In this episode, host Kristin Hayes talks with Sheila Olmstead, a professor of public affairs at the University of Texas at Austin and a university fellow at Resources for the Future. Olmstead is a coauthor of a new report from the External Environmental Economics Advisory Committee about the underlying economic analysis behind the Trump administration’s Navigable Waters Protection Rule, which strips Clean Water Act protections from isolated wetlands and intermittent streams. Olmstead expands on why she and her coauthors question many of the rule’s economic assumptions, from the assertion that water is best regulated at the local level to the prediction that states will pursue more ambitious pollution restrictions than the federal government.
Listen to the Podcast
- Historically, the Clean Water Act has been contested: “[The 1970s] was a time of fairly widespread support for a muscular federal role in environmental policy. We had the Clean Air Act in 1970 (and the [US Environmental Protection Agency] was created in 1970), the Clean Water Act in 1972, and the Endangered Species Act in 1973. The challenge over time for the Clean Water Act has been that the definition of waters that fall under the umbrella of the Clean Water Act has always been a little bit fuzzy … What waters are subject to federal Clean Water Act jurisdiction? That has been controversial almost since the start.” (6:06)
- Questionable science underlying the Navigable Waters Protection Rule: “Our sense was that, if the science suggests that connectivity is important and real, then we really can’t start the economics from the premise that it isn’t. That’s where science and economics have to work hand in hand with good benefit-cost analysis for environmental regulation. And [the Navigable Waters Protection Rule] was a case where we felt like … the best available science says that these things are connected, and effects over here would cause downstream impacts.” (17:59)
- Legislative inaction contributes to regulatory uncertainty: “The reason [these definitions have] been litigated so much is because of a lack of clarity within the text of the Clean Water Act itself. And where did that come from? Well, that came from the Congress … Like a lot of environmental regulations over the past few decades, we seem to have moved from this place where things happen legislatively to a place where things happen in terms of administrative rulemaking, like what we see here in both the Clean Water Rule and the Navigable Waters Protection Rule. Administrations of all stripes are guilty of this.” (33:38)
Top of the Stack
- "Report on the Repeal of the Clean Water Rule and its Replacement with the Navigable Waters Protection Rule to Define Waters of the United States (WOTUS)" by David A. Keiser, Sheila M. Olmstead, Kevin J. Boyle, Victor B. Flatt, Bonnie L. Keeler, Daniel J. Phaneuf, Joseph S. Shapiro, and Jay P. Shimshack
- Bowlaway by Elizabeth McCracken
- The Giant's House by Elizabeth McCracken
The Full Transcript
Kristin Hayes: Hello, and welcome to Resources Radio, a weekly podcast from resources for the future. I'm your host, Kristin Hayes. Today I'll be talking with Sheila Olmstead, a professor at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin, a university fellow at RFF, and a senior fellow at the Property and Environment Research center in Bozeman, Montana. She spent time at the Council of Economic Advisers during the transition from the Obama to Trump administrations, and has been working on a report commissioned by the External Environmental Economics Advisory Committee (E-EEAC) that will be the subject of our conversation today. Just so that our listeners know, the E-EEAC is an independent organization dedicated to providing up-to-date, nonpartisan advice on the state of economic science as it relates to programs at the US Environmental Protection Agency (EPA).
So as our regular listeners may recall, a few months back, I discussed an E-EEAC report with coauthors Mary Evans and Matt Kotchen. And that report was on the Mercury and Air Toxics Standards (MATS) rule. This week, Sheila and I will be talking about a newly released report commissioned by the E-EEAC, and this time, it’s on the 2015 Clean Water Rule and its eventual replacement, the Navigable Waters Protection Rule. As in that previous episode, we're going to cover what the rules are all about, how they've shifted under changing administrations, and the author's views on how to improve the economic analysis underpinning the development and finalization of the rules. Stay with us.
Hi, Sheila, welcome to Resources Radio. It's always a pleasure to talk with you.
Sheila Olmstead: Hi Kristin. Thanks so much for having me.
