13.0 Introduction

Perhaps, the most striking aspect of the U.S. national environmental regulation is its brief history. As recently as 50 years ago, the United States had no major federal legislation controlling the discharge of pollutants into the air and water, no national regulations covering the disposal of hazardous waste onto land, no process for reviewing new chemicals, only a limited procedure for registering new pesticides, and no protection for endangered species.

Before 1970, the states had sole responsibility for pollution-control activities, but even at the state level, serious efforts at environmental protection have only a short history. Oregon initiated the first statewide air-pollution-control effort in 1952; only California had mandated tailpipe emission standards for cars by 1970. In the late 1950s and 1960s, as national attention began focusing on environmental problems, the federal government passed a variety of laws encouraging such decentralized efforts to regulate air and water pollution. These laws sponsored research on the health effects of pollution, provided resources for technical assistance and mechanisms for resolving cross-boundary disputes, and put informal pressure on U.S. automakers to reduce vehicle emissions.

On April 20, 1970, Americans celebrated Earth Day for the first time. In addition, that year, motivated by increasing public awareness, dissatisfaction with slow state regulatory efforts, and little improvement in the pollution performance of U.S. cars, the U.S. Congress struck out on a different, centralized environmental road. The Clean Air Act (CAA) amendments of 1970 embraced a new philosophy in which minimum standards for air pollution control for the entire nation would be set in Washington. During the remainder of the decade, a similar approach was adopted for water pollution, solid and hazardous waste disposal, and chemical and pesticide registration.

New pollution laws continued to pass at the federal level through the early 1990s, but over the last two decades, environmental issues have become increasingly partisan at the national level, leading to gridlock in Washington, DC. As a result, the legislative pendulum has swung back to the states. Because the federal government has been slow to regulate emissions of carbon dioxide (${\text{CO}}_2$), the principal global warming pollutant, states on the East and West coasts have begun imposing their own statewide restrictions on carbon dioxide. And across the country, states have taken measures to promote renewable energy and energy efficiency.

This chapter provides an overview of the basic national legislation in five areas: air pollution, water pollution, hazardous waste, toxic substances, and endangered species. We will see as well that steps to attack climate change at the national level in the United States over the last decade have utilized the already existing framework of air pollution laws. With this background laid, in the next chapter, we move on to consider the actual accomplishments of this legislation, criticisms of regulation, and an evaluation of the prospects for future regulatory success. In particular, under President Trump, the nation now seems likely to back down from many existing initiatives.

13.1 Cleaning the Air

The original Clean Air Act (CAA), passed in 1963, focused on federal assistance to the states. Major amendments to the CAA occurred in 1970, 1977, and 1990 and have shaped the national regulatory framework.¹ The CAA (as amended) mandates a safety standard. Standards are to be set to “provide an adequate margin of safety…to protect the public…from any known or anticipated adverse effects associated with such air pollutants in the ambient air.” Congress explicitly ruled out a consideration of costs and benefits in the attainment of this goal. Yet, as we saw in Chapter 7, completely safe levels of many pollutants, short of zero discharge, do not exist. One of the difficulties the EPA has had in implementing the CAA has been in hammering out a politically acceptable definition of safety.

The CAA distinguishes two types of air pollutants. First are the so-called criteria (or common) air pollutants: particulates, sulfur dioxide, carbon monoxide, nitrogen oxide, ground-level ozone (smog), and lead. All these pollutants generate a variety of respiratory and heart-related problems, some contribute to cancer, and also lead causes neurological diseases. Ground-level ozone, better known as smog, should not be confused with ozone in the upper atmosphere. Ground-level ozone is a harmful pollutant, while the ozone layer surrounding the earth provides a shield protecting us from dangerous ultraviolet rays. Similarly, carbon monoxide (CO)—the fatal gas that accumulates in a closed garage when the car is running—should not be confused with carbon dioxide. Carbon dioxide, which is the major contributor to global warming, is also emitted from cars but does not directly harm human health.

In addition to the criteria pollutants, Congress was also concerned about other less common air pollutants, which are also carcinogenic or interfere with reproductive, immune, or neurological systems. These pollutants, now called hazardous air pollutants or air toxics, are also regulated under a safety standard, but in a different manner compared to the criteria pollutants.

For the criteria pollutants, Congress directed the EPA to develop National Ambient Air Quality Standards (NAAQS). Ambient air quality refers to the average quality of air in a particular region. Each criteria pollutant was to be given a primary standard, designed to protect human health and a secondary standard that focused on protecting wildlife, visibility, and ecological systems. Table 13.1 lists the primary NAAQS for the six criteria pollutants.²

The NAAQS are minimum standards, uniform around the country. In other words, regardless of the variation in compliance costs, all regions are expected to meet the NAAQ levels of air quality. If they desire, states are allowed to impose stricter standards.

What about areas already cleaner than that prescribed by the NAAQS? The 1977 CAA amendments set up a three-tiered system designed to prevent the significant deterioration of air quality. National parks and other scenic areas were designated Class I, in which air quality was to be maintained at the current level. Most areas were categorized into Class II, in which some deterioration was allowed. In the remaining areas, Class III, air quality was allowed to fall to the level of the NAAQS, but not below it.

Once the NAAQS were set, each state was required to develop a state implementation plan detailing how emissions from both stationary sources (factories, power plants) and mobile sources (cars, trucks, airplanes) would be controlled to meet the ambient standards. To do this, state environmental officials first had to divide their territory into the so-called air quality control regions, geographic areas sharing similar air pollution problems. The plan would then provide an implementation strategy for each region.

For stationary sources, the EPA requires states to use what is known as technology-based regulation. For all new sources, the states must mandate the type of pollution technology required for new plants. These New Source Performance Standards (NSPS) require firms to install the “best technological system of emissions reduction” commercially available at the time the standards are set. Note that NSPS technology may not be sufficient to achieve the NAAQ standard; it is simply supposed to represent a serious effort to get there.

State regulators are also supposed to define even more stringent technology-based regulation for sources wishing to locate in areas that have not achieved the NAAQ standards (nonattainment areas). Such firms must use the lowest achievable emission rate (LAER) technology. Those wishing to locate in Class I (pristine) areas are theoretically required to achieve yet another standard, the best available control technology (BACT). In practice, there is often little difference between NSPS, LAER, and BACT.

