Most environmental problems stem from the misuse of resources that are owned in common. What is owned in common is owned by no one and, accordingly, has no protectors or defenders. Many regard government as the logical protector of the commons, but government has not only often failed to fill this role but has also abused the very environment it is charged with protecting.

Since government must define and protect property rights, and since government enacts legislation, a role for government is essential. The solution involves requiring government to act in accordance with certain pre-defined rules before enacting environmental legislation or approving any environmental regulations. The rules that should apply are:

• The Federalism Rule. Regulatory decisions should be made by the smallest possible government entity.

• The Cost-Benefit Rule. Before any regulation is imposed, objective studies should weigh the benefits against the costs.

• The Compensation Rule. Innocent property owners must be compensated for the loss of property rights or non-negligible losses of value.

This study examines abuses of the three rules cited above in specific federal environmental programs and explores solutions that would bring the programs into compliance with the rules.

Introduction: Progressive Environmentalism

To the vast majority, it is important that appreciation of the natural world be integrated with respect for the unique role of human beings on the planet, respect for science and appreciation of the benefits of technology and economic growth. These people are "progressive" in the sense that they believe in human progress and in the achievement of environmental goals as one measure of progress.

A small minority of environmentalists, however, do not believe in human progress, asserting that there is nothing to progress to. Often idealizing American Indian or medieval European lifestyles, they believe that the best of all possible worlds lies not in the future but in the past. These people are "reactionaries" in the truest sense of the word. They oppose science, technology, industrialization and economic growth. At times they imply that humans are an unfortunate accident of evolution and have no natural place on our planet.1

If the sway of the environmental debate were determined by a head count, the reactionary environmentalists would be unimportant and could be safely dismissed. Unfortunately, this is not the case. Because they are very vocal, prolix and committed, they have achieved a disproportionate degree of influence. They control some of the largest and best-funded environmental organizations. And they have apologists among the leadership of mainstream environmental groups.2

"Reactionary environmentalists have achieved a disproportionate degree of influence."

For too long, federal government policy toward the environment has been dominated by the approaches these reactionaries favor. With the change in leadership on Capitol Hill, however, an opportunity exists to reshape environmental regulation in a progressive way. Consistent with the goal, this study examines the nature of the public policy problem we face and proposes solutions.

The Tragedy of the Environmental Commons

The problem is not new. It has been around for as long as human beings have occupied the planet. Take the case of commonly owned grazing land. If a single cattle herder conserves some grass for the coming year, the odds are small that he will derive any benefit from that action - since the grass is then available for consumption by the cattle of all other herders. With commonly owned grazing land, no single herder reaps the full benefits of "good" behavior or bears the full costs of "bad" behavior. All herders may find it in their self-interest to overgraze the land, even though in the long run all are worse off as a result.

Hardin's analysis can easily be extended to other environmental problems. Most of us would not consider dumping trash in our neighbor's backyard. But since air and water are commonly owned resources to which we have free access, we find it in our self-interest to use them as dumping grounds for all manner of waste. Private timber companies are often exemplary environmental stewards of their own land. Indeed, much of what we know about forest management comes from their pioneering discoveries.4 Yet some of the same companies have caused environmental harm in the federally owned commons of the U.S. forests. The lessons can also be applied to endangered species:

• One hundred years ago, the nation had three billion passenger pigeons and very few chickens. But because chickens were privately owned and pigeons were common property, today there are three billion chickens and the passenger pigeon is extinct.5
• Two hundred years ago, bison greatly outnumbered cattle in America. Today, privately owned cattle flourish, while the bison is almost extinct.6
• In some African countries where elephants are owned in common, their numbers are dwindling rapidly - the victims of poachers in search of ivory. But in India, where elephants are owned by villagers, they are almost never killed for their tusks.7

The Tragedy of the Political Commons

Studies also have revealed poor environmental records at other government agencies.10 These include the U.S. Park Service, the U.S. Forest Service, the Bureau of Land Management, the Army Corps of Engineers, the Atomic Energy Commission and its successor the Department of Energy, the Federal Highway Administration and the World Bank. Consider, for example, the record of the U.S. Forest Service:

• About 342,000 miles of roads have been built in our national forests - more than eight times the total mileage of the U.S. Interstate Highway System.11 [See Figure I.]
• These roads, primarily designed to facilitate logging, extend into the ecologically fragile backcountry of the Rocky Mountains and Alaska, where they are causing massive soil erosion, damaging trout and salmon fisheries and causing other environmental harm.12

• In many cases, the costs of these logging activities far exceed any commercial benefit from the timber acquired; this environmental destruction would not have occurred without government subsidies.13

• Office of Reclamation projects have eliminated one national wildlife refuge and are threatening others through water shortage and contamination.14
• Because of the Bureau of Land Management, more than three million acres of wildlife habitat were cleared with huge chains (600-foot anchor chains weighing 100 pounds to the link drawn across the landscape by 200,000-pound D-8 crawler tractors) and replaced with fields of crested wheatgrass for domestic livestock.15

Space does not permit a full discussion of all of the ways in which federal bureaucracies cause environmental harm. However, a host of other rules, regulations and policies buried within the Washington labyrinth encourage environmental destruction in sometimes subtle, sometimes blatant, ways. For example:16

• Special provisions in the tax code, in addition to low-interest Small Business Administration (SBA) loans, subsidize uneconomical development on the periphery of ecologically fragile areas, including Yellowstone National Park.
• Conservation measures intended to reduce soil erosion very often foster farming practices that cause increased erosion.
• Agricultural price supports encourage uneconomical farm development and have led to the draining of marshes that formerly were waterfowl habitats.
• Federal subsidies for flood and hurricane insurance, grants from public utility and highway funds and projects sponsored by the Army Corps of Engineers all have contributed to destruction in the Barrier Islands along the Atlantic and Gulf coasts.

The principal reason why government solutions usually don't work is that the political process is itself a "commmons."18 People who support bad policies bear only a small part of the costs of those policies. Most of the costs are borne by others. On the other hand, people who support good policies reap only a small portion of the benefits. As a result, the pursuit of political self-interest all too often results in environmental harm.