Kristin Hayes: Of course. So let me start by asking you to tell our audience about your own background. I understand that you have a particular interest in water economics, so very apropos that you would be a leader of this report. Maybe you could also just tell us a little bit more about, or remind us about, the genesis of the E-EEAC itself.
Sheila Olmstead: Yeah, absolutely. It's true, I can't hide it. I do have an interest in water economics.
Kristin Hayes: No shame in that, Sheila.
Sheila Olmstead: You haven't probably talked to a lot of us on Resources Radio or elsewhere. But yeah, I'm an economist by training and I work on a lot of things, but my favorite projects have always been those that focus on water resource management in some way. That includes water pollution, water demand, water conservation, and those kinds of things.
I got interested in those ideas and challenges actually when I was a master's student here in Texas, at the University of Texas at Austin and I started working on a project where I was trying to evaluate the water infrastructure needs of a bunch of communities—1,000 or more communities in the Texas border region that didn't have access to water and wastewater service. That just kind of fascinated me that wow, we still have some really egregious challenges in this sector and especially for lower-income households. And that was a surprise to me in my 20s. I started working on that and then just kind of got hooked and navigated toward a lot of other water issues over the rest of my career. And then a little about the E-EEAC—EPA has always had a science advisory board.
Sheila Olmstead: As part of that science advisory board for decades, they had a standing subcommittee and environmental economics subcommittee. And that committee had a lot of jobs. They did things like draft and then revise and keep up to date EPA’s guidelines for preparing economic analysis. So that's an important role that it played. It also reviewed—as kind of what we're doing here in the report that we'll talk about today—individual benefit-cost analysis that were done by the agency over time for major environmental rules that had to do with air pollution or water pollution or the environmental problems.
And in the Trump administration—first, administrator Scott Pruitt of the EPA dissolved that standing subcommittee. And so the E-EEAC, as it exists now, is foundation-funded and completely independent. It's not part of EPA anymore, but they are trying to play the same role of providing this objective analysis of bothbest practices and also independent review of individual rules that EPA is promulgating.
Kristin Hayes: Great. Thank you. That's really helpful background to set the stage for the main focus of our conversation, which is on this latest report commissioned by the E-EEAC and which, as I mentioned, is focused on the Clean Water Rule and its eventual replacement, the Navigable Waters Protection Rule. So these are lots of words that I have never strung together in that order before.
Sheila Olmstead: Oh, wait till I get started.
Kristin Hayes: Yeah that's great. So I probably should start with some background on those rules as well, both for myself and for our audience.
Sheila Olmstead: Sure.
Kristin Hayes: So can you tell us just kind of about the rules, both in terms of the timeline and then the areas of controversy?
Sheila Olmstead: Absolutely. Compared to some of the air quality concerns that folks have been talking about recently on Resources Radio, I think we have to go back a little further than the typical conversation to think about what these changes have meant and where they came from and why they're important. And so I'll start with the Clean Water Act which is the kind of main federal environmental statute in the United States that ensures the sort of integrity of US waters. That was passed in 1972 and it was passed by the US Congress, which required overriding a veto by then President Nixon. You sort of think about what was going on in the early 1970s. People think about events like the 1969 Cuyahoga River fire, which was prominently covered by the media, and other kinds of events like that are widely credited for raising public awareness of the damages from water pollution.
This was a time of, I would say, fairly widespread support for a muscular federal role in environmental policy. We had the Clean Air Act in 1970, and EPA was created in 1970, then Clean Water Act in 1972, and the Endangered Species Act in 1973. So the challenge has been over time for the Clean Water Act, that the definition of which waters fall under the umbrella of the Clean Water Act has always been a little bit fuzzy. So in the statute itself, back in the ’70s, it referred to the, "Waters of the United States" and the acronym for that is “WOTUS.” Often, rules that have to do with the CWA jurisdiction are referred to using that acronym. And the idea is, what is a water of the United States? What is the water that's subject to federal CWA jurisdiction? That has been controversial almost since the start.
