HOW GOOD INTENTIONS BACKFIRE
Negative Effects of Federal Environmental Policies
Jordan Lofthouse, MS, Strata Policy
The Institute of Political Economy (IPE) at Utah State University seeks to promote a better understanding of the
foundations of a free society by conducting research and disseminating findings through publications, classes,
seminars, conferences, and lectures. By mentoring students and engaging them in research and writing projects, IPE
creates diverse opportunities for students in graduate programs, internships, policy groups, and business.
OCTOBER 2016
PRIMARY INVESTIGATORS:
Jordan Lofthouse MS
Strata Policy
STUDENT RESEARCH ASSOCIATES:
Devin Stein
Camille Harmer
Barrett Anderson
Jacob McNeil
Greg Dudley
Matthew Coates
Jadyn Naylor
Katie Colton
Eliza Welsh
TABLE OF CONTENTS
Executive Summary and Key Findings ................................................................................................................................ 1
Chapter 1: How and Why Environmental Policies Are Created ......................................................................................... 1
Chapter 2: The Wilderness Act ......................................................................................................................................... 11
Chapter 3: The National Environmental Policy Act .......................................................................................................... 17
Chapter 4: The Clean Air Act ............................................................................................................................................ 24
Chapter 5: The Clean Water Act ....................................................................................................................................... 29
Chapter 6: Comprehensive Environmental Response, Compensation, and Liability Act ................................................. 36
Chapter 7: Energy Policy Act of 2005 ............................................................................................................................... 41
Chapter 8: Market Approaches to Environmental Problems ............................................................................................ 49
EXECUTIVE SUMMARY AND KEY FINDINGS
Although federal environmental laws have seemingly good intentions, not all outcomes have been beneficial. The
Institute of Political Economy (IPE) at Utah State University examined how and why negative consequences arise from
what appear to be good environmental laws. This report first uses public choice theory to examine the political process
of creating environmental policies. Then it explores the negative outcomes from six of the most influential
environmental laws. The report concludes with market approaches to environmental problems.
Legislators and bureaucrats, like all people, are rationally self-interested individuals who strategically make policies
for their own benefit. When politicians, bureaucrats, and special interests work to fulfill their own self-interest,
environmental policies can have negative consequences and unseen costs that burden the environment and taxpayers.
Special interest groups tend to dominate the policymaking process because they often seek legislation as a tool to get
what they want.
Unintended consequences easily arise from even the most well-intentioned policies. Even with large numbers of highly
educated advisors, policymakers are not all-knowing or all-powerful, and they can make flawed policies can impose
unintended economic or environmental harm. Sometimes policymakers intentionally make policies that are socially
harmful when they grant privileges to certain groups at the expense of everyone else.
Environmental laws generally backfire in three major ways. First, these laws can cause additional harm to the
environment, rather than improving it. Second, these laws impose costs on taxpayers and consumers through
government inefficiency and bureaucratic bloat. As regulations have accumulated over time, compliance costs have
increased for government agencies, businesses, and consumers. Third, some of these laws are unjust because they
promote cronyism and violate individual rights. Government-granted privileges allow political favorites to benefit while
everyone else bears the cost.
To avoid the negative outcomes from policymaking, society will have to demand better policymaking or embrace
market-based solutions. Markets allow for unique solutions to diverse problems. Markets facilitate innovation and
entrepreneurship that can help find solutions to many environmental issues.
CHAPTER 1: HOW AND WHY ENVIRONMENTAL
POLICIES ARE CREATED
INTRODUCTION
For the past 50 years, Americans have turned to the federal government to solve pressing environmental problems.
Major federal policies have helped improve environmental quality to varying degrees, but these policies also have
resulted in negative consequences, such as high costs, inefficiency, violations of property rights, and environmental
1
degradation. This report is meant to dispel the myths that surround federal environmental policies. Applying public
choice theory allows policymakers and average citizens to understand how negative consequences arise from
seemingly good intentions.
In the 1960s and 1970s, American homes were bombarded with stories of alarming environmental issues: the pesticide
DDT, the Cuyahoga River fire, the Love Canal toxic waste scandal, the Santa Barbara oil spill, and the Three Mile Island
nuclear disaster, just to name a few.1 Overall, environmental quality was steadily improving over the course of the
1960s and 1970s without federal policies, but alarmism overshadowed the actual gains in environmental quality.2
Policymakers began to respond to their constituents' calls for environmental protection. Environmental laws and
regulations have grown in size and scope, affecting many aspects of American life.
The first chapter of this report examines the realities of the policymaking process. Each subsequent chapter examines
some negative consequences from environmental policies. This report examines the following laws:
•
•
•
•
•
•
Wilderness Act
National Environmental Policy Act
Clean Air Act
Clean Water Act
Comprehensive Environmental Response, Compensation, and Liability Act
Energy Policy Act of 2005.
The final chapter of this report looks at how markets can provide environmental solutions without the negative side
effects of government policies.
PUBLIC CHOICE THEORY
Public choice theory is a field of political economy that explains how and why governments fail. All people pursue
activities that benefit themselves, and public choice asserts that officials in the public sector are self-interested like
those in the private sector.3 Government officials do not always make policies based on altruistic intentions or pure
benevolence. They make environmental policies strategically for their own advantage. Because policymakers are not
all-knowing or benevolent, government failures result.
Public choice theory uses "methodological individualism," which asserts that individuals, not groups, have preferences
and make choices. Individuals work together as groups to make policies because collective action requires agreement
with others before political goals can be attained. 4
1
Lear, L.J. (1993). Rachel Carson's ‘Silent Spring’. Environmental History Review. Vol. 17:2, pp. 23-48. Oxford University Press: Forest History
Society and American Society for Environmental History;
Stradling, D. & Stradling, R. (2008). Perceptions of the Burning River: Deindustrialization and Cleveland's Cuyahoga River. Environmental
History. Vol. 13:3, pp. 515-35. Oxford University Press: Forest History Society, Forest History Society and The American Society for
Environmental History. Retrieved from: http://www.jstor.org/stable/25473265;
Stine, J.K. (1993). The Public Historian. National Council on Public History, Vol. 15:4, pp. 117-19. University of California Press.
2
Goklany, I.M. (2007). The improving state of the world: why we're living longer, healthier, more comfortable lives on a cleaner planet. pp.2332233. Washington, D.C.: Cato Institute.
3
Buchanan, J. M. (1999). “Politics without Romance.” In The Logical Foundations of Constitutional Liberty. Vol. 1, pp. 48-49. Indianapolis:
Liberty Fund.
4
Ibid.
2
At the most basic level, regular citizens advocate for government solutions to ensure their own health, safety, and
justice because they are self-interested and rational. Despite what the general public wants from regulations, special
interest groups tend to dominate the policy process. Special interest groups are composed of rationally self-interested
individuals who seek regulations as a tool to get what they want under the guise of public benefit. Specific industries
or companies benefit from lobbying for government privileges. Environmental protection policies and regulations are
not exempt from the foibles of the political process.
INSTITUTIONAL FRAMEWORKS FOR MAKING POLICIES
Institutions are formal and informal ways that people interact with one another. Some of the most important institutions
are formal government entities and rules that help groups of people make collective decisions. Some of the most
influential government institutions are constitutions, decision rules, and separate government branches.
COLLECTIVE DECISION-MAKING: CONSTITUTIONS AND DECISION RULES
In the simplest terms, constitutions serve as the "rules of the game" for how legislators and bureaucrats make decisions
and how much power they can have. Constitutions also set up the framework for how interest groups interact with
legislators and bureaucrats and dictate how politicians and bureaucrats can choose winners and losers.
The U.S. Constitution set up a majority-rule, winner-takes-all voting system for electing representatives and passing
legislation. This voting system was meant to reflect the will of the majority while also protecting the rights of the
minority. In the actual legislative process, however, this voting system does not always reflect the majority will or
protect the rights of minorities because it allows special interest groups to easily capture the legislative process for
their own gain. Special interest groups can disproportionately exert their influence on elected officials because these
groups are powerful voting blocs that can contribute money and other forms of political support to political parties and
candidates. Although the Founding Fathers intended elections to serve as a check on politicians, the majority-rule,
winner-takes-all voting system has allowed the will of special interest groups to increase their influence.
SEPARATE BRANCHES OF GOVERNMENT
The U.S. Constitution contains institutional checks on government power to ensure that one branch of government does
not become tyrannical. The Founders also codified rights within the Bill of Rights to create a strong institutional
framework to limit the U.S. federal government’s ability to infringe on individual rights. These checks and balances are
not failsafe, and loopholes have allowed the erosion of personal liberty and the expansion of governmental authority.
The division of power among the three branches was meant to limit government power, but over the course of U.S.
history, all branches of government have grown in size and scope. One phenomenon that the Founding Fathers may not
have foreseen was the emergence of bureaucratic rule. Bureaucracies are given large leeway on how to enforce laws.
Congress usually writes laws in abstract terms and then allows the government agencies to implement laws by writing
rules and regulations. Regulators have wide discretion to issue policies because they are not elected and have little
accountability for their actions, especially in the environmental sector.
Although Congress controls how much money is allocated to each government agency, bureaucrats are not overseen
carefully because Congress and the president have practical limitations in their oversight abilities. Effectively, there
are only four checks on bureaucratic actions: congressional oversight committees, the amount allocated to agencies in
3
the budget, the chief executive’s power to appoint agency heads with the advice and consent of the Senate, and judicial
oversight when people sue regulators.
First, congressional oversight committees can investigate and scrutinize how agencies are run and how well agencies
are fulfilling their legislatively dictated duties. Congressional oversight committees are constrained in their effective
oversight because of the imbalance of information that passes from the agency to the committee. Congressmen cannot
effectively oversee bureaucracies easily because they must allocate their limited time to more pressing responsibilities,
such as reelection and drafting legislation.
Second, bureaucratic power is constrained, in theory, by the amount of funding allocated from Congress in the federal
budget. Bureaucrats formulate regulations to maximize their budgets and secure their jobs, so they rarely cut costs and
often provide services beyond what society demands. As rationally self-interested actors, bureaucrats are incentivized
to show that they need larger budgets each year, and Congress generally complies because individual congressmen do
not have the time or resources to closely monitor the spending of thousands of bureaucrats.5
Third, the president can appoint agency heads with the advice and consent of the Senate. This mechanism is not
particularly effective, however, because agency heads and the president do not have sufficient time to oversee the
daily activities of every decision made in lower levels of the bureaucracy. With so many people and such little oversight,
individual bureaucrats in local offices have wide discretion to implement their personal preferences, as long as there
is no public outcry.
Fourth, average citizens can sue agencies who violate legislation, and if the courts agree that agencies are in violation,
agency leaders must change their policies. Prosecution against agencies’ conduct is the most effective check on
bureaucratic behavior. This check, however, is costly for individuals to pursue and usually means a class-action lawsuit,
which is difficult to organize. With all of these factors combined, each agency has large discretion and limited practical
oversight in many cases.
CONCENTRATED BENEFITS AND DISPERSED COSTS
Government-granted privileges benefit certain interest groups at the expense of everyone else. Despite being
seemingly unfair, this preferential treatment remains in effect because the benefits are concentrated on a small group,
but the costs are dispersed over a much larger population. Through concentrated benefits and dispersed costs,
preferential treatment is able to last for decades, even though the policies may cause net social harm. When the
benefits are concentrated in the hands of a few and the costs are dispersed among the whole population, special
interests will continue to seek privileges that allow them to benefit and the rest of the population will not fight back
because it is too costly to do so.6
Government policies and projects are larger than circumstances may warrant otherwise because the people who
benefit bear only a small fraction of the cost burden.7 A government policy's costs are paid for from a "common pool,"
so each beneficiary will want to consume more from the common pool as the share of the costs is smaller for each
5
Niskanen, W. A. (1968, May). The Peculiar Economics of Bureaucracy. The American Economic Review, Vol. 58: 2, pp. 293-305.
Olson, M. (2002). The Logic of Collective Action: Public Goods and the Theory of Groups. Vol. CXXIV. Harvard University.
7
Weingast, B. R., Shepsle, K. A., Johnsen, C. (1981). The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive
Politics. Journal of Political Economy, Vol. 89: 4, pp. 642–64. Retrieved from http://www.jstor.org/stable/1833029.
6
4
political constituency.8 The policies or projects grow larger and become less efficient as people demand more and pay
less.
LEGISLATURES
Much of environmental policy is based on the idea that legislators should use the force of government to solve market
failures. For the past 50 years, many policymakers have considered environmental problems as market failures and
have justified government intervention as the solution. Even when environmental issues are not market failures, many
government officials assert that it is the government's responsibility to resolve these issues. Public choice theorists,
however, argue that government intervention can be more harmful than allowing the market to find a solution.
SEEKING GOVERNMENT POLICIES: "BOOTLEGGERS AND BAPTISTS"
In the public sphere, special interest groups can persuade legislators to draft and pass laws they prefer. Bruce Yandle,
an economist from Clemson University and George Mason University’s Mercatus Center, developed the "Bootleggers
and Baptists" theory to explain one way in which special interests capture the legislative process for their own benefit.
Yandle found that most special interest groups are comprised of two distinct sub-groups, which Yandle termed
"Baptists" and "bootleggers." "Baptists" are people who advocate for a government regulation for a moral or safety
reason, like Baptists in the South used to advocate outlawing the sale of liquor on Sundays. "Bootleggers" advocate
for particular regulations for more narrow reasons. Bootleggers, like Baptists, wanted regulations to limit Sunday liquor
sales, but bootleggers wanted the law simply because they could profit by selling more liquor in a restricted market.9
In this theory, "Baptists" do the majority of lobbying while the "bootleggers" benefit. Within a Baptist-bootlegger
coalition, Yandle has found that regulations are durable insofar as the Baptists and the bootleggers have a common
objective.10 Yandle asserts that when the Baptists become less vocal, the bootleggers lose a key coalition partner. For
regulations to endure, both the Baptist and bootlegger factions must be active and vocal; otherwise the regulations
likely will be phased out.11
Like any special interest group, the environmental movement comprises a Baptist-bootlegger element.
Environmentalists serve as the "Baptists" because they argue that environmental concerns are health, safety, and moral
issues that necessitate government intervention. Other groups or industries can free-ride on environmentalists'
lobbying so that they too can receive government privileges. Sometimes "bootleggers" masquerade as "Baptists,"
especially in environmental causes. Some companies or industries use a mask of environmentalism to reap economic
benefits from favorable government policies. These "bootlegger" industries claim a moral high ground that will
persuade policymakers to give them privileges and persuade the public to urge the creation of supportive policies.
While policymakers and the public may be convinced by environmental rhetoric, many industries can benefit financially
from direct government handouts and/or regulations that restrict competition.12
8
Primo, D. M., & Snyder, J. M. (2008). Distributive Politics and the Law of 1/n. The Journal of Politics, Vol. 70:2, pp. 477–86.
Smith, A., & Yandle, B. (2014). Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics
[Powerpoint Slides]. Washington, D.C.: Cato Institute. Retrieved from: http://www.cato.org/events/bootleggers-baptists-how-economic-forcesmoral-persuasion-interact-shape-regulatory-politics
10
Yandle, B. (2010, June 20). Bootleggers and Baptists: A Conversation with Bruce Yandle [Video file]. Mercatus Center at George Mason
University. Retrieved from: http://mercatus.org/video/bootleggers-and-baptists-conversation-bruce-yandle
11
Ibid.
12
Yandle, B. (1998, November). Bootleggers, Baptists and Global Warming. PERC Policy Series Issue Number PS-14, pp. 5-8. Retrieved from:
http://www.perc.org/sites/default/files/ps14.pdf.
9
5
FAVOR TRADING, POLITICAL COMPETITION, AND LAME DUCK SESSIONS
Environmental laws are rarely born out of pure environmental concern. Through a system of favor trading, political
competition, and lame duck sessions, legislators often pass environmental laws that are meant to benefit themselves
more than they are meant to benefit the environment. Favor trading is one of the most common ways legislators pass
their preferred laws. Favor trading has been partially limited, however, with recent restrictions on earmarks. Lawmakers
work to maximize support from their constituency, as well as powerful special interests to boost campaign contributions
and sway voters. Legislators often vote for privileges to benefit other constituencies or special interests unrelated to
them because they can vote-trade. Legislators may strike a deal with one another to support each other's projects so
they can improve their chances of passing a policy. 13 By favor trading, politicians help themselves by helping other
congressmen with their pet projects.
In contrast to favor trading, opposing politicians may support similar policies when they are competing against each
other to capture the same constituency. Policies are passed more easily when a Democrat and a Republican running
for the same office want to appeal to the same subset of the voters. Especially with environmental policy, opposing
candidates may support similar policies to appear more “green” than the other to capture as many votes as possible.
When both parties want to appear more environmentally conscious, environmental laws are passed more quickly and
with less opposition.
Congress and the president may use a lame duck session to pass even larger, more controversial laws because defeated
members do not have to worry about facing the voters again. Lame duck sessions allow congressmen to pass laws that
may have been politically unviable before an election. In essence, lame duck sessions allow congressman to pass laws
with minimal repercussions because the next election would be at least two full years away, possibly providing enough
time for voters to forget about unpopular legislation.
GOVERNMENT TOOLS TO GRANT PRIVILEGE
Legislators have many tools to extend special privileges to certain groups, and these special privileges benefit both the
legislator and his allies. Lawmakers and bureaucrats routinely choose winners and losers from a variety of special
interests. Environmental policymaking is no different.
Most special interests have strong lobbying arms that compete for preferential treatment from politicians and
bureaucrats. Because government officials can grant certain types of favors to certain companies, many of these
interests spend time, money, and resources trying to gain the favor of regulators who can increase their economic
gains, while at the same time harming their rivals. Some of these forms of government-granted privilege include
corporate bailouts, subsidies, price regulations, entry regulations, tax credits, non-competitive bids, loan guarantees,
and trade protections.14 Special interest groups can capture these benefits (also known as "rents") if they persuade
policymakers, so they spend large amounts of money lobbying and contributing to political campaigns. Policymakers
are rationally self-interested in reelection and retaining their jobs, so they respond to these forms of persuasion.
Politicians are rarely experts in energy production or environmental science, so they are prone to support interests that
13
Buchanan J. M., & Tullock, G. (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy. pp. 92-109. Retrieved from:
http://files.libertyfund.org/files/1063/Buchanan_0102-03_EBk_v6.0.pdf
14
Mitchell, Matthew. 2015. "The Pathology of Privilege: The Economic Consequences of Government Favoritism." The Mercatus Center at
George Mason University, 1-3. http://mercatus.org/sites/default/files/Mitchell-web.pdf.
6
lobby and financially support them in return. Politicians also want to promote interests that are economically beneficial
to their constituents to increase their chances of reelection.15
One of the main problems with government-granted privileges is cronyism. Politicians or bureaucrats can give
preferential treatment to their allies at the expense of taxpayers and other interests. Policies that favor certain
industries restrict competition in the market, leading to higher prices and lower quality goods and services. Time,
money, and resources are also wasted when industries seek government favors for themselves. Those resources could
have been put to better social use by engaging in research to find more efficient, cost-effective, or reliable products
and services.16 In the most blatant form, government-sanctioned preferential treatment makes rich, well-connected
people even richer while everyone else bears the cost.17
Cronyism becomes especially harmful because of the "revolving door" between the public and private sectors.
"Revolving door" refers to the tendency of former politicians and bureaucrats to receive jobs in the industries they
previously oversaw. On the other hand, the revolving door includes people who worked in industries that receive jobs
in regulatory agencies as politicians or bureaucrats, meaning industry insiders can create policies for their former
colleagues.18
Government favoritism often causes a net economic loss. When a specific industry or interest receives preferential
treatment from the government, the benefit to the single industry or interest will be less than the total damage to the
rest of the community. This economic loss is termed "deadweight loss," which is an economic phenomenon where a
loss to one group does not benefit another group, and society overall is worse off. 19
BUREAUCRACIES AND RULEMAKING
REGULATION-MAKING PROCESS
Federal legislators often draft environmental laws vaguely and passed them quickly to give the public the perception
that they were “doing something” to protect the environment. Under these circumstances, bureaucrats in federal
agencies have wide discretion in deciding how to implement the laws. Often, bureaucrats have more power than
legislators in determining the actual outcomes of environmental laws. The more vaguely legislators write laws, the
more discretion bureaucrats have to interpret the law.
Often, the bureaucratic rulemaking process begins without a clear statement as to why an observed action violates a
law and without a well-formed theory as to how a regulation will solve a problem better than will market forces. Even
when bureaucracies try to gather evidence and form theories based on that evidence, the evidence often is incomplete
or dubious. Bureaucrats rely on anecdotes, internal agency expertise, and the testimony of experts, but these types of
evidence rarely can be tested. Imposing an untested theory on an entire country is likely to be risky or possibly even
immoral.20
15
Buchanan, J.M. “Politics without Romance” In The Logical Foundations of Constitutional Liberty, Vol. 1. Indianapolis: Liberty Fund, 1999.
Mitchell, M. (2015). The Pathology of Privilege: The Economic Consequences of Government Favoritism. The Mercatus Center at George
Mason University. pp. 16, 18, 21-33. Retrieved from: http://mercatus.org/sites/default/files/Mitchell-web.pdf.
17
Ibid. pp. 15-23.
18
Ibid. pp. 32.
19
Stigler, G. J. (1971). The Theory of Economic Regulation. The Bell Journal of Economics and Management Science, Vol. 2: 1, pp. 3–21.
20
Muris, T. J. (1982). Rules Without Reason: The Case of the FTC. AEI Journal on Government and Society: Regulation. pp. 20-26. Retrieved
from http://object.cato.org/sites/cato.org/files/serials/files/regulation/1982/9/v6n5-4.pdf
16
7
BENEFIT-COST ANALYSES AND REGULATORY IMPACT ANALYSES
Benefit-cost analysis (BCA) is one of the standard tests bureaucrats adopt when deciding on the effectiveness of
regulations. Simply put, benefit-cost analyses (BCAs) measure how much people are willing to pay for a gain or avoid
a loss. BCAs help regulators to choose the option that maximizes the difference between benefits and costs.21 BCAs
are useful only if the analyses are conducted and interpreted appropriately.22 The Office of Information and Regulatory
Affairs (OIRA), part of the Office of Management and Budget, is responsible for reviewing all “major” Executive Branch
regulations.23 Over the past several decades, OIRA has made BCA more common in government agencies. As time goes
on, BCA will likely become more widespread in bureaucracies.24
Despite the growing trend of BCA in government agencies, bureaucrats tend to overstate the benefits and understate
the costs for any rules they promulgate. Bureaucrats are incentivized to make their rules seem as good as possible with
the fewest costs.25 Bureaucrats are not impartial judges of their own rules, and BCAs may be biased to favor an agency.
