Environmental Law for the 1990s: Focus Private Initiative, Don't Stifle It

Pete du Pont

Editors' Summary: One of the most serious tasks Americans face in the near future is electing a President to lead the nation into the 1990s. Environmental law and policy are heavily influenced by the decisions made by elected officials and their senior appointees, and environmental issues should command close attention as voters and opinion leaders approach the 1988 election.

The Environmental Law Reporter has invited several leading presidential candidates to present their views on environmental law and policy. This month, Pete du Pont emphasizes the need to consider whether the environmental laws enacted to deal with early environmental hazards are still the most appropriate instruments as the nature of the threats change. Some governmental programs, he observes, have created perverse incentives which have actually harmed the environment or increased cleanup costs. He suggests increased private stewardship of designated resources, and strict adherence to a "polluter-pays" approach to cleanup. Market incentives and the action of voluntary associations, he concludes, must be more fully integrated into management of the nation's environment.

Pierre ("Pete") du Pont was Governor of Delaware from 1977 to 1985. He was a United States Congressman for six years beginning in 1971, and a member of the Delaware House of Representatives from 1968 to 1970. Mr. du Pont is a candidate for the 1988 Republican nomination for President.

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The next generation of environmental challenges will be fundamentally different from the challenges we have already met. Society has already considered very visible pollution from large, highly concentrated industries. But now we face equally dangerous but more subtle pollution from widely scattered smaller sources.

Today's tools of environmental protection are not adequate to meet the challenges of environmental protection tomorrow. Our present tools are born of a different age. The tools of the 1960s and 1970s are unlikely to be effective in meeting the challenges of the 1990s and the next century.

We should not be surprised, because events and technologies move rapidly, and the modern environmental movement — dating only from the 1970 Earth Day event — is still in its adolescence.¹ During the 17 years since that day, the United States has enacted a complex array of laws intended to reduce air and water pollution, to protect our natural resources and ecosystems, and to reduce the risks posed by new technologies. An equally complex array of federal, state, and local environmental agencies now administers these laws.

This initial effort paid little attention to efficiency or cost. It was a "command and control" approach to environmental regulations. Goals were established, standards were set, and government — only government — was assigned the task of enforcing compliance.

Such an approach was all too typical of the general approach to public policy in the 1960s and 1970s. Identifya problem, pass a new law, create a new agency, provide it funding, and wait for things to get better. The environmental policies adopted in this era assigned little responsibility to the individual and largely ignored the potential contributions of the market or of private environmental groups. Nonetheless, that system has achieved some significant environmental gains: the air is cleaner, Lake Erie is alive again, and the Cuyahoga River no longer burns.

But these initial gains were relatively easy to achieve. To reduce air and water pollution, we had only to control a few major generators and a small number of large-quantity pollutants. We now face the far more difficult task of controlling many small-scale dispersed polluting activities, of very large numbers of pollutants, and of managing the risks of low volume hazardous materials. Having succeeded in addressing some of the environmental "haystack" problems, we find ourselves facing the far more difficult task of finding and resolving the problems associated with the remaining "needles."

Problems of Current "Command and Control" Regulation

Our current approach requires federal and state governments to spend directly large sums to advance environmental objectives. Many billions have and are being spent to build wastewater treatment plants and to "clean up" hazardous waste sites. To date we have spent 15 billion Superfund dollars and cleaned up exactly five of the 2,000 identified Superfund sites. At this rate, the task will be completed in 3036 at an approximate cost of another $100 billion. Under this approach, progress is slow and costly indeed.

Unfortunately, politics and the political decisionmaking process provide a fertile area for special interest groups to advance their objectives. Hazardous waste cleanup programs and wastewater treatment plants run the risk of becoming merely another form of pork barrel. The "Clean Air vs. Dirty Coal" debate is another example. In the latest Clean Air Act, the high-sulfur fuel producers were able to add provisions eliminating any economic reason to burn low sulfur fuel. The cleanup requirements now require the same percentage reduction in the sulfur contained in the initial fuel, rather than setting an absolute level to encourage reduction in overall sulfur emissions. As a result, we have spent much more and received much less air pollution reduction than our investment has warranted. Such results seem an unavoidable consequence of allowing [17 ELR 10354] politics rather than environmental concerns to dictate the details of the cleanup effort.

