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Dispatches from “Conservative Visions of Our Environmental Future”

Today I am at Duke to participate in a conference on “Conservative Visions of Our Environmental Future,” sponsored by the Duke Environmental Law and Policy Forum, Nicholas Institute for Environmental Policy Solutions, Nicholas School for the Environment, Duke Federalist Society, Duke College Republicans and the Energy & Enterprise Initiative. The conference is being live streamed here, and I’ll be offering comments on the proceedings below.  [Read more…]

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Could the Health Care Decision Hobble the Clean Air Act?

Sackett v. EPA was the big environmental case from this past Supreme Court term, but the Court’s decision in NFIB v. Sebelius, the health care case, could actually turn out to have the larger effect on environmental law.  While most commentators on NFIB focused on the Commerce Clause challenge to the individual mandate, the arguments against the health care reform law’s provisions expanding Medicaid turned out to be more consequential, as seven justices concluded that in trying to create incentives for states to expand Medicaid, the health care reform law went too far.  This aspect of the Court’s ruling could also have a significant impact on environmental law.

As part of the Patient Protection and Affordable Care Act, Congress sought to expand Medicaid to cover all adults at or below 133 percent of the poverty line.  As states are tasked with implementing Medicaid, Congress had to make it worth their while.  So in addition to offering generous funding (at least in the beginning), the PPACA also threatened to cut off all Medicaid funding to any state that did not go along with the expansion.  In effect, Congress made the states an offer they couldn’t refused, which is one reason over twenty states sued.

In NFIB a majority of the Supreme Court found Congress’ offer to be unconstitutional.  Congress’ use of conditional spending, seven justices concluded, crossed the line from inducement to coercion, and was constitutionally impermissible.  In the process, the Court reaffirmed that the Constitution creates a federal government of limited and enumerated powers, and that the federal government’s spending power is subject to judicially enforceable limits.

The NFIB ruling matters for environmental law because conditional spending is a staple of modern environmental law.  Most of the major federal environmental statutes adopt a “cooperative federalism” model under which states are encouraged to implement federal environmental programs.  State cooperation is encouraged through, among other things, the promise of federal financial support and, in some cases, the threat to withhold money for other programs. Under the Clean Air Act, for example, states that fail to adopt federally approved air pollution control programs risk losing federal highway funding.  This condition, combined with the threat of direct federal regulation, has been largely successful at inducing state acquiescence.  Yet after the Supreme Court’s NFIB decision, this arrangement may be unconstitutional.

The Clean Air Act would appear potentially vulnerable on several grounds.  First, the Clean Air Act conditions the receipt of money for one program (highway construction) on compliance with conditions tied to a separate program (air pollution control).  This may be problematic because a majority of the Court thought Congress was trying to leverage state reliance on funding for one program (traditional Medicaid) to induce participation in another program (the Medicaid expansion).  While the money at stake under the Clean Air Act is far less – most states receive substantially less in highway funds than in Medicaid funds – highway funding is less directly related to air pollution control (particularly from stationary sources) than traditional Medicaid is to the Medicaid expansion.

Though highway funding is less than that for Medicaid, it still may be enough to raise constitutional concerns. Highway funds are raised from a dedicated revenue source in gasoline taxes and placed in the Highway Trust Fund.  For many states, federal highway funds represent the lion’s share of their transportation budget.  As a consequence, threatening to take highway funds may strike some courts as unduly coercive under NFIB.  In the 1980s the Supreme Court upheld conditioning five percent of a state’s highway funds on setting a 21-years-old drinking age.  Under the Clean Air Act, however, a state can lose all highway funds, save those that will reduce emissions or are necessary for traffic safety, for failure to adopt a complete pollution control plan that satisfies the federal EPA.

