Addressing such questions, whether in environmental law or in some other area, is not just academic rumination.  Classification is inherent and fundamental to the operation of law.  Justice requires consistency, and legal classifications enable consistency by designating categories of similar situations to which a common set of principles apply.  The category into which one assigns a situation thus may determine how the law applies to the situation.  The law works through categories, and one of the more important types of categories employed in the law is the legal field.  We designate legal fields—environmental law, labor law, criminal law—on the premise that those designations identify something important about how the law operates.

Thinking about what it means to designate a field of law and what is required for an area of law to be a legal field therefore carries the promise of improving our understanding of how the law functions.  When we understand how the law functions, we are better able to identify situations in which the law does not promote our desired objectives and to posit alternative approaches that may be more effective.  Constructing an analytical framework that brings together an area of law as varied and complex as environmental law will not itself resolve the recurring conflicts and difficulties that stymie environmental lawmaking, but it may well expose those conflicts and difficulties in a new light and help to frame the decisions facing legislatures, agencies, and courts, thereby facilitating more effective lawmaking.

I.
What Makes an Area of Law a Legal Field?

A.     Legal Taxonomy and Legal Fields

We organize the law into distinct fields as a form of legal taxonomy, on the premise that such classification will facilitate an improved understanding of the law by identifying a pattern of characteristics associated with the field.  An organizational framework does the work of identifying such a pattern or patterns for a particular field.  The usefulness of the field varies depending on how well its pattern explains the various situations that the field encompasses.  This explanatory power, in turn, depends on several factors: (1) the extent to which situations that arise within the field exhibit a recognizable pattern; (2) the simplicity of the pattern; (3) the extent to which the pattern predominates within the field—that is, the extent to which characteristics exhibiting the pattern predominate over other characteristics that do not; (4) the extent to which a single pattern explains the various issues that arise within the field; and (5) the breadth of the field.

B.     The Allure, and Hazard, of Coherence

Taxonomy inevitably and inherently is, to some degree, a quest for coherence.  We employ taxonomy to identify a pattern that functionally coheres the field of study by adding some amount of logical order, consistency, and clarity.  An area of law’s coherence depends on, among other things, the extent to which it exhibits strong, recognizable patterns.  Several factors may influence the existence of such patterns: (1) an area of law is more likely to exhibit consistency if its factual patterns have a great deal of commonality; (2) areas of law in which a single value or interest has an influence are more likely to follow strong, recognizable patterns; and (3) centralized and well-coordinated lawmaking processes are more likely to produce law that follows a strong pattern, and thus areas in which law is created by such processes are more likely to exhibit strong, recognizable patterns.

Despite its benefits, coherence also has its disadvantages.  First and most important, seeking coherence can lead to imposing a framework that creates an appearance of coherence where coherence does not in fact exist.  An organizational framework that prioritizes coherence may do so at the cost of imprecisely and inaccurately characterizing the field by ignoring complexity and variation.  Second, chasing coherence discourages experimentation in lawmaking.  Coherent accounts of the law can become deterministic, helping to perpetuate the patterns they identify by obscuring and discouraging opportunities to depart from those identified patterns.  Third, attempting to create coherence through internal logic in the law may well be ineffectual.  Incoherence arises from a lack of consensus about how to approach a legal problem.  As long as a consensus is lacking, lawmaking institutions are unlikely to be able to force coherence, but instead may merely push incoherence into other areas.

The drawbacks of allowing some incoherence in a field, moreover, can easily be overstated.  Indeed, incoherence is itself worthy of study, and it is only by grouping materials together in a field that incoherence becomes identifiable and susceptible to studied examination.

C.     Dimensions of the Field

It is useful to conceptualize a legal field as the interaction among four underlying constitutive dimensions of the field: factual context, policy tradeoffs, values and interests, and legal doctrine.  Every area of the law operates within a factual context—a set of factual characteristics shared by situations that arise within the field.  These factual characteristics create certain policy tradeoffs, which dictate the range of options available to lawmaking institutions such as courts, legislatures, executive branch agencies, or the public.  The lawmaking institutions apply values and interests to choose among the available options dictated by the tradeoffs.  Legal doctrine—the law of the field—arises as the product of the lawmaking institutions’ choices among available options; that is, the application of values and interests to policy tradeoffs.  The following figure illustrates the relationship among the underlying constitutive dimensions—factual context, policy tradeoffs, values and interests, and legal doctrine:

Figure 1:  Conceptual Diagram of Generic Legal Field

Because the interplay among the underlying constitutive dimensions produces law, one can characterize an area of law by any or all of its underlying dimensions.  An ideal, complete analytical model of a legal field would identify interrelated patterns across all of the dimensions of the field.  Depending on the features of the area of law, however, this ideal may not be possible, and we may be limited to an incomplete model that addresses only those dimensions that exhibit recognizable patterns.

D.     Minimum Requirements

At a minimum, a legal field must exhibit two characteristics—commonality and distinctiveness—that may arise within any of the different underlying constitutive dimensions of the field: the factual context, the policy tradeoffs, the values and interests, or the legal doctrine.

A field of law must exhibit some degree of commonality, a characteristic or set of characteristics shared by the situations that arise within the area of law the field encompasses.  Commonalities establish patterns that cohere the field.

However useful in some respects it may be to conceptualize the law in terms of fields or categories, dividing the law generally into discrete fields risks obscuring larger principles or features that transcend the particular field.  For a legal field to be legitimate, therefore, the organizing features (patterns) common to the field must be distinct to the field.  Distinctiveness can arise directly from unique features of the field or from the unique interplay of otherwise non-unique features.

II.
Why Is Environmental Law a Legal Field?

Having set forth an approach to thinking about legal fields generally, we can apply that approach to explicate my proposed use-conflict framework for understanding environmental law.

A.     Factual Context

Environmental problems exhibit two core factual characteristics that, in combination, are both common and distinct to environmental law.

First, environmental problems involve a physical resource that is in important senses publicly rather than privately valued, owned, and/or controlled: for example, public lands, air, water, and wildlife.  The interrelationship among uses of these physical public resources, and the special difficulties with attempting to regulate conflicts among uses in the environmental context, lie at the heart of all problems that arise in environmental law.  Some of the difficulties with addressing use conflicts in environmental law are not distinct to the environmental context, but rather arise in many common-resource situations that require collective management.  But several characteristics of environmental public resources make them particularly difficult to manage or to regulate collectively.  The environment, in its many forms, is traditionally an unregulated public resource, often associated with long traditions and customs of relatively uninhibited exploitation and open access.  Environmental public resources often have extremely numerous, valuable, and varied uses, which increases the probability and intractability of conflicts among users and decreases the likelihood of effective collective action.  The numerousness of users and the often complex lines of causation that create interrelationships among uses mean that, when conflicts among uses arise, it can be exceedingly difficult or impossible for any user harmed by the conflict to trace her harm to any particular other user or beneficiary.  The same factors—numerous users and complex causation—make it relatively easy for users to ignore, or not to recognize, their causal role in affecting another use.  The objectives of regulating the environment are often difficult to evaluate because they are not valued either economically as the subject of traditional market transactions or politically as the subject of traditional individual rights.

Second, everything in the environment, including humans, is part of a pervasively interrelated ecological system.  Scholars sometimes refer to this pervasive interrelatedness as the First Law of Ecology.  The pervasive interrelatedness among elements of the environment makes the environment a highly complex system that often is exceedingly difficult to manage.  The complexity and pervasive interrelatedness of the environment, however, make it extremely difficult to decide which activities need regulation to what extent to achieve a desired balance.  Any particular impact on a use of a resource may arise from numerous, difficult-to-identify causal events.  Conversely, every event may contribute to numerous, difficult-to-identify impacts.  Pervasive interrelatedness thus contributes to the extraordinarily complex lines of causation that often characterize environmental problems.  It may be difficult or impossible to determine with any precision a particular action’s innumerable causes and effects that ripple throughout the environment.  Not surprisingly, unintended consequences are a recurring phenomenon in environmental law.

