Fracking Stakeholders Win Key Legal Round

A federal judge in Wyoming granted a preliminary injunction on Wednesday against new regulations for hydraulic fracturing on public lands, handing a victory to oil and gas producers who had vehemently opposed the rules.

U.S. District Judge Scott Skavdahl had put the regulations on hold in June as he weighed a request from energy industry groups and four states to stop the rules from being implemented until their lawsuit against the new standards was resolved.

The rules issued by the Interior Department would require companies to provide data on chemicals used in hydraulic fracturing, or fracking, and to take steps to prevent leakage from oil and gas wells on federally owned land.

The Independent Petroleum Association of America and the Western Energy Alliance were joined by Colorado, Wyoming, North Dakota and Utah in seeking to stop the new rules from taking effect.

In his order granting the injunction, Judge Skavdahl ruled that federal agencies only have authority to regulate hydraulic fracturing, or fracking, when the use of diesel fuel is involved.

Fracking involves injection of large amounts of water, sand and chemicals underground at high pressure to extract fuel. During the Bush administration, fracking was largely exempted from federal regulation unless diesel fuel was also being pumped into the ground, though the extent of that exemption remains the subject of debate.

Skavdahl also questioned whether there was any justification for the fracking regulations.

"The (Interior Department) has neither substantiated the existence of a problem this rule is meant to address, identified a gap in existing regulations the final rule will fill, nor described how the final rule will achieve its stated objectives," the order said.

The department said it is currently consulting with the U.S. Justice Department about the court's ruling.

"While the matter is being resolved, the (Bureau of Land Management) will follow the court's order and will continue to process applications for permits to drill and inspect well sites under its pre-existing regulations," agency spokesman Jeff Krauss said in a statement.

Though environmentalists have argued that fracking risks contaminating ground water and increasing air pollution, oil and gas drillers have argued that the practice is safe and should be regulated at the state level.

"The court recognized that both substantive infirmities with the rule itself and procedural inadequacies in (Bureau of Land Management's) rulemaking process compromise the validity of BLM's hydraulic fracturing rule," said Mark Barron, an attorney with Baker & Hostetler representing the two oil groups in the lawsuit.

Reporting by Ayesha Rascoe