Today, the Secretary of Energy Advisory Board Subcommittee (SEAB) on Shale Gas Production released its second and final ninety-day report which analyzes the progress that has been made on the recommendations of its previous report, issued on August 18, 2011. The new report criticizes federal agencies, state governments, industry and public interest groups for not moving quickly enough on its recommendations of increased regulation on hydraulic fracturing – a critical technology that allow us to access the nation’s rich shale gas resources.

For example, the SEAB urges more regulatory action on the following areas:

• Air Emissions – Even though the Environmental Protection Agency (EPA) is currently working on regulations that would reduce emissions at hydraulic fracturing sites, the SEAB’s report claims the proposed rules do not go far enough and should be expanded to include more wells.
• Chemical Disclosure – The SEAB wants to see more disclosure of the chemicals used in hydraulic fracturing fluid and believes that there should be an extremely high bar for trade secret protection. The subcommittee quickly discounts current efforts underway including voluntary disclosure websites such as fracfocus.org and the Department of Interior’s (DOI) intent to require the disclosure of fracturing fluid composition on federal lands.
• Water Discharge Standards – The EPA is currently in the process of studying the impact of hydraulic fracturing on drinking water and has also announced a schedule setting waste water discharge standards for some fracturing activities. The SEAB, however, believes that the EPA should not wait until the study is complete to take additional regulatory actions.

The SEAB’s draft report outlines unrealistic expectations and does little to highlight the efforts that industry and regulators have already made to ensure that these activities are conducted safely. It is unreasonable to expect that industry and federal, state and local regulators could institute complex new regulatory programs in three months. Increased access to our nation’s shale gas resources means more affordable energy and more jobs for our nation’s struggling economy. The SEAB’s recommendations to pile on unnecessary and complex regulations could quickly put an end to the nation’s shale gas revolution.

Yesterday the Department of Energy’s (DOE) Natural Gas Subcommittee released its interim report which makes recommendations to the Secretary regarding the safety and environmental performance of hydraulic fracturing from shale formations. The final report is expected in November of this year and the public will be given a chance to comment.

The preliminary report recognizes that “natural gas is a cornerstone of the U.S. economy, providing a quarter of the country’s total energy.”  It also acknowledges that technologies used in extracting natural gas from shale formations have increased production by 30 percent. What does all this mean? It’s very simple; it means more domestic jobs, stronger economy, lower natural gas prices and greater energy security.

In a Bloomberg story that ran today on new possible regulations for the shale industry, it would seem that the Director of the Bureau of Land Management may seem eager to issue potentially burdensome regulations on the industry.  

Do we need to make sure we extract shale gas responsibly and safely, yes! Can the states do a good job of regulating shale gas production? Yes they can.  States have been doing it for 150 years, 4.3 million wells, and by the way, most of the natural gas wells involve some form of hydraulic fracturing. Companies are continuing to work to improve the process, technology and implement the best practices possible.

It is critical to the global competitiveness of manufacturers and job creation in our country that we are able to utilize all the sources of energy available. We can’t afford to lock any of it away. Shale gas can provide much of our country’s natural gas needs. If the federal government is put in charge of regulating shale gas production then I have already seen this movie and it doesn’t end well. Let’s not go down the path of limiting what energy sources we will use, but let’s pursue a course of utilizing all of our sources which will help lead to lower energy costs and economic growth. 

Chip Yost is vice president for energy and resources policy, National Association of Manufacturers.

The Department of Energy’s (DOE) Natural Gas Subcommittee released a draft report on August 11 that makes recommendations regarding the safety and environmental performance of hydraulic fracturing from shale formations. Manufacturers, users of one-third of the energy consumed in the United States, agree with the Subcommittee’s characterization of natural gas as “a cornerstone of the U.S. economy.”  Unfortunately, the call for increased regulation of hydraulic fracturing is a reason for concern.

The Subcommitee’s recommendations include:

•  Required disclosure of all chemicals in hydraulic fracturing fluid – Many companies that manufacture this fluid voluntarily disclose the chemicals they use through the Frac Focus registry. Additional mandatory disclosure requirements may discourage manufacturers from developing new fluids if they know that competitors can easily find their exact “recipe.”
• New air emission standards – Comprehensive Environmental Protection Agency (EPA) rules are already in place or are in the process of being revised. Additional regulation would be redundant, confusing, expensive and unnecessary.
• Reduction in the usage of diesel engines at fracturing sites – This sweeping recommendation does not take into consideration that there may be no economically viable alternative to using a diesel engine at some wells.

