Vetocracy: Big Lawsuits eat Small Fish
for in the absence of a magistrate the strong will swallow the weak; but under his protection, the weak resist the strong
The Arthashastra (Kautilya)
There are a few ways of doing environmental regulation. The first is a legislature passing specific laws saying what's illegal and what's not. This happens after months of debate, with various participants lobbying for what they want and legislators coming to a compromise. The second is to specify what outcomes you want and let the specifics of this be set by regulatory agencies. A law might say "this thing is illegal and X agency must make rules to ensure its implementation". Crucially this approach avoids going too deep into the specifics and leaving those to bureaucrats. The nice part of this is that changes to the law can be made without going through a long legislative process by either asking the regulators to change them or more commonly, changing the regulators as governments change.
Both of these ways have their pluses and minuses but here's what they have in common: the rule making and enforcement is left to a small set of people who are accountable to someone for their decisions. Sometimes these people are elected like legislators or sometimes they are appointed by elected officials like bureaucrats.
Now consider this news story:
The University of California, Berkeley, may have to cut down its incoming freshman class by almost one-third, or by over 3,000 seats, after a court ruling limited its expansion of enrollment.
In a news release Monday, the university said it had appealed to the California Supreme Court, hoping to stay a lower court decision limiting its enrollment so that it could send out acceptance letters next month for freshmen who would start college in fall 2022.
These rulings come after Save Berkeley’s Neighborhoods, a local community group, sued the school over its expansion plans, arguing that enrolling more UC Berkeley students would result in a higher impact on housing prices and other environmental issues.
Here's the story: A California law called CEQA requires all public institutions to file an environmental impact review for any projects they take. In 2005 UC Berkeley filed an EIR which projected flat enrollment through 2023. But enrollment was not flat from 2005 to 2023. A citizen's group argued that this was not covered under the previous EIR and that UC Berkeley would be required to go through the time consuming process of filing a separate EIR. The court ruled in favour of the group and against UC Berkeley and said that they had to restrict admissions in line with the original EIR. So if the California Supreme Court doesn't rule against the lower court, it may mean that UC Berkeley will have to reduce the number of spots by around 30%.
There are several critiques of this but there's a deeper problem here: the law and its enforcement mechanisms are very poorly designed.
The Information Problem
There is nothing inherently wrong about public agencies being required to report the environmental impact of their actions. But the problem lies in three aspects
Requiring long term pre reporting
Requiring constant updates
Enforcement by Lawsuit
The first problem is obvious. It is hard if not impossible for public agencies to forecast things for a few years ahead, let alone decades. If UC Berkeley was writing an environmental impact review in 2005 for the year 2022, that statement contained almost no informational value at the time. For any university there are several factors that affect its environmental impact. The energy courses it uses, the method of transport inside the campus, the pollution from construction and so on. It is irrational to expect anyone to know to any level of detail what would happen in nearly 2 decades later.
The second problem is the legal requirement to file the EIR again if there are changes to the project. It is not clear to what extent adding a large number of students is a new "project" under California law. But that is an absurd reason to stop the entire process. If there are more students than predicted a decade and 8 years ago, then allowing the university to amend its previous report only to the extent to which the new students affect the environmental impact is reasonable.
And even if this happens the biggest problem is with the manner of enforcement.
Enforcement by Lawsuit
The main problem with this is the medium of enforcement. When you have enforcement by private lawsuit the problem is that rent seeking groups try to use the law to make as much money as possible at the expense of others.
Extract the money
Many public policies have distributed benefits and concentrated costs. Which means that a lot of people get a small level of benefit from it, but a few people lose and they lose quite a bit. Take the example of UC Berkeley increasing its admission numbers. This would lead to higher earnings for those graduates, benefit the government because of higher taxes, companies would benefit because if the higher pool of employees and all of these benefit people not related to the University of California. On the other hand the costs of this are felt by a few people: people who live around UC Berkeley and face higher congestion and rents.
When the latter group of people is given to file a lawsuit for any reason - like environmental effects - they will take it. It gives them a way to stall the process at the expense of everyone else.
There is a natural constituency for stalling mechanisms for any project. If the law allows them to stall it, then this group of people will do it! And they will use it for nefarious purposes. Take for example the several times environmental law has been used by homeowners to stop new construction near their homes. An example was in 2017 when a nonprofit tried to build homes in San Francisco to reduce their housing crisis but was stopped by homeowners seeking environmental review. Or the example of bicycle lanes being stopped because they hadn't hit the environmental review guidelines.
The problem isn't that they are required to review their impact on the environment. The problem is that anyone can sue them for it and unlike the normal prosecution process there is nobody to sort out the legitimate ones from the purely rent seeking ones.
And here is the irony of the situation: what was intended to be a way to level the playing field for common citizens against large public institutions has ended up as a way for one group of people to slow down another for frivolous reasons. The quote from the Arthashastra at the start of this shows the ideal here. That if you have the rule of law, the big fish won't eat the small fish. But in this law, ordinary people are getting hurt because of the poorly designed law. Or in other words the big lawsuits are eating the small fish.