B.     Policy Tradeoffs

The factual context in which environmental law operates—physical public resources subject to numerous uses connected by an intricate web of pervasive interrelationships—creates certain key policy tradeoffs that frame lawmaking choices.  Thinking in terms of the various competing uses that one can make of environmental resources provides a promising analytical framework for studying environmental lawmaking that carries several advantages over alternative frameworks.

First, thinking of environmental lawmaking in terms of use conflicts helpfully highlights the fundamental difficulties of the environmental context.  For example, environmental lawmaking requires lawmaking institutions to resolve tradeoffs among conflicting uses (or combinations of uses), but the immense complexity of the interrelationships in the environment renders our understanding of the environment incomplete and makes the precise nature of those tradeoffs difficult to ascertain.

Second, unlike many frameworks that scholars have proposed for thinking about environmental law, a use-conflict framework does not assume any particular baseline by which to judge alternative legal arrangements.  Nor does a use-conflict framework favor any particular use of the environment as normatively superior.  Instead, a use-conflict framework provides a relatively value-neutral approach that facilitates a full comparison of alternatives.  As suits its objective as a descriptive framework, it does not favor any particular alternative, but rather provides a useful basis for evaluating alternatives by applying a normative framework, or even for evaluating alternative normative frameworks.

C.     Values and Interests

Tradeoffs are only part of lawmaking; equally important are the values and interests that lawmaking institutions bring to bear on the relevant tradeoffs to make decisions that produce law.  Although we could frame our description of the values and interests in environmental lawmaking in terms of abstract, general principles or goals such as environmental protection or distributional equity, a descriptive analysis framed with abstract, generalized values and interests illuminates little about how environmental lawmaking functions.  A descriptive analysis of the values and interests in environmental lawmaking begins to yield meaningful insights only when we frame values and interests specifically enough to tie them to conflicting use demands on environmental resources.

D.     Legal Doctrine

Commenters and scholars have bemoaned the incoherence of environmental law as a body of legal doctrine.  I agree with their observation that environmental law appears to lack a set of fundamental, unifying substantive principles that explain environmental law, but not necessarily their concern that this incoherence is a serious blemish on the field.

First, the incoherence of environmental law provides fertile material for investigation and analysis.  We have much to learn from environmental law’s incoherence, and incoherence can play a constructive role in the development of environmental law.  Incoherence reflects the ongoing struggles of environmental law—with differences over values, extreme scientific uncertainty, and a scale and complexity that severely taxes, and may even surpass, the abilities of human understanding; incoherence is a functional and productive reaction to the extreme difficulties environmental law confronts.

Second, although we cannot reduce the substance of environmental law doctrine to a few fundamental principles, this does not mean that environmental law lacks a conceptual core.  Organizational frameworks such as the one proposed in this Editorial, which focus on patterns in dimensions of environmental law other than legal doctrine, can provide a coherent understanding of environmental lawmaking.  We can represent the relationship among these patterns with a conceptual diagram of environmental law, just as we earlier represented a conceptual diagram of a generic legal field:

Figure 2:  Conceptual Diagram of Environmental Law

Conclusion

It is impossible to reduce environmental law to a set of fundamental unifying legal principles.  Rather, the dominant characteristic of environmental lawmaking has been ad hoc muddling through, and this is reflected in the complexity and diversity of environmental law doctrine.  But this apparent doctrinal incoherence does not mean that environmental law lacks a conceptual core or that it is not a legal field.  An area of law is a legal field if it exhibits patterns associated with common and distinctive features that predominate within the area to an extent that justifies studying the area as a distinct category of legal situations.  We can cohere an area of law into a field by employing an organizational framework to highlight the distinctive patterns associated with the field.

Applying this methodology to environmental law, environmental law as a legal field is best understood conceptually as a category of situations that involve physical public resources subject to numerous, pervasively interrelated uses.  Conflicts among these uses are inevitable and create tradeoffs.  These use-conflict tradeoffs define the choices facing environmental lawmaking institutions.

This use-conflict framework for environmental law is superior to other explanations of environmental law because it focuses on features that are common and distinctive to environmental law and that explain the fundamental difficulties of lawmaking in the environmental context.  It does so, moreover, with a relatively value-neutral approach.  Unlike explanations of environmental law that are tethered to environmentalism, market capitalism, or other ideological commitments, the use-conflict framework does not assume any particular baseline by which to judge alternative options and does not favor any particular use of the environment as normatively superior.  By thus adopting a relatively value-neutral approach, the use-conflict framework facilitates critical analysis of a full range of alternatives.

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Todd S. Aagaard is Assistant Professor of Law at Villanova University School of Law.

This Legal Workshop Editorial is based on the following Law Review Article: Todd S. Aagaard, Environmental Law as a Legal Field: An Inquiry in Legal Taxonomy, 95 CORNELL L. REV. 221 (2010).

This raises important questions:  To what extent does current land use and property law protect existing uses?  To what extent does the Constitution demand this level of protection?  Are there normative justifications for protecting existing uses?  The answers turn out to be surprising.

Courts have developed a variety of doctrines that assume categorical protection for existing uses.  In fact, however, current constitutional rules do not compel it.  Moreover, there are no particularly good reasons to treat the existence of a use as the boundary line between property that can and cannot be regulated.  A more sensible approach to existing uses—and one that the Constitution in fact permits—is to treat them in the same way as prospective future uses.  There is no persuasive reason to afford greater legal protection to an existing decrepit shack in the woods than to a developer’s reasonable but not yet realized plans for the future.

 
I.
The Special Protection of Existing Uses

The law’s treatment of existing uses appears across a wide cross-section of land use doctrines.  The Standard Zoning Enabling Act, dating back to the 1920s, wrestled with the problem of existing uses,and implicitly took the view that the Constitution does not compel their protection.  Nevertheless, the subsequent evolution of zoning and land use law has largely assumed constitutional protection without explicitly addressing the issue.  In fact, much of the protection of existing uses in current law can be found in its exceptions—exceptions that, by their nature, assume some unstated background rule that existing uses are categorically different than prospective future uses.

This is most apparent in the law of prior non-conforming uses, that is, preexisting uses of property made impermissible by a subsequent zoning change.

To deal with prior non-conforming uses, many states have adopted amortization provisions that allow the application of zoning restrictions to prior non-conforming uses so long as the use is allowed to remain in place for some time.  If the property owner is given sufficient time to amortize her investment, the government can then require the property to come into conformity with new zoning regulations without paying compensation.  The constitutional issue often presented by amortization provisions is the duration of the amortization period required under the Due Process and Takings Clauses.  Strikingly, courts have almost entirely failed to ask why an amortization period is required at all.  The unstated assumption built into amortization rules is that existing uses are categorically protected from zoning changes in the absence of amortization. 

Another easy place to discern the special protection of existing uses is in the vested rights doctrine, which defines when a property owner has taken sufficient steps in developing her property so as to immunize it from new regulations.  The doctrine is implicated when a property owner has begun, but has not yet completed, some project before the government downzones the property or otherwise changes applicable land use regulations.  The constitutional issue here is usually deciding when the development rights vest—upon hiring an architect, obtaining permits, or pouring a foundation?  Under the vested rights doctrine, then, property rights are subject to a kind of existing use tipping point:  Once a property owner has done enough to establish a particular use on her property, it is suddenly protected from regulatory change.

