Federalism and Environmental Regulation: An Overview
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Description
In the United States, vesting control over environmental regulation at the federal level is most commonly justified both in the legal academic literature and the legislative arena by reference to three distinct arguments. First, advocates of federal control argue that in its absence interstate competition would result in a “race to the bottom.” Second, they maintain that federal regulation is necessary to prevent interstate externalities. Third, proponents of centralization raise the public choice claim that environmental interests will be systematically underrepresented at the state level relative to business interests. This essay, which builds upon my prior works in the area, has three major purposes. First, it casts serious doubt on the validity of some of the arguments made in favor of centralizing environmental regulation. Second, it shows that, to a large extent, there has been a misallocation of responsibility over environmental regulation: the federal government has taken too aggressive a role with respect to matters best handled at the state level, but has been too constrained in its exercise of authority with respect to issues over which it enjoys a distinct comparative advantage. Third, it attempts to extract from the experience in the United States, lessons that might be of interest to the European Union and to the international trading regime. The first section develops the arguments for a presumption for decentralization, which calls for vesting responsibility over environmental protection at the state rather than federal level, as a result of differences in preferences over environmental protection, as well as differences in the benefits and costs of such protection. This presumption can be rebutted if decentralization gives rise to some pathology that could be cured through federal regulation. Subsequent sections examine the three most prominent justifications offered in the academic literature and in the legislative histories of the US environmental statutes for vesting responsibility over environmental regulation at the federal level. First, the "race to the bottom" rationale posits that states, in an effort to induce geographically mobile firms to locate within their jurisdictions, will offer them suboptimally lax environmental standards, so as to benefit from additional jobs and tax revenues. Second, the problem of interstate externalities arises because a state that sends pollution to another state obtains the labor and fiscal benefits of the economic activity that generates the pollution, but does not surfer the full costs of the activity. Thus, a suboptimally large amount of pollution will cross state lines. Third, a public choice claim posits that state political processes will systematically undervalue the benefits of environmental protection or overvalue its costs. I show that these three arguments do not justify the broad role over environmental regulation accorded to the federal government in the United States. The next section attempts to define an appropriate federal role. It focuses on the types of federal regulation that may be desirable in light of (1) different types of interstate externalities (pollution externalities, benefits that accrue outside the jurisdiction in which the need for environmental protection arises, and existence or non-use values placed by out-of-state citizens on certain natural resources), (2) economies of scale, (3) benefits that might flow from uniformity in regulation, and (4) rights-based views concerning the protection of minimum levels of public health. It shows that these arguments justify a far narrower federal role than that embodied in the current environmental statutes. The following section shows that much of the criticism to centralized regulation that flows from the preceding analysis of the institutional framework in the United States applies with equal force to the European Union. It also underscores the importance for the European Union of debates concerning the proper allocation of authority currently waged primarily on this side of the Atlantic. The final section explains why the assessment of centralized intervention is different in the international community than in federal systems. It also provides a framework for analyzing the desirability of environmentally based trade restrictions in the international community.
Source Publication
Environmental Law, the Economy and Sustainable Development: The United States, the European Union and the International Community
Source Editors/Authors
Richard L. Revesz, Philippe Sands, Richard B. Stewart
Publication Date
2000
Recommended Citation
Revesz, Richard L., "Federalism and Environmental Regulation: An Overview" (2000). Faculty Chapters. 1935.
https://gretchen.law.nyu.edu/fac-chapt/1935
