Independent Businessmen, an Endangered Species?
Gary Benoit
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The New American, November 19, 1990
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Many Americans still believe that the free enterprise system and private property rights are sacred in America. The truth of the matter is, they used to be sacred. With each passing decade, the federal government gains greater control over private enterprise and private property through its tax and regulatory policies.
The federal government has not formally declared ownership over all property and land, as so many communist and socialistic governments have done. It simply extends a bureaucratic tyranny over business and property. Ever so gradually, businessmen and property owners are becoming employees of Uncle Sam, even though they are still allowed to hold nominal title.
In 1887, the first federal regulatory agency -- the Interstate Commerce Commission- came into existence. In recent decades the regulatory agencies have metastasized like a cancer on the American landscape. They include the Occupational Safety and Health Administration, the Food and Drug Administration, and the Environmental Protection Agency. By combining the three branches of government -- the legislative, the executive, and the judicial -- into a single body, these agencies weaken the system of checks and balances that the Founding Fathers so carefully crafted into the Constitution.
Regulations issued by these agencies can take on the force of law unless vetoed by an act of Congress. Victims of these regulations can be forced to argue their cases before the agency that issued the regulations, and are obliged to exhaust all administrative remedies before the case can go before a regular court.
Free Enterprise Works
The Environmental Protection Agency, since its inception in 1970, has become one of the most powerful agencies of the federal government. Major environmental laws such as the Clean Air Act, the Wilderness Act, the Endangered Species Act, and the Clean Water Act, to name but a few, have greatly expanded the powers of the federal government. In spite of recent studies showing that the environment is actually cleaner than in the past, environmental concerns have been used as a pretext to extend government control over everybody and everything. Should this trend continue unabated, the most seriously endangered species could become the independent American businessman and property owner.
Ironically, the destruction of the American free enterprise system would probably have a negative impact not only on freedom but also on the environment. Anyone who doubts this need look no further than the environmental damage! in Eastern Europe and the Soviet Union. The free enterprise system has been good for the environment not only because it results in new technologies -- enabling more production with less pollution -- but because free men and women tend to be more responsible than government bureaucrats and slaves.
Cost of Regulation
The impact of these regulations on the economy is awesome to contemplate. According to a 1989 study prepared by economists Dale Jorgenson and Peter Wilcoxen for the Kennedy School of Government at Harvard University, "The cost of environmental regulation is a long-run reduction of 2.59 percent in the level of the U.S. gross national product." The Detroit News commented in 1990, "This means that the gross national product this year will be about $180 billion lower, with four million fewer jobs, than it would have been otherwise."
Even President Bush admits that in 1987 alone we spent $81 billion on pollution control, over $62 billion of it in the private sector. When non-environmental regulations are factored into the equation, the costs are even higher. According to Mr. Bush, "Federal regulations impose estimated direct costs on the economy as high as $175 billion annually -- more than $1700 for every taxpayer in the United States." Should the Clean Air Act now before Congress be enacted, the annual cost to the economy would increase as much as $22 billion to $25 billion.
The EPA is the federal government's main environmental agency, entrusted (in the words of the U.S. Government Manual) to "control and abate pollution in the areas of air, water, solid waste, pesticides, radiation, and toxic substances." In fiscal 1990 this one agency consumed an estimated $5.5 billion in order to carry out this mission.
Satisfying environmental regulations can be very costly and time consuming. Sometimes it's even difficult to determine what environmental agencies such as the EPA require. Rick Brueggemann, the environmental supervisor for the Bavarian Truck Co., a mid-sized waste-disposal business based in Kentucky, told THE NEW AMERICAN: "The regulations are a moving target. Every time you try to do something, the rules change." Brueggemann does not know how much money environmental regulations are costing his company, but does know that "it's a full-time job" to satisfy them. In addition, his company, which employs 90 people, has piled up plenty of attorney hours. Environmental regulations impact businesses of all sizes and types, but they fall most heavily on small businesses that cannot afford to employ batteries of lawyers or full-time environmental supervisors.
The EPA enforces compliance with its regulations by imposing heavy fines and by filing lawsuits. On June 26, 1989, for instance, the agency publicly announced fines totaling $1.65 million against 42 companies for failing to report toxic releases. The largest fine ($262,000) was levied against Diceon Electronics Inc., a California-based electronics company. On July 27, 1990, the USX Corp. resolved an EPA-filed lawsuit by agreeing to pay $34 million in costs and penalties for discharging untreated waste water from its plant in Gary, Indiana.
