Gonzaga Debate Institute 2008

Scholars

1 Regulations/Free Market Toolbox

Regulations/Free Market Toolbox
Regulations/Free Market Toolbox ..................................................................................................................................1 ***Command and Control Bad – General .....................................................................................................................4 Command and Control EPA Indict..................................................................................................................................5 Command and Control Fails – General...........................................................................................................................6 Command and Control Fails – Flexibility, Cost..............................................................................................................7 Command and Control Fails – Cost................................................................................................................................8 Command and Control Fails – Clarity ...........................................................................................................................9 Command and Control Fails – Flexibility.....................................................................................................................10 Command and Control Fails – Environment.................................................................................................................11 Command and Control Fails – Small Business ............................................................................................................12 Command and Control Fails – Diminishing Returns....................................................................................................13 Command and Control Bad – Coercion .......................................................................................................................14 Command and Control Bad – Coercion .......................................................................................................................15 Federal Command and Control Bad – States Better ....................................................................................................16 Regulations Fail – Clarity.............................................................................................................................................17 Regulations Fail – Cost.................................................................................................................................................18 Output Regulations Fail – Cost.....................................................................................................................................19 Technology Standards Fail – Innovation.......................................................................................................................20 RegNeg Good................................................................................................................................................................21 Fees Bad – Too Low, Competitiveness.........................................................................................................................22 Permits Fail – Innovation..............................................................................................................................................23 Liability Laws Good – Innovation................................................................................................................................24 Liability Laws Bad – Filing Deadlines.........................................................................................................................25 Liability Laws Bad – Burden of Proof..........................................................................................................................26 Liability Laws Bad – Cost............................................................................................................................................27 Disclosure Good – Accountability................................................................................................................................28 Disclosure Good – Accountability .............................................................................................................................29 Waste Disposal Tax Bad................................................................................................................................................30 ***Regulations Bad – Regs Death................................................................................................................................31 Regulations Bad – Economy ........................................................................................................................................32 Regulations Bad – Economy/Resource Tradeoffs.........................................................................................................33 Regulations Bad – Competitiveness ............................................................................................................................34 Regulations Bad – Poverty ...........................................................................................................................................35 Regulations Bad – AT: Innovation ...............................................................................................................................36 ***Regulations Good – AT: Regs Death ......................................................................................................................37 Regs Good – General Econ...........................................................................................................................................38 Regs Good – Innovation...............................................................................................................................................39 Regs Good – Innovation...............................................................................................................................................40 Regs Good – AT: Hurts Econ........................................................................................................................................41 Regs Good – AT: Job Loss............................................................................................................................................42 Regs Good – AT: Competitiveness................................................................................................................................43 Regs Good – AT: Poverty..............................................................................................................................................44 C&C Good-Solves Pollution.........................................................................................................................................45 C&C Good-AT: Inefficient............................................................................................................................................46 ***Tax Credits Good....................................................................................................................................................47 Tax Credits Good – Key to Alternative Energy ...........................................................................................................48 Tax Credits Good – Expansion Key to Alternative Energy..........................................................................................49 Tax Credits Good – Solve Oil Dependence..................................................................................................................50 Tax Credits Good – Laundry List .................................................................................................................................51 Tax Credits Good – Laundry List .................................................................................................................................52 Tax Credits Good – Laundry List .................................................................................................................................53 Tax Credits Good – Tax Revenue ................................................................................................................................54 Tax Credits Good – Income Adjustments.....................................................................................................................55 Tax Credits Good – Cost Competition .........................................................................................................................56 Tax Credits Good – Commercialization ......................................................................................................................57

Gonzaga Debate Institute 2008
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2 Regulations/Free Market Toolbox

Tax Credits Good – Innovation ....................................................................................................................................58 Tax Credits Good – Better Than Command & Control ...............................................................................................59 Tax Credits Good – AT: Economically Infeasible ........................................................................................................60 ***Tax Credits Bad ......................................................................................................................................................61 Tax Credits Bad – Not Cost Competitive .....................................................................................................................62 Tax Credits Bad – No decrease in conservation ...........................................................................................................63 Tax Credits Bad – Not meeting current goals ..............................................................................................................64 Tax Credits Bad – Hard to manage ..............................................................................................................................65 Tax Credits Bad – Hot Spots ........................................................................................................................................66 Tax Credits Bad – Zero Sum (Enviro and Econ) .........................................................................................................67 Tax Credits Bad – Econ Infeasible (Permits better) .....................................................................................................68 Tax Credits Bad – AT: Raises revenue .........................................................................................................................69 ***Free Market Bad – Misc..........................................................................................................................................70 Incentives Bad – Environmental Justice ......................................................................................................................71 Rewards Fail – Cheating...............................................................................................................................................72 Refund Bad – Cost........................................................................................................................................................73 Subsidies Fail – Burden, Environment.........................................................................................................................74 Subsidies Unpopular.....................................................................................................................................................75 Incentives Bad – AT: Their Evidence ...........................................................................................................................76 ***Free Market Good ..................................................................................................................................................77 Voluntary Best – Motives..............................................................................................................................................78 Voluntary best – pilot programs....................................................................................................................................79 Voluntary Best – Empirics............................................................................................................................................80 Voluntary Best – Industry Bonds..................................................................................................................................81 Incentives Best – Business and Labor...........................................................................................................................82 Incentives Best – Laundry List.....................................................................................................................................83 Incentives Best – Results..............................................................................................................................................84 Incentives Best – Cost...................................................................................................................................................85 Incentives Best – Small Sources...................................................................................................................................86 Incentives Best – Innovation.........................................................................................................................................87 Refund Good – Small Sources......................................................................................................................................88 Subsidies Good – Environment.....................................................................................................................................89 AT: Regs Bad – Innovation...........................................................................................................................................90 AT: Regs Bad – Innovation...........................................................................................................................................91 AT: Incentives Bad – Non-Unique/Solve Advs. of C & C............................................................................................92 ***Emissions Trading ..................................................................................................................................................93 Emissions Trading Fails – cheaters...............................................................................................................................94 Emissions Trading Fails – Cheaters..............................................................................................................................95 Emissions Trading Fails – Verification.........................................................................................................................96 Emissions Trading Fails – International verification....................................................................................................97 AT: Trading/New Markets Good...................................................................................................................................98 ***Capital Flight DA....................................................................................................................................................99 Capital Flight DA 1NC (1/2).......................................................................................................................................100 Capital Flight DA 1NC (2/2).......................................................................................................................................101 Capital Flight – Uniqueness: Investment UP..............................................................................................................102 Capital Flight – Link: Environmental Regulation.......................................................................................................103 Capital Flight – Impact: World Econ..........................................................................................................................104 ***AT: Capital Flight DA...........................................................................................................................................105 Non-Unique: Capital Flight Up...................................................................................................................................106 Turn – Capital Flight Good – Investment ..................................................................................................................107 Turn – Capital Flight Good – Environment ...............................................................................................................108 No Link – Environmental Regulation.........................................................................................................................109 ***EPA Administration DA........................................................................................................................................110 EPA Administration DA (1/2)......................................................................................................................................111 EPA Administration DA (2/2)......................................................................................................................................112 Uniqueness: Environmental groups going to courts...................................................................................................113 AT: We Don’t Use the EPA .........................................................................................................................................114

Gonzaga Debate Institute 2008
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3 Regulations/Free Market Toolbox

AT: EPA Not Administrative.......................................................................................................................................115 Administrative/Judicial Tradeoff Links .....................................................................................................................116 2NC Link: Consent Agreements.................................................................................................................................117 2NC Link: Penalty Reductions....................................................................................................................................118 AT: EPA Rules Good...................................................................................................................................................119 Impact Extension: Turns Case.....................................................................................................................................120 ***AT: EPA Administration DA.................................................................................................................................121 2AC: EPA DA (1/2).....................................................................................................................................................122 2AC: EPA DA (2/2).....................................................................................................................................................123 Extension: Congress-EPA conflict..............................................................................................................................124 Extension: Bush administration-EPA conflict.............................................................................................................125 Extension: Courts hurt the environment.....................................................................................................................126 Extension: EPA helps the environment.......................................................................................................................127 Extension: EPA regulations not resisted......................................................................................................................128 Non-Unique: Courts not helping the environment......................................................................................................129 ***DOE Good/Bad.....................................................................................................................................................130 DOE Good – Quarterly Checks .................................................................................................................................131 DOE Good – Regulations ..........................................................................................................................................132 DOE Bad – Management ...........................................................................................................................................133 DOE Bad – Cost control ............................................................................................................................................134 DOE Bad – Risk Assessment .....................................................................................................................................135

Gonzaga Debate Institute 2008
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4 Regulations/Free Market Toolbox

***Command and Control Bad – General

Gonzaga Debate Institute 2008
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5 Regulations/Free Market Toolbox

Command and Control EPA Indict
Command and control fails, only serves to prop up the EPA Lee 1 (Dwight,
Ramsey Prof at the Terry College of Business, U of Georgia, Vol. 51 No. 9, http://www.fee.org/publications/theFreeman/article.asp?aid=3690))

I hope I don’t sound outrageously cynical when I say that employees of the EPA are willing to sacrifice environmental quality for personal gain. I hasten to add that I am not singling out EPA employees for special criticism. They are just like the rest of us. We all do things for personal benefit that harm the environment (almost everything we do causes some environmental harm). It shouldn’t be surprising that EPA employees do the same. Command-and-control policies are not the best for protecting the environment, but they are great for protecting (and expanding) EPA budgets and jobs. The EPA has more to do when it is involved in the details of pollution control than it would if decisions were shifted to those with more information on local conditions. As The Economist pointed out, “The EPA exists to regulate things, not to see the market do the job for it.”1 Few things are easier than convincing yourself of the social virtue of things that serve your interest, so most EPA officials are likely convinced that command-and-control policies are justified. But even if they are motivated by civic virtue, EPA officials benefit by reducing pollution through detailed regulation. And since they are well organized and considered experts on pollution control, their views have significant influence on environmental policy.

Gonzaga Debate Institute 2008
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6 Regulations/Free Market Toolbox

Command and Control Fails – General
( ) Command and control regulations are vastly over-costly, inefficient, and fail to secure substantial environmental benefits Stephen M. Johnson, Associate Professor of Law, Walter F. George School of Law, Mercer University, Winter 1999, Washington & Lee Law Review, 56 Wash & Lee L. Rev. 111
Academics have criticized command and control regulation on several grounds for over a decade. n4 Critics argue that command and control regulation is not cost-effective because it normally requires all polluters to comply with the same pollution limits even though one polluter may be able to reduce its pollution more cheaply than another polluter n5 and even though it may not be necessary for all polluters to reduce their pollution to the levels required by the uniform limits in order to achieve pollution reductions that protect human health or the environment. n6 Critics also argue that command and control regulation (i) imposes unreasonable information-gathering burdens and exorbitant costs on government; n7 (ii) often imposes disproportionate burdens on new pollution sources; n8 and (iii) provides no incentives to polluters to develop new strategies to reduce their pollution beyond the levels required by law.

Gonzaga Debate Institute 2008
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7 Regulations/Free Market Toolbox

Command and Control Fails – Flexibility, Cost
Increases command and control prevent flexibility, not cost-effective Doul et al 96 (John, Department of Pharmacology, Toxicology and Therapeutics, Kansas University Medical Center, Bernard Goldstein,
Director, Environmental and Occupational Health Sciences Institute and Chairman, Joshua Lederberg, President Emeritus, Rockefeller University Sheila McGuire, President, Iowa Health Research Institute David Rall, Former Director, National Institute of Environmental Health Sciences Virginia V. Weldon, Senior Vice President for Public Policy, “Commission on Risk Assessment and Risk Management”, June 13, http://www.riskworld.com/nreports/1996/risk_rpt/html/nr6aa001.htm#TC1)

In some cases, OSHA may be an exception, we may have reached a point of diminishing returns, in that each incremental improvement in human health- and environmental-risk reduction comes only with a large increase in control costs, or benefits of additional regulation may be slight because so much has already been invested in environmental risk reduction. In still other cases, the cost of risk reduction is aggravated by the rigidity of the underlying command-and-control regulatory system. Rule-makings and permitting processes become de facto design standards sanctioning the use of specific technologies for pollution control. There may not be adequate flexibility for tailoring remedies to reflect the circumstances of individual sources and locations, including the relative advantages that different companies might have in choosing risk-reduction options. For some, especially small businesses, there may be a preference for design standards because resources for research and innovation are limited. For progress to continue, we must look beyond command-and-control regulatory programs. The call for
alternatives to command-and-control regulations was particularly strong in presentations received by the Commission outside of Washington, D.C. In addition, federal agencies emphasized their commitment and cited their projects aimed at finding effective alternatives to command-and-control regulation. This subsection discusses several analytic tools for identifying when environmental protection is improved and risk reduced, and endorses a number of alternatives to command-and-control regulation that should be considered when there is interest in going beyond current levels of protection and risk reduction.

Command and control regs prevent the best local solutions, become caught up in EPA politics Lee 1 (Dwight, Ramsey Prof at the Terry College of Business, U of Georgia, Vol. 51 No. 9,
http://www.fee.org/publications/the-Freeman/article.asp?aid=3690)) The EPA can never acquire all the information necessary to know the cheapest way for each of a large number of polluters to reduce its pollution. And even if by some miracle it did have the information, it wouldn’t use it properly for reasons that I will explain. Not surprisingly then, the EPA regulations do not take different circumstances into account. Instead, the EPA typically imposes uniform regulations on very different situations, making it unlawful for polluters to control pollution in the cheapest way possible.
Imagine the federal government’s taking over shoe production and making all shoes the same size. Ridiculous, right? But no more ridiculous than some of the consequences of the EPA’s “manufacturing” one-size-fits-all pollution-control commands. For example, one EPA regulation mandated that 30 percent of the organic matter be removed from the inflow into sewage treatment plants, probably a defensible regulation in most cases. But not in Anchorage, Alaska, which is blessed with some of the purest water in the world because it comes from nearby glaciers. Anchorage officials asked the EPA for a waiver, since its untreated inflow was cleaner than the treated outflow in most jurisdictions, and removing 30 percent of almost nothing would require building a new $135 million treatment plant. The EPA refused to grant the waiver. So Anchorage officials had fish guts dumped into the water and then removed most of them—surely exceeding the 30 percent requirement by a wide margin. Anchorage taxpayers saved buckets of money and EPA mandates were satisfied, but the water was dirtier than before.1

Such one-size-fits-all regulations obviously prevent polluters from protecting the environment in the most cost-effective ways. The people closest to the situation, who know the most about reducing their pollution, should be allowed to utilize that knowledge to reduce pollution as cheaply as possible. If the EPA quit telling people how to reduce pollution and simply told them how much to reduce, each polluter could use its localized knowledge to reduce pollution in the cheapest way possible. This would be an improvement over the prevailing practice of imposing uniform approaches to pollution control.
But it takes more than allowing people to reduce pollution at least cost to minimize the cost of reducing pollution. The EPA would also have to require a pattern of reduction that equates the marginal cost of reduction for all polluters.2

The EPA could never collect all the information necessary to determine how much each firm should reduce pollution to achieve the least-cost pattern. The information is too dispersed and sensitive to local circumstances, and too subject to change, to be collected, processed, and updated in order to be appropriately considered by the EPA. Therefore the agency operates in an informational vacuum and couldn’t fine-tune its commands to fit local circumstances even if it wanted to. And it wouldn’t want to. Even if the EPA had all the information necessary to determine the least-cost pattern of pollution reduction, political considerations would insure that it would not be used properly.

Gonzaga Debate Institute 2008
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8 Regulations/Free Market Toolbox

Command and Control Fails – Cost
Command and control misses multiple opportunities to reduce operating costs, implementation is arbitrary and unfair Lee 1 (Dwight, Ramsey Prof at the Terry College of Business, U of Georgia, Vol. 51 No. 9,
http://www.fee.org/publications/the-Freeman/article.asp?aid=3690)) The least-cost pattern of reduction will generally require that some polluters (low-cost reducers) reduce a lot while others (high-cost reducers) reduce very little. This will seem arbitrary and unfair, since the implications of differences in marginal costs of pollution reductions are hard to explain in concise and compelling language. (If such explanations were easy, the marginal value of economists would be even lower than it already is.) So any attempt to force some firms to reduce pollution a lot more than others is sure to motivate polluters to lobby politicians and bureaucrats to reduce their control requirements. These lobbying efforts will be not only expensive, but effective as well, and the result will have little to do with reducing pollution economically. For example, a firm that should reduce its pollution a lot because it can do so cheaply may be in a district whose congressional representative chairs a committee that can influence the EPA budget. Does anyone believe that in this situation the EPA would put the goal of least-cost pollution reduction ahead of its budget? Of course not! The evidence is clear that the command-and-control approach of the EPA misses opportunities to greatly reduce the cost of achieving a given level of pollution control. For example, it has been estimated that the marginal capital cost of removing a kilogram of biological oxygen demand (BOD)—a standard measure of water pollution—varies from one penny for one firm to $59.09 for another. In other words, if the first firm reduced BOD by one kilogram more while the second reduced it by one kilogram less, $59.08 would be saved with no degradation in water quality.3 The saving would add up as the first firm continued to substitute BOD reduction for the second until each had the same marginal cost of reduction. The total saving can be substantial in each of a large number of pollution control situations.

Gonzaga Debate Institute 2008
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9 Regulations/Free Market Toolbox

Command and Control Fails – Clarity
Environmental regulations fail – clarity
Volokh 97 (Alexander, Associate Professor at Georgetown University Law Center, speech delivered at UrbanEco97, American-Russian Conference, "A Safe Environment for Big Cities on the Threshold of the 21st Century," February 4-6, 1997, San Diego, Calif. ,http://volokh.com/sasha/russian.html ) Unclear laws and regulations defeat the very purpose of environmental regulation. The success of the environmental regulatory scheme depends on how well people follow the regulations' mandates and prohibitions. But if no one knows what he is supposed to do or not do, the regulations will not achieve the intended result. The more complex the regulatory regime, the less clear the laws and regulations, the more difficult it is for the most well-intentioned individual to comply because he cannot ascertain what is expected. EPA Administrator Carol Browner has noted that the existing environmental regulatory scheme is "a complex and unwieldy system of laws and regulations and increasing conflict and gridlock." The Supreme Court has commented on the complexity of the Clean Water and Clean Air Acts. The statutes themselves can be hundreds of pages long, and combine detailed congressional micromanagement with extensive delegation to the EPA. The regulations that implement the statutes take thousands of pages in the Code of Federal Regulations. The laws and regulations are supplemented by policy pronouncements in the Federal Register, judicial opinions, guidance documents, letters of agency interpretation, verbal advice given over hotlines by employees of EPA contractors, and litigation positions taken in civil and criminal enforcement actions. Two-thirds of corporate lawyers surveyed in 1993 by the National Law Journal admitted that their companies had violated some environmental statute during the previous year, largely because of uncertainty and complexity. Seventy percent believed that full compliance with all federal and state environmental laws was impossible.

Gonzaga Debate Institute 2008
Scholars

10 Regulations/Free Market Toolbox

Command and Control Fails – Flexibility
Command and control fails, reducing pollution requires market information Lee 1 (Dwight, Ramsey Prof at the Terry College of Business, U of Georgia, The Freeman: Ideas on Liberty October 2001 Vol. 51 No. 10)) The Environmental Protection Agency’s attempt to reduce pollution with command and control suffers from the same problem as attempting to direct the economy with socialism—central authorities dictate outcomes without knowing what the outcomes should be or how they are best achieved. The EPA isn’t any better at socialism than the former Soviet Union (or anyone else for that matter). Reducing pollution efficiently requires information from many firms and coordination of their activities. This is clearly a task for markets, since market prices excel at communicating widely dispersed information to those who can respond to it most effectively by coordinating their actions with the actions of others. But markets require private ownership, and pollution problems exist because our waterways and atmosphere aren’t privately owned. If they were privately owned, there would be no pollution problems because prices for discharging our waste in these resources would arise that would reflect the costs imposed on others. But how can we use markets to reduce pollution if we cannot divide up, and parcel out as private property, these resources? As we shall see, we can create an imperfect market that will reduce pollution far more
efficiently than the command-and-control approach.

Markets create effective pollution solutions, command and control fails Lee 1 (Dwight, Ramsey Prof at the Terry College of Business, U of Georgia, The Freeman: Ideas on Liberty October 2001 Vol. 51 No. 10)) In most markets price communication determines not only how much of a good goes to each consumer, but also how much is supplied. When consumers want more of a good, they communicate that through higher prices, and suppliers respond by increasing production as long as the marginal value to consumers (the price they are willing to pay) is greater than the marginal cost of production. If oceans, lakes, rivers, and the atmosphere could be privately owned and every owner could charge everyone whose discharges pollute his water or air, then market transactions would determine the efficient amount of pollution. If polluters wanted to pollute more, they would communicate that desire by offering to pay a higher price to do so, and owners of air and water would allow more pollution until its marginal value (the price polluters are willing to pay) is greater than its marginal cost. As I explained in my May and June columns, the bargaining needed to determine this efficient amount of pollution is not likely to take place.* So no market we create will determine the right amount of pollution reduction. That decision will generally be made politically. But once made, we can create a market that achieves the reduction at far less cost than can command-and-control policies. The EPA would issue transferable permits for a particular type of pollutant; each permit would allow a given amount of discharge over some specified period, with the total adding up to the allowable discharge of the pollutant. Because the permits would be transferable, a market would quickly develop in which the permits are bought and sold at a price that clears the market—equates the number of pollution permits demanded with the number that exists.

Gonzaga Debate Institute 2008
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11 Regulations/Free Market Toolbox

Command and Control Fails – Environment
Command and control legitimizes environmental destruction, as long as they have a permit Yandle 99 (Bruce, Alumni Distinguished Professor Economics at Clemson University, April, The Freeman: Ideas
on Liberty - Vol. 49 No. 4) This was changed with the passage of federal legislation that effectively nationalized air and water quality in the United States. What was becoming private property was made public property, almost a commons. The new system of command-and-control regulation allowed polluters to operate legally if they had a permit. With permits in hand, new polluters could enter already crowded river basins. The new regime provided political access to industries and municipalities that hoped to postpone the day of reckoning in common law courts. Environmentalists ran interference, since they typically preferred political solutions to remedies based on property rights, markets, and the rule of law. A triumph on the commons was reversed. Tragedy once again reared its head.

US command and control measures hurt the environment, land conservation proves Badan and Ethier 93 (John A and Robert, founder and chairman of the Foundation for Research on Economics and the Environment
and Department of Agricultural, Resource and Managerial Economics, Cornell University, The Freeman: Ideas on Liberty - Vol. 43 No. 9)

As the U.S. works to promote free markets in Eastern Europe, the costs of its own environmental autocracy are ignored or heavily discounted. Many of the government's resource agencies, such as the Forest Service, the Bureau of
Land Management, and the Bureau of Reclamation, operate in a perverse world in which they have incentives both to degrade the environment and to lose money.

Bureau of Land Management lands are among the most degraded and eroded in the west. Yet the agency continues to encourage, even require, overgrazing. Ranchers, who pay far below market rates for grazing rights, have little incentive to invest in soil conservation or water storage. If they attempt to rest an area through reduced use they are threatened with revocation of permits for underuse. Many of the National Forests lose money while hurting the environment. They build roads whose costs are not covered by the revenues from the timber sales they facilitate, while the environmental costs are unaccounted for. Far more is invested in replanting than would be in a private forest, where natural revegetation is a realistic
option. Budgets are maximized while the environment and the taxpayer suffer.

It is essential that environmental groups realize the negative effects of command-and-control policies on the environment. While politics may seem to be the cheapest route to environmental control, recent conflicts over preserving old growth timber for spotted owl habitat show that environmentalists cannot count on the political process. By replacing political-bureaucratic management with market forces, property rights, and private management, we promote conservation and economic progress.

Gonzaga Debate Institute 2008
Scholars

12 Regulations/Free Market Toolbox

Command and Control Fails – Small Business
Command and control measures sacrifice small businesses for help big business Lee 1 (Dwight, Ramsey Prof at the Terry College of Business, U of Georgia, Vol. 51 No. 9,
http://www.fee.org/publications/the-Freeman/article.asp?aid=3690)) Command-and-control regulation typically increases the costs of doing business. But those costs are often easier for a big business to handle than a small business, because large firms already have legal departments to deal with the inevitable litigation that comes with environmental regulation, and they can spread the costs of pollution control over more units of output. Also, pollution-control regulation often reduces an industry’s output. This can increase industry profits by allowing firms to raise prices and act like a monopoly cartel, something that is normally illegal. For example, EPA regulations for reducing sulfur in gasoline have recently improved the profit outlook for refiners by causing them to shut down some plants.2 Sometimes command-and-control policies are intentionally used to protect an industry against competition at the expense of the environment. One blatant example involves air-pollution policy. The
1970 Clean Air Act established acceptable levels of several pollutants, including sulfur dioxide (SO2), the primary pollutant of coal-fired electric generating plants. While requiring those generating plants to reduce their SO2 emissions, the Act did not specify how. The

cheapest way to reduce SO2 emissions is often to shift from high-sulfur eastern coal to low-sulfur western coal, and that is exactly what many coal-fired plants did, even some in the east. The alternative is to install stack scrubbers that remove much of the sulfur from the flue gas, but they are expensive, consume large amounts of energy, and often do less to reduce SO2 emissions than simply burning western coal.

Gonzaga Debate Institute 2008
Scholars

13 Regulations/Free Market Toolbox

Command and Control Fails – Diminishing Returns
( ) Command and control fails – remaining sources of pollution require non-C&C approaches Stephen M. Johnson, Associate Professor of Law, Walter F. George School of Law, Mercer University, Winter 1999, Washington & Lee Law Review, 56 Wash & Lee L. Rev. 111
For almost three decades, the federal government and state governments have addressed environmental problems primarily through "command and control" regulation. Under this traditional approach, the federal government establishes uniform national pollution limits ("command") that the federal or state governments impose on individual polluters through a system of permits or other controls. n1 However, as the command and control approach has eliminated many of the most prolific sources of pollution, the incremental cost of cleaning up the remaining pollution has risen dramatically, n2 and command [*112] and control regulation has become politically less attractive. In addition, command and control regulation may be too rigid to address many of the remaining major environmental problems, such as nonpoint source water pollution.

Gonzaga Debate Institute 2008
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14 Regulations/Free Market Toolbox

Command and Control Bad – Coercion
Command and control is built from the idea that the federal government can legitimize polluting on public land, common action holds everybody accountable Adler 94 (Jonathan, Associate Director of Environmental Studies at the Competitive Enterprise Institute in
Washington, D.C, The Freeman: Ideas on Liberty, Vol. 44 No. 4, April) If the federal government is mediocre at protecting environmental values, and spends much of its time inflicting ecological damage, one may ask whether the federal government should be engaged in environmental policy at all. The common law was premised on the protection of persons and their properties and, as a result, was often used to prevent what is now considered environmental harm. Polluters were not guilty of despoiling “public” water or lands, rather their crime was the violation of the rights of others. In their chapter “Clean Water Legislation: Reauthorize or Repeal?” Meiners and Yandle note that “The common law relies upon individuals seeking protection of their rights, not on group lobbying before Congress.” This not only curtails efforts to politically impose ecological asceticism, but in some cases “the common law often sets standards far tougher than those set by statutes.” Under common law protections, no political entity could unilaterally impose a pollution easement upon private lands. From this standpoint, it seems that the best a government could do is to transfer all that is common into private hands.

