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Op-Ed | The American Prospect | March 1, 2023

Calling Deficit Squawks’ Bluff on Environmental Enforcement

Climate and EnvironmentConsumer ProtectionCorporate CrackdownExecutive BranchGovernanceGovernment Capacity
Calling Deficit Squawks’ Bluff on Environmental Enforcement

Deregulatory zeal and government spending cuts are surefire ways to preserve corporate impunity, at the public’s peril.

This article first appeared in The American Prospect. Read the article on the original website.

A 38-car train wreck. Toxic chemicals seeping into water and soil, and a black plume rising in the sky. Sick people, sick pets. As the Prospect’s Jarod Facundo wrote last week, the national spotlight remains fixed on the ecological consequences of the February 3 derailment of a Norfolk Southern train carrying hazardous chemicals in East Palestine, Ohio.

In the context of this ecological disaster, arguing for a reduced budget for federal investigators, air and water quality testing, and programs that hold polluting corporations accountable for proper cleanup and restitution is sheer madness. But that’s exactly what the current right-wing push for massive government spending cuts in the name of deficit reduction would entail.

And that’s not all. Cutting funding for environmental enforcement would actually increase the deficit. Enforcement programs at several agencies, as we’ll see, are incredibly cost-effective, bringing in more money to the Treasury through fines and penalties from corporate offenders than the work costs. What’s more, lax environmental enforcement invariably leads to disasters that damage the economy, reduce tax revenue, and impose costs on the government. Pointing out deficit squawks’ willful blindness to the fiscal reality of enforcement budgets is a useful way to call their bluff: Whether or not government programs recoup their costs doesn’t matter to them, because what they’re really after is preserving corporate impunity.

The Case for More Government Capacity

The dangerous situation in East Palestine should be a sobering antidote to “debt hysteria,” demonstrating the need for stronger regulation and increased investment in environmental enforcement and compliance programs. In the heat of the moment, if we take them at their word, it appears some Republican voices might even agree.

The derailment led Sens. Marco Rubio (R-FL) and J.D. Vance (R-OH) to question whether there is adequate federal agency oversight of the railroad industry. Sen. Ted Cruz (R-TX) retweeted Rep. Ilhan Omar (D-MN) about the need for congressional oversight and regulatory action from Transportation Secretary Pete Buttigieg. Sen. Vance’s proposed plan for helping the region recover is actually a good one, and as it embraces the government’s ability to hold a corporation accountable and improve people’s lives in a time of need, a decidedly progressive one.

CNN suggested that the derailment may have spurred “rare signs of bipartisan agreement on rail safety.” But it remains to be seen whether that agreement will be stretched into action, particularly in the GOP-controlled House. The same Republicans assailing the administration for being slow to act in response to this disaster have been eager to cut funding to agencies like the EPA—undermining its ability to ensure clean air, water, and soil around the country. They have also refused to confirm Biden’s nominees to lead the EPA’s enforcement division and Superfund and waste division for over a year.

Pointing out this hypocrisy is not enough. Every politician clamoring for action in East Palestine should be held accountable during the 2024 appropriations process for giving the federal agencies responsible for offering that help, from the EPA to FEMA to Health and Human Services, the resources they urgently need.

Preventing this kind of accident from happening again will require the Department of Transportation to resist industry pressure and pass and enforce new safety regulations. And holding corporations accountable for cleaning up hazards like this all across the country requires the Environmental Protection Agency to have the resources to oversee corporate compliance with environmental laws, and bring cases against violators.

The EPA has indicated that it will use its significant authority under the Superfund Act to compel Norfolk Southern to clean up the site, and take over any required cleanup that the company fails to perform. It’s good to see the EPA take this forceful step. But the EPA has not yet recovered from years of budget cuts that bit deepest under Trump, with its staffing levels shrinking to Reagan-era levels that it still has not exceeded. As recent climate laws have expanded the EPA’s mission, including the goal of aggressively cleaning up many other Superfund sites across America, its workforce has become even further stretched.

report from the Environmental Data and Governance Initiative last week concluded that the Biden administration has only made “slow to minimal progress restoring the capacity of the EPA to handle enforcement and compliance of our nation’s environmental laws.” This is in large part because its budget has not increased proportionally to inflation or need. Looking at hazardous waste and Superfund enforcement specifically, money allocated to these programs is still 14 percent lower than in 2016, and 36 percent lower than in 2011.

The EPA is not the only agency involved in the East Palestine response whose capacity is cause for concern. Staffing levels at the National Transportation Safety Board, which is conducting the investigation into the derailment, have been stagnant for over 15 years. The agency had 406 employees in 2008; as of 2022, it has 412, up from 401 in 2021.

The Fiscal Case for Environmental Enforcement

President Biden is set to release his budget plan for 2024 next week, after daring Republicans last month to “show me your budget and I’ll show you mine.” We can guess what the Republican plan will be: axing discretionary spending on everything that isn’t the military, and undercutting entitlement programs like Social Security and Medicare.

