Public Policies for Environmental Protection

Paul R. Portney

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317310143
• Edition: 1
• Topic: Economics
• Subtopic: Environmental Economics
• Index: Economics

Originally published in 1990, this study tracks the issues, progress and problems in environmental issues in the United States from the 1980's. Improvements in air and water quality as well as regulation of hazardous waste and toxic substances has led to new policies such as the Superfund Act and a general increase in awareness about environmental issues on a federal level. Placing an emphasis on economics, these papers analyse the effectiveness of environmental policy and progress made in relation to air pollution, water quality, hazardous wastes, toxic substances and enforcement of regulations. This title will be of interest to students of environmental studies.

one
Introduction

Paul R. Portney

The fall of 1977 saw the finishing touches put to Current Issues in U.S. Environmental Policy, the predecessor to this book. The introduction to that volume identified several factors that favored a thorough review of domestic environmental policy. These factors included the slow pace of environmental improvements following the legislation of the early 1970s, the high cost of complying with those laws, the arrival of a new president (Jimmy Carter) with the promise of a new approach to environmental regulation, the changing nature of environmental problems, and the then-current energy "crisis."

Although twelve years have elasped since then, these same reasons—and several new ones as well—justify still another in-depth review of the environmental policies of the United States. For instance, air and particularly water quality continue to improve quite slowly (if at all) in many places, even after a dozen more years of pollution-control spending by households, municipalities, and industrial polluters. This pace is not unrelated to the spotty record of compliance with air and water regulations and the sometimes feeble enforcement efforts that have been taken. Perhaps more distressing, very little progress seems to have been made in regulating hazardous wastes and toxic substances, even though the basic laws thought necessary to do so have been in place since 1976.

Nor has environmental regulation ceased being expensive. For example, according to the most recent estimate of the U.S. Environmental Protection Agency (EPA), the cost of complying with federal air and water pollution-control regulations was $52 billion in 1981 alone (in 1988 dollars)—exclusive of the costs of pesticide, toxic substance, or hazardous waste regulations.¹ Between 1981 and 1990, according to the EPA, the nation will spend more than $640 billion in pursuit of clean air and water.

Since the earlier book, moreover, still another president has come to and gone from Washington, one with very different ideas than his predecessors about the means and ends of environmental regulation. Such change has not been without controversy. However, in one area the Reagan administration built upon and attempted to extend one of the major redirections in environmental policy charted by the Carter EPA, and it appears that President Bush will pursue this approach more vigorously than Reagan (although it is still too early in the Bush administration to be sure). Involved is the expanded use of economic incentives as supplements for or complements to more traditional types of regulation. This development merits explanation and discussion.

The focus of environmental policy also appears to be shirting once again, although in a more subtle way than before. To be sure, public health is still the primary emphasis of this nation's environmental laws. That much has not changed. Yet, an evolution is taking place in the kinds of health threats the EPA is addressing. The agency now spends much more time worrying about, and devotes more resources to, the toxic substances that pose longer-term and more exotic threats to health than it does to the so-called conventional air or water pollutants with which it was concerned for the first decade or so of its existence. While this apparent shift in emphasis is understandable, particularly given heightened public concern about hazardous substances and the risks they pose, it may also be regrettable if, collectively, we have an exaggerated view of the risks associated with the new breed of environmental hazards and at the same time turn our backs on older, now less "sexy" environmental problems. Some evidence presented below suggests that this may be the case.

Finally, there are new reasons to take a fresh look at U.S. environmental policy. At least one major piece of new legislation—the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (better known as the Superfund)—has been passed and significantly amended, and several of the older laws have been amended in important ways. In addition, a number of new environmental problems or policy issues that went unaddressed in the earlier volume have arisen or become more apparent. For all these reasons, it is again appropriate to review the current state of U.S. environmental policy and how it might evolve. That is precisely the purpose of this book.

The plan of the book is as follows. In chapter 2, I review briefly the evolution of federal regulatory policy from its early concern with natural monopoly, deceptive trade practices, and financial soundness toward its more recent preoccupation with environmental, safety, and health regulation. It was in the latter context that the EPA was created. After tracing briefly the growth of the EPA and the impact of its regulations, 1 turn to the sorts of choices that must be made in deciding whether and how to regulate, using examples illustrative of environmental policy in the United States. Chapter 2 should set the stage for the discussions that follow of the specific regulatory programs that protect the air, water, and land.

In chapter 3, I address the air pollution control policies or the United States, beginning with a review of efforts before 1970, when the Clean Air Act was amended to form the current basis for regulation. That review suggests that previous efforts were concentrated almost exclusively at the state and local levels, but that this began to change with the first federal laws in the 1950s. Following that discussion, I outline the major features of the Clean Air Act and several of their implications. Next I present some evidence on the effect of the act on air quality in the United States—this is, after all, the ultimate measure of effectiveness and one in which we should all be interested. The review suggests that, on the whole, air quality continues to improve in the United States.

