Column: Consider costs of clean air regs

Mark J. Perry
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So much for regulatory reform. Just a few months ago, the popular wisdom was that the Trump Administration finally had things under control. The Environmental Protection Agency, by rolling back costly and difficult pollution controls, had soothed states and communities. All that local governments had to do, the story went, was to sit back and wait for relief from national ambient air-quality standards — and all would be well.

But the peddlers of popular wisdom forgot that Congress is involved. Suddenly, local governments are being hammered by air-quality standards for ground-level ozone that EPA must issue under the Clean Air Act. Industrial states like Michigan, Indiana and Ohio say that they’re being told to comply with a new ozone standard even before they’ve been able to meet an existing standard for the same pollutant. In other words, they are left with the difficult problem of complying with overlapping standards that can only be met at an enormous cost, without much environmental benefit. But disregarding the law is not a realistic option.

Given what we know about what air pollution does to public health, there is no doubt that it poses a major threat. Ground-level ozone, a major component of smog, causes premature deaths among people with lung and respiratory ailments like asthma. Young children and elderly people are those at greatest risk. Reducing ozone levels is an important goal of the Clean Air Act, and understandably so. In fact, manufacturing companies have responded by reducing ozone levels 33 percent since 1980.

To be sure, this has not been easy. The EPA is not allowed to factor in the cost of environmental compliance when tightening its ozone standard. What’s more, state and local governments found to be in noncompliance are at economic risk. A company seeking a site for a new facility is not going to pick one in a place that’s in violation of the statute.

Consequently, some states have already lost tens of thousands of jobs, and noncompliance could cost even more jobs in the future unless something is done to fix the statute. “It’s essentially a kiss of death for economic growth for communities in Michigan and every state,” says Rep. Fred Upton, R-St. Joseph, chairman of the House Subcommittee on Energy and Power.

What is the problem? In 2008, the EPA set an 8-hour standard for ozone at 75 parts per billion. But the agency didn’t release rules for implementing the standard until 2015, and based on the most recent monitoring data, 241 counties in 33 states would violate this standard. Yet because the Clean Air Act requires promulgation of a new standard every five years, EPA in 2015 tightened the standard to 70 parts per billion and had actually considered lowering it to 65 parts per billion. The result is that states like Michigan now face the prospect of implementing two different ozone standards simultaneously.

The new ozone regulation promises to be the most expensive regulation in U.S. history. A study by NERA Economic Consulting found that the new ozone standard could reduce the nation’s GDP by $270 billion per year, and cumulatively by $3.4 trillion from 2017 through 2040 and result in 2.9 million fewer jobs per year on average through 2040.

To address this problem, the House has passed by a wide margin a bill that would double the five-year time frame under which EPA reviews the Clean Air Act’s ambient air-quality standards for ozone and authorizes the agency to consider the economic cost of revising the standards. And it extends the timetable for implementing the 2015 standard from 2018 to 2025, so that states can adequately achieve the standards with time for compliance.

The Senate needs to do the same.

If Congress really wants to save the Clean Air Act, it should let states do what’s necessary to implement the ozone standard on a more realistic timeframe — and it should do so without demanding that it be done regardless of its cost.

Mark J. Perry is an American Enterprise Institute scholar and an economics professor at The University of Michigan-Flint.

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