National Center for Policy Analysis

MONTH IN REVIEW

Environmental Policy
August, 1996

CRITICS WONDER WHAT'S AFOOT AT EPA

The Environmental Protection Agency has been spending more money, but doing a lot less, according to the agency's own documents and Congressional records. Critics say the agency's productivity and effectiveness seem to be dropping.

When the EPA failed to release yearly enforcement figures this spring, people on Capitol Hill began to wonder if the agency was trying to hide something. When the figures were finally released three months late, they generated more questions than they answered, according to observers.

Although the EPA claims it is trying to cooperate with business, the agency initiated 562 criminal cases in fiscal 1995 -- an increase of 7 percent from the year before and a new high.
EPA enforcement is usually pursued through civil, rather than criminal, actions -- with civil outnumbering criminal actions usually by about 12 to 1.
Although EPA spending rose 8.5 percent in fiscal 1995, to $6.4 billion, it collected $70 million in civil penalties -- down from $113 million the prior year.
Inspections have fallen 12 percent over the past five years -- including a 4 percent drop last year.

EPA officials have tried to blame poor performance on Republican budget cuts. But observers note that the decline pre-dates GOP assumption of Congressional power.

Source: Daniel J. Murphy, "The Dirty Little Secret at EPA," Investor's Business Daily, August 1, 1996.

FINDING CANCER JUST ABOUT EVERYWHERE

New guidelines proposed last April by the Environmental Protection Agency would enable the agency to label virtually anything it wants as cancer-causing -- regardless of what the science says, according to agency-watchers.

Critics say that while science has never been EPA's strong suit, past EPA cancer risk assessments were at least rooted in science by its traditional guidelines.
Those guidelines held that epidemological results must be statistically significant -- that they must have at least a 95 percent confidence level.
Because of this statistical threshold, EPA has not been able to demonstrate that chlorinated drinking water, electromagnetic fields, dioxin, second-hand smoke, dietary pesticide residues and Superfund sites -- to name a few examples -- are cancer-causing.
Critics say that with its new guidelines, EPA would free itself of the "statistical significance" straightjacket and gain much more latitude to label various phenomena as cancer risks.

Observers say the EPA is making this move because of its inability to verify cancer risks in two areas in particular: electromagnetic fields and environmental tobacco smoke.

A vast majority of studies on electromagnetic fields were not statistically significant at the 95 percent level, which made it impossible for the EPA to throw its weight behind regulations favoring burying power lines -- which would have cost an estimated $20 billion.
When the agency studied the dangers of environmental tobacco smoke, it lowered the necessary confidence limit from 95 percent to 90 percent -- tainting scientific means for regulatory ends.

Scientific observers are fearful that if the EPA has its way in this regulatory sleight-of-hand, it would set a precedent for regulators world-wide to ignore statistical significance.

Source: Steven J. Milloy (publisher of "The Junk Science Home Page" on the World Wide Web), "The EPA's Houdini Act," Wall Street Journal, August 8, 1996.

IF IT EXISTS, IS IT THEREFORE VALUABLE?

Estimating the costs and benefits of government actions or calculating environmental damage is difficult. Some economists are making the task more difficult by attempting to estimate "existence value" -- the value of just knowing that a wilderness, endangered species or other object in nature exists.

In fact, in 1993 a panel of leading economists convened by the National Oceanographic and Atmospheric Administration declared that existence value should be used in government analysis. But other economists point out:

The concept of existence value is inconsistent with accepted economic theory and practice.
While some people may place a positive value on the existence of a wilderness, others may place a negative value on it, depending on their value system or how they are affected by a government action to protect it.
For example, the high value placed on wilderness and endangered species by some people reflects the religious value put on these objects by some environmentalists.

Thus the problem with existence value is that it attempts to answer a religious question with an economic method.

Source: Robert H. Nelson, "How Much Is God Worth?" May 1996, Competitive Enterprise Institute, 1001 Connecticut Avenue, NW, Suite 1250, Washington, DC 20036, (202) 331-1010.

REGULATORY TAKINGS DON'T PROTECT WILDLIFE

Under the federal Endangered Species Act (ESA), property owners can be barred from any use or development of their land without receiving any compensation. Thus landowners have a powerful incentive to kill off wildlife or develop their land before it falls under federal land use plans.

The United States Constitution bars the taking of private property for a public purpose "without just compensation" to the owner. But the ESA and the Clean Water Act (which regulates the use of wetlands) keep many landowners from using their property and drastically reduces its sale value without giving them any compensation.

In Armstrong v. United States (1960) the Supreme Court held that the prohibition of uncompensated takings "was designed to bar government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole."

