Between a Rock and a Hard Place: Governing Unconventional Natural Gas at the Local Level in the United States

Abstract

While numerous studies have addressed the impact of unconventional natural gas development on communities in the United States during the initial boom period (2007 to 2014), few works synthesizing local governance issues exist. This paper aims to address the gap in the research by reviewing the literature and identifying challenges local governments encountered while attempting to govern the burgeoning industry. After conducting an integrative literature review of 43 studies, the author contends that the industry’s newness, regulatory confusion, information asymmetries, distrust of producers, conflicting interests, and ambiguous costs and benefits of extraction hindered local governments and their ability to address the industry and its impacts. The paper suggests that local officials should adopt collaborative frameworks to exchange information, establish best practices, and clarify regulatory landscapes. This study adds to the literature on local governance in communities with mineral resource extraction and provides insights for future industries or resources with local impacts.

1. Introduction

The United States sits atop vast reserves of natural gas. Geologists estimate that the nation is endowed with approximately 2828.8 trillion cubic feet of natural gas, with most of the recoverable reserves lying thousands of feet beneath the earth’s surface in tight shale formations [1]. To extract natural gas from the tight shale, producers employ a technique known as hydraulic fracturing. Hydraulic fracturing requires millions of gallons of water, sand, and chemicals to be pumped through wells at high pressures to break up the rock, free the gas, and transport it to the surface. Because this process differs from traditional or conventional natural gas extraction, hydraulically fractured wells are known as unconventional wells, and hydraulic fracturing is known as unconventional natural gas development [2].

For many years, unconventional natural gas development was not economically feasible. Hydraulic fracturing proved too costly for the natural gas derived from the well. However, technological advances in the 1990s and 2000s improved the economics of the process and ushered in the widespread adoption of the practice [2]. Given the technological advancement, landowners in communities that sit atop the tight shale formations began to be bombarded by industry representatives who sought to lease their land to establish unconventional natural gas wells. By 2010, millions of acres of land had been leased, and tens of thousands of unconventional natural wells had sprung up across the country [3].

Seemingly overnight, citizens and municipal officials with no previous experience with natural gas development found themselves at the forefront of an energy revolution. Local governments were inundated with requests for property records and applications for development, while citizens were subjected to a barrage of real estate offers and lease requests [4,5]. Large sums of money were offered for leases in states with vast natural gas reserves, such as Colorado, Ohio, Pennsylvania, Texas, and West Virginia [6]. Many communities felt overwhelmed by the sudden boom in natural gas extraction and unprepared for the demands on infrastructure, resources, and services the industry brought [7,8].

Citizens and public officials were eager to reap the economic rewards of unconventional natural gas development. However, the new and unfamiliar nature of the industry made establishing rules and regulations that would protect the community and mitigate nuisances associated with the industry, such as dust, light, noise, pollution, and traffic, difficult [9,10]. As leases proliferated, communities were unsure of how to regulate a sprawling industry that expanded rapidly [11]. Furthermore, the regulatory environment in which unconventional natural gas development existed was confusing and fragmented, making it challenging to determine local governments’ oversight powers [12,13].

The narrative of the natural gas boom and the issues associated with the industry’s explosive growth are well documented in the literature. Numerous quantitative and qualitative research studies explore the industry’s impacts on local governments and communities between 2007 and 2014. However, few studies situate the issues in the context of governance and do not recognize why or how local governments failed to address the problems the burgeoning industry presented. This paper fills that gap. Utilizing the integrative literature review model explored by Torraco (2005), the author reviewed 43 studies conducted between 2008 and 2022 focused on unconventional natural gas development, local governments, and oversight. After conducting a staged review, the author identified elements from the articles and synthesized the information presented to develop a conceptual framework that explains the difficulties local governments experienced while attempting to govern the new industry [14].

The framework developed as a result of the review process contends that the newness of the industry to local bodies and citizens; regulatory confusion amongst local, state, and federal agencies; information asymmetries between communities and the industry; distrust of producers; conflicting interests in the community, especially between those with mineral interests and those without; and ambiguous costs and benefits of extraction have all impacted the ability of local governments to govern the burgeoning industry. These issues undermined local decision-making bodies and their confidence in addressing community impacts. As such, local officials struggled to guide development as it occurred.

