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Tuesday, April 23, 2013

Important Harvard analysis: existing fracking regs, disclosure, practices need improvement

The Harvard Business Law Review has published an excellent analysis of public and private efforts to regulate hydraulic fracturing written by Hannah J. Wiseman, Assistant Professor, Florida State University College of Law.

The Private Role in Public Fracturing Disclosure and Regulation looks at existing federal informational disclosure requirements for oil and gas production, which it characterizes as “weak”; voluntary disclosure efforts like FracFocus; a growing list of 16 states that have updated or proposed new laws or regulations to require basic chemical disclosure; various regulatory comparisons and analysis efforts; and “private and quasi-private” guidelines and best practices.

Professor Wiseman finds these efforts wanting.  She writes:

All of these public-private efforts toward sharing regulatory information, suggesting better regulation, and developing industry best-practices are valuable but may fail to address all of the risks. Substantive efforts to self-regulate are voluntary, meaning that members may ignore best practices without penalty. These efforts also may be influenced by a strong interest, shared by industry and many state regulators, to keep regulation at the state level. And in the case of industry efforts, profit motives could potentially dampen best practices aimed to reduce environmental risks. Despite all of these drawbacks, public-private efforts beyond chemical disclosure in tight oil and gas development seem to be expanding the regulatory information available to the public, reducing the use of certain chemicals, and potentially lowering certain development risks.

Professor Wiseman discusses how further improvements will be needed to ensure effective regulation of oil and gas development through a combination of public and private controls, concluding:

More action, both at the public and private levels and the grayer areas between them, will be needed to address the range of impacts introduced by a rapidly growing industrial practice. Local, state, and federal agencies implementing further change must account for and in some cases formalize the private progress already occurring, while recognizing that such action could disincentivize future industry efforts. At the same time, private actors seeking public acceptance of tight oil and gas would be wise to further improve information dissemination and show the extent to which industry actors follow the many best practices that already have been developed. Disclosure is a very important start, but much more collaborative work remains to be done.

Professor Wiseman’s paper is a must-read.

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