A market approach to regulating the energy revolution: assurance bonds, insurance, and the certain and uncertain risks of hydraulic fracturing

As tens of thousands of new unconventional, hydraulically fractured oil and gas wells spring up around the US, Americans face a long-term threat of significant soil and water contamination. The current patchwork of state "command and control" regulations fails to prevent this contamination...

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Bibliographic Details
Published in:Iowa law review 2014-05, Vol.99 (4), p.1523
Main Authors: Dana, David A, Wiseman, Hannah J
Format: Article
Language:English
Subjects:
Behavior
Drilling
Energy
Environmental cleanup
Environmental liability
Environmental policy
Environmental regulations
Evaluation
Hydraulic fracturing
Industrial Revolution
Liability insurance
Methods
Natural gas
Oil wells
Outdoor air quality
Petroleum production
Political economy
Pollution liability insurance
Risk management
Soil contamination
Water pollution
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Summary:As tens of thousands of new unconventional, hydraulically fractured oil and gas wells spring up around the US, Americans face a long-term threat of significant soil and water contamination. The current patchwork of state "command and control" regulations fails to prevent this contamination. Even in states with updated rules, sloppy operations have caused contamination events. Command and control regulations will be an important first step to prevent contamination but cannot address all risks, particularly those for which industry has more knowledge than agencies. This Article proposes a market-based approach and responds to objections, and then explores the bottom-up, localities-as-leaders political economy by which bonding and insurance mandates are most likely to emerge and ultimately become established as a matter of state law. Lacking adequate bonding and insurance requirements risks creating a new wave of widespread, unaddressed pollution from the current energy revolution. At this critical decision point, this Article proposes a better path forward.
ISSN:0021-0552