The study proposes that in the future, local officials should adopt a collaborative framework whereby actors in communities with unconventional natural gas development, or other energy resources, will be able to exchange information, establish best practices, and understand regulatory landscapes more easily. In addition, this paper suggests that such impediments could have been overcome with clarified roles for state and local governments, the establishment of industry-wide best practices, and better knowledge sharing. Examining these issues adds to the literature on local governance and the burgeoning study of communities with mineral resource extraction and provides insights for future industries or energy sources with local impacts.

2. An Overview of Unconventional Natural Development

Before discussing the challenges local officials encountered in managing unconventional natural gas development, an explanation of the hydraulic fracturing process is essential. To begin, hydraulic fracturing extracts oil, natural gas, and natural gas liquids from tight shale formations that lie thousands of feet below the earth’s surface. The shale formations of the United States stretch hundreds of miles and across multiple states. The process primarily produces natural gas and natural gas liquids in states including Ohio, Pennsylvania, and West Virginia, home to the Marcellus and Utica shale formations. In other parts of the United States, such as North Dakota, home to the Bakken shale formation, oil is the main product extracted.

Oil and gas producers begin hydraulic fracturing by drilling wells that bore vertically upon initial descent before rotating horizontally underground in the deep shale layer [2]. After establishing the well, producers propel millions of gallons of water, sand, and chemicals at high pressure to break up the tight rock and free the mineral resources from the millions of tiny chambers in the shale layer [15]. Once the oil or gas is released from the rock, the resource is brought to the surface along with the spent water, sand, and chemical compounds used to break open the chambers. The resource is collected by the producer for transport, while the wastewater is either pumped into trucks for disposal or stored at the well pad in impoundment ponds [16]. Establishing the well (preparing the site, drilling the well, and hydraulically fracturing the shale) typically requires several weeks to a few months, while production can last for many years [17].

In most respects, a well pad is like any heavy industrial or construction site—there is an abundance of loud equipment and heavy machinery, bright work lights, and traffic to and from the site as crews deliver the machinery necessary for well completion [18]. Producers typically have crews of 20 or more employees and private contractors on-site during the construction or spudding of the well. Crews work long hours to clear the site of vegetation, establish access roads, monitor equipment, and transport water and chemicals. Complaints about noise, light, and traffic are common in communities that engage in unconventional oil and natural gas development [19,20].

Before hydraulic fracturing commences, however, firms engaged in extraction must secure a lease to the land that holds the resource. Typically, the firm contacts the landowner via a landman and offers a dollar amount per acre for the lease. In addition, the company typically offers a royalty to the landowner based on the volume of the resource withdrawn [21]. Under this regime, producers can access the resource on land they do not own, and landowners can collect, in some cases, large sums of money for allowing the industry on their properties [22]. Producers frequently attempt to amass as much leased land as possible to access the most oil and natural gas. Consequently, wells tend to spring up in clusters across entire communities where the resource is present [3].

Because shale formations stretch across multiple states and hundreds of counties and municipalities, oversight of the industry is complex. Multiple state agencies and local bodies claim to have authority over different aspects of the industry. From well completion to transportation and logistics, as many as three or more agencies can have regulatory and oversight powers. Thus, firms seeking to establish unconventional natural gas wells must navigate a patchwork of state and local laws that can sometimes be conflicting [3].

3. Regulation of Unconventional Natural Gas Development in the United States

In the United States, unconventional natural gas development is regulated primarily at the state and local levels with little federal guidance. Typically, state agencies issue permits for wells, develop and oversee regulations on the industry’s operations, levy and collect taxes on producers, and disclose information about the industry to the public [23]. Meanwhile, local governments tend to issue permits for wells based on local zoning laws and regulate the industry’s use of roads, water, and refuse collection, as well as monitor local environmental impacts of the industry, like erosion, sedimentation, and stormwater management [9,15].

