Federalism and Reform of the Toxic Substances Control Act

Photo: Joey Gannon.

Last month, in a bit of symbolic bipartisanship, Congress passed the National Bison Legacy Act, making the bison America's national mammal.  Last week Congress passed a significantly more ambitious (if less charismatic) legislative initiative: major reform of the Toxic Substances Control Act of 1976.  The TSCA tasks the federal Environmental Protection Agency with regulating chemicals that pose unreasonable risks to human health or the environment.  It is an admirable statute, but the TSCA hasn't stood up to close scrutiny in recent years.  For one thing, it hasn't been meaningfully updated since 1976.  It requires little from manufacturers in terms of data disclosures or modern technology adoption, and the EPA's regulatory powers are relatively weak.

As a result, regulation of toxic substances has taken place predominantly at the state level, if at all.  States like California, Oregon, Washington, Michigan, and Connecticut have passed comprehensive regulatory programs to address toxic chemicals.  Many of these state programs have been successful, and toxic chemicals regulation is a great example of state leadership filling a federal government void when it comes to environmental governance (climate change is another).  But the state-led approach has its critics, too.  For every state that has passed aggressive chemicals regulation programs, there is another state that has taken little or no action, leaving many populations vulnerable (minority, low-income, elderly, and infant populations bear the highest risk from exposure).  Chemical manufacturers themselves have called for reform as well, preferring a single, uniform regulatory program on the federal level to the patchwork of state programs that must presently be navigated.

Congress responded by passing the Frank R. Lautenberg Chemical Safety for the 21st Century Act, possibly the most sweeping environmental legislation enacted in years:

The bill allows the EPA to evaluate the safety of tens of thousands of older chemicals that were impossible to regulate under existing law and strengthens the agency’s hand in reviewing new chemicals. It requires the agency to consider only safety and health – and not costs – when deciding whether a chemical presents “unreasonable risk.” It charges companies up to $25 million to pay for the reviews, and provides new protections for vulnerable groups such as children, the elderly and people with compromised immune systems.

The bill passed with bipartisan support.  If there was any debate at all, it centered around the bill's preemption of state regulations.  Typically federal law trumpts conflicting state laws, unless Congress otherwise specifies.  Here, some states wanted to maintain their authority to regulate toxic chemicals.  Those states were, unsurprisingly, many of the states with strong existing regulations.  Representatives from California and Washington, for example, expressed concern that weak federal regulations might trump their stronger state regulations.  Or, from a more procedural point of view, if the federal government wants to regulate a new chemical, their lengthy regulatory review process would preclude a more rapid state response.  

All things considered, though, TSCA reform is a win.  A cynical EPA could hamper stronger state regulation in the future, but the more immediate outcome is that a national regulatory program for toxic chemicals is now more firmly in place.

Introducing 'Marijuana Agriculture Law'

Photo: Brittney

If you've been following this blog for the past few weeks, you've noticed that I've been teasing out my forthcoming article entitled "Marijuana Agriculture Law: Regulation at the Root of an Industry."  I wrote about marijuana appellations, as well as the potential for counties across the country to start adopting a marijuana ordinance.  I've been working on the article for the past few months, and I'm pleased to finally post a full draft online.  See here for access to the article.  The article will be published in the Florida Law Review sometime next year, but this draft is available immediately.  Major themes covered include the potential commoditization/consolidation of the marijuana industry, the environmental regulation of marijuana agriculture, and the administrative challenges of regulating this new industry.  Below is the introduction to the article:  

Across the United States, voters are weighing the costs and benefits of marijuana legalization.  As many as sixty marijuana legalization initiatives may appear on election ballots in 2016, legalizing the recreational or medicinal use of marijuana in as many as 17 states and adding to the growing number of states that have already legalized marijuana.  As states move toward legalization, governments will need to address a broad range of regulatory issues, including the distribution, sale, and consumption phases of the supply chain.  But legal marijuana’s track record so far suggests that the agricultural component of the marijuana industry is being ignored.  Whether states are failing to appreciate marijuana’s agricultural roots or choosing to disregard them, the industry’s direction will be out of state control until regulatory frameworks are in place.  

