Timothy Terrell is assistant professor of economics at Wofford College in Spartanburg, South Carolina.
Most of us learn early in life to despise tattlers. Sometimes this revulsion results from a desire to avoid punishment for a serious offense, such as an unauthorized redecoration of the guest bathroom wall with a permanent marker. Often, however, the tattler is complaining of an offense that is no legitimate concern of his: “Bobby and Sarah are making ugly faces at each other.” Such a complaint might meet with a parental response along the lines of, “What’s it to you?” It is an appropriate question for a parent to ask of an unharmed child complaining of a sibling’s petty annoyances.
Imagine a parent, however, without a sense of proportion in meting out punishments or the common-sense ability to distinguish between serious and trivial offenses and with 30 feet of shelf space devoted to complex rules and regulations (which are sometimes mutually contradictory and may be inconsistently interpreted) and a standing offer of goodies for tattlers. Imagine now how a “litigious” child could abuse the system if this parent agrees to hear frivolous complaints from unharmed tattlers.
One of the most important U.S. Supreme Court decisions this year concerned whether just anyone may sue if a law has been violated. In Friends of the Earth v. Laidlaw, the high court granted a group of environmentalists standing to sue after the group claimed it had been harmed by an incinerator’s disposal of waste into a river near Roebuck, South Carolina. Even though there appeared to be no evidence that Laidlaw Environmental Services’ emissions-permit violations actually caused any environmental damage or health risk, the Court’s 7-2 majority held that “concern” about possible damages was sufficient to show harm and establish standing. While we can appreciate the possibility of subjective harm to a plaintiff, it would seem reasonable to place the burden of proof on the plaintiff to demonstrate the nature of that harm.
Significantly, there is nothing but the erratic whim of the court to limit the application of this principle outside environmental cases. In antitrust cases, for example, the concern of monopolization could be enough to warrant standing. We may well see, in coming years, a flood of suits alleging various vaporous “harms.”
The background for the Laidlaw decision includes a number of cases dating from the early 1970s that broke from the common-law tradition requiring the would-be plaintiff to prove some reasonably observable harm, or infringement on a property right, before appearing in court with a lawsuit. A 1973 case, U.S. v. Students Challenging Regulatory Agency Procedures (SCRAP), is probably the most notorious. In this case, George Washington University law students were granted standing to sue the federal government’s railroad rate-setting bureau on grounds that a surcharge on shipments of freight produced a price differential between recycled and nonrecycled products. This, the students alleged, would lead to decreased use of recyclables. Through a long chain of events, environmental harm could result in the form of increased litter in public places and air pollution from having to manufacture new materials.
Cases such as SCRAP, along with numerous new statutes permitting “citizen suits,” have substantially weakened the requirement that concrete and particularized harm to the plaintiff be a prerequisite for appearing in court. The historic principle that the legislature should address harms inflicted on the general population and that the courts should address harms to individuals or minorities was implicitly scrapped.
In addition to the satisfaction the plaintiff/tattler receives from destroying the property rights of landowners, the environmental group is usually reimbursed generously for its services in bringing the violation to the attention of the regulatory agency. There are two chief forms in which this compensation comes.
First, if the plaintiff prevails in court, he is usually reimbursed attorneys’ fees and litigation costs at the “community market rate” for for-profit legal services. This might not seem inappropriate, until it is pointed out that the suits are generally brought by public-interest law firms that charge fees considerably lower than the market rate.
Second, many settlements in environmental citizen suits include “supplemental environmental projects,” or “mitigation projects,” which require the defendant to fund certain projects set up by environmental groups. Though the plaintiff organization is itself excluded from among the group of recipients, these credit programs benefit the environmental movement as a whole. It is not unreasonable to expect that environmental advocacy groups might collusively seek out this project money for their mutual benefit. The sum of these transfers to environmental groups is so substantial that Michael Greve of the Center for Individual Rights has referred to citizen-suit provisions as “an off-budget entitlement program for the environmental movement,” and compared environmental advocacy groups to bounty hunters with incentives to over-enforce the law.
Both the tattler analogy and Greve’s bounty hunter comparison can go only so far, of course. In addition to suing private parties for alleged violations of the law, some groups often sue the government if they believe some regulation has not been enforced with sufficient vigor. The citizen-suit provisions present in almost all federal environmental statutes explicitly grant this privilege to “any person” who perceives a violation of the law. Yet the EPA can’t lose, even when its “opponent” wins in court. As Ben Lieberman of the Competitive Enterprise Institute pointed out recently, these “sweetheart suits” result in an expansion of the agency’s power, as well as the usual pecuniary rewards for the plaintiffs. “In reality, EPA often wants to be sued by environmentalists and agency records indeed reveal that it hands out millions of taxpayer dollars to the very organizations that routinely take it to court.”
In the early 1990s it appeared that the Court might be moving in a more reasonable direction. Justice Antonin Scalia, one of the soundest minds on the Court, wrote several majority opinions, including Lujan v. National Wildlife Federation and Lujan v. Defenders of Wildlife, which appeared to restrict the ability of undamaged parties to complain in court. According to research I conducted in 1998, after the second case the EPA seemed less vigorous in its enforcement of environmental regulations. Property owners were somewhat more secure from the threat of legal assaults by environmentalists. However, in Laidlaw the high court backed over these previous decisions and gave environmentalists virtually unlimited standing to sue.