Until 1990, states were not required to impose technology-based regulations on existing sources. However, the 1990 CAA amendments require the states to define and impose, reasonably available control technology (RACT) on existing sources in nonattainment areas. RACT, BACT, LAER, NSPS—these acronyms seem bewildering upon introduction, and in fact, the actual regulatory process is quite tortured. The legal struggle to define what these different terms mean for individual industries has been one of the primary battlegrounds in the information war discussed in the previous chapter.

There are several major, ongoing exceptions to the technology-based regulation of stationary sources common under the CAA. Authorities in the Los Angeles area and the northeastern United States have created incentive-based “cap-and-trade” programs designed to provide firms with substantial flexibility in achieving targets for emissions of criteria pollutants. The 1990 CAA amendments also provided a similar flexible system to control acid rain that created a nationwide trading program capping sulfur dioxide and nitrogen oxide emissions from power plants. These alternative incentive-based approaches will be explored in detail in Chapters 15 and 16.

To control emissions of criteria pollutants from mobile sources, the CAA has put most of the burden on auto manufacturers, requiring several rounds of reductions in vehicle emissions for new cars. As a result, today’s vehicles are dramatically less polluting than their older counterparts. This policy, however, has been criticized as a cost-ineffective strategy for achieving the NAAQS, because it builds in equally high costs for auto consumers in both clean and dirty areas. In other words, rural residents wind up paying for the cleanup they may not need, in the form of higher priced cars. The EPA has also required nonattainment areas to use more closely targeted programs, including vehicle-inspection programs and the sale of reformulated (lower polluting) fuels. In addition, as we discuss further in Chapter 18, California has implemented a low-emission vehicles program in an attempt to meet the NAAQ standard.

To summarize, for the criteria pollutants, the regulatory process is now well advanced, and progress has been made on several fronts, though problems remain. By contrast, the air toxics case illustrates how regulatory progress can take a long time to unfold. Under the 1970 CAA statute, the EPA was instructed to identify and regulate hazardous air pollutants, defined as substances “which may reasonably be anticipated to result in an increase in mortality or an increase in serious, irreversible, or incapacitating reversible illness.”³ As with the criteria pollutants, the CAA established “an ample margin of safety” as the regulatory target.

Over the next 20 years, the process went into a deep stall. The EPA argued that a literal interpretation of the CAA’s safety mandate would require a zero-discharge standard, effectively banning dozens of valuable industrial chemicals. Unwilling to take such a severe step, the agency chose to ignore the problem and regulated only a couple of air toxics during the 1970s. Environmentalists sued the agency, arguing that bans were not necessary; instead, high levels of (expensive) controls should be imposed on products without substitutes. A compromise along these lines was developing in the late 1970s but collapsed with the election of President Reagan in 1980, who had campaigned on a deregulatory agenda.

During the first half of the decade, the EPA chose to “study the problem.” However, by the late 1980s, pressure was building for action: the 1984 explosion of a chemical plant in Bhopal, India, and the congressionally mandated release of plant-by-plant chemical emissions (the TRI discussed in Chapter 12) prodded the EPA into a study revealing that cancer risks from air toxics in 205 communities around the country exceeded 1 in 1,000.

The impasse was finally addressed in the 1990 CAA. The 1990 amendments adopt technology-based regulation, requiring the EPA to specify the maximum achievable control technology (MACT) for different sources emitting 189 air pollutants presumed to be hazardous. The EPA can add or delete substances from this list. MACT was not supposed to immediately achieve an “ample margin of safety,” because Congress mandated that it be selected with some consideration of attainment cost. However, once MACT had been put in place, additional control measures would be required to reduce any residual cancer risk to a level of at least 1 in 10,000 for the most exposed population, with an ultimate risk target of 1 in 1 million for the population at large. The EPA has since issued dozens of MACT regulations and initiated several of the follow-up industry-level risk analyses.⁴

Until 2012, however, certain pollutants continued to slip through the regulatory cracks; airborne mercury (primarily from coal-fired power plants) was the most egregious offender. Originally considered an air toxic, mercury escaped regulatory attention until 2000, when MACT rules were finally proposed by the Clinton administration. But, the Bush EPA decided to reject the Clinton proposals and reclassified mercury as a criteria pollutant—enabling the agency to propose less strict regulations that also featured a cap-and-trade component (more on this in Chapter 16). Several states then sued the Bush EPA over this decision, and in 2008, the courts determined that the EPA had acted improperly in declaring mercury a nontoxic air pollutant. The Obama administration dropped the Bush plan, and in 2012, mercury regulation using MACT command-and-control techniques was finally being put into place.

To summarize, for air toxics, it took 20 years of stalled progress and contentious litigation until, in 1990, policymakers finally took the bull by the horns and clearly defined what was meant by “an ample margin of safety.” With some very notable exceptions such as mercury, the process of regulating air toxics is now well under way. The 1990 CAA amendments, however, addressed only stationary sources of hazardous air pollutants. Only 20 percent of air toxics are in fact emitted by stationary sources that fall under the purview of the amendments. Thus, air toxic emissions from small and mobile sources remain uncontrolled under current legislation.⁵

Figure 13.1 provides a general outline of the CAA amendments. To summarize, the CAA has set a general goal of “safety” for the two categories of criteria and hazardous pollutants. Emissions of the criteria pollutants are regulated with the intent to achieve an ambient air quality standard within each air quality control region. By contrast, hazardous pollutants must meet emission standards ultimately designed to reduce cancer risks to the most exposed to at least 1 in 10,000. Finally, both programs are technology based. With some exceptions, regulators decide on particular pollution-control technologies that firms are then required to adopt.

13.2 The Clean Air Act and Climate Change

The CAA plays one final, critically important regulatory role in the United States: reducing greenhouse gas emissions. Recall that the CAA legislation originally passed back in 1970 and was focused on reducing urban air pollution—smog—emitted from car tailpipes and factory and power plant smokestacks. This was before anyone, including members of Congress, had even heard of global warming. Yet, this 45-year-old law has now become the principal mechanism for national policy to address climate change. How did this happen?

