The nation’s environment has dramatically improved in the four decades since adoption of America’s foundational environmental statutes. It is also true that there could have been even greater improvement at far less cost—economic and social—had lawmakers forgone centralized government control in favor of the transformative powers of market incentives and private property rights. But it is not too late for change. This primer presents alternatives to the regulatory status quo that would enhance the environment and economic growth, and preserve Americans’ freedoms.
Conventional wisdom has long held that government controls of industry are the best and only way to protect flora and fauna. We now know better. Forty years of command-and-control regimes have led to massive, ineffective, and unaccountable bureaucracies. And the bigger the federal government has grown, the more essential political influence has become, leading to corruption in the regulatory realm. All of this has weakened property rights, inhibited innovation, and increased the prices of food, fuel, fiber, and minerals.
In many respects, the need for reform of environmental regulation has never been greater. The nation’s primary environmental statutes are woefully outdated, and do not reflect current conditions. The White House, Congress, and federal agencies routinely ignore regulatory costs, exaggerate benefits, and breach legislative and constitutional boundaries. They also increasingly dictate lifestyle choices instead of focusing on public health and safety.
Conservatives rarely shape the debate on environmental policy. Too often they focus solely on regulatory costs rather than on an alternative agenda. But green eyeshades simply cannot compete for public support against the seemingly selfless agenda of green activists. Americans care deeply about the environment and expect public officials to act. Therefore, conservatives must put forth their own platform for responsible stewardship and not merely oppose the green lobby’s agenda. As noted in an earlier Heritage study, “While the conservative critique is well known, the conservative agenda is not.”
To that end, this primer recommends reforms based on conservative principles and fundamentals of good governance: Market incentives are more effective than government diktats; sound science fosters sound policy; and, most important, citizens are far better stewards of the environment than the government will ever be.
State of the Environment
Americans are living longer than at any time in history—81.2 years for women and 76.4 for men. Centenarians, in fact, are now one of, if not the, fastest-growing segment of the population. No period in history has experienced such a dramatic increase in life expectancy. Advances in medical care and abundant and affordable nutrition are major factors, of course, and a cleaner environment also plays a significant part.
Yet the public perception persists that mankind’s collective nest remains dangerously fouled. And no wonder. Almost daily, Americans are fed outright falsehoods on the state of the environment by those who profit economically and politically from peddling doom and gloom.
In reality, America’s environment today is remarkably cleaner than in the 1970s, when pollution abatement came to the forefront of public policy. Billions of dollars’ worth of new technologies have dramatically reduced industrial emissions and discharges. From 1970 to 2012, for example, aggregate national emissions of six common pollutants dropped an average of 72 percent, while gross domestic product grew by 219 percent. The national average concentration of carbon monoxide in the air fell by 85 percent between 1980 and 2014; sulfur dioxide by 80 percent; nitrogen dioxide by 60 percent; and ozone by 33 percent. Concentrations of particulate matter measuring from 2.5 micrometers (PM2.5) to PM10 decreased by 35 percent since 2000, and by 35 percent for particulate matter smaller than PM2.5. The presence of lead in the air has declined by a remarkable 98 percent since 1980.
Natural resources are more abundant and affordable today than ever before. Aside from customary short-term volatility, the price of almost all natural resources—from cocoa to cotton to coal—is cheaper today in real terms than 50, 100, or 500 years ago. This resource abundance exists despite increasing demand from the growth of global population. That is to say, human ingenuity has made the world far more efficient.
Dramatic improvements in energy efficiency have also occurred. From 1950 to 2011, for example, U.S. energy intensity decreased by 58 percent (per real dollar of gross domestic product). The efficiency trend predates the imposition of government energy conservation standards; it is instead rooted in consumer preference for lower energy costs, which drives innovation.
Energy resources are also abundant. Doomsayers insist that America is running out of conventional fuels, such as oil. But thanks to technological advances in resource extraction, the United States now has hundreds of years’ worth of petroleum, natural gas, and coal.
