Regulatory Reform

Administration Gives Mixed Signals on Domestic Energy Production

President Obama used his State of the Union address last month as an attempt to reassure the oil and gas industry of his commitment to expanding domestic production as a step toward energy independence. The need for reassurance was evident, as past statements from Obama, and indeed the actions of his administration, have entrenched the notion that he is the anti-energy President.

Though the remarks made headlines, it appears the industry is not yet convinced, and it did not take long for subsequent actions to demonstrate clearly that the President is retreating from his rhetoric, especially as it relates to shale gas.

“We hear positive statements about natural gas, but the administration now has eight different departments and agencies reviewing, with the intent to regulate, the high-tech practice of hydraulic fracturing,” API President Jack Gerard told the Wall Street Journal. Refusing to allow Obama credit for the development, Gerard added that production of natural gas has increased in the U.S. “in spite of his Administration.”

Dan Dinges, President and CEO of Cabot Oil and Gas Corporation, is the most recent industry leader to express confusion over Obama’s alleged support of natural gas. Citing the President’s State of the Union remarks, Dinges sent a letter to EPA Administrator Lisa Jackson after the agency reversed its previous position – and contradicted the approval of state regulators – by initiating a water sampling program in the area around Dimock, Pennsylvania.

The letter accuses the agency of making selective use of data points, ignoring science, reaching a finding that is inconsistent with that of the Pennsylvania Department of Environmental Protection (PADEP), and reversing its previous position, which it has expressed as recently as December.

“It appears that EPA selectively chose data on substances it was concerned about in order to reach a result it had predetermined,” wrote Cabot in a report on the issue. “EPA chose to include specific data points without adequate knowledge or consideration of where or why the samples were collected, when they were taken, or the naturally occurring background levels for those substances throughout the Susquehanna County area.

Bewildered by the lack of evidence produced by EPA to defend its decision to regulate on top of the efforts by PADEP, Dinges speculates that the decision was political, since a motive having to do with environmental protection is not readily apparent. His suspicion is justified by the President’s single-minded captivation with clean energy and his willingness to bow to his supporters in the environmental left. Despite his public statements, his administration has been nothing but an obstacle to further development of America’s energy resources, as indicated by this running list of anti-energy decisions kept by House Natural Resources Chair Rep. Doc Hastings.

BLM is preparing to release a regulatory scheme for hydraulic fracturing on federal lands, and a leaked draft indicates that it will include, among other regulations, complete chemical disclosure of fluids used in the fracking process. Like the water sampling program in Dimock, this decision is redundant to the efforts of states that are already effectively adapting their regulatory programs to the challenges posed by hydraulic fracturing.

ALEC recently adopted as model legislation the Disclosure of Hydraulic Fracturing Fluid Composition Act, which has already been enacted in two major gas states, Texas and Pennsylvania, and introduced in four other states where hydraulic fracturing is used: Illinois, Indiana, New York and Ohio. These state bills are designed to preempt the need for an unfriendly BLM to impose a complex, one-size-fits-all regulatory scheme on the oil and gas industry.

Yet somewhat unsurprisingly, EPA and BLM are pushing forward nonetheless. Both this pending regulatory program and EPA’s actions toward Cabot provide further ammunition for those advocating for state sovereignty in regulating oil and gas drilling. It is critical to avoid heaping costly, duplicative regulations on our nation’s burgeoning domestic oil and gas industry, an integral part of which is allowing states to maintain their role rather than subject businesses to the whims of federal regulatory bodies .

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth