EPA defies Mandate Relief Act.

The U.S. Environment Protection Agency and the states are on a collision course. The agency has boldly asserted in its proposal for tough new clean air standards for ozone and particulate matter that it does not have to comply with the Unfunded Mandates Reform Act (UMRA).

If EPA persists in this interpretation of the act, and other agencies follow suit, it would essentially gut Title II of UMRA. Title II is the provision requiring federal agencies to estimate how much a mandate would cost and to look at alternative regulatory possibilities and pick the one that is cheapest and the least burdensome for states.

Despite the plain language of the Mandate Reform Act, EPA insists that the Clean Air Act bars the agency from even considering the economic burden of its regulations. Clean air standards, says EPA Administrator Carol Browner, must under the law be based on science-based health criteria regardless of cost. Costs, she says, may be considered only in devising means of implementing new clean air standards, not in the process of setting the standards.

The agency is under court order to reach a final decision by July 19 on new standards for ozone and particulate matter. In November, EPA proposed new and significantly stricter regulations that could place a financial burden on many areas, including many of those that have been successful in meeting current clean air standards. The upshot is that these areas could find themselves out of compliance again and subject to federal sanctions.

NCSL argues that UMRA and two related presidential executive orders require the agency to estimate the aggregate economic impact of the proposed new standards on state, local and tribal governments and to adopt the most cost-effective regulatory alternative. This cost estimate, NCSL says, should account not only for the direct cost to states enforcing the...