Clean Clear Air, Nothing To See Here, Drive Through Please

Court Declares Clean Air Interstate Rule (CAIR) Not Patchwork Enough

Back in December, 2007, the EPA denied California the waiver the state requested under the Clean Air Act (CAA). The state wanted to set its own tougher emissions standards, which at least 18 other states would have adopted. However the auto and energy industries lobbied successfully against the waiver to an administration as dedicated as they were to denying global warming. EPA administrator Stephen Johnson defended the denial, saying the waiver would have created a "patchwork quilt" of regulation.

At the time, Bush had just signed the new Corporate Average Fuel Economy (CAFE) mileage standards passed by Congress under the National Highway Transportation Safety Act, and he defended the EPA's denial, saying: "Director Johnson made a decision based upon the fact that we passed a piece of legislation that enables us to have a national strategy, which is the -- increasing CAFE standards..."

Last week, the administration might have had another opportunity to point to the success of its own brand of environment legislation, while once again shooting down the Clean Air Act. The EPA announced its decision to ignore the Supreme Court order in Massachusetts v. EPA to regulate greenhouse gases and instead decided to issue an Advance Notice of Public Rulemaking (ANPR)¹. But unlike the CAFE standards which Congress passed and Bush signed into law, the Bush administration's Clean Air Interstate Rule (CAIR) aimed at regulating sulfur dioxide and nitrogen oxides from stationary polluters was challenged by the state of North Carolina and rejected by a three judge panel of the U.S. Court of Appeals District of Columbia Circuit.

CAIR was a cap and trade system for large stationary polluters in the framework of Bush's "Clear Skies". It required 28 eastern states to reduce sulfur dioxide (SO2) and nitrogen oxide (NO_x) emissions (not carbon) that contribute to air pollution. The D.C. court disputed the EPA's regional plan: "The EPA's approach, region-wide caps with no state-specific quantitative contribution determinations or emissions requirements, is fundamentally flawed....the trading program is unlawful, because it does not connect states' emissions reductions to any measure of their own significant contributions."

Environmental groups thought it ironic that the conservative court overturned what some considered the best-of conservative Bush legislation on greenhouse gases .Although attempts to project the exact effects of CAIR fell short of providing a thorough understanding of outcomes and overall there was very little reaction from either science and environmental groups, almost everyone, including utility companies, agreed that effort was worthy. The projected benefits to health and air quality under CAIR would have improved acid rain and air quality on the eastern seaboard. According to the EPA CAIR would reduce SO₂ emissions by over 70% and NO_x emissions by over 60% from 2003 levels.

While people were taken aback that the court struck down CAIR in its entirety, no one was surprised that the EPA's Stephen Johnson announced the Advance Notice of Proposed Rulemaking (ANPR) instead of working to create new Clean Air Act regulation. He had responded to Representative Waxman (D-CA) several months ago with his intention, as we wrote in "The EPA: Mulish Days, Staring out to Pasture".

At that time, many saw the Office of Management and Budget (OMB), especially the Office of Information and Regulatory Affairs (OIRA) headed by Susan Dudley, as in the "catbird seat" over federal regulation as Public Citizen put it, and therefore overlord of the EPA's actions. People weren't sure that "Director Johnson" really had too much choice in the issue. Susan Dudley had a long history in conservative think tanks advocating the types of cost benefit analyses that the Bush administration sought to impose, as we described in "EPA, OMB and OIRA: The Biggest Kid on the Block is Back". The OIRA footprint was evident under the Bush administration, especially in the EPA's lack of action on the environment.

When the EPA released its several hundred page document last week, it of course included a statement from the OIRA head Susan Dudley, who rejected the EPA's staff's recommendations, writing: "the [EPA] draft cannot be considered Administration policy or representative of the views of the Administration". Dudley magnanimously added that given the Supreme Court ruling the EPA could go ahead and seek public comment.

Considering the previous repudiation of the OMB/OIRA from critics who called the agency on its interference with the EPA's mandate to protect clean air,², it's not surprising that the OMB recruited additional support from the secretaries of Agriculture, Commerce, Transportation, and Energy. They too denounced the EPA draft in 75 pages of testimony, saying:

1. The Clean Air Act (CAA) is "fundamentally ill-suited to the effective regulation of GHG emissions" because the US cannot control emissions from other countries, so state or regional reductions could be "replaced with emissions increases elsewhere"
2. CAA would hurt international competitiveness
3. The EPA draft "suggests that regulating GHGs under the Clean Air Act would be workable. We disagree. The draft offers a number of legal constructs to support its position but there is no certainty of how those theories will work out in actuality, or whether they would be unheld by the courts."

