The Political Economy of Local Vetoes

64 Pages Posted: 8 Jul 2015

See all articles by David B. Spence

David B. Spence

University of Texas at Austin - School of Law; University of Texas at Austin – McCombs School of Business – Department of Business, Government & Society; University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business

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Date Written: 2014

Abstract

Political philosophers, welfare economists, and positive political theorists have long puzzled over a problem that the law is frequently called upon to resolve: namely, how to choose the “best” policy when a majority mildly prefers policy X, and a minority strongly prefers policy not X. This is a frequent subtext of preemption litigation, when disputes between federal and state governments reflect the fact that popular preferences are geographically heterogeneous, and the majority preference in a state is in the minority nationally. Federal preemption doctrine establishes a conceptually straightforward way of addressing this issue, but doctrinal rules governing state law preemption of local zoning decisions are murkier. In addition, when local zoning rules restrict development, those rules can also trigger regulatory takings claims, further complicating the resolution of these state-local disputes.

According to the environmental group Food and Water Watch, within the last few years more than 400 local governments, from California to Texas to New York, have enacted ordinances restricting or banning within their borders the use of hydraulic fracturing (fracking) to produce natural gas or oil from shale formations; indeed, there are more than 200 of these ordinances in New York State alone. These kinds of local vetoes of a state-regulated activity pose the potential for claims that the local ordinance is preempted by state oil and gas regulation, as well as regulatory takings claims by holders of mineral rights devalued by the local ban. In what seems likely to be only the tip of the litigation iceberg, state courts have recently begun to decide state-local preemption challenges to anti-fracking ordinances (rendering only a few opinions to date) and are facing the first few takings claims (none of which have yet been decided). These attempts by local governments to veto local development are essentially fights over the distribution of the costs and benefits of development. This Article explores the distribution of those costs and benefits, how distributional concerns drive the politics that cause these conflicts in the first place, and how the decision rules courts use to resolve preemption and takings claims try to address those distributional concerns to address those distributional concerns.

This analysis is self-consciously policy neutral. That is, it does not proceed by selecting a preferred policy for regulating fracking and then advocating a decision process most likely to produce that policy. Rather, because the risk profile of fracking is still being developed and because there is such disagreement about that profile, this analysis asks which level of government (state or local) is most likely to produce decisions that balance the costs and benefits of shale oil and gas production well. Thus, the focus is on the politics of welfare maximization (or of long-run utility maximization). This analysis will consider the many and varied effects of fracking in terms of costs and benefits: not to quantify them or to suggest that they ought to be quantified but rather as a way of exploring how the distribution of impacts disposes people toward or against shale oil and gas production.

Keywords: state law, local zoning decisions, regulatory takings claims, state-local disputes, local vetoes, fracking, natural gas or oil from shale formations, cost and benefits of development, distributional concerns

Suggested Citation

Spence, David B., The Political Economy of Local Vetoes (2014). Texas Law Review, Vol. 93, 2014; KBH Energy Center Research Paper No. 2015-08. Available at SSRN: https://ssrn.com/abstract=2628190

David B. Spence (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin – McCombs School of Business – Department of Business, Government & Society ( email )

2110 Speedway, B6000
CA 5.202
Austin, TX 78705
United States
512-471-0778 (Phone)
512-343-0535 (Fax)

HOME PAGE: https://law.utexas.edu/faculty/dspence/

University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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