Environmental Regulation: How It Evolved and Where It Is Headed

By Shaw, Jane S. | Real Estate Issues, April 1996 | Go to article overview

Environmental Regulation: How It Evolved and Where It Is Headed


Shaw, Jane S., Real Estate Issues


The Republican sweep of the House and Senate in November 1994 was partly a backlash against growing federal regulation in the areas of health, safety and the environment. This backlash explains why during the first 100 days of the reconfigured Congress, the House of Representatives declared a moratorium on many new regulations, passed a bill requiring agencies to conduct a risk assessment and cost/benefit study before issuing major regulations and proposed a bill to ease the Clean Water Act. While that reform movement has slowed, we can expect to see a resurgence of regulatory reform in the months ahead.

The reasons for the backlash are not hard to find. Increasing regulation has hurt a wide swathe of businesses and individuals. Writing for the Center for the Study of American Business, Murray Weidenbaum and Melinda Warren point out that the Federal Register, which records regulatory actions by the federal government, reached 87,000 pages in 1980, fell to 53,000 in 1988 and was back up to 69,684 in 1993. They also report that in real terms, the budget for federal regulatory agencies is about 35 percent higher now than it was during the last year of the Carter Administration.l Just the cost of compliance with federal environmental regulations is now about $150 billion annually, reports Thomas D. Hopkins of the Rochester Institute of Technology.2

Environmental Laws-Logical Or Ludicrous? For the real estate business, several laws have been particularly onerous in recent years.

* The Superfund's expensive and unpredictable liability provisions have discouraged the redevelopment of urban sites that may have had hazardous waste. These brownfields, which otherwise might be attractive, are being ignored in favor of the greenfields where there is no Superfund liability.

* Regulation of wetlands under the Clean Water Act has forced developers to pay mitigation fees if they drain or fill land that the Environmental Protection Agency (or the Army Corps of Engineers) deems a wetland. If developers drain or fill without a permit, they can be prosecuted as criminals. A number of people have gone to prison for filling land under these rules. William Ellen was creating a hunting area for waterfowl in eastern Maryland just as the federal government changed its definition of wetlands. Frustrated with bureaucratic red tape, Ellen placed two truckloads of dirt on land that, under the new definition, might be a wetland. He went to jail even though he was adding wetlands to the property!3

* Zealous administration of the Endangered Species Act has also put development of private property on hold. The Fish and Wildlife Service interprets the Endangered Species Act to mean that habitat cannot be modified if it will cause the death of an endangered species. Although most of the public discussion on endangered species has focused on logging (because protection of such birds as the northern spotted owl and the red-cockaded woodpecker affect forests), a number of developments have been thwarted or slowed by the ability of the Fish and Wildlife Service to control how people use the land.

For example, Beth Morian has been unable to develop homesites on her property west of Austin, Texas, because the area is habitat for the blackcapped vireo, a bird on the endangered species list.4 The act does allow development if a landowner creates a habitat conservation plan, but such plans are costly and must be worked out, step by step, with the Fish and Wildlife Service. According to one estimate, a habitat conservation plan proposed by The Nature Conservancy for a 34,000-acre area around Austin will cost $173 million over 30 years.5 While these obtrusive regulations have hampered real estate development, what probably changed the mood in Washington was that they were beginning to border on the absurd. For example: an EPA rule requires municipal sewage treatment plants to remove 30 percent of organic materials in sewage that is discharged into the ocean. …

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