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The Effectiveness of Fracking Disclosure Regimes in Canada

30 Pages Posted: 27 May 2016 Last revised: 15 Jun 2016

Dror Etzion

McGill University

Miron Avidan

McGill University - Desautels Faculty of Management

Kelsey Franks

McGill University

Samuel Ruderman

McGill University

Joel Gehman

University of Alberta - Department of Strategic Management and Organization

Date Written: May 25, 2016

Abstract

In response to the rapid adoption of hydraulic fracturing and horizontal drilling (collectively, “fracking technology”) over the past few decades, some provincial governments have developed legislation and regulations to delimit, monitor and safeguard fracking practices. Among these rules are guidelines requiring fracking companies (“operators”) to disclose a wide array of fracking-related information to the regulators that oversee these activities. This information serves several purposes, and has the potential to provide the public with timely and useful information regarding the activities that take place in their communities and potential harms that may result. In this report, we provide an analysis of existing disclosure regimes in the four Canadian provinces where fracking is actively taking place: Alberta, British Columbia, Manitoba and Saskatchewan. We assess the effectiveness of these disclosure practices, benchmarked against current theoretical and empirical scientific knowledge. Our analysis yields four main conclusions, summarized below.

In Some Provinces, Regulation Provides a Good Basis for Public Disclosure. Alberta and British Columbia, the provinces with the greatest fracking activity, have strong legislative structures that require operators to disclose information to regulatory bodies. Subsequent reports to the public are based on this information. Moreover, websites currently in use such as BCOGC.ca, AER.ca and Fracfocus.ca provide good infrastructure in terms of accessibility. However, even in Alberta and British Columbia, disclosure regarding some fracking-related issues has not received specific regulatory attention, and in Manitoba and Saskatchewan, relevant regulations are almost non-existent.

Legislation Specifying Public Disclosure of Information Related to Hydraulic Fracturing is Minimal. The vast majority of current relevant legislation covers operator-to-regulator disclosure, and not regulator-to-public disclosure. In fact, only two regulatory provisions (both in British Columbia) require the Oil and Gas Commission to report directly to the public on fracking-related risks. Although various provincial websites enable public inquiry into additional issues, the Canadian public largely lacks regular, legally mandated reporting on fracking issues.

Information that is Disclosed to the Public is Difficult for Ordinary Citizens to Access and Comprehend. Although websites currently in use such as AER.ca, BCOGC.ca and Fracfocus.ca provide good infrastructure for public disclosure, an additional layer of processing is required to make data easily accessible. At the same time, possibly one of the most conspicuous pitfalls of disclosure systems is the overuse of scientific jargon or language that is otherwise obscure for potential users. We found that almost none of the information that is currently available to the public has been disclosed in a manner that is meaningful to non-specialists.

Public Disclosure and Access Should be Promoted Despite Scientific Uncertainty. Regulation related to public disclosure need not necessarily depend on the status of ongoing scientific endeavours to unveil the actual risks that fracking poses. Rather, we recommend that decision-makers and public policy leaders adopt a precautionary approach that provides greater public awareness while scientific certainty is being pursued.

Keywords: Hydraulic Fracturing, Fracking, Information Disclosure, Regulatory Regimes, Compliance, Enforcement

JEL Classification: Q33, Q38

Suggested Citation

Etzion, Dror and Avidan, Miron and Franks, Kelsey and Ruderman, Samuel and Gehman, Joel, The Effectiveness of Fracking Disclosure Regimes in Canada (May 25, 2016). Available at SSRN: https://ssrn.com/abstract=2784468

Dror Etzion (Contact Author)

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Miron Avidan

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Kelsey Franks

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Samuel Ruderman

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Joel Gehman

University of Alberta - Department of Strategic Management and Organization ( email )

Edmonton, Alberta T6G 2R6
Canada
(780) 248-5855 (Phone)

HOME PAGE: http://www.joelgehman.com

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