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Risk Analysis and Government Regulation

Nicholas Krivacs

ENVI-232-E01

2/18/20
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The political nature of risk analysis is tied to the uncertainty involved in the scientific process.

The government takes many approaches to regulate environmental concerns and the role of the market

has a major impact on what policies will be implemented based on their expenses. There are many

things that effect the creation of governmental environmental regulation. Three of the major influences

are the political nature of risk analysis, economic influence, and the interactions between politics and

science.

The political nature of risk analysis is deeply intertwined with the scientific process. Risk analysis

is the process of assessing the chance of a harmful event occurring in this case to the environment. The

scientific process is firstly observing something. Once an issue has been observed a question is asked to

identify the problem. Then research is done followed by the formulation of a hypothesis. Then an

experiment is preformed, and conclusions are drawn. Science by its own nature has limitations in what it

can answer. In science there is hardly ever results that are true 100% of the time. The results from an

experiment regarding how much pollution is safe for a human to be exposed to must have some degree

of uncertainty. The scientists that have done these experiments can only give an approximate amount of

pollution that they know will harm people. This does not include however, that pollution level that they

believe can cause harm. Scientists tend to err on the side of caution. This leads them to giving a

restriction amount a little below the known harmful amount. The scientific perspective and the political

perspective are in serious conflict. Within the realm of politics, one must have complete factual proof to

justify any position. There can be no assumptions or well thought out predictions. This political/scientific

conflict causes great struggles for Environmental regulations being put into law. Environmental

regulations for pollution/hazardous material can be tricky for this reason. Many public health and

Environmental administrations have been sued in the past for setting regulations “too high”. For

example, according to the Environmental Policy Paradox, the Occupational Safety and Health

Administration(OSHA) had developed regulations that would change the acceptable amount of benzene
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exposure in the workplace from 10ppm to 1ppm (Smith, 2018). The Occupational Safety and Health

Administration is a division of the United States department of labor. Their mission is to keep working

conditions safe for workers. OSHA did not have any direct evidence that being exposed to 10 parts per

million of benzene would cause adverse health effects. OSHA did however know that benzene could

cause leukemia in humans at high levels of exposure and that it could be carcinogenic at low levels of

exposure. Without direct evidence, the courts will not be able to support any regulation.

There are many ways in which the government regulates certain issues. Blanket fines for doing

harmful activities can be implemented such as a fine for keeping fish that are smaller than the legal limit

or littering. On the business level these regulations could be that a business cannot inject toxic wastes

into the aquifers. These types of regulation however can be ineffective against larger corporations

because larger corporations have enough money to afford these fines and just continue polluting or

breaking the law because they can afford to pay the fines. This method provides very little incentive for

the company to regulate its activities. It is even less efficient in countries with lower levels of law

enforcement such as China. According to McGuire many of the fees in China are "subject to individual

negotiation” and that “Local regulators may be more inclined to please local business interests than a

distant national authority” (McGuire, 2014, 255). A more effective form of governmental regulation for

environmental policy is utilizing incentives and win-win solutions.

Occasionally profit and efficiency can push corporations to regulate themselves in order to save

money while also helping the environment as a beneficial side effect. The Advisory Committee on

Business and the Environment (ACBE) consider both the effect of business and government on the

environment. an ACBE Chair Chris Fay said: "Sustainable development, and in particular environmental

issues, are increasingly moving up the business agenda, but still not far enough.” (Energy and

Environmental management, 2004, n.p.). These situations are called Win-Win Solutions. One example of
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this is reducing packaging. The reduction of packaging can help the business save money by reducing the

costs of manufacturing. For example, some water bottle companies are reducing the amount of plastic

needed to create each bottle. This helps them save money by using less plastic while also helping the

environment. These Win-Win Solutions have another hidden benefit. If the business then advertises that

they use less plastic, environmentally conscious people will wish to purchase their bottles over a

company that uses more plastic per bottle. This can create a market environment in which being

environmentally conscious is vital for the business to succeed. ACBE published “How Sustainable is your

business”, which is a document that helps businesses understand sustainability. Once businesses

become more sustainable, they help to preserve themselves. Direct bans of certain practices and forced

changes can also be quite effective. This means that in order for a business to stay open in a place, it

must follow these regulations. An example of this is Ciba Geigy’s polluting in Toms River. Ciba Geigy is a

chemical company that dumped billions of gallons of chemicals in Tom’s River New Jersey that polluted

the local groundwater. In the past, the government had not had many regulations on what can be

released into the watershed by factories. Today, there are certain chemicals cannot be dumped into the

water at all. These strict zero tolerance bans have had a mixed effect. The local environment has

become cleaner but many of the factories moved their businesses out of the country to places they can

pollute legally. This is the path that the Ciba Geigy factory in Tom’s River took. Over the course of recent

American history there have been many Supreme Court Cases on the Environment.

