American Oil and Gas Reporter - January 2012 - 246

The Presidential Papers
arching, one-size-fits-all legislation and
regulation.
The industry's tax structure was the hotbutton issue in 2011 and 2012 will not be
any different. As the budget deficit debate
boiled last summer, the Obama administration and many Democratic legislators in
Congress slammed the oil and natural gas
industry for riddling the federal budget
with "subsidies" and "loopholes." IPAA
was on the forefront of this fight, educating legislators, media, and the public that
drilling costs and percentage depletion are
neither loopholes nor subsidies, but necessary business deductions that all manufacturing industries receive.
IPAA estimated that eliminating these
provisions would cut investment by independent producers-who reinvest 150 percent of their revenue into new American
projects-by as much as 30 percent. This
would eliminate thousands of U.S. jobs.
Through its "Declaration of Independents" oil-focused initiative, IPAA
wrote original economic analyses, largely focused on taxes' economic impact, and
blasted the information to staff and legislators on Capitol Hill. Largely as a result
of the tireless, coordinated effort of IPAA
and other industry associations, August's
last minute deficit deal did not cut the industry's provisions.
Then, the 12-member supercommittee
created by the deficit legislation to cut $1.2
trillion from the budget by late November,
proposed plans to overhaul the tax code
that also would have cut industry provisions. Again, IPAA hammered Capitol
Hill, educating lawmakers that this oversimplified overhaul of the complicated U.S.
tax code would stunt new investment, job
creation, and economic growth. Once
again, with all hands on deck, these plans
were discarded as time ran out for the supercommittee. IPAA will continue to remain vigilant on energy tax policy, particularly a tax code overhaul, as these issues undoubtedly will resurface in 2012.
Restricted Access
The federal government should seek to
increase and not limit U.S. supply. But restricted access to our nation's vast resources of oil and natural gas remains a
major roadblock to development-and
consequently a roadblock to jobs, economic growth, and energy security. IPAA
constantly is pushing against the Department of Interior's efforts to ban hydraulic

fracturing on federal lands.
In November, President Obama released the new five-year plan for offshore
leases, which failed to open any new areas for exploration. Many offshore companies, particularly independents, also
have faced serious permitting problems.
IPAA continues to urge the administration
to streamline the permitting process to decrease the general uncertainty that has
plagued the offshore industry since the
president's moratorium.
Washington is indeed creative-creatively
destructive-with its regulatory threats at the
industry. One such threat on which IPAA is
focused is the Endangered Species Act. Under the cloak of protecting wildlife, federal regulators use ESA as the kiss of death
to oil and natural gas development.
It is no coincidence that the ESA has
been invoked in areas including Texas,
where there is an abundance of oil and natural gas. You can be sure that if this threat
proves successful at undermining the industry in Texas, the tactic will not end there.
It certainly will be employed in burgeoning areas such as the Marcellus, Utica and
Bakken plays.
We cannot let America's amazing energy future fall victim to federal regulators
under pressure from environmentalists
who seek to stamp out all development in
the name of the dunes sagebrush lizard and
the lesser prairie chicken.
EPA Antagonism
The Environmental Protection Agency
is possibly the most aggressive agency confronting America's independent producers
as it seeks to regulate the industry on a variety of fronts. Hydraulic fracturing, the
technology which has combined with
horizontal drilling to enable America's
amazing shale revolution, is the EPA's
bull's-eye to take down the industry. Using the cries of environmentalists as fodder, the EPA is conducting a study behind
closed doors to determine the effects of hydraulic fracturing on groundwater. It is doing so despite the fact that EPA head Lisa
Jackson has acknowledged the lack of one
proven case linking hydraulic fracturing to
drinking water contamination.
EPA also is vigorously trying to regulate hydraulic fracturing under the Safe
Drinking Water Act. First, states already
regulate hydraulic fracturing. Second,
this activity lies outside the scope of the
SDWA, which never was intended to ap-

246 THE AMERICAN OIL & GAS REPORTER

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ply to well completion fluids when it was
passed in 1974.
In the 1990s, environmental groups
sought to use litigation to change the legislation's scope so it would regulate the industry. The 2005 amendment, coined by
opponents as the "Halliburton loophole"
is not a loophole at all, but simply a clarification of the legislation that returned its
scope back to its purpose.
Unfortunately, these Washington-based
federal initiatives ignore state-based programs
such as FracFocus, an online chemical registry website where production companies
list their hydraulic fracturing fluids, and
STRONGER, (State Review of Oil and Natural Gas Environmental Regulations). IPAA
actively promotes both programs, for they
demonstrate the success of the state regulatory regimes already in place.
Looking Ahead
These threats demonstrate the importance
of electing policymakers who understand
how much the oil and natural gas industry
has to offer. The IPAA Wildcatter Fund is
the country's largest oil and natural gas industry political action committee. Its success
has been demonstrated throughout many
election cycles. In 2010, the Wildcatters
Fund contributed to 113 races nationwide.
Of those races, 86 percent of our candidates
won. Not only does IPAA help elect these
leaders, but once they are in office, IPAA
holds them accountable by publicizing
their voting records on industry issues.
The oil and natural gas industry has the
ability to help our nation along the path of
prosperity and energy security. The importance of the 2012 elections cannot be
overemphasized.
Despite the dangers the industry faces in
2012, IPAA is confident that the future of
the American oil and natural gas industry is
bright. We must take back the debate from
radical environmentalists who champion
their cause by demonizing the industry and
stirring unfounded public fear. Their activities threaten the livelihoods of millions of
American workers who depend on the oil
and natural gas industry for well-paying jobs.
Independent producers support 4 million jobs in America, which is 3 percent
of all U.S. jobs. IPAA is committed to
fighting overregulation and irresponsible
legislation that limits the oil and natural gas
industry's ability to lead our nation to economic recovery and a more stable energy
future.
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American Oil and Gas Reporter - January 2012

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2012