Regulat ing Law - Environmental Protection's Belief Systems

• Author: Oliver Houck
• Position: Professor of Law at Tulane University in New Orleans, Louisiana
• Pages: 6-7

Page 6 ❧ THE ENVIRONMENTAL FORUM Copyright © 2010, Environmental Law Institute®, Washington, D.C. www.eli.org.

Reprinted by permission from The Environmental Forum®, Nov./Dec. 2010

Mercury is one of most

toxic elements on

earth. Its af‌f‌lictions

are accompanied by

mental retardation,

weakness, and pain. Two thirds of

the mercury emissions in the United

States come from coal f‌ired power

plants. e Environmental Protec-

tion Agency was recently required to

regulate them under the Clean Air

Act, prompting a cost-benef‌it assess-

ment. e agency limited benef‌its

to reduced mental impairment in

babies, measured by the loss of IQ

points, translated to loss of future

earnings due to lower IQ, and re-

duced again since many victims were

poor and thus had less earn-

ing potential.

Question: What is

wrong with this picture?

Answer: to a dominant

strain of current economic

thinking, nothing. To Yale

Law Professor Douglas A.

Kysar, everything. His new

book, Regulating From No-

where: Environmental Law

and the Search for Objectiv-

ity, deconstructs the mod-

ern economic thinking that

pervades, and regulates, en-

vironmental law. At bottom

his argument is that the approach

is not only wrong-headed, incon-

sistent, and non-objective; it is also

inhumane.

For those of us who have followed

this dialogue, Kysar’s thesis does not

spring full-blown. A growing num-

ber of scholars and resource econo-

mists have launched attacks on the

peculiarities of cost-benef‌it analysis,

provoking to-the-last-ditch defense

in some quarters (“the problem does

not exist”), rationalization by others

(“it’s the best tool we have”), and pal-

liatives from still others (“in extreme

cases perhaps we ought not to rely

on dollar values”). A previous re-

view of OMB Of‌f‌ice of Information

and Regulatory Af‌fairs chief Cass

Sunstein’s book Nudge tracks the

schizophrenia of this last mindset,

one willing to accept that today’s en-

vironment presents extreme hazards

(e.g. climate change) inappropriate

for cost-benef‌it decisionmaking, but

f‌ine for the rest of the machine. Sun-

stein is at least acknowledging the ex-

istence of a dif‌ferent drummer. Kysar

takes him up on that.

Regulating From Nowhere adds

three things to the debate about

cost-benef‌it analysis in environmen-

tal regulation. e f‌irst is its moral

dimensions. e second is the short-

comings of its practice. e last —

and the ultimate measure of all schol-

arship — is a remedy. We may take

them in order.

Environmental law ref‌lects two

dif‌ferent belief systems. e one that

has come to predominate is that it

should be economically “rational.”

e sub-text is that environmental

goals are largely aspirational and driv-

en by emotions that ref‌lect our baser

instincts. Like the Hamiltonians of

old, the economic rationalists fear

the whimsy of the mob, especially

as ref‌lected in legislation. e rem-

edy is for the executive to moderate

those emotional outbursts with en-

lightened decisionmaking, based on

rational, prof‌it seeking behavior.

Economic rationalism is deter-

mined in several ways, but the two

most prevalent are called “revealed

preference” and “heuristic evalua-

tion.” Revealed is better: after all,

goes the theory, it is what the data

show. Laborers on oil rigs get (some-

what) higher pay than those on shore,

in ef‌fect voting on the value of their

lives. Mothers pay more for organic

baby food, a handy pricing mecha-

nism for their children’s health. Voila,

safety and health become dollar val-

ues. When market indicators fail, we

turn to contingent valuation — how

much would you pay not to be sick?

It is all very logical.

It is immoral, says Kysar,

because it buries the ethical

choices that underlay envi-

ronmental laws in the f‌irst

place, a very dif‌ferent be-

lief system, and because it

reduces individual choices

to money when that is not

what is driving us at all.

We make non-prof‌it-maxi-

mizing decisions every day.

Some of them are even sac-

rif‌icial. To Kysar, we need to

start from a dif‌ferent place,

the declaration inherent in

environmental law of not

simply what is, but what ought to

be.

His second critique of the practice

of cost-benef‌it analysis need not de-

tain us. It has been said before. e

process contains hidden and “Her-

culean” assumptions about human

needs and desires, it warps consid-

erations of high-risk and irreversible

consequences, and it is easily politi-

cized to arrive at favored results. As

many have noted, economic analysis

is most often used to limit environ-

in T h e li T e r a T u r e

Regulating From Nowhere:

Environmental Law and

the Search for Objectiv-

ity. Douglas A. Kys ar. Yale

University Pr ess. $45.

REGULATING LAW

Environmental Protection’s Belief Systems

By Oliver Houck