The Clean Air Act, first enacted in 1963, is in many ways a wild success. Thanks to the landmark environmental law and its subsequent amendments, the six most common air pollutants fell by an average of 69 percent between 1980 and 2019. Acid rain, once a major public health threat in the U.S., has been reduced to a fraction of the problem it once was. The Environmental Protection Agency estimates that these efforts now save more than 200,000 lives each year.
But the law, which has not been significantly amended since 1990, is not without some glaring defects — for the economy and environment alike. Ironically, the regulatory hurdles the Clean Air Act originally created for heavy polluters have now begun to hinder the very sorts of investments needed for clean technology and environmental progress. If the U.S. wants to revitalize its domestic industries while continuing to protect the environment, Congress must fix these inefficiencies and bring the Clean Air Act into the 21st century. A new bill from Sens. Bill Cassidy (R-La.) and Kyrsten Sinema (I-Ariz.) offers a chance to do just that.
The Modernizing Clean Air Permitting Act would change the way that the law defines what’s known as a “source modification” — that is, any change made by a facility that might increase its emissions. Under the current version of the Clean Air Act, if a modification increases hourly emissions — regardless of its overall long-term emissions impact — it can trigger a lengthy permitting process known as New Source Review. This approach has created an enormously skewed incentive structure, in which it is often cheaper for facilities to operate more expensive, higher-polluting equipment than to replace them with newer, cleaner technology. By the EPA’s own admission, “NSR as applied… discourages projects that would have provided needed capacity or efficiency improvements and would not have increased air pollution — in fact in some cases air pollution may have decreased.”
For example, suppose a power plant wants to install a new turbine that burns coal more efficiently. While the turbine operates, it emits more sulfur dioxide per hour because of higher combustion rates, even as overall coal consumption decreases because the plant can meet demand with less operating time, leading to lower emissions annually. Nevertheless, because hourly emissions increase, the plant must undergo renewed permitting under the Clean Air Act, making the upgrade more time-consuming and expensive despite being an environmental and economic win-win. In one particularly stark example, New Source Review increased the expected cost of a turbine efficiency improvement project from $937,000 to over $68 million.
The Modernizing Clean Air Permitting Act would correct these warped incentives. Per the bill, a modification would trigger New Source Review only if it both increased the hourly emissions rate and expanded the production capability of the source. In other words, facilities would be able to make changes that improve efficiency and reduce emissions without fear of triggering a new round of permitting.
Under the proposed legislation, states would also no longer be required to lower the air quality standard under “locally uncontrollable levels.” As it stands, many counties across the country are deemed out of compliance with the Clean Air Act’s national ambient air quality standard (NAAQS) despite having zero polluting facilities in the area. As a result, projects in these counties face a significantly harsher set of regulations. This is true even if the pollutants are blowing in from elsewhere, or from cars traversing the interstate. That is, even if the sub-standard air quality is not the fault of the county itself, the current rules trigger severe regulatory consequences that make siting new industrial facilities extremely difficult. Cassidy and Sinema’s bill would correct this imbalance, and ensure that counties aren’t unfairly penalized for emissions that are not their own.
Finally, the new bill would require the EPA to evaluate “rates of compliance with previous standards, the technological feasibility of compliance, and the costs of compliance when revising air quality standards.” Under the current version of the law, the EPA is not permitted to consider economic impact when revising the NAAQS. Given that air quality standards have enormous consequences for American industry, this represents a huge imbalance in the standard-setting process. The EPA should weigh new regulations against their economic implications — and the new bill would make sure that it does.
The introduction of the Modernizing Clean Air Permitting Act suggests a growing, bipartisan awareness that our environmental laws are in need of updating, and can be amended to bolster economic development without sacrificing their substantive protections. While the short timeline before election season indicates that the bill is unlikely to pass before the end of the 118th Congress, that alone is very good news.
Thomas Hochman is a research associate at the Foundation for American Innovation.