They Say It Can’t Be Done depicts how vital innovations find themselves stalled in the face of confusing, outdated and slow regulation.
It’s hard to disagree with most of what Benjamin Zycher says in his Liberty Forum essay, but let me add a bit of historical context. First, he is right to see the bureaucracy as an interest group, not just an impartial arbiter, but he doesn’t go into the question of why it came into existence in the first place. To me that’s the issue that helps us make sense of the whole problem.
Environmentalism as a mass movement developed in the late 1960s as growing numbers of Americans became disgusted by the pollution of their air and water supplies, and the despoiling of the countryside by billboards, dumps, poorly planned urban sprawl, indiscriminate use of toxic pesticides, and even such monstrosities as proposed dam-building schemes in the national parks. Unlike many of the era’s social movements, this was a bipartisan, across-the-board protest, as popular with Republicans as with Democrats. No wonder the vote for the National Environmental Policy Act of 1969 and much subsequent legislation was so lopsidedly favorable.
Industries that faced regulation had plenty of warning. They could have policed themselves, by setting up and agreeing to strict pollution standards. There were precedents to self-regulation as a way of avoiding federal regulation. The Hollywood movie industry in the 1930s, for instance, confronted with a threatened boycott from the Catholic Legion of Decency and possible political action, had created its own production code, enforced by the Hays Office, to keep explicit sexuality and “crime-does-pay” themes out of their movies. Better to engage in self-regulation, they reasoned, than to allow the feds to intrude. The polluters failed to take this path, and federal regulation was the price they paid.
The regulation is far from ideal but it has made impressive gains in cleaning up the environment in the United States. Factories and cars are incomparably cleaner than they were in 1970; there is no more lead in gasoline; rivers that were once literally fire hazards (notably the Cuyahoga in Cleveland) flow safe and clean again, repopulated by fish that are safe to eat; and Los Angeles has many fewer smog days, even as the standard for “poor air quality” has been ratcheted up repeatedly. More national parks, national monuments, and national recreation areas exist, and several endangered species have been brought back from the brink of extinction. Meanwhile, formerly “dirty” businesses, which argued that bankruptcy was the inevitable sequel to regulation, have actually made profits while cleaning up their act. The Detroit auto industry swore up and down in the early 1970s that fuel economy standards and emissions regulations would kill it, but when the law changed, it soon adapted. Ford, GM, and Chrysler are with us yet.
How shrewd Tom Paine was when he wrote: “Government, like dress, is the badge of lost innocence.” If everyone had acted right, the regulation would not have come into existence in the first place.
Why Industry Actually Likes Environmental Regs
What’s more, we have seen industries that began by struggling against regulation come later to embrace it. There are three reasons, historically, for their changed approach. The first was that, as citizens’ disgust and protests over pollution grew, cities and states passed laws of their own. Some specified a particular method of abatement. Others simply set a target and told polluters they would have to meet it, by whatever means necessary. Manufacturers who were trying to market their products nationwide found it increasingly difficult to satisfy a patchwork of different regulations in different places. Much better, they realized, to have one set of rules that applied everywhere, and to which they could conform their products. That’s when these manufacturers began to lobby in favor of federal regulation.
Second, it didn’t take long before they began to see the benefits of what has come to be called “regulatory capture.” In complex modern industries, the only people who knew enough about the technology to regulate it adequately were people who had worked for many years in those industries. They could be enticed to work at the regulatory agency for a few years but they continued to fraternize with, and see the world with the same eyes as, their recent colleagues. They also realized that, before long, they were likely to reenter the industry itself, where pay was generally higher and political oversight less irksome. They were, therefore, unlikely to be confrontational, and sometimes even colluded with the people they were supposed to be regulating. The Kemeny Commission that investigated the Three Mile Island nuclear accident in 1979 found that regulators at the Nuclear Regulatory Commission were too cozy with the industry, lacked critical distance and detachment, and had failed to perform rigorous inspections.
