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A Six-point Environmental Flexibility Checklist

Christopher A. Hartwell
September 1, 1999

Table of Contents

I. Introduction 

II. The Six Keys to Success 

III. Other Resources 

About the Author 



I. Introduction 

For the past several years, Reason Foundation has highlighted innovative state environmental programs. These programs dispel the notion that states, left to their own devices, will engage in an environmental race to the bottom. Rather, they race to the top, implementing flexible and non-regulatory programs to achieve environmental improvement. Reason Foundation studies and our new environmentalism Web site (www.newenvironmentalism.org) highlight many success stories, with more states experimenting in this realm all the time.

But case studies do not tell the whole story of innovation. What works in one locality may not be replicable in another one, due to local circumstances and knowledge. Also, differing preferences in different states may hinder the development of a certain type of program, and uneasy histories with the U.S. Environmental Protection Agency (EPA) may also affect the ability of some states to innovate.

With this in mind, Reason Foundation has compiled a brief "how-to" checklist on making innovation work in your state. The lessons learned from some of our policy research are general enough to fit most situations, and have been tested at the local and state level.

Shifting the focus of environmental regulation from the current punitive mindset will not happen overnight.

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II. The Six Keys to Success 


A. Listen to the Regulated 

Making environmental policy more performance-oriented requires more than just loosening up a few rules or shuffling personnel around. It means finding out what local people think is important for their local areas. Reason Foundation 's work in the area of watershed management (see study 259, "Rivers Among Us: Local Watershed Preservation and Resource Management in the Western United States") has highlighted the benefits of decentralized decision-making, in which local knowledge and local priorities become the building blocks of environmental progress. For example, in California in the mid 1980's, a concerned history teacher was instrumental in forming the Feather River Alliance, a group of disparate interests that coalesced to protect the river and its tributaries. Backed by Pacific Gas & Electric (PG&E), this group has had a number of successes to date in combating erosions and restoring local creeks.

A critical element of flexibility is an absence of top-down mandates that define what the environmental problems are and what the solution should be. Rather, flexibility requires that we find out what the people affected are really concerned about. Rural Californians have different ideas about pollution than city folk: farmers will be more worried about nonpoint-source pollution, while Los Angelenos will care more about ozone levels and air quality. Listening to local preferences should be a major priority in any move away from command and control. Without knowing what the problem is, how can one fix it?

B. Measuring Meaningful Indicators of Success 

How do you measure "success" for the environment? Is it the number of violations caught, the number of fines issued, the size or political clout of the environmental agency? Or is it tangible environmental improvements? All too often, agencies and regulators confuse the two, leading to undesirable situations such as that in Massachusetts. Massachusetts had a prolific system of issuing permits, regulating over 10,000 sites through 16,000 individual permits. But did this work in improving the environment? Evidently not: all but one of their Superfund sites had been a permitted facility, sanctioned by the DEP. It is imperative to shift the focus of environmental improvement from the means to the ends, and get away from the "bean-counting" method.

C. Consider Risk Assessment 

While many people think that prioritizing environmental remediation activities based on risk is a good idea for any regulation, for many environmental activists, weighing risk in the environment is sacrilegious. But heresy or not, it may not be feasible or desirable to eradicate every last bit of pollution. As an example, the New York Department of Environmental Conservation had requirements that oil producers store all the water that comes up with the oil in storage tanks instead of allowing them to dispose of it. The cost of storing and hauling the water to a special site is too high for small producers, requiring them to utilize a system that may not be appropriate for their activities.

Before deciding on a course of action or a policy, ask whether any proposed change will really help the environment; whether there is a net benefit in terms of lives saved or pollution prevented. By simply asking these questions, and not looking upon emissions as an a priori evil, public policy can be better administered. Environmental protection, like everything else in public policy, involves trade-offs.

D. Strive for Incremental Success 

The secret to moving away from command and control is taking small steps. The Berlin Wall did fall overnight...but only after forty-five years of increasing pressure and systemic collapse. Moving away from one-size-fits-all regulation requires the same incrementalist attitude. Policy occurs in a political environment, and what is most efficient or most beneficial for the environment may be blocked by special interests or other forces if it seems unfamiliar.

