15 March 2017

Sidley Shale and Hydraulic Fracturing Report

Vol. 6, No. 11

Topics discussed in this week’s Report include:

  • Tenth Circuit asked DOJ whether Trump administration intends to defend BLM rule on hydraulic fracturing.
  • Dakota Access pipeline readied for controversial crossing under Lake Oahe.
  • Environmental groups claimed that FERC natural gas pipeline decisions suffer from unlawful “structural bias.”
  • Congress passed CRA resolution to repeal BLM’s “Planning 2.0” rule.
  • The Pennsylvania Supreme Court heard arguments on residents’ challenge to natural gas well drilling permits.


Tenth Circuit asks DOJ whether Trump administration intends to defend BLM rule on hydraulic fracturing. The U.S. Court of Appeals for the Tenth Circuit has asked the Department of Justice (DOJ) whether the Trump administration is prepared to defend U.S. Bureau of Land Management (BLM) regulations governing hydraulic fracturing on federal and tribal lands. Several states, tribes, and industry groups challenged the regulations in U.S. District Court, where the judge vacated the rule finding BLM lacked the authority to regulate hydraulic fracturing. BLM and several environmental groups appealed to the Tenth Circuit. A brief order from the Tenth Circuit noted the change in administrations and the appointment of Ryan Zinke as Secretary of the Interior before stating that the court was “concerned that the briefing filed by” the Department of Justice “may no longer reflect the position of the Federal Appellants.” It requested confirmation that BLM’s position in the litigation is the same and whether DOJ is prepared to proceed with oral arguments, scheduled for March 22. The notice also offered to “entertain motions for supplemental briefing by the parties.” The notice requests a response by March 15.

Dakota Access pipeline readies for controversial crossing under Lake Oahe. A status report filed with the U.S. District Court for the District of Columbia indicated that the last link in the Dakota Access pipeline is ready to be completed. The pipe would cross under Lake Oahe, a reservoir on the Missouri River, and oil could begin flowing as early as this week. Several tribes moved to block the crossing, but the district court rejected multiple motions for a preliminary injunction. Judge James Boasberg denied the Cheyenne River Sioux Tribe’s recent motion for a preliminary injunction arguing that the pipeline violates the Religious Freedom Restoration Act. In the order denying the motion, Judge Boasberg wrote that the Cheyenne River Sioux waited two years after they learned of the pipeline’s route to raise the issue. The parties will proceed to summary judgment briefing on the tribes’ other claims related to the National Environmental Policy Act and the Administrative Procedure Act.

Environmental groups claim that FERC natural gas pipeline decisions suffer from unlawful “structural bias.” A D.C. District Court judge heard arguments in the Delaware Riverkeeper Network’s suit against the Federal Energy Regulatory Commission (FERC) claiming that it suffers from a “structural bias” that all but guarantees approval of new natural gas pipelines. Delaware Riverkeeper is challenging FERC’s approval of the PennEast pipeline, which will carry natural gas from the Marcellus Shale play to New Jersey, but argued that FERC’s receipt of fees from natural gas companies deprives pipeline opponents of a neutral decision-making body in violation of their due process rights. FERC has asked the court to dismiss the suit, countering that the fees in no way affect FERC decision making, as all fees collected from companies are remitted to the U.S. Treasury to offset the operating budget established by Congress.

Congress passes CRA resolution to repeal BLM’s “Planning 2.0” rule. By a 51-48 vote, the U.S. Senate repealed a BLM rule for managing federal lands, nicknamed “Planning 2.0.” The resolution, issued under the Congressional Review Act (CRA), passed the House of Representatives in February and will advance to President Donald Trump, who is expected to sign it. The Obama administration had advanced the rule as increasing transparency and public involvement while reducing the time for creating resource management plans. Proponents of the repeal resolution claimed that the rule did the opposite while increasing administrative burdens and uncertainty for smaller oil and gas companies in western states. Federal lands are subject to approximately 160 resource management plans that attempt to balance competing uses, such as oil and gas development, recreation, and grazing. With the anticipated demise of the Planning 2.0 rules, BLM must rely on the pre-existing 1983 land management regulations, which were often the subject of similar complaints. Proponents of the rule had noted that the CRA prohibits BLM from creating a “substantially” similar rule, and thus by repealing this rule, the Congress may hinder BLM’s ability to fix the deficiencies in the 1983 regulations with a new rulemaking.


The Pennsylvania Supreme Court hears arguments on residents’ challenge to natural gas well drilling permits. Fairfield Township residents told Pennsylvania’s highest court that their board of supervisors’ permit approval for natural gas wells in a residential area must be overturned. The residents claimed that the wells, approved to be built within a half mile of nearly 130 homes, do not fit under the “public service facilities” conditional use exemption because the wells are privately owned. They also argued that the permitting decision violated the Pennsylvania Supreme Court’s Robinson Township decision, which struck down a state bar on municipal regulation of oil and gas wells, in part, on environmental rights in the Commonwealth’s constitution. The author of that opinion, however, Justice Max Baer, questioned its applicability to the appellants’ case, noting that the entire point of the opinion was to give municipalities more control over well siting decisions. Justice Baer did press attorneys for the board of supervisors about its exercise of discretion, possibly setting up new standards for what municipalities may consider in allowing for gas wells within their jurisdictions. Environmental groups filed amicus briefs with the court arguing that even municipalities are required to make zoning decisions based on the environmental rights of citizens under Robinson Township.