Our decentralized federal-state-local government system has been enormously important in the political and economic success of our country. Letting decisions be made at the lowest appropriate level usually means more effective and responsive government and better use of resources.
In economic policy, it is often important that the area covered by some unit of government matches the problem at hand. This isn’t easy, because the optimal areas for different levels of government typically vary from one problem to another. That is true in the challenge to the U.S. Clean Water Act that came before the U.S. Supreme Court last week.
The U.S. Constitution expressly states, “powers not delegated to the United States by the Constitution … are reserved to the States respectively, or to the people.” Most states, in turn, let local governments provide education, roads, and police and fire protection.
But conflicts inevitably arise. Pollution is one example. Sewage or agricultural runoff entering the Mississippi River at Little Falls, Minn., affects not only St. Paul, but also many cities down to New Orleans. It can affect the ecosystem of the Gulf of Mexico.
Air pollution is no different. Emissions from a power plant in North Dakota can affect not only Minnesotans, but also many others downwind.
If we leave water-pollution control to states and cities, society will suffer because the external costs of pollution won’t be controlled. Pollution is inefficient. That is, a given set of resources produces less satisfaction of human needs when society fails to control external costs like pollution.
But controlling water pollution inevitably implies some control of land use. If St. Cloud dumps untreated sewage in the Mississippi, St. Paul can sue to stop it. But St. Paul cannot control the actions of thousands of farmers or land developers upstream. Nor can Missouri or Louisiana control what happens in Minnesota or Iowa.
Interstate externalities did not trouble the framers of our Constitution. No provision in the Constitution expressly requires or overtly authorizes the federal government to control pollution. The Clean Water Act of 1972 is based on a federal right to regulate use of “navigable waters” developed in court cases for more than a century.
Property-rights advocates are correct in arguing that a right to regulate navigable waters forms a tenuous basis for the federal government to forbid a home builder in Washington County from filling in a marshy area on some tract of land.
Environmentalists — and the Bush administration — are correct in arguing that if the court chooses to restrict federal pollution-control powers, the environment and the living standards of million of Americans will suffer.
A constitutional amendment clearly specifying federal responsibilities for environmental protection would be the ideal solution. That is not likely to happen in the short term. Watch how the court handles this one. It will affect you as well as your grandchildren.
© 2006 Edward Lotterman
Chanarambie Consulting, Inc.