Oil & Gas Boom 2014: A Withering Regulatory Assault

Apr 1 2014, 7:09pm CDT | by

Oil & Gas Boom 2014: A Withering Regulatory Assault
Photo Credit: Forbes Business

While the Obama Administration frequently touts its commitment to an “all of the above” energy policy, its ongoing devotion to handing out massive subsidies (wind, solar) and demand quotas (ethanol, biofuels) to some forms of energy while ramping up taxes and heavy-handed regulations on others reveals this commitment to be highly qualified and selectively applied.  Nowhere is the downside of this picking-and-choosing approach to energy policy more evident than as it relates to the oil and gas industry, upon which the Administration’s ongoing withering regulatory assault continued last week on several fronts.

First, on March 25, the Environmental Protection Agency (EPA), working in concert with the Army Corps of Engineers, issued its new “Waters of the United States” proposed regulation, which EPA claims would “clarify” the scope of its regulatory authority under the Clean Water Act (CWA).  Naturally, in “clarifying” its authority, EPA – as it invariably does – seeks to vastly expand said authority.

The proposed rule would take EPA’s current statutory authority under the CWA to regulate “navigable waters” and “clarify” it in a way that would allow it to regulate any connected or adjacent wetlands, streams, creeks, ditches or ponds, including those that are intermittent, seasonal, man-made or “ephemeral”, whatever that means.  EPA protested that concerns expressed by the various industries the rule would impact were “overblown”, which is what EPA always does before going about ensuring that such concerns invariably are either met or exceeded by the ultimate impacts.  This is how EPA has functioned since its inception, in administrations of both parties, and no one should expect it to change anytime soon.  Or ever, for that matter – it’s the nature of this bureaucracy.

EPA Administrator Gina McCarthy quickly moved to reassure the Agricultural industry that their existing exemptions under the CWA would not be impacted, a statement no one really believed.  Conversely, no such assurances were forthcoming related to the oil and gas or other energy industries, an omission which surprised no one.

This proposed rule is the third effort in recent years to expand EPA authority in this area.  There were repeated efforts to pass legislation through congress during the early part of President Obama’s first term, all of which failed.  More recently, the EPA issued a guidance document under the statute that it decided to withdraw in response to strong protests by affected industries.  So one must assume the agency hopes that this third attempt to regulate your local drainage ditch or stock pond will be the charm.

Not to be outdone, on March 28 the U.S. Fish and Wildlife Service announced its decision to list the Lesser Prairie Chicken as “threatened” under the Endangered Species Act.  While this designation is a step below the “endangered” status under the ESA, and theoretically provides regulators and affected parties more flexibility in determining ways to go about protecting this bird, the potential negative impacts of the listing on vast swaths of five different states is very significant.

The oil and gas industry and other affected parties were naturally disappointed by the decision, given that companies, ranchers and other landowners had already agreed to set aside more than 3 million acres of land as habitat for the chicken under the Five State Conservation Plan that is sponsored by the states of Texas, Oklahoma, Colorado, New Mexico and Kansas.  The decision ultimately becomes another victory for radical groups like the Center for Biological Diversity (CBD), which have been allowed to abuse this statute and circumvent the normal regulatory and administrative processes with their “Sue and Settle” racket I detailed for readers in this space last year.

In fact, Oklahoma Attorney General Scott Pruitt challenged this spurious and really un-American practice in a lawsuit he filed in federal court earlier in March.  If there is any justice remaining in this country’s legal system, he will prevail.  Of course, any ultimate disposition of that case will come years in the future.  In the meantime, CBD will have free reign to continue collecting millions of dollars from the federal government at the expense of taxpayers and consumers.

Also on March 28, the White House released an outline of its long-awaited Climate Action Plan Strategy to Reduce Methane Emissions. The strategy would initiate a process whose ultimate goal would be EPA regulation of methane emissions at several points along the upstream, midstream and downstream supply chain for natural gas, as well as the coal industry and landfills.

The process would begin with the solicitation of input from affected industries through a series of technical white papers, followed by bureaucratic determination of possible actions that everyone expects would result in heavy-handed regulation of the natural gas industry, which has long been the goal at EPA. The strategy document also includes proposed updated standards under the Bureau of Land Management’s Onshore Order #9, which governs venting and flaring of natural gas in oilfield operations on federal lands.

Interestingly, the strategy in no way contemplates mandatory regulation of farm animal flatulence and other agricultural industry emissions, which are the largest single source of methane emissions in the United States.  Then again, if EPA were to regulate flatulence from cows and sheep, it might then attempt to extend its authority to similar human emissions, and nobody with any fiber in their diet wants to see that happen.

Coincidentally, on April 1, the House Budget Committee under Chairman Paul Ryan issued its proposed 2015 budget.

In his statement accompanying the release, Rep. Ryan criticized the Administration for creating nearly $500 billion in additional annual regulatory activity costs associated with compliance since 2009.