The Secretaries cited the "burdens, difficulties, and costs, and likely limited benefits" of CAA. Of course this is familiar Bush rhetoric, delivered with orchestral cohesion. However if the Clean Air Act is ill-suited for the task, shouldn't the reasons be grounded in fact rather than fear laden campaign?

The Wall Street Journal described Johnson as being stuck in between his staff and the White House, and as if to illustrate the dysfunction, Johnson disagreed with the conclusions of his staff, calling CAA "ill-suited for the task of regulating global greenhouse gases."

The Administration's Gut

The document was a product of "career EPA's" critics said, with the hint of a sneer they might use for "teacher's unions". Piling on the hyperbole, William Kovacs, vice president of the U.S. Chamber of Commerce in Washington told the Wall Street Journal "This is a classic example of EPA staff saying we can manage the economy of the United States better than the president." (WSJ July 11, 2008) (To which some economists gasped in surprise -- Aha, the president's running the economy?)

The Bush administration has led a sustained attack on the Clean Air Act and the EPA. Last fall Bush publicly conflated the Clean Air Act emissions standards with CAFE standards, acting as though they were the same thing. But they're not. The NHTSA in the Department of Transportation (DOT) sets gas mileage standards through (CAFE). The energy bill that Congress passed and Bush signed (H.R. 6) last December improves long term mileage standards (barely).

The EPA regulates carbon emissions that contribute to global warming, through the Clean Air Act. Several industries argue that the EPA should not regulate emissions because of "regulatory overlap" between the NHTSA and EPA, but the Supreme Court rejected that argument in Massachusetts v. EPA. Said the court, the EPA "has been charged with protecting the publics 'health' and 'welfare'", whereas "DOT sets mileage standards".

The legislative goal of CAA was to protect considerations about healthy air and water from being corrupted by private interests and business. It's this goal that industries resent. As we described in previous posts, the petroleum and auto industries petitioned the EPA and the Bush administration to deny the California waiver. Industries argued that the EPA should adopt the notion of "maximum feasibility", and "set standards that take account of the limits on the investment capabilities and product cycles of the industry, just as NHTSA does...", as Chrysler put it in a memo last year.

One-Two Punch

There are legitimate criticisms of Clean Air Act, however the auto industry simply wants to continue its 30 year run of little to no regulation, despite the evidence that this damages health, the environment and the auto industry.

As the administration winds down, the Bush administration now seems more then ever about criticizing the EPA document directly. Bush chose the familiar war theme when he called the EPA outline a "'command-and-control' regime that would regulate virtually every aspect of American life from cars to factories, hotels and lawnmowers". "Command and control" is a conservative slur you run across scanning the conservative op-eds, as in "command and control communism", "command and control socialism", and "enemy of the free-market".

The push by the OIRA, the administration, industry, and much of congress for measures that considers projected costs to industry when determining whether or not to regulate of course has valid points, but is subject to abuse. If the cost to industry is used to determine whether industry should clean up the mess it makes of air and water, then why shouldn't industry make a really BIG mess and what incentive is there to accurately estimate either costs or benefits?

An example of how costs and benefits can be manipulated is in the latest report from the EPA on CAA. The Los Angeles Times reported that the benefits section of the current draft was "sharply revised" from a May draft that calculated savings to consumers of up to $2 trillion dollars.

"$2 trillion in savings to consumers at the gas pump and elsewhere could be achieved if greenhouse gas regulations were implemented.. [In the current draft], that number was slashed to $830 billion, and the price of gas was calculated at $2 a gallon for the next 30 years.

According to the LA Times EPA press secretary Jonathan Schradar said "he did not know why the numbers had been changed". Or perhaps he knew why but didn't know how or who or when? An inherent danger of such analyses?

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¹ (ANPR) Advance Notice of Proposed Rulemaking: Regulating Greenhouse Gas Emissions under the Clean Air Act.

² Congressman Waxman's Committee of Oversight and Government Reform has a long running investigation of the OMB and EPA's actions on the environment/. He held the two agencies in contempt of court for refusing to release documents related to decisions about the ozone and the California waiver, to which President Bush claimed executive privilege.