Five Highlights Surrounding New Rules for Hydraulic Fracturing on Federal Lands

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP, with Katharine Newman, Sidley Austin LLP

On March 20, 2015, the Department of the Interior’s Bureau of Land Management (BLM) released a final rule regulating hydraulic fracturing on federal land managed by BLM and the U.S. Forest Service, as well as on Native American tribal lands. The rule is the first from the federal government to specifically address hydraulic fracturing on federal lands.

For BLM, the final rule completes a process the agency began in 2010 to update well-drilling regulations in response to technological advances in high volume hydraulic fracturing and horizontal drilling that now dominate domestic oil and gas operations. BLM reports that there are over 100,000 oil and gas wells under federal management and that at least ninety percent of these wells use hydraulic fracturing technology. The new rule will not, however, govern wells on private and state land that are regulated by state agencies and account for the vast majority of oil and gas development in the United States.

Below are five key highlights related to the final rule: Continue reading

Federal Regulators’ Disregard for Sound Science Displayed in Four Agencies’ Actions

4th CircuitHow federal regulators use—and abuse—science in the regulatory process has a profound impact on regulated businesses and consumers who purchase their products and services.  In addition to the financial impact, every time that an agency forces science and the scientific process to serve its ideological or political agendas, rather than be guided by the neutral data, the public becomes less trusting of government pronouncements based on science. Below are some troubling recent examples of regulatory junk science. The first example demonstrates that protections against junk science do exist in the courtroom. The subsequent three examples reflect the lack of similar protections in the rulemaking and adjudication contexts.

Fourth and Sixth Circuits Slap-down EEOC. For the second time in less than a year, a federal appellate court has rebuked the Equal Employment Opportunity Commission (EEOC) for its use of junk science in accusing an employer of discrimination for conducting criminal background checks in its hiring process. EEOC’s litigation crusade against criminal background checks has faltered since its outset, with federal district court judges in Ohio and Maryland separately dismissing Title VII claims in 2013. Last April, just 20 days after hearing oral argument, the U.S. Court of Appeals for the Sixth Circuit affirmed the Ohio trial judge’s decision in EEOC v. Kaplan. The court found the EEOC’s statistical proof of disparate impact—compiled and presented by expert witness Kevin Murphy, an industrial psychologist—unreliable and “based on a homemade methodology” not generally accepted in the scientific community. A WLF Legal Opinion Letter and a WLF Legal Pulse post, both published last spring, offer more detail on the ruling. Continue reading

Ohio Supreme Court Holds Municipal “Fracking” Regulations Cannot Conflict with State Rules

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP, with Katharine Newman, Sidley Austin LLP

Last week, the Ohio Supreme Court weighed in on the battle being waged between state and local governments over oil and gas development, ruling that Ohio cities and municipalities may not use home rule to regulate oil and gas operations if local regulations directly conflict with Ohio state law. The decision represents a significant victory for the oil and gas industry and is likely to serve as important precedent in disputes raising similar issues in other states.

In State ex rel. Morrison v. Beck Energy Corp., the court ruled 4-3 that Munroe Falls’ ordinances, enacted between 1980 and 1995, were in direct conflict with Ohio’s 2004 law, R.C. 1509, which provides statewide, uniform regulation of oil and gas operations. R.C. 1509 preserves local regulation over public spaces and permit authority for heavy traffic, but expressly prohibits a local government from using its powers to impede or obstruct oil and gas activity. Continue reading

Struggle over Federal Environmental Law Preemption of Public Nuisance Suits Heats Up in Kentucky

faulkFeatured Expert Column − Complex Serial and Mass Tort Litigation

by Richard O. Faulk, Hollingsworth LLP*

It’s been a long wait for those who believe the federal Clean Air Act preempts public nuisance claims under state common law.

