Although the White House Council of Economic Advisers’ annual report to Congress largely restates the President’s State of the Union address on “middle-class economics,” it includes a welcome suggestion. This glimmer of hope is a lone, but surprising sentence in the report’s energy chapter: “The regulatory structure for addressing local environmental concerns, especially around land and water use [for hydraulic fracturing operations], exists primarily at the State and local level.”
If the Obama Administration were to take the advice, it would mark a positive step in the right direction after years of moving in the opposite direction.
State and Local Regulation of Fracking
Leaving regulation of fracking to the states would leave it in the most capable and responsive hands. States have effectively regulated fracking for decades, such that there has not been a single case of water contamination from fracking operations. Even as new technology sparked a boom in shale oil and gas production, states have stayed apace of changing technology, the interests of their constituents, and increased demand. Further, states were already regulating oil and gas activities from construction through waste management scores of years ago. Equally as important, the best environmental policy is for management decisions to be made closest to the people who will benefit from wise management or be hurt by poor choices, as detailed further in the American Conservation Ethic.
The council’s statement also seems to tacitly recognize the economic benefits of the revolution in oil and gas production, which has occurred on lands under state management, not federal lands. In fact, oil production on federal lands has fallen by 9 percent since 2009, while production on state and private lands has increased by 61 percent. Yet roughly 43 percent of proved crude oil reserves are on federal lands. Similar stories can be told of coal and natural gas.
This bit of good policy seems more like a blind squirrel finding a nut, given the council’s energy chapter as a whole and the momentum of the Administration’s regulatory agencies. The Environmental Protection Agency (EPA) continues to move forward slowly with regulation on fracking chemicals in addition to recently announcing intentions to regulate methane emissions on the tail end of oil and gas production. The Bureau of Land Management is poised to release its own final rule in the next few weeks. The federal government further regulates energy production on federal lands with redundant and burdensome environmental laws, such as the National Environmental Policy Act.
Real Pain, Little Gain
Like the White House’s other energy policies, there’s more to the rhetoric of Obama’s middle-class economics. The center of the President’s energy policy isn’t energy at all—it’s the Clean Power Plan. As the council’s report states, “The energy revolution lays the groundwork for reducing domestic greenhouse gas emissions” (emphasis added).
The Administration is using misleading and outdated climate science to defend the President’s Clean Power Plan, which will have next to no impact on global temperatures, as even the EPA admits. Even worse, the President’s plan is poised to wreak havoc on the nation’s electric grid and the economy in the form of hundreds of thousands of jobs lost and higher energy prices.
In other words, it is very real pain for little or no gain: the worst kind of environmental policy. In fact, no environmental policy is good if it harms human beings. Regrettably, many of the President’s energy and environment policies don’t match his rhetoric about middle-class economics.