Environmental federalism when numbers matter more than size.

• Author: Adelman, David E.
• Position: Introduction through II. Air Pollution in the United States as a Numbers Game B. Cars and Coal: The Emissions of the Many Versus the Big, p. 238-281

1. THE PRESSURES TO FEDERALIZE CLEAN AIR POLICY A. CALIFORNIA AS A POLICY INCUBATOR B. THE PUNCTUATED EVOLUTION OF FEDERAL CLEAN AIR POLICY C. POLITICAL COMPROMISE AND FEDERAL EXPANSION. II. AIR POLLUTION IN THE UNITED STATES AS A NUMBERS GAME A. Understanding EPA Emissions Inventories and Cancer Risk Estimates B. Cars and Coal: The Emissions of the Many versus the Big C. Urban Density and Air Quality D. Outliers and Hotspots of Industrial Emissions III. THE LIMITS OF COOPERATIVE FEDERALISM UNDER THE CLEAN AIR ACT A. The Dependence of State Clean Air Programs on Federal Regulations B. Environmental Federalism and Public Choice Reconsidered IV. REALIGNING CLEAN AIR POLICY TO REFLECT THE IMPORTANCE OF SMALL SOURCES A. Reforming NAAQS Planning and Implementation Processes B. Reevaluating the Rationales for the NSR and PSD Programs V. CONCLUSIONS A vast literature exists on environmental federalism examining the appropriate balance of regulatory authority between the federal government and the states. The power of concentrated business interests to pressure government officials into relaxing environmental standards has long been a central focus of legal scholarship. (1) This perspective has been reinforced by writing on the political economy of environmental regulation, which is typically framed by public choice theory's narrative of agency capture by large regulated industries. (2)

   This Article will show that, as an empirical matter, the prevailing focus on corporate power is misplaced. Industrial sources as a class rarely account for more than fifteen percent of the emissions of most air pollutants; (3) instead, diffuse sources in the transportation, residential, and small business sectors are the dominant contributors nationally. (4) Except for emissions from coal-fired power plants, air pollution is principally an urban problem for which the number of sources matters far more than their size. (5) Urban areas are home to 80 percent of the United States population, (6) and account disproportionately for the 50 percent of Americans who in 2005 lived in areas that failed to meet one or more national standards. They are also closely associated with high levels of toxic air pollution--the ten largest cities encompass 88 percent of the population exposed to the highest excess cancer risks nationally. (7)

   The history of clean air policy reflects these patterns insofar as the strongest opposition to regulation has often involved the public rather than large industries. Experience implementing the Clean Air Act (CAA) in the 1970s illustrates the longstanding importance of small sources and public attitudes. The national ambient air quality standards (NAAQS), which established minimum health-based standards for six widely released "criteria" air pollutants, are viewed as the cornerstone of the statute. (8) Yet, it was evident from the start that emissions from older motor vehicles were the primary obstacle to states meeting the first NAAQS compliance deadline in 1975. (9) By mid-1973, the significance of this problem became clear when the Environmental Protection Agency (EPA) determined that at least ten major cities would have to ration gasoline. (10) These findings were particularly ill timed, as they coincided with the public outcry over the gas shortages triggered by the 1973 OPEC oil embargo. (11)

   Public discontent boiled over later that year when, under court order, EPA issued a federal plan for California that required gas usage in Los Angeles to drop 82 percent during the smoggiest months. (12) EPA's plan was decried as absurd and met with utter disbelief by the public, (13) prompting even the Sierra Club to acknowledge that it was unrealistic. (14) To make matters worse, the court order binding EPA's actions was not limited to California--it applied to another nineteen cities, including New York, Philadelphia, and Houston. (15) Implementing such draconian measures ultimately proved to be a political non-starter, and Congress backpedalled by passing the first of several delays in the NAAQS compliance deadlines. (16)

   One possible explanation for the focus on large industrial sources in the academic literature is the salience of anti-corporate sentiment in environmental politics. The public backlash against clean air policies in the 1970s exposed both the practical constraints to progress (i.e., the inertia of replacing older vehicles) and the political pitfalls of regulatory policies that directly impact the public. In this light, framing environmental policy around industrial sources has obvious virtues--the populist appeal of targeting large companies, the moral clarity of a narrative in which industry unilaterally harms the public, and the benefit of tapping into the enduring belief that industry is the primary cause of environmental problems. Further, by absolving the public of responsibility, this view mitigates the risk of inciting a public backlash similar to that experienced in the 1970s.