Most states require operators to obtain permits to establish an unconventional natural gas well. States issue permits for the wells themselves and permits that allow operators to flare and vent natural gas, withdraw water, and transport hazardous materials, all activities commonly associated with well completion and operation [3]. Few states have a centralized administrative structure for managing environmental regulation, let alone unconventional natural gas development [24]. Consequently, numerous commissions and authorities have jurisdiction over the completion and operation of wells and ancillary structures, such as compressor stations and pipelines.

Because many offices and agencies are responsible for permitting and oversight, processes are highly fractured across the states. Depending on the state, the involvement of agencies can vary dramatically. For example, in Pennsylvania, the Public Utility Commission and Department of Environmental Protection play prominent roles in the permitting and oversight processes, with some responsibilities falling to the Department of Conservation and Natural Resources and Fish and Boat Commission [25]. In Texas, however, the Texas Commission for Environmental Quality and the Texas Railroad Commission are primarily responsible for the permitting and oversight of wells [12]. Numerous other states, including Colorado, Louisiana, and Oklahoma, have multiple agencies involved with unconventional natural gas development.

In addition to permitting and oversight responsibilities, most states levy a tax or fee on the industry. Almost all states assess a tax on the amount of natural gas extracted or severed from the ground. Oklahoma, Colorado, and Louisiana are examples of states that collect these so-called severance taxes [26]. In Pennsylvania, a variable impact fee is assessed on each well. The Pennsylvania fee, established under Act 13, charges operators based on the well’s age, production level, the prevailing price of natural gas, and several other factors [27]. Taxes and fees are collected to pay for oversight and compliance of the industry and establish legacy funds that benefit the public after the resource has been exhausted. As a result, revenue generated by unconventional natural gas has become an essential stream in state and local budgets [26].

At the municipal level, public officials issue permits for wells based on local zoning laws, regulate the industry’s use of roads, water, and refuse collection, and monitor the industry’s environmental impacts, such as erosion, stormwater management, and sedimentation. The land lease regime described in the previous section helps to explain how and why unconventional natural gas companies intersect with local governments. Because local governments in most states are charged with overseeing community and economic development as well as establishing land use controls under home rule regimes, they are frequently involved in the approval of leases and well completions [7,15,28]. In addition, local governments are responsible for the construction and maintenance of much of the infrastructure (roads, bridges, tunnels, sanitation facilities, etc.) utilized by producers to establish and operate the wells [4,13,29,30]. Given these intersections, local governments have been and will continue to be on the front lines of unconventional natural gas development.

Despite the legal challenges, most municipalities maintain the power to regulate where and how a well operates to promote their citizens’ health, safety, and welfare. In nearly all states, municipalities can dictate where a well is permitted and establish setbacks, height restrictions, and other similar regulations that unconventional natural gas operators must follow [31]. Such regulations have been resisted by unconventional natural gas operators who view the regulations as too restrictive [32,33].

In terms of managing the industry’s use of goods and services provided by the municipality, public officials have established rules, regulations, and fees that restrict access or offset the municipality’s costs for providing services consumed by unconventional natural gas operators. The most common examples include posted and bonded roadways (roads that are off-limits to industry haulers or require a bond to access) and 911/emergency service surcharges for the industry. Such policies prove necessary as many communities claim that the heavy equipment used to complete wells causes widespread damage to roads and bridges during transport and that the rural and remote locations of wells require emergency services to update 911 call systems [4,34,35].

Finally, most municipalities also monitor industry compliance with environmental regulations. The most common example is erosion and sedimentation controls to minimize industry impacts on water quality. Because many municipalities are responsible for managing stormwater and maintaining and improving water quality in local waterways, they often issue permits for site grading and sediment removal during well completion [36]. Once the permits are issued, local governments and water districts follow up with routine inspections. Both the permitting and inspection processes ensure that the industry avoids negative environmental impacts and is held accountable when damage does occur [12,32].

In the United States, unconventional natural gas operations fall under the purview of many regulatory units. States and local governments are responsible for permitting and oversight but have different standards and expectations. Because of the overlap, determining which agency or body is responsible for different aspects of development can prove difficult both for the industry and the respective governing bodies.

