Feb. 19 (Bloomberg) -- A dozen U.S. governors are pushing for states, not the federal government, to lead regulation of oil and gas drilling. They argue they know their territories best, even as environmentalists question whether they’re doing enough -- or doing the industry’s bidding.
With federal rules on hydraulic fracturing pending, the bipartisan group created the States First initiative to promote states as the “primary and appropriate regulators.” They’ve started a website to publicize their efforts and programs to share expertise such as a regulatory exchange and certification for inspectors.
“We have made great progress, and we urge the federal government to leave regulation in the capable hands of the states,” the governors said in a Dec. 11 letter to American energy policy leaders. “Our programs are working.”
The move that unites Colorado Democrat John Hickenlooper and Texas Republican Rick Perry comes as environmentalists said states have been lax on issues such as potential groundwater contamination and whether byproducts of the technique, also called fracking, trigger earthquakes. It’s just the latest fight about states’ rights and the role of the federal government in monitoring industries such as oil and gas, insurance and firearms.
While the federal government has enacted protections for air and water, states already play a significant role in enforcing those rules and regulating drilling, said Amy Mall, a senior policy analyst at the Natural Resource Defense Council in Washington. Initiatives such as States First can undermine public confidence, Mall said.
“When a governor says it’s safe and they have everything under control, it sounds like industry is writing their talking points,” Mall said in a telephone interview.
Governors joining States First are from Alabama, Alaska, Colorado, Kentucky, Montana, Mississippi, Nevada, North Dakota, Oklahoma, Pennsylvania, Texas and Utah. It’s a partnership between the Interstate Oil & Gas Compact Commission and the Ground Water Protection Council, organizations that represent energy-producing states and their regulators, according to the States First website.
Costs are paid by the commission, which is funded by fees from member states based on oil and gas production, said Carol Booth, a spokeswoman in Oklahoma City. The initiative plans no formal lobbying, she said.
States First was formed in part to ward off “onerous” regulations for fracking on federal lands that the U.S. Bureau of Land Management is considering, as well as about possible rules from a U.S. Environmental Protection Agency study on drinking water, Booth said by phone.
The industry, which includes producers such as Exxon Mobil Corp., Chesapeake Energy Corp., and Chevron Corp. generally supports the initiative's aims, according to Karen Moreau, a spokeswoman for the Washington-based American Petroleum Institute trade group. The group doesn't have a formal position, she said.
“State-level oversight of oil and gas development is the most appropriate and effective approach to protecting human health and the environment while accounting for local geology, hydrology and other local factors,” Alan Jeffers, a spokesman for Exxon, the largest U.S. oil company, said in an e-mail.
Perry, governor since 2000, joined the initiative because it allows the Lone Star State to avoid “the overreaching arms of the federal government,” said Cynthia Meyer, a spokeswoman.
Even so, more than 800 people attended a Jan. 2 town hall meeting in Azle, which is 60 miles (97 kilometers) west of Dallas, to complain that the state is not doing enough in response to dozens of earthquakes in recent months. Federal scientists have linked the temblors in states including Texas, Arkansas and Ohio to wells used to inject wastewater from fracking, a technique in which water, chemicals and sand are shot underground to free oil or gas from rock. U.S. oil production has been at the highest level in more than two decades as technological advances let drillers coax crude from shale rock formations.
But the area around Azle has had more than 30 earthquakes since November and residents have reported loud noises, sinkholes and small cracks in walls, said Lynda Stokes, mayor of Reno, Texas, five miles north of Azle.
Texas responded by ordering additional study of the issue, said state Representative Lon Burnam, a Fort Worth Democrat who has studied fracking issues for a decade.
“The state has been totally negligent,” Burnam said by phone. “Because of our regulatory environment, they have to have 100 percent proof that it is a problem before taking action.”
David Porter, a member of the Texas Railroad Commission, which oversees drilling, issued a statement Jan. 3 to reporters saying the agency must base its regulation on “sound science and proven facts, not speculation and theories.”
Hickenlooper, a former oil-company geologist and one of three Democrats to join the initiative, said states are “the laboratory of innovation.” He said he has met with both environmental groups and industry executives about proposed state rules.
“Rather than just try to regulate over their objections, we sat down with them,” Hickenlooper said in an interview. “Our shared value is we want clean air and clean water and we want to get there as inexpensively as possible.”
Still, five Colorado communities have approved ballot measures since 2012 banning fracking or imposing moratoriums, said Sam Schabacker, an organizer for Food and Water Watch in Denver.
“People on the ground feel like the governor of Colorado is failing in regulating this industry and protecting their health and safety and quality of life,” Schabacker said by phone.
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