Regulatory impact analysis (RIA) is the framework that government agencies use to weigh the costs and benefits
proposed regulations will impose. If government agencies do not conduct robust RIAs, regulators make decisions on
good intentions, not scientific thinking. Adopting regulations without knowing the costs and benefits is irresponsible
because regulations affect the well-being of millions of people. RIAs are also important because they help Congress in
its oversight duties. Legislators can make beneficial decisions only when they have accurate information about how
regulations are fixing problems or how alternative solutions could be fixing problems more effectively.26
The Government Accountability Office (GAO) studied regulation formation between 2011 and 2013. The GAO reported
that nearly all government agencies conducted the necessary RIAs on economically significant regulations. The GAO,
however, did not "evaluate the quality of the cost-benefit analysis in the rules. The presence of all key elements does
not provide information regarding the quality of the analysis, nor does the absence of a key element necessarily imply
a deficiency in a cost-benefit analysis.”27 Without evaluating the quality of the agencies’ RIAs, the GAO’s report does
not accurately reflect the effectiveness or usefulness of the RIA process in federal agencies.28
Federal agencies conduct less-than-ideal RIAs because of institutional weaknesses. The Office of Information and
Regulatory Affairs (OIRA) is meant to ensure effective regulations, but agency officials who issue the regulations have
conflicting incentives. First, when the president chooses to prioritize a certain regulation, agency officials may choose
to skim over the analytical requirements in past executive orders to fulfill the president's goals. Fulfilling the wishes of
the president and higher-level bureaucrats raises the chances of promotion and larger budgets for lower-level
21
Gayer, T., & Viscusi, W. K. (July 2012). Overriding Consumer Preferences with Energy Regulation. Mercatus Center Working Paper, No. 12-21,
pp. 3. Retrieved from: http://mercatus.org/sites/default/files/Energy_regulations_GayerViscusi_WP1221_1.pdf
22
Graham, J. D. (2008). Saving Lives Through Administrative Law and Economics. University of Pennsylvania Law Review, Vol. 157: 2, pp. 395540. Retrieved from: http://www.jstor.org/stable/40380248.
23
The White House. Office of Information and Regulatory Affairs. Retrieved from: https://www.whitehouse.gov/omb/oira
24
Graham, J. D. (2008, December). Saving Lives Through Administrative Law and Economics. University of Pennsylvania Law Review, Vol.157,
No. 2. The University of Pennsylvania Law Review. pp. 404. Retrieved from: http://www.jstor.org/stable/40380248.
25
McNutt, Patrick. (2002, May). Bureaucracy and Government Output. In 2nd ed. Of The Economics of Public Choice, pp. 124-164. Edward Elgar
Publishing.
26
The White House. "Regulatory Impact Analysis: A Primer." Retrieved from
https://www.whitehouse.gov/sites/default/files/omb/inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf
27
Government Accountability Office. (2014). FEDERAL RULEMAKING Agencies Included Key Elements of Cost-Benefit Analysis, but Explanations
of Regulations’ Significance Could Be More Transparent. Retrieved from: http://www.gao.gov/assets/670/665745.pdf
28
Ellig, J. (2015, February 25). Comprehensive Regulatory Impact Analysis: The Cornerstone of Regulatory Reform. Testimony before the Senate
Committee on Homeland Security and Governmental Affairs Hearing on “Toward a 21st-Century Regulatory System.” The Mercatus Center at
George Mason University. Retrieved from: http://mercatus.org/sites/default/files/Ellig-SenateHSGACommittee-Testimony.pdf
8
bureaucrats. Second, OIRA officials evaluate the administration's own regulations, so there is little incentive for OIRA
workers to undermine the administration's own work. Also, agencies can appeal to the vice president when OIRA blocks
a regulation. Thus, the OIRA administrator is incentivized to block a regulation only if he knows that he is likely to win
the political battle within the administration.29
One of the major problems with BCAs is the quantification the actual costs and benefits. Calculating benefits is usually
derived from Value of Statistical Life (VSL) models. These models show how much a population values preventing a
premature death of a random person in that group. The EPA, in particular, uses VSL estimates to calculate the expected
benefits from proposed regulations, which is meant to inform the decision-making process. VSL estimates are flawed
because sampling error is present in data, agencies use differing data sets, and government researchers use
inconsistent methodological choices. Government researchers also use data that suffers from selection bias, skewing
the VSL estimates. When faulty data and methods are used to calculate expected benefits, these skewed projections
usually result in inflated averages. Decision-makers are prone to make misinformed decisions about the benefits of a
proposed rule when they use these inflated estimates. 30 When bureaucrats unintentionally or intentionally inflate
benefit estimates, regulations may actually cause more harm than good.
ACCUMULATION OF REGULATIONS OVER TIME
One of the main problems with the regulatory process is that no system-wide mechanism exists to remove old,
redundant, or ineffective regulations. As the number of regulations accumulates, the regulations' effects on the
economy and personal liberty also grow.31
The Code of Federal Regulations contains all of the regulations that are in effect at any given time. The Code of Federal
Regulations has more than doubled in size in the past 40 years. In 1975, the code contained 71,224 pages of regulations.
By 2012, the number of pages had grown to 174,545. The number of restrictions within the code has grown similarly to
the number of pages. The accumulation of regulations over decades has resulted in over one million restrictions.32
The constant accumulation of regulations is problematic for society in several ways. First, excessive regulations can
hinder innovation and entrepreneurship. Second, over-regulation can hamper economic efficiency. By stifling
innovation, entrepreneurship, and efficiency, regulations can lead to a lower average household income nationwide.
Third, regulatory accumulation can disproportionately affect low-income households, which places the burden most
heavily on the people that the regulations generally are trying to help. Fourth, political and public pressures can
incentivize regulators to create regulations without proper research or create regulations that favor one group of people
over another. By pushing through hastily made regulations, regulators can spur more unintended consequences from
their rules, harming even more people in the process. Also, because regulations are so difficult to remove once they
are put in place, making regulations too quickly allows unsound or counterproductive regulations to exist almost
29
Ibid.
Doucouliagos, C., Stanley, T., & Giles, M. J. (2011). Are estimates of the value of a statistical life exaggerated?. Journal of Health Economics,
Vol. 31: 1, pp. 197-206. Retrieved from: http://ro.ecu.edu.au/ecuworks2011/209
31
McLaughlin, P. A. (2013). On the Human Costs of the US Regulatory System: Should Congress Pressure Agencies to Make Rules Faster?
Testimony before the Senate Judiciary Committee Subcommittee on Oversight, Federal Rights, and Agency Action. The Mercatus Center at
George Mason University. Retrieved from: http://mercatus.org/sites/default/files/McLaughlin_human-costs_testimony_073013.pdf
32
Ibid.
30
9
indefinitely. Poorly made or rushed regulations may not achieve their intended goals, but they will likely impose costs
on taxpayers and consumers.33 Regulations can also reduced the growth rates of economic output and productivity.34
One of the main problems with growing numbers of regulations is the increase in "opportunity costs."35 In terms of
regulations, the opportunity cost is the lost productivity because scarce resources have to be allocated to complying
with regulations.36 Business owners and government officials have to spend time and money complying with an evergrowing list of regulatory requirements, rather than innovating, creating value, or seeking entrepreneurial success.
Regulations are often regressive, meaning that the burden of the regulation disproportionately falls on people of lower
incomes. Producers spend billions of dollars each year complying with regulations, which force producers to incur
greater costs. Those costs are often passed onto the consumers as higher prices for goods and services. These higher
prices services hurt people with lower incomes proportionally more. 37
HOW NEGATIVE CONSEQUENCES ARISE
UNINTENDED CONSEQUENCES
Policymakers and economists often have a difficult time foreseeing what the effects of any law will be. Many laws are
rooted in noble intentions, but the actual application of the laws and the political process can alter the law so that
unforeseen outcomes arise. Frederic Bastiat, a French economist in the 19th century, described how all laws spark a
series of effects. He said, "There is only one difference between a bad economist and a good one: the bad economist
confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those
effects that must be foreseen."38
Government officials do not and cannot have sufficient information to accurately plan complex economic or political
systems, and their lack of knowledge allows negative consequences to arise that they may not have foreseen.
Economist Friedrich Hayek asserted that there are two types of planning: centralized and decentralized. Centralized
planning occurs when a small number of legislators or bureaucrats dictate the solutions to problems and use the
government's authority to make others comply with their system of solutions. Decentralized planning occurs when many
people voluntarily cooperate to find solutions to problems without any coordinating force.39
Government officials may genuinely try to find the best solution by using the best scientific knowledge and expert
opinions. Even aided by the most knowledgeable experts, they cannot know the specific details about every situation
in every time and every place. Because it is impossible for government officials to gather and process all relevant
33
Ibid.
Dawson, J. W. & Seater, J. J. (2010). Federal Regulation and Aggregate Economic Growth. Journal of Economic Growth, pp. 1–41. Retrieved
from: http://www4.ncsu.edu/~jjseater/regulationandgrowth.pdf
35
Henderson, D. R. (n.d.). Opportunity Cost. The Concise Encyclopedia of Economics. Retrieved from:
http://www.econlib.org/library/Enc/OpportunityCost.html
36
McLaughlin, P. A. (2013, August 1). On the Human Costs of the US Regulatory System: Should Congress Pressure Agencies to Make Rules
Faster? Retrieved from: http://mercatus.org/sites/default/files/McLaughlin_human-costs_testimony_073013.pdf
37
Thomas, D. (2012, November). Regressive Effects of Regulation. Working Paper, No. 12-35. Mercatus Center at George Mason University.
Retrieved from: http://mercatus.org/publication/regressive-effects-regulation
38
Bastiat, F. (1848). Selected Essays on Political Economy: What Is Seen and What Is Not Seen. Irvington-on-Hudson, NY: Foundation for
Economic Education. Retrieved from: http://www.econlib.org/library/Bastiat/basEss1.html.
39
Hayek, F. A. (1945). The Use of Knowledge in Society. American Economic Review. Vol. XXXV,: 4, pp. 519-30. Library of Economics and
Liberty. Retrieved from: http://www.econlib.org/library/Essays/hykKnw1.html
34
10
information or foresee all possible outcomes, unintended consequences easily arise from even the most wellintentioned policies. Decentralized planning, on the other hand, takes advantage of the collective knowledge of people
in a society.40 Decentralized planning is not perfect, but it allows individuals to respond to changing incentives more
easily than centrally controlled regulations.
INTENDED CONSEQUENCES
Special interest groups seek for preferential treatment, and lawmakers often oblige when they can reap benefits from
the industries while not upsetting their constituency. The political exchange of favors between lawmakers and special
interest group leaders may intentionally lead to a socially negative effect when costs are dispersed over a sufficiently
large number of people. Therefore, negative consequences may be intended when government officials strategically
use regulations as a means of political exchange. 41 The combination of purely unintended consequences and
strategically designed political exchange can result in policies that generate socially negative outcomes.
CHAPTER 2: THE WILDERNESS ACT
The Wilderness Act of 1964 designated 54 pieces of federal land as individual wilderness areas and created the
National Wilderness Preservation System. Subsequent wilderness acts have designated millions of additional acres of
undeveloped land as wilderness areas. Congress passed the Wilderness Act in 1964 as a response to growing pressure
to protect undeveloped federal land in the United States from ever being developed. The act limits the uses of
designated wilderness areas and restricts land managers from actively managing wilderness areas.
Many Americans value the existence of undeveloped wilderness. Many Americans prefer the idea of keeping land in
its “natural state,” but the idea of a "natural state" is a social construction, not an ecological reality.
Beginning with the 1964 act, Congress has set apart areas of federal land that will remain “unimpaired for future use
and enjoyment as wilderness.” The act states that land that is eligible for wilderness designation has been primarily
affected by natural forces and provides “outstanding opportunities for solitude or a primitive and unconfined type of
recreation.”42 Over the past five decades, the Wilderness Act has been a beloved subject for environmentalists. In the
past 51 years, Congress has designated 765 wilderness areas, totaling 109 million acres of land. 43 More recent
wilderness designations include laws such as the Utah Wilderness Act of 1984, the California Wilderness Act of 1984,
and the Alaska National Interest Lands Conservation Act of 1980.
The Wilderness Act is subject to the wide interpretation of wilderness managers in the U.S. Forest Service, National
Park Service, Bureau of Land Management, and Fish and Wildlife Service. The Wilderness Act allows decision makers
in these agencies to make exceptions to provisions of the act as they see fit.
40
Ibid.
Stigler, G. J. (1971). The Theory of Economic Regulation. The Bell Journal of Economics and Management Science, Vol. 2: 1, pp. 3-21. Wiley,
RAND Corporation.
42
Wilderness Act, Pub. L. No. 88-577, 16 U.S.C. § 1131-1136 (1964). Retrieved from: http://wilderness.nps.gov/document/wildernessAct.pdf
43
(n.d.). The Beginnings of the National Wilderness Preservation System. Retrieved from: http://www.wilderness.net/NWPS/fastfacts
41
11
Native tribes have inhabited currently designated wilderness land for thousands of years. They harvested trees, cleared
farmland, grazed animals, intentionally set forest fires.44 Many wilderness areas once had grazing, mining, roads, or
logging on them before they were designated as wilderness. Wilderness designations are not rooted in science or
historic reality. These designations are often political maneuvers that special interest groups and politicians have used
to lock in a particular management system on lands they prefer. Hence, "wilderness" is a social construct, and
wilderness designations are a tool to perpetuate a certain worldview.
Preserving land in its “natural state” assumes that the land has not changed in the past and will continue to remain
constant in the future.45 This perception is often referred to as a “balance of nature.” Dr. Daniel Botkin, Professor
Emeritus from the Department of Ecology at the University of California, Santa Barbara, said, “If you ask an ecologist
if nature never changes, he will almost always say no. But if you ask that same ecologist to design a policy, it is almost
always a balance of nature policy.”46 The Wilderness Act was written and is administered with the mindset that
wilderness is eternal and unchanging, but every ecosystem naturally changes over time.
FAILURES AND NEGATIVE CONSEQUENCES OF THE
WILDERNESS ACT
WILDERNESS DESIGNATIONS HINDER BENEFICIAL MANAGEMENT PRACTICES
The Wilderness Act exists primarily because early wilderness advocates and the politicians involved with the
Wilderness Act capitalized on the romantic ideal of wilderness. Today the government still enforces those ideals,
without evidence that hands-off management is environmentally beneficial.
In some cases, wilderness designations may discourage land managers from acting in the best interests of the land
they manage because the Wilderness Act makes many actions illegal or politically unsavory. The environmental health
of wilderness areas can suffer for three main reasons. First, the act makes active management illegal or nearly
impossible in many cases. Second, wilderness managers in various agencies adhere to the romantic ideals of the law,
so they choose not to engage in active management even if they have the legal authority to do so. Third, the fear of
litigation from environmental groups can deter wilderness managers from engaging in beneficial active management
on wilderness lands. When wilderness managers are restricted in preserving environmental quality, the health of
wilderness areas can decrease, which is contradictory to the original intentions of the Wilderness Act.
The Wilderness Act requires that wilderness land must “[retain] its primeval character and influence,” but the
restrictions of the Wilderness Act can prevent land managers from being able to meet this requirement in some
situations. Because the Wilderness Act restricts logging and burning in wilderness areas, the trees in these areas are
often overgrown. The Wilderness Act does allow active management in wilderness areas to stop the spread of disease
or insect infestations once it has begun, but it does not allow for the general maintenance of wilderness areas. The
unmanaged state of wilderness forests makes them particularly susceptible to pest infestation and, consequently,
forest fires.
44
Mann, C. C. (2005). The artificial wilderness. 1491: New revelations of the Americas before Columbus. pp. 353. New York, NY: Random
House.
45
Marris, E. (2011). Rambunctious Garden. pp. 27. New York, NY: Bloomsbury
46
Ibid. pp. 30.
12
Throughout forests in the West, bark beetles are a particularly severe problem, especially in federally designated
wilderness areas. Bark beetles burrow into trees during the summer and fall, lay eggs, then move on to new trees.
When the eggs hatch, the larvae tunnel out of the trees and make their way into other trees. The tunnels the beetles
make deprive trees of nutrient flow, and the trees often die within a few years. 47 As the trees die, they rot and fall in
the forest, eventually drying out and providing prime fuel for wildfires.
A Mountain Pine Beetle epidemic began in 1996 in the Black Hills of South Dakota, affecting the Black Elk Wilderness
in the forest.48 As of 2013, 90 percent of the trees in the wilderness have been affected by the Mountain Pine Beetle
and are dying or dead.49 Since the infestation began, the USFS has issued commercial logging contracts for areas
outside the wilderness to help control the spread of the beetles.50 Figure 2 shows the Pine Beetle infestation in the
Black Elk Wilderness and provides context for how detrimental the bark beetle is to forests.
Figure 2. Beetle Infestation in the Black Hills of South Dakota.51
47
Thom, D. (May 2014). Mountain Pine Beetle. Retrieved from United States Department of Agriculture Forest Service website:
http://www.fs.usda.gov/detail/blackhills/landmanagement/?cid=stelprdb5113978
48
Thom, D. (May 2014). Mountain Pine Beetle. United States Department of Agriculture Forest Service. Retrieved from:
http://www.fs.usda.gov/detail/blackhills/landmanagement/?cid=stelprdb5113978
49
Mejicano, E. (August 2013). Black Elk Wilderness: A report on wilderness character monitoring. United States Department of Agriculture
Forest Service. pp. 13. Retrieved from:
http://www.wilderness.net/toolboxes/documents/WC/Black%20Elk%20Wilderness,%20Wilderness%20Character%20Monitoring%20Report.p
df
50
Thom, D. (May 2014). Mountain Pine Beetle. United States Department of Agriculture Forest Service. Retrieved from:
http://www.fs.usda.gov/detail/blackhills/landmanagement/?cid=stelprdb5113978
51
(n.d.). Black Hills National Forest - Land and resource management. United States Department of Agriculture Forest Service. Retrieved from:
http://www.fs.usda.gov/Internet/FSE_MEDIA/stelprdb5113998.jpg
13
Figure 2 shows the boundary line of the Black Elk Wilderness. On the left is the Black Hills National Forest, which has
been treated and managed. On the right, the Black Elk Wilderness has been left untreated.
Causes of particularly bad bark beetle infestations include warm winters, droughts, and dense forests. 52 Warmer
winters kill fewer bark beetles, meaning the beetles live longer and harm more trees. Dense forests allow the bark
beetles to move easily from tree to tree, and to spread more quickly. In 2011, the FWS referred to forest conditions as
a “perfect storm” for bark beetle epidemics. Warming climates and denser forests facilitate the spread of bark beetles
and allow for epidemics.53 Wilderness areas are especially dense because of the lack of logging in wilderness areas
and the suppression of wildfires in forests that surround wilderness areas.
Although the Wilderness Act allows for the active management of beetle infestations, lands managers often refrain
from intervening to uphold the spirit of the Wilderness Act. The Wilderness Act was intended to provide additional
protection to federal lands, but it can affect how the land is managed and damage the ecological state of wilderness
areas.
The Kofa Wildlife Refuge also illustrates how the Wilderness Act can hinder beneficial land management practices. In
2007, the U.S. Fish and Wildlife Service (FWS) filed a report investigating the cause of the decline of the local bighorn
sheep population. Following the report, the FWS undertook a project to provide water for bighorn sheep in the Kofa
Wilderness on the Kofa Wildlife Refuge by building a water tank in the wilderness, a clear violation of the Wilderness
Act. Since the wilderness area is part of both the wilderness system and the refuge system, it is subject to the
management guidelines of both systems. 54 In many cases, providing for the animals of a refuge may violate the
stipulations set in place by the Wilderness Act.
In 2007, the FWS constructed the Yaqui and McPherson water tanks, two man-made structures within the wilderness
that were intended to alleviate potential droughts in the area that may affect sheep populations. The FWS used
motorized equipment to build the tanks in three days, which limited the time humans spent in the area and decreased
the possible negative effects of human presence on the sheep populations.
Soon after the tanks were constructed, the Wilderness Watch filed a lawsuit against the FWS for violating the
Wilderness Act. The Watch argued that the FWS had altered the natural conditions of the wilderness, rather than
preserving wilderness character by protecting local wildlife populations.55 Although the FWS did not prove that the
tanks were necessary to the health of the wilderness area, they did assert that the water tanks were the least intrusive
action to protect sheep populations.56
In the court case, the Wilderness Watch charged the FWS to remove the tanks from the wilderness using non-motorized
equipment. On September 5, 2008, the District Court of Arizona ruled that the tanks, installed using motorized vehicles,
were not a violation of the Wilderness Act.57 As of January 2016, the tanks are still in place in the wilderness. The
52
(n.d.) Medicine Bow-Routt National Forests & Thunder Basin National Grassland - Mountain Pine Beetle epidemic. Retrieved from United
States Department of Agriculture Forest Service website: http://www.fs.usda.gov/detail/mbr/home/?cid=stelprdb5139168
53
Chalfoun, A. D. (2011, May 18). Wyoming: ‘Perfect storm’ fuels Mountain Pine Beetle epidemic. United States Fish & Wildlife Service.
Retrieved from: http://www.fws.gov/news/blog/index.cfm/2011/5/18/Wyoming-Perfect-Storm-Fuels-Mountain-Pine-Beetle-Epidemic
54
National Wildlife Refuge System qtd. In Wilderness Watch v. U.S. Fish and Wildlife, 629 F.3d 1024 (9th Cir. 2010). pp. 1026-1027, 1046.
Retrieved from: https://casetext.com/case/wilderness-watch-v-us-fish-and-wildlife
55
Kammer, S. (2013, February 2). Coming to terms with wilderness: The Wilderness Act and the problem of wildlife restoration. pp. 89-91.
