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Compliance could cost industry up to $390 million annually but save 4,200 lives a year, agency says

WASHINGTON—The Biden administration on Friday proposed tougher rules on airborne soot produced by factories and vehicles, saying the measures would save 4,200 lives annually and billions of dollars in healthcare costs when fully implemented in 2032.

The proposal from the Environmental Protection Agency targets tiny particles of airborne pollutants that can penetrate the lungs and cause human health effects, including asthma, heart attacks and premature death.

EPA officials said compliance with the new rules could cost industry up to $390 million annually beginning in 2032.

“This proposal will help ensure that all communities, especially the most vulnerable among us, are protected from exposure to harmful pollution,” EPA Administrator Michael Regan said. “This proposal to deliver stronger health protections against particulate matter is grounded in the best available science.”

The proposal now goes out for public comment for the next 60 days, and the EPA said it would issue its final soot rule in 2024.

Agency officials came up with their estimates of lives saved and health benefits by reviewing studies on the health effects of air pollution that were compiled in a 328-page scientific assessment and a 685-page policy assessment, both of which were released in May 2022.

The EPA estimated that, when fully implemented in 2032, the tougher air measures will result in savings of an estimated $43 billion a year because of fewer trips to hospital emergency rooms, less money spent on medication, fewer lost work days and fewer people prematurely dying.

Mr. Regan’s announcement came after EPA scientists reviewed years of scientific studies and reversed the decision by his predecessor in the Trump administration, Andrew Wheeler, who in 2020 decided to keep standards that had been in place since 2012.

Chemical, oil and other industry groups that will pay the cost of implementing the higher standards had argued for keeping particulate standards at existing levels.

“The current particulate matter standards are effective and will continue to build on significant improvements in air quality while protecting public health,” said Will Hupman, vice president of downstream policy at the American Petroleum Institute.

The U.S. Chamber of Commerce said the new standard will be difficult to achieve.

“The United States has some of the best air quality in the world, thanks to steady reductions in contributors to particulate matter emissions over the last decade—some by over 75 percent,” said Chad Whiteman, vice president of environment and regulatory Affairs at the Chamber’s Global Energy Institute.

Environmentalists and public-health advocates supported tougher standards, saying they would benefit children with asthma, the elderly and minority communities, which are disproportionately affected by soot.

Susan Anenberg, associate professor of public health at George Washington University, said air quality in the U.S. has improved significantly since the passage of the Clean Air Act in 1990, “but we still are dealing with air pollution levels that are unhealthy to breathe,” she said. “We’re still seeing associations with premature mortality, with heart disease, with respiratory disease and with lung cancer.”

The Environmental Defense Fund, a New York-based environmental group, also supported the EPA action. The group commissioned a report last year that found that an annual standard of 8 micrograms per cubic meter prevents more than four times as many premature deaths as a standard of 10 micrograms per cubic meter.

The standard by itself doesn’t force any polluter to shut down, but the EPA and state regulators could use it as the basis for other rules that target pollution from specific sources.

The administration proposal would require states, counties and tribal governments to meet a stricter air quality standard for airborne particles that are smaller than 2.5 microns, about the size of a human hair.

The agency is proposing to lower the current annual standard of 12 micrograms of particulate matter per cubic meter of air to somewhere between 9 and 10 micrograms per cubic meter depending on the final rule, the agency said.

Particulate matter is emitted directly from power plants, smokestacks, construction sites and farmers’ fields. It also forms in the atmosphere when emissions of sulfur dioxide and nitrogen oxides from factories and vehicle tailpipes react with sunlight to form nitrate and sulfate particles. Naturally occurring sources of particulate matter include wildfires, windblown dust and salt spray from the ocean.

Under the proposal unveiled Friday, 112 counties that currently meet the National Ambient Air Quality Standards for fine particulates would be out of compliance and forced to make changes, such as reducing emissions from factories or requiring cleaner vehicles.

In December 2022, the EPA announced tougher emissions standards for heavy duty vehicles for engine manufacturers to lower nitrogen-oxide emissions from tractor-trailer-size trucks, as well as other delivery trucks, cement mixers and trash trucks.

The standards require manufacturers to create gasoline- and diesel-engine models with better exhaust systems. Industry officials said that could significantly raise the cost of new vehicles, which could lead older vehicles to stay on the roads longer, running counter to the administration’s public-health goals.

The EPA is also proposing tougher emissions standards for power plants and oil-and-gas operations. Taken together, these new measures are expected to significantly cut the amount of particulates that cause a number of health effects, according to Joseph Goffman, principal deputy assistant administrator in the EPA’s Office of Air and Radiation.

“PM is the granddaddy pollutant because, frankly, it’s so dangerous to public health and it’s so pervasive,” Mr. Goffman said. “So almost anytime you are intervening to reduce a pollutant the chances are pretty high that you will be capturing some particle pollution as well.”

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The industry is trying to come back after a tough year that brought some buzzy darlings back down to earth.

