A View From the Cheap Seats

A Regulatory Primer

In one sense, it’s easy to be critical of people who report environmental issues. The regulatory system is so bloody complicated that, even after 25 years in the field, I still get confused sometimes. That doesn’t excuse the media and Michael Hawthorne from getting environmental stories wrong, but it does explain it a little.

So, for the benefit of every journalist who attempts to cover environmental issues and for members of the public who are interested as well – here’s a brief, (hopefully easy-to-read) environmental regulation primer.

Step 1–Setting Goals
Regulations start here: what should clean air and water look like? Most people, and the EPA, understand that “clean” doesn’t equal “zero.” The EPA sets numerical standards designed to protect public health and eco-systems, after doing extensive research.

Those standards in turn, are designed with both big picture and the local picture in mind. Let’s start with the latter.

If your neighbor, for example, dumps his septic tank on your lawn, he’s not creating an environmental hazard that affects the public or the environment in general. He is rather stinking up your lawn. Regulations are written to make sure that relatively small amounts of pollutants (in the big picture) don’t affect immediate neighbors (in the little picture).

The rules are also written to ensure that the larger environment is protected. Emissions from coal fired power plants in the Midwest, for example, can create smog on the east coast, even though the local effect of those emissions is really pretty small. Accordingly, EPA has been busy implementing rules that force coal-fired power plants in the Midwest to reduce smog-creating nitrogen oxide emissions.

It is also important to note that these goals are often a moving target. Once we meet one set of goals, the EPA – Congress – or both, may take a fresh look and set new, more stringent goals. It is thus that the air or water in a given area can go from “clean” to “dirty” over night, without any actual increase in pollution. The air and water didn’t change, the definition of clean did.

Step 2–Doing the Math
Once we’ve decided what clean air and water should look like, the next step is figuring out how to get there. That involves a lot of math.

Now we’re going to over simplify a very complicated process here. We must, because my keyboard would explode if I tried to explain it all in detail.

In crafting their rules, EPA looks at the effect of each pollutant and what type of reductions are needed to meet its goals of “clean.” It also considers where those pollutants are discharged. Industry plays a role of course, but not the only role and, sometimes, not even the biggest role. Households, automobiles, agriculture and even nature can contribute to the pollution picture.

Yet industry is most often the biggest target when rules are formulated, but not primarily because it’s big, bad corporate America. The reason EPA hits industry hardest is because that is usually the most cost-effective solution.

Which brings us to the next part of rule-making: cost effectiveness. Let’s say it takes 1,000 cars to emit 50 tons of a particular air pollutant, but the factory down the street emits 50 tons as well. If EPA needs 50 tons of reduction to get to Clean Air goals, it’s going to be a lot cheaper to control one factory smoke stack than 1,000 cars.

Again, we’re oversimplifying, but hopefully you get the idea. EPA considers:

1.) the importance of the pollutant;
2.) how much reductions are needed to get to “clean”; and
3.) how those reductions can be achieved for the lowest cost.

At the end of the day, they come up with a set of proposed rules custom designed for different industries, automobile makers, the pubic in general, and many other sectors of society.

Step 3–Getting Involved
Rule-making is a very public process. EPA solicits participation by “stakeholders,” a term that usually encompasses both industry and environmental interest groups. It’s not an exaggeration to say that both sides have had a say before any new environmental rule has been published. Does everyone agree? Not usually, but most rules are compromises, with both sides of the table getting some–not all–of what they want.

Those unfamiliar with the process often think that one side or the other gets their way depending on the political party in power. It’s a common misconception, for example, to believe that pollution increases under Republican Presidents and decreases under Democrat Presidents. This theory is only half right. Since the original Clean Air and Clean Water Acts were first promulgated in the 70s, pollution in the U.S. has constantly been reduced, no matter who occupied the White House. Sorry if you don’t believe it, but it’s the truth. The data is very, very clear.

So why do we frequently hear that Republican administrations “go easy” on polluters? The answer involves what I will refer to as “environmental group arithmetic.” It’s not something they teach in school.

Let’s say that EPA determines that wastewater treatment plants are emitting too much Deathium (this is a fictional element folks) into our waterways. They do their math and determine that we must reduce Deathium discharges from 70,000 tons per year to 30,000 tons. Environmental groups disagree, calling for a reduction to 10,000 tons.

Both EPA and the environmental groups have called for a reduction. If the President happens to be a Democrat, the environmental groups won’t raise a stink and, as a result, the press will happily trumpet the over 50 percent reduction in Deathium discharges. Yay!

Ah, but if an evil Republican is in charge, the environmental group will scream that the president is in favor of releasing an “additional” 20,000 tons of Deathium into the environment. This isn’t what actually happened of course, but – when a Republican is in power – every reduction becomes an “increase” when this peculiar arithmetic is applied.

Step 4–Staying Flexible
Our system is designed to be flexible, although that flexibility is often remarkably cumbersome.

Limits, for example, are often tied to productivity. Productivity is a good thing, right? So if a plant makes an investment and increases its production from 1,000 to 2,000 widgets per hour, should they be penalized for that? Most rules are written such that emissions – overall – can go up, as long as the emissions per widget stay the same or go down.

This approach makes environmental sense too. As plants get more productive – more modern – don’t we want discharges per unit to go down? There is a certain, given economic demand for widgets. Let’s have rules that encourage more environmentally efficient production of them.

The system also imposes the tightest restrictions on the newest processes. This also makes sense. If someone is investing $1 billion in a new plant, then a $10 million investment in state-of-the-art pollution control makes a lot more sense than it does at an aging plant that will likely close soon anyway.

The rules recognize that local, isolated increases may occur but that – when you do the math – discharges will continue to go down overall. That may be a hard concept to grasp, but the fact is that it works. We know that it works because pollution in the U.S. continues to go down.

“Free market” systems also place a larger and larger role in environmental regulation. Rather than develop limits for each and every plant, the EPA simply sets a cap on ovreall discharges. This cap, of course, corresponds to the agency’s “clean” goal. Plants are then allowed to trade emissions, so long as the cap is never pierced. The Acid Rain program is an example of a free market system that has been very successful in reducing pollution.

Wrapping It Up
The system has its flaws, to be sure. As a representative of industry, I think that the system is too damned complex and that hurts both industry and the environment. Most everyone I have represented over 25 years has desperately wanted to do the right thing, but the regulatory system, with its volumes upon volumes of overlapping rules, is so hellishly hard to understand that many small and mid-sized companies often throw up their hands. A streamlined system would make compliance easier and, ultimately result in an even cleaner environment. Sadly, I doubt that we’ll ever convince some of the fringe environmental groups of that.

That said, the system works. Our environment and the quality of our lives have continued to improve for over 30 years. It is profoundly disturbing when a politician or activist picks on this project or that in isolation without the slightest understanding of how the regulatory system works as a whole. We’ve made great progress, thanks to the combined efforts of the public, industry, environmental advocates and government. Is there anything wrong with acknowledging that simple fact?


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