Environmental Law, Vol. 43:83, pp. 83-124. Retrieved from: http://law.lclark.edu/live/files/13642-431kammerpdf
56
Wilderness Watch v. U.S. Fish and Wildlife, 629 F.3d 1024 (9th Cir. 2010). pp. 1042 Retrieved from: https://casetext.com/case/wildernesswatch-v-us-fish-and-wildlife
57
Wilderness Watch v. U.S. Fish and Wildlife Service, No. CV-07-1185-PHX-MHM. (D. Ariz. Sep 05, 2008). pp. 6, 19-20. Retrieved from:
14
FWS has monitored the tanks since they were placed and found that have little impact on the sheep population. If the
tanks are taken out, FWS employees from the Kofa Wildlife Refuge will have to create a Minimum Requirements
Decision Guide, a process that helps land managers assess the impact of wilderness management decisions. If the
tanks are taken out, they will likely be removed by hand rather than with motorized equipment to impact the wilderness
area as little as possible.58
The Wilderness Act creates costly barriers for human intervention in wilderness even where it may be necessary for
stewardship purposes. Although many environmentalists agree that intervening in the environment can be beneficial,
wilderness advocates argue that wilderness areas must remain unaffected by humans. In the past, however,
management agencies have intervened in wilderness to set and contain fires, control invasive species, provide water
for species in need, help vegetation recover, curtail soil erosion, and reintroduce native species.59
The Kofa Wilderness, and other wilderness areas in national parks and on wildlife refuges, illustrate a disconnect
between federal land management policies. The intent of the wildlife refuge is to preserve the wildlife on the refuge,
which often requires active management strategies. The Wilderness Act, however, restricts land managers from
actively intervening in wilderness. To meet the needs of one federal regulation, land managers may be required to
violate the requirements of the other federal regulation.
VAGUE AND SUBJECTIVE WORDING IN THE WILDERNESS ACT
The definition of wilderness in the 1964 Wilderness Act contains and subjective parts. First, an area must appear “to
have been affected primarily by the forces of nature.” Depending on the subjective definition of “forces of nature,”
most federal land could meet this definition. Second, the area must have “outstanding opportunities for solitude.” The
definition of solitude is not quantifiable or measurable. Third, the area must be at least 5,000 acres, or be of “sufficient
size as to make practicable its preservation and use.” 60 Typically, Congress follows the 5,000-acre rule when
designating wilderness areas, but 90 of the 765 wilderness areas in the National Wilderness Preservation System are
smaller than 5,000 acres, with the smallest wilderness area being 5.5 acres.61 Fourth, the area may, but is not required
to, “contain ecological, geological, or other features of scientific, educational, scenic, or historical value.” This final
condition allows potential wilderness designation to be essentially any federal land, if it complies with any of the other
vague standards.62
The vagueness of the Wilderness Act allows the act to be interpreted to fit the preferences of policymakers with little
to no oversight. This vagueness, however, allows different agencies to implement different policies in wilderness areas,
and means that the use of a wilderness area can change based on the personal ideals and preferences of land
managers.
Many designated wilderness areas do not meet the definitions and requirements of being a wilderness according to
the Wilderness Act. For example, ranchers heavily grazed their cattle and sheep on the Wellsville Mountains in northern
Utah for decades. Local residents formed the Wellsville Area Project Corporation in 1941 to preserve the mountains
http://wildernesswatch.org/pdf/Kofa_DistCt_Order.pdf
58
Bisdahl, G. (2016, January 14). Personal Communication.
59
Kammer, S. (2013, February 2). Coming to terms with wilderness: The Wilderness Act and the problem of wildlife restoration. pp. 87.
Environmental Law, Vol. 43:83, pp. 83-124. Retrieved from: http://law.lclark.edu/live/files/13642-431kammerpdf
60
Wilderness Act, Pub. L. No. 88-577, 16 U.S.C. § 1131-1136 (1964). Retrieved from: http://wilderness.nps.gov/document/wildernessAct.pdf
61
(n.d.). Wilderness Data Search. Retrieved from: http://www.wilderness.net/NWPS/advSearch
62
Wilderness Act, Pub. L. No. 88-577, 16 U.S.C. § 1131-1136 (1964). National Park Service. Retrieved from:
http://wilderness.nps.gov/document/wildernessAct.pdf
15
from further overgrazing.63 The corporation acquired the land and deeded it to the Forest Service for further protection.
Congress then created the Wellsville Mountain Wilderness in 1984.64 Under the definitions of the Wilderness Act, the
Wellsville Mountains were not affected primarily by the forces of nature because of past human activities.
THE WILDERNESS ACT AS A POLITICAL TOOL FOR THE NPS
Both the National Park Service Organic Act of 1916 and the Wilderness Act require land managers to protect federal
land in a way that leaves it available for the use of future generations. 65 Parks and wilderness areas, however have
distinctly purposes different and management regimes. The 1916 Organic Act allows the Secretary of the Interior to
engage in active management to protect national parks. The Secretary of the Interior can permit logging in national
parks to control invasive species and protect the state of the park. The secretary can also do what he sees fit in providing
for the preservation of native plant and animal life. The 1916 Organic Act allows the secretary to accommodate for
visitors to parks, national monuments, and reservations managed by the NPS.66 In comparison, the intent of the
Wilderness Act is to preserve federal lands by restricting human development in designated wilderness areas, which
in many ways restricts human access to the designated areas.67
NPS officials in specific national parks sometimes lobby congressmen to designate wilderness areas within national
parks despite the different purposes of wilderness lands and national parks. The NPS asserts that wilderness
designation is necessary in national parks because “national park backcountry is protected only by administrative
regulations that agency officials can change.”68 Implicitly, NPS officials fear that future park managers will contradict
conservation principles that current NPS officials employ, so wilderness designations within parks are a strategic tool
to limit the power of future NPS managers. Wilderness designations within parks allow present managers to ensure
that their preferences for the park last indefinitely. In essence, current park managers can use wilderness designations
to impose their preferences and management styles on future NPS managers by using wilderness designations as a
stringent land policy to restrict future development.
Parks with designated wilderness areas are not necessarily more natural than parks without wilderness designations.
Some major national parks, like Yellowstone, Grand Canyon, and Glacier, do not have designated wilderness land
within them. Despite not having official wilderness, these parks are some of the most highly protected and undeveloped
land in the United States. Other national parks, like Yosemite and Mount Rainier, contain official wilderness areas.
Undeveloped lands in non-wilderness national parks are not in any danger of being developed because NPS officials
have no disposition or incentive to develop wild land. The potential for public backlash also protects land in nonwilderness national parks from being developed. Wilderness designations in national parks create legislative and
judicial burdens that may discourage future NPS managers from taking necessary actions to maintain national park
land.
WILDERNESS DESIGNATIONS LIMIT ESTABLISHED RECREATION
Wilderness designations can change uses of federal land that have been in place for decades, especially certain forms
of recreation. The Wilderness Act of 1964 allows some prior uses, such as grazing and mining, to continue after a
63
Schneider, B & Seifert, A. (2005). Hiking Utah. Globe Pequot. pp. 10.
(n.d.) Wellsville Mountain Wilderness. Retrieved from: http://www.wilderness.net/NWPS/wildView?WID=636
65
National Park Service Organic Act, 16 U.S.C. § 01 (1916). Retrieved from: http://uscode.house.gov/statviewer.htm?volume=39&page=535#;
Wilderness Act, Pub. L. No. 88-577, 16 U.S.C. § 1131-1136 (1964). Retrieved from: http://wilderness.nps.gov/document/wildernessAct.pdf
66
National Park Service Organic Act, 16 U.S.C. § 01 (1916). Retrieved from: http://uscode.house.gov/statviewer.htm?volume=39&page=535#
67
Wilderness Act, Pub. L. No. 88-577, 16 U.S.C. § 1131-1136 (1964). Retrieved from: http://wilderness.nps.gov/document/wildernessAct.pdf
68
(n.d.). Wilderness - Frequently asked questions. National Park Service. Retrieved from: http://wilderness.nps.gov/faqnew.cfm
64
16
wilderness designation, but some forms of recreation on federal land must be discontinued after designation. In
essence, federal policymakers are arbitrarily choosing winners and losers in the use of public lands even when the land
has been used in a certain way for years. Wilderness designations are a political tool to limit recreation that certain
policymakers and powerful special interest groups find undesirable.
One of the most recent examples of wilderness-caused changes in recreation patterns occurred in central Idaho’s
Boulder and White Cloud Mountains, where recreationalists travel each year for camping, hiking, hunting, and fishing.69
Congress created three new wilderness areas in the Boulder and White Cloud Mountains in August 2015.70 Locals and
tourists can no longer mountain bike on or off trails in the areas that they had used for decades. The Wilderness Act
does not allow mechanical transport on designated lands. 71
The new wilderness designations in Idaho have impacted local mountain bikers in negative ways. In response to the
new wilderness areas, Brett Stevenson, a member of the board of directors of the Wood River Bicycle Coalition,
explained the value of the bike paths in the Boulder-White Clouds area. He said, “They are high alpine, big backcountry
rides that don’t exist anywhere else in the state and frankly don’t exist in the rest of the region.”72
In response to the designation, Tom Flynn, an environmentalist and long-time biker of the Boulder-White Clouds area,
said, “My heart breaks for current and future mountain bikers that will never get the chance to ride Castle Divide, or to
have their breath taken away when they pedal to the ridge overlooking Ants Basin. These rides have a near-mythical
status for Idaho mountain bikers, inspiring us to explore and care for big, wild landscapes. We mourn their loss.”73
CHAPTER 3: THE NATIONAL ENVIRONMENTAL
POLICY ACT
The National Environmental Policy Act (NEPA) was signed into effect on January 1, 1970, largely as a response to the
growing public concern for increased environmental awareness. The purpose of NEPA is to minimize environmental
degradation caused by federal agencies. Under NEPA, government agencies must file publicly-accessible and
reviewable forms which address the environmental impacts of proposed federal projects, as well as feasible project
alternatives. NEPA also created the Council on Environmental Quality (CEQ), which acts as an advisor to the president
on environmental quality issues.
69
(n.d.). The sights of Boulder-White Clouds, Possibly Idaho’s Next National Monument. Retrieved from: http://wilderness.org/sights-boulderwhite-clouds-possibly-idahos-next-national-monument
70
USDA Forest Service. (2015, August 21). Sawtooth National Recreation Area and Jerry Peak Wilderness Additions Act fact sheet. United
States Department of Agriculture Forest Service. Retrieved from: http://www.fs.usda.gov/Internet/FSE_DOCUMENTS/stelprd3851358.pdf
71
USDA Forest Service. (2006, December 26). Chapter 2320 - Wilderness Management. Forest Service Manual. United States Department of
Agriculture Forest Service. pp. 9. Retrieved from: https://www.wilderness.net/NWPS/documents/FS/FS_wilderness_policy.pdf
72
Barnhill, F. (2015, August 4). As Boulder-White Clouds Wilderness Bill advances, mountain bikers feeling left behind. Retrieved from:
http://boisestatepublicradio.org/post/boulder-white-clouds-wilderness-bill-advances-mountain-bikers-feeling-left-behind
73
Flynn, T. (20115, August 5). Loss in the Boulder White Clouds. Retrieved from: http://woodriverbike.org/loss-in-the-boulder-white-clouds-bytom-flynn/
17
The policymakers who drafted NEPA intentionally made the wording vague and simple. NEPA’s ambiguity left agencies
and the general public unsure of the extent of the act’s reach. Litigation attempting to clarify NEPA’s implications
swiftly followed its passage.
In the years since it became law, several court decisions and new regulations have changed NEPA’s vague and
subjective skeleton. The increasingly complex and detailed nature of Environmental Assessments (EAs) and
Environmental Impact Statements (EISs) has contributed to a significant increase in the time necessary to adequately
comply with the act. As EAs and EISs have continued to grow in length and complexity, and the costs for completing
these forms has correspondingly increased.
Federal agencies must fill out Environmental Assessment (EA) and Environmental Impact Statement (EIS) forms before
moving forward with projects.74 If a project will not have a “significant effect” on the environment, then a Categorical
Exclusion (CX), a document explaining the negligible environmental impacts of a proposal, can be filed. If a CX is filed,
then neither an EA nor an EIS is required for the proposal. 75 The federal agency tasked with preparing the form,
generally referred to as the lead agency, decides which form is appropriate and assumes responsibility for completing
the paperwork. 76 The form is then reviewed by the public, Environmental Protection Agency, the CEQ, and other
agencies.77 The lead agency, after evaluating feedback received on its project proposal, decides whether it will continue
with the project.78
Individuals and special interest groups who oppose certain government agency projects can hinder the project’s
development by suing an agency over its methodology for NEPA compliance, further compounding the unnecessary
time and money costs associated with the act. Because litigation is costly and time-consuming, government agencies
over-prepare EISs, often with irrelevant information, to protect against litigation. NEPA-related compliance and
litigation limits economic growth because procedural delays hinder job creation. NEPA does not explicitly mandate proenvironment decision-making by government agencies, which allows the self-interest of bureaucrats to influence
actions. NEPA’s financial inefficiencies are compounded by the fact that the act contains no cost-tracking mechanisms,
which makes fiscal accountability for agencies difficult, and the completion of benefit-cost analyses nearly impossible.
FAILURES AND NEGATIVE CONSEQUENCES OF NEPA
The increasingly complex and detailed nature of EAs and EISs has contributed to a significant increase in the time
necessary to adequately comply with the act. NEPA’s drafters may have overlooked, or disregarded, the massive cost
of time associated with NEPA compliance. During a House Hearing held in 2005, Senator Bennett Johnston (D- LA)
stated, “Despite the achievements of the legislation, litigants and dissenting bureaucrats have exploited the bill to kill
projects by vexatious, expensive delay, and unnecessary administrative requirements. These unintended consequences
74
South Coast Air Quality Management District. (n.d.). Frequently Asked CEQA Questions. Retrieved from:
http://www.aqmd.gov/home/regulations/ceqa/frequently-asked-questions
75
U.S. Department of Transportation Federal Highway Administration. (n.d.). NEPA Documentation. Retrieved from U.S. Department of
Transportation Federal Highway Administration website: https://www.environment.fhwa.dot.gov/projdev/docuce.asp
76
South Coast Air Quality Management District. (n.d.). Frequently Asked CEQA Questions. Retrieved from South Coast Air Quality Management
District website: http://www.aqmd.gov/home/regulations/ceqa/frequently-asked-questions
77
Council on Environmental Quality Executive office of the President. (December 2007). A Citizen’s Guide to the NEPA - Having Your Voice
Heard. Council on the Environmental Quality Executive office of the President. pp. 4-6, 18. Retrieved from:
http://www.blm.gov/pgdata/etc/medialib/blm/nm/programs/planning/planning_docs.Par.53208.File.dat/A_Citizens_Guide_to_NEPA.pdf
78
Ibid. pp. 18.
18
within the legislation are bad for our nation and should be remedied. To use the popular phrase, these actions have led
to ‘paralysis by analysis.’”79
TIME CONSTRAINT & DELAYS
As NEPA compliance has grown increasingly complex and meticulous, the amount time required to file EAs and EISs
has steadily increased. Current CEQ guidance recommends that a typical EA be between 10 and 15 pages in length;
however, in a survey conducted by the CEQ, nearly two-thirds of the 41 agencies surveyed responded that their EAs
typically exceed the 15 page recommendation.80 The CEQ expects EISs to be between 150 and 300 pages, depending
on the project’s complexity and scope.81 According to a study completed by Cambridge University, which analyzed 2,236
final EISs completed between 1998 and 2006, “the time [required] to prepare an EIS ranged from 51 days to 6,708 days
(18.4 years).”82 In April 2013, the National Association of Environmental Professionals (NAEP) reported that the average
preparation time for final EISs in 2012 was 1,675 days, or 4.6 years.83 The NAEP also found that from 2000 to 2012, the
average preparation time for all government-wide EIS completion “increased at an average rate of 34.2 days per year.”84
The constant threat of public litigation has further increased the amount of time required to prepare EAs and EISs by
creating “a tendency by lawyers and consultants to invest an extraordinary amount of time and money in ‘over-papering’
EIS’s to insulate them from judicial challenge.” 85 This powerful incentive to over-prepare EAs and EISs to protect
agencies from litigation has unintentionally misdirected NEPA’s focus away from protecting the environment. In a CEQ
report, Chairwoman Kathleen McGinty stated, “NEPA is supposed to be about good decision-making—not endless
documentation.”86
The sheer time commitment for adequately completing an EIS, coupled with possible litigation delays, can drag out a
project’s potential approval for more than a decade. NEPA’s red-tape delays are expensive, meticulous, and inefficient.
SUPERCONDUCTING SUPER COLLIDER (SSC) PROJECT
The SSC Project illustrates the clear lack of accountability and financial oversight under NEPA, as well as the
detrimental consequences of delaying a project for years. During the 1980s, the Department of Energy (DOE) proposed
building the world’s largest and most powerful particle accelerator near Waxahachie, Texas, in order to detect a
79
NEPA Litigation: The Causes, Effects and Solutions, House Hearing, 109 Cong. (2005). Retrieved from: http://www.gpo.gov/fdsys/pkg/CHRG109hhrg24546/html/CHRG-109hhrg24546.htm
80
Eccleston, C. (1999). The NEPA Planning Process: A Comprehensive Guide with Emphasis on Efficiency. Pp.153. New York, NY: John Wiley &
Sons, Inc. Retrieved from: https://books.google.com/books?id=5HWsV7H-SmcC&q=10#v=snippet&q=10%20pages&f=false
81
Federal Aviation Administration. (January 2002). Best Practices for Environmental Impact Statement (EIS) Management. Retrieved from
Federal Aviation Administration website: http://www.faa.gov/airports/environmental/eis_best_practices/?sect=documents
82
DeWitt, C., & DeWitt, P. (2008, December 5). How Long Does It Take to Prepare an Environmental Impact Statement? Environmental Practice,
Vol. 10:4, pp. 164-174. Retrieved from:
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=2836720&fileId=S146604660808037X
83
U.S. Government Accountability Office. (April 2014). National Environmental Policy Act - Little Information Exists on NEPA Analyses. U.S.
Government Accountability Office. pp. 13. Retrieved from: www.gao.gov/assets/670/662543.pdf
84
Ibid.
85
Forgie, J., Hook, E., Miller, M., Sullivan, L., and Vogel, R. (2014, July 15). Comments and Recommendations on NEPA Reform for the White
House Council on Environmental Quality. Stanford Law School. pp. 26. Retrieved from: https://www-cdn.law.stanford.edu/wpcontent/uploads/2015/04/NEPA-Submittal-to-CEQ-FINAL-5.pdf
86
Council on Environmental Quality. (January 1997). The National Environmental Policy Act: A Study of its Effectiveness After Twenty-five
Years. Council on Environmental Quality. pp. Iii. Council on Environmental Quality. Retrieved from Bureau of Land Management website:
http://www.blm.gov/style/medialib/blm/wo/Communications_Directorate/legislation.Par.75991.File.dat/nepa25fn.pdf
19
subatomic particle called the Higgs boson.87 In 1987, the DOE received approval from President Reagan and Congress
to move forward with the project and was granted an initial budget of $4.4 billion.88
In 1988, the DOE issued a draft EIS. During the review period, the DOE received 5,360 comments from the public and
held several public hearings about the project. Later that year, the DOE issued its final EIS (FEIS) for the project. The
FEIS was a four-volume, 8,000-page document that weighed 26 pounds when printed.89 Dissemination of the FEIS
resulted in 19,000 copies of the 8,000-page document being printed—17,000 of which were distributed to relevant
parties, including agencies, landowners, and media outlets. 90 According to an investigation conducted by the U.S.
Government Accountability Office (GAO), the DOE used “overnight delivery and first-class/priority mail” to distribute
221 tons of copies of the FEIS.91 The GAO stated in its report regarding the investigation, “many of the recipients neither
expected nor wanted copies of the final EIS.” Costs strictly accumulated through printing and distributing the document
totaled nearly $1.4 million.92
In the early 1990s, the DOE began construction on the SSC. During early construction, the project experienced several
design alterations, which both delayed the project and altered the project’s estimated costs.93 In 1993, the project’s
estimated cost had risen from $4.4 billion to $11 billion.94 On October 28, 1993, after a decade of planning, years of
construction, and $1.57 billion in expenses, Congress terminated the project.95 According to Scientific American, nearly
20 percent of the SSC’s construction was complete when Congress killed the project: “specifically, two dozen
kilometers of tunnel had been drilled with over 17 access shafts, and 18,600 square meters of buildings erected.”96
The SSC Project is a perfect example of the fiscal wastefulness of government—not only in regards to the project as
a whole, but more specifically the wastefulness of the NEPA process. The government misspent $1.57 billion on an
unfinished project, and NEPA’s lack of specificity allowed the DOE to waste an additional $1.4 million on simply printing
and mailing an EIS that few people wanted.
MID STATES COALITION FOR PROGRESS V. SURFACE TRANSPORTATION BOARD
The experience of the Surface Transportation Board in dealing with landowners in South Dakota and Wyoming
illustrates how the vague requirements of the NEPA process can lead to an agency wasting years to compile multithousand page documents full of extraneous information, which may ultimately be deemed inadequate. In 2003, the
Surface Transportation Board, an agency housed under the U.S. Department of Transportation, was brought to court by
the Mid States Coalition for Progress, a group of nearly 150 landowners in South Dakota and Wyoming, for having
87
Appell, D. (2013, October 15). The Supercollider That Never Was. Retrieved from: http://www.scientificamerican.com/article/thesupercollider-that-never-was/
88
Schorner-Sadenius, T. (2015). The Large Hadron Collider -- Background and History. Springer International Publishing Switzerland. pp. 13. DOI
10.1007/978-3-319-15001-7_1.
89
Stevens, L. N. (1989, July 28). Information Dissemination - Cost of Mailing Environmental Impact Statement for Super Collider. United States
General Accounting Office. pp. 1-3. Retrieved from: http://gao.gov/assets/220/211553.pdf
90
Ibid.
91
Ibid.
92
Ibid.
