McWilliams: How to solve the Uinta rail issue
On March 30, The Aspen Times published a well written article by Amy Hadden Marsh illuminating the Uinta Basin Railway consortium. The consortium transports crude oil from the oil fields of eastern Utah via the environmentally sensitive I-70 Colorado River corridor and on to refineries at the Gulf Coast. The Rio Grande Pacific Corp., a privately held Texas railroad holding company, is responsible for all of the consortium’s railway operations.
In classical economics, rational choice theory helps understand economic and social behavior. The theory originated in the 18th century and can be traced back to political economist Adam Smith. The theory postulates that businesses will perform a cost-benefit analysis to determine whether an option is right for them.
In Third Wave economics, environmental pricing reform is a business decision by producers, adjusting their market prices to account for “negative environmental costs.” In such situations, rational choice (self-interested) economic decisions by producers can lead to environmental harm, as well as market distortions and misallocation of scarce resources.
Environmental pricing reform is implemented by the introduction of some form of financial punishment on producer’s negative externalities to modify bad behavior in the marketplace by economic actors. Environmental pricing reform can be economy-wide, or focused on a specific sector, such as the Uinta Basin Railway consortium.
Recommendation: The state of Colorado should enact civil legislation whereby the owners of the Utah crude oil (not their railroad) are held civilly liable for all spills. Should a Colorado spill occur, the owners of the Utah crude oil are deemed to be negligent and acting in reckless disregard. Additionally, their negligence and reckless disregard is actionable in Colorado district court by the injured Colorado county where the spill occurred in the amount of treble damages of the costs of the cleanup.
Carl L. McWilliams