The Clean Air Act Amendments of 1990

About TED Categories and Clusters

          CASE NUMBER:        300     
          CASE MNEMONIC:      CLEAN
          CASE NAME:          The 1990 Clean Air Act Amendments 


1.        The Issue

     Air pollution is a significant drain on the health, economy,
and environment of the United States.  Adverse health affects range
from mild eye irritation to death and birth defects.  Reduced crop
yields, "dead" lakes, and crumbling monuments are also caused by
air pollution.  Because of all these deleterious effects, the
United States has been progressively expanding its efforts to
control pollution since the first city smoke control ordinances
were passed in 1881.  The first major national strides were made in
1970 with the establishment of the Environmental Protection Agency
and the 1970 Clean Air Act.   The 1990 Clean Air Act Amendments are
a landmark effort to reduce air pollution through a variety of
instruments including the use of a market based system of tradeable
pollution "permits" under Title IV and Title V.  Recently, however,
enforcement has lagged because of Congressional resistance.

"In drawing a circle of value around those things we consider
important enough to measure in our economic system, we not only
exclude a great deal that is important in the environment, we also
discriminate against future generations."  Al Gore from Earth in
the Balance

      The American public is becoming increasingly aware of air
pollution as a national and international problem.  Everyone
familiar with hot, quiet summer days in almost any large urban area
is familiar with smog's visual blight.  However, air pollution is
not constrained to urban environments or even to hot summer days;
it is an ongoing problem for many regions.  While air pollution is
visible locally, its sources are a combination of a wide variety of
local and extra-local pollutants.

     Air pollution is far more than an impairment of visibility. 
It causes significant health problems, damages land and aquatic
environments, primarily through the phenomena know as "acid rain,"
damages construction materials, paper, leather, and textiles.    
Despite the damage caused by pollution, a combination of a
general societal dependence on the sources of pollution and the
specific, mostly economic concerns of polluters, inhibits govern-
ment's willingness and ability to implement some of the more
austere measures espoused by environmentalists.  Nevertheless,
government response to pollution has also escalated culminating in
the 1990 Clean Air Act Amendments.

     This set of amendments is a comprehensive approach to many
sources of pollution and supports several different enforcement and
implementation mechanisms.  The most innovative enforcement
technique is created by Title IV and Title V which establish
tradeable pollution "permits" for sulfur dioxide (SO2) emissions,
the primary precursor to acid rain.  These measures have varied in
effectiveness with the determination of the Environmental
Protection Agency (EPA) to vigorously enforce all regulations
established by the Clean Air Act Amendments of 1990.

                     Effects of Air Pollution

          Air pollution originates from a variety of natural
sources such as forest fires, volcanoes, and windblown dust as well
as the more deleterious anthropogenic (man made) sources such as
auto emissions, power plants, heating units, and primary metal
smelters.  Unlike natural pollution, anthropogenic pollution can be
mitigated or controlled and thereby limit pollution damages and

      The six major or "traditional" air pollutants are carbon
monoxide, ozone, particulate matter, sulfur dioxide, nitrogen
dioxide, and lead.  A second category of pollutants is referred to
as toxic or hazardous air pollutants.  This category includes
asbestos, benzene, vinyl chloride, beryllium, mercury,
radionuclides, and arsenic.   The "traditional" air pollutants are
known to be causes and/or aggravators of respiratory tract
problems, eye and throat irritation, asthma, impairment of some
cardiovascular functions, and lung damage to name a few.  Toxic air
pollution also has serious impacts on health.  They have been found
to contribute to lung disease, Leukemia, liver, spleen, kidney, and
lymph damage, and a variety of cancers. <1> (For a complete
discussion of the health effects of pollution see Thad Godish, Air
Quality and TED case .)