Sometimes the fines border on the bizarre. Joseph Jones, the owner of a small West Virginia industrial supply business started by his father, was fined $20,000 because a transformer leaked a small amount of oil containing more than the government-mandated level of PCBs onto a concrete slab. Now Jones must test the transformers and, at his own expense, transport those deemed hazardous to a special environmentally-secure dump site in Arkansas.
These instances of EPA regulations are not isolated examples. Whole sectors of the economy have been affected. For instance, in 1988 the EPA began phasing in rules requiring firms to upgrade or replace aging gasoline tanks. These rules could cause many of the nation's service stations to fold. According to the Petroleum Marketers Association of America, 17 percent of the gas-tank operators it surveyed will close over a four-year period as a direct consequence of the EPA's regulations. The EPA concedes that its regulations will increase the failure rate for small businesses by 40 percent.
According to EPA figures, tank replacement for an average size station will cost $80,000, and tank upgrades will cost as much as $40,000. The EPA estimates that there are as many as 2 million underground tanks in this country covered by their regulations, and that ten to thirty percent of these tanks are probably leaking.
EPA regulations also require owners to purchase expensive leak detection devices for all but the smallest tanks, and to purchase insurance covering claims against leak damage. Even small businessmen with fewer than 13 tanks must purchase $1 million in insurance coverage by October 1991. EPA enforces compliance with fines of up to $10,000 per day for each tank in violation.
De-Energizing America
EPA regulations affecting service stations are just one example of how government-enforced environmentalism has been used as a weapon to drive up the cost of energy and to restrict energy development:
• In June 1990, Mr. Bush delayed oil and gas development in vast off-shore areas, including 99 percent of the waters off the California coastline, for ten years. Development "should occur in an environmentally sound manner," the President declared in his announcement.
• The huge Point Arguello field off the California coast can produce 100,000 barrels of oil per day just as soon as a go-ahead is given. The wells have been drilled and the platforms have been put in place. But state and local environmental officials have refused to issue the necessary permits because of their unyielding opposition to transportation of the oil by tanker.
• The Arctic National Wildlife Refuge is still closed to development, even though this area is estimated to contain as much oil as Alaska's Prudhoe Bay. Those who claim that development would be an environmental catastrophe neglect to mention that the caribou herd -- which was supposed to have been threatened by the pipeline and Prudhoe Bay development -- has grown substantially in recent years.
• Exaggerated environmental and health concerns have also been used to virtually halt construction of any new nuclear power plants in this country. Since 1974, every order placed for a new nuclear generating unit has been either canceled or rejected. No new orders have been placed since 1978. Orders for more than 100 nuclear generating units have been canceled or rejected.
Wetlands Policies
Running for President in 1988, George Bush promised that our national goal would be no net loss of wetlands. David Senter, national director of the American Agriculture Movement, claimed in a letter to U.S. senators that federal agencies "are using wetlands delineation, clean water, and other laws as a way to take control of vast areas of farmland, much of which has been farmed for decades and has nothing to do with permanent wetlands." Senter warned that U.S. farmers could lose "25 percent to 50 percent of their net equity due to the outright taking of their land by the federal government."
"Some environmentalists are running headlong at the property rights embedded in the U.S. Constitution," the Wall Street Journal editorialized on August 27, 1990. "The question is why the Bush Administration has been helping the greens succeed." Anyone who doubts that property rights have been violated need only consult the record:
• John Pozsgai, a refugee from the 1956 Hungarian uprising, found out just how little regard the EPA has for property rights when he placed top soil and clean fill on his own property without a permit. A self-employed truck mechanic, Pozsgai operates a small repair shop in Morrisville, Pennsylvania. In June 1987, he purchased a lot near his home with the intent of building a new garage.
The lot, used for the last 20 years as an illegal dump site, was littered with old tires, rusting cars, and other trash. Pozsgai removed the junk and then had top soil and clean fill placed over part of his property. Then, in September 1988, the EPA had Pozsgai arrested for "discharging pollutants into waters of the United States" -- pollutants consisting of top soil and clean fill.
It seems that a stream running along the eastern border of the property, which was dry most of the year, would sometimes flood part of the property because of the damming effect of the old tires, thereby creating "wetland" conditions. When the tires were removed, the flooding ceased. But this did not prevent the EPA from charging that the placing of fill on the property resulted in the destruction of "wetlands." This was deemed to be a violation of the Clean Water Act, even though the Act itself merely bans the polluting of "navigable waters," not of wetlands.
For his "crime," John Pozsgai was fined $202,000 and sentenced to three years in prison and five years probation. Recalling Mr. Bush's campaign pledge, U.S. Attorney Seth Weber claimed at the sentencing, "A message must be sent to the private landowners, the corporations and developers of this country."
