Like an earthquake ready to rumble along a California fault, the coming extension of the 20-year-old Clean Air Act is about to shake up some parts of the American economy.
It is difficult to say for sure what the impact will be as the nation begins to pay the price for intensifying the cleanup of dangerous chemicals and acids from its air. For the most part, pictures will just sway on the walls. But in certain pockets of the economy, buildings are likely to come crashing down with some workers' lives changed forever.
There is general agreement among economists that strengthening the Clean Air Act will pose no significant threat to the overall U.S. economy, which this year will produce goods and services worth well over $5 trillion. After all, the United States already spends some $90 billion a year controlling pollution. And the Bush administration is determined that the new legislation, once the House and Senate work out their differences, should add no more than $22 billion to that figure. Environmental groups say the costs may be significantly less.
Still, such cost estimates are extremely imprecise and in some ways understate the likely impact the legislation will have on scattered companies, communities and individuals. Few bills out of Congress carry with them the potential to cut through so many industries with new rules that will change the way products are manufactured, where they are made, by whom and with what materials.
Among those that will pay the heaviest price are the oil, auto, steel, chemical, dry cleaning, paint and furniture industries and electric utilities dependent on high-sulfur coal. In certain communities, the changes brought on by the legislation could be devastating.
The cost of compliance for some factories will be so high that plant closings could likely result. Some mines producing environmentally damaging high-sulfur coal used to produce electricity will close in West Virginia and Ohio -- and in parts of those states where there are few other jobs paying comparable wages.
In other cases, American companies will find it easier and cheaper to import products rather than meet stringent new pollution standards.
The effect in some cases might be similar to that on American factories in the 1980s when a soaring U.S. dollar made their products too expensive to sell abroad. Most workers found new jobs, but some workers' incomes never rebounded, according to Robert Z. Lawrence of the Brookings Institution.
American consumers should encounter changes, too. The cost of driving a car, getting a suit cleaned, turning on the lights and painting a house probably will go up. While much of the actual cost of compliance will be paid initially by industry, consumers ultimately will pay the bill that comes with making the air cleaner.
It is impossible to predict the precise cost that will be incurred as the nation tries to reduce acid rain in the Northeast, slash emissions of toxic, often cancer-causing substances and cut smog in the nation's cities. In some cases, there is not even a clear sense of whether the proposed standards can be met at all, or whether the standards will be enforced if the costs of compliance are too high. After all, the rules have on occasion been relaxed under the present Clean Air Act, and few cities have ever had to pay the specified penalties for failing to meet the law's standards.
There will be positive entries on the balance sheet to offset some of the costs, but those benefits are equally difficult to calculate. As a whole, the nation should expect to see lower health costs, reduced damage to buildings and streams and forests where the effects of acid rain have been etched, a boost to industries that produce cleaner burning fuel and jobs created by pollution control.
The money spent to control pollution "doesn't go down a rat hole," said David Doniger, senior staff attorney with the Natural Resources Defense Fund. "It gets spent on goods and services that produce pollution control."
Nevertheless, most of the debate in Congress has focused not on whether the Clean Air Act should be strengthened but on what the costs are and who will bear them.
"What is notable," Frank Press, president of the National Academy of Sciences, said last week, "is that this year they argued mainly over questions of economics and equity, rather than about science. Who should pay for scrubbers in Ohio? What should be done about mountain resorts in New England whose forests are harmed by acid rain? These are political questions. We may not like the economic implications of some of the answers."
When President Bush first proposed that the Clean Air Act be strengthened, the Environmental Protection Agency admitted that it had no firm idea how about one-fourth of the required reductions would be accomplished, much less their cost.
But the administration says now that the estimated cost should peak at $22 billion -- calculated in terms of dollars with today's purchasing power -- in 2005 when the economy should be considerably larger than it is today. At that level, the cost is quite manageable, administration officials maintain.
"Unless we are seriously wrong, there should not be" any major impact on the overall economy, said Richard L. Schmalensee, a member of the president's Council of Economic Advisers who is partially overseeing compliance costs for the legislation.
Schmalensee sees the impact on productivity, not jobs: Some workers could find themselves producing fewer goods because their employers are spending more money on pollution control equipment instead of new machines to boost productivity.
The bottom line, said Schmalensee, is that workers will be spending time doing things that benefit the environment but don't necessarily show up on the economic scorecard.
Nevertheless, additional costs will have to be borne -- either by consumers who will pay more for the things they buy, workers whose real wages will be lowered if the more costly products cannot be sold or, possibly, business owners whose profits may be reduced.
A business lobbying group, the Clean Air Working Group, estimates that the legislation that passed the Senate with the president's blessing will cost not $22 billion a year but $45 billion. The key difference in costs was the result of assuming that a number of U.S. cities' air would remain dirty enough to require extremely costly cleanup measures to bring them into compliance.
"There will be investments hither and yon throughout the economy, in autos, oil, utilities and so on," Schmalensee said. Equipment used to reduce plant emissions "are fairly costly little items. There will be some tooling investments in automobiles ... a lot of this stuff is capital intensive."
Out of the thousands of individual factories facing tighter standards, some undoubtedly would close rather than invest in expensive new equipment.
The steel industry, for example, has warned that proposed restrictions on plant emissions could force it to stop making coke from coal in the United States. If the firms can't make coke, a key ingredient in the steelmaking process, they would have to import it or go out of business, the industry argued.
Indeed, the issue of cooking hard coal in huge ovens to make coke is an example of a technological problem no one now knows how to solve. No one knows how to make steel without coke, though in theory it might be done, and no one knows how to make coke without violating the proposed air pollution standards. And if a new technological fix were found, no one has any idea what it would add to the price of steel.
Conceiveably, such a new technology might even be cheaper than today's steelmaking process. Industry experts believe that is unlikely, but possible.
Cleaner Car Exhaust In the auto industry, a large part of the added economic burden associated with the legislation involves making car exhaust cleaner -- either by making engines burn more cleanly or by switching to new fuels. Recently, tests of a new type of catalytic converter similar to those now in use indicate there might be a far cheaper way to meet the new standards without resorting to alternative fuels. Again, no one knows whether the new catalytic converter will do the trick.
Such uncertainties have caused the administration and even some environmental groups to insist that the version of the Clean Air Act that Congress passes set standards but not specify how they should be met.
Just as the administration wants to leave industry as much flexibility as possible to reduce air pollution at the least possible cost, it also wants to avoid providing special benefits for workers, companies or communities that might suffer from the law's passage. In particular, Schmalensee said, the administration opposed an amendment added in the House that would pay extra benefits to workers who lost their jobs because of the law. "That would have a terrible precedential effect" that could apply to military base closings or just about any federal action that affected the economy, he warned.
Maybe symmetrical treatment would be in order, he joked: "My response to such proposals is to suggest that we should place a surtax on anyone who gets a job as the result of the law."
Tomorrow in Washington Business: The Clean Air Act's effect on utilities will be felt by households and businesses alike.