     Air pollution has been responsible for thousands of deaths in
its most severe form such as the notorious 1952 "black fog" in
London <2>.  While air pollution rarely becomes that severe, it
clearly hurts human health in many ways.  It is also quite costly;
one study concluded that every ton of sulfur dioxide emitted into
the air causes more than $3000 of health related damage to affected
communities.  While $3000 may not seem like much, when multiplied
by the tonnage of pollutants emitted and the number of effected
communities, the resulting cost is $25 billion per year from the
effects of midwestern coal-fired power plants alone. <3>   Air
pollution has also been linked to declining male fertility.  Some
airborne pollutants are thought to mimic the female hormone
estrogen and interfere with male fetus sex organ development. <4> 

History of Clean Air Efforts

     As the costs and effects of air pollution have become more
widely accepted as facts and not just environmentalist nightmares,
efforts to limit and mitigate those effects have accelerated
resulting in increasingly effective legislation.  The first
American responses to air quality problems were taken by the cities
of Chicago and Cincinnati in 1881 in response to dense smoke
problems.  Over the next 30 years, 23 other cities passed similar
ordinances.  By the 1930s and 1940s, some cities such as Pittsburgh
and St. Louis had been forced to establish tough smoke ordinances
and enforcement provisions that significantly increased air

     Efforts to combat air pollution remained local until the first
federal air pollution legislation was passed in 1955.  This
legislation, and subsequent efforts in 1960 and 1962 kept
responsibility for reducing air pollution at the state and local
level but began research and training on air pollution at the
federal level with the Public Health Service in the Department of
Health Education and Welfare (HEW). <5> 

     The federal government began to take a more active hand in
controlling air pollution with the 1963 Clean Air Act.  This act
provided for more research and education, federal enforcement
authority to abate interstate pollution problems, and the
development of air quality criteria.  Although a landmark effort in
many ways, this legislation retained state and local jurisdictions
as primary enforcement and monitoring agencies. <6>

     In 1965, the Clean Air Act was amended with the Motor Vehicle
Air Pollution Control Act which authorized the Secretary of Health,
Education, and Welfare to promulgate emission standards for motor
vehicles.  The resulting emission standards for all 1968 light-duty
motor vehicles were the first federally mandated emission
standards.  The 1965 amendment also established the National
Pollution Control Administration (NAPCA) to provide regulatory
leadership for future pollution control efforts. <7>

     As air quality continued to worsen and weaknesses or previous
legislation became evident, Congress passed the Air Quality Act of
1967.  Many of the components of the 1967 act provide the
foundation for current air quality legislation.  The most important
parts of the act required the Secretary of Health, Education and
Welfare to designate Air Quality Control Regions and stipulate air
quality control criteria and techniques.  By 1970, NAPCA had only
designated 23 of their proposed 57 Air Quality Control Regions. 
Air Quality Criteria Documents for sulfur oxides and particulates
were issued two years after the passage of the bill and criteria
documentation for HCs, CO, and oxidants were not ready until 1970
and NOx criteria were not issued until 1971.  These procedures and
definitions were complex and understandably took considerable time
to establish.  However, the resulting lack of timely improvements
in air quality paved the way for more effective legislation. <8>  

    The 1970 Clean Air Act was created in the same year as  the
Environmental Protection Agency (EPA), partly in response to
recognized deficiencies in earlier legislation.  In conjunction,
the two were designed to remedy problems with earlier legislation. 
The objective of the 1970 Clean Air Act was "to protect and enhance
the quality of the Nation's air resources so as to promote public
health and welfare and the productive capacity of its population." 

   The most important aspects of the Act included the federal
government adoption of responsibility and authority for controlling
air pollution, the provision of significant federal enforcement
capabilities, and a goal of clean air for all regions by July 1,
1975.  The EPA was authorized to take steps to halt emissions that
endangered public health and could impose fines of up to $25,000
per day on intentional pollution ordinance violators.  The 1970 Act
also established emission goals for automobiles and regulated use
of potentially harmful fuel additives.  Anyone removing pollution
control devices could be subject to a $10,000 fine. <9>

     1970 was a landmark year both for the creation of the EPA and
for the adoption of environmental legislation that had significant
built-in enforcement provisions.  Although great strides were made 
following the 1970 legislation, it became clear that many regions 
would not achieve federal goals.  That realization culminated in
the  1977 Clean Air Act Amendment which postponed and modified 
goals and deadlines. Clean air legislation languished almost 
untouched during the Reagan administration even though pollution 
continued to be a significant voter concern.  In 1990, the stage
was  finally set for another landmark effort to combat air

                        Regulatory Methods   

     Before taking a detailed look at the Clean Air Act Amendments
of 1990, a brief examination of regulatory alternatives is in
order.  Regulations, pollution charges/taxes, subsidies for
pollution abatement investments, and most recently, tradeable
pollution permits are all viable abatement instruments.  One author
also cites an expanding role for private litigation as a
potentially effective regulatory technique - particularly when used
in conjunction with one or more of the other options. <10>

     Direct regulation - the establishment, monitoring, and
enforcement of specific requirements - is the most frequently used
approach.  The most common type of regulations are emission
standards which establish limits on emissions for specific groups
of sources such as pounds of emissions per hour or the amount of
particulate and hydrocarbon matter allowed in automobile emissions. 

