Constrained Regulatory Exit in Energy Law

In recent years, the federal government’s efforts to open up competitive electricity markets have transformed how we think about the regulation of energy. In many respects, the Federal Energy Regulatory Commission’s (FERC) broad “deregulatory” efforts, which commenced in the 1990s, might appear to be a case of paradigmatic regulatory exit as defined by J.B. Ruhl and Jim Salzman. But our case study of FERC’s restructuring of wholesale electricity markets reveals some important institutional features that make exit in federalism contexts, and under federal statutory duties, a rich and difficult problem. In the context of energy, exit from one regulatory sphere can create regulatory gaps. This has led FERC, which largely exited the regulation of wholesale electricity rates, to increase regulation in other spheres. It has also invited forms of intergovernmental exchange, as states have emulated or otherwise responded to FERC’s regulatory modifications in the areas in which states have jurisdiction. In this sense, the transition to competitive energy supply markets has involved constrained exit characterized by a hydraulic back-and-forth between regulators and institutions in an effort to ensure that statutory duties are fulfilled and other public needs are met. This assessment of regulatory exchange has a prescriptive implication: a federal regulator seeking to exit specific forms of conventional regulation needs to proactively develop strategies to facilitate regulatory exchange, while simultaneously preserving its authority over important substantive values related to its regulatory mission. Attention to “offsetting” regulations is often necessary to ensure that problematic regulatory gaps will not arise. In the energy context, these strategies might also include the use of mechanisms that give other institutions a voice in implementing exit strategies, as well as better ex ante regulatory planning for market enforcement that will continue after partial exit. We argue that it is not only a good strategy for federal regulators to recognize this hydraulic feature of exit, but that cooperative federalism statutes such as the Federal Power Act often require them to do so

Delegation and Dysfunction

Much of the scholarly literature lauds cooperative federalism, in which states regulate to achieve federal standards, as an innovative federal-state partnership. But delegation of authority also has grave dangers caused by principal-agent problems, among others. The largely toothless nondelegation doctrine captures these challenges, but the bidirectional difficulties of principals adequately monitoring agencies, and vice versa, extend far beyond Congress\u27s delegation of duties to agencies

Regulatory Adaptation in Fractured Appalachia

America faces a growing energy challenge. We require energy for our every activity, yet we increasingly recognize that there are no easy energy solutions. Reliance upon traditional fossil fuels – many of them imported – jeopardizes our national security and releases harmful emissions, yet renewable energy technologies require high capital investments and have environmental impacts of their own. As we address this challenge and move toward a more sustainable energy future, “bridge fuels” like domestically-produced natural gas offer a near-term compromise between renewables and traditional fossil fuels. A growing quantity of bridge fuel in the form of domestic natural gas is produced from American shales through a process called hydraulic fracturing, and this practice is booming in the Appalachian region. Some residents of this region are now asking how this type of extraction can and should occur while adequately preventing potential harm to their health and their treasured natural resources. This Article investigates how state regulation has adapted to address this concern and argues that regulations must improve in some areas; it suggests steps toward state improvement and briefly explores additional federal options. The Article concludes that improved regulations are important to address potential environmental- and health-related concerns and to serve as a model for future regulatory transitions in the energy area as America slowly shifts toward a new energy base