Hydraulic fracturing is a critical process that has allowed the U.S. to take advantage of its rich shale gas resources. The majority of natural gas wells have used hydraulic fracturing, and there have been 4.3 million wells drilled in North America over 150 years. Current state regulations have been effective in protecting the environment. Manufacturers urge caution as the DOE moves forward with its final recommendations – additional federal regulations could put the brakes on a technology that is creating jobs and providing more affordable energy for all Americans.

President Obama on Monday, remarks at Forsyth Technical Community College, Winston-Salem, N.C.:

If this is truly going to be our Sputnik moment, we need a commitment to innovation that we haven’t seen since President Kennedy challenged us to go to the moon.  And we’re directing a lot of that research into one of the most promising areas for economic growth and job creation –- and that’s clean energy technology.  (Applause.)  I don’t want to see new solar panels or electric cars or advanced batteries manufactured in Europe or in Asia.  I want to see them made right here in America, by American businesses and American workers.  (Applause.)

From ExecutiveGov.com, “Will China Win Clean-Energy Race? Chu Ponders ‘Sputnik Moment’ for US”

Cummins hosted Secretary of Energy Steven Chu in Colombus, Ind., Monday as the Obama Administration announced nine project awards totaling more than $187 million to improve fuel efficiency for heavy-duty trucks and passenger vehicles.

As the company’s news release explains, Cummins will receive nearly $39 million to support systems level technology development, integration, and demonstration for highly efficient Class 8 trucks (SuperTruck). Another $15 million will support advanced technology powertrains for light-duty vehicles (ATP-LD).

Cummins will partner with Peterbilt Motors Company, a division of PACCAR, for its SuperTruck project. The Cummins project will develop and demonstrate a highly efficient and clean diesel engine, an advanced waste heat recovery system, an aerodynamic Peterbilt tractor and trailer combination, and a fuel cell auxiliary power unit to reduce engine idling.

“Cummins has long enjoyed a collaborative partnership with the DOE. These R&D programs have helped us develop the best products for our customers and the environment,” said Cummins President and Chief Operating Officer Tom Linebarger. “We appreciate the funding provided by the DOE for the Cummins SuperTruck and Light-Duty programs, which will create jobs, help address climate change and reduce oil consumption. This public-private partnership is a win for our economy, a win for the environment and a win for energy challenges. We are looking forward to working closely with Peterbilt on this important technology project.”

Emphasize that partnership angle. The Department of Energy notes that with a private cost share of 50 percent, the awards will support nearly $375 million in total research, development and demonstration projects nationally. Secretary Chu said:

Improving the efficiency of our vehicles is critical to reducing America’s dependence on foreign oil and addressing climate change. Today’s awards will help demonstrate the potential benefits for long-haul trucks and passenger vehicles and will play an important role in building a more sustainable transportation system for the country.

Other funding recipients announced Monday were Daimler Trucks North America, Navistar Inc., Chrysler Group, Delphi Automotive Systems, Ford Motor Company, General Motors. So you can see why it was big news at the Detroit Auto Show, too. See Detroit News, “US grants Detroit 3, suppliers millions for fuel savings, jobs”

More…

• TruckTrend Magazine, “Department of Energy Allocates $187 Million for Nine Vehicle Efficiency…”
• WISH TV video, “Video: Cummins gets $54M to develop fuel efficient vehicles“
• New York Times (blog), “Energy Department Awards $187 Million for Development of Efficient Cars and Trucks”

(Caption: From left: Sen. Evan Bayh, Cummins Chief Technical Officer John Wall, Secretary Chu, Rep. Baron Hill. Photo courtesy Cummins.)

From The Tennessean, Nashville, “House approves advanced vehicle technology bill“:

The U.S. House of Representatives has passed bipartisan legislation to re-authorize the Advanced Vehicle Technology program in the U.S. Department of Energy.

“From passenger cars to heavy duty long-haul trucks, it is essential for our country to reduce our dependence on petroleum and develop new energy sources and technologies to power these vehicles,” said Congressman Bart Gordon, D-Murfreesboro, who strongly supported the bill. “This legislation will support the research and development of advanced vehicle technologies, which will in turn play a critical role in creating new jobs and decreasing our reliance on foreign oil.”

The Advanced Vehicle Technology Act (H.R. 3246) was authored in and unanimously approved by the House Science and Technology Committee chaired by Gordon. The bill authorizes DOE’s Vehicle Technologies Program to provide long-term sustained funding for public-private vehicle research, development, demonstration and commercial application projects.

The vote was 312-114.

The National Association of Manufacturers had issued a statement from the NAM’s vice president for energy and resource policy, Keith McCoy, urging passage of the bill. Excerpt:

This legislation will create high-paying manufacturing jobs and create opportunities for universities to get involved in the research necessary to make important advances in clean energy. Many NAM member companies are making large investments in advanced vehicle technologies that will benefit from these partnerships with universities, and will expedite the manufacture of cost-competitive, clean transportation fleets that will be critical to the future of U.S. transportation.