Next 1 turn to an economic evaluation or the Clean Air Act. There I review selectively a number of studies providing evidence about the benefits and costs associated with air quality regulations under the act. Perhaps not surprisingly, one conclusion I draw is that it is no simple matter to compare the different estimates—they often pertain to slightly different views of the program, use different base years, or vary in other important ways. I conclude that both costs and benefits are likely to be substantial, but that saying more than this requires much care. Less ambiguous is another conclusion: it is possible to reduce the costs of meeting our current air quality goals quite substantially. A large number of studies support this conclusion. A final section presents some conclusions and policy recommendations.

In chapter 4, A. Myrick Freeman analyzes federal efforts to control water pollution in the United States. He too begins with a review of efforts prior to the substantial change that Congress made in 1972, a change that involved the goals, methods, and federal responsibilities in water pollution control. Next Freeman discusses in some detail the framework that grew out of the 1972 amendments to the Federal Water Pollution Control Act (now known simply as the Clean Water Act). Basically, the approach in this framework differs from the environmental-quality-based approach in the Clean Air Act: the Clean Water Act, Freeman finds, concerns itself more with technology-based standard-setting and the use of federal grants to encourage waste water treatment by municipalities.

Freeman then turns his attention to the accomplishments under the new federal approach. He finds that these are difficult to identify because there is no single and unambiguous indicator of water quality, particularly at the national level. The problem is made more difficult by our inability to distinguish between changes in water quality that are a result of the act and those that might have occurred for other reasons. Freeman then reviews fragmentary evidence bearing on EPA's performance in carrying out the Clean Water Act, the performance of regulatees in meeting their responsibilities, and data on water quality since passage of the act.

Turning to the economic implications of the Clean Water Act, Freeman presents evidence on the costs and benefits associated with the act. In spite of uncertainty about the estimates, Freeman finds that the former are likely to exceed the latter, apparently by a considerable margin. He then suggests several kinds of changes that might be made in the act or in the way it is implemented that would improve this unfavorable picture. He devotes special attention in this discussion to the construction grants program and the control of non-point source pollution.

Roger C. Dower addresses current U.S. policy regarding the regulation of hazardous wastes in chapter 5. He begins by attempting to identify the scope of the problem—no simple matter given the lack of a standard definition of hazardous wastes and the absence of solid data on the number of abandoned disposal sites or the frequency with which such wastes turn up in drinking water or other environmental media. Following this introduction, Dower describes the two major laws passed to address the problems caused by hazardous wastes. In subsequent sections Dower discusses the economic impacts—both favorable and unfavorable—associated with the laws, the question of liability for damages caused by disposal sites (and the difficulty of securing insurance against such liability), the financing of cleanups at disposal sites, and the question of where the by-products of industrial production and household consumption will go if land disposal is ultimately prohibited.

In chapter 6, Michael Shapiro takes up the control of toxic substances by the Environmental Protection Agency. He begins by detailing the growth of the chemical and pesticide industries in the United States, particularly since the end of the Second World War. This discussion is useful because of widespread concern that the problems associated with toxic substances are due directly to these industries. Shapiro then explains the structure of the two major legislative responses to this perceived problem, the Toxic Substances Control Act (1976) and the Federal Insecticide, Fungicide, and Rodenticide Act (1947, with subsequent amendments).

Shapiro then identifies several major issues that arise in regulating pesticides and toxic substances. These include the information base upon which action must build, the speed with which the program must proceed, the definition of "unreasonable" risk and the way risks of this kind are to be balanced against benefits, and the problem of inhibiting the introduction of new and useful chemical products. In the course of this discussion, Shapiro presents what fragmentary evidence is available on the costs and benefits of toxic substance regulation.

In chapter 7, Clifford S. Russell reviews evidence on an often-ignored aspect of environmental policy in the United States—the ways our major laws are monitored and enforced. He begins by discussing the various forms of monitoring and enforcement, distinguishing between initial and continuing compliance, and between the monitoring of ambient quality and the monitoring of emissions by sources or other source activities. He then presents what sketchy evidence there is on the frequency of monitoring and inspection of polluters, and the kinds of enforcement actions that are taken, as well as their severity. One finding is that much more attention has been devoted to ensuring that polluters get pollution equipment in place than to seeing that it is operating correctly. Russell then examines several recent efforts to improve the monitoring and enforcement of environmental regulations. He concludes by suggesting additional measures that might be taken to strengthen this neglected but nevertheless quite important aspect of U.S. environmental policy.

