What Happens if California Loses Its Clean Air Waiver?

August 16, 2019 Updated: August 16, 2019

The Donald Trump administration has proposed a series of rollbacks to federal environmental rules, including greenhouse gas and fuel economy standards.

In addition, the Environmental Protection Agency (EPA) has been studying the possibility of revoking a waiver that gives California the privilege to impose its own, stricter standards. If the federal government decides to go ahead with the waiver withdrawal, certain infrastructure projects in the Golden State could be delayed. The result, California officials say, could be detrimental to the economy.

According to California Air Resources Board chair Mary Nichols, if the waiver is revoked and the state has to pause ongoing projects, the state will sue.

“Where we’re going to start is litigating,” Nichols told CalMatters. “And we will not yield on our standards. So we will be enforcing our standards while that goes on.”

The main concern, she added, is that the Trump administration may decide to pull federal funding due to these delays. “We would be unable to continue working on a bunch of different projects that are designed to improve traffic flow—because we wouldn’t have the federal funds.”

With 93 percent of the Golden State’s population found to be living in areas that doesn’t meet federal clean air standards, according to the state’s air board, the way California officials found to follow the state’s own strict clean car rules was to create its own system to calculate future emissions.

The model works by factoring in the belief that cars roaming California roads will be cleaner in the future. But without a waiver, the method wouldn’t work, and the state would be forced to rethink how it approaches certain projects.

Southern California planning and modal programs manager with the California Department of Transportation Chris Schmidt told CalMatters, this would “[put] a big monkey wrench into how we deliver transportation projects,” as federal cash would stop coming thanks to use-it or lose-it provisions.

“The ramifications are pretty dire,” Schmidt said. “You’re talking about many, many projects, and we’re talking about lots and lots of money.”

But this money comes from taxpayers. And as California struggles with budgetary issues, it’s no wonder that officials fear losing federal tax-backed dollars.

“Federal funding for transportation is an important revenue source for the states, including California,” William F. Shughart II, the research director and senior fellow at the California-based Independent Institute told The Epoch Times. “California probably would not care about the change in EPA’s clean air standards if so much money were not at stake.”

To the economist, California’s concerns should prompt the state to address other budgetary concerns before it looks to the feds for help.

“Like most states and the federal government, the fundamental problem is not inadequate own-source revenue, but profligate spending. California needs to get its fiscal house in order by getting the expenditure side of its budget under control,” he said.

For a state under the firm control of Democratic officials, Shughart explained, being independent from the federal government should be particularly appealing. After all, nothing guarantees that Trump won’t stay in the White House for another four years.

“Federal funding is a lever that Washington frequently uses to influence policies at the state level. It always comes with ‘strings’ attached,” he explained.

“[Trump already] used that lever recently to force public colleges and universities to respect freedom of speech.”

With federal funding for transportation in jeopardy, he added, state officials believe the president’s threat is credible. But what about residents?

“Unfortunately, the states treat federal dollars like ‘free money,’ allowing them to expand spending without raising taxes on their own citizens,” Shughart explained.

Because the state ends up relying on this cash, he continued, “citizens come to believe that the cost of the government programs from which they benefit is less than it actually is.” In the end, the belief that state-run programs are affordable leads them to “demand more government programs than they wouldn’t want if they had to pay the full cost— a version of something that public finance economists call ‘fiscal illusion.’”

For California to live up to its promise of meeting stricter clean air standards than the rest of the country, Shughart told The Epoch Times, Californians “should be willing to pay for it.”

“Air quality has been improving nationwide for decades, largely because of public utilities switching from coal to natural gas for generating electricity. Gasoline-powered engines also have become substantially cleaner over time because of newer technologies. So, further reductions in tailpipe emissions and improvements in air quality will be more costly to achieve than in the past.”