The Court in NFIB also stressed that conditional grants of federal funds operate much like a contract, and that the parties are limited in their ability to unilaterally revise the terms.  This could expose another vulnerability in the Clean Air Act because while the statutory requirements don’t regularly change, what states must actually do to comply with the Clean Air Act’s terms do. The requirements for state pollution control plans are constantly changing, as the EPA tightens or otherwise revises federal air quality standards and additional pollutants become subject to Clean Air Act regulation.  Were this not enough, the recent inclusion of greenhouse gases as pollutants subject to regulation under the Act has radically altered states’ obligations, such that states will now have to do many things they could not have anticipated when the Clean Air Act was last revised in 1990.

Many states are already chafing under the Clean Air Act’s requirements.  The NFIB decision may give them a tool to relieve the burden.  Specifically, the Court’s decision to limit the federal government’s authority to place conditions on the receipt of federal funds may offer states some relief from Clean Air Act requirements.

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Anti-Market, Anti-Environmental Fishery Policy

There is substantial theoretical and empirical evidence that property-based management schemes, such as catch-shares, prevent fishery collapse and ensure sustainability. The creation of property rights in ecological resources is also a principled conservative alternative to centralized regulation. Yet somehow a majority of House Republicans were bamboozled into voting to bar funding for further implementation of catch share funding along the Atlantic Coast and in the Gulf of Mexico. By supporting this amendment, offered by Reps. Steve Southerland (R-FL) and Ryan Grimm (R-NY), and endorsed by Rep. Barney Frank (D-MA), a majority of House Republicans managed to oppose property rights, market-based reforms, and environmental protection all at once.

Ronald Bailey has more here.

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Just Say No to Embalming

In this two minute video the Insitute for Justice points out the injustice of the Government making entrepreneurs “do useless things for no reason?”

Verlin Stoll has built a successful business because he offers low-cost funerals while providing high-quality service.  His business is one of the few funeral homes that benefits low-income families who cannot afford the big funeral-home companies.  Stoll wants to expand his business,  but Minnesota refuses to let him build a second funeral home unless he builds a $30,000 embalming room that he will never use. Stoll and the Insitute for Justice are fighting back.

There are other reasons to think about avoiding embalming fluid writes Joe Sehee, founder of the Green Burial Council and PERC Enviropreneur alum. In “Green Burial: It’s Only Natural” Sehee writes:

In the United States, deathcare has become a $15 billion industry—and a wasteful and toxic one at that. Each year we bury:

—Enough embalming fluid (now made up of formaldehyde, a known carcinogen according to the World Heath Organization) to fill eight Olympic-size pools;

—More steel (in coffins alone) than was used to build the Golden Gate Bridge; and

—So much reinforced concrete that we could construct a two-lane highway from New York to Detroit.

Joe Sehee, Karen Eller, and others have been successfully promoting green burial around the country. You may laugh and think this sounds like just another eco-trend, but it is the way most of humanity has cared for its dead for thousands of years. The idea calls for returning to the earth without the use of non-biodegradable toxins or materials. As Sehee asks, “remember that ashes to ashes thing?”

Green burial is not a new concept, what is new is that it is being done in conjunction with restoration planning and conservation management techniques, providing a new tool for protecting endangered habitat at a time when innovative, market-based solutions are needed.

In the end, economic viability and ecological sustainability are capable of co-existence “and that may be what it’s going to take to make ‘ashes to ashes, dust to dust’ once again meaningful,” says Sehee.

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The President’s Agency Consolidation Proposal

This morning I received a CNN “Breaking News” alert that “President Obama said today he is elevating the Small Business Administration to a Cabinet-level agency.” My first reaction was utter disbelief. The question is whether the SBA should exist, not whether it should be a cabinet-level agency. Fortunately, the CNN report was in error. What the President is, in fact, proposing is to consolidate multiple business-related agencies, including the SBA, into a single agency. As the White House fact sheet explains:

Currently, there are six major departments and agencies that focus primarily on business and trade in the federal government. The six are: U.S. Department of Commerce’s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency.

This is redundant and inefficient. Small businesses often face a maze of agencies when looking for even the most basic answers to the most basic questions. There is a whole host of websites, toll-free numbers and customer service centers that at times offer them differing advice. The result is a system that is not working for our small businesses.