More recently, in Lucas v. South Carolina Coastal Council (1992), the Court held that land-use regulations that cause a landowner to suffer a total economic loss are takings that must be compensated.

But the court did not say whether landowners who only lost some use of their land or a portion of it were entitled to compensation; therefore disputes about compensation for regulatory takings continue. A number of landowners have filed suits seeking compensation, and 23 states have enacted property rights laws. Bills have been introduced in Congress that would require the payment of compensation to landowners for regulatory takings.

Researchers suggest that because the government hasn't been paying for regulatory takings, it overuses land-use regulations to achieve environmental goals. Studies show that incentive-based conservation programs are far more cost-effective than land-use regulation.

Source: Jonathan H. Adler, "Property Rights, Regulatory Takings and Environmental Protection," April 1996, Competitive Enterprise Institute, 1001 Connecticut Avenue, NW, Suite 1250, Washington, DC 20036, (202) 331-1010.

TOUGH CRIME POLICY NABS ENVIRO-THUG

The Environmental Protection Agency has extradited an "environmental terrorist," Bruce Burrell. He was nabbed in Costa Rica and returned to Florida, where he is under indictment for more than 70 violations of federal law, including smuggling, obstruction of justice, conspiracy, money laundering, tax evasion and violations of the Clean Air Act.

His extradition caps a lengthy investigation by police agencies. He and a codefendant face a maximum of 700 years in prison and more than $28 million in fines.

His crime is Freon smuggling -- one of the indirect costs of banning its manufacture and future use. The economic cost of the Freon ban now in effect in the United States and other developed countries could top $100 billion over the next 10 years. The costs in human life could also be quite high, since most Freon substitutes are toxic or highly flammable.

When a product that the public desires is banned and there are no good substitutes, the price goes up and black markets arise. Freon sold for $1 a can in 1987; now it sells for between $15 and $30 a can, and the price is expected to rise. The result is smuggling from developing countries where the ban doesn't apply.

According to environmentalists, Freon released when refrigerators and air conditioners are repaired or leak breaks up ozone molecules in the upper atmosphere. Ozone blocks the sun's ultraviolet rays. The loss of ozone could cause an increase in skin cancers and damage wildlife; although some scientists believe the effect would be negligible.

On the other hand, Freon made modern refrigeration and air-conditioning possible. Millions of people in countries without adequate refrigeration still die from food-borne disease. Freon is non-toxic, largely inflammable and long-lasting.

The results of laboratory tests, the increase of Freon in the atmosphere and the discovery of a seasonal thinning of the ozone layer over the Antarctic were a cause for concern and further study, but they did not merit the panic and resulting legislative ban.

Source: Op Ed, H. Sterling Burnett, environmental policy analyst , National Center for Policy Analysis.

For complete information on Freon and related issues, visit the NCPA Environment page at http://www.public-policy.org/~ncpa/pi/enviro/envdex.html

PROPERTY RIGHTS ARE GOOD FOR THE ENVIRONMENT

Critics claim that the Senate's "Omnibus Property Rights Act of 1995" (S.605) would make it almost impossible to protect endangered species or halt wetland losses. But some environmental analysts conclude that the act would actually enhance environmental protection.

The bill would make it easier for land owners to seek relief in federal courts, by allowing certain courts to hear claims for both equitable relief -- seeking to overturn the decisions of environmental agencies -- and compensation for the value lost.

The bill requires compensation to landowners when restricting the use of their land reduces its value by at least 33 percent, and it forces federal agencies to consider alternative actions that might reduce the need for taking land.

Polls show that by a wide margin the public believes property owners should be compensated when their property is taken or its uses restricted to promote a healthy environment. And the Supreme Court has upheld the right to compensation under the Fifth Amendment.

Current laws discourage people from creating, enhancing or preserving wetlands or species habitat, and thus S. 605 would enhance environmental protection.

Many wetlands are on private land, and more than 75 percent of the endangered species depend on private land for all or part of their habitats.
If a person provides suitable habitat for endangered species, his land is now subject to severe regulation if not taken outright.
There is evidence that landowners destroy potential habitat for endangered species to avoid attracting them.

But if land owners were compensated, they wouldn't have to choose between their welfare and environmental health.

The Congressional Budget Office has concluded that S. 605 would not cost taxpayers much, since the cost of paying compensation would be offset by lower costs for such things as litigation.

Source: Op Ed, H. Sterling Burnett, Environmental Policy Analyst, National Center for Policy Analysis.

ALARM OVER STATE DEPARTMENT'S ENVIRONMENTAL COMMITMENTS

Business groups fear that the State Department's commitment to combat "global warming" could have devastating economic consequences. They charge that these international deals would let foreign bureaucrats inspect and punish American firms.

