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API Backs State Regulation of Shale Gas, Hastings Bills

American Petroleum Institute (API) CEO Jack Gerard said regulation of the nation's shale gas plays would best be handled by state government and cautioned against involvement by the U.S. Environmental Protection Agency.

"This is another example of where we have got to be thoughtful about how we proceed with energy policy," Gerard said during a press conference Tuesday. "There can be significant damage done by regulators if they don't fully understand the implications for energy policy and don't understand or appreciate the modern technologies that have been brought to bear to produce this vast resource.

"We're working closely with state regulators and have developed the new best practices and standards that we are encouraging regulators to adopt. We want to continue to make sure that there is a robust regulatory regime out there."

Commenting on the Fracturing Responsibility and Awareness of Chemicals Act of 2009, or FRAC Act, Gerard said, "There will continue to be a lot of noise and a lot to support that approach. We will continue to stay focused on the states. There should not be intervention on the part of the U.S. Environmental Protection Agency and others to go into new territory where some would suggest they do not have the authority to go."

Gerard added that the API supports three energy bills introduced by U.S. Rep. Doc Hastings (R-WA), and predicts that they will pass the House with bipartisan support but face an uncertain future in the Senate.

The first bill -- HR 1230, the "Restarting American Offshore Leasing Now Act" -- is reportedly up for a floor vote in the House on Thursday. It would require the federal government to conduct oil and gas lease sales in the Gulf of Mexico (GOM) and off the coast of Virginia. Also up for consideration are HR 1229 and 1231, also known as the "Putting the Gulf Back to Work Act" and the "Reversing President Obama's Moratorium Act," respectively.

Gerard conceded that the polarized climate in Congress, coupled with news developments in the Middle East, made the bills' passage premature to predict. He added that the Senate "does not yet have similar proposals. I think they are on a little bit of a different path and they're looking at some other issues first. But at some point the question (over passage of all three bills) will be enjoined between the House and Senate."

He added that API was continuing its "educational outreach" efforts to members of Congress.

"We'll continue our outreach as this debate continues," Gerard said. "We think a good, robust public policy debate surrounding these issues will produce the best public policy. Energy should not be a partisan issue, and it's unfortunate that it's slipped to that over the years. Proposals put forward to expand the production of oil and natural gas in the U.S. will create jobs, generate revenue and bring more energy security. That's a sharp contrast to what some have proposed, which is to increase taxes on the domestic oil and natural gas industry."

HR 1229 calls for ending the de facto moratorium on drilling in the GOM and requires Interior Secretary Ken Salazar to act on a permit to drill within 30 days of receiving an application, as well as 30 days to restart permits that were approved before May 27, 2010. Meanwhile, HR 1231 would open new coastal waters to offshore drilling.

All three bills were introduced in March by Hastings, who serves as chairman of the House Natural Resources Committee. The bills were voted out of the committee on April 13.

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