Clean Air Federalism: Do States Race to the Bottom?(*)

Beginning of article

From the lofty heights of Capitol Hill, it may appear the federal government makes all the important decisions about clean air policy. After all, United States Environmental Protection Agency (USEPA) regulations and the detailed provisions of the 1990 Clean Air Act regulate the amount of pollutants floating in the air (ambient air quality), the amount of pollutants released by industrial and mobile sources (emissions standards), and the types of fines and sanctions levied against pollution violators. From the Capitol Hill perspective, these national standards and regulations are absolutely necessary. According to the cynics, if left to their own devices, states would adopt weaker and weaker clean air protection laws, creating a "race to the bottom" in which states compete for economic growth by enticing industry with less stringent--and less costly--regulations.

Do states always adopt the lowest possible environmental standards, as critics charge? Or can the states in fact develop policies that fit their particular political and environmental contexts? If states were involved in overwhelming competition for economic growth, no state would choose to exceed USEPA standards. A second, weaker interpretation of the race-to-the-bottom hypothesis posits that economic pressures to lower clean air standards most severely affect states that rely on heavily polluting industries. This article investigates these questions, drawing on results from the State Air Pollution Control Survey (SAPCS) conducted in 1998 by the Council of State Governments. Overall, the results show that many states have adopted clean air standards and programs that are more stringent than the USEPA requirements. Multivariate analyses of states' standards in three clean air policies indicate that states with "greener" political climates--those with stronger environmental interest groups and public opinion favoring environmental protection-are significantly more likely to develop air pollution standards that exceed USEPA requirements.

The next section of this article discusses the importance of environmental policy federalism for both policy makers and academic scholars. The third section summarizes clean air policy in the United States. The fourth section presents SAPCS data on the number of states choosing to exceed USEPA standards in criteria pollutant clean air policy.(1) The fifth section presents multivariate analyses of states' decisions to exceed USEPA standards. The final section concludes that there is little evidence of a race to the bottom among states in clean air policy.

The Importance of Environmental Federalism

How do states handle policy authority that is delegated from the federal government? In an era of increasing devolution of policy authority from central to local governments, this question has become increasingly important for scholars and for policy professionals. For scholars, the states have been a valuable laboratory for understanding environmental policies. In the early to mid-1980s, scholars of state environmental policy investigated how states responded to Ronald Reagan's New Federalism (Crotty 1987; Davis and Lester 1987; Lester 1986). Lester (1986), for example, categorizes states by their capacity to assume responsibility for environmental programs and the extent to which they did so during the 1980s. As states assumed responsibility for environmental programs, the relevance of this question declined, and scholarly focus shifted to how state (see Ringquist 1993) and local (see Weiland 1998) governments shape environmental policies to fit their own political and policy contexts.

The division of policy authority between a national government (such as the federal government) and lower-level governments is an important factor in policy development. Proponents of stronger central-government authority argue that competition for industrial development creates a "race to the bottom" in which states relax their environmental standards to avoid losing businesses to states with more "business-friendly" regulations (Duerksen 1983). In this context, the race to the bottom occurs because each state can "export" the cost of its more lenient clean air standards--more pollution in the air--to states beyond its borders, while the economic growth attracted by the lower standards occurs exclusively within each state's borders. Despite considerable research, the degree to which states relax environmental standards for economic gain remains unclear (for a review of race-to-the-bottom studies in environmental policy, see Engel 1997). If such a race to the bottom does not occur, it is important to understand how states resist economic pressures for lower standards and how they are responding to new environmental federalism challenges, such as unfunded mandates (Cimitile et al. 1997).

This article informs these issues by investigating two simple but important questions. First, do any states choose to exceed the USEPA's minimum criteria in clean air policies? Second, if some states do choose to exceed USEPA criteria, what factors help them to escape the race to the bottom? The analyses that follow investigate these questions in the area of criteria-pollutant air policy.

Regulating Air Pollution: USEPA Criteria-Pollutant Standards

The USEPA and the states share responsibility for regulating stationary-source air pollution. Stationary sources are factories and power plants (mobile sources of air pollution, including cars and trucks, constitute a different class of air pollution policy). For each major stationary-source policy area--setting ambient air quality and emissions standards, monitoring emissions and ambient air quality, enforcement, and issuing permits--the USEPA sets minimum criteria for state programs. Each state's clean air agency submits to the USEPA a state implementation plan (SIP) that details how the state will meet USEPA standards. If the USEPA determines that the SIP is inadequate, it can "preempt" all or part of the state's clean air program and administer the failing portions in that state. …