One of the most interesting aspects of the State of the Union for the energy industry was not what the president said, but something buried in the accompanying White House fact sheet: a proposal for the federal government to assume an enhanced role in  helping  to plan shale gas development and at the same time promote renewable energy

Elliott, E. Donald

English

Yale Law School Legal Scholarship Repository

3-2014	 NEWS	&	ANALYSIS	 44	ELR	10185
Obama Administration Proposes 
New Federal Role in Siting 
Shale Gas Development in 
Combination With Renewables
by.E ..Donald.Elliott
E ..Donald.Elliott.is.Senior.of.Counsel.in.the.Washington,.D .C .,.office.of.Covington.&.Burling.LLP.and.Professor.
(Adjunct).of.Law.at.Yale.Law.School ..He.served.as.General.Counsel.of.EPA.in.the.Administration.of.George.H .W ..
Bush ..The.opinions.are.those.of.the.author.as.an.individual.and.not.any.organization,.client,.or.group .
One.of.the.most.interesting.aspects.of.the.State.of.the.Union.for.the.energy.industry.was.not.what.the.president.said,.but.something.buried.in.the.
accompanying.White.House. fact. sheet1:. a.proposal. for.
the. federal. government. to. assume. an. enhanced. role. in.
“helping”.to.plan.shale.gas.development.and.at.the.same.
time.promote.renewable.energy .
Creating Jobs Through Shale Gas Development. 
The.President. is. calling. on.Congress. to.work.with. the.
Administration.and.State.and.local.governments.to.cre-
ate.Sustainable Shale Gas Growth Zones,.helping.regions.
come.together. to.make.sure. shale.gas. is.developed. in.a.
safe,. responsible.way. that.helps.build.diverse. and. resil-
ient. regional. economies. that. can.withstand.boom-and-
bust.cycles.and.can.be.leaders.in.building.and.deploying.
clean.energy.technologies ..Smart.regional.planning.and.
federal.technical.assistance.to.States.and.local.commu-
nities.can.ensure.we.develop.shale.gas. the.right.way—
and,. at. the. same. time,. create. stable. communities.with.
well-paying.jobs .
The.language.seems.to.support.shale.gas.development,.
at. least. if. it. is.within.one.of.the.federally.approved.“Sus-
tainable. Shale. Gas. Growth. Zones .”. Plus,. who. could. be.
opposed.to.developing.shale.gas.in.a.“safe,.responsible.way”.
that.creates.“stable.communities.with.well-paying.jobs”?
The.proposal.is.still.vague,2.so.there.may.be.opportuni-
ties.to.shape.it,.but.at.the.outset,.it.is.not.clear.what.prob-
1 .. The. White. House,. The. State. of. the. Union. Fact. Sheet:. Opportu-
nity. for. All. (Jan .. 28,. 2014),. available at. http://www .whitehouse .gov/
the-press-office/2014/01/28/state-union-fact-sheet-opportunity-all .
2 .. Talia.Buford,.White.House.Shale.“Zones”.a.Mystery.to.Many,.POLITICO.
Pro,.Jan ..30,.2014.(“‘We.have.no.idea.what.is.meant.by.sustainable.shale.
gas.growth.zones,’.said.Erik.Milito,.director.of.upstream.and.industry.op-
erations.for.the.American.Petroleum.Institute .”),.https://www .politicopro .
com/go/?id=30330 .
lem. the. federal. government. believes. it.would. be. helping.
state.governments.to.solve;.President.Barack.Obama.him-
self. took.credit3. in.his.State.of. the.Union.speech. for. the.
American.energy.renaissance.that.has.largely.been.driven.
by.fracking.and.horizontal.drilling.under.state.regulation ..