• In 1989, Ocie Mills and his son Carey went to prison for placing 19 loads of sand and cleaning out a 300-foot drainage ditch on their own Florida property. Ocie Mills had wanted to build a house for his son near the ditch and needed the fill to solve already-existing drainage problems. He was told by Florida environmental officials that he did not need a permit. Indeed, he received a letter from Florida Department of Environmental Regulation Assistant General Counsel E. Gary Early, stating that investigation had "determined that you were maintaining your existing canal rather than engaging in new dredging activities. Maintaining existing structures is specifically exempted from further permit requirements."
This pronouncement notwithstanding, Ocie Mills and his son were later convicted of "knowingly discharging fill material in wetlands," and of "dredging a canal in navigable waters." For these crimes, the two were each sentenced to 21 months in prison, freed $5000, and ordered to restore the property. Keith Onsdorff, an EPA associate enforcement counsel, argued that this penalty would "send a strong message across the country that those who knowingly violate environmental laws are going to jail."
• John and Gene Biggi own a piece of land bordering a drainage ditch in downtown Beaverton, Oregon. The property has not been a wetland since 1908, the year the drainage ditch was completed. In 1976, as part of the city's plan to improve its downtown area, the Biggis, along with other property owners along the ditch, began filling in their property. The Biggis completed their fill in 1983, but in 1986 the EPA cited them for filling without a permit. Then in 1990 the EPA sought to have the Biggis pay a free of $10,000 a day from May 9, 1977 through February 5, 1987, and then $25,000 a day from that point on. By September 30, 1990, these fines amounted to more than $73 million.
Endangered Species Act
The Endangered Species Act is another weapon used by environmentalists to impose their will. By getting the Fish and Wildlife Service to declare a species "endangered" or "threatened," environmentalists have been able to block development and, in the process, destroy jobs. For example, environmentalists oppose the harvesting of trees in the "old-growth" evergreen national forests that stretch from northern California to British Columbia. By getting northern spotted owls declared a "threatened" species, they have been able to "protect" the forests as well as the owls, while adversely impacting the livelihoods of thousands.
Environmentalists who oppose logging ignore the fact that loggers must take great care not to cut down all of their trees. A Pacific Lumber Co. brochure explains:
Because a continuous supply of trees is vital to The Pacific Lumber Company, we manage and cultivate our 194,000 acres of forestland carefully. We maintain access roads so we can protect our trees against forest fires, erosion, insects, or damage from human activity. We plant and nurture new seedlings to replace the trees we cut. We watch our lands as carefully as any good farmer would, because our lands represent our livelihood.
Because of its concern for the environment, Pacific Lumber even donated 20,000 of the 76,000 acres of old-growth redwoods that are in public preserves in California. Yet, the President of Pacific Lumber, Charles Hurwitz, has become (in the words of the Los Angeles Times) western environmentalists' "Enemy #1."
Earth First! radicals were unable to halt logging in the Pacific Northwest, so forest "defenders" seized upon the spotted owl in order to use the power of government to accomplish basically the same thing. In April 1990, a team of government wildlife biologists recommended a logging ban in vast areas of the Pacific Northwest in order to save the northern spotted owl. One lumber company executive calculated that this recommendation would set aside about $95 million in timber for each pair of spotted owls. Two months later, the northern spotted owl was declared a threatened species, even though the only difference between it and a California cousin may be habitat.
The economic consequences of this decision will be severe. In May 1990, the U.S. Forest Service and the Bureau of Land Management released a study estimating that efforts to protect the owl would cut timber harvests nearly in half by 1995 and eliminate at least 13,000 jobs. Other estimates are even higher. The Northwest Forest Resource Council contends that treating the owl as a threatened species would eliminate 130,000 jobs and deprive the federal government of $1 billion in timber revenue.
Speaking in Portland, Oregon in May 1990, Mr. Bush stated: "I reject those who would ignore, totally ignore, the economic consequences of the spotted owl decision." Then he added, "But I also reject those who do not recognize their obligation to protect our delicate ecosystem."
The northern spotted owl is not the only species that has been used to impede development and lock up the land. All across the country, environmentalists are identifying species that can be used to accomplish their political purposes. Stephens' kangaroo rat, a three-inch-long rodent, has delayed the construction of new housing in Riverside County, California. The Colorado squawfish has blocked a $590 million water project intended to benefit the Ute Indians. The Mount Graham red squirrel has held up a planned $300 million observatory atop Mount Graham in Arizona.
