What’s Up with the Downtrend in EPA Enforcement Effort?
This emerging trend could spell trouble…
Over the past weeks, we’ve been confronted with a sobering example of what can happen when enforcement of environmental regulations falls slack. Following a drop in efforts to enforce logging and ranching restrictions under the new Brazilian president, the rate of deforestation in the Amazon has accelerated.
Here in the United States, we’re also seeing signs of a decline in the federal enforcement of our environmental regulations. The decline may not be so dramatic. The impacts are not so clear cut. But troubling trends have prompted GAO investigations and Congressional hearings. Trump Administration officials insist there’s no problem here. I’m not so convinced.
Unsung Heroes of Environmental Regulation
When you think about the remarkable improvements in U.S. environmental quality over the past decades, rock star environmental regulations such as The Clean Air Act likely come to mind. The passage of these regulations was critical. But it’s the less glamorous behind-the-scenes enforcement that’s done much of the heavy lifting.
The EPA, along with the states, is responsible for overseeing over 40 million entities regulated under 58 different environmental regulations and programs. Economists have shown how thousands of facility inspections, violation detections, and fines have enhanced compliance and reduced pollution. Thank you, unsung heroes and heroines of environmental enforcement!
The EPA reports on a series of enforcement metrics to track these efforts. The graph below shows how one of these metrics—facility inspections– has been trending over time:
The 2018 report shows similar declines in other key metrics such as civil enforcement case initiations, environmental crime cases opened, defendants charged, etc.
An incomplete picture (of enforcement efforts)
At this point, it’s tempting to conclude that these downtrends are unambiguously bad news for the environment. But don’t grab your Berkeley protest signs just yet. There are other plausible interpretations and explanations.
One possibility: As the structure of the economy changes, perhaps there are fewer polluting sites to monitor? A cursory review of the data suggests this is not the case. The number of Federally regulated facilities has been increasing over the past decade.
Here’s another consideration: The metrics we have to track enforcement effort are seriously imperfect and/or incomplete. Imperfect because counts of facility inspections and case initiations could fail to capture improvements in targeting and efficacy. Incomplete because state and local enforcement efforts (which account for a majority of activity!) are left out of the picture.
This second argument has been emphasized by the Trump Administration when called upon to explain the measured declines in enforcement effort. They contend that a focus on federal efforts ignores an important counter-trend at the state-level. A central EPA priority under the Trump administration has been to “rebalance power” and push even more of the enforcement responsibility down to state and local agencies. In other words, it’s possible that the step down in Federal enforcement is being offset by this stepped-up role for states.
Will the states pick up the slack?
Some delegation of enforcement is a good thing. The Feds should not be issuing your speeding tickets or responding to your call when your neighbor is violating the local ban on leaf blowers. Your local law enforcement can draw more effectively on local resources, knowledge and community interactions. Similar arguments apply in the context of environmental enforcement….up to a point.
For an eloquent and expert discussion of why further delegation to the states could spell bad news for the environment, the Congressional testimony of my economist friend Jay Shimshack is a must-read. Here’s my less-expert blogger take on why we may be pushing this delegation balance in the wrong direction:
Regulatory capture: The same local relationships that can make state agencies effective agents of enforcement can also be a liability. State agencies may lack the political will to enforce costly regulations if violators are influential and/or important employers in the state.
Pollution crosses state borders: States have little incentive to crack down on its polluters if damages flow down-wind or down-river and out-of-state. Economists have documented how, in the allocation of states’ inspection and enforcement actions, out-of-state neighbors seem to count less than in-state ones. The Federal EPA has an essential role to play when cross-state externalities are not internalized.
Regulatory leakage/Race to the bottom: If businesses locate economic activity – and associated emissions- to avoid more stringent enforcement, this can create perverse incentives for states to be more lenient. Mary Evans and co-authors provide some evidence of “regulatory leakage” under the Clean Water Act. Evidence that pollution-intensive industries locate in places with relatively lax Clean Air Act regulation is mixed.
States can’t do more with less: If we’re serious about asking the states to do more, we need to make sure the states have resources. The EPA is tasked with distributing money to states that have delegated authority. The Trump Administration’s 2020 Budget Proposal reduces support for state environmental protection by $1.4 billion.
Where there’s smoke, there’s fire?
We don’t have all the information we need to understand what’s driving measured declines in federal enforcement efforts, or to draw definitive conclusions about how these declines could be impacting the environment. Unlike illegal deforestation, increases in toxic releases or illegal pollution can’t be captured in a photo or satellite image.
This incomplete picture notwithstanding, I see cause for concern. I’m dubious that states can effectively compensate for reductions in federal enforcement efforts. Budget proposals that reduce state funding suggest that this “states-pick-up-the-slack” story is more smokescreen than serious.
Above-the-fold stories about high profile EPA regulatory rollbacks get lots of attention. Behind-the-scenes enforcement, not so much. We should be tracking enforcement efforts more closely. After all, landmark environmental regulations without enforcement are just good suggestions.
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.
Suggested citation: Fowlie, Meredith. “What’s Up with the Downtrend in EPA Enforcement Effort?”, Energy Institute Blog, UC Berkeley, September 3, 2019, https://energyathaas.wordpress.com/2019/09/03/whats-up-with-the-downtrend-in-epa-enforcement-effort/
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Might be useful to extend the principles of fiscal federalism (see esp. Thomas Nechyba) to study both the evolution of federal, state, and local roles in environmental regulation and the implications for regulatory design. This goes beyond what regulation is needed to the question of which jurisdiction has a comparative advantage in what function (as well as the optimal amount).
“For an eloquent and expert discussion of why further delegation to the states could spell bad news for the environment, the Congressional testimony of my economist friend Jay Shimshack is a must-read. Here’s my less-expert blogger take on why we may be pushing this delegation balance in the wrong direction…”
From what I can tell, your less-expert blogger take is right on the money, Meredith. This has been on ongoing trend in utility deregulation for at least 50 years, with the most prominent example being the 2005 repeal of the Public Utility Holding Company Act of 1935 (PUHCA). Before 2005, multi-state energy holding companies were: 1) subject to federal review by the Securities and Exchange Commission for conflicts of interest (self-dealing), 2) forbidden from making campaign contributions, and 3) required to obtain a permit to lobby elected officials.
Repeal was justified under the premise states would assume regulatory duties. Instead, state officials have been all-too-vulnerable to fossil fuel influence (California is a textbook example).
The EPA was a product of Richard Nixon, who recognized polluting a river in one state might poison residents of a state downstream. Federal regulation was required…not that hard, is it? That our current administration is able to lower the bar below that of Richard Nixon might be regarded as an achievement in itself.