While. all. forms.of. energy.development. come.with. some.
risks,.neutral.academic.observers.conclude.that.fracking.has.
lower.risks.than.most .4.There.is.strong.support.for.fracking.
in.states.with.experience.with.the.practice,.although.there.
is.also.concern.with.minimizing.possible.adverse.effects.to.
the.environment .5
The. reference. to. “federal. technical. assistance”. to. pro-
mote.“smart.regional.planning”.is.particularly.provocative.
because.it.is.paired.with.the.goal.of.“diverse.and.resilient.
regional. economies. that. can. withstand. boom-and-bust.
cycles. and. can be leaders in building and deploying clean 
energy technologies .”. Does. this. imply. that. Washington.
wants. to. tie. shale. gas. development. to. “deploying. clean.
energy.technologies”.on.the.rationale.that.combining.the.
two.will.help. “regional. economies.  .   .   ..withstand.boom-
and-bust. cycles”?. Is. that.what. they.mean. by.Sustainable 
Shale.Gas.Growth.Zones?.Is.shale.gas.growth.somehow.not.
“sustainable”.in.their.view.unless.it.is.paired.with.deploy-
ing.more.clean.energy.technologies?
3 .. Gary.Guzy,.President Obama’s State of the Union Continues a Central Focus 
on Energy and the Environment,.Covington.&.Burling. Inside.Energy.
&.Environment.Blog.(Jan ..29,.2014),.http://www .insideenergyandenvi-
ronment .com/2014/01/president-obamas-state-of-the-union-continues-a-
central-focus-on-energy-and-the-environment/.(last.visited.Feb ..4,.2014) .
4 .. Susan.L ..Brantley.&.Anne.Meyendorff,.The Facts on Fracking,.N .Y ..Times,.
Mar ..13,.2013,.http://www .nytimes .com/2013/03/14/opinion/global/the-
facts-on-fracking .html?pagewanted=all&_r=0.(last.visited.Feb ..4,.2014) .
5 .. Alan.J ..Krupnick.&.Juha.Silkamäki,.Would You Pay to Reduce Risks From 
Shale Gas Development? Public Attitudes in Pennsylvania and Texas,. Re-
sources. No .. 185,. 38,. 40. (2014). (59%. support. fracking,. but. 41%. in.
Pennsylvania.and.34%.in.Texas.say. they.are.extremely.concerned.or.very.
concerned.about.possible.environmental.risks) .
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44	ELR	10186	 ENVIRONMENTAL	LAW	REPORTER	 3-2014
None.of.this.is.clear.yet,.but.it.appears.
that.the.Administration.may.have.in.mind.
trying.to.persuade.state.and.regional.gov-
ernment. to. require. cross-subsidies. from.
shale. gas. to. renewables. as. a. condition.
of. development .. This. approach,. which.
is. sometimes. called. a. “fee-bate”. by. its.
supporters,6. is. a. double.whammy.of. eco-
nomic.incentives:.the.extra.cost.makes.fos-
sil.energy.more.expensive.while.the.money.
raised.is.funneled.into.renewables.to.make.
them.less.expensive .
The. suggestion. that. shale. gas. develop-
ment. should. be. tied. to. deploying. more.
clean.energy.technologies.comes.at.a. time.
when.taxpayer-funded.subsidies.for.renew-
able. energy. development. are. drying. up,.
with. the. production. tax. credit. for. wind.
slated. to. expire. at. the. end. of. the. calen-
dar. year .. Advocates. for. renewable. energy.
development.are.looking.for.new.sources.of.
funding ..Rather.than.taxing.or.borrowing.
for.subsidies,.which.requires.congressional.
approval,. the. Administration. and. some.
of. its.allies.believe. that. it.can. fund.renewables. indirectly.
without.congressional.approval.by.giving.“credit”.against.
new.regulatory.requirements ..For.example,.national.envi-
ronmental.groups.such.as.the.Natural.Resources.Defense.
Council. (NRDC).and.the.Environmental.Defense.Fund.
have.suggested.that.existing.fossil. fuel-fired.power.plants.
get. credits. against. the. upcoming. U .S .. Environmental.