Progressive environmentalists know that we cannot successfully reach environmental goals by substituting a "political commons" for an "economic commons." Trying to achieve environmental goals by turning the problem over to government often exacerbates environmental destruction.

Ending the Tragedy of the Commons

Is there a way out of this dilemma? We believe there is. The solution involves requiring government to act in accordance with certain predefined rules. These rules would perform the role in the political commons that property rights perform in the private sector. They would erect barriers to those who seek to obtain private benefits at others' expense.

"The federalism, cost-benefit and compensation rules should apply to any regulation being considered."

Accordingly, we propose that before any new environmental regulation is approved or any existing regulatory function is reauthorized, the following rules apply:

• The Federalism Rule. Regulatory decisions should be made by the smallest possible governmententity.19
• The Cost-Benefit Rule. Before any regulation is imposed, objective studies should weigh the benefits against the costs.
• The Compensation Rule. Innocent property owners must be compensated for the loss of property rights or nonnegligible losses of value.

Guide to Regulatory Reform: The Federalism Rule

The reasoning behind this design was that government is likely to work best when it is closest to the governed. Thus while national defense requires coordination by the central government, drainage ditches do not.

"While national defense requires coordination by the central government, drainage ditches do not."

This principle of federalism can be expressed quite simply: The federal government's proper role is limited to carefully defined and constitutionally legitimate problems beyond the reach of the individual states.

The Constitutional Basis for Federalism. Federalism should not be confused with "states' rights." States do not have rights, they have powers. The Ninth and Tenth amendments in particular demonstrate that the Founding Fathers were not confused over the distinction between rights and powers.

Amendment IX: "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

Amendment X: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

However, the principle of federalism is today more rhetoric than reality in our nation's capital. For example, in October 1987, President Reagan issued Executive Order 12612, setting out federalist principles for every member of the bureaucracy to adhere to. Yet Timothy Conlan and David Beam, writing in Intergovernmental Perspective magazine, found that "some agencies routinely fail to implement the Executive Order's certification and assessment procedures in even the most superficial way."

Federalism in Practice. Applying the principle of federalism consistently has become a problem as America has grown in social and commercial complexity. In the name of environmental protection, federal power to regulate local behavior has grown enormously in the past three decades. Many federal environmental laws go far beyond anything that can be justified under federalism. For example:

• The Superfund law assumes that thousands of local sites - from industrial zones to abandoned waste dumps - pose a serious threat to human health unless the federal government acts.20
• The Safe Drinking Water Act assumes that the federal Environmental Protection Agency (EPA) is more interested in protecting human health than are local officials.21
• The wetlands provisions of the Clean Water Act assume that even isolated plots of occasionally soggy ground should be regulated by federal bureaucrats rather than local officials. 22

Unfunded Mandates. Federal laws that leave little room for local decision making often take the form of unfunded mandates. This is certainly true of laws dealing with the environment.

• Federal environmental regulations cost the U.S. economy as much as $150 billion annually.23
• l In Columbus, Ohio, the growing costs of compliance with environmental regulations may consume 23 percent of the city's budget in the year 2000.24

These examples are just the tip of the iceberg. The Advisory Commission on Intergovernmental Relations studied the growth of mandates from 1981 to 1991. It found that Congress passed 27 laws that included at least one mandate on the states or their political subdivisions. The National Conference of State Legislatures reported that 185 federal mandates currently impact state and local governments.25

To localities, unfunded mandates come from both state and federal officials seeking to shift the costs and keep the political benefits of environmental laws. But local governments are political subdivisions of the state, not the federal government, and state officials are obligated to represent the interests of the local communities that elect them. Much of the problem of federal unfunded mandates has arisen because, until recently, state officials had not made an effective case against them.

Subsidies as Sources of Mandates. Violations of federalism are not limited to unfunded mandates imposed on the states by federal authorities. Many times, federally collected dollars are used to subsidize local activities or programs such as disaster relief, Superfund site cleanup or public education. Of course, much of this federal largesse comes with strings attached, thus entangling state and federal officials in a Gordian knot of unfunded mandates and unjustifiable subsidies.

Backlash Among the States. The backlash against federal overreaching and interference in local affairs is growing.26

• Eight states (Arizona, California, Colorado, Hawaii, Illinois, Missouri, Oklahoma and Pennsylvania) passed resolutions in 1994 that asserted state sovereignty under the Tenth Amendment and called on the federal government to "cease and desist" from actions that exceed the constitutional delegation of powers from the states.
• Seven states (Alabama, Arizona, California, Delaware, Michigan Pennsylvania and South Dakota) have passed legislation requesting that the state's federal delegation appear before the state legislature to discuss unfunded mandates and other federally imposed requirements.
• Four states (Arizona, California, Florida and Texas) have filed suit against the federal government to recoup costs incurred due to the presence of illegal immigrants. The federal government has a constitutional duty to control the nation's borders, so these states reason that its failure to do so should not burden state taxpayers.

Traditionally, the states were laboratories of democracy, developing policies appropriate to local conditions. Today, the federal government asserts authority over a wide range of issues, imposing a "one size fits all" policy. It is time to reestablish the federal government in its proper role so that future power grabs become more difficult and less likely.

"It is time to reestablish the federal government in its proper role."

Guide to Regulatory Reform: The Cost-Benefit Rule

The Republican Contract With America calls for the application of cost-benefit analysis to new rules and regulations. The intent is to force Congress and regulatory agencies to assess the costs and benefits of regulations before enacting them - just as they would assess the regulation's impact on the budget deficit.

A weak cost-benefit rule would simply require that costs and benefits be assessed. A strong rule would require that the benefits exceed the costs.

What Is Cost-Benefit Analysis? When applied to health and safety regulations - and environmental regulations whose intent is to promote health and safety - cost-benefit analysis requires calculating the cost of saving human life. Many critics argue that one cannot place a dollar value on a human life. But that is not the intent of cost-benefit analysis. Rather, such analysis permits comparison of various options, all of which may be beneficial in some way but not all of which can be simultaneously undertaken.

"Cost-benefit analysis requires calculating the cost of saving human life".

