Bargaining and regulatory formation : a case study of offshore oil in British Columbia
Date
1982
Authors
Richards, Patricia Lynn
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The regulation of resource usage frequently reflects the interdependencies that can occur when one resource is subjected to a number of uses. The nature of these interdependencies will influence the manner in which each use must be limited to avoid damaging other uses. Limitations of resource use rights will be set through the process of regulatory formation or resource use planning within the political arena. It is this process that provides the focal point of this analysis.
Regulatory formation is conceptualized as a bargaining process in which new and existing resource users bargain through a government intermediary to define limitations upon new use rights. The preferred outcome of this bargaining process is posited to be those limited use rights that will facilitate the efficient internalization of external impacts through future bargaining. The argument is then made that the regulatory formation process must be structured in a particular manner to achieve this preferred outcome. It must allow all affected resource users discretion to bargain within a representative bargaining system where damages are known.
In developing this requisite structure the analysis draws upon two basic sources. These include the regulatory bargaining literature and the literature founded in the work of R.H. Coase on efficient resource allocation through bargaining. An attempt is made to apply the insights of the latter to the conceptual framework of the former in generating an ideal type model of regulatory formation.
The application of this model is illustrated through discussion of the case of planning the regulation of offshore oil development in British Columbia. It is hypothesized both that the offshore planning process will not meet the structural criteria and that this failure will reflect both the nature of user group representation in that process and the discretionary control government agencies exercise over that process.
In addressing this hypothesis, the analysis proceeds in two distinct steps. First, the manner in which offshore exploration may impinge upon other users of the oceanic resource is discussed in some depth to determine those users who should be involved in regulatory bargaining. The ongoing regulatory formation process is then described to determine the actual extent of user involvement. Comparison of the results of these two steps provides a basis from which the offshore planning process is critiqued.
The analysis concludes that the planning process does, in fact, fail to meet the regulatory bargaining criteria initially developed. The factors found to underly this failure include both indirect user representation and government agency discretion as hypothesized. However, they also include the noncomprehensive nature of existing damage information. These findings suggest that the offshore planning process will produce new resource use limitations of a particular type.
In closing, the analysis attempts to predict the form these limitations will take and suggests alterations required of the process structure to more closely approximate those use right limitations preferred.