Wall Street has always been a roller coaster — but the ups and downs have all become supersized, leaving fashion to barrel into 2023 with more than a little stock market whiplash.

Investors are ceaselessly gauging the prospects of everything, taking in the economy, the consumer, new products, strategy and performance and boiling it down to a single data point — the all-important stock price.

And while ups and downs are expected as individual companies and sectors surge ahead or as the economy cools, something more is going on.

The investment crowd fundamentally reset expectations for the consumer sector in 2022 as e-commerce growth slowed, inflation and interest rates skyrocketed and recession loomed. Last year also had its optical challenges and the quarterly financial reports often paled in comparison with the go-go days of 2021, when the world was first reemerging from COVID-19.

The Dow Jones Industrial Average dropped 8.8 percent in 2022, but fashion fell further and faster.

A WWD study of 104 global apparel, luxury, retail and beauty companies found that only 26 firms in the space beat the Dow last year. (E.l.f. Beauty Inc. led the way, rising 66.5 percent, while middle America department store standby Dillard’s Inc. gained 38.7 percent).

Luxury also held onto its pandemic gains and continued to power through even the economic worries, but 2022 was a year defined by the decliners.

Among those getting hit the hardest were some of the buzziest names of yesteryear that were either new to Wall Street or pushing newer business models that investors are still trying to get their heads around.

Companies losing more than 70 percent of their value last year included resale specialist ThredUp Inc., brand house A.k.a Brands Holding Corp., sneaker-maker to the tech crowd Allbirds, social media-focused beauty company Olaplex Holdings Inc. and direct-to-consumer eyewear pioneer Warby Parker Inc.

That counts as a rude awakening for the great 2021 wave of IPOs and leaves the position of some of the newcomers in doubt.

“Darlings fall quickly and the first step’s a doozy,” said Matthew Katz, managing partner at SSA & Co.

That reflects the flight of investors from the buzzy new idea to the more tried and true business model — and it seems likely that investors will continue to seek out safety.

“We’re in a period of uncertainty,” Katz said. “And some would say it’s become more and more certain that there’s trouble ahead.”

So companies still working on their operations might get caught in the squeeze.

“Where there’s unfinished business, inefficiencies are going to get magnified in a period of slowdown,” Katz said.

Resale platforms, for instance, caught the imagination of investors quickly, but now have to prove themselves as more brands get into the game and the sector evolves.

oshmark Inc., which was valued at more than $7.4 billion after it went public in January 2021, took a $1.2 billion buyout from Naver in October and shares of both The RealReal Inc. and ThredUp are struggling.

Jessica Ramírez, senior research analyst at Jane Hali & Associates, said, “When we look to resale … we were also very surprised how quickly Wall Street adapted to it, which we almost thought didn’t make sense. It usually takes [Wall Street] longer to warm up to some of these ideas.”

Turns out, investors were quick to fall in love in 2021 and quick to move on.

Many companies that had been building in private hands failed to live up to the public market’s big expectations.

Allbrids was another one.

Ramírez said the brand “has a glass ceiling to the excitement it can cause and the stir it can cause.”

The brand is in step, even leading in the sustainability movement, but is still finding its footing.

“There’s a good cause to it, but the shoe isn’t attractive,” Ramírez said. “You need to have good product that’s attractive and have a good story behind that.”

It’s steady businesses and proven models that are winning on Wall Street today, like offpricers Ross Stores Inc. and The TJX Cos. Inc., which have been feasting on the industry’s excess inventory after all the COVID-19 supply chain backups.

“Ross and TJX have really taken advantage of what’s out there to buy and have killed it with their buys,” Ramírez said.

Dick’s Sporting Goods Inc. has also proven its mettle.

“Product has really taken off there — private label and the relationships that they’re building with all their vendors have really increased,” said Ramírez, noting the retailer is also taking advantage of the continuing rise in outdoor activities. “They’re very much in tune and they’re running a pretty good business.”

Dick’s, TJX and Ross not only beat the market, but posted modest stock gains last year — a time when small gains counted as big wins.

Much of the trouble over the past year came from changes in the consumer market that were bigger than any one brand.

Lower-end shoppers started having to choose between fashion and food as prices rose. More consumers went back to stores, slowing e-commerce growth. And Russian president Vladimir Putin’s invasion of Ukraine upended the geopolitical calculus, threatened Europe and prompted many companies to close up shop in the once-promising Russian market.

It might take similarly broad changes to help turn retail back around this year — but in the second half, when comparisons ease again.

John Kernan, an analyst at Cowen, said supply chain cost deflation and more normal inventory levels would drive sentiment in the second half.

“We favor cheap stocks vs. history given the several hundred basis points of gross margin relief from lower ocean container rates and air freight along with the normalization of sector inventory levels and markdowns into the second half,” Kernan said. “Balancing supply chain risk, inventory turn and gross margin is a source of value creation in the sector.”

That is a very back-to-basics path back to Wall Street success after a very rocky year for fashion.