ipa Ameriew, Oil Gas JWducen

December27, 2010
The Honorable Darrell Issa
Ranking Member
Committee on Oversight and Government Reform
2157 Rayhurn House Office Building
Washington, DC 20515
Dear Congressman Issa.
Thank you for the opportunity to voice the concerns of independent oil and natural gas
producers in regard to the regulatory state. The Independent Petrole um Associ ation of
America (IPA.A) represents thousands of small-business oil and natural gas produc ers,
many of which operate on strict budgets in accordance with their respec tive busine ss
plans. Simply stated, any increases in regulatory costs that take capital away from
investing in exploration and production will negatively impact job growth
in the oil and
natural gas industry.
Oil and natural gas production is a highly technical and compl ex industr y. The correla tion
between job growth and regulatory certainty is not always a direct link. Howev er, a stably
priced and ample supply of energy is clearly linked to job growth. Furthermore,
a fluid
regulatory state or the implementation of a new dracon ian rule, can lead to negativ e
circumstances for small-business companies due to the delicat e relatio nship betwee n their
operational budgets, the cost of regulatory compliance, and allowi ng for the approp riate
number of employees. Independents that must operate within limited financial
parameters
are often those most impacted by regulatory measures.
As the Committee on Oversight and Government Reform begins to examin e the areas of
economic impact due to existing and proposed regulat ions, please remem ber that the
regulatory state cannot be viewed as stand-alone measures. Rather, as you will
see, it is
an aggregate dynamic that factors into the economic health of any industry.
Per your recommendation, TPAA has identified existing and proposed regulat
ions that can
have a negative impact on job growth. They are as follows:
Offshore Permitting
Ongoing delays in the processing of permit and plan applica tions.
The omission of allowing the use ofNEPA Categorical Exclusions will
cause major
delays in permitting.
• ‘lie recently issued “guidance docum ent” by BOEM RE is the latest in a long string
of regulations on offshore producers from the Obama Administration. There
has
been no clarity or certainty provided by the Administration on whether there
will he
any further regulations implemented.
 Onshore Federal Laud Permitting
• The omission of allowing the use of NEPA Categorical Exclusions will cause mor
delays in permitting, parallel to concerns of the same issue involving offshore
production.
Resource Management Plans could be reconsidered adding extensive delays .
• Endangered Species Act designations can create, or contribute to, more uncerta
inty
in the permitting process.
• These uncertainties have created a backlog of permits in the intermountain west
that
must be addressed, as capital is flowing out of the region during the delays.
Environmental Protection Agency
• EPA has altered permitting under the Safe Drinking Water Act for hydraulic
fracturing when diesel is used.
• NRDC petitioned EPA to reopen the 1988 Regulatory Determination under
RCR4
to seek regulation of drilling fluids and produced water as hazardous waste.
NRDC challenged and won litigation on EPA regulations on stormwater
management during construction.
• Implementing new SPCC regulations
Revising the ozone standard
Implementing ORG regulations
Aggregating air emissions to require additional controls
• Applying the Toxic Release Inventory to oil and natural gas production
Adding hydrogen sulfide to the list of hazardous air pollutants
Revising/creating Effluent Limitation Guidelines under the Clean Water Act
• Listing additional species under the Endangered Species Act
• Revising the national ozone standard
• EPA enforcement initiative targeting oil and natural gas production
Finandal Reform
Thc CFTC will be developing regulations on commodity markets that will impact
the availability and cost of hedging.
IPAA would like to recommend a follow-up meeting with you, or the approp
riate staff, to
further discuss each of these regulations in detail. Please contact Joel Noyes at (202)
857-4722 to arrange a meeting that fits your schedule.
Thank you again for the opportunity to represent the concerns of America’s independent
oil and natural gas producers on this critical topic.
Sincerely,
tf.
Barry Russell
President & CEO
cc: The Honorable Edoiphus Towns, Chairman