Sacramento Rules

Donald F. Kettl
Donald Kettl
Donald F. Kettl Donald F. Kettl is a Nonresident Senior Fellow at the Brookings Institution as well as Professor Emeritus and former Dean of the University of Maryland School of Public Policy

December 1, 2002

At the rate things are going, the head of the U.S. Environmental Protection Agency may not be setting much environmental policy a decade from now.

It’s scarcely the case that EPA won’t have anything to do. Recent agency administrators, both Republican and Democratic, have been pinned down in a fierce guerrilla battle between members of Congress who wish to lighten the regulatory burden of environmental rules and others who would toughen pollution standards and reduce global warming. In fact, the administrator’s job increasingly has been to chart EPA’s course through the political crossfire. But as the mElee has raged in Washington, the policy initiative has shifted to the states—and to a certain extent, foreign governments. For automakers in particular, the focus this year has been on California, not on Congress or the EPA.

Californians, of course, have as much at stake as anyone in the campaign to clean the air. Pollution problems in the Los Angeles basin are legendary. The state has consistently set tougher standards than required by federal regulation, and in the past 25 years, the results have been remarkable. The number of health advisories for high levels of ozone shrank from 166 in 1976 to just 15 in 2001.

In July, California took another tough step. The legislature passed a bill requiring all cars sold in the state after 2009 to meet tough standards for greenhouse gases, the carbon-based emissions that scientists believe promote global warming. Carmakers had waged a fierce battle against the California bill but could not defeat it.

In signing it, Governor Gray Davis chided federal officials for “failing to ratify the Kyoto treaty on global warming.” They “missed their opportunity to do the right thing,” Davis said. “So it is left to California, the nation’s most-populous state and the world’s 5th-largest economy, to take the lead.” California was proud, as the governor put it, to “join the long-standing and successful effort of European nations against global warming.”

In March 2001, President Bush had announced plans to withdraw the United States from the Kyoto treaty, the international pact dealing with the greenhouse gas issue. But California’s legislation rendered that decision moot, at least for carbon dioxide pollution from cars. No automaker can afford to ignore California and its huge market. In the 1970s, when California mandated catalytic converters to scrub auto exhaust, it soon became impossible to buy cars in Wisconsin or Texas that did not contain the device as well. That will be the case for the greenhouse gas rules now. As California goes, at least in air pollution, so goes the nation. Instead of focusing their attentions on Washington, auto lobbyists find themselves trooping off to Sacramento to haggle over the details of the new regulations.

One of the important details they are haggling over is diesel fuel. New-generation diesel engines are more fuel-efficient than many gasoline-powered engines. That means less energy consumption and fewer carbon dioxide emissions. And that, in turn, has brought California regulators into close negotiations with automakers about production of diesel-powered cars.

For those who have long seen diesels as blue-smoke-belching behemoths, it might seem unlikely that government would be encouraging a shift to diesel engines. Or, for that matter, that the government making the decisions would be in a state capital, not Washington. But that’s exactly what’s happening.

All this, in turn, has led to new ties between state regulators and the European Union. European nations have been working as hard and long on global warming as anyone. The EU’s aggressive efforts to reduce greenhouse gases have led to new diesel technologies. So California regulators find themselves steering in the same direction as their counterparts abroad.

Put together, this means that American policy for auto emissions is subtly shifting course, driven by activities at the state and international levels. It’s not that EPA doesn’t matter. It’s just that the Washington political battles that consume EPA aren’t really central to the shaping of long-term environmental policy.

State governments have long prided themselves as the nation’s policy laboratories, and healthy competition among them always promises to generate new breakthroughs. But there’s also risk involved in having the country’s environmental policy evolve through accidental bits and bumps, without a national debate about what’s truly in the national interest.

Risky or not, however, the trend is briskly underway. Jeffrey Immelt, General Electric’s chief executive, has said that 99 percent of all new regulations the company faces are, over time, going to come not from the federal government but from the EU. Combined with the growing state activism on regulatory issues, this creates a potent combination that the feds may be unable to match, even if they start paying attention. Congress and the EPA may look around one day and discover to their displeasure that they spent precious years fighting interest-group battles that turned out to matter less and less.