    Other regulations place limits on fuel content, specify the 
opacity of stack plumes, and prohibit certain activities such as
open burning.The "best practicable means" is the most common means
of establishing emission standards.  The term implies economic,
political, and technical practicality.  It also implies that
emission standards become more stringent over time as
technology improves <11> and the public and government become more
accepting of higher standards and their attendant costs.

     The merits of regulation include transparency, certainty, and
neutrality which are all important consideration regarding affected
businesses and their success and continued operation.  Regulation
also includes a number of negative factors.  The costs of
administering regulations, including all the fine print, can be
quite high.  Secondly, regulations are not necessarily neutral
because they apply exactly the same to all situations which does
not allow variance for local conditions and needs.  Perhaps most
importantly, regulations do not provide any incentive to reduce
pollution below the level stipulated by the regulations;
regulations effectively provide a floor underneath pollution
levels. <12>

     Subsidies are financial incentives paid to polluters to
stimulate pollution control measures.  Subsidies take a variety of
forms.  The most common types of subsidies are tax exemptions or
tax reductions on pollution control equipment, investment tax
credits, and accelerated depreciation of assets used for pollution
control.  While subsidies reduce the financial burden of investment
in pollution control, they do not provide positive incentives to
pursue pollution control.  Subsidies simply assist those firms that
are investing in pollution control for other reasons.  It is also
difficult to determine the amount of subsidies to be paid and, once
the subsidy is acquired, there is no guarantee that it will be
utilized effectively for the full duration of the asset. <13>     
Taxes on pollution, on the other hand, provide an active incentive
to reduce pollution output.   Taxes on pollution can also be
assessed at purchase point prior to the actual emission of
pollution as when we purchase gasoline for our cars.  Pollution
taxes are more easily tailored to local conditions and, since costs
are largely passed on to end product users, consumers as well as
primary pollution producers have substantial impetus to minimize
pollution.  Additionally, pollution taxes put the onus of reducing
pollution on the polluters themselves and provides revenue for
regulatory monitoring and compliance. <14>  Taxing products and
activities that create pollution is an effective way of
incorporating environmental costs in personal decision making. <15> 

    A fourth strategy establishes a system of tradeable pollution
permits; each permit grants the owner a right to emit a certain
amount of pollution.  In this system, a regulatory body gives or
sells a fixed number of permits equal to the total pollution target
for the year.  Polluters can buy and sell these permits according
to their situation.  Permits provide incentive for firms to reduce
their pollution output by allowing them to sell unused permits. 
This system allows for tremendous polluter flexibility in reducing
pollution over time but since the total number of permits allocated
is reduced over time to meet progressively more stringent air
quality standards, all polluters will eventually have to seriously
curtail their pollutant output. <16>

     Greater utility for private litigation  would help enforce any
other system.  By expanding avenues of legal redress for private
interested or injured parties against polluters, citizens and
environmental organizations can take a more active "watchdog" role
over polluters and the EPA and provide them with extra incentive to
fully comply with appropriate regulations/taxes/permits if not to
actually reduce emissions. <17>  

     Transparency and public knowledge is crucial for citizen
awareness and subsequent political pressure as well as to the
efficacy of private litigation.  The 1986 Emergency Planning and
Community Right-to-Know Act, also known as Title III of the
Superfund law, requires manufacturers of over 300 chemicals to
report annually to the EPA and to the states in which they operate
the amounts of these substances they emit to air, water, or land.

     These enforcement strategies provide regulatory agencies such
as the EPA and its state and local counterparts with a wide range
of incentives with which to obtain compliance.  By combining these
instruments in effective ways, polluting businesses are allowed the
greatest flexibility in adopting the most economical pollution
abatement  strategies which is vital for the ongoing success of any
abatement program.  Overly restrictive regulations damage
businesses and their employees - and thereby influence voters. 
Consequently, effective regulation must walk a fine line between
effectively reducing pollution and not placing so great a burden on
polluting businesses that the regulation becomes an economic and
political issue.  Given an "either/or" choice between jobs and the
local economy or more stringent pollution control, voters are more
likely to support the former much more vigorously.

