PrintFebruary 7, 2009
Smarter Environment Spending For Jobs and Business Relief
If America wants economic stimulus from environmental clean-up, there is a much smarter way to do it than found in the current stimulus proposal. The Stimulus legislation (HR 1) that emerged from the House of Representatives with President Obama's blessing had no Republican support. I suggest this legislation should be seen as an opportunity for the Republican Party and thoughtful Democrats to respond with smarter ideas. HR 1 is so broad in its scope and colossal in cost that no one person can really critique the details with any confidence. Given my environmental law and policy experience, I suggest what I think would be smarter environmental EPA related program spending than the $9.4 Billion dollars as authorized by the House in HR 1.
First, a resort to policy context: Many people, including me, are skeptical of the idea that America can spend its way out of this severe recession. Some 200 academic economists signed a petition to Barack Obama last month, saying:
Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.
In making my suggestions, I focus on "reforms that remove impediments to work, saving, investment and production" and "reduction of the burden of government".
The current regulatory programs run by the EPA are, by and large, "command and control" programs over business and the public sector for activities that may impact air, water, land, water supply, or wildlife, especially regarding public health and welfare. Federal programs have grown from a patchwork framework of grant making and very basic regulation in the 1960's that mostly supporting state-led activity, into a comprehensive Federal lead regulatory format that governs all environment related activity. Now, every new chemical in commerce must be registered, and most stationary equipment and significant new real estate development must be permitted. Not even government activity may be undertaken without a review of whether it will impact human health or the environment. In many respects this environmental consciousness and regulation is beneficial, but there are inherent limitations on its efficiency and flexibility that stem from staffing constraints and regulatory complexity.
Enter, stage Left: HR 1. Of the $9.4 Billion Dollars authorized by Title VIII of HR 1, fully $6 Billion Dollars are for the construction of Sewage Treatment Works and $2 Billion Dollars are for State Drinking Water programs. Only $800 Million Dollars are devoted to Superfund site clean-up, and $200 Million Dollars are designated for leaking underground storage tank programs and remedies.
It seems to me that proponents of HR 1 must have reached for ready language and thrown it on a page, rather than sat back and actually thought about what their priorities on environment spending should be. While the building of improved sewage treatment works and drinking water facilities could certainly be beneficial, the environmental and economic benefit of putting our money there is marginal and will be delayed compared to a conscious effort to clean up the urban environment by attacking existing urban contamination.
There are many tens of thousands of sites on the Superfund list and "brownfield" sites crying for attention on our urban landscapes. (Senate Report) With a typical Superfund remedy cost running between $30 and $40 Million dollars, one can quickly see that the $800 Million Dollars in HR 1 will address only about two dozen sites around the country.
Fully three quarters or more of problematic Superfund and brownfield sites are in urban environments, often in or near poorer neighborhoods. The immediate funding of cleanups there will have immediate health benefits, and they can be a means of providing jobs for unemployed people. Also, importantly, Superfund liabilities are clogging the books of numerous companies large and small. These liabilities put a drag on their capacity for internal growth and for raising new capital. At many of the sites, the very heavy industrial companies that are in the most economic difficulty today are supposedly responsible parties for what may have occurred a generation or more ago and was likely lawful at the time of occurrence. Moreover, there is a huge transactional cost drag and wasted time on the present process of government making demands on the private sector for cleanups. If there is a place for government to step in, spend, and really help the economic picture, it is streamlining problem site cleanup and getting the cost off the back of business.
So here is my message to John McCain, James Inhofe, Mark Kirk and the many others in the Senate and Congress who want both to protect environment and help the economy but wish to do it with common sense: Get Superfund off the backs of American business and clean up our cities, too! The present process is fundamentally flawed, heavily bureaucratic, and unfair. Only a fraction of sites have been fully addressed in the law's 27 years, and industry was called on for the vast bulk of the expense, including over $1.5 Billion dollars last year alone. (USEPASummary ) If you will fund immediate government sponsored clean up of these sites and provide training and jobs to do it, then you will have the very kind of impact that even skeptical economists would say can make a real difference in the lives, prosperity and health of the American people. Besides, with the slowdown in economic growth, I do not sense some booming demand for additional sewage treatment in the next couple of years.
Harvey M. Sheldon is a partner in a Chicago law firm, where he concentrates in environmental law issues. These comments are his and do not represent the position of his firm or of any client.