The President is proposing to consolidate those six departments and agencies into one Department with one website, one phone number and one mission – helping American businesses succeed.

This is a good idea. To be sure, I would love to see the President go even farther and consider whether the federal government needs to devote taxpayer dollars to business promotion at all. But if the government is going to be engaged in such efforts, it certainly makes sense to do so in as efficient a way as is possible, eliminating duplicative agencies and functions. This plan may only be a small step in the right direction, but given the orgy of spending over the past several years (including during the Bush Administration), a reorganization plan projected to save $3 billion over ten years is certainly a step in the right direction. Brad Plumer has more here.

More at The Volokh Conspiracy.

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The Case for Economics and the Environment

Don’t miss Gernot Wagner’s latest piece in the Washington Post. Wagner teaches at Columbia, is the author of But Will the Planet Notice? How Smart Economics Can Save the World, and is an economist at the Environmental Defense Fund.

Wagner points out that it has become acceptable to say that markets don’t work, just look at “the demise of Lehman Brothers and the subsequent swoon of the global economy.”

The next time you hear someone say this, you can tell them they’re wrong for two reasons: Lehman Brothers is more a symptom of what happened rather than the underlying cause, and it was guided by much larger forces than itself. Markets, in fact, work all too well. They are an aggregator of wishes and desires, however misguided they may be.

Furthermore, how can we say that markets don’t work when we are “far from having anything approaching a free market?”

Fossil fuel subsidies and various other loopholes and distortions make the playing field uneven. More significantly, we violate one of the most basic tenets of economics, that there is no free lunch. In reality, it turns out, we all get a steady stream of free passes. It starts in the financial sector, where the benefits of bankers’ actions are often and almost entirely privatized: They pocket the bonus if the bet pays off. But the costs are socialized: Bankers pay but a tiny fraction of the costs of their failed bets; society pays. The fundamental mismatch, as evidenced by the collapse of Lehman Brothers, has enormous consequences for the rest of us.

So what can be done? Perhaps more people should study economics. When people think about economics, Wagner writes, “their minds turn to business and finance. But economics goes beyond these fields, and the difference between business and economics goes beyond size.” Economics is about a way of thinking.  “Economics is organized common sense,” and as Wagner points out, “If there is anything we need right now to guide our economy and the planet out of this dual malaise, it’s more common sense.”

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Going Off the Rails Against the REINS Act

Today the House of Representatives is expected to vote on the REINS Act, a bill to enhance political accountability over regulatory decisions. The bill has two essential features. First, it bars new “major” regulations (those anticipated to cost more than $100 million annually) from taking effect unless approved by both houses of Congress. Second, it creates an expedited review process that forces each house to vote on each major rule. So while requiring Congressional approval, REINS prevents members of Congress from ducking their responsibility to vote yay or nay.

REINS is a controversial bill, in part because it effectively limits the delegation of broad regulatory authority to federal agencies, but to read some critics, REINS would usher in an anti-regulatory armageddon. While I support the legislation, for reasons detailed in these posts (and summarized in this NRO piece), I recognize that there are reasonable arguments to be made on the other side. What’s so interesting watching this debate, however, is how many opponents refuse to make them, relying instead on inaccurate and fanciful characterizations of the bill. It’s telling when opponents of legislation are unable or unwilling to describe it accurately when making their case.

To take one example, US PIRG’s Ed Mierzwinski argues that the REINS Act would lead to unsafe toys on the market and emasculate the CPSC.

One bill, the REINS Act, would not only allow but require congressional meddling in the implementation of all public health and safety rules. A single member of Congress, at the behest of some powerful special interest or campaign contributor, could block the public database, block science-based lead standards for children’s products, block crib safety rules or any number of protections that provide a safer consumer marketplace.

