Federally Mandated but Locally Administered: Political Differences in Air Pollution Abatement Under the Clean Air Act

Abstract

In the US, much of the authority to administer the Clean Air Act (CAA) is delegated to indi-vidual states. States are responsible primarily for the administration of the National Ambient Air Quality Standards (NAAQS), which impose technological and other requirements on stationary emission sources located in areas in “nonattainment” with the standards. In this paper, we examine the differential state level implementation of the CAA’s technological requirements across political regimes. We use a regression discontinuity design to estimate the effect of each state’s political leadership on the expenditures and types of new air pollution abatement technology at electric utili-ties. We find that the political affiliation of a state’s governor has no effect on either outcome in ar-eas that meet the NAAQS. However, in nonattainment areas, Republican gubernatorial control de-creases utilities’ new air pollution abatement capital expenditures and their probability of installing “first-best” nitrogen oxide abatement technology, relative to utilities in states with a Democratic governor. Finally, we present evidence that the additional costs of abatement technology adoption at utilities in nonattainment areas with a Democratic governor exceed the additional health benefits of decreased NOx emissions in these areas.