There are some disturbing implications of the Supreme Court ruling today regarding EPA enforcement of the Clean Air Act:
The 5-4 decision, a victory for environmentalists, found the EPA did not go too far when it overruled a decision by Alaska regulators, who wanted to let the operators of a zinc and lead mine use cheaper anti-pollution technology for power generation.
In short, the deal is this: the mine built a new electric generator and the Alaska state government authorized them to install emission reduction technology that reduced emissions by 30 percent. The US EPA did not agree with that authorization, and ordered the mine to install technology to reduce emissions from the new generator by 90 percent. The mine found this order prohibitively costly, and Alaska found this to be a violation of state’s rights. A federal court disagreed with Alaska, saying that the EPA has the final jurisdiction over enforcement of the Clean Air Act, and the Supreme Court agreed.
This decision flies in the face of the knowledge problem, the issue at the heart of this very website. Local regulators are going to be in a better position to know the costs, benefits, and tradeoffs in the specific local conditions (although even a local regulator will never, never, be able to capture or replicate the information of individual economic actors). The counterargument to this is that the EPA may do a better job of aggregating preferences across multiple jurisdictions (I am skeptical about their ability or incentive to do this impartially), but in the case of an isolated mine in Alaska, the issue of transboundary pollution is specious as a justification for federal regulation. Another counterargument may be that the local regulators are captured by the local regulated firms. Possible.
I have other concerns about this ruling, but will leave them for later.