The idea that REINS would allow a single member of Congress to block new regulations is a common claim. The Center for American Progress makes it here. It’s also false. The bill expressly limits debate, waives procedural objections, and requires a vote on the merits. Under REINS, if some members of Congress wish to block needed safety rules at the behest of a special interest, they will have to do it out in the open, and will only succeed if they can win a majority vote. How could this undermine legislative accountability? It’s true REINS requires that legislative approval occur within a set period of time, but it also ensures the vote occurs before the deadline expires.

The NYT worries REINS will “undermine the executive branch.” Really. Why? Because it will be too easy for a majority in either House to prevent a President from rewriting regulatory requirements. The NYT also argues REINS is “deeply undemocratic.” Got that? Requiring legislative votes on major regulations — that two or three of the most consequential regulatory decisions made by federal agencies — is “undemocratic,” whereas allowing agencies to rely upon decades-old statutes to remake industries and reconfigure whole sectors of the economy is not.

The REINS Act would dramatically alter how major rules are made, but it would do so by making sure the people’s representatives have a greater say on — and greater accountability for — the major regulatory actions our federal government takes. If the public wants greater regulation of environmental or other problems, REINS won’t stand in the way. Only if the public is skeptical of such regulations, or unconcerned by legislative vetoes of proposed rules, will REINS slow down the adoption of new rules. And perhaps that’s what the REINS Act’s opponents are truly afraid of: A regulatory process that more accurately reflects what the public wants.

UPDATE: For unhinged commentary on the REINS Act, it’s hard to do better than this piece which, among other things, claims the Act would “essentially return environmental regulation to 1890s standards – when corporations polluted with impunity.” That’s an astounding charge given that REINS a) does not have any effect whatsoever to regulations already on the books and b) would apply equally to deregulatory initiatives, such as any effort by a future President to repeal existing regulations.

UPDATE 12/8/11: Yesterday, the House passed the REINS Act on an almost exclusively party-line vote, 241–184.  All the House Republicans voted for the bill, as did four Democrats.  Though the bill passed the House, it’s not about to be enacted into law.  The Senate is unlikely to take up the bill and President Obama has promised to veto the REINS Act should it somehow reach his desk.

Originally posted at The Volokh Conspiracy.

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The Double Standard of Environmental Enforcement

One of the hypocrisies of modern environmental law is its double standard of enforcement: strict application to small entrepreneurs, and exemptions for politically powerful players like large industry and municipalities. This pattern can be seen in Canada as well as the United States. Kerry Freek, editor of Water Canada magazine, tells the story of one entrepreneur whose business is at risk because of Environment Canada’s double standard, in Deconstructing “Deleterious”:

Located near the mouth of Rivers Inlet, north of Port Hardy on the central coast of British Columbia, the floating Rivers Lodge is one of several that host sports fishing vacations. For six weeks each year, Pat Ardley and her two kids run the lodge, but it’s not an easy business. The economic downturn has forced at least nine nearby lodges to close, and Ardley fears that her lodge might be next. Despite financial turmoil, eager buyers are still on the market. Recently, Ardley received an offer to purchase her lodge, but the deal hangs in the balance for one major reason: wastewater.

Two years ago, Ardley and several of her colleagues received Environment Canada (EC) directives to treat their wastewater effluent to the standards required by Section 36.(3) of the Fisheries Act. Simple in theory, the section states that “no person shall deposit or permit the deposit of a deleterious substance of any type in water frequented by fish.” In short, it means that nobody has the right to pollute water.

In reality, not polluting is a near-impossible feat and that’s why regulations can exempt some parties from the rule. Over the years, a variety of industries, including pulp and paper and mining, have lobbied for and received federal exemptions that allow them to continue to do business, provided they adhere to specific effluent limits and monitoring practices.  Meanwhile, operations that do not fall under exemption, such as Ardley’s lodge, are fair game for Environment Canada inspectors.

The tale is yet one more example of the inevitable politicization of centralized environmental management regimes.  Read the rest of the story here.