The problem of standing is essentially a problem of allocating a scarce resource—judicial decisions—to the highest and best uses. Judges in any appellate court face what Bertrand de Jouvenel called a “chairman’s problem,” or rationing problem, when deciding which cases to hear. Judges are attempting to make these allocations without benefit of crucial price information. Calculation by judges of the total costs and total benefits of deciding specific cases is impossible. An altruistic judge might attempt such a calculation, but as Ludwig von Mises would point out, the hope of consistently producing efficient outcomes is quite dim. Liberalizing standing rules may increase the probability that those outcomes will be inefficient. Judicial decisions always exist on the basis of certain presuppositions, and one traditional presupposition has been that those who are objectively and individually harmed have more at stake than others, and should have priority when limited court time is allocated. Furthermore, those who have suffered harm that is common to the general population traditionally have been referred to the legislature for relief.
One solution to de Jouvenel’s “chairman’s problem” is, as Murray Rothbard put it, “recasting the concept of rights in terms of private property rather than in terms of freedom of speech or assembly.” That is, a chairman facing a number of would-be speakers “could ask for price bids for scarce places at the podium and then award the places to the highest bidders . . . . There would then be no shortages, and no feelings of resentment at a promise (‘equal access’ of the public to the column, podium, or microphone) reneged.”
But beyond this, as Rothbard pointed out, the owner of the meeting place (for example, the court) must be the ultimate allocator of permission to speak. Therefore, as long as the owner is concerned for his own well-being, he will attempt to make such allocations as maximize his satisfaction.
A private arbitration firm would have the incentive to choose those cases that would provide it with the highest profit, presumably, those that either enhance the reputation of the firm or offer high compensation from the litigants. Each arbitrator would then have to establish standing criteria. One can imagine many versions of the standing doctrine that might evolve through different arbitration decisions, but we would expect private arbitrators to come up with something similar tothe traditional, common-law restrictions on standing.
This is because a restrictive standing policy has a unique element of efficiency. It limits the set of potential plaintiffs who may be approached by a potential offender for bargaining. Without some limitation of plaintiffs to those who are concretely and particularly harmed by an action, there would be no way for a potential defendant to approach each one to secure permission or offer compensation for the offensive act he is considering. Possibly profitable exchanges could not occur, and potential wealth could not be created.
Avoiding Nuisance Suits
For instance, suppose a forester is considering harvesting activity that would add silt-bearing runoff to a stream and possibly harm those owning the stream or property along the stream. To avoid a potential nuisance suit, he approaches the stream owner or property owners along the stream and offers compensation in exchange for permission to pollute. If he succeeds in obtaining these rights, and has not omitted a property owner, he is secure from legitimate lawsuits. If anyone can sue, including those claiming a “concern” about pollution, there is no way to contract out of the problem. An anti-logging group in another state could assert an “aesthetic or conservational” interest in the purity of the stream’s water and succeed in enjoining the forester’s harvesting. Certainly members of such a group could actually suffer psychic harm from the forester’s activity. However, the need for predictability in all our activities seems to promote a conservative view of standing.
Currently, there is little expectation that state-run courts will give way to private arbitration on anything like a large scale. However, there is a way to sidestep the entire standing issue. Reducing the need for adjudication would reduce the need to decide standing issues. It is no coincidence that standing has come to the forefront of judicial controversy at the same time that government regulation has exploded into almost every area of human decision-making.
Citizen-suit provisions are now a fixture in federal environmental regulation, and professional “tattling” is big business for environmental advocacy groups. If it is not politically feasible to eliminate citizen-suit provisions, and if the courts continue to downplay the “What’s it to you?” question, then reducing regulation would eliminate some of the fuel for standing controversies. “Concerned citizens” cannot sue for the enforcement of a property-right destroying statute that does not exist.
“He who passes by and meddles in a quarrel not his own is like one who takes a dog by the ears,” says the Book of Proverbs, chapter 26. Some of us learned as children to stay out of matters that were no legitimate business of ours. Thanks in part to citizen-suit legislation and the U.S. Supreme Court, those children who didn’t learn that lesson have grown up to make a career of tattling. 
- Michael S. Greve, “Private Enforcement, Private Rewards: How Environmental Citizen Suits Became an Entitlement Program,” in Michael S. Greve and Fred L. Smith, Jr., eds., Environmental Politics: Public Costs, Private Rewards (New York: Praeger, 1992).
- Michael S. Greve, “The Private Enforcement of Environmental Law,” Tulane Law Review 65 (1990), p. 341.
- Ibid., pp. 343-51.
- Ben Lieberman, “Environmental Sweetheart Suits,” October 21, 1999; https://cei.org/news-letters-cei-planet/environmental-sweetheart-suits.
- Timothy D. Terrell, “Rent Seeking and Standing to Sue in Environmental Policy” (doctoral dissertation, Auburn University, 1998).
- Bertrand de Jouvenel, “The Chairman’s Problem,” American Political Science Review, June 1961, pp. 305-32.
- See Ludwig von Mises, Economic Calculation in the Socialist Commonwealth (Auburn, Ala.: Ludwig von Mises Institute, 1990).
- Murray N. Rothbard, The Ethics of Liberty (New York: New York University Press, 1998 ), p. 115.
- Ibid., p. 116.