And so what we see is after ’72 you've got new agency regulations, in 1977, 1980, 1982, ’86, ’88, always trying to kind of do a better and clearer job of defining this. You know, which waters are within the scope and which ones are not? And I should say that for at least some parts of the Clean Water Act it's not just the EPA, but also the Army Corps of Engineers that has to worry about this. And so by the early 1980s, EPA and the Corps had a formal joint definition of WOTUS, but that continued to be challenged in several high-profile wetlands cases that eventually reached the US Supreme Court.
So you had cases like that in 1985, 2001, 2006, and now we're getting closer in time to today. Basically, in those disputes, the two sides were kind of the US federal government and agencies like EPA and Army Corps saying, "I think this particular wetland or pond or stream that you might affect in your land development project or your farm or your kind of municipal agency intend to do something with a piece of land." The government would be saying, "We think this falls under the Clean Water Act's jurisdiction." And then the private actor or public actor that was suing the federal government would be arguing the opposite, right? So land developers for example, would be saying, "Hey, there's this wetland that's on my private property. And I don't think that falls within the jurisdiction of the Clean Water Act."
So those cases kind of went both ways. You know, there's a couple important ones that'll come up during our conversation today. But the basic idea is that in 2015 the Obama administration, through this rule that you mentioned, the Clean Water Rule sought to standardize this kind of the characteristics of water bodies that would be subject to a variety of Clean Water Rule regulations.
That was the initial purpose of that 2015 rule. There were all major rules under the US federal regulations it had to go through a rigorous benefit-cost analysis. In this case that was done by both the EPA and the Army Corps jointly. So that was passed, but like a lot of these WOTUS questions it was immediately litigated. By the time it was the end of the Obama administration, that rule had been stayed in just over half of the US states and then was in place and the other half. So it was very much in limbo, right? And then we had a very significant change, a kind of 180 degree turn, in terms of environmental policy when the Obama administration leaves office and the Trump administration comes in. And very quickly by January, February of 2017, the Trump administration had issued an executive order announcing its plan to repeal the Clean Water Rule and to replace it with another rule.
That kicked off the agency's work over the past three years, which is what we're assessing in this report, both the repeal of the Clean Water Rule first—that officially happened in 2019, although it sort of had fits and starts before that—and then the Navigable Waters Protection Rule, which became effective this year in June, just a few months ago. And again, There's multiple kinds of competing economic analysis that were done by the agencies in that whole process. The bottom line in terms of what did the repeal and the replacement mean is that the Navigable Waters Protection Rule—the Trump rule relative to the Clean Water Rule, which was the Obama-era rule—narrows the scope of the Clean Water Act. It sort of takes waters that would formerly have been considered WOTUS—those subject to Clean Water Act jurisdiction under the 2015 rule—and it removes that protection from those waters.
The best estimates that we have suggested the rule removes about one half of US wetlands from federal protection and about 18 percent of US streams. The numbers for streams are much higher in the arid west where most, or many at least streams are what the rule would call intermittent or ephemeral, they don't flow all the time. So it's up to about 35 percent, just over a third of streams in the arid west are thought to be removed from federal protection now under the new Navigable Waters Protection Rule.
Kristin Hayes: Okay. And Sheila, let me just ask one thing about what protection means in this case to you. Is it about quality, measures of quality? Is it about quantity and use, how much is the scope?
Sheila Olmstead: It's a great question. So this is primarily focused on quality, although you know, the two are related. But there are a lot of different things that the Clean Water Act regulates. The most important one, and the one where we'll spend most of our time talking about today, has to do with what sort of land developers, farmers, and so on are allowed to do with respect to wetlands. And that kind of process, that sort of wetlands regulatory program falls under Section 404 of the Clean Water Act. That is the section that requires those kinds of actors, land developers, farmers, construction firms, and so on to acquire a permit to dredge and fill wetlands.
So if you have a swampy area in your property that you're trying to develop, if you decide, "Well, what we want to do is we want to fill that, bring it up to the grade of the rest of the property, dry it out and build some stuff there, or grow some crops or something like that." You need a permit to do that. And so that's one really important piece, right? Those kinds of activities are regulated.
But other things that are pretty straightforward would be things like, if you want a permit to emit pollution from a pipe into receiving waters, if those waters are considered part of the Clean Water Act, then you need a permit to do that. Under a different section of the Clean Water Act, if your activity does not fall under federal jurisdiction, then the only way you would need a permit to do that would be if states then step in and assert some jurisdiction over those waters.
