A Private Solution to a Public Problem: Managing Hydraulic Fracturing Risks by Enhancing Private Governance Through Mandatory Insurance Requirements
Open AccessAbstractA Private Solution to a Public Problem: Managing Hydraulic Fracturing Risks by Enhancing Private Governance Through Mandatory Insurances Requirements The U.S. Environmental Protection Agency has identified several environmental risks associated with the use of hydraulic fracturing in oil and gas operations, including potential water shortages; air, land, and water contamination; and climatic warming. Moreover, workers’ safety is jeopardized from exposure to significant amounts of crystalline silica. Several earthquakes have also been linked to hydraulic fracturing. Despite these risks, hydraulic fracturing produces many benefits, including energy independence. The federal government, under the Obama Administration, tried to strengthen hydraulic fracturing requirements. However, the Trump Administration has been backing away from these efforts. Some states have regulated this activity, but most states have not provided comprehensive regulation. Local governments are limited in what they can do. Given the gaps in public governance, many private organizations have developed best practices, but private organizations are often limited by the amount of information and cooperation oil and gas companies provide. This article suggests that hydraulic fracturing risks are best managed by private organizations creating standards developed, implemented, and enforced with the help of insurance companies and mandatory insurance requirements. The article sets out hydraulic fracturing benefits and risks. It looks at public efforts to manage the risks at the federal, state, and local levels. It also examines ways to reduce risks through litigation. It then considers private governance and its limitations. Finally, it explores how private governance limitations can be minimized with the help of insurance companies and insurance mandates.
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