Nowhere has this been more apparent than in California.  In 1996, California voters passed Proposition 215, the Compassionate Use Act (CUA).  With the CUA California became the first state to legalize the medicinal use of marijuana, exempting patients and prescribing physicians from criminal prosecution.  The text of the act was short, and did not address how the state or local governments were intended to regulate the marijuana industry.  It did not, for example, assign regulatory authority to an administrative agency, articulate limits on possession or cultivation, or propose a broad regulatory framework from which the state or local governments could operate. 

In the wake of the CUA a legal medical marijuana industry was created in California, and the industry experienced tremendous growth, notwithstanding the absence of any meaningful state regulations.  But the CUA’s omissions prompted the state legislature to enact the Medical Marijuana Program Act (MMPA) in 2003, which, among other measures, restricted the number of plants medical marijuana patients or designated caregivers could cultivate, and assigned further regulatory authority to the Attorney General.  Even these limits, however, became legally ambiguous guidelines after the California Supreme Court ruled that the rights established by constitutional amendment Proposition 215 could not be limited by legislative act.  The upshot of these early experiments with marijuana legalization is that California’s burgeoning marijuana industry has been more or less unregulated for twenty years.

In the absence of regulation, marijuana cultivation in California has exploded, with approximately 50,000 marijuana farms accounting for 60% of all marijuana grown in the United States.  There are as many marijuana farms in Humboldt County, California, as there are wineries statewide.  And this un-checked growth in marijuana agriculture has consequences for the sustainability and potential growth of the industry.  Marijuana farming has been blamed for sucking rivers dry, poisoning soil and water resources with pesticides and rodenticides, and clearing mature forests.  Much of these criticisms are flawed, as research on the environmental impacts of marijuana farming is nascent and rarely acknowledges that farmers can grow responsibly and sustainably on private lands. 

Many farmers would welcome the security of being in compliance with state and local laws, while being distinguished from cartel operations or destructive “trespass grows” on public lands.  As it stands, farms on private property remain vulnerable to police raids and asset forfeiture laws, and are unable to take advantage of typical agricultural government services, such as crop insurance programs or pesticide-free certifications.  Because marijuana agriculture’s regulatory contours have remained ambiguous for so long, the marijuana agriculture industry has been poorly understood by states and the public.  This disconnect presents a threat to responsible management of legal marijuana markets. 

Fortunately, change is on the horizon in California.  In January 2016, the Medical Marijuana Regulation and Safety Act (MMRSA) came into effect, with ambitious proposals to create comprehensive regulations for marijuana agriculture.  The MMRSA assigns authority for various regulatory responsibilities to a variety of state agencies, including the Department of Food and Agriculture, Department of Fish and Wildlife, Department of Public Health, and the State Water Resources Control Board.  Said the author of the bill, “cultivators are going to have to comply with the same kinds of regulations that typical farmers do…it's going to be treated like an agriculture product.”  It took twenty years to get there, but marijuana cultivation has finally been recognized as an agricultural activity in California, and may now be regulated as such.

The same cannot be said for every state that has legalized, or is considering legalizing, medicinal or recreational marijuana.  In many states the immediate regulatory priority is the distribution, sale, and consumption of marijuana.  Colorado legalized recreational marijuana by passing Amendment 64: The Regulate Marijuana Like Alcohol Act of 2012.  For political and public health reasons the analogy makes sense, but it also reveals a regulatory blind spot.  States may be using alcohol as a model for regulating the distribution, retail, and consumption of marijuana, but marijuana is much more than a retail product.  It is also an agricultural product, and by some measures, the largest cash crop in the United States.  Since marijuana prohibition laws were passed long before any regulations for cultivation were developed, states are facing an unprecedented challenge: regulate, for the first time ever, one of the country’s largest agricultural industries.  