This legislation will give our transportation sector a boost at a difficult time and assure our leadership in energy efficient transportation of the future. It deserves support from all members of the House.

So congratulations and thank you.

President-elect Obama has emphasized moderation, ability, pragmatism, experience, smarts and other good attributes in naming his economic team, much to the relief of the business community. Tim Gaethner, Larry Summers, Christina Romer — no radicals or cryptosocialists there.

Yet for all the agenda setting the economic team will carry out in the interest of growth, jobs and long-term economic stability, others in the Administration will determine if policies and day-to-day agency operations match those goals. If you want to discourage investment and jobs creation, just name a Labor Secretary and OSHA administration who want to stick it to business at every turn. “OSHA issues record fines” may be a welcome headline for the activist crowd, but enough of those and you could well persuade other businesses to keep their heads low and their dollars unspent — or invested overseas. For example.

The Wall Street Journal makes a similar point in its very good Saturday editorial Potomac Watch column by Kimberly Strassel, “Obama’s Environmental Test — The president-elect’s picks for his energy and environment team could undo any smart moves so far.”

Having enraged the left wing of his party with several initial high-profile appointments, Mr. Obama is now under pressure to placate this mob. One obvious, if frightening, choice would be to reward them with the energy-and-environment portfolio, turning it over to a team that shares the grass-roots’ green agenda.

The appointments at stake here are big, with the potential for even greater influence. There’s chief of the EPA, the prominence of which is growing in the climate debate. Another is secretary of the Energy Department, a body that traditionally serves as a cheerleader for the entire mix of domestic energy sources (including nuclear, oil and coal), but which, with a weak or turncoat head, could easily fail in that duty.

Save the Detroit automakers? Not if you turn over management of carbon dioxide levels and vehicle fuel-efficiency standards to a dictatorial EPA. “Better to have a team that is aware of the political and practical implications of an EPA power grab,” the Journal observes.

President-elect Obama sounded an aggressively pro-environmental-regulation tone in a video he sent last month to a conference on global warming in California, vowing to cut CO2 emissions by 80 percent by 2050 and invest $150 billion in new energy-saving technologies. As the New York Times reported:

“Now is the time to confront this challenge once and for all,” Mr. Obama said. “Delay is no longer an option. Denial is no longer an acceptable response.”

Denial is not acceptable? How about disagreement?

As a matter of democratic principle, we think presidents should be able to appoint the people they want to office, naming the personnel to carry out policies they were elected to effect. And so far so good. In naming the members of his economic team, President-elect Obama has made it clear his priority is restoring the economy and relieving unemployment. The next round of appointments will determine whether that clarity is maintained or muddied.

Before all the attention turns to the inclusion of automaker financial assistance in the next economic stimulus legislation, let’s first take notice of the Department of Energy’s good work so far on the regulations for the already approved $25 billion low-interest loan program. Looks like somebody has been working weekend.

From the Department of Energy, November 5:

WASHINGTON, DC – Today the U.S. Department of Energy issued an Interim Final Rule that implements the Advanced Technology Vehicles Manufacturing Incentive Program authorized by section 136 of the Energy Independence and Security Act of 2007 (EISA). The FY09 Continuing Resolution provided DOE with funding to make up to $25 billion in direct loans to eligible applicants for the costs of reequipping, expanding, and establishing manufacturing facilities in the United States to produce advanced technology vehicles, and components for such vehicles. These vehicles must provide meaningful improvements in fuel economy performance.

In the FY09 Continuing Resolution, Congress required DOE to issue to issue interim final regulations for the section 136 program within 60 days – that is, by November 29. The Department has completed and issued those regulations in approximately half of that time.

“Issuance of this interim final rule opens the process for automakers and component manufacturers to immediately apply for government funding under the Advanced Technology Vehicles Manufacturing Incentive Program,” said Secretary of Energy Samuel Bodman. “Since Congress provided funding for this loan program approximately 30 days ago, the Department has worked quickly and responsibly to draft this rule, set up a loan office, and establish a credit review board to review loan applications.”

The final rule is available here as a .pdf file. News coverage…

Detroit News, “DOE sets auto loan rules“: “Senior government officials said during a conference call with reporters that it was “doubtful,” but possible, that the funds could be issued before Dec. 31. ‘We are prepared to act on anything we get immediately if it is a good quality application,’ an official said on the call. ”

There IS this, however, as described in the Washington Post: “Still, the loan must comply with the National Environmental Policy Act and the Congressional Review Act, which prevents a regulation from being implemented until 60 days after the next Congress convenes in January.”

