American Oil and Gas Reporter - August 2016 - 102

ConventionSection: Western Energy Alliance

Legal Wins, Regulatory Input
Uphold Alliance's Goals
By Dan Larson
Special Correspondent
DENVER-Success in the courtroom,
persistence on the regulatory front, and
effective challenges to anti-industry rhetoric have combined this year to carry the
Western Energy Alliance and its members
through a difficult market downturn, say
the group's leaders.
As they prepare for their annual meeting, scheduled for Aug. 17-18 in Vail,
Co., Alliance leaders acknowledge the
group's members are enduring a slow
market, and in response have reduced
the Alliance's operating budget and cut
staff. "As the industry continues to face
difficult market conditions, Alliance directors and staff have shown they recognize
the importance of active participation in
policy, regulatory and legal matters," reflects Jay Ottoson, Alliance chairman
and president of SM Energy in Denver.
Ottoson, whose term as Alliance chairman concludes with the meeting at the
Vail Marriott Mountain Resort, adds, "I
am proud of the accomplishments we
have made and confident the Alliance
will continue to hold a pivotal role in
federal lands access and energy issues in
the West."
The Alliance continues to champion
such issues and adds value for members
by finding new ways to reach a wider audience with its insights into energy vitality
while it pushes back against regulatory
overreach, reflects President Tim Wigley.
According to Wigley, regular e-mails,
an engaging social media presence, and
participation in the legislative and regulatory processes help the Alliance provide
continuing value for its members. Such
activities, Wigley notes, inform the energy
discussion and influence policy across
the West and in Washington.
But the Alliance's charter also includes
social activities and networking events,
Wigley observes. Among its contributions
in that role, the group hosts casual events
throughout the year that allow members
to relax and stay in touch. Sometimes,
he describes, the Alliance's business and
social functions come together, as they

did June 23 at the Alliance's second
annual car show.
The car show gives Rocky Mountain
producers and service companies opportunities to network in an informal setting,
he describes. "To maintain the fun atmosphere, we usually don't have any formal announcements," Wigley says.
Despite that, he reflects, it seemed appropriate to discuss some good news at
this year's event. "The federal court decision
that blocked the Bureau of Land Management's fracturing rule was important for
producers everywhere, but especially in
the West," Wigley observes. "That is why
we took time at the car show to reinforce
the story with our members."
Lack Of Authority
The decision, which comes from U.S.
District Judge Scott Skavdahl in Wyoming,
blocked BLM's attempt to regulate wellbore construction, fracturing chemical
constituent disclosures, and water management on federal and tribal lands. The
ruling was handed down June 22.
Following publication in March 2015
of the BLM's final "frac rule," lawsuits
seeking to block the ruling were filed separately by Colorado and Wyoming, and
by the Alliance along with the Independent
Petroleum Association of America against
Interior Secretary Sally Jewell. Skavdahl
later combined the two suits into a single
case. North Dakota, Utah and the Ute
Indian Tribe joined the petitioners' case
against the rule, while six environmental
groups filed as respondents in support of
the government, Wigley recalls.
While Skavdahl reviewed the breadth
of arguments against and for BLM's regulation, his ruling centered on the lack of a
statutory foundation for such a rule, notes
Kathleen Sgamma, Alliance vice president
of government & public affairs. "The
judge's ruling was clear that the BLM
does not have the authority," she describes.
According to Skavdahl, the courts
must "determine whether Congress has
delegated to the Department of Interior
legal authority to regulate hydraulic fracturing. It has not." He cited a pair of previous rulings to support his conclusion.

102 THE AMERICAN OIL & GAS REPORTER

Immediately following the district
court ruling, a White House spokesman
indicated the government would respond.
Less than a week later, the federal government filed its intention to appeal the
ruling at the U.S. Court of Appeals for
the 10th Circuit in Denver (AOGR, July
2016, pg. 38).
"We have a strong argument to make
about the important role that the federal
government can play in ensuring that hydraulic fracturing doesn't threaten drinking
water," stated White House spokesman
Josh Earnest. "That is a pretty simple
proposition and indicative of the common-sense approach the Obama administration has pursued. That has been our
policy approach, but when it comes to
legal authority, we will continue to make
our case in the courts."
Judge Skavdahl on Sept. 30, 2015, issued an injunction that prevented the
BLM rules from taking effect (AOGR,
October 2015, pg. 18). According to press
accounts, the injunction prompted a bureau
spokesperson to declare at the time that
BLM would "continue to process applications for permits to drill and conduct
site inspections under the pre-existing
regulations."
The injunction offered an early indication that Skavdahl, appointed by President Obama to the federal bench in 2011,
considered BLM's fracturing rule an overstep, Sgamma suggests. "In the 52-page
ruling granting our preliminary injunction,
the judge agreed with many of the points
we argued and then declared the BLM
lacked authority," Sgamma notes. "When
your preliminary injunction is granted,
there is a high likelihood your arguments
have merit. And with his strongly-worded
ruling, (Skavdahl) indicates he is even
more convinced. I believe that bodes well
for our chances in the appeals court."
Attorney Mark Barron of Baker &
Hostetler LLP, who represented the Alliance and IPAA in the case, concurs
about the strength of the industry's case.
The limit of BLM authority "is only one
problem with the fracturing rule," Barron
is quoted in media reports. He adds that
BLM's fracturing rule is "substantively

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