UCLA Journal of Environmental Law and Policy

As companies consider pursuing offshore exploratory drilling operations in the Arctic Outer Continental Shelf, the federal regulatory regime surrounding such activities continues to develop. In February 2015, the United States Department of the Interior released a proposed rule employing more stringent standards and requirements for offshore exploratory drilling operations in order to ensure effective and safe exploration in the Arctic Outer Continental Shelf. The proposed rule has received mixed responses, with environmental groups praising the government for regulating such activities while simultaneously requesting that the mandates become even more stringent. The regulated entities in the oil and gas industry oppose the rule because they argue it is redundant and unnecessary, while also imposing extravagant costs for relatively minimal improvements to the safety of these exploratory drilling operations. However, as with any regulation, controversy among different interest groups is to be expected. To determine whether the proposed rule is the appropriate regulatory approach, this article employs a familiar tool to determine the favorability of the proposed regulation: economic analysis. Although some claim that economic analysis is an improper tool for quantifying certain benefits such as environmental protection, it seems clear that the government must find some way to reconcile these conflicting interests and ensure the sustainable development of Arctic resources moving forward. This article provides a starting point for this discussion by assessing the economic costs associated with the proposed rule.