Cadillac Air at Cadillac Prices

Alan Charles Rule*

President Clinton has decided in favor of the Environmental Protection Agency's fabulously expensive new air pollution rules for ozone (smog) and particulate matter (soot). EPA Administrator Carol M. Browner has insisted that the Clean Air Act required her to disregard cost-effectiveness in setting these new standards, even though she concedes the agency is neither legally required to nor capable of achieving zero risk for all individuals. It will now be up to Congress and the courts to decide whether the president and the EPA acted reasonably.

The smog and soot rules were proposed last November and will be finalized this month, notwithstanding a barrage of criticism from governors and mayors, large and small business and members of Congress from both parties. In general, the critics have argued that the rules will cost more than $60 billion a year, while the additional health benefits are speculative or nonexistent.

The conventional wisdom in Washington accepted Browner's argument that the Clean Air Act compelled the EPA to impose ever-tighter pollution standards, no matter what the cost. But the act does not command irrational results. The law states that the EPA shall protect public health with an adequate margin of safety; it contains no language prohibiting consideration of costs and benefits. Nothing in the act forbade Browner from seeking to protect the public's health efficiently and rejecting vastly disproportionate regulations like the agency's ozone rule.

For instance, using the EPA's own estimates, compliance with the new rules would cost society from $1 billion to $10 billion a year on top of existing controls against smog, but would produce only $100 million to $2.8 billion in extra health benefits. In the worst case scenario, the EPA's estimates show the costs of the ozone proposal outweighing the benefits by 100 to 1. By any standard, this proposal is absurdly ineffective, and nothing in the relevant law or science forced the EPA to adopt it.

Before the President made his decision to back the EPA, scores of administration officials had heaped vitriol on the EPA's proposals because of the grossly disproportionate expense and the substantial scientific uncertainty about the health benefits. But too many of these officials imagined that the EPA was legally unable to avoid wasting billions of dollars of the public's money.

How could such a state of affairs happen? Like many situations where it appears that Congress wrote an unreasonable law, the explanation can be traced to a court decision. Here, the answer lies in a 17-year-old D.C. Circuit opinion that affirmed the EPA's air pollution standard for lead but denied the EPA any discretion to balance costs and benefits in setting permissible levels. Nearly two decades later, the Clean Air Act has been so successful in improving air quality that future gains do not fit into this simplistic model. Unlike lead, both ozone and particulate matter are considered "nonthreshold" pollutants, which means that the EPA cannot keep 100% of the population free from any adverse health effects. Unfortunately, some people will be affected no matter how low the standard is set. The EPA's decision on where to draw the line ought to reflect a policy judgment that takes account of whether our children's money is being well spent.

While the Clean Air Act does not specifically require consideration of costs and benefits in making policy, another statute does. Congress overwhelmingly passed the Unfunded Mandates Reform Act in 1995. The act obligates the EPA, like every other agency, to analyze and weigh the costs and benefits of its regulations, including the new Clean Air Act proposals, and to certify that the final regulation is cost-effective.

If the EPA applied this new law, the solution to this regulatory miasma would be obvious. But don't hold your breath waiting for Washington to see it.

*Alan Charles Raul has represented industry in connection with EPA's Clean Air Rules. For more information about Mr. Raul, please see the People on the Move feature on Page Two. Copyright@1997. Los Angeles Times, Inc. Reprinted with permission.


2001 The Federalist Society