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Regulatory: EPA’s July clean air initiative

The EPA seeks to limit emissions of major pollutants on a state-by-state basis, and set fuel economy standards for cars and greenhouse gas limits for trucks.

The first week of July will witness a remarkable flurry of activity by the Environmental Protection Agency to regulate air pollution. Air rules historically have the highest costs and greatest benefits of all federal regulations and, accordingly, present the most difficult policy problems. After the 4th of July holiday, EPA will take action in two critical areas: establishing final limits on emissions of major pollutants on a state-by-state basis, and moving toward fuel economy standards for cars and greenhouse gas (GHG) limits for trucks. Collectively these rules will cost tens of billions of dollars and save millions of lives over time.

The Transport Rule

Eastern states must take more extensive steps than Midwestern states to produce the same air quality because the background pollution levels in the Atlantic states reflect large amounts of pollution transported from the Midwest by the prevailing winds. Midwestern states do not suffer this problem because the pollution generated on the Pacific coast dissipates before reaching the Mississippi basin.

In early July, EPA will issue the final Clean Air Transport Rule, which will set state-by-state caps on emissions of sulfur dioxide and nitrogen oxides so that imported pollution from Midwestern states does not burden efforts by downwind states to meet federal air quality standards. In essence, compliance costs will be shifted to coal-fired Midwestern electric generating plants, which have less effective controls than Eastern facilities and presumably can further reduce pollution at lesser cost. The rulemaking process has taken 20 years because the upwind states have bitterly resisted the increased electricity costs that the rule will impose on their manufacturing base.

One flash point will be the caps imposed on Texas, which imports little pollution from the desert Southwest but whose plants export substantial emissions to the Southeast. The proposed rule did not seek to limit emissions from Texas. The inclusion of such limits in the final rule will be hotly contested, both on procedural grounds and because of the costs of adding pollution controls and closing inefficient coal-fired plants necessary for Texas to attain compliance.

Motor Vehicles

The White House is reviewing a final EPA rule that would establish GHG emission standards for medium- and heavy-duty trucks. The rule will require manufacturers to achieve substantial reductions in fuel consumption and pollution from tractor trailers, buses and other trucks with emissions that are not as heavily controlled as those of passenger automobiles.

The White House also is starting negotiations with automobile manufacturers on a proposed EPA/Department of Transportation rule that will raise average fuel economy standards for new cars. The Obama Administration has suggested a 56.2 mph standard for 2025. This target is double the 27.5 mpg level that has governed since 1980 and the 35.5 mpg standard manufacturers must attain in 2016. The proposal would be costly and require that automakers shift to battery-powered cars. The agencies want to issue the proposed rule in September.

Members of Congress will respond quickly to EPA’s initiatives. Multiple House oversight hearings will be held during the summer, and there will be efforts to adopt legislation to block or delay the rules. The most likely vehicle will be this fall’s EPA appropriations measure, although the issues conceivably could be introduced in the debt ceiling negotiations. Prior legislative efforts to block EPA’s GHG rules failed in the Senate. The question this time will be whether the disparate effects of EPA’s rules in different states will persuade a sufficient number of Senate Democrats to join Republicans in voting against the proposed rule.

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