Environmental Justice: Operationalizing TSCA to Fulfill Its Destiny

Posted on February 4, 2021 by Lynn L. Bergeson

The Biden Administration has embraced environmental justice with unprecedented gusto.  In its July 2020 Plan to Secure Environmental Justice and Equitable Economic Opportunity (Plan), the Biden Administration sets out in broad terms how it intends to use an “All-of-Government” approach to “rooting out systemic racism in our laws, policies, institutions, and hearts.”

The Toxic Substances Control Act (TSCA) is not explicitly mentioned in the Plan, but its potential utility to help achieve environmental justice is significant.  Congress amended TSCA in many ways in 2016, but two provisions are especially relevant to this discussion.  Congress added a requirement that, in prioritizing chemicals for risk evaluation and in conducting chemical risk evaluations, the U.S. Environmental Protection Agency (EPA) must consider whether a chemical substance presents an unreasonable risk to a “potentially exposed or susceptible subpopulation identified as relevant to the risk evaluation” by EPA.

TSCA defines “potentially exposed or susceptible subpopulation” as follows:

The term “potentially exposed or susceptible subpopulation” means a group of individuals within the general population identified by [EPA] who, due to either greater susceptibility or greater exposure, may be at greater risk than the general population of adverse health effects from exposure to a chemical substance or mixture, such as infants, children, pregnant women, workers, or the elderly.

This enumeration of subpopulations is illustrative only, and TSCA authorizes EPA to identify other subpopulations, as appropriate.

The second provision relates to risk evaluation.  EPA is required under TSCA to review existing chemical substances and to conduct risk evaluations for chemicals identified as high priority.  To date, EPA has selected an initial 10 chemicals for risk evaluation and an additional 20 as high-priority chemical substances for risk evaluation.  EPA is in various phases of the risk evaluation and risk mitigation process for these 30 chemicals.  With approximately 41,000 substances active in commerce, EPA has a long, long way to go.

Importantly, and as noted, the 2016 TSCA amendments require EPA to determine risks to subpopulations with greater susceptibility to the health effects of chemical exposures.  Many would agree that the risk evaluations conducted to date, and the 2020 scoping documents for the next tranche of existing chemicals slated for evaluation, focus little on how potentially exposed or susceptible subpopulations are at increased risk from chemical exposure due to life stage, genetic polymorphisms, sex, race and ethnicity, lifestyle considerations, preexisting health conditions, nutrition, and other factors.  In a few evaluations, EPA has accounted for enhanced susceptibility by applying a default interspecies uncertainty factor of 10.  Detractors have noted that a 10-fold uncertainty factor can be presumed to be too small because EPA customarily uses it to account for normal expected variations in sensitivity within the healthy population.  EPA has applied an uncertainty factor above 10 to susceptible subgroups in other regulatory contexts, such as to infants and children under Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) risk assessments.

No one is questioning the complexity of the risk evaluation task under TSCA.  Chemical risk evaluations are demanding under the best of circumstances, and the sheer number of them required under TSCA is daunting.  Importantly, however, Congress explicitly directed EPA to consider potentially exposed or susceptible subpopulations, which necessarily includes populations with unique and/or disproportionate exposure pathways, whose risk from combined exposures is likely to be underestimated, and perhaps greatly so, by more conventional risk assessment practices and assumptions.  These populations include environmental justice communities, generally defined by EPA to include urban and rural poor, fence-line communities, minorities, Native Americans, and others.

Many would agree that now, as amended, TSCA offers unprecedented opportunities to help achieve environmental justice.  To date, EPA has worked hard to implement the 2016 amendments, under sometimes-difficult circumstances.  With the Biden Administration squarely committed to the goals of environmental justice, TSCA stakeholders all have a role to play in optimizing TSCA.  Here are a few suggestions:

  • Build upon the competencies of the National Health and Nutrition Examination Survey (NHANES) model to support and include community-based research on environmental justice communities that may be at higher risk;
  • Task EPA’s Office of Research and Development with developing specific risk evaluation practices that more accurately reflect sensitive subpopulations, such as developing default uncertainty factors that better eliminate bias;
  • Ensure that TSCA Section 6 scoping documents routinely identify fence-line exposures and related susceptible subpopulations expected to be disproportionally impacted by chemical exposures;
  • Ensure that TSCA Section 6 scoping documents evaluate dietary exposure in native populations due to bioaccumulation in fish and hunted prey;
  • Consider convening a “national conversation,” not unlike (but perhaps more focused than) the National Conversation on Public Health and Chemical Exposures the Centers for Disease Control and Prevention (CDC) convened in 2009-2011 identifying how TSCA and other laws can be optimized to tackle environmental health disparities;
  • Utilize TSCA’s expanded Section 4 testing and Section 8 information-gathering authorities to compel testing and information reporting to inform prioritization of chemicals and the scope of risk evaluation, including testing and information relating specifically to environmental justice communities;
  • Create blue-ribbon committees to prioritize the hardest questions to answer in assessing chemical exposures and risks to environmental justice communities and then answer them; and
  • Utilize Risk-Screening Environmental Indicators to identify geographic areas with a high proportion of environmental justice communities that have high cumulative risk scores to identify chemical releases that might warrant review under TSCA Section 6.

A bipartisan Congress amended TSCA in 2016 and directed EPA explicitly to assess risk from chemical exposures with a view toward identifying and protecting subpopulations that may be at greater risk due to susceptibility or enhanced chemical exposure.  TSCA is a powerful weapon in the fight to help in “rooting out systemic racism in our laws, policies, institutions, and hearts.”  We can do better to operationalize it and eliminate fundamental inequities in chemical exposures and their assessment under TSCA.

A Personal Note: My View of Environmental Justice Through the Lens of Covid-19

Posted on January 27, 2021 by Earl Phillips

As Covid-19 swept through our country, I was struck by this virus’s patterns of spread and severity, which challenged its supposed impartiality.

Latino and African-American residents of the United States have been three times as likely to become infected as their white neighbors, according to the new data, which provides detailed characteristics of 640,000 infections detected in nearly 1,000 U.S. counties. And Black and Latino people have been nearly twice as likely to die from the virus as white people, the data shows.

Months earlier, statistics had shown that residents of majority-black counties were three times more likely to be infected with the virus, and suffer six times the rate of deaths as residents in majority-white counties. The virus itself has been constant across our minority communities, but as Dr. Fauci explained in a White House briefing, these results are a function of our country’s already-existing disparities in access to healthcare being exacerbated by the stresses of a global pandemic. These communities suffer from a lack of resources and protections, resulting more broadly in impacts to environmental health, safety, and welfare.

Environmental justice (EJ) is the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation and enforcement of environmental laws, regulations and policies.  Fair treatment means no group of people should bear a disproportionate share of the negative environmental consequences resulting from industrial, governmental and commercial operations or policies.

Unfortunately, the failure of the federal government to adequately protect EJ communities from Covid-19 is far from unique, and instead merely the latest chapter in a long and shameful history of neglect. For many different reasons, we lack any strong federal program or template to address environmental justice considerations and as a result we are left with a patchwork quilt of state programs - some strong, some weak, some non-existent.

In this relative vacuum, there are some states that have stepped forward (or are in the process of enacting or upgrading programs) in significant ways. Without getting into the specifics of any particular state’s program, the common elements of these programs tend to be:

A clear definition of what is and is not an EJ community; 

  • What actions, events, or decisions do or do not trigger an EJ program;
  • What is required of an applicant, respondent, and/or State to effectively notify and engage an EJ community;
  • What resources, benefits, or opportunities will be provided to an EJ community so that the community can meaningfully review the proposed triggering event and thoughtfully participate in any proceedings, and who will provide those resources; and
  • What burdens of proof must be met for decisions to be made that might further impact a host EJ community. 

The Biden-Harris campaign made addressing the absence of federal leadership part of their pitch last July when they released their “Plan to Secure Environmental Justice and Equitable Opportunity,” which promised voters an administration that would: (i) work with EJ community leadership to establish meaningful metrics; (ii) establish regular performance reviews to track progress; (iii) revisit and rescind certain Trump-Era actions that were presented as stream-lining but that had the effect of limiting opportunities for community engagement; (iv) reinvest in science and data gathering efforts; and (v) establish offices of Environmental Justice in the DOJ and White House while at the same time reforming EPA’s External Civil Rights Compliance Office. Unfortunately for this planned-for aggressive “whole of government” upgrade to the Environmental Justice commitment, a divided congress could slow or stall much of the Biden-Harris presumptive legislative agenda. That said, Executive Orders (again, and hopefully only for the time being) may be seen as a viable workaround solution in the interim.

