Colloquium: The Future of Environmental Reform

Environmental Law & Property Rights Practice Group Newsletter - Volume 1, Issue 1, Fall 1996

December 1, 1996

Jonathan H. Adler, Jay Benforado, F. Scott Bush, Don Clay, Henry Diamond, Becky Norton Dunlop, C. Boyden Gray, Larry Hart, Dana Joel, Dorothy Ann Kellogg, Debra Knopman, Michael McCloskey, Andrew Otis, Alan Raul, Lynn Scarlett, Robert Sussman

The Federalist Society hosted a colloquium on environmental regulatory reform at Georgetown University's Leavey Center on Thursday, July 18, 1996. The colloquium, jointly sponsored by the Federalist Society and Beveridge & Diamond, was designed to provide an informal forum for open discourse and cross-fertilization of ideas on environmental regulatory reform issues. As moderator Alan Raul of Beveridge & Diamond explained, the conference did not aspire to harmonize or converge the many prevailing views on reform but sought to brainstorm and to identify themes, principles and strategies.

The panel of sixteen environmental law and policy experts was drawn from public interest, private practice, government and policy think tanks. The panel established a rough consensus on the need for reform and a recognition that a favorable climate was emerging that offered unprecedented opportunity for experimentation and cooperation between regulator and regulated.

Several principal themes were identified. The panel generally endorsed devolution (empowerment of state and local stakeholders), evolutionary rather than revolutionary reform, innovation and flexibility, and an increased recognition of the role of property rights and private stewardship. Also identified as reform priorities were streamlined information gathering and dissemination, sharpened accuracy in risk assessment, and an effort to effectively communicate the reform message to the voting public. The Sierra Club, however, indicated that environmental reform was not part of their agenda, considering reform efforts to be misplaced priorities that benefit industry, not the environment. All participants joined Raul in calling for media efforts to better educate the public on all environmental issues.

Only a few issues engendered division amongst the panel. Serious disagreement arose over whether legislative change was necessary to effectuate reform. Despite consensus on the need for change, legislative movement may not be possible at all given the prevailing partisan divisiveness on Capitol Hill. The panelists recognized that significant tensions must be reconciled, particularly in the area of federal control over state programs and in balancing flexible regulatory programs with enforcement and performance standards. The panel also acknowledged that future environmental improvements will demand greater impacts on lifestyle patterns and on small business.

The four-hour colloquium provided an enlightening and informative exchange of the most current ideas on environmental reform from many of the experts closest to the subject. The atmosphere was overwhelmingly collegial and congenial.

Participants:

  • Jonathan Adler - Competitive Enterprise Institute.
  • Jay Benforado - EPA Regulatory Reinvention Team.
  • F. Scott Bush - National Environmental Policy Institute.
  • Don Clay - Don Clay Associates.
  • Henry Diamond - Beveridge & Diamond.
  • Becky Norton Dunlop - Secretary of Natural Resources, Commonwealth of Virginia.
  • C. Boyden Gray - Wilmer, Cutler & Pickering.
  • Larry Hart - United States Congress, Energy & Environment Subcommittee, House Committee on Science.
  • Dana Joel - Citizens for a Sound Economy.
  • Dorothy Ann Kellogg - Chemical Manufacturers Association.
  • Debra Knopman - Progressive Foundation and Center for Innovation and the Environment.
  • Michael McCloskey - Sierra Club.
  • Andrew Otis - Center for Strategic & International Studies and Enterprise for the Environment.
  • Alan Raul - Beveridge & Diamond.
  • Lynn Scarlett - Reason Foundation.
  • Robert Sussman - Latham & Watkins.

Jonathan Adler of the Competitive Enterprise Institute ("CEI") offered the first of four semi-formal presentations. Adler's diagnosis of current regulatory policy identified a general dissatisfaction with the onerous character of regulation and the frequency with which inappropriate parties, such as small landowners, bear a disproportionate share of the regulatory burden. Adler noted that the complexity of current regulatory schemes often results in one regulation undermining the effectiveness of another program. As an example, Adler pointed to EPA's Green Lights Program which has been thwarted by EPA's simultaneous regulation of compact florescent light bulbs as hazardous waste. Drawing a parallel to the late Soviet Union's corpulent centralized bureaucracy, Adler warned that adding additional layers to the regulatory framework was not an effective solution and that more than minor tinkering was required. Adler and CEI advocate reworking the current system with a focus on expanded market mechanisms and economic growth. Adler outlined a CEI initiative which recognizes market forces, private stewardship, state and local control over programs, property rights and increased accountability of federal agencies.

