EPA’s Enforcement “Bean Counting” Grabs Headlines, Ignores Incentives

Published November 1, 1998

Since its founding nearly 30 years ago, the U.S. Environmental Protection Agency has yet to grasp a fundamental truth: Sugar attracts more flies than vinegar.

Despite numerous restructurings and internal name changes that were supposed to make the agency more thoughtful and practical when protecting the public’s health, EPA continues to rely on “bureaucratic bean counting” that puts the greatest value on how many stiff fines it can assess and how many threats of possible imprisonment it can publish to achieve its goals, writes a prominent free-market environmentalist.

Jonathan H. Adler, director of Environmental Studies at the Competitive Enterprise Institute in Washington, DC., writes in a recent issue of Regulation magazine that EPA’s emphasis on scoring political points has flourished during the Clinton administration. It’s a strategy that grabs headlines and insures continued funding, and is designed make people believe that increased enforcement activity is synonymous with increased environmental protection.

Any lessening of such activity would be seen by environmentalists as a sign that the federal government is “soft on polluters,” Adler contends in “Bean Counting for A Better Earth.”

“Environmental enforcement is often a meaningless exercise, a form of bureaucratic bean counting, with little demonstrated environmental value,” says Adler, adding that nothing will change at EPA unless its officials accept specific changes to current environmental laws.

Such modifications most likely would include making it less risky for companies to voluntarily audit themselves and take any necessary steps to comply with federal regulations. As it stands now, companies that step forward on the basis of a self-audit often find themselves the target of an EPA enforcement action based on the very information that the companies disclosed.

One example of how forthrightness failed to pay off occurred in 1992, when Colorado-based Coor’s Brewing Co. evaluated its operations and discovered that it was violating air pollution standards. Although Coors was seen as acting responsibility by some federal regulators, EPA nonetheless levied a $1 million fine on the company.

If there is a bright side to this bureaucratic foolishness, it is that the Coors case was partly responsible for making Colorado one of the first states to pass an audit law that protects companies that act responsibly in locating and dealing with environmental problems.

But these laws are continuously challenged by federal regulators who argue that company run (and state-reviewed) audits prevent the implementation of “appropriate” penalties and could discourage prosecutions because information gathered by a state is privileged. EPA remains adamant that even those who step up on their own to correct a problem should be fined to “compensate” for any economic benefit that came as a result of the violation.

“Thus, companies are effectively told that coming clean can cost them more than continuing with business as usual,” said Adler.

EPA routinely takes credit for a cleaner environment, but Adler cites evidence that environmental improvements were taking place even before EPA’s formation. Also contributing to this trend were efforts made by companies, eager to maintain a favorable public image; productivity and technology improvements; and an economic base that relies less on heavy manufacturing and more on information and high-tech industries.