FINAL REFLECTIONS

Like many of you, I feel extremely fortunate to have had the opportunities that I have had along the way.

Like some members of the American College of Environmental Lawyers (ACOEL), I regularly represent companies looking to build facilities, manufacture products, mine raw materials, conduct research for new products and solutions, and/or generate energy. A number of these efforts have taken me to communities in states with more robust Environmental Justice programs. 

While the EJ process can be unsettling as you and your client work to alert and engage the community, and/or satisfy additional requirements, it has been my experience that effective EJ programs can lead to a better understanding of differing perspectives, an improved community/company relationship, a more thoughtful outcome, and in some instances, a better way to proceed. As we turn the page to 2021 I encourage you to think about the EJ programs in your regions or states, consider the potential value and importance of these programs, and HAVE A SAFE AND HEALTHY NEW YEAR.

What a Difference a Day Makes

Posted on January 26, 2021 by Brian Rosenthal

Co-authored by Brian Rosenthal and Timothy Webster

On Day One, the 46th President of the United States signaled his focus on climate, the environment, and energy in executive orders, official correspondence, and memoranda.  In a few strokes of his pen, the President undid much or all of what his predecessor had done, also largely by executive order, and cast into doubt many of the prior administration’s environmental and energy policies and rules.

As has been widely reported, the new administration’s Day One executive actions established and implemented a broad range of policy objectives, several of which were environmental, that immediately start to make good on some of the commitments of candidate Biden during his campaign and President Biden in his inaugural address:

While unable to change substantive rules, the administration’s memorandum “Modernizing Regulatory Review” weaves themes together of environmental justice and equality. It supports the administrative agencies recommending steps for “improving and modernizing regulatory review” in order to “promote public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interests of future generations.”  Among other things, this memorandum order seeks to review the regulatory process by 

(i) identifying ways to modernize and improve the regulatory review to reflect current science and economics considerations even where “difficult or impossible” to measure; and 

(ii) considering the regulatory impact on disadvantaged communities.

Similar themes are presented in the administration’s “Executive Order on Advancing Racial Equity and Support for Underserved Communities through the Federal Government.”  The order imposes equitable assessment benchmarking across agency programs to examine barriers in and to federal programs. 

Perhaps the boldest order for environmental lawyers was President Biden’s “Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.”  The order directs executive agency heads to review hundreds of agency actions implemented during the Trump Administration, including more than 120 related to energy and the environment.  In addition, the order suspends or revokes, in whole or in part, nearly one dozen Executive Orders issued by the prior president that were directly tied to energy infrastructure.

The order includes the phrases “listening to science” and “holding polluters accountable.”  It also emphasizes reviewing all regulations of the last administration for disproportionate effects on low-income areas.  Parenthetically, as noted in Seth Jaffe’s Law & the Environment Blog—the line between legitimate environmental concern based on cost benefit and NIMBY reactions is narrow but must be drawn.   

Opposition has already been expressed to many of these measures, several of which will surely spur litigation.

Turning the Lights Off on Environmental Justice?—Not this Administration

Posted on June 24, 2016 by Renee Cipriano

In the United States, Environmental Justice (EJ) began to take shape in the mid-1990s with the signing by President Clinton of Executive Order 12,898, “Federal Actions to Address Environmental Justice in Minority Populations and Low Income Populations.”  Over the years, the commitment to EJ has ebbed and flowed.  However, in 2011, EPA unveiled “EJ 2014,” the Obama Administration’s comprehensive plan for EJ.  The plan breathed new life into the EJ movement and focused on incorporating EJ concerns into EPA’s regulatory arenas.

EJ 2014 produced a number of very detailed implementation plans with targeted action.  For example, EPA developed its National Enforcement Initiatives for fiscal year 2011-2013 by targeting enforcement in communities considered “overburdened”.  In EPA’s permitting programs, the Agency sought to ensure that it provided EJ communities potentially impacted by the permitting decision a meaningful opportunity to participate.  Moreover, EPA asked permittees to provide “supported analysis” that no unacceptable, disproportionate impact to the community would result from the permitted activity. 

