Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches

RFF Discussion Paper 14-15

24 Pages Posted: 15 Dec 2014

See all articles by Sheila M. Olmstead

Sheila M. Olmstead

LBJ School of Public Affairs; Resources for the Future

Nathan D. Richardson

University of South Carolina - Law Library; Resources for the Future

Date Written: June 2, 2014

Abstract

Booming production of oil and gas from shale, enabled by hydraulic fracturing technology, has led to tension between hoped-for economic benefits and feared environmental and other costs, with great associated controversy. Study of how policy can best react to these challenges and how it can balance risk and reward has focused on prescriptive regulatory responses and, to a somewhat lesser extent, voluntary industry best practices. While there is undoubtedly room for improved regulation, innovative tools are relatively understudied. The liability system predates environmental regulation yet still plays an important — and in some senses predominant — role. Changes to that system, including burden-shifting rules and increased bond requirements, might improve outcomes. Similarly, new regulation can and should incorporate modern understanding of the benefits of market-based approaches. Information disclosure requirements can benefit the liability system and have independent benefits of their own. Policymakers faced with a need for policy change in reaction to shale development should carefully consider alternatives to regulation and, when regulation is deemed necessary, consider which tool is best suited.

Keywords: shale, shale gas, liability, market-based tools, burden shifting, information

Suggested Citation

Olmstead, Sheila M. and Richardson, Nathan D., Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches (June 2, 2014). RFF Discussion Paper 14-15. Available at SSRN: https://ssrn.com/abstract=2432194 or http://dx.doi.org/10.2139/ssrn.2432194

Sheila M. Olmstead

LBJ School of Public Affairs ( email )

2300 Red River St., Stop E2700
PO Box Y
Austin, TX 78713
United States
512-471-2064 (Phone)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
512-471-2064 (Phone)

Nathan D. Richardson (Contact Author)

University of South Carolina - Law Library ( email )

1525 Senate Street
Columbia, SC 29208
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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