It remains to be seen how Biden’s proposed budget will balance different sources of revenue and spending. Savings from the Inflation Reduction Act, which raised taxes on corporations and will reduce tax evasion by the richest Americans, will likely play a part. But there is another, often overlooked source of government revenue that aligns with the best of Biden’s people-first ambitions: increasing enforcement cases against corporations whose violations of the law harm communities around the country.

The Inflation Reduction Act’s tax provisions are actually a limited proof of this concept. The law is deficit-reducing overall, in significant part because the revenue the IRS will bring in through increasing audits on the wealthiest Americans (estimated at around $180 billion over the next decade, which many think is an underestimate) outstrips the cost of performing those audits ($46 billion). But the IRS is not the only agency for which increasing white-collar and corporate enforcement would bring in more money to the Treasury than the agencies would expend.

Biden’s forthcoming budget should funnel money toward underresourced enforcement efforts at the Environmental Protection Agency, the Federal Trade Commission, the Securities and Exchange Commission, and the DOJ Antitrust, Civil, and Environment and Natural Resources Divisions, among other offices. In 2022, corporate and white-collar prosecutions reached a record low, and the fewest civil environmental enforcement cases were closed in at least 22 years.

I’ve written at length before about how increasing enforcement against corporate lawbreakers at the federal level is not just the right thing to do, and not just smart politics—standing up to crooked CEOs is a good look!—but also remunerative for the government. Though penalties can vary significantly year by year, the trend across administrations is clear: The returns tend to outstrip the budget allocated for the work.

Take the Federal Trade Commission, for example. In 2021, it brought in ​​$13 in consumer savings per dollar spent on consumer protection law enforcement. Its enforcement actions returned to consumers or forwarded to the Treasury $2.39 billion; the agency’s entire budget in 2021 was only $351 million, half of which was already offset by collecting routine fees. Likewise, over at the SEC, its 2022 enforcement budget of $613 million brought in $4.2 billion in penalties.

Let’s look at the case of environmental enforcement specifically. In 2021, the EPA’s civil enforcement budget was $164.9 million and its criminal enforcement budget was $49.6 million, increased only to $168.3 million and $51.3 million in 2022. In 2021, the EPA’s enforcement office secured over $1 billion in total penalties, and in 2022, around $300 million. Under Trump, the average value of civil and criminal penalties brought in each year was $576 million and $836 million, respectively. Outlier fines every few years from massive corporations like Volkswagen and BP suggest that if the EPA had sufficient staffing and resources to go up against large corporate polluters with deeper pockets more often, the financial returns would be proportionately even greater.

These numbers show that the EPA, even when undervalued and underresourced, is still more than capable of bringing in fines that eclipse its enforcement budget. What the numbers do not show is how much work remains undone. Thousands of corporations continue to flout pollution standards and endanger public health. By one recent estimate, the U.S. averages one chemical accident every two days, with roughly 200 million people at regular risk of exposure. And the EPA lacks capacity to pursue resolution and restitution in all of these cases.

Conversely, when those disasters do happen, life is often badly disrupted in the affected area, with people moving elsewhere, businesses closing, and workers laid off—all avoidable traumas to communities that also happen to reduce tax revenue. And while the EPA is forcing Norfolk Southern to pay for the cleanup in East Palestine, the agency itself pays entirely for cleanup at 30 percent of all Superfund sites, and helps pay at an additional 15 percent. Furthermore, if victims require health care after chemical exposure, they often get it through Medicare or Medicaid, or can end up on taxpayer-funded disability.

In coming months, Republicans and Manchinites will undoubtedly crow about “fiscal responsibility” and stoke fear about the deficit to justify cutting programs that most directly assist people. Democrats should remind them that the quality of federal agencies’ response to disasters like East Palestine is shaped by the resources they’re given. But that’s not the only available tactic; Democrats can also call their bluff on enforcement spending.

Deficit squawks’ veneer of fiscal responsibility is easily exposed by confronting them with the fact that increasing enforcement against corporate bad actors is highly cost-effective. Why? Because their real sympathies lie with the very corporations that fear increased enforcement.

Corporate-backed politicians use fearmongering about the deficit and debt to try to weaken budgets for federal agencies, so that the corporate interests they speak for can evade accountability for breaking the law. Compromising with these bad-faith agents of austerity, as Bloomberg’s editors exhort the administration to do, is effectively ceding ground to (literally) toxic corporate greed. Americans know all too well how much ground “too big to jail” corporations already hold.

IMAGE: “Ohio Derailment contractors cleanup 2023by the Environmental Protection Agency is in the public domain.

Climate and EnvironmentConsumer ProtectionCorporate CrackdownExecutive BranchGovernanceGovernment Capacity

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