Measuring Benefits in Terms of Years of Life Saved. Eventually we all will die. Thus, researchers who study risks refer to "life-years saved" rather than "deaths prevented." Avoiding a particular risk of death today means that you are more likely to live the statistically average life span in America. The difference between this average life span and a premature death is the number of life-yearssaved.28

Currently, scholars discount future years of life saved at a 5 percent rate of interest. Thus, if a regulation allows a person to live 10 more years rather than die today, the "present value" of the number of life-years saved is 7.7 years. Future costs also are discounted at a 5 percent rate.29

Of course, in most cases we are not sure that a particular regulation has saved a particular life. That's why most calculations of life-years saved are based on statistical probabilities.

Measuring the Costs Per Year of Life Saved. Consider the case of mammograms. If we gave every woman in America an annual mammogram, we would detect some breast cancers in their early stages and prevent some women from dying prematurely. However, since the number of women whose lives would be saved would be relatively small, the cost per life saved would be high.

In making the calculations shown in the Figure II, researchers assumed that in the absence of a mammogram women would get an annual physical breast exam. So the figure shows the net additional cost and net additional benefit of adding a mammogram to a regular physical exam. As Figure II shows, for women in their 40s, the cost per year of life saved would be $186,635. For women in their 50s, it would be $108,401.30

When Hillary Rodham Clinton devised the Clinton health care plan, she and her advisors decided not to cover a cost much higher than $100,000 to save a year of life. That's why the plan provided regular mammograms for women in their 50s but not for younger women and why it provided for Pap smears only once every three years.31

Is $100,000 the right standard? That can be debated. But if we accept that standard and apply it to the health and safety regulations of major government agencies, then most of what government does in these areas fails the test.

The Most Expensive Regulations. Some regulations impose astronomical costs relative to the benefits they produce. Table II shows five of the worst examples. Bear in mind that the dollar figures shown are the estimated costs for each year of life added to an exposed individual's life span.32

"Some regulations impose astronomical costs relative to the benefits they produce."

• The standard set for chloroform emissions at 48 pulp mills imposes over $99 billion in costs for each life-year saved.
• If this regulation allowed one person to live another 20 years, the implicit "cost" of saving that life would be about $2 trillion - about one-third the size of the U.S. annual GNP.

Sound Science. Examples like those above highlight the need for sound science as a foundation for cost-benefit analysis. When bureaucrats ignore the best available research data in favor of the most advantageous political outcome, they distort and abuse cost-benefit analysis. Unfortunately, this is a frequent practice, as when the EPA utilized unsupportable assumptions and methods in its analysis of secondhand tobacco smoke.33 The best response to such misuse of economic analysis is to demand better execution of the procedures and techniques.

Placing a Value on Human Life. Is there a way of determining how much a human life is worth? One technique economists use is to measure the implicit amount people are willing to pay to avoid risk; or, conversely, to measure t have estimated the value of an average life-year to be somewhere between $10,000 and $500,000. This 50-fold range reflects differences in willingness to incur risk as well as genuine uncertainty about how much people care about life expectancy.34

Wealthier Is Healthier. Some question whether we should try to put a value on human life. But researchers have found that needlessly wasting economic resources may have a deadly effect on human populations.35 In other words, the wealthier a society is, the healthier its citizens are likely to be. Some have estimated that for every reduction in national wealth of $3 million to $8 million, one additional premature death will occur.36 This is due to the fact that spending money on one activity, even if it reduces a particular risk, makes those dollars unavailable for other risk-reducing expenditures that might have produced even greater gains in public safety. In the real world, all individuals, industries and local governments must operate within limited budgets. This creates a zero-sum game whereby spending for one priority reduces the amount of money available for all others. Even if the goal is as important as protecting human health, there comes a point at which the marginal benefit derived from spending one more dollar is too small to justify in light of other possible uses for the money.

"It has been estimated that for every reduction in national wealth of $3 million to $8 million, one additional premature death will occur."

Placing a Value on Other Environmental Benefits. What about cases where the benefit is not saving human lives, but achieving some other environmental goal? One method is to try to infer from human behavior how much people are willing to pay. Why not simply ask people what value they place on various environmental amenities? Because when people are asked to place a theoretical value on various benefits, their answers are not believable.

For example, after the Exxon Valdez oil spill in Alaska, individuals were asked how much they would be "willing to pay" to protect the shoreline from future oil spills. Their answers, when extrapolated to the entire U.S. population, were astronomically large, yet they were presented as estimates of the "value" of pristine wilderness - a technique sometimes called "contingent valuation." However, contingent valuation methodologies often confuse what one is willing to say and what one is willing to pay. Cost-benefit calculations require a firmer footing.37

"Contingent valuation methodologies often confuse what one is willing to say and what one is willing to pay."

Comparing Regulatory Agencies. There is justifiable debate among experts about what the "right" cost-benefit standard is. However, few believe that federal health and safety regulators should apply widely different standards in different areas. Yet that is precisely the effect of many regulations, as Table III shows.

• The median regulation imposed by the EPA implies a cost per life-years saved standard that is almost 100 times as high as the median regulation adopted for highway safety.
• The median EPA regulation implies a standard that is 332 times the standard used to regulate airline safety.

"The median EPA regulation implies a standard that is about 100 times as high as for highway safety and 332 times as high as for airline safety."

Guide to Regulatory Reform: The Compensation-for-Takings Rule

The Supreme Court has stated that the primary purpose of the takings clause is "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." This sound principle underlies any legitimate government action. Because the federal courts have not diligently protected people's rights under the takings clause, the Republicans' Contract With America seeks to restore these rights to citizens through legislative action.

Takings and Compensation. Consider a few examples of regulatory decisions under the Endangered Species Act, wetlands rules and other environmental laws.38

• Brandt Child of Moab, Utah, hoped to develop campgrounds and a golf course on his property; the federal government used the Endangered Species Act to block his plans because the rare Kanab ambersnail resided in the springs on his land.
• A Baptist congregation in Florida wanted to build a new church and adjacent parking lot; federal officials determined that the site was more important as a wetland.
• Retiree Margaret Rector of Austin, Texas, sought to sell 15 acres of land; the government blocked the sale because the land was potential habitat for the black-capped vireo and the golden-cheeked warbler.

