U.S. Elections vs. the Environment: The stigma of successful regulation

Frank Ackerman

What will the presidential election in November mean for U.S. environmental policy? Although we don’t yet know who the Republican candidate will be, we know all too well what will be on his environmental agenda. The endless televised debates have exposed what the New York Times called “the broken windows of the Republican idea factory.” It’s not a pretty sight.

The candidates all share the same approach to the environment. Ron Paul plans to govern primarily by abolishing things. His hit list includes America’s foreign wars, but also the Federal Reserve, most federal taxes, the Environmental Protection Agency (EPA), and all limits on offshore drilling and the use of coal and nuclear power. Rick Santorum agrees that energy companies must be entirely deregulated. Newt Gingrich will build a moon colony by 2020, and will replace the EPA with a new agency that “will operate on the premise that most environmental problems can and should be solved by states and local communities.” Mitt Romney promises to “eliminate the regulations promulgated in pursuit of the Obama administration’s costly and ineffective anti-carbon agenda,” and to slow down or block regulations in general whenever industry complains about their costs (i.e., always).

Do we really need to slow down the snail’s pace of current environmental regulation, and pay more attention to industry as it bemoans the cost of compliance? Consider the case of coal ash: produced in stupendous quantities by coal-burning power plants, it contains dangerous concentrations of arsenic, lead, mercury and other toxic metals. Improper disposal has led to contamination of groundwater in many communities, and to occasional disasters such as the billion-gallon sludge spill that inundated Kingston, Tennessee in 2008.

This looks like the poster child for hazardous waste regulation – except that the coal industry has consistently used its considerable political clout to win special treatment. Back in 1980, near the dawn of modern waste regulations, Congress directed EPA to study coal ash in detail before applying hazardous waste rules to it.

That process of study has already stretched over more than 30 years. Under the Obama administration, closure was finally in sight; in 2009, EPA Administrator Lisa Jackson said she would complete regulation of coal ash that year. It turns out that the industry’s clout is undiminished, and the revised Obama plan is to punt until after the election. In January a coalition of environmental groups announced plans to sue EPA to force regulation of ash disposal.

Industry’s grumbling about regulatory costs has taken two forms. One is the claim of job losses: regulation of coal ash as hazardous waste, according to an industry-sponsored report, would eliminate more than 300,000 jobs a year. I re-examined their report and found it to be close to a complete fabrication; using standard methods of economic analysis, regulation of coal ash as hazardous waste would cause a net annual gain of 28,000 jobs.

A more exotic claim is that the stigma created by regulation of coal ash disposal would destroy the market for ash reuse. More than one-third of coal ash is recycled, often used in construction materials such as concrete, cement, and wallboard. Although EPA’s proposed rules explicitly exempt ash recycling, the industry claims that regulation of ash disposal as hazardous waste would stigmatize all uses of ash, including recycling.

If coal ash disposal bears a regulatory stigma, is it deserved? Nuclear waste is stigmatized as dangerous, which is a huge setback for any plans you might have to bury it in your backyard. No one, however, would count the lost income from your inability to open a backyard nuclear waste dump as a cost of regulation. Nor would we count the loss of income if sales dropped for a different product that was mistakenly stigmatized as nuclear waste. The latter is exactly parallel to the purported stigma effect on coal ash reuse.

Liz Stanton and I critiqued the stigma theory in testimony on ash disposal rules in 2010. At the time, the idea seemed purely hypothetical. Now the industry alleges that regulatory uncertainty and “toxic” publicity are already driving down recycling; after soaring under the previous administration, the ash recycling rate stalled in 2008-2009 and declined in 2010.

The industry has missed the obvious explanation for these trends. Coal ash is created by electricity generation; ash reuse often occurs in construction. In the economic boom before 2008, construction grew more rapidly than electricity generation, so markets for ash reuse expanded relative to the supply. In the crash after 2008, the reverse was true: construction declined more steeply than electricity generation, so reuse markets shrank relative to ash supply.

Is regulation too expensive because it calls hazardous materials hazardous, and clueless customers could accidentally extend the resulting stigma to other products? In rational debate in ordinary times, this notion would be greeted with derisive laughter, at best. Yet in a year when leading presidential candidates discuss statehood for a non-existent future moon colony, or plans to make immigrants engage in voluntary self-deportation, it’s hard to know what will count as serious.

The current administration’s environmental policies have frequently been a disappointment, but the choice in the November elections seems sure to be between disappointment and disaster.