Debra Knopman, of the Progressive Foundation and the Center for Innovation and the Environment ("CIE"), an arm of the Democratic Leadership Council, also recognized growing discontent in both parties over the course of environmental programs. Knopman noted that voters have historically considered the environment a "core value" and have rarely divided along party lines over environmental issues. She observed that the climate attached to the 104th Congress has made promoting environmental reform on the Democratic side of the aisle a lonely venture. Knopman credited the Clinton administration with some marginal improvements but explained that the face of environmental issue-making has changed dramatically now that environmental regulation has been fully implemented at the industry level. She explained that a range of less-well-defined but more difficult issues, such as global warming and non-point-source pollution, have been added to the table. Knopman agreed with Adler that new principles should govern the next wave of reform. Chief among these, Knopman identified the need to set goals for the ten major environmental statutes that have no statements of purpose. She also advocates efforts to harness market forces and to promote devolution. Knopman also stressed promoting flexibility through incentive and reward programs and recognized a need for better measurement of environmental results. CIE offers an initiative which advocates vision, flexibility and reconciliation of opposing viewpoints. Knopman noted that the "tragedy of the commons" scenario results from lack of regulation rather than over-regulation; accordingly, environmental regulatory policies are not inherently inconsistent with property rights. The biggest challenge for reform, in Knopman's view, was to package a reform policy for the Democratic side of the aisle that would comport with the reality of tight budgets and draw from the Democrats' reputation as protectors of the status quo.

Andrew Otis, from the Center for Strategic and International Studies, spoke on behalf of the Enterprise for the Environment, a joint project of 75 stakeholders, including former members of Congress, regulators and public interest groups. While acknowledging the polarized climate on the Hill, Otis pointed to recent reports by the President's Council for Sustainable Development as an indicator of bi-partisan, multi-lateral consensus regarding the need for environmental reform. Otis articulated another theme of the day, which was the need for evolutionary, rather than revolutionary change, but emphasized that, in the past, small gains have been purchased at the price of a cost-ineffective and rigid system. Enterprise for the Environment's initiative identifies many of the same concerns shared by the preceding groups. They also support the development of international standards and internal drivers to corporate behavior. Enterprise for the Environment is currently developing a legislative recommendation for 1997.

Lynn Scarlett spoke on behalf of the Reason Foundation, a think-tank based in Los Angeles. Scarlett reminded the panel of the importance of vision and poetry and the need for new regulatory paradigms, such as problem-solving instead of punishment and performance rather than prescription. Scarlett echoed what were becoming the dominant themes of the session: devolution, evolution, creation of incentives, and recognition of private stewardship values. Scarlett pointed to several innovative strategies that were already established in some regions, such as Massachusetts' self-compliance permit program and EPA's XL project. Finally, Scarlett noted that many proposed reforms create new unknowns, such as whether market systems are equipped to allocate common resources and whether accurate measurement and documentation of compliance is possible. Scarlett considers the task of balancing competing choices - certainty versus flexibility, diversity versus uniformity and complexity versus simplicity - the most daunting of the obstacles facing environmental policy-makers.

The panel having set out what seemed to be a loose consensus on the problems facing environmental regulation, and having suggested some principles and strategies to tackle the problems, moderator Raul opened the floor to discourse. He invited Jay Benforado, from EPA's Regulatory Reinvention Team, to initiate an open roundtable discussion by commenting on EPA's recent activities. He encouraged response from the panelists and audience.

Benforado related that EPA was striving to incorporate many of the suggestions on the table. He agreed that evolution rather than revolution was the proper approach, characterizing EPA's strategy as a "nuts and bolts tuning" rather than remodeling. Benforado cited a number of successful EPA programs including Project XL, plain language compliance assistance centers, paperwork reduction, and compliance rewards. EPA is also considering rewards for participation in the ISO 14000 program and seeks to make advances in information access, he noted. Raul then interjected with the only question of the night that seemed to sharply divide the panel - whether legislation was necessary to accomplish regulatory reform or whether EPA policy and discretionary authority was sufficient. Benforado replied that regulators were not as adamant as were lawyers that legislation was indispensable to achieving reform. He explained that EPA was committed to conducting as many bold experiments as possible within their existing authority and was not concentrating on legislative reform.

Becky Norton Dunlop, Secretary of Natural Resources for the Commonwealth of Virginia, confirmed that an attitudinal change at EPA was obvious, but complained that the States still struggle under stifling federal command and control structures. She observed that federal agencies often exhibit a lack of respect for state agency competence and fail to fully share valuable information. She argued that Virginia vigorously has been seeking devolution of authority but that EPA has resisted. Moreover, she noted, EPA has criticized innovative state initiatives such as voluntary compliance audits. Addressing a point made by Lynn Scarlett, Dunlop admitted that Virginia has been troubled by the difficulty in "packaging" environmental reform programs to gain support from voters who tend to view open market strategies skeptically.