Early indications suggest that states are making little effort to regulate marijuana cultivation, or fail to appreciate the disruptive potential of marijuana agriculture.  21 states may have marijuana legalization initiatives on their ballots for the 2016 elections.  Colorado, Washington, Oregon, Alaska, and Washington DC have already legalized the medicinal and recreational use of marijuana.  But few of these states are anticipating the unique regulatory challenges that marijuana agriculture presents.  Even fewer are prepared to tackle them.

This Article argues that marijuana is a burgeoning agricultural industry, and calls for regulations that recognize it as such.  As the field of marijuana agriculture law is incipient, this article provides a roadmap for the major regulatory issues states and the industry are likely to encounter.  Many agricultural policies and programs are created or supported by the federal government, and would not apply to marijuana agricultural activities that run afoul of federal marijuana prohibition laws.  Therefore, states and the marijuana industry will need to be creative in providing analogous regulatory functions.

The most immediate choice regulators will be forced to make is between an approach that incorporates the marijuana industry into the existing regulatory framework for agriculture (essentially treating marijuana like any other agricultural product), or an approach that creates a separate regulatory framework for marijuana cultivation.  While the former has its benefits, and may be achievable long-term, marijuana’s transition from the black market may call for a targeted regulatory scheme in the interim. 

Another fundamental issue facing the marijuana agriculture industry has not yet been conclusively resolved: is marijuana an agricultural commodity?  Commodities are fungible goods with no qualitative differentiation, such as wheat or soybeans.  Many existing farmers fear that marijuana markets will be flooded with cheap, indistinct marijuana grown by “Big Ag” conglomerates.  To counteract these concerns, some industry groups are advocating for states to adopt an appellation model of marijuana cultivation that would preserve markets for regional marijuana products and maintain quality standards.  States and counties can play a large role in this existential question by adopting or rejecting the appellation model, or by enacting other regulations that facilitate or preclude the consolidation of marijuana agriculture.

There is an environmental component to marijuana agriculture that will also require regulatory attention.  Pesticides and fertilizers facilitate plant growth, but may reduce soil and water quality.  There is a market for organic or pesticide-free marijuana that states and the marijuana industry may wish to cultivate.  Marijuana agriculture also requires appropriate quantities of water for irrigation and, when grown indoors, energy resources.  Regulators must balance an interest in providing resources to a growing industry with the need to manage those resources sustainably.  

When the environment does not cooperate, the federal government has been instrumental in providing stability to the agricultural industry by regulating crop insurance and providing disaster relief.  As marijuana farmers would not be eligible for these programs, states may want to provide their own support structures.  However, it may be difficult to avoid the federal government’s institutional and legal reach, presenting federal preemption concerns.

Another question concerns power sharing: where can/should regulatory authority be placed?  Local governments may play a large role in the direction of marijuana agriculture, as states with marijuana regulations have so far been broadly permissive of counties and municipalities creating their own (often more restrictive) marijuana agriculture regulations.  Local governments can utilize their lawmaking powers to shape agricultural policy for the marijuana industry, but this decentralized nature of policy-making may come at the expense of regulatory clarity for the state as a whole.

Keeping the regulatory framework centralized on the state level provides more consistency, but may be difficult to apply in states where political support for marijuana cultivation changes drastically by jurisdiction.  In addition, states will need to decide whether to consolidate regulatory authority for marijuana into one state agency, or to assign different roles and responsibilities to several agencies and regulate cooperatively.  Colorado has adopted the former model, while California the latter.  

In February 2016, Humboldt County passed a comprehensive commercial marijuana cultivation ordinance, one of the first of its kind.  As the heart and soul of California’s marijuana agriculture sector, Humboldt County has consistently played a leadership role in the development of the marijuana industry, and this ordinance may prove instrumental in shaping marijuana agriculture policies around the country.  The ordinance addresses many of the issues identified in this article, placing limits on farm size, water, and energy use, while developing an artisanal labelling program.  The Humboldt County ordinance is an ideal case study for the nascent field of marijuana agriculture law, and underscores the need for state and local governments across the nation to start developing their own regulatory framework.   