The nuisance exception to takings liability is similar.  Core takings doctrine holds that the government can regulate away an existing use in order to prevent a harm.  The corollary is equally important but invariably left unstated:  If the government is not preventing a harm, it cannot eliminate an existing use.

In short, a number of important land use doctrines assume that existing uses are entitled to protection, but the basis for that protection is left unstated and is entirely unclear.

 
II.
The Illusory Constitutional Basis for Existing Use Protection

Instead of a coherent set of protections based on sound constitutional footing, existing use protection is generally an unexamined assumption that courts blindly follow.  Neither the Takings nor the Due Process Clauses provide the protection for existing uses that courts generally assume.

 
A.     The Takings Clause

The principal basis for takings liability comes from the Supreme Court’s Penn Central¹ test.  The factors for determining whether a regulation is a taking include its interference with distinct investment-backed expectations and the extent of the diminution in value it caused.  The first factor has the potential to provide the most significant protection for existing uses; however, it is now principally used to distinguish a property owner’s reasonable expectations from pie-in-the-sky development dreams.  In other words, the test today focuses more on the reasonableness of a property owner’s expectations, not on the extent of her investments, and therefore focuses on future uses and not existing ones.

Diminution in value, the second Penn Central factor, has become the cornerstone of takings jurisprudence, and it provides even less doctrinal justification for protecting existing uses.  Applying this factor, a regulation is a compensable taking if it reduces the value of the property by too much.  A regulation of an existing use is more likely to be a compensable taking than a regulation of a prospective future use because it will have a more significant impact on the value of the property.  But because the Penn Central test is applied in reference to the value of the property as a whole, it serves only to prevent the government from eliminating valuable existing uses on parcels of land that have little other value.  Where the existing use either does not add very much value to the underlying property—such as in the case of run-down, low-income housing in a gentrifying neighborhood—or where an existing use is but one part of a much larger property, the diminution in value test provides very little protection.

 
B.     Due Process Clause

The Due Process Clause is the other principal source of constitutional protection for private property.  For almost a century now, courts have had little appetite for striking down economic regulations on substantive due process grounds.  Land use, however, remains one area where courts have consistently been willing to invalidate regulations under substantive due process.

As the Supreme Court recently explained in Lingle v. Chevron,² the Due Process Clause prevents government regulations that are arbitrary or irrational, including regulations that have an insufficient means-ends fit.  Due process therefore prohibits the government from imposing harms that are disproportionately high compared to the benefits that are created.  Judicial review is highly deferential, and land use controls enacted pursuant to the government’s police power are entitled to a presumption of validity.  Some courts have found land use regulations irrational simply because of their impact on existing uses.  More typically, however, the due process inquiry into means-ends fit is only tangentially related to existing uses.  Indeed, in most situations, a municipality’s decision to eliminate an existing use is both perfectly rational and likely to succeed in achieving its goals.

Therefore, the due process inquiry itself does not appear to provide particularly strong protection for existing uses.  Its balancing of benefits and burdens is effective at proscribing arbitrarily short amortization periods or arbitrary distinctions in the development process that determine whether rights vest, but it does not explain why amortization periods are required at all or why vested rights are entitled to protection against legislative change.

 
III.
Normative Accounts of Existing Use Protection

If the Constitution does not compel categorical protection of existing uses, does (or should) the protection come instead from more general normative considerations?  The most likely normative justifications focus on:  (1) the nature and extent of the loss; (2) protecting reliance interests and the status quo; and (3) political economy.  None of these possible justifications for the categorical protection of existing uses withstands serious scrutiny, although each could justify protection in specific cases or contexts.

 
A.     Nature and Extent of the Loss

It is perhaps tempting to situate the protection of existing uses within the broader set of legal constraints against retroactive legislation.  While the Ex Post Facto Clause does not apply outside of the criminal context, deep rule-of-law concerns disfavor retroactive laws.  Failing to grandfather existing uses looks like retroactive lawmaking.  In actuality the line between retroactive and prospective laws does not necessarily track the line between existing uses and prospective ones.

It is surprisingly difficult to define what counts as a retroactive law.  Even prospective-only regulations can have a significant retroactive effect.  Leading academic accounts of retroactivity distinguish between strongly and weakly retroactive laws.  The former alter a legal status retroactively (for example, defining conduct as criminal after the fact); the latter change a legal status only prospectively, but rely on events that predate enactment of the law (for example, prospectively repealing the mortgage interest tax deduction).  In the land use context, imagine a new zoning ordinance that eliminates a particular existing use.  That zoning ordinance is not strongly retroactive because it only operates prospectively—that is, it does not impose civil or criminal penalties, say, for the existence of the use in the past.  It has a severe “weak” retroactive effect, however, because it interferes with the owner’s prior investment in the existing use.  But almost all land use regulations are retroactive in this sense.  Any land use regulation threatens to undermine settled expectations concerning the uses of property.

Antiretroactivity rules and norms are therefore either under- or over-inclusive when it comes to protecting existing uses.  If they only prohibit regulations that actually change preenactment legal statuses (that is, that are strongly retroactive), then they permit prospective regulations regardless of their impact on existing uses.  If they prohibit regulations that simply interfere with settled expectations (that is, that are weakly retroactive), then they do not distinguish between regulations of existing uses and regulations of undeveloped property where the owner reasonably expected to be able to build.  Retroactivity on its own does not explain, let alone justify, existing use protection.

Perhaps, alternatively, existing uses demand protection because of the nature of the losses they impose.  Simply put, the owner of an existing use is likely to value it more than an otherwise identical use that does not yet exist—a phenomenon that behavioral economists cast in terms of endowment effects.

While this account has considerable descriptive force, it is very difficult to justify treating these psychological connections differently from any other subjective value an owner may feel toward her property.  In other contexts, courts have reasoned that the difficulty—indeed, the seeming impossibility—of measuring subjective value with any precision militates in favor of ignoring it altogether.  There is really no conceptual difference between the subjective value resulting from the actual possession of property and the subjective value resulting from, say, property being in the family for a long time.  Furthermore, applying the subjective value intuition to justify protecting commercial property or abstract investments in property is far more of a stretch.

One may argue that these economic accounts miss some more fundamental aspect of existing uses and the connection that can develop between people and their property.  As Professor Margaret Radin has observed, these relationships can implicate the owner’s very personhood.³

Even if this is sometimes true, an existing use is at most a necessary but not sufficient precondition for property to implicate personhood.  It is simply not the case that all or even most existing uses involve personhood at all, let alone to an extent that demands protection.  The kinds of existing uses frequently at issue in land use disputes are commercial uses or property owned by corporations.  Personhood in such contexts simply is not—or at least not often—at issue.

 
B.     Protecting the Status Quo

Another kind of explanation for the protection of existing uses may come from property law’s more general role in promoting stability.  This claim, however, is problematic both descriptively and normatively.

First, descriptively, existing use protection could either protect stability in legal rules or in actual uses of property.  Neither are plausible, however.  The former provides no basis for singling out existing uses for special protection—stability in legal rules would resist any change in the law, regardless of the impact on existing uses.  But existing use cannot be about stability in the actual use of property either.  Indeed, the history of property law in this country is the history of promoting increasingly intensive uses.  It is not about stability but about encouraging productivity.  Existing use protection is only consistent with this history to the extent that it protects existing uses from less intensive uses, not more intensive ones—a distinction that simply does not exist in the doctrine.

Instead of protecting some kind of objective stability, perhaps existing use protection can be justified as protecting property owners’ subjective expectations about the use of property.  It is one thing to protect a property owner’s claim that she hoped, someday, to develop her property.  It is, perhaps, something else to protect the property owner who has already actually done so.  Viewed this way, existing uses have salience primarily because they are particularly good evidence of a property owner’s real expectations about the use of her property.