4. Methodology

Despite a vast body of work exploring numerous facets of the unconventional natural gas boom in the United States (generally referred to in the literature as the period between 2007 and 2014), few works specifically examine governance issues at the local government level. Moreover, very few works synthesizing information on governance and shale gas development exist. Consequently, the extant literature is fragmented, with a scarcity of unifying streams apparent in current and emerging research. This study sought to address the dearth of work synthesizing current research on unconventional natural gas development and local governance by conducting an integrative literature review.

The integrative literature review is a process in which the researcher identifies, reviews, and synthesizes literature to develop a new framework or perspective on a topic or research stream [14]. In this case, the researcher identified, reviewed, and synthesized the literature on local governments involved with unconventional natural gas development in the United States. The review aimed to identify the factors that hindered, undermined, or stopped local governments from governing the unconventional natural gas industry. This paper defines governance as any policy, management technique, or performance system that guides unconventional natural gas development [37,38].

Studies were identified using common research databases, including EBSCOHost, EconLit, Google Scholar, JSTOR, PLoS, and ScienceDirect. Search terms included fracking, governance, local government, oversight, mineral resource extraction, shale gas, and unconventional natural gas development. Combinations of the search terms were created and searched in an iterative process. Studies conducted between 2008 and 2022 were included in the review to incorporate longitudinal research and accommodate delays in publishing. A staged review was completed, and 43 studies were ultimately included in the synthesis. Findings from the extant literature were evaluated and classified based on common elements. The method followed the conceptual classification of constructs strategy, as outlined by Torraco (2005) [14] and adopted in other reviews [39].

5. Challenges Municipalities Face in Managing Unconventional Natural Gas Development

After completing the integrative literature review, six common challenges experienced by local governments emerged from the research—the newness of hydraulic fracturing as a process, regulatory confusion surrounding the industry, information asymmetries between producers and the communities hosting them, distrust of companies and a perceived lack of transparency, conflicting interests amongst stakeholders, and ambiguous costs and benefits of the industry for individuals and the community. In the following sections, the paper will examine these challenges and why local officials struggled to govern unconventional natural gas development.

5.1. Newness of the Industry

The unconventional natural gas industry grew in the United States in a boom-like fashion. Between 2007 and 2014, unconventional natural gas production grew by 51 percent per year. Because of the swift pace of development, the areas in which wells were being developed, and the lack of experience municipalities had dealing with the activity, local officials encountered difficulties when trying to manage the bourgeoning industry [10].

The rapidity with which unconventional natural gas grew across the United States and within communities left public officials unprepared. In some states during the initial boom period, thousands of wells were spudded in a single year [40]. At the municipal level, governmental bodies often received hundreds of permit applications at one time. A close review of every application was nearly impossible for local governments with a small staff and part-time public officials [5]. Furthermore, many communities lacked the technical expertise to critically review the permits (some municipalities lacked a planner on staff, let alone an engineer or geologist). The ongoing deluge of applications did not allow public officials to regulate proactively, only to police retroactively [11]. As city councils, county commissions, and township managers struggled to keep up, firms continued to enter the market. Consequently, local public officials found themselves in the uncomfortable position of learning about, permitting, and regulating an entire industry simultaneously [41].

The fact that the industry seemed to expand in predominantly rural and suburban areas further complicated matters. Many communities ripe for unconventional natural gas development were zoned primarily for agricultural or residential uses [28]. Current zoning for heavy industry or other similar uses was mainly non-existent. Public officials hesitated to allow well completions in non-industrial areas given the scarcity of information about the industry’s daily operations and long-term impacts on citizens, livestock, and property [42]. Citizens and public officials alike questioned the compatibility of well pads in agricultural and residential areas. In response, public officials felt compelled to revisit comprehensive plans and zoning ordinances amidst the influx of applications for unconventional natural gas wells [31].