Never before has a major agricultural product entered legal markets with the pace and scale that marijuana is entering them today.  States face an unprecedented regulatory challenge, and ignoring the agricultural dimension of the marijuana industry is not a sound long-term approach.  This article will present and analyze the most significant legal and regulatory challenges states will face when legalizing marijuana.  Responsible and sustainable marijuana agriculture can be fostered at the state level, but only if regulations are responsive to the unique and unprecedented challenges that marijuana agriculture presents.

Regulating the drought in California, Ctd

Groundwater pumping in California.  Photo: General Physics Laboratory.

For the first time in the Public Policy Institute of California's polling history, Californians now list 'water and drought' as the most important issue facing the state, almost twice as important as 'jobs and the economy.'  No wonder, then, that water law reform is developing quickly.  Last week the state Senate passed a bill that would finally make data from well logs (showing well location and depth) a matter of public record.  California had been the only Western state that did not provide public access to well logs.  According to stakeholders, the drought has precipitated rapid shifts in public opinion on water regulation:

This is the third time that Pavley has introduced legislation to make the well logs public. The data have been restricted to the well owner, the Department of Water Resources, and selected state agencies for more than 50 years. The Legislature required well drillers to file the completion reports starting in 1949, but two years later lawmakers, at the request of well drillers who claimed the information was a trade secret, halted public access to the documents.

Times have changed. John Hofer, executive director of the California Groundwater Association, which represents well drilling companies, said the organization will not oppose the bill.  “We’re not going to stand in the way,” Hofer told Circle of Blue. “It’s not an issue for us now. We’re not going to fight it. It’s coming.”

The legislation is a good start, but remains incomplete for two reasons.  First, because while the logs are made public, the actual owners and users of those logs remain confidential.  Public shaming of excessive water users in Silicon Valley led to California tightening public access to water consumption records in the late 1990s.  Public shaming may not be the most effective route towards use reductions, but knowing who is operating and using wells is important for groundwater management.  And that leads to the second concern: California water laws still lack a mechanism to monitor and distribute actual extraction data.  In other words, well users still aren't required to report how much water they're using.  Until then hydrological models will estimate supply and demand, but the legislature still has work to do to make extraction data more accessible.  Still, if public opinion on the drought remains steady, more reforms to California water law are sure to come.  Stay tuned.

Who should have regulatory authority over marijuana?

The Mayor of Seattle signs an ordinance creating a regulatory framework for marijuana in the city.  Photo: Jen Nance.

Recreational use of marijuana is now legal in Colorado, Washington, Oregon, Alaska, and Washington DC.  Between now and election day 2016, an additional 14 states may place marijuana legalization initiatives on their ballots, including: Arizona, Arkansas, California, Georgia, Ohio, Maine, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, and Wyoming.  23 states and Washington DC have legalized medical marijuana, with up to seven states pending legislation.  In 2016 Florida is likely to again consider legalizing medical marijuana; a similar 2014 ballot measure narrowly failed to reach the 60% supermajority required.  

Amid the stampede to legalize marijuana production, distribution, sale, and use, states are experimenting with various regulatory schemes.  A central question in developing a regulatory framework for marijuana is: who should have authority to regulate it?  So far there have been a multitude of approaches.  Some states are proposing to create a new institution devoted to marijuana regulation.  Ohio's 2015 ballot initiative proposes a Marijuana Control Commission.  Pending legislation in California proposes an Office of Medical Marijuana Regulation responsible for creating rules, with local governments in charge of enforcement.  Elsewhere states are placing authority in an existing institution, such as the Oregon Liquor Control Commission or the Washington State Liquor Control Board.  Colorado uses a hybrid model in which local governments and the state legislature share responsibilities.  And some ballot initiatives require the legislature to decide at some future date where authority should lie.