This account has some descriptive power, but again it does not justify categorical protection of existing uses.  Most profoundly, it does not explain why a property owner’s individual plans should be a relevant consideration for property protection in the first place.  When it comes to prospective future uses, the law does not even aspire to protect all genuine and reasonable expectations.  Developers are routinely required to scale back projects and offer concessions as part of the development process, regardless of the sincerity of their original expectations.  So long as that interference does not go too far, it is not impermissible and does not trigger takings liability.

 
C.     Political Economy

An entirely different kind of normative justification for existing use protection comes from the potential for systemic political malfunction.  Under one account, property protection should be at its highest when political protections are at their weakest.  The question, then, is whether owners of existing uses are likely to suffer from a predictable political failure.

If anything, owners of existing uses would seem to enjoy a predictable political advantage:  They are easy to identify and tend to have high stakes in regulatory changes affecting their uses, making them easy to mobilize into an effective special interest group.  In the rough-and-tumble of interest group politics, the class of existing owners appears far less susceptible to the kinds of political failures that can occur when costs are imposed on a diffuse, disinterested, and unorganized group.

There are admittedly some political process failures that may suggest a need to protect particular existing uses from exploitation. Most pressingly, governments can single out owners of specific kinds of disfavored existing uses to bear regulatory burdens. Zoning away adult businesses is perhaps the easiest example. But this same political dynamic exists whenever a municipality can single out any disfavored use.

Ultimately, however, it is difficult to generalize about the political power of owners of existing uses.  It is likely to depend on the nature of the government and the nature of the use.  This variety in the political story cannot justify the blanket protection that existing uses receive.

 
IV.
Existing Uses as a Proxy for Other Interests

The fundamental problem with the plausible justifications for categorical protection of existing uses is that the presence of an existing use does not always correspond to the various interests that existing use protection might claim to protect.  Importantly, though, this is not an argument that existing uses are irrelevant or never represent important and protectable interests.  Frequently, the presence of an existing use is a relatively good proxy for high transition costs or high subjective value.  Existing use protection can then perhaps be defended as an easy-to-administer bright-line rule.  Although overbroad, it prevents harms that are often—even if not always—associated with the elimination of an existing use.

If existing use protection were costless or sufficiently cheap, an admittedly overbroad prophylactic rule might make good sense.  But even without providing a full empirical accounting of the costs and benefits, there are some strong reasons to be skeptical of this prophylactic justification:  The costs are likely to be too high and the benefits too low.

Protecting owners from legal change—whether in the form of compensation or grandfathering—creates predictable and potentially perverse incentives.  One of the most obvious is the opportunity it creates for property owners to make investment decisions specifically to take advantage of temporarily favorable regulatory treatment.  In the face of a future regulatory change, property owners can lock in a current use by building or by vesting rights before the regulatory change takes effect.  This can precipitate a race to develop and can lead to inefficient over-investment in property.

Existing use protection can also lead to inefficient investment decisions simply by allowing property owners to ignore the risk of an adverse government action.  If property owners know that the government will compensate them for their existing uses, they may fail to account sufficiently for the risk of regulatory change.

Existing use protection may also make local governments less willing to experiment with zoning.  The less flexibility local governments retain to get out of unsuccessful zoning decisions, the less they will innovate where the outcome is uncertain.  If planners have to zone around existing uses, then a significant part of any zoning project will involve incorporating the existing uses, whether or not they make sense where they are.  Categorical existing use protection can hobble a local government’s zoning power by locking in the status quo and preserving incompatible neighbors.

In addition to these significant costs of existing use protection, many of the apparent benefits are largely illusory.  There are two principal problems.  The first, quite simply, is found in the exceptions to existing use protection.  Because courts generally accept as inviolable the implicit protection of existing uses, they instead focus on such theoretically unsatisfying questions as whether pouring a footing for a foundation is sufficient to vest development rights or whether environmental protection counts as preventing a harm or conferring a benefit.  If the benefit of categorical existing use protection is supposed to derive from the ease with which it can be applied, the myriad and murky exceptions substantially undermine this rationale.

The second problem with existing uses as a category is deciding what it actually includes.  How the use is characterized will determine whether or not a regulation even implicates the protection of an existing use.  The more narrowly an existing use is defined, the more any regulation will look like it eliminates that use.  If a local government requires homeowners with wells to hook into the municipal water supply, it could be seen as eliminating the existing well or merely as regulating the continuing use of the house.  Existing uses may not define an easily administrable category for property protection after all.

 
Conclusion

The normative justifications for current existing use protection are surprisingly unconvincing.  The costs are also substantial.  This is not to suggest, however, that existing uses are irrelevant and should simply be ignored.  Rather, it is to argue that blanket, categorical rules exempting existing uses from regulatory change protect too much.  Instead, courts and government actors should apply the same kind of inquiry to existing uses that they apply to prospective future uses.  The outcome may well be different if a use already exists, but not because there is anything sacrosanct about the existing use, and not because the analysis itself is any different.

Following this approach, governments still should not make a common practice of trampling over existing uses.  In many, if not most instances, governments should protect existing uses as part of the usual cost-benefit analysis that they undertake.  It is ultimately an empirical question whether a particular existing use should be protected in a particular case.  In other contexts involving such economic regulations, courts rarely interfere to second-guess legislative cost-benefit determinations.  There is little, if anything, conceptually different about existing uses that justifies special judicial protection.

Acknowledgments:

Copyright © 2009 New York University Law Review.

Christopher Serkin is Associate Professor at Brooklyn Law School and a 2009 Visiting Associate Professor at the University of Chicago Law School.

This Legal Workshop Editorial is based on the following Law Review Article: Christopher Serkin, Existing Uses and the Limits of Land Use Regulation, 84 N.Y.U. L. REV. 1222 (2009).

Environmental law scholars argue that federal ceiling preemption has pernicious effects.¹ These scholars fail, however, to adequately address the risk that states may adopt tough environmental regulations because they can externalize costs to other states, which may allow large pro-regulatory states like California to effectively dictate suboptimally stringent national standards.  Cost externalization—an inevitable byproduct of dividing the nation into fifty geographic zones—refers to instances where states and their residents do not bear the full cost of the regulations they pass because significant costs are borne by out-of-state consumers and producers.  This Editorial contends that the case for federal ceiling preemption in the area of environmental law based on cost-externalization arguments is weak.  It does so through a case study of California’s regulations of greenhouse gas emissions from motor vehicles.

California’s emissions regulations were initially preempted under the Clean Air Act by the Bush administration’s decision to deny its waiver request.  The Obama administration has reversed this denial and has also taken steps to combine California’s emissions regulations with the federal corporate average fuel economy program.² If the program succeeds, it will again impose a single national fuel economy standard.  Yet the history of motor vehicle regulation strongly suggests that any equipoise between federal and state regulations may be temporary, and that California (and states that choose to follow California) might again impose motor vehicle regulations that outpace the rest of the nation.  This Editorial addresses the costs consumers and producers in other states face from such leadership.

This Editorial argues that state regulations that provide manufacturers with sufficient flexibility to meet standards without disrupting economies of scale can largely avoid externalizing costs to out-of-state consumers, and that states often also have to consider, at least indirectly, the interests of out-of-state producers when issuing regulations.

 
I.
State Environmental Regulation and Federal Ceiling Preemption

States have developed innovative environmental policies.  Perhaps most prominently, every state has now taken some action to address climate change, adopting strategies ranging from targeted measures to increase energy efficiency and promote alternative energy to far broader proposals to cap greenhouse gas emissions across entire state economies.