Kristin Hayes: Okay. All right. That's very helpful context too. It sounds like the legal challenges by and large, these sort of back and forth legal challenges have been largely based on what this definition of WOTUS is.
Sheila Olmstead: That's right.
Kristin Hayes: As in which waters are covered. Okay, great.
Sheila Olmstead: Yeah, that's right. I guess the only exception I would say is that now, in the case of the current litigation, so not surprisingly—given the litigious history of this particular idea—even the Navigable Waters Protection Rule, the new rule that is also now being challenged in the courts by several states. For example, it's stayed in the State of Colorado right now, and there's uncertainty as to what the new Biden administration would actually do to make any changes.
In any case, that one—a lot of the objections, again, the question is what waters belong where. That's still the main question, but a lot of the legal challenges have to do with the economic analysis that we're going to be talking about today in the sense that states that are suing are saying, "Hey, you've done this analysis poorly. It doesn't incorporate things that we think are important." So that kind of challenge falls under federal administrative law—the Administrative Procedure Act—which says that agency regulations can't be "arbitrary and capricious." So if the rule and the economic analysis underlying the rule is thought to ignore important aspects of science or economics, then that's the basis for some of these legal challenges today.
Kristin Hayes: Great. Okay, that's a good segue into the main focus on the economics. I hope we can come back to your sense of what the end game is here, but, hard question I'm sure, but let's put that off towards the end and let's talk about the economics and the focus of this report.
Sheila Olmstead: Sure.
Kristin Hayes: So you and your coauthors, mostly economists by training, took a close look at a number of the economic questions raised by EPA, Army Corps repeal and replacement rules. And so let's talk about three main ones in turn. The first is about federalism or at what level of government, whether that's federal, state, local, certain authorities should lie or policies should be promulgated. So what was different about the revised rules take on who should be regulating the issues covered in the rule? And maybe why did you flag that as a point of concern?
Sheila Olmstead: That's a great question. The agencies at the beginning of the rules sort of sets the stage for the empirical arguments that they're going to make using quantitative methods for benefit-cost analysis. In that sort of setting the stage, they argued that in this case water quality is what they called a "local public good." And that would suggest they're sort of relying on a piece of economic theory that says that in some cases in an ideal world one might want to decentralize environmental decisionmaking and delegate decisions about environmental regulation to entities like the states rather than the federal government. And you would do that in a case where you feel as though it's really just, all of the effects of that rule are going to be internalized within a state. And so it ought to be up to public decision makers within that state to make those choices and to set those standards.
That's a really important contribution in economics to thinking about regulation. There are many cases in which one can argue that that's the right level of regulation for a particular kind of problem. In this case we cried foul, because our concern was that in the 2015 rule—if you go back to the Clean Water Rule, the Obama-era rule—there was a whole kind of set of scientific analysis that was done around this question, of the degree to which these relatively more isolated or femoral, or kind of intermittent streams, isolated wetlands, were connected hydrologically, biologically in other important ways to the downstream waters that are sort of clear cases, right?
So if you had the Mississippi River, that's a clear case where it'd be hard to say that that does not fall under the sort of jurisdiction of the Clean Water Act, even given all of the court cases over time. But if you have an isolated wetland that's maybe kind of far from a small tributary of the Mississippi River, that's where the questions arise. These are the resources that are in the gray area. In the 2015 rule, there was what we felt were pretty convincing scientific arguments that those waters are connected in important ways. And the challenge is that the new rule—the Navigable Waters Protection Rule and the repeal—they don't really take that science head on. So that science was peer reviewed and then it went through a review by the EPA Science Advisory Board with a standard kind of practice and regulatory rulemaking to avoid again this standard of being called arbitrary and capricious. Making sure that you're following the best available science.
