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Reforming Environmental Policy: Zycher's Proposal and My Response

A discussion on how to reform federal environmental policy.

Environmental protection is important, but there's a strong argument that the nation's environmental laws and regulations are in need of reform. Over at the Law & Liberty Forum, the American Enterprise Institute's Benjamin Zycher makes the case for reforming environmental policy. Zycher's essay begins:

Environmental protection can be an important government function, in particular because private incentives, as reflected in market prices, often do not capture the full social value of environmental quality, or perhaps more precisely, changes in that quality. In the standard analytic framework, private actors cannot capture the value of environmental improvements, or do not bear the full costs of environmental degradation, unless "transaction" (negotiating) costs are zero, so that resulting environmental quality is lower than the optimal level.

At the same time, the political incentives shaping environmental policies and their implementation are hardly immune from various kinds of distortions, the upshot of which is promulgation of environmental policies that might be too stringent, insufficient, or counterproductive. Given that such policies have the effect of transferring wealth among interest groups, economic sectors, and geographic regions, it is not difficult to predict that the complex congressional bargaining process yielding actual policies might fail systematically to result in "optimal" outcomes, particularly given the shifting nature of majority coalitions.

After diagnosing the failures of contemporary environmental policy, Zycher suggests two possible reforms: modifying the National Environmental Policy Act and abandoning Chevron deference.

In my reply, I endorse much of Zycher's critique of contemporary policy, but I express skepticism about his proposed solutions. In particular, I am skeptical that NEPA reform and the elimination of Chevron deference would do much to improve federal environmental protection efforts.

There are many reasons why so many regulatory interventions do not achieve their environmental goals, and Zycher is also correct that policymakers lack sufficient incentive to make things better, particularly at the federal level. The economic stakes of environmental policy decisions can be quite substantial, creating ample incentive for rent-seeking. Powerful economic interests have much to gain from ensuring that environmental measures suppress competition and increase profits.

Improving these efforts requires dramatic reform. It should begin with the wholesale rejection of the dominant "market failure" paradigm upon which most regulatory interventions are founded.

Resource scarcity and pollution problems tend to arise where the underlying institutional framework upon which markets rely is lacking. Where ecological resources are fully incorporated into the system of private property and voluntary exchange, protected by the rule of law, waste is minimized and resources are used efficiently. Where, however, this underlying institutional framework is lacking—or where transaction costs are high—environmental problems are more likely to accumulate.

Much of the environmental progress of the past several decades can be credited to market-driven technological innovation and the embrace of property-based resource management. As the experience with marine fisheries amply demonstrates, the shift from centralized regulation to property-based resource management generates substantial economic and ecological gains. The catch is that not all environmental problems are so readily amenable to such property-based solutions and, as Zycher notes, the underlying political incentives do not always encourage the adoption of such policies.

Given the broad and deep failings of contemporary environmental law, Zycher has made a curious choice of reform targets: the National Environmental Policy Act and Chevron deference. Reforms in these areas might produce some economic savings, but neither will do much to reorient environmental protection efforts. . . .

While I share Zycher's concerns about contemporary policy, I am not at all sure that he has trained his fire on the proper targets. Reforming NEPA may reduce the time and expense involved in government projects and ease some permitting delays, but it will not address the substantive burdens of environmental regulation. Abandoning Chevron may limit the regulatory ambition of progressive administrations, but it will also hamper deregulatory initiatives and risk a return to the days when federal judges felt more free to dictate regulatory priorities to recalcitrant agencies—a risk that is only magnified by the current and immediately foreseeable composition of the D.C. Circuit.

The primary burdens imposed by NEPA fall upon government directed and funded projects. Thus, reforming NEPA will not do much to free private economic activity from unnecessary or inefficient regulatory burdens. Insofar as NEPA is a problem, it might be more fruitful to find ways of freeing productive activity from NEPA's reach, perhaps by limiting federal involvement.

