One of the major issues of our time involves the institutional arrangements that should be introduced in response to damage caused by various forms of pollution. In dealing with this issue, there is widespread agreement that pollution from natural sources is a risk to be controlled, and that pollution from human sources creates dangers that are the proper subject of legal constraint, be it by government regulation, state or federal, or by private rights of action under either federal or state law, brought individually or by classes. Any supposed laissez-faire regime that would leave the question of pollution to the "market" is no more plausible than a laissez-faire regime that assumes that the state need not supply some remedy against other forms of aggression that one individual takes against the rest of the world. The only question here is that of technique, which leads those interested to worry about two primary issues. The first involves the proper analytical framework to deal with environmental issues. And the second deals with the distinctive treatment of some specific issues in environmental law. In both areas, it is critical to be attentive to the incentives that the rules create for opportunistic behavior on all sides, the risks of over-and under-enforcement of environmental safeguards, and the administrative costs of putting any complex regulatory scheme into place.
The level of choice raised by these issues is not inconsiderable. In particular, this Essay presents extensive differences with Professor Blais's argument (1) that extend to virtually every point of institutional design outside her general condemnation of pollution as a species of harmful conduct. (2) Before responding to these issues directly, the first Part of this Essay puts the common law framework into perspective and analyzes the role that a correct understanding of both the just compensation principle and the harm principle plays in the overall analysis. Thereafter, the second Part addresses three particular issues: the use of injunctions, the role of knowledge as a form of assumption of risk, and the dangers of environmental exactions.
The Common Law Approach
The major intellectual challenge in this area is whether it is possible to organize a system of property rights that deals with the larger question of pollution that outperforms the articulation of the common-law rules, as they apply to both public and private nuisances. (3) The answer to that question is that the law cannot do better. Therefore, the function of the federal or state governments in these issues ought not to be, in effect, to create a brave new world of weird and uncertain entitlements. Environmental entitlements, such as those that have been created for dealing with wetlands or endangered species, list the preservation of habitat as a nuisance and pollution issue rather than a takings issue, which is how it ought to be classified. Legal modesty should be the order of the day. The role of government at all levels should be to improve the enforcement of the set of entitlements already in place by using collective enforcement actions when the disorganized actions of private individuals are insufficient to deal with pollution risks.
One way to make the point is to turn for a moment to the famous fire on the Cuyahoga River in Ohio in 1969. (4) The fire was caused by an oil slick in severely polluted water and caused tens of thousands of dollars worth of damage. (5) The source of the evident institutional breakdown that led to this dramatic event is as follows: The local governments, often subject to political pressure by their major industrial constituents, did not enforce the standard legal rules, set in place to deal with the private creation of public nuisances. (6) The lax enforcement of these rules led to private parties treating valuable public resources as a useless dump in which they could deposit their waste without limit and resulted in private gain at public expense. (7) This situation thus replicates the standard prisoner's dilemma game: (8) All polluters are better off without the pollution, but none unilaterally will stop so long as others can pollute. The appropriate response to this breakdown in social responsibility is not to pass some new huge, unwieldy, and overambitious law. Rather, it is to ramp up effective state enforcement, conferring, if necessary, standing on private individuals who use the rivers to coerce public bodies to take steps to clean up the river. (9) On that model, the only hard question is how far to push the cleanup agenda, and on this point I believe that many strong environmentalists, including Professor Blais, go wrong.
The private law of nuisance contains, of course, a strong prohibition against pollution of neighboring properties and public waters. (10) Yet that basic regime of strict liability is also offset by a de minimis or a live-and-let-live rule, (11) which says, roughly speaking, that once the state has gotten rid of ninety-nine percent of the pollution at any particular site, and received in exchange a large net benefit, it adheres to the economic law of diminishing marginal utility, and resists any temptation to double down on expenditures and thus drive pollution levels to zero. (12) Knowing when to quit is as important as knowing when to proceed. Any support for creating a pollution-free river fails if it overlooks the need to set marginal benefit equal to marginal cost. (13) In so doing, advocates of a pollution-free position have gone a bridge too far by inventing problems that need no solution. Now the environmentalists themselves become the social problem.
The Compensation Principle
These dangers can be avoided. Those who say "either we do everything, or it is as though we have done nothing," have deviated from a principle that was best articulated by one of the most prominent of the 19th century English libertarian judges, Baron George Bramwell. (14) In his great decision in Bamford v. Turnley, (15) Judge Bramwell explicitly related the law of nuisance to modern accounts of social welfare years before these were formalized. He wrote:
The public consists of all the individuals of it, and a thing is only for the public benefit when it is productive of good to those individuals on the balance of loss and gain to all. So that if all the loss and all the gain were borne and received by one individual, he on the whole would be a gainer. But whenever this is the case,--whenever a thing is for the public benefit, properly understood,--the loss to the individuals of the public who lose will bear compensation out of the gains of those who gain. It is for the public benefit there should be railways, but it would not be unless the gain of having the railway was sufficient to compensate the loss occasioned by the use of the land required for its site; and accordingly no one thinks it would be right to take an individual's land without compensation to make a railway. (16) In making this general statement, Judge Bramwell showed a deep awareness of the just compensation principle, which all too often is shunted aside today, even though it functions exactly as Bramwell envisions: It is a financial constraint on government that does not allow one person to impress his will on others without paying the just freight. (17) It is for that reason that he takes into account the interests of all persons, not just those who benefit from the improvement, which makes his articulation of the principle a worthy forerunner to the development of the Paretian formulas around 1900 (18) and the Kaldor-Hicks formula (or hypothetical compensation formula) some forty years later. (19) One sense of the strength of the common-law system of entitlements is that it tends to generate strong Pareto efficient outcomes from the ex ante perspective. (20)
To show the common law's efficiency, it is important to illustrate how this system of private rights works. Exclusive possession means, among other things, the protection against invasion by pollutants from other sources, subject to the constraint that de minimis or low level interferences are not to be enjoined. (21) In those cases where there are reciprocal damages among two or more parties, no action need be allowed at all, because each person is compensated for the loss of some environmental purity by his or her own greater freedom of actions.
The Harm Principle
In making this argument, it is critical not to include other supposed harms in the analysis. Indeed, one of the...