Proposed Federal Rules on Fracking Cause for Concern

May 4, 2012

A worker at a natural gas production site in Camptown, PA. Photographer: Julia Schmalz/Bloomberg.

Today, the U.S. Department of Interior released proposed regulations from the Bureau of Land Management's (BLM) regarding well construction and hydraulic fracturing on federal and tribal lands.  These regulations are significant because they represent the first attempt by the federal government to regulate hydraulic fracturing. While these regulations appear to be less extreme than earlier leaked versions, they remain deeply troubling.

States have a long and credible history of regulating oil and natural gas development, including hydraulic fracturing.  As unconventional oil and natural gas development has grown, states have responded with proactive and modern regulations that make sense for their respective circumstances.  Those regulations balance the need for energy and the significant positive economic impacts of resource development with the need to ensure public safety and minimize environmental impact.  As such, these states are reaping the employment and economic benefits of increased production.

The addition of this new and unnecessary bureaucracy will increase operating costs and ensure production of the country’s resources will continue to lag, forcing greater reliance on overseas imports.  Yet surely these new regulations will create a net benefit to the country right?  Otherwise why take this step?  According to BLM’s own, overly optimistic projections, the new costs created by this regulation could outweigh societal benefits by as much as $30 million per year.

A one-size-fits-all regulation like the one proposed by BLM today is the wrong approach and ignores the unique geology and physical characteristics that exist around the country.  The Department of Interior has already been hampering production of oil and natural gas on federal lands by imposing an increasingly lengthy and restrictive process.  As a result, in 2011, oil production was down 11 percent and natural gas production is down 6 percent when compared to the previous year. 

Fortunately, development on private and state lands has been able to pick up the slack and meet needed demands.  But further restrictions like the ones proposed today will make it even harder.   One must continue to wonder why the Administration’s “all of the above” approach to energy production seems to mean “none from below.”

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