New Hydraulic Fracturing Moratorium Bill: Worse Than Misguided

by Blank Rome LLP

Senator Jim Ferlo (Armstrong, Westmoreland, and Allegheny, PA) recently announced his intention to introduce a bill calling for an open-ended moratorium on hydraulic fracturing in Pennsylvania.  The bill is extremely misguided and irresponsible; further, there is no basis for an open-ended moratorium.  We are already seeing a troublesome tendency by some to glom onto unnecessary job-killing policies regarding our energy activities, and this bill would only add to that trend.

Although Senator Ferlo is a Democrat and it was the Pennsylvania Democratic State Committee that voted for a moratorium on fracturing last summer, this is not a blue-red political issue.  Governor Jerry Brown (D-CA) and Governor John Hickenlooper (D-CO), among others, believe that fracturing can take place safely.  President Obama agrees, as evidenced by his recently announced Climate Action Plan (“CAP”), which calls for a 17% reduction in American carbon emissions from 2005 levels by 2020—a task the President calls our “moral obligation,” further emphasizing that natural gas is central to his and our nation’s CAP aspirations.

Senator Ferlo says that the “industry operates in an unregulated way without very many environmental regulations.”  That is nonsense, of course.  It is also ironic that his bill comes on the heels of the University of Texas study, which shows that methane emissions are much lower than previous estimates, and the University of Michigan study, which confirms that hydraulic fracturing is safe and regulatory programs are successfully managing potential environmental impacts.  Additionally, it is not disputed that natural gas is already playing a big role in our nation’s efforts to reduce carbon emissions.  Our carbon emissions are lower now than at any point since 1994 and this is due in large part to the use of natural gas fuel for electricity generation.

The Pittsburgh Tribune Review published an article on Wednesday on the topic of two-year technical schools that educate kids for jobs in the growing shale industry.  The Tribune reported that the number of jobs in Marcellus Shale core industries in Pennsylvania, including gas extraction, drilling oil and gas wells, and pipeline transportation, increased 149 percent—from 12,188 to 30,369 jobs—between the fourth quarters of 2009 and 2012, according to the Three Rivers Workforce Investment Board.  These are good paying jobs—the average wage in these core industries was $83,100, according to the Board.  It seems that Senator Ferlo and his adherents are either not paying attention or they don’t care—or both.

As I told CNBC recently, we are just at the sunrise of this energy renaissance.  This is just the beginning of an economic juggernaut for the U.S. and Pennsylvania.  What is also ironic is that, as everyone knows, Royal Dutch Shell is deciding right now whether or not to build a major ethylene cracker in Western Pennsylvania, right in Senator Ferlo’s home region and right where jobs would be created by the tens of thousands.  That project would sustain about 10,000 construction jobs for the several years it will take to build the plant, as well as 20,000 new jobs overall after construction.  Ferlo’s bill would not only kill existing jobs, but also future jobs.  In fact, Senator Ferlo may have already killed these jobs since the announcement of the bill itself may create uncertainty, which is the enemy of investment.

At the end of the day, this bill is nothing more than irresponsible political theatre.  However, I’m sure that the potentially tens of thousands of men and women that it could put out of work and prevent from getting these jobs are not amused.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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