THE EPA AT FIFTY: TIME TO GIVE BOOTLEGGERS THE BOOT!(The EPA at Fifty Symposium)

• Author: Mannix, Brian F.

Contents INTRODUCTION I. AGENCIES COME AND AGENCIES GO II. OF BOOTLEGGERS AND BAPTISTS A. "Clean Coal, Dirty Air" B. The "Land Ban" of Hazardous Waste C. Protecting the Ozone Layer, and a Manufacturer D. Picking the Perfect Pesticide E. CAFE Standards F. Getting the Lead out of Gasoline G. The Ethanol Bootleggers CONCLUSION: IS EPA A VICTIM OR A PERPETRATOR? INTRODUCTION

The Environmental Protection Agency (EPA) has an important and well-defined mission with broad public support. Too often, however, the Agency has sought to strengthen its position by aligning itself with politically powerful rent-seeking interests. There are numerous examples--most recently, the use of the renewable fuels standards to subsidize ethanol refiners and related agricultural interests. My wish for the Agency on its fiftieth birthday is that it stays focused on its own mission and remembers that old adage: "Dilution is not the solution to pollution."

1. AGENCIES COME AND AGENCIES GO

   My first full-time job was as an operations research analyst at the EPA in 1977, under President Jimmy Carter and Administrator Doug Costle. I returned to serve as the EPA's Associate Administrator for Policy, Economics, and Innovation from 2005 to 2009, under President George W. Bush and Administrator Steve Johnson.

   In between those stints, I held several other jobs that let me see the EPA from different perspectives: from 1979 to 1987 I did economic oversight of EPA regulations first at the Council on Wage & Price Stability and then at the newly created Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB). Later, I held a position in state government, supervising the state's Department of Environmental Quality and its interactions with the EPA. For a while I worked at a manufacturing think tank, and learned the challenges of regulatory compliance from its members.

   Along the way I often found reasons to question the Agency's decisions, but to this day, the EPA remains my favorite federal agency. In part that is because I have many friends and colleagues there, but it is also because, in contrast to many other federal agencies, the EPA has a persuasive reason to exist.

   That may sound odd, but when I first studied public policy in the 1970s, it was common to ask whether a government program was really necessary, and sometimes the answer was "no." President Carter promoted a concept called "zero-based budgeting," which encouraged a fundamental review of each program every year. (1) (Sadly, it did not last.)

   In 1974, under Chairman Ted Kennedy, the Senate Judiciary Committee held hearings questioning the need for airline regulation by the Civil Aeronautics Board (CAB). (2) The hearings were organized by Special Counsel (now Justice) Stephen Breyer, from whom I took an administrative law course when he returned to the academy. (3) Economist Alfred Kahn was the star witness at those hearings; he went on to chair the CAB and to help phase it out of existence. (4) This year we celebrate the thirty-fifth anniversary of the CAB's abolition.

   This year we also celebrate the fortieth anniversary of the trucking and rail deregulation bills signed by President Carter, and the twenty-fifth anniversary of the complete demise of the Interstate Commerce Commission (ICC). In fact, the ICC's old hearing room still exists; it is now a conference room called Room 1123 EPA East. After a difficult day in the office, I would sometimes go to that room just to rejoice in the fact that the ICC was no longer there. We rightly celebrate the dismantling of those agencies in the era of economic deregulation, (5) which was a thoroughly bipartisan effort and was a spectacular success in terms of improving consumer welfare.

   At roughly the same time, new agencies were being created to address environmental, health, and safety concerns. And new procedures were put in place to guide these social regulatory agencies. President Clinton's Executive Order No. 12,866, (6) Regulatory Planning and Review, built on earlier efforts by Presidents Nixon, Ford, Carter, and Reagan, and remains in effect today. (7) It specifies that, before regulating, agencies should state what problem they are trying to solve, explain why markets are not adequate to solve it, examine the available alternatives, and use cost-benefit analysis to evaluate the alternatives' relative merits. (8)

   Applied rigorously, the well-established principles in Clinton's executive order might give some agencies considerable trouble. The Occupational Safety and Health Administration might struggle to explain why labor markets and traditional common law remedies would not adequately ensure workplace safety, for example. The Consumer Product Safety Commission would need to explain how its regulations improve the function of markets for consumer goods. Where exactly is the market failure?

   But the EPA would have no such trouble explaining why it is needed. Environmental externalities are a very real problem, and markets do not exist to handle them adequately. The need for the EPA is not really in question.

   This is not to say we could not find radical ways to improve the way the EPA approaches its job. There are plenty of opportunities to strengthen property rights and private remedies for environmental damage, and to design more market-like regulatory solutions. From the beginning, the EPA has done some thoughtful work on this topic, but in its regulatory actions, the impulse to command and control more often seems to prevail.

   We could also do a better job of parsing the federal and state roles in environmental protection. Contrary to much of the press coverage, I think the recent rule narrowing the definition of "waters of the United States" is a step in the right direction. (9) States have been protecting water quality for far longer than fifty years, and in many ways they are better equipped to carry out this task. They have the authority to regulate land use, for example, which can be one of the most important tools for protecting water quality.

   But in the final analysis, we will still need a federal agency with responsibility for environmental regulation. The EPA gets its fair share of criticism, but still enjoys strong bipartisan support and unwavering public support. (10) It therefore should have the confidence to put up a vigorous resistance when rent-seeking interests seek to bend the Agency's authorities towards private aims that often conflict with the public interest.

2. OF BOOTLEGGERS AND BAPTISTS

   Clemson Professor Bruce Yandle offered a positive theory of...