Apart from the swift pace and rural/suburban nature of development, many local officials struggled to manage unconventional natural gas development at the onset because they lacked a context for the type of development they were experiencing [6]. In a series of in-depth interviews with public officials in Texas, Edwards (2019) concluded that local government representatives voiced great uncertainty in crafting policies that regulated shale gas development in their communities. Public officials explained that the industry and its rapid development were novel and that there was no guidance or resource regarding regulations or best practices [43]. With little experience or background to apply to the seemingly novel industry, local public officials were unsure how to proceed with regulations for operators in their communities. In Pennsylvania, researchers found that public officials were often confused about how current laws could or should be applied to the industry [31].

The speed, location, and nature of unconventional natural gas development put local public officials at a disadvantage. With few staff members, many local officials attempted to learn as much about the industry as possible while simultaneously developing rules and regulations managing it. These unique circumstances challenged most local government officials and made regulating the industry much more difficult.

5.2. Regulatory Confusion

In addition to the industry’s newness, local government officials struggled to make sense of the regulatory framework in which unconventional natural gas operated [44]. Multiple state agencies were responsible for permitting and regulating various aspects of unconventional natural gas development. Determining what rules applied to the industry and whether local governments could develop guidelines proved complicated [44]. Furthermore, in several cases, states preempted local decisions, which sewed doubt in the minds of local officials who wished to develop regulations [45]. The lack of clarity and threat of preemption hobbled local government decision making.

Most states with unconventional natural gas development had statutes on oil and natural gas extraction before the boom in unconventional natural gas began in 2008. After all, many had at least a few conventional wells in operation for several years [3]. Such laws gave the state almost all control over the location and operation of conventional wells and provided direct reporting and inspection procedures for the industry. However, when unconventional well applications began to appear, the applicability of existing laws and regulations was unclear [46]. The new wells involved natural gas extraction, but the methods and well locations preferred by operators were very different. Municipal officials were unsure if the same rules applied, the extent to which they had authority over various aspects of development, and how to implement changes effectively [28,33].

Across the country, local governments began establishing rules and regulations that dictated where an unconventional natural gas well could be established and how it operated (operating hours, truck routes, wellpad access points, etc.) [45,47]. However, some states attempted to preempt local governments by limiting their ability to regulate the industry and/or invalidating local laws on unconventional natural gas development [32]. In addition to the lack of clarity surrounding existing laws and regulations, the threat of preemption hindered management efforts.

Two states serve as examples of this struggle—Pennsylvania and Colorado. In Pennsylvania, lawmakers preempted local rules and regulations with the passage of Act 13, which established an impact fee on unconventional natural gas wells. Under the legislation, municipalities were expressly forbidden from regulating the establishment of wells and could be barred from receiving revenue from the impact fee if they attempted to dictate locations and operating protocols. A municipality later challenged the legislation, and the Pennsylvania Supreme Court ultimately overturned the provision that barred the application of land use controls to the industry [33].

In Colorado, several municipalities attempted to restrict or even ban unconventional natural gas development in their respective jurisdictions. The Colorado Oil and Gas Association filed suit against the municipalities, and the cases eventually reached the Colorado Supreme Court. On 2 May 2016, the Colorado Supreme Court decided that state law preempted the ability of citizens to restrict unconventional natural gas development [32]. In both cases, state preemption muddied the waters for local control. Even after the court resolutions, confusion over local abilities to govern the industry continued [7].

The lack of clarity in regulatory controls and state preemption hindered local public officials’ abilities to regulate unconventional natural gas development. Municipalities struggled to identify what could and could not be done locally and feared that the state could preempt whatever regulations they implemented. Such confusion put local officials at a great disadvantage in regulating the industry.

5.3. Information Asymmetries

Local government officials were also at an information disadvantage when unconventional natural gas operators began to apply for permits to establish wells. As previously discussed, municipal governments were overwhelmed by the boom and the pace of development. However, municipalities faced another challenge: the knowledge gap between operators and public officials. While producers and industry representatives were generally aware of prime production areas and the methods/technology needed to extract natural gas, public officials were not. As a result, municipal leaders lacked the information necessary to make optimal decisions for their communities [48].