In chapter 8, I draw some overall conclusions about progress in environmental protection in the United States, and identify several recent trends that are likely to shape the future direction of environmental policy.

Notes

1. Environmental Protection Agency, "The Costs of Clean Air and Water Report" (1984).

two
EPA and the Evolution of Federal Regulation

Paul R. Portney

By comparison with many other federal regulatory agencies, the EPA and its siblings of the 1970s are relative newcomers. Indeed, it was more than a century ago, in 1887, that Congress created the Interstate Commerce Commission to regulate surface transportation industries, and it has been more than seventy years since the Federal Reserve Board and Federal Trade Commission were created to regulate commercial banks and deceptive trade practices, respectively. The first great burst of federal regulatory activity took place in the 1930s, during which Congress created the Federal Power Commission, the Food and Drug Administration, the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Communications Commission, the Federal Maritime Commission, and the Civil Aeronautics Board.

Between 1938 and 1970 little took place in the way of new federal regulatory activity.¹ Following this lull, however, came the second major burst of federal regulation. In quick order were created the EPA, the National Highway Traffic Safety Administration, the Consumer Product Safety Commission, the Occupational Safety and Health Administration, the Mining Safety and Health Administration, the Nuclear Regulatory Commission, the Commodity Futures Trading Commission, and the Office of Surface Mining Reclamation and Enforcement. Along with the Food and Drug Administration (FDA) (and omitting the Commodity Futures Trading Commission), these have come to be known as the "social" regulatory agencies. Generally speaking, they are those having to do with environmental protection and the safety and health of consumers and workers.

Aside from age, there are at least three important distinctions between the "old-line" agencies and the newer, social regulators like the EPA.² The first has to do with their reasons for being. In principle at least, all regulatory agencies have been created to remedy a perceived failure of the free market to allocate resources efficiently. Except for the FDA, the older agencies were meant either to control "natural monopolies" or to protect individuals from fraudulent advertising or unsound financial practices on the part of financial intermediaries or depository institutions.³ (The latter justification was clearly a reaction to the calamitous Great Depression, during which many of these agencies were created.)

Federal intervention in the areas of environmental protection and the safety and health of workers and consumers has a very different rationale. Here, it is argued, the government must intervene because of externalities or imperfect information. The former arise when the production of a good or service results in some costs (like pollution damage) which, in the absence of regulation, are unlikely to be borne by the producer. In such cases, the prices of products will not reflect what society must give up to have them, so that Adam Smith's "invisible hand" will steer us awry. In the case of imperfect information, workers or consumers may be only dimly aware of the health hazards associated with various occupations or consumer products or foodstuffs. If so, they will be unable to trade off higher risks for either higher wages or lower prices in an informed way, so that the unaided market would not necessarily result in either the right amount or the correct distribution of risk.

The newer regulatory agencies differ from their elders in another important way, having to do with the specificity of their focus. The older agencies can be thought of as dealing with a single industry—the interstate Commerce Commission (ICC) with surface transportation, the Federal Communications Commission (FCC) with communications, the Civil Aeronautics Board (CAB) with airlines, and so on. This is not true of the newer social regulatory agencies. Thus, for instance, the Occupational Safety and Health Administration (OSHA) regulates workplace conditions in a wide variety of industries ranging from chemicals to agriculture. Similarly, the EPA regulates emissions of air and water pollution from the electric utility, steel, food-processing, petroleum-refining, and many other industries. The broader mandate of the social regulatory agencies may be a more difficult one to satisfy, since it requires each agency to become knowledgeable about and sensitive to the special problems and production technologies in many different industries.

A final distinction between the old-line agencies and their newer counterparts concerns recent developments in the scope of their activities. While it is always difficult to generalize over members of such a diverse group, the thrust of recent legislation and administrative actions at the older regulatory agencies has been in the direction of a sharp curtailment in the extent of their intervention in the markets they have regulated. This has been most pronounced in the case of the CAB, which was legislated out of existence in 1985 after it was recognized that the airline industry was ripe for competition. Similarly, the FCC has proposed significant reductions in the scope of its own activity, and both the trucking and railroad industries have been substantially deregulated through recent legislation and through administrative rulemakings at the ICC. The financial regulatory agencies and the Federal Ene...

Table of contents

• Cover
• Title
• Copyright
• Original Title
• Original Copyright
• Contents
• List of Tables
• List of Figures
• Foreword
• Acknowledgments
• About the Authors
• 1. Introduction
• 2. The Evolution of Federal Regulation
• 3. Air Pollution Policy
• 4. Water Pollution Policy
• 5. Hazardous Wastes
• 6. Toxic Substances Policy
• 7. Monitoring and Enforcement
• 8. Overall Assessment and Future Directions
• Index