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The Leaflet: States Debate Hydraulic Fracturing

March 9, 2017
By Elizabeth Sanders

This week's Leaflet examines hydraulic fracturing bans, a gas tax in South Carolina, education savings accounts in Georgia, net-metering in Montana, certificate of need in West Virginia, and a Mercatus Center Economic Situation report.

Proposals have been introduced in the Florida, Maryland, and Nevada that would permanently ban hydraulic fracturing, also known as “fracking”. Opposition to fracking stems partly from environmental concerns over the possibility the process could contaminate the groundwater aquifers, which provide drinking water to most of the state’s population. However, these claims are unfounded and not supported by the presently available well-researched data.

The aforementioned concern, that fracking causes groundwater contamination, was long ago debunked, according to recent Washington Post op-ed by Thomas Wheatley, a law student at the Antonin Scalia Law School and contributing writer at the Washington Post “To be clear: Despite the enormous size of the 70-year-old fracking industry, there has never been a proven case in which fracking chemicals seeped into drinking water. The theory that fracking affects groundwater was first popularized by the anti-fracking documentary Gasland, in which a resident of a fracking community was depicted igniting his tap water. The drinking water’s increased flammability, said the resident, was caused by methane gas leaking into groundwater as a result of fracking. The scene — as well as most of the documentary — has since been has been discredited by the experts as ‘sensationalism and scare tactics.’”

Enacting a permanent ban on fracking would be a costly mistake. The existing peer-reviewed evidence shows hydraulic fracturing processes do not pose a systemic impact on groundwater. Since 2010, at least 15 of these studies have been produced, including ones by the Bureau of Economic Geology at the Jackson School of Geosciences at the University of Texas-Austin, the Department of Geology at the McMicken College of Arts and Sciences at the University of Cincinnati, the California Council on Science and Technology and the Lawrence Berkeley National Laboratory, the Department of Energy’s National Energy Technology Laboratory, and Germany’s Federal Institute for Geosciences and Natural Resources.

This is reinforced by the Environmental Protection Agency’s own $29-million, six-year study of fracking’s impact on groundwater sources, which failed to find any systemic impact caused by the 110,000 oil and natural gas wells that have been in use across the country since 2011.

One current political soundbite is that fossil fuels are running out however, James Conca, a senior scientist for the Institute for Energy and the Environment at New Mexico State University, argued in a recent Forbes article that we have a lot of oil, gas, and coal stating “In fact, the United States has more oil, gas and coal together than any other country in the world.” Conca defined fossil fuels as “Deposits of hydrocarbon materials in the earth. The conventional types are petroleum or crude oil, coal and natural gas. These deposits form from the organic materials in bodies of long-dead organisms trapped in accumulating sediments, and buried for geologic time.”

Heartland Policy Analyst Tim Benson argues in a recent Research & Commentary that fracking has had a positive economic impact on those areas that have allowed the practice as well as being environmentally safe. Drilling is currently being conducted across the country in a safe and responsible manner. Federal, state, and local governments have tested thousands of sites for hydraulic fracturing pollution of groundwater and drinking water resources, as well as for air quality. Flatly, there is no scientific justification for banning hydraulic fracturing or overregulating it out of existence.” Benson writes.


What We’re Working On

Budget & Tax
Research & Commentary: Gas Tax Will Not Solve South Carolina’s Road-Funding Issues
According to The State, the South Carolina Transportation Department has claimed it needs an additional $1 billion per year to repair and maintain the state’s roads. As a result, South Carolina legislators are now considering a substantial increase to the state’s motor-fuel tax to cover the looming costs created by an aging transportation system and the decreasing return on the current gasoline tax. The new proposal would increase the current 16.75-cent-per-gallon tax by 2 cents per year over five years, setting the new rate at 26.75-cent-per-gallon. South Carolina’s gas tax is currently below the average state gas tax of 28.9 cents per gallon. In this Research & Commentary, Senior Policy Analyst Matthew Glans examines the proposed gasoline tax hike in South Carolina and the decreasing efficiency of gasoline taxes. “South Carolina legislators need to explore innovative and efficient ways to fund road construction and traffic infrastructure, such as privatizing roads and establishing toll systems,” Glans writes. Read more