California has also led an effort to regulate greenhouse gas emissions from motor vehicles, relying on its unique authority under the Clean Air Act.  The Clean Air Act preempts states from enforcing their own motor vehicle emissions standards, but makes an exception for California, which may petition the Administrator of the Environmental Protection Agency (EPA) for a preemption waiver.  In 2002, California’s legislature passed the nation’s first law to regulate motor vehicle greenhouse gas emissions, and the California Air Resources Board (CARB) subsequently promulgated regulations in 2004 establishing specific greenhouse gas reduction standards.  While other states cannot adopt their own emissions standards, they can opt into California’s program, and sixteen states have chosen to do so to regulate greenhouse gases.

Before California’s emissions regulations can become effective, the EPA must approve California’s waiver petition.  In December 2007, under the Bush administration, the EPA denied California’s waiver petition—the first time it had done so in decades and the only waiver request it ever denied in full.  Upon taking office, the Obama administration immediately decided to review this determination, and the new EPA Administrator granted California’s petition after completing formal reconsideration.³ The Obama administration also plans—through joint action of the EPA and Department of Transportation—to increase federal fuel economy standards, and harmonize them with California’s stricter standards.⁴

For now, then, it seems that those favoring more stringent regulation of motor vehicles to help combat global warming have won.  But the gains may be temporary and they do not resolve the structural question of the proper role for the states in environmental regulation.  As exemplified by the initial denial of California’s waiver petition, federal ceiling preemption in environmental law threatens state regulatory activity.  Over the past decade, federal ceiling preemption has expanded in environmental law as the result of broad interpretations of existing statutes by courts and agencies, as well as the enactment of new legislation by Congress.  Even presuming a Democratic Congress and presidential administration will be more interested in preserving the states’ ability to adopt stringent environmental regulations, questions about the proper scope of federal ceiling preemption are sure to arise.  For instance, business leaders have argued that preemptive federal policies are necessary to address climate change, while state leaders have supported federal action but have lobbied against federal ceiling preemption that would disable the many state, regional, and local programs under development.  In fact, a provision in the Waxman-Markey Bill, a leading climate change and energy bill that passed the House on June 26, 2009,⁵ imposes a five-year moratorium on state cap-and-trade programs for greenhouse gas reduction.⁶ Properly analyzing such questions requires precision about the tradeoffs involved in either permitting or preempting more stringent state environmental policies.

 
II.
Cost Externalization and Federal Preemption

Federal ceiling preemption has costs, but preemption may be justified when state regulation externalizes costs.  Cost externalization is undesirable because it distorts the incentives of state governments and regulators, leading them to enact stringent environmental regulations to gain benefits like environmental protection for their constituents at the expense of others.  Federal ceiling preemption is proffered as a solution to this problem, as it allows the federal government to consider and balance all of the costs and benefits of regulation.

A principled argument against the use of federal ceiling preemption in environmental law must therefore address whether and when state environmental regulations externalize costs.  Proponents of the extensive use of federal ceiling preemption suggest state regulations may often externalize costs, particularly when states regulate products with national markets and economies of scale in production.  California’s regulation of motor vehicle emissions is referenced as a paradigm example.  These regulations, the argument goes, may externalize costs to both out-of-state consumers and out-of-state producers.  Consumers are adversely affected if the regulations increase the cost of motor vehicles in their state, either by reducing economies of scale and increasing marginal production costs, or by forcing manufacturers to adapt vehicles to meet more expensive California standards nationally.  Producers and their workers may be harmed if the regulations make automobiles more expensive, which could decrease sales, reduce profits, and negatively affect employment rates.

This Editorial’s case study of California’s regulations suggests, however, that these fears may be overblown.  California’s regulations are designed in a way that minimizes disruption to economies of scale and mitigates cost externalization, and the argument that California is insulated from the costs it imposes on producers beyond its borders seems exaggerated.

 
III.
California’s Greenhouse Gas Regulations for Vehicle Emissions

California’s regulations under Assembly Bill 1493 (A.B. 1493),⁷ which limits tailpipe emission of greenhouse gases, grew out of the state’s preexisting Low Emission Vehicle Program (LEV).  Following the model of prior LEV regulations, the A.B. 1493 regulations set emissions standards for two different categories of new vehicles sold within the state (determined by vehicle weight) based on grams of carbon dioxide emitted per mile driven (calculated on a fleet-average basis).  The regulations do not directly impose fuel economy standards—and indeed, legally they may not under the federal Energy Policy and Conservation Act⁸—but the majority of emissions reductions are accomplished through enhanced fuel economy, and greenhouse gas emissions standards can be converted to approximate miles-per-gallon requirements.

As discussed above, in 2007 the EPA denied California’s Clean Air Act waiver request, preventing, at the time, the implementation of California’s vehicle emissions regulations.  In 2009, the EPA pivoted, as it withdrew its earlier denial and granted the waiver.  Assuming that both actions were within the EPA’s legal discretion, which is the better policy?  The answer ultimately turns, at least in part, on whether the initial waiver denial can be justified on cost-externalization grounds.  In other words, do California’s greenhouse gas emissions regulations enable it, as a single large state, to impose substantial costs to consumers and producers beyond its borders and effectively dictate national policy?

Looking first at the regulation’s potential impact on out-of-state consumers, the vehicle emissions standards’ reliance on fleet-wide averages—rather than vehicle-specific mandates—allow manufacturers to meet California standards without having to make modifications across product lines, minimizing the impact on out-of-state consumers.  Manufacturers do not have to build new “California cars.”  Instead, they can comply by altering the mix of car models sold in a jurisdiction.  Even for 2009 model-year cars—2009 being the first model year to which California’s regulations were scheduled to apply—most leading automobile manufacturers had at least some vehicle models in their fleet that comply with California’s standards.  California’s regulations admittedly may increase the cost of less fuel efficient vehicles by altering patterns of production and diminishing economies of scale.  However, they should also correspondingly increase the market for high fuel efficiency vehicles, creating additional economies of scale for these vehicles and making them less expensive both in California and in other states.

The car industry has actually recognized the possibility that California’s regulations could be satisfied by adjusting in-state sales.  In Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie⁹—a case brought in federal district court by members of the car industry to enjoin on preemption grounds Vermont’s adoption of California’s standards—a General Motors executive director testified that the company might have to gradually restrict products offered in jurisdictions like Vermont that adopted the more stringent emissions regulations.  While this prediction was offered as an argument against the state regulations, the case for preemption is thin when states primarily restrict the consumption options of their own constituents.  If state residents become dissatisfied with their consumer options or come to believe the regulations are ineffective,¹⁰ they can pressure their state government officials to change them.

Commentators have also suggested that California’s greenhouse gas regulations will negatively affect out-of-state producers.  It is reasonable to presume that the regulations will impose initial additional costs on the already struggling car industry, though the regulations might also benefit the industry in the long term.¹¹ In any case, the fact that California’s regulations may affect Michigan’s economy does not establish that the regulations are suboptimally stringent, and it is not sufficient to justify federal ceiling preemption.  The key issue is whether stringent regulations result from cost externalization or whether state regulators and politicians properly consider the interests of other states.

To this end, the argument that California voters have little incentive to protect Michigan’s interests is appealing in the abstract, but the case is overstated.  First, California voters do bear some of the costs of their more stringent vehicle emissions regulations in the form of increased prices and possibly reduced consumer options. If producers can pass on their increased production costs to consumers within the jurisdiction, then the cost of the regulation will be at least partly internalized. Second, the notion of a complete “free lunch” for legislators is rather idealized.  Out-of-state interests often lobby state governments, and they may have the support of in-state groups with whom their interests align, such as car dealerships supporting automobile manufacturers.  Additionally, the line between in-state and out-of-state interests is blurred by the widely dispersed ownership of large public companies like Ford Motor Company.

