Law Professors to House Panel: “Race to the Bottom” Is a Myth (so why does EPA exist?)

Last Friday morning, the Energy and the Economy subcommittee of the House Energy and Commerce Committee held a fascinating hearing aptly titled “Constitutional Considerations: States vs. Federal Environmental Policy Implementation.”

Witnesses included law professors Jonathan Adler (Case Western University School of Law), Rena Steinzor (University of Maryland School of Law), and Richard Revesz (New York University School of Law), as well as the Congressional Research Service’s Robert Meltz. (testimonies hyperlinked). Click here for a background memo. Subcommittee chairman John Shimkus’s opening statement is available here. I’ve reposted video of the hearing at the bottom of this post.

My purpose today is not to describe the entire hearing; rather, it’s to highlight one particular exchange, concerning a putative “race to the bottom” among States on environmental standards absent federal regulations.

According to the “race to the bottom” thesis, unless the federal government intervenes, States would compete with one another to lower environmental standards in order to better attract industry. This proposition took hold in the mid-1970s, and was a major intellectual influence of the 1977 and 1990 Clean Air Act Amendments.

Simply put: The presumed existence of a “race to the bottom” justifies a federal presence in state environmental policymaking.

Thus aware, now consider the following exchange between Ohio Representative Bob Latta and professor Jonathan Adler, which casts considerable doubt on the very existence of a “race to the bottom” (!!!):

Representative Bob Latta: Is there any empirical evidence to support the assertion that leaving environmental regulation to the States will precipitate a race to the bottom.

Professor Jonathan Adler: No there actually really isn’t such evidence.

There’s one study that relies upon survey data that shows state officials are responsive to competitive concern, but that’s not sufficient in terms of showing a race to the bottom.

Professor Revesz [N.B.: A fellow panelist; his testimony is linked to above] has written what is probably the seminal article on the theoretical arguments related to race to the bottom, showing quite compellingly that, as an analytical matter, the race to the bottom theory rests on a lot of assumptions that aren’t justified.

As an empirical matter, I’ve done work in the area of wetlands showing that the pattern of state wetland regulation prior to federal regulation is the exact opposite of what the race to the bottom theory would predict.

There is a significant amount of literature, in both the economic literature and the political science literature, looking empirically at patterns of state regulation, again, showing that the patterns of state regulation are not consistent with the idea of a race to the bottom.

In fact, there is some scholarship that suggests that states in fact learn from each other. When one state…regulates more stringently in order to enhance environmental protection, that neighboring states become more likely to follow suit…as they learn from the positive experience of their neighbor.

There is also some work…suggesting that even non-preemptive federal regulation alters the incentives that state regulators face, and, in some cases, will discourage states from being innovative and being more aggressive and more experimental to confront aggressive environmental problems because of the way it alters incentives.

To which I say: WOW! Very notably, Professor Steinzor, who was the minority witness, had no rebuttable when afforded the opportunity to speak, despite the fact that her written and oral testimony both cited the “race to the bottom” as a key justification for federal environmental regulation.

• Click here for a link to Professor Revesz’s influential article, which argues that the logical underpinnings of the “race to the bottom” hypothesis are by no means certain. In the paper, he constructs a number of relatively simple models demonstrating how federal intervention often is sub-optimal.

• Professor Adler elaborates on environmental federalism in this article, Let Fifty Flowers Bloom: Transforming the States into Laboratories of Environmental Policy. In this article, Fables of the Cuyahoga: Reconstructing a History of Environmental Protection, Professor Adler, explains common law remedies to environmental pollution, in addition to debunking an influential environmental myth.

Watch the exchange are the 1:03 mark.