By John Kemp
LONDON Oct 17 Legislatures in 34 U.S. states,
from Alaska and California to Kentucky and Maryland, have
enacted no fewer than 94 separate laws relating to oil, gas and
coal so far this year, as the surge in exploration and
production pushes fossil fuels high up the agenda for state
The number of new laws passed on fossil fuels has soared
from 66 bills in 22 states last year, and 55 bills in 27 states
in 2010, according to the online bill-tracking database run by
the National Conference of State Legislatures (NCSL).
It is the second-wave of energy laws to emerge from state
capitols. The first wave came in 2009 when 35 states passed a
total of 129 different laws (Chart 1).
But the first wave contained numerous measures about
greenhouse emissions and energy conservation.
The second wave centres firmly on drilling, transporting and
taxing fossil fuels.
At their session in 2009, Maryland legislators approved the
Greenhouse Gas Emissions Reduction Act. By 2012, the General
Assembly was enacting the Gas Wells in Deep Shale Deposits Act
to require drillers to restore local water supplies properly.
In 2008/9, California's legislature was concerned about
promoting geothermal and other forms of renewable energy. By
2011/12, the focus had shifted to collecting taxes from oil and
gas production and improvements to pipeline safety.
The geographical focus of state lawmaking has also shifted.
Interest in regulating fossil fuel extraction and distribution
has spread from North Dakota and Montana, the two states at the
heart of the Bakken drilling boom, to go nationwide.
In 2009, Montana and North Dakota accounted for a quarter of
all new fossil energy laws. The new wave is far more extensive,
and includes states like Pennsylvania that did not pass any
fossil fuel bills during the first wave (Chart 2).
The subjects of new legislation provide a roadmap to the
issues states are encountering as they update their laws to cope
with the drilling boom. In 2012, most laws have fallen in six
(1) Severance taxes, production credits, and the treatment
of income from oil and gas for corporate and individual income
taxes, as well as the need to raise revenue for state oil and
gas commissions and other regulators.
(2) Pipeline siting, rights of way, exercise of eminent
domain and safety inspections -- for both trunk pipelines and
local gathering and distribution systems.
(3) Disclosure of drilling activity and the chemicals used
for hydraulic fracturing, as well as rules preserving the
confidentiality of individual well records.
(4) Environmental regulations, including drinking water
quality, and special rules covering drilling on state-owned
(5) Rules to define the rights of surface owners as well as
control exploration, seismic surveying and the use of multiple
(6) Laws to pre-empt regulation and law-making by cities and
The pattern that emerges is one of lawmakers rushing to fill
gaps in state laws to cope with a disruptive new technology
revolutionising domestic oil and gas production, which has
brought exploration and production to areas of the country that
have not seen new drilling and pipelines for decades.
Like any other new technology, the rules governing hydraulic
fracturing initially proved out of date and inadequate to
control the social side effects. Much of the criticism of the
oil and gas industry relates to this semi-lawless "wild west"
phase. But the upsurge in new laws suggests state governments
are now quickly moving to address these concerns and bring the
industry under proper control.