C /.c^^'Ar 5?(o/^ TOWARD REGULATORY REASONADLENESS X. ^< ""''%. \ ^C ^^ATES O^ O J U.S. DEPARTMENT OF COMMERCE Regulatory Policy Committee TOWARD REGULATORY REASONABLENESS U.S. DEPARTMENT OF COMMERCE Elliot L. Richardson, Secretary .^<°?«'v. a O \ January 13, 1977 TOVJARD REGULATORY REASONABLENESS Contents Page INTRODUCTION Elliot L. Richardson 1 I. TOWARD REGULATORY REASONABLENESS 9 A. "BIG GOVERNMENT" IN PERSPECTIVE; 10 AND THE LIMITS OF "CORPORATE RESPONSIBILITY" B. REGULATORY INTERVENTION: BALANCING 34 COSTS AND BENEFITS NOW C. DIRECTIONS FOR CHANGE: FASHIONING 12 3 A BALANCED FUTURE II. APPENDICES A. COPPER AND PAPER INDUSTRIES: A-1 REGULATORY IMPACT STUDIES B. PROCEDURAL CHANGES TO IMPROVE B-1 THE ENVIRONMENTAL IMPACT STATEMENT PROCESS C. STUDIES ON NONDETERIORATION OF C-1 AIR QUALITY: AN ANNOTATED BIBLIOGRAPHY D. OPPORTUNITIES FOR "PRIVATIZATION": D"! IMPROVING MUNICIPAL AND SOCIAL SERVICES INTRODUCTION In the latter half of 1975 and early 1976, a new catch-phrase for an area of public policy interest seemed to be of emergent general concern: "regulatory reform." That concern has lately seemed to have diminished--lost , with many others, in the shifting swirl of media attention given first to Presidential politics and now to the politics and personalities of transition. In time — indeed, soon--attention will shift again. And "regulatory reform" (under some such heading) , along with other major national issues of substance, will return to a visible position on the national agenda. The legislative calendar virtually assures that this will be the case, with early Congressional action likely on major issues of environmental regulation: most notably, the pending amendments to the Clean Air Act and the Federal Water Pollution Control Act. The character of these amendments promises fundamentally to affect not only the quality of our natural environment but, at least potentially, the pattern of U.S. economic and social development. Even if the