Congress could pass a waiver when it convenes for a lameduck session November 17.

From today’s Washington Post, Page A1, “Lifeline for Automakers Dangles Just Out of Reach“:

A $25 billion loan program rushed through Congress to revive the nation’s ailing domestic auto industry may not deliver any money to Detroit for more than a year, federal officials said, prompting concern that the cash may come too late to prop up one of the country’s most important manufacturing sectors.

In recent days, auto industry representatives and lawmakers from Michigan, Kentucky and other states where auto plants employ tens of thousands of workers have begun clamoring to pry the funds loose, prodding the Bush administration and questioning the reasons for the delay. Federal officials have said it would take months to finalize the rules for distributing funds.

Specifically, the Department of Energy states may take six to 18 months to make the funds available to the companies. Congress wrote into the law the requirement that the regulations be completed within 60 days, but there are, to no one’s surprise, many other regulatory hurdles to jump. Not only are there environmental rules, the Congressional Review Act requires a 60 day period so Congress can review the regs before they go into effect.

Congress has the power to waive all these requirements — and add protection against lawsuits, too, for that matter — should have written the waivers into the current law and should darn well write them into any legislation that passes a lameduck session in November.

NAM President John Engler addressed the issue in a speech on October 13 to the Detroit Economic Club:

I was alarmed last week to read that the Department of Energy thinks it may take months to work out the loan details. This is the same department that took more than two years to implement loan guarantees for the nuclear power industry and then failed to get them right. GM, Ford and Chrysler need help now.

So, today, I call on the White House to intervene and ensure that these loans are processed promptly. Look at the treatment of General Motors and Ford in the markets last week – rising bond yields and plummeting stock prices are ominous signs. It’s not a time for meetings; it is a time for action.

Let’s have both Congress and the DOE act. Now.

For more news coverage on the issue, go here.

Environmental groups and supporters of a larger, more intrusive regulatory state have made a vice presidential staffer, Chase Hutto, their bete noire, beating him up for questioning the wisdom and efficiency of expanded government authority over the economy. Hutto is apparently being talked about as an assistant secretary for policy and international affairs at the Department of Energy, alarming the usual suspects.

Seen in the abstract, it’s sort of funny that groups like the Union of Concerned Scientists are devoting so much effort to attacking a fellow who would fill a modest agency post in the waning days of a lameduck Administration. The groups went to Juliet Eilperin of the Washington Post and managed to elicit a 1,260-word story (that’s really long) on A2 yesterday, “Anti-Regulation Aide to Cheney Is Up for Energy Post.” The attack is spelled out in the lead, Hutto’s appointment being “a promotion that would put one of the administration’s most ardent opponents of environmental regulation in charge of forming department policies on climate change.”

But it’s certainly not to funny to Mr. Hutto to be the target of anonymous attacks because of his political philosophy, and the story represents the kind of clear message sending to those who oppose the extremism of the environmental activists.

Anonymous attacks? Yes, despite the Post’s supposed diligence and ethical standards, its reporters are still allowed to repeat anonymous statements impugning a person’s reputation.

“He’s got an incredible amount of authority and a portfolio seemingly without end,” said a source familiar with policy discussions involving Hutto. “He’s got his fingers in everything.”

Some attribution. Is that an Administration source? Someone from the environmentalist groups who dislikes his policies? “He’s got his fingers in everything.” Why do Washington Post editors allow this kind of anonymous sourcing on what is, after all, a story about policy?

The subjective standard of sourcing appeared in Eilperin’s previous story that mentioned Hutto, the July 11 piece, “EPA Won’t Act on Emissions This Year,” which also included this very informative bit of news that Hutto’s “grandfather patented at least seven piston inventions for the Ford Motor Company.”

The article ends with the restatement of the implicit thesis from an activist who, we would guess, started this line of criticism.

Francesca Grifo — who directs the Scientific Integrity Program at the Union of Concerned Scientists, an advocacy group — said that if Hutto takes the helm of the Energy Department’s climate policy office, the impact could last well beyond Bush’s term in office.

“It’s not surprising that the Bush administration is considering a candidate who has a track record of putting politics ahead of science. Over and over again, appointments like this one have damaged the government’s ability to protect the environment and public health,” Grifo said, adding that in the coming months, Hutto could make policy decisions that the next administration would find difficult to reverse quickly.

Putting politics ahead of science? Cripes, that could be the Union of Concerned Scientists’ motto. But don’t imagine you’ll see a lengthy story in the Post about that group’s modus operandi. They’re too good of a source, someone familiar with their operations told us.