Henry Diamond, of Beveridge & Diamond, doubted whether most environmental public interest groups were actually opposed to reform. He observed that the Christmas 1995 stall in regulatory reform efforts was attributable more to resistance from local bankers and business than from environmental groups. Diamond noted that political posturing has resulted in overly- cautious margins of safety in industrial end-of-pipe regulation despite enormous reductions in emissions over recent decades. This phenomenon has created a culture that readily accepts parts per quadrillion as a meaningful industrial emissions standard while ignoring non-industrial pollution sources, such as land runoff and mobile source emissions, which contribute the lion's share of current environmental stress. Reform of land use practices should form the core of environmental concerns today, Diamond cautioned, yet land use issues are routinely displaced by the more politically approachable subject of industrial regulation. Diamond noted that private stewardship is the traditional basis of land use in this country and urged that its potential be tapped.

Dorothy Ann Kellogg, of the Chemical Manufacturers Association ("CMA"), remarked on the degree of commonality that had emerged among the commentators. She stressed the need to increase the level of trust between regulated and regulator in a historically adversarial system. She confirmed that the CMA was excited about Project XL's potential and called for continued development of "soft-landings" - opportunities to craft solutions while allowing each side to save face.

Scarlett responded to Kellogg by re-emphasizing the need to recognize and surmount inherently different approaches to environmentalism. Difficult questions, such as whether markets serve as a tool or an end, whether enforcement should punish violations or actual harm, and whether reforms should be substitutes for or additions to existing regulatory structures, have a potential to cause deep rifts in the reform movement if left unaddressed.

Adler returned to the question, posed by Raul, whether legislative measures are a necessary ingredient to reform. Adler opined that legislative certainty was desirable in light of the ephemeral nature of politics, but lamented that a seemingly clear, bi-partisan consensus on regulatory reform has in fact been derailed by squabbles between the political leadership. Alder doubted Benforado's optimism regarding EPA's flexibility and noted that existing statutory schemes posed real, legal barriers to agency flexibility that could not be overcome by mere internal policy changes. In his view, statutory reform is indispensable.

C. Boyden Gray of Wilmer, Cutler & Pickering, challenged Benforado to justify EPA's resistance to reform in the acid rain program and its refusal to adopt definitive performance standards. Benforado responded that flexibility could co-exist with enforcement.

Robert Sussman, of Latham & Watkins, took the floor to identify a number of areas of real disagreement between the various groups which, he observed, were occasionally masked by the politeness of the discourse. Sussman said that he supported reform but felt reform advocates needed to make the case for why we really need improvement. Because the current scheme has achieved clear environmental gains, a new system must be capable of providing the same or higher levels of protection at lower cost. Sussman cautioned that reform could require an increased devotion of political and financial resources which might be severely constrained at the state and local level.

Raul then posed a question to Don Clay, of Don Clay Associates, asking how reform advocates could send an effective message and build political consensus. Clay reminded the panel that innovation and flexibility necessarily involve risk and asked whether reformers are willing to accept the chance that projects might fail and efforts might be wasted. Clay noted the paradox of a person who says that they like gambling, but really means that they like to win. Clay recommended that programs concentrate on involving the public. He also noted that statistics on "safety" are more instructive than those on "risk." Clay criticized our litigious culture and its potential to impede progress. Unlike the United States, he commented, the European Union calls top industry leaders to the table in order to resolve problems in a fraternal manner. Clay also pointed out that a multiplicity of programs often frustrates enforcement ability. He observed that, conversely, a large measure of flexibility that does exist within the present statutory schemes, especially within RCRA, goes untapped - chilled by relentless criminal enforcement. Clay acknowledged some recent regulatory successes, such as RCRA's reworked mixture rule and a variety of EPA pilot programs. Clay urged Congress to continue to fund pilot projects rather than asking EPA to impose untested mandates on states.

F. Scott Bush joined the discussion stating that the National Environmental Policy Institute ("NEPI") is thinking along the same lines. Bush outlined a platform that emphasized consensus, vision, devolution, and improved information gathering. Bush chastised EPA for second-guessing state initiatives while purporting to encourage state participation. He called for performance-based, cross-media standards with risk assessment and benefit analysis to measure effectiveness. NEPI also supports facility-wide permitting that draws on engineer participation and talent.

Larry Hart, a staffer with the Energy and Environment Subcommittee of the House Committee on Science, revisited the question whether legislation is needed to effect environmental reform. He noted that failure to communicate, not real differences, have created the schism on Capitol Hill. Hart opined that the "action and reaction" phase is now over and a new climate has arrived in which members are again talking. He cautioned, however, that with so few days remaining in this session, serious reform dialogue will have to await a new Congress. Hart's final assessment was that, despite the many positive sentiments, it will be hard to achieve reform without legislation. Cleanup required strong laws and reform will require the same, he counseled.