 
Conclusion

Despite broad suggestions to the contrary, the scope of cost externalization for particular state environmental regulations may turn out to be fairly minimal.  As the magnitude of any regulatory cost externalization decreases, it becomes increasingly doubtful that federal ceiling preemption is desirable in light of the benefits of state-based environmental regulation, including the value of tailoring standards to local preferences and conditions, the importance of state-level experiment for technology development, and the desirability of decentralized democratic decisionmaking.  Policy makers should therefore look closely at the realities of cost externalization before determining whether federal ceiling preemption is appropriate.

Acknowledgments:

Copyright © 2009 New York University Law Review.

Brian T. Burgess is a Law Clerk for Judge Guido Calabresi. He wrote this piece while he was a J.D. Candidate at New York University School of Law.

This Legal Workshop Editorial is based on the following Student Note: Brian T. Burgess, Limiting Preemption in Environmental Law: An Analysis of the Cost-Externalization Argument and California Assembly Bill 1493, 84 N.Y.U. L. REV. 258 (2009).

The inherent problem with such lawmaking moments, however, is just that: they are “moments.”  What Congress and the President do with much fanfare can slip quickly and quietly away in the ensuing years.  This is famously so for environmental law.  Subsequent legislative amendments, limited budgets, appropriation riders, interpretive agency rulings, massive delays in rulemaking, and simple nonenforcement are more than capable of converting a seemingly uncompromising legal mandate into nothing more than a symbolic aspirational statement.  In short, what Congress and the President give, they are just as easily able to take away.

The critical lesson for climate change legislation is that the pending lawmaking moment must include the enactment of provisions specifically designed to maintain the legislation’s ability to achieve its long-term objectives.  Climate change legislation is peculiarly vulnerable to unraveling over time for a variety of reasons, but especially because of the extent to which it imposes costs on the short term for the realization of benefits many decades and sometimes centuries later.  Because of its fundamentally redistributive character, there will invariably be politically and economically powerful interests unhappy with its short-term costs seeking to relax the law’s requirements either formally or informally.  The erosion will be quiet, yet far-reaching in effect.  It will happen in the chambers of Congress, in the form of compliance extensions, budgetary shortfalls, appropriation riders, and earmarks, and it will happen in the vast hallways of the federal bureaucracy, in the form of delays in the promulgation of regulations, agency interpretations of statutory mandates as non-mandatory, generous agency settlements, and simple non-enforcement of the law.

It is therefore not enough for Congress to enact a law that mandates tough, immediate controls on greenhouse gas emissions.  Nor is it enough for Congress to build into the new law strong economic incentives that render more palatable the changes in business and individual behavior necessary to accomplish those mandates and promote overall economic efficiency.  Much more is necessary.  Like much legislation, for climate change legislation to be successful, the new legal framework must simultaneously be flexible in certain respects and steadfast in others.  Flexibility is necessary to allow for the modification of legal requirements over time in light of new information.  Steadfastness or “stickiness” is important to maintain the stability of a law’s requirements over time.  The need for both is just far greater for climate change legislation.  Flexibility is essential for climate change legislation in light of the enormity of the undertaking, both in its temporal and spatial reach, and the surrounding uncertainty concerning the wisdom of specific regulatory approaches.  Yet the basic legal framework and legal mandate must also be sufficiently steadfast to be maintained over the long term notwithstanding an unrelenting barrage of extremely powerful short-term economic interests that will inevitably seek that mandate’s relaxation.

To that end, the law will need to include institutional design features that allow for such flexibility, but insulate programmatic implementation to a significant extent from powerful political and economic interests propelled by short-term concerns.  Such design features will include “precommitment strategies,” which deliberately make it hard (never impossible) to change the law in response to some kinds of concerns.  They will also simultaneously provide avenues for change in response to other longer-term concerns that are in harmony with the law’s central purpose to achieve and maintain greenhouse gas emission reductions over time, thus addressing concerns that are otherwise less likely to have a powerful voice in lawmaking fora.

Directed to all three branches of government, such institutional design features should therefore be deliberately asymmetric, making it easier to change the law in one substantive direction rather than another.  Like the classic children’s board game “Chutes and Ladders,” the design of climate change law should include chutes that make it harder for the government to make certain kinds of changesand ladders that make it easier to make other kinds of changes and to achieve the overall statutory purpose over time.

Climate change law should further include a series of other structural features deliberately designed to keep the statute on track over time, particularly within the executive branch.  Congress could design some measures to insulate agency officials from certain political pressures, especially those likely derived from short-term economic concerns, which seek to undermine the law’s effectiveness.  Congress could craft other measures to enhance the influence on the law’s administration of interest groups concerned about protecting future generations, but which would otherwise lack the necessary economic or political clout.  Possible techniques include requirements for consultation with other agencies, scientific advisory committees, and stakeholders more insulated from short-term political pressures; statutory and regulatory hammers and judicial review provisions that ensure timely implementation; and preemption triggers that accommodate the prerogatives of competing sovereigns while also exploiting the resulting tension as leverage to further climate change policy.

The obvious objection to any such deliberate modifications of lawmaking processes, especially those that make future lawmaking more difficult, is that they are antidemocratic.  They allow the views of existing majorities to trump the views of future majorities who may well view sound public policy very differently.  The present always tends to believe that it may well be wiser than those who came before them or those who will come after them, and the risk is too great that allowing such restraints on future lawmaking will allow the present in its own self-interest to control the future.  The shorthand reference to this objection, of course, is that the deadhand of the past or present should not be able to govern the future.

There are, however, at least three compelling reasons for why these concerns are not persuasive as applied to the need for substantial lawmaking restraints in federal climate change legislation.  The first is that such restraints, notwithstanding their seemingly anti-democratic implications, have a long and accepted history in domestic law, ranging from the Constitution’s organization of the House and the Senate to a host of existing federal statutes that seek to insulate somewhat certain decisions from politics.  Hence, rather than suggest a departure from the nation’s lawmaking traditions, at the very least, they fall well within them.  Second, the lawmaking restraints in federal climate change legislation would be deliberately asymmetric to further the options ultimately available to future generations, not to restrict them.  There is existing skewing in lawmaking, particularly of the undue influence exercised by certain interests groups at the expense of others.  The kind of institutional lawmaking design features contemplated for federal climate legislation would  seek to address that existing skewing and therefore ultimately foster, rather than undermine, the fundamental values underlying representative government.

The final justification relates to the sheer practicalities of failing to address over the longer term the threats now posed by climate change.  Most simply put, preserving the ability of future majorities to retain the full range of options necessary for self-government most likely depends on climate change legislation capable of maintaining greenhouse gas emission reductions over the longer term.  Otherwise, current lawmakers will be undercutting the autonomy of future majorities by subjecting them to a natural environment that sharply curtails their options.  In other words, cross-temporal majority effects will occur with or without climate change legislation.  The question is not whether to have such cross-temporal impacts, but which ones.  To the extent, therefore, that lawmaking restraints are a necessary component of climate change legislation that can provide future majorities with greater opportunities, they further, rather than undermine, democratic norms.  It would therefore be tragic, indeed, to posit that protection of the political prerogatives of the future precludes current generations from adopting laws that seek to preserve future generations’ options.  Sometimes lawmaking limits do weaken the future, but sometimes they strengthen it instead.

The challenge to develop the right mix of precommitment strategies is considerable, and the risk that any particular one could be perversely hijacked can never be eliminated.  But through the asymmetric hurdles and shortcuts described above, Congress could diminish the risk of short-term pressures undermining its legislation and increase the chance that future generations’ concerns willnot be forgotten during the decades required to achieve the law’s ambitious objective.  That would be truly momentous.
 

