Environmental protectionism: when environmental laws protect businesses from competition

The environment’s greatest friend is technological innovation. Human ingenuity—what Julian Simon called “the ultimate resource“—has consistently enabled us to make more with less. Yet environmental laws too often throw up roadblocks to that progress, favoring the dirty status quo over a cleaner future.

Take New York’s State Environmental Quality Review Act. Ostensibly to protect the environment, this law requires any new development to undergo an environmental review and mitigate any environmental impacts. At that high level of generality, that probably doesn’t sound so bad.

The devil is in the details. One of the “environmental” impacts, according to SEQRA, is when a new business displaces an existing one. The state’s handbook explaining how the law should be applied advises local governments “reviewing a big box development should consider the impact of the development on the community character of a neighboring village that might suffer business displacement as a result”.

There’s a word for that: protectionism. Environmental review statutes, if they include business displacement as an environmental impact, direct government to subject new businesses to enhanced scrutiny simply because they would compete with existing businesses. Economic competition is not an environmental impact. It’s the best engine for reducing real impacts.

New York’s SEQRA is not alone in this regard. On the other side of the country, California’s Environmental Quality Act (CEQA) is regularly exposed as a tool of NIMBYs and existing business to prevent economic progress. The most ridiculous example was a gas station owner who was blocked from adding an additional pump for 18 months. Winning the right to go forward ultimately cost the owner half a million dollars, thanks to a lawsuit brought by the owner of a gas station across the street.

Rather than obstructing economic development, environmentalists should be embracing it. There should be no status quo bias. That only freezes in place current technology and land use decisions, blocking the innovative breakthroughs that could reduce impacts. How are you supposed to phase out dirty coal-burning power plants, for instance, if you erect huge barriers to building new zero-carbon nuclear plants?

Clear environmental standards that apply to everyone, like the common law nuisance system, foster innovation. Overreliance on permitting, what my friend Timothy Sandefur refers to as “the permission society“, thwarts innovation. It ignores the environmental impacts of the status quo, while subjecting anything new to a labyrinthine permit program to implement a hopelessly vague standard.