A good way to chisel away at the edifice is to bring together a roundtable of interested industry leaders and environmental activists and present them with a "wish list" question: If you could have one thing changed in existing environmental laws, what would it be? Are audit immunity laws foremost in your mind, would a facility-wide permit work? Virginia's experience with watersheds exemplifies the consensus-building approach: The town of Hopewell, Virginia has become a leader in community environmental involvement, working with its many interests for incremental success. The partnership between Hopewell and its industries began with the 1977 opening of a regional wastewater treatment facility designed to effectively treat industrial as well as municipal wastewater. The wastewater facility was custom-designed by the City of Hopewell and industry leaders, and is funded by both the public and private sector. This initial success was institutionalized as the Hopewell Community and Industry Panel (HCIP), a forum of business, government, and community leaders who are involved in formulating solutions to the town's problems. HCIP's successes to date have included environmental awareness programs and the financing of a $10.7 million improvement to the wastewater facility, marking a 30-year operating agreement between the City of Hopewell and local industries.

E. Focus on Organization 

Having gone through some of the ideological and practical steps that a state can take to move towards flexibility, what about the actual organizational measures? Breaking the command and control mindset in state environmental agencies is tough. Regulators generally only see the regulated when there's a violation, so the prevalent view among state employees is adversarial. Some form of education process for employees of environmental departments may help to dispel some of these myths (training and re-training of workers is a good idea). Reorganizing agencies along geographic lines, to garner local expertise, is also a viable move, a way to shake up the punitive mindset and work towards effecting a real shift. The Minnesota Pollution Control Agency (MPCA) is a good example of this organizational change: their reorganization in 1998 to regional offices (rather than one centralized office) has brought the focus of improvement to the localities. [This case is explored in further detail in our upcoming study on the MPCA].

Other subtle changes, such as having people spend time in the field, also helps to put a human face on the state agency and builds trust among the regulated and the regulators. Rotational assignments are another good idea, as they let people build competencies in many different fields. Finally, maybe teaming is a good way to go, with different specialists (every type of specialist is going to have their own culture: engineers will be interested in technical violations, economists care how much it costs, etc.).

F. Deal with the Federal Question 

The success of innovative programs in New Jersey and Massachusetts is partly based on the fact that they offer flexibility and help within their own states, rather than tackling federal programs. The Environmental Results Program in Massachusetts and the Facilitywide Permit in New Jersey do not provide protection against federal laws, and as such are necessarily second-best solutions. So the question for the states becomes, "where do you pick your battles?" Are resources better targeted at untangling the morass of Superfund legislation, or can more headway be made with smaller, local initiatives (see "Incremental Success" above)? Oklahoma DEQ head Mark Coleman has advised that the states are better off implementing their programs first, and then fighting with the EPA later. This step will also depend on the history between a state and the EPA, but really boils down to a state's preferences.

G. Additional Comments 

As economists have noted for decades, environmental regulation should be concerned with incentives, getting the regulated to internalize desirable behavior. The only way to get people to protect the environment is for them to see the benefits of protection, and have them involved in the process. People with a stake in the environment will work to preserve it. This is the essence of local knowledge, local priorities, and should be the keystone of all environmental innovation. Simply replacing one bureaucratic mechanism with another is not enough. And of course, you must be prepared for a long haul, for environmental progress is not an instant success.

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III. Other Resources 

Race to the Top: The Innovative Face of State Environmental Management, by Alexander Volokh, Lynn Scarlett, and Scott Bush, Reason Foundation Study No. 239.

Simplify, Simplify: Alternative Permitting at the State Level, by Christopher A. Hartwell, Reason Foundation Study No. 253.

Rivers Among Us: Local Watershed Preservation and Resource Management in the Western United States, by Michael Harrington and Christopher A. Hartwell, Reason Foundation Study No. 259.

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About the Author 

Christopher A. Hartwell is an environmental policy analyst at Reason Foundation, and is project manager for Reason Foundation's State Innovations Project, which examines the continuing trend towards state and local-based environmental management. He is the author of Reason Foundation policy study 253, Simplify, Simplify: Alternative Permitting at the State Level, which examines the development of permitting innovation across the United States.

Mr. Hartwell received his B.A. in political science and economics from the University of Pennsylvania and his Master's of Public Policy from Harvard University.

Prior to his work at Reason Foundation, Mr. Hartwell was at the Harvard Institute for International Development (HIID), where he was involved with environmental economics in the Czech Republic, editing an economics textbook for researchers at Charles University in Prague. Mr. Hartwell has also worked at the German Ministry for Economics in their European Department and at the U.S. Department of Labor.

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