Criminalizing Federal Regulations. Some private property owners have had more than their land rights taken away. They have been sent to prison or threatened with prison for technical violations of environmental regulations, particularly federal rules dealing with wetlands. For example:

• Bill Ellen spent six months in jail for minor violations of wetlands permit requirements; although he had secured 38 separate permits to construct waterfowl habitat on his employer's land, the bureaucrats considered him a "willful" violator of the law.39
• A Missouri family farmer was tried, but not convicted, for repairing a broken levee on his farm; in the process of moving dirt to rebuild the levee, he was accused of destroying wetlands.40
• Twelve oil companies recently filed suit seeking the return of $570 million paid for offshore oil leases. After granting the leases, the federal government imposed a ban on drilling - and kept the money.41

Recent Court Decisions. Indications are that the tide is turning in this struggle to enforce the Constitution.42

In the 1987 case First English Evangelical Lutheran Church v. County of Los Angeles, the Supreme Court established that takings may be temporary as well as permanent. Often, regulators will deny a construction permit to a property owner who must then go to court. At the last minute, the regulators will change their minds, hoping to avoid embarrassment in court. This temporary denial of a property right is properly seen as a temporary taking and the government must compensate the property owner, just as would a private lessee who occupied the site temporarily.

In another 1987 case, Nollan v. California Coastal Commission, and the more recent 1994 case, Dolan v. City of Tigard, the Supreme Court held that applications for building permits cannot be held ransom to other state goals. In these cases, property owners were being coerced to give land to the government for public pathways before they could build elsewhere on their land.

Chief Justice Rehnquist declared in his majority opinion in Dolan, "We see no reason why the Takings Clause of the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment...should be relegated to the status of a poor relation..."

In a 1992 Supreme Court case, Lucas v. South Carolina Coastal Council, a developer who owned two expensive beachfront lots was awarded compensation when the state prevented him from building on the site. The case was significant because the state had relied on a host of safety and environmental justifications to support its position that compensation was not required. The court saw through this smokescreen.

Most of these cases involved a relatively small amount of compensation, at least by federal standards. Yet takings claims are not always for small dollar amounts.

• In one case, the U.S. Court of Claims awarded $60 million plus interest to a private firm that had been prevented from developing its mining lands.43
• The spotted owl regulatory decisions have blocked the sale of millions of dollars worth of timber in the Pacific Northwest - for which there has been no takings award.44

"Takings under Presidents Bush and Clinton have steadily increased."

Applying the Principles

• Is there a proper role for the federal government, or is the object of regulation a state or local problem?
• Do the costs of the proposed regulation reasonably reflect its benefits?
• If property rights are taken or diminished by the regulation, are the owners compensated for their losses?

Case Study: Superfund

The stated intent of Superfund was to provide federal funding for the cleanup of chemical waste if responsible parties could not be found or were unable to pay. The original law required that at least 400 "National Priority List" (NPL) sites be identified and placed under the program. This was an arbitrary number apparently matching the number of congressional districts more closely than the number of places that posed objective environmental risks.

"There is no direct relationship between a company's creation of waste sites and the taxes it must pay under Superfund."

The revenues for this huge environmental program are collected through a series of excise taxes, especially on crude oil and petrochemicals, and a general environmental income tax on corporate profits. However, there is no direct relationship between a company's creation of waste sites and the taxes it must pay under Superfund. Total Superfund expenditures have now reached $15.2 billion.

In addition, funds spent directly by the private sector at Superfund waste sites amount to several billion dollars.47

The Superfund law was intended as a temporary, emergency program. Thus, the law contained a provision requiring Congress to revisit the issue every five years with the expectation that the cleanup program would be rapidly completed. However, the complex and controversial nature of Superfund delayed the first such reauthorization until 1986. The Superfund Amendments and Reauthorization Act (SARA) extended the trust fund for another five years and increased its dedicated, special tax revenue funding to $8.5 billion. More recently, the Omnibus Budget Reconciliation Act of 1990 stretched Superfund into 1994 and added another $5.1 billion in authorized tax collections. The special taxing authority of Superfund expires at the end of 1995. If this Congress fails to reauthorize the program and the taxes, Superfund must be phased out as the existing revenues are depleted.

"Total Superfund expenditures have reached $15.2 billion plus several billion dollars spent directly by the private sector."

Imposing Unfair Liabilities on the Private Sector. Superfund is a classic example of the tragedy of the political commons that results when the people who derive the benefits of government action are different from those who bear the costs. In theory, Superfund is supposed to enforce a "polluter pays" policy. That is, if culpable parties can be linked to a polluted site, these "potentially responsible parties," or PRPs, must pay. However, Superfund's liability structure goes far beyond the state policy. Because of the excessively high costs, polluter and nonpolluter alike overpay. One reason is that Superfund liability is based on an incredibly tough combination of common law remedies known as strict, retroactive and joint-and-several liability.48 These liability standards serve more to supply lawyers with employment than to provide the nation with environmental quality.

Superfund imposes strict liability on people who are only remotely connected to hazardous chemicals. Past and present owners or operators of a site, the company that created the chemicals and even companies that used or transported the chemicals are potentially responsible.49 The government does not need to show any negligent behavior on the part of PRPs in order to make them liable at a site.

In addition, Superfund liability is applied retroactively. Actions that were legal (perhaps even mandated by state law) when undertaken may later trigger Superfund liability. The U.S. Constitution prohibits ex post facto or "after the fact" application of criminal laws, yet Superfund embraces this concept for civil liability.

Finally, courts have imposed joint-and-several liability under Superfund. A party even peripherally responsible for any portion of the material at a Superfund site can be held financially responsible for the entire cleanup. This includes banks that made loans on the property, insurers of the property owners or operators and even municipal governments that operated or disposed of wastes on what is now a Superfund site. Under joint-and-several liability, firms often sue one another. The EPA itself rarely targets small businesses or minor polluters, preferring to target wealthy firms and allow them to sue others under the joint liability doctrine. The end result is the same: hundreds of innocent parties are dragged into Superfund litigation.50

Creating Waste Instead of Cleanup. Many embarrassing examples of waste and fraud have been uncovered in recent years. Superfund contractors have used Superfund money to pay for Christmas parties, office plants, sports tickets, even calls to pornographic 900 numbers.51 These are extreme examples of lack of oversight by the Superfund bureaucracy.