President Barak Obama’s administration passed many environmental regulations. Throughout

the course of Donald Trump’s presidency, the trump administration has tried to weaken environmental

regulations set by the Obama administration. The chemical Disaster Rule was reinstated in August 2018.

The Chemical Disaster Rule makes it so that information about chemicals used in certain factories must

be made public information for the local people living near the factory. The U.S. Court of Appeals for the

District of Columbia were the judges in deciding on how to implement new environmental regulations
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based on an incident in 2013 in which a fertilizer plant had an explosion. According to Eliperin, “Judges

Judith Rogers and Robert Wilkins stated that the EPA's argument that industry needed 20 months to

determine how to meet the new standards makes a mockery of the statute" (Hale, 2019). The judges

decided to reject this and enforce these rules immediately. If the explosion had never happened, the

issue would most likely have never even reached the higher courts. More recently, there was a dispute

over whether or not the Clean Water Act applies to pollution that travels to federally protected surface

waters via groundwater. The Supreme Court reviewed lower court decisions regarding rulings about

water contamination. A precedence exists for the liability of the county involving water that flows

directly into federally protected water as illustrated in the case County of Maui v. Hawai'i Wildlife Fund

(No. 18-260). Another case they reviewed was Kentucky Waterways Alliance et al. v. Kentucky Utilities

Co. (No. 18-5115). In this case coal ash from the Kentucky Utility Company was seeping out of its storage

and contaminating the Harrington Lake. In both cases the courts upheld that to be liable, the defendant

must dump pollutants directly into the water source. Because neither did this, they were both not

considered liable. This shows that just because a practice is causing harm to the environment, it does

not mean that said practice is wrong from a legal standpoint.

Market forces have a major influence on the implementation of environmental policies.

The market differs from country to country and so do the environmental policies that are implemented.

In Nigeria there is rampant corruption and to create a successful business one must make ties to political

leaders. According to Adomako and Danso, “Less developed market economies are characterized by

ineffective legal enforcement... and weak regulatory structures” (Adomako & Danso, 2014, 223). This

lack of strong impartial law makes it harder for ingenuity, and can keep environmental regulations from

being made that are in the interest of the environment instead of the corporations themselves. In the

United States there is also some level of partiality when creating environmental policies. Many

politicians are supported financially and politically by large corporations. They then create regulations
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that will not target the companies supporting them. This can in turn keep the government from passing

environmental regulations that would help the majority of the citizens of the United States. Ultimately

market forces are driven by consumers. Consumers set the bar for how companies will run. many

customers are looking for the best quality at the lowest prices. In order to maintain profitability and

keep prices down for consumers, companies may relocate to locations where the environmental policies

are less stringent or nonexistent. Environmental policy may be influenced by the market, due to the loss

of manufacturing and jobs that could occur if the policies are too expensive for the companies to

handle. This is a difficult balancing act that environmentalists must face. On one hand the environment

needs saving but on the other, if the factories all shut down or move away, many people will lose their

jobs and will not support these kinds of regulations. Good environmental policy should allow for a timed

decrease in pollution in order to allow the company to incur costs over time. Regardless of what level of

development a country is at, money almost always comes first over environmental stability.

The political nature of risk analysis has become one with the uncertainty of science. Science is

never 100% sure of anything while in politics complete proof must be presented for any conclusion to be

reached. There are many different regulatory strategies that governments may employ but the most

effective seems to be Incentive based strategies. There have been many Supreme Court cases regarding

environmental issues. These are not always about what is best for the environment but more so about

technical truths. Market forces are the largest driving factor in the creation of environmental policies.

The creation of economically beneficial policy that mutually benefits the environment is necessary to

make a positive difference and environmental policy around the world.

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References

Adomako, S, Danso, A. (2014). Regulatory environment, environmental dynamism, political ties, and

performance: study of entrepreneurial firms in a developing economy. Journal of Small Business

and Enterprise Development 212-226. doi.org/10.1108/jsbed-01-2014-0004

Eilperin, J. (2018, Aug 20). Environmental policies stand firm. The Washington Post Retrieved from

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com.americansentinel.idm.oclc.org/docview/2089767199?accountid=169658

Hale, Z. (2019, Jan 09). US EPA review could inform supreme court case with big coal ash

implications. SNL Power Policy Week Retrieved from

http://americansentinel.idm.oclc.org/login?url=https://search-proquest-

com.americansentinel.idm.oclc.org/docview/2165968674?accountid=169658

McGuire, W. (2014). The effect of ISO 14001 on environmental regulatory compliance in China.

Ecological Economics 105, 254-264. doi.org/10.1016/j.ecolecon.2014.06.007

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Smith, Z. (2018). The Environmental Policy Paradox. New York: Taylor & Francis.