                The 1990 Clean Air Act Amendments 

     One of the difficulties faced by most pollution abatement
techniques is the increasing marginal cost of pollution reduction. 
It is relatively easy to initially reduce heavy pollution.  But
before long the point of diminishing returns is reached where every
step in reducing pollution further has a progressively increasing
cost. <19>  Consequently, achieving completely pollution-free air
is a very costly, probably unfeasible, and, at this time, is a 
politically unrealistic short term goal.  

     The 1990 Clean Air Act Amendments (CAAA) build on the main
tenets of the 1970 Clean Air Act although there are also several
new provisions.  The CAAA are divided into a number of "titles"
addressing a broad range of pollution control and abatement issues. 

    Title I: Nonattainment  This title defines various categories
of ozone (6 categories in spectrum), carbon monoxide and particu-
late matter (2 categories each) "nonattainment" regions and
establishes deadlines ranging from three to twenty years for
regions to achieve specified air quality standards.  Smaller
pollution sources became included for heavily polluted regions to
allow regulatory agencies greater freedom to address the full range
of polluters. The 1990 law also supplants the 1970 provision for
"reasonable further progress" with annual emission reduction goals.

     Title II: Mobile Sources  Title II specifies more than 90
emissions standards for vehicle emissions including  reductions of
hydrocarbons and nitrogen oxides by 35 percent and 60 respectively
for all new cars beginning with the 1996 model year.  Oil companies
are required to offer alternative gasoline formulations (including
mixtures of gasoline with ethanol and methanol, liquified petroleum
gas, and liquified natural gas <21>) that produce fewer emissions
during combustion, particularly in non-attainment areas.  In
addition, auto manufacturers are being required to produce
experimental cars for sale (150,000 in 1996 and 300,000 in 1998) in
Southern California that meet even more stringent emission
standards. <22>

     Title III: Hazardous Air Pollutants  Title III lists 189
chemicals for which the EPA is to phase in emission standards by
the year 2000.  These are pollutants which are known to be or
reasonably suspected to be carcinogenic, mutagenic, teratogenic,
neuro-toxic, cause reproductive dysfunctions, or are acutely or
chronically toxic.  The objective is for an average 90 percent
reduction in air toxics and a 95 percent reduction in particulate
matter. <23>  This provision also establishes the Chemical Safety
Board which is responsible for investigating chemical accidents and
preparing risk management plans for accidental toxic releases. 
Industrial plants are also required to prepare and make public
safety reviews and safety standards which contributes to
transparency and public awareness. <24>

     Title IV and Title V:  Acid Deposition Control and Permits  
The most innovative feature of the 1990 CAAA is the establishment
of an emissions trading program for sulfur dioxide (S02), the
primary precursor to acid deposition.  The goal of a tradeable
emissions allowance (EA) system is to allow industry - primarily
the steam turbine electricity generating industry - maximum
flexibility in undertaking reduction of SO2 emissions by 10 million
tons per year through the year 2000.  This title also specifies
reductions of nitrogen oxides (NOx) of 2 million tons per year.

      The first phase of Title IV requires the 110 largest polluter
plants to reduce emissions to an intermediate level by 1995.  By
the year 2000, all fixed point polluters with capacity greater than
25 megawatts  and all new plants are expected to be in compliance
resulting in a 40 percent decline in SO2 emissions from 1980
levels, approximately 23 million tons every year. <26>

     The first auction of EAs was conducted by the Chicago Board of
Trade on March 29, 1993.  The price of permits will vary with
supply and demand although the price will tend to go up over time
as the total amount of permits issued declines.  The current
effective cap on permit prices is $2000 per ton which is the
current penalty for non-compliance. <27>

     Although an innovative market approach to reducing pollution,
there are several objections.  Many people find that putting a
price on clean air is immoral although there is broad agreement
that polluters should not be able to pollute for free.  Secondly,
by explicitly permitting pollution, it institutionalizes a right to
pollute and destroys the idea that the environment is a sanctuary
and undermines efforts to reduce pollution to the maximum extent
possible in favor of reducing emissions to the point of maximum
financial benefit. <28>

