Regulating under conditions of uncertainty and risk: Lessons learned from state regulation of hydraulic fracturing

ABSTRACT Uncertainty and risk can often characterize the conditions under which new policy is developed. This has been particularly true in the case of hydraulic fracturing (“fracking”) and its regulation within America’s federal system of governance. During the George W. Bush administration, the federal government intentionally limited the Environmental Protection Agency’s legal authority to regulate processes associated with fracking. This decision shifted the primary responsibility for the regulation of fracking to the states. Some states, in the interest of economic development, were quick to adopt policies that promoted the use of fracking despite environmental concerns regarding the risks. Other states were more cautious, instituting moratoriums on its use. In this study, we develop a typology that can explain the actions of states in response to uncertainty. We also provide seven lessons that can be learned from the regulation of hydraulic fracturing in the United States.