! competition!among!the!states!to!attract!limited!capital!investment!causing!downward!pressure! on!state!regulations?!(often!known!as!a!“race!to!the!bottom”),”!and!“Is!regulatory!capture!by! industry!players!occurring!in!state!capitals!or!state!agencies?”!!If!the!answer!to!either!of!these! questions!is!yes,!even!in!a!subset!of!states,!there!would!be!a!strong!case!that!regulatory!failure! is!occurring!at!the!state!level,!and!that!further!federal!intervention!and,!likely,!federal! assumption!of!regulatory!authority!is!required.! ! The!analytical!findings!in!Chapter!5!are!summarized!here:! • Most!of!the!costs!and!benefits!of!shale!gas!development!are!experienced!within!the! geographic!boundaries!of!the!state!where!the!development!is!occurring.!!Furthermore,! the!practice!of!shale!gas!development!varies!by!geography,!due!in!part!to!geological!and! environmental!factors.!!As!a!result,!states!appear!to!be!best!suited!to!regulate!most! aspects!of!shale!gas!development!since!they!are!in!the!best!position!to!decide!how!to! strike!a!balance!between!the!costs!and!benefits!of!shale!gas!development!as! experienced!by!their!own!residents.!!The!exception!to!this!finding!arises!when! externalities!cross!state!borders,!as!occurs!with!air!emissions,!contamination!of! navigable!waterways,!and!earthquakes!resulting!from!underground!injection!of! wastewater!–!all!of!which!are!already!regulated!under!the!federal!Clean!Air!Act,!Clean! Water!Act,!and!Safe!Drinking!Water!Act,!respectively.! • Both!the!federal!government!and!the!states!possess!the!requisite!technical!know\how! to!regulate!shale!gas!development.!!The!states,!however,!have!greater!experience! regulating!oil!and!gas!development!than!the!federal!government!does!(although!the! federal!government!does!have!experience!regulating!off\shore!drilling).!The!states!are! also!better!positioned!to!understand!the!unique!geological,!environmental,!and!land!use! factors!that!impact!how!shale!gas!development!and!its!regulation!are!likely!to!play!out! in!specific!locations.!!The!states!edge!out!the!federal!government!in!possessing!superior! regulatory!capacity.! • A!virtue!of!a!federal!system!is!that!states!can!experiment!with!different!ways!of!doing! things!before!the!country!adopts!a!single!federal!standards!or!method.!!States!are! engaging!in!this!type!of!experimentation!in!their!regulation!of!shale!gas!development.!! States!are!responding!differently!to!the!risks!presented!by!shale!gas!development!and! are!adopting!a!variety!of!strategies!to!mitigate!these!risks.!!States,!and!even!the!federal! government,!are!learning!from!the!experiences!of!other!jurisdictions!and!are!seeking!to! apply!lessons!and!best!practices!from!other!states!as!they!emerge.!!Therefore,!the! states!appear!to!be!better!positioned!to!pursue!regulatory!innovation!than!is!the!federal! government.!The!states!are!also!in!a!better!position!to!respond!flexibly!to!the! circumstances!of!the!localities!where!shale!gas!development!is!occurring!because!they! have!a!richer!understanding!of!local!conditions.! Chapter!1!–!Introduction!
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