Compensatory mitigation and neoliberalism

Restored perennial and season marsh and riparian forest
at Wildlands Mitigation Bank, Placer County, California (EPA)

The always interesting Dave Owen recently posted "The Conservative Turn Against Compensatory Mitigation", whose primary subject is the recent turn described in the article's title (compensatory mitigation is a policy that require parties receiving permits for environmentally harmful activities to compensate for them by improving environmental conditions elsewhere). Owen also has something to say about the origins of the practice, rejecting the arguments of critics who have portrayed compensatory mitigation as part of a neoliberal, capitalist resurgence:

The proponents of compensatory mitigation reform hardly ever identified their efforts as measures to boost the capitalist system. As one retired departmental employee explained to me, even during the Reagan Administration, debates about compensatory mitigation were driven more by conflicts over regulatory intensity and states’ rights rather than by Milton Friedman-style market ideals. And later reformers’ key goal was to strike a compromise between political mandates to accommodate economic development and legal mandates to protect the environment, and to make permitting decisions in an expedited fashion. Compensatory mitigation policy, in other words, evolved to fulfill agency goals, not to advance a free-market agenda, even though the policies did sometimes bring regulated industries the benefits of expedited and more flexible permitting.

I have to say that I don't find this very convincing, though it is true that compensation mechanisms can serve as a way of balancing interests, as Calabresi and Melamed taught us. First of all, I doubt whether one can get a full and reliable account of agency motivations by interviewing agency sources. Second, as Laleh Khalili points out in a recent interview at Viewpoint, officials and managers often work to advance capitalism without being conscious of it. Finally (and relatedly), I would posit that regulators " driven... by conflicts over regulatory intensity and states’ rights" were in fact often responding to "Milton Friedman-style market ideals" (whether they realized it or not). "States' rights" and "regulatory reform" are ideas the popularity of which in the last few decades owe a lot to business interests, politicians, and intellectuals pushing a neoliberal, capitalist agenda. It is no surprise that "agency goals" meshed with the neoliberal agenda (or that the recent conservative about-face on compensatory mitigation exposes the essential bad faith behind much of "regulatory reform").