Sounds good, right?  Some would say “just ok.”  Although EPA could point to what it identified as successes of EJ 2014, criticisms of EPA’s commitment to the integration of EJ into programmatic decisions in a meaningful way remained.  EJ community activists and other interested non-governmental organizations still questioned EPA’s regulatory ability to demand that disproportionate impacts be addressed.  Could a permit be denied or conditioned solely because the regulated activity had a disproportionate impact on an overburdened community?  What is “an actionable, disproportionate impact” and what does “overburdened” mean?  Were EPA’s significant rulemakings truly addressing EJ concerns through clear mandates or restrictions?  And what about the countless complaints filed with the EPA Office of Civil Rights under Title VI of the Civil Rights Act?  A broken system, some say, claiming that over 95% of Title VI complaints are dismissed. 

Arguably, the Obama Administration has achieved the best successes in EJ to date.  Not only can EPA point to real impacts at the federal level, but there are also visible signs of EJ integration in state-administered environmental regulatory programs.  The Administration probably could have rested easily on its good work with EJ in the remaining months in office with very little push back.  Not this Administration, however, and not where environmental justice is concerned. 

Two very significant initiatives are underway right now with seemingly little consideration given to the end of the Obama Administration.  First, in January 2016, the United States Commission on Civil Rights (Commission) announced its intention to hold a briefing on EPA’s work under Title VI of the Civil Rights Act and Executive Order 12,898 with a focus on the civil rights implications of siting coal ash disposal facilities near minority and low-income communities.  With this announcement and briefing, the Commission has sought to further its 2016 statutory reporting project on EJ.  In particular, the Commission has identified its work to address and reduce the “backlog of Title VI complaints” handled by EPA’s Office of Civil Rights.  The Commission has also tasked its State Advisory Committees (SACs) to undertake a similar review.  The Commission’s activities with respect to EJ are clearly underway in earnest, as is the work of the SACs.

Second, in May 2016, EPA released the final draft of its EJ2020 Action Agenda.  According to the Agency, “EJ2020 is EPA’s EJ plan of action that will involve every EPA office and region.  EJ2020 consists of “eight priority areas and four significant national environmental justice challenges.”  The Action Agenda, currently open for public comment until July 7, 2016, builds on EJ 2014 and specifically includes addressing national challenges, including lead disparities, drinking water systems, air quality, and hazardous waste sites, as a way to measure success.   

In addition to EPA’s work on the national challenges, the Agency’s rulemaking and permitting efforts under EJ2020 should be of great interest to environmental regulatory practitioners.  EPA has released new guidance (June 2016) presenting its “analytical” approach for EJ review of significant rules.  Also, EPA plans to use permit terms and conditions to address EJ concerns and has folded into its agenda “next generation-esque” community-based monitoring approaches.

With no indication of slowing down, the Obama Administration is certainly looking to leave the lights on for environmental justice through the next administration.  The EJ2020 agenda and the results of work by the Commission may very well set a tone and approach that cannot easily be undone.  Yet significant challenges remain to incorporate EJ considerations in regulatory decision making.  Questions also exist: are the EJ policies truly advancing the interests of overburdened communities?  In May 2016, for example, the U.S. Court of Appeals for the Ninth Circuit upheld EPA’s broad discretion in settling Title VI actions, even after the Agency had excluded the overburdened community members from participating in the settlement negotiations.  Whether EPA can address this and other challenges remains to be seen.  For now, any commitment by this Administration to tackle EJ challenges is overshadowed by the presidential election and the uncertain future direction of EPA.   We can only wait and see if the lights will dim or burn brightly on this important initiative.

New EPA Case Studies on Environmental Justice and Permitting

Posted on June 4, 2013 by Elliott Laws

With the 20th anniversary of Executive Order 12898 soon approaching, EPA has been planning on extensively incorporating “environmental justice” into its permitting processes.  This executive order required all federal agencies to address disproportionately adverse human health or environmental effects of their programs, policies, and activities on minority and low-income populations in the U.S.

To that end, nearly two years ago, EPA issued “Plan EJ 2014” as a roadmap – not as a rule – to implement the executive order throughout the agency.  Specifically, Plan EJ 2014 formally introduced EPA’s priorities of promoting increased public participation in the permitting process and considering more stringent permit conditions.  In February of this year, EPA selected two case studies that highlight the agency’s approach to achieving these permitting priorities.