Secondly, majority opinion is a thin reed on which to secure the safety of environmental values. Environmental support can melt away as new concerns come to dominate the headlines and the evening news. Recall the "energy crisis" and President Carter's efforts to impose emergency "fast track" procedures that could have suspended environmental safeguards enacted only a few years earlier.²

Finally, current environmental policyhas assigned almost total responsibility to government to determine whether new technologies should be allowed to be tested in practice. A market-oriented risk management approach — allowing an entrepreneur the freedom to advance new concepts, while holding him or her responsible for any harm created — has largely been replaced by an elaborate regulatory system. Bureaucrats act as technological gatekeepers, and the bureaucratic regulator will quickly recognize that career risk is minimized by doing nothing. Prospective risk-reduction gains are held hostage to the concern of those who see much to lose and little to gain in approving any new process or products. As the role of such risk management strategies becomes more pervasive in our society, change becomes less and less acceptable. We begin to accept a status quo society and reject the major forces of change that always make environmental and health improvements possible.³

Alternatives for the Future

Our challenge is to propose reforms that would strengthen the current system, while reducing its major shortcomings. Reforms must address four questions:

How can we best utilize government to help us achieve our environmental goals?

How can we use America's greatest strength, its market economy, to help solve environmental problems?

How can we ensure that we get the best bang for the environmental buck?

How can we best harness the entrepreneurial and creative genius of all our citizens to advance environmental goals? How can we use private organizations to help us achieve public goals?

These themes suggest that we must seek wherever possible to move beyond the traditional "command and control" model of environmental policy and seek ways to bring environmental concerns into society's private structure without sacrificing public environmental goals. "Command and control" is often thought of as the best response where the free market has failed. This is misleading; both the market and the rules of the market have failed.⁴

Federal environmental statutes have too often neglected the problems created by the government's own incentives. Too often, the environment is threatened not only by business, but also by efforts of government itself. For example, one of the major achievements of the Reagan Administration was the enactment of the Coastal Barrier Resource Act, a program that sought to eliminate or at least moderate the effects of, on the one hand, numerous federal agencies subsidizing the development and destruction of fragile barrier beaches and coastal wetlands, while, on the other hand, other government programs sought to prevent such losses. That Act sought to reduce the role of government in such environmental degradation. Such reforms are overdue in many other areas. The Coastal Barrier Resource Act should serve as a model for similar laws aimed at the protection of forests, rivers, water resources, and floodplains.

Similarly, requirements such as those now embodied in the Clean Air Act which deliberately rule out less costly solutions because they would modify existing economic arrangements and make some plants and some localities less viable than others must be rethought. Rational environmental policy will indeed mean that plants and technologies creating less pollution will gain relative to their less well-advantaged competitors, but that is exactly the result we must seek. We do ourselves no favors by defining environmental goals, then blocking their efficient attainment.

Third, we should reconsider the value and necessity of managing environmental resources collectively, and rethink the role that private responsibility can play in seeing that environmental values are protected. For example, the National Audubon Society maintains a major bird refuge in coastal Louisiana in the center of a major oil field. The fact that any royalties earned from drilling would accrue to Audubon encouraged that group to think carefully about the tradeoffs involved. After consideration and negotiation to ensure that the environmental disruption was minimized, the group elected to permit a few select wells to be drilled and operated. The royalties have allowed the Audubon Society to improve the refuge and to conduct other environmental programs.

Extending this concept of private stewardship to a broader range of environmental resources is now being explored in such disparate areas as the management of African wild game, the establishment of wilderness "enterprise" zones in resource-rich but environmentally sensitive areas, and in improving our groundwater protection.

A solution developed in another area — oil field management — might offer a private property model to protect groundwater. The oil industry has developed "unitization," a new form of private property management. In that system, the separate owners of drilling rights assign their rights to an association which operates the field as a unit.

By avoiding each individual's incentive to pump oil as rapidly as possible without concern for the oil field as a whole, unitization avoids the "tragedy of the commons" although it involves tremendous organization and legal problems. When successful it overcomes wasteful overdrilling in the oil fields.⁵ Moreover, it allows the individual to protect the resource and thus reduces the task of government regulators. Were a similar effort possible in the groundwater area, we might bring hundreds or even thousands of new groups into the national effort to safeguard this vital resource.