Command and control allows environmental regulations to be shaped by the political process, statist intervention fails Adler 94 (Jonathan, Associate Director of Environmental Studies at the Competitive Enterprise Institute in
Washington, D.C, The Freeman: Ideas on Liberty, Vol. 44 No. 4, April) Heyne finds principled opposition to the conventional environmental agenda not in neo- classical economics, but in a traditional standard of justice that emphasizes individual rights and the rule of law. This approach will not only facilitate a free political order, it will also allow for the pursuit of many goals, environmental and otherwise; “A regime of clear and stable property rights, as it turns out, will be supportive of both efficiency and justice.” Indeed, by protecting rights and the rule of law, “efficiency will • largely take care of itself.” The alternative of statist intervention in all facets of life—whether for the environment or any other end—will fail on both counts. As Heyne astutely observes, “the commandand-control approach will almost inevitably substitute arbitrary decisions for the rule of law.” Moreover: “Allowing environmental regulations to be shaped by a political process that is dominated by special interests is another ethically indefensible procedure.” The reality of both failings are amply demonstrated in the balance of the book. Free market advocates are often branded “anti-environmentalists” for their seeming indifference to environmental harms. To most self-proclaimed environmentalists, fealty to free market ideologies will end in ecological if not total—devastation. Yet, as this volume suggests, perhaps it is the modern environmentalist whose outlook will lead to ruin. As Heyne concludes, “When we take the whole environment seriously, we will acknowledge that our primary moral obligations are to respect the persons, the liberties, and the rights of those among whom we live. After all, these are the people upon whose cooperation we must ultimately rely, whether it is to ‘make a living,’ to ‘save the earth,’ or to see the realization of any other of our larger aspi rations.”

Gonzaga Debate Institute 2008
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15 Regulations/Free Market Toolbox

Command and Control Bad – Coercion
Reliance on the government to protect the environment cedes our agency, erodes freedom Shaw 95 (Jane S., Senior Associate of PERC, The Freeman: Ideas on Liberty – March, Vol. 45 No. 3)
In contrast, Americans live in a world that is extremely safe. The vast majority survive to a healthy adulthood; a child born today can expect to live 75 years. Today, death is tragic in part because it is so rare. Yet the actions of Americans imply the opposite. Americans have allowed their government to intervene with the goal of protecting them against risks. The government now bans many chemicals, controls emissions of small quantities of chemicals from industrial plants, clamps down on pesticide residues on vegetables, and slows down the introduction of potentially valuable new drugs—all in the name of greater safety. Most of the risks being addressed are small. These policies may actually be increasing our risk by reducing our self-reliance and frittering away resources that we need if we are to deal with our problems individually. Reliance on the government in this area erodes freedom just as it does in every other area.

Gonzaga Debate Institute 2008
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16 Regulations/Free Market Toolbox

Federal Command and Control Bad – States Better
State command-and-control alone better than federal
Marzulla 98 (Roger, fmr head of the U.S. Justice Department's Land and Natural Resources Division, Sept 1, http://www.heartland.org/Article.cfm?artId=13827) Most states now have sophisticated environmental protection programs. Because they are run locally, those programs are much more effective and efficient than command-and-control programs run from EPA's offices in Washington. Even the federal government admits this. The principal obstacle to shifting power to the states is the reluctance of federal bureaucrats who now hold power to give it up. When they are freed of the straitjacket of federal over-regulation, states not only do a better job of protecting air and water, but they are able to integrate environmental protection with economic development, transportation, housing, and community development. EPA can't do that. In fact, the way the federal environmental laws are set up, EPA is often required to oppose projects that would not only benefit the state and community, but would improve the environment in the process by building ecological concepts into the facilities and plans from the beginning. It is a lot easier to avoid environmental problems at the design stage, but federal laws often prohibit simple solutions that would minimize waste and pollution by avoiding its creation in the first place.

Gonzaga Debate Institute 2008
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17 Regulations/Free Market Toolbox

Regulations Fail – Clarity
Unclear regulations confuse industry, increase litigation costs Marzulla and Volokh 96 (Roger and Alexander , Assistant Attorney General, Environmental and Natural Resources divisionUSJD,
assistant policy analyst at the Reason Foundation.., “ENVIRONMENTAL ENFORCEMENT: In Search of Both Effectiveness and Fairness, Policy Study No. 210, August, http://www.reason.org/ps210.html)

Many permit "violations" merely involve the failure to follow every element of a complex monitoring protocol. Under the NPDES, permitted individuals can be required to perform composite sampling— collecting a variety of grab samples and following certain procedures to create a composite sample of the grab samples. If the permittee doesn't follow the sampling protocols exactly, the entire sample is invalid. This means that there could be a permit violation even though the actual samples may be within permit limits. Erroneous test data could make the permittee change his discharge and accidentally be out of compliance the next month. These problems are compounded by two- to four-week delays in getting test results back. Another result of unclear laws and regulations is "regulation by litigation." When no one can understand the regulations, they often end up in court, where judges, on a slow, inconsistent, case-bycase basis, decide what the law means. "Regulation by litigation" tends to lead to a new cycle of unclear laws, as the courts
reward sloppy lawmaking by often resolving ambiguities in the government's favor. In U.S. v. Standard Oil (1966), for example, the Supreme Court found the statutory term "refuse matter" to include commercially valuable gasoline. In U.S. v. Phelps Dodge Corporation (1975), a federal district judge ruled that the terms "navigable waters" and "waters of the United States" in the Clean Water Act could encompass "normally dry arroyos through which water may flow." And it took the Supreme Court more than 20 years to finally decide the meaning of "harm" as used in the Endangered Species Act, in Babbitt v. Sweet Home (1995)

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18 Regulations/Free Market Toolbox

Regulations Fail – Cost
Command and Control fails – multiple sources create high costs, inefficiency Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Traditional regulatory approaches normally operate through one of three means: source-specific emission limits, output specifications, or technology requirements. A brief description of each alternative illustrates both
the strengths and weaknesses of traditional forms of regulation. The first alternative applies emission (or effluent) limits to specific sources as a means of achieving health standards or environment-based ambient standards. The total amount of pollutants that are released could be limited by setting emissions standards for individual sources, such that total emissions just equaled the sum of the individual contributions from each source. Other pollution allocation formulas that do not treat new sources more harshly than existing sources could also be used. One such formula, for example, determines a set weight of pollution that can be released per unit of output. Unless the authority responsible for controlling pollution is able to identify which sources have the lowest incremental costs for controlling pollution and insist that those sources implement their pollution controls first, this source-specific approach to emissions will not be cost-effective. As Figure 3-1 depicts, each source will usually have a number of options for controlling emissions. The least cost option (#1 in the figure) will control some emissions. Other

It is very difficult in practice to identify the least cost strategy for controlling emissions from multiple sources. If all control measures and their costs are
successively more expensive measures may be implemented until all emissions are controlled.

known, linear programming or other modeling techniques could be used to find the least cost strategy for every level of emission control for the sources taken as a whole. However, in most cases all potentially available control measures are not known,

and, even if they were, pollution control laws typically do not allow an agency to impose strict controls at one source and relatively lenient control burdens on another, even if their control costs are quite different. Generally, similar sources must be treated the same. Furthermore, incremental control costs include more than simply the costs that sources must bear in order to comply with regulations, as noted earlier. It is likely to be difficult to predict in advance how emission limits would affect production technology, energy and other input use, and other cost elements. Economic instruments avoid the problems that a pollution control agency would have in identifying the least cost methods of meeting a pollution control objective by harnessing market forces to identify cost-effective solutions.

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19 Regulations/Free Market Toolbox

Output Regulations Fail – Cost
Output regulations not cost-effective Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

The second alternative specifies certain characteristics of outputs that are destined for the product market. Some examples include fuel efficiency requirements for automobiles, product specifications for gasoline, and regulations regarding the ability of products to be recycled and the recycled material content of consumer products. The regulatory strategy of imposing limitations on the polluting characteristics of products is affected by the same issues noted above that make it difficult to regulate emissions in a cost-effective manner. For example, the cost to individual refineries of meeting a sulfur limit in gasoline is likely to vary significantly. It would be more efficient to allow trading among sources to meet pollution reduction obligations than to apply uniform standards to each source.

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20 Regulations/Free Market Toolbox

Technology Standards Fail – Innovation
Tech standards not cost-effective, hurt innovation Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf

Technology standards (or more accurately de facto technology standards) are likely to be less costeffective than emission or effluent standards, since the latter give sources the freedom to choose the least costly method of compliance. Further, technology standards tend to lock firms into one accepted method of compliance, which discourages technical change and innovation. However, when emissions cannot be measured or
concerns exist about the feasibility of enforcing tax or trading systems or both, technology standards provide a practical way to reduce pollution.

identifying the strategies that should be implemented to control pollution at the least cost is more problematic. Technology is not static. Over time, the number of possible options increases. Most of the options offer improvements over earlier technologies, in terms of cost, environmental performance or both. A traditional regulatory strategy to identify and mandate least cost controls can lock firms into technologies that become progressively less effective, and thus less attractive, over time.
From a dynamic perspective,

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21 Regulations/Free Market Toolbox

RegNeg Good
Regulatory negotiations create effective environmental solutions while accommodating business Doul et al 96 (John, Department of Pharmacology, Toxicology and Therapeutics, Kansas University Medical Center, Bernard Goldstein,
Director, Environmental and Occupational Health Sciences Institute and Chairman, Joshua Lederberg, President Emeritus, Rockefeller University Sheila McGuire, President, Iowa Health Research Institute David Rall, Former Director, National Institute of Environmental Health Sciences Virginia V. Weldon, Senior Vice President for Public Policy, “Commission on Risk Assessment and Risk Management”, June 13, http://www.riskworld.com/nreports/1996/risk_rpt/html/nr6aa001.htm#TC1)

Consensus, Mediation, and Dialogue Projects. Negotiated rule-making and dialogue projects, such as EPA's Common Sense Initiative, offer opportunities for stakeholders to design new standards and solutions that protect human health and the environment more reliably and with greater cost effectiveness and public acceptance. With the Common Sense Initiative, begun in 1994, EPA has convened consensus-oriented teams of stakeholders to look for opportunities to turn complicated and inconsistent environmental regulations for six major industries--automobile manufacturing, computers and electronics, iron and steel, metal finishing, petroleum refining, and printing--into comprehensive sector-specific strategies for environmental protection. Several industrial sectors have launched their own initiatives such as Responsible Care by the Chemical Manufacturers Association.

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22 Regulations/Free Market Toolbox

Fees Bad – Too Low, Competitiveness
Foreign competitiveness concerns prevent fees from being set high enough Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Although fees can generate substantial revenues for the government agency that imposes them, they tend to be set at rates too low to have a significant impact on pollution. Generally speaking, if pollution fees or taxes were set at rates equal to the incremental damage being caused by the pollution, or at a level that would force changes in business or personal behavior, they would be controversial. Concerns about the competitiveness of U.S. businesses would be raised if foreign companies were not subject to similar fees. Consequently, the rates of most of these environmental fees and taxes are not set high enough to achieve U.S. environmental goals, although in some specific cases fees and taxes are working well as a mechanism for controlling pollution.

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23 Regulations/Free Market Toolbox

Permits Fail – Innovation
Permits that limit pollution and input performance standards prevent innovation Scott et al 98(V. J. Lein, and E. L. David, Wisconsin Department of Natural Resources, Madison, WI; and Donna M. Downing, USEPA,
“ENVIRONMENTAL INNOVATION AND REGULATION: SIFTING REALITY FROM RHETORIC”, Jan 1, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0408A-1.doc/$File/EE-0408A-1.doc)

We did find instances in which the environmental regulatory regime does appear to hinder innovation, either by making it more difficult to innovate or by failing to provide strong incentives for innovation.
We summarize these regulatory hurdles and our policy recommendations below. We then note the various barriers to innovation that the theoretical literature considers important, but that appear in practice not to importantly hinder innovation. Finally, we review motivations to innovate that are generated or augmented by current environmental policies and attempt to underline areas in which existing policies and practices might be strengthened. Regulatory hurdles are of two types; they discourage innovation or fail to encourage innovation. The regulatory hurdles that could discourage innovative approaches, and therefore merit immediate attention include the following:

Permits that limit production or production inputs, in addition to pollution, can blunt firms’ incentives to consider creative ways to reduce emissions per unit of product. EPA requires such production
limits, in response to a court order; so short of challenging the court decision, state and federal agencies can not directly address this problem. Nevertheless, agencies should make certain that firms understand that their production cap is based on their releases and that it may be recalculated if the firm demonstrates that it has reduced its releases. Expedited permit review for such changes may lessen this hurdle to innovation.

Performance standards that apply to the content of the input material, rather than to environmental releases from production activities, can hinder innovation. While it doesn’t appear that this
application of performance standards has deterred much innovative activity, it remains possible. Either such standards themselves should be revisited, or an expedited variance process should be developed for innovative approaches that run into conflict with these standards.

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24 Regulations/Free Market Toolbox

Liability Laws Good – Innovation
Strict liability laws encourage innovation because of high litigation costs Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Being held legally responsible for health or environmental damages is a potent incentive for sources to reduce or avoid pollution, since if found liable they can face extraordinarily large and unpredictable damage claims. The Clean Water Act, for example, requires the cleanup of oil and petroleum products spilled into the nation’s waters, while the Superfund Act and the Oil Pollution Act impose liability for environmental damages caused by the release of hazardous substances and oil, respectively. Since 1990, awards and settlements for damages to natural resources under these and related state statutes total more than $700 million, with a number of cases that involve large sums still in varying stages of litigation. Liabilities associated with the cost of cleanup at Superfund sites total billions of dollars. With potential costs of this magnitude, sources have a powerful incentive to minimize their legal exposure. Consequently, expensive technologies that control pollution or aggressive environmental management systems can seem very reasonable to sources. While liability has prodded sources to take significant actions to reduce pollution, such as managing hazardous wastes on site, it is sometimes difficult to quantify the environmental results of those actions or to establish a causal link between concerns over liability and reductions in pollution.

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25 Regulations/Free Market Toolbox

Liability Laws Bad – Filing Deadlines
Liability laws fail – the filing deadline is too fast Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Polluters respond to federal and state pollution liability statutes by taking precautionary actions that reduce the severity and frequency of spills. Alberini and Austin found this effect with respect to the imposition of strict liability laws by states.19 The petroleum industry created the Marine Spill Response Corporation, an emergency spill response effort, following the Exxon Valdez spill and the 1990 Oil Pollution Act.20 Common law, such as nuisance, trespass, and negligence, can be used to address harm to individuals and to private property that is caused by pollution. The effectiveness of these approaches in dealing with pollution is an open question. In selected applications, liability can be a strong deterrent, but a number of considerations limit the effectiveness of this approach as a general solution to pollution-related problems. One factor that restricts its widespread use is the time limit for filing claims, otherwise known as the "statute of limitations." In most jurisdictions, a case must be filed within two or three years of discovering a harm. In a few jurisdictions, a case must be filed within a two- or three-year period of when the harm occurred. This distinction is very important for individuals who develop cancer and other diseases of long latency possibly as a result of exposure to toxic substances, since observable effects may arise many years or even decades following the exposure.

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26 Regulations/Free Market Toolbox

Liability Laws Bad – Burden of Proof
High burden of proof prevents companies from liability Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

A second limiting factor is the burden of proof required by law. The burden of proof required for a judgment against the defendant is usually the standard of “more likely than not,” which usually is interpreted as having a probability greater than 50%. Epidemiological studies may suggest that exposure to a particular toxic substance is but one of many factors that could have caused a disease. Satisfying the more-likely-than-not standard can be difficult. Even if a substance is implicated, it may be difficult to determine which polluter is responsible for the harm. For example, doctors may determine that an auto mechanic’s lung cancer likely was caused by inhaling dust from brake linings, but assigning responsibility to a particular manufacturer may be impossible. A few jurisdictions allow the assignment of proportional responsibility for both the harm-causing substance and for the determination of who is responsible.

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27 Regulations/Free Market Toolbox

Liability Laws Bad – Cost
High transaction costs prevent defendants from bringing claims forward Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

A final limiting factor for liability systems are the transaction costs of pursuing a claim. These costs include the legal costs of obtaining evidence, reaching agreement among plaintiffs on how to pursue a case, presenting the case, and following up if the case is appealed. Liability works best when there is one party on each side of the case and an easily demonstrated harm. When the harm is large in magnitude, liability systems may perform reasonably well when transaction costs are small in proportion to the amounts awarded and if there are few defendants and clear causation, even if the number of plaintiffs is large.

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28 Regulations/Free Market Toolbox

Disclosure Good – Accountability
Public disclosure of environmental performance spurs greater demand for accountability, provide a business incentive Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf

The collection and public availability of information on environmental performance has proven to be a strong incentive for sources to reduce their emissions of pollution. The incentive derives from a number of factors. For example, when companies collect emissions information, they learn about the nature and magnitude of their emissions. When such information is made easily accessible to the public, workers and local communities have a much better idea of the environmental risks they face, so they are more prone to support or demand actions to reduce emissions. When a source’s emissions are shown to decline over time, the source often reaps the benefits of better relationships with its employees and with the local community. Finally, in some cases a proven, long-term record of environmental stewardship makes a company’s products more desirable to consumers.
The disclosure of environmental performance information is much more common today than a decade ago. Although some information is disclosed voluntarily, other information must be released to the public as required by statute. The two best-known laws mandating the public disclosure of environmental information are the Toxics Release Inventory provisions of the federal Community Right-to-Know Act and California’s Proposition 65. Other forms of information reporting include environmental impact assessments, product labeling, environmental performance awards, Securities and Exchange Commission (SEC) environmental reporting requirements, and disclosure requirements for lead paint and radon when homes are sold. Information disclosure has been a powerful tool for reducing pollution. Over the past decade,

the Toxics Release Inventory, for example, shows that sources have substantially reduced the amount of substances listed in the inventory that they release into the environment. Because the TRI requires only the reporting of information, actions taken by sources to reduce pollution are voluntary and in all likelihood relatively low cost.

Disclosure decreases pollution more than command and control, California laws prove Doul et al 96 (John, Department of Pharmacology, Toxicology and Therapeutics, Kansas University Medical Center, Bernard Goldstein,
Director, Environmental and Occupational Health Sciences Institute and Chairman, Joshua Lederberg, President Emeritus, Rockefeller University Sheila McGuire, President, Iowa Health Research Institute David Rall, Former Director, National Institute of Environmental Health Sciences Virginia V. Weldon, Senior Vice President for Public Policy, “Commission on Risk Assessment and Risk Management”, June 13, http://www.riskworld.com/nreports/1996/risk_rpt/html/nr6aa001.htm#TC1)

The Toxic Release Inventory and California Proposition 65 have proved effective pollution prevention incentives by requiring the disclosure of information about chemical releases to the environment and labeling of chemicals in products, respectively. Those right-to-know laws rely on the public's attitudes toward toxicants to encourage industry to reduce or eliminate their use or release. In the case of Proposition
65, the requirement to warn people about exposures to chemicals known to cause cancer, birth defects, or other reproductive harm has been an incentive to businesses to eliminate such chemicals or reduce exposures and associated risks below the bright lines for cancer and reproductive risks. Rather than relying on command and control, Proposition 65 uses disclosure of

information and labeling requirements as risk-management tools. Proposition 65 places the burden of proof of safety on manufacturers rather than on government agencies, requiring businesses to present a risk-based analysis to avoid having to label their products and substances as cancer-causing or reproductive toxicants. David Roe of the Environmental Defense Fund informed the Commission that Proposition 65, once
enacted and implemented, has had widespread support from environmental and business communities and has had few legal challenges. A key element was the decision by the state agency, accepted by environmentalists and business, to put the bright line for cancer risk at 10-5, rather than 10-4 or 10-6, as proposed by contending parties. He estimated that under this system, the state of California completed the necessary regulatory work for 282 chemicals at a cost of about one-tenth of what EPA was spending on risk assessment during the same years.

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29 Regulations/Free Market Toolbox

Disclosure Good – Accountability
Environmental accounting key to worker safety, efficiency, environment Doul et al 96 (John, Department of Pharmacology, Toxicology and Therapeutics, Kansas University Medical Center, Bernard Goldstein,
Director, Environmental and Occupational Health Sciences Institute and Chairman, Joshua Lederberg, President Emeritus, Rockefeller University Sheila McGuire, President, Iowa Health Research Institute David Rall, Former Director, National Institute of Environmental Health Sciences Virginia V. Weldon, Senior Vice President for Public Policy, “Commission on Risk Assessment and Risk Management”, June 13, http://www.riskworld.com/nreports/1996/risk_rpt/html/nr6aa001.htm#TC1)

In traditional accounting of revenue, expenses, and net income of businesses, energy costs are lumped in overhead, and effects on and uses of resources--such as air, rivers, soils, and other environmental components--are neglected altogether. The challenge is to incorporate all costs involved in design, production, use, disposal, and reuse so as to arrive at a lifecycle analysis of a product or process. Assigning values to various environmental assets used and to real or potential environmental effects that have varied probabilities is problematic, however. Those assigned values may well drive the results of the analysis. Nevertheless, the process of environmental accounting can link environmental costs

with activities and products and provide information that results in win-win opportunities to increase operational efficiency, improve worker safety, enhance product quality, and meet environmental protection goals. Bankers and investment advisers have been slow to encourage up-front investments in those cost-saving initiatives. The President's Council on Sustainable Development (1996) recommended that national business associations provide technical assistance to companies interested in identifying environmental management costs and innovative ways to increase profits by reducing energy and materials use while better protecting public health and the environment.

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30 Regulations/Free Market Toolbox

Waste Disposal Tax Bad
Waste disposal taxes fail – too many variables for proper enforcement Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Although “[s]tates’ experience suggests that taxes may provide an alternative to the standardbased policies now used for most hazardous waste regulation,” Sigman found, the design and implementation of such taxes pose several potential problems, including the determination of tax levels. To maximize the efficiency of these taxes, they should reflect the social cost of hazardous waste generation. This cost, however, depends on the type of waste, the method of disposal, the geographic location, and various other factors that are difficult to assess and incorporate into tax structures. If, on the other hand, taxes are too high, they could encourage illegal dumping, of which even a small amount could cause enough environmental damage to offset the increased efficiency achieved by taxes. “In the presence of illegal dumping,” the study states, “a deposit/refund program may be substantially less costly than a wasteend tax.” Because current federal regulations impose high costs on generators of hazardous waste, there may already exist sufficient incentives to reduce the generation of hazardous waste. If existing regulatory incentives are sufficient, taxes could raise the costs of waste disposal to a level that is higher than what is socially desirable.

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31 Regulations/Free Market Toolbox

***Regulations Bad – Regs Death

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32 Regulations/Free Market Toolbox

Regulations Bad – Economy
A regulatory approach destroys liberty and causes economic collapse McIntosh 96 (David, former Indiana congressman, “Making Regulatory Reform a Reality”, 1/31,
http://www.heritage.org/Research/GovernmentReform/HL559.cfm)

This leads me to the key area -- the environment -- where I think we need to more effectively articulate our position. Republicans must lay out their vision of environmental protection. We should start by explaining that in the 1960s, 1970s, and 1980s, as we turned towards the goal of protecting the environment in this country, we did what the Soviet Union did. It used a command-and-control approach, made tremendous strides forward, changed from a peasant economy into a manufacturing economy, but at great cost in individual liberty. And what we now see is that if we continue down that route of a command-and-control approach we run the risk of going the way of the Soviet Union, where the structure collapses in on itself. So if we want to have a truly good record of protecting the environment, we need to follow the same principles we follow in the economic world, where you use free markets, you use property rights as the foundation of your policies. I think we can prove empirically that this will deliver a better result on the environment.

Regulations cause economic centralization, destroying small business Shaw and Stroup 0 (“Do Environmental Regulations Increase Economic Efficiency?”, Spring,
http://www.cato.org/pubs/regulation/regv23n1/shaw.pdf)

Large companies have always been tempted to seek tougher regulations as a means of raising the costs of their smaller competitors more than their own. But today, they can wrap themselves in the cloak of respectability by promoting regulation as a way of forcing beneficial change. One result can be to draw the most entrepreneurial companies into the process of negotiating for regulations that give their companies special advantages. Bruce Yandle reported in Regulation (Vol. 22, no. 3) that some oil and natural gas companies have already figured out how to benefit from the proposed Kyoto Treaty negotiations—at other companies’ expense. He also noted that logging regulations to protect the northern spotted owl, which drastically reduced timber logging in public forests, raised timber prices, helping companies like Weyerhaeuser that log primarily on their own land. (This fact helps explain why Weyerhaeuser’s chairman enthusiastically supported the regulations.) Regulation can be a competitive tool regardless of its environmental merits.

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33 Regulations/Free Market Toolbox

Regulations Bad – Economy/Resource Tradeoffs
Regulations increase pressure on the economy, preventing resources from being spent on more important issues Antonelli 96 (Angela, Dept. of Housing & Urban Development chief financial officer, “Making Regulatory Reform a Reality”, 1/31,
http://www.heritage.org/Research/GovernmentReform/HL559.cfm)

The American people have not stopped wanting regulatory reform, but we need to help them understand that the goals of reformers are not different -- we want cleaner air and cleaner water -- but we can do it with less money and less government intervention. Today, the federal bureaucracy supports elaborate programs aimed at reducing tiny risks at huge costs to the taxpayer, while more serious dangers go neglected. At the same time, this huge misallocation of resources means these resources are not available for other purposes -- for example, the local community that must spend millions of dollars to eliminate one chemical from its water supply that poses a negligible or non-existent risk to the public cannot spend this money to put police on the streets or build a school. Helping people put daily risks in perspective is one of the challenges we face in making regulatory reform a reality. As Dr. Graham points out, today people are suffering from what can be called a "syndrome of paranoia and neglect" about the potential dangers to their health, safety, and the environment. Risk regulation is responsible for the bulk of the nation's $600 billion in annual regulatory costs, particularly those rules affecting the environment. Dr. Graham's work with Dr. Tammy Tengs recently has shown us that a reallocation of resources to more costeffective programs could save an additional 60,000 lives per year at no increased cost to taxpayers or industry. 60,000 lives! And we can also save $31 billion.

Regulations impair the economy and health system McIntosh 96 (David, former Indiana congressman, “Making Regulatory Reform a Reality”, 1/31,
http://www.heritage.org/Research/GovernmentReform/HL559.cfm)

I think we must return to the basic principles that have been successful for us. We need to explain regulatory reform in terms of what it does for the average American. Reform will help us create more jobs; it will help us get more products; it will lead to a healthier health system; it will help small businesses be more productive and be able to be competitive. I think we need to search out examples of how the current regulatory system works against us. I talk with people back home in Indiana about working in a foundry. I put myself through college, and I point out that that foundry is now closed down because they could not afford all costs of compliance of the Clean Air Act Amendments. Two hundred people are out of a job, and their families are affected. It has had a terrible effect on the community. I talk about some of the people I have met in hearings, for example, when we looked at FDA's review process. We heard from a wonderful little 8-year-old girl who is a hydrocephalic child, and she is alive because of a miracle of science. They have a shunt that drains the fluid from the back of her head; it's made out of silicone, and the manufacturers are saying they're no longer going to make that shunt because FDA has still not said that silicone is safe for use in the human body.