The first case study involved a recent Prevention of Significant Deterioration (PSD) permit for the Pioneer Valley Energy Center, a power plant expected to generate up to 431 MW in Westfield, Massachusetts.  From the developers’ filing of the permit application in November 2008 through EPA’s issuing of the final permit in April 2012, Region 1 incorporated what it has described as environmental justice into this permitting process by providing enhanced public engagement opportunities and including more stringent conditions in the permit.  These stricter conditions were aimed at limiting the applicant’s ability to burn ultra-low sulfur diesel for testing of its emergency generator when air quality would already be diminished.

The second case study involved a National Pollutant Discharge Elimination System (NPDES) general permit for oil and gas exploration in Cook Inlet, Alaska.  Even as this permit has evolved over time, now with federal and state authority split, the subject conditions have been based on environmental justice considerations dating back to 2006-2007.  In the permit’s 2007 iteration, Region 10 incorporated environmental justice into this permitting process by collecting and considering tribal traditional knowledge about the effects of development and by imposing more restrictive permit conditions.  These conditions imposed new monitoring requirements, extended the area where discharges were prohibited for all sources from 1,000 to 4,000 meters from sensitive coastal areas, and explicitly did not authorize several types of drilling discharges for new sources.
 
There are two striking facets of these case studies.  First, even as EPA found no disproportionate adverse effect on minority populations, low-income populations, or tribal populations, EPA still included somewhat more restrictive permit conditions based upon environmental justice considerations.  Second, the imposed conditions do not appear to be particularly onerous – perhaps explaining why the permittees did not challenge the additional restrictions.  Opinions vary as to the impact of these “EJ conditions” on the permitting process, as EPA likely  could have imposed these restrictions under existing statutes and regulations without any reference to environmental justice. 

Nevertheless, EPA seems to be testing the limits of its authority and telegraphing its intent to continue these efforts.  Consequently, practitioners and permit applicants should be wary of EPA seeking to impose potentially unnecessary conditions based upon environmental justice.

Birds, Butterflies, and the Doctrine of Standing

Posted on June 22, 2011 by Susan Cooke

A recent Seventh Circuit decision authored by Judge Richard Posner provides a useful review of the doctrine of standing in the context of an alleged environmental injury. In American Bottom Conservancy v. U.S. Army Corps of Engineers (No. 09-cv-603-GPM) issued on June 14, the Seventh Circuit concluded that the plaintiff conservation organization had standing to appeal the U.S. Army Corps of Engineers’ issuance of a Section 404 permit. Members of the Conservancy had offered sufficient evidence to support their allegation that destruction of the wetlands near a state park would diminish the wildlife population (including birds and butterflies) visible to them, and thus their enjoyment of the wildlife.


The Army Corps permit authorized Waste Management of Illinois, Inc. (WMI) to remove soil from wetlands which it owned near the park and to use that soil as cover for its neighboring landfill. Once it completed the excavation of those wetlands and adjacent acreage, WMI intended to convert the area into a new landfill. WMI agreed to configure compensating wetlands of even greater size in the immediate vicinity and next to the state park.


After casting a critical eye at several grounds articulated in the past to support the doctrine of standing, Judge Posner identified the “solidest grounds” as being “practical” ones. Those included “preventing the federal courts from being overwhelmed by cases” and ensuring that “the legal remedies of primary victims of wrongful conduct will not be usurped by persons trivially or not at all harmed by the wrong complained of.”

Based on his finding that the wetlands to be destroyed were close enough to the park to impact birds and butterflies that could fly into or over the park or be seen from it, Judge Posner concluded that there was sufficient proximity to demonstrate the probability of harm to the park’s wildlife. He then rejected the district court’s conclusion that members of the conservation organization must show that they would no longer visit the state park. Instead, he declared that it was only necessary to show that their “pleasure is diminished”.

Judge Posner also disagreed with the district court’s finding that the injury was “merely speculative” because about 30% of the wetlands would be preserved and compensating wetlands of twice the size would be built. Judge Posner found it more significant that more than two-thirds of the existing wetlands would be eliminated, that the compensating wetlands would not be built until after all soil removal had occurred, and that the time for the new wetlands to reach maturity would exceed the short lifespan of at least some species (such as the six week lifespan of a butterfly), Judge Posner found the probability of injury, even if small, to be real.

