Endogenous Decentralization in Federal Environmental Policies

Abstract

Under most federal environmental laws and some health and safety laws, states may apply for "primacy," that is, authority to implement and enforce federal law, through a process known as "authorization." Some observers fear that states use authorization to adopt more lax policies in a regulatory "race to the bottom." This paper presents a simple model of the interaction between the federal and state governments in such a scheme of partial decentralization. Our model suggests that the authorization option may not only increase social welfare but also allow more stringent environmental regulations than would otherwise be feasible. Our model also suggests that the federal government may choose its policies so that states that desire more strict regulation authorize, while other states remain under the federal program. We then test this hypothesis using data on federal regulation of water pollution and of hazardous waste, which are two of the most important environmental programs to allow authorization. We find that states that prefer more environmental protection authorize more quickly under both policies. This evidence suggests that states seek authorization to adopt more strict policies instead of more lax policies compared to federal policies.

Regulatory competition, administrative discretion, and environmental policy implementation

“…In order to assume primacy for environmental programs, a state must submit an application that provides adequate assurances that EPA directives will be followed. Once submitted, these applications are almost never denied (Chang et al, 2014). In practice, therefore, the decision lies almost entirely with the states, although the EPA has a variety of mechanisms it may use to attempt to induce states to assume primacy (Crotty, 1988).…”

“…Some studies suggest that more environmentally‐oriented states (measured variably) are more likely to implement federal environmental programs (Chang et al, 2014; Crotty, 1987; Sigman, 2003) although others do not (Wassenberg, 1986; Woods, 2006b). Of course, states may be assuming primacy for varying reasons.…”

“…More generally, state regulators indicate that members of congress contact the state agency officials not infrequently and that they are perceived to exert a relatively high amount of influence on state environmental policy (Waterman et al, 2004). Moreover, studies have found that the decision to assume responsibility for implementing environmental programs is influenced by the environmental policy preferences of the state's congressional delegation (Chang et al, 2014), and that once states assume responsibility to operate delegated regulatory programs, these preferences continue to impact the enforcement practices of state agencies (Headrick et al, 2002; Hedge, 1993; Innes & Mitra, 2015).…”

“…3 3 Similarly, Chang et al (2014) argue that the EPA induces “green” states to apply for primacy, thus leading pro‐environment states to receive delegated programs more quickly. …”

The Federal Enforcement Threat: The Effect of Overfiling Under the Resource Conservation and Recovery Act

“…Given increasing political polarization around environmental issues, this assumption might no longer hold true. There is also empirical work on cooperative federalism schemes more generally (e.g., Chang et al 2014), and on the effect of federal preferences on state or local enforcement, though the focus of this literature has so far been on the effect of legislators ' preferences and influence (e.g., Helland 1998a;Innes & Mitra 2015;Kleit et al 1998). 4 In Missouri, the Missouri Department of Natural Resources is the state agency authorized by EPA to administer RCRA.…”