Defining Ideas

The Flint Fiasco

via Defining Ideas (Hoover Institution)
Monday, February 8, 2016

The details of the Flint, Michigan, water scandal are all too well known to require more than a brief summary. For many years, Flint obtained its water service from the Detroit Water and Sewage Department, which acquired its supply through both Lake Huron and the Detroit River. But with Flint in receivership since 2011, its city council decided to switch its water service to the Karegnondi Water Authority, which was in the process of constructing a pipeline to carry water to Flint from Lake Huron. Once Detroit realized that it could not keep the Flint account, it terminated its contract with Flint on twelve months notice in April 2014. Unfortunately, the KWA water pipeline was not scheduled for completion until sometime in 2016 and the Flint River was identified as an interim water source. The water from the Flint River contained many more impurities than the Detroit water. These chemicals leached the lead out of aging pipes, which worked itself into the water supply.

Exposure to high concentrations of lead has long been known to cause serious health problems, especially in children.  Unfortunately, some 6,000 to 12,000 Flint children are at risk for lead poisoning, which in small children can lead to intellectual disabilities and behavioral disorders, as well as impairment of the heart, kidney, nervous system, and other functions. It is no wonder that the EPA publishes extensive information about the risks of lead poisoning and what to do about it.

It is of course one thing to know about the risks of lead poisoning and another to do something about it. After the initial decision to switch Flint’s water service to KWA, there were signs that the discolored water was poisoned. But federal, local, and state officials were slow to remedy the situation. This is why citizens were outraged when studies confirmed the high presence of lead and other toxic chemicals in the water. Efforts to reconnect with the Detroit water systems floundered when the state-appointed Flint manager claimed that the Flint water met both federal and state safety standards. But a careful engineering study from Virginia Tech demonstrated conclusively that lead levels in Flint exceeded these standards, in some instances by close to a thousand fold.

In the midst of the just denunciation of the many public officials who shared responsibility for the damage, its deeper structural cause has generally been overlooked: Flint residents are also the victims of government arrogance and massive misallocation of resources. Right now in Michigan, both the Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality (DEQ) share responsibility for protecting the public water supply. As is common, the current system of shared federal, state, and local control makes it all too easy for each group to rely on the other to prevent or minimize risks. This system of joint control also makes it exceedingly difficult to assign blame after the fact once the damage occurs. In addition, both of these agencies are protected from private lawsuits by an elaborate set of absolute federal and state immunities that protect them in their discharge of “discretionary functions.” Individual officials may, and indeed have, lost their jobs, but public relief is limited to bottled water and modest healthcare assistance.

To see how pitiful the current institutional structure is, imagine what would have happened if a private party had been involved in either the creation or the cover-up of the Flint water crisis. Tort law typically imposes strict liability on parties who either create danger or who, in breach of their duties, fail to discover or prevent it. That liability properly incentivizes private parties to take the requisite level of care needed to prevent undue public harm. However, it is also widely understood that tort remedies after the fact are slow and balky; governments at all levels put additional controls in place, including civil fines and criminal sanctions, to deter danger. There is no question that if these standards applied to government actors and agencies in Flint, they would be required to pay full damages, covering pain and suffering, medical expenses, and lost future earnings.  In all likelihood, they would also be at risk for both heavy punitive damages and criminal punishment for polluting the environment. There is currently a full-court press against Volkswagen for its widespread emissions fraud that in some cases resulted in pollution levels of up to 40 times permissible levels. It is doubtful that these emissions, egregious as they are, caused total damage equal in overall severity to the Flint fiasco. VW has set aside about €6.7 billion (or about $8 billion) in reserves for future losses. This is $8 billion more than will be collected from government agencies in Flint.

Perhaps the most powerful tool in the federal and state arsenal is embodied in the permit system. Section 404 of the federal Clean Water Act (CWA) imposes strict conditions on the issuance of permits that allow the use of dredged or filled materials in the waters of the United States. Similarly Michigan’s Wetlands Protection Act of 1994 tracks the CWA in that it requires that individuals secure a permit from the DEQ before cutting a tree, building a house, or digging a ditch, or face the combined force of federal and local government.