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Fourth, we must once again begin to view pollution as trespass, and environmental damage as a cause of action. The basic principle is the familiar "polluter-pays" principle. Properly applied, that concept requires a demonstration that a specific party (or parties) has caused damage, before being required to compensate for these damages. This basic principle has been increasingly disregarded in recent years in favor of no-fault and compensation-driven theories of environmental protection.

The difference between the modern theory of compensation-driven environmental rules and the polluter-pays principle is profound. Perhaps the most glaring example of this has been the rules developed in the Superfund program to make wealth rather than liability the deciding variable for who would pay cleanup costs.⁶

That deep pocket theory of justice not only encourages innocent parties to fight the process, and thus to delay the date of effective cleanup, it also weakens the feedbacks that encourage future potential polluters to consider carefully the consequences of their activities.

Further, there are steps that we can and should take to "fingerprint" potential polluters. Just as cows were branded to help police the unfenced rangelands of the West, we may well require that firms introduce "identifiers" into their effluent streams. Suspected acid rain sources, for example, might tag the sulfur in their fuels to determine what sources contribute which sulfate ions to the acid rain problem. Such fingerprinting techniques have already been applied to tracking down tankers suspected of oil spills.

Finally, one of the greatest untapped resources of America in the environmental area is that of its voluntary nonprofit sector. For too long, we have lost sight of what de Tocqueville once saw as the unique genius of the American system: not its governmental institutions, nor even its strong market economy, but rather its rich system of voluntary associations used to address creatively a wide range of important goals not readily handled by either of the other institutions.

For too long that vision has been lost. Too many voluntary groups have lost faith in the efficiency of their own actions and see themselves empowered only as lobbyists to expand government. We need to regain faith in direct action and the power of the individual and the small group. For example, the Hawk Mountain Sanctuary in Pennsylvania was organized to protect raptors at a time when the prevailing wisdom was that such birds should be eliminated. A single individual decided to oppose popular opinion and purchase the site — a focal point for hawk migrations. The group then posted the land against hunting and hired a naturalist to patrol and protect the site and the hawk population and began a long-term effort to educate the public. Today, their views are dominant.

The success of Hawk Mountain demonstrates one of the main strengths of the private sector and private initiatives. In a world in which individuals can own and nurture environmental resources, the efforts of only a few highly dedicated individuals can be marvelous. We need not await the conversion of 51 percent of the electorate to act. Ducks Unlimited and Trout Unlimited are further excellent examples of private sector organizations accomplishing public sector environmental goals. We should encourage more environmental groups to assume direct responsibility for the environment. We need more Hawk Mountains and we need to ensure that current public policies are not discouraging this path to environmental control.

Conclusion

I hope to begin, not close, a dialogue. I believe that the environmental strategies that have dominated the past have achieved much, but I do not believe they will prove sufficient to resolve the far more challenging environmental problems that must be addressed in the future. I do not believe we can continue to view environmental problems as something outside of and alien to our most effective institutions — markets and voluntary associations. Nor can we continue to limit the ingenuity and genius of those dedicated to environmental values to the passive task of lobbying Congress and the state legislatures for larger budgets, more stringent regulations, and bigger government. The protection of the environment is too important a task to be left to the bureaucrats. They need help — together we can see that they get it.

1. Cf. Reed, Reforming Environmental Law, 15 ELR 10062 (1985) (environmental law "is still a growing teenager").

2. See Comment, President Carter's Environmental Message Stresses Resource Conservation, Fudges on Energy Production, 9 ELR 10139, 10140-41 (1979) (many environmental advocates "fear the President's energy proposals entail environmental harms that will far outweigh any benefits achieved by his new protective initiatives and, in addition, may undermine hard-won environmental safeguards put in place during the last decade.").

3. See generally Huber, Exorcists vs. Gatekeepers in Risk Regulation, REGULATION, November/December 1983, at 23.

4. R. POSNER, ECONOMIC ANALYSIS OF LAW 271 (2d ed. 1977).

5. Cf. POSNER, supra note 4, at 51.

6. Cf. Light, A Defense Counsel's Perspective on Superfund, 15 ELR 10203, 10207 (1985) (Superfund as interpreted by the government "does not lead to a result where the 'polluter pays'; instead … this strategy can lead to the purely arbitrary result that the deepest pocket pays.").