As we’ve seen time and time again, at least in Texas, state government is in the best position to regulate the energy industry in areas such as hydraulic fracing. Texas has done a good job of using its laws and its court system to deal with the issue in a reasonable and sensible way, promoting the oil and gas industry for economic growth and energy independence while also making sure Texans, their property rights and their environment are safe.
North Dakota Senator John Hoeven’s new bill is a welcome move in Washington for those of us working in oil and gas law. Senator Hoeven, who is on the Senate’s Energy and Natural Resources Committee, is calling it the Empower States Act. He told reporters in Bismarck, North Dakota that “(t)he legislation also recognizes that states have a long record of effectively regulating oil and gas development, including [fracing], with good environmental stewardship.” He went on to assert that “(w)ith the right policies, I believe we can get our country to energy independence in five to seven years.”
Senator Lisa Murkowski of Alaska immediately signed up to cosponsor the bill. “Senator Hoeven’s bill provides for local accountability, local knowledge, and local communication instead of a one-size-fits-all federal approach to regulation” Senator Murkowski said while she was in North Dakota for a two day tour of the technological advances used in the Bakken shale region. She said that it “makes sense” to let the states take the lead on regulations in oil and gas development.
If the bill passes and goes into effect, any federal agency or department would be required to hold a hearing and consult the state, Indian tribe and local government affected by any proposed new regulation on oil and gas development. The agency proposing the new regulation would also be required under the bill to create an energy and economic impact statement identifying any potentially adverse effects on energy supplies, reliability, and price, and discuss possible job losses and revenue decreases to the states’ general and education funds. The federal agency would also have the burden of showing that the new regulation is needed to prevent immediate harm to humans and the environment. Senator Hoeven said this is intended to prevent arbitrary decisions by the Environmental Protection Agency (EPA), which has been a serious problem in recent years, and will allow states independence in determining what is best for their unique geological circumstances. Finally, the bill includes an opportunity for redress in the federal courts, either in the state or in the District of Columbia. The federal court would be required to examine the regulation itself, rather than relying exclusively on the EPA’s (often biased) findings.
In addition to Senator Murkowski, the bill has attracted the support of the American Petroleum Institute. API’s president Jack Gerard said, “Hydraulic fracturing has been used safely for more than 60 years, and the states are well-equipped to ensure that record continues. The Empower States Act recognizes that states are getting the job done when it comes to robust regulation of [fracing].”
The bill was still in a Senate Committee at the end of the 2012 session. Let’s hope it is taken up again in 2013.
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