Chevron deference may have problems, but Chevron is not an inherently pro-regulatory doctrine. Indeed, Chevron was born out of the Reagan Administration's efforts to adopt market-oriented regulatory reforms, and (barring an unusual burst of legislative initiatives) Chevron deference will be essential to any deregulatory moves the Trump Administration tries to make. Whatever arguments tehre are against Chevron deference, the claim that it stands as an obstacle to market-oriented reforms or an obstacle to deregulation is not among them.

Zycher offers a final rejoinder here, where he also responds to reply essays by Patrick Allitt, and William Dennis.

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  • Remember to keep it all polit||

    IANAL, so .....

    I am surprised at the interest in retaining Chevron deference. AIUI, it seems all too easy for unaccountable bureaucrats to run unchecked. Judges are supposed to be the final arbiters of what laws and regulations means (well, juries in my philosophy, but that's a different kettle of giraffe), not bureaucrats, and keeping Chevron deference for its alleged advantage in reforming the EPA seems like keeping the tumor because it helps lose weight, side effects be damned.

  • Stephen Lathrop||

    Is there some reason this dispute isn't pointless for now, given the mid-term results? Pretty sure legitimate gutting of existing environmental regulations will have to wait for one of those supreme plutocratic moments, with control of the house, senate, and presidency all together. Until then, you don't need any particular philosophical approach to just drag your feet on new regulations. Control of one political branch will generally do for that, right?

    So isn't this really just advocacy for plutocratic control of the courts, to let them substitute unaccountable environmental fiats for politically founded policy judgments from other branches? And there, of course, things are looking up for plutocracy, what with the Kavanaugh Court about to break loose, and leave mere political policy making in the dust.

    That ought to be good for a few years of chaos, before younger voters take stock. Then, will they decide the moment has arrived to use political power to rein in the Court? If so, it's still not evident that younger voters will follow Adler, and decide the way to get the most good out of a public commons is to get rid of it. As Adler's link suggests, even old Republicans couldn't accomplish that politically. That's why they want the Court to do it.

  • Rossami||

    Way to miss the point. Let's ignore the bipartisan consensus that current environmental policy is failing at it's actual goals and rant about tribal politics instead.

  • OtisAH||

    "Bipartisan consensus" in matters environmental is one of my favorite right-wing cons. Take those opposed to environmental regulations, add folks who believe environmental regulation doesn't go far enough, subtract out that little detail, then proclaim "See, everybody hates the environmental regulation!"

  • Bored Dad Is Bored||

    Professor Adler,

    I'm not sure I agree with your statement/conclusion that the "primary burdens imposed by NEPA fall upon government directed and funded projects. Thus, reforming NEPA will not do much to free private economic activity from unnecessary or inefficient regulatory burdens."

    While your first sentence is true, the second minimizes the true reach of NEPA. While it is true that private economic activity is not regulated under NEPA, this ignores the reach of government funding/licensing. Any project that needs a wetlands permit under the Clean Water Act or a Title V permit under the Clean Air Act or requires consultation related to endangered species, even if completely private, requires NEPA. Sure, this likely does not encompass your local mom and pop store adding a new A/C unit or expanding into the adjacent strip mall building, but in terms of the projects that have the ability to impact the environmental quality, the NEPA umbrella is large.

    That said, I do not necessarily disagree with your position. NEPA reform will only go so far and it could substantially degrade environmental quality if weakened (though, I note that NEPA is procedural and does not actually require picking the least damaging option). My point is that I think you should consider cleaning up how you paint the NEPA picture in order for it not to detract from your overall point.

  • Bored Dad Is Bored||

    Professor Adler,

    I'm not sure I agree with your statement/conclusion that the "primary burdens imposed by NEPA fall upon government directed and funded projects. Thus, reforming NEPA will not do much to free private economic activity from unnecessary or inefficient regulatory burdens."