And in the new rule there's no evidence that's presented, no real discussion of that being wrong-headed in any specific way or ways. But just more of a kind of declarative statement that, "Hey, in this context these waters are local public goods." And our sense was, "Gosh, if the science suggests that connectivity is important and is real, then you can't really start the economics from the premise that it isn't." And so that's where science and economics have to work hand in hand in good benefit-cost analysis for environmental regulation. And this was a case where we felt like you can't really, unless you're going to present some convincing arguments to the contrary, the best available science says that these things are connected and effects over here are going to cause downstream impacts.
And then most importantly, things like state boundaries typically ignore things like watershed boundaries. So if you're worried about downstream impacts, those could very, very likely be impacts that move across state lines. In fact, we even found that the agency's arguments were not really internally consistent. For example, they do a special in-depth case study analysis in three different watersheds to try and demonstrate their points. For better or for worse, in all three of those cases the watersheds that they pick—these fairly small watersheds that they pick—are all across multiple state lines.
So our feeling was, it's awfully hard to find cases where this is not going to be an important factor. In fact, the agencies themselves would have had a hard time. I think the case study question shows that they also had a hard time finding cases where those interstate impacts might not be important. For us that was the challenge—the science suggests there's connectivity. We don't see state lines in most cases following watershed boundary lines. And so you really can't argue that this is one of those cases where the best place to regulate water quality is going to be at the state level.
Kristin Hayes: Well, and then you also build on that federalism discussion. And by noting that the economic analysis for the Navigable Waters Protection Rule suggests that if the federal government stops regulating certain bodies of water states will step right in. So in other words, we can take away that federal protection, but even if we do that, it's going to be okay because the states are going to pick up that mantle. Why are you skeptical? Why are you and your coauthors skeptical that that would in fact be the case?
Sheila Olmstead: Yeah, it's a really good question. You know, we kind of approached it objectively saying, "Look, what the agencies are trying to do, which is laudable, is to set up ‘what is the right counterfactual for federal regulation of these waters?’" That actually is a really important point in the sense that we always want to be careful when we're doing this kind of analysis not to give a federal or any other kind of regulation credit for achievements or damages that are really not caused by the regulation itself. I think that agencies set out to say, "Well hey, if we repeal this, we take half of US wetlands and 20 percent of US streams out of federal jurisdiction under the Clean Water Act, probably a lot of states are going to step in and protect those waters." And so we want to account for that.
So there were several reasons to be skeptical of that assumption. The first actually just comes from EPA’s own guidelines. And again, these are those guidelines for preparing economic analysis, the kind of recipe book or directions book that the agencies are meant to follow that represent best practices. In those guidelines it's fairly clear that for example, if the Navigable Waters Protection Rule is under consideration, and simultaneously there is a state law under consideration in the state of California, let's say, they’re picking a state that often tends to lead the way in terms of thinking about environmental regulation. And then that law passes in California. And the report says that this is completely made up, hypothetical. But imagine this happens and it passes and the California law says that, "Hey, if this Navigable Waters Protection Rule goes through and federal protection is removed, then California as a state, we're going to include all of those affected waters within our state jurisdiction."
So then under those conditions, with a state law that is truly scheduled to take place, then the agency's guidelines suggest that they should take that into account. So that would be to say that if you're adding up costs and benefits and you know California is going to step in for sure, then you should not include the benefits of the regulation on that for that state. And that makes sense. But in this case, what the agencies did was quite different. It was extremely ambitious to the degree that we felt was speculative. And that is that for each state they used a variety of criteria to try and predict what the states might do in response to the federal government removing the jurisdiction from these waters. That is exactly what the guidelines say not to do.
So the first reason to be skeptical of that approach is to suggest that it violates what are thought to be best practices for benefit-cost analysis. It's just too speculative in that sense. And then a second reason to be skeptical is the sheer number of states that they deem to be likely to take on this role. So by our count it's 23 states in their kind of middle scenario and then 31 states in their most optimistic scenario that they view as very likely to fully subsume this prior federal role. And if we look historically, there's two reasons to worry about that. One is if we look historically at other times, then this may be fairly unprecedented in the sort of scope of the magnitude of the affected waters that the Navigable Waters Protection Rule removes from federal jurisdiction.