Yet even if every expenditure had been necessary, the bigger problem is that cleanup at Superfund sites has proceeded at a snail-like pace. Fewer than 20 percent of NPL sites have been declared "clean" since Superfund began. Through March 1994, cleanup activity had yet to begin at almost half of the NPL sites.52 Yet economic development on or near a site can be paralyzed from the moment it is listed, at considerable cost to the private sector.

Depressing Local Economies. Superfund creates major problems for local economies. A Superfund site designation often dries up business loans in already depressed neighborhoods and discourages redevelopment of abandoned industrial areas. Since a purchaser of such a property potentially is buying Superfund liability as well, this has created the so-called "brownfields" syndrome. Rather than redevelop an older industrial site, with the potential for unlimited Superfund liability, private investors seek out properties that have never been used for commercial activities. Inner cities and declining industrial areas thus are disadvantaged in the competition for jobs and tax revenues. As Doug Sarno of the nonprofit organization Clean Sites has noted, "The easiest thing to do is to walk away from a brownfield and find some nice greenfield where you can avoid the whole predicament."53

Imposing Unreasonable Cleanup Standards. The average cost of a Superfund cleanup has been estimated at $30 million, including lawyers' fees and bureaucratic overhead.54 The major reason for the high cleanup costs is that Superfund standards are irrationally strict. Some have compared these standards to requiring every kitchen in America to be as sterile as a hospital operating room. It makes little sense to clean up chemically contaminated groundwater to drinking water standards if no one will ever drink from that source. Yet in many cases, that is the standard Superfund imposes.55 Unreasonably stringent cleanup standards also lead to high litigation costs. The reason corporations (and municipalities) fight so hard in court is because the stakes are so high.

"Some have compared standards for Superfund waste sites to requiring every kitchen in America to be as sterile as a hospital operating room."

Even a cosponsor of the original Superfund bill, James Florio of New Jersey, discovered after becoming governor of the state that Superfund imposes absurdly tough standards. Florio complained, "It doesn't make sense to clean up a rail yard in downtown Newark so it can be a drinking water reservoir."56

Superfund and the Federalism Rule. If analyzed according to the principles of regulatory reform, Superfund flunks the tests. The primary health concern at Superfund sites is groundwater contamination. Theoretically, this contamination could cross state lines and justify federal involvement. Yet a 1984 General Accounting Office survey of 15 states failed to find any "interstate aquifer problems."57 Since even the worst Superfund sites do not have national environmental impacts, Superfund imposes federal control on what are essentially state and local problems. Moreover, Superfund tends to impose "one size fits all" environmental standards. Even J. Winston Porter, who headed the Superfund program from 1985 to 1989, admits, "The major problem with Superfund is ... that the federal government is ill-equipped to make local, one-of-a-kind site cleanup decisions."58

Superfund and Cost-Benefit Analysis. As noted above, the cost of cleaning up Superfund sites is huge, averaging about $30 million per site.59 The benefits are largely hypothetical, however. When risks are as small as those claimed to exist at most Superfund sites, it is impossible to prove that any human has been harmed in any given case. One of the major problems for Superfund's supporters has been an inability to demonstrate any negative impact on human health from exposure to Superfund site contaminants - that is, a disease or death that would not have occurred if the site had not existed.

"One of the major problems for Superfund's supporters has been an inability to demonstrate any negative impact on human health."

Yet by assuming that extremely unlikely - sometimes physically impossible - events will occur in the future, EPA creates the impression of risk where no actual harm will occur. These exaggerated risks, when accepted by the general public or policymakers, generate political pressure in favor of the EPA program. In general, the EPA approach under Superfund relies on excessively pessimistic assumptions, including the assumption that the highest theoretically possible exposure to a chemical will occur at a site.60 For example, EPA consistently assumes that future site uses will include children, who will live there for 70 years, ingesting slightly less than a teaspoon of local dirt every day and relying exclusively on contaminated local groundwater for bathing and drinking.

The EPA also estimates each chemical risk to human health at a site based on the worst-case results from tests on the most sensitive laboratory animals. Every factor in the overall risk equation is slightly - sometimes significantly - exaggerated. For example, the assumed amount of soil contamination is based on the worst samples and the amount of soil assumed to be ingested by a human being is based on worst-case dirt-eating scenarios. When one inflated risk assumption is multiplied by the next, the total exaggeration grows enormously. The EPA defends its process as erring on the side of caution, but even cautious policies must have limits.

To understand how absurd some EPA risk assumptions are, imagine that similar risk assumptions were applied to highway safety. The EPA might assume that all vehicles are driven at 90 miles per hour for 70 years with at least three babies in the back seat, the brakes are worn out and the driver is drunk. Based on this scenario, the EPA would calculate terrifying probabilities of injury or death and require that all cars be built like Sherman tanks.

The result of the EPA's Superfund approach is that the unrealistic assumptions result in unnecessarily stringent cleanup standards that produce no additional human health benefits, yet add millions to the cost of each site cleanup.

Superfund exemplifies all that is wrong with American environmental policy: It is an expensive assault on minor risks resulting in an enormous waste of scarce economic resources. The head of California's environmental protection agency calls Superfund "the environmental equivalent of the Defense Department's $600 toilet seat."61

"Superfund has been called 'the environmental equivalent of the Defense Department's $600 toilet seat'."

A Solution. Even if Superfund worked as intended, it would provide insignificant benefits to human health and the environment. Superfund's design defies sound science and sound economics and fails to assign costs to the appropriate parties. As currently administered, the program causes more fiscal harm than environmental good. Thus, Superfund should be ended as a federal program. As an interim step, the federal government's role should be limited to capitalization of a State Revolving Loan Fund, from which states could borrow funds for site cleanup or containment. This would be similar to the State Revolving Fund set up under the Clean Water Act's sewage treatment facility program. Because almost $2.7 billion of uncommitted revenues remains in the Superfund pipeline, there would be little need to raise additional taxes. Such an approach would be consistent with the principle of federalism and would finally cap the federal government's involvement in what is properly a local issue.

