Disclosure, Reverse Setbacks, and Paternalism

Here is a letter I sent to city council, speaking solely as an individual and not on behalf of any organization. Happy to hear any thoughts folks may have on this.

Dear City Councilors,

Thank you for the open exchange of ideas this Tuesday about the gas well drilling and production ordinance. Despite Mayor Watts’ understandable concern about waxing philosophical, it seems to me that policy decisions are always grounded in philosophical positions even if these are often left implicit. What I most valued about Tuesday night was how those positions were made more explicit.

To me, the discussion about reverse setbacks and disclosure was most important. In situations where a new gas well comes into an existing neighborhood, we are dealing not simply with risk but with a risk that is not willingly chosen. But in the reverse case, it could be that those moving into new homes around existing gas wells willingly choose the risks. In such cases, who are we to stop them? That would seem to be an act of government paternalism, which requires a great deal of justification in a democracy premised on individual liberty.

This raises a question: why have any reverse setback at all? Admittedly, we must adhere to the 100 foot distance imposed by the international fire code. But why anything greater than that? Why not leave it up to the land owners? This may be a case where government is trying to figure out some optimal decision that is best handled by the invisible hand of the market.

I found it curious that even those of you arguing from surface property owner rights didn’t make this suggestion. There was a general consensus around 350 feet. (As an aside, I would argue this should be from the nearest piece of equipment, not just the wellhead, because the wellhead is not necessarily the riskiest thing on a site.) Why 350 feet and why make that decision rather than leave it up to the property owner?

Now, it could be that this is for some of you a political compromise. “Ideally,” you might say, “it would be 100 feet, but I’m willing to go up to 350 to meet in the middle with others who want 500 or more.”

But I didn’t get that sense. Rather, it seemed like there was a consensus around a kind of mild paternalism, that is, a need to put some modest limits on the amount of risk we can allow individuals to assume. To me, this seems reasonable, for a couple of reasons that hinge on who is actually choosing the risk and on the basis of what knowledge.

First, there is much talk of developers and homeowners as the primary people involved here. Assuming they are fully informed of risks, then there is no problem. But there is also always the potential for renters and others who will live in the area who are not given the chance to assent to the risks but who will nonetheless be exposed to them. I think also of children here, though recognize this is problematic, because parents routinely make risk calculations on behalf of their kids. A robust reverse setback distance may be justified to protect people like this.

Second, how can we ensure that even the typical agents (i.e., adult homebuyers) are made aware of the risks? Here, I would submit, we cannot simply rely on the market to guarantee disclosure of risks. Indeed, profit motives will work against disclosure, because it would almost certainly reduce property values. Everything hinges on establishing an adequate disclosure mechanism, because the assumption all along has been that people know what they are getting themselves into. We clearly do not have adequate disclosure now. The real question is whether any such thing is even possible.

Currently, as the Meadows at Hickory Creek testifies, people are not informed. They don’t fit the archetype that seems to be so often assumed in these discussions of the rational decision maker with perfect access to all salient information. And I don’t think it is appropriate to blame homebuyers in such situations for “not doing their homework.” They did their homework as well as anyone could reasonably be expected to do. The standard here should be one of reasonable persons, not perfectly rational calculators. Knowledge about gas well plats, gas well equipment, and the associated risks is not something that can be expected of the reasonable person. That knowledge must be explicitly provided.

I spoke to one gentleman who had just moved into a home in that brand new development around the south site at the Meadows. His house was a stone’s throw from the site. I asked him what he was told about that site when he moved in. He said that he was promised there would be “no new activity” there. I asked him if he got that in writing and he said no. I would submit that he was not honestly or adequately informed. And this was a man who had lived around gas wells at his previous home. If anyone should be expected to ask more questions, it would be him. But again it is unreasonable to put the burden of information gathering on the shoulders of those considering a move near a gas well site. These sites are not ordinary sorts of things people can be expected to know about.

Underneath all the talk of property rights is a notion that we all own ourselves. To be in possession of yourself is to be an autonomous being. This is arguably what makes us persons with dignity. Respecting persons means providing them with a chance to give their informed consent. This is what disclosure does. So, I see disclosure as the very essence of honoring private property rights. Yet it is something that the government must ensure.

The form that disclosure takes is more straightforward than the content. Formally, it should happen early in the decision process (not when someone is signing closing papers, for example) and it must be intelligible to non-experts.

The content is the issue, because there is no consensus on the risks to be communicated. Indeed, we are not talking about risks here at all but rather uncertainty. Risk connotes a known probability (like a 50% chance of getting tails). Uncertainty is a murkier situation.

One way around this is to provide people with a set of information accepted by representatives on different sides of the controversies involving shale gas development. Or you can supply them with information culled exclusively from credible authorities like government reports and peer-reviewed studies. Another strategy is to provide people with competing narratives from different sides.

But at the end of the day, I think the justification for a more robust reverse setback distance (far more than 100 feet) is this uncertainty itself. Imagine the most robust disclosure process practicable: at the end of it, won’t any reasonable person still be left with lots of uncertainty afterward? We cannot really give our informed consent to something about which so little is known (especially about long-term health consequences). In some sense, no one can really know what they are getting themselves into (this is one way to phrase the conclusion of the New York State Health Department study that recommended a ban on hydraulic fracturing there).

I would argue that you have an obligation to err on the side of caution in the face of this uncertainty and require a sizeable reverse setback distance even when our disclosure process is improved. I might even argue that there is no morally significant difference between regular and reverse setback distances, because in neither case can one willingly choose the risks, because too much is unknown.

Anyway, these are some of my thoughts and I’d be happy to discuss more specific ideas for disclosure (e.g., why not a brochure like the one used when selling homes with lead paint?). It seems to me that we have a responsibility to respect people by supplying them with information. But we also have a responsibility to own up to the consequences of lingering uncertainties by enforcing robust reverse setback distances.

I know there is a concern about acting paternalistically with these reverse setback distances. But I actually think some form of paternalism is inevitable here. Consider the present situation that led to the ban: decisions that impact people in important ways are being made without their consent. They are, in short, being treated like children. Even if we leave it up to the market plus a robust disclosure policy, we may only salvage the appearance of autonomy, because in reality people will continue to make decisions basically in the dark given the level of uncertainties involved here. We might only be tricking them, albeit unintentionally.

I still favor stronger disclosure policies to try to enable people to act autonomously. I’m just not sure those conditions are really possible.