There was one of those Supreme Court cases that I mentioned was a case in 2006, in which the Supreme Court struck down what had been known as the Migratory Bird Rule. In that case the EPA and Army Corps had jurisdiction under the Clean Water Act over isolated wetlands, even if they were not hydrologically connected, if they provided habitat for migratory bird species that did cross state lines. And that rule was thrown out, so that rule was negated by this 2006 Supreme Court decision. That meant that a lot of formerly federal waters were known then to be, sort of, not federal waters. Interestingly, a few states moved to partially take over that former federal role for those affected wetlands.
But here we are, 20 plus years down the line. And we don't see, certainly not 31 States acting right away to take over that full federal role. So if we look at prior state behavior, that's one indicator, sort of a second reason to be a little skeptical of this approach. And then I'd say the third reason to be skeptical is that not surprisingly what the agency does is that in the benefit-cost analysis, once they'd predict which states are likely to take over that role, they then justify that by eliminating those states benefits and costs from their national estimates, right? So that is, if we think 31 states are going to take over, then we're just not going to count any benefits and costs of the federal rule.
So that has a really big effect on the rule’s bottom line, and we can show, and we do in the report that, gosh, even if you just take one state like the state of Florida in the agency's estimates accounts for almost half of the kind of foregone benefits from wetlands depletion, or the sort of disappearing wetlands acreage that one might predict would happen when the federal government removes its jurisdiction, but only accounts for about 10 percent of the avoided costs. So that really skews just removing one state by predicting that they're going to take over the federal role is highly favorable to the Trump administration’s Navigable Waters Protection Rule.
Our concern is that hey, it's sketchy doing this. It violates the best practices as defined by the agency itself. It doesn't really jive with what we see from prior state behavior, and in addition it has such a strong effect on the bottom line and is, obviously we can't say that what the agency was doing was strategic, but it certainly gives this sort of impression of a lack of objectivity. And we just felt like, gosh, it's awfully hard to take those numbers seriously in those scenarios where they're dropping states, because we're quite concerned about how sensitive the results are to that and how speculative the decision to put states in one category than others seem to be.
Kristin Hayes: So let me pivot quickly to the third point that you call out. And it does relate again to the cost-benefit analysis, which is a very popular topic here on Resources Radio, and in particular, let me just quote, one piece, "The methods used to estimate the foregone benefits from reducing CWA jurisdiction." So, kind of wonky. Fortunately, we have a wonky audience here at RFF, but help me interpret that if you can.
Sheila Olmstead: Yeah, that's great.
Kristin Hayes: And tell us why it matters?
Sheila Olmstead: So this actually has been one of the higher profile pieces of this batting back and forth of the rule between the two administrations. I say that because some of my colleagues, in fact some of the coauthors on our current report, have written before about this. And that is that the main set of what I'll call damages, what EPA and Army Corps call forgone benefits, right? So if you reduce the scope of federal jurisdiction under the Clean Water Act, then you're going to have some waters that are going to be negatively affected.
So this idea of foregone benefits, or damages from that, would be that the primary damage that they look at is lost acreage of wetlands. The way that they handled this when they first repealed the Obama-era Clean Water Rule, when they made their first attempt at that in 2017 and 2018, what they did was they just took the old rule’s benefit-cost analysis. That is they took the Obama era, EPA and Army Corps analysis that had estimated the benefits of wetlands on a per acre basis. And they said, "Those benefits are just too uncertain, so we'll just call it a zero."
That did not go over well. As you can imagine, in our wonky environmental economics benefit-cost analysis community people were up in arms and said, "There's a lot of uncertainty in all kinds of estimates that we make when we do regulatory impact analysis, but you can't just zero something out." And so there was some writing about that and there's lots of public comment and so on. So they got a lot of pushback on that. And to their credit, when they finalized the repeal and then when they replaced it with the Navigable Waters Protection Rule, they took a very different approach. And generally it's a much better approach obviously than just calling it a zero. And what they did was they used something called a meta-analysis. That is where there are a lot of sort of smallish individual studies that have estimated the damages from lost wetlands or the converse of that benefits from kind of wetland improvements in the United States.