Education
Research & Commentary: Universal ESAs Would Make Georgia a National Leader in Education Choice
Georgia is currently considering a proposal that would establish a universal education savings account (ESA) program. If passed, ESAs would be available to parents of public school children to pay for tuition and fees at private and parochial schools. The funds could also be used to pay for textbooks, tutoring services, computers and other approved hardware, online courses, and educational therapies and services. Additionally, the ESAs could be used to cover the fees required to take national standardized achievement tests, such as the SAT and ACT.

In this Research & Commentary, Policy Analyst Tim Benson argues that ESAs would help pay for tuition, textbooks, tutoring services, educational therapies. “Establishing a universal ESA program would put the Peach State at the forefront of the education choice movement and would give all Georgia families a greater opportunity to meet each child’s unique education needs. When parents are given the opportunity to choose, every school must compete and improve, which gives more children the opportunity to attend a quality school.” Benson argues. Read more

Energy & Environment
Research & Commentary: Montana Net Metering
Montana is considering multiple proposals that, if passed, would significantly reform the state’s net-metering program. Under current Montana law, households with their own electricity generation source, also called “distributed generation,” can sell the excess, unused electricity they generate back to their utility company’s grid. The utility company can then re-sell this electricity to other customers. Distributed generation usually comes in the form of rooftop solar panels. Net metering is the billing mechanism that measures this excess electricity. Under current law, excess electricity is sold back at the retail-price rate.

In this Research & Commentary, Policy Analyst Tim Benson argues that Montana should create a truly free, consumer-friendly energy market where all utilities and small-scale power providers are given the right to compete for customers stating, “Moreover, these maintenance costs are shifted to the owners of homes without solar panels, unfairly raising their monthly bills. State net-metering programs should be reduced and ultimately brought to an end, as should all energy subsidies.” Read more

Health Care
Research & Commentary: Certificate-of-Need Laws Hurt West Virginia Health Care Market
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines certificate of need (CON) reform and why West Virginia needs to roll back its disruptive CON laws. “West Virginia has taken some small steps toward limiting these laws. In 2016, the state ended its requirement forcing hospitals to undergo the CON process to increase the rates they charge patients. West Virginia should consider expanding its rollback of the state’s CON program. Allowing CON laws to persist increases the cost of health care while limiting access and benefitting those with political connections,” Glans writes. Read more

From Our Free-Market Friends
Mercatus Center at George Mason University Releases Economic Situation Report, March 2017
In just the first few weeks in office, the Trump Administration announced a score of proposed and major policy changes. Add this to an already slow economy and the combined uncertainty is likely to yield postponed investment, delayed hires, and other let’s-wait-till-the-clouds-clear reactions that reduce GDP growth. In fact, the Global Economic Policy Uncertainty Index indicates that the index stood at a 20-year high as 2016 ended. Simultaneously, the 2.5 percent US wage growth, while surely appreciated by working families, points to the beginning of an inflationary path.

The Economic Situation Report is authored by Dr. Bruce Yandle. Yandle is dean emeritus of the Clemson College of Business and Behavioral Sciences and was executive director of the Federal Trade Commission (FTC), and senior economist on the President’s Council on Wage and Price Stability. The March report looks closely at the nation’s weak economic pulse and discusses the possibilities of achieving Mr. Trump’s promised 4 percent GDP growth rate in the next decade. The report also assesses inflationary forces playing through the economy, examines the effects of financial regulation on small banks and their local communities, and focuses on the geographic impact of economic activity across the 50 states. A new section—that will be continuing in future reports—puts the spotlight on a single state’s performance. Because of significant change playing through its economy, Mercatus chose Kentucky for this report. The report also contains a section that focuses strictly on regulation and regulatory policy. Read more