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Regulations Bad – Competitiveness
Regulations force increased industry spending without improving products, halting medical and industrial advances to destroy competitiveness Miller 93 (Dane, Biomet Inc. CEO, 12/8, http://www.heritage.org/Research/Regulation/HL482.cfm)
By Dane Miller The Congress of the United States has focused a great deal of its attention on the Food and Drug Administration (FDA) for the past five years. During this period, congressional oversight committees have meddled with the agency's operations to such an extent that the FDA is cur- rently incapable of giving approval to the release of new medical devices into the marketplace. These devices at my company, Biomet, include such things as hip and knee replacements, bone screws, and bone healing products. In fact, the FDA has become such an impediment to the intro- duction of new devices in the United States that most new or improved devices are available to the rest of the world more than a year in advance of the U.S. I am in a position to see the dangerous, albeit often hidden, medical consequences of this. I have worked in the field of orthopedic research and product development for nearly twenty-five years, the last sixteen of which I have served as President and CEO of Biomet, Inc., after co- founding the company in 1978. During this time period I have seen America's manufacturers increasingly distracted by the regulatory process as a result of inaccurate tabloid reporting and political sensationalism. This has forced the U.S. Food and Drug Administration and other regula- tory organizations to divert from good, sound regulatory practice to a crisis response based on these pressures. As a result, today's manufacturers of medical devices have been forced to spend more money and effort on regulatory approval and compliance with little or no improvement in the safety and efficacy of our products. Having the Opposite Effect. Legislation to improve the situation has not been effective. In 1990, the Safe Medical Devices Act (SMDA) was passed into law. Industry supported the SMDA because it was intended to get devices into the marketplace in a timely manner. SMDA places more emphasis on postmarket monitoring of devices and less emphasis on premarket re- quirements. Unfortunately, SMDA has had the opposite effect. SMDA significantly increased FDA's workload but gave no extra resources to handle that increase. Congress merely pressured the agency to step up enforcement activities, and FDA resources were directed toward compli- ance activities at the expense of new device approvals. At the beginning of 1993, Congress
pressured the FDA into making organizational changes to improve its efficiency and reduce the backlog of product submissions. The FDA recently re- leased the results of an internal survey given to the staff of the Center for Devices and Radiological Health asking whether those organizational changes have improved their efficiency and effectiveness. The Office of Device Evaluation, which is responsible for premarket reviews, had the highest negative response rate at 80 percent. Only 8 percent thought there had been improvement. In our experience, congressional interference into the activities of the FDA has had a negative impact on the agency, on the medical device industry, and consequently on the patient. Medical device research and development is increasingly

moving overseas to avoid the ever-increasing regulatory burdens in the United States. And the manufacture of devices sold in the international marketplace is moving overseas to avoid the delays
associated with FDA export clearances. In summary, the way in which the FDA carries out the tasks assigned to it by Congress is directly related to the interference and pressure placed on the agency by the Congress. During the past three years, Congress has devastated the FDA, and the industry it regulates, by using the agency as a media and publicity ploy. For example, the public congressional hearings on the "Silicone Breast Implant Crisis" is one example of a grossly exaggerated and oversensational- ized issue driven by political gamesmanship. With the FDA's Office of Device Evaluation's premarket review activities in a state of virtual gridlock, new and improved devices are not being made available to physicians and their patients. U.S. companies are discouraged from operating in the U.S. marketplace, but are inclined to supply the international market with medical devices made by foreign subsidiaries. Let me give you a few specific examples of the frustrations we as an industry face as we deal with the FDA on a daily basis. My first example concerns the FDA's approval for marketing of a specific hip implant developed at Biomet for patients who needed replacement of a failed total hip. The FDA has taken more than a year (now typical) to respond to a 5 1 0(k) premarket noti- fication for a modular calcar hip stem. A 5 1 0(k) premarket notification is supposed to be a simplified approval process in products which are similar in design and function to others currently being produced and sold and with a proven clinical track record. The device is a hip prosthesis used for revision surgery; in other words, it is an implant designed for use in a patient whose previously implanted total hip had not functioned properly and required re- placement. The hip stem is part of the Mallory/Head Modular Hip System previously cleared for general marketing by the FDA. The 5 1 0(k) was submitted on October 30, 1992, and the FDA's first reply was received November 18, 1993. In their response, the FDA gave us 30 days to complete a fatigue test of 5 stems to 10 million cycles and submit the results. Not only is this an unreasonably short response time in light of the FDA taking more than a year to respond to the original filing, but it is impossible to complete this amount of testing, analyze the data, and prepare a report in such a short time period. If it takes us longer than 30 days to provide the FDA with additional information, the FDA may consider the 5 10(k) notification to be with- drawn. Once a submission is considered withdrawn, the entire 5 1 0(k) must be resubmitted as if it were a new submission. The FDA will then give the submission a fresh date of re- ceipt, and place it at the end of the backlog queue. Our request for an extension of response time is still awaiting action with the FDA and the status of this request is unknown at pre- sent.

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35 Regulations/Free Market Toolbox

Regulations Bad – Poverty
Environmental regulations disproportionately hurt the poor Parry 2 (Ian W H, Resources for the Future Fellow, “Are All Market-Based Environmental Regulations Equal?”,
http://www.issues.org/19.1/p_parry.htm)

Policymakers might also be concerned about the effects of environmental policies on different income groups. Unfortunately, environmental and distributional objectives often appear to be in conflict. A number of studies suggest that the burden on households from environmental regulation imposed on power plants, refineries, and vehicle manufacturers is moderately regressive. The increase in prices as producers pass on the costs of regulations tends to hurt lower-income groups disproportionately, because they spend more of their income on polluting products than better-off households do.

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36 Regulations/Free Market Toolbox

Regulations Bad – AT: Innovation
Regulations cause a net decrease in profits – their arguments are flawed Shaw and Stroup 0 (“Do Environmental Regulations Increase Economic Efficiency?”, Spring,
http://www.cato.org/pubs/regulation/regv23n1/shaw.pdf)

Most environmental economists dismiss the notion that innovation depends on regulation. You could almost hear Karen Palmer, Wallace E. Oates, and Paul R. Portney sputtering with indignation as they responded in the Journal of Economic Perspectives. They called the Porter-van der Linde article “somewhat astonishing” because it defended environmental regulation without recognizing the necessity of weighing costs and benefits. “The traditional approach,” they explained, “consists of comparing the beneficial effects of regulation with the costs that must be borne to secure these benefits.” They disparaged the Porter- van der Linde claim that there are “lots of $10 bills lying around waiting to be picked up.” They graphed an abstract model showing that environmental regulation cannot, as a general rule, lead to higher profits. They explained that examples cited by Porter and van der Linde were special cases under narrow circumstances. In addition, they reported that they had communicated with officials of firms, including some mentioned by Porter and van der Linde. Each official “said quite emphatically that, on the whole, environmental regulation amounted to a significant net cost to his company.” The economists cited a Bureau of Economic Analysis study showing that industry spent $102 billion in 1992 on pollution con- trol, of which $17 billion (less than 2 percent) was offset by innovation. And they pointed out that whatever the successes, concentration on environmental innovation meant “other opportunities forgone” for these companies.

Shock effect proves their argument wrong Shaw and Stroup 0 (“Do Environmental Regulations Increase Economic Efficiency?”, Spring,
http://www.cato.org/pubs/regulation/regv23n1/shaw.pdf)

We agree with these economists. The theory that regulations will wake up sleepy executives, forcing them to become more efficient, is illogical in a competitive economy. The claim, however, resembles a predecessor idea, the “shock effect.” Taught in labor economics texts, the theo ry of the shock effect held that unions, by raising wages, would shock management into efficiency gains. The higher wages would stimulate productivity so that higher wage costs would not be passed on to buyers. As Neil Chamberlain put it in his 1958 text, Labor, “It is amazing the way firms find theycan cut costs when they are driven to it by the spur of rising wages!” With this spur, he said, it is “possible to pay the added wage costs, retain the old scale of prices, and make as much profit as before” (p. 289). But, of course, it is not true in general. Studies in the United States and the United Kingdom indicate that unionized firms have higher wages but lower profits and lower employment. Unionized firms and sectors have grown less rapidly than have nonunionized ones, further discrediting the shock-effect theory.

Regs aren’t key – economic competition solves innovation Shaw and Stroup 0 (“Do Environmental Regulations Increase Economic Efficiency?”, Spring,
http://www.cato.org/pubs/regulation/regv23n1/shaw.pdf)

Business executives never accepted the shock theory of union wages in a big way, and the theory died a natural death. It is easy for economists to assume that this new variant, the Porter–van der Linde message, has been discredited and is on its way to a similar demise. After all, how many stodgy firms are there in need of artificial stimulus to competitive behavior? In a global economy, with increased foreign trade, wider markets in nearly every industry, and thriving merger-and-acquisition activity, surviving firms are lean, mean, and innovative without regulation.

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37 Regulations/Free Market Toolbox

***Regulations Good – AT: Regs Death

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38 Regulations/Free Market Toolbox

Regs Good – General Econ
Environment regulations are key to the economy Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 4, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

Effective environmental regulation is integral to successful markets, an essential ingredient of a vibrant, modern economy. Unregulated markets would be chaotic, unfair and unlikely to deliver what people want – safe, reliable products and a clean environment in which to live and work. The opposite is sometimes assumed - that environmental regulation represents sand in the cogs of the economy, resulting only in burdens on business, inefficiency and lower competitiveness. Businesses often focus on the time spent and cost of dealing with regulators and tend to underestimate the benefits of regulation to business and wider society. Oppressive environmental regulation can be damaging, but a modern approach can help to deliver the environmental improvements people want in a way that fits with a competitive economy. Good, modern regulation is likely to incorporate a mix of policy tools, including market-based measures such as emissions trading, a risk-based approach, and effective engagement and dialogue with business and other stakeholders. Some countries, including Germany, Italy and Sweden, point to the advantages of having a coherent environmental code bringing together, summarising and harmonising all relevant environmental legislation, including on nature conservation. Such a code can enhance the clarity of law for the public and for businesses and simplify enforcement by the competent authorities. Society benefits from less pollution and waste and improved quality of life. Businesses can also be better off with clear standards that are enforced effectively, rather than uncertainty and unfair competition from those who ignore the rules. Good environmental regulation helps reduce costs for industry and business Business can benefit directly because regulation in areas such as energy efficiency and waste reduction can deliver cost savings and help companies develop more attractive products. These reduced costs add up to substantial benefits across the whole economy. Research in the UK 2 suggests that: – waste minimisation could yield almost 4.4bn euros saving in manufacturers’ annual operating costs, equal to 7% of profits in 2000 - 60% of the savings come from the costs of materials that do not end
up in the final product, – industry could save 2.7bn euros through energy efficiency, – typical payback periods for waste investments are no more than 12 months. – the agriculture sector could save some 1.3bn euros through improved environmental management

Individual companies also show that such gains need not be short-lived. The healthcare company Baxter International reckons it is saving more than 50m euros a year from measures such as packaging and waste reduction which have been introduced since 1996. The technology company 3M began its pollution prevention
programme in 1975 and is still profiting from it, having saved over 740m euros since then.

Environmental regulations are key to business success Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 6-7, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

Recent research found a close link between environmental governance – embracing policies, processes and performance – and financial performance. Such a link was found in 51 of 60 recent studies reviewed by researchers, covering performance of individual companies, whole sectors and pension funds 12. For example, the difference in financial performance between the best and worst environmental performers in the oil and gas sector was nearly 12% over three years . Similarly the UK Financial Times Share Exchange (FTSE) prices of the best electric utilities beat the worst companies by 39% over three years. Another recent study, by the Climate Group, found that 5 international companies (DuPont, Alcan, British Telecom, IBM and Norske Canada) had achieved reductions of over 60% in their greenhouse gas emissions since 1990. The resulting savings of over 6bn euros resulted from improved energy efficiency (process, product, buildings), fuel switching and reduced waste 13. The banking and insurance sectors, which provide strategic business advice and insure all businesses, look more favourably on those with a good environmental record and low environmental risks, providing better access to capital and lower insurance premiums than for businesses with a poorer record. A recent Danish study confirmed that financial institutions pay attention to environmental risk management in their evaluations of companies

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39 Regulations/Free Market Toolbox

Regs Good – Innovation
Environmental regulations spur innovation that creates new environmental markets Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 5, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

Higher environmental standards and regulation help create markets for environmental goods and services. The world market for environmental goods and services is estimated to be worth 425bn euros and is likely to grow to 565bn euros by 2010. This figure is comparable with those for the aerospace and pharmaceutical industries. In the UK, the environmental goods and services industry already consists of over 17,000 companies with an estimated annual turnover of 33bn euros. The International Institute for Industrial Environmental Economics in Lund reported continuous growth in the number of Sweden’s environmentrelated jobs 5 It is forecast that in the years ahead, more and more people will devote at least some of their working hours to environment-related tasks. Michael Porter of Harvard University was instrumental in showing that countries with high environmental standards often have market-leading firms and record better economic performance than those with lower standards This is because high standards can stimulate innovation both in firms selling environmental solutions and in those having to comply. English Nature has provided a useful summary of international research in this area undertaken since Porter’s initial challenge

Regulations are key to innovation that increases profits and competitiveness Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 6, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

Some industries depend for commercial success on high environmental standards, most obviously those providing clean technology and waste management. Danish leadership in wind turbine technology is an example of a country gaining competitive advantage by pursuing environmental leadership and innovation. The way businesses respond to regulation is more important, especially in the environmental context where regulation is often designed specifically to change behaviour. Michael Porter has recognised this dynamism, writing: “The data clearly show that the costs of addressing environmental regulations can be minimised, if not eliminated, through innovation that delivers other benefits.” 8 Some argue that if companies risk profitability by failing to innovate then an unregulated market will pass judgement. However Porter and Van der Linde have argued that this makes unrealistic assumptions and that a regulatory push is needed to overcome business inertia, to alert and educate companies about resource efficiencies and the potential for technological improvement and to protect the environment in the interim. It is clear, for example, that companies innovate in response to tighter waste regulation, to change products and processes so that they generate less waste. They save money and possibly find an opportunity to charge a premium price for an improved product. Similarly, companies have responded to the climate change levy by investing in energy efficiency, again cutting costs. A World Wildlife Fund report on the effect of proposed EU chemicals regulations on innovation found that the regulations were likely to promote innovation by encouraging the replacement of risky and less sustainable chemicals with safer alternatives. Indeed, this innovation can allow an industry to be more competitive internationally because the resultant products are in greater demand

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40 Regulations/Free Market Toolbox

Regs Good – Innovation
Regulations are good for the economy – increase profits and innovation while providing business opportunities Shaw and Stroup 0 (“Do Environmental Regulations Increase Economic Efficiency?”, Spring,
http://www.cato.org/pubs/regulation/regv23n1/shaw.pdf)

A different idea is gaining ground in business boardrooms, however. Saving the environment is a “business opportunity,” says Tachi Kiuchi of Mitsubishi Electric. According to the Aspen Institute (in a report developed with help from businesses— from Anheuser-Busch to Wey-erhaeuser), “By learning to ‘value the environment,’ companies and financial institutions are uncovering another competitive edge.” Yes, regulation can be a good business opportunity for some, even with the higher costs it imposes. For example, producers who are the first companies to discover better ways to reduce pollution can profit by keeping costs down. In addition, they may profit by selling new technologies to other producers. (As we will note later, some companies also profit by obtaining monopoly power through regulation.) So far, so good. But some business strategists make another leap: they argue that regulation leads to cost-reducing innovation, directly increasing profits. Lower costs and lower pollution can result. Under these conditions, who would argue against tighter regulation?

Regulations spur cost-saving innovations Shaw and Stroup 0 (“Do Environmental Regulations Increase Economic Efficiency?”, Spring,
http://www.cato.org/pubs/regulation/regv23n1/shaw.pdf)

Although there are variants, the idea that regulation spurs innovation that raises profits stems largely from the work of Michael Porter and Claas van der Linde. They have presented their views in such places as the Harvard Business Journal, Scientific American, and the Journal of Economic Perspectives. Indeed, an exchange with economists in the latter journal seems to be the one serious debate over the issue— and it is not clear that the economists won. Since their competing essays appeared in 1995, economists have moved on, assuming they were victors. Or, so it would appear. Meanwhile business strategists have held conferences, written books, and persuaded journalists (in case they needed persuasion) that more environmental regulation is nearly always a good thing. In the 1995 article, Porter and van der Linde argued that “properly designed environmental standards can trigger innovation that may partially or more than fully offset the costs of complying with them.” They offered several examples of such offsets. • CibaGeigy responded to environmental standards by making process changes that saved $740,000 per year. • 3M saved $120,000 in capital investment and $15,000 annually by replacing solvents with water-based solutions.•The Robbins Company saved nearly $300,000 in capital costs and more than $115,000 per year by moving to a closed-loop system in its jewelry-plating business. These examples are undoubtedly true. The companies mentioned are making money from pollution control or material reduction. It should not surprise us. The profit motive has long led to increasingly efficient use of material resources. Every 1 percent reduction in the aluminum needed to make a beverage can saves beverage can manufacturers $20 milliona year. Similarly,air pollutiondeclined for decades long before the passage of the Clean Air Act because engineers strove to improve the efficiency of burn- ing fuel. The profit motive has been a steady contributor to cleaner industry. Porter and van der Linde’s claim, however, is that environmental regulation is necessary, for the most part, to spur the innovation that will add to profits. They argue that because of poor information and management incentives in many companies today, there are “$10 bills” lying around that have not been picked up—innovations just waiting to be made. And regulation is the way to make executives start looking for them.

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41 Regulations/Free Market Toolbox

Regs Good – AT: Hurts Econ
The costs of regulation is inevitable – government regulations just make their impact more equitable and improve efficiency Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 7, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

There are several reasons why regulation tends to be mistakenly seen as anti-competitive, not least that the costs in terms of time spent dealing with regulators is much more visible than the benefits, such as fair competition and less pollution. But it seems likely that businesses over-estimate compliance time. A recent report for the UK Government (the Hampton Report 22) estimated that a firm with 19 employees would spend less than 2 1/2 hours per person per month complying with all government-related regulation and paperwork (not just that related to the environment). The bulk of this would involve labour and financial regulation (the OECD estimate that 46% of the time needed to comply relates to taxation and 35% to employment regulations 23). However, it is also recognised that proportionately larger businesses have less administration of regulation per person that small businesses. More fundamentally, estimates of the impact of regulation often ignore two important issues: – the element of self-regulation which would take place in the absence of formal requirements – the ways in which businesses adapt. Self-regulation is common in many areas because it is in companies’ interests to behave responsibly, and because they are under pressure from society to avoid anti- social behaviour such as dumping waste. Voluntary action is not always sufficient to achieve widespread responsibility, and regulation can be more efficient because it provides certainty and equity. Indeed, voluntary action only works if there is the understanding that regulation will be introduced if the desired outcomes are not achieved. It is unlikely that the costs of regulation would disappear if the regulations were removed.

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42 Regulations/Free Market Toolbox

Regs Good – AT: Job Loss
Regulations improves employment and business Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 7, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

Evidence tends to indicate that the net impact on employment of environmental regulation is either neutral or slightly positive. The most visible beneficiary is the environmental goods and service sector, which by 2001 already employed over 2 million full time equivalent jobs in the EU15 24. The Confederation of British Industry (CBI), which is very alert to competitiveness issues, has acknowledged that “economic growth can be consistent with a better environment” 25 and has found that there is “no strong evidence that environmental regulation destroys jobs and businesses” 26. High standards are also important in sectors such as tourism and leisure, which rely on an attractive physical environment to win customers. In England, economic activities connected with the management of the natural environment support an estimated 2.68 million full time jobs 27. In Wales an estimated 1 in 6 of the workforce depends on the environment for employment, whilst in Scotland nearly as many people are employed in natural heritage related activity as are employed in biotechnology, call centres and electronics combined.

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43 Regulations/Free Market Toolbox

Regs Good – AT: Competitiveness
Regulations don’t hurt competitiveness Network of Heads of European Environmental Protection Agencies 5 (“The Contribution of Good
Environmental Regulation to Economic Competitiveness”, Nov., p. 7, http://www.eea.europa.eu/aboutus/documents/prague_statement/prague_statement-en.pdf)

Several economic studies have exposed the myth that regulation leads to competitive disadvantage. On the contrary, good regulation can have a positive impact through stimulating dynamic responses, innovation and better practices. The World Bank has observed that “Contrary to common perceptions, higher environmental standards in industrial countries have not tended to lower their international competitiveness” 15 The World Resources Institute says “There is no evidence that industries affected by regulatory costs do poorly in international markets” 16 A DG Enterprise study found that air pollution legislation in Europe has had very little effect on competitiveness of industry, particularly when compared to other international regions 17. In fact industry competitiveness was more associated with product quality and range, raw material quality, location of the plant relative to the market and transport costs. Other studies have however pointed out that macro-economic studies can hide substantial variations and complexities at sectoral level

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44 Regulations/Free Market Toolbox

Regs Good – AT: Poverty
Regulations don’t exacerbate poverty – they assume the worst-case scenarios Parry 2 (Ian W H, Resources for the Future Fellow, “Are All Market-Based Environmental Regulations Equal?”,
http://www.issues.org/19.1/p_parry.htm)

But distributional concerns should not be an excuse for avoiding action on serious environmental problems. Pollution control measures should be evaluated mainly by weighing their environmental benefits against their economic costs for society as a whole. Distributional objectives are much better addressed by altering the income tax system or providing a safety net through the benefit system. It still makes sense, however, to avoid environmental policies that increase income inequality. That is a major drawback of grandfathered emissions permits. When the government gives away rights to pollute for free, companies acquire an asset with market value. This enhances their net worth. The increase in company equity values in turn leads to more profits for shareholders, either directly through higher dividends and capital gains or indirectly though their holdings in retirement accounts. Stock ownership is highly skewed toward the rich; the top income quintile owns about 60 percent of stocks, whereas the bottom income quintile owns less than 2 percent. Using annually allocated grandfathered permits to meet the original U.S. carbon pledge under Kyoto could transfer more than $50 billion each year in pretax income or larger retirement assets to the top income quintile. Thus, higher-income groups can benefit greatly from grandfathered permits, with their windfall gains easily outweighing their income losses from higher product prices. Poor households, by contrast, are worse off. According to a study by the Congressional Budget Office, grandfathered permits to reduce U.S. carbon emissions by 15 percent would cut the annual real spending power of the lowest-income quintile by around $500 per household, while increasing that for the top income quintile by around $1,500 per household. Auctioned emissions permits and emissions taxes do not create windfall gains to shareholders. Instead, the government obtains revenue that can be returned to households in a distributionally neutral manner, such as proportional reductions in all marginal income tax rates, or in ways that disproportionately benefit the poor, such as increasing personal allowances

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45 Regulations/Free Market Toolbox

C&C Good-Solves Pollution
Command and control solves pollution
Hart`7 (Stuart L. Hart is one of the world's top authorities on the implications of sustainable development and environmentalism
for business strategy, Capitalism at the Crossroads: Aligning Business, Earth, and Humanity, November 2, 2007, http://www.whartonsp.com/articles/article.asp?p=775679)

There can be no question that command-and-control regulation was of enormous importance; it required, perhaps for the first time, that business address directly its negative societal impacts. Since the time of the industrial revolution, enterprises had relied upon the extraction of cheap raw materials, exploitation of factory labor, and production of mass quantities of waste and pollution (think of those "dark, satanic mills"). Indeed, pollution was assumed to be part of the industrialization process. When economists conceived the concept of externalities, in other words, it seemed virtually impossible that firms could behave in any other manner. For the better part of 200 years, industrial firms engaged in what might be described as "take, make, waste" as an organizing paradigm.2 Command-and-control regulation seemed a necessary and appropriate counter to the prevailing industrial mindset. .

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46 Regulations/Free Market Toolbox

C&C Good-AT: Inefficient
Command and Control not inherently inefficient, the solvency must be determined on an individual basis Cole and Grossman 98 (Daniel H and Perter Z, Professor Indiana University School of Law and Clarence Efroymson
Chair and Assc. Prof. of Economics, Sept., http://papers.ssrn.com/sol3/papers.cfm?abstract_id=135749)

Contrary to the conventional wisdom among economists and legal scholars, command-and-control (CAC) environmental regulations are not inherently inefficient or invariably less efficient than alternative "economic" instruments (EI). In fact, CAC regimes can be and have been efficient (producing net social benefits), even more efficient in some cases that alternative EI regimes. Standard economic accounts of CAC are insensitive to the historical, technological, and institutional contexts that can influence (and sometimes determine) the efficiency of alternative regulatory regimes. A regime that is nominally or relatively efficient in one set of circumstances may be nominally or relatively inefficient in another. In some cases, given the marginal costs of pollution control, technological constraints, and existing institutions, CAC can be the most efficient means of achieving a society's environmental protection goals. This paper reviews the empirical literature on environmental regulation and finds that CAC is not inherently inefficient or invariably less efficient that EI. In addition, the paper elaborates a model through five stylized cases, which demonstrate how alternative approaches to environmental regulation are more or less efficient depending on institutional and technological factors that affect overall regulatory costs. Finally, the model is empirically supported by a detailed history of the U.S. Clean Air Act's regulatory regime. Viewed as an evolutionary process, occurring within an institutional and technological framework, it was (nominally and relatively) efficient for Congress to rely, in the early years of federal air pollution control, on CAC regulations, and then in more recent years to begin experimenting with efficiency-enhancing EI.

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47 Regulations/Free Market Toolbox

***Tax Credits Good

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48 Regulations/Free Market Toolbox

Tax Credits Good – Key to Alternative Energy
( ) Tax credits are the best incentive for alternative energy. This will encourage experimentation in this field with a security blanket for the cost of failure. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Preferential tax treatment is often provided to risky industries. n163 According to proponents' rationale, without a subsidy, the tax system may discourage investment in activities that involve both high risk and the possibility of substantial losses. n164 In certain circumstances, "lower income tax rates for the more risky industries may be consistent with an optimum allocation of productive resources." n165 Moreover, investors in high-risk activities require higher investment returns, and taxes can make that harder to achieve. n166 Because of the social benefits of inexpensive petroleum, ignoring other costs such as pollution, the government has provided tax incentives that reduce or eliminate the effect of taxation on the oil and gas industry. n167

( ) Alternative energy resources have not developed because of the absence of tax credits. The current subsidies are not immediately deductible and do not encourage investment in other types of energy. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola
University Chicago School of Law, Journal, 38 Loy. U. Chi. L.J. 43, Lexis) The federal government's huge investment in the petroleum industry, through both tax and other government subsidies, influenced how [*65] quickly and dramatically the United States developed into a fossil fueldriven society. Investment spurred development and consumption, resulting in exhaustion of the resource more quickly than might otherwise have occurred. In addition, other energy resources have not developed because of the inability to compete with the heavily subsidized petroleum fuel industry. This section discusses the impact and effectiveness of energy-based tax incentives for the petroleum industry over a fairly long time period, and it considers ways to use similar incentives to stimulate alternative fuels. For over ninety years, the combination of percentage depletion and the deduction for intangible drilling costs, along with more recently enacted tax incentives, has significantly lowered the effective tax rate for, and attracted substantial resources to, companies in the oil and gas industry. Deductions for the costs of exploration and production in the petroleum industry are superaccelerated as compared to other types of capital investments because amounts in excess of original cost are deducted and most other costs associated with the investment are not only recoverable, but immediately deductible. n141 These generous tax incentives were designed to defer tax liability and to encourage oil and gas prospecting and drilling along with the development of U.S. petroleum reserves. n142 Since their inception, however, the combination of percentage depletion and intangible drilling costs deductions has resulted in little or no income tax for much of the petroleum industry. n143 A mere nine years after Congress enacted percentage depletion in 1925, critics begin to characterize these deductions as tax "loopholes." n144 In 1937 President Franklin Roosevelt declared that percentage depletion was "perhaps the most glaring loophole in our present revenue law." n145

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49 Regulations/Free Market Toolbox

Tax Credits Good – Expansion Key to Alternative Energy
( ) Tax subsidies for alternative fuels are too small. The lack of action has failed to reduce fossil fuels. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

The most significant alternative fuel tax provision, the credit or deduction for alcohol fuels, which constitutes over ninety-four percent of alternative tax incentives directed at reducing gasoline use, n193 grants a subsidy to fossil fuels mixed with an alternative fuel, typically alcohol or ethanol. n194 Although the incentive ostensibly encourages more efficient fossil fuel consumption, alternative fuel use has not resulted in lower fossil fuel consumption or reduced our dependence on cars. n195 In fact, both consumption and car use have increased despite these provisions. Since 1978, when Congress enacted most of the alternative fuel provisions, the United States has invested between $ 30 and $ 33 billion in alternatives through tax subsidies. During this same period, despite decreases in oil and gas incentives, the United States invested approximately $ 106 billion in fossil fuels three times what it spent on alternative fuels. n196 This kind of differential, not surprisingly, undercuts the likelihood of achieving successful results for alternative fuel technologies. To date, the tax subsidies for alternative fuels are too small, and they fail to target the real problem: fossil fuel dependence. Alternative fuels have the potential to reduce petroleum consumption, reduce greenhouse gas emissions, and produce significant energy savings. Therefore, under a long-term strategy, moving to alternative fuels represents an intermediate step in the right
direction. Unfortunately, several recent studies indicate that even with increasing purchases of alternative fuel vehicles by federal agencies, state governments, and private consumers, "alternative fuel use in the transportation sector remains very small." n197

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50 Regulations/Free Market Toolbox

Tax Credits Good – Solve Oil Dependence
( ) Petroleum companies have been granted tax relief 6.5 times higher than the maximum rate applicable to general businesses. This system can be reversed and will have astronomical effects. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

