Think the days of over-regulation are numbered? Not so fast. State and local governments face severe economic penalties if they fail to comply with a recently issued national ambient air-quality standard for ground-level ozone, a key component of smog.
If that happens, some states and communities designated as not meeting the new federal ozone standard will become less attractive locations for new industrial facilities than others. Manufacturing growth could slow or stop in such places (“nonattainment areas” in bureaucratize). Upgrading aging highways, bridges and other infrastructure will take more money out of taxpayers’ pockets; opening up new oil and natural gas fields for production will be costlier.
How did we get here? In order to reduce smog nationwide, the Environmental Protection Agency’s ozone standard was issued under the 1970 Clean Air Act, and since then the standard has been made much tougher. In 2015, the Obama Administration’s EPA tightened the standard to 70 parts per billion even as some metropolitan areas were struggling to comply with an earlier standard, issued in 2008, of 75 parts per billion. The upshot is that ozone compliance is now characterized by two overlapping regulations, one more difficult to meet than the other.
If a city or state hasn’t been able to reduce ozone concentrations to 75 parts per billion since 2008, what purpose is served by requiring them to cut ozone to 70 parts per billion, even with a recently announced one-year delay?
What’s needed in Washington, as always, is a dose of commonsense. It is obvious that fixing the ozone rules should be a priority for the EPA, Congress and the president. In July, the House passed a bill that extends the compliance period for the new ozone standard to allow the 2008 standard to be met first. The measure also harmonizes the new ozone standard with other existing air-quality regulations that will continue to reduce ozone levels across the country.
And the House bill provides states like Utah and Colorado with a reasonable path forward for implementing the standards, while also updating the Clean Air Act to make the law more workable in the years ahead. News flash: U.S. states and metropolitan areas differ widely in the mix of productive activities on which their economies are based. When it comes to air-quality regulations, one size does not fit all.
A fundamental problem with the Clean Air Act is that it places no limits on the sums of money the EPA can require companies to shell out to meet any ambient air-quality standard. A study by NERA Economic Consulting found that 2015’s stricter ozone rule could reduce the nation’s annual GDP by $270 billion, running to a total of $3.4 trillion from 2017 through 2040. NERA estimated that compliance expenditures of that size would mean 2.9 million fewer jobs every year, on average, over the same period.
The EPA itself reports a 30 percent reduction in ozone emissions since 1980, owing largely to improvements in automotive fuels, engine designs, and industrial efficiency. National air quality was improving before the EPA was created; it has continued to improve at essentially the same pace ever since. Private businesses should be allowed to continue the progress they have made without facing the uncertainty and unnecessary costs that come from having to comply with overlapping standards.
Absent action by Congress, more billions, perhaps more trillions of dollars will be spent in complying with air-quality regulations that either fail to achieve their stated objectives or do so at a cost that far outweighs even the most generous estimates of their benefits.
While the House-passed ozone measure is not a cure-all, since EPA rem able to penalize state and local governments failing comply with ozone regulations, it will continue to drive down pollution levels without causing undue damage to jobs and the economy. That’s something worthwhile.
William F. Shughart II, research director of the Independent Institute, is J. Fish Smith Professor in Public Choice at Utah State University’s Huntsman School of Business.