Trade Secrets, Disclosure, and Dissent in a Fracturing Energy Revolution

In the United States, Congress has traditionally relied, in part, upon citizen participation to control industrial activity and its effects on public welfare. It has also required industry to disclose certain information to the public in order to enable this participation. Early on in the movement toward expanded federal regulation of industry, Congress granted broad standing to individuals in generous “private attorney general” provisions in environmental and business-related statutes. It also required agencies to follow strict notice-and-comment rulemaking procedures, which directed agencies to publicize proposed rules and receive citizen comments. Through statutes such as the Emergency Planning and Community Right-to-Know Act (EPCRA) and the Safe Drinking Water Act (SDWA), Congress further mandated that industry publish information about releases of toxic materials and that public water providers disclose violations of water quality standards. These statutes all envisioned that informed citizens would influence industrial activity through open public venues. But a recent revolution in energy development – inspired by a new technique to extract natural gas from shale – called slickwater hydraulic fracturing (fracing) – does not fall squarely within traditional venues for public disclosure and participation. In September 2010, the Environmental Protection Agency (EPA) took one step toward the “publicization” of fracing when it sent a letter to nine natural gas companies, requiring that they disclose to the agency the chemicals used in fracing in order to support a comprehensive EPA study of the potential drinking water quality and public health impacts of fracing. Although this administrative action appears to open a door to public access to information veiled by trade secrets, it is not currently clear that natural gas companies will promptly disclose the requested information – as shown by Halliburton’s refusal to disclose information in response to the letter and a subsequent subpoena issued by EPA – or that the information will be publicly available. Unless Congress or state legislatures partially remove trade secret protections from fracing fluids, communities experiencing the brunt of the energy boom may have inadequate tools to evaluate and address the potential impacts of this development

The Private Role in Public Fracturing Disclosure and Regulation

Abstract: Recent domestic growth in oil and gas natural gas production from shales and sandstones called “tight” formations—largely enabled by a modified technology called slickwater hydraulic fracturing—has driven both economic growth and environmental concerns. Public concerns have often focused on the chemicals used in the fracturing process, yet federal regulations requiring disclosure of chemicals are weak. In the midst of initial “threats” of federal intervention, industry—along with state regulators—developed a website that enabled chemical disclosure. State regulations later mandated disclosure through this website, or allowed it as one option within a mandatory disclosure regime. Independently, gas companies also have begun to experiment with less toxic fracturing chemicals and to take other substantive efforts toward identifying and limiting the risks of tight oil and gas development. This example of a public-private effort to enhance informational access in fracturing, and to make limited substantive changes, may offer important lessons for other oil and gas regulation moving forward. Agencies and policymakers must make independent assessments of risks and avoid directly adopting industry solutions if those solutions are incomplete or avoid needed change. But oil and gas operators have shown how public action, combined with industry coordination and innovation, can sometimes inspire productive responses to the risks of unconventional oil and gas production

Trade Secrets, Disclosure, and Dissent in a Fracturing Energy Revolution

In the United States, Congress has traditionally relied, in part, upon citizen participation to control industrial activity and its effects on public welfare. It has also required industry to disclose certain information to the public in order to enable this participation. Early on in the movement toward expanded federal regulation of industry, Congress granted broad standing to individuals in generous “private attorney general” provisions in environmental and business-related statutes. It also required agencies to follow strict notice-and-comment rulemaking procedures, which directed agencies to publicize proposed rules and receive citizen comments. Through statutes such as the Emergency Planning and Community Right-to-Know Act (EPCRA) and the Safe Drinking Water Act (SDWA), Congress further mandated that industry publish information about releases of toxic materials and that public water providers disclose violations of water quality standards. These statutes all envisioned that informed citizens would influence industrial activity through open public venues. But a recent revolution in energy development – inspired by a new technique to extract natural gas from shale – called slickwater hydraulic fracturing (fracing) – does not fall squarely within traditional venues for public disclosure and participation. In September 2010, the Environmental Protection Agency (EPA) took one step toward the “publicization” of fracing when it sent a letter to nine natural gas companies, requiring that they disclose to the agency the chemicals used in fracing in order to support a comprehensive EPA study of the potential drinking water quality and public health impacts of fracing. Although this administrative action appears to open a door to public access to information veiled by trade secrets, it is not currently clear that natural gas companies will promptly disclose the requested information – as shown by Halliburton’s refusal to disclose information in response to the letter and a subsequent subpoena issued by EPA – or that the information will be publicly available. Unless Congress or state legislatures partially remove trade secret protections from fracing fluids, communities experiencing the brunt of the energy boom may have inadequate tools to evaluate and address the potential impacts of this development