Regulatory

Quick Facts

  • Western Energy Alliance is a strong supporter of the REINS Act (Regulations from the Executive in Need of Scrutiny), which aims to rein in out-of-control federal regulation with congressional oversight.
  • From 2004 to 2014, EPA’s regulations cost more than five times as much as the next most costly agency.
  • The average U.S. company paid $233,182 to comply with federal rules.  That’s almost $20,000 per employee on average, with small companies hit the hardest. Those with fewer than 50 employees pay compliance costs over $34,000 per employee.

Industry Is Well Regulated

One of the biggest misconceptions about the oil and natural gas industry is that it escapes regulation entirely or is very lightly regulated. In reality, the oil and natural gas industry is one of the most heavily regulated in America. Regulations that industry must comply with include the:

  • Clean Air Act
  • Clean Water Act
  • Safe Drinking Water Act
  • Endangered Species Act
  • National Environmental Policy Act (NEPA)
  • Comprehensive Environmental Response Compensation and Liability Act (CERCLA)
  • Resource Conservation and Recovery Act (RCRA)
  • Emergency Planning and Community Right-to-Know Act (EPCRA)
  • Occupational Health and Safety Act (OSHA)
  • National Historic Preservation Act
  • Plus state and local laws

The oil and natural gas industry employs thousands of environmental and safety engineers to ensure they comply with all regulations while spending billions of dollars on environmentally beneficial technologies. Companies also continually innovate to produce more oil and natural gas with greater efficiently, which delivers environmental benefits. Companies constantly implement new technologies and better practices that go above and beyond what’s required by regulation to further reduce impacts to wildlife, air, water and the land (see Environmental Stewardship.) However, when mistakes are made or accidents occur, companies are held accountable by state and federal regulators and must correct the situation.

Despite existing regulation and the myriad steps companies take to ensure safe and environmentally protective operations, federal agencies continually institute more regulations that are often redundant while delivering little environmental benefit when compared to the societal cost. Costly regulation takes productive resources away from job creation and economic growth and puts it into red tape. A Small Business Administration report shows that regulations cost American businesses $1.75 trillion annually. The many small independent businesses that make up the oil and natural gas industry are disproportionately squeezed by redundant, costly regulations.

Federal vs. State vs. Local Regulation

One area of contention is determining at what level of government industry should be regulated. The environmental community pushes for increasingly more federal regulations, making the erroneous argument that federal bureaucrats know better than state regulators about how to preserve a state’s own air, land and geology. On the other end of the spectrum are community groups, ironically often supported by those same environmental groups, that argue for local control of oil and natural gas development at the county or city level. In reality, these environmental groups have an agenda of stopping oil and natural gas development and are agitating for local control as a means of banning development. Most cities and counties have neither the resources nor the expertise to effectively regulate the oil and natural gas industry.

States with oil and natural gas development, on the other hand, have a long history of successfully regulating the industry. States have oil and gas commissions with experts on such topics as the state geology and effective industry practices that work in their states. They have environmental agencies that implement federal statutes such as the Clean Air Act and the Clean Water Act. Federal regulators are too far removed from the specific regulatory needs of each state, and have a tendency to put in place one-size-fits-all regulations that do not work well for the particular conditions of each state.

States are also more nimble and able to adjust regulations with advances in technology and industry practices. For example, all states with any sizeable oil and natural gas development have wellbore integrity and hydraulic fracturing rules, which makes any new federal rules unnecessary. For example, the Bureau of Land Management’s (BLM) hydraulic fracturing rule is redundant since 100% of permits to drill approved by BLM in 2014 were in states with recently updated fracking regulations

Governors of energy producing states, both Democrats and Republicans, agree that states should be the primary regulator of oil and natural gas development. States are both flexible and effective in regulating the industry and are supported by the Interstate Oil and Gas Compact Commission and the Ground Water Protection Council to ensure state regulators continue their exemplary health and safety records. And the public understands this as well. Nationwide polling shows that a majority, 62%, does not want centralized control of energy development. 

Energy development polling

Regulatory Comments

Below are comments submitted by Western Energy Alliance on various regulatory issues.