrative Record, having heard witness testimony and oral argument of counsel, and being otherwise fully advised, FINDS and ORDERS as follows:

BACKGROUND

On March 26, 2015, the Bureau of Land Management ("BLM") issued the final version of its regulations applying to hydraulic fracturing on federal and Indian lands. 80 Fed.Reg. 16,128–16,222 (Mar. 26, 2015) ("Fracking Rule"). The Fracking Rule's focus is on three aspects of oil and gas development—wellbore construction, chemical disclosures, and water management (id. at 16,128 & 16,129 )—each of which is subject to comprehensive regulations under existing federal and state law. The rule was scheduled to take effect on June 24, 2015. Following a hearing on the preliminary injunction motions, this Court postponed the effective date of the Fracking Rule pending the BLM's lodging of the Administrative Record ("A.R.") and the Court's ultimate ruling on the preliminary injunction motions. (See ECF No. 97.)

For the better part of the last decade, oil and natural gas production from domestic wells has increased steadily. Most of this increased production has come through the application of the well stimulation technique known as hydraulic fracturing (or "fracking")—the procedure by which oil and gas producers inject water, sand, and certain chemicals into tight-rock formations (typically shale) to create fissures in the rock and allow oil and gas to escape for collection in a well.² See 80 Fed.Reg. at 16,131 (estimating that ninety percent of new wells drilled on federal lands in 2013 were stimulated using hydraulic fracturing techniques). Hydraulic fracturing has been used to stimulate wells in the United States for at least 60 years—traditionally in conventional limestone and sandstone reservoirs—and meaningful attempts to use the technique to extract hydrocarbons from shale date back to at least the 1970s. See U.S. DEP'T OF ENERGY, How is Shale Gas Produced ?³ "More recently, hydraulic fracturing has been coupled with relatively new horizontal drilling technology in larger-scale operations that have allowed greatly increased access to shale oil and gas resources across the country, sometimes in areas that have not previously or recently experienced significant oil and gas development." 80 Fed.Reg. 16,128.

Purportedly in response to "public concern about whether fracturing can lead to or cause the contamination of underground water sources," and "increased calls for stronger regulation and safety protocols," the BLM undertook rulemaking to implement "additional regulatory effort and oversight" of this practice. Id. at 16,128 & 16,131. In May of 2012, the BLM issued proposed rules "to regulate hydraulic fracturing on public land and Indian land." 77 Fed.Reg. 27,691 (May 11, 2012). The stated focus of the rules was to: (i) provide disclosure to the public of chemicals used in hydraulic fracturing; (ii) strengthen regulations related to well-bore integrity; and (iii) address issues related to water produced during oil and gas operations. Id. The BLM reports it received approximately 177,000 public comments on the initial proposed rules "from individuals, Federal and state governments and agencies, interest groups, and industry representatives." 80 Fed.Reg. at 16,131.

Just over a year later, the BLM issued revised proposed rules, representing that the agency has "used the comments on [the May 11, 2012 draft proposed rules] to make improvements" to the agency's proposal. 78 Fed.Reg. 31,636 (May 24, 2013). Key changes included an expanded set of cement evaluation tools to help ensure protection and isolation of usable water zones and a revised process for how operators could report information about chemicals they claim to be protected as trade secrets. Id. at 31,636 & 31,637. The BLM also expressed its intent to "work with States and tribes to establish formal agreements that will leverage the strengths of partnerships, and reduce duplication of efforts for agencies and operators, particularly in implementing the revised proposed rule as consistently as possible with State or tribal regulations." Id. at 31,637. The BLM reportedly received over 1.35 million comments on the supplemental proposed rule. 80 Fed.Reg. at 16,131.

The BLM ultimately published its final rule regulating hydraulic fracturing on federal and Indian lands on March 26, 2015. The BLM determined the Fracking Rule fulfills the goals of the initial proposed rules: "[t]o ensure that wells are properly constructed to protect water supplies, to make certain that the fluids that flow back to the surface as a result of hydraulic fracturing operations are managed in an environmentally responsible way, and to provide public disclosure of the chemicals used in hydraulic fracturing fluids." Id. at 16,128.

The Industry Petitioners and the States of Wyoming and Colorado filed separate Petitions for Review of Final Agency Action on March 20th and 26th, 2015, respectively, seeking judicial review of the Fracking Rule pursuant to the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq. The States of North Dakota and Utah, and the Ute Indian Tribe of the Uintah and Ouray Reservation, later intervened in the States' action, and the Court granted the parties' motion to consolidate the two separate actions. Petitioners and Intervenor–Petitioners request a preliminary injunction enjoining the BLM from applying the Fracking Rule pending the resolution of this litigation.

STANDARD OF REVIEW

To obtain a preliminary injunction, petitioners must show: "(1) a likelihood of success on the merits; (2) that they will [likely] suffer irreparable harm; (3) that the balance of equities tips in their favor; and (4) that the injunction is in the public interest." Petrella v. Brownback, 787 F.3d 1242, 1257 (10th Cir.2015). See also Glossip v. Gross, –––U.S. ––––, 135 S.Ct. 2726, 2736, 192 L.Ed.2d 761 (2015) (quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) ). "[B]ecause a preliminary injunction is an extraordinary remedy, the movant's right to relief must be clear and unequivocal." Fundamentalist Church of Jesus Christ of Latter–Day Saints v. Horne, 698 F.3d 1295, 1301 (10th Cir.2012) (internal quotation marks and citation omitted).

The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held. Given this limited purpose, and given the haste that is often necessary if those positions are to be preserved, a preliminary injunction is customarily granted on the basis of procedures that are less formal and evidence that is less complete than in a trial on the merits. A party thus is not required to prove his case in full at a preliminary-injunction hearing, and the findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits.

Univ. of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981) (citations...