When the Supreme Court reversed and remanded Connecticut v. American Electric Power in 2011, it refused to rule on the preemption issue—leaving the question for the U.S. Court of Appeals for the Second Circuit to resolve on remand.1 Before that could happen, however, the plaintiffs withdrew their complaints—and the opportunity vanished.2

When a federal district court granted dismissal of a public nuisance claim in Bell v. Cheswick Generating Station, the opportunity rose again. Hopes were high that the Third Circuit would affirm the dismissal, but alas, the court reversed. Nevertheless, the case rose to the Supreme Court on a petition for certiorari. Numerous amicus curiae briefs were submitted to support the petition, but the Supreme Court denied review. Many were left wondering whether the Supreme Court’s remand of the issue in AEP truly reflected the Court’s interest in the issue—or whether it was simply a matter of appellate housekeeping. Continue reading

Local “Fracking” Bans Face Constitutional Takings Challenges

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP

Recently, the citizens of Denton, Texas voted to ban hydraulic fracturing within the city limits, becoming the first municipality in the state to do so. One day later, the Texas Oil and Gas Association filed suit, arguing the ordinance was unconstitutional and preempted by state law. N1 In enacting a ban, Denton joined the list of municipalities that have adopted limits on hydraulic fracturing, N2 including a number of outright bans. N3 The bans reflect the ongoing battle between state and local interests over the value and risks of oil and gas development. The legality of local bans is being hotly disputed in the courts, with two common challenges being that the bans are preempted by state law or constitute an unconstitutional taking.

Preemption

Plaintiffs have challenged local bans as expressly preempted by or in direct conflict with a comprehensive state oil and gas statute—quite simply, the argument goes, municipalities and other local governments cannot prohibit what has already been expressly authorized by the state. Moreover, as a policy matter, allowing local governments to restrict or otherwise regulate oil and gas development would create a patchwork of regulation within a state—or even within a single county. To date, several courts have found preemption, but others have deferred to local land use authority. N4

Takings

Plaintiffs have also challenged local bans on constitutional grounds, N5 asserting a range of claims, including a Takings claim under the Fifth Amendment (and state analogs). N6 Although as of yet no courts have ruled on the issue, here are a few of the basics:

Of course a traditional “taking” occurs when the government actually causes a “permanent physical occupation” of an individual’s property. N7 A regulation, however, can be a taking when it affects or limits the use of private property to a sufficient degree. N8 According to the Supreme Court, a “regulatory” taking occurs if the regulation deprives the property holder of all economically beneficial use of their property, Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), or satisfies a three-part balancing test set out by the Court in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). Continue reading

Nutrition Nannies Win Only 1 of 4 High-Profile Ballot Initiatives

election2014The 2014 election featured four high-profile attempts by the national food nanny movement to impose its agenda through municipal and state ballot initiatives. Voters in Oregon and Colorado rejected mandatory “genetically-modified organism” (GMO) food-labeling measures, while voters in two California cities split on sin taxes for “sugary” drinks.

Food Labeling. Exactly 2/3 of Colorado voters said “no” to the Colorado Right to Know Act. The vote on Oregon’s Measure 92 was considerably closer, with the “no’s” outnumbering the “yes’s” 50.7% to 49.3%. Each initiative trumpeted the superficial appeal of  consumers’ “right-to-know,” and both made the oft-repeated misleading or false claims in their legislative “findings” sections that GMOs in food are unregulated, unsafe, and unhealthy. Much like California’s unsuccessful Proposition 37 initiative, the Oregon and Colorado proposals were riddled with labeling exemptions, including food served at restaurants and alcoholic beverages. Oregon’s proposal would have also unleashed the plaintiffs’ bar on food processors through a “private attorney general” enforcement provision.

Thin Taxes? Two California municipalities, San Francisco and Berkeley, held votes on soda excise taxes. The Berkeley measure, which passed by a large margin, imposes a one-cent-per-fluid-ounce tax on all soda, energy drinks, coffee syrups, sweetened tea, and other packaged “sugary” drinks, while exempting milk and diet soda. The failed San Francisco initiative would have imposed a two-cent-per-fluid-ounce tax on sodas and other sugar-sweetened drinks, including some juices, coffees and flavored waters. It garnered 55% at the polls, but fell short of the 66% “yes” votes needed for measures whose revenues are aimed at a specific purpose. The initiative would have funded children’s nutrition and physical education programs. The revenues from Berkeley’s tax measure will go into the city’s general fund.

