After decades of effort, the voluntary, collaborative approach to restoring the health and vitality of the Chesapeake Bay— the largest estuary in the United States—has not worked and, in fact, is failing. A diverse group of 57 senior scientists and policymakers have joined forces to save the Bay. This is our plan.

The Pollution Diet and Environmental Arbitrage

(Posted by Bob Gallagher.)

After decades of dissembling and broken promises, the President’s Executive Order 13508 and the implementing “pollution diet” proposed by the EPA represent the best chance we have had in a generation to actually start cleaning up the Chesapeake Bay. It shouldn’t come as a surprise then that corporate polluters have ramped up their opposition to the pollution diet to unprecedented levels to include massive spending on media advertising, lobbying, campaign contributions, litigation and scientific dirty tricks.

During one 60-minute segment of television news programming, I recently saw four oil and gas industry public relations ads, including one extolling the benefits of “fracking,” the process of extracting natural gas by injecting million of gallons of water and toxic chemicals into the ground. A legislative measure offered by Representative Goodlatte (R-Virginia) would have stripped the EPA of funding to implement the pollution diet. The Farm Bureau has sued EPA to prevent implementation of the pollution diet. Corporate polluters have funded bogus studies to undermine the science behind everything from climate change to the consequences of fracking.

Now some congressional beneficiaries of corporate polluters’ first amendment largess would require EPA to do a cost-benefit analysis of the pollution diet. It would not analyze the cost to the public of continued pollution of the bay and its tributaries. Rather, it would seek to determine whether the cost of implementation by EPA of the pollution diet would outweigh the value of the benefits of the regulation.

The idea is breathtaking in its perversity. Would we require the prosecutor of Bernie Madoff to demonstrate that the costs of investigation and prosecution would be less than any fine expected to be recovered? We are talking about enforcing a law that protects a public treasure.

The bay is owned by all of us. The Clean Water Act recognizes that by requiring that pollution of our waters stop unless allowed by a permit. In the decades since its passage, polluters have undermined the CWA by gutting funding for implementation and enforcement. Some point to this as the reason we have been unable to make the needed progress in improving the Bay’s health. Polluters’ attack on the pollution diet is a continuation of those efforts to undermine the requirements of the CWA.

Not even the worst corporate polluters pollute for pollution’s sake. It is all about the money. It is not about the role of government. Corporate polluters are happy to accept corporate welfare. It is not about states’ rights. Polluters frequently choose the regulator that brings the most benefit to their bottom line. It is not about jobs. We will have a stronger economy and more jobs with a clean bay. The only principle behind opposition to the pollution diet is money.

Corporate polluters do not expect indefinitely to avoid rules that will restrict their ability to pollute the bay. All they need to do is delay them. The longer they delay them, the more money they make by avoiding the costs of pollution reduction.

Historically, American corporations have made money and thrived by improving processes and productivity, opening new markets, fostering innovation and adapting new technologies. These profits are not easily achieved. They require hard work and risk of investment capital.

Arbitrage is profiting through the exploitation of an imbalance in the market with little or no risk. In this age of deregulation, corporations increasingly seek profits through creating or maintaining regulatory imbalances in the markets. The opportunities for huge imbalances, like those created by regulatory monopolies, have diminished. But, opportunities to arbitrage regulatory costs can yield huge risk-free profits. Even after spending millions of dollars on public relations advertising, lobbyists and campaign contributions, corporate agriculture—including corporate operators of factory farms—will reap millions in profits from delaying the day when they will have to clean up their animal waste, stop spreading arsenic and other contaminants on the land and stop releasing millions of tons of contaminated sediments into our rivers and streams. Other industries reap similar benefits from delay.

It is much easier to boost the corporate bottom line by environmental arbitrage—by passing major costs of production to taxpayers and the next generation through the delay of environmental regulation—than it is to create value through increased productivity and innovation. Unless we require that the pollution diet be implemented without delay, we will permit corporate polluters, through environmental arbitrage, to continue to steal a public treasure a penny at a time. That is the real cost of delay.

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