– ANWR: Arctic National Wildlife Refuge, Northern Slope, on Prudhoe Bay: Drill? CBA
o For: Less volatility, improve national security (but enough to offset destroying ANWR?); get oil (enough to make it worth it?); improved lifestyle for natives – education, jobs, etc.
o Against: Not enough oil to make it worth it; reduce incentives to find alternates; U.S. strategy shifting away from oil; effect on wildlife; effect on people, natives – do they have special claim to maintain lifestyle?; loss of natural area, recreation
Tragedy of the Commons
– Degradation of air, water, common lands
o There is a point where the commons reaches its maximum sustainable use
§ If one person adds to the commons they will often reap the benefit and the cost is shared by everyone else (individually rational but collectively destructive)
o How do we solve the tragedy?
§ Regulate at maximum sustainable yield and distribute accordingly: Make certain rights tradeable
§ Contractual Cooperation: Agree not to overuse the resources (tough for market economy, society – has worked in native fishing villages w/ no outside market)
§ Allocation/Division of Land: But then it’s no longer “the commons”
· How do you divide some resources – air, water
§ Control Access: Like our national park systems
o E.g., fisheries – 200-mile international zone; boats can sail, but you can halt fishing, rebuild fish populations; up 12 miles is territorial zone – you can defend
§ Nations have to decide how to handle commercial enterprise in international zone
· U.S. has maritime councils of scientists, politicians, fishing industry: Allocate quotas to fishers, bad for fishermen
§ Beyond 200 miles – open season – any method (giant nets sweeping up the ocean); need international pacts – like the whaling pact in current events
– Externalities: Putting things into air, water is also a commons issue
o Driving car = spreads pollution burden to everyone; create driving rights – license plate number ends in odd/even, drive certain days
o Property rights would internalize the externalities: How to do it for air, water, etc.?
§ We all benefit from no internalized costs, e.g. steel: Output is steel, pollution – paying to control pushes cost higher – control devices, electricity
§ Externalizing incentivized to make more $
– Fighting externalities:
o Common law suit; nuisance suit; trespass suit
§ Have limitations, problems: Free riders, transaction costs, causation issues, small recovery so no incentive to sue (not cost-free to get plant to stop polluting; damages might be low for one person – no incentive to sue)
o Government intervention: How much pollution should be allowed? Should they just pay for what they pollute? How much is that? How to measure? (crop damage, aesthetics, health problems, value of animals killed)
– ID problem: Stop if it makes economic sense
o ID options – do nothing, do a bit, total bar
o What are net benefits for each option?
§ Can classify as variable, assign arbitrary value, list as a range
§ Some are hard to define – life, cognition, environment
– (Page 31) Lead in gasoline since 1920s: Raised octane cheaply, cut knocking
o Raised lead levels in children – not good; in 1975, catalytic converters required, which didn’t mix w/ lead – misfueling cars began – not good
o Options – no change, low-lead, no-lead
§ Lead damaged engines – even w/o health benefits it made sense to get rid of lead
o Cost-benefit justified: Net benefits far exceed costs, later discovered other benefits – blood pressure affected by lead – each 1 microgram reduction in average blood lead yields net benefits of $17.2B
Tough valuations – life, cognition
– Ways to value: What will people pay?; regulated price – $7M; market price – value of risky jobs; extrapolate from known values
– How to value loss of cognition? Remedial education – $4K; value of an IQ point – $1,100
o Estimate of remedial education ($4k/kid benefitted)
– How to value human life: $5M to $7M?
o For regulatory law, all lives are equally valued: No preference for babies over elderly
· 7M/70 years (average lifespan): Life worth $1K a year; should the 65 crowd be valued at $5K or full value?
o OMB attempted to go to life/year – Congress rejected – old votes
· Another way to consider – productivity – peaks at 20s-60s, down after that; should the value of the life depreciate based on age?
o Say cost of risk is $7K for 1 in 1,000 risk: What would cost of risk of 1,000 in 1,000 be? $7M – that’s what the life is worth
o Extrapolate from known risks: If regulation saves 1,000 lives, measure saves $7B annually
– Lives valued at different levels at different agencies: EPA says $7M – huge possible benefit
o If something saves 1K lives, that’s $7B in benefit – program can cost a ton under CBA analysis
– Not a lot of other things that have a quantified value – human life, therefore, important in CBA
o If Program X saves 10 lives but Program Y saves 1,000 – for same $ – save lives efficiently – even the government likes efficiency
– Value of the ecosystem? $33T estimate
– Nonfatal cancer: See arsenic, below
– In 1989, EPA banned all asbestos under Toxic Substance Control Act Section 6: No more manufacture, importation, processing, distribution because of unreasonable risks presented to human health by exposure to asbestos
o Section 6: Gives EPA power to limit, prohibit a chemical’s use if there is unreasonable risk to human health or the environment
o CBA analysis: Probability that harm will occur vs. potential harm to society from removal of product benefits
§ EPA’s math came out as worth it
Corrosion Proof Fittings v. EPA (5th Cir. 1991): Page 235 – Under TSCA the EPA must use the least burdensome regulations to prevent unreasonable risks – maybe not the case here, calculations not done; total ban is tough to do – even on deadly asbestos – have to stay w/in controlling statute
– Was EPA’s CBA sufficient under the TSCA to show that the least-burdensome method to achieve goal of minimum reasonable risk was a total ban of asbestos?