It is critical to note the uncommon vigor that governments at both levels direct toward private development. The statutory requirements apply to all projects great and small: remove any tree stump or bulldoze any land, and a permit is required. The conditions attached to these permits are exacting to say the least, given that public officials have virtually carte blanche to grant or deny a permit, subject to almost any conditions they deem necessary to give the greatest protection possible to wetland resources. The scope of both statutes is, moreover, immensely broad. Thus in the twisted 2006 decision in Rapanos v. United States both the United States and Michigan came arm-in-arm to the court to defend their interpretation of the term “waters of the United States” as including not just the waters of the United States—that is navigable rivers, but also the wetlands that are close to rivers, and dry lands from where it is possible that water could flow into wetlands. In a confused set of opinions, the broad discretion of the Army Corps was left largely untouched.

The aggressiveness of the current regime against private parties is subject, moreover, to massive abuse. In the 2012 decision in Sackett v. EPA, the EPA invoked its extensive powers under the CWA to conclude that the Sackett’s property contained wetlands that were part of the navigable waters of the United States, even though it was separated from the nearest body of navigable water, Priest Lake, by several other plots of land on which homes had already been built. Just digging a foundation for the house resulted in a strict order to stop work and to undo the work that was already done. The base fine per day for failure to comply with the statute was $37,000, which is doubled when the actions continue in violation of a specific compliance order. Sackett was able to duck the bullet in a decision that dealt with complex matters of administrative procedure. But make no mistake about it, the EPA and the DEQ still exercise enormous powers through the use of the permit system.

But to what effect? Right now the system of environmental controls is completely out of whack. The activities of ordinary people like the Rapanoses and the Sacketts pose trivial threats to the environment. Yet the government demands that these minor activities go through permit review, creating delays stretching into years and costs that easily exceeding tens of thousands of dollars. The great vice of this permit system is that it requires landowners to provide detailed documentation of, and immense precautions against, risks that have only a minute probability of occurrence. The old common law rule on this subject took exactly the opposite approach. It allowed all development activities to go forward until there was some sign of imminent peril, at which point the property owner could be enjoined from further activity and subject to damages and fines for any harm that remained. Those strong signals had the desired deterrence effect in virtually all cases, and did so at a fraction of the cost in delay and disruption than our current law.

The decision of the EPA and the DEQ to exercise their broad powers does more than delay sensible new development. In its own way, the inordinate attention that EPA and DEQ give to permits increases the chance of serious environmental harms from other more pressing risks that are left relatively unattended. Thus all agencies have limited budgets. The decision to pour extensive state resources into this mindless permit process diverts funds that could be used elsewhere, namely to supervise the huge level of governmental activities that are known at the outset to have a direct and immediate connection to environmental peril. Think of the senseless tragedies that could have been averted if government funds now wasted on an overwrought permit process were used to make sure that the transition of the Flint water supply had been sensibly and properly done.

Nor is Flint the only case of aggressive government environmental regulations resulting in major environmental harm. The case of the Animas River in Colorado has fallen off the public radar in recent months. But over the summer, an EPA excavation released some three million gallons of sludge, laced with heavy metals, into the Animas River wreaking havoc up and down its length. Much of this difficulty stemmed from an arrogance of power as the EPA ignored warnings from local experts that its efforts to eliminate pollution leakage could result in widespread damage. There are two lessons to learn here. First, the EPA is not the only group in town that is concerned with pollution. Second, the level of pollution released from this one incident probably exceeded by orders of magnitude the damage to the navigable waters of the United States that the EPA and state agencies have prevented through their permit system. The root of the problem here is that the EPA and other agencies assume that only they protect the environment and that private parties are always the ones who despoil it. The sad truth is that under the current laws, the greatest perils to the environment come from government agencies. It is hard for government agencies to learn that modesty is a public virtue. That will only happen when government agencies begin to focus narrowly on the serious threats to the environment—both public and private.