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An Overview of
Environmental Regulation
Introduction

In 1970, the United States had
 No major federal legislation controlling the
discharge of pollutants into the air and water
 No national regulations covering the disposal
of hazardous waste onto land
 No process for reviewing new chemicals
 No protection for endangered species
States-> Feds ->States -> Feds
Prior to 1970: Most regulatory action at
the state level
 1970-1990: Most regulatory action at the
Federal level
 1990-2008 (Global Warming): All
regulatory action at the state level
 2008-Present (Global Warming) EPA
active under a 1970 Law: Clean Air Act.

Regulatory Approaches

Early years (prior to 1990): Mostly
“Command and Control”
 Uniform standards
 Uniform technology requirements

Since 1990: Increasing use of incentivebase approaches: cap & trade, fees and
taxes.
Statewide Initiatives

Prior to 1970, the states had sole
responsibility for pollution control activities
 Oregon initiated the first statewide air pollution
control effort in 1952
 Only California had mandate emission standards
for cars by 1970
 In the late 1950s and 1960s, the federal
government passed laws encouraging
decentralized efforts to regulate pollution
Cleaning the Air

The Clean Air Act (CAA)
 Passed in 1963, focused on federal assistance to
the states
 Major amendments in 1970, 1977, and 1990
shaped national regulatory framework
 Standards set to provide an “ample margin of
safety”
○ Congress ruled out use of cost-benefit analysis
Air Pollutants
• Criteria (urban) air pollutants
○ Particulates, sulfur dioxide, carbon
monoxide, nitrogen oxide, ground-level
ozone, and lead
• Hazardous air pollutants or air toxics
 Criteria pollutants: EPA sets National Ambient Air
Quality Standards (NAAQS)
 Ambient air quality refers to the average quality of
air in a particular region
NAAQS


NAAQS are minimum standards, uniform around
the country
For areas already cleaner than the NAAQS, the
1977 CAA amendments established three tiers
 Class I
○ Air quality to be maintained at current level
 Class II
○ Some deterioration allowed
 Class III
○ Air quality allowed to deteriorate to NAAQ levels, but not
below
NAAQ Standards
Role of the States
 Develop implementation plans detailing how
emissions would be controlled to achieve NAAQS
from
○ Stationary sources
○ Mobile sources
 Divide territory into air quality control regions,
geographic areas sharing similar air pollution
problems
The Clean Air Act
Alphabet Soup

Regulations require firms to install certain
technologies:
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
LAER: Lowest achievable emission rate
BACT: Best available control technology
NSPS: New source performance standards
RACT: Reasonably available control technology
MACT: Maximum achievable control technology
The legal struggle to define these terms for
individual industries has been one of the primary
battlegrounds in the regulatory information war
Fishable and
Swimmable Waters
 Federal Water Pollution Control Act (FWPCA) of
1972
 Clean Water Act of 1977
 Technology-based regulation, similar to CAA
○ Best Practical Technology (BPT)
○ Best Available Technology (BAT)
 Federal grants to municipalities for construction
of sewage facilities
FWPCA
Called for the safety-based goal of the
achievement of “fishable and swimmable
waters” by 1983
 Called for the elimination of all risk--zero
discharge of pollutants into navigable
waters by 1985
 Prohibited the discharge of “toxic materials
in toxic amounts”
 Individual states are left to draft their own
water quality emissions guidelines that
must be consistent with FWPCA

The Big Problem

Regulation of non-point water pollution (runoff
from storm sewers, farms, and construction
sites) has been designated the responsibility of
the states, and has been quite difficult
Hazardous Waste
Disposal on Land
Resource Conservation and Recovery Act
(RCRA), 1976. Covers disposal of
municipal and hazardous waste
 Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA,
better known as Superfund): Clean-up of
abandoned dump sites.