An early Treasury Department study indicated that percentage depletion reduced the taxable gross income of the petroleum industry as a whole by approximately 25.3%, even taking into account the 50% net income limitation in place prior to 1990. n146 The study also revealed that percentage depletion exceeded cost depletion by approximately 95.7% [*66] of the total depletion allowable. n147 Other studies show that intangible drilling costs account for
seventy-five to ninety percent of the costs of drilling. n148 A nationwide survey taken between 1948 and 1955 indicated that IDCs averaged slightly less than seventy percent of total gross income from production. n149 Therefore, the IDC deduction alone appears to have had the effect of reducing the marginal tax rate by more than half. Another tax return study using samples from leading corporations in selected industries for the period between 1938 and 1961 indicated that oil and gas producers earned higher rates of return than integrated petroleum companies, manufacturing companies, mining companies, and all other industry, with a rate of return for oil and gas producers ranging from three to twenty-two percentage points higher. n150 After 1969, when Congress reduced the percentage depletion rate to twenty-

the combination of the percentage depletion and IDC deductions reduced the total tax liability for petroleum and oil producers by approximately forty-six percent, 6.5 times higher than the maximum rate applicable to the general business credit available at the time. n151 Throughout the 1980s and 1990s, tax rates for oil and gas producers continued to be lower than rates for other industries. n152
two percent, one report estimated that

( ) Tax credits have a direct effect on consumption – the tax relief granted to petroleum companies prove. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

[*67] The increased profitability and reduced marginal tax rates of the petroleum industry reduced production costs, increased investments in petroleum exploration, accelerated oil and gas extraction, and caused rapid depletion of energy resources. n153 Specifically, "relatively low oil prices encouraged petroleum consumption (as opposed to conservation) and inhibited the development of alternatives to fossil fuels, such as unconventional fuels and renewable forms of energy." n154 One early study analyzing resource allocation from 1959 to 1971 concluded
that federal tax policies significantly affected investment in crude petroleum reserves. n155 The same study also indicated that the percentage depletion allowance was not cost-effective in increasing reserves when compared to the alternative policy of having the government purchase additional oil reserves directly. n156 The

effect of these tax benefits can be directly related to increased consumption. Several recent reports have quantified the tax benefits to the petroleum industry as reflected through lower gasoline prices to consumers. n157 These estimates conclude that tax subsidies reduce the price of gasoline by 1.5 to 7 cents per gallon. n158 Lower prices translate into additional consumption, rather than conservation, of gasoline by consumers. Because energy policy is made in a political setting, it rarely comports with principles of
economic or public finance theory, and "more often than not, energy tax policy may compound existing distortions, rather than correct them." n159 In 1920, oil and gas production comprised sixteen percent of total U.S. energy production. By 1970, the nation's peak production year, petroleum [*68] production constituted seventy-one percent of total U.S. energy production. n160 Policy makers have justified the differential tax treatment of the petroleum industry on several grounds: (1) to adjust for the high risk associated with the oil and gas industry and encourage investors to provide the significant up-front capital needed to develop this valuable commodity; (2) to encourage conservation of the oil and gas reserves and prevent waste of our limited oil reserves; and (3) to maintain our productive capacity in oil reserves for national defense purposes. n161 While other reasons for preferential tax treatment are also advanced, these three reasons are the most commonly used to justify percentage depletion and the IDC deductions. n162

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Tax Credits Good – Laundry List
( ) Tax incentives are cheap and will result in massive energy conservation – this will increase the likelihood of investment into alternative energy. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Unfortunately, Congress only extended the provision for two years in the 2005 legislation. n211 Since the Reagan era, all of the energy tax legislation enacted by Congress has continued to provide tax relief for the oil and gas industry, with only modest incentives for conservation and alternative fuels. n212 For example, in the most recent 2005 Energy Tax Act legislation, fossil fuel subsidies accounted for more than twothirds of the total tax expenditures provisions for energy. n213 The various tax incentives available for conservation and renewable technologies represent a small fraction when compared with the country's enormous investment in fossil fuels and its infrastructure.Yet the potential for improved energy efficiency in the United States is immense. n214 One report states that with existing cost-effective energy efficiency improvements, electricity demand could be reduced by eleven to twenty-three percent below projected levels for 2010, and possibly up to thirty-five percent by 2020. n215 In fact, data on energy [*77] efficiency and conservation activities from 1973 through 1991 revealed an eighteen percent reduction in energy use from previous projections, saving about $ 150 billion annually in total domestic energy expenditures. n216 In terms of environmental quality, one study estimated that by implementing a number of recently proposed conservation programs, annual carbon emissions would be reduced by about 3.5% and nontransportation energy consumption would be reduced by about 6%. n217 Energy efficiency policies, which address the demand side of the energy equation, are an inexpensive means to address the environmental and national security problems associated with fossil fuel use. The energy savings alone typically cover the cost associated with the policy change.Tax incentives can help increase the market for new energy efficient products by reducing their cost and lowering the risk of production for manufacturers. n218 As a result of tax incentives, the public benefits from lower energy use, environmental quality improvements, and enhanced energy security. n219 One study estimated that tax incentives for new energy efficient homes, energy efficient upgrades to existing homes, and energy efficient upgrades to new and existing commercial buildings could save eleven quadrillion Btus of energy through 2025, ultimately saving consumers over $ 88 billion during the same period. n220 On the positive side, the government's cost to implement the tax incentives included in the 2005 Energy Tax Incentive Act is far less than it will realize from the energy efficiency improvements, not including the cost savings from environmental quality improvements. n221 Moreover, tax deductions and credit for energy conservation could significantly increase the likelihood that individuals and businesses will invest in alternative fuel technologies. n222 To the extent that policy [*78] makers are able to identify incentives that encourage environmentally sound behavior and result in both environmental and monetary savings, Congress must be more proactive in adopting such incentives.

( ) Tax credits are necessary – multiple reasons. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

The federal government has used tax incentives to effect social, economic, and political goals since the inception of the income tax. The use of such targeted tax incentives violates principles of tax neutrality when they deviate from the generally accepted structure of an income tax. n13 In essence, such tax incentives implement government policy [*47] apart from any revenue-raising impact, which is the purported function of the tax system. The advent of the tax expenditure budget in the 1970s forced policy makers to quantify these "tax subsidies," thereby increasing their transparency. n14 Since the early stages of the fossil fuel industry's development, the federal government has implemented tax incentives to promote the industry. Federal incentives targeting the energy industry have been justified on several grounds: (1) to encourage oil and gas production and exploration during the initial stages of development; (2) to compensate for the value differential of an activity between the private sector and the public sector; n15 and (3) to overcome the risks and hazards associated with producing oil and gas. n16

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52 Regulations/Free Market Toolbox

Tax Credits Good – Laundry List
( ) Tax credits have multiple benefits – none of them are being seen in the squo because the government over allocates them to fossil fuel producers. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Since the 1970s, policy makers have employed energy taxes and subsidies to help alleviate a host of problems: declines in production, increases in demand, oil embargoes, oil price and supply shocks, wide petroleum price variations and price spikes, rising oil import dependence, and increased evidence of the seriousness of environmental problems associated with fossil fuels. n55 The Energy Tax Act of 1978 was Congress's first attempt to encourage energy conservation and development of alternative fuels through tax provisions. n56 Although the government's new environmental legislation and its regulations on pollutants enacted during the 1970s were groundbreaking, these "environmentally friendly" tax incentives are inconsequential when compared with the federal investment targeted at fossil fuel exploitation. The overwhelming majority of energy tax incentives continue to support businesses that extract, produce, and transport nonrenewable resources. Although federal support is slowly increasing, industries involved in developing renewable energy do not receive the government assistance and commitment that the fossil fuel industries have enjoyed.

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53 Regulations/Free Market Toolbox

Tax Credits Good – Laundry List
( ) Tax incentives can be very effective in expanding the alternative energy market – petroleum industry proves. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Despite rhetoric claiming a commitment to the development and implementation of alternative and renewable energy and to overcoming our devastating oil habit, the numbers tell the truth: to date, Americans have only dabbled in alternatives. Tax incentives enacted to encourage alternative fuels are too small and do little to change the infrastructure that supports nonrenewable fuels. Put simply, the incentives are insignificant and fail to address the real problem - dependence on fossil fuels. On the other hand, the same tax incentives that subsidized fossil fuels fifty years ago still do so today. This combination of provisions, by and large, has been ineffective in solving any of the problems associated with fossil fuel dependence. Though Congress has limited fossil fuel subsidies somewhat over the years and enacted a few "environmentally friendly" tax subsidies since the 1970s, policy makers, hampered by politics, are slow in formulating a long-range plan for dealing with fossil fuel dependence through tax policy or elsewhere. Policy makers must focus on identifying features of the various tax incentives that correlate positively with their goals: stimulating alternative fuel technology, promoting investment in and public acceptance of renewable energy sources, conserving energy, and increasing efficiency of traditional energy technologies. Carefully crafted tax incentives are a vital tool that can assist policy makers in moving the nation toward a sustainable energy future. The effectiveness of energy tax incentives used to develop the petroleum industry reveals a number of important lessons that should be considered when formulating incentives to develop alternative energy sources. n223 Promoting the commercialization of advanced technologies and assisting their establishment in the marketplace can be facilitated through tax incentives. n224 Policy makers should prioritize developing those technologies that will have the most significant impact in reducing energy use and greenhouse gas emissions. To be most effective, incentives should be substantial enough to overcome barriers to market entry and target technologies where the primary obstacle to development is the initial cost. Governments also need to be flexible in [*79] terms of who receives incentives and must allow adequate time before eliminating them. Finally, tax incentives need to be incorporated into a comprehensive mix of policy instruments, operating in harmony with other initiatives. The Energy Tax Incentives Act of 2005 has both succeeded and disappointed based on these criteria. First, the vast majority of its tax incentives will expire at the end of 2008. n225 To be most effective, the incentives should be left in place for at least a ten-year period. n226 Because these new incentives will expire within a short time, individuals and businesses that might have utilized the credits may not even know they are available before the credits are phased out. Even taxpayers interested in investing in new technologies subject to the incentives may have difficulty finding those technologies in the market. Additionally, some of the most cost-efficient and energy-efficient tax credit proposals were not enacted. For example, a ten-percent credit for Combined Heat and Power Systems, which
has an estimated benefit-to-cost ratio of 3:1, was not enacted. n227 On the other hand, the $ 2 billion the government is spending on energy efficiency tax incentives will save 2.5 quadrillion Btu, or about two percent of projected energy use in 2020, will reduce energy bills by more than $ 20 billion, and will reduce carbon dioxide by about fifteen million metric tons, n228 making it apparent that energy-saving tax measures can produce significant cost savings and contribute to environmental improvements.

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Tax Credits Good – Tax Revenue
( ) Governments prefer tax credits because they maximize tax revenues and can selfsustain further environmental projects. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

Svendsen argues that state governments prefer green taxes because of the ability to maximize tax revenues. n85 Nordic green taxes in the 1990s taught policymakers that it can be difficult to net substantial revenues through green taxation. Governments should consider the ability for even relatively small amounts of revenue to selfsustain further environmental projects. In other words, revenue from green taxes can be recycled back into projects that further environmental protection. The political success of trading permit schemes should not be overlooked. The environmental success of trading schemes in the United States has encouraged several other governments to choose permit trading over green taxation. For many governments, green taxation is an uphill battle against the powerful forces of industry, a battle potentially not worth fighting. n86

( ) Tax credits can generate government revenue and increase the economy. This would help accelerate efforts on the environmental front. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

Green taxes may be used to punish polluters. The general principle of increasing taxes on "bads" (e.g. polluting, smoking) and decreasing taxes on "goods" (e.g. labor) n93 was first adopted by the OECD in [*428] 1972. n94 Environmental agencies across the globe use this underlying principle as a reason for implementing green taxes. n95 Countries including Sweden, Norway, Finland, Denmark, and the Netherlands have attempted to shift the tax burden of labor and capital to the use of environmental resources through the implementation of green taxes. n96 Green taxes are also often designed to change behavior. Taxes must be set high enough to "make it attractive for customers to use more
environmentally benign products and practices." n97 For example, in 1989 the U.S. Congress introduced a federal tax on Ozone Depleting Chemicals. Initially the tax on chlorofluorocarbons (CFCs) was $ 1.37 per pound, approximately twice the then-current product price. n98 By 1995, the federal tax was $ 3.10 per pound. n99 The Federal Government simultaneously introduced the Clean Air Act, which put a cap on most CFCs with a phase-out in 2000. Nevertheless, many analysts believe that the tax, not the cap, is responsible for U.S. ozone gas reduction. n100 Similarly, policymakers can use green taxes to channel good behavior and influence the choice

governments may want to discourage the use of exhaustible natural resources and provide more attractive alternatives through the use of the tax system. n101 Governments may also use green taxes to generate revenue. Governments may choose to use the resulting revenue to pay for damages created from past pollution or for measures to reduce future pollution. For example, of the thirty-two billion pounds generated by U.K. environmental taxes in 2001, fourteen percent purportedly was allocated to environmental projects. n102 Tax shifting describes the economic theory that by combining a significant pollution tax with a major restructuring of the national tax system, government can make the overall economy more efficient. [*429] This theory often arises in conjunction with raising revenue. In the early 1990s, many scholars suggested that governments could eradicate unemployment by implementing high environmental taxes. The debate was most vigorous in European countries with strong environmental political parties and high unemployment. n103
of resources used. For example,

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55 Regulations/Free Market Toolbox

Tax Credits Good – Income Adjustments
( ) Tax credits good – they can be income adjusted and class-effective. Mann 2k (Roberta, Associate Professor of Law, Widener University School of Law, Arizona State Law Journal, Lexis)
The home mortgage interest deduction serves primarily to subsidize the shelter of middle to upper income Americans who are willing to purchase residences. As shown above, the home mortgage interest deduction has a strongly regressive effect. n277 At the other end of the spectrum, a series of direct spending programs provide shelter for lower income Americans. n278 In [*1394] 1972, Henry Aaron noted that the United States has no housing strategy. n279 Henry Aaron evaluated six groups of Federal housing policies: (1) housing subsidy through the Internal Revenue Code; (2) federal mortgage insurance and loan guarantees; (3) federally sponsored financing instruments; (4) "public housing[;]" (5) "special assistance through mortgage markets[;] and" (6) "aid to residents of rural areas." n280 He reserved his harshest criticism for the Internal Revenue Code, stating that "with respect to any conceivable policy objective, the pattern of tax benefits seems to be capricious and without rationale." n281 As a more equitable alternative to the existing policies, Henry Aaron proposed a "Housing Assistance Plan," which would provide "rent" certificates to renters and homeowners making monthly mortgage payments. n282 The payments would be tied to actual housing outlays. n283 More recently, Professor Peter Dreier has proposed eliminating the home mortgage interest deduction and replacing it with a refundable homeowner tax credit. n284 The

tax credit would be organized along the lines of the earned income tax credit for low wage earners, and would be administered by the Internal Revenue Service. n285 Peter Salsich notes that the housing benefits of such a tax credit could be expanded to include renters by allowing a credit against taxes for a percentage of housing costs, not just mortgage interest and property tax payment. n286 The shelter credit, as outlined below, would encourage home ownership for all Americans, while discouraging sprawl. Tax credits, unlike itemized deductions, benefit the relatively low income taxpayers who take the standard deduction as well as the relatively higher income taxpayers who itemize deductions. The proposed shelter credit would have two components, a base amount and a location efficiency premium ("LEP"). The base amount of
the credit would be designed to encourage purchase of a median-priced home, in contrast to the home mortgage interest deduction, which provides an increasing

Limiting the benefit of the credit to the more modest median home ensures that wealthier taxpayers do not get the lion's share of the credit. Limiting [*1395] the benefit of the credit to the more modest median home also eliminates an incentive to sprawl development--the government would no longer subsidize the
benefit for increasingly expensive homes. purchase of larger homes on larger lots. The base amount of the credit would be determined by multiplying the median national home price by the annualized longterm tax exempt interest rate, and then multiplying that product by the lowest marginal tax rate. n287 The base amount of the credit will thus approximate the amount of tax benefit that would be derived from interest payments on the average home under current law, if the taxpayer did not have to itemize to get those benefits. If structured as a refundable tax credit, the Federal shelter credit would not only reduce or eliminate federal income tax liability, but would also pay cash to homeowners if the Federal shelter credit exceeded the tax they owed. n288 The amount of the credit would be capped at the actual housing cost paid by the taxpayer, n289 and

LEP component of the shelter credit would reduce sprawl by increasing the amount of the shelter credit for homes located close to public transportation. The LEP would be based on calculations similar to those done by John Holtzclaw in his analyses of location efficiency. n291 Because the
could be phased out at higher income levels in a similar manner to the phase out of itemized deductions. n290 The [*1396] LEP reflects the additional value represented by the accessibility of the home to public transportation, it would create an incentive for home buyers to purchase transit accessible homes, which are generally located close to the urban core. n292 Encouraging home buyers to seek homes close to available transportation will reduce sprawl development, which is characterized by low density and automobile dependence. n293

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56 Regulations/Free Market Toolbox

Tax Credits Good – Cost Competition
( ) Renewable energy is not cost-competitive – tax credits are key to stimulate R & D. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Studies evaluating the effectiveness of tax incentives in stimulating the alternative fuel technology industry confirm that such incentives, or equivalent measures, are necessary to the industry's development. Entering into the current energy industry with its deeply entrenched fossil fuel infrastructure presents potential investors in alternative and renewable fuels with difficult barriers. Without federal tax incentives, which make prices competitive with conventional fuels, no markets would exist for alternative energy sources like alcohol fuels, and the result is no capital. n9 Alternative energy sources have the potential to reduce petroleum consumption, reduce greenhouse gas emissions, and produce significant energy savings. To date, however, their limited use has not had a significant impact on the environment. Even with increasing purchases of alternative fuel vehicles by federal agencies, state governments, and private consumers, "alternative fuel use in the transportation sector remains very small." n10 Nor have alternative energy sources been effective in increasing the supply of oil reserves or reducing dependence on foreign imports. As long as fossil fuels remain relatively inexpensive, alternative energy industries will not be competitive. The United States must eliminate fossil fuel subsidies and invest in renewable energy before any real gains will be realized.

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57 Regulations/Free Market Toolbox

Tax Credits Good – Commercialization
( ) Tax credits will provide the government flexibility and stimulate the commercialization of advanced technologies. This will overcome barriers to entry into the market. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Tax incentives, if properly structured, can play a valuable role in moving the United States toward a sustainable energy future. A detailed analysis of the effectiveness of energy tax incentives reveals a number of guiding principles that should be used in formulating tax incentives to promote alternative energy sources. For example, tax incentives should stimulate the commercialization of advanced technologies. Such incentives must be substantial enough in the initial stages of the subsidy to overcome barriers to entry into the market. Concomitantly, tax incentives should target technologies where the initial equipment cost to either the supplier or the consumer presents the major barrier. n11 Governments also must remain flexible in terms of [*46] which industry players receive incentives and should allow adequate time before phasing out such incentives. Finally, tax incentives must form part of a mix of policy initiatives and work in complementary fashion with other strategies.

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58 Regulations/Free Market Toolbox

Tax Credits Good – Innovation
( ) Tax credits allow entities to have insurance for failed projects. This massively increases innovations and interests in research for alt. energy. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

As American dependence on fossil fuel-based technologies, such as cars and electricity, increased, so too did Congress's use of tax incentives to encourage exploration and development in the oil and gas industry. Arguing
that the United States must do all it can to encourage the search for more oil, including more tax incentives, one 1958 government article, written by an official at the Pure Oil Company in Chicago, stated, "A large part of the credit for the high standard of living in the United States may be attributed to a healthy oil industry. It not only provides employment to millions of people directly, but it is one of the largest customers of ... other industries which employ additional millions merely to keep the oil industry supplied." n17 By the early 1970s,

the federal government realized that the domestic supply of oil was fixed and relatively determined while the nation's increasing demand for oil showed no signs of slowing. The
justification for continued fossil fuel tax incentives had changed from support for a [*48] fledgling industry to price support for American fuel demands. n18 The

For almost 100 years, two very important tax incentives have been available for businesses that explore for and produce oil and gas: (1) the percentage depletion allowance and (2) the deduction for intangible drilling costs. Similar to depreciation of a tangible
next two sections discuss those tax incentives used to promote the energy industry, their justifications, and their effectiveness. asset, the depletion allowance provides for cost recovery of an owner's mineral investment. n19 Such cost recovery recognizes the wasting nature of the mineral deposit as it is extracted from the ground. Typically, the purchase price of the property, discovery costs, and development costs are included in the capital costs of the mineral investment. Two methods of depletion are allowable: cost depletion and percentage depletion. A taxpayer using cost depletion recovers the actual costs of his or her mineral investment over the deposit's producing life based on the amount of the mineral extracted each year. n20 Cumulatively, cost depletion deductions cannot exceed the original capital investment.

Congress adopted percentage depletion n21 to encourage exploration and production activities. Under percentage depletion, taxpayers are permitted to deduct a fixed percentage of the gross value of annual production. n22 Percentage depletion is computed without regard to the taxpayer's actual investment in the property. As a result, cumulative percentage depletion deductions can exceed the original investment costs. If the value of the mineral deposit exceeds the original cost of the investment, percentage depletion affords the investor a bigger tax deduction, and thus a [*49] significantly reduced tax rate based on successful production. n23 Moreover, taxpayers taking percentage depletion deductions may also take additional deductions from gross income of nearly
all of the actual exploration and development costs. In addition to percentage depletion, taxpayers may immediately deduct their intangible drilling and development costs (IDCs). n24 IDCs typically include labor, fuel, hauling, power, materials, supplies, tool rentals, drilling equipment repairs, and other items incident to and necessary for drilling and equipping productive wells. n25 Unlike similar costs in other businesses, these costs do not have to be capitalized.

In addition, the costs associated with a nonproductive well or "dry hole" (which make up about eighty percent of all wells drilled) are also deductible when incurred and can offset other sources of income. n26 If the taxpayer chooses to capitalize these costs, they can be recovered through depletion or depreciation deductions. n27 The percentage depletion allowance and the intangible drilling cost deduction account for the most significant federal investment in the fossil fuel industry.

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Tax Credits Good – Better Than Command & Control
( ) Tax credits are better than command and control – three reasons. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University
of Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

Economic incentives (EIs), on the other hand, have become increasingly popular around the globe. The Environmental Protection Agency (EPA) has adopted a broad definition of EIs as "any instrument that provides continuous inducements, financial or otherwise, to encourage responsible parties to reduce their release of pollutants or make their products less polluting." n69 As such, EIs include tradable [*423] permit schemes and green taxes. EIs have a number of advantages over traditional CAC regulation in controlling GHG emissions. n70 First, EIs encourage polluters to "reduce pollution below permitted amounts when it is relatively inexpensive to do so." n71 Second, EIs promote technological innovation. Polluters will be willing to spend resources on alternative energy sources, for example, when economically efficient. n72 Third, EIs are better suited to cover a wide range of polluters, large and small, because EIs do not demand the amount of enforcement required by CAC regulation. n73

( ) More ev. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

In his book, Public Choice and Environmental Regulation, Gert Ting-gaard Svendsen of the Aarhus School of Business in Denmark discusses the general attitude of private industry, state government, heavily regulated industry, and environmental groups toward the options for emissions regulation. n81 Svendsen reports that private industry generally supports permit markets. n82 Permit trading schemes are more flexible than CAC regulation, which does "not readily adapt to changing economic conditions, and therefore, does not embrace new technological solutions." n83 Green taxes are rigid and may be arbitrarily set, while permit markets allow the market to set prices. Moreover, private industry particularly supports grandfathering schemes that effectively make it more difficult for future competitors to enter the industry. n84

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60 Regulations/Free Market Toolbox

Tax Credits Good – AT: Economically Infeasible
( ) Tax credits are the most economically prosperous – studies and effects prove. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

While green taxation can provide government with a revenue source, the amount of revenue will be a function of the level of tax and administrative costs. n339 The days of the golden double dividend appear to be gone. Economic models suggesting governments could eradicate unemployment with sufficient green taxes did not stand up in the real world. n340 That said, existing green tax regimes suggest it is entirely possible to simultaneously reduce other "bad" taxes. n341 Also, governments may choose to recycle some tax revenue back into environmental projects. n342 Such systems reflect sound policy choices because, in essence, the environment receives a double dividend. Naturally, government must spend sufficient resources in determining the appropriate level of tax and where to appropriate any resulting revenue. In some cases, administrative [*458] costs can be greater than the tax assessed and thus provide a negative source of revenue, a result to be avoided. Since permit trading schemes allow polluters to purchase extra allowances, some polluters will continue doing business as usual. As such, environmentalists criticize some trading schemes for creating "hotspots" (areas in which GHG emissions remain strong). n343 For instance, environmental groups have called for stringent mercury regulation in the United States and have argued that mercury is too great a health hazard to be an appropriate candidate for market-based regulation, which can result in uneven enforcement and protect some populations more than others. n344 Taxation on GHGs is also market-based and simply provides a price incentive for firms to decrease GHG emission and can, theoretically, result in hotspots. n345 Recent studies suggest permit trading schemes are more likely culprits. Grandfathered permit schemes are especially likely to create this negative public health effect because entrenched industry is favored and thus may be allocated enough permits to cover its prior emissions levels. These established industries are also quite likely to reside in the same geographical area for reasons having to do with available resources or the history of development. Further scientific discovery will answer whether carbon dioxide and other greenhouse gases lead to such hotspots. Carbon taxation may also make more sense in economic terms than the alternative permit trading system. There is enormous uncertainty regarding the costs and benefits of carbon abatement and, therefore, "it can make a big difference whether you regulate by quantity (that is, caps) or with price (that is, with taxes)." n346 Economists argue that the per-unit benefits of carbon abatement change little relative to the amount of the overall carbon dioxide in the Earth's atmosphere. n347 Conversely, the per-unit costs to factories and utilities change a lot. n348 Therefore, economists reason the tax is preferable to a trading system because the tax, theoretically, can be set at a rate that can never greatly exceed the benefits. n349 (Extensive research would be required to achieve the correct tax rate.) The trading system, on the other hand, [*459] depends on a volatile market with much less certainty. n350 In other words, "a reasonable carbon tax would never impose unreasonable costs on the reduction of carbon emissions, but a quantity target could" n351 and "preserving the cap at all costs is simply not worth it." n352

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61 Regulations/Free Market Toolbox

***Tax Credits Bad

Gonzaga Debate Institute 2008
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62 Regulations/Free Market Toolbox

Tax Credits Bad – Not Cost Competitive
( ) Tax credits have been implemented on a large scale in 2005 – studies prove they are not cost effective and have no impact on energy production. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Congress passed the Energy Tax Incentives Act in August 2005. As the most significant energy legislation in many years, the Act contains tax incentives for both the fossil fuel industry and its infrastructure, as well as the alternative and renewable fuel industries. n41 Tax breaks for domestic fossil fuels constituted well over half of the government expenditure mandated by the legislation over a ten-year period. n42 As part of this Act, Congress added to the nonconventional fuels credit a production credit for qualified facilities producing coke or coke gas. The $ 3.00 credit is available for up to 4,000 barrels of oil equivalent. The credit for these fuels extends until January 1, 2010. In addition, this credit is now part of the general business credit, thus making carry back and carry forward of unused credits available. n43 [*52] The Act also included several other incentives to stimulate oil and gas production. First, the new law increases the number of oil and gas producers that will be able to claim percentage depletion by qualifying as independent producers or royalty owners. Percentage depletion
may only be used by independent producers or royalty owners who are not "refiners." Under the old law, to avoid being classified as a "refiner," a producer could not engage in refining operations in which production exceeded 50,000 barrels on any day during the taxable year. The law now allows producers to refine up to 75,000 barrels based on average daily production and still qualify for percentage depletion. n44 In addition, the Act made certain natural gas distribution lines and electricity transmission property depreciable over fifteen years rather than thirty years, and natural gas gathering lines depreciable over seven years rather than fifteen years. n45

Congress also provided a temporary option to claim qualified oil refinery property as an expense. A taxpayer may also expense fifty percent of qualified refinery property used in the refining of liquid fuels for property if the property has a binding construction contract prior to January 1, 2008; is placed in service before January 1, 2012; and meets increased capacity requirements. n47 Ordinarily, petroleum refining assets are recovered over a ten-year period. Congress also included two new credits for investment in certain clean coal technologies. A twenty percent investment tax credit is provided for property associated with gasification of coal, including any coal handling and gas separation equipment. Additionally, a fifteen percent tax credit is now available for other advanced coal-based projects, and a twenty percent credit is available for certain certified gasification projects as well. n48 The Act also provides significant additional government investment into the existing nonrenewable energy infrastructure. Though several of [*53] these provisions are designed to encourage more efficient use of fossil fuels, a number of these incentives target exploration and development of petroleum. However, most of the available studies suggest that these tax incentives are not cost effective and have little or no impact on energy production. n49 One recent study evaluating many of the Act's tax incentives found that the estimated federal revenue loss from enacting the incentives would not be offset by revenues generated from increased oil and gas supplies stimulated by those tax incentives. n50
Geological and geophysical costs are now amortizable over a two-year period rather than capitalized as part of the cost of the oil and gas property. n46

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63 Regulations/Free Market Toolbox

Tax Credits Bad – No decrease in conservation
( ) Tax credits have not resulted in conservation nor an increase in security of foreign imports – empirics prove this method fails. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Early empirical studies of the impact of oil and gas tax incentives on resource allocation consistently concluded that these special provisions allowed the petroleum industry to maintain a higher level of private investment than it would have absent these policies. n4 However, early cost-benefit analyses of these tax incentives were inconclusive. The
earliest studies focused on the petroleum industry's rate of return on investment as compared to other industries. They reveal that tax incentives substantially increased the petroleum industry's rate of return, but they provide little information regarding the correlation between such incentives and the level of investment in oil and gas. n5 A later study by the United States Treasury Department concluded that the annual cost of the percentage depletion deduction, $ 1 billion per year for the fossil fuel

Moreover, these incentives have not resulted in conservation of the oil and gas reserve, nor have they decreased U.S. security concerns associated with foreign imports, two of the chief justifications advanced for such incentives. The General Accounting Office stated that "developing alternative fuels, increasing fuel efficiency in transportation, and continuing development of the Strategic Petroleum Reserve" would likely increase U.S. energy security more than additional oil and gas tax incentives. n8 Despite this spotty data, the United States continues its questionable practice of investing billions of [*45] dollars to facilitate exploration and production of fossil fuels. At a minimum, the government's investment in the fossil fuel industries must be reconceived as a transitional tool to be combined with increased investment in new energy sources.
industries, n6 far exceeded the annual additions to oil and gas reserves ($ 150 million) during the 1960s. n7

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Tax Credits Bad – Not meeting current goals
( ) Tax credits will not be as good as anticipated – they are not even meeting current goals. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

In one recent example, Congress enacted a nonconventional fuels tax credit to encourage production of fossil fuel from marginal sources. n174 A recent study indicated that the primary impact of this credit would be increased gas production from qualified sources. n175 Though gas production is expected to increase due to the credit, the study concluded [*70] that the impact on petroleum production and petroleum imports would be negligible. n176 The credit will likely have little or no impact on reducing our dependence on fossil fuels or foreign imports because total energy consumption continues to rise at a pace that far exceeds any energy production increases.

