EPA’s Proposed Ozone Standards Would Exacerbate State, Local Fiscal Woes

At a time of historic fiscal woes for state and local governments, the last thing they need are more mandates from D.C. that worsen the problem. Yet, our tone-deaf U.S. Environmental Protection Agency could obviously care less, because it is proposing exactly that.

At issue is the EPA proposal to tighten ozone standards that cities and metros have to meet. And with the threat of holding back federal highway dollars for non-compliance, local governments that fail to meet the new standards would be severely punished economically, forcing their backs to the wall. The only realistic alternative is to comply with the ozone standards and take your medicine—generally involving lots of new expenditures on public transit, building retrofits, new planning and studies, and other so-called “green” strategies aimed at reducing ozone levels. Not to mention a whole plethora of regulations (i.e., building code tweaks and the like) aimed at forcing the medicine down everyone’s throats, including the job-creating business sector.

So it’s a fiscal double whammy. You get new government spending to meet what is essentially a politically determined ozone standard (despite claims that it is “science-based”) at a time when budgets are thrashed and “extra” money is nowhere to be found. And then you get the second effect of the dampening economic effect as regulations force businesses to spend more and become less productive, eventually manifesting itself in reduced tax revenues to government.

Poor Houston offers a taste of how this ozone whimsy may play out:

The federal government proposed a tougher limit on ozone pollution Thursday that will force Houston to make deeper emissions cuts just as the former smog capital met the previous standard for the first time. […]

The tougher stance will likely have a profound effect on Texas, where more than 25 counties could be out of compliance and in jeopardy of losing federal highway funds.

Those areas will have up to 20 years to meet the new standard.

Houston, for one, must make further pollution cuts from vehicles and industry just as the eight-county area complies for the first time with the previous standard.

While environmentalists and public health advocates applauded the stricter limit, industry groups and some Texas officials said it will harm the state’s economy without yielding meaningful health benefits.

“The EPA’s only consistent target has been the target on the backs of Texas workers and taxpayers,” said Gov. Rick Perry, who added that the state has invested more than $1 billion to comply with the 1997 standard.

Translation: The state of Texas and Houston spent a ton of money and worked for years just to finally meet the current ozone standard. Now that they finally achieved it, they face the prospect of spending a lot more because economically-ignorant environmental regulators in D.C. see a window of political opportunity and want to set up a moving target. Imagine Charlie Brown upended trying to kick the football Lucy’s just pulled away.

For an administration supposedly so focused on job creation and economic recovery, you’d think that the folly of imposing new, costly ozone standards on state and local governments and private businesses—potentially on top of cap-n-trade or some other new carbon regulation regime—would be obvious.

But the economy isn’t EPA’s concern—in fact, they get the luxury of ignoring the costs it imposes on the economy:

Federal law prohibits the EPA from considering cost when setting air standards. It has estimated the price tag of the new program at $19 billion to $90 billion per year by 2020, depending on the standard it sets, but also said the expense could be offset by reduced health care costs.

So EPA gets to set standards in a vacuum while forcing all of the accompanying economic trade-offs on others.

How nonsensical is this ozone proposal? The failed first stimulus was largely a union-backed, temporary bailout of state and local governments, and now policymakers are angling for a second stimulus in light of continuing state fiscal woes. At the same time the administration apparently sees no problem with imposing tremendous new costs on states and locals via more stringent environmental regulation. Unfortunately, this is typical D.C. practice—what one hand giveth the other taketh away.

UPDATE: I used “moving target” above metaphorically, but The New York Times notes that the administration is considering imposing an actual moving target on ozone:

The Obama administration is also proposing a secondary smog standard that would vary with the seasons to protect plants and trees from repeated exposure.

More sound “logic” from D.C. environmental bureaucrats—it’s been hard enough for cities to meet one target, so let’s throw more several at them.

UPDATE 2: Of course, you’ll hear that the reason for this nonsense is “to protect lives and human health.” But looking at this WaPo graphic, it looks to me like the estimated additional “benefit” of the proposed changes—likely on the rosy high end, as this was estimated by the EPA itself—would be felt by less than 200,000 people nationally (mostly those with respiratory problems, much less so for those with acute bronchitis or aggravated asthma).

To put that into perspective, a policy proposal that would cost untold billions if past experience is any judge will bring a purported benefit to around 0.7% of the U.S. population. I leave it to the readers to judge whether that’s a trade-off worth making.