Regulatory Reform at EPA: Separating Fact from Illusion

Abstract

Reforming Air Pollution Regulation: The Toil and Trouble of EPA's Bubble, by Richard A. Liroff.* Washington, D.C.: The Conservation Foundation, 1986. 186 pages. $16.50. Much of the environmental legislation administered by the U.S. Environmental Protection Agency (EPA) pays little attention to the costs of imposing various standards on industry. Indeed, it would be fair to say that the majority of this legislation was drafted with the philosophy that environmental objectives should dominate cost concerns. The basic philosophy underlying the writing of standards was the "command-and-control" approach. Using this approach, federal and state regulators promulgated rules which directed companies to use a particular technology to meet a prescribed emission standard. Firms were provided very little latitude in choosing alternatives to meet specific standards. Economists were quick to point out that this "command-and-control" method of regulation was quite expensive. Indeed, they performed a number of simulation studies which indicated that dramatic cost savings could be achieved by allowing firms more flexibility in meeting standards.