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Tax Credits Bad – Hard to manage
( ) Tax credits are not a good incentive – they are hard to manage and the figures exclude too many externalities. Hymel 6 (Mona, Professor of Law, James E. Rogers College of Law, University of Arizona, Loyola University Chicago School of Law, Journal, 38 Loy. U.
Chi. L.J. 43, Lexis)

Additionally, neither percentage depletion nor the IDC deduction has succeeded in their purported goal of encouraging conservation of the oil and gas reserve. n181 Petroleum is a nonrenewable wasting asset; thus, its conservation depends on the rate of use of known mineral reserves and the rate of discovering new reserves. Lowering the costs of consuming petroleum through tax incentives has made it easier to consume, encouraging waste rather than promoting conservation. n182 These incentives have also failed with respect to their other justification, improved national security. This justification rests on the argument that domestic production of petroleum increases national
security by reducing importation of foreign petroleum, which leaves the United States vulnerable to foreign governments. Domestic production contributes to the creation and maintenance of a domestic reserve in times of energy shortages and produces reserves sufficient to allow a large volume of petroleum to be diverted for military use and war [*71] production without creating a civilian energy crisis. n183 However, because domestic oil consumption continues to outstrip production, conservation of petroleum reserves and decreased dependence on oil imports remains impossible. The GAO concluded that "developing alternatives, increasing fuel efficiency in transportation, and continuing the development of the Strategic Petroleum Reserve" would likely increase U.S. energy security more than additional oil and gas tax incentives. n184 Alternative and renewable fuels have the potential to increase petroleum conservation and alleviate national security concerns, but because of their limited use to date, they have done little to increase the supply of oil reserves or to reduce dependence on foreign imports. n185 Since the inception of

the United States has spent between $ 370 and $ 391 billion in tax subsidies for fossil fuels, n186 an average expenditure of approximately $ 4.5 billion every year for the last eighty-seven years. n187 Moreover, these
the percentage depletion allowance and the IDC deduction, amounts represent the tax expenditure figure only, and do not include subsidies that directly and indirectly benefit the oil and gas industry or other externalities that are more difficult to measure. Taxpayers also support government subsidies for transportation [*72] infrastructure, energy security costs, research and development subsidies, and Strategic Petroleum Reserve maintenance costs. n188 Furthermore, these

figures do not take into account externalities that flow from fossil fuel use, such as localized pollution, agricultural crop losses and loss of visibility, planetwide environmental costs such as global warming, water pollution costs such as oil spills, noise pollution, the environmental impact of sprawl, and travel delays and subsidized parking, all of which cost Americans both money and quality of life. n189

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Tax Credits Bad – Hot Spots
( ) Credits are bad – they just create hyper-concentrated hot spots that ruin the environment. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

Moreover, the Sierra Club opposes emissions trading schemes because of resulting "hotspots." n91 In essence, because most emissions trading schemes do not put a CAC-type limit on the amount of pollution allowed from a particular source (i.e. polluters can purchase an unlimited number of permits), areas around these remaining high polluters become hotspots. The Sierra Club opposes the EPA's proposed mercury trading scheme under the Clean Air Act because "dirty plants could continue to emit high levels of mercury beyond 2018 and create mercury 'hotspots' by simply purchasing mercury pollution credits from cleaner plants." n92 Traditional CAC regulation is source specific, requiring each polluter to reduce GHG emissions. Green taxation and emissions trading schemes, on the other hand, provide economic incentives for polluters to reduce emissions but do not demand that each polluter reduce emissions. Instead, these Els focus on total reduction of emissions and as such allow industry greater flexibility in compliance.

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Tax Credits Bad – Zero Sum (Enviro and Econ)
( ) The environment and the economy are a zero-sum game with tax credits – any effective tax credit will raise serious problems with cost-competitiveness and hurt revenue. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

Big industry is sometimes a big problem for policymakers devoted to environmental taxes. Energy industry groups argue that environmental taxes hinder global competitiveness. n129 The effectiveness of this claim is perhaps most evident in the public statements by leaders of the United States and Australia in rejecting the Kyoto Protocol. n130 A survey of recent literature reveals that scholars are working to counter this fear and have suggested at least five techniques to reduce the effects from environmental taxes on competitiveness. n131 First, a country may introduce a relatively low rate of environmental tax. n132 A tax that is too low, however, will not only fail to affect competitiveness, but will also fail to have substantial beneficial environmental effects. In the words of the OECD, a tax that is too low will simply be a "revenue raising device" not an environmental tax. n133 Indeed, the EPA proposes that green taxes tend to be set too low to have a significant impact on the environment, with few exceptions. n134 Second, scholars suggest that countries may "exempt those industries or products that are exposed to international competition from the tax." n135 Many countries have used this technique, but this method "raises serious problems related to cost-effectiveness and the achievement of the environmental objective in question." n136 Third, countries may subsidize parts of industry subject to
competitive disadvantages. n137 Fourth, countries can make domestic taxes dependent on whether foreign producers competing in the same market as domestic producers are subject to similar taxes. n138 Finally, countries can offset the adverse effects of environmental taxes through a mechanism called a "border [*433] tax adjustment." n139 For example, by applying the tax to final products rather than to raw materials, a country has greater freedom to adjust the tax as the product either enters or leaves the country. n140

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Tax Credits Bad – Econ Infeasible (Permits better)
( ) Tax credits are economically infeasible – permits would be better. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis) Permit trading can oftentimes be politically achievable when industry interests have stalled green taxation. In some cases, the implementation of an environmental tax will involve enormous increases in costs to industrial polluters. n313 Therefore, these polluters will expend large sums of money lobbying politicians to reject the tax and put in its place a trading scheme. Politicians

must also answer to their constituents. Taxes can be extremely hard to sell to voters, especially outside of Northern Europe. Indeed, most policymakers have accepted that economic models promising to rid countries of unemployment and the like through the application of a green tax simply could not work in the real world. n314 Even in Northern Europe, taxes could not be set high enough to achieve such lofty goals. n315 In the case of the European Union, its own structure inhibits the implementation of a common carbon tax because it requires unanimity for fiscal measures. n316 Countries such as the United Kingdom have stood firm against a common carbon tax. n317 In contrast, a permit [*455] market is not fiscal in nature and may thus be passed by majority rule. n318 Whereas the idea of permit markets may be more politically attainable than green taxes, getting these markets off the ground can be a political struggle. n319 It is often difficult to gain agreement on the distribution of the initial assignment. For example, the EPA has yet to get political and industry agreement to implement the CAMR and CAIR trading programs. n320Permit trading is also more economically feasible for industry than green taxation. Even the most devout environmentalists must acknowledge the potential for economic damage as a result of ill-conceived green taxes. n321 Trading schemes provide greater flexibility for industry than green taxes and the market, rather than a government agency, is better able to determine the cost of cleaning up GHGs under emissions trading schemes. n322 Conceptually, trading schemes should be more economically efficient than green taxes. Governments, like industry, are also concerned about maintaining industrial competitiveness in the world market, and thus, may favor trading schemes. n323 For instance, the United States and Australia unapologetically withdrew their support for the Kyoto Protocol citing their concern that binding emissions cuts would hinder competitiveness. n324 Many politicians fear green taxes will similarly impede industry and hamper their own political ambitions. n325 In contrast, permit trading schemes are more flexible and allow industry a greater opportunity to mitigate loss. n326 Less cost to national industry means it can maintain its position on the global market.

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Tax Credits Bad – AT: Raises revenue
( ) Tax credits exacerbate the inefficiencies of the existing tax system. It will not have a positive effect on the economy. Harper 7 (Christina, Morgan Lewis’s Business and Finance Practice, LL.M. Commercial Law from the University of Cambridge, J.D. from the University of
Southern California Law School, 30 B.C. Int'l & Comp. L. Rev. 411, Boston College International and Comparative Law Review Lexis)

Currently, most policymakers believe that the second dividend is unrealistic. n117 The green tax, like any other tax, exacerbates the inefficiencies of the existing tax system. n118 Much of the early double dividend literature previously ignored this negative "tax interaction effect," n119 [*431] focusing only on the good aspects of carbon taxes--the reduction of carbon emissions and the ability to raise revenue that could be used to reduce existing taxes and their inefficiencies ("revenue recycling effect"). n120 However, most economists now agree that "the tax interaction effect does exist and may actually be as large as--or even larger than--the revenue recycling effect, so the double dividend argument has pretty much been ruled out." n121 For this reason, the first
dividend--the promise of a cleaner environment--must be the driving force behind green taxes. While this may be a harder sale, the onset of the Kyoto Protocol has made countries more amenable to the possibilities of carbon and energy taxes. Although taxes may not be set high enough to eradicate unemployment, revenues from green taxes can be recycled back to at least partially offset "bad" taxes. n122 Moreover, some of the revenues raised by green taxes may be recycled into

some Belgian green taxes are so low it costs the government more to collect them. n123 This fact alone does not necessarily make the tax inefficient. The persistence of such taxes signals that the Belgian Government has determined that the social benefits outweigh the administrative costs.
environmental projects and research. Such a program, in essence, creates a green double dividend and makes good policy sense.In an extreme example,

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***Free Market Bad – Misc

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Incentives Bad – Environmental Justice
Economic incentives fail on environmental justice issues – there’s no market incentive to care about other people

Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

However, just as economic incentives have advantages, they also have limitations. One of the most significant disadvantages is that they are often inappropriate for dealing with environmental issues that revolve around equity concerns. Many types of environmental standards are designed to protect individuals around the site of a polluting facility; in some cases the specific purpose is to protect individuals exposed to the highest pollutant concentrations. In general, people are not willing to accept higher risks to their health because it is “more economical” to reduce risks to others. There are many such environmental and health standards, including toxicity standards for air, waste management standards, and cleanup standards. For example, risks cannot be traded between Superfund sites. To do so would mean that some people would live near an unsafe site.

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Rewards Fail – Cheating
Carbon trading proves, rewards only encourage cheating, Bell 2 (Ruth Greenspan, Director of International Institutional Development and Environmental Assistance at Resources for the Future,
http://www.emissierechten.nl/climate_change__monitoring_inter.htm)

What does this mean for protecting the world from global warming? The dazzle of trading, and its undeniable benefits, should not blind policymakers to the need for fashioning a reality-based system with real greenhouse gas reductions. They must be sure that the rewards from trading do not tempt traders to manipulate the system for their own enrichment. This requires countries in the developing world and
countries in transition to develop institutions that can control emissions and expose cheating before, during, and after trades are made. The role of the developed world must be to face this challenge the old fashioned way--by providing assistance and working patiently to develop laws, monitoring systems, and property rights, as well as respect for those requirements. The governments running the system, through the Conference of the Parties, must build confidence through an institutional structure that is capable of managing these very difficult problems. The bottom line is integrity must be developed and insured. Emissions trading clearly can save society money. But international planners must put safeguards into place now, not later, to keep the mission of traders on track with the goal of reducing greenhouse gas emissions. If international policymakers wait to act until a scandal

erupts, it will be too late. The United States, with 200 years of experience in financial regulation, has just acknowledged the urgent need to step up enforcement through the Securities and Exchange Commission. Who will be the international SEC of greenhouse gas credit trading?

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Refund Bad – Cost
Refund systems for pollutants fail – the system’s too expensive Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Deposit-refund systems appear to be most appropriate for discrete, solid commodities such as beverage containers, batteries, and car bodies that would cause environmental harm through their improper disposal. Government-mandated deposit systems for less discrete substances, like air and water pollutants, have not been attempted. One factor that limits the widespread use of deposit-refund systems is their high transaction cost. Collecting and refunding deposits on the sale of individual products such as beverage containers tends to be expensive, and additional costs are involved in collecting and returning used products for disposal.

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Subsidies Fail – Burden, Environment
Subsidies make the government pay for the polluters cost, don’t solve the environment Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Subsidies for environmental management are sometimes criticized because the government entity providing the subsidy and the taxpayer, ultimately is helping to bear the costs that should be the responsibility of the polluter. Other environmentally related subsidies, such as federal support for timber harvesting in the national forests, are also criticized because they in fact have proven harmful to the environment. Nonetheless, subsidies have become a fairly common tool to manage the environment at every level of government.

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Subsidies Unpopular
Subsidies politically unpopular Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Subsidies often are politically popular. In contrast to taxes, they transfer funds to specific targets within the private sector where incentives for conservation, recycling or pollution control currently are lacking. Consequently, subsidies may be most useful in situations in which targeted assistance is essential and other policy approaches would be politically unacceptable or ineffective.

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Incentives Bad – AT: Their Evidence
( ) Their offense for incentives isn’t reflective of the way they’re actually implemented – in the real world, incentives are counterproductive for environmental protection Stephen M. Johnson, Associate Professor of Law, Walter F. George School of Law, Mercer University, Winter 1999, Washington & Lee Law Review, 56 Wash & Lee L. Rev. 111
Supporters of these market-based approaches cite dozens of studies which suggest that market-based approaches can reduce pollution control costs n36 and which provide equivalent or better environmental protection than command and control regulation. n37 Despite the rosy predictions, market-based reforms have not been implemented in the manner advocated by economists, participation in market-based reforms has been marginal, and the reforms are not generating the substantial cost savings that economists predicted. n38 Nevertheless, even if market-based approaches delivered all of the benefits that economists predict, governments should proceed down the economic path with caution because market-based approaches could exacerbate existing problems of environmental injustice.

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***Free Market Good

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Voluntary Best – Motives
Voluntary measures best; command-and-control forces businesses to use outdated methods Marzulla 98 (Roger, former head of the U.S. Justice Department's Land and Natural Resources Division,
Environment & Climate News, Sept 1, http://www.heartland.org/Article.cfm?artId=13827) Cohen: Do you consider voluntary self-audits a good idea? Marzulla: Self-audit and voluntary compliance are the only way to keep the environment healthy. If the bureaucrats at EPA are right--and everybody in America really wants to contaminate our water and air--no federal program is going to stop it. But Americans are a law-abiding people who, moreover, don't want polluted air or water. EPA enforcers, like the holdover KGB hard-liners in Moscow, are completely out of step with what is going on in the country. Ironically, by insisting on punctilious compliance with mind-numbingly complicated regulations under threat of fine or imprisonment, they force people to forego environmental protection measures that are better than the ones drafted 15 or 20 years ago in Washington. You wouldn't use a 20-year-old manual to operate your new car or computer--so why use outmoded rules that have little to do with modern processes and technologies?

Incentives best – harness natural motives for public health, environment, economy Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Economic incentives have a singular advantage over traditional forms of regulation: they harness the force of the marketplace to reduce environmental and health risks. While this feature does not make economic incentives applicable to every source of pollution, market forces often can operate where traditional regulations would be ineffective. Sources of pollution include point sources such as discharge pipes and stacks; area sources such as factories and storage areas; and non-point sources such as streets, farms, and forests. In a traditional regulatory system, owners of many of these sources have an incentive to comply i.e., avoidance of enforcement actionsbut releasing pollution has no economic cost to the owner. Consequently, owners of these sources of pollution (hereafter referred to as “sources”) normally have no incentive to do more than the regulations require, whether it is a limit on emissions or on the use of a specific technology. With market incentives, sources of pollution can see an economic value in reducing pollution because doing so saves them money. Consequently, the difference between a traditional regulatory system and economic incentives can lead to several public health, environmental, and economic benefits.

Voluntary programs spur innovation, solve nation-wide Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Voluntary programs have also become a major environmental management tool at EPA over the past decade. The Agency now manages dozens of such programs, many of which have led to measurable reductions in pollutant emissions. In some cases EPA’s voluntary programs have given U.S. companies an incentive to develop less polluting products, like computers and household appliances, the sale of which reduces pollution in every part of the country.

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Voluntary best – pilot programs
Voluntary programs offer a litany of benefits, key to pilot programs Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

An important new trend in environmental management is the use of voluntary programs to accomplish the goals of environmental protection. This trend involves implementing methods to cut waste, conserve materials, and improve efficiency— outcomes that increase the value added by business, improve competitiveness, and reduce pollution. Voluntary programs are an important addition to the more marketbased incentive measures discussed elsewhere in this report. While the market-based programs offer financial and other closely related incentives to encourage firms and individuals to reduce pollution, voluntary programs offer less tangible rewards such as public recognition and access to information on ways to reduce pollution at low or no cost. Governments promote voluntary initiatives for a variety of reasons, including the pilot testing of new approaches and the absence of legislative authority to establish mandatory programs. As such, many voluntary programs offer unique approaches to environmental management.

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Voluntary Best – Empirics
Energy Star proves voluntary programs solve Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Working with equipment manufacturers, the U.S. Department of Energy (DOE) and EPA are using Energy Star labels to promote highly energy-efficient products. Collaborations formed with DOE are also facilitating the development of initial markets for advanced technologies, for example, by encouraging largevolume purchases. These purchases help reduce manufacturing costs through economies of scale in initial production. More than 1,200 manufacturers now offer Energy Star products in over 30 commercial and residential product categories such as air conditioners, heating systems, and exit lights. These products are featured in over 4,000 retail stores. In 1999 alone, consumers purchased more than 100 million EPA-labeled Energy Star products, saving over 25 billion kWh of energy.

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Voluntary Best – Industry Bonds
Voluntary measures strengthen industry bonds, constructive dialogue Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Voluntary agreements appear to contribute to constructive dialogue among groups that normally act as adversaries. Voluntary agreements also provide for more opportunity for stakeholder participation than the status quo does. With improvements in administrative, monitoring, and participatory procedures, voluntary agreements could become an important element of the U.S. strategy for improving the cost effectiveness of environmental management. Unilateral, industry-led voluntary agreements can suffer from what is termed
the "free rider" problem. Such agreements provide benefits in the form of publicity and goodwill for all members. Members of an industry association may join a voluntary agreement, yet take minimal actions to comply. Members can also choose not to

join the voluntary agreement, but they can still benefit from the actions of those who have joined.
Understandably, an association would be reluctant to eject members, since it depends on dues from them to survive. Thus, free-riding may be a significant problem from the point of view of truly motivating participants to join unilateral agreements. This problem was evident in the STEP program of the American Petroleum Institute (API). In this case, several API members joined STEP, yet they failed to follow through with all of its provisions.

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Incentives Best – Business and Labor
Voluntary programs provide a litany of benefits to business and labor Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

There are a number of reasons why voluntary reductions in pollution are proving more and more popular with sources, and they are related to the incentives associated with information disclosure. When sources voluntarily reduce pollution and their employees, neighboring communities, and customers learn about it, sources gain several benefits. Voluntary actions taken by sources often reduce employees’ exposure to harmful pollutants, thus lessening sources’ liability and improving their relationship with labor. Sources enjoy better relations with neighboring communities, and a reputation for good environmental stewardship may attract more customers for their products. In some cases, sources also save money by taking these actions. Moreover, sources that join voluntary partnership programs can be eligible for various kinds of technical assistance from sponsoring government agencies. For example, they can receive free information on the cost and availability of energy-efficient technologies.

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Incentives Best – Laundry List
Incentives better that command and control – multiple warrants Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

The Report also concludes that economic incentives for environmental pollution control: • Provide a unique contribution to environmental management--In many cases incentives generate benefits beyond what is possible with traditional regulations; sometimes they are applied where traditional regulations might not be possible. They are particularly useful for small and geographically dispersed sources. They can also provide impetus for technological change. • Provide cost savings relative to traditional regulatory approaches–Demonstrated theoretically, based on at least 40 studies. One study estimates potential savings of widespread use of economic incentives could reach $45 billion annually. On a practical level, acid rain trading savings are at least $700 million annually. • Have wide applicability to specific environmental problems–Although a wide variety of incentives are available, any particular one may be effective in managing only a fairly narrow range of problems. The report suggests which incentives are most useful for what problems. Economic incentives are expected to be particularly useful in controlling pollution not subject to regulation For instance, citizens can be encouraged to reduce curbside solid waste by recycling, composting and other means if there is a disposal charge based on the volume of solid waste.

Incentives better than regulations – multiple warrants Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Clearly, economic incentives have several advantages that make them attractive environmental management tools. When properly designed and used in appropriate circumstances, they can achieve environmental results beyond those of traditional regulations, they can achieve those results at lower costs, they often can do a better job of controlling large numbers of small sources, and they provide a valuable spur to technological innovation.

Incentives better than regulations – multiple warrants Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

In some instances it is difficult to quantify the reductions in pollutants or the improvements in human health and environmental quality that result from the use of specific economic incentives. However, there is little doubt that such incentives are providing a new and unique element to environmental management in the United States. In many cases, incentives are generating health and environmental benefits beyond what is possible with traditional regulations, and sometimes they can be applied in situations where regulations might not be possible at all. It is difficult to imagine, for example, the public supporting a regulatory system that mandated reductions in household waste, but household wastes are declining significantly in communities that charge for waste collection based on the amount generated.

Incentives better – innovation, cost, tech Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf

Market-based or incentive approaches, by contrast, provide rewards for reducing pollution (and, conversely, assign penalties for releasing pollution). The rewards may or may not be financial. In contrast to the traditional regulatory approach, an incentive based regulatory strategy gives sources great flexibility in selecting both the type and magnitude of their response and gives them incentives to develop new and cheaper strategies and technologies to control pollution.

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Incentives Best – Results
Incentives allow a greater reduction in pollution than regulations Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

First, economic incentives in some circumstances can be structured to achieve larger reductions in pollution than would result from traditional regulations. For example, a program that allows trading of pollution reduction obligations among sources may be able to require greater reductions in pollution than a similar program that does not use trading. Pollution charges or voluntary pollution prevention programs could encourage sources to reduce emissions below permitted amounts.

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Incentives Best – Cost
Low compliance costs drive markets to reduce achieve better results Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Second, economic incentives often can control pollution at lower costs than can traditional regulations. By setting standardized emissions, product, or technology requirements, traditional regulations do not usually take into consideration the different costs of compliance faced by different sources. But in an incentive system, the marginal costs of controlling pollution play an essential role. When emission allowances or credits can be bought and sold by the sources, the sources that have relatively low costs of pollution control will reduce more pollution than sources that have relatively high costs of pollution control. Thus, when economic incentives are used, goals of reducing pollution whether applied over a facility, an industry, or the nation as a whole will be achieved at the lowest cost as determined by market forces. One study done for the EPA (Anderson. 1999) estimated that the potential savings from widespread use of economic incentives at the federal, state, and local level could be almost one-fourth of the approximately $200 billion per year currently spent on environment pollution control in the United States.

Incentives more cost-effective than regulations Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf

Economists have long understood that economic incentives have the potential to reduce pollution at a cost below that imposed by traditional regulations. The national experience of using economic incentives over the past decade reinforces this point of view. In some cases, it is difficult to quantify the costs imposed by a particular incentive. In other cases, the hoped-for cost reductions do not materialize to the extent expected. However, in general, it is clear that economic incentives do provide the opportunity to achieve any given level of pollution control with substantial cost savings. Evidence supporting the lower costs of economic incentives is both theoretical (derived from models) and empirical (based on the results of operating programs). At least 40 studies based on computer modeling of different scenarios for controlling pollution show that economic incentives should be more cost-effective than traditional regulations. One study (ICF, 1989) estimated that allowance trading in EPA’s acid rain program could result in savings to affected utilities of $700 to $800 million per year over the long term. The actual cost savings now are believed to be at least twice this amount. Other areas also offer potentially large savings. For example, effluent trading has the potential to save sources as much as $7.5 billion annually. Even if the cost savings from using market incentives are less than predicted as a result of regulatory, institutional, transactional, or legal restraints, or some combination of these factors, the actual savings undoubtedly are still significant.

Incentives that allow for trading are cost-effective Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Economic analysis indicates that incentive mechanisms can often increase the cost effectiveness of pollution control relative to traditional regulatory approaches. Several reasons exist for this conclusion. First, some incentive-based mechanisms explicitly allow the trading of pollution allowances or pollution reduction credits. By trading credits or allowances, sources with high incremental costs of pollution control can have their obligations satisfied by sources with low incremental costs of pollution control. Other incentive-based mechanisms levy a charge or tax on each unit of pollution. Under such an approach sources would control pollution only to the point at which the incremental cost of control equaled the charge or tax. In an ideal world that did not have transaction costs and competitive markets, both permit/credit trading and pollution
fee, charge and tax approaches should result in the same marginal cost of controlling pollution at each source. In such an idealized world of economic incentives, control costs should be lower than (or, at most, the same as) the costs associated with a traditional regulatory approach.

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Incentives Best – Small Sources
Incentives control multiple small sources better, regulations can’t regulate all the sources of a problem Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Third, the use of economic incentives, in contrast to that of traditional regulations, can control the pollution that is caused by a multitude of small and dispersed sources. A traditional regulatory system, which relies on reporting, inspections, and fines for noncompliance, becomes very cumbersome and expensive to administer when applied to thousands, or even millions, of sources. For many serious environmental concerns today, such as surface water quality and global warming, the sources of the problem can indeed number in the millions. two good examples of how economic incentives can more effectively manage the quantity of pollution that is released from large numbers of small and dispersed sources.