   It is nevertheless surprising that academics have done little to challenge basic misperceptions about the relative importance of industrial sources, and that they frequently reinforce them. (17) Academic writing on environmental federalism, in particular, often assumes implicitly that industry is the primary obstacle to environmental regulation and that opposition from the public and small businesses is of marginal importance. (18) This Article will examine the influence of this industry-centric perspective on environmental policy and theories of federalism. It will focus on experiences under the CAA, which established the model for cooperative federal-state regulation found in the major national environmental laws. In doing so, the Article will draw on a variety of historical sources and geospatial databases compiled by EPA.

   The divergence between established views about cooperative federalism and its operation under the CAA illustrates the insights that emerge from an empirically grounded understanding of the law. A presumed virtue of cooperative federalism is that states make the difficult policy judgments regarding how to allocate emissions among sources. Cooperative federalism achieves this balance through a complementary division of authority between the federal government, which promulgates national standards, and the states, which determine how to meet them. Courts have interpreted this to mean that, while EPA retains oversight authority, states have complete discretion "to determine ... the particular restrictions that will be imposed on particular emitters within their borders" so long as the national standards are met. (19)

   The EPA data show that the CAA's system of cooperative federalism is undermined by legal and practical constraints on state programs. The overarching problem is a dearth of viable options available to states from which to select "particular restrictions" on air emissions. (20) Their authority to regulate emissions from motor vehicles, the largest source of emissions, is restricted in most states to transportation planning, which has evoked strong public opposition and had few successes. (21) Similarly, regulation of small stationary sources, (22) which account for most of the remaining emissions, is impeded by political and administrative barriers that have stalled regulation for decades. (23) The constraints on state programs are also greatest in large metropolitan areas where air quality is lowest.

   By contrast the barriers are lower for direct federal regulations, which according to recent empirical studies are the primary driver of reductions in air pollutants under the CAA. The success of federal regulations is attributable to two simple facts--federal regulations cover a large share of total air emissions, and they regulate sources that are relatively easy to control. In every state except California, EPA has had preemptive authority to regulate emissions from motor vehicles since 1967, and beginning in 1990 it gained primary authority over regulation of emissions from electric utilities. (24) To put this in perspective, these source categories account for roughly 40 to 90 percent of each criteria pollutant's emissions nationally. (25)

   Despite these realities, academics, judges, and stakeholders routinely describe the CAA as a model of cooperative federalism. (26) The schism between such broadly held beliefs and the realities on the ground illustrates the urgent need for more empirical studies of environmental laws in practice. Many academic debates focus on first principles, such as the relative merits of pure health-based standards versus balancing regulatory costs and benefits, without considering the effects of overlapping programs or systemic constraints. Political or ideological battles can reinforce these tendencies. Academics are notably silent, for example, about carve-outs in the NAAQS--putatively national standards that afford multi-decade exemptions in areas with the worst air quality--and the daunting practical barriers to meeting them. (27)

   Recognizing the structural limits and inconsistencies of clean air policy opens up significant opportunities for reform, two of which will be outlined below as illustrative examples. First, the CAA's system of cooperative federalism will continue to underperform unless it stimulates development of effective state and local policies for regulating smaller sources. EPA could be given the authority to set NAAQS compliance deadlines and to condition approval of state plans on adoption of specific programs. These reforms would refocus the planning process from meeting narrow bureaucratic ends to developing innovative programs and transparent compliance schedules. Second, federal regulation of major industrial sources skews regulatory priorities and unnecessarily limits state authority to select policies and allocate emissions across sources. I will argue that the two programs could be eliminated as part of compromise...