Critics of big government focus most of their attention on
soaring federal budgets and the endless stream of new legislation
that would further increase spending and taxes. Often overlooked is
the trillion-dollar annual cost of compliance with federal
regulations. Like the federal budget, this regulatory burden
continues to increase and usually accelerates during the final year
of an Administration.
The most worrisome regulation now under consideration is a
declaration by the Environmental Protection Agency (EPA) that
carbon dioxide emissions from motor vehicles endanger public
health. The so-called endangerment finding would spark many costly
measures with the potential to harm the U.S. economy and intrude on
citizens' daily activities. The EPA should refrain from initiating
any regulation that would jump ahead of Congress on global
warming.
Background
In April 2007, the Supreme Court ruled in a 5-to-4 decision
against the EPA over its refusal to regulate emissions of carbon
dioxide, a greenhouse gas, from motor vehicles. However,
Massachusetts v. EPA did not require the agency to change
its position; it required only that the agency demonstrate that
whatever it chooses to do complies with the requirements of the
Clean Air Act. In the Court's words, "[w]e need not and do not
reach the question whether on remand EPA must make an endangerment
finding," and "[w]e hold only that EPA must ground its reasons for
action or inaction in the statute."
Nonetheless, it appears that some people in the Administration
and the EPA want to read this case as a mandate to begin cracking
down on carbon dioxide. But doing so is not required under the
law.[1]
A Cautious Federal Approach Thus
Far
Carbon dioxide is a naturally occurring component of air that is
created by breathing and other natural processes. It is also the
ubiquitous and unavoidable byproduct of fossil fuel combustion,
which currently provides 85 percent of America's energy. Thus, any
effort to substantially curtail such emissions would have extremely
costly and disruptive effects on the economy and on living
standards. That may change over the long term: The Bush
Administration is supporting research into carbon-friendly energy
technologies as well as means to capture and store carbon emissions
underground rather than releasing them into the air. But these
efforts will likely take at least 20 years to reach fruition. There
are no cost-effective solutions in the interim.
For these reasons, the federal government has been extremely
cautious about requiring mandatory carbon reductions over short
timeframes. In 1997, the Senate unanimously resolved to reject any
climate change treaty that unduly burdened the U.S. economy or that
failed to engage all major emitting nations, such as China and
India. Although the U.S. signed the Kyoto Protocol later that year,
neither President Clinton nor President Bush submitted the treaty
to the Senate to be ratified.
Legislatively, Congress has rejected every attempt to control
carbon dioxide emissions, including provisions proposed for the
1990 Clean Air Act Amendments and the 2005 energy bill. Even the
current Congress, with its stated zeal to regulate carbon, has done
little since taking power in January 2007. One climate change bill,
S. 2191, has been voted out of committee, but it must overcome a
number of hurdles before it stands a realistic chance before the
full Senate. The House has done nothing beyond introducing several
bills and holding hearings.
Beyond the economic costs, there are also questions about
whether these measures would accomplish anything environmentally.
Even assuming the worst-case scenarios of man-made global warming,
the impact from these bills would be so small as to be difficult to
detect.
Overall, Congress has recognized the potential pitfalls of
ill-advised climate measures and has acted with the appropriate
caution.
A Regulatory Pandora's Box
It is with this justified caution that the Administration should
approach its response to Massachusetts v. EPA. The Clean Air
Act has many shortcomings as an instrument for rationally
regulating carbon dioxide emissions--something the statute was not
set up to do.
The Clean Air Act is a model of redundancy. Virtually every type
of pollutant is regulated by not one but several overlapping
provisions. Terms of art like "air pollutant" and "public health"
appear throughout the statute, as do a number of non-discretionary
duties for EPA. Any finding that carbon dioxide from motor vehicles
is a pollutant that endangers public health or welfare would
unleash costly regulations for activities throughout the
economy.
Under the Clean Air Act, once carbon dioxide emissions are
regulated from motor vehicles, they must also be controlled from
stationary sources under the New Source Review (NSR) program, which
applies to all pollutants subject to regulation anywhere in the
statute. Also, given that the threshold for regulation--250 tons
per year and in some cases as little as 100 tons per year--is
easily met in the case of carbon dioxide emissions, the agency
could impose new and onerous NSR requirements heretofore limited to
major industrial facilities.
Most emissions regulated under the Clean Air Act are trace
compounds measured in parts per billion, so these threshold levels
make sense to distinguish de minimis contributors from
serious ones. But carbon dioxide occurs at far higher levels
(background levels alone account for 275 parts per million), and
even relatively small usage of fossil fuels could meet these
thresholds. A restaurant kitchen, the heating system in an
apartment building, the activities associated with running a farm,
and potentially a million other entities could face substantial and
unprecedented requirements whenever they are built or modified.
The bottom line is this: If the EPA declares an endangerment
finding, the kind of industrial-strength red tape that routinely
costs hundreds of thousands if not millions of dollars (and can
take more than a year to comply with) could now be imposed for the
first time on many commercial buildings, farms, and all but the
smallest of businesses. The paperwork would also hamper federal and
state environmental regulators, drawing resources away from more
useful endeavors.
Even if the EPA attempts to limit the impact to motor vehicles,
it will be hit with a number of lawsuits from environmental
organizations trying to force an expansion of its carbon dioxide
restrictions. In addition to NSR, the language used to regulate
carbon dioxide from motor vehicles could also qualify it as a
National Ambient Air Quality Standard (NAAQS), and a lawsuit
seeking to do so would be inevitable. If carbon dioxide becomes an
NAAQS, it would trigger requirements that could be met only by
severely curtailing economic activity. Other Clean Air Act
regulations could also be unleashed--none of which would require
congressional approval.
In effect, an endangerment finding for carbon dioxide would lead
to a regulatory scheme far more extensive than those Congress has
wisely rejected. The economic impacts, unintended consequences, and
public backlash could be unprecedented. It would leave a highly
unfortunate legacy for this Administration. Indeed, the cost of
this de facto tax increase on businesses and consumers would
more than undo the benefits of the Bush tax cuts and other
pro-growth policies.
Conclusion
An endangerment finding is a regulatory Rubicon that the
Administration is not required to cross. Given that the Supreme
Court declined to set any deadline for the EPA, there is no reason
for the Administration to take final action in 2008. This is
particularly true given the complexity of the issue, made more so
by provisions in last year's energy bill that made substantial
changes in both motor vehicles and fuels regulations. Gathering
more information would be the best course of action at this time.
In any event, the EPA should not take precipitous action on global
warming, especially without guidance from Congress.
Ben Lieberman is Senior
Policy Analyst in Energy and the Environment in the Thomas A. Roe
Institute for Economic Policy Studies at The Heritage
Foundation.