     Title VI:  Stratospheric Ozone Protection  Title VI
domestically implements the Montreal Protocol on Substances That
Deplete the Ozone Layer (see TED cases  and ) by
requiring a phaseout of specific ozone depleting chemicals.  The
production of chloroflourcarbons (CFCs) and carbon tetrachloride
will be progressively phased out until they become illegal on
January 1, 2000.  Methyl chloroform cannot be legally produced
after January 1, 2002.  The use of hydrochlorofluorocarbons in
aerosol cans and insulating materials was prohibited on January 1,
1994 and the production of those chemicals will be prohibited after
2030.  The EPA is also required to issue new rules regarding the
recycling and disposal of ozone-depleting chemicals. <29>

     Title VII:  Enforcement  This provision enhances EPA
monitoring requirements and updates penalties to make them
consistent with those in other environmental statutes. <30> It also
provides greater legal standing for citizens to file suit directly
against non-complying polluters and against the government -
commonly the EPA - if its monitoring and enforcement activities are
insufficient to bring a pollution source into compliance.  Suits
against the EPA have been used to compel the EPA to implement its
own regulations when it has failed to do so.  

     EPAs enforcement lapses occur for a number of  practical and
economic reasons including manpower availability problems,
administrative priorities, and bureaucratic inertia. <31> 
Additionally, the prevailing sentiment in Congress is for less
stringent enforcement of EPA regulations which has prompted the EPA
to relax its enforcement efforts in order to prevent Congress from
deciding on a complete overhaul of the EPA mandate and its
regulations. <32>

     Title XI:  Clean Air Employment Transition Assistance  Title
XI authorizes the secretary of labor to establish a compensation,
retraining, and relocation program to assist workers laid off
because of their company's compliance with the Clean Air Act.  The
annual cost of this program is expected to reach $250 million by
1995. <33>  The previous sections of the 1990 CAAA will have
substantial impact on American business and employment patterns in
the years ahead.  Title XI is a valuable tool for minimizing the
dislocation and anxiety that will naturally result from reduced or
eliminated businesses complying with the 1990 CAAA.

     The other three titles (VIII, IX, and X) are smaller
provisions requiring, respectively, EPA monitoring and study of
smaller pollution sources, research into pollution and its health
effects and a requirement that EPA expends at least 10 percent of
its subcontracting funds on business that are at least 51 percent
owned by socially and economically disadvantaged businesses. <34> 

    The 1990 Clean Air Act Amendments comprise a landmark piece of
legislation that will significantly improve national air quality
and environmental quality.  It makes important provisions for
private involvement in oversight and litigation as well
establishing procedures for significant pollution reduction
including an innovative system of tradeable pollution permits.  The
real success of the 1990 CAAA may be mitigated by Congressional


     While the 1990 Clean Air Act Amendments will doubtlessly help
improve air quality over time, it is too early to determine how
effective it has been.  State sponsored impediments such as local
coal usage requirements raise barriers to efficient and timely
compliance.  Companies that are impacted by the legislation also
spend effort to block or circumvent enforcement.  This last factor
in particular is exacerbated by the current political climate in
Washington D.C.  The EPA is under heavy fire from a Republican
controlled Congress.  In order to prevent Congress from completely
reexamining the 1990 Clean Air Act Amendments and potentially
gutting them, the EPA has chosen to relax its enforcement
procedures which it hopes will minimize complaints of "extremism." 

    The EPAs current "loose" enforcement stance has cost the agency
its credibility.  While companies were initially motivated to
comply with the amendments because of mandatory and
discretionary sanctions that could be imposed by the EPA, many have
discovered that discretionary sanctions appear to be unlikely and
that even mandatory sanctions have proved far less certain and
timely than the language of the legislation implies. It is
uncertain whether Congress will revise the Clean Air Act again but
it appears "extremely unlikely that the EPA will pursue (or could
sustain) a tough enforcement stance.  The terms of the CAAA
implementation are likely to be rewritten, in effect if not in
fact, through a process of consultation and negotiation between the
states and the federal government." <35>     

