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Senate Subcommittee Reports That States Regulate the Shale Oil and Gas Industry Effectively

Contrary to the Obama administration’s expectations, it sounds as though states are doing a fine job regulating the oil and gas industry, according to members of a shale gas subcommittee in the U.S. Senate. In the Shale Gas Subcommittee 90-day Report subcommittee members reported to the Senate Committee on Energy and Natural Resources during a hearing last fall. The subcommittee was formed to make recommendations about the safety and environmental performance of shale gas production.

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The Report made 20 recommendations, including:

1. Improve public information about shale gas operations.

2. Improve communication between state and federal regulators. The subcommittee recommended continued yearly support to STRONGER (the State Review of Oil and Natural Gas Environmental Regulation) and to the Ground Water Protection Council for expansion of a data management system that determines risk, along with similar programs.

3. Improve air quality. The subcommittee had recommendations for reducing general pollutants, ozone precursors, and methane quickly.

4. Protect water quality. The subcommittee recommended a water management system based on “consistent measurement and public disclosure of the flow and composition of water at every stage of the shale gas production process.”

5. Disclose fracturing fluid composition. The subcommittee believed that although the risk was remote that fluid from deep shale reservoirs fractures could leak into drinking water, any chemicals in fracturing fluids should be made available to the public.

6. Manage short-term and cumulative impacts on communities, land use, wildlife, and ecologies.

The subcommittee intends to report back on any progress made in its next report. Its members hope to correct a public “perception gap” that states don’t adequately regulate the oil and gas industry. In fact, as one member stated: “I think there is a very strong [state regulatory] fabric.” He went on to say that states are superior to the federal government because they are closer to the local communities than federal regulators could be. Regulations can differ depending upon the geology of drilling, which gives Texas different challenges than Pennsylvania. Another committee member noted that state governments in Colorado and Wyoming have made “significant progress” in protecting air quality around oil production efforts. In addition, states have a long history of regulating natural resources. The subcommittee noted this, commenting that overall, “deck chairs” did not need to be “shuffled around.”

As a Texas oil and gas attorney, I couldn’t agree more with the subcommittee’s conclusions. The federal government too often resorts to the “one size fits all” approach to regulation, with the condescending view that state methods that differ from theirs are never good enough. Yet as the subcommittee suggests, not only are state methods good enough, but they’re better. The next report is expected to express this. Certainly we in the oil and gas industry know that it is far easier to produce energy that people need if the regulatory system in place is run by people who actually understand the business — instead of federal bureaucrats who don’t.