The third reason for industry’s embracing rather than resisting regulation was that it reassured the public. As Three Mile Island suggests, their confidence might sometimes have been misplaced, but in general they liked the idea that experts were monitoring the medicines they took, the construction codes of the buildings in which they lived and worked, and the cleanliness of the facilities where their food was processed.
From our vantage point it’s clear that the legislation was not always well thought out. Dr. Zycher mentions the Endangered Species Act of 1973 only briefly and dismissively, and he’s right that it contains plenty to criticize. Congressmen, eager to show their constituents that they cared about condors, eagles, and mountain lions, soon realized that they had failed to distinguish between popular endangered species and ones of whose existence most Americans were completely unaware. The law gave as much protection to mollusks, weeds, and sub-species of beetles as it did to top predators. It also brought to a halt development projects in these creatures’ respective habitats without compensating the land owners, who had reason to feel aggrieved that they were shouldering a burden imposed on them by everyone else.
Some Regs Work Well, Like “Cap and Trade”
On the other hand, regulation did sometimes improve over time. The 1990 amendments to the Clean Air Act, for example, introduced the “cap and trade” principle, using a flexible market mechanism to reduce pollution in a user-friendly way. After setting a maximum of permissible pollution (a smaller total volume from year to year), the agency then issued permits to current polluters. If they were already meeting or exceeding that year’s cleanliness standard, they could trade their permits to “dirtier” businesses, enabling them to keep going while also creating a clear economic incentive to clean up—everyone knew that the next year’s standard would be tougher and that the trend in permit prices was likely to rise. Cap and trade has worked well and has contributed to the great clean-up of the last few decades.
I agree with Dr. Zycher that NEPA has “created a heavy bias in favor of the infrastructure status quo.” The difficulty of getting new projects approved, even when these will have an environmentally benign effect, is an irksome reality, and surely retards economic growth. It may even have the ironic effect, sometimes, of preventing the environmental improvement the law was designed to foster. His example of pipelines as opposed to trucking for the movement of oil is a case in point. Environmentalists should have welcomed the Keystone XL Pipeline in the name of getting more oil trucks off the road, and so should the government.
To make matters worse, the pragmatic middle ground in Congress has disappeared in the years since NEPA was passed. Any proposed reform in the law is now vulnerable to deliberate misinterpretation by one side or the other for partisan reasons. In consequence, the executive agencies, principally the Environmental Protection Agency, have greater discretion in applying the rules.
Judicial Deference Is Inevitable in This Policy Area
Similarly, I can see why Dr. Zycher deplores the Chevron decision but it’s hard to see what else the Supreme Court could have done under the circumstances. Unless the legislation is thousands of pages long, dealing in microscopic detail with every issue and every contingency, it is certain to contain ambiguities. Even if it covered every contingency imaginable in 1970, it would be inadequate to the very different circumstances of 2018. The enforcement agency must interpret the language of the law in light of the new situations that are constantly arising in a dynamic economy. It’s regrettable that sharp partisan divisions mean sudden changes of direction for the EPA with each new presidency, but the possible alternatives are probably worse and certainly less democratic.
Let me finish on a brighter note. The history of American environmentalism since 1970 is a success story, giving us a great deal to celebrate and much to enjoy. It’s true that the environmental bureaucracy is bloated, cumbersome, slow-moving, self-interested, and often more responsive to political fights in Washington than to realities on the ground out in the states. Could it be better? Yes. It would be a step forward if Congress regularly updated and improved the legislation to keep up with the times and to get rid of the roadblocks and the perverse incentives. But with this bureaucracy we have achieved clearer skies, cleaner water, better health, great life expectancy, and a still-expanding array of landscapes that have been set aside for the enjoyment of the American public for the indefinite future. If the bureaucracy wasn’t there, and if Congress hadn’t acted in 1970, I think our environmental situation would be a great deal worse.
One more piece of good news is the discovery, since 1970, that we don’t have to choose between environmental protection and economic growth. We can have both, and our environment has become cleaner as the growth has continued. Current trends in renewable energy, whose capacity keeps increasing and whose cost keeps falling, suggests that our experience since 1970 is not a once-only phenomenon. Instead, the environmental improvements and the economic growth seem all set to continue.