In sum, Judge Posner concluded that the plaintiff had met its burden of alleging a probable harm to its members (the “injury in fact” which consisted of being deprived of the pleasure of watching wildlife) and of seeking relief that would address such injury (retraction of the Army Corps permit). He noted that for standing purposes plaintiff need not show the magnitude of the injury, as distinct from its directness. Consequently, the Seventh Circuit reinstated the Conservancy’s lawsuit. The Seventh Circuit also denied WMI’s request that the district court’s dismissal be upheld on the merits because WMI had not filed a cross appeal seeking to dismiss the case with prejudice.

Judge Posner’s analysis of the case law and commentary on the standing issue reveals his concern about conflating the “zone of interests” for standing and the merits of a case. As he noted in Harzewski v. Guidant Corp., 489 F.3d 799 (7th Cir. 2007), involving an ERISA class action, interpreting standing requirements too broadly would merge the standard of proof for standing with the standard of proof on the merits. His latest effort to address the issue should provide helpful guidance in an area where the prerequisites for establishing standing have been a matter of serious debate.

 

Supreme Court Hears Oral Argument In American Electric Power Case

Posted on April 21, 2011 by Theodore Garrett

On Tuesday, April 19, 2011, the Supreme Court heard oral argument in American Electric Power v. Connecticut, a case where the Second Circuit held that States and private plaintiffs may maintain actions under federal common law alleging that five electric utilities have caused or contributed to global warming, and may seek injunctive relief capping defendants’ carbon-dioxide emissions at judicially determined levels. The questions before the court are: 1) whether States and private parties have standing to seek judicially fashioned emissions caps on the five utilities, 2) whether a cause of action to cap carbon-dioxide emissions can be implied under federal common law when the Clean Air Act speaks directly to the same subject matter, and 3) whether claims seeking to cap defendants’ carbon-dioxide emissions at “reasonable” levels based on a court’s weighing of the potential risks of climate change against the socioeconomic utility of defendants’ conduct, would be governed by “judicially discoverable and manageable standards” or could be resolved without “initial policy determination[s] of a kind clearly for nonjudicial discretion.” Baker v. Carr, 369 U.S. 186, 217 (1962).

The transcript of Tuesday’s argument is available online here.

Although one must be cautious about predicting results based on questions raised during oral argument, it is difficult to review the transcript of argument without concluding that the justices were very skeptical about a federal common law action to address climate change.

Several of the Justices questioned whether the relief sought by plaintiffs was properly the role of EPA rather than the courts. Justice Ginsberg observed that “Congress set up the EPA to promulgate standards for emissions, and now what -- the relief you're seeking seems to me to set up a district judge, who does not have the resources, the expertise, as a kind of super EPA.” (Tr. 37)

Justice Roberts expressed a similar concern, namely that with global warming “there are costs and benefits on both sides, and you have to determine how much you want to readjust the world economy to address global warming, and I think that's a pretty big burden to post -- to impose on a district court judge.” (Tr. 40-41) Justice Alito similarly was concerned with how a district judge would deal with the tradeoffs involved in providing relief. (Tr. 59).

Justice Kagan agreed, saying that plaintiff’s complaint “sounds like the paradigmatic thing that administrative agencies do rather than courts.” (Tr. 41-42) Justice Kagan further wondered whether plaintiff’s theory would mean that they “have a Federal common law cause of action against anybody in the world,” (Tr. 51) This prompted Justice Scalia to ask whether one could aggregate “all the cows in the country” and bring a climate change suit against all farmers, or all homes that emit carbon dioxide in their heating systems. (Tr. 52-53). Justice Breyer wondered what would happen if a district judge thought that a $20 per ton tax on carbon was the best way to deal with the problem. (Tr. 61). This prompted Justice Scalia to ask what standard would prevail if a district judge set an emission limit and EPA subsequently set a different standard. (Tr. 65). He added that this is a “displacement of the normal process of administrative law.” (Tr. 66)

Just What We Need: More Community Engagement in Superfund Sites

Posted on May 26, 2010 by Seth Jaffe

Last week, EPA’s Office of Solid Waste and Emergency Response announced release of its Community Engagement Implementation Plan. Who could be against community engagement? It’s as American as apple pie. It’s environmental justice. It’s community input into decisions that affect the community. It’s transparency and open decision-making.