These cases are not isolated examples. Step by step, environmentalists backed by the power of government are using environmental concerns as a pretext for locking up the land. If it is not the Endangered Species Act, it is unreasonable wetlands policies or some other environmental bugaboo. Regulations that already impact many businessmen and property owners may soon be extended to others. The American Forest Resource Alliance reported in June 1990:
Grazing, mining, timber, recreation, hunting, fishing, and many other uses are under attack. It is becoming increasingly clear that for any of us to survive, we must all work together when one group is attacked.
The timber industry faces issues such as regulation of forested wetlands, preservation of the Red-cockaded Woodpecker, biodiversity, and the Spotted Owl. These issues are actually tools used by the preservationists to remove multiple users from federal land. The Desert Tortoise is being used now to remove ranchers.
Environmental Scare Tactics
Environmentalists are not above employing scare tactics and bad science in order to condition people to accept government intervention. Examples include the asbestos scare, the Alar scare, and the radon scare.
Asbestos Scare:In 1982, the nation's schools were required to inspect for asbestos. In 1986, the Congress passed and President Ronald Reagan signed into law the Asbestos Hazard Emergency Response Act, which ordered "abatement" in every school building judged to contain damaged asbestos. Abatement involves the sealing off or removal of asbestos. The following year, the EPA issued regulations for inspecting asbestos building materials in schools and for asbestos abatement.
The cost of this clean-up is horrendous. The EPA estimates that 45,000 of the nation's 100,000 school buildings contain asbestos in a potentially dangerous state. Removing asbestos costs $20 or more per square foot, or approximately 100 times the cost of installing it. The National School Boards Association estimates that abatement will cost more than $6 billion just for the public schools. The public school costs will be borne by the taxpayers, while many private schools unable to shoulder this extra burden may be forced to shut down.
Should these regulations be extended to all public and commercial buildings, the cost would skyrocket. The EPA estimates that at least 733,000 public and commercial buildings contain asbestos in a potentially dangerous condition, and that the cost of abating this asbestos would run about $51 billion. Other estimates range as high as $100 billion to $150 billion.
Yet, asbestos does not pose a serious health risk. The January 19, 1990 issue of Science published an asbestos study that concluded: "Available data do not support the concept that low-level exposure to asbestos is a health hazard in buildings and schools." The study found that fiber concentrations in buildings were "comparable to levels in outdoor air, a point surely relevant to assessing the health risks of asbestos in buildings." The paper argued that removing the asbestos is far more risky than any health benefits derived from removing it. "Clearly, the asbestos panic in the U.S. must be curtailed, especially because unwarranted and poorly controlled asbestos abatement results in unnecessary risks to young removal workers who may develop asbestos related cancers in later decades," the authors of the paper maintained.
In July 1989, the EPA issued new rules banning almost all uses of asbestos by 1997. According to agency estimates, all but six percent of the asbestos currently in use would be banned.
Alar Scare:In February 1989, the EPA announced that it planned to ban Alar, but would allow its use for at least another 18 months. Alar was used by apple growers as a ripener and to preserve crispness. Later that month, the CBS news program 60 Minutes aired a sensational story claiming that Alar was causing cancer in children. In the wake of the ensuing public panic, consumers stopped buying apple products, causing the price of apples to plummet.
In May 1989, apple industry spokesmen held a news conference in Washington DC to announce that they were asking growers to end the use of Alar. The spokesmen said that the year's apple crop had dropped by 20 percent compared to the previous year, largely because of the Alar scare. They estimated that the downturn had already cost the industry $50 million. Interestingly, the International Apple Institute, a trade association represented at the news conference, estimated that only about 5 percent of the U.S. apple crop was treated with alar in 1989.
Yet, like asbestos, Alar did not present an undue health hazard. The 60 Minutes story cited an unpublished report by the Natural Resources Defense Council (NRDC), an environmental group. The NRDC report was based on a discredited 1977 test in which the amount of Alar fed to rats was 266,000 times that of normal human ingestion. Even the EPA admitted that "there are no hard facts on hand that directly link Alar with human cancer cases." Moreover, "the Natural Resources Defense Council report used data rejected in scientific peer review." These pronouncements notwithstanding, the EPA in September 1989 called for an end to Alar use after May 31, 1991.
Radon Scare:In September 1988, the EPA issued a national health advisory on radon, recommending the testing of homesites for the presence of this colorless, odorless gas. In April 1989, the EPA recommended that school officials test their buildings for radon. Later that year, EPA administrator William Reilly claimed that 10 million homes in America may have dangerous levels of radon. He cited Iowa as having 71 percent of its homes above the EPA's "danger level" -- a higher percentage than any other state.