“The President has installed a heavy-handed compliance culture dependent on regulations, favorable tax treatment and spending on administration-favored constituencies. This administration has proposed more economically significant regulations in four years than previous administrations have in the past 15 years combined,” Ryan said.

Mr. Ryan was of course speaking globally about the Administration’s impacts across the economy, but no sector has been more impacted by this unending assault has oil and gas.  And almost three more years of this fun still to come.

Follow me on Twitter at @GDBlackmon

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Global entrepreneurship summit boost for SMEs
Marrakech, Nov 22 (IANS) Nine agreements were signed between the Moroccan General Confederation of Enterprises (CGEM) and several small and medium enterprises (SMEs) as well as between major Moroccan banks and start-ups at the 5th Global Entrepreneurship Summit (GES 2014) held in Morocco.
 
 
NASA's flying saucer among 'Best of What's New'
Washington, Nov 22 (IANS) NASA's Low-Density Supersonic Decelerator (LDSD), a spacecraft that aims to facilitate the safe landing of future Mars missions, has earned a place in the the Popular Science magazine's "Best Of What's New" list.
 
 
Indian helping to light up Gambia (Diaspora Feature)
Banjul (Gambia), Nov 22 (IANS) Like many Indians who are proving to be philanthropists around Africa, Ram Mohan has set up a social business called Comafrique Intelizon Initiative and has embarked on the replacement of candles in villages in the Gambia with solar lights from India.
 
 
Leopards in human areas not conflict animals: Study
New Delhi, Nov 22 (IANS) Leopards in human areas are not always "stray" or "conflict" animals but residents with strategies to thrive in human dominated areas, says the first GPS-based study of leopards in India.
 
 
 

Latest from the Network

Amazon Black Friday: Samsung UN32H5203 Black Friday TV Deal is Best Seller on Amazon
Amazon begun to take pre-orders on 15 Samsung TV Black Friday 2014 TV deals. All deals are the at the lowest advertised prices in Black Friday ads. All Samsung Black Friday deals seem to be controlled by Samsung. Amazon...
Read more on Black Friday Countdown
 
Evangeline Lilly appreciated new Hobbit role
Evangeline Lilly found it ''liberating'' playing a new character in 'The Hobbit' movies. The former 'Lost' actress joined the cast as Tauriel in second movie 'The Hobbit: The Desolation of Smaug' and though she was...
Read more on Movie Balla
 
Indian smuggler shot by Nepal police
Kathmandu, Nov 22 (IANS) Nepal Police shot dead an Indian national along the Nepal-India border while he was smuggling weapons from India. The incident took place Saturday afternoon in Bishnupura village of Rupandhei...
Read more on Politics Balla
 
Battle with IS militants continues in Iraq
Baghdad, Nov 22 (IANS) Iraqi security forces launched a major offensive against Islamic State (IS) militants in the western province of Anbar Saturday, even as fighting continued in the province of Salahudin, a...
Read more on Politics Balla
 
Global entrepreneurship summit boost for SMEs
Marrakech, Nov 22 (IANS) Nine agreements were signed between the Moroccan General Confederation of Enterprises (CGEM) and several small and medium enterprises (SMEs) as well as between major Moroccan banks and start-...
Read more on Business Balla
 
Five killed in Indonesia landslides
Jakarta, Nov 22 (IANS) At least five people were killed and many houses damaged in landslides in Indonesia's North Sumatra Saturday, an official said here. Heavy downpour caused the landslides in Sibio Bio village of...
Read more on Politics Balla
 
Al-Shabaab claims responsibility for Kenya bus attack
Nairobi, Nov 22 (IANS) Somalia-based militant group Al-Shabaab Saturday claimed responsibility for the killing of 28 bus passengers in Kenya. Al-Shabaab spokesman Sheikh Ali Mohamud Rage said the dawn attack on the...
Read more on Politics Balla
 
Force India cars to start 13th, 14th at Abu Dhabi
Abu Dhabi, Nov 22 (IANS) Force India drivers Sergio Perez and Nico Hulkenberg will start 13th and 14th at the season ending Formula 1 Abu Dhabi Grand Prix to be held at the Yas Marina Circuit here Sunday. In Saturday'...
Read more on Sport Balla
 
Chandhok finishes 6th in Putrajaya ePrix
Putrajaya (Malaysia), Nov 22 (IANS) India's Karun Chandhok, driving for Mahindra Racing, eventually finished sixth to bring home eight points despite racing for a podium spot for most of the Formula E Putrajaya ePrix...
Read more on Sport Balla
 
Australia replace Sandhu with Conway in team facing India
Melbourne, Nov 22 (IANS) New South Wales (NSW) fast bowler Harry Conway replaced bowler Gurinder Sandhu in the CA XI squad in the first tour match against India as the Indian-origin player was selected for the NSW...
Read more on Sport Balla