State Department officials have promised to back binding timetables and numerical targets for emission levels of "greenhouse" gases -- principally carbon dioxide -- despite the dispute over scientific evidence surrounding the theory of global warming.

By some estimates, target emission levels would be so low as to reduce economic growth by $200 billion a year and destroy 600,000 jobs.
Critics charge that the Clinton administration is betting that the public will not understand the complexities of the issues or question its policies at the United Nations.
Although the Constitution requires a two-thirds vote of the Senate to ratify treaties, critics say President Clinton can avoid that through executive orders and changing the way he enforces existing regulations.

Another issue causing concern to business is the Chemical Weapons Convention, set up to outlaw the production of chemical weapons. The pact lets U.N. inspection teams nose through the plants of thousands of U.S. automotive, biotech, pharmaceutical, electronics, and even brewing and cosmetics firms. Such an open door policy could lead to international industrial espionage.

Source: Daniel J. Murphy, "Our New 'Green' Foreign Policy," Investor's Business Daily, August 19, 1996.

For more information on Global Warming and other environmental issues visit the NCPA at http://www.public-policy.org/~ncpa/pi/enviro/envdex.html

THE GREENING OF FOREIGN AID

Foreign aid programs have recently been justified in the name of environmental protection. Yet the institution that receives a substantial portion of U. S. aid, the World Bank, has degraded environmental quality in the Third World for 50 years, in addition to impeding economic growth.

The Bank's massive construction projects have subsidized rainforest destruction and forced migration, and even contributed to the outbreak of disease.
Bank projects have been intensely opposed by local communities and environmental advocates.
Such criticism led the Bank to abandon the giant $1 billion Arun dam project in Nepal in 1995.

In response to critics, the Bank has increased its "environmental" lending for global climate and biodiversity policies through its Global Environmental Facility (GEF). But the GEF, already plagued by management failures, focuses only on potential problems in the distant future, while existing environmental hazards are worsened by the Bank's insistence on statist economic policies and wealth-destroying regulatory controls.

In addition to the World Bank, other agencies fund wasteful "environmental" projects, including the U.S. Agency for International Development, the Inter-American Development Bank, the United Nations and the North American Development Bank established by NAFTA (North American Free Trade Agreement).

Such projects are often labeled "sustainable development," a wide-ranging social agenda that is supposed to address environmental concerns but includes regulatory restrictions on development, population control, trade restrictions and the creation of multinational regulatory bodies. The Clinton administration requested $3.75 billion to promote sustainable development in its proposed 1997 budget.

Source: "Foreign Aid and Environment," Environmental Briefing Book 1996, Competitive Enterprise Institute, 1001 Connecticut Ave., NW, Suite 1250, Washington, DC 20036, (202) 331-1010.

ELECTRIC CAR SPARKS DEBATE

The electric car is no solution to smog in California's cities, according to a new report published in the journal Environmental Science and Technology. The study by Carnegie-Mellon University economist Lester Lave and three engineers attempted to assess the probable impact of 500,000 electric cars on the air quality of Los Angeles and New York City.

Here's what happens when 500,000 electric cars are substituted for the same number of gasoline-powered vehicles:

In Los Angeles, peak levels of ozone are reduced from 200 to 199 parts per billion.
In New York City, the effect would be virtually undetectable -- leaving peak projected ozone levels at 190 parts per billion.
The current safe level is estimated to be 120 parts per billion.
An all-electric car fleet would lower peak ozone in Los Angeles by just 10 percent from what it would be given the types of clean gasoline-powered cars of 2010.

Robert Hahn, an economist at the American Enterprise Institute, says that the zero-emission electric cars won't make much difference if they are substituted for today's very clean gasoline-fueled cars.

Gasoline cars mandated for California remove 95 percent to 98 percent of those pollutants believed detrimental to health.
Most electricity-generating plants -- which would feed the batteries of electric cars -- burn natural gas, which also emits pollutants.

Moreover, electric cars are both environmentally suspect and expensive.

Manufacturing, use and eventual disposal of their lead-acid batteries will inevitably release lead into the environment.
The price of a General Motors two-seater runabout would be approximately $35,000 -- plenty for a vehicle which won't go far without a recharge.

Lave says the fact is that the public would "not get any benefit from electric cars."

Source: Peter Passell, "Another Accepted Truth Under Fire: Electric Cars = Cleaner Air," New York Times, August 29, 1996.

For more information on electric car pollution, read our Executive Alert article at http://www.public-policy.org/~ncpa/ea/eajf96/eajf96n.html