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Taming drillers through legislative action: Evidence from Pennsylvania’s shale gas industry

Byung-Cheol Kim () and Matthew E. Oliver

Resource and Energy Economics, 2017, vol. 50, issue C, 15-35

Abstract: In 2012 Pennsylvania amended its Oil and Gas Act to tighten regulations on development of shale gas resources. Three key pecuniary provisions were annual well fees, increased bonding requirements, and higher penalty limits for violations. We analyze the effects of these mandates on well operator behavior using data on well operations and inspections over the period 2000–2013. After deriving theoretical predictions, we empirically examine each provision’s effect on firm behavior in two aspects: (i) acquisition of new well permits, and (ii) regulatory violations. Overall, we find the amendments induced firms to acquire fewer permits and elevate environmental protection effort.

Keywords: Shale gas; Regulatory compliance; General deterrence; Environmental bonds; Impact fee (search for similar items in EconPapers)
JEL-codes: D82 G2 Q5 R52 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.reseneeco.2017.06.002

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