93
Layton, J. C. (1996, April 23). Summary Audit Report on Lessons Learned from the Superconducting Super Collider Project. U.S. Department of
Energy. pp. 13. Retrieved from: http://www.osti.gov/scitech/servlets/purl/231955
94
Appell, D.(2013, October 15). The Supercollider That Never Was. Retrieved from: http://www.scientificamerican.com/article/thesupercollider-that-never-was/
95
Layton, J. C. (1996, April 23). Summary Audit Report on Lessons Learned from the Superconducting Super Collider Project. U.S. Department of
Energy. pp. 1. Retrieved from: http://www.osti.gov/scitech/servlets/purl/231955
96
Appell, D. (2013, October 15). The Supercollider That Never Was. Retrieved from: http://www.scientificamerican.com/article/thesupercollider-that-never-was/
20
approved a proposal to construct and upgrade nearly 900 miles of rail line leading to coal mines located primarily in
Wyoming’s Powder River Basin.97 The Board’s decision to approve the project came after a four-year process of NEPA
compliance. During the compliance process, the Board issued a 5,000-page draft EIS and received nearly 8,600
comments on the proposal. The final EIS acknowledged the feedback received during the review process by including
“recommendations regarding environmentally preferable routing alternatives and mitigation measures.”98
The U.S. Court of Appeals for the 8th Circuit ruled that the Board’s EIS was inadequate and failed to consider horn
noise, vibration, and increased coal consumption. 99 NEPA does not specifically call for agencies to look for these
impacts; rather, this was a difference in interpretation of the act between the court and the agency. Predicting changes
in coal consumption is a difficult task for an agency to carry out because of the complex array of economic factors that
would have to be considered, as well as the heavy reliance on assumptions of consumer and producer behavior. Due
to this difficulty, the board did not conduct an analysis regarding a projected increase in coal consumption. The court,
however, found the Board’s inaction of not “addressing incomplete and unavailable information” a violation of NEPA.100
According to the Court of Appeals, “[W]hen the nature of the effect is reasonably foreseeable but its extent is not, we
think that the agency may not simply ignore the effect.”101 The court held that the nature of the effect (increased coal
consumption) was “far from speculative,” and should have been examined by the Board despite the heavy reliance on
assumptions of demand and consumption required to estimate the extent of the effect. “We believe it would be
irresponsible for the Board to approve a project of this scope without first examining the effects that may occur as a
result of the reasonably foreseeable increase in coal consumption.”102
Despite issuing a 5,000-page draft EIS, the document was ultimately deemed inadequate by the court because the
agency did not address every single environmental impact possible. NEPA is so vague, yet all-encompassing, that the
length of EISs will continue to balloon in order to protect agencies from litigation. The lack of explicitly stated
requirements for compliance under NEPA leads to federal agencies spending years compiling thousands of pages of
often irrelevant information—a costly and time-consuming process.
COSTS ASSOCIATED WITH COMPLIANCE
As EAs and EISs have continued to grow in length and complexity, the costs for completing these forms has also
increased. The Department of Energy (DOE) estimates that the average cost paid to a third party for completing an EIS
is $6.6 million, but can be as much as $85 million.103 The DOE reported the costs for completing EAs ranged between
97
Mid States Coalition for Progress v. Surface Transportation Board, 8th Cir. 44 (2003). Retrieved from:
http://media.ca8.uscourts.gov/opndir/03/10/021359P.pdf
98
Swartz, L. (2003). Recent NEPA Cases (2003). Lucinda Low Swartz, Esq. pp. 2. Retrieved from:
http://www.lucindalowswartz.com/images/NEPACases_2003.pdf
99
Ibid
100
Ibid
101
Ibid.
102
Ibid.
103
House Committee on Natural Resources. (2014, April 15). GAO Audit of the National Environmental Policy Act Reveals Lack of Accountability
and Transparency. House Committee on Natural Resources. Retrieved from:
http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=376653
21
$3,000 and $1.2 million, with a median expense of approximately $65,000. 104 The National Preservation Institute
estimates that federal agencies complete about 50,000 EAs and 500 EISs each year.105
While it is difficult to put a price tag on a clean and protected environment, there are clear, expensive inefficiencies
within NEPA. The compilation of irrelevant information and project delays hardly merit the massive expenses
associated with NEPA documentation.
LITIGATION
Individuals and special interest groups who oppose certain government agency projects can hinder the project’s
development by suing an agency over its methodology for NEPA compliance. Because litigation is costly and timeconsuming, government agencies over-prepare EISs to protect against litigation, which adds unnecessary time and
money to the NEPA process. There are approximately 100 NEPA-related lawsuits each year, and the government
prevails in the vast majority of cases, according to the GAO.106 Although this equates to only about 0.2 percent of EAs
prepared resulting in litigation, the lawsuits are extremely costly for everybody involved.107 The GAO stated, “Although
the number of NEPA lawsuits is relatively small when compared with the total number of NEPA analyses, one lawsuit
can affect numerous federal decisions or actions in several states, having a far-reaching impact.”108 The Department
of Justice estimates that plaintiff attorney fees paid between 2009 and 2013 were over $22 million, but due to limited
information, the House Committee on Natural Resources believes “the numbers are likely much higher.”109 According
to ex-NEPA practitioner, Alan Harwood, “The threat of litigation under NEPA is entirely too pervasive. Too often the
NEPA process is used as a threat by community groups to fight or block projects they don’t like - even if there is
widespread but less vocal support for the project.”110 Plaintiffs in these litigations are most often environmental groups
and citizens’ groups.111
According to a study conducted by the National Association of Environmental Professionals (NAEP), federal agencies
prevailed in 86 percent of NEPA-related litigations in 2012 which were held in a court of appeals. 112 Plaintiffs
understand the unlikelihood of a victory in court and often use NEPA litigation simply as a tool to “delay and sometimes
104
United States Government Accountability Office. (April 2014). National Environmental Policy Act - Little Information Exists on NEPA
Analyses. United States Government Accountability Office. pp.17. Retrieved from: http://www.documentcloud.org/documents/1114488662546.html#document/p4
105
(n.d.). Environmental Assessment. Retrieved from: http://www.npi.org/nepa/assessment;
(n.d.). Environmental Impact Statement. Retrieved from: http://www.npi.org/nepa/impact
106
Conger, M. (2014, April 17). Federal agencies can’t track costs or benefits of National Environmental Policy Act reviews, GAO says.
Washington Examiner. Retrieved from: http://www.washingtonexaminer.com/federal-agencies-cant-track-costs-or-benefits-of-nationalenvironmental-policy-act-reviews-gao-says/article/2547342
107
Testimony of Thomas O. McGarity, President of the Center for Progressive Reform. (2005, November 10). Hearing on NEPA Litigation: The
Causes, Effects and Solutions. pp.2. Retrieved from: http://www.progressivereform.org/articles/Mcgarity_NEPA.pdf;
Cama, Timothy. (2014, April 15). GAO audit finds lack of data on environmental reviews. The Hill. Retrieved from:
http://thehill.com/policy/energy-environment/203610-gao-audit-finds-lack-of-data-on-environmental-reviews
108
United States Government Accountability Office. (April 2014). National Environmental Policy Act. Little Information Exists on NEPA Analyses.
United States Government Accountability Office. pp. 19. Retrieved from: http://www.gao.gov/assets/670/662543.pdf
109
House Committee on Natural Resources. (2014, April 15). GAO Audit of the National Environmental Policy Act Reveals Lack of Accountability
and Transparency. House Committee on Natural Resources. Retrieved from:
http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=376653
110
Committee on Resources. (2005, November 17). NEPA, Lessons Learned and Next Steps. Oversight hearing before the Committee of
Resources, House, 109th Cong. 52 (2005).
111
Eccleston, C. H. (2008). NEPA and Environmental Planning: Tools, Techniques, and Approaches for Practitioners. Boca Raton, FL: CRC Press.
pp. 80.
112
United States Government Accountability Office. (April 2014). National Environmental Policy Act. Little Information Exists on NEPA Analyses.
United States Government Accountability Office. pp.21. Retrieved from: http://www.gao.gov/assets/670/662543.pdf
22
halt government actions that could negatively affect the environment.”113 This goal to cause “delay for the sake of
delay” illustrates a clear deficiency in NEPA’s public review process, as well as an inability for the public to genuinely
contribute in the decision making process.114
For example, on May 14, 2012, the Quechan Tribe of the Fort Yuma Indian Reservation, located in Arizona, sued the
United States Bureau of Land Management (BLM) for approving the Ocotillo Wind Energy Facility Project. According to
the Quechan Tribe, the BLM failed to consider the tribe’s concerns about building the large wind farm on top of sacred
land. After nearly a year of litigation, the court ruled in favor of the BLM, stating that the BLM made “many attempts,
starting regularly in 2010” to meet with the tribe and modify the wind project around the tribe’s concerns. The case
brought to trial by the tribe delayed the Ocotillo Wind Project for nearly a year, and did nothing more than waste time
and money for both parties involved.115
STUNTED ECONOMIC GROWTH
An unintended consequence of NEPA’s arduous compliance process has been the stunting of job creation and economic
growth. According to Western Energy Alliance, NEPA delays strictly for oil and natural gas projects are preventing
101,121 jobs from being created, and are limiting $24.9 billion in annual economic impact in the West alone.116 House
Representative Doc Hastings (R-WA) commented, “Costly, abusive lawsuits and endless government red tape caused
by NEPA harm new job creation, and there is a clear need to improve and modernize the law to ensure environmental
reviews are completed in an efficient and timely manner so responsible decisions can be made on projects that will
lead to new jobs and a growing economy.”117
LACK OF COST-TRACKING MECHANISMS
NEPA lacks any cost-tracking mechanisms, which makes accountability for agencies difficult, and cost-benefit analyses
nearly impossible. A report published by the GAO stated, “Little information exists on the costs and benefits of
completing NEPA analyses. Agencies do not routinely track the cost of completing NEPA analyses, and there is no
government-wide mechanism to do so.”118 Data compiled by the NAEP, as well as a Cambridge University study, show
the cost and time required to comply with NEPA has been steadily increasing, but no comprehensive financial data
exists. 119 NEPA’s expensive inefficiencies have largely been ignored by lawmakers because no government-wide,
113
Pralle, S. B. (2006). Branching Out, Digging In: Environmental Advocacy and Agenda Setting. Washington, D.C.: Georgetown University Press.
pp. 119.
114
Committee on Resources. (2005, November 17). NEPA, Lessons Learned and Next Steps. Oversight hearing before the Committee of
Resources, House, 109th Cong. 52 (2005).
115
Schneider, J., & Hogan, A. (2013, March 19). Court strikes down Quechan Tribe’s challenges to the Ocotillo Wind Energy Facility Project.
Retrieved from: http://www.lexology.com/library/detail.aspx?g=cbc0b001-394a-4db7-801f-28b88daa9a84;
Streater, S. (2012, May 15). Wind: Interior ignored tribal concerns about wind farm impacts -- lawsuit. Retrieved from:
http://www.eenews.net/stories/1059964429
116
These results were reached by: first, gathering data about projects in Wyoming, Utah, Colorado, New Mexico, and Montana being delayed
by NEPA; second, using IMPLAN economic modeling to estimate the impacts of proposed projects in these states. Reference the original report
for further explanation of their methodology: SWCA Environmental Consultants. (February 2015). Economic Impacts of Oil and Gas Development
on Public Lands in the West. Western Energy Alliance. Retrieved from: http://www.westernenergyalliance.org/knowledgecenter/land/onshore-development/national-environmental-policy-act-nepa
117
House Committee on Natural Resources. (2014, April 15). GAO Audit of the National Environmental Policy Act Reveals Lack of Accountability
and Transparency. House Committee on Natural resources. Retrieved from:
http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=376653
118
United State Government Accountability Office. (April 2014). National Environmental Policy Act - Little Information Exists on NEPA Analyses.
Retrieved from: http://www.gao.gov/products/GAO-14-370
119
U.S. Government Accountability Office. (April 2014). National Environmental Policy Act - Little Information Exists on NEPA Analyses. pp. 11-
23
quantifiable data exists. Until cost-tracking measures are implemented, the costs associated with NEPA compliance
will continue to be overlooked.
CHAPTER 4: THE CLEAN AIR ACT
The Clean Air Act is a federal law that regulates the emissions and concentration levels of various pollutants and also
led to the creation of the Environmental Protection Agency. The law was a response to increasing levels of pollution in
the United States that spawned an environmentalist movement to clean the ambient air for citizens. Politicians and
lobbyists from both the Democratic and Republican parties worked together to create the Clean Air Act and the EPA
that would enforce it. Important political figures took advantage of the country’s growing concern with pollution by
enacting the Clean Air Act to make themselves look like protectors of the environment.
The Clean Air Act is focused on the reduction or elimination of specified pollutants in the ambient air of the United
States. The law gives power to the EPA to set emissions and concentration standards for pollutants, as well as the
power to enforce noncompliance. Each state must formulate a plan to reduce or eliminate harmful pollutants from the
air and each plan must be approved by the EPA. Geographical areas that are above the permitted levels of pollution
are designated as nonattainment areas, and significant polluters must reduce their emissions or face fines from the
EPA. Currently there are six criteria pollutants: tropospheric ozone, carbon monoxide, sulfur dioxide, nitrogen oxides,
and particulate matter.
The EPA released a report in 2011 that highlights the overwhelming success of the CAA and claims that the law has
saved the United States billions of dollars, as well as hundreds of thousands of lives. There is, however, skepticism
from some scholars that the EPA has effectively assessed the benefits and costs of the CAA. The methodology of the
EPA’s studies has been questioned and the findings are drastically different from a similar report released during the
Clinton Administration.
The CAA has negatively impacted nonattainment areas by imposing fines and costly requirements on the industrial
sites that are located within these areas. It is estimated that the CAA has caused more than $100 billion in lost
productivity and many of these nonattainment areas are losing employment for their blue-collar workers, thereby
straining local economies further.
FAILURES AND NEGATIVE CONSEQUENCES OF THE CLEAN AIR
ACT
Although CAA has succeeded in decreasing the concentration of dangerous pollutants in the air around the country,
there have also been various unintended consequences, shortcomings, and failures. The EPA has overstated the impact
of the CAA on the overall health of the country, as well as the monetary benefits that have arisen from its enforcement.
The CAA also picks winners and losers based on geographic location as a result of designation between nonattainment
14. United States Government Accountability Office. Retrieved from: www.gao.gov/assets/670/662543.pdf;
DeWitt, C., & DeWitt, P. (2008, December 5). How Long Does It Take to Prepare an Environmental Impact Statement? Environmental Practice,
Vol. 10:4. pp. 164-174. Retrieved from:
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=2836720&fileId=S146604660808037X
24
and attainment areas. Finally, the CAA is not the only logical method of reducing harmful emissions despite the fact
that the EPA and lawmakers have celebrated it as one of the most effective and beneficial laws passed.
OVERSTATEMENT OF BENEFITS FROM THE CAA
A 2011 EPA report estimates that the CAA creates benefits that exceed the costs of regulation by a factor of more than
30:1. Nearly 85 percent of these economic benefits arise from the prevention of premature deaths that would have
been caused by particulate matter. Overall, the EPA estimates that, by the year 2020, it will have saved over 230,000
lives from the reduction of particulate matter in the ambient air.120 The EPA also believes that by 2020 the CAA will
have saved this country approximately $2 trillion from avoided health effects and lost workdays, among other factors.
For comparative purposes, the EPA estimates that the CAA will only have cost the United States approximately $65
billion by 2020.
The EPA’s models try to predict future effects of regulation that are very difficult to estimate and the range of potential
benefits spans from $250 million to $5.7 trillion. During the Clinton Administration a similar study was performed and
the economic benefits estimated at that time were 91 percent less than the current projection of $2 trillion.121
Another example of the inefficacy surrounding the EPA’s report is the value of a statistical life (VSL) method employed
by the agency. In a study commissioned by the EPA, researchers found that the method used by the EPA to determine
how much wealth is lost when employees die or miss work is not robust and actually unstable.122
Not only are the estimates of the EPA unreliable, but there is also no way to validate that conditions would have been
worse without the Clean Air Act. According to a study published by the Mackinac Center for Public Policy, there is
evidence that air quality was improving in the 1960s with technological advancements and local regulation. For
instance, hours of heavy smoke in Pittsburgh, Pennsylvania, dropped by an incredible 96.6 percent between 1946 and
1955. Pittsburgh also saw dustfall levels dropping by approximately 20 percent as citizens and local policymakers
became more aware of the dangers of pollution in the 1950s, and New York City saw a drop of nearly 50 percent in its
sulfur dioxide emissions between 1964 and 1970.123
Diane Katz of the Heritage Foundation is also critical of the myriad of assumptions that the EPA employs to reach its
conclusions. Specifically, Katz takes issue with the liberal use of particulate matter estimates to reach the total number
of PM-related deaths. Some assumptions that the EPA used would suggest deaths decreased by an astonishing 84
percent. When compared to the study performed by the EPA during the Clinton Administration, the newest EPA study
increased the effect of particulate matter on premature mortality by 50 percent, despite the fact that no rigorous
analysis has been performed to test this.
Without more rigorous analysis of the underlying assumptions used, very little credence should be placed on the results
of the 2011 study. The EPA does recognize that the direct costs of the CAA will rise above $65 billion, which represents
taxpayer dollars that have been spent by the EPA that are much easier to calculate. Without consideration or analysis
120
Environmental Protection Agency. (n.d.). Benefits and Costs of the Clean Air Act 1990-2020, the Second Prospective Study. Retrieved from
http://www.epa.gov/clean-air-act-overview/benefits-and-costs-clean-air-act-1990-2020-second-prospective-study
121
Katz, D. (2011, March 3). Coming Clean on Regulatory Costs and Benefits. Heritage Foundation. Retrieved from
http://www.heritage.org/research/reports/2011/03/coming-clean-on-regulatory-costs-and-benefits#_ftn7
122
Dockins, C., Maguire, K., Simon, N., Sullivan, M. (2004, April 21). Value of Statistical Life Analysis and Environmental Policy: A White Paper.
Environmental Protection Agency National Center for Environmental Economics. pp. 8. Retrieved from
http://yosemite.epa.gov/ee/epa/eerm.nsf/cf39f0d6770458fc8525769a006aba5a/2e88d27f9462c8ad852575b6005f1d5b/$FILE/EE-0483-01.pdf
123
Hayward, S., Fowler, E., Steadman, L. (2000, April 4). Analyzing National Air Quality Trends. Mackinac Center for Public Policy. Retrieved
from http://www.mackinac.org/2821
25
of the hidden and indirect costs associate with the CAA, the EPA’s report falls short of telling the whole story of the
true cost shouldered by American citizens.
PICKING WINNERS AND LOSERS
Government regulation inherently favors one outcome over another. In the case of the CAA, this favoritism is manifested
in the winners and losers that are created. New stationary sources of pollution and citizens living in nonattainment
areas are two groups that lose economic benefits because of the CAA, whereas existing polluters and attainment areas
are favored by the government.
BARRIERS TO ENTRY
The CAA protects some of the oldest, dirtiest coal plants with the provisions included in Section 111 of the law. Coal
power plants that should have been closed years ago have continued to operate because the CAA prevents competitors
from replacing them. Federal standards for new stationary sources of pollution are stricter than state standards in many
cases, which provides existing polluters with an unfair advantage in the market.
The National Association of Regulatory Utility Commissioners estimates that the average lifespan for a coal power
plant is approximately forty years. In the United States today, there should be very few coal power plants that were
put into service before 1970. However, more than fifty percent of the 1400 operating coal plants in the country were
built in 1970 or earlier. Many of these coal power plants have not been retired because the replacement costs for a
new power plant are prohibitive.
NONATTAINMENT AREA CHALLENGES
The goal of the Clean Air Act is to decrease emissions around the country in order to protect the citizens’ ability to work
and live a healthy life. However, the CAA has taken the ability from many Americans to find work in counties or areas
that have been designated as nonattainment areas.
In an article published in the Journal of Political Economy, Michael Greenstone finds that the costs companies incur
from being located in a nonattainment area have an impact on employment and capital accumulation. Greenstone
concludes that over a fifteen-year period the EPA standards for the Clean Air Act were responsible for over 590,000
lost jobs and reduced output by more than $100 billion.124
Not only did these areas lose out on significant investments in the form of capital stock, but the investments that were
lost from nonattainment designations being overly harsh were reinvested in less profitable investments. Daniel
Benjamin, a professor from Clemson University, argues that this capital was initially selected for industrial plants,
electricity generators, refineries, or other stationary sources that come under the CAA.125 Since regulation made these
investments less profitable, the money was spent on investments that were originally not selected because they did
124
Greenstone, M. (September, 2001). The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean
Air Act Amendments and the Census of Manufactures. National Bureau of Economic Research. pp. 2. Retrieved from
http://www.nber.org/papers/w8484.pdf
125
Benjamin, D. K. (2003). The Costs of Clean Air. Property and Environment Research Center. Retrieved from
http://www.perc.org/articles/costs-clean-air
26
not provide the same return on investment as the stationary polluters. Since many of these industries employ Americans
with less formal education, it is possible that those affected most by the Clean Air Act were the working-class families.
Pollution is typically at its peak as an economy grows to prominence and higher levels of wealth. As a society begins
to generate more wealth, it will begin to value a cleaner environment and will decrease its pollution through reduction,
avoidance, and removal of pollutants. This natural phenomenon is referred to as a Kuznets curve.126 When the EPA
decides to punish a geographic area for nonattainment criteria, it is potentially punishing economies that cannot yet
afford cleaner energy. Any economies that are limited from growth by the EPA are poorer relative to the rest of the
country as they cannot obtain reasonable investments for their workers.
EXPORTING OUR POLLUTION
The United States has seen its air become significantly cleaner over the last half century. This success is due, in part,
to the strict regulations on sources of pollution in this country. Rather than cleaning up industrial processes, however,
the United States has simply “exported” these industries to countries that have not enacted or enforced pollution laws.
Instead of cleaning the air, the CAA has made it the problem of less developed countries.
The CAA makes manufacturing more expensive in the United States, contributing to the exodus of manufacturing jobs
from the United States. In 1970, nearly 18 million Americans were employed in manufacturing jobs. Today, only 12
million Americans work in manufacturing.127 The CAA is one factor that has moved manufacturing jobs out of the United
States.
The CAA has not affected the demand for manufactured goods in the United States. Instead, it has shifted where we
purchase them. Many of the manufacturing jobs lost in the United States have moved to low-wage countries in the
past forty years.128 Between 1999 and 2008, American multinational companies created 2.9 million jobs abroad, while
reducing their domestic workforce by 864,600 jobs.129 Air pollution has been increasing in poorer parts of the world,
including South Asia, Latin America, and Africa.130
The cost of compliance with National Ambient Air Quality Standards (NAAQS) issued by the EPA is not trivial.
Manufacturers estimate that they spend upwards of $30 billion every year just to comply with environmental
regulations imposed by the federal government.131 With fewer restrictions for American competitors, the United States’
government could keep some of this pollution at home and determine a more appropriate way to decrease emissions
rather than “exporting” it to nations less capable of handling the damaging effects.