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Incentives Best – Innovation
Economic incentives let the marketplace choose the most cost-effective tech, stimulate innovation Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic
Incentives for Protecting the Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B01.pdf/$File/EE-0216B-01.pdf) Fourth, economic incentives can stimulate technological improvements and innovations in pollution control in situations where traditional regulatory mechanisms may not. In some cases, traditional regulatory
mechanisms can stimulate technological change. For example, challenging numerical performance standards have prompted the development of cleaner technologies (e.g., catalytic converters). Also, when regulations require the use of the best available control technology (BACT), manufacturers of pollution control equipment have an incentive to improve the performance of the products they offer for sale. But traditional regulations that specify the approved pollution control technologies

discourage sources from developing better pollution control technologies. Not only is there uncertainty that an improved pollution control technology would be approved, but greater pollution control normally is costly. What source would want to engage in greater control of pollution than is required by existing regulations? Economic incentives, on the other hand, attach a value to controlling pollution. In some cases the value is an explicit monetary amount, while in other cases the financial impact is indirect. Therefore, sources have an incentive to develop technologies that are more effective or less costly, particularly when pollution reduction obligations can be traded among sources like any other commodity in the marketplace.

Voluntary incentive programs spur innovation, global competitiveness Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf

Many economic incentives give an impetus to technological change and innovative pollution control because sources can generate profits by finding better, cheaper ways of reducing emissions. EPA’s voluntary programs are a particularly good example of economic incentives acting as an incubator for technological improvements. When businesses take initiative on their own or work collaboratively with government to find ways to reduce pollution, instead of merely reacting to government regulations, they tend to apply the same inventiveness and cost-cutting skills used in other parts of the business. In this sense, voluntary programs, as well as other kinds of economic incentives, unleash the qualities of American entrepreneurs that make U.S. businesses such strong competitors in the marketplace and encourage these sources to use those skills to protect the environment.

Market-based incentives stimulate technological change, innovation Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf

Market-based instruments should have significant advantages over traditional regulatory mechanisms in terms of stimulating technical change and innovation in pollution control. The reason is that each and every unit of pollution is costly to the source. In contrast, under a traditional regulatory approach, once a source has satisfied the emission limits, all pollution within those limits has no cost. Why spend valuable resources instituting further controls when there is no offsetting cost savings? In fact, there generally is no incentive for a facility to reduce pollution much below permitted amounts because such an action would invite regulators to reduce the facility's permit limits. In many parts of the nation, pollution control agencies are constantly struggling to find ways of meeting ambient environmental quality goals. Facilities that demonstrate the possibility of making emission reductions below permitted amounts offer an easy target for obtaining some of the necessary emission reductions. These same innovative firms may be the catalysts for developing regulations that require other firms in the same industry to reduce their emissions to the amount shown to be feasible.

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Refund Good – Small Sources
Deposit refunds effective at pollution reduction, they can target small sources Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

The contributions to environmental management made by economic incentives are as varied as the incentives themselves. Deposit-refund systems are helping change the environmental behavior of individual consumers in ways that traditional regulations could not. Deposit-refund systems and taxes on products and outputs are reducing the pollution caused by a multitude of small and geographically dispersed sources that typically are difficult to control through traditional regulations.

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Subsidies Good – Environment
Subsides effective to protect health and the environment Doul et al 96 (John, Department of Pharmacology, Toxicology and Therapeutics, Kansas University Medical Center, Bernard Goldstein,
Director, Environmental and Occupational Health Sciences Institute and Chairman, Joshua Lederberg, President Emeritus, Rockefeller University Sheila McGuire, President, Iowa Health Research Institute David Rall, Former Director, National Institute of Environmental Health Sciences Virginia V. Weldon, Senior Vice President for Public Policy, “Commission on Risk Assessment and Risk Management”, June 13, http://www.riskworld.com/nreports/1996/risk_rpt/html/nr6aa001.htm#TC1)

Taxes and Subsidies. Tax and subsidy programs that encourage and discourage economic activity can be powerful motivators, either encouraging or discouraging use of natural resources and production or reduction of pollution. For example, agricultural land-retirement programs have prevented excessive soil erosion and damage to waterbodies and wildlife habitat, and promoting agricultural production through implicit and explicit subsidies for inputs, such as pesticide and water use, can contribute to environmental damage. Elimination or amelioration of negative-tax and subsidy programs can have a positive impact on the protection of human health and the environment, as can carefully targeted increases in subsidies for the provision of some environmental benefits. Government purchasing practices can also encourage the development of markets for products that are environmentally more sound. Care is needed to avoid excessive acquisition costs for products with small markets and to avoid buying products with one attractive attribute but other unfavorable characteristics.

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AT: Regs Bad – Innovation
Study proves, regulations DO NOT prevent business innovation Scott et al 98(V. J. Lein, and E. L. David, Wisconsin Department of Natural Resources, Madison, WI; and Donna M. Downing, USEPA,
“ENVIRONMENTAL INNOVATION AND REGULATION: SIFTING REALITY FROM RHETORIC”, Jan 1, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0408A-1.doc/$File/EE-0408A-1.doc)

The principal purpose of this study was to determine the extent to which the current regulatory system does, in fact, create barriers to environmental innovation. Our research asked how environmental regulations actually affect manufacturing firms' decisions to innovate in their control or prevention of environmental releases. In addition, we sought to better understand the full range of hurdles to innovation that manufacturers face, so that we
might put in context the relative importance of regulatory-induced innovation barriers. We focused on how firms experience regulatory hurdles to innovation, the nature and extent of perceived hurdles, and the relative importance of hurdles in preventing innovation. In both structured interviews and with survey tools, we

looked for instances where manufacturing firms had wanted to do something innovative but were prevented or hindered from doing so by the environmental regulatory regime. We analyzed firms' experiences to provide direction to policymakers for how they might
remove or lower the regulatory hurdles to innovation.

In stark contrast to the impression of EPA administrators, and the literature more generally, we found no instances where firms perceived that the environmental regulatory process erected outright barriers to innovation. No interviewed firm could identify a specific instance in which they sought to use an innovative approach for controlling or preventing pollution but were prevented from doing so by environmental regulations, how those regulations were implemented, or how they were enforced.

Environmental regulations spur product design innovation Scott et al 98(V. J. Lein, and E. L. David, Wisconsin Department of Natural Resources, Madison, WI; and Donna M. Downing, USEPA,
“ENVIRONMENTAL INNOVATION AND REGULATION: SIFTING REALITY FROM RHETORIC”, Jan 1, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0408A-1.doc/$File/EE-0408A-1.doc) The study’s working definition of “innovation” excluded innovation directed towards reducing a products' in-use emissions. We were interested in releases during the product manufacturing, not releases caused by the products' use. Of course, environmental

regulations do affect innovations in product design. For example, regulations might cause a smallengine manufacturer to re-engineer its engines to reduce emissions from when consumers use the engine. Regulations could also cause paint manufacturers to change paint constituents to reduce emissions when other manufacturers use their paint. Such innovation was not the focus of our study.
However, in the latter example, we were interested in how regulations might prompt secondary manufacturers to use innovative paints in the manufacture of their products or to work with paint suppliers to develop these paints. We examined how regulations affected innovation by manufacturers in the manufacturing process, not innovations in the products they manufactured.

<< >> doesn’t hurt innovation Scott et al 98(V. J. Lein, and E. L. David, Wisconsin Department of Natural Resources, Madison, WI; and Donna M. Downing, USEPA,
“ENVIRONMENTAL INNOVATION AND REGULATION: SIFTING REALITY FROM RHETORIC”, Jan 1, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0408A-1.doc/$File/EE-0408A-1.doc)

There are various barriers to innovation that the theoretical literature considers important, but that appear in practice not to importantly hinder innovation. These theorized regulatory hurdles appear to have limited or no practical effect on innovation. Findings include the following: Regulations do not specify the technologies firms must use. Rather, both in the regulations and in firms' experiences, requirements specify the level of environmental performance to be achieved. Firms do not appear unable to distinguish agency requirements from agency suggestions. No interviewed firm felt that their permit writer had a preferred approach to compliance. Fear of noncompliance penalties is not a factor in deterring innovation. However, firms dislike being treated like “bad actors” if attempts to innovate run into difficulty, as happened to one interviewed firm. Firms were largely unaware of available variances that would prevent compliance problems by allowing them more time to get their innovative approach up and running. Agencies should consider ways of better
publicizing the existence of variances for innovative endeavors. Agencies should also consider addressing issues of enforcement style in training programs or review for enforcement staff. Information is available for small firms. It does not appear that small firms have significantly less access to information about innovative approaches than large firms. However, environmental managers at smaller firms are more likely to have multiple responsibilities and so are less likely to have time to avail themselves of the information. Unless small firms feel that the potential benefits of tracking emerging requirements and researching alternative approaches is worth the investment in time, providing more information and seminars is unlikely to have the desired result.

Permitting delays occur, but do not appear to favor conventional over innovative approaches to pollution prevention and control.

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91 Regulations/Free Market Toolbox

AT: Regs Bad – Innovation
Multiple regulations increase innovation Scott et al 98(V. J. Lein, and E. L. David, Wisconsin Department of Natural Resources, Madison, WI; and Donna M. Downing, USEPA,
“ENVIRONMENTAL INNOVATION AND REGULATION: SIFTING REALITY FROM RHETORIC”, Jan 1, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0408A-1.doc/$File/EE-0408A-1.doc) Even while the environmental regulatory system erects some hurdles to environmental innovation, it also provides important incentives for firms to innovate. Policymakers concerned about innovation should use care when considering proposals that would dilute these regulatory incentives. Firms must comply with environmental requirements. Frequently, they pay attention to the actual and potential costs associated with releases and their control. The following regulatory motivations, found to be especially

effective at motivating innovative approaches to pollution control, should be enhanced or strengthened where possible. Environmental requirements that limit firms' releases. One example, product bans, motivates considerable innovative activity. Stringent regulations that require firms to reduce or watch their releases also motivates innovative behavior. Future standards anticipated to be more stringent. Firms innovate to stay ahead of the regulations. Liability for process wastes. The potential for uncertain liability prompts firms to innovate to eliminate their use of hazardous substances altogether. Reduction in regulatory burden when releases fall below a threshold. Thresholds can motivate innovation if the regulatory burden is substantially lessened for firms that reduce their releases below the threshold, i.e., the firm is subject to less burdensome recordkeeping or reporting requirements or is no longer subject to a regulation. Public release of firms' pollutant information. The Toxic Release Inventory status appears to provide a powerful motivation to innovate.

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92 Regulations/Free Market Toolbox

AT: Incentives Bad – Non-Unique/Solve Advs. of C & C
( ) Incentives in general are inevitable, triggering their link, and they access every benefit of command and control at lower costs Stephen M. Johnson, Associate Professor of Law, Walter F. George School of Law, Mercer University, Winter 1999, Washington & Lee Law Review, 56 Wash & Lee L. Rev. 111
In light of those criticisms and limitations, the federal government and state governments are increasingly implementing market-based approaches to address environmental problems. n10 The Clinton Administration has suggested that "[m]arket incentives should be used to achieve environmental goals, whenever appropriate," n11 and a recent report by the Environmental Law Institute estimates that governments are using over one hundred different economic incentive mechanisms to address environmental problems in the United States. n12 Instead of mandating uniform pollution reductions on a national basis, market- based approaches use economic incentives to encourage polluters to reduce their pollution in the most cost-effective manner. n13 Theoretically, market-based approaches can achieve the same level of pollution reduction as command and control regulation at a lower cost. n14 In addition, proponents claim that market- based approaches can eliminate the information-gathering burden of command and control regulation on the government.

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***Emissions Trading

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Emissions Trading Fails – cheaters
Emissions trading fails to decrease warming Bell 2 (Ruth Greenspan, Director of International Institutional Development and Environmental Assistance at Resources for the Future,
http://www.emissierechten.nl/climate_change__monitoring_inter.htm)

Advocates of international emissions trading would be wise to reflect on recent U.S. accounting and trading scandals. The Kyoto Protocol establishes an international greenhouse gas trading system. Emissions trading clearly can save society money, but international planners must put safeguards into place to keep the mission of traders on track with the goal of reducing greenhouse gas emissions. If international policymakers wait until a scandal erupts, it will be too late. Who will be the international Securities and Exchange Commission of emissions trading? Ruth Greenspan Bell directs Resources for the Future's program for
International Institutional Development and Environmental Assistance, helping institutions in societies without strong legal systems to become more effective in implementing natural resource management and environmental protection policies and laws. Her current projects include efforts involving public participation in environmental decision making in the Danube region and in Thailand. Before joining RFF, Bell spent almost 17 years in management positions in the Office of General Counsel at the Environmental Protection Agency.

Sham trades reported by Reliant Resources, Dynergy, Enron, and CMS Energy to pump up trading revenue and volume in California, the out-and-out balance sheet fraud committed by WorldCom, and the most recent revelations about seemingly reputable bankers who intentionally structured transactions to allow Enron to hide $125 million in debt, seem, at first glance, to have only a remote connection to global climate change policy. But advocates of international emissions trading would be wise to reflect on these scandals.The cornerstone of the approach to climate change management taken by the administration of former U.S. President Bill Clinton is a complex international
greenhouse gas trading system. The administration of President George W. Bush has pulled out of the Kyoto Protocol process, but it has not slammed the door shut on an emissions trading scheme in the future. Emissions trading allows firms and countries that can control pollution more cheaply to accumulate credits for their efforts. They may then sell these credits to others for whom the cost of pollution reduction is greater. Variations of this technique were written into the Kyoto Protocol's "clean development mechanism." The Pew Center for Climate Change calls emissions trading the "policy of choice," and the theory has been endorsed by many economists, including several Nobel laureates, and now even by many environmental advocacy groups. The

purpose of trading is to harness market forces in the reduction of greenhouse gases. The main opposition has come from proponents of the view that emissions trading would allow the developed world, and in particular the United States, to escape responsibility for its energy-intensive lifestyle by funding reductions in other parts of the world.

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95 Regulations/Free Market Toolbox

Emissions Trading Fails – Cheaters
Despite checks, US emissions trading abuse is rampant Bell 2 (Ruth Greenspan, Director of International Institutional Development and Environmental Assistance at Resources for the Future,
http://www.emissierechten.nl/climate_change__monitoring_inter.htm)

But in the past six or so months, a number of warning bells have sounded for those who care to listen. Examples of trading abuses have cropped up in the United States, meaning within the context of a welldeveloped legal and oversight system and a free press--an important issue that will be discussed further below. The basic message of each of these incidents is that even in a mature, capitalist democracy, the invisible hand needs plenty of highly visible oversight and management. Without strong institutions to police the participants in the market, markets can be captured and distorted. The losers from the frauds reported in today's press have been investors and consumers. In the future, if greenhouse gas trading is not backed up by effective institutions, the environment will be the loser. The first of these incidents involved New Jersey's emissions trading system. PSEG Fossil LLC, the biggest player in that state's system, apparently had not installed necessary pollution controls or obtained proper permits. The U.S. Justice Department discovered this and brought an enforcement action, which was resolved
in the form of a consent decree. PSEG, without admitting any wrongdoing, agreed to stop selling its credits to other firms and to stay out of the trading system. When PSEG was forced to withdraw, its sheer size and status as one of the largest "suppliers" of credits in New Jersey brought that state's system close to collapse. In addition, according to the Aug. 5, 2002, issue of the Electricity Daily, the South Coast Air Quality Management District (SCAQMD) in California and the regional office of the U.S. Environmental Protection Agency are looking into charges that a Pasadena broker cheated several firms who paid for emissions credits that were never delivered. The SCAQMD manages emissions trading for the Los Angeles region. A similar example from the United Kingdom was reported in the April 12, 2002, edition of the Electricity Daily, in an account of a government-sponsored auction in which participating companies bid by offering greenhouse gas reductions. An independent review by Environmental Data Services noted strong

grounds to suspect that at least half of the claimed emissions reductions were not real, and blamed the inaccuracies on shortcomings in the Department of Environment, Food, and Rural Affairs regulatory controls and "poorly thought
through rules." The New Jersey and U.K. situations attracted little public notice. But more recent events have attracted a great deal more attention. This past spring, several energy trading companies admitted to having made sham electricity trades. In

addition to the well-known activities of Enron, Duke Energy Corp. reported that it had included about $1.1 billion of energy trades that had no economic benefit in financial statements over a three-year period, and
the chief executive of CMS Energy was forced to resign when it was disclosed that the company had inflated revenue by 28 percent over two years. A former Reliant executive was quoted as saying, "The same circuit got traded back and forth. The idea

was to book more transactions and get a market going." All of the above failures and near failures, including the Enron and WorldCom debacles, took place in countries where law and law enforcement are relatively well developed. The news media paid close attention and
so, therefore, did the public and government officials. The nongovernmental organizations are vigilant and know how to bring lawsuits or how to complain to Congress.

Cheating inevitable in the carbon trading system, emissions hard to regulate Bell 2 (Ruth Greenspan, Director of International Institutional Development and Environmental Assistance at Resources for the Future,
http://www.emissierechten.nl/climate_change__monitoring_inter.htm)

Emissions trading systems must be tested against the difficult conditions found in the real world, where there will always be people who cut corners or outright cheat. If it was not clear before these recent events, it certainly is now: some countries and some people will not follow the rules. And the rules are particularly hard to enforce when what is being traded is a highly intangible commodity, as are carbon emissions. The difficulty of the proposed global emissions trading system is that it rests on a foundation of carbon reductions in each country. The actual in-country reductions can be achieved any number of ways, using
traditional command-and-control or market-based environmental instruments, but they must be continuous, that is, there must be a reliable continuing stream of carbon reductions over time. It is these reductions that are sold or traded. In addition, if the Kyoto regime holds up, the reductions will be calculated after a baseline is established; the greenhouse gas emission reduction for which a credit can be obtained must be incremental to each country's baseline, defined as that would occur in the absence of the certified project activity. In other words, the commodities being traded are difficult to identify, to keep track of, and to count. The European Union has recognized this fact by attaching an explanatory note to its proposed directive on greenhouse gas emissions trading that allows the EU to enter into separate agreements with non-EU countries for trading, but emphasizes that such agreements will depend on whether there are adequate monitoring, reporting, and verification programs in place so that the carbon allowances would be demonstrably related to actual emissions reductions.

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Emissions Trading Fails – Verification
Cap and trade fails – high verification costs Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

At the same time, trading programs may have several drawbacks, including the potential for high transaction costs and inactive markets, especially in credit or open-market systems. High costs can be attributed to the need to verify each reduction before authorizing the credit. Clearly, trading programs should not be applied to all environmental problems. The long-term effects of The U. S. Experience with Economic Incentives for Protecting the Environment trading programs on technical innovation vary from program to program. Some have spurred considerable innovation, such as the acid rain program, while others have not due to high transaction costs.

Weak domestic environmental enforcement makes verification unworkable Bell 2 (Ruth Greenspan, Director of International Institutional Development and Environmental Assistance at Resources for the Future,
http://www.emissierechten.nl/climate_change__monitoring_inter.htm)

But verification can be notoriously difficult and rests on domestic systems of environmental enforcement. Participants in these transactions in the West know they can rely on a viable legal system or some analogous set of institutions to ensure the integrity of trades and to act in a timely manner to protect wronged parties. But many places where the "cheapest" carbon reductions are to be found do not have reliable rule of law traditions or the resources and policies that would discourage cheating. For example, a power plant can change its fuel entirely, or use cleaner coal, or install control technology. Verification of each of these approaches is quite different. It is relatively easy to determine whether the plant is fired by coal or natural gas, but harder to know, on a continuous basis, whether the coal used is cleaner or the control technology has been turned on and continuously maintained. The EU may have the best of intentions, but its actual ability to monitor what is going on in Russia, Ukraine, Bulgaria, and Romania, to choose four examples, will be quite limited. Verification and oversight procedures in the developing world and the countries of the former Soviet bloc, where reside many of the big potential sellers in this market, have been notoriously ineffective. In many cases, these are countries that have adequate laws on the books, but they have done a very poor job of controlling their domestic pollution. We could not be sure how much pollution each of their plants would send in to the atmosphere when they do not have the expensive monitoring equipment that is required in the United States. The court systems may move too slowly, giving life to the adage, "justice deferred is justice denied." Or the judiciary lacks independence, and sometimes judges get their pay checks and social benefits from the same body that owns polluting industry. In addition, rampant, or even institutionalized, corruption may mean that public officials who oversee such programs will make policy decisions on the basis of personal connections or illegal payments rather than whether the trade involves true reductions in greenhouse gas emissions. Independent nongovernmental organizations, where they exist, do not have the tools available to their counterparts in the United States. Indeed, many of these countries cannot produce accurate figures on basic data such as population and economic production, let alone the highly esoteric information for greenhouse gas emissions.

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Emissions Trading Fails – International verification
International verification problems for emissions trading doom success Bell 2 (Ruth Greenspan, Director of International Institutional Development and Environmental Assistance at Resources for the Future,
http://www.emissierechten.nl/climate_change__monitoring_inter.htm)

Critically, verification must be in the countries of origin of the emissions. There are no international institutions to police trades across borders and keep them honest, although some level of oversight is planned
through the Conference of the Parties and an executive board supervising the clean development mechanism. Nevertheless, we know through examples--such as the difficulty of policing arms reduction

and nuclear proliferation treaties--how hard verification can be and how many resources they can absorb. Climate change verification should be even harder, and the incentives to do it fewer. This is because reducing greenhouse gas emissions can require supervision of potentially thousands of domestic reduction projects in each country. Historically, governments have typically given far less weight and attention to supervising international environmental treaties than they do to agreements that involve arms and world trade. And the sanctions available, even when governments are alert to violations, are limited in number and often severe. Negative trade measures, unilateral sanctions, membership sanctions, and other economic and political measures are rarely or reluctantly used because of their political consequences.
What if we set up a worldwide system and later find fraudulent record keeping or industries that sell phony reductions? Who will enforce the rules? What body would prosecute false accounting schemes and assure the basic integrity of the regime? There are at least two possible outcomes. The best solution would be if countries with currently weak enforcement and compliance regimes could be inspired to make improvements so they can share in the considerable benefits that global trading might bring them. The other possibility is the temptation toward cheating.

Either way, trading itself will not solve the problem of greenhouse gas emissions in the absence of substantial domestic commitment to making real emissions reductions. Proponents are quick to point out the undeniable successes of the sulfur dioxide emissions trading scheme, but they are less likely to mention its reliance on the many unique safeguards built into the U.S. program. No less an authority than The Economist magazine has published a spate of articles trumpeting market-based instruments as the
salvation of the environment (in the same issues that report the details of the WorldCom scandal). But their exhibit No. 1, emissions trading, alone is not a solution to resolving works relatively well, these same solutions are far less likely to succeed where institutions are much weaker.’

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AT: Trading/New Markets Good
Trading systems fail to meet cost expectations—models don’t take into account restrictions Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

Examining the performance of trading systems in particular, one finds that existing applications fail to achieve anywhere near their theoretical potential cost savings.24 Trades have been fewer and cost savings smaller, according to this analysis, than indicated by economic modeling. A number of explanations have been offered for why the predicted savings are not realized.25 Regulatory and legal requirements of the actual programs may limit the trading opportunities to a greater extent than portrayed in the models, especially where the incentive programs operate in conjunction with traditional regulatory programs. Various models have not fully reflected all the aspects of real regulatory programs, including the transaction costs, restrictive trading rules, monitoring and reporting requirements, and the administrative burden placed on both emission sources and regulatory agencies. In addition to the limitations imposed by the regulatory structure, potential participants in trading systems may be reluctant to trade emissions credits or allowances, preferring instead the greater certainty of installing pollution control equipment at their facilities. Moreover, pollution credits have a limited life whereas engineering controls, in principle, last for the life of a facility. In most trading systems, the vast majority of trades that take place occur within firms, not between firms. Furthermore, markets for permits that are available for sale tend to be thin, and it may be difficult to locate potential sellers.26

Multiple state policies prevent effective trading Anderson 1 (Robert C, Resource Consulting Associate, EPA, “The United States Experience with Economic Incentives for Protecting the
Environment”, http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE-0216B-01.pdf/$File/EE-0216B-01.pdf)

ERC emission trading has not lived up to expectations; trades have been fewer and offset prices lower than many had expected. Several factors seem to have limited the appeal of the emissions trading policy. In order to assure that air quality did not deteriorate, state environmental administrators often required expensive air quality modeling prior to accepting proposed trades between geographically separated parties. Deposits to emission banks typically were “taxed” by the air quality management authority to meet state SIP requirements or to generate a surplus that the area could offer to attract new firms. Offset ratios greater than unity further depressed the value of ERCs. In many areas, it appears that ERCs had an economic value less than the transaction costs of completing a sale to another party.

Gonzaga Debate Institute 2008
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99 Regulations/Free Market Toolbox

***Capital Flight DA

Gonzaga Debate Institute 2008
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100 Regulations/Free Market Toolbox

Capital Flight DA 1NC (1/2)
A. US capital investment up Chapman 8 (John, The American [http://www.american.com/archive/2008/june-06-08/america2019s-economicoutlook-a-symposium] America’s Economic Outlook: A Symposium/ June 27, 2008) When considering the U.S. economy, one is reminded of Dickens’s A Tale of Two Cities: it is the best of times, and the worst of times. On the one hand, in spite of several concurrent challenges, America’s consumers and its entrepreneurial class have proven themselves remarkably resilient. Bolstered by record levels of non-farm productivity and a huge increase (more than 15 percent) in exports, the economy is on track to grow by 1.5 percent this year. Additionally, real corporate profits should grow slightly in 2008, and $150 billion to $200 billion in new private equity and venture capital investment suggest an enduring confidence in future growth. Fueled by an expansionary monetary policy, which has driven interest rates to artificial lows, and accommodative fiscal policies (including a $168 billion “stimulus” package), the United States may well avoid a “recession” in the technical sense of the word—that is, it may avoid two consecutive quarters of negative growth.

B. Environmental policies force businesses to “pollution haves” in foreign countries. Krissoff et al 96 (Barry, May, U.S. Department of Agriculture. Agricultural Economic Report No. 738.,
http://www.ers.usda.gov/publications/aer738/Aer738.pdf)
National environmental policies may exert longrun effects on international investment flows and firm location. Just as labor-intensive industries may concentrate where labor is abundant (everything else equal) polluting industries may concentrate in countries with less stringent environmental policies (everything else equal). One concern is that developing countries, in particular, may use their lower environmental standards to attract foreign investment and stimulate economic growth.9 Another is that countries that are moving toward stricter environmental regulations will encourage industrial and capital flight toward countries offering “pollution havens.” Little evidence supports the pollution-haven hypothesis, particularly concerning the importance of differing environmental standards for foreign direct investment in the food and agriculture sectors. Pearson’s survey (1987) finds little evidence of industrial flight to developing countries as a result of differing environmental standards. In another study, Pearson (1976) estimates that developing countries may have increased their export revenues by 2.1-4.6 percent by lowering their environmental standards. Duerkson and Leonard (1980) conclude that there is no evidence of widespread relocation of U.S. industries to pollution havens. However, Molina (1994), investigating pollution abatement costs and U.S.-Mexico trade in food-related products, finds some evidence to support the pollution-haven hypothesis. He finds that in U.S. industries that incur higher water and solid waste abatement costs relative to Mexico, the United States is more likely to import from that industry and, consequently, firms are more likely to migrate.

Gonzaga Debate Institute 2008
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101 Regulations/Free Market Toolbox

Capital Flight DA 1NC (2/2)
C. Multinational corporations destroy the environment Shah 2 (Anup, May, Society of Environmental Consultants and Auditors
http://www.globalissues.org/TradeRelated/Corporations/Environm ent.asp#Corporateinterestsandactionscanharmtheenvironment One sharp example of environmental problems caused by multinational corporations, is the drive to extract oil from Nigeria. As the previous link, from this site’s section on Africa shows, corporations have even backed the military to harass, even kill, local people who continue to protest at the environmental and other problems the activities of the various oil companies have caused. Some local groups have become extreme themselves, kidnapping foreigners for example. The interests of the various big polluters, such as the auto, mining, oil and chemical corporations influenced the Kyoto Global Climate Change Conference outcome. And with biotechnology and genetically engineered food production, companies are accused of following a profit motive even as they promote the technology as a means to address world hunger. Environmental concerns also feature quite strongly on this issue. With increased consumerism, there has been a rise in the number of environmental groups campaigning on various issues such as environmentally friendly products. To varying extents then, environmental concerns are issues that sometimes make the mainstream news. However, a cover story, of Down To Earth magazine from Delhibased Centre for Science and Environment as an example, warns that the latest craze in green and ethical consumerism may just be another way for corporations to exploit people and make money by misrepresenting the facts. As another example of this, EarthDay Resources’ annual Don’t Be Fooled Awards highlight some of what they call the corporate “greenwashing” that goes on through advertising and lobbying campaigns. There are countless examples where corporate involvement in various issues could contribute to environmental problems as a result. Corporations are major entities in the world and thus have an enormous impact (negative and positive) on all our lives. And concerns of overly corporateled globalization contributing to environmental problems are increasing, as reported and documented by countless environmental and social justice groups around the world.