Global warming was first identified as a major environmental issue in the late 1980s. In the 30 years since then, Congress has taken only one major step to address the issue. In 1992, on a bipartisan basis, the U.S. Senate ratified a climate treaty that had been negotiated by Republican President George H.W. Bush, the UN Framework Convention on Climate Change (UNFCCC). This has enabled the United States to be a party to the ongoing international efforts to address climate change, leading finally to the Paris Climate Agreement in 2015 that was signed by President Obama. More on the Paris Agreement follows below.

However, since the UNFCCC treaty was adopted in 1992, an increasingly bitter partisan divide has grown up in Washington DC around many environmental, social, and economic issues, including climate change in particular.⁶ As a result, since ratifying the UN climate treaty 25 years ago, Congress has passed zero laws requiring reduction in greenhouse gas emissions. Frustrated by this inaction, in the mid-2000s, several liberal states sued the EPA, arguing that carbon dioxide and other greenhouse gasses were “dangerous pollutants” as defined by the 1970 CAA. Given this, the states argued, the EPA was required by law to force industry to start cutting global warming pollution.

In 2007, the U.S. Supreme Court agreed that carbon dioxide and other greenhouse gasses should indeed be considered criteria air pollutants, harmful to human health and the environment. This opened the door to EPA regulating CO₂, and in 2009, the EPA officially concluded that greenhouse gas pollution was heating the planet and did in fact constitute a serious threat to human health and welfare. This finding gave the EPA the authority to start requiring the industry to cut emissions.

Recall that the EPA’s mandate under the CAA is to provide (or work toward) a “safe” level of air quality. However, CO₂ is a global pollutant, and stabilizing the climate is far out of reach of any U.S. government agency. Given these facts, how could the EPA start to guarantee Americans a safe (stable) climate? The agency’s answer was to move step by step in the direction of safety, as they did for other pollutants: requiring Best Practical Technology regulations, first for new sources, later for existing sources; in addition, the EPA did this, via the Paris Climate Agreement, in conjunction with measures taken by other countries across the world.

Under the Obama administration, the EPA proceeded to take three major steps to reduce greenhouse gas pollution. First, corporate average fuel economy (CAFE) standards were increased for the first time in decades. By 2025, average fuel economy in the new car vehicle fleet in the United States is required to reach 54.5 mpg, up from 28 mpg in 2012. Ford, Toyota, and other companies are now working to ensure that on average, the vehicles they will sell in the United States will achieve this new standard. By doubling fuel efficiency, U.S. cars will burn a lot less fossil fuel, both lowering emissions and saving consumers on gasoline bills. For more on this regulation, and innovations in vehicle technologies, see Chapter 17.

Second, Obama’s EPA required any new electric power sources to reduce greenhouse gas emissions substantially relative to existing technology. In particular, any new coal-fired power plant will be required to produce no more CO₂ than a comparable-sized natural gas plant. This regulation effectively rules out the construction of new coal plants in the United States until there is a cost-effective technology that allows coal plants to capture their carbon emissions and “sequester” the CO₂ underground.

Finally, in 2015, the EPA put in place a Best Practical Technology regulation for the existing electric power sector. Called The Clean Power Plan, this rule requires an overall reduction of global warming pollution from power plants of around 30% by 2030 in the United States, relative to the levels in 2006.⁷ To reach this goal, the EPA analyzed the potential to reduce emissions in each state from (1) greater efficiency at coal plants; (2) fuel switching from coal to natural gas; and (3) the build out of renewable energy sources, energy efficiency measures, and potentially, new nuclear generating stations.

Different targets were then set for each state, adding up in total to the national 30% cut. And following the issuing of the rule, in state capitals across the country, CAA State Implementation planning processes were put in motion to develop strategies to achieve the mandated state-level reductions in global warming pollution.

However, in early 2016, following a law suit brought by conservative states, the Clean Power Plan regulation on the existing power sector was put on hold by the Supreme Court, pending a review of the overall legality of the EPA’s rule. In most states, the State Implementation Planning also stopped as well. The Court is expected to decide on this final piece of global warming regulation affecting existing power plants in late 2017.

To summarize, in the increasingly partisan environment that has characterized U.S. politics for the last two decades, Congress has not passed any new environmental laws of significance. Nevertheless, as a result of the ratification of the UNFCCC treaty in 1992—the last major environmental action of any type passed by Congress—President Obama signed the 2015 Paris Climate Agreement. In this UN accord, the United States pledged to reduce global warming pollution by around 30 percent from the levels in 2006 by 2030. (More details on the agreement are in Chapter 21.) Obama was able to make this commitment, in turn, because of the new EPA regulations on vehicles and power plants introduced by his administration that were enabled by a law passed way back in 1970: the Clean Air Act.

However, this is not the end of the story. In our highly partisan world, government climate action is now politically controversial in a way that in the previous decades, regulations to protect the environment were not. As of the final edit to this book (December 2016), newly elected President Trump, working with significant political support in both the house and Senate, appears likely to reverse or delay many of the Obama administration’s CAA initiatives on climate and perhaps withdraw from the Paris agreement altogether.

Given this, the United States may not meet its emission reduction commitments under the Paris Climate Agreement. Moreover, the United States seems very unlikely to fulfill a key requirement that each country return in 2020 with a set of deeper proposed cuts. Because the United States is the second biggest global warming polluter after China, without U.S. participation, there is a serious danger that the Paris accords could unravel. On the other hand, it is possible that state-level action to continue to reduce global warming emissions on the west coast and in the northeast, and new 2020 sets of commitments by these groups of states, could help salvage the Paris Agreement in the medium term. Regardless, the election of 2016 will reshape the landscape of the United States and international climate policy.

13.3 Fishable and Swimmable Waters

The first national water pollution law was passed in 1899. Its simple intent was to prevent industries from disrupting navigation by literally clogging rivers and streams with sludge, sawdust, or fiber. There was little national activity beyond this until the 1950s and 1960s, when the federal government began assisting and encouraging states to develop their own pollution standards. In 1972, however, Congress opted for a centralized strategy with the passage of the Federal Water Pollution Control Act (FWPCA). In combination with the Clean Water Act of 1977, this legislation provides our basic water pollution framework.⁸

FWPCA laid out an ambitious safety-based goal: the achievement of fishable and swimmable waters by 1983. However, the legislation set its sight beyond this charge, which we might consider a reasonable safety standard as defined in Chapter 7 (the elimination of “significant” risk). FWPCA, in fact, called for the elimination of all risks—zero discharge of pollutants into navigable waters by 1985. Needless to say, this last goal has not been met. Finally, the act prohibits the discharge of “toxic materials in toxic amounts,” another ambiguous phrase that has provided grist for the regulatory lawyers’ mill.