– Section 6: Regulates “an unreasonable risk of injury to health or the environment,” means must protect adequately against such risk using “least burdensome requirements.”
o 94 percent ban, some excepted uses; regulation challenged
– Least Burdensome and Reasonable: Use of TSCA OK, but analysis was bad
– Problems w/ EPA’s determinations:
o Cost/life from total ban too great – $74M/life saved; when total numbers disaggregated, it’s worse – $200M-$300M to save seven lives over 13 years: NOT REASONABLE
§ Total cost/total benefit vs. marginal cost/marginal benefit: Should court look at the marginal costs or stick to total?
§ Court breaks down costs because much of the life-saving came from one group of products, but the costs were more evenly spread.
o Replacements were a problem – they could be as toxic – known alternatives needed testing
§ Where no replacement existed, could get waiver – but in limited circumstances
o No middle-option explored – just total ban; what about labeling (EPA said no one agency could do it – joint operations allowed)
o Bad calculations: Discounted costs, not benefits – keep it apples to apples
§ No cost/benefit projections beyond 2000 – double counted costs of asbestos use, now tries to say lives saved past 2000 justify cost.
· Cost discount – When doing CBA, say total is $5M, but it’s not – money spent in Y2, Y3, etc., is discounted – total might be $4.5M when discounted
· Discount rate: Value used determines future benefit, costs; government uses 3 percent more today than a higher, more aggressive figure
o At 7 percent: today life worth $5M; 23.5 years – $1M; 100 years – $5K; 500 years – nothing
o At 3 percent: today life worth $5M; 23.5 years – $2.5M; 100 years – $260K; 500 years – $1.91
· W/ a long-term problem, not worth doing anything at 7 percent – life is of such little value in today’s dollars; even at 3 percent, little incentive to look long-term
§ W/ latency period like asbestos, numbers might not reflect the CBA of spending: throw in unquantifiable things – peace of mind – to balance out the sides
Safe Drinking Water Act, Lead, Arsenic
– (Page 249) EPA gets power to limit contaminants in public drinking water systems that have at least 15 service connections or regularly serve at least 25 individuals – states are the primary enforcers
o Three-step process that EPA must complete:
§ Maximum contaminant level goals (MCLGs): Level w/o known/anticipated health effects, w/ adequate margin of safety
§ Maximum contaminant level (MCL): As close “as is feasible” to the MCLGs for actual regulation using best technology available – cost a consideration
§ Then, that’s the standard: Get reviewed every five years
o Requires published list of contaminants not subject to regulation that are known to occur in public water systems, every 5 years, EPA must consider regulating at least 5 on list
– Lead: MCLG of zero set in 1991; removal of lead pipes could costs tens of billions; EPA didn’t set MCL for lead, said Congress didn’t foresee corrosion problem/cost; dealing w/ lead could create new problems w/ other chemicals
o “Treatment technique” approach used: Requires water suppliers to employ corrosion-control measures if more than 10 percent of water samples exceed 15 ppb lead at the tap; if that fails, water suppliers may have to replace lead service lines
o Nonaction attacked: Groups said SDWA requires action if something could be measured
§ EPA: Feasible = “capable of being accomplished in a manner consistent with the Act,” technology based, not putting anyone out of business and raising other contaminants to cut lead wouldn’t work – court agreed
– Cheaper options: New York found cheaper option than filtration system was buying open space, strict controls on land use – alternatives such as that have to have EPA’s OK
– Variances: Allow EPA to OK smaller systems if they can’t afford compliance but otherwise comply w/ “treatment technology, treatment techniques or other means” that EPA finds “ensure adequate protection of human health”
o Pre-1986 MCLs and MCLs for microbial contamination excluded from variance provisions
– Arsenic: Human carcinogen, not clear at what level; causes other issues
o WHO standard is 10 ppb: Even at 10 ppb, skin cancer risks estimated at 6 in 10K
o In U.S., it was 50 ppb; proposed to be 10 ppb; Bush administration put 10 ppb on hold for short time, did some studying and then went w/ 10 ppb
§ 97 percent of water systems in U.S. have to do nothing – they get water from surface
§ Comes from well water, rocks – the 3 percent have to bear the cost
· EPA noted 3 ppb lowest feasible level, but yields bad CBA result
o Why 10 ppb?: As much as they could do w/ achieving costs equivalent to benefits
§ Risks of cancer w/ 10 ppb: 1 in 500 (cancer risk chart – page 257)
· Double the protection of 5 ppb only reduces risk to 1 in 1,000
· U.S. went on record in CAA to say that 1 in 1M could still warrant additional controls
§ Why 1 in 500 OK?: High cost for relatively little gains to go lower
son v. Ducktown Sulphur (Tenn. 1904): Where rights conflict, court must make best arrangement to allow each the largest measure of liberty possible under the circumstances.