Gonzaga Debate Institute 2008
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102 Regulations/Free Market Toolbox

Capital Flight – Uniqueness: Investment UP
US capital investment levels are steady Selko 8 (Adrienne, managing editor of corporate publications at a large regional financial institution
[http://www.industryweek.com/ReadArticle.aspx?ArticleID=16860] U.S. Manufacturing to Remain Flat over Next 3-6 Months Says Industry Group/ July 17, 2008) Two indexes remained flat at positive levels of activity. The U.S. investment index, which queried executives on their expectations regarding capital investment in 2008 compared to 2007, held steady at 62%. The research and development (R&D) index remained at 72%.

US capital investment up Chapman 8 (John, The American [http://www.american.com/archive/2008/june-06-08/america2019s-economicoutlook-a-symposium] America’s Economic Outlook: A Symposium/ June 27, 2008) When considering the U.S. economy, one is reminded of Dickens’s A Tale of Two Cities: it is the best of times, and the worst of times. On the one hand, in spite of several concurrent challenges, America’s consumers and its entrepreneurial class have proven themselves remarkably resilient. Bolstered by record levels of non-farm productivity and a huge increase (more than 15 percent) in exports, the economy is on track to grow by 1.5 percent this year. Additionally, real corporate profits should grow slightly in 2008, and $150 billion to $200 billion in new private equity and venture capital investment suggest an enduring confidence in future growth. Fueled by an expansionary monetary policy, which has driven interest rates to artificial lows, and accommodative fiscal policies (including a $168 billion “stimulus” package), the United States may well avoid a “recession” in the technical sense of the word—that is, it may avoid two consecutive quarters of negative growth.

Capital investment expected to increase Daily Dash 8 ([http://www.wwj.com/Hiring-Likely-to-Remain-Soft/2451389] Hiring Likely to Remain Soft This
Year, But Signs Point to Better Times In 2009/ July 14, 2008) Likewise, the Federal Reserve and other economists say they think the fragile national economy will strengthen later this year and into next year – even as the nation's unemployment rate, a lagging indicator of business health, rises. Earlier this month, for example, Fed Chairman Ben Bernanke told an international monetary conference that the Fed's recent interest rate reductions along with the government's $168 billion stimulus package should bring about "somewhat better economic conditions" in the second half of this year. According to a national survey released last week by the Business Roundtable, most chief executives expect sales and capital investment to remain at current levels or even improve over the next six months.

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103 Regulations/Free Market Toolbox

Capital Flight – Link: Environmental Regulation
Environmental policies cause capital flight. Granados 6 (Francisco J, Social Forces. University of North Carolina Press, Dec.,
http://socialissues.wiseto.com/Articles/156364106/?page=1) Environmental policies are often resisted on the grounds that they will cost jobs and slow economic growth. Economic globalization heightens such fears because firms can easily move investment and production to other countries should local environmental regulations become too onerous (Cobb and Daly 1989; Hansen-Kuhn 1993; Korten 1993; Thrupp 1994). Countries that choose to enact strong environmental protections may experience flight of firms and investment, damaging the economy. Yet, empirical studies on the economic impact of environmentalism have proven equivocal.

Environmental regulations reduce capital investment. Granados 6 (Francisco J, Social Forces. University of North Carolina Press, Dec.,
http://socialissues.wiseto.com/Articles/156364106/?page=1) Opponents of environmental regulations often argue that constraints on firms and economic activity reduce economic growth. (1) Basic economic theory holds that capital investment is a primary source of economic growth (Barro and Sala-i-Martin 1995). Environmental regulations can decrease the efficiency of invested capital and discourage investment altogether. (2) For example, air pollution laws that require expensive pollution abatement equipment necessitate greater capital investment to achieve a given level of economic output, reducing the incentive to invest. Laws prohibiting or taxing the utilization of available resources have a similar effect. For example, environmental regulations prevent the development of productive land (wetlands, forests), the use of certain fuels (e.g., high-sulfur coal), the emission of particular chemicals, and so on. This directly halts economically productive activities or lowers profitability by requiring the use of more expensive fuels and production methods. (3) The costs of environmental regulation can be quite large. By one estimate, the implementation of the Kyoto Protocol limiting CO2 emissions may reduce economic output by $100 billion (in 1990 U.S. dollars) annually for Western Europe, and on the order of $50 billion for Japan alone (Li 2000:164). Depending on the circumstances, Kyoto may cost the typical nation between 0.5 percent and 1 percent of total GDP (Li 2000:168).

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Capital Flight – Impact: World Econ
Capital flight quickly destroys world economic growth Eurodad 8 (European Network of Debt and Development, May,
http://www.eurodad.org/uploadedFiles/Whats_New/Reports/Capital_flight_report.pdf) In the aftermath of the Asian financial crises ten years ago the international community recognised the importance of financial stability. Today new troubles infect the global financial system, leaving governments and financial analysts uncertain how to react. The media is full of the credit crunch, write-downs by private banks and dramatic price rises. There is discussion of how these incidents are spilling over across the economy in the U.S.A., Europe and elsewhere, with people losing their homes and jobs and struggling to provide meals for their families. Very little attention is given to the specific impacts in the world’s poorest countries. Yet global financial stability – like climate change – is a key global challenge and one that the current financial and regulatory system is ill-equipped to handle. The sub-prime crisis that started in the U.S. and spread through contagion has shown that market-based solutions and conventional crisis management are completely insufficient. Central bankers and finance ministers have tried injecting liquidity, lowering interest rates, and even nationalising a bank. Yet regulators and central banks are largely playing catch up. In France a single trader caused a €5 billion loss to Société Générale by evading in-house systems. In Germany the scandal of hidden deposits in Liechtenstein exposed the tip of the tax havens scandal iceberg. The crisis is not just due to individual misbehaviour. There are deep flaws in the international financial system. Finance has become an end in itself: to make money out of money in the shortest possible time. This speculation leads to instability and widens the gap between rich and poor. Recurrent crises are inevitable. We are very far from achieving what the world’s governments signed up to at the Monterrey Financing for Development conference in 2002. There they pledged to encourage “the orderly development of capital markets aimed at addressing development financing needs and foster productive investments”. They agreed, correctly, that this “requires a sound system of financial intermediation, transparent regulatory frameworks and effective supervisory mechanisms”. Finally they said they would introduce measures “that mitigate the impact of excessive volatility of short-term capital flows” and to strengthen “prudential regulations and supervision of all financial institutions, including highly leveraged institutions”. The financial system is not only unstable, it is also unjust, resources are flowing from poorer to richer. Experts estimate that every year $500 - $800 billion leave Southern countries due to criminal activities, tax evasion, and corruption. This makes South-North financial flows several times higher than the average $90 billion annual aid flows, the $240 billion foreign direct investment to the South and the couple of hundreds of billions of dollars of remittances transferred from migrants.1

Gonzaga Debate Institute 2008
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105 Regulations/Free Market Toolbox

***AT: Capital Flight DA

Gonzaga Debate Institute 2008
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106 Regulations/Free Market Toolbox

Non-Unique: Capital Flight Up
Treasury bonds are causing an increase in capital flight Colby 8 (Robert, Senior Analyst [http://www.forexhound.com/article.cfm?articleID=104612] Daily Market
Update by R. W. Colby, Tradingeducation.com, LLC/ July 7, 2008) U.S. Treasury Bond September futures contract moved up to a new 4-month high. The theme seems to be capital flight to safety, and away from stocks. That appears to be the path of least resistance.

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107 Regulations/Free Market Toolbox

Turn – Capital Flight Good – Investment
Capital flight doesn’t hurt employment Mokhiber 98 [Russell [http://multinationalmonitor.org/hyper/issues/1995/01/mm0195_04.html]
PRIVATIZATION AND HEALTH/ August 19, 1998) Environmental regulation has often been blamed for contributing to a shift in the U.S. economy from manufacturing jobs to service employment. Industry critics have argued that environmental protection measures have led to plant shut-downs, encouraged the flight of U.S. manufacturing capital overseas and reduced domestic investment by hampering productivity growth. But the report found the employment effects of shutdowns, capital flight, and productivity losses from environmental protection have been small or non-existent. At the same time, the report found that money spent to protect the environment has in fact created jobs. In 1993, some 4 million people were employed directly or indirectly in the “environmental protection industry.” Because much of the environmental spending is either labor intensive (recycling and sewage construction) or uses domestically produced capital goods (air-pollution control equipment), most studies indicate that environmental spending boosts aggregate employment.

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108 Regulations/Free Market Toolbox

Turn – Capital Flight Good – Environment
Capital flight helps impoverished countries and environment. Muradian 2 (Roldan, UNIVERSITAT AUTÒNOMA DE BARCELONA NEPAD AND THE ENVIRONMENT: ENVISAGING THE
ECOLOGICAL CONSEQUENCES OF OUTWARD-ORIENTED DEVELOPMENT IN AFRICA

http://www.worldsummit2002.org/texts/RoldanMuradian.pdf) On the other hand, foreign direct investment (FDI) is also supposed to encourage both economic growth and environmental quality improvement. Transnational corporations (TNCs) should play an important role in the economic performance of developing economies by enhancing competition, injecting capital, providing technological advances, and promoting modern management practices. TNCs may help developing countries leapfrog stages in development, enabling them to shift from an economy oriented toward primary products to a service economy. This would release pressure on natural resources and improve the environmental performance of the economy. Even if foreign investments are directed to the primary sector, many analysts assume that environmental performance will improve because TNCs are more efficient and technologically advanced than outdated national enterprises (Zank, 1995). According to some authors, multinational firms are the single most important vehicle for the transfer of environmental information and technology to the developing world, and the initiatives they are taking in many cases exceed the requirements of the host country governments (Hadlock, 1994). Natural resources have no value unless they are discovered, extracted, processed, transported, and distributed to customers. The predominant idea is that TNCs may give value to these resources that would otherwise remain unused due to lack of capital, managerial skills, and technology in poor countries (Wilkins, 1998).

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109 Regulations/Free Market Toolbox

No Link – Environmental Regulation
Industries won’t leave US for environmental regulations Goodstein 2 (Eban, Professor of Economics at Lewis and Clark College in Portland Oregon
[http://www.progressiveregulation.org/perspectives/enviro_regs_jobs.cfm] The Trade-off Myth: Fact and Fiction About the Employment Effects of Environmental Policy/ May 2002) This is one case in which the conventional wisdom is dead wrong. Economists who have studied the issue agree that the three propositions above are false. At the economy-wide level, in reality, there has simply been no trade-off between jobs and the environment. In fact, regulation-induced plant closings and layoffs are very rare. And, despite what one hears in the media, few firms are fleeing industrial countries like the U.S. to take advantage of lax environmental regulations in poor countries. Let’s look more closely at these three facts. First, there is no economy-wide tradeoff. This reality is demonstrated by looking at U.S. economic performance in recent years. From 1990 to 2000, U.S. firms, consumers, and governments boosted their spending on environmental protection from round $138 to $219 billion -- from 2.1 percent to 2.8 percent of GDP. These expenditures financed the installation of pollution control equipment in factories, catalytic converters in cars, laboratory testing of new pesticides, the construction of municipal sewage plants, and the disposal of household garbage, to name just a few items. Over the same period of time that environmental spending grew so dramatically, the U.S. economy added a whopping 16 million new jobs. At a nationwide level, unemployment rates ultimately depend on the health of the macroeconomy, which has not been impaired by environmental regulation. Second, it is a mistake to confuse costs of environmental protection with net job losses from environmental protection. Environmental costs translate into environmental spending, which also provides jobs. The great majority of studies which have examined this issue find that jobs created in the environmental and related sectors balance jobs lost as a result of higher regulatory costs.

Environmental regulations won’t cause capital flight Goodstein 2 (Eban, Professor of Economics at Lewis and Clark College in Portland Oregon
[http://www.progressiveregulation.org/perspectives/enviro_regs_jobs.cfm] The Trade-off Myth: Fact and Fiction About the Employment Effects of Environmental Policy/ May 2002) Over the last 35 years we have been at this same decision point-- facing a new set of major environmental regulations—several times. And each time that a new regulation is put in place, we have been able to gather more evidence that refutes such claims. In spite of apocalyptic predictions from industry-sponsored models about the consequences of the SO2 control program, for example, not even a whiff of economic slowdown emerged from this highly successful clean-up program. The accumulated experience to date shows unambiguously that the job impacts from environmental regulation have been small and gradual and that job gains have balanced losses. Environmental protection has never induced or deepened a recession, lead to widespread plant shutdowns, nor has it promoted significant capital flight to poor countries.

Gonzaga Debate Institute 2008
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110 Regulations/Free Market Toolbox

***EPA Administration DA

Gonzaga Debate Institute 2008
Scholars

111 Regulations/Free Market Toolbox

EPA Administration DA (1/2)
A. Uniqueness: The EPA implements environmental law in the status quo. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175) Federal environmental law has no single, uniform statutory base. Over the last four decades, Congress

has enacted numerous pieces of legislation focusing upon a range of particular types of environmental problems. For example, the
CAA was concerned with the nation's air quality while the CWA focused upon the eradication of pollution in the nation's waters. 28 As a result, federal environmental law has been established in a media-specific or problem-specific fashion and, as a consequence, is a composite of a large number of statutes. These environmental laws usually direct EPA to set substantive and

procedural requirements necessary for the achievement of identified environmental policy goals underlying each statute. 29 For instance, in order to [*182] meet the National Ambient Air Quality Standards (NAAQS) set
under the CAA, EPA and the states must establish source-specific emission standards that limit the amount of air pollution that can be emitted. 30 Agency requirements, such as these emission rules, often impose economic costs, require operational changes and/or delay activities falling under EPA's statutory jurisdiction. 31 As a result, these environmental standards may not be enthusiastically embraced by those subject to them. Not surprisingly, those falling under the EPA regulatory umbrella may find many practical reasons not to comply or not to fully comply with these rules.

B. The plan’s increase in EPA’s administrative efforts trades off with judicial efforts to address environmental problems. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175) However, those regulated by EPA rules do not immediately come into compliance with the them. Environmental

regulations are not self-enforcing and frequently, when they ask regulated entities to assume new economic costs or to change their methods of operation, they are resisted. 7 As part of federal environmental policy, EPA has also developed both coercive and cooperative tactics to achieve compliance with its many rules. 8 Using the threat of punishment to encourage voluntary compliance, EPA has adopted an enforcement program that threatens noncompliant behavior with a variety of judicial and administrative sanctions, believed necessary to achieve the environmental goals of federal law. 9 Environmental law authorizes a range of
enforcement techniques that can impose both civil remedies--injunctive and financial--and criminal penalties. 10 However, both of these enforcement methods require a federal enforcement lawsuit. 11 Federal environmental statutes provide an alternative enforcement route to resource-intensive and time-consuming judicial intervention: EPA's issuance of administrative injunctive and penalty orders. 12 Increasingly, EPA has selected this in-house approach by taking civil enforcement actions within the agency's own administrative law structure to punish environmental violators. 13 [*178] During the last decade, these administrative enforcement cases have become so numerous that they far outnumber court-ordered actions and result in the payment of millions of dollars in civil penalties and in the imposition of injunctive compliance orders. 14 This practice is so pervasive that one recent assessment has estimated that approximately ninety percent of EPA's enforcement actions are administrative, not judicial, in nature. 15 For example, in fiscal year 2006, EPA data reported that the agency initiated 4647 administrative complaints while issuing 1438 compliance orders and imposing 4624 final administrative penalty orders for approximately $ 42 million in fines. 16 To put these [*179] numbers into a comparative perspective, during this same year, EPA reported that the total number of judicial enforcement cases concluded in federal court totaled only 173 and that $ 82 million were collected in civil penalties. 17 A private estimate places the number of civil enforcement law suits filed by the Department of Justice (DOJ) in fiscal year 2006 to be only fifteen cases. 18 The overall trends in EPA enforcement

demonstrate consistent reductions in the number of judicial civil case referrals and case conclusions, as well as criminal sentences and fines. 19 While at the same time, the available data shows that EPA administrative [*180] penalties have become the only increasing form of enforcement undertaken over the last decade. 20 This striking rise in in-house environmental enforcement has occurred just when more visible judicial enforcement has diminished. Administrative enforcement has not only become the more frequently selected alternative to judicial enforcement, but it has also given rise to the development of an administrative analogue to the federal judicial system--an administrative judicial system. 21 This system conducts adjudicatory proceedings governed by its
own Agency rules of practice, largely within the confines of EPA, in an insulated administrative format with significantly less public involvement or awareness. 22 Despite the increasing importance of EPA's internal enforcement regime, the

workings of this administrative enforcement process have operated as a stealth system, largely escaping the view of the public. Over the years, it has also avoided scholarly examination both in terms of its methods and its results. 23 Significantly, there has been no concerted [*181] attempt to analyze reported case decisions
that have been generated by these administrative enforcement methods. The augmented use of EPA's administrative civil penalty technique of enforcing environmental rules is the focus of this Article.

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EPA Administration DA (2/2)
C. Impact: The administrative mechanism of the EPA hurts the environment more than it helps turning the case. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175) In conclusion, the increased use of the administrative penalty mechanism is not a clear-cut improvement in the attainment of environmental-quality objectives. In fact, this shift could actually represent a movement towards under enforcement and result in damage to the deterrent effect of all environmental enforcement. An unjustified and unwise over reliance on informal

and less-costly methods of enforcing environmental law could have a deleterious effect on the willingness of regulated parties to meet their environmental obligations. If this actually does occur, the stealth system of administrative enforcement will have harmed environmental policy more than it has helped--certainly an unfortunate result.

Gonzaga Debate Institute 2008
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113 Regulations/Free Market Toolbox

Uniqueness: Environmental groups going to courts
Environmental groups are using courts now: Whale case proves. Greenhouse June 24 (2008, New York Times, Linda, http://www.nytimes.com/2008/06/24/washington/24scotus.html)
The Supreme Court on Monday stepped into a long-running environmental dispute over the impact on whales and other marine mammals of Navy training exercises off Southern California. The court, warned by the Bush administration that a set of conditions placed on the exercises by the federal appeals court in San
Francisco “jeopardizes the Navy’s ability to train sailors and marines for wartime deployment during a time of ongoing hostilities,”

agreed to hear the Navy’s appeal during its next term.

Environmental groups have been taking cases to the Supreme Court: Whale case. Anderson June 24 (2008, Mark H, Wall Street Journal,
http://online.wsj.com/article/SB121426356830998271.html?mod=googlenews_wsj)

The U.S. Supreme Court agreed to hear the Navy's request to overturn restrictions on its ability to train with sonar off the California coast because of concerns about harm to whales and dolphins.
The Ninth U.S. Circuit Court of Appeals, based in San Francisco, in March upheld most of a court ruling that bans high-powered sonar near the California coast and puts other limits on Navy training exercises.

Several environmental groups sued the Navy to block its sonar use in the Pacific Ocean near southern California. The area is home to nine threatened or endangered species of whales, dolphins, sea lions and seals.

Supreme Court is hearing environmental cases: Whale case. Environmental News Service June 23 (2008, http://www.ens-newswire.com/ens/jun2008/2008-06-23-04.asp)
The U.S. Supreme Court today accepted a request by the U.S. Navy that the court review a series of lower court rulings that restrict the Navy's use of loud sonar blasts in submarine detection training exercises off the coast of Southern California.
The Navy, in its official environmental assessment of the exercises, acknowledges sonar use now underway in Southern California waters will disturb or injure an estimated 170,000 marine mammals, including causing permanent injury to more than 450 whales and temporary hearing impairment in at least 8,000 whales.

The underlying lawsuit was brought by a coalition of conservation organizations led by the Natural Resources Defense Council, NRDC. The other groups are the International Fund for Animal Welfare, the League for Coastal Protection, Cetacean Society International, and Ocean Futures Society and its president and founder Jean-Michel Cousteau.

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114 Regulations/Free Market Toolbox

AT: We Don’t Use the EPA
Congress relies on EPA for administration. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175) This four-tier array of enforcement methods represents a mix of techniques sharing the common goal of ensuring compliance with the myriad environmental rules and regulations, as well as the larger programmatic objectives underlying each environmental statute. 53

While citizen suits continue to be filed, the vast majority of environmental enforcement activity is initiated by the government, rather than by citizens or environmental organizations. 54 Frequently, media attention is fixed upon enforcement results from significant court judgments or settlements [*187] imposing substantial monetary penalties and far-reaching injunctive relief. 55 With this big case emphasis in the popular media and in the minds of many commentators, it is easy to lose sight of the fact that a significant amount of environmental enforcement occurs within EPA itself by way of administrative or agency penalty practice. 56 It is not difficult to comprehend the reasons for this shift towards administrative enforcement: (1) reduced agency resources than are required by judicial methods; (2) EPA independence in enforcement without required coordination with the DOJ; and (3) decisionmaking by EPA's ALJs, who are familiar with the law, regulations, and technical aspects of environmental conflicts. 57 Relying upon these administrative authorities, EPA annually obtains both monetary penalties and
injunctive relief in many individual cases that are decided within its own administrative judicial system staffed by EPA ALJs and by EPA's Environmental Appeals Board (EAB or Board). 58 As the statistical data below will indicate, this kind of [*188] administrative enforcement is becoming increasingly common as more cases are disposed of in this low visibility, administrative fashion. The wisdom of this enhanced reliance on civil enforcement via administrative means remains an open question.

Congressional laws allow the EPA to use administrative mechanisms for the environment. ExpectMore.gov January 29 (2008, http://www.whitehouse.gov/omb/expectmore/detail/10000220.2004.html)
Explanation: The purpose of EPA's Civil Enforcement Program (i.e., compliance assistance, compliance incentives, compliance monitoring, and civil and administrative enforcement actions) is to protect human health and the environment by ensuring that regulated entities achieve full compliance with the nation's environmental laws; and by assisting and overseeing our state, tribal, and local partners in achieving maximum compliance with federal and state environmental laws. All major environmental laws provide the Agency enforcement and oversight authority, as well as authority to achieve compliance through
other means (e.g., compliance assistance). The program purpose is embodied in the Agency's strategic plan, and the mission statements of the Office of Enforcement and Compliance Assurance (OECA) and its subsidiary offices.

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AT: EPA Not Administrative
90% of EPA actions are administrative. Miller ‘5 (Jeffrey G, Professor of Law at Pace University, 29 Harv. Envtl. L. Rev. 1, “Theme and Variations in Statutory Preclusions
Against Successive Environmental Enforcement Actions by EPA and Citizens”) States have similar arsenals of enforcement remedies in their statutes. In practice, however, EPA and

states conduct most enforcement by issuing administrative orders. Approximately ninety percent of EPA enforcement actions and ninety-five percent of state actions are administrative. 30

EPA uses administrative regulations to deter potential polluters. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175) As with any regulatory scheme, EPA must find ways to have its regulations followed so that the environmentally protective goals of the regulations and statutes will be realized. But how will compliance be achieved? What approach will be taken? This effort to insure

regulatory compliance is generally known as enforcement. 32 Two main theories of enforcement have been advocated: a deterrence-based approach and a negotiated, cooperative approach. 33 Over time, and
with the differing political philosophies of successive governing administrations, the relative emphasis between these two approaches can shift. Despite this observation, EPA's enforcement system has consistently stressed deterrence-based

enforcement methods using formal sanctions imposed through adversarial processes as a sign of programmatic success. 34 The central idea underlying this view is that polluters will act in an economically rational fashion and
will seek to avoid the certain--and [*183] high--penalty costs of their environmentally noncompliant conduct. 35 This risk avoidance will influence behavior and encourage compliance. 36 In this way of thinking, EPA consistently must act to quickly identify regulatory violations and punish these transgressions in a predictable and economically onerous way. Even if EPA wishes to employ its

enforcement powers in a more conciliatory or cooperative way, it must maintain the possibility of using more punitive tactics as an incentive to securing cooperation. 37 This conclusion is especially true when public health
and environmental quality interests are at stake. In the most environmentally threatening situations, the deterrence theory also requires that EPA have the authority to punish particularly egregious behavior with noneconomic criminal law penalties. 38

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Administrative/Judicial Tradeoff Links
Administrative enforcement deters action from entities like the courts. Glicksman and Earnhart 7 (Robert: Distinguished Professor of Law at the University of Kansas and Dietrich: Professor of
Economics at the University of Kansas, “The Comparative Effectiveness of Government Interventions on Environmental Performance in the Chemical Industry”, 26 Stan. Envtl. L.J. 317)

Despite the central role of enforcement in the implementation of environmental legislation, relatively little is known about why regulated entities either do or do not comply with their regulatory obligations. In particular, "until recently, there have been surprisingly few empirical studies of environmental enforcement," in part because comprehensive data on compliance and enforcement have been difficult to obtain. 7 The EPA and state environmental agencies typically proceed on the assumption that rigorous enforcement will deter noncompliance by regulated entities. 8 Other participants in the environmental enforcement process, including the courts, seem to agree. 9 Some environmental law scholars, however, have interpreted the available
evidence to suggest "that economic sanctions do not play a major role in encouraging compliance" with environmental regulations. 10 Even assuming that government enforcement efforts can potentially induce regulated firms to improve their performance, relatively little is known about what kinds of enforcement actions are more effective at deterring noncompliance than others. 11

Data proves that administrative enforcement trades off with judicial enforcement. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175) After reviewing the EPA administrative enforcement data for the five-and-a-half-year study period, a number of conclusions can be made. First, administrative enforcement within EPA is definitely increasing, even if recent EPA data is

discounted for being somewhat over-inclusive. This appears to be the result of twin trends: a reduction in EPA and DOJ judicial civil enforcement and an increase in the use of administrative measures. If this
de-emphasis of more formal judicial enforcement continues, EPA will employ these administrative tactics to seek both injunctive relief and civil penalties from violators of environmental regulations in the future. Serious questions remain whether this increased reliance on administrative enforcement measures sufficiently advances the environmental policy goals of the underlying statutes. A more complete analysis of this greater emphasis on the administrative process is warranted to determine if environmental policy goals are being adequately served.

EPA administrative enforcement cases are kept away from the courts. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175)

Fifth, with a limited number of cases reviewed by the EAB, ALJ decisions, in reality, represent the final step in the EPA enforcement process. This conclusion means that a larger number of environmental enforcement disputes are being resolved by EPA's ALJs without external review by courts. 172 The only review of these decisions is potentially undertaken by the EAB. However, the small number of EAB appeals granted suggests that few cases are seriously reconsidered. All in all, this adjudicatory process vests
considerable discretion and authority upon EPA's ALJs and in regional officials to determine how environmental noncompliant behavior will be sanctioned.

While there may be certain efficiencies and other benefits from such an administrative enforcement system, there is no assurance that the right cases are being kept inside the Agency, rather than being enforced in a more public way outside of EPA in court. Perhaps this kind of case selection represents a proper exercise
of prosecutorial discretion. However, this increased emphasis on administrative enforcement potentially diverts more serious cases away from the judicial forum. Perhaps these right cases will be resolved in the wrong venue. The expansion of this form of internal Agency enforcement, while simultaneously contracting the amount of external enforcement, holds the potential for inadequately sanctioning more serious environmental wrongs. While deciding which matters are worthy of referral to the DOJ for civil enforcement would be essentially a matter of discretionary judgment, the rapidly shrinking number of judicially enforced environmental cases calls this selection process into serious question.