Acknowledgments:

Copyright © 2009 Cornell Law Review.

Richard J. Lazarus is Professor of Law at Georgetown University Law Center.

This Editorial is based on the following full-length Article:   Richard J. Lazarus, Super Wicked Problems and Climate Change: Restraining the Present to Liberate the Future, 94 CORNELL L. REV. 1152 (2009).

Yet the United States has hardly been inactive on climate change policy.  During the eight years of federal inaction, a surprisingly large number of states have stepped in to fill the policy void.  States have enacted renewable portfolio standards; created incentives for carbon capture and sequestration; mandated energy efficiency standards; and established public benefit funds to support energy efficiency and renewable energy.  Some states have gone even further, enacting overall greenhouse gas emissions caps, adopting greenhouse gas emissions standards for new automobiles, and capping utility emissions. 

 Several scholars have puzzled over why many states have chosen to regulate climate change given the lack of obvious economic incentive to do so.  State actors are part of a classic collective action problem: no single state can solve the problem absent action by other states—including nation-states, in the case of global climate change.  Moreover, states cannot fully realize the benefits of their regulatory actions to regulate carbon emissions.  The free rider incentives are large.  Theories about why states have acted to reduce carbon emissions include that states are simply responding to electorate preferences to gain political advantage,¹ and that competition among states for economic development drives state behavior.² 

I contend that accounts of state involvement on climate change miss a large part of the story.  By emphasizing how the states have partly filled the regulatory void created by federal inaction, this conventional story misses the important, indeed critical, backdrop of the federal government and federal law.   The most innovative state responses to climate change are neither the product of state regulation alone nor are they exclusively the result of federal action.  Instead, such regulations are the results of repeated, sustained, and dynamic lawmaking efforts involving both levels of government—”iterative federalism.”      

Iterative federalism, I argue, is the best label for describing two of the most significant climate change initiatives to come from the states—California’s mobile source emissions standards and the Regional Greenhouse Gas Initiative (RGGI).  While the national government has failed to lead, the federal government’s long history of environmental policymaking has shaped and enabled state responses to climate change.  But the concept of iterative federalism extends even further: without the role played by the federal government in enabling the particular states or regions to act, these two state initiatives would not have occurred.  Understanding the important federal role in these state initiatives requires looking not only at the inactive federal government and its active state counterparts but also at the interaction between state and federal law—iterative federalism.

These examples of iterative environmental federalism share two characteristics.    First, rather than treating all fifty states as legally homogenous, federal law has singled out a state or group of states for special regulatory power.  California’s special status in regulating automobile emissions under the Clean Air Act—which the state used to enact its greenhouse gas emissions legislation—provides one example.   The establishment of the Ozone Transport Commission (OTC) in the 1990 amendments to the Clean Air Act provides another.  For the ten northeastern states comprising the OTC, this federal creation served as the impetus for the Regional Greenhouse Gas Initiative (RGGI).  Second, federal law harnesses this special state regulatory power by requiring the state regulator to comply with national environmental standards.  Out of this dynamic, in which the federal government has not acted itself but has quasi-deputized a state or region to act while simultaneously regulating its actions, a distinct version of federalism emerges.  Under this system, one level of government—either the singled-out state actor or the national government—moves to regulate a particular environmental policy area.  The initial policymaking then triggers a series of iterations adopted in turn by the higher or lower level of government.  The process then extends back to the policy originator, and so forth. 

In identifying and analyzing examples of iterative federalism, I mean to distinguish iterative federalism from federalism schemes that involve areas where state and federal areas of jurisdiction merely overlap through independent exercises of policymaking authority.  Instead I focus on schemes of federalism where federal law consciously designates a particular and distinct state or group of states to regulate and relies on that regulatory arrangement to enhance compliance with federal standards. 

In both the California and OTC examples, the regulatory exceptionalism contained in the Clean Air Act has produced a robust series of policy iterations that has resulted not only in large air pollution reductions but has also expanded the initial regulatory experimentation beyond the borders of the super-regulator jurisdictions to other states and the federal government.  And both iterative federalism schemes have produced two ambitious and interesting legislative initiatives to reduce carbon emissions.  California has enacted greenhouse gas emissions standards for passenger automobiles and the OTC states have entered a memorandum of understanding to impose a cap and trade scheme on electric utilities to regulate carbon dioxide emissions.³  Just as the air pollution iterations have expanded beyond the super-regulator’s borders, it is likely that the climate change regulatory schemes will do so as well.

In order to put the regulatory efforts of California and the OTC into context, a bit of brief background about the operation of the Clean Air Act is necessary.  The basic framework for controlling air pollution since the enactment of the modern Clean Air Act in 1970 is one of cooperative federalism: the Environmental Protection Agency, through its delegated authority under the Act, has issued National Ambient Air Quality Standards (“NAAQS”) for harmful air pollutants.  The EPA has designated six “criteria” pollutants for which NAAQS are established, including carbon monoxide, lead, nitrogen dioxide, ozone, and particulate matter.  The standards (set as allowable parts per million) are designed to protect human health and, in some instances, the physical environment. 

Section 110(k) of the Clean Air Act delegates to states the authority to implement the NAAQS through the adoption of State Implementation Plans (SIPs).  States are given a fair amount of discretion to devise their plans in a manner that takes into account local geographic and economic conditions, voter preferences, and the like, so long as a state’s SIP contains measures that will either attain or maintain the NAAQS and, importantly, mitigate the transport of interstate air pollution.  Though states were supposed to meet the NAAQS by 1975, Congress has twice extended the NAAQS deadlines and numerous areas of the country—principally the cities of the northeast, parts of Texas, and California—remain out of compliance for ozone and particulate matter.   In addition to the central features of the Clean Air Act, two provisions are of special interest to my claims here.   One grants California special authority to regulate motor vehicle standards.  The other provision establishes the northeast’s Ozone Transport Commission.  I describe these special provisions and the resulting regulatory activity next.

 
I.
Iterative Federalism and Motor Vehicle Standards

California is the only state in the country authorized to enact its own vehicle emissions standards.  Section 209 of the Clean Air Act preempts all other states from enacting their own standards.  Other states can, however, opt into the California standards or remain subject to federal standards, which are typically less stringent than California’s.

The California experience as a “super regulator” under a scheme of iterative federalism has been a rather remarkable one, leading to at least nine separate iterations of emissions standards.  Typically, the pattern has been that California enacts ambitious motor vehicle standards and within a year or two the federal government follows suit. A number of states, typically in the northeast and Pacific northwest, have opted into the California standards.

The various iterations include the first tail pipe standards in the mid-1960s, which were tightened numerous times between that time and 1990.  Over that twenty-five year period California’s efforts led to standards that cut nitrous oxide, carbon monoxide, and hydrocarbons emissions by over ninety percent.  Post 1990, California shifted its mode of regulation to create extremely low emissions vehicles based on fleet standards.  The regulatory program has been so successful that the state’s past Air Resources Board chairman describes the program as follows: “We’ve seen the near impossible accomplished with gasoline vehicles: zero evaporative emissions, exceedingly clean exhaust—cleaner, in some cases, than the outside air entering the cabin for ventilation purposes and emission control systems that are twice as durable as their conventional forebearers, forecasted to last an astonishing 150,000 miles.”⁴  Slightly less stringent low emissions vehicle standards—modeled after the California program—have been adopted at the federal level.

 
II.
Iterative Federalism and Cap and Trade Schemes

While California has been the first mover on mobile source emissions standards, the northeastern part of the country has quite successfully experimented with regulating air pollution by adopting cap and trade schemes.  Generally speaking these schemes set an overall cap on a particular pollutant and then allocate to major polluters allowances or credits.  Each credit typically allows its holder to emit one ton of the regulated pollutant.  If a polluter pollutes less than the amount its credits allow, the polluter can sell excess credits to polluters who need more.  If a polluter lacks sufficient credits, it can purchase unused credits. 

