The Capacity of States to Govern Shale Gas Development Risks

Abstract

The development of natural gas and oil from unconventional formations in the United States has grown substantially in recent years and has created governance challenges. In light of this recent growth, and increasing attention to global shale gas resources, the successes and failures of governance efforts in this country serve as important lessons for other nations that have their own unconventional petroleum resources and are beginning to move forward with development, thus calling for a more in-depth examination of the laws governing shale gas development and their implementation. Governance includes both the substance of laws and the activities of entities that implement and influence laws, and in the case of oil and gas, states are primarily responsible for risk governance. Nongovernmental actors and industry also work with states to shape and implement regulations and standards. This Policy Analysis introduces the role of various actors in U.S. shale gas governance, explaining why the states are primarily responsible for risk governance, and explores the capacity of states to conduct governance, examining the content of their laws and the strength of their regulatory entities. The Analysis concludes that states are, to a degree, addressing the changing risks of development. Gaps remain in the substance of regulations, however, and many states appear to lack adequate support or policies for training industry in compliance matters, monitoring activity at sites, prioritizing certain types of regulatory violations that pose the highest risks, enforcing laws, and ensuring that the public is aware of inspections and enforcement and can therefore monitor state activity.