 

Call me a curmudgeon, but I’m against it. Study after study shows that, in terms of the actual risks posed by Superfund sites, we devote too many of our environmental protection dollars to Superfund sites, when we should be focusing on air and water. Why do we keep doing this? Because the community demands it. As Peter Sandman has noted, perceptions of risk are driven only partly by the actual hazard posed. To a significant degree, those perceptions are more driven by outrage over the situation. In some circumstances, what Sandman calls outrage management makes sense, but I’m skeptical that EPA’s community engagement initiative is really about outrage management.

 

In any case, here’s the public policy question of the day. Does it really make sense to spend scarce environmental protection resources, not to reduce risk, but to reduce outrage?

On Financial Markets and Environmental Regulation

Posted on January 14, 2009 by Kevin Finto

I save the instructions for an item so I can try to figure out what is wrong when it breaks. Given the state of our financial markets, I went looking for the instructions. I couldn’t find a copy of Adam Smith’s nine hundred page, two volume set The Wealth of Nations, first published in 1776. I did; however, find the next best thing: P.J. O’Rourke’s On the Wealth of Nations, (Atlantic Monthly Press 2007), a concise 250 page explanation that is both informative and entertaining. In reading through O’Rourke’s summary, I noted that Smiths three principles that determine market behavior (i.e, pursuit of self interest, division of labor and freedom of trade) explain a lot about why the markets currently are frozen up. We have had perhaps too much of all three, and too much of a good thing rarely turns out well.  Being an environmental lawyer, it also struck me that unintended consequences of current environmental regulations might be at least in part responsible for our current financial situation.  Finally, given the change in administrations, it occurred to me that the interplay between the market economy and environmental regulation and policy will continue, so we need to be smart about it.  

 

Adam Smith identified three critical aspects of proper market function that have been called his “invisible hand.” The first is that people act in their own self interest. This is the basic motivation for capital investment, risk taking and human labor. The second is that we get more productivity and higher quality of life if there is a division of labor such that the people who are good at things do them and those that are not pay the people who are good to do them for them. Third, and the one most important to our discussion, is that the less regulation on trade among the people doing these specialized tasks, the better. Smith was, of course, most concerned about tariffs and their effect on international trade, but certainly any regulation imposes some friction on the markets.

This brings us to the question of how environmental regulation may have caused, at least in part, the current financial crisis. To make this point it is helpful to think of financial markets, which we want to be “fluid,” like a system of tanks and pipes in a waterworks.  Water is analogous to money in this example.  Adam Smith’s first principle, self interest, is a motivating force, like a pump in our system. The second principle, division of labor, is a set of pipes which are sized according to the amount of economic activity they carry (Wal-Mart is a bigger diameter pipe than say your local shoe repair shop). Regulations are analogous to valves that restrict flow in the system. 

 

Both water in a pipe and money in our financial markets follow the path of least resistance. Putting aside questions about excessive self interest (read greed) and excessive division of labor (read opaqueness or lack of accountability) which may have contributed to the financial meltdown, regulations played a role as well.   Just as valves can direct the flow of water in a system, regulations direct the flow of money in our economy. Traditional, capital intensive, economic multiplying investment opportunities, say in energy infrastructure or manufacturing facilities, have faced stringent regulation which imposed significant resistance to that investment opportunity -- small pipes with lots of valves. On the other hand, many financial investment vehicles offered little or no resistance; they were big pipes with no valves. Guess where the money flowed? 

 

            So what implications does this have for future environmental policy or regulation. With a change in parties in the adminstration, the old debate between those favoring market based regulation and those favoring command and control is rekindled. As the new administration considers economic stimulus packages and regulations on environmental impacts, it will be well served to understand that it is not only the absolute amount of regulation, but also the relative amount of regulation, on economic options can have a significant impact on the markets as well as unintended consequences. Moreover, while terms like “free market” and “markets forces” may be derogatory in some circles, the reality is that market-based environmental programs have worked so well. No one can seriously debate the success of the acid rain program far more productive than command and control regulations would have been in that situation.  The reason is that market-based programs rely on the same human nature that Adam Smith recognized in his first principle and that gets our entrepreneurial and creative juices flowing.  That is what is needed to solve economic and environmental problems.  Ignoring market concepts in environmental regulation only leads to unintended consequences, conflict and gridlock, which the markets and we can no longer afford.