Thursday, October 07, 2010

Sifting Through the Smog

A New York Times article explains the legal action being taken by the state of West Virginia against the Obama administration regarding coal-mining regulations. At the direction of Governor Joe Manchin, the state is claiming that new federal mountaintop mining regulations are unconstitutional and place an unnecessary burden on the coal industry:
"The lawsuit, filed by the state Department of Environmental Protection, accuses U.S. EPA of overstepping its authority and asks the U.S. District Court for the Southern District of West Virginia to throw out the federal agency's new guidelines for issuing Clean Water Act permits for coal mines."
This raises several interesting questions, which do not have clear answers. According to Stigler, firms use the government to craft regulation in their favor. So then, who benefits from these regulations on the coal industry (Environmental groups, the renewable energy industry, local fisheries, etc.)? Could it be that these regulations are actually in the public interest as it is almost always claimed? Or rather is the inefficiency created by this regulation a type of "rent" that firms are seeking to capture for their own benefit?

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