Individual states are left to draft their own water-quality emissions guidelines. For consistency with the FWPCA, they must be sufficiently strict to allow swimming and some types of fishing. However, states are free to draft stricter regulation, for example, to protect water habitat or undeveloped rivers.

The approach used to achieve state water-quality targets is in many ways similar to the regulation of air toxics described in the previous section. In 1972, Congress envisioned two initial rounds of technology-based controls. The EPA was directed to determine the best practical technology (BPT) and a more stringent best available technology (BAT) so that all industrial dischargers could have the technologies installed by 1977 and 1983, respectively. The timetable proved too stringent, however, and was amended in 1977.⁹ It took until 1988 for the EPA to issue all (save one) of its BAT regulations. With BAT in place, the EPA has the authority to impose a third round of even more stringent (better than the best!), technology-based controls on sources contributing to the pollution of lakes or streams that have yet to achieve state ambient quality standards.

Besides installing BPT and then BAT (or BAT alone for newcomers), each discharger must hold a permit that specifies his or her legal pollution emission level. State agencies are generally responsible for the permitting process and for enforcing compliance. The process does not always run smoothly. A Google news search on “CWA permit violations” will pull up dozens of local news articles with recent examples of states with permit backlogs and allegations of lax enforcement.

One of the major sources of water pollution is improperly treated sewage. As a result, a principal component of federal clean-water legislation has been the provision of grants to municipalities for the construction of sewage facilities. From 1965 to 1991, close to $100 billion in federal dollars were committed for this purpose. However, for the last two decades, federal clean-water infrastructure funding significantly declined in absolute terms, even while populations continue to grow, and states and local water districts have struggled to raise investment capital to make up the difference. Lowered spending on sewage treatment plants and piping systems has raised concerns about deterioration in water quality.¹⁰

Federal clean-water legislation has focused primarily on the stationary point sources of pollution discussed earlier: factories and sewage plants. However, nonpoint water pollution, runoff from storm sewers and construction sites in urban areas and from agricultural production and mining sites in rural areas, has always been an important source of water pollution. For the last 20 years, siltation, nutrient and pesticide loading from agricultural runoff have in fact been the primary source of pollution affecting our streams, rivers, and lakes. Runoff is not only from farms but also from huge cattle, chicken, and hog production facilities called Concentrated Animal Feeding Operations (CAFO’s). In the United States, these facilities now generate ten times more animal waste than the waste produced by humans. A significant proportion of this sewage washes into streams and rivers. Nitrate pollution from these organic sources and from chemical fertilizer is a critical problem, leading to major “dead zones” at the mouth of the Mississippi River, in the Chesapeake Bay, and elsewhere.

The federal clean-water legislation delegates responsibility to the states for regulating nonpoint pollution; the 1987 Water Quality Act requires states to develop the so-called best management practices to control runoff from industrial and agricultural sites. Progress in this area has been slow because the diverse nature of the nonpoint problem makes centralized, technology-based regulation infeasible.

Two ways to control nonpoint water pollution are to (1) reduce runoff and (2) reduce the volume of pollutants available to be mobilized, a “pollution-prevention” strategy. As an example of the latter, farmers have begun adopting so-called conservation-tillage practices, which leave stubble in the fields to reduce runoff. In addition, a variety of measures that reduce overall pesticide use have been introduced. We look more closely at some of these steps in Chapter 18. Finally, the EPA has experimented with permit trading between point and nonpoint sources. Under these experimental schemes, point sources can pay nonpoint sources to reduce pollution as an alternative to installing point-source technology controls.¹¹

Other water quality issues include controlling the loss of wetlands from both pollution and drainage. Wetlands are managed under a “no net loss” directive by the Federal Army Corps of Engineers, through the authority of the Clean Water Act. That means that if developers want to fill in ten acres of wetlands, they need to restore or create ten acres providing comparable ecosystem services nearby. Finally, the recent emergence of “fracking” technology for use in recovering natural gas (see the discussion in Chapter 18) has led to an upsurge of concern about potential groundwater contamination. Groundwater itself is largely unprotected, coming under regulatory control only when there is a threat of contamination of drinking water.

13.4 Hazardous Waste Disposal on Land

The 1970s was the decade of air and water pollution legislation. In the 1980s, concern shifted to land disposal of hazardous waste. Although the initial law covering hazardous waste disposal, the Resource Conservation and Recovery Act (RCRA, pronounced RICK-ra), was passed in 1976, actual regulation did not get under way until 1980 and accelerated when the law was amended by Congress in 1984.¹² RCRA is concerned with current disposal practices. The second major piece of hazardous waste legislation deals with abandoned dump sites. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, better known as Superfund) was passed in 1980 and amended in 1986.

What exactly is hazardous waste? One inclusive definition is any substance that poses a potential, substantial threat to human health or the environment. However, resolving what this means has proved to be a thorny problem. The EPA has developed a RCRA list of several hundred substances and waste flows deemed to be hazardous, based on criteria such as ignitability, corrosivity, reactivity, and toxicity. However, certain materials—oil-drilling muds and mine tailings—were granted immunity from hazardous waste regulation under RCRA. Some states, such as California and Washington, have instituted more stringent definitions that effectively double the volume of substances regulated as hazardous.¹³

A typical hazardous waste dump will include many substances known or suspected either to be carcinogenic or to have adverse effects on reproductive, immune, or neurological systems. While hazardous waste thus clearly poses a potential threat to human health and the environment, what are the actual risks? This is a very contentious topic. Most exposure to waste occurs when chemicals leach out of dumps in rainwater or into the air in vaporous form. However, because the number of people living in close proximity to the dumps is small, and because residents come and go, it is difficult to establish whether elevated levels of disease sometimes found by such dumps occur by chance or as a result of exposure to water. Moreover, because many wastes are quite long-lived, long-term effects that are difficult to predict must be factored in.