Case Study: The Delaney Clause

A "pesticide" is any chemical that can kill a "pest" such as an insect, rodent or weed. Thus, the generic term encompasses fungicides, rodenticides, insecticides and herbicides.63 Pesticides are generally toxic to the target species, although some work less directly, by disrupting the reproductive cycle, for example. While some pesticides are pest-specific, most are at least potentially toxic to many other species. Thus, any application of any pesticide should be carefully conducted to avoid unintentional exposures. Before looking at the downside of pesticides, however, let's first consider what's good about them.

Economic Benefits of Pesticides. From a purely commercial point of view, pesticides are a bargain:64

• The U.S. Department of Agriculture estimates that approximately $4 billion a year is spent on pesticide use.
• Pesticide use prevents the loss of about $16 billion in food products - four times its cost.

"If the world still depended on 1950s technology, it would take almost three times as much land to feed the world's population. "

Environmental Benefits of Pesticides. Modern agricultural techniques, including judicious applications of pesticides, are far more productive per acre than older methods. Thus, we would need far more land to produce the current amount of farm output in the absence of pesticides and fertilizers.66 As Figure III shows:

• If the world were still dependent on the technologies available in 1950, approximately 10 million square miles of new farmland would have to be developed in order to produce enough to feed the world's growing population.67
• Since agriculture of all types currently occupies about 5.8 million square miles, in a very direct sense pesticides help preserve wilderness, especially in developing countries.

After years of similar results around the world, it has become clear that most man-made chemicals are no more likely to be carcinogenic than are chemicals naturally present in the plants we eat.71 In most of the test results, cancer was caused not by the properties of the chemicals but by the extremely high doses administered.

"In most of the test results, cancer was caused not by the properties of the chemicals but by the extremely high doses administered."

Nevertheless, the EPA continues to rely on tests with laboratory animals to determine which man-made chemicals in pesticides are carcinogenic. This creates a host of uncertainties. Rats (or other species) do not respond to chemicals in exactly the same way humans do; different species metabolize chemicals in different ways.72 Even if all responded in exactly the same way, extrapolating from rodents to humans is hard: Should one rely on body weight, surface area or some other factor?

There is another reason to doubt the scientific validity of high-dose rat tests. Constant injection or ingestion of high doses of a substance is likely to kill or injure the cells that are directly overdosed. The body's normal repair mechanism responds by having surrounding cells divide and grow to replace the dead cells. Because cancer is the result of a single cell mutation, the greater the number of cells dividing, the greater the probability that one will become cancerous.73 Under such constant high-dose conditions, up to half of all tested chemicals, natural and man-made, can cause cancer in rodents.

Rodent tests for the possibility of carcinogenicity in humans is inexact, to say the least.74 Indeed, noted food safety expert Dr. Elizabeth M. Whelan has declared, "Mouse to man extrapolation has become an essential weapon in the arsenal of those who seek to terrify us about food additives, pesticides and other synthetic chemicals."75

Pesticide Regulations. The major federal law dealing with pesticides and the food supply is the Food, Drug and Cosmetic Act (FDCA).76 One important function of the FDCA is the setting of "tolerances" for pesticide residues on foods. Tolerance levels are intended to provide a wide margin of safety from any potential harm due to pesticide residues. The tolerance level is established by making certain assumptions as to the pesticide's potential for toxicity or health risk to humans, and these assumptions are based on the types of laboratory animal studies just described.77

For the reasons given above, high-dose experiments are an unreliable method by which to measure the potential for harm at the low doses pesticides are actually encountered in the food supply. Yet the FDCA makes a difficult process almost impossible by creating two separate standards for pesticide regulation.78

• l For raw or unprocessed foods, the EPA must establish the tolerance level by weighing the potential risks against the benefits derived from the use of the pesticide - a risk vs. benefits standard.79
• l For processed foods, the law establishes an absolute, zero-risk standard.

The Delaney Clause. The Delaney Clause prohibits even a trace of any food additive shown to cause cancer or induce tumors in laboratory animals or humans at any dose. When the clause was adopted in 1958, the existing technology could not detect trace contaminants below levels of several parts per million. Today, we can detect parts per trillion or less. Thus many substances that would have been considered a "zero" risk less than 40 years ago would be prohibited today.82

"The Delaney Clause prohibits even a trace of any food additive shown to cause cancer or induce tumors in laboratory animals or humans at any dose."

However, because the Delaney Clause applies only to processed foods, America still applies a double standard to our food supplies.83

In practice, the EPA is likely to ban any uses of a pesticide if processing eventually may concentrate it to levels exceeding the tolerance standard in any food item.

In Les v. Reilly, a 1992 case, the Ninth Circuit Court of Appeals held that the EPA must enforce the Delaney Clause's zero tolerance standard.84 While this case specifically dealt with only four pesticides, it has potential application to "more than 32 pesticides that are currently used on 80 to 100 food crops."85

Thus the Delaney Clause is at the center of a major controversy. Numerous critics have called for its reform. Even EPA Administrator Carol Browner has expressed an interest in reforming it. Early in her tenure at the EPA, she described the Delaney Clause as a "scientific anachronism."86

How does the clause measure up to the three principles of reform? It does not directly involve property rights. Moreover, because most processed foods are intended for interstate commerce, there is a strong justification for some federal involvement in the issue. However, the federal government is supposed to regulate, rather than prohibit, interstate commerce. It is critical that any regulations dealing with pesticides be based on sound scientific and economic principles. Cost-Benefit Analysis and the Delaney Clause. In general, there is a negligible risk to human health from either natural or man-made pesticides in our food supplies. The National Academy of Sciences implicitly recognized this fact when it recommended establishing "a negligible risk standard in setting and revising tolerances for all [carcinogenic] pesticides found in food."87 Others are even more blunt about the insignificant nature of health risks from pesticide residues. According to Dr. Sanford Miller, Dean of the Graduate School of Biomedical Sciences at the University of Texas, "Today's pesticides represent trivial risks to the public and to our food safety. The pesticide residue risk is so low as to be meaningless, whatever the specific numbers of the risk estimates."88 The National Research Council's Committee on Diet and Health agrees:

"In general, there is a negligible risk to human health from either natural or man-made pesticides in our food supplies."