Protection. Agency. (EPA). standard. for. greenhouse. gases.
(GHGs). from. existing. power. plants. by. funding. renew-
able.energy.projects:.“Lower.emitting.sources.such.as.gas,.
wind.and.solar.would.earn.credits.that.other.plants.could.
use,. to. reduce. average. emissions. rates .”7.EPA. is. seriously.
considering.such.fossil-renewables.offsets.as.a.possible.new.
funding.mechanism. for. renewable. energy. and. to. reduce.
pollution.at. lower.cost ..The.Agency.is.quietly.developing.
a.new.computer.program,.“AVERT”.(AVoided.Emissions.
and. geneRation.Tool).whose. only. function.would. be. to.
quantify.the.reduction.in.GHG.emissions.attributable.to.
energy.efficiency.and.renewables.projects ..Expect.this.strat-
egy.to.feature.prominently.in.EPA’s.proposal.of.new.GHG.
rules.for.existing.electric.power-generating.units.slated.for.
proposal.in.summer.2014.and.a.final.rule.in.summer.2015 .
Is. the. proposal. by. the. Obama. Administration. for.
an. increased.federal. role. in.planning.shale.gas.develop-
6 .. Bennett.Cohen.&.Cory.Lowe,.Feebates: A Key to Breaking U.S. Oil Addic-
tion.,.Solutions.J .,.Summer.2010,.http://www .rmi .org/FeebatesKeyBreak-
ingOilAddiction.(last.visited.Feb ..4,.2014) .
7 .. Press.Release,.NRDC,.Innovative.NRDC.Plan.Featuring.Federal-State.Part-
nership. Saves.Americans.More.Than.$25.Billion. in.Climate. and.Health.
Costs.While. Unleashing. Billions. in. Clean. Energy. Investments. (Dec .. 4,.
2012),.available at.http://www .nrdc .org/media/2012/121204 .asp;.NRDC,.
Closing the Power Plant Carbon Pollution Loophole: Smart Ways the Clean Air 
Act Can Clean Up America’s Biggest Climate Polluters.(Mar ..2013),.available 
at. http://www .nrdc .org/air/pollution-standards/files/pollution-standards-
report .pdf .
ment.part.of.a.similar.effort.to.get.the.shale.gas.industry.
to. subsidize. renewables. through. Sustainable. Shale.Gas.
Growth.Zones.that.would.combine.shale.gas.and.renew-
able. energy.development?.The. fact. sheet. states. that. the.
president.“is.calling.on.Congress to.work.with.the.Admin-
istration.and.State.and.local.governments.to.create.these.
new. Sustainable. Shale. Gas. Growth. Zones .”. But. this.
comes.at.a.time.when.the.U .S ..House.of.Representatives.
opposes.expanding.federal.regulation.of.fracking,.which.
has.traditionally.been.under.state.and.local.jurisdiction ..
For. example,. last. July,. the. House. Natural. Resources.
Committee.passed.H .R ..2728,.a.bill.that.would.prohibit.
the.federal.government.from.regulating.fracking.even.on.
federal.lands .8
If. the. U .S .. Congress. declines. to. enact. new. legisla-
tion. creating. the. president’s. proposed. Sustainable. Shale.
Gas. Growth. Zones,. will. the. Administration. try. to. go.
it. alone. using. executive. authority?. In. his. State. of. the.
Union.speech,.President.Obama.pledged,.“wherever.and.
whenever. I. can. take. steps.without. legislation. to. expand.
opportunity. for. more. American. families,. that’s. what.
I’m. going. to. do .”9.The. proposed. Sustainable. Shale.Gas.
Growth.Zones.are.reminiscent.of.another.federal.program.
intended.to. influence.siting.decisions.traditionally.made.
at. the. state. and. local. level ..The.Obama.Administration.
recently.began.designating.energy.right-of-way.corridors.