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Beyond Politics

I never really understood “political economy” until I read Beyond Politics: Markets, Welfare, and the Failure of Bureaucracy some 15 years ago. The simple but powerful preface includes the following by Randy Simmons and William Mitchell:

Politics and economics cannot be separated. Economies do not exist in a vacuum and neither do politics. Political systems shape, sometimes control, and often misdirect economic systems. Likewise, economic interests shape, sometimes control, and often pervert politics.

The combined study of the two fields seems like a no brainer, yet here we are 15 years later with economists and policy analysts focusing on the same old market failures and government solutions. This path is well traveled because, as Simmons says, “no human institution is perfect so it’s easy to find imperfections.” It’s also easy to call for government intervention if you think government is “benevolent” and have no sense of how government actually functions.

The more difficult and less-traveled path involves recognizing the effects of the political system on the “shape, direction, and rules of the economy.” Protecting consumers, the environment, and the poor  are widely shared values, “but advancing these goals politically often yields greater costs than benefits.”

Simmons  uses the Endangered Species Act as an example. Congress passed the law in 1973 and Richard Nixon signed it because it was “such a good thing for the environment.” It prohibits people from “taking” endangered or threatened wildlife. “Take” includes “harming” a listed species.

But what does harming mean? The Fish and Wildlife Service, who manages the Endangered Species Act, interpreted harm to mean habitat modification on private and public lands. Hence, a landowner harvesting timber, a farmer plowing, or a developer clearing land suddenly stands in the same position as a poacher taking aim at a whooping crane. So, if you modify your habitat, you might as well get the shotgun out and shoot what you can, because you’re going to be treated the same.

I still remember Professor Simmons (or Randy as he likes to be called) asking my freshman Poly Sci class, “What would you do if a wolf or a grizzly showed up on your ranch?” There was some giggling in the back—where the ranch kids sat with their well-warn baseball caps. One of them was called on. His answer, “Well, we’d just shoot, shovel, and shut up.” Simmons response: “Shoveling a hole for a grizzly is a pretty big hole, but I guess you do have tractors with front loaders.”

Many of the students, including myself, were appalled. But Simmons went on to explain that environmental regulation is often ideologically driven and has very little to do with actual outcomes—we have more endangered species today than we had when we created the Endangered Species Act.

The Endangered Species Act punishes landowners who conserve the public interest, and no claims about the value of biodiversity or moralizing about the diversity of life will change that basic fact. If we want to conserve species, we need to make it in people’s individual interest to do so. If we don’t we’re going to continue to fool ourselves with regulations.

If you are interested in learning more about politics, bureaucracy, courts, and legislation be sure and read the recently revised and updated version of Beyond Politics. Randy is a well-qualified author; he has served as a mayor, he’s a bureaucrat because he teaches at a state university, he teaches Law and Economics so he’s knowledgeable about the courts, and he is a member of the Board of Directors of the Utah League of Cities and Towns. As Randy says, “I am an example of everything that’s wrong in America!”

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A Decade to Determine Nothing

The Clinton administration signed off on the Roadless Rule [PDF] in 2001 to preserve 58.5 million acres of national forest land by preventing road construction, reconstruction, and timber harvest. The lands designated for roadless protection were inventoried in the 1970s to determine their merit for inclusion into the National Wilderness system. Some are now Wilderness; the rest remain under roadless and wilderness study area protection. Over the last decade, the Roadless Rule has been challenged, appealed, promulgated, upheld, replaced, and in the latest court decision on October 21, upheld again.

Of the 58.5 million acres of inventoried roadless, 24.2 prohibited road construction prior to the Roadless Rule. Of the 34.3 million acres remaining open to road construction, roads were built on less than three million acres between 1970 and 2001. Forest Service road building is declining in response to current agency policy, growing controversy, and agency multiple use goals.

The driving force behind the Roadless Rule was to protect the areas from fragmentation and move the lands into hands-off management status. There was, however, no eminent threat of road building and harvest on the land. The alternative would be to allow Forest Service managers, which are trained and educated in forest management, to manage the lands as directed by Forest Service goals and guided (and restricted) by applicable federal legislation and regulation.

