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Federal regulations cost West billions of dollars, report says

By Amy Joi O'Donoghue | Posted - Sep 17th, 2013 @ 4:33pm

SALT LAKE CITY — Utah and other energy-producing states in the West are besieged by federal regulations controlling oil and gas production, a barrier that is costing economies billions of dollars and thousands of jobs.

Those findings were detailed Tuesday in a report released by the newly created Sutherland Institute Center for Self Government in the West, which looked at three scenarios of development on federal land for fossil fuels, as well as renewable energy.

"There is a lot more potential for development on public lands than we are able to achieve," said Carl Graham, the center's director. "We're leaving an awfully lot on the table by not being able to responsibly develop the resources on public lands at the same pace as private lands."

In Utah, the hit at the high end is $6.7 billion and 58,000 jobs, according to methodology used by University of Wyoming professor Timothy Considine, drawing on past trends, current plans and energy holdings.

"However one views the posture of federal policy, this scenario clearly demonstrates there is considerable upside potential from developing oil and natural gas on federal lands," the study notes.

Considine modeled the economic values of energy resources on federal lands in seven Western states and looked at those pending projects winding their way through the federal regulatory process on lands already set aside for development.

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"We're not talking about lands like national parks or wilderness study areas," Graham said.

At the most conservative end of the scale, the study notes Utah could realize about $1.2 billion more and tap into an extra 9,400 jobs if the projects could untangle from the red tape.

The report notes that Utah and six other Western states produce more than 1.2 billion barrels of crude oil and natural gas liquids per day, accounting for more than 20 percent of the country's natural gas production.

A snapshot of where that production is happening reveals that on public lands, natural gas output has declined since 2009 and experienced a slight uptick on private lands. The difference is more startling for crude oil production — 14 percent growth on public lands overshadowed by a rate twice that much, 28 percent, on private land.

Because nearly half of the lands in these Western states are owned by the federal government, industry faces long delays and uncertainty propelled by changing regulations and government inaction, the report said.

"Thanks to red tape, regulation and conflicting priorities, the wealth of natural resources in the region's federally held lands is largely untapped — and the result has been a loss of economic growth in a region brimming with potential," it said.

We're leaving an awfully lot on the table by not being able to responsibly develop the resources on public lands at the same pace as private lands.

–Carl Graham

But the Sierra Club's Tim Wagner said the report's findings are baseless, driven by a dollar-hungry industry.

"The so-called 'red tape, regulation and conflicting priorities' alleged by this report is nothing more than rhetoric from an industry that wants complete, unfettered access to public resources," he said.

Wagner noted with irony that a tourism report released the same day highlighted the popularity of Utah's natural landscapes, which draw millions of visitors.

"Let's ask those visitors if they want to see a Utah with more drill rigs, pipelines, and heavy truck traffic on our scenic byways," he said.

Graham said the study's findings coupled with the center's report have important pubic policy implications for Western states that struggle with federal land ownership issues.

A Montana native who was plucked by the institute to head up the new center this summer, Graham is overseeing a regional federalism effort that has its roots in Utah's 2012 passage of the Transfer of Public Lands Act — which demands the federal government cede title to the land it controls in Utah.

"The idea is returning government closer to the people," he said. "We feel there are too many decisions being made too far away, and that has the potential to impose other people's values on communities. The solutions or policies aren't optimized for here. They are optimized for somewhere else."

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