3.        Related Cases











Keyword Clusters (1): Trade Product = MANY (2): Bio-geography = GLOBAL (3): Environmental problem = Air Pollution [POLA] 4. 4. Draft author: David Field (May 1996) B. LEGAL Filters 5. Discourse and Status: AGRee and COMPlete Although the legislation of the 1990 CAAA is in place, it should be noted that enforcement efforts vary. As noted above, the current Republican controlled Congress is hostile to vigorous enforcement and the EPA has relaxed its enforcement and punishment efforts to forestall sweeping Congressional revision of environmental legislation and EPA powers. 6. Forum and Scope: USA and UNILATeral States also have significant environmental protection agencies and powers. Some states, such as California, have even more stringent requirements that national regulations, particularly regarding vehicle emissions. The 1990 also implements American compliance with the Montreal Protocol on Substances that Deplete the Ozone Layer (see TED case ), in some cases more rapidly than required by that international treaty. 7. Decision Breadth: 1 Although the 1990 CAAA only specifically applies to domestic pollution sources, it will have a much wider effect. Canada in particular will be a major beneficiary of reduced acid deposition resulting from abatement measures mandated by this legislation. There are also somewhat varying provisions for attainment and non- attainment areas. 8. Legal Standing: LAW C. GEOGRAPHIC Clusters 9. Geography Geographic Domain: North America Geographic Site: Eastern North America Geographic Impact: USA and Canada 10. Sub-National Factors: YES State environmental initiatives and interests influence national legislation and public opinion. Beginning with the 1977 Amendments, national ambient air quality standards (NAAQS) established the maximum permissible atmospheric concentrations of certain pollutants and required states to develop state implementation plans (SIPs) to achieve those standards. The degree of state cooperation (or lack thereof) varies considerably with many factors including how difficult and expensive the standards will be to achieve, organization of opposing interests, and structures of penalties for non-compliance. <36> States can impose other obstacles to Title IV implementation such as disallowing permits issued in state to be sold to "upwind" pollution producers. Other states (Indiana for example) requires state institutions to buy and use coal produced within the state unless specific federal regulation prohibits it due to excessive sulfur content. These states naturally tend to be states that produce high sulfur coal. <37> In addition to these direct obstacles that states can impose on the Title IV system of tradeable permits, these measures also distort the market for permits and increase the costs of regulatory compliance which would undermine the proposed simplicity and low enforcement cost. <38> 11. Type of Habitat: TEMPerate D. TRADE Clusters 12. Type of Measure: Regulatory Standard [REGSTD] The 1990 CAAA establish many regulatory standards for numerous pollutants. The methods of implementation range from the outlaw of various ozone depleting chemicals early in the next century to the market mechanism of tradeable pollution permits for SO2 under Title IV and provision for greater citizen legal redress. 13. Direct vs. Indirect Impacts: DIRect 14. Relation of Measure to Environmental Impact a. Directly Related to Product: YES OIL/GAS b. Indirectly Related to Product: YES d. Not Related: YES d. Related to Process: YES Pollution Air The 1990 Clean Air Act will directly effect the environment in numerous ways and indirectly effect the public's use of the air as a life-giving necessity and its impact on public health as well as the industries that pollute the environment and all the employees dependent on those industries for their livelihood. In particular, the high-sulfur coal, pollution abatement equipment, automobile manufacturers, chemical producers, and power generation industries will be significantly affected by this legislation. 