Unfortunately, the management of our public lands is dictated by politics and court decisions that are slow at responding to the dynamics of nature. Between federal land regulations, legislation, and litigation, the hands of public land managers are essentially tied, but the Roadless Rule has them hog tied.

Public lands do, after all, belong to us all. By giving every one of us a say (educated on land management or not) in how they are managed we are getting non-active management — by intent, such as directed by the Roadless Rule, and default, through a continual barrage of appeals and litigation. That is exactly what some parties aim to achieve.

Originally posted at Environmental Trends.

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State Parks: When in Doubt, Bail ’em Out

Amid the state’s budget crisis last spring, California’s governor threatened to close more than 70 state parks by the spring of 2012 to save the state money. This threat of park closure is a common occurrence in California and other states. Typically, the threat garners enough concern and uproar that funds are found. In fact, never in California Park’s century of existence has a park been closed due to lack of funding.

There are alternatives for state park systems to get out from under the ebb and flow of state finances. The state could lease park operations, for example, as has been demonstrated by private firms such as Recreation Resource Management (RRM). This is the topic of my recent PERC Case Study and a forthcoming RRM conference on public-private partnerships in parks.

The current sentiment to “bail out” troubled entities in our nation, however, is overwhelming. The National Park Service has negotiated with California State Parks to take over operations of at least three of the parks threatened for closure. But the National Park Service is not known for its abundant finances or even its stewardship. Add in the current federal financial situation and it does not seem to be a prime time for federal agencies to take on more responsibility and acreage for management.

Nonetheless, rather than let private entrepreneurs provide the desired recreation opportunities at the same or lower user price and make a dime, park agency bureaucrats prefer to have all taxpayers split the tab. It doesn’t have to work this way.

To read the case study, click here.

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Cities Face New Emission Controls Even Without Tighter Ozone Standard

Earlier this month President Obama asked the Environmental Protection Agency to shelve a proposal to tighten the National Ambient Air Quality Standard for ozone this year. The Administration was apparently concerned about the cost a tighter standard would impose, and the EPA is required to consider revising the standard in 2013 anyway. Does this mean metropolitan areas are off the hook for additional environmental controls? Nope. Even without a tighter standard, many metropolitan areas will have to adopt more stringent pollution controls in order to meet the revised ozone standard adopted by the Bush Administration in 2008, as EPA Administrator Lisa Jackson confirmed in House testimony yesterday. The WSJ reports:

Testifying before a House subcommittee, Ms. Jackson said her agency would enforce an ozone standard of 75 parts per billion, adopted by the EPA in 2008. Until now, the standard had been suspended because of the EPA’s intention to introduce a more stringent measure, and the 1997 standard of 84 parts per billion prevailed.

There are 52 areas where air quality fails to meet the 2008 standard, the EPA said in a memo to state officials. Among them are Baltimore, San Diego, Dallas-Fort Worth and parts of Los Angeles. Ms. Jackson said the EPA would enforce the standard in a “common-sense way” to minimize the burden on state and local governments.

In practical terms, this shows how the Obama Administration’s decision not to tighten the ozone standard this year will not have a significant environmental effect in the near– to medium– term. Those areas with the worst ozone pollution do not meet either standard, so such areas would be required to adopt more stringent regulations either way. As for areas that meet the 2008 standard but would fail to meet more stringent requirements, the compliance date for a revised standard would be years off anyway, so if a more stringent standard is adopted in 2013 as many expect, the practical effect will be small.

While the EPA now plans to enforce the 2008 standard, there is some question whether it will be the standard for long. Not only is a scheduled revision only two years away, but legal challenges against the rule by both environmentalist and industry groups are pending in federal court as well. Given the EPA’s poor record of defending Bush-era air quality rules, it’s certainly possible one of these challenges will succeed.

Originally posted at the Volokh Conspiracy.