Uniform regulation would help shale industry grow COMMENTARY Gene Barr

REACHING AN agreement on a comprehensive Marcellus Shale oversight bill is essential to foster the industry's growth, lower energy costs for consumers, provide appropriate environmental protections, generate adequate revenue to address local impacts, and sustain and build on the economic opportunities – both direct and indirect – that natural gas drilling is providing to Pennsylvanians.

Key to the success of such oversight is the adoption of uniform regulatory standards at the state level, which would provide drillers with a clear picture of the operating environment in the commonwealth for this highly sophisticated industry.

This clarity is lacking. To date, more than 115 municipalities have adopted more than 145 different ordinances ranging from land-use limitations to road-use restrictions to noise limits to well setback requirements. Many are designed to ban drilling activity altogether. And local ordinance activity is increasing. Since Oct. 1 of last year, 27 municipalities in 11 counties have considered or adopted oil and gas industry regulations.

Having been a local government official in southeastern Pennsylvania for 10 years, I recognize and value the importance of our local government system, which provides valuable services to the commonwealth's communities and citizens. But, in my role at the Pennsylvania Chamber of Business and Industry, I have seen the adverse impact that multi-municipal jurisdictions can have, as well as the impact of inconsistent, arbitrary local rules and regulations.

Regardless of the industry, job creators above all else want and need a predictable operating climate. They want to know the rules and the potential costs. It was this very uncertainty about proposed policies and regulations emanating from Washington, D.C., that led many employers to hold back on investing in their operations and workforce as the nation struggled to emerge from one of the worst recessions in memory.

Similarly, the confusion resulting from a hodgepodge of existing and emerging local ordinances, even if well-intended, make it very difficult for drillers operating in multiple jurisdictions to be in compliance and to effectively and efficiently operate. And without uniform operating rules, competing states are marketing their more competitive and predictable shale producing climates in order to attract capital and jobs from Pennsylvania.

The Marcellus Shale industry already is generating measurable economic benefits for areas of the state in which drilling is occurring. From March 2010 to March 2011, Washington County – home to the first Marcellus well – had the third-highest percent increase in employment in the nation, according to the U.S. Labor Department's Bureau of Labor Statistics. Williamsport, according to the U.S. Commerce Department's Bureau of Economic Analysis, was the seventh fastest growing metropolitan area in the country in 2010 (as measured by percentage change in real gross domestic product).

In other areas of the commonwealth, local economies are benefiting through ancillary business opportunities. In a recent series of statewide Marcellus Shale forums hosted by the Pennsylvania Chamber Education Foundation and local chambers of commerce, attendees heard from companies – many that do not have their primary locations in drilling regions – that are expanding their operations and hiring because of their support work for the industry.

And increased natural gas production is helping consumers by delivering cheaper natural gas, such as the recent rate cut of more than 13 percent announced by UGI.

But, the longer the oversight debate drags on and the longer drillers face rules that differ from municipality to municipality, the less investment, energy savings, jobs and revenue will be realized. It is essential that industry oversight be done right and be done quickly.

Companies involved in Marcellus Shale drilling here strive to make sure they are in full compliance with laws and regulations; and people living in communities where drilling activity is taking place want assurance that those companies are following the rules. The best way to ensure both and enable the commonwealth to reap the greatest economic benefits from the industry is to adopt rules that are consistent.