126
Yandle, B., Vijayaraghavan, M., Bhattari, M. (May, 2002). The Environmental Kuznets Curve: A Primer. Property and Environment Research
Center. pp. 3. Retrieved from http://www.macalester.edu/~wests/econ231/yandleetal.pdf
127
3.7 percent was achieved by dividing 12 million by the total 2014 U.S. population of 318.9 million. Scott, R. E. (2015, January 22). The
Manufacturing Footprint and the Importance of U.S. Manufacturing Jobs. Economic Policy Institute. Retrieved from
http://www.epi.org/publication/the-manufacturing-footprint-and-the-importance-of-u-s-manufacturing-jobs/
128
Morley, R. (February, 2006). The Death of American Manufacturing. The Trumpet. Retrieved from
https://www.thetrumpet.com/article/2061.24.80.0/economy/the-death-of-american-manufacturing
129
Wessel, D. (2011, November 22). U.S. Firms Keen to Add Foreign Jobs. Wall Street Journal. Retrieved from
http://www.wsj.com/articles/SB10001424052970203710704577052220096932832
130
Ji, Z. (n.d.). Rising Pollution in the Developing World. World Economic Forum. Retrieved from http://reports.weforum.org/outlook-globalagenda-2015/top-10-trends-of-2015/6-rising-pollution-in-the-developing-world/
131
Benjamin, D. K. (2003). The Costs of Clean Air. Property and Environment Research Center. Retrieved from
http://www.perc.org/articles/costs-clean-air
27
The United States has transitioned from a manufacturing economy to a service economy. This change has been fueled
by innovations in scientific, engineering, and technological. As Americans transition from providing goods to providing
services, the amount of pollution produced by manufacturing drops. The diminishing pollution levels in America over
the past three decades is largely due to new technologies and an increasing demand for services, rather than the CAA.
BUREAUCRATIC GROWTH
The EPA has seen its responsibilities over the CAA grow over the past four decades. Like most bureaucracies, the EPA
has expanded its reach to areas that were not originally intended to be governed by the agency. Through judicial
decisions and budgetary increases, the EPA has grown to a higher level of prominence that allows it to govern more
than originally intended by policymakers.
MASSACHUSETTS VS. ENVIRONMENTAL PROTECTION AGENCY
In 2004, the EPA was taken to court by the Commonwealth of Massachusetts for declining to establish regulations for
greenhouse gases, including carbon dioxide.132 After establishing that Massachusetts had standing to bring a complaint
against the EPA, the District of Columbia District Court ruled in favor of the EPA. This decision held that the EPA did
not have the authority to issue mandatory regulations for greenhouse gases under the provisions of the CAA.133
Two years later the Supreme Court agreed to hear the case after Massachusetts appealed the decision. Among the
issues, the Supreme Court considered whether carbon dioxide was an air pollutant and whether the EPA had an
obligation to regulate it.
The Supreme Court determined that, because of the broad language used in the CAA, carbon dioxide should be
considered an air pollutant and therefore falls under the jurisdiction of the EPA. The case was remanded to the EPA,
which required the agency to determine alternative measures to be taken for greenhouse gas emissions.134
The CAA’s open-ended interpretation of air pollutants, coupled with split decisions from both the D.C. District Court
and the Supreme Court, expanded the EPA’s ability to regulate businesses, consumers, and automobiles. The EPA now
has power that was not explicitly provided to it when the CAA was signed into law. This expansion of EPA influence
on emissions will serve only to amplify the unintended consequences and shortcomings of the CAA.
The Clean Power Plan is a proposed rule presented by the Obama Administration to reduce carbon dioxide emissions
by approximately 30 percent over the next 15 years. The Clean Power Plan would regulate carbon emissions from
sources that are not currently regulated by the EPA under the CAA.
BUDGET INCREASES
According to the EPA’s own statistics, over 80 percent of the American population lives in areas that are now in
compliance with the majority of the NAAQS set by the EPA. Concentration levels for criteria pollutants have fallen by
132
Environmental Protection Agency. (2003, August 28). EPA Denies Petition to Regulate Greenhouse Gas Emissions from Motor Vehicles.
Retrieved from
https://yosemite.epa.gov/opa/admpress.nsf/fb36d84bf0a1390c8525701c005e4918/694c8f3b7c16ff6085256d900065fdad!OpenDocument
133
Massachusetts v. EPA. No. 03-1361. pp. 9,15. Retrieved from
https://pacer.cadc.uscourts.gov/internet/opinions.nsf/131F165AA3EA9E328525742B0055906B/$file/03-1361a.pdf
134
U.S. Department of Justice. (2015, May 14). Massachusetts v. EPA. Retrieved from https://www.justice.gov/enrd/massachusetts-v-epa
28
an average of 50 percent and have all attained the national standard goals.135 Despite the decreased levels of pollutants
in the air, the EPA shows no signs of decreasing its budget for air quality improvement.
The 2016 Budget in Brief for the EPA outlines the funds allocated to every program overseen by the agency. The EPA
will receive increased funds to improve air quality, despite the fact that the national standards have already been
achieved and there are fewer nonattainment areas in the United States to regulate. Specifically, the funds allocated to
improving air quality will rise by more than $25 million in the 2016 fiscal year, representing a 3.3 percent year over year
increase. Total air quality funds will increase approximately 10.8 percent in the current year, with most of this increase
coming from additional climate change actions.136
It is unlikely the EPA will conclude that its role in air quality has been diminished as a result of policies and procedures
already in place. The majority of stationary polluters now comply with emissions standards and each automobile emits
90 percent less since the introduction of the CAA.137 As with all bureaucracies, the leadership of the EPA is selfinterested and continues to search for ways to increase its budget and secure additional responsibilities. Since the
creation of the EPA in 1970, the annual budget has increased from $1 billion to $8.59 billion for 2016.138 This represents
a mostly flat trend in spending since 1980 when adjusted for inflation, despite the continued progress the United States
has achieved in cleaning its air. If the country has attained its targets for emissions, the expected effect on the EPA’s
budget would be reduced spending, not continual budget increases.
CHAPTER 5: THE CLEAN WATER ACT
The Clean Water Act of 1972 (CWA) shifted water pollution control from state management to federal management.
Academics, politicians, and the media pushed for the nationalization of water pollution control despite the fact that
water pollution was rapidly improving under state and local governments. The Cuyahoga River Fire of 1969 and other
highly publicized environmental crises convinced the public that pollution was getting worse, despite the actual trends.
The CWA authorizes EPA to regulate point source pollution by requiring states to form their own water quality
standards. State plans must meet the minimum requirements of the federal regulation. Despite some successes, the
CWA has created a host of unintended consequences. The CWA's unintended consequences are rooted in the law's
vague wording. The Supreme Court defined the scope of regulatory power for the EPA and Army Corps of Engineers
(ACE), making the entire process of water pollution regulation insulated from the will of the public. The Court's illdefined interpretations have exacerbated confusion and have left industries to the regulatory interpretation of
bureaucratic agencies.
After forty years, and hundreds of billions of dollars, the EPA has failed to assess over half the waters of the United
States. Sixty percent of assessed waters do not meet water quality regulations. For example, the EPA has spent
135
Environmental Protection Agency. (n.d.). Air Quality Trends. Retrieved from http://www3.epa.gov/airtrends/aqtrends.html#comparison
Environmental Protection Agency. (February, 2015). 2016 Budget in Brief. pp. 13. Retrieved from
http://www.epa.gov/sites/production/files/2015-02/documents/fy_2016_bib_combined_v5.pdf
137
Environmental Protection Agency. (April, 2007). The Plain English Guide to the Clean Air Act. pp. 8. Retrieved from
https://www.epa.gov/sites/production/files/2015-08/documents/peg.pdf
138
Environmental Protection Agency. (2016, February 12). EPA’s Budget and Spending. Retrieved from
http://www.epa.gov/planandbudget/budget
136
29
decades and millions of dollars to clean up the Great Lakes, but they are still over ninety percent impaired.139 Fifty-five
percent of America’s assessed rivers and streams are still impaired, as well as 70 percent of assessed lakes and
ponds.140 Cleaning the nation’s waters provides social and environmental benefits, but the process imposes costs on
both the federal government and the private sector. Under the control of state and local governments, water pollution
was falling rapidly due to increased technology and better education concerning the harms of water pollution. American
waterways were actually improving faster before the passage of the CWA, but the slower rate cannot be blamed on
the passage of the 1972 bill.
The CWA has been relatively successful in targeting point-source industrial pollution, as well as wastewater discharges
from urban areas, but it has created many unintended consequences. The vague wording of the law has allowed the
Supreme Court to expand the regulatory power of the EPA and ACE through judicial interpretation, rather than the
legislative process. These inefficient bureaucratic agencies have vast discretion in crafting regulations that affect the
everyday lives of Americans while remaining insulated from the will of the people. The agencies' broad power has
resulted in the invasion of citizen’s property rights through federal attempts to preserve wetlands and policies that
have proven unsuited to tackle the problem of water pollution in the United States.
FAILURES AND NEGATIVE CONSEQUENCES OF THE CLEAN
WATER ACT
TEXTUAL DEFINITIONS
“SIGNIFICANT NEXUS”
In 2006, the Supreme Court split 4-1-4 on a decision concerning wetlands protection in Rapanos v. U.S. George Rapanos,
a Greek immigrant, was developing private property that lay about 11-20 miles from the closest waterway when the
EPA issued a compliance order due to wetlands within the development area. Rapanos ignored the order and began
filling in the wetlands with sand. The EPA brought a civil suit, which worked its way to the Supreme Court. In the
decision, Justice Antonin Scalia wrote that only “wetlands with a continuous surface connection” to traditional
waterways were protected under the CWA. Justice Anthony Kennedy wrote for the opposition and countered that
wetlands only need to have a “significant nexus” to navigable waters to fall under the protection of the CWA. Any
wetlands that “either alone or in combination with similarly situated lands in the region, significantly affect the
chemical, physical, and biological integrity” of other waters qualify as protected. 141 Because the Court split into a
plurality decision, the EPA generally abides by Kennedy’s broader definition.
Kennedy’s definition of what constitutes a protected wetland gives the EPA and ACE almost unlimited jurisdiction over
what constitutes a protected wetland and jeopardizes the property rights of private citizens. Without a clearly written
definition of what is and is not protected, definitional authority rests with the EPA and ACE, which have incentives to
maximize their authority to achieve greater funding from Congress and wider jurisdiction.
139
Environmental Protection Agency. (n.d.). National Summary of State Information. Retrieved from
http://iaspub.epa.gov/waters10/attains_nation_cy.control#wqs
140
Environmental Protection Agency. (n.d.). National Summary of State Information. Table 1: Assessed Water of United States. Retrieved from
http://iaspub.epa.gov/waters10/attains_nation_cy.control#LAKE/RESERVOIR/POND
141
DC Bureau. (2012, September 12). Clean Water Act Story and Timeline. Retrieved from http://www.dcbureau.org/tag/clean-water-acttimeline
30
“WATERS OF THE UNITED STATES”
Originally, the power of the federal government to regulate water pollution only applied to navigable waters that affect
interstate commerce. This power has been extended much further than the traditional meaning of the terms used in
the CWA. In the 1975 case of Natural Resources Defense Council v. Calloway, the Supreme Court ruled that the CWA
showed congressional intent that the ACE exercises broad power over all navigable waters that affect interstate
commerce. 142 Additionally, the Court equated the terms “navigable waters” and “waters of the United States” as
interchangeable, which expanded the EPA’s and ACE’s jurisdiction to all sources of water whether or not they are a
traditionally navigable waterway.
With the Supreme Court having fundamentally modified the term “navigable waters,” the EPA introduced the Clean
Water Rule, which seeks to clarify the jurisdiction of the federal government over wetlands and waterways.143 The
report states that any waters falling under the definition of a “significant nexus” must be determined on a case-bycase basis, which further empowers federal agencies.144 The recent Supreme Court decision of U.S. Army Corps of
Engineers v. Hawkes Co., Inc., threatened the ACE’s authority to determine wetlands by allowing private property
owners to legally challenge wetland designations on their property.145 Hawkes takes a positive step by increasing
protection for property owners, but increased confusion concerning wetland regulation. In the decision, Justice
Kennedy declared that the CWA is possibly “unconstitutionally vague,” casting doubt on his Rapanos opinion, which
was the basis for the Clean Water Rule.146
Terms such as “waters of the United States” and “significant nexus” leave vast amounts of discretion to bureaucratic
agencies. These broad terms decrease the liberty of individuals and industries by enabling government agencies to
extend their jurisdiction to include private property or activity through a case-by-case basis, rather than a clearly
established rule of law.
WATER QUALITY FAILURES
ASSESSED WATERS
After four decades and hundreds of billions of dollars, the EPA has failed to assess the majority of American waterways.
The magnitude of testing the waters of the United States in their entirety is too vast for one agency to accomplish.
Although many would argue that the EPA merely needs more funding and manpower to assess and regulate American
water quality, the current system is inherently inefficient, as proven by its minimal results over the past 40 years. These
inefficiencies will not disappear with a larger EPA budget. A new, more efficient approach is needed if water quality
is truly going to improve.
The mere accumulation of enough data to accurately determine the national condition of water in the United States is
such a massive endeavor that the EPA lacks any type of data or assessment on over half of all water sources. An agency
as large as the EPA, with centralized power, lacks the knowledge necessary to effectively implement regulation for
each instance of water pollution. This lack of knowledge makes centralized regulation inefficient and increases the
142
Ibid.
Copeland, C. (2016, January 4). EPA and the Army Corps’ Rule to Define “Waters of the United States”. Congressional Research Service. pp.
4-5. Retrieved from https://www.fas.org/sgp/crs/misc/R43455.pdf
144
Ibid. pp. 5.
145
Annie, S. (2016, May 31). Supreme Court ruling means more Clean Water Act lawsuits are likely. Politico. Retrieved from:
http://www.politico.com/story/2016/05/clean-water-act-supreme-court-223740
146
Ibid.
143
31
likelihood of unnecessary and even detrimental policies for local pollution problems. Even when the EPA does possess
adequate assessments of a waterway, they are not efficient at cleaning them. For example, over 80 percent of the
water in the Great Lakes has been assessed, but they are over 98 percent impaired, despite large amounts of funding
and efforts to cleanse them.147
IMPAIRED WATERS
The CWA has failed to improve over half of the assessed waters of the United States to meet EPA standards. The EPA
defines impaired waters as “waters that are too polluted or otherwise degraded to meet water quality standards.”148
Table 1: Assessed Waters of the United States149
Table 1 shows that the EPA has not assessed the majority of American waterways. Over 67 percent of assessed waters
are still impaired.150 This percentage does not take into consideration the waters that have not been assessed, which
exceeds 50 percent. When considering the amount of work that the EPA still faces, the CWA’s efficiency and approach
to water pollution is unlikely to efficiently improve water pollution.
INVASION OF PRIVATE PROPERTY RIGHTS
Federal protection of wetlands has been inefficient and has also infringed on property rights. Wetland management by
local government and private organizations has proven to be more successful and less invasive of private citizens’
property rights. Section 404 of the CWA prohibits the discharge of any dredge or fill material into navigable waters
without a permit issued by the ACE. The agencies enforcing the CWA have broadly interpreted the meaning of “dredge
147
Environmental Protection Agency. (1972, 18 October). Public Law 92-500. Sec. 108, (a). Retrieved from
http://www3.epa.gov/npdes/pubs/cwatxt.txt
148
Environmental Protection Agency (n.d.). Implementing Clean Water Act Section 303(d): Impaired Waters and Total Maximum Daily Loads.
Retrieved from http://www.epa.gov/tmdl
149
Environmental Protection Agency. (n.d.). National Summary of State Information. Retrieved from
http://iaspub.epa.gov/waters10/attains_nation_cy.control#wqs
150
The percentage was calculated from the data included on Figure 2 by adding the total of impaired waters and dividing the sum by the total
sum of assessed waters.
32
or fill material” to regulate the deposit of any type of material into a wetland.151 The definition of “wetlands” by the
federal government is broad and places over 100 million acres, 80 percent of which are private property, under the
protection of the CWA.152 A “wetland” could be anything from marshes and ponds to former dumps.
PRIVATE WETLAND PRESERVATION
From 1780 until 1980 the U.S. lost an estimated 30 percent of total wetlands and 53 percent of wetlands in the
continental United States.153 Many of these losses were caused by federal incentive programs that encouraged citizens
to drain wetlands and convert them into farmlands. From 1954 to 1992, over 14.2 million acres were drained and
converted to agricultural purposes.154
State and local governments, which had wetland protection in place before the federal government, as well as private
organizations, have been successful in creating and preserving wetlands.155 Voluntary programs to restore wetlands
seek to work with private landowners, rather than regulate the wetlands that fall on private property. Between the
years of 1992 and 1996, these voluntary programs restored more than 160,000 acres of wetlands annually at a cost of
an estimated $1,000 per acre.156 Under federal management, wetland restoration cost around $3,980 per acre and after
the addition of mitigation, the costs increased to nearly $34,000 per acre.157 With a similar budget, the private sector
and voluntary programs could have saved more than three times the amount of wetlands than the federal government.
Although many wetlands serve important functions, such as flood mitigation and water filtration, they can also produce
undesirable environments for private property owners, such as a breeding ground for pests like mosquitoes. 158
Additionally, wetlands have historically been the cause of diseases such as malaria and arboviruses.159 If a property
owner alters the wetland without a permit, they can be criminally prosecuted. Although the ACE is required under law
to issue any permits within 60 days of application, most applicants wait for over a year for permits to be approved.160
Citizens can be blocked for years from altering their own property due to the bureaucracies.
PROPERTY RIGHTS INVASIONS
Mike and Chantell Sackett are one example that highlight the violation of property rights and undue burdens that the
current protection of wetlands places on private property owners. In 2005, the Sacketts purchased a 0.63-acre lot near
Priest Lake, Idaho, for $23,000. Two years after the purchase, the couple began filling in the lot with gravel and dirt to
begin construction on their “dream home.” After three days, EPA officials arrived and stopped the workers, stating that
they believed the land to be protected wetlands. Six months later, the Sacketts received an administrative compliance
order from the EPA demanding that the Sacketts restore the wetland to its previous condition or face a fine of $30,000
151
Riggs, D. (n.d.). The Clean Water Act. Competitive Enterprise Institute. pp. 53. Retrieved from http://cei.org/pdf/2315.pdf
Ibid. pp. 53.
153
Dahl, T. E. (1990). Wetlands Losses in the United States 1780s to 1980s. U.S. Department of Interior, Fish and Wildlife Services. pp. 6.
Retrieved from http://www.fws.gov/wetlands/Documents/Wetlands-Losses-in-the-United-States-1780s-to-1980s.pdf
154
Crosson, P. & Frederick, K. (March, 1999). Impacts of Federal Policies and Programs on Wetlands. Resources for the Future. pp. 8. Retrieved
from http://www.rff.org/files/sharepoint/WorkImages/Download/RFF-DP-99-26.pdf
155
Riggs, D. (n.d.). The Clean Water Act. Competitive Enterprise Institute. pp. 56. Retrieved from http://cei.org/pdf/2315.pdf
156
Ibid. pp. 55.
157
Ibid. pp. 56.
158
Ibid. pp. 54.
159
Russell, R. C. (January 1999). Constructed Wetlands and Mosquitoes: Health Hazards and Management Options - An Australian Perspective.
Retrieved from http://www.sciencedirect.com/science/article/pii/S0925857498000573
160
Riggs, D. (n.d.). The Clean Water Act. Competitive Enterprise Institute. pp. 54. Retrieved from http://cei.org/pdf/2315.pdf
152
33
per day of noncompliance.161 Mr. Sackett said that “The EPA used bullying and threats of terrifying fines, and has made
our life hell,” but they decided to take their case to court and eventually won in the Supreme Court.162
In 2012, Andy Johnson and his wife spent $50,000 to build a stock pond by damming a small creek running through
their eight-acre property with the approval of the Wyoming State Engineer's Office.163 Under the CWA, stock ponds are
exempt from regulation, but the EPA contended that Johnson built a dam without a proper federal permit and that his
dam was causing discharges from his pond into other water sources. On January 30, 2014, Johnson received an EPA
order requiring that he hire a professional consultant to assess the impact of discharges caused by his dam within thirty
days. This report also required that he include a plan for restoration of the creek and a 60-day schedule to be approved
by the EPA. Johnson commissioned a private report, which showed only positive environmental effects from the pond,
but the EPA argued that the sand, rock, and concrete used to form the pond were pollutants. 164 For each day of
noncompliance Johnson was subject to $75,000 in fines and faced accumulated fines of up to $16 million.165 Johnson
brought a lawsuit against the EPA to waive the accumulated fines and declare his stock pond legal. He recently reached
a settlement after agreeing to temporarily fence off part of the pond to keep livestock out and plant willows around
the pond.166
In the recent Supreme Court decision of U.S. Army Corps of Engineers v. Hawkes Co., Inc., the Court ruled unanimously
in favor of property owners by allowing legal challenges to wetland designations by the ACE.167 The decision in Hawkes
provides property owners with a legal mechanism to protect their property from bureaucratic overreach. Examples of
EPA and ACE overreach, such as these, are widespread and common throughout the country. Families like the Sacketts
and Johnsons face federal invasion of their property rights in cases where they are causing little or no harm to the
environment. Cases such as these highlight the inefficiency of federal regulations and more importantly, the overreach
of wetland protection into the rights of private citizens.