As for global warming—the current source of greens’ apocalyptic threats—reality has simply not cooperated with the fearmongers. The extent to which so-called greenhouse gases affect climate remains undetermined, and predictions of accelerating warming and more frequent, more intense natural disasters are unsupported by the climate record. As even the U.N.’s Intergovernmental Panel on Climate Change conceded: “No robust trends in annual numbers of tropical storms, hurricanes and major hurricanes counts have been identified over the past 100 years in the North Atlantic basin.”
Beyond the rhetoric by which the environmental lobby generates money and power, the environment shows vast improvement by nearly every objective measure. Consequently, the environmental statutes crafted 40 years ago are largely irrelevant and obsolete. The major pollution sources of the 1970s are controlled, and the regulatory approach of that era is unsuitable for achieving marginal improvements. Reforms are needed that reflect today’s cleaner conditions and technological innovations, and which account for the regulatory experience of the past four decades.
State of Regulation
Despite the dramatic gains in environmental quality, both the number and cost of federal regulations have been increasing for decades, and especially so under the Obama Administration. Between January 2009 and August 2015, the Environmental Protection Agency (EPA) issued 30 major regulations, which the government estimates will increase regulatory costs by more than $57 billion annually (in addition to one-time implementation costs of more than $7 billion).
At least eight other proposed and final major regulations are in the pipeline for the coming year. On October 1, the EPA issued a stricter standard for emissions of ozone—although the existing 2008 standard has not been fully implemented. The new standard lowers the allowable level of ozone from 75 parts per billion (ppb) to 70 ppb. The cost of compliance, according to the EPA, will reach $1.4 billion annually. In the past, however, the agency’s regulatory impact analyses have underestimated costs and exaggerated benefits.
The Administration’s new Clean Power Plan rule, issued on August 3, exemplifies some of the most problematic elements of the agency’s rulemaking process. The regulation is the first direct regulation of carbon dioxide emissions from power plants, and it effectively bans construction of coal-fired electricity-generating units. The agency estimates that compliance costs will be $9 billion annually—a figure widely contested as low by industry. But the benefits calculation used to justify the rule is even more dubious than the cost calculation.
Simply put, the only way the EPA could show that the benefits of the power plan rule exceed the costs was to (1) count presumed benefits worldwide rather than just in the United States, and (2) ascribe the majority of benefits to health impacts associated with the reduction of ancillary air pollutants that are already controlled under other regulations. This regulatory sleight of hand is all too common for regulations that otherwise would cost far more than they return in benefits.
The Department of Energy (DOE), too, has imposed a dizzying array of regulations—including energy efficiency standards for some 50 appliances and equipment—based on the very broad authority granted to it by Congress under the Energy Policy and Conservation Act of 1975. This statute requires any new energy standards to be “technologically feasible” and “economically justified”—standards that the DOE often ignores.
The government is a very poor arbiter of technological feasibility and economic justification. In fact, technology standards set by government are more likely to inhibit innovation than promote it. As for Washington’s economic acuity, one need only note the growth in government borrowing and spending. What government does do is to substitute political considerations for market incentives in the energy sector. And, in doing so, it masks the signals that would otherwise guide investment and innovation most efficiently.
The regulatory benefits cited by the DOE must rely on global benefits to justify the costs. As reported by Sofie Miller of the George Washington University Regulatory Studies Center, the DOE attributed some 97 percent of the regulatory benefits from stricter standards for commercial refrigeration equipment (a revision of 2009 standards) to the reduction of carbon emissions and consumers’ energy savings from more efficient equipment. But only 7 percent to 23 percent of the purported benefits from reduced carbon emissions would affect the United States. Nonetheless, the DOE scored the entire global reduction as a benefit.
For each of these rules, the DOE also counted as a benefit the energy savings to owners from more efficient equipment and appliances. But such “private benefits” constitute a substitution of the regulator’s preference for that of American families and entrepreneurs. Whether energy savings are worth the higher cost of a more efficient item is a decision that American families and business owners can and should make for themselves. Taking away their ability to make that choice is not a benefit; it is, in fact, a steep cost to liberty.