15. Trade Product Identification: MANY 16. Economic Data Industry output (pollution abatement): $100 billion/year. <39> This figure only estimates funds spent directly on pollution abatement equipment/processes and do not include cost of regulatory enforcement or other material inputs such as use of higher grade coal or oil that would reduce emissions. $25 billion/year health costs associated with pollution from midwestern coal fired power plants <40> 50,000 deaths per year in the United States <41> It should be noted that these dollar costs do not reflect the myriad associated costs such as higher produce prices, higher health care costs, higher costs for electricity and subsequent competitiveness considerations whether inter-local, inter-state, or inter-national. The National Acid Precipitation Assessment Program concluded in its 1987 report that current levels of ozone were reducing cotton and soybean crop yields by approximately 7 percent and reducing alfalfa yields by more than 30 percent. It estimated total crop losses at between five and ten percent of production representing economic losses of $5.4 billion. <42> Ozone, one of the components of air pollution, is responsible for 90 percent or more of pollution caused crop damage in the United States. It affects major crops such as corn, soybeans, wheat, cotton, grain sorghum, and barley. Estimates indicate that a 25 percent reduction in current ambient ozone level would result in $1.71 billion annual increase in crop production and 40 percent reduction would yield a $2.52 billion increase in annual crop production. <43> 17. Impact of Measure on Trade Competitiveness: LOW The main operative provisions of the 1990 CAAA deal with domestic power generation and vehicular pollution. The emissions requirements for American automobiles are more stringent than in many countries with some European exceptions. American owned overseas production facilities may shield manufacturers from incurring the costs of such equipment for vehicles destined for countries without similar environmental regulations. Power generation is predominantly produced and consumed domestically and not subject to international competition. Chemical companies may be affected as various chemicals are phased out although these firms also have the ability to shift production offshore in order to sidestep EPA regulatory efforts. Since power is primarily produced and consumed domestically, there is little trade in which to be competitive. Metal smelters are another big polluter that will be affected by this legislation. Many industrialized countries either have or are considering methods of attaining standards at least comparable to US standards. There are threats posed by growing Third World producers such as China and India that do not have significant environmental regulation to contend with. Pollution's impact on crops (as per #16, above) raises the price of affected crops and thereby hurts competitiveness. That estimate is based on "farmed" crops, not timber which is a major industry that is clearly affected by forest loss and damage due to air pollution and resulting acid deposition. All the costs of pollution would indicate a significant impact on trade competitiveness. Research for this paper uncovered no information specific to trade competitiveness or specifics of how trade fluctuates because of pollution and abatement efforts. It is abundantly clear, however, that the large costs associated with pollution must have some impact on trade. Furthermore, there is a global trend to reduce pollution, particularly among industrialized nations. Given the continuation of that trend, pollution abatement is not a question of "whether or not" but of when. American leadership in pollution abatement and control is becoming a highly marketable item in Europe (which is $50 billion market for pollution control <44>) as it heads for unification and similar standards throughout the European Union. In the pollution abatement industry, the CAAA of 1990 would actually seem to promote trade competitiveness as American firms are encouraged to develop more efficient means of controlling and reducing pollution. 18. 18. Industry: OIL/GAS This legislation will obviously have far reaching impacts on numerous industries including COAL, METAL, PRIMET, OILGAS, UTIL, CHEMICAL, AUTO, FOOD, PAPER, TIMBER, TOURISM, and HEALTH industries. 19. Exporter and Importer: MANY and USA V. ENVIRONMENT Clusters 20. Environmental Problem Type: Pollution Air Air pollution affects habitats, biodiversity loss (particularly aquatic species in acidified aquifers), air pollution sinks and waste products, global warming and ozone depletion. 21. 21. Species Information 22. Impact and Effect: HIGH and REGULatory 23. Urgency and Lifetime: LOW and 100s of years 24. Substitutes: Alternative energy Lower sulfur coal, non-fossil fuels, new fossil/non-fossil fuel mixtures, and improved processes can all help reduce emissions. 25. Culture: YES American culture and society is "dependent" on vehicles that produce substantial pollution as well as on numerous industrial processes - notably electric power generation. It has been argued that the best way to reduce pollution is for people to simply use fewer polluting products/services/resources. However, Americans seem very reluctant to reduce their energy consumption patterns without rigorous encouragement or enforcement which rapidly becomes a "freedom" oriented issue perceived to be at odds with national priorities and important personal rights. Consequently, legislation that directly controls people's consumption patterns is politically unrealistic prior to a major shift in public attitudes as well as potentially unconstitutional. 