Figures such as these suggest a crisis. Yet, once again, the risk to the public has been greatly exaggerated. Warren Brooks demonstrated in a March 1990 syndicated column that the EPA's figures simply did not add up. "According to the EPA's risk model, Iowa should have had 1,600 lung cancer deaths from radon alone in 1988," noted Brooks. "Instead, Iowa's total lung cancer deaths in 1988 were 1,420, and even the EPA admits that at least 85 percent of those were caused by smoking. Diet, genetic factors and simple aging probably account for nearly all of the rest." Brooks points out that, based on EPA guidelines, venting radon from American homes could cost $8 billion to $10 billion.
Where Will It All Lead?
Unless informed Americans once again limit our federal government to its proper constitutional role, it will continue to use environmentalism as a pretext for grabbing power. Unless the power grab is exposed and opposed, the developing bureaucratic tyranny of California's South Coast Air Quality Management District (AQMD) may be a sign of things to come. According to the Wall Street Journal, this agency is, "in a sense, a model for environmental agencies everywhere."
In order to combat pollution, the AQMD has submitted a 20-year plan that would limit even bakeries, dry cleaners, and backyard barbecues. It intends to restrict construction of new drive-through restaurants and banks, and to eliminate all aerosols. This unelected body fully intends to alter the life-styles of Californians under the guise of fighting pollution. Its budget has been increasing at the rate of 32 percent per year, and its growing staff already numbers 900.
In February 1990, a coalition of builders, manufacturers, and labor unions charged that AQMD regulations could cause at least 350,000 persons to lose their jobs. The coalition further maintained that the regulations would cause many businesses to flee the region. David Finegood, the owner of a furniture company, said that AQMD rules are compelling him to move a manufacturing plant from Compton, California to Tijuana, Mexico in order to stay competitive.
Riding the Issue
Many Americans sincerely believe that regulations are necessary in order to clean up the environment, Yet the EPA's own studies show that the environment is cleaner than in the past. In April 1990, an EPA report found that the release of toxic substances into the environment by industry had dropped by about 9 percent in 1989 as compared to 1988. In its annual report on urban quality, the EPA concluded that pollutants had fallen dramatically from 1979 to 1988.
Why are tough new environmental restrictions being imposed when air quality is improving? The answer is simple: Environmental regulations are based not so much on safe-guarding the environment as on implementing the political agenda of the environmentalists. "We've got to ride the global warming issue," Senator Timothy Wirth (D-CO) told a reporter. "Even if the theory is wrong, we will be doing the right thing in terms of economic and environmental policy." Stephen Schneider, a respected global warming expert with the National Center for Atmospheric Research, put it this way:
On the one hand, as scientists, we are ethically bound to the scientific method, in effect promising to tell the truth, the whole truth, and nothing but -- which means that we must include all the doubts, the caveats, thefts, ands, and buts. On the other hand, we are not just scientists but human beings as well. And like most people we'd like to see the world a better place, which in this context translates into our working to reduce the risk of potentially disastrous climatic change. To do that we need to get some broad-based support, to capture the public's imagination. That, of course, entails getting loads of media coverage. So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have .... Each of us has to decide what the right balance is between being effective and being honest.
Environmental Politics
The key to understanding the environmental issue is to recognize that the politics of environmentalism is much more important than the science. There are certainly legitimate environmental concerns that should be solved at the local and state levels. But, at the same time, environmental concerns -- real, imagined, and exaggerated -- are being used to further a not-so-hidden political agenda. Moreover, these same concerns are also being portrayed as global crises that can only be adequately addressed on the international level. The latter argument is being used to justify more and more international regulation in order to help bring about a new world order. As Jessica Tuchman Mathews put it in the July/August 1990 issue of the EPA Journal:
[E]nvironmental imperatives are changing the concept of national sovereignty. The post-postwar era is still unnamed, but its defining characteristics are clear: multipolarity, replacing the bipolar U.S.-USSR axis around which nations used to array themselves; economic interdependence; and diverse invasions of national sovereignty.
Putting these trends together, it is likely that international problem-solving in the decades ahead will for the first time depend on collective management, not hegemony. And it is precisely this form of governance that global environmental problems will yield.
Mathews, vice president of the World Resources Institute, is a member of the world-government-promoting Council on Foreign Relations.
Put simply, the power grab is not limited to Washington DC alone. Unless stopped, environmentalism will be used to convince Americans not only to lower their standard of living and boost federal spending, but to accept international controls. Unless businessmen and others who profit from the free enterprise system work to save this now-threatened system from extinction, they can anticipate losing not only their businesses and property but their freedom as well.
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