Love Canal, formerly a suburb of Niagara Falls, New York, is the best-known example of a hazardous waste dump. From 1942 to 1953, the Hooker Chemical and Plastics Corporation (now Occidental Chemical) buried millions of pounds of chemical wastes encased in metal drums in the abandoned canal. Hooker then sold the site to the city for $1 as a possible location for an elementary school. A suburban housing development soon grew up around the area. However, the drums rusted, and liquid waste began to pool on the surface and seep into people’s basements. In 1978, after growing concern by residents over reported health effects—ranging from the loss of fur on pets to birth defects and breast cancer—and the detection of high levels of chemicals in some homes, the state of New York ordered the area immediately around the dump evacuated.

Love Canal is probably the most extensively studied hazardous waste site in the world, yet many questions remain about possible health effects. The New York State Department of Health did find roughly double the expected rate of low-birth-weight babies in a low-lying area adjacent to the dump during the period of active dumping, as well as a statistically significant increase in babies born with birth defects after the chemicals were dumped. Another study found that children who had lived in the canal area were shorter and weighed less than a control group.¹⁴

The Love Canal case illustrates first that improperly handled hazardous waste can pose a real health threat. Second, it shows that establishing the full extent of adverse health effects is quite difficult. One government-sponsored scientific review panel, charged with assessing public concern that hazardous waste poses a serious threat to public health, concluded only that such concern could be neither confirmed nor refuted.¹⁵

Nevertheless, because of the limited routes of exposure, and the small numbers of people living in the close vicinity of dumps, many have argued that hazardous waste is unlikely to pose a national health threat comparable to that of air and water pollution. Following this line of reasoning, the EPA’s Science Advisory Panel did not list hazardous waste as a primary concern for ecological, welfare, or health risks (see Table 5.1). At Love Canal, after the dump had been capped with a layer of clay, the streams cleaned up, and other remedial action taken, the New York State Department of Health commissioner concluded in 1989 that some homes in the area could be safely reoccupied.¹⁶

However, despite official assessments that downplay the overall risk from hazardous waste, the public remains quite concerned. Partly, this has to do with a disagreement over the normative goal of environmental policy. Under a safety standard, the fact that the numbers at risk of exposure are small does not lessen concern. Concern over hazardous waste also has to do with the visibility of victims. While directly tracing a birth defect to a neighboring waste dump is difficult, it is easier than linking it to smokestack emissions a hundred miles away. Finally, the public remains wary of scientific risk assessment; given the current state of knowledge about possible effects of hazardous waste, such skepticism might be warranted.

The volume of hazardous waste is significant. Each year, American industry and households generate about 40 million tons that fall under RCRA regulation; much of the remainder is disposed of through liquid discharges regulated by the Clean Water Act. Household hazardous waste takes the form of used motor oil, house paint, pesticides, and batteries. The bulk of waste, however, is produced by industry, and about 2 percent of industrial sources produce 95 percent of the total.¹⁷

What happens to all this waste? Common disposal methods include surface impoundment, landfilling, injection into deep underground wells, direct or indirect discharge into surface waters, incineration, and treatment. However, under the presumption that disposal on land posed the greatest long-term environmental threat from hazardous waste (and given that discharge into water and air was already regulated), the 1984 RCRA amendments built in a strong bias against land disposal. The legislation essentially puts the burden of proof on firms to demonstrate that the disposal method is indeed safe.¹⁸ Deep-well injection, incineration, recycling, and water discharge are thus likely to become the most common disposal methods in the future.

The regulatory framework for hazardous waste disposal under RCRA has a three-part focus. First, as noted, the EPA has been required to designate which substances are to be deemed hazardous. RCRA then requires cradle-to-grave tracking of such wastes. When hazardous waste is shipped, it must be accompanied by a manifest stating its origin and intermediate stops. This manifest system was designed to discourage illegal dumping.

Finally, RCRA requires that facilities that treat, store, or dispose of hazardous wastes are to be regulated under a safety standard. To accomplish this goal, RCRA imposes location restrictions and requires personnel training, groundwater monitoring, closure and post-closure plans, and adequate insurance coverage. Under RCRA, facilities can also be forced to clean up old dump sites under their jurisdiction in order to receive a permit. However, the stringency of regulations varies from program to program. As we saw in Chapter 12, the EPA’s final regulatory standards for deep-well injection of wastes were successfully challenged as too onerous by the chemical industry.

RCRA governs the current disposal of wastes. By contrast, CERCLA, or Superfund, provides a mechanism for cleaning up abandoned dump sites. Superfund takes its name from what was originally a large pool of money collected by the government in the form of taxes on the chemical and petroleum industries and a general corporate environmental tax, supplemented by personal income tax revenues, used to finance dump cleanups. However, the industry taxes were abolished in the mid-1990s, and the Superfund is largely exhausted.

Superfund also provides another funding mechanism. Any party that disposed of waste in a particular dump, legally or not, can be sued by the government to finance the entire cost of the cleanup. This system, known as strict, joint, and several liability, was put in place as a way to fund cleanups without spending additional government dollars. If the government could find one responsible party, the theory went, that party would then have the incentive to uncover other dumpers. However, the system has developed into a legal morass. Rather than bear what are potentially tremendous cleanup costs, firms have devoted resources to suing one another and the government over who will pay what share. Detroit automakers, for example, sued more than 200 parties, including the Girl Scouts, to contribute to one Michigan cleanup.¹⁹

Given this situation, the legal costs of Superfund can be quite high. As a percentage of cleanup costs, legal fees and other transaction expenses range from 23 percent to 31 percent; about $8 billion could have been saved from currently designated Superfund sites if retroactive liability provisions were eliminated and cleanup was financed solely out of the trust fund.²⁰

The liability system under Superfund does have one attractive efficiency feature: waste generators, not just disposal facility operators, are held strictly responsible for the ultimate fate of their waste; this policy clearly provides a powerful incentive for careful management practices today. Fear of future liability under Superfund has spurred manufacturers both to seek methods for reducing their use of hazardous chemicals and to take greater care in their disposal practices.