When firms began to flood local governments in search of property records to execute leases and apply for well permits, they generally knew where they wanted to establish wells and begin production. Their research made them aware of local geologies, including where extraction was most feasible and what type of gas and natural gas liquids were available [49]. Conversely, most citizens and local government officials were unaware of the shale beneath their communities and the amount of natural gas available. Many locales were in the precarious position of relying almost entirely on information provided by companies of the industry and not independent third parties. The information gap led some communities to become overly accommodating and allow permits out of fear that the industry might go elsewhere. Therefore, many communities permitted wells they may not have allowed had they had more or better information [50].

Furthermore, few local officials completely understood the hydraulic fracturing process and everything it entailed. As the first wells were permitted and spudded, officials were surprised to learn how intensive the process was. At the well pad, crews would work around the clock using heavy equipment and noisy machinery. Hundreds of heavy tanker trucks drove on local roads to deliver hundreds of thousands of gallons of water to the site [20]. Temporary workers overran local hotels, motels, mobile parks, and apartments [6]. None of these impacts were expected until they were observed in real time by local communities. Consequently, few public leaders had the foresight to post and bond roads, prepare for an influx of workers, or support local services strained by the growth [51].

5.4. Distrust of the Industry/Lack of Transparency

The distrust of the industry grew as the boom in unconventional natural gas wells progressed. Citizens and public officials became concerned about the industry’s lack of transparency, perceived litigiousness, and questionable motives [52]. As a result, local governments became less comfortable trusting information that the industry shared and were hesitant to establish local regulations for fear of operators filing suits [33].

Early on, some citizens and local government officials lost trust in unconventional natural gas operators [49]. In many cases, the catalyst for this erosion was the composition of fluids used in the hydraulic fracturing process. Some suspected the fluids were highly toxic and damaging to the environment and human health [53]. The industry contended that the fluids comprised well-contained standard chemicals that posed little risk. Despite the industry’s reassurances, few operators offered chemical disclosures to citizens and public officials [54]. Protected by state laws, operators claimed that the fluids were proprietary and that divulging them would give away trade secrets [12]. Without operator disclosures, communities had little or no information about what was being pumped underground to release the natural gas from the shale formations.

The unwillingness of the industry to disclose the composition of fluids led many communities to believe that operators were not transparent. Questions about transparency in other aspects of the industry, such as lease terms and payments, began to take hold soon after [49]. The perceived lack of transparency led to an erosion of trust in many communities and established an adversarial relationship between some public officials and operators. Such a relationship made local governance more difficult because municipalities felt that they could not trust the information they relied on from the industry.

A sense of distrust in the industry continued to grow as operators began to file suit against municipalities that enacted laws that banned unconventional natural gas development outright or severely restricted the ability of operators to establish wells in certain areas [47,55]. Numerous suits were brought against local municipalities throughout the United States. The suits challenged local permitting procedures, land use controls, and provisions of environmental regulations. In many cases, the industry won, and the municipalities were forced to overturn local laws and pay exorbitant legal fees [56]. As cases against local governments and their regulations proliferated, public officials began to doubt their ability to establish local laws for operators in their communities.

The new untrusting and even adversarial nature of the relationship between local governments and operators was not conducive to collaboration or management. With trust in the industry diminished or lost entirely, public officials hesitated to rely on operator information to establish rules and guidelines for the operators in their communities. Furthermore, with the threat of lawsuits, some communities declined to establish new regulations entirely.

5.5. Conflicting Interests

Views of unconventional natural gas development vary considerably within and across communities. Some citizens and public officials support the industry and hope to see the activity expand, while others vehemently oppose it. Typically, those supporting the industry gain the most through employment or leases. They are more willing to tolerate the negative aspects of the industry, including traffic and noise, because they are benefiting economically. However, those who oppose the industry are less likely to benefit from it and more likely to express annoyance or concern about the nuisances associated with the industry and its potential negative long-term impacts [57,58]. Across communities hosting unconventional natural gas development, public officials were in the crosshairs of a debate between those who wanted wells and those who did not.

