Thursday, July 27, 2017

California in an Oyster Shell

Most people in the rest of the country know that the state of California is a strange place. Unless you live here, however, you can’t fully appreciate just how dysfunctional it has become.

A case in point is what is happening to Coast Seafoods Company, the state’s largest shellfish producer. The company has been operating an oyster farm in Humboldt Bay for the past 65 years. However, the company may cease operation because the California Coastal Commission in June voted 6-5 to deny permits for both the company’s existing 230 acres of shellfish farming as well as a proposed 265-acre expansion. Coast Seafoods has 80 employees and an annual payroll of $2 million. Doubling its capacity is a microcosm of what economic growth means and how it happens.

The commissioners who voted to deny the permit renewal and expansion asserted that the company “had not adequately addressed potential impacts to ecologically significant eelgrass beds in the bay.” Humboldt Bay covers a total of 17,000 acres. The disputed area, therefore, comprises less than three percent of the bay.

California has made the accomplishment of virtually any economic activity incredibly costly in both time and money. Coast Seafood’s project, for example, has to be approved by the Humboldt Bay Harbor District, the California Coastal Commission, the North Coast Regional Water Quality Control Board, the California Fish and Game Commission, and the U.S. Army Corps of Engineers.

Even if all those agencies approved the project there would still be obstacles. Three environmental groups, Audubon California, Earth Justice, and California Waterfowl Association, have filed a lawsuit alleging that the oyster farm expansion would “irreparably harm eelgrass in the bay.”

In its attempt to expand its oyster beds Coast Seafoods has so far spent over $2 million for environmental studies. Although the company initially wanted approval to farm 500 acres, it has reduced its request several times in attempts to meet the long list of concerns and demands by the various agencies.

Jack Crider is the harbor district’s executive director. His agency voted unanimously to approve the oyster farm’s renewal and expansion. He said, “By the time we butcher the hell out of this, we’ll be lucky to have 100 acres, maybe 70 or 80 acres, divided up six different ways.… If you were in the oyster industry, would you consider investing in Humboldt Bay after this? It’s just a big trigger to say it’s going to be too expensive and difficult to get a permit. They’ll go to Oregon, they’ll go to Washington, they’ll go somewhere else. They won’t go to California.”

If Coast Seafoods ceases operation, it will not be the first oyster farm to succumb to out of control regulations in California. Two hundred miles south of Humboldt Bay is Drakes Bay. The oyster farm there, in operation since the 1930s, was forced by the U.S. Park Service to suspend operations in 2014. The dispute had raged for over ten years and was considered to be one of the ugliest environmental disputes ever. Fighting the forced closure were Democrat Senator Dianne Feinstein, renowned California cuisine creator Alice Waters, and Food Democracy Now. Even California leftists are powerless against the march of the inexorable agencies.

In her letter to the Park Service Feinstein wrote, “The Park Service has falsified and misinterpreted data, hidden science and even promoted employees who knew about the falsehoods all in an effort to advance a predetermined outcome against the oyster farm. It is my belief that the case against Drakes Bay Oyster Company is deceptive and potentially fraudulent.” Same old same old.

California stacks regulatory agency on regulatory agency. Permission for most projects requires approval from all layers. The result is that every agency has what amounts to veto power over any project. The agencies are populated by self-important board members who see themselves as vital guardians of the planet. Wildlife is assumed to have infinite value for which any minute risk or uncertainty is deemed to be unthinkable. Anything else, human well-being, for example, is assumed to have zero value.

Furthermore, each agency has tunnel vision. They aren’t allowed or motivated to consider anything outside their narrow focus. Nothing else can be considered, no compromises are allowed. Private property rights are given absolutely no consideration. They can do nothing beyond enforcing the rules they’re hired to enforce. This is not the way we should be making resource-allocation choices.

The agencies in no way bear the costs of the decisions they impose on the people and companies they regulate. When their rulings put a company out of business, it’s not their problem. Their job security is untouched.

There is absurd duplication and redundancy throughout the bureaucracies. The Coast Seafoods project must receive “water quality certifications” from the Army Corps of Engineers as well as the North Coast Regional Water Quality Control Board. (Ironically, oysters filter water.)

The regulatory agencies and their environmentalist co-conspirators are expert goal post movers. Their favorite ploy is to add to the already long list of “threatened” species. For example, in the oyster farm issue a new concern is for the black brant goose. Supposedly a three percent reduction in Humboldt Bay eelgrass will constitute an existential threat for the geese in their annual migrations.

Eelgrass, black brant geese, marbled murrelets (a shore bird that nests in old-growth forests) have all been granted victim status and they will not be the last. The supposed at-risk species used to execute the Drakes Bay oyster farm was the harbor seal. Agencies don’t mind taking sides in imagined conflicts between species, e.g. eelgrass vs. oysters, seals vs. oysters, spotted owls vs. barred owls, whatever works.

An article of faith among environmentalists is that every ecology is a fragile, delicate system. Each ecology’s current state is perfect and the tiniest change will set in motion forces too terrible to contemplate. To describe the agencies as “risk averse” is far too tame a description. Negativity overwhelms positivity.

Besides having to cope with all the agencies, California grants incredible power and authority to every imaginable self-appointed protector of the “environment.” A traditional legal doctrine is that to sue someone you must demonstrate “damages” and “standing.” Environmental groups are given wide latitude in making such claims. Everyone is granted “stake-holder” status. In addition, “not in my backyard” resisters successfully stop or at least delay project after project.

In any economy, there are wealth creators and wealth preventers. In California, the wealth preventers hold the upper hand. Because the obstructionists have been so successful in the past at consolidating their power, there are few checks and balances left in the state. The state is politically and philosophically uniform and predictable. Diverse it is not.

The wealth preventers, i.e. environmental groups, trail lawyers, and Democrat politicians, hold the reins of power in California. They are all system wonks and are experts at gaming the system. They feign concern for spotted owls, delta smelt, and eelgrass.

In actuality, logging opponents couldn’t care less about spotted owls. Their real objective is to stop all logging or at least make logging so costly and such a hassle that it’s greatly reduced. If there were a population explosion of spotted owls it would have absolutely no impact on their opposition to logging.

The oyster company’s maddening regulatory mine field is the rule in California and there are only rare exceptions. California’s insanity has gotten so over the top even some liberals can’t ignore it. After the legislature and Governor Brown recently extended its asinine “cap and trade” policy for an additional ten years, San Francisco Chronicle columnist Joe Mathews wrote, “Can our system for controlling greenhouse gases be adopted around the world? Or is California pursuing a lonely one-state war on climate change that will land us in a bubble of economy-destroying regulations?… At its worst California is a bubble of distinctive and convoluted regulations and laws, which are hard to unwind, especially in a state with so many lawyers.”

California is like a petri dish for unbridled Democrat control. It’s the canary in the economic coal mine. The state is demonstrating to the rest of the country what’s in store if Democrats start winning elections. It’s what would have been in store for the whole country if Hillary Clinton had won in November. President Trump has made rolling back regulations one of his foremost priorities.

That California’s economy manages to function as well as it does in spite of the barriers placed in front of it is a tribute to the persistence, energy, and creativity of its wealth creators. California has such immense beauty, natural resources, and human resources the fact that they are being so squandered and wasted is a crime. The difference between what could be accomplished in the state and what is accomplished is incalculable.

“Of all sad words of tongue or pen, the saddest are these, ‘What might have been.’” — John Greenleaf Whittier


California in an Oyster Shell July 27, 2017

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at

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