– Landowners sued for damages and injunction against sulfur company to halt operation of smelters, claiming that the SO2 from it was destroying their farms
– Court finds no injunction available, but awards damages – it was a nuisance; allows sort of private eminent domain
o CBA of company’s value w/ landowners: $2M vs. $1K (fair-market value of farms is $1K, current value is $0) – worst damages could be is $1K
§ Court doesn’t care about landowners’ ties, history, personal value – not a K case
§ Plant was operating lawfully, couldn’t be moved, employed everyone, huge benefit – reasonable activity, BUT landowners shouldn’t suffer burden w/o compensation
– Decision against company could have been technology forcing, but Ds said they spent $200K looking for other options, but nothing was available; Injunction would mean they could negotiate
– Trespass theory: No need for harm, doesn’t have to be unreasonable
o Martin v. Reynolds Metals Co. (Ore. 1959): $91,500 damages OK’d due to fluoride emissions from aluminum plant that poisoned cattle; particles constituted trespass because they invaded property owner’s interest in exclusive possession.
§ Ps pursued trespass over nuisance because statute of limitations favored it
Public Nuisance: An unreasonable interference w/ a right common to the general public
– Only unreasonable invasions of rights actionable – what’s unreasonable? Courts consider if conduct:
o 1) involves significant interference w/ public health, safety, comfort or convenience;
o 2) is illegal;
o 3) is of a continuing nature or has produced a long-lasting effect on the public right that the actor has reason to know will be significant
– Private parties may bring public nuisance suits if they can show nuisance has harmed them in a manner not shared w/ general public – special injury requirement
o Special injury requirement: From ancient notion that private parties shouldn’t be able to vindicate rights of the sovereign, desire to prevent a multitude of suits to redress same issue
o BUT the broader the injury to the community, more P’s injury resembles injury suffered by others, less likely P can bring public nuisance suit
Georgia v. Tennessee Copper (1907): States aren’t treated as citizens, they have the right to demand quasi-sovereignty over air, land in their state from out-of-state folks.
– States aren’t treated like average citizens, they’re quasi-sovereign – has interest in air, land in state; not required to give up sovereignty for pay
o Tennessee doesn’t care, it’s getting benefit – Georgia does, SO2 killing forests, etc.
– Case disappeared until Massachusetts v. EPA last year
– Court doesn’t analyze this case based on the balancing of values – look at Georgia’s status as a state
o But it would matter if Georgia had copper smelting in its own state – injunction is equitable remedy and requires P to come w/ clean hands
§ Compare to Missouri – it was dumping stuff in river too
– Difference here vs. Missouri: Causation is clear, meets Missouri standard; Georgia not dousing itself w/ sulfuric acid
– Court could grant full, limited injunction: Spectrum from 100 percent reduction to 0 percent
o Companies settled by limiting operations to certain periods (See Notes 6, 7)
o Limited dilution as solution to pollution under Constitution – funny
– Georgia opens itself up to border suits w/ win here – what’s it doing that others don’t like?
– Scotus no longer establishes emissions limits in federal common-law nuisance actions
o New York v. New Jersey (1921): Court advises cooperation, conference, concession to settle issue – cooperation probably better serve everyone
– Illinois v. City of Milwaukee (1972): Court says federal district courts proper forum for hearing nuisance action by Illinois charging four Wisconsin cities w/ polluting Lake Michigan, not high court under original jurisdiction
o Soon after, federal statutes led court to slam door on most federal common-law actions
Missouri v. Illinois (1906): Causation needs to be clear AND the affected state cannot demand that the source state adhere to a higher standard than the affected state applies to its own citizens – clean hands
– Chicago reverses flow of river, sewage in water: St. Louis notices, typhoid deaths increase.