Tuesday, March 11, 2014

Looking at Law and Regulation Through Shale Oil & Gas Regulation

I study both business law issues and shale oil and gas regulation, and I see a lot of overlaps between the two. Big business, is after all, big business.

The political intensity related to shale oil & gas development, is a concentrated version of many other types of regulation, such as we related to securities and publicly traded corporations.  I am currently finalizing an article regarding the Pennsylvania Supreme Court's decision in Robinson Township v. Commonwealth, which overturned Act 13, the state's law designed to promote hydraulic fracturing and horizontal drilling.  In major part, Act 13 largely eliminated local zoning of oil & gas development.  

David B. Spence's article, Responsible Shale Gas Production: Moral Outrage vs. Cool Analysis, provided one good source for analyzing the regulatory backdrop of shale law and regulation.  I recommend it highly. 

Here's the abstract:      

The relatively sudden boom in shale gas production in the United States using hydraulic fracturing has provoked increasingly intense political conflict. The debate over fracking and shale gas production has become polarized very quickly, in part because of the size of the economic and environmental stakes. This polarized debate fits a familiar template in American environmental law, pitting “cool analysis” against “moral outrage.” Opponents of fracking have generally framed their arguments in moral or ethical terms, while systematic research is beginning to build a more careful and nuanced understanding of the risks associated with shale gas production (though the record is far from complete). All of which makes the question of how to produce shale gas “responsibly” – corporate social responsibility being the focus of this symposium – very difficult to answer. This essay argues that: (i) because shale gas production entails difficult to measure and unevenly distributed costs and benefits, there is no clear responsible (read: ethically preferable) set of limitations that we ought to impose on shale gas production; and (ii) moral outrage is obscuring (or influencing perceptions of) empirical facts in the shale gas policy debate. More specifically, well-established behavioral heuristics – particularly, confirmation biases and the cultural cognition of risk – are impeding the development of a common understanding of the empirical facts necessary to guide policymaking. Recognizing this, policymakers must resist political pressures and work that much harder to ground their decisions in empirically-demonstrated facts – namely, those produced by sources that are less susceptible to these heuristics and biases. Thus, information generated by rigorous, empirical analyses performed by academic or government sources ought to be credited over anecdotes or studies associated with industry or NGOs that have staked out a clear pro or con position in the fracking debate. Indeed, responsible fracking decisions ought to consider all of the consequences of permitting, regulating or banning shale gas production, including the relative risks of shale gas production compared with the relevant energy alternatives.

http://lawprofessors.typepad.com/business_law/2014/03/looking-at-law-and-regulation-through-shale-oil-gas-regulation.html

Current Affairs, Joshua P. Fershee, Securities Regulation | Permalink

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