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2NC Link: Consent Agreements
Administrative enforcement results in consent agreements for environmental complaints, which eliminates judicial enforcement. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175)

Second, the data collected indicates that administrative enforcement can result in cost savings for the Agency by encouraging Consent Agreements as the principal method of resolving a large number of environmental complaints. While the EPA regional offices expend time and effort to secure these settlements, it would seem that more of both would be needed to expand judicial and administrative enforcement proceedings from their present levels. As the research shows, a relatively small portion of the administrative complaints actually result in contested cases. Put into perspective, for the five-plus years of the study period, there were less than 200 reported ALJ case decisions under the
five major environmental statutes. This suggests that EPA conducted adjudicatory hearings in approximately thirty-five contested cases each year, with hundreds more resolved by CAFO settlement agreements. 170 If this trend continues, negotiated

settlements conducted at the regional level will become the rule in environmental violation cases, with [*214] administrative penalty proceedings being an occasional event and judicial enforcement serving as the rare exception.

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2NC Link: Penalty Reductions
Administrative mechanisms result in high penalty reductions increasing incentive for challenges to enter the EPA instead of the courts. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175)

Fourth, the administrative enforcement process not only results in low visibility and negotiated settlements but has also produced an adjudication format that results in a high number of penalty reductions. The number of downward penalty adjustments greatly exceeds the number of upward adjustments. This fact suggests that ALJs frequently perceive EPA's initial proposed penalty to be too high, rather than too low. It is not altogether clear why EPA enforcement officials would repeatedly err on the high side. One possible
answer is that they expect the ALJs to reduce the penalty, so they set their bargaining and litigation starting point high. Perhaps the ALJs systematically discount the EPA claims as being excessive from past experience in prior cases. [*215] Whatever the strategic

reason might be for setting the initial penalty amounts, as the system has evolved, it rewards initial penalty challenges with a forty-two percent chance of downward adjustment. This adjustment would compensate penalty challenges with a relatively high probability of financial reductions.

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AT: EPA Rules Good
Regardless of what rules the EPA has, it doesn’t follow them. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175)

Third, the review of the reported CAFOs and administrative case decisions reveals a surprising lack of adherence to EPA's own rules of practice in administrative penalty hearings. This defiant behavior is not
reflected by the parties charged with environmental offenses or EPA enforcement officials, but rather by the RJOs and ALJs who draft the CAFOs and write the case decisions. These are the decisionmakers who have been charged with the responsibility of implementing EPA's administrative enforcement system. In particular, the absence of specific civil penalty calculations in the final penalty decisions undercuts the objectivity of the system as a whole. The Part 22 rules specifically require this explanation in all decisions to enhance the transparency and accountability of these decisionmakers. In an agency adjudicatory system where individual decisions rarely reach the public or the environmental community, it would seem especially important to comply with EPA's own disclosure regulations as a means of reinforcing the legitimacy of this important and increasingly utilized penalty process. Unfortunately, this does not seem to be the case and one is left to wonder just how the particular civil penalties were calculated. The absence of coherent explanations certainly does not build confidence in the administrative

enforcement system that is so isolated from public view. 171

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Impact Extension: Turns Case
EPA enforcement turns case because it does not have the serious threat of court enforcement. Rosenberg ‘8 (Ronald H, “Doing More or Doing Less for the Environment: Shedding Light on EPA’s Stealth Method of Environmental
Enforcement”, 35 B.C. Envtl. Aff. L. Rev. 175)

Sixth, the sustained increase in EPA administrative enforcement emphasizing negotiated settlements and relatively low civil penalties may provide the regulated community with the idea that environmental enforcement does not present a serious threat of court enforcement, and so may not deter noncompliant conduct. If those subject to environmental [*216] rules believe that regulatory compliance is something that can be negotiated away for a low-level sanction in a nonthreatening context, what will become of the deterrent effect of enforcement? Conventional wisdom suggests that serious and costly EPA enforcement is unlikely and that environmental charges can be dealt with through publicly
invisible negotiation.

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***AT: EPA Administration DA

Gonzaga Debate Institute 2008
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122 Regulations/Free Market Toolbox

2AC: EPA DA (1/2)
1. Non-Unique: EPA is fighting with Congress: No reason Congress would use the EPA. Lieberman July 11 (2008, Ben, The Heritage Foundation, http://www.heritage.org/Research/EnergyandEnvironment/wm1987.cfm)
Today, the Environmental Protection Agency (EPA) issued an Advance Notice of Proposed Rulemaking (ANPR) detailing potentially devastating regulation of the economy in the name of fighting global warming. But several weeks ago, the Senate considered and wisely rejected global warming legislation that, as with EPA's proposal, would have done far more economic harm than environmental good. Apparently, the EPA bureaucracy is trying to circumvent Congress and regulate carbon dioxide and other greenhouse gas emissions under the Clean Air Act. Fortunately, while allowing the ANPR to be released for comment, the Bush Administration expressed in clear terms its
objections to it. EPA Administrator Steve Johnson noted that the Clean Air Act was originally intended to regulate regional pollutants that caused health problems and is not the way to reduce greenhouse gases.

The regulatory roadmap laid out in the ANPR would result in a vast expansion of the EPA's power, giving the organization unprecedented regulatory oversight into all sectors of the economy, including restaurants, hospitals, apartments, schools, shipping, trucks, and farming. There is now a 120-day comment
period for interested parties to explain why this proposal needs to be stopped.

2. Non-Unique: EPA won’t get that regulatory power because the Bush administration is blocking efforts to regulate. Madia July 7 (2008, Matt, RegWatch, http://ombwatch.org/article/blogs/entry/5166/24)
The White House Office of Information and Regulatory Affairs (OIRA) has rejected an Environmental Protection Agency proposed rule that would encourage the recycling of pesticide containers. EPA has been
mulling the proposal for at least a few years. The rule would establish a national recycling program that would help ensure pesticide containers are rinsed out and properly disposed of. According to EPA, "The proposed regulation is intended to protect human health and the environment by promoting recycling of pesticide containers to reduce the risk of unreasonable adverse effects to public health and the environment that may be associated with certain nonrefillable pesticide containers and the associated residues." But the White House has rejected the EPA proposal. In a July 3 letter to EPA Deputy Administrator Marcus Peacock, OIRA Administrator Susan Dudley takes exception to the proposal. Dudley says the rule would be too costly and criticizes

the agency for not examining other regulatory alternatives.

3. Link Turn: The courts don’t help the environment: Clean Air Interstate Rule proves. New York Times July 16 (2008, http://www.nytimes.com/2008/07/16/opinion/16wed3.html)
Nobody could ever seriously accuse the Bush administration of being too aggressive when it comes to enforcing the nation’s environmental laws. But it was partly on those grounds that a federal court last week struck down the Clean Air

Interstate Rule, a regulation aimed at reducing soot and smog and one of the few creative initiatives to emerge from the Environmental Protection Agency in the last seven years. The decision was an unexpected triumph for a handful of utilities, including Duke Energy, which complained that the agency had overstepped its authority. It was also an enormous setback for the nation’s air quality and the health of all
Americans

4. Link Turn: Current EPA regulations protect the environment. EPA No Date Given (Compliance and Enforcement, http://www.epa.gov/ebtpages/complianceenforcement.html)
Complying with environmental regulations is important in protecting public health and the environment. EPA is responsible for enforcing and assuring compliance with environmental regulations and may delegate this responsibility to state and tribal governments. EPA's enforcement efforts focus on assisting businesses and communities with compliance training and guidance. The Agency also partners with
foreign governments, international organizations and other federal agencies to help building enforcement and compliance capabilities in other countries, and to fulfill U.S. commitments under international agreements.

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2AC: EPA DA (2/2)
5. No internal link: EPA works with businesses on regulations: No reason to resist. EPA June 9 (2008, http://www.epa.gov/lawsregs/brochure/index.html)
EPA encourages and facilitates such voluntary efforts to protect the environment, but sometimes we also must write mandatory requirements called regulations. While Congress passes the laws that govern the United States, Congress has also authorized EPA and other government agencies to create and enforce regulations in order to put those laws into effect. EPA regulations cover a

range of environmental and public health protection issues, from setting standards for clean water to specifying cleanup levels for toxic waste sites to controlling air pollution from industry and other sources. We invite stakeholders to share in the development of EPA regulations. We want our rules to be practical and fair for the American people. This online brochure provides an in-depth overview of how EPA writes
regulations, and how your voice can influence the policies that shape our environmental future.

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Extension: Congress-EPA conflict
EPA and Congress are fighting over lowering greenhouse gas emissions. Reuters July 11 (2008, http://www.reuters.com/article/environmentNews/idUSN1149339120080711)
The head of the U.S. Environmental Protection Agency said federal clean air laws are the "wrong tool" to regulate greenhouse gas emissions and that Congress should enact laws to tackle climate change. The EPA has been under pressure to take steps to regulate greenhouse gases since a landmark 2007 Supreme
Court decision that it must reconsider its refusal to regulate carbon dioxide emissions from new cars and trucks.

"The Clean Air Act is ill suited and the wrong tool, therefore I believe this should be the responsibility of Congress," EPA administrator Stephen Johnson told reporters in a teleconference.

More evidence. Reuters July 11 (2008, http://www.guardian.co.uk/business/feedarticle/7646135)
The top U.S. environmental regulator on Friday declined to make rules to regulate planet-warming emissions under existing pollution laws despite a Supreme Court decision that has pressured his agency to act. Environmental Protection Agency Administrator Stephen Johnson said Congress should make rules to regulate emissions of carbon dioxide and other gases blamed for global warming

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Extension: Bush administration-EPA conflict
The EPA has worked against regulation due to White House direction. LA Times July 12 (2008, Janet Wilson,
http://www.boston.com/news/nation/washington/articles/2008/07/12/epa_chief_sidesteps_supreme_court_ruling/)

Responding to a US Supreme Court order, the Environmental Protection Agency said yesterday that the Clean Air Act was "the wrong tool for addressing greenhouse gases" because it would be too costly for the American public and that instead Congress should move forward with passing legislation to tackle the issue.
The high court had ordered the EPA more than a year ago to determine whether greenhouse gases were a danger to the public. If so, the justices said, under the Clean Air Act the agency is required to develop regulations to reduce the risk.

Instead, Stephen Johnson, EPA administrator, signed what he said was an unprecedented 1,000-page document yesterday that included letters from numerous White House environmental and economic agencies detailing how such regulations could have a negative impact on major sectors of the economy.

The Bush administration is preventing regulation on climate change. Charleston Post and Courier July 18 (2008, http://www.charleston.net/news/2008/jul/18/face_up_global_warming47922/)
By week's end, though, environmentalists were assailing the Bush administration anew over its refusal to act on the findings of Environmental Protection Agency scientists who concluded that climate change presents "grave risks" to human health due to its impact on supplies of food, water and energy.
That EPA analysis was conducted in response to a 2007 Supreme Court ruling requiring it to regulate greenhouse gases unless it could provide a "scientific" basis for not doing so.

Yet EPA Administrator Stephen Johnson rejected his own agency's report, instead declaring a fourmonth "public comment" period before deciding the next step. By the time that delay ends, a new president-elect will have been chosen. The Bush administration's apparent intention to play out the clock on climate change is hardly surprising. In a related recent development, a former senior EPA official charged that Vice President Dick Cheney's office altered
testimony from the Centers for Disease Control early this year to downplay climate change's ill effects on public health.

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Extension: Courts hurt the environment
Supreme Court not helping environmental groups: Border fence proves. Environmental News Service June 23 (2008, http://www.ens-newswire.com/ens/jun2008/2008-06-23-092.asp)
The U.S. Supreme Court today decided not to hear a plea by two environmental groups to limit the Bush administration's power to waive laws in order to construct a fence along the U.S.-Mexican border. In April, Homeland Security Secretary Michael Chertoff announced that he was waiving 36 federal laws, including the Endangered Species Act, the Migratory Bird Treaty Act, the National Wildlife Refuge System Administration Act, and the National Environmental Policy Act, in order to speed up construction of over 300 miles of border wall.

Even Massachusetts vs. EPA didn’t work: The Bush administration is rejecting action. ContraCostaTimes July 15 (2008, http://www.contracostatimes.com/opinion/ci_9893757)
PRESIDENT BUSH'S STALL tactics on global warming have finally worked. By turning down recommendations from top experts and rejecting regulation of greenhouse gases blamed for global warming, Bush has officially passed the hot potato on to the next administration. Bravo, Mr. President. The Bush administration dismissed a 588-page federal notice, saying it would cripple the economy.
However, the evidence comes from an Environmental Protection Agency that is suddenly mastering the art of flip-flopping, even when the future of our society could be hanging in the balance. In the notice released, the EPA said it made no finding on whether global warming threatens people's health or welfare; that was a reverse of an earlier conclusion and came at the insistence of the White House. Three weeks earlier, the EPA suggested that the 1970 Clean Air Act can be workable and effective for addressing global climate change. But the White House not only rejected that claim, the EPA later changed its stance again and said that law is "ill-suited" for dealing with global warming. EPA Administrator Stephen Jackson said "It is really at the feet of Congress."

The Supreme Court ruled last year that the government had the authority under the Clean Air Act to regulate greenhouse gases as a pollutant, but Bush has steadfastly opposed such a notion.

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Extension: EPA helps the environment
The EPA helps the environment: It promotes environmental management systems. EPA 5 (January 12,
http://yosemite.epa.gov/opa/admpress.nsf/a76c9c7d7c5403f8852572a000658eee/50f77e260c79da2785256f870065068f!OpenDocument)

Environmental management systems (EMS) are a well established tool to help local governments prevent pollution, operate more efficiently and improve environmental performance within their communities. Since 1997, EPA has helped local entities establish EMS that include effective environmental policies and measurable goals for reducing impacts on the environment. Mayor Douglas Palmer of Trenton, N.J., who co-chairs the National Conference of Mayor Urban Watershed Council said, "Introducing EMS as a tool reduces costs and improves government efficiency in addition to preserving environmental quality, making it a ‘must do’ for mayors and their staff and programs." The agency has been working with local governments and others to help understand the benefits of an EMS and assist those that choose to put one in place. EPA in cooperation with the Global Environment and Technology Foundation has worked with more than 30 local governments around the country to reduce operating costs, improve their compliance and significantly reduce environmental impacts in the community. In the first year of implementing an EMS, the city of San Diego's Solid Waste Division was able to reduce air emissions from heavy equipment more than $800,000. EPA is also leading a program to work with non-profit organizations, called EMS Local Resource Centers, to help increase the number of local governments that adopt EMS. These centers provide a range of
services to local governments including education, training, workshops and guidance. There are 11 local resource centers around the country, including four new centers recently designated by EPA. These newly designated centers are located at the University of Missouri-Rolla, Kansas State University, the University of Colorado, and EcoVenture in Oakland, Calif. Each of these local

resource centers is playing an important national leadership role by helping local governments operate in a more environmentally and economically sound manner and provides more efficient services for taxpayers in their communities. Information about EMS and the new centers is available at: http://www.peercenter.net .

EPA helps the environment: New website. EPA 7 (May 2, Dave Ryan,
http://yosemite.epa.gov/opa/admpress.nsf/066afa186adc1114852572a00065593c/0fe60b8b9050fed7852572cf005f5262!OpenDocument)

The new EPA Web site on stewardship programs, launched today, can help business, government and private citizens make intelligent choices on sustainable environmental benefits. Simple everyday decisions by
organizations and individuals on such issues as recycling, reuse or choice of fuel support pollution prevention and environmental stewardship. The Web site will enable users to find EPA partnership programs, such as the Energy Star energy saving program, which best align with their needs and interests. Businesses can search for EPA programs based on their industrial category, environmental issue of interest, and geographic area. One specific Web site, for example, shows businesses how they can help employees reduce the environmental impacts of commuting. The Web site also provides information links individuals can use to protect the environment in different settings, such as home, work, school and shopping. One Web site shows citizens how they can use pesticides safely.

This tool is the latest in a series of steps EPA has taken to support environmental stewardship. In 2005, EPA Administrator Stephen L. Johnson endorsed a framework for EPA that recognizes environmental stewardship as the next phase in an ongoing evolution of environmental policy – from pollution control to pollution prevention and sustainability. EPA is now promoting environmental stewardship in a variety of ways. For example, the agency has challenged
individuals to become more energy efficient at home through the "Change a Light, Change the World" campaign, and challenged Fortune 500 companies to double their purchases of green power. Examples at the local level include EPA offering communities technical assistance in applying smart growth principles, as well as providing funding to retrofit older diesel school buses with pollution control equipment. At colleges and universities, EPA is sponsoring research to help students develop and design innovative solutions to sustainability challenges in agriculture, water and energy use. EPA's commitment to environmental stewardship is also evident at the agency's facilities: In 2006, EPA's new Potomac Yard office in Arlington, Va., earned a gold rating under the internationally recognized green building standard known as LEED (Leadership in Energy and Environmental Design).

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Extension: EPA regulations not resisted
EPA regulations provide flexibility for businesses. EPA June 9 (2008, “Providing Flexibility”, http://www.epa.gov/lawsregs/brochure/flexibility.html)
Companies sometimes argue that, by mandating specific solutions, EPA regulations stifle innovation that could lead to better environmental results. By pursuing innovative approaches and insisting on strong accountability for

results, we are finding ways to build more flexibility into regulations. One way we do so is by using performance-based approaches that emphasize the end result we want to achieve. For example, an air quality regulation directed heavy-duty diesel trucks and buses to cut sulfur emissions by 95 percent. The
regulation did not specify how refiners and engine manufacturers must achieve this goal, but it did give them significant time to decide for themselves.

In other instances, EPA has offered companies extra time to comply with a new requirement if those companies were willing to invest in more advanced technologies than required. The goal of this approach is to achieve better protection for the environment and more flexibility in making environmental investment decisions. EPA works with states, businesses, and other organizations with environmental interests to test approaches that can lead to more flexible regulations. The objective is to find more efficient and effective ways of
achieving environmental goals and to then apply those approaches on a scale that produces the greatest possible benefits.

EPA is completely accountable to the public. EPA June 9 (2008, “Providing Flexibility”, http://www.epa.gov/lawsregs/brochure/flexibility.html)
Many individuals outside the government are affected by and interested in environmental regulations. These stakeholders often provide valuable comments on EPA's proposed regulations. Stakeholder comment can illuminate issues that EPA has not yet considered, allowing us to benefit from the knowledge and experience of the concerned public and leading to better regulations.

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Non-Unique: Courts not helping the environment
The courts are not helping the environment: Clean Air Interstate Rule proves. New York Times July 16 (2008, http://www.nytimes.com/2008/07/16/opinion/16wed3.html)
Nobody could ever seriously accuse the Bush administration of being too aggressive when it comes to enforcing the nation’s environmental laws. But it was partly on those grounds that a federal court last week struck down the Clean Air

Interstate Rule, a regulation aimed at reducing soot and smog and one of the few creative initiatives to emerge from the Environmental Protection Agency in the last seven years. The decision was an unexpected triumph for a handful of utilities, including Duke Energy, which complained that the agency had overstepped its authority. It was also an enormous setback for the nation’s air quality
and the health of all Americans

Supreme Court not helping environmental groups: Border fence proves. Environmental News Service June 23 (2008, http://www.ens-newswire.com/ens/jun2008/2008-06-23-092.asp)
The U.S. Supreme Court today decided not to hear a plea by two environmental groups to limit the Bush administration's power to waive laws in order to construct a fence along the U.S.-Mexican border. In April, Homeland Security Secretary Michael Chertoff announced that he was waiving 36 federal laws, including the Endangered Species Act, the Migratory Bird Treaty Act, the National Wildlife Refuge System Administration Act, and the National Environmental Policy Act, in order to speed up construction of over 300 miles of border wall.

Even Massachusetts vs. EPA didn’t work: The Bush administration is rejecting action. ContraCostaTimes July 15 (2008, http://www.contracostatimes.com/opinion/ci_9893757)
PRESIDENT BUSH'S STALL tactics on global warming have finally worked. By turning down recommendations from top experts and rejecting regulation of greenhouse gases blamed for global warming, Bush has officially passed the hot potato on to the next administration. Bravo, Mr. President. The Bush administration dismissed a 588-page federal notice, saying it would cripple the economy.
However, the evidence comes from an Environmental Protection Agency that is suddenly mastering the art of flip-flopping, even when the future of our society could be hanging in the balance. In the notice released, the EPA said it made no finding on whether global warming threatens people's health or welfare; that was a reverse of an earlier conclusion and came at the insistence of the White House. Three weeks earlier, the EPA suggested that the 1970 Clean Air Act can be workable and effective for addressing global climate change. But the White House not only rejected that claim, the EPA later changed its stance again and said that law is "ill-suited" for dealing with global warming. EPA Administrator Stephen Jackson said "It is really at the feet of Congress."

The Supreme Court ruled last year that the government had the authority under the Clean Air Act to regulate greenhouse gases as a pollutant, but Bush has steadfastly opposed such a notion.

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***DOE Good/Bad

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DOE Good – Quarterly Checks
( ) The DOE makes communication and management a top priority – quarterly report cards check inefficiencies. DOE 8 (Department of Energy, Steps to Success, http://www.doe.gov/pma/stepstosuccess.htm) DOE’s success has resulted from strong top level leadership, ownership by career officials, broad communication and participation at all levels of the agency, including the field. The Secretary and Deputy Secretary have made management improvement a high priority and consistently used the President's Management Agenda (PMA) to implement needed reforms. The Management Council, which is chaired by the Deputy Secretary and consists of DOE’s top political and career officials, was established to oversee PMA implementation. The Council meets monthly to discuss guidance from the President’s Management Council, review progress in implementing PMA initiatives and establish expectations for future action. The Secretary
designated the Associate Deputy Secretary to lead day-to-day management of the PMA and provide consistent attention to PMA issues. To institutionalize DOE’s management reforms, a kitchen cabinet of career senior executives was established by the Associate Deputy Secretary to strengthen ownership of PMA principles in the career ranks. Senior career executives were designated to lead each of the five PMA initiatives. These initiative “owners” report directly to the Associate Deputy Secretary on PMA matters. PMA office coordinators were designated to help implement PMA initiatives in their component. PMA coordinators were also identified

The Deputy Secretary issues a quarterly “report card” that uses stoplight scores to assess each component’s performance in implementing the five PMA initiatives. Components with yellow or red scores must prepare remediation plans, which are monitored by Associate Deputy Secretary.
at DOE’s national laboratories to ensure that major facilities contractors align their management practices around PMA principles.

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DOE Good – Regulations
( ) DOE is good with regulations – recent health provisions prove.
DOE 6 (Department of Energy, February, http://www.doe.gov/news/3147.htm) Energy Secretary Samuel W. Bodman today announced regulations aimed at improving worker safety across the Department of Energy complex. This rule establishes a uniform set of standards that will require departmentwide compliance and monetary fines for contractors who fail to apply these regulations.“This announcement marks a major step forward in protecting the health and safety of our workers and contractors,” said Secretary Bodman. “Most importantly, this rule strengthens our hand in both identifying and fixing safety issues before an accident occurs.” While DOE nuclear workers are protected under the Price-Anderson Act, which allows the Department to take enforcement actions against contractors who violate nuclear safety rules, there is no uniform standard or enforcement mechanism that addresses the health and safety of non-nuclear workers. “In the past, health and safety regulations varied from site-to-site and contractor-to-contractor, creating uneven standards of protection,” said Assistant Secretary of Energy for Environment, Safety and Health, John S. Shaw. “While DOE’s record is strong, this rule provides incentive for our contractors to constantly continue to improve safety practices.”

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DOE Bad – Management
( ) DOE has many problems with management and coordination on many existing projects.
ASCE 5 (American Society of Civil Engineers, Project Management Factors Affecting Department of Energy Project Success,
http://books.google.com/books?id=xZte3iKpuV8C&dq=Department+of+Energy+success&source=gbs_summary_s&cad=0)

An independent research team (IRT) was assembled to perform the study in collaboration with the CERF staff. This team collected data on the projects, familiarized themselves with what happened on each project, discussed the projects with DOE Headquarters personnel, and visited the sites to discuss the projects with project teams. The data from the 16 projects were discussed by the IRT team during a meeting in Washington, and the common factors contributing to project success, or deficiencies, were ascertained. These factors were then grouped into categories and prioritized. Finally, lessons learned were listed and recommendations formulated for presentation to the DOE. The key categories and results are: Organization and personnel. A critical success factor is the assembling and coordinated focus of a co-located Integrated Project Team (IPT) consisting of all key participants who are needed to perform the project as well as those who will use the deliverable when it has been completed. Both procurement and operations/facility user personnel should be on the team. A critical success factor is employment of an effective DOE Project Director with the right skils, including an undertstanding of the difference between assuming a leadership role and directing actual project execution. The most successful Contractor Project Managers have both technical and leadership skills.

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DOE Bad – Cost control
( ) DOE does not use all of the tools available to them. This hinders their ability to coordinate successful cost control.
ASCE 5 (American Society of Civil Engineers, Project Management Factors Affecting Department of Energy Project Success,
http://books.google.com/books?id=xZte3iKpuV8C&dq=Department+of+Energy+success&source=gbs_summary_s&cad=0)

The projects that performed robust front-end planning had the fewest problems during project execution. The risk assessment and management skills of the project team are critical determinants of eventual project success. Some of the projects reviewed showed an excessive reliance on the use of Earned Value Management Systems (EVMS) to monitor projects and were not using other tools at their disposal such as critical path schedule methods. Also, EVMS data problems and frequent rebaselining masked the true state of some of the projects. Best practices in schedule and cost control are the use of integrated, critical path project schedules and trending of potential changes. Regular, periodic project reviews by internal and external parties are often an effective means of keeping projects on track. However, these reviews need to be coordinated and limited to those necessary to track the project.

( ) DOE procurement approaches are not tailored to specific needs – this limits their effectiveness and success.
ASCE 5 (American Society of Civil Engineers, Project Management Factors Affecting Department of Energy Project Success,
http://books.google.com/books?id=xZte3iKpuV8C&dq=Department+of+Energy+success&source=gbs_summary_s&cad=0)

An acquisition strategy should be developed during the conceptual design phase of the project and integrated with the risk management program. Procurement approaches should be tailored to project needs. Performance metrics and incentives should be used to tie contractor performance to desired business results.

Gonzaga Debate Institute 2008
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135 Regulations/Free Market Toolbox

DOE Bad – Risk Assessment
( ) DOE fails – poor risk assessment policies prove.
ASCE 5 (American Society of Civil Engineers, Project Management Factors Affecting Department of Energy Project Success,
http://books.google.com/books?id=xZte3iKpuV8C&dq=Department+of+Energy+success&source=gbs_summary_s&cad=0)

Reviews by technical peers from other sites can play a key role in the success of complex, first-of-a-kind DOE projects. Unpredictability of funding disrupts projects, lengthens schedules, and increases costs. Develop a core group of highly qualified Federal Project Directors along with a defined career path to retain these individuals. Create opportunities for interactions and the sharing of lessons learned sharing among DOE Project Directors. Provide guidance on the required membership on an IPT and ensure that an IPT is appropriately identified early in the project. Take steps to strengthen risk assessment and risk management practices, an make the discussion of risk assessment and mitigation plans a part of all project reviews. Work to make Earned Value Management Systems (EVMS) meaningful management tools by improving the awareness of IPTs that EVMS are more than reporting mechanisms. Appropriately control the rebaselining of projects. Ensure that an integrated project schedule which includes all participants’ work efforts is developed for projects. Encourage robust front-end planning. Establish a baseline at the 30-40% design point for large projects (over 50M) that have reached Critical Decision-1. If they are not ready to satisfy all of the requirements of Critical Decision-2 at that point then a shortened list of requirements should be developed so that they can have a formal baseline for some portion of the work approved. Ensure that an acquisition strategy is developed at the beginning of the project. See that procurement staff play an integral role in the development of the acquisition strategy and become key members of the integrated project team. Require peer reviews for first-of-a-kind and technically complex projects at Critical Decision 1. Fully fund the smaller line-item projects and provide phased funding for the larger ones. The phased funding should be linked to the Critical Decision points. See that multi-partner teams develop Memorandums of Agreement early in the project and incorporate them in the relevant contracts. Develop guidelines for tailoring the requirements of the 413.3 Order and Manual to address the special conditions facing smaller and other unique programs. Examine the value of the PARS program reporting system to senior managers responsible for monitoring program efforts.

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