Love Canal

From 1942 to 1953, the Hooker Chemical
and Plastics company (now Occidental
Chemical) buried millions of pounds of
chemical wastes in the abandoned canal.
Hooker then sold the site to the city for $1
as a possible location for an elementary
school
Love Canal
A suburban housing development grew up
around the area. Liquid waste began to pool
on the surface and seep into people’s
basements
 In 1978, the state of New York ordered the
area immediately around the dump
evacuated
 In spite of the contamination, and many
reported cases of illness, it has been hard to
show definitive impacts of Love Canal
exposure to residents.

Waste Disposal
Under RCRA
• EPA designates which substances are
hazardous
• Requires cradle-to-grave tracking of such
wastes
• Facilities that treat, store, or dispose of
hazardous waste are to be regulated under a
safety standard
Superfund
Superfund provides a mechanism for
cleaning up abandoned dump sites
 Government collects money for Superfund
through two means

 Taxes on the chemical and petroleum industries
 Any party that disposed of waste in a particular
dump can be sued by the government to finance
the entire cost of the cleanup
○ Known as strict, joint, and severe liability
○ Fear of future liability under Superfund has spurred
manufacturers to reduce their use of hazardous chemicals
and to take greater care in their disposal practices
Status of Superfund Sites on the
National Priorities List, End of FY
2000
Chemicals and Pesticides
Efficiency-based legislation: the EPA
reviews both new and currently marketed
pesticides and chemicals for their
environmental impact.
 The agency can then recommend
restrictions on such products if they pass
a benefit-cost test.
 Laws:

 The Federal Insecticide, Fugicide, and
Rodenticide Act (FIFRA)
 Toxic Substances Control ACT (TSCA)
FIFRA

Manufacturers must conduct and submit
scientific studies of the toxicity of major new
ingredients
 Registering a new ingredient may cost as much as
$5 million to $7 million and take as long as 3 years

If the EPA deems a new ingredient to be
potentially harmful, it can conduct its own
special review process
Benefit-Cost Analysis Under
FIFRA

Highlights many of the problems
associated with such analyses
 Information about the benefits and costs of
regulation is not easy to obtain
 Regulators must often turn to regulated firms
to obtain access to the information that is
available
 Lobbying resources and political orientations
matter
TSCA
The EPA must be notified ninety days before
the manufacture of a new chemical
 No scientific data need be included with the
notification
 The EPA then reviews the new chemical,
testing for toxicity with similar compounds

 If the agency determines the chemical is
potentially hazardous, it can prohibit the
manufacture of it
Toxics Release Inventory
After a 1984 chemical plant explosion in
Bhopal, India killed and maimed
thousands, the US Congress passed the
Emergency Planning and Right-to-Know
Act
 Requires companies to report on their
releases of 450 chemicals suspected or
known to be toxic
 Called the Toxics Release Inventory (TRI),
it provides data on chemical releases on a
plant-by-plant basis across the country

Endangered Species Act
The ESA is our one piece of ecologically
motivated environmental legislation
 Requires protection of a certain type of
natural capital--species--regardless of the
cost

 The rationale for the law is strictly anthropocentric

“God Squad” can overrule ESA decisions on
efficiency grounds
ESA
Under the ESA, federal agencies are
required to list animals and plant species
considered to be endangered or
threatened
 Recovery plans for these organisms must
be developed and then critical habitat
designated
 Once this has been done, both public and
private actors must refrain from damaging
this habitat

Endangered Species

In 2000, there were 1,238 listed species
 960 were endangered
 268 were threatened

In 1995, the government spent about $80
million in total on listing and recovery: not
much.
Criticism of the ESA
 Large economic costs for private landholders? Not
much evidence of this.
 Incentives: The ESA gives landowners no
incentive to go beyond the letter of the law,
leading potentially to “shoot, shovel, and shut
up” actions
 Biological: The ESA’s focus on species rather
than ecosystems distracts attention from the
primary task--preserving biodiversity
Summary