Regulating America Out Of The Oil Shale Fracking Business

Editorial Cartoon by William Warren

by Dustin Howard : Prior to his reelection, President Barack Obama said that the U.S. is the "Saudi Arabia of natural gas." Like so many things, the President has no problem publicly taking credit for what his Administration privately disrupts. Earlier this year, the Bureau of Land Management (BLM) issued controversial rules on hydraulic fracturing, the very genesis of the domestic energy revolution that is moving the United States toward energy independence. What does that mean for the prices we pay for oil and natural gas?

The BLM's rules are meant to regulate fracking on federal lands and Indian reservations. However, the BLM controls 260 million acres of surface land, and 700 million acres of mineral rights beneath it, making the rules far-reaching and impactful. This amounts to 100,000 wells on federal land, which is 11 percent of U.S. production, and 5 percent of our total consumption. More than 90 percent of new land-based wells in the U.S. use fracking.

The new rules are currently in limbo after a series of court rulings, but would impose redundant storage and construction standards, which are already regulated by major producing states like Wyoming and Colorado. This, as well as the long permitting process, further obstruct producers from bringing oil and natural gas to market. The existing state processes take less than a week on average, where the federal process takes over eight months.

Compliance with the BLM's rules would increase the cost $97,000 per well according to industry sources. That would be bad enough, but the rules will also force producers to publically disclose their proprietary processes to all; not just the regulators, but the environmental interests that are trying to sue them out of business. These rules open the door for a "death by a thousand cuts" strategy that their opponents would surely use to stop production.

This would be devastating to the United States economy that is inching closer to energy independence for the first time in years. The fracking boom has increased crude oil production substantially, accounting for 49 percent of American production. Fracking has nearly doubled oil and natural gas production overall, giving consumers relief in an otherwise troubled economy.

Before the rules make it out of court alive, there is an opportunity to kill them once and for all. Instead of allowing environmentalists to wage a war of attrition on one of America's most promising industries, Congress can instead defund the rule in the coming omnibus spending bill for the remainder of Fiscal Year 2016, providing investors and producers the certainty the Obama administration would otherwise deny.

In fact, in the underlying House Interior and Environment appropriations bill, Section 439 would have defunded the rule altogether: "None of the funds made available by this or any other Act may be used to implement, administer, or enforce the final rule entitled 'Hydraulic Fracturing on Federal and Indian Lands' as published in the Federal Register on March 26, 2015 and March 30, 2015 (80 Fed. Reg. 16127 and 16577, respectively)."

Now, House and Senate lawmakers need only carry it over to the next spending bill. Congress has the opportunity to assert their Article I prerogatives, and secure the energy future their constituents deserve, and leaving fracking regs to the states.

As Oklahoma Republican Senator James Lankford noted in a June statement, "the regulation of hydraulic fracturing should remain a state function. There is no need to grant more regulation of it to the federal government."

The American people have paid enough for foreign energy, and for the President's radical environmental policy. It is time that Congress return the favor.
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Dustin Howard is a contributing editor at the Americans for Limited Government

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