Three States are Suing the Federal Government to Preserve State Jurisdiction
A federal judge has decided to allow North Dakota and Colorado to join a Wyoming lawsuit that challenges new rules from the U.S. Bureau of Land Management regarding drilling on federal lands.
“North Dakota regulators say the new federal rule could add years to the permitting process and hamper the drilling of thousands of wells in the state,” according to a report by the Associated Press.
On April 24, Colorado Attorney General Cynthia Coffman issued a press release stating that “the lawsuit raises a straightforward legal question: whether BLM can impose its own regulations on hydraulic fracturing, even though federal law does not give it that power and instead allows states to regulate in this area.
“I believe it is important to test BLM’s novel assertion of regulatory authority in an area that has been traditionally—and in this case expressly—reserved for the states. To be clear, this case is not about whether hydraulic fracturing should or should not be regulated. It should be regulated, and Colorado is doing so. However, the debate over hydraulic fracturing is complicated enough without the federal government encroaching on states’ rights,” Coffman said.
North Dakota Attorney General Wayne Stenehjem, said in a press release, “I am pleased the Court has allowed North Dakota to participate as a party to uphold our state’s strong and comprehensive fracking regulations.
“The BLM’s final rules, released on March 20, 2015, were issued despite North Dakota’s efforts to persuade the BLM that the state’s longstanding laws and regulations already effectively govern oil and gas development and protect our underground water sources,” Stenehjem said in the press release.
North Dakota is asking the Court to invalidate the BLM’s regulations “not only because those regulations interfere with the state’s comprehensive oil and gas development rules and environmental protection standards, but also because the federal government, through the Environmental Protection Agency, has already delegated authority to the states to monitor and protect underground water sources.”
[yks-mailchimp-list id=”a32a355444″ submit_text=”Closing Bell Sign-up”]
“The BLM is overreaching its authority and seeking to impose an unnecessary and costly layer of federal bureaucracy on the state’s existing regulatory processes,” said Stenehjem.
Peter Michael, the Wyoming attorney general, argues in the complaint that the Safe Drinking Water Act gives authority over underground injection exclusively to the Environmental Protection Agency (EPA) and states, while the Energy Policy Act of 2005 exempts fracking’s underground injection from EPA’s regulations, The Hill reported.
In an interview with Oil & Gas 360®, Wyoming Gov. Matt Mead weighed in on Wyoming’s pending lawsuit against the Department of Interior: “What I would like to see is for the federal government, wherever they end up nationally, to say to Wyoming, ‘Hey your rules are at least as good as if not better than ours and so we’re giving the entire state a waiver with regard to the Oil and Gas Commission and your Department of Environmental Quality because your rules are already in place’,” Mead told Oil & Gas 360®.
“And that will provide one set of rules–state rules–which not only provide simplicity and predictability but they also, working with the state—just by the mere difference in size between the federal government and the state government—you know when we screw it up at the state level, we can fix it in short order. We are much more nimble than the large federal government in addressing situations where we’ve not done it correctly.
“And so the ultimate outcome would be just that: for the federal government to say, “hey, if we’re going to have this rule, we recognize Wyoming in particular is way ahead of us on this and we’re going to give a waiver to the entire state based upon the state rules you already have in place.”
When Oil & Gas 360® asked Colorado Gov. John Hickenlooper about the effects of the BLM’s new regulations on oil and gas, Hickenlooper expressed similar beliefs: “Well, almost certainly it will slow down oil and gas investment. It complicates an already complicated procedure in terms of applications and getting permitted to drill on BLM land. When you look over the Western states, whether its Republican governors or Democratic governors, we’ve all rigorously improved our regulatory environment. … “Why couldn’t [we] have one regional set of regulations in the West?
“If we do that, I think that takes a lot of the burden off the BLM. … If we can agree among ourselves then I think we have a stronger case to go back to the BLM and say, “You don’t need to regulate methane emissions or fugitive emissions of any kind; you don’t have to regulate all these impact assessments they make; the states are already doing that … .”
A significant barrier to investment by oil and gas exploration and production companies who would seek to drill on U.S. federal lands is the time required to gain a drilling permit, compared to state permitting times to obtain drilling permits for private and state lands.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.