Unlike with mobile source emissions, the first level of government to enact a cap and trade program was the federal government in passing the 1990 Acid Rain Program. The Acid Raid Program regulates sulfur dioxide.   Based on that experience and under authority granted to them by a separate provision of the Clean Air Act, eleven northeastern states and the District of Columbia enacted a cap and trade program to regulate ozone pollution.   These states, acting under the auspices of the Ozone Transport Commission, worked together in an attempt to combat cross border ozone pollution.  The cap and trade scheme they adopted was a smashing success by virtually all measures.  Each year of the program—from 1999 through 2002—saw double digit declines in NOx emissions below allocation levels (twenty percent in 1999, eleven percent in 2000, twelve percent in 2001, and eleven percent in 2002).⁵  Moreover, emissions fell during the peak ozone season and on particularly hot days (a problem for smog formation not only because of the temperature but because electricity generation soars as temperatures increase).  The emissions trading program also achieved almost perfect compliance rates and very little “leakage”—emissions migrating from a regulated area to a non-regulated area—as a result of the program.  The program was so successful that it led to a third iteration, called the NOx Budget Trading Program.  The NOx Budget Trading Program, adopted by the EPA, used the Ozone Transport Commission’s cap and trade program and expanded it to include eleven states, in addition to the northeastern participants, many of them Midwestern and southern states that have caused significant cross border pollution in the northeast.   Preliminary results show that the new program has also succeeded in significantly reducing ozone pollution.

 
III.
Air Quality, Climate Change, and Iterative Federalism

The deployment of federal law to create “super regulators” has succeeded in creating a particularly robust and dynamic series of iterations that have resulted in two separate and impressive achievements.  First, the California and OTC provisions have led to large reductions in air pollution.  Second, the provisions have created regulatory capacity in California and the OTC states that have led to major state initiatives on climate change, more thoroughgoing and significant than the states would have been likely to produce without the federal role. 

California has used its special authority to enact the country’s first greenhouse gas emissions standards for passenger automobiles.  These standards are modeled directly on the state’s most recent air pollution regulations establishing extremely low emissions vehicle tiers.  And the state’s influence has expanded well beyond its borders: at least fifteen states have indicated that if the California standards are allowed to go into effect they will enact them.  The northeastern states have used their regulatory expertise to enact the first greenhouse gas emissions cap and trade scheme in the country.  The greenhouse gas emissions scheme looks almost identical in operation to the cap and trade scheme the same states adopted to tackle ozone pollution.  Other states are using the northeastern state experience to craft their own cap and trade programs, including California.

 
IV.
Lessons for Environmental Federalism

An examination of iterative federalism schemes also contributes to ongoing theoretical debates about federalism within the environmental context.  Identifying iterative federalism as a significant factor in state climate change leadership moves the federalism debate beyond two key claims that have emerged in legal scholarship. The first claim is that a flurry of state environmental regulatory activity can lead to uniform federal legislation as a result of pressure from the regulated community.  The second is that states are more likely to produce efficient levels of environmental regulation because of interstate competition for capital and residents.  Here I identify a third pattern.

In their seminal paper, Donald Elliott, Bruce Ackerman, and John Millian argued more than twenty years ago that a flurry of state regulatory activity often spurs a federal response as industry clamors for centralized regulation.    They claimed that a high degree of state environmental regulatory activity can spur uniform federal legislation as a result of pressure from the regulated community.  While this dynamic may explain certain developments in environmental law, it cannot fully explain the breadth of state climate change action to date.  Instead, the reverse is also true: federal law has spurred state regulatory activity by bolstering state regulatory capacity and leadership, ultimately leading to climate change regulation.

Iterative federalism schemes also shed light on the ongoing debate about devolution versus centralization in environmental policymaking.  In an influential article, Richard Revesz argued that states are more likely to produce efficient levels of environmental regulation because of interstate competition for capital and residents.  Revesz’s article led to a robust academic debate about federalism and environmental law, focused to a large extent on which level of government—state or national—will provide the optimal level of environmental services.  Proponents of state devolution base their preference for state regulation principally on Tieboutian-influenced economic models about interstate competition, which predict that states will compete among themselves to produce an efficient level of regulation.  Centralization proponents, by contrast, argue that the nationalization of environmental law overcomes various market failures, including lax environmental standards among states that “race to the bottom” in an attempt to attract business, economies of scale in federal regulation, and interstate externalities.   

A close examination of iterative federalism schemes suggests that innovative regulatory mechanisms can achieve the best of both worlds.  These schemes facilitate some of the chief benefits of devolution—policy experimentation, avoidance of untested and potentially expensive national mandates—while simultaneously addressing interstate externalities, national product market economies of scale, and the race to the bottom.   These iterative federalism schemes also test empirically the contrasting hypotheses about devolution and centralization.  For example, California’s experience in regulating mobile sources bolsters claims of centralization proponents that regulators often operate under conditions of scientific uncertainty and with poor information about the economic effects of their regulatory proposals.  This particular regulation thus offers illustrative evidence suggesting that claims about a working competitive regulatory market among states are overstated.  But these examples challenge the pro-centralization camp’s assumptions as well.  The California experience demonstrates a significant benefit of devolution: minimizing the risk of overly stringent national regulation while allowing individual states to experiment and take risks.  Premature federal adoption of California’s rigorous emissions standards might have proven much costlier than allowing California first to experiment and then having the federal government act.  Similarly, the experience with the OTC—which adopted a ten state regional cap and trade scheme to regulate nitrogen oxides—provided an experimental base for persuading the federal government to expand the program’s reach to areas of the country much less politically supportive of regulation.  The state regulation also enabled the program to overcome potential public choice pathologies at the federal level.  By the same token, the OTC states were pushed to develop stringent strategies for reducing air pollution through their need to comply with national air standards—standards that form the linchpin of the centralized federal role in controlling air pollution.

The iterative federalism schemes analyzed here raise interesting possibilities for other pollution problems and for regulatory experimentation outside the environmental arena.  Federal preemption, for example, has occurred in numerous substantive areas in recent years—including securities regulation; pension benefits; predatory lending; cigarette labeling and advertising; tort law; and liability for oil spills—often at the behest of industry.  Though the case for uniform national standards in product markets has some intuitive appeal, one can imagine iterative federalism schemes in various substantive areas in which a particular state or states might be singled out to continue to play a regulatory leadership role, as California has, while preempting other states from regulating in order to avoid the chaos of fifty separate regulatory schemes.  In the environmental arena, for example, all fifty states are preempted from setting energy efficiency standards for many appliances.  Why not provide super-regulator status for California and let the state experiment with tighter standards?   Similarly, regional problems like the management and transport of waste, water pollution, and traffic and land use might benefit from the regional approach embodied in the OTC, with strong state involvement bolstered by significant technical and leadership support from the federal government.  In short, iterative federalism ought to expand our regulatory horizons. 

Acknowledgments:

Copyright © 2009 Northwestern University Law Review.

Ann E. Carlson is Professor of Law, UCLA School of Law; Faculty Director, Emmett Center on Climate Change and the Environment.

This Editorial is based on the following full-length Article:  Ann E. Carlson, Iterative Federalism and Climate Change, 103 NW. U. L. REV. ___ (forthcoming 2009).

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Editors at NYU and Stanford who have played a special role in carrying the torch include Thomas Haymore, Ben Kingsley, Matt Lawrence, Lincoln Mayer, Michael Montaño, Sam Nitze, Sean Nutall, and William Rawson.
 

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