    While your first sentence is true, the second minimizes the true reach of NEPA. While it is true that private economic activity is not regulated under NEPA, this ignores the reach of government funding/licensing. Any project that needs a wetlands permit under the Clean Water Act or a Title V permit under the Clean Air Act or requires consultation related to endangered species, even if completely private, requires NEPA. Sure, this likely does not encompass your local mom and pop store adding a new A/C unit or expanding into the adjacent strip mall building, but in terms of the projects that have the ability to impact the environmental quality, the NEPA umbrella is large.

    That said, I do not necessarily disagree with your position. NEPA reform will only go so far and it could substantially degrade environmental quality if weakened (though, I note that NEPA is procedural and does not actually require picking the least damaging option). My point is that I think you should consider cleaning up how you paint the NEPA picture in order for it not to detract from your overall point.

  • Bored Dad Is Bored||

    Professor Adler,

    I'm not sure I agree with your statement/conclusion that the "primary burdens imposed by NEPA fall upon government directed and funded projects. Thus, reforming NEPA will not do much to free private economic activity from unnecessary or inefficient regulatory burdens."

    While your first sentence is true, the second minimizes the true reach of NEPA. While it is true that private economic activity is not regulated under NEPA, this ignores the reach of government funding/licensing. Any project that needs a wetlands permit under the Clean Water Act or a Title V permit under the Clean Air Act or requires consultation related to endangered species, even if completely private, requires NEPA. Sure, this likely does not encompass your local mom and pop store adding a new A/C unit or expanding into the adjacent strip mall building, but in terms of the projects that have the ability to impact the environmental quality, the NEPA umbrella is large.

    That said, I do not necessarily disagree with your position. NEPA reform will only go so far and it could substantially degrade environmental quality if weakened (though, I note that NEPA is procedural and does not actually require picking the least damaging option). My point is that I think you should consider cleaning up how you paint the NEPA picture in order for it not to detract from your overall point.

  • Bored Dad Is Bored||

    Sorry that it appeared three times. I'm not on the most robust internet network and apparently I got click happy!

  • Remember to keep it all polit||

    The Reason website has long had a problem with double and more posting. It's usually blamed on the squirrels. I have had it happen a couple of times mysteriously, and once where my finger stuttered or something -- I forget now, but do remember having done something unusual and wondered if similar but unknown stutterings could be behind all double submissions.

  • bernard11||

    The ITQ system sounds sensible to me, but let's not pretend that it is not government regulation. It's also clear that setting the overall limit, the TAC, can be governed by political, rather than scientific/economic considerations. Still, it's probably a good idea, for some of the reasons the paper cites.

    I not wholly convinced the environmental benefits are as great as claimed, but there should be some. The argument there seems a bit more tenuous.

  • Michael Cook||

    In this age the question of what may be proper "scientific" ethics and practices is as politically charged as the similar question of what may be proper "journalistic" standards or "legalistic" standards.

    The fact of the matter is that in all human institutions people seek promotion and pay, which often means jumping on what seems to be the up and coming popular bandwagon in any profession. The tragedy is that popular bandwagons can be on the wrong track, not merely on the road to nowhere, but eventually will be shown to be absurdly wrong-headed from the very start.

    It is my not-entirely-uninformed belief that the greenhouse gas proposition (which claims that carbon dioxide is far and away the dominant, controlling, factor in climate change) is an over-blown, fantastically over-hyped theory supported by skewed data and massively flawed analysis . At bottom, it rested on the assumption that all other significant climate warming factors were completely known, understood, and could be ruled out.

    Poppycock! Rubbish! Nonsense! That claim ascends to the level of hypocritical partisan intellectual dishonesty as the claim that the Clinton campaign in 2016 should not have had a sweepingly empowered fire-breathing, scalp hunting special prosecutor to investigate it, but just cause existed to give the Trump campaign the absolute works in vicious, media-driven witch hunts.

  • apedad||

    So the Aristotelian principles of inductive-deductive method and empiricism are completely overshadowed by political and/or selfish motivations?