The marijuana legalization movement is developing rapidly, but it's worthwhile for states to think about which of their many institutions is best equipped to handle regulation of the burgeoning marijuana industry.  There remains a great deal of uncertainty in this regard, but at the very least it seems clear there isn't a one-size-fits-all model available.  A relatively small state like Maine might be able to handle a centralized approach, concentrating regulatory authority in a state-level institution.  California, on the other hand, has a diversity of stakeholders with varying degrees of tolerance for marijuana cultivation and use, so a decentralized power-sharing arrangement, where local governments set the terms of engagement, makes sense.  

Regardless of the choice, it will be important for states to understand the limitations of their choice.  Local governments are typically not as well-funded, staffed, or equipped to handle administrative burdens as state-level agencies are.  On the other hand, state agencies tend to be less responsive to local context and might be overwhelmed themselves with state-wide regulation.  

Take California, for example.  A pending Senate proposal would establish a regulatory body - the Office of Medical Marijuana Regulation - that would create regulations and issue licenses.  Local governments would be responsible for enforcement.  The proposal is a poor approach in my view, as state-wide regulations may not be responsive to local conditions, and as a consequence, local governments may not be enthusiastic about their enforcement obligations.  On the other hand, the California Assembly is proposing to establish a regulatory agency that sets the rules, while various state agencies would be responsible for enforcement.  Again, the proposal doesn't maximize local knowledge and sensitivity, and this time, fragments enforcement responsibilities across departments, creating the potential for confusion or diffusion of responsibilities.  A better approach for California, in my view, would create a state-level agency dedicated to marijuana regulation that creates a basic regulatory framework and serves to support local governments in setting specific rules and developing enforcement capabilities by providing technical expertise and financial assistance.  In any case, adoption of any of these proposals is likely better than nothing.  California's lack of marijuana regulation does not bode well for the state's preparation if current polling accurately foretells full blown legalization in 2016.  

Some states are using existing mechanisms - like their liquor control boards - to create a smooth transition.  But marijuana is a unique industry, and may eventually require a more tailored regulatory framework.   The legal marijuana industry is the fastest growing industry in the United States, and may eventually become larger than the entire organic food industry, the NFL, or newspaper publishing.  Estimates of the size of the US black market marijuana industry range from $10 to 120 billion annually.  Slotting marijuana regulation into existing mechanisms might avoid messy transitions for now, but eventually states will have to come up with a more dedicated regulatory plan.  Where states choose to allocate regulatory powers is an issue that will require more attention than it currently receives.  

Regulating the drought in California, Ctd

On the Public Record, a pseudonymous blogger on California water issues, responds to my post outlining some drawbacks to bottom-up water management with an interesting observation on government discourse:

This is the second time we’ve needed people who are employed by universities, not water agencies to tell us this.  There is certainly no will to acknowledge this from within the state bureaucracies.  Local agencies are not magic: some are good, some are inept, some are overwhelmed.  We will find out which ones are which, but we’ll have lost years to the process.

Sacramento Delta.  Photo: Daniel Parks.

The stakes are so high in the California water sector I'm not surprised government agencies are keeping their heads down.  Groundwater regulations can ensure some measure of fairness between users and long-term sustainability, but there's no doubt reforms will turn some status quo winners into losers, and some losers into winners.  As a case in point, Maven's Notebook has a blog roundup on this week's California water news which features, in addition to this blog, an article demonstrating the trade-offs between endangered species, urban populations, and agriculture in the Sacramento-San Joaquin Delta.  There isn't an easy solution for water managers: 

Given tight water supplies, there’s little doubt that this additional water flowing from the Delta could have been used for other purposes. But some of the fish species that depend on the Delta are struggling mightily during this drought. Reallocating more water to other uses almost certainly would have caused further environmental harm, and increased the chances of stricter future regulations to protect endangered fish. 

The South Florida Water Management District orchestrates a similar balancing act between water needed for the Everglades, the sugar industry, and coastal populations.  Florida's water management districts are relatively well-funded and staffed, yet groundwater management still presents problems.  Local agencies in California now have to bear the responsibility for making complex trade-offs between groundwater users whether they are prepared for it or not.  Let's hope the legislature gives them the support they need.