But those are very time and place specific estimates. And so what a meta-analysis allows the researchers to do at the agency is it allows them to take as much information as they can collect about all of these independent studies that have been done in different parts of the United States and different times. And then kind of put them together in a statistical model that says, "Okay, this is how we might model a per unit, say per acre, lost wetland based on all of these different criteria that we have data on from all of these independent studies." So then you can use that model to predict what those losses would look like in places where we don't have accident studies, which is really most places, right? You know, if you sort of look at what we know, standing under the street light, it's not very much compared to how wetlands might be lost or valued in the whole country.
So that's actually a laudable approach, and what's even more laudable about it is they contract it out to an environmental economist who worked with their team to do that study, it was peer reviewed, so it's published in a peer reviewed journal. That's always a good thing. And then the challenges, and they use that meta-analysis within the agency's economic analysis to then project these losses at the national scale. So we really liked the meta-analysis, that movement from calling it a zero to the meta-analysis was the big improvement.
But then we had some concerns and questions about how they use the results from that meta-analysis to then project those national damages from potentially lost wetlands acreage. And those had to do with things like, were they inclusive enough in the studies that they compiled right to generate the data that they're using in the meta-analysis? That was one of our concerns. Were they as transparent as they could be in some of the assumptions that they made.
And then very importantly, these arguments about federalism that they make all throughout the rule also affected how they used that meta-analysis. So for example, when they projected the losses of affected wetlands within different states, they assumed that those losses stopped at state borders. And again, you have to do that to be internally consistent if you're arguing upfront that these things are not connected and there aren't these interstate impacts, then you can't very well model interstate impacts in your benefit valuation.
It's pretty questionable as far as best practices go in this kind of work. So just for example again, think about those case studies that they picked and they've got these multi-state watersheds. If you're going to lose wetlands acreage in Maryland, can you assume that the effects are only going to be felt in Maryland, but aren't there recreators from DC and Virginia and other places that might be birding or hunting or hiking, or doing something else in those areas. And that's where our skepticism came in, was how do you go from this nice model that was a big improvement to actually making these projections. Again, I think it’s one of our biggest problems with that as it comes right back to this federalism argument that these impacts stop at state boundaries. And we just know from long environmental economics literature that that's just not the case.
Kristin Hayes: I feel like I've gotten such a good grounding in this conversation both ... Well, about the rules themselves of course, but then also just about how the federal process, which can seem so opaque, actually has real consequences to sort of how rules are developed and the considerations that go into it. And why the rigor of the analysis really matters. So I just want to thank you for putting some context on that too, because it's again about the rule itself, but then also about kind of the broader context in which these rules are developed. So, thanks.
Sheila Olmstead: Sure.
Kristin Hayes: Yeah. And maybe just to kind of wrap up the conversation about the substance of the report and the rule itself, I do want to turn back to this question of what happens next, Sheila?
Sheila Olmstead: Oh man, I know.
Kristin Hayes: There's been decades of kind of going back and forth and competing legal challenges, and-
Sheila Olmstead: Yeah, it's a great question.
Kristin Hayes: Where does an incoming Biden administration go from here?
Sheila Olmstead: I know; it's hard. I mean, they've indicated their intent to revisit all of this and that's not surprising. But again, even if they hadn't, it's being litigated. It'll either be someone in the administration or someone in the Congress or the courts that are going to force some changes here. I think in a way this, maybe this is going to be controversial. My own feeling is that, if you look at the whole history of this, the reason this thing has been litigated so much, is because of a little bit of a lack of clarity within the text of the Clean Water Act itself. And where did that come from? Well, that came from the Congress, right? That's a legislative thing. And like a lot of environmental regulations and concerns of all kinds, over the past few decades we seem to have moved from this place where things kind of happen legislatively to a place where things happen in terms of administrative rulemaking, like what we see here in both the Clean Water Rule and the Navigable Waters Protection Rule. So administrations of all stripes are guilty of this.
Then the debate over those rules takes place in the courts. And that's just a very different setting from the legislative branch; if Congress decided that it wanted to really clarify the language in the Clean Water Act, it could do that. That seems unlikely, but I'm going to go ahead and put that out there as the first best solution, because it seems irresponsible somehow not to talk about the fact that if the problem is coming from lack of clarity in the words of the Congress, then it might be useful for the legislative bodies to revisit that. Given that, that seems maybe a little bit unlikely.