The Bigger Picture. Mandatory GMO-labeling proponents have now lost each of their four initiative campaigns. And they have failed in states where one might think voters would overwhelmingly support such progressive measures: California, Washington, Oregon, and Colorado. With 2015 being a slow year for elections, activists will likely turn their attention now to state legislatures. The negative opinions of hundreds of thousands of voters in the aforementioned states should speak volumes to politicians in other states about mandatory GMO labeling. In addition, as several WLF publications have explained (i.e. here and here)—and a suit against Vermont’s labeling mandate argues—such mandates infringe on federal authority to regulate food labels and tread on food producers’ constitutional rights. Policy makers should bear these points in mind, and keep a watchful eye on the legal challenge to Vermont’s law, when they are urged to embrace mandated labeling.

Nutrition nannies such as former New York City Mayor Michael Bloomberg have trumpeted the Berkeley vote as a watershed moment. Given the Berkeley electorate’s historical affinity for fringe movements and big government, the outcome is more likely an aberration than a harbinger. The result also should be considered counterproductive for the fight against obesity. It advances the entirely baseless notion that regressive taxes on soda and other disfavored beverages will benefit taxpayers’ health. Reliance on such taxes also detracts attention and energy from actual solutions to America’s expanding waistline. But considering the financial largesse of benefactors like Mr. Bloomberg and the zeal of his activist allies, the fight over manipulative sin taxes is likely to continue.

Also published by Forbes.com on WLF’s contributor page

Federal Court “Shall” Hear Challenge on EPA’s Failure to Assess Job-Loss Impact of its Rules

EPA-LogoSection 321(a) of the federal Clean Air Act (CAA), titled “Continuous Evaluation of Potential Loss or Shifts of Employment,” states plainly:

The Administrator shall conduct continuing evaluations of potential loss or shifts of employment which may result from the administration or enforcement of the provisions of this chapter and applicable implementation plans, including where appropriate, investigating threatened plant closures or reductions in employment allegedly resulting from such administration or enforcement.

The Environmental Protection Agency (EPA) has long treated this as yet another optional duty, which it may or may not perform at its discretion. Murray Energy Corporation and a number of other coal companies that have suffered substantial job losses due to environmental regulations disagree. The word “shall” in § 321(a), they argue, reflects that Congress required EPA to do this. Last March, these companies filed suit in the Northern District of West Virginia, seeking declaratory and injunctive relief. A June 6 WLF Legal Backgrounder by Vermont Law School Professor Mark Latham and Shook, Hardy & Bacon L.L.P. attorneys Victor Schwartz and Chris Appel, Is EPA Ignoring Clean Air Act Mandate to Analyze Impact of Regulations on Jobs?, described the suit and its arguments.

On September 16, Chief Judge John Preston Bailey rejected EPA’s specious argument that the agency is protected by sovereign immunity and allowed the suit to proceed. The plaintiffs sued under a section of the CAA which permits actions if EPA has failed to perform a non-discretionary duty. The court thus had to determine whether EPA had discretion to ignore § 321(a).

As Chief Judge Bailey noted, courts need not defer to federal agencies’ positions when determining jurisdiction. And Chief Judge Bailey certainly offered no deference. He cited extensive case law that supported Murray Energy’s argument that “shall” reflects a mandatory duty. As one court stated, “The word ‘shall’ does not convey discretion. It is not a leeway word, but a word of command.” EPA argued that § 321(a)’s lack of a “date-certain deadline” renders the provision discretionary. Chief Judge Bailey found that while that issue “was open to question,” relevant precedent dictated that the lack of a deadline was not “fatal to plaintiffs’ case.”  He added, “While EPA may have discretion as to the timing of such evaluations, it does not have the discretion to categorically refuse to conduct any such evaluations.”

In addition, Chief Judge Bailey refused to strike the plaintiffs’ request for injunctive relief.

Given the enormous implications of this case for EPA and for regulated entities, this decision marks, as the saying goes, merely the end of the beginning for Murray Energy Corp. v. McCarthy.

Also published by Forbes.com at WLF’s contributor site