The Ozone Standard as Presidential Policy: Some Concerns

Cross-posted from RegBlog.

As Stuart Shapiro recently pointed out in a RegBlog post, President Obama himself made the decision a week ago to withdraw the U.S. Environmental Protection Agency’s (EPA’s) ozone National Ambient Air Quality Standard (NAAQS). Presidents have occasionally acted to resolve disputes between the White House Office of Information and Regulatory Affairs (OIRA) and EPA before, but typically OIRA acts in the President’s name without knowing exactly what he thinks about the regulatory details that OIRA negotiates with EPA. Stuart Shapiro also correctly points out that the President’s substitution of his general policy judgment for a judgment of an agency charged by Congress with the responsibility to implement a statute’s policy has implications for administrative law.

Obama’s withdrawal of the ozone NAAQS shows why these implications should trouble everybody, even those who do not like the Clean Air Act’s policy of basing the NAAQS on health considerations alone, leaving cost for later consideration in formulating plans to meet the NAAQS. Many Americans still believe that the “rule of law not men” embedded in our Constitution should mean something. There is some wisdom in this idea. Enacted law, however imperfect, can lend some stability to efforts to solve stubborn national problems and moderate the tendency of government to go into wild mood swings that can make government ineffectual. The rule of law, however, demands that those who enforce the law follow its policies even when they conflict with their personal or political preferences. 

The Supreme Court has held that EPA must set the NAAQS at a level that protects public health without regard to costs. Obama’s decision relies squarely on a rejection of the law’s fundamental policy, citing the burdens on regulated firms during a time of economic weakness as the primary reason for withdrawing the standard. I would find the President’s decision to ignore the law in favor of his own policy preferences troubling, since we long ago rejected monarchy, even if I were sure that his policy decision was a sensible one.  

Obama’s stated policy reasons for the withdrawal, however, fail so completely that they raise questions about whether the decision reflects any legitimate policy preference at all. Concern about short-term burdens on the economy has nothing to do with the NAAQS, because a NAAQS imposes no immediate costs on private firms. Instead, a NAAQS serves as a goal for state programs, triggering a long state government effort to translate the NAAQS into specific requirements for polluters. Only after states create and EPA approves these emission reduction requirements do firms need to incur compliance expenses. Thus, immediate promulgation of the NAAQS does not produce near-term burdens, just long-term ones.

Furthermore, the NAAQS may have a positive effect on the economy. We currently suffer from weak demand, with large firms sitting on piles of cash. A NAAQS creates demand, forcing regulated firms or their contractors to pay workers (and sometimes even hire new ones) to install and operate pollution control equipment or make needed process changes. So, even if the recession turned into a long-term Japanese-style one, a NAAQS might be a good thing economically. Historically, environmental regulations have caused a small net increase in jobs, although most of them have no impact at all on employment. 

The other justification President Obama offers is equally lame – the need for business certainty. Postponing NAAQS revision until after the next election (which is what Obama did) increases uncertainty. Businesses cannot know whether there will be a revision and what it will look like, because the proposed standard was withdrawn instead of enacted. While it is true that EPA must revisit the NAAQS in 2013, EPA would almost surely simply affirm any standard adopted as recently as late 2011. The science does not advance rapidly enough to require any other result and EPA’s institutional habits strongly support adhering to a decision made so recently. 

Since the concerns Obama cited cannot justify the decision, what lessons can we draw about the value of allowing Presidential preferences to trump the law? One possibility is that Obama’s advisors did not communicate the relevant facts discussed above to the President. If so, that would illustrate the dangers of kicking a complex regulatory decision upstairs to a non-expert President, even an exceptionally intelligent one. Agency officials are more likely than a President to have the detailed knowledge necessary to understand a decision’s implications. 

It’s more likely that this decision was based on political considerations, like a desire to mend relations with the business community going into an election or to create credibility with Republicans that Obama imagines may help get his jobs program enacted. The first possibility suggests special interest influence; the second involves sacrificing thousands of lives on the vanishingly small chance that this decision would create enough goodwill to make a difference on another matter. I cannot read Obama’s mind. But accepting the notion that Presidential “preferences” should trump the law would lead to the sacrifice of a lot of measures needed to meet important long-term goals to short-term and ephemeral political considerations. In short, establishing a tradition of having a sitting President’s “preferences” displace agency decisions poses a profound threat to the rule of law, vastly increasing politics’ already overly expansive domain.