Kristin Hayes: Or at least challenging, yes.
Sheila Olmstead: Or at least challenging, right? I think we're more likely to see this continued back and forth. It is complicated in the sense that we had a rule, the Clean Water Rule, and it had an economic analysis. And then we had a repeal, and that had an economic analysis. And then we had a replacement, and that had an economic analysis. And now we need to have what? Another repeal and replacement. Unfortunately I think that's probably where we're headed.
Kristin Hayes: Yeah.
Sheila Olmstead: I think what we probably would see would be that the Biden administration may be unlikely to try and defend the Navigable Waters Protection Rule in court under the cases that have currently been brought against it, that ongoing litigation. And then try to go back to the drawing board. As an economist and someone who is wonky about benefit-cost analysis, the hard thing is to see when the agencies in a politically motivated way are changing the bottom line of the analysis to match the kind of flavor of the day in terms of what the particular interests of the administration that they're working under.
That's very hard, right? Over time my concern is that as opposed to a legislative solution where the language is really clarified, and then we can just take that and do the best possible benefit-cost analysis of a rule, instead we're sort of stuck fighting over how to do the benefit-cost analysis. And that's not really the purpose of that tool, right? The purpose of that tool is to try and provide this objective input so that we can weigh apples to apples and oranges to oranges. So that's just my wish is that we could move from that process, which has been so fraught, to a process where we get more clarity from the Congress and then use benefit-cost analysis in a way that's more appropriate. That would be great, but I don't think that's where we're headed, so.
Kristin Hayes: Yeah. Well, I do think there's a lot of interesting conversation to be had about what happens with benefit-cost analysis more generally moving forward. We just had another episode on Resources Radio on that topic. And I think we're going to try to hold some events on that at RFF.
Sheila Olmstead: Great.
Kristin Hayes: So yeah, that's definitely a big picture conversation that I look forward to continuing with you and others. And if there's any good news in the fact that this topic is likely to be live for a while longer, it's that maybe we'll get more good conversations out of it.
Sheila Olmstead: That's right. Yeah, I think that's true. I think over time we will sort all these things out.
Kristin Hayes: Oh, let's end on that very optimistic note, but also with our regular feature, Top of the Stack. So Sheila, let me just ask you to close. What would you recommend to our listeners? Content on this topic or more broadly?
Sheila Olmstead: Yeah, like a lot of people, I think I have recently shifted from reading way too much political news and election related stuff online and elsewhere to back toward maybe reading some novels and trying to enjoy my downtime a little bit more. So downtime to the extent that we have that during the pandemic.
Kristin Hayes: I was like, "I'm sorry, what is that again?" But yeah, anyway. Yes.
Sheila Olmstead: Well we’re teaching school and also doing our jobs, yes, but I recently read Bowlaway by Elizabeth McCracken, and I loved her book, A Giant's House, which I read a long time ago. And then she's visiting at the University of Texas and I thought, "Oh, I should read something. I'll read her latest book." And it was really funny and quirky and kind of whimsical. It was fun. So I recommend that to people: Bowlaway by Elizabeth McCracken.
Kristin Hayes: Well, Sheila, thank you so much again for explaining these things in such clear terms. I know it's complicated, but it's always helpful to have a guide and you were a wonderful one. So thank you so much.
Sheila Olmstead: I'm happy to do that, and thanks so much for the invitation.
Kristin Hayes: You've been listening to Resources Radio. Learn how to support resources for the future at rff.org/support. If you have a minute, we'd really appreciate you leaving us a rating or a comment on your podcast platform of choice. Also, feel free to send us your suggestions for future episodes. Resources Radio is a podcast from resources for the future. RFF is an independent nonprofit research institution in Washington, D.C. Our mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement.
The views expressed on this podcast are solely those of the podcast guests and may differ from those of RFF experts, its officers or its directors. RFF does not take positions on specific legislative proposals. Resources Radio is produced by Elizabeth Wason, with music by Daniel Raimi. Join us next week for another episode.