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Amid DC gridlock, states make their own ‘fracking’ rules

Anti-fracking activists demonstrate in New York City.
Getty Images
Anti-fracking activists demonstrate in New York City.

In his State of the Union address last week, President Obama promised to implement change with or without Congress, and called on the various states to take the initiative themselves on issues such as the minimum wage. But the president was a little behind the curve; states are already stepping in to take action where federal lawmakers have failed to act.

Across the country, many public policy issues that have traditionally been handled by federal-level regulations – minimum wage requirements, environmental regulations, even immigration – are increasingly the subject of state-level regulation. Often, this is because state officials simply got tired of waiting for Washington to address a problem, and took matters into their own hands.

"The states are picking up more, because they have to," said Dan Crippen, executive director of the National Governors Association. "The pace of change in states, and the recognition of having to pick up some of the slack from Washington is increasing."

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On the highly controversial issue of hydraulic fracturing, for example, the federal government has been slow to develop comprehensive environmental regulations, and in Congress, legislators have even taken steps to try to block enforcement of the rules that do exist.

Hydraulic fracturing, or fracking, involves pumping large amounts of water and caustic chemicals into the ground to release valuable natural gas and other resources. There is controversy over how damaging fracking is to the environment, but there is no question that the chemicals used in the process, if allowed into the water supply, are dangerous.

As a result, numerous states have adopted their own laws to regulate the practice. New York is still debating whether to even allow fracking, while states from Montana to Arkansas have established their own rules for how wastewater must be handled. Wyoming – hardly a state known for hostility to the energy industry – last year issued some of the toughest standards for assuring water quality of any states.

Wyoming governor Matthew H. Mead told The New York Times, "I am not going to accept the question of do you want a clean environment or do you want energy. The fact is that in Wyoming, we want and need both."

(Read more: What's powering oil servicers' profits: (It's not fracking))

State-level rulemaking for issues that affect the entire country can be both a blessing and a curse. The states are often more free to experiment and innovate than the federal government, and as a result, new policies tested first at the state level often percolate up to Washington. Love it or hate it, it's pretty clear that the Affordable Care Act would never have become law if similar legislation passed and implemented in Massachusetts hadn't already been successful.

But on the other hand, when individual states make their own rules, they wind up creating a patchwork of regulation that leads to increased compliance costs for businesses that operate across state lines.

(Read more: Don't blame frackers for U.S. water shortages: Kemp)

The extraction industry, for example, has been actively lobbying lawmakers and regulators in Washington to weaken and delay federal efforts to regulate fracking, but by forcing the states to take on the issue, they now face the reality that compliance requirements for one well may be significantly different for another just a few miles away if there is a state border in between, creating the kind of inefficiencies that businesses, for the most part, find expensive.

It's no mistake that insurance companies, which are regulated on a state-by-state basis, have long clamored for Washington to create a "federal charter" that would normalize rules across the country.

Another area where states have tried to fill the gap left by federal lawmakers is in the area of immigration law, and with the announcement today by House Speaker John Boehner that there is unlikely to be successful immigration reform this year, state-level efforts are only likely to increase.

(Watch: Three reasons Boehner hit pause on immigration)

This is a particularly tricky area, because state officials technically have no authority to enforce federal immigration law, but this hasn't stopped state legislatures concerned about illegal immigrants from trying, sometimes with disastrous results.

Georgia and Alabama have both, in recent years, passed laws cracking down on illegal immigrants, and both were successful in driving large numbers of undocumented workers away. But both states also found that their farms were suddenly drastically short on laborers, to the point where crops were left rotting in the fields because there weren't enough workers to harvest them.

As President Obama noted in the State of the Union address, while the federal minimum wage is worth far less than it would be if it had been allowed to grow at the rate of inflation over the past several decades, numerous states have passed their own laws setting a wage floor well above the federal level.

(Read more: As minimumwages rise, businesses grapple with the consequences)

According to the National Employment Law Center, 13 states increased their minimum wages effective at the beginning of the year, and another 11 plus Washington, DC, are poised to do so in 2014.

Again, it's a case where state action has been fueled by frustration at federal inaction.

"2014 is poised to be a turning point," NELP policy analyst Jack Temple told USA Today. "States are seeing the unemployment rate is going down but job growth is disproportionately concentrated in low-wage industries. (They're) frustrated that Congress is dragging its feet."

By Rob Garver of The Fiscal Times