PROTECTION OF POLLUTERS
National Pollutant Discharge Elimination System (NPDES) permits violate citizens’ property rights by denying them the
ability to sue for damages caused by pollution if the polluter holds a valid NPDES permit. Under the current NPDES
framework, any point source of pollution cannot be held liable for damage done to individual property, health, or the
environment as long as a valid NPDES permit is held. Property holders can only bring civil suits for technical violations
of the law and paperwork problems, not damages done by discharges from the point source.168 With no legal tool for
161
Associated Press. (2012, March 21). Court Sides with Sacketts Over EPA. Coeur d’Alene Press. Retrieved from
http://www.cdapress.com/news/local_news/article_9227d392-736b-11e1-b247-0019bb2963f4.html#user-comment-area
162
Vogue, A. (2012, March 21). Supreme Court Rules for Idaho Couple in Supreme Court Battle. ABC News. Retrieved from
http://abcnews.go.com/blogs/politics/2012/03/supreme-court-rules-for-idaho-couple-in-epa-battle/
163
Healy, J. (2015, September 18). Family Pond Boils at Center of a ‘Regulatory War’ in Wyoming. New York Times. Retrieved from
http://www.nytimes.com/2015/09/19/us/regulatory-war-fought-over-a-wyoming-familys-pond.html?_r=0;
Chakraborty, B. (2014, March 14). Wyoming welder faces $75,000 a day in EPA fines for building pond on his property. Fox News. Retrieved
from http://www.foxnews.com/politics/2014/03/14/wyoming-welder-faces-fine-for-building-pond-on-his-own-property.html
164
Healy, J. (2015, September 18). Family Pond Boils at Center of a ‘Regulatory War’ in Wyoming. New York Times. Retrieved from
http://www.nytimes.com/2015/09/19/us/regulatory-war-fought-over-a-wyoming-familys-pond.html?_r=0
165
Chakraborty, B. (2014, March 14). Wyoming welder faces $75,000 a day in EPA fines for building pond on his property. Fox News. Retrieved
from http://www.foxnews.com/politics/2014/03/14/wyoming-welder-faces-fine-for-building-pond-on-his-own-property.html
166
Pacific Legal Foundation. (2016, May 9). In “common sense” settlement with EPA, family’s stock pond stays [Press release]. Retrieved from
https://www.pacificlegal.org/releases/release-5-9-16-johnson-1-1494
167
Snider, A. (2016, May 31). Supreme Court ruling means more Clean Water Act lawsuits are likely. Politico. Retrieved from
http://www.politico.com/story/2016/05/clean-water-act-supreme-court-223740
168
Riggs, D. (n.d.). The Clean Water Act. Competitive Enterprise Institute. pp. 48. Retrieved from http://cei.org/pdf/2315.pdf
34
repercussion, each individual is left defenseless against damage to their property or health from pollution sources if
the polluter holds a valid NPDES permit.
COMPLIANCE COSTS OF THE CLEAN WATER ACT
Regulation resulting from the 1987 Amendments provides an example of how the EPA’s top-down approach can defeat
its own purpose. The 1987 Amendments to the CWA established a permitting program for the regulation of stormwater
discharges. The required paperwork to apply and achieve a permit proved so expensive that many cities were forced to
forgo environmental upgrades and projects. In a congressional testimony, local public officials testified that the cost of
the paperwork to apply for a permit averaged each city $625,000.169 According to a 1994 study performed by Price
Waterhouse, the cost of complying with new storm water permits drained public funds, meaning that local cities could
not afford to upgrade sewer systems or home septic tanks.170 This attempt by the government to ensure better water
quality through regulation ironically resulted in deteriorating water quality improvements for cities throughout the
United States. A recent report from the General Accounting Office shows a failure by the EPA to determine whether
the storm permit program improves water quality in any significant way. The report states, “Although EPA and state
agencies believe that the program will be effective in improving water quality, EPA has not made a systematic effort
to evaluate the program. Without such an effort, [the] EPA cannot tell what effect the program is having on water
quality nationally.”171
BENEFIT-COST ANALYSIS OF THE CLEAN WATER ACT
A benefit-cost analysis of the CWA is difficult for many reasons. First, the sheer number of variables that must be
considered is staggering. Analyzing the direct expenditures, lost jobs, and opportunity costs throughout the entire
nation is difficult and costly. Second, many of the benefits are normative, making any calculation of the benefits
preference-based. Those benefits that are quantifiable are also difficult to calculate because of the number of variables
that must be considered. Although the CWA benefitted the quality of drinking water for millions of Americans, there is
no accurate way to quantify exactly how many lives were saved or illnesses avoided. Additionally, the amount of
tourism, wildlife, fishing, recreation, and improved waterfront property that is a result of the CWA must be considered
for an accurate analysis.
A comparison of the known costs and benefits of the CWA varies according to the source. According to the Bureau of
Economic Analysis (BEA), the CWA has cost an estimated $1 trillion between government and industry expenditures,
while estimates from the Mercatus Center place the estimated costs at $2.25 trillion.172 The BEA does not take into
account the private costs of operation, regulation and monitoring, research, or development caused by the CWA,
whereas the Mercatus report does. Despite the money spent in the attempt to cleanse American waterways, over 55
percent remain impaired while the remainder lack water quality assessments. According to recent EPA estimates, at
169
Riggs, D. W. & Anderson, T. L. (n.d.). The Clean Water Act. Competitive Enterprise Institute. pp. 47. Retrieved from
http://cei.org/pdf/2315.pdf
170
Ibid. pp. 47.
171
Ibid. pp. 48.
172
Keiser, D. A. & Shapiro, J. S. (December, 2015). Consequences of the Clean Water Act and the Demand for Water Quality. Iowa State
University & Yale University. pp. 45.;
Johnson, J. M. (March, 2004). The Cost of Regulations Implementing the Clean Water Act. Mercatus Center George Mason University. pp. 45.
Retrieved from http://mercatus.org/sites/default/files/publication/cost-regulations-implementing-clean-water-act.pdf;
Calculated total from Table 8 of Johnson and plugged the amount into the CPI inflation calculator of the Bureau of Labor Statistics for 2016
dollars. Retrieved from http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=2002&year2=2016;
Total was calculated by adding the amounts from Johnson’s Table 8 to the sum of annual EPA budgets for clean water from 2001-2015.
35
the current rate it will take over 500 years for the CWA to clean and restore all American waterways if no new
waterways become impaired.173
Each new CWA regulation stifles innovation and economic growth and increases the burden placed on taxpayers.174
The cost of water pollution control is ultimately paid for by taxpayer dollars through higher taxes at the local, state,
and federal levels. State and local governments are forced to raise taxes to meet ever tightening regulations and
restrictions imposed by the EPA. The costs imposed on businesses by clean water regulation places burdens on
consumers and citizens through a higher price of goods and services, reduced employment in regulated industries, and
displaced small businesses that are unable to compete in a more expensive environment.
CHAPTER 6: COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION, AND LIABILITY ACT
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) empowered the federal
government to take an active role in cleaning up hazardous waste sites.175 In the late 1970s, an environmental disaster
in Love Canal, New York, brought hazardous waste to national attention. This disaster, coupled with the political
ramifications of the 1980 election, prompted congressional action on hazardous waste.
CERCLA was created to provide financing for the cleanup of uncontrolled or abandoned hazardous waste sites through
a "Superfund" of federal money. Superfund also finances cleanup operations for accidents, spills, and other
emergencies involving hazardous waste. Because hazardous waste can pose serious health and safety concerns for
Americans, many support CERCLA's protections. The law's theoretical benefits to society and the environment seem
noble, but despite the intentions, CERCLA has been ineffective, inefficient, and costly in many cases. Unfortunately,
the inefficient application of the law and its allocated funds have caused unintended consequences that have, in many
instances, outweighed the benefits of the law. Superfund’s shortcomings include, significant waste of resources,
outright misappropriation of funds, and the imposition of unfair liabilities on private parties.
CERCLA's provisions include retroactive liability, allowing the EPA to impose liability for polluter's past actions.176 This
liability structure, when combined with the establishment of a Superfund Trust and a National Priorities List (NPL),
represents the three core tenets of CERCLA. 177 The EPA has generally been successful at implementing the law
according to Congress’ intent for these three factors, but each success has been accompanied with various problems.
The NPL was established, and is still used today, but has been criticized for its seemingly arbitrary ranking and listing
173
Environmental Protection Agency. (November, 2011). A National Evaluation of the Clean Water Act Section 319 Program. pp. 4. Retrieved
from http://www.epa.gov/sites/production/files/2015-09/documents/319evaluation.pdf
174
McClaughlin, P. A. (2013, August 1). On the Human Costs of the US Regulatory System: Should Congress Pressure Agencies to Make Rules
Faster? Mercatus Center George Mason University. pp. 6. Retrieved from http://mercatus.org/sites/default/files/McLaughlin_humancosts_testimony_073013.pdf
175
Bearden, D. M. (2012). Comprehensive Environmental Response, Compensation, and Liability Act: A Summary of Superfund Cleanup
Authorities and Related Provisions of the Act. Congressional Research Service. pp. Summary. Retrieved from
https://www.fas.org/sgp/crs/misc/R41039.pdf
176
Ibid. pp. Summary.
177
Ibid. pp. Summary.
36
process. The liability provisions of CERCLA are used to require responsible parties to pay for cleanups, but are
constitutionally dubious in penalizing entities for actions taken before they were deemed illegal.
Many of CERCLA’s successes in cleaning sites have come at high costs with limited benefits. Individuals are financially
penalized for legal past actions, including some committed by past generations, in the name of environmental
cleanliness. Inefficiencies have plagued the program, resulting in the need for massive congressional appropriations to
sustain what was originally a self-sustaining program. The costs of these inefficiencies are passed on to American
taxpayers.
FAILURES AND NEGATIVE CONSEQUENCES OF CERCLA
INEFFICIENCY
CERCLA’s first problem is a record full of inefficiency and outright waste of taxpayer funds. Inefficiency is a common
characteristic of government policies, but CERCLA’s inefficiencies are egregious, even by government standards.
Foremost among CERCLA’s list of inefficiencies is the time it takes to begin a cleanup. Cleanup operations begin, on
average, ten years after discovery of a hazardous site.178 Preliminary assessments and investigations during the listing
process average over four years, meaning that thousands of sites are consistently waiting for investigatory actions to
occur. 179 The EPA's slow implementation of CERCLA led to a mere 20 sites being cleaned during the first seven years
after the law's passage.180 This equates to an average of under three successful site cleanups per year. CERCLA’s
inefficiency is rooted in a mixture of bureaucratic red tape and a serious misappropriation of government funds.
Questionable standards in cleanup operations has resulted in cases where the EPA has mandated the cleanup of sites
that do not pose a risk to humans or have greatly inflated risk assessments. This is detrimental to cleanup efforts as it
diverts resources to sites that are either unnecessary or low priority, thereby slowing the cleanup of dangerous sites.181
A study of thirteen sites located in EPA Region 1 determined that the median number of people at risk for all sites was
250. Further research by economist Dr. Kip Viscusi found that the danger posed by listed sites was relatively minor.
Viscusi and his coauthor, James Hamilton, examined 78 NPL sites and found that 72 percent of total risks stemmed
from estimated future land use practices. This study further revealed that potential future land use accounted for 70
percent of cancer risks and 79 percent of non-cancer risks.182 The EPA is spending taxpayer funds to clean up sites that
are only potentially harmful if something dramatically changes.
Superfund money that is marked for cleanup is often diverted and used elsewhere. Instead of being used for cleaning
up sites, a significant amount of the Superfund budget is consumed by feasibility studies, administrative costs, and
litigation.183 Attorney fees, administrative costs, and fees for consultations consume fifty percent of all publicly sourced
178
Ferris, L. & Rees, D. (June 1994). CERCLA Remedy Selection: Abandoning the Quick Fix Mentality. Ecology Law Quarterly, Vol. 21:3. pp. 798.
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
180
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 168. Retrieved from http://escholarship.org/uc/item/8jg867n2
181
National Center for Policy Analysis. (1996). Superfund: History of Failure. pp. 1. Retrieved from http://www.ncpa.org/pdfs/ba198.pdf
182
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
183
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 170. Retrieved from http://escholarship.org/uc/item/8jg867n2
179
37
Superfund expenditures. These costs take money from other sources, with 88 percent of insurance expenditures and
35 percent of corporate expenses going to things other than cleanup. 184 Administrative costs of Superfund are
particularly inefficient, with the cost of administering contractors accounting one-third of the EPA’s spending for
cleanup. 185 Feasibility studies conducted by the EPA add to the administrative costs, with multiple studies often
occurring at one site prior to cleanup.
In recent years, the amount spent on administration and other non-cleanup actions by the EPA have been going down.
A 2008 GAO report found that from 1999 to 2007, the EPA used 77 percent of its funds on cleanup actions and the
remaining 33 percent on enforcement and administration. Enforcement expenditures fell from $243 million in 1999 to
$187 million in 2007, but the percentage of spending on enforcement rose from 13 to 15 percent over the same period.
Administrative costs also were found to have declined from $143 million in 1999 to $132 million in 2007, but also rose
in percentage from 8 to 10 percent.186
Since its enactment, the EPA has often used funds from CERCLA to pay contractors for cleanup operations. EPA-hired
contractors have little accountability when using taxpayer money for non-cleanup related activities. Some contractors
have used Superfund money to throw Christmas parties, purchase sports tickets, and even make personal phone calls.187
CERCLA has resulted in by the EPA and private parties seeking to contest the liability standards imposed by the law.
As a result of this cycle of litigation, legal fees and associated administrative costs consume substantial amounts of
Superfund money, up to 35 percent by some estimates. Testimony before Congress indicates that approximately 75
percent of the increase in the number of environmental lawyers can be directly attributed to CERCLA and its
implementation.188
IMPOSING UNFAIR LIABILITIES
CERCLA imposes three kinds of liability: strict, retroactive, and joint and several liabilities. The retroactive liability of
CERCLA has proven to be constitutionally uncertain because the law allows for parties to be punished for actions that
were not illegal or even discouraged when they occurred.189 The retroactive liability provisions of CERCLA were among
the biggest sticking points for many members of Congress. These reservations have become an increasingly large focal
point of opposition to CERCLA. In particular, CERCLA's liability provisions are unfair on small businesses, who are
assigned massive EPA fees that severely limit their livelihoods.
If the EPA mistakenly or unjustly accuses someone of contamination, accused parties have a difficult time exonerating
themselves. Provisions in CERCLA limit the ability of accused parties to challenge EPA orders because the law stipulates
184
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
185
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 170. Retrieved from http://escholarship.org/uc/item/8jg867n2
186
United States Government Accountability Office. (2008). Superfund: Funding and Reported Costs of Enforcement and Administration
Activities. pp. 3-4 Retrieved from http://www.gao.gov/new.items/d08841r.pdf
187
National Center for Policy Analysis. (1996). Superfund: History of Failure. pp. 1. Retrieved from http://www.ncpa.org/pdfs/ba198.pdf
188
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
189
Montgomery Jr. W. A. (1987). Constitutional Implications of CERCLA: Due Process Challenges to Response Costs and Retroactive Liability.
Urban Law Annual; Journal of Urban and Contemporary Law. Vol 31. Homeless Symposium. CERCLA Symposium. Retrieved from
http://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1356&context=law_urbanlaw
38
that any review of the EPA's orders must be delayed until after a site has been cleaned. If a potentially responsible
party (PRP) wants to challenge or dispute an order issued by the EPA, the PRP needs to adhere to the order’s commands
and then challenge the measure in court, after spending large amounts of money on cleanup. The other alternative
would be the PRP refusing to adhere to the EPA’s order and waiting until the EPA performs cleanup, then begins
enforcement proceedings against the PRP, where it could finally defend itself.190 Both options appear to conflict with
the constitutional protection of the due process of law.
EPA SITE DETERMINATION
The EPA’s method of determining where action is needed has been a major shortcoming of CERCLA. According to the
EPA, site determination is a process used to collect data and information to “...identify, evaluate and rank hazardous
waste sites…” The EPA ranks hazardous waste sites on the National Priorities List.191 In theory, sites should be listed
according to their level of danger, ensuring that the most contaminated and hazardous sites are cleaned first.192
The EPA listing process is problematic due to the seemingly arbitrary nature of the system, which many argue does not
properly consider the health risks a site poses. 193 Viscusi and Hamilton assert that sites with more well-known
chemicals are more likely to have stringent standards of cleaning, regardless of the actual danger.194 In addition, the
EPA's score used to rank sites is limited to the most dangerous substance present, often ignoring the composite
measure of contaminants.195 This is significant due to possible interactions between chemicals, or an aggregate impact
of all the substances combined, which can be overlooked when the composite measure is not understood.
One area of the EPA’s ranking that has come under fire is the use of the Hazard Ranking System (HRS) as a method of
determining the potential threat to public health. Critics have noted that the HRS is little more than a “…crude
statistical index that ‘scores’ sites based on potential exposures from groundwater, surface water, air and soil.” Each
of these factors are rated according to a scale of 0 to 100, with a score of 28.5 making a site eligible for the NPL. The
28.5 cutoff is an arbitrary designation, often resulting in little correlation between a site’s listing on the NPL and the
risk that it actually poses to the health of the population. Joel Herschhorn from the Office of Technology Assessment
indicated that “…the ranking system is only very loosely related to the actual severity of the problems at the site.”196
190
Corley, S. (2011). The Constitutionality of the EPA’s Enforcement of CERCLA: Big Business Challenges and a Small Business Problem. Journal
of Energy, Climate, and Environment. p. 269-270. Retrieved from:
http://law2.wlu.edu/deptimages/journal%20of%20energy,%20climate,%20and%20the%20environment/April%2012%20-%20Corley.pdf
191
Superfund Site Assessment Process. (2015). United States Environmental Protection Agency. Superfund. Retrieved from
http://www.epa.gov/superfund/superfund-site-assessment-process
192
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 166-168. Retrieved from http://escholarship.org/uc/item/8jg867n2
193
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 167-168. Retrieved from http://escholarship.org/uc/item/8jg867n2
194
Viscusi, W. K. & Hamilton, J. T. (1999). Are Risk Regulators Rational? Evidence from Hazardous Waste Cleanup Decisions. The American
Economic Review. Vol 4. pp. 1024-1025. Retrieved from https://law.vanderbilt.edu/files/archive/202_Are-Risk-Regulators-Rational_Evidencefrom-Hazardous-Waste-Cleanup-Decisions.pdf
195
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 167-168. Retrieved from http://escholarship.org/uc/item/8jg867n2
196
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
39
POLITICAL INFLUENCE
The original CERCLA included the requirement that “...at least one hazardous site be listed for each state…” even if
each state did not contain such a site. This provision resulted in the inclusion of sites that did not immediate attention,
thereby diverting time and funds from more important sites.197 Viscusi and Hamilton also determined that EPA site
listing was subject to a “...variety of political influences pertaining to the nature of the community.” This study’s results
indicated that “[s]ites in counties with higher voter turnouts, states with more environmentalists, and states with
senators with stronger environmental voting records were all more likely to have stricter environmental cleanup
targets.”198
COST
Congress originally intended for CERCLA and Superfund to be be economically self-sufficient, using liability from PRPs
to accomplish its mission. In addition, CERCLA was originally intended to be a short-term project, spending $1.6 billion
over five years to clean approximately 400 sites.199 In reality, the GAO conducted an analysis of Superfund for the fiscal
year 1993 and determined that the EPA only recovered “...$1.2 billion of the $8.7 billion it spent on the Superfund
program…”200 A more recent 2010 GAO report noted that “...EPA’s costs for remedial actions over the next several
years will exceed recent funding levels…”201 The GAO’s data indicates that annual costs for the EPA to administer
CERCLA will be between $335 and $681 million, an increase from the $220 to $267 million allocated annually between
2000 and 2009.202 Additionally, the GAO believes the hypothetical future costs are likely understated, considering that
the EPA’s costs are commonly greater than its own estimates.203
Critics have noted massive costs associated with Superfund, topping $30 billion in public funds and tens of billions
more from the private sector.204 The program was initially expensive because of a constant cycle of feasibility studies
and litigation.205 A University of Tennessee study found Superfund’s annual costs to society at approximately four billion
dollars per year. This same study determined that the total costs of Superfund will eventually cost the country about
400 billion dollars.206
197
McGee, R. W. (1993). Superfund: It’s Time for Repeal after a Decade of Failure. University of California Los Angeles. Journal of
Environmental Law and Policy. Vol 12 (1). pp. 167. Retrieved from http://escholarship.org/uc/item/8jg867n2
198
Viscusi, W. K. & Hamilton, J. T. (1999). Are Risk Regulators Rational? Evidence from Hazardous Waste Cleanup Decisions. The American
Economic Review. Vol 4. pp. 1024-1025. Retrieved from https://law.vanderbilt.edu/files/archive/202_Are-Risk-Regulators-Rational_Evidencefrom-Hazardous-Waste-Cleanup-Decisions.pdf
199
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
200
United States Government Accountability Office. (1994). Superfund: EPA Has Opportunities to Increase Recoveries of Costs. Retrieved from
https://www.gpo.gov/fdsys/pkg/GAOREPORTS-RCED-94-196/html/GAOREPORTS-RCED-94-196.htm
201
United States Government Accountability Office. (2010). Superfund. EPA’s Estimated Costs to Remediate Existing Sites Exceed Current
Funding Levels, and More Sites Are Expected to Be Added to the National Priorities List. Report to Congressional Requesters. pp. 23. Retrieved
from http://www.gao.gov/new.items/d10380.pdf
202
United States Government Accountability Office. (2010). Superfund. EPA’s Estimated Costs to Remediate Existing Sites Exceed Current
Funding Levels, and More Sites Are Expected to Be Added to the National Priorities List. Report to Congressional Requesters. pp. >i. Retrieved
from http://www.gao.gov/new.items/d10380.pdf
203
Ibid.
204
National Center for Policy Analysis. (1996). Superfund: History of Failure. pp. 2. Retrieved from: http://www.ncpa.org/pdfs/ba198.pdf
205
Light, A. R. (2014). Clean Up of a Legislative Disaster: Avoiding the Constitution Under the Original CERCLA. University of California, Davis.
pp. 204. Retrieved from http://environs.law.ucdavis.edu/volumes/37/2/Articles/Light.pdf
206
Taylor, J. (1995, June 22). Hazardous Waste Landfills and Superfund. Subcommittee on Water Resources and Environment, Committee on
40
CHAPTER 7: ENERGY POLICY ACT OF 2005
The Energy Policy Act of 2005 (EPAct) was meant to increase and diversify domestic energy production, encourage
energy conservation, and boost investments in new energy technology. Although the intentions of the law seem noble
at first glance, the realities of law are less positive. The EPAct turned into a political grab bag for dozens of special
interest groups who could benefit at the taxpayers' expense. The act has given special privileges and billions in
subsidies to nearly all energy industries. The EPAct has become a prime example of how political compromise and favor
trading in Congress can end up costing taxpayers billions of dollars with limited benefits.
The EPAct has generated negative outcomes and unintended consequences that are both economically and
environmentally harmful. Subsidies and special privileges create market distortions and wealth transfers for wellconnected industry favorites. The Renewable Fuel Standard is causing economic damage, especially in Corn Belt
counties, and exacerbating environmental damage from large-scale monocropping and carbon emissions. Exemptions
from environmental protection policies for the fossil fuel industry provides an unfair advantage to oil and natural gas
companies. The Energy Policy Act legislates that certain companies are winners while others are losers. The complex
and convoluted process of choosing winners and losers does little to help the average American or the environment.