Some citizens have supported the industry across states with large natural gas reserves. Studies reveal that counties with unconventional natural gas wells generally tend to see employment and income gains, albeit by varying degrees [59]. In addition, local landowners stand to gain financially from the leases they sign with unconventional natural gas operators and royalties they collect from extraction. Income generated by leases and royalties collected by the landowners circulate through local economies and positively impact ancillary businesses and local tax collections [21,29,35]. In some cases, landowners have become millionaires from their payments [40]. Given the economic rewards, some citizens defend the industry and oppose any regulation encroaching on local extraction efforts.

Conversely, many citizens vehemently oppose the industry. Research suggests that those less likely to benefit from jobs or payments and more likely to encounter the nuisances of production tend to speak out against unconventional natural gas development [57]. Citizens against unconventional natural gas development often cite the environmental and health consequences, noise, smells, and traffic associated with the industry as significant inconveniences and reasons to restrict or ban the industry in their communities [45]. Others complain that unconventional natural gas wells negatively impact land values in their communities [60]. These citizens are equally as quick to mobilize to oppose any industry expansion in their communities.

With many citizens having starkly different views of the industry, local government officials were in the middle of the conflict. Any regulation that addressed the negative externalities of development was viewed as an assault on citizens with jobs in the industry or leases with operators. Meanwhile, a lack of rules and regulations on the industry was viewed as a lack of care for the health, safety, and welfare of the rest of the community. Thus, municipal officials encountered another challenge while trying to govern unconventional natural gas development.

5.6. Ambiguous Costs and Benefits of the Industry

Finally, local government officials struggled to make sense of the deluge of information about the economic, environmental, and health impacts of the industry released at the time [43]. Research proliferated, analyzing the new industry and its impacts. Many of the findings were conflicting. Some studies showed positive economic effects, while others showed negative impacts because of infrastructural stresses and public costs (e.g., road and bridge repairs, crime increases, and labor market changes) [61]. Public health reports showed dire environmental and health consequences in communities with extraction [62]. The conflicting information and ambiguities in the research led to confusion amongst public officials at the local level.

Multiple studies over the past decade suggest that unconventional natural gas development can be an economic boon for communities in the United States. In many rust belt towns, for example, unconventional natural gas development has facilitated economic growth during a period of stagnation. Once extraction begins, jurisdictions may enjoy a host of benefits, including population growth, increased employment, higher wages, injections of capital into the local economy, increased rents, greater profits among firms, and income from royalties collected on land leases [40,63,64].

Studies on the adverse economic effects of unconventional natural gas development suggest that economic gains, such as employment and wage increases, may be negated by stresses on infrastructure and services caused by the industry, however [4,61]. The heavy equipment producers use, which must be transported via local roadways to the well pads, can cause significant damage to local infrastructure, which local governments are responsible for repairing [20]. Communities may need to expand or enhance infrastructure to accommodate the industry, as wells are constructed in previously undeveloped areas. In addition, unconventional natural gas development may put stress on local services. As the industry grows in a region, it often necessitates service expansions in administrative services, public safety, health, and public works as labor moves in to build the well pads [29].

The research on unconventional natural gas development’s environmental and human health effects contends that the industry is highly harmful to both. Completing and operating wells can lead to deforestation, habitat fragmentation, and pollution [65]. Multiple studies suggest that impoundment ponds pollute local water bodies, and the motors powering the well equipment reduce localized air quality [16]. Reductions in water and air quality can negatively impact human health. Long-term health impacts can be both acute and chronic. Common impacts include but are not limited to short-term breathing issues, asthma, long-term lung damage, cancer, and endocrine system disruption [66,67]. Despite the evidence, most researchers contend that more data must be collected and that many long-term impacts remain unknown [68].

Given the economic benefits discussed here, many jurisdictions consider unconventional natural gas development advantageous. However, the environmental and human health impacts are considerable. With new studies released showing new information with starkly different conclusions, local leaders found a straightforward narrative in favor of or in opposition to the industry challenging to find.

6. Solutions to the Challenges Municipalities Faced

Several actions should be taken immediately to address the issues and challenges that local government officials faced (and in some cases continue to face) in managing unconventional natural gas development locally. First, state and local officials should collaborate to clarify regulatory roles and establish clear boundaries between state and local regulators. Second, officials at all levels should work with industry representatives to establish generally accepted best practices for unconventional natural gas development. Third, local governments should enlist the help of regional bodies, non-profits, and colleges/universities to promote knowledge sharing between entities to facilitate a greater understanding of the industry and build the capacity to manage its full range of impacts. While the solutions presented here do not address all the challenges discussed earlier, they can help facilitate the governance of the industry in the future.