Regulations that rely on “private benefits” as justification have increased at the same time that most major sources of pollution have been controlled—thus leaving regulatory agencies with fewer regulatory targets related to health and safety. Rather than downsize the bureaucracy, regulators have shifted attention from controlling smokestacks to controlling individuals’ behavior.
Principles of Environmental Policy
Americans want a clean, healthy, and safe environment. The question is which policies will realize these goals most effectively. It is not enough only to consider how to reform federal regulation. A more substantive debate must address the extent to which it is even appropriate for the federal government to intervene.
Since the 1970s, the number and cost of environmental regulations have exploded. Virtually all are based on statutes crafted decades ago, when environmental conditions were dramatically different and little was known about the consequences of command-and-control regimes. As a result, most environmental regulation empowers and enlarges bureaucracies, hobbles free enterprise, and sacrifices environmental quality to environmental politics.
Despite Washington’s infatuation with heavy-handedness, history has shown that command-and-control regulation is inherently inefficient and often counterproductive. A classic example is the Endangered Species Act, which has prompted property owners to “shoot, shovel and shut-up” with respect to targeted species on their property lest they come under the Fed’s thumb. By its very nature, the act is adversarial; individuals are forced to bear the costs of benefits enjoyed by the majority. Or consider government-subsidized wind farms: Their assumed superiority over carbon-based fuels ignores the mangling of millions of birds and bats caused by these Cuisinarts of the air.
In contrast, the well-being of societies and individuals has long been enhanced by individual freedom, free markets, property rights, and limited government. The annual Index of Economic Freedom, for example, documents that the intensity of poverty in countries whose economies are considered “mostly free” or “moderately free” is only about one-fourth the level of that found in countries that are rated less free. Moreover, per capita incomes are much higher in countries that are economically free.
The same goes for the environment: Free minds and free markets improve environmental quality far more than federal regulation. This obvious reality is fiercely resisted by those who benefit from the status quo—politicians, bureaucrats, and many incumbent businesses. Consequently, environmental policies often violate fundamental American values.
Conservatives have generally failed to articulate the policies that would better protect the environment and preserve individual rights. But such policies are easily derived from core conservative values.
Just such a set of policy principles has been enunciated as the American Conservation Ethic. This ethic holds that Americans must be good stewards of the environment for the well-being of the current generation as well as that of future generations. The following are the eight principles that comprise this ethic:
- People are the most important, unique, and precious natural resource.
- Renewable natural resources, such as air, water, and soil, are not fragile and static but resilient and dynamic, and respond positively to wise management.
- Private property protections and free markets provide the most promising opportunities for environmental improvements.
- Efforts to reduce, control, and remediate pollution should achieve real environmental benefits.
- As we accumulate scientific, technological, and artistic knowledge, we learn how to get more from less.
- Management of natural resources should be conducted on a site- and situation-specific basis.
- Science should be employed as one tool to guide public policy.
- The most successful environmental policies emanate from liberty.
America has unsurpassed natural beauty and natural resource wealth, and Americans aspire to wisely use and conserve these resources for generations to come. Policies built upon the American Conservation Ethic can fulfill these aspirations.
Why America Needs Fundamental Reform of Environmental Policy
Environmental policy has long been based on the notion that only the federal government can adequately protect natural resources against the destructive self-interests of humans (as producers and consumers). The result is a vast command-and-control regulatory regime that is not only ineffective, but also destructive to a free and vibrant society.
A major part of the problem is the centralization of regulatory power in Washington. Federal agencies set regulatory standards for a multitude of pollutants across numerous industrial sectors. But Washington bureaucrats hardly possess sufficient information and expertise to impose controls on hundreds, if not thousands, of dissimilar locations across the 50 states.
Science can offer reliable—but not definitive—guidance for such tasks, but regulatory goals are often based on politics, not empiricism. Too often, agencies fail to properly perform scientific analyses before imposing rules, and many of the analyses that are conducted are biased toward regulation. Regulators selectively pick findings from the academic literature to justify their actions and ignore evidence that contradicts their agenda.