Beyond high legal costs, Superfund has been bedeviled by other problems, including site selection, costly cleanup efforts, and resolving the “How clean is clean?” issue. By 2011, from a universe of some 40,000 dump sites nationwide, the EPA had designated around 1,500 as high-priority Superfund sites. More than 1,120 sites had been cleaned up to varying degrees. Average per site cleanup cost estimates range from $27 million to $50 million. Total cleanup costs for the currently designated sites alone are estimated to run to at least $51 billion. Congress has long considered major changes to the Superfund program; as of 2016, however, no revision had been undertaken.²¹

Superfund also authorizes the EPA to conduct emergency action at sites where immediate risks to the public or the environment are present. From 1980 to 2000, the agency had undertaken remedial emergency action at more than 3,200 sites. More than 40,000 people were evacuated from their homes, and close to 90 percent eventually returned. Alternative water supplies had been provided to 200,000 people. Emergency removals continue: EPA annually oversees hundreds of evacuations associated with hazardous chemical spills and releases.²²

13.5 Chemicals and Pesticides

So far, this chapter has given a brief review of the legislation governing the disposal of wastes into the air and water and onto the land. The government has also passed two laws that share the ostensible goal of restricting the use of environmentally dangerous products in the first place. The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and the Toxic Substances Control Act (TSCA, pronounced TOSS-ka) provide a mechanism for the EPA to review both new and currently marketed pesticides and chemicals, respectively, for their environmental impact. The agency can then recommend restrictions on such products, if they can be justified on a benefit–cost basis. Thus, unlike the other major pollution statutes just described, FIFRA and (until recently) TSCA directed the EPA to pursue an explicit balancing of costs and benefits in the regulatory process. Efficiency rather than safety is the intended goal.

FIFRA was originally passed by Congress in 1947 to protect farmers from fraudulent claims by pesticide manufacturers. Amendments in 1964, 1972, 1978, and 1988 have provided the legislation with an environmental mandate. Under FIFRA, all new pesticides must be registered with the EPA; to obtain approval for major new ingredients, manufacturers must conduct and submit scientific studies of an agent’s toxicity. This can be an expensive and time-consuming process. According to an industry source, registering a major new ingredient will cost between $5 million and $7 million in scientific studies and take as long as 5 years.²³ The EPA is then expected to weigh the benefits of approving the new pesticide (lower costs to farmers and, ultimately, food prices for consumers) against the environmental costs.

If evidence accumulates that an existing pesticide is harmful, the EPA can institute a benefit–cost analysis of the product and, depending on the findings, limit or restrict its use. This so-called special review process entails a lengthy, trial-like procedure. Finally, under the 1972 amendments, the EPA was required to reregister hundreds of existing pesticides that had already been registered without environmental analysis. However, until 1988, when it was forced to do so by Congress, the EPA took no action on this front.

The EPA’s benefit–cost analyses under FIFRA have been subject to criticism, primarily on the benefits side. In theory, benefits of pesticides should be measured as the net increase in consumer surplus from lower food prices, plus any change in growers’ and manufacturers’ profits. Ironically, if pesticides boost yields, farmers as a group may be made worse off with the introduction of a new pesticides as crop prices fall and demand is unresponsive to price decreases (inelastic). In the agricultural case, one also needs to subtract additional subsidy payments to farmers who report an increase in yields. To do this properly, one would need good estimates of the pesticide’s effectiveness relative to the next best alternative, the price responsiveness of demand (elasticity) for different crops in question, and good input and output price data.

This information is generally difficult to obtain. In fact, for pesticide registration, the EPA has often done no benefits estimation at all. Instead, the agency has relied on the manufacturer’s willingness to expend money on the registration process as evidence that the project will yield some benefit. The EPA in fact has not even required any evidence that the pesticide is effective; thus, it could not even begin a formal benefit analysis. As a result, the process for new pesticides looks only at risks and has essentially been a “loose” safety standard.²⁴

Under the special review process for existing pesticides, the agency does engage in benefits analysis, but the available information is often poor. Thus, the quality of the benefit assessment varies from study to study. One analysis found that numerical benefit estimates were available for only 167 of the 245 food-use decisions studied in the special review process.

The researchers also looked at the political economy of the special review process and found that regulators did in fact respond to the information presented in the benefit–cost analyses. Pesticide uses were more likely to be canceled as the associated health and environmental risks increased. At the same time, higher estimated costs of cancellation reduced the likelihood that such an action would be taken.

The authors also found substantial evidence for political influence. Comments by environmentalists (often concerned about protecting marine life) dramatically increased the likelihood of restriction, while comments by growers and academics (primarily representing industry) had the opposite effect. Environmentalists commented on 49 percent of the decisions, and growers and academics commented on 38 percent of the decisions. On any particular decision, the combined influence of the latter group outweighed that of the former. Of course, the influence of the pesticide manufacturer, involved throughout the process, was important but could not be independently identified.²⁵

This brief discussion of the benefit–cost process under FIFRA highlights several points made in Chapter 12. First, information about the benefits and costs of regulation is not easy to obtain. Second, regulators must often turn to regulated firms to obtain access to the information that is available. Third, lobbying resources and political orientations matter; special review decisions were clearly affected by the presence of industry and environmental advocates. Finally, lobbying is not the only thing that matters. In controlling for the presence of industry and environmental advocates, regulators did respond to their legislative mandate of weighing costs against benefits.

The legislation governing the allowable uses of toxic chemicals, TSCA, was passed in 1976. However, TSCA gave the government much less leverage than did FIFRA. As a result, the legislation has been largely ineffective. Of more than 80,000 synthetic chemicals used in industrial processes in the United States, the EPA requested tests on less than a thousand new and existing chemicals and has issued regulations to ban or limit the use of only a handful. As discussed in Chapter 4, the EPA’s 10-year effort to restrict asbestos use under TSCA was thrown out by the courts for failing to meet the strict efficiency (“least burdensome”) standard required by the law.

As a result, and in a move bucking the general trend toward partisanship on environmental issues, in 2016, Congress passed a bipartisan TSCA reform bill. The new law actually moves TSCA off of an efficiency standard that weighs benefits and costs, to a science-based safety standard for chemical use. It also requires new chemicals to be evaluated by the EPA for negative impacts prior to their introduction into the market. Under the old TSCA, the EPA could only challenge the chemicals after they were already in commercial use and after a cumbersome review process. On these two fronts, the new TSCA has followed the lead from chemical regulation in the European Union that requires companies to submit test data proving the safety of new chemicals before they are manufactured.

