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Environmental Bounty-Hunting

By Bruce L. Benson

Private prosecution of crimes has a long and sordid history, and that history isn’t over. Bounty hunters no longer hound innocent people to death as some did in England in the mid-18th century, but environmental groups such as the Natural Resources Defense Council have modified the tactic. They use "citizen suits" to reap rich rewards for themselves with little positive impact on the environment.

Most federal environmental statutes allow citizens to sue individuals or companies for violating the laws. Indeed, from 1993 to 2002, more than 75% of all environmental federal court decisions started as citizen suits, reports James May. Writing the Widener Law Review, he concludes that citizen suits are "the engine that propels the field of environmental law."

But most of these suits are brought by environmental organizations, not individuals, and most of the filings don’t end in a court decision; they end in settlements. From 1995-2002, there were 4,438 notices of intent to sue under four environmental statutes–6.6 times more than actual federal court decisions in citizen suits. Presumably most of the others were settled.

Why the settlements?

My research indicates a clear and compelling reason: settlements bring in money environmental groups can use to pursue other goals. Although statistics are hard to come by, most citizen suits appear to be filed under the Clean Water Act and the Resource Conservation Recovery Act (RCRA). Provisions in these laws enable citizen prosecutors to craft settlements that compensate them generously for legal costs (amounts well above actual costs) and that channel funds into pet environmental projects (called "supplements! environmental projects.")

These laws make prosecutions easy because they require companies to keep detailed records of their activities; in other words, evidence of technical violations is provided by the companies themselves! Furthermore, the laws saddle "violators" with very heavy penalties (up to $25,000 per day), but these penalties can be waived if the case is settled. And RCRA even allows citizens to prosecute past violations, not just ongoing ones.

Many of the violations are trivial and technical. Defendants who have not even minimally harmed the environment are roped in. One commentator points out that the Atlantic States Legal Foundation has frequently sued over paperwork violations under the Clean Water Act, but "not over violations of substantive environmental standards." Companies settle simply to avoid expensive litigation.

An indication that self-interest, not environmental stewardship, propels these suits comes from comparing citizen suits filed under two different laws. Between 1995 and 2002, 1,371 citizen suits were filed under the under the Clean Water Act but only 143 under the Clean Air Act. Do environmental groups such as the Natural Resources Defense Council and the Earthjustice Legal Defense Fund think that water violations are more serious than air pollution? Probably not. They do know, however, that the Clean Water Act mandates record-keeping that makes suing under it easy and allows large fines that make settlements lucrative; the Clean Air Act does not. Another sign that the goals are financial, not environmental, is that the Clean Water Act suits are disproportionately targeted at private firms, not municipal governments. Yet municipal governments generate much more water pollution.

Current statutes thus create a moral hazard, distorting the incentives of environmental groups. As Michael Greve wrote some years ago, "In purpose and effect, citizen suit provisions are an off-budget entitlement program for the environmental movement." Repealing these provisions, particularly those in laws that authorize large monetary fines, would help some environmental groups refocus on activities that actually enhance environmental quality.

Mr. Benson, the DeVoe Moore Distinguished Research Professor at Florida State University, was the 2005 Julian Simon Fellow with PERC, the Property and Environment Research Center. His paper on citizen suits, "Unnatural Bounty: Distorting the Incentives of Major Environmental Groups, " has just been published by PERC. Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved.

Related Sites:
Unnatural Bounty: Distorting the Incentives of Major Environmental Groups


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