Meanwhile, the supposed science underlying regulations is often hidden from the public and unavailable for vetting by experts—which is otherwise the very essence of scientific inquiry. Statutes intended to discipline regulators, such as the Information Quality Act, are often ignored for lack of accountability.
Also problematic is the federal government’s emphasis on “inputs” rather than results. That is to say, many regulations focus on requiring stationary and mobile sources of pollution to install specific control technologies designed to limit emissions and discharges. Actual monitoring and enforcement are secondary. Such a system rewards compliance rather than innovation, and offers no incentive to the private sector to devise more efficient methods of pollution control.
Decades of experience and research have documented numerous problems with this complex, time-consuming, and litigious approach. As Yale scholar Bruce Ackerman notes, “The present regulatory system wastes tens of billions of dollars every year, misdirects resources, stifles innovation, and spawns massive and often counterproductive litigation.”
Regulators are not immune to political or ideological biases that subvert the intent of Congress—if that intent is even discernable. Lawmakers often enact vaguely worded statutes that effectively delegate their policymaking powers to regulatory agencies. A prime example of this vast expansion of regulatory authority is the Waters of the United States rule proposed by the Army Corps of Engineers and the EPA.
As currently written, the Clean Water Act applies to “navigable waters,” defined in the statute as “the waters of the United States, including the territorial seas.” This notoriously vague definition has invited the Corps and the EPA to stretch their authority well beyond their constitutional limits. In their most recent action, the agencies proposed a reinterpretation of the act that would cover virtually all waters in the nation and, by extension, much of the land.
In delegating its legislative authority to bureaucrats, Congress prevents constituents from holding their elected representatives accountable. When agencies control rulemaking, lawmakers evade responsibility for regulations—even when their delegation of authority and oversight failure is actually at fault.
Federal agencies are also unable to adequately manage the ever-growing inventory of public lands and the natural resources therein. These land holdings comprise about one-third of the U.S. land mass—including Alaska and Hawaii—and cover more than the combined area of France, Spain, Germany, Poland, Italy, the United Kingdom, Austria, Switzerland, the Netherlands, and Belgium. Nevertheless, the federal government continues to expand its holdings and to increasingly restrict public access to them.
Land management agencies spend billions of taxpayer dollars each year on programs to improve the condition of federal lands. But mismanagement abounds. Many of these dollars never deliver tangible benefits, as they are consumed by environmental studies, compliance with handbooks, regulations and guidance, and lawsuits.
The U.S. Fish and Wildlife Service routinely designates vast acreages of private land as “critical habitat” for species listed under the Endangered Species Act. Private property owners have very little recourse when faced with such regulatory “takings.”
The Elements of Sound Environmental Policy Reform
America’s primary environmental goal should be a clean, healthy, and safe environment for current and future generations, while protecting liberty. Sound policy will enhance both the environment and the economy because both are inextricably entwined. There is no balancing test between the two. When environmental policy properly accounts for private property rights, economic incentives will drive stewardship.
Major reforms are needed for virtually every environmental statute. The following reforms would go a long way toward improving environmental policy. Policymakers should:
- Shift responsibility for environmental regulation from the federal government to the states and the private sector. States are better equipped to customize policies for local conditions, and land owners have greater incentives than the government to protect private property. Both groups can act regionally when there are cross-border components to environmental issues. A less centralized regime would also mean more direct accountability—taxpayers would have an easier time identifying the officials responsible for environmental policies, and the people making those regulatory decisions would have to live with the consequences. Property owners would be held accountable through common law.
- Find market alternatives to command-and-control regulation, such as tradable permits for air emissions and water discharges. A permit “market” could create incentives for firms to implement the most effective means of pollution control at the lowest cost. Grounding environmental policy in property rights would also increase accountability, according to economist Bruce Yandle, by “provid[ing] a legal basis for taking action against those who generate pollution that degrades property values.”
- Limit congressional delegation of regulatory authority. Congress routinely enacts vague environmental statutes, and leaves the regulatory details to unelected bureaucrats. This system invites political manipulation and gross inefficiency because there is little accountability for incompetence or error. Congress, not regulators, should make the laws and be accountable to the American people for the results. Therefore, no major environmental regulation should be allowed to take effect until Congress explicitly approves it.