With the TSCA reform, the pesticide law FIFRA remains the only federal environmental law still based on an efficiency standard. Why did conservatives, who generally favor a benefit–cost standard over a safety standard, support changes to TSCA in the other direction? In part, the chemical industry has adapted to the European system and has gotten comfortable with pretesting of chemicals, providing them some protection from future lawsuits. However, a main concession to business was that the new TSCA preempts states, including large progressive states such as California, from requiring stricter chemical regulation standards than the EPA. Indeed, some environmental groups opposed the TSCA deal because of this preemption.²⁶

While TSCA regulates the use of chemicals, an information-based law appears to have had a much bigger impact on U.S. chemical emissions. In 1986, after a chemical factory in Bhopal, India, exploded, killing and maiming thousands, the U.S. Congress passed the Emergency Planning and Right-to-Know Act. The act required companies to report on their releases of 450 chemicals suspected or known to be toxic—many of them unregulated at the time. The so-called Toxics Release Inventory (TRI), mentioned briefly at the end of Chapter 12, provides self-reported data on chemical releases on a plant-by-plant basis across the country.

The TRI data first went public in 1989 and proved to be startling: industry was emitting nearly 5 billion pounds of chemicals of various toxicities, mostly substances that were either unregulated or under legal limits. In the face of public relations pressures generated by the TRI list, many big chemical firms adopted pollution prevention programs.

The TRI numbers provide evidence of success. Overall, releases of the 17 most toxic chemicals fell by 51 percent from 1988 to 1994, and firms with more public exposure reduced emissions the most.²⁷ Unlike all the other laws discussed in this chapter, the TRI did not mandate emission reductions or indeed have any particular goal other than informing the public about emissions. Its success suggests that preventing pollution at industrial plants, through either recycling or source reduction, is relatively inexpensive.

13.6 Endangered Species Protection

The Endangered Species Act (ESA) is our one piece of ecologically motivated environmental legislation. The law, passed in 1973, requires protection of a certain type of natural capital—species—regardless of the cost. The rationale for the law is strictly anthropocentric: “These species…are of aesthetic, ecological, educational, historical, recreational and scientific value to the Nation and its people.”²⁸

The strict implications of the law became apparent in the mid-1970s, when a University of Tennessee law school student filed suit and successfully halted the construction of a nearly completed $110 million dam. The reason? A new species of fish called the snail darter had been discovered downriver. Upset by the successful lawsuit, Congress created the so-called God Squad—an appointed committee with the authority to overrule ESA decisions on efficiency grounds.

Ironically, the God Squad concluded that the dam in fact didn’t make sense even on benefit–cost terms. Finally, Congress overrode the God Squad and authorized construction by a special act of legislation. A new population of snail darters, meanwhile, had been discovered elsewhere; and in 1984, the status of the fish was upgraded from “endangered” to “threatened.”

Under the ESA, federal agencies are required to list animals and plant species considered to be endangered or threatened (likely to become endangered). Recovery plans for these organisms must be developed and then critical habitat designated. Once this had been done, both public and private actors must refrain from damaging this habitat. (Technically, the act prohibits “taking” of a listed species, and the Supreme Court has ruled that this includes damaging their habitat.) Both the listing and habitat designation decisions are supposed to be purely scientific and involve no consideration of economic costs or benefits.

Currently, there are approximately 1,350 listed species—75 percent endangered and 25 percent threatened. Some 4,000 other species are potential candidates for listing. The scientific basis for deciding which critters and plants to list is far from precise; both larger and perceived “higher” life-forms are more liable to get listed, and there is little consistency in the scientific justifications across listings. In the past, 10 feathered or fuzzy species (8 birds, 1 bear, 1 panther) have accounted for more than half of all federal expenditures on recovery.²⁹

These expenditures are not large: The government spends about $80 million a year on listing and recovery or about the construction cost of a few miles of interstate highway.³⁰ However, the ESA has been embroiled in controversy because, its critics allege, it imposes large economic costs on private landholders. Recall that the statute prohibits all actors—public and private—from disturbing the critical habitat of a listed species. This means, in practice, that should an endangered animal be discovered on your property, then you might not be able to develop that land—no matter how much you paid for it.

Now, from an economic perspective, markets should be able to readily adapt to this kind of situation. If such surprise discoveries happened often, then people would start paying attention to them. One might even expect potential property buyers to demand “ESA surveys” before they buy land. Indeed, such surveys are routine now for uncovering the presence of hazardous waste. The fact that we don’t see a market for ESA surveys suggests that the problem is fairly isolated. And the data bear this out. From 1987 to 1991, the U.S. Fish and Wildlife Service engaged in 2,000 formal consultations on development proposals under the ESA; 18, less than 1 percent, were blocked.³¹ And in an analysis of two recent endangered species actions involving fish protection on the Colorado and Virgin rivers, the authors found very small impacts on employment and income; for some areas, the impacts were positive, for others negative. In no case did impacts rise above three-tenths of 1 percent change from the baseline forecasts.³²

Nevertheless, the ESA, similarly to all regulations, imposes costs on the private sector, and in certain cases, these costs have been large and dramatic. Perhaps, the best-known case involves protection of the spotted owl in the old-growth forests of the Pacific Northwest. While a far cry from the disaster predicted by critics, owl protection, which began in 1994, has meant that a few thousand timber jobs lost in the 1990 recession did not reappear. (As noted in Chapter 6, this case, along with high-sulfur coal mining, represents by far the most severe local jobs–environment trade-off found in the United States.)

However, the overall Pacific Northwest economy performed quite well through the mid-2000s and had very low unemployment rates. Many area economists attributed the robust growth of the non timber economy largely to the high quality of life—including protected forests—found there.³³ Finally, one benefit–cost study found that the nationwide willingness to pay (WTP) for owl preservation exceeded the costs, implying that owl preservation met the standard of ecological sustainability as well as efficiency.³⁴

Beyond high and/or unfairly distributed compliance costs, the ESA has received two other types of criticism. The first is economic. The ESA in its original formulation was all stick and no carrot; it gave landowners no incentive to go beyond the letter of the law. Indeed, some have argued that it provided the opposite, perverse incentive. Upon discovering an endangered critter, landowners might be tempted to “shoot, shovel, and shut up.” Overtime, the ESA has evolved through practice to provide better incentives for private landowners. For example, ESA rules now allow trading, in which some critical habitat can be developed provided that comparable habitat nearby is better protected. In addition, interagency Habitat Conservation Plans help private parties better understand their development options, should they find endangered species on their property.