Michael McCloskey spoke for the Sierra Club, confessing that his group was not prepared to join the reform effort. Sierra Club, he explained, is not concerned with relieving burdens on regulated entities. Rather, Sierra Club is committed to attaining fishable and swimmable waters. McCloskey admitted to feeling like "an interloper in the proceedings," because he considers the strategies being discussed as relief rather than reform. Although he recognized that progressive and small companies were entitled to be treated differently, McCloskey doubted the reform movement's commitment to "cleaner" as well as "more flexible." He admitted that the current system was not perfect, but reminded the panel that it was a far cry better than the conditions that pre-dated the environmental movement. The system was never designed to be perfectly efficient, he added. He expressed a deep concern that relaxation under the guise of "leveling the playing field" would precipitate a free-fall to the bottom and predicted that the American public would see reform as an attempt to "get away with" more pollution.

Raul then opened the panel to questions from the audience. Becky Norton Dunlop fielded questions about whether devolution is feasible, and responded with vigorous optimism. States are excited about participating and assuming control, she argued, despite resistance from a few bad-apple industries and challenges from public interest groups. Virginia is committed to "re-involving" its citizens in the environment, seeks to re-connect people with natural resources, and will support educational programs that promote those goals.

Knopman asked McCloskey to expand on Sierra Club's objections to the reform effort. McCloskey responded that more pressing issues, such as researching the effects of hormone disruptors and setting target dates for unaddressed media, were priorities that deserved greater attention than reform of industry regulation policies. He also cautioned the panel to distinguish between bona fide environmental benefits and economic social benefits (such as new bridges or buildings) that are the most visible and alluring incidents of reform.

That comment kindled a lively discussion on America's willingness to accept lifestyle changes as the price of environmental improvement. Raul commented that the lifestyle question had the capacity to change the face of the entire dialogue. Hart agreed that current environmental issues are carefully designed to avoid the lifestyle debate. McCloskey warned that a "holy war" over lifestyle could derail the environmental process. Dana Joel, of the group Citizens for a Sound Economy, noted that it is incumbent on policy groups to disseminate information and to persuade the public, rather than seek legislative mandates. Adler built on that comment by pointing out that the 103rd Congress was stymied in the environmental field, despite a Democratic president and congress, because local constituents vocally resisted a perceived intrusion on lifestyle and unacceptable impacts on small business concerns.

Don Clay concluded the forum discussion by noting that securing constituent support is often complicated by skewed popular perceptions of risk. He pointed to radon testing as an illustration of an inexpensive and non-intrusive response to a serious and proximate risk that nonetheless has failed to garner public support while, at the same time, the comparatively remote risks posed by Superfund sites engender enormous public outcry.

At the conclusion of the dialogue, Raul asked each panelist to add a parting thought. Hart reiterated that legislation was needed to secure reform efforts that are now on the right track. McCloskey offered Sierra Club's willingness to continue to participate in the reform discourse, but reaffirmed that reform is not Sierra Club's agenda. Sussman pointed out that some convergence of the reform and activist agendas was critical. He pointed to the recent Safe Drinking Water Act amendments as proof that convergence is possible. Diamond suggested that the lifestyle issue may serve as a healthy referendum of public commitment to the environment and cautioned the panel not to underestimate the public's willingness to participate and even to voluntarily modify societal behavior. Dunlop called on government to cease the common hypocrisy wherein legislators mandate change but are unwilling themselves to purchase alternative fuel vehicles or offer true recycling programs. Adler noted that reform can be pro-environment and asserted that it enjoys a 70% public approval. He added that the Wise Use and Environmental Justice movements, though lying at extremes of the political spectrum, both support devolution and community involvement. Kellogg stressed the importance of having examples of successful reform to act as templates. She called for development of solutions though experimentation. Bush warned that EPA presently lacks the tools or authorization to achieve many of the goals being discussed. Therefore, he advised, Congress must empower the agency through specific legislation. Clay agreed that change is possible.

Raul summed up the discussion by noting that nothing discussed that day could be described as revolutionary measures. Establishing clear minimum standards and allowing for flexibility is not radical, he pointed out. Raul called for a fusion between the environment-only and reform agendas and an increased level of public commitment. He also called for efforts to encourage the press and media to communicate these issues to the public and suggested that the reform movement enlist an effective spokesperson to spark public involvement.

* This colloquium was the first program planned and sponsored by the Environmental Law and Property Rights Practice Group.