One of the critical challenges discussed throughout the literature was the complexity of the regulatory landscape for unconventional natural gas development. Identifying which department or agency was involved in permitting and compliance made local regulations more difficult to develop. Local and state regulations overlapped, and in some cases, the state would preempt local bodies. In others, the states attempted to neuter local governments in the regulatory process completely. Such a confusing landscape hindered public officials as they attempted to establish local policies that addressed the new industry. Unfortunately, much of that confusion continues to stand today.

The detrimental effects of regulatory complexity and ambiguity are well documented in the literature [69]. When such complexity exists, intergovernmental bodies cannot establish clear roles in the regulatory process. In response, the literature suggests that new frameworks for regulation and oversight be established [23]. Rather than tweaking existing gas laws, states should consider overhauling the laws entirely to address the unique facets of unconventional natural gas development [3,46]. Roles for local bodies and state agencies should be defined in the process. Defining new roles may require the state to consolidate responsibilities between agencies and offices. Once the new framework is in place, regulations should be regularly reviewed and updated to reflect new knowledge about the industry [70].

To promote transparency and restore trust in the industry, state and local governments should work with operators to establish best-management practices. These practices should address well siting and completion, pollution prevention, chemical disclosure, nuisances, and public safety issues [71]. By doing so, communities and operators will have a shared sense of success in well completions and operations. With standard practices and mutually shared expectations in place, operators can repair relationships with communities [72]. Furthermore, local government officials will feel more empowered to hold the industry accountable as operators leave and enter the community over time.

Finally, local governments should enlist the help of regional bodies, non-profits, and colleges/universities to promote knowledge sharing between entities and build the capacity to govern the industry and its many impacts. As discussed earlier, many communities lacked the technical expertise to critically review the permits, develop rules and regulations, and understand the positive and negative aspects of unconventional natural gas development. By partnering with outside entities, local governments could gain information about the industry and augment and enhance their management capabilities.

The importance of knowledge sharing and cooperation between governmental agencies and external partners is prominent in the public administration and public policy bodies of literature [69]. Research suggests that pressing workloads and administrative shortcomings (lack of experience, knowledge, or training) within local governments can be overcome by embracing technical assistance partnerships, knowledge-sharing arrangements, and capacity-building programs [73,74,75]. Local government officials could overcome resource constraints within their organizations by opening clear knowledge-sharing pathways. In practice, this would translate to communities sharing policies and best practices, relying on colleges and universities to synthesize research and information on the industry, and collaborating with regional bodies such as Councils of Government (COGs) or Metropolitan Planning Organizations (MPOs) to create information exchanges.

7. Conclusions

There were numerous challenges local government officials faced in governing unconventional natural gas development during the initial boom period. Public officials were confused and conflicted by the industry’s newness, gaps and overlaps in regulations, information asymmetries between operators and communities, distrust of operators, conflicting points of view amongst citizens and officials, and ambiguous reports of the industry’s costs and benefits. In response to these challenges, this paper suggests that clarifying roles for the states and local governments, establishing industry-wide best practices, and better knowledge sharing could have helped (and will help) local officials to overcome these challenges. To accomplish these goals, new policy frameworks must be adopted, public officials must partner with their industry counterparts to develop best practices and shared visions of development, and external partnerships with regional bodies and colleges/universities must be formed. If communities can make these changes, they will be better prepared to manage the unconventional natural gas industry in the future.

Learning from the mistakes of local governments during the initial boom period of unconventional natural gas development will prove helpful as the United States explores the feasibility of new technologies and energy sources. Hydrogen energy and carbon capture, utilization, and storage (CCUS), which could have significant land use and zoning impacts, have become salient topics of discussion in the energy policy arena in recent years. Addressing lingering issues from unconventional natural gas development and land use could inform policy, if not prevent errors, for this new energy source.