The second criticism of the ESA is biological. The law’s focus on species rather than ecosystems distracts attention from the primary task—preserving biodiversity. Too much energy can be devoted to saving a single species while a rich ecosystem goes down the tubes. (This is similar to the criticism that the safety standard provides no guide to cost-effectiveness.) Recognizing this weakness in the structure of the ESA, interest has turned to the identification and preservation of the so-called hot spots—ecosystems rich in threatened or endangered biodiversity. Government agencies have significantly shifted their application of the ESA in this direction.³⁵

13.7 Summary

This chapter has provided a brief look at the existing structure of national environmental protection legislation. Table 13.2 provides a summary. The three statutes governing disposal on land and in the air and water have the achievement of a safe and clean environment, irrespective of the cost, as their goal. In fact, costs do enter through the back door, in the decisions about the resources the EPA can devote to each area and in the specific regulations that emerge to implement the laws. However, the clear intent of the law is to require, if it is needed to achieve safety, stricter regulation than would otherwise be efficient.

By contrast, the two statutes governing the introduction of new pesticides and chemicals—until 2016—explicitly sought to balance the costs and benefits of environmental protection, in an attempt to achieve something as efficient regulation. However, recent TSCA reform has shifted regulation of existing and new chemicals from an efficiency to a safety standard, leaving the pesticide rules as the sole remaining example of a benefit–cost-based regulation. Meanwhile, chemical emissions have been substantially reduced by the public relations pressure generated from the TRI.

Finally, the ESA is our only major statute that explicitly seeks ecological sustainability as a goal.

Given this background, we now turn to an evaluation of the successes and failures of this impressive regulatory structure.

1. 13.0 This chapter reviews the major federal environmental laws and their accomplishments in five areas: waste disposal (1) in the air, (2) in the water, and (3) on land; (4) the regulation of new and existing pesticides and chemicals; and (5) protection of endangered species.
2. 13.1 The Clean Air Act and its amendments require regulation to achieve an adequate margin of safety. Two types of pollutants, criteria (common) and hazardous air pollutants (air toxics), are regulated differently. The EPA sets National Ambient Air Quality Standards (NAAQS) for criteria pollutants and a health-based standard for air toxics. States must develop implementation plans to bring both stationary and mobile sources into compliance with standards. Nonattainment areas face special requirements. In all cases, the EPA relies on technology-based regulation, specifying particular types of technologies firms must use (e.g., NSPS, LAER, BACT, RACT, and MACT). Recently, the CAA has begun to target global warming pollution.
3. 13.2 Congress has taken only one significant action on climate change: ratification in 1992 of the UN Framework Convention on Climate Change (UNFCCC). The UN process eventually led to the 2015 Paris Climate Agreement, in which the United States agreed to cut global warming pollution by 30% below levels in 2006 by 2030. With a partisan Congress gridlocked on climate legislation, on what basis did President Obama agree that the United States would make these reductions? In 2007, the U.S. Supreme Court said that the EPA had the legal authority to require industry to cut emissions under the 1972 Clean Air Act. And so, in 2012, the agency issued rules requiring greenhouse gas cuts from vehicles (tightening the CAFE standards) and then, in 2015, from the electric power sector (through the Clean Power Plan). However, in 2016, the Court put a hold on the EPA action directed at new power plants (but not vehicles), with a final ruling on the power sector regulation expected in the fall of 2017. Given this uncertainty, it remains to be seen if the United States will meet the Paris commitments.
4. 13.3 Water-quality regulation, under the Federal Water Pollution Control Act and the Clean Water Act, also has safety as its target, mandating fishable and swimmable waters. Technology-based regulation (BPT, BAT) is employed. The government initially invested directly, through grants to municipalities, for sewage treatment plants. However, lack of continued funding has led to deteriorating infrastructure. Difficult-to-regulate nonpoint sources are now the major contributors to water pollution. Nonpoint sources are both urban and agricultural, including Confined Animal Feeding Operations (CAFO’s).
5. 13.4 Two statutes deal with hazardous waste disposal on land, and both require a safety standard. The Resource Conservation and Recovery Act (RCRA) has created the RCRA list, a variety of substances that must be disposed of in a controlled manner. RCRA has a built-in bias against land disposal of hazardous waste. Assessing the actual health risks from hazardous waste dumps such as the one at Love Canal is difficult. Nevertheless, in contrast to popular opinion, the EPA’s science advisory board views hazardous waste as a relatively low-priority environmental problem. Superfund is the second hazardous waste statute, and it deals with existing dumps. Cleanups are financed through public funds and by means of strict, joint, and several liability. While the latter has led to high legal costs, fear of future liability may have had a positive effect on current disposal practices. Superfund has been bedeviled by high costs, uncertain benefits, and slow progress.
6. 13.5 The statutes regulating the safety of new and existing pesticides (FIFRA) and chemicals (TSCA) were originally based on an efficiency standard. FIFRA has a registration and screening process for new substances and provides a special review of existing substances. Benefit–cost analysis to support efficient regulation under FIFRA has been of varying quality. Due to the high burden of proof placed on the government to demonstrate that the costs of any particular chemical use in terms of danger to public health outweighed the benefits of use, TSCA proved unworkable and was substantially amended in 2016. Congress shifted TSCA from an efficiency standard to a safety standard and mandated that new chemicals be prescreened for safety. In terms of the emissions of unregulated chemicals into the air and water, the Toxic Release Inventory (TRI), by simply requiring public disclosure, has proved to be an effective weapon.
7. 13.6 The Endangered Species Act (ESA) seeks ecological sustainability—the protection of natural capital—as its goal. The act requires listing of endangered and threatened species on a scientific basis and prevents activities that disturb critical habitats. The ESA has been criticized because of the costs it may impose on a small number of landholders and rural workers, lack of incentives for participation, and a focus on species instead of ecosystems.

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