Although it was touted as a way to reduce dependence on foreign oil and moderate gasoline prices, many people from
all political orientations recognize the EPAct of 2005 as little more than a collection of perks for nearly every energy
industry. Myron Ebell of the Competitive Enterprise Institute criticized the EPAct, saying, "Every industry gets their own
little program. There's pork in there for everybody."207 On the opposite end of the spectrum, House Democratic leader
Nancy Pelosi of California also criticized the cronyistic nature of the law. She accused President Bush of exploiting
people’s fear of rising energy prices to pass a bill “...written by energy lobbyists for the benefit of the energy
industry.”208
FAILURES AND NEGATIVE CONSEQUENCES OF THE ENERGY
POLICY ACT
ENERGY INDUSTRY SUBSIDIES
SUBSIDIES FOR FOSSIL FUELS
Under the EPAct, the fossil fuel industry has received ample subsidies, most notably for development of “clean coal”
technology. The act established tax credits for investments in clean coal facilities, such as a 20 percent credit for
integrated gasification combined cycle (IGCC) projects. Instead of simply burning coal, the expensive IGCC process
breaks coal down into its chemical constituents to collect the byproducts (carbon dioxide, sulfur dioxide, nitrogen oxide,
Transportation and Infrastructure. United States House of Representatives. Retrieved from http://www.cato.org/publications/congressionaltestimony/hazardous-waste-landfills-superfund
207
Grunwald, M., Eilperin, J. (2005, July 30). Energy Bill Raises Fears About Pollution, Fraud. The Washington Post. Retrieved from
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/29/AR2005072901128.html
208
NBC News. (2005, April 21). House approves $12 billion energy package. Retrieved from
http://www.nbcnews.com/id/7574562/ns/politics/t/house-approves-billion-energy-package#.VtRRapwrLIU
41
trace metals, and particulates) for filtering and treatment before combustion.209 Many saw these subsidies as nothing
more than a move by the coal industry to acquire taxpayer money.210
Politically connected fossil fuel companies have been able to exploit the EPAct's subsidies since its enactment. Former
House Majority Leader Tom DeLay included hundreds of millions of dollars in subsidies for companies in his district
that he had direct ties to. DeLay added $500 million in subsidies over ten years to the bill for research into deep-water
oil and gas drilling. Much of this grant went to the Texas Energy Center in DeLay's hometown of Sugar Land.211 Title
IX, Subtitle J of the EPAct allows the government to contract with "...a corporation that is structured as a consortium
to administer the programmatic activities..." for deep-water drilling.212 The “program consortium” has the power to
allocate taxpayer money to corporations. The Research Partnership to Secure Energy for America (RPSEA) is the
program consortium for Subtitle J of the Energy Policy Act of 2005.213 The Texas Energy Center is one of the members
of the RPSEA.214 Six executives of the Texas Energy Center have strong ties to Tom DeLay and donated thousands of
dollars to DeLay’s campaign since March 2004.215
SUBSIDIES FOR RENEWABLE ENERGY SOURCES
Like the oil and gas industry, the renewable energy industry also employs similar political maneuvers to protect their
own businesses and profit margins. A variety of renewable energy sources received billions of dollars in subsidies from
the EPAct. The act extended the Production Tax Credit (PTC), which guarantees a 1.8-cent-per-kilowatt subsidy for new
wind energy and gave a comparable tax incentive to the solar industry. This act extended these subsidies until 2007.
The bill also created a “...30-percent tax credit for the purchase of residential solar water heating, photovoltaic
equipment, and fuel cell property,” as well as tax incentives for the construction of geothermal facilities, all through
2007.216 The PTC has expired several times since 2007, and Congress has repeatedly renewed it. In December 2015,
the Consolidated Appropriations Act renewed the PTC until the end of December 2019 for wind facilities. The
Consolidated Appropriations Act also extended the tax credit for other eligible renewable energy sources until the end
of December 2016.217
Despite these subsidies, advocates of renewable energy were unconvinced that renewable energy had been given
enough support by the EPAct. Although the act awarded $6.4 billion in subsidies and incentives for renewable energy,
209
Senate Energy & Natural Resource Committee. (2006). The Energy Policy Act of 2005 Anniversary Report. Retrieved from
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwjNh86Dp_JAhUQ_WMKHQWMBPMQFghEMAY&url=http%3A%2F%2Fwww.energy.senate.gov%2Fpublic%2Findex.cfm%2Ffiles%2Fserve%3FFile_id
%3Df3ef8500-1a60-4c8b-b455-4279b8f86e6d&usg=AFQjCNGP2oVNHaatj1mg3MXSpKH83UYtDw
210
Taxpayers for Common Sense. (2008, September 9). Clean Coal Projects: Cleaning Out the Pockets of Taxpayers. Retrieved from
http://www.taxpayer.net/library/article/clean-coal-projects-cleaning-out-the-pockets-of-taxpayers
211
Grunwald, M., Eilperin, J. (2005, July 30). Energy Bill Raises Fears About Pollution, Fraud. The Washington Post. Retrieved from
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/29/AR2005072901128.html
212
Public Law 09-58 (2005, August 8). Energy Policy Act of 2005 Sec. 999B. Ultra-Deepwater and Unconventional Onshore Natural Gas and
Other Petroleum Research and Development Program. p. 918. Retrieved from http://energy.gov/sites/prod/files/2013/10/f3/epact_2005.pdf
213
Research Partnership to Secure Energy for America. (n.d.). Frequently Asked Questions. Retrieved from http://www.rpsea.org/faqs/
214
Research Partnership to Secure Energy for America. (n.d.). Current RPSEA Members. Retrieved from http://www.rpsea.org/current-rpseamembers/
215
Public Citizen. (2016). The Best Energy Bill Corporations Could Buy: Summary of Industry Giveaways in the 2005 Energy Bill. Retrieved from
http://www.citizen.org/cmep/article_redirect.cfm?ID=13980
216
Senate Energy & Natural Resource Committee. (2006). The Energy Policy Act of 2005 Anniversary Report. p. 5. Retrieved from
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwjNh86Dp_JAhUQ_WMKHQWMBPMQFghEMAY&url=http%3A%2F%2Fwww.energy.senate.gov%2Fpublic%2Findex.cfm%2Ffiles%2Fserve%3FFile_id
%3Df3ef8500-1a60-4c8b-b455-4279b8f86e6d&usg=AFQjCNGP2oVNHaatj1mg3MXSpKH83UYtDw
217
United States Department of Energy. (n.d.). Renewable Electricity Production Tax Credit (PTC): Program Info. Retrieved from
http://energy.gov/savings/renewable-electricity-production-tax-credit-ptc
42
it also included $25 billion for oil, gas, coal, and nuclear plants.218 The Institute of Electrical and Electronics Engineers
issued a report on the effects of the EPAct on renewable energy, stating that the level of subsidies provided to
renewable energy in the bill would have little impact on the amount of renewable energy produced in the U.S.219
Many renewable energy industries have become dependent on government assistance. Continually extending the PTC
and other subsidies implies that federal policymakers do not perceive that the wind industry can be economically selfsustaining. Renewable energy industries also have a strong incentive to continually lobby and rent-seek for subsidies,
regardless if renewable energy becomes more efficient, consistent, or economically stable. Despite the financial
stability of the fossil fuel industry, the fossil fuel industry still receives government assistance and has for decades.
The renewable energy industry will likely follow the same course.
SUBSIDIES FOR NUCLEAR ENERGY
The EPAct’s biggest winner was probably the nuclear industry, which received billions of dollars in subsidies and tax
breaks covering almost every facet of operations. Nuclear companies received subsidies for “...research into new
reactor designs, ‘fusion energy,’ small-particle accelerators, and reprocessing nuclear waste…” There was even a
“...$250,000 provision for research into using radiation to refine oil.”220 The EPAct also contained “$2 billion for ‘risk
insurance’ in case new nuclear plants run into construction and licensing delays.” Nuclear utilities “...will be eligible
for taxpayer-backed loan guarantees of as much as 80 percent the cost of their plants.”221
Nuclear subsides within the EPAct included $2.9 billion in R&D subsidies, $3.25 billion in construction subsidies, $5.7
billion in operating subsidies, and $1.3 billion in shut-down subsidies.222
Although there has almost been a complete halt in nuclear power plant construction for over thirty years, seventeen
nuclear companies have applied for EPAct funding for 21 projects. The success of this legislation is still undetermined
since the companies that applied for funding are still in the planning phases on their proposed building applications.
Some of the proposed sites have scrapped their building plans.223
THE EFFECTS OF SUBSIDIES AND LOAN GUARANTEES
Subsidies distort the supply and demand of the market and alter price signals that indicate what people value. In an
unhampered free market, buyers and sellers interact with one another to make each other better off. The seller has
something that the buyer wants, and the buyer has something that the seller wants. When the two engage in trade,
they both benefit. If one of the people in this transaction was not made better off, then that person would not participate
in the trade. Voluntary exchange is mutually beneficial to those who participate, which is one of the core tenets of
economics. Nationwide and worldwide economies are extremely complex when taken as a whole, but they are simply
218
Weiss, D., Kong, N. (2008, March 4). Renewable Energy Subterfuge: Bush’s Sleight of Hand. Center for American Progress. Retrieved from
https://www.americanprogress.org/issues/green/news/2008/03/04/4048/renewable-energy-subterfuge-bushs-sleight-of-hand/
219
Malmedal, K., Kroposki, B., Sen, P. (2007). Energy Policy Act of 2005 and Its Impact on Renewable Energy Applications in USA. Institute of
Electrical and Electronics Engineers. p. 6. Retrieved from http://www.neiengineering.com/wp-content/uploads/2012/05/The-Energy-Policy-Actof-2005-and-it%E2%80%99s-Impact-on-Renewable-Energy-Applications-in-the-USA.pdf
220
Grunwald, M., Eilperin, J. (2005, July 30). Energy Bill Raises Fears About Pollution, Fraud. The Washington Post. p. 2. Retrieved from
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/29/AR2005072901128.html
221
Ibid.
222
Public Citizen. (2003) Nuclear Giveaways in the Energy Policy Act of 2005. p. 1-2. Retrieved from
https://www.citizen.org/documents/NuclearEnergyBillFinal.pdf
223
World Nuclear Association. (2015). US Nuclear Power Policy. Retrieved from http://www.world-nuclear.org/info/country-profiles/countries-tz/usa--nuclear-power/
43
large collections of mutually beneficial trades. Competitive markets are more likely to produce better outcomes of
buyers and sellers. More competitive markets tend to emerge in three cases: first, when property rights are welldefined; second, when the costs of negotiating the terms of trade are small; and third, when barriers to entering or
exiting an industry are minimal.224
Government policies that provide special privileges to certain industries or companies make the market less
competitive, which lowers the benefits from exchange. Government policies that distort the normal market processes
can also lower economic growth and harm the private sector while certain favored industries profit.225 Some of the
forms of destructive privilege contained in the EPAct of 2005 are subsidies, loan guarantees, and restricted market
entry.
Some companies and industries received more indirect financial support through loan guarantees or subsidies given to
energy customers, rather than energy producers. Under the EPAct's Title XVII, Sections 1702 and 1705 allow the Energy
Department to make loan guarantees to specific energy companies. 226 One of the worst outcomes from the loan
guarantee program created by the EPAct happed with a solar energy company called Solyndra. In 2009, the federal
government granted Solyndra $535 million in loan guarantees. Under the loan guarantee program, the company would
have to repay back its debt if it was financially successful. If the company was not financially successful, the federal
government would absorb the losses through tax dollars. Two years after Solyndra received the loan guarantee, it filed
for bankruptcy and fired its 1,100 employees. Taxpayers were stuck with the cost of the loan. Solyndra is only one of
dozens of companies that have used the loan guarantee program to shield themselves from financial risk at the
taxpayers' expense.227
Joseph Kelliher, former chairman of the Federal Energy Regulatory Commission (FERC), asserts that "effective
regulation is necessary to protect the consumer from exploitation and assure fair competition."228 Although regulations
may be well intended to protect consumers, regulations are nearly always contradictory to competitive markets.
Regulations are imposed specifically to limit markets to the firms that the regulators prefer. Sometimes the regulators'
preferred firms make consumers better off, but often regulations can make consumers worse off by restricting who can
enter markets. Regulations put newcomers in the market at a large disadvantage because navigating complex
regulation is more manageable for large, established firms than it is for smaller start-ups.
Firms who receive government privilege are less like to engage in beneficial innovation. Economist Chun-Lei Yang
shows that the incentive to invest in research and development diminish when rent seeking is more prevalent.229
Economists Stefanie Lenway, Randall Morck, and Bernard Yeung found that companies most actively engaged in
224
Mitchell, M. (2014). The Pathology of Privilege: Economic Consequences of Government Favoritism. Mercatus. Retrieved from
http://mercatus.org/sites/default/files/Mitchell-web.pdf
225
Ibid.
226
United States Department of Energy. (n.d.). Loan Guarantee Program Governing Documents. Loan Programs Office. Retrieved from:
http://energy.gov/lpo/loan-guarantee-program-governing-documents;
Rahim, S. (2011, October 11). Republicans Probe Whether DOE's Effort to Save Solyndra Violated 2005 Energy Act. The New York Times.
Retrieved from http://www.nytimes.com/cwire/2011/10/11/11climatewire-republicans-probe-whether-does-effort-to-sav11629.html?pagewanted=all
227
Mitchell, M. (2014). The Pathology of Privilege: Economic Consequences of Government Favoritism. Mercatus. p. 9. Retrieved from
http://mercatus.org/sites/default/files/Mitchell-web.pdf
228
Kelliher, J. T. (2006, February 2). Commission Meeting Statement of Chairman Joseph T. Kelliher. Federal Energy Regulatory Commission.
229
Rent Seeking, Technology Commitment, and Economic Development Author(s): Chun-Lei Yang Source: Journal of Institutional and
Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft, Vol. 154, No. 4 (Dec. 1998), pp. 640-658. Retrieved from
http://www.jstor.org.dist.lib.usu.edu/stable/pdf/40752099.pdf?acceptTC=true
44
lobbying were often "larger, older, less diversified, and less profitable than non-lobbyers.” Rent seeking appears to be
a substitute for innovation and entrepreneurship.230
As subsidies, loan guarantees, and restricted entry cause companies to become less innovative, the economy generally
suffers. In competitive markets, new companies can challenge older, less-innovative ones on a more equal playing
field. New companies, without being bogged down by bureaucratic inefficiencies or disadvantaged by special privileges
given to larger companies, are more likely to patent and commercialize new technological innovation.231
Government privilege often encourages companies to engage in risk-taking that they otherwise would not have if they
were left to the market. Risk-taking happens most notably when a company’s loans are guaranteed because a company
gets to keep any profits, but is not liable for any losses. Engaging in risk-taking when a company is insured against loss
is called “moral hazard.” When people know they will not bear the full costs of some action, they are willing to act in
riskier ways.232 The Solyndra scandal is a prime example of moral hazard.
When politically connected companies receive government privileges, labor and capital allocations are not based on
costs and benefits. These allocations are based on political considerations that benefit politicians, bureaucrats, and
the politically connected companies. These misallocations are problematic because they distort the flow of labor and
capital to the places where they are most highly valued.233 Markets provide the feedback mechanism for people to
communicate what they value, and based on the feedback producers respond by using labor and capital accordingly.
Government-caused market distortions muffle the feedback mechanism, causing labor and capital to flow towards
lower-valued uses.
UNINTENDED CONSEQUENCES OF THE RENEWABLE FUEL STANDARD
In an effort to decrease the United States’ dependence on foreign oil and to reduce emissions from motor vehicles,
Congress used the EPAct to require gasoline and diesel refiners to purchase and blend fossil fuels with renewable
fuels. This mandate is called the Renewable Fuel Standard (RFS). The renewable fuel predominantly used to fulfil RFS
requirements is corn ethanol. Cellulose fuels, which can be made using any organic material that contains cellulose,
hemicellulose, or lignin help fulfil RFS requirements to a lesser degree.
The EPAct stipulated that the amount of renewable fuel must increase annually. The EPAct's original RFS (termed RFS1)
contained blending requirements from 2006 until 2012. In 2012, the RFS required gasoline and diesel companies to
purchase and blend in 7.5 billion gallons of renewable fuel. Congress extended the RFS requirements in 2007 (termed
RFS2) to the year 2022. By 2022, gasoline and diesel refiners will be required to purchase 36 billion gallons of renewable
fuel annually and blend it with conventional fuel.234
The RFS was justified based on two false assumptions. First, some policymakers thought domestic ethanol production
was a way to substantially decrease the need for foreign oil. Second, some policymakers thought RFS would be
230
Rent Seeking, Protectionism and Innovation in the American Steel Industry Author(s): Stefanie Lenway, Randall Morck and Bernard Yeung
Source: The Economic Journal, Vol. 106, No. 435 (Mar., 1996), pp. 410-421 Published by: Wiley on behalf of the Royal Economic Society Stable
URL: http://www.jstor.org/stable/2235256
231
Shane, S. (2001). Technological Opportunities and New Firm Creation. Management Science, (Vol. 47, No. 2). pp. 205-220. Retrieved from
http://www.jstor.org/stable/2661570
232
Mitchell, M. (2014). The Pathology of Privilege: Economic Consequences of Government Favoritism. Mercatus. p. 27. Retrieved from
http://mercatus.org/sites/default/files/Mitchell-web.pdf
233
Ibid. p. 28.
234
Environmental Protection Agency. Program Overview for Renewable Fuel Standard Program. Retrieved from
https://www.epa.gov/renewable-fuel-standard-program/program-overview-renewable-fuel-standard-program
45
environmentally beneficial. These beliefs turned out to be patently false. Domestic oil production in the United States
has been increasing since 2008, the year after RFS2 was passed. Since 2008, American oil production increased by
over 80 percent and net imports decreased by over 50 percent. With foreign oil imports falling, the original justification
for the RFS is lost. Also, the law assumed “advanced” and “cellulosic” ethanol would be cost-effective if Congress
mandated their use. Congress was wrong because advanced and cellulosic fuels have proven to be expensive and in
many cases non-existent in commercial quantities.235
The corn industry still supports the RFS today for its supposed economic and environmental benefits. The RFS actually
causes economic and environmental harm due to higher food, distribution, and natural gas prices, as well as decreased
air, water, and soil quality. The RFS also fails to meaningfully increase US energy security because it does little to
offset oil imports.
ECONOMIC IMPACTS OF THE RFS
FOOD PRICE INCREASES
Corn is the most widely used and versatile crop grown in the United States. Corn is an important input to many food
products, including meat, because animals like pigs and cows are primarily fed corn. As the majority of RFS
requirements are fulfilled using corn ethanol, RFS significantly increases the demand for corn. In 2001, ethanol
production only used 7 percent of U.S. corn crop, while in 2015, ethanol production used approximately 38 percent.
The laws of supply and demand necessitate that an increase in the demand for a good or service must be accompanied
by an increase in price, holding all else equal. The increase in demand for corn created by increased ethanol production
necessarily increases corn prices. These price increases affect every industry that uses corn as an input. For example,
a 2010 report by the Congressional Research Service estimated that by 2022, increased demand of crops for ethanol
production will have collectively raised food prices in the U.S. by $3 billion. A National Academy of Sciences study
found that globally, biofuels expansion accounted for 20 to 40 percent of the food price increases seen in 2007, which
led to a global food crisis that pushed 100 million people into hunger and sparked riots in 30 countries.236
ENVIRONMENTAL IMPACTS OF RFS
ENERGY BALANCE AND EMISSIONS
Among corn ethanol’s many problems is its energy balance. The amount of energy it takes to produce corn ethanol is
greater than the energy created when corn ethanol is burned for fuel. A Cornell University study specifically calculated
that “[e]very time you make [one] gallon of ethanol, there is a net energy loss of 54,000 BTU.”237
Although corn ethanol burns cleaner than conventional gasoline in terms of carbon emissions, the whole life cycle
emissions of corn ethanol often emits more pollution and carbon than conventional gasoline. Life cycle emission
analysis consider the emissions released in every phase in the production, use, and waste disposal of corn ethanol,
235
Institute for Energy Research. Renewable Fuel Standard. Retrieved from http://instituteforenergyresearch.org/topics/policy/renewable-fuelstandard/
236
Friends of Earth. The Renewable Fuel Standard: Understanding the U.S. federal biofuels mandate and its environmental risks. Retrieved from
http://www.foe.org/system/storage/877/72/c/2270/Issue_Brief_RFS_101.pdf
237
Cornell Chronicle. (2001, August 6). Ethanol fuel from corn faulted as 'unsustainable subsidized food burning' in analysis by Cornell scientist.
Retrieved from http://www.news.cornell.edu/stories/2001/08/ethanol-corn-faulted-energy-waster-scientist-says
46
which includes the emissions from fertilizer use to grow corn and the carbon that is released when grasslands and
forests are converted to corn production.238
A study by Friends of Earth concluded that, on average, corn ethanol contributes 36 percent more greenhouse gas
emissions than gasoline when its entire lifecycle is taken into account. The EPA has estimated that though corn ethanol
does not decrease emissions in the present, it will in the future due to technological improvements. Unfortunately, the
Friends of Earth study concluded that only in the final years of the current RFS will corn ethanol become marginally
better than gasoline, far from the 20 percent greenhouse gas emission reduction that renewable fuels are supposed to
achieve under the current RFS.239
One of the main sources of emissions in corn ethanol’s lifecycle is the carbon emissions released when land is
converted for corn farming. A substantial amount of carbon dioxide is released into the atmosphere from either burning
native flora (slash and burn) or the natural decomposition of tilled plants. The benefits of burning the ethanol will not
be greater than burning regular petroleum until the carbon debt created by converting land for corn farming is made
up. A study published in Science magazine estimated that the conversion of United States prairie to cropland creates
a carbon debt that will take around 93 years to make up. In other words, the effects of lowered carbon emission would
not be felt for 93 years after the expansion of corn fields.240
WATER POLLUTION
Corn is more fertilizer-intensive than any other crop that is grown in the United States. Approximately 95 percent of
ethanol in the United States comes from corn. The Baker Institute estimated that 2.39 million additional tons of nitrogen
fertilizer will be needed to meet the 2015 RFS requirements, and the increased use of nitrogen fertilizer and pesticides
is already having impacts on water quality. In the Midwest, where the majority of corn in the United States is grown,
fertilizer-laden runoff eventually flows into the Mississippi River and contributes to algae blooms in the Gulf of Mexico.
