Washington: EPA's Life of Reilly

On June 12, President Bush unveiled a sweeping package of revisions to the Clean Air Act, incorporating an approach long favored by free-market economists—setting emissions goals but allowing polluters to decide how to meet the goals or even to trade pollution "permits." The idea made its way into the president's acid rain policy, but on automobile emissions the market approach lost out to a more dictatorial plan, including an unprecedented mandate on Detroit to produce by 1997 more than one million cars that use fuels other than gasoline.

Michael Boskin, chairman of the president's Council of Economic Advisers, had argued that a market approach to auto pollution would lead to more efficient emissions control and would allow for innovation by industry. Boskin was joined by White House Chief of Staff John Sununu and by officials from Energy, Transportation, and the Office of Management and Budget. But in the end, the dictatorial approach won out—championed by White House Counsel Boyden Gray (an alternative-fuel aficionado who drives a methanol-powered Chevrolet) and by William Reilly, head of the Environmental Protection Agency.

That Reilly was the chief advocate of heavy-handed regulation in the clean air debate (on most items, Gray sided with the free marketeers) came as a surprise to many officials and policy analysts. Reilly came to the EPA from a 15-year stint as head of the Conservation Foundation, an environmentalist group known more for negotiation than for confrontation. Under his leadership, the foundation specialized in bringing together disparate factions—environmental activists, business people, and government officials—to hammer out compromises on such issues as toxic waste cleanup and wetlands protection.

When he was appointed, many analysts thought that Reilly would advance the flexible, efficient environmentalism typified by tradable permits and "debt-for-nature swaps." Environmental activists complained that Reilly's approach, which he described as "sensitive to economics," lacked the vigilance needed to police the environment. "It is the Environmental Protection Agency, not the Environmental Negotiation Agency," David Baker, political director for Friends of the Earth Inc., groused in early January.

But in the first few months of Reilly's tenure at EPA, radical environmentalist groups have had little to complain about. The agency has taken a number of forceful, unilateral actions to assert its control over resource policy, public health, and air quality. These include:

• A March 24 decision to delay, with clear intention to veto, the proposed Two Forks Dam project in Colorado, a $1-billion locally financed reservoir that would supply water to the Denver metropolitan area. After eight years of environmental impact studies (costing local governments there about $40 million) and negotiations among a myriad of state and federal agencies, Reilly overruled his own regional administrator's go-ahead, citing the need to protect the area's "beautiful free-flowing trout-stream" and habitat for the endangered whooping crane.

• A May announcement that the EPA plans to ban the use of Alar, an apple preservative that some laboratory tests have found to be carcinogenic. The subject of a public relations blitz by environmentalists and actress Meryl Streep, Alar actually poses about the same risk of causing cancer as does tap water, according to University of California biochemist Bruce Ames. (Beer is about 3,000 times more carcinogenic.)

• A July decision to ban virtually all products using asbestos, a carcinogen common in such items as brake pads, roofing supplies, and cement pipes. The asbestos industry contends that the current uses of the material do not threaten public health, but in any event substitutes are likely to be less heat-resistant and more costly—up to five or six times the cost of asbestos in automobile braking systems, according to General Motors. The EPA estimates the cost of the ban to be about $500 million, and Reilly himself has stated that the ban will save 200 lives at most over 13 years.

Reilly got most of what he wanted in the president's clean air package as well. The revisions would extend California's draconian hydrocarbon standards nationwide and require gas stations to install equipment to reduce vapor emissions—both steps that Reilly had included in his original proposal to Bush. And although the president called for an EPA study of how market incentives could be applied to urban smog problems, Reilly says that the market approach is "very much a second track."

The drastic action he wants on urban smog, however, hardly seems justified by the facts: Levels of sulfur dioxide, carbon monoxide, ozone, and nitrogen oxide have all decreased since 1975. And breathing even Southern California smog, says Ames, is only as risky as smoking a pack of cigarettes a year.

One reason Reilly gives for opposing flexibility is that Congress won't accept anything less than mandatory controls. But Kent Jeffries, an environmental policy analyst for the Heritage Foundation, says his impression from talking to administration officials is that the pressure Congress and EPA careerists have put on Reilly has turned well-intentioned policies into overreaching mandates. "They [the Bush team] seem to be just holding a wet finger in the air, without asking the technical questions," he says.

In the alternative fuels case, a host of questions remain unanswered. The plan would essentially mandate the development of new technologies and designs, setting a target date (about the year 2000). But problems with methanol and ethanol vehicles may not be solved so quickly. Both fuels cost a lot more than gasoline while delivering only about half the fuel efficiency. Although ethanol use would reduce some forms of toxic emissions, it does produce organic compounds that could add to urban smog.

And methanol poses significant health and safety risks: Unlike gasoline, methanol is water soluble, putting groundwater at greater risk and making spills more difficult to contain. It emits formaldehyde, which some studies show is a carcinogen. It's about 25 times as toxic as gasoline and is more easily absorbed through the skin. And its flame is nearly invisible, making accidents more likely and firefighting more difficult.

Despite these facts, the alternative fuels lobby wields great power. Farm state representatives cheer loudly for ethanol, which can be made from corn and sugar cane. And a major agribusiness that develops and markets alternative fuels, the Archer Daniels Midland Co., spends a lot of money on Capitol Hill and sponsors many of the Sunday morning news shows. Methanol has powerful boosters as well—such as Boyden Gray. The pressures from both the alternative fuels lobby and EPA lawyers and engineers may have drowned out economic arguments at Reilly's EPA, Jeffries says.

Another explanation for the EPA rampage is an all-too-familiar one: Power corrupts. Surely the opportunity to direct a $5-billion, 15,000-employee agency in a war against pollution is a heady and seductive one. At a Washington Post lunch early this year, Reilly admitted that while he came close to turning down the EPA job, after a couple of weeks he relished the power to get things done and asked himself, "God, how did I nearly not do this?"

During the Alar scare, Reilly told Post staffers, he became frustrated with his duty under the pesticide law to balance health risks against the cost, in price and availability, to the food supply. "So what if we're overturned in court?" he said he told advisers, after suggesting that the EPA just ban Alar. "Why not do it today?"

Whatever the reason, Reilly has not become the advocate for flexibility and economic thinking at the EPA that some expected. Rather, he has taken on a high-profile, activist role that seems likely to attract toward Washington more power over environmental policy—even though the threats posed from urban smog and other forms of pollution differ greatly from city to city, making federal mandates cumbersome and inefficient.

Based on his record so far, Reilly can be counted on to give traditional big-government environmentalism a voice in administration policy. He plans, for example, to upgrade the agency's efforts on global bugaboos such as the greenhouse effect, and he seeks an increase in federal fuel-efficiency standards, which the Competitive Enterprise Institute and other analysts say will sacrifice auto safety.

But all is not lost. Boskin, Sununu, and others also have Bush's ear. Provided the market incentives for acid rain control survive the legislative process, the Bush administration's clean air package will still have broken some new and exciting ground—no thanks to William Reilly.

Contributing Editor John Hood is a reporter-researcher at The New Republic.