    Man, Rev. Kirkland is not going to like this...

  • MatthewSlyfield||

    Rev. Kirkland is a prime example of political and/or selfish motivations overshadowing the Aristotelian principles of inductive-deductive method and empiricism.

  • Stephen Lathrop||

    One major problem with most environmental policy reform proposals—the ones discussed here conspicuously included—is that they tend to be crafted with preservation of certain preferred aspects of the status quo very much in mind. In many cases, it's not that hard to figure out what the environment probably needs. Even the notorious cod fishery collapse would probably respond better to a requirement that cod fishing revert to hook and line, than it would to anything else.

    But that illustrates the problem—because that would be a political non-starter among vested interests, with those probably including more on-shore interests than otherwise. In the larger scale of the nation's interest in keeping a cod fishery, those onshore political operators ought to be trivial. But in customary political practice, they wield enough money and voting influence in their congressional districts to put them in a position to hamper and obstruct reforms they don't like.

    Given the political weight of status quo interests, the root of so much environmental policy struggle is really not to be found among environmental issues at all—it is to be found among the laws and customs relating to campaign finance. And those are status quo interests which the kinds of proposals discussed in the OP seek to protect—however tacitly—before they even begin to think about protecting the environment.

  • grb||

    Reforming Henhouse Security Policy
    by Mr. Fox

  • arch1||

    "Improving these efforts requires dramatic reform. It should begin with the wholesale rejection of the dominant "market failure" paradigm upon which most regulatory interventions are founded."

    I disagree with "wholesale". Markets haven't done well with existential risks. They basically ignore many of them. That is not a viable long term strategy.

  • arch1||

    (Mention of existential risks yields crickets)

    I was going to close with a quip about our humanity being short-lived, but at least consistent. Then it hit me that the approach being advocated in the quote is not just an innocuous heads-in-the-sand move (existential risks? We're not the experts and besides they are icky; let others deal with those): A wholesale embrace of market based solutions to environmental issues would, if could prevail, damage prospects for dealing with the some of the few issues which imperil our very existence. This is irresponsible behavior.

  • bernard11||

    It should begin with the wholesale rejection of the dominant "market failure" paradigm upon which most regulatory interventions are founded.

    Why, exactly? These are market failures, after all. The proposed "market-based" solutions - carbon trading anyone? - are just as much government-based as market based.

    Markets in fact do a poor job in many circumstances. This is not controversial among those who try to understand markets, rather than worship them.

  • Bob from Ohio||

    Governments in fact do a poor job in many circumstances. This is not controversial among those who try to understand governments, rather than worship them.

    All "market failure" means is someone in government did not like the result.

  • bernard11||

    I don't worship either one, Bob.

    All "market failure" means is someone in government did not like the result.

    This is a ridiculously ignorant statement.

  • Bob from Ohio||

    "I don't worship either one"

    You are half right.

  • bernard11||

    And you are 100% wrong.

  • Bob from Ohio||

    When have you ever opposed a Democratic initiative to expand government or increase regulation?

  • billatcrea||

    I am not an attorney. My experience in air quality management has been on the science side. The Clean Air Act is clearly in need of revision. Take tropospheric ozone for example. Because ozone is such a ubiquitous pollutant, and given that the exposure/effect relationship is assumed to be linear, a reduction in the standard can be justified almost always by the resulting reduction in calculated human health effects. As a result, the standard is inexorably approaching the increasing global background concentration, over which we have no control. Clearly, cost/benefit must enter the equation and not just when considering the policy options for implementing the change. But I am not holding my breath. There are just too many interests, public as well as private, invested in maintaining the status quo. And perhaps for good reason. It is far from certain that revising the legislation will result in improvement.

  • Stephen Lathrop||

    Wait a minute. Doesn't the amount we add eventually end up as part of the background? If that isn't true, what is the explanation for why the background is increasing? If it is true, then why doesn't that suggest we do have control, at least in principle, by adding less. What am I missing?

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