- Compensate citizens for regulatory “takings.” The benefits of environmental improvements are enjoyed by the public, but the regulatory costs are routinely imposed on individuals. This leaves regulatory agencies to act without any consideration of the costs of regulation. Whenever the use of private property is prohibited, property owners should be compensated for the lost value. In the event that compensatory funding is exhausted, further regulatory takings should be prohibited. This would encourage agencies to prioritize various conservation efforts.
- Codify stricter information quality standards for rulemaking, including limits on agency use of co-benefits to justify regulation. Federal agencies too often mask politically driven regulations as scientifically based imperatives. In such cases, agencies fail to properly perform scientific and economic analyses or selectively pick findings from the academic literature to justify their actions and ignore evidence that contradicts their agenda. Strict information quality standards for rulemaking should be imposed, along with oversight to ensure that the standards are met. Compliance with such standards ought to be subject to judicial review, and noncompliance ought to be deemed “arbitrary and capricious.”
- Establish a sunset date for environmental regulations. To help ensure that obsolete and ineffective rules are taken off the books, sunset dates should be set for all major environmental regulations. After this sunset date, rules should expire automatically if not explicitly reaffirmed by the relevant agency through the formal rulemaking process. As with any such regulatory decision, this reaffirmation would be subject to review by the courts. Such sunset clauses already exist for some new regulations. They should be the rule, not the exception.
- Restate and clarify in law that the Clean Air Act was never intended to regulate greenhouse gases as air pollutants, and declare in statute that greenhouse gases are not pollutants subject to regulation under the act. After dramatic improvement in air quality and ever-stricter federal air-quality standards now approaching natural background levels (the levels at which covered pollutants occur naturally), the EPA recently concocted a method to create a vast reservoir of new health risks in order to justify more stringent regulation.
- Shift federal land holdings to states and the private sector. The federal government’s land holdings are greater than the areas of France, Spain, Germany, Poland, Italy, the United Kingdom, Austria, Switzerland, the Netherlands, and Belgium combined, approaching a third of the U.S. land mass, including Alaska and Hawaii. Only a fraction of it is composed of National Parks. Federal agencies are unable to adequately manage these lands and the natural resources on them.
- Remedy the “sue and settle” problem. Environmental groups routinely sue federal agencies to compel regulatory action. Agency officials are often complicit in these cases because settlements have limited the public from participating in the rulemaking process—thereby allowing the agency to regulate as it prefers. Once a lawsuit is filed, the agency and the advocacy group typically settle behind closed doors. This deceit can be eliminated by requiring agencies to submit proposed settlements to a public notice and comment process before any settlement has been filed with a court. Making it easier for third parties to intervene in such cases would also go a long way toward ending this abuse of the judicial system. Further, settlements should not be allowed to dictate substantive provisions of a rule.
For decades, green activists have claimed that a federal command-and-control regime is the best and only hope for environmental improvement. As one of Washington’s wealthiest and most powerful special interests, environmentalists want to preserve the status quo. Although environmental quality has improved, command-and-control regulation is inherently inefficient and often counterproductive. So there is much to be gained by unleashing the power of market incentives and private property rights to improve stewardship of America’s remarkable natural resources.
Virtually all of the nation’s foundational environmental statutes date from the 1970s, when smokestacks and tailpipes presented the most pressing problems. Environmental conditions are dramatically different today, in large part because of technological innovation. Four decades of regulatory experience has vastly increased knowledge of the shortcomings of the command-and-control model. It is unnecessary to sacrifice individual liberties for environmental progress.
As the Obama Administration—perhaps the most regulatory Administration in history—comes to a close, the outlook for meaningful reform is improving. The time is ripe for the conservative environmental ethic to shape environmental policy for the 21st century.
—Diane Katz is a Senior Research Fellow for Regulatory Policy in the Thomas A. Roe Institute for Economic Policy Studies, of the Institute for Economic Freedom and Opportunity, at The Heritage Foundation.