These algae blooms deplete the region of oxygen and suffocate marine plants and animals. With more fertilizer
contributing to larger algae blooms, the Gulf of Mexico’s “Dead Zone” will likely continue to grow.241
WATER USE
Growing corn is a water-intensive process and can threaten regional water supplies, and mandating and subsidizing
corn for ethanol will continue to exacerbate water supply problems. The Baker Institute estimated that producing the
corn to meet the ethanol mandate for 2015 would require 2.9 trillion gallons of water.242 Most of this irrigation water
is drawn from groundwater aquifers in regions that are already water stressed. Conflicts over water allotments have
occurred in Kansas and Nebraska since the Ogallala Aquifer, which lies under the Great Plains and supplies 30 percent
of the nation’s groundwater for irrigation, is in danger of running dry.243
238
Environmental Working Group. (2008, August 29). The Unintended Environmental Impacts of the Renewable Fuel Standard. Retrieved from
http://www.ewg.org/research/unintended-environmental-impacts-renewable-fuels-standard
239
McMahon, K., Witting, V. (2011). Corn ethanol and climate change. Friends of Earth. Retrieved from
http://www.foe.org/system/storage/877/80/0/542/Corn_ethanol_and_climate_change.pdf
240
Fargione, J., Hill, J., Tilman, D., Polasky, S., Hawthorne, P. (2008). Land Clearing and the Biofuel Carbon Debt. pp. 1237. Science, Vol. 319,
pp. 1235-1238. Retrieved from http://classic.sciencemag.org/content/319/5867/1235.full.pdf?sid=f9eface9-dc36-43f7-b570-47340b20b671
241
Cho, R. (2011, March 21). Ethanol’s Impacts on Our Water Resources. State of the Planet. Retrieved from
http://blogs.ei.columbia.edu/2011/03/21/ethanol%E2%80%99s-impacts-on-our-water-resources/
242
James A. Baker III Institute for Public Policy. (2010). Fundamentals of a Sustainable U.S. Biofuels Policy. Retrieved from
https://bakerinstitute.org/files/492/
243
Cho, R. (2011, March 21). Ethanol’s Impacts on Our Water Resources. State of the Planet. Retrieved from:
http://blogs.ei.columbia.edu/2011/03/21/ethanol%E2%80%99s-impacts-on-our-water-resources/
47
WILDLIFE HABITAT LOSS
The RFS has been pushing farmers to plant unused land with corn, and some of this land is critical habitat to wildlife.
The Conservation Reserve Program (CRP) pays farmers to convert cropland to grasses and trees to create critical wildlife
habitat. Over $32 billion in taxpayer dollars have went to this program since 1986. The push to ramp up corn production,
largely created by RFS requirements, pushes farmers to repurpose land that was once held in conservation to corn
fields. The Department of Agriculture has estimated that one-third of CRP land will be taken out of reserve.244
LITTLE REDUCTION IN FOREIGN OIL DEPENDENCE
Despite all the efforts and costs associated with meeting RFS mandates, the degree to which the RFS displaces
gasoline is small. Thirty-five percent of the U.S. corn crop was used for ethanol in 2009, yet the resultant ethanol only
accounts for about five percent of gasoline consumption. If the entire 2009 record U.S. corn crop of 13 billion bushels
were used as ethanol feedstock, they would only displace eighteen percent of estimated national gasoline use. Under
the RFS2 mandate, by 2022 biofuels will still represent less than 25 percent of gasoline energy demand.245
UNINTENDED CONSEQUENCES OF ENERGY EFFICIENCY POLICIES
REBOUND EFFECTS
More efficient appliances require less energy per unit of “service,” and so, in theory, consumers should use less energy.
Higher efficiency causes each unit of service to become cheaper. Consumers have less of an incentive to use services
frugally, and end up using more services than before. This “rebound effect” can negate some, or even all, energy
savings of the EPAct’s energy-efficiency provisions.246
Very few estimated rebounds are zero, and generally the larger the number of economic sectors analyzed the greater
the impact of rebound. A rebound that negates all of the energy savings generated by more efficient device or system
is called a “backfire.” Rebound estimates vary widely, depending on factors such as the energy-saving device or system
being assessed, and region and wealth of the people studied.247 A meta-analysis of rebounds associated with more
efficient electric heating by Dr. Steve Sorrell of the University of Sussex found a range between 10 and 58 percent in
the short run and 1.4 to 60 percent in the long.248 Measuring rebounds beyond those that are direct is more speculative
because studies on indirect effects require knowledge of just how much different sectors of an economy are related.249
But including indirect rebounds in rebound analyses has yielded dramatic findings. One study of Sweden estimated
that 20 percent improvements in the efficiency of personal transport and space heating would bring backfires of 120
and 170 percent of the saved energy.250
244
Environmental Working Group. (2008, August 29). The Unintended Environmental Impacts of the Renewable Fuel Standard. Retrieved from:
http://www.ewg.org/research/unintended-environmental-impacts-renewable-fuels-standard
245
Schnepf, R., Yacobucci, B. (2010). Renewable Fuel Standard (RFS): Overview and Issues. Congressional Research Service. p. 25. Retrieved
from: http://digital.library.unt.edu/ark:/67531/metadc31329/m1/1/high_res_d/R40155_2010Oct14.pdf
246
Michaels, R. (2012). Energy Efficiency and Climate Policy: The Rebound Dilemma. Institute for Energy Research. Retrieved from:
http://instituteforenergyresearch.org/wp-content/uploads/2012/07/NJI_IER_MichaelsStudy_WEB_20120706_v5.pdf
247
Ibid.
248
Steven S. (October 2007). The Rebound Effect: An Assessment of the Evidence for Economy-wide Energy Savings from Improved Energy
Efficiency. UK Energy Research Center. pp. 34
249
Michaels, R. J. (2012). Energy Efficiency and Climate Policy: The Rebound Dilemma. Institute for Energy Research. Institute for Energy
Research. Retrieved from: http://instituteforenergyresearch.org/wp-content/uploads/2012/07/NJI_IER_MichaelsStudy_WEB_20120706_v5.pdf
250
Steven S. (October 2007). The Rebound Effect: An Assessment of the Evidence for Economy-wide Energy Savings from Improved Energy
48
Unforeseen rebounds limit or completely negate the effectiveness of energy efficiency policies. The American Council
for an Energy-Efficient Economy (ACEEE) estimated the energy savings caused by the EPAct’s energy efficiency
mandates, but these estimates did not account for rebound effects. The ACEEE, however, admitted the likelihood of
rebounds occurring. By excluding rebound effects, the ACEEE’s modest estimate of 1.5 percent energy savings from the
EPAct’s energy efficiency mandates is probably an overestimate.
CHAPTER 8: MARKET APPROACHES TO
ENVIRONMENTAL PROBLEMS
Two notions have dominated the general view on environmental issues. First, free markets result in the destruction of
environmental quality because people unrestrained by the government will only be concerned about making profit, not
protecting the environment. Second, the government works for the public interest by passing laws that will protect the
environment. These two notions are rarely true in reality. Without government regulations, people can and do preserve
the environment when economic incentives are aligned with environmental quality.
Government solutions often create side effects, whether intended or unintended, that limit a law's effectiveness and
efficiency. Government policies, however, are not the only solutions to environmental problems. Policymakers and the
general public have many tools they can use to help the environment. Markets, property rights, and tort law can solve
environmental issues without the need for policies that inflict additional consequences. Both policymakers and citizens
should consider all the tools available if they want a larger selection of options when trying to tackle environmental
issues.
First, policymakers can use the power of the government to solve problems. The most common government approach
has been command and control policies. Most of the environmental policies discussed in this report are command and
control, which require a central authority to dictate how environmental quality should be managed. 251 No central
authority knows enough to single-handedly protect environmental quality for every circumstance throughout the entire
United States. When forming command and control policies, lawmakers and regulators set up a system where special
interest groups try to reap the benefits and pass the costs along to others.
There is a smarter approach to government policies. By using market-based incentives, policymakers can craft policies
to harness the power of markets. The federal government has already used market-based approaches in several
policies. These approaches have generally been successful.252 When government policies rely on market incentives,
environmental outcomes can improve by taking advantage of mutually beneficial exchange. Rather than creating a
system that requires a party simply to meet minimum standards, market incentives harness self-interest for socially
beneficial purposes. Government policies with the most potential for efficiently and effectively improving
environmental quality create win-win situations for everyone. For example, policymakers have used market incentives
Efficiency. UK Energy Research Center. pp. 49
251
Lee, D. R. (2001, August 1). The High Cost of Command and Control. Foundation for Economic Education. Retrieved from:
https://fee.org/articles/the-high-cost-of-command-and-control/
252
Harrington, W. & Morgenstern, R. D. (2004). Economic Incentives versus Command and Control. Resources for the Future.
49
to address sulfur emissions under the CAA, to limit nitrogen pollution in the Chesapeake Bay under the CWA, and to
protect fisheries through Individual Transferable Quotas in Alaska.253
Second, policymakers and citizens can use common law and property rights to solve environmental issues, rather than
strict government laws and regulations. Tort law is a form of common law that allows citizens to sue others when they
infringe on their legal rights or cause personal harm. The common law system promotes accountability for polluters
because they are held liable for any harm or damage they inflict. Because litigation is costly and time-consuming,
common law incentivizes polluters to minimize environmental harm. Common law creates a system of widespread
enforcement because anyone can sue another party that harms them or their property. When held accountable for
harming other people and their property, polluters change their behavior to avoid future repercussions. For example, if
a wastewater treatment plant is taken to court for polluting a river, the plant will find ways to pollute less to avoid
future litigation.
Third, policymakers and ordinary citizens can rely solely on the free market to solve environmental problems. A
movement called Free Market Environmentalism (FME) looks for ways to use the power of market incentives,
entrepreneurship, and innovation to solve environmental problems. This approach is completely voluntary and is not
subject to the problems of concentrated benefits and dispersed costs that are associated with most government
policies. FME is not just a romanticized notion of individuals caring for the environment. In a market system, people are
willing to invest their time and resources directly into the aspects of the environment that they value the most. Even
with today’s massive amounts of environmental regulation, there are many examples of FME in action.
Free market environmentalists believe that the way to solve environmental issues is to change the incentives of those
involved in the market rather than relying on government control.254 Changing incentives can be difficult, but advocates
of FME believe that changing property rights or establishing tort law will help the environmental market create different
incentives. Countries that have well-defined and well-enforced property rights are more likely to have economic growth
and are more likely to pursue a cleaner environment. Property owners are given an incentive to treat the environment
as an asset and create greater property value by protecting it. For example, in England and Scotland fishing rights to
streams have been granted to landowners. These proprietors then sell or trade the rights of the streams to others who
wish to fish or use the stream. This has led to an increase in fish population and a decrease in stream pollution as
owners of the stream can litigate against those who pollute or overuse their property. 255
FME EXAMPLES
CASE STUDY: CONSERVATION OF SPECIES THROUGH THE MARKET
Environmentalists are finding that the free market offers more of a variety of solutions to animal endangerment than
the government can offer. One example of environmentalists using the free market for the conservation of an
253
Environmental Protection Agency. (2013). 2013 Program Progress: Clean Air Interstate Rule, Acid Rain Program, and Former NOx Budget
Trading Program. pp. 11.;
Chesapeake Progress. (n.d.). Water Quality Standards Attainment and Monitoring. Chesapeake Bay Program. Retrieved from:
http://www.chesapeakeprogress.com/clean-water/water-quality/water-quality;
No Author. (2008, September 18). A rising tide: Scientists find proof that privatizing fishing stocks can avert a disaster. The Economist.
Retrieved from: http://www.economist.com/node/12253181
254
Anderson, T. L. & Leal, D. R. (2015). Free Market Environmentalism for the Next Generation. New York, NY: Palgrave Macmillan. pp. 3. Print
Stroup, R. L. (2008). Free-Market Environmentalism. The Concise Encyclopedia of Economics. Library of Economics and Liberty. Retrieved
from http://www.econlib.org/library/Enc/FreeMarketEnvironmentalism.html
255
50
endangered species and improvement of air quality is off the coast of Santa Barbara, where ships are paid to slow
down to prevent hitting whales, specifically blue whales an endangered species. Researchers found that over the past
15 years, dozens of blue, humpback, and fin whales have been killed by ships. The whales swim north to Channel
Islands to feed on the krill feeding ground, and then swim south to warmer water for breeding. 256 Unfortunately,
thousands of ships use shipping lanes that cross the migratory paths of the whales. In 2007, over a two-week period,
three blue whales were killed near the Channel Islands due to ship collisions.257 Also, more than half the smog-forming
emissions come from the large cargo ships, according to officials.258
Rather than seek a government solution, environmentalists have started to pay shipping companies to slow down or
change their shipping lanes. During the peak season for the whales, July to October, ships are paid $2,500 to slow their
speed to twelve knots or slower while crossing the channel.259 This helps the whales move out of the way of large
cargo ships as well as improve the air quality of the coast. One of the researchers studying the whales pointed out that
it was good business for everyone as “a ship hitting a whale that weighs as much as 25 elephants isn’t good for the
vessel, either.”260
The Santa Barbara Foundation and the Santa Barbara County Air Pollution Control District are the two organizations
funding the initiative.261 The change in the shipping lane and slower speeds reduced the chance of whales being hit by
80 percent. 262 Air emissions were reduced by 50 percent when ships reduced their speed. 263 Rather than create
regulation and pay people to enforce a law, environmentalists used the market to directly change the impact cargo
ships had on whales.
Another example of animal conservation through the free market is the Defenders of Wildlife preservation of wolves
in Yellowstone. The Defenders of Wildlife established a compensation fund for farmers losing cattle to wolves in the
Yellowstone region as a way to incentivize ranchers to welcome the wolves rather than shoot them. About $22,000
has been paid out to 28 different ranchers for their loss of livestock since the inception of Defenders of Wildlife in
1987. The organization then helps to control the wolves that have killed livestock and in each incident the attacks have
stopped. The ranchers receive market value for their livestock after the losses are verified by specialist from the Animal
Damage Control division of the U.S. Department of Agriculture. As a result of the compensation fund, the wolf
population has increased in the area and rancher complaints have decreased.264 Working with government officials, but
using the market to incentivize ranchers, the Defender of Wildlife conservationists have established the reintroduced
wolf population in the Yellowstone region.
256
Purnell, W. (2014, December 8). Slowing Ships For Whales. Property and Environment Research Center. Retrieved from
http://www.perc.org/articles/slowing-ships-whales
257
Morell, V. (2014, July 23). Science: Blue Whales Being Struck by Ships. American Association for the Advancement of Science. Retrieved
from http://www.sciencemag.org/news/2014/07/blue-whales-being-struck-ships
258
Barboza, T. (2014, August). Cargo Ship Plan Aims to Protect Whales quality off Santa Barbara. Los Angeles Times. Retrieved from
http://www.latimes.com/science/la-me-shipping-whales-20140807-story.html
259
Ibid.
260
Morell, V. (2014, July 23). Science: Blue Whales Being Struck by Ships. American Association for the Advancement of Science. Retrieved
from http://www.sciencemag.org/news/2014/07/blue-whales-being-struck-ships
261
Barboza, T. (2014, August). Cargo Ship Plan Aims to Protect Whales quality off Santa Barbara. Los Angeles Times. Retrieved from
http://www.latimes.com/science/la-me-shipping-whales-20140807-story.html
262
Morell, V. (2014, July 23). Science: Blue Whales Being Struck by Ships. American Association for the Advancement of Science. Retrieved
from http://www.sciencemag.org/news/2014/07/blue-whales-being-struck-ships
263
Barboza, T. (2014, August). Cargo Ship Plan Aims to Protect Whales quality off Santa Barbara. Los Angeles Times. Retrieved from
http://www.latimes.com/science/la-me-shipping-whales-20140807-story.html
264
Defenders Compensates For Yellowstone and Idaho Wolf Kills. (1996, August 7). Defenders of Wildlife. Retrieved from
http://www.defenders.org/press-release/defenders-compensates-yellowstone-and-idaho-wolf-kills
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CASE STUDY: PRESERVING LAND QUALITY
For decades, environmentalists have used the government to help preserve land through acts such as the EPAct or the
Wilderness Act, but now they are finding new ways to preserve the environment. One such unique solution to the
problem of land conservation is the American Prairie Reserve, a privately owned and leased habitat in Montana
consisting of over 300,000 acres.265
In addition to restoring the land to its natural habitat, the American Prairie Reserve plans on populating the land with
10,000 genetically pure bison. Most of the bison herds today are hybrids or cattle and bison whereas the reserve would
only have pure bison. The American Prairie Reserve will use the bison as “cuddly fundraising mascots” to generate
revenue and be economically self-sustaining. The idea is to preserve the environment without having to wait for
bureaucratic red tape or legislation which can slow down the process of preserving land. Likewise, mismanagement of
current national land has incentivized these environmentalists to preserve the land themselves. This group of
environmentalists hope to “sell the possibility” of a cleaner, preserved environment to the public by backing up their
beliefs with their money.266
CASE STUDY: INNOVATION BY ENTREPRENEURS
Government regulation of the environment is a slow process; it usually involves excessive amounts of paperwork, and
has restrictive amounts of red tape. Innovative entrepreneurs can solve some of the most pressing environmental
problems that government regulation slows down. One of the greatest environmental challenges faced is the amount
of waste produced in the world; 2.6 trillion pounds of waste will be generated by the end of this year, which is the
weight of 7,000 Empire State buildings. In 2014 alone, 622 billion pounds of plastic waste was generated.267 Plastic
waste is becoming a global concern and entrepreneurs are using market incentives to overcome this widespread
problem.
In India, where food is traditionally eaten by hand, 120 billion plastic utensils are thrown away every year. Narayana
Peesapaty, a native of India, invented edible cutlery to cut down on plastic waste. The change from plastic utensils to
something more environmentally friendly is needed because it takes 450 years for one plastic bottle to decompose. The
biodegradable edible cutlery is meant to be “tasty, nutritious, and environmentally friendly.” 268
Alex Henige started a company that allows for the free market to produce more trees from waste. His idea is to create
coffee cups that are biodegradable and hold tree seeds.269 This way the consumption of coffee, and all of its coffee
cups, could be used to create a better environment. In the United States, over 400 million cups of coffee are consumed
a day. Instead of just recycling products, in which some waste is created, these coffee cups are biodegradable and help
to reduce carbon dioxide levels. One plantable coffee cup will grow a single tree which will reduce carbon dioxide
levels by one ton over the tree’s 40-year lifespan. A normal coffee cup produces up to 35 grams of carbon dioxide in
265
Building the Reserve. (n.d.). American Prairie Reserve. Retrieved from https://americanprairie.org/building-the-reserve
Ibid.
267
Thompson, D. (2012, June 7). 2.6 Trillion Pounds of Garbage: Where Does The World’s Trash Go? The Atlantic. Retrieved from
http://www.theatlantic.com/business/archive/2012/06/26-trillion-pounds-of-garbage-where-does-the-worlds-trash-go/258234/
268
Kelmachter, M. (2016, March 30). India's Edible Cutlery Points the Way For a Zero-Waste Future. Forbes. Retrieved from
http://www.forbes.com/sites/micakelmachter/2016/03/30/indias-edible-cutlery-paves-the-way-for-asia-to-dream-of-zerowaste/#3c1dcd2e51f8
269
Henige, A. (n.d.). Seed Embedded Technology. Reduce. Reuse. Grow. Retrieved from http://www.planttrash.com/seed-embedded
266
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the process of decomposition. The plantable cup does require a little bit of effort for the seeds to germinate; the cup
needs to be soaked in water for five minutes and then planted before the tree seed can grow. 270
CONCLUSION
For decades Americans have relied on the federal government to promote a healthier and cleaner environment. The
realities of these laws are often masked or hidden from the public. Federal environmental laws may help to improve
environmental quality in some ways, but they also come with negative effects. These negative effects include economic
harm, wasteful government spending, and even additional environmental harm.
The negative effects of federal environmental laws may be unintended or intended. Unintended consequences arise
when policymakers cannot foresee implications or perverse incentives that come about from large blanket policies.
Unseen consequences of regulatory action occur when policymakers intend one result but complex interactions spark
outcomes no one could foresee.
Some of the negative effects of regulation are specifically intended by their creators. Special interest groups are able
to ‘capture’ benefits from the legislative or regulatory process. The reality of dispersed costs and concentrated benefits
allows special interest groups to gain government privileges at the expense of everyone else. Because the cost to
everyone else is low, there is not enough of an incentive to fight against such regulation.
Public choice theory explains why unintended and intended consequences occur. Lawmakers and regulators are not
benevolent or altruistic, they are rationally self-interested individuals that work to promote their preferences and secure
their jobs. If government officials were omniscient and benevolent, then property could be commonly held and there
would be little pollution or overconsumption of public goods.
Major environmental laws clearly exemplify these unintended and intended negative consequences. For example, the
core premise of NEPA is to force government agencies to consider their environmental impacts before proceeding with
their projects. The law's drafters, however, did not foresee the effects of NEPA-related litigation. Due to the fear of
being sued regarding NEPA compliance, government officials over prepare environmental documentation, which
needlessly wastes taxpayer dollars with minimal benefits. An example of intended negative consequences is the EPAct
which is mainly a political tool used to grant favors to special interest groups. The effects of loopholes, subsidies, and
other market distortions cause harm to the overall economy and alter market signals, leading perverse incentives for
individuals.
The economic and environmental problems caused by government solutions may be solved through civil society and
market approaches. The free market allows for property rights and tort law to incentivize people to manage property
successfully and to innovate. Harnessing the power of self-interest, free market environmentalism incentivizes
individuals to take action to create a cleaner environment in an economically sustainable way. The FME movement
allows individuals to shape the environmental market without creating constraints and red tape that accompanies
government intervention. These individuals and groups can be entrepreneurs who innovate new ways to help counter
pollution and improve environmental quality. “One size fits all” regulation often hinders entrepreneurs from finding
alternative solutions to environmental problems.
270
Plantable Coffee Cups Embedded With Seeds Grow Into Trees When Thrown Away. (2015, March 7). Earth Porm. Retrieved from
http://www.earthporm.com/plantable-coffee-cups-trees/
53
Although people have turned to the government for environmental quality in the past fifty years, civil society and
markets provide solutions without the negative unintended and intended consequences of government policies. Nearly
every American wants a healthier, cleaner world to live in, and by acknowledging the limitations and incentives of
government officials, the public may be more apt to use the market as a tool for environmental improvement.
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