26. Human Rights: NO 27. Trans-Boundary Issues: YES 28. Relevant Literature Anderson, Joshua P. and Howitt, Arnold M. "Clean Air Act SIPs, Sanctions, and Conformity." Transportation Quarterly 49/3 (Summer 1995): 67-79. Bertram, Geoffrey. "Tradeable Emission Permits and the Control of Greenhouse Gases." The Journal of Development Studies 28/3 (April 1992): 423-446. Bryner, Gary C. Blue Skies, Green Politics: The Clean Air Act of 1990. Washington DC: Congressional Quarterly Press, 1993. Cookson, Clive. "Scientists Alarmed by Fall in Male Fertility." Financial Times (February 13, 1996): A22. Demiral, Sezai. Pollution Control and the Pattern of Trade: Germany and the United States. New York: Garland Publishing, 1990. Godish, Thad. Air Quality, second edition. Chelsea, Michigan: Lewis Publishers, 1991. Gore, Al. Earth in the Balance: Ecology and the Human Spirit. New York: Penguin Books, 1993. Lee, Gary. "Compromising on Clean Air Act." Washington Post (February 21, 1996): A1, A4. Mostaghel, Deborah M. "State Reactions to the Trading of Emissions Allowances Under Title IV of the Clean Air Act Amendments of 1990." Boston College Environmental Affairs Law Review 22/2 (Winter 1995): 201-224. Pearce, David W. and Turner, R. Kerry. Economics of Natural Resources and the Environment. Baltimore: Johns Hopkins University Press, 1990. Postel, Sandra and Flavin, Christopher. "Reshaping the Global Economy (Chapter 10)." State of the World 1991. New York: W.W. Norton and Company, 1991. Sheridan, John H. "The New Economics of Clean Air." Industry Week (July 6, 1992): 57-58. Vig, Norman J. and Kraft, Michael E. Environmental Policy in the 1990s, second edition. Washington DC: Congressional Quarterly Press, 1994. Webster, David B. "The Free Market for Clean Air." Business and Society Review (Summer 1994): 34-37. References <1> Gary C. Bryner. Blue Skies, Green Politics: The Clean Air Act of 1990 (Washington DC: Congressional Quarterly Press, 1993), 42-44. <2> Thad Godish. Air Quality, second edition. (Chelsea, Michigan: Lewis Publishers, 1991), 131. <3> David B. Webster, "The Free Market for Clean Air," Business and Society Review (Summer 1994), 34-35. <4> Clive Cookson, "Scientists Alarmed by Fall in Male Fertility," Financial Times (February 13, 1996), A22. <5> Godish. op. cit. 247. <6> Ibid. <7> Ibid. <8> Ibid, 248. <9> Bryner. op. cit. 83-84. <10> Geoffrey Bertram, "Tradeable Emission Permits and the Control of Greenhouse Gases," The Journal of Development Studies 28/3 (April 1992), 434-435. <11> Godish. op. cit. 243. <12> Sezai Demiral. Pollution Control and the Pattern of Trade: Germany and the United States (New York: Garland Publishing, 1990), 96-97. <13> Ibid, 97. <14> Ibid, 100. <15> Sandra Postel and Christopher Flavin, "Reshaping the Global Economy (Chapter 10)," State of the World 1991 (New York: W.W. Norton and Company, 1991), 181. <16> Bertram. op. cit. 435. <17> Ibid, 434. <18> Bryner. op. cit. 62. <19> David W. Pearce and R. Kerry Turner. Economics of Natural Resources and the Environment (Baltimore: Johns Hopkins University Press, 1990), 89-90. <20> Bryner. op. cit. 124-125. <21> Godish. op. cit. 264. <22> Bryner. op. cit. 125. <23> Godish. op. cit. 258. <24> Bryner. op. cit. 126. <25> Ibid, 126-127. <26> Webster. op. cit. 35. <27> John H. Sheridan and Michael E. Kraft, "The New Economics of Clean Air," Industry Week (July 6, 1992), 58. <28> Webster. op. cit. 36. <29> Bryner. op. cit. 127. <30> Ibid. <31> Godish. op. cit. 266. <32> Gary Lee, "Compromising on Clean Air Act," Washington Post (February 21, 1996), A4. <33> Bryner. op. cit. 127. <34> Ibid, 128. <35> Joshua P. Anderson and Arnold M. Howitt, "Clean Air Act SIPs, Sanctions, and Conformity," Transportation Quarterly (Summer 1995, 49/3), 77-78. <35> Deborah M. Mostaghel, "State Reactions to the Trading of Emissions Allowances Under Title IV of the Clean Air Act Amendments of 1990," Boston College Environmental Affairs Law Review (Winter 1995), 204. <36> Ibid, 215-216. <37> Ibid, 220-221. <38> Bryner. op. cit. 9. <39> Webster. op. cit. 34-35. <40> World Watch Institute. Cleaning the Air: A Global Agenda (World Watch Paper #94) (New York: W.W. Norton, 1994) 12. <41> Ibid, 22. <42> Godish, op. cit. 198. <43> Catherine Vial, "Why EC Environmental Policy Will Affect American Business," Business America (March 8, 1993) 27.

Go to Americas Cases

Go to Super Page

Last revised: April 30, 1996