Much of the argument for keeping the Delaney Clause in its current form seems to be based on one group's desire to impose excessive costs on another. For example, if federal policies imply that pesticide-treated foods are less healthful than organic foods, many consumers may decide to buy organically grown produce. Thus, the clause is a tool for achieving a competitive advantage unjustified by objective conditions. This amounts to an unfair subsidy through federal regulation.

Solution. Because offsetting benefits (in the form of reduced cancer risks) coexist with pesticide residues, overregulating pesticides may be counterproductive - that is, harmful to human health. Therefore, we must base federal regulations on the best available scientific information - and repeal the Delaney Clause. In place of the outmoded clause, Congress should adopt a standard based on negligible risk to human health, rather than zero risk.

Case Study: The Endangered Species Act

As interpreted by the Fish and Wildlife Service, the ESA bestows essentially unlimited power on bureaucrats to confiscate private land where endangered species are or might be ("habitat") without compensation. This interpretation ignores the U.S. Constitution's Fifth Amendment requirement that property shall not be taken without the payment of just compensation.91 Consequently, the ESA potentially places an enormous burden on tens of thousands of private property owners across the country.

Relying on Unsound Science. Although it might surprise most Americans, the ESA is not limited to rare or truly endangered creatures. It has been interpreted to apply to "identifiable subpopulations," or groups, of distinctly nonendangered species if a particular colony may be at risk. Proponents of the ESA defend this position as an effort to protect the distribution and range of population of otherwise healthy species. Yet all species have a natural range limited by climate and food sources. Most such ranges tend to gradually fade out rather than end at clear boundary lines. So it stands to reason that most species will include a few isolated groups within small habitats. By going beyond strictly endangered species, the ESA allows federal control to expand without any compelling biological justification.

Currently, 800 plants and animals are listed by the ESA with another 3,300 under consideration for listing. However, most of the United States consists of land that - for one species or another - is at the edge of the natural range and may include a few isolated individuals. Therefore, the ESA potentially could regulate much, if not all, of the land in America. The effect can be seen with the salmon of the Pacific Northwest (which the ESA declares separate "species" depending on the tributary in which they spawn) and the Northern spotted owl of the same region (which is biologically almost identical to its numerous cousins to the south).92

"The Endangered Species Act potentially could regulate much, if not all, of the land in America."

This policy leaves the ESA open to regulatory mischief. When a small population of any species becomes geographically isolated, ESA bureaucrats can declare them more precious than any human property right.

Failing to Save Species. Despite its high cost to private landowners, apparently the ESA doesn't save species. A study published by the Center for the Study of American Business found that:93

• Of the more than 1,350 species listed under the ESA for protection, only 19 have been subsequently deleted.
• Seven of these 19 species had become extinct - hardly successes for the ESA.
• l Eight of the species were incorrectly listed in the first place due to original data 94

"By confiscating private property, the ESA creates an incentive to eliminate habitat before rare species can find it."

• Even environmentalists are beginning to acknowledge that the ESA may endanger some species by giving people an incentive to engage in what people in the Pacific Northwest call the "shoot, shovel and shut up" phenomenon.95
• A similar response has resulted in the loss of habitat for the golden-cheeked warbler and black-capped vireo in Texas, where even billionaire Ross Perot plowed up 333 acres covered with juniper trees to prevent the birds from nesting on his land.96
• "I am convinced," Larry McKinney of the Texas Parks and Wildlife Department recently testified, "that more habitat ... has been lost in those areas of Texas since the listing of these birds than would have been lost without the ESA at all."97

With the passage of the ESA, the relationships among the states, private citizens and the federal government changed dramatically. In essence, the federal government took away regulatory authority from the states and took away ancient hunting rights (and property rights) from private citizens. What had been state-level wildlife management was nationalized. Over time, the federal government came to assert that the habitat in which these wild animals lived was effectively an extension of the federal commons.98

The ESA and Cost-Benefit Analysis. Once a species is listed, restrictions may be imposed on private land use decisions. The consequences of the listing process include tremendous costs to private owners.99 Yet while the act imposes direct costs on a few individuals, proponents claim vague and unspecified benefits for society at large. The ESA legislation explicitly rejects the calculation of costs and benefits in decisions to list a species as endangered.

An Excuse for Opposing Growth? In addition, the ESA is being intentionally abused and misused to block private (and even public) development. Some environmentalists have admitted as much. For example, Andy Stahl, a resource analyst with the Sierra Club Legal Defense Fund, declared, "Thank goodness the spotted owl evolved in the Northwest, for if it hadn't, we'd have to genetically engineer it."100 The goal of Stahl and other environmentalists was not just to save the spotted owl but to prevent the logging of "old growth" forests in the Northwest.101 These forests consist of trees that may be centuries old but are extremely valuable to timber companies.

"The ESA is being intentionally abused and misused to block private (and even public) development."

Next to the spotted owl incident, perhaps the best-known case was the attempt by environmentalists to stop construction of the Tellico Dam in Tennessee by maintaining that the affected stretch of river sheltered the last members of a species of fish called the snail darter. In this case, the effort was thwarted when Congress, under strong political pressure, voted to exempt the Tellico Dam project from the ESA. Small private landowners rarely receive such congressional attention.

The ESA and the Compensation Rule. Today, many landowners must provide public benefits (by protecting endangered species and their habitat) at private cost. Furthermore, rural landowners are not the only ones exposed to the ESA's uncompensated takings. A recent Gallup poll conducted for Times-Mirror Magazines asked: "Should the government compensate private property owners" when "land is devalued by the need to protect an endangered species?" Fifty-nine percent of all respondents said "yes," while only 28 percent answered "no."102

Solutions. Generally speaking, because nature works as it does, we cannot save species directly. The most we can do is save them indirectly by saving their habitats. If we, as a society, deem a species valuable enough to authorize state preservation of its habitat, we must compensate those who own the habitat. This is the only way to make the Endangered Species Act consistent with the Constitution.

Case Study: Wetlands

Particularly when we are dealing with the infectious agents found in municipal sewage, public health risks can loom large. Thus, a governmental role exists for regulating the introduction of such materials into publicly owned bodies of water. We may find it necessary to impose certain restrictions for land along the shore or nearby. In most cases, the primary responsibility for such restriction falls to the states. Only when the federal commons is clearly involved does the federal government have a role.

