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Reason Foundation

Journal of Commerce

States Can Teach the Feds

Pennsylvania shows incentives work better than mandates

Lynn Scarlett
July 31, 1999

An environmental policy revolution began in the 1970s that put the federal government center stage in the decision-making process.

In the Clean Air Act, Clean Water Act and companion laws, the states became supplicants to the federal boss in what looked like a game of "Mother, May I?"

Even after nearly 30 years, Congress and the Environmental Protection Agency remain largely locked in this old game. Not so for the states, which are launching their own policy revolution.

But this second revolution is not just a churlish rebellion by upstart adolescents.

Now, the states have well-developed environmental laws and a cadre of highly qualified professionals. Nine of 10 environmental enforcement actions are now brought by states. And because state and local regulators implement most federal environmental laws, they have a better idea of what works and what doesn't.

They want to move away from the prescriptive, procedure-obsessed approaches of federal environmental law, and they are not waiting for a green light from Congress or the EPA to do so.

Daily, state regulators experience the limits of mandates and top- down prescriptions that stifle environmental innovations. But even amid these difficulties, the states are achieving tangible results with "out of the box" thinking.

Many states have recognized the value of results-oriented flexibility. Illinois passed its own flexible-permitting law when its efforts to obtain approval from the EPA stalled.

Under the law, Illinois has negotiated with Minnesota Mining & Manufacturing Co., setting an overall emissions cap in which 3M can make process changes without additional regulatory approval — as long as it stays beneath its maximum emissions cap.

This type of agreement saves time and money while improving environmental results.

Many states also see the limits of an obsession with punishment, especially when the "crime'' is a mere procedural violation with no impact on the environment.

California launched a compliance-assistance program in 1988 — well before any significant federal action in this arena.

Many companies that violate environmental laws are not flouting the law. Many are small companies, like local dry cleaners or small gas stations, that simply don't have environmental expertise. California's EPA found high noncompliance rates among these businesses - about half for solvent cleaning, for example.

The old regulatory mind-set would have been to slap them with fines. Under the new mind-set, however, California regulators created compliance manuals to help these firms better understand how to reduce emissions.

So far, the manuals have helped reduce noncompliance by 50 percent to 60 percent. In this win-win situation, the environment improves and companies avoid sometimes costly fines and litigation.

States have also discarded the old mind-set in which environmental values were perceived to eclipse all other values.

Jim Seif, secretary of Pennsylvania's Department of Environmental Protection, says this "purity and Garden of Eden" attitude makes for good political posturing, but it is "a practice which, of course, produced no hazardous waste cleanups" because of the extreme expense or even impossibility of chasing after the last molecule of a given chemical compound.

Wanting results instead of symbols, Pennsylvania passed a land recycling act that set realistic cleanup goals and provided incentives for private land owners and developers to clean up old industrial sites.

Under the new law, over 300 sites have initiated cleanups, and over 100 cleanups have been completed - only a few at taxpayer expense.

Many federal laws essentially prohibit flexible, incentive-based approaches to environmental protection. In other cases, years-long federal delays in approving state innovations has placed them in jeopardy.

Some states complain that federal rules mandate the use of inferior pollution-reduction technology, essentially dragging states down to lower levels of environmental protection.

For many federal policy-makers, the old environmental laws have become symbols, rather than tools, for achieving stated goals. When this is the mind-set, these rules become hard to change.

But times have changed, as have our environmental problems. Now it is time for the process to change, too.

Lynn Scarlett is president of Reason Foundation.



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