8 .. Raymond.J ..Keating,.House Committee Votes to Stop Federal Regulations of 
Fracking,. Aug .. 1,. 2013,. http://www .sbecouncil .org/2013/08/01/house-
committee-votes-to-stop-federal-regulation-of-fracking/.(last.visited.Feb ..4,.
2014) .
9 .. Full Transcript: Obama’s 2014 State of the Union Address,.Wash ..Post,.Jan ..
28,. 2014,. http://www .washingtonpost .com/politics/full-text-of-obamas-
2014-state-of-the-union-address/2014/01/28/e0c93358-887f-11e3-a5bd-
844629433ba3_story .html.(last.visited.Feb ..4,.2014) .
Billboard in Oklahoma City, OK.
Copyright © 2014 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
3-2014	 NEWS	&	ANALYSIS	 44	ELR	10187
on.federal.lands,.thereby.nudging10.local.governments.to.
site. transmission. lines. to. line.up.with. the. federally.pre-
ferred.routes ..That.program.was.created.not.by.legislation,.
but.by.a.June.7,.2013,.Presidential.Memorandum.for.the.
Heads.of.Executive.Departments.and.Agencies ..It.seems.
highly. unlikely. the. Republican-controlled. House. will.
give.the.Administration.an.enhanced.role.in.siting.shale.
gas.development.and.require.cross-subsidies.to.encourage.
renewable. energy .. Instead,. will. President. Obama. again.
wield.his.infamous.“pen”.to.bypass.Congress?11.There.is.a.
10 .. See generally.Richard.H ..Thaler.&.Cass.R ..Sunstein,.Nudge:.Improving.
Decisions.About.Health,.Wealth,.and.Happiness.(2008) .
11 .. Rebecca.Kaplan,.Obama: I Will Use My Pen and Phone to Take on Congress,.
CBSNews .com,. Jan .. 14,. 2014,. http://www .cbsnews .com/news/obama-
i-will-use-my-pen-and-phone-to-take-on-congress/. (last. visited. Feb .. 4,.
2014);.Ron.Fournier,.A Pen, a Phone, and a Flailing President,.Nat’l.J .,.Jan ..
27,. 2014,. http://www .nationaljournal .com/white-house/a-pen-a-phone-
and-a-flailing-president-20140127.(last.visited.Feb ..4,.2014) .
long.history.of.presidents.acting.on.their.own.when.their.
initiatives.are.thwarted.by.Congress,12.but.these.assertions.
of. extraordinary. executive. authority. are. often. later. set.
aside.in.court .13
The.Obama.Administration’s.proposal.to.“help”.regions.
manage. shale. gas. development. through. “smarter. regula-
tion”. reminds. one. of. Ronald. Reagan’s. famous. line. that.
“The.nine.most.terrifying.words.in.the.English.language.
are,.‘I’m.from.the.government.and.I’m.here.to.help .’”14
12 .. Jim.Powell,.How President Obama Could Be Swept Away With His Executive 
Orders That Defy Congress and the Courts,.Forbes,.Jan ..30,.2014,.http://www .
forbes .com/sites/jimpowell/2014/01/30/how-president-obama-could-be-.
swept-away-with-his-executive-orders-that-defy-congress-and-the-courts/.
(last.visited.Feb ..4,.2014) .
13 .. See, e.g.,.Chamber.of.Commerce.v ..Reich,.74.F .3d.1322.(D .C ..Cir ..1996);.
Youngstown.Sheet-Tube.Co ..v ..Sawyer,.343.U .S ..579.(1952) .
14 .. Quotation.#33742.from.Michael Moncur’s (Cynical) Quotations,.The.Quo-
tations. Page,. http://www .quotationspage .com/quote/33742 .html. (last.
visited.Feb ..4,.2014) .
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Obama Administration Proposes New Federal Role in Siting Shale Gas Development in Combination With Renewables

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Obama Administration Proposes New Federal Role in Siting Shale Gas Development in Combination With Renewables

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