Wetlands and the Clean Water Act. Unfortunately, the Clean Water Act has been extended beyond any justifiable position in regulating the land areas adjacent to, or connected to, navigable waters. In particular, Section 404 of the Clean Water Act has been interpreted to extend to almost any wet or swampy land in the United States.

• In 1975, the federal District Court for the District of Columbia in Natural Resources Defense Council, Inc. v. Callaway radically expanded the interpretation of congressional intent to include wetlands as part of the "waters of the United States."103
• Thus, the judiciary expanded the Clean Water Act to regulate any "discharge" into wetlands that eventually drain into navigable waterways.

"Federal wetlands regulations have come to include even isolated wetlands with no connection to navigable waterways".

Ironically, throughout most of American history the federal government viewed true wetlands as an obstacle to progress. Swamps bred mosquitoes, which spread malaria and other diseases, so draining them was a high priority. Beginning with the Swamp Lands Act of 1849, the federal government distributed some 65 million acres to 15 states for "reclamation" purposes.104 The federal grants were predicated on draining the swamps to "improve" them. Leading farm states such as California, Illinois, Iowa, Indiana and Ohio have eliminated more than 85 percent of their original wetlands acreage.105 Thus, much of the current debate revolves around activities in states that retained a sizable portion of their original wetlands, along with smaller areas in states that developed their wetlands earlier.

To carry out their policies, federal agencies (primarily the Army Corps of Engineers and the Environmental Protection Agency) developed guidelines for "jurisdictional" wetlands. In 1989, following President George Bush's campaign pledge to achieve "no net loss" of wetlands,106 the agencies wrote a joint manual to create a uniform definition of wetlands within the federal government. Unfortunately, they wrote the guidelines so broadly that it almost became difficult to find acreage outside the federal regulatory reach. As a result, thousands of private landowners found themselves compelled to apply for federal permits before "developing" their land. Under the ludicrous interpretations of this requirement that arose from Callaway, any activity that disturbed the dirt within wetlands might count as a "discharge" of fill material.

In one instance, John Arens, an attorney representing a Missouri farmer charged with violating the wetlands rules, forced an EPA witness to admit that if a baseball diamond were built on the type of soil typical of wetlands, a player knocking dirt off his cleats could be in technical violation of Section 404.107

"A baseball player knocking dirt off his cleats could violate the Clean Water Act." Today, a debate rages over federal regulation of areas that are privately owned and may only occasionally collect water. Rather than recommending that the federal government purchase these contested areas, proponents of a regulatory approach demand that the government restrict their use without compensating their owners.

Alaska has a permanently frozen layer of earth just below the surface known as "permafrost." This prevents precipitation from soaking into the ground during thaws and creates vast stretches of wetlands. Thus, Alaska has more wetland acreage than the remaining 49 states combined. However, this wetland area encompasses almost every parcel in the state that is not a mountain or a glacier. Thus, under a strict "no net loss" policy, almost all development in Alaska would be stymied.

Although active farming operations are supposedly exempt from federal wetlands regulations, the variability of the nation's total farm acreage creates potential conflicts with wetlands goals. For example:108

• Between 1972 and 1982, the total cropland area in the United States grew from 295 million to 383 million acres, an average increase of 8.8 million acres per year.
• However, cropland had declined by 60 million acres from 1954 to 1972.

Criminalizing Wetlands Violations. In December 1990, the EPA and the U.S. Army Corps of Engineers issued a joint memorandum outlining a publicity campaign against wetland regulation violations.109 The memorandum directed regional officials to "nominate" regulatory violations for high-profile prosecutions in time to meet an Earth Day 1991 deadline. It endorsed both civil and criminal penalties. The latter were not to be limited to those who intentionally disregarded federal regulations; they could apply even in cases of negligence. With the few criminal prosecutions, the federal government intended to frighten other wetlands owners into meek compliance.

Thus far, the most famous case is that of John Pozsgai of Morrisville, Pa. After purchasing a 14-acre dump site to expand his truck repair business, Pozsgai cleaned up over 7,000 old tires and several rusting cars. Neighbors may have been happy to see the junk hauled away, but when Pozsgai leveled about five acres with clean fill dirt the EPA took him to court. He was fined $5,000 and sentenced to three years in jail.110 Pozsgai's only crime: dumping dirt without permission.

"The EPA specifically set out to conduct some high-profile prosecutions for regulatory violations by Earth Day 1991."

In another widely reported case, Wall Street millionaire Paul Tudor Jones II tried to create a waterfowl habitat on his land along the Chesapeake Bay. The EPA determined that this activity amounted to a criminal act. Jones paid a $1 million fine and "donated" a second million to support a wildlife refuge, thereby avoiding trial. But his employee, William Ellen, was sentenced to six months in jail and several additional months of home detention.111

Wetlands and the Federalism Rule. For the 25 percent of wetlands in the Lower 48 states that are on federal property, the Constitution is explicit. Article IV, Section 3 grants to Congress the "Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States." Executive Order 11990, issued in May 1977 by President Carter, requires executive branch agencies to avoid adverse impacts on wetlands to the "maximum extent possible."112 Thus, no constitutional difficulty is raised by federal wetlands regulations on federally owned property.

Wetlands and Cost-Benefit Analysis. Bearing in mind the requirement to compensate landowners, it makes sense for federal agencies to identify truly valuable wetlands and protect them through outright purchase - weighing their cost against their anticipated benefits. Since the present approach offers little incentive for good behavior by regulators, it requires reform. Wetlands and Real Pollution. It is important to note that banning real pollution - that is, hazardous or biologically damaging material introduced to a waterway - does not require compensation under the Fifth Amendment. But we could control pollution without controlling a wetland itself; we need only control discharges from wetlands into navigable waterways. And until harmful materials are discharged into federal waters, the state is the appropriate regulator. Until the actions of a private property owner impact the legitimate federal estate, the federal government has no legitimate role.113

Solutions. To reform wetlands policies in America, Congress should:

• Identify the wetlands areas that fall within the federal estate,
• Rank the areas according to ecological value, and
• Purchase the areas deemed to be of highest or most critical ecological value.

Case Study: The Clean Air Act