! Geographic(distribution(of(costs(and(benefits! The!applicable!principle!is!that!regulation!should!be!conducted!by!the!lowest!level!of! government!that!geographically!encompasses!the!costs!and!benefits!associated!with!the! regulated!activity.!!The!reasoning!behind!this!principle!is!that!the!jurisdiction!of!government! that!best!matches!the!geographic!distribution!of!costs!and!benefits!will!be!best!able!to!decide! on!the!appropriate!balance!between!the!costs!and!benefits.!!Under!this!criterion,!federal! regulation!would!be!needed!when!the!costs!or!benefits!of!the!regulated!activity!are!felt!largely! across!state!lines.!322! ! Regulatory(capacity( The!regulatory!entity!should!possess!the!capacity!to!regulate!the!activity!in!question.!!While! capacity!consists!of!various!components,!including!financial!and!human!resources,! management!capacity,!and!organizational!infrastructure,!among!others,!the!critical! consideration!here!pertains!to!technical!know\how.!!While!a!regulatory!agency!may!require! additional!financial!resources!to!carry!out!its!mandate,!for!example,!or!may!require!some!time! to!build!out!its!management!capacity,!responsible!agencies!should!already!possess!technical! know\how!and!expertise!in!regulating!areas!that!are!similar!to!shale!gas!in!terms!of!the!types!of! technical!capacities!(e.g.!risk!analysis,!modeling,!geologic!expertise,!etc.)!that!are!required.! ! Innovation,(flexibility,(and(adaptability(in(regulation( This!criterion!seeks!to!assess!how!well!a!regulatory!entity!or!entities!would!experiment!with! new!regulatory!approaches,!or!allow!for!such!experimentation,!in!order!to!yield!enhanced! policy!and!regulation.!!A!key!component!of!this!criterion!is!the!regulatory!entity’s!ability!to!be! flexible!and!adaptable!to!changing!circumstances!as!shale!gas!development!continues!to!evolve! in!practice!and!as!science!and!public!opinion!about!shale!gas!continue!to!evolve.! ! Efficiency,(certainty,(and(stability(in(regulation( As!noted!in!the!introduction!to!this!chapter,!regulatory!action!by!state!and!federal!governments! generally!seeks!to!balance!the!benefits!derived!from!regulation!against!the!costs!imposed!by! regulation!and!to!make!sure!that!the!associated!benefits!are!greater!than!equal!to!the!costs.!!A! key!cost!of!regulation!is!the!burden!that!it!imposes!on!business,!particularly!business!actors! associated!with!the!regulated!industry.!!This!criterion!seeks!to!assess!how!well!a!regulatory! entity!or!entities!would!be!able!to!create!and!enforce!regulations!efficiently,!in!order!to! minimize!the!burden!on!the!regulated!entities,!and!how!effectively!the!regulatory!entity!could! create!regulatory!stability!and!certainty!(as!uncertainty!and!changing!regulations!can!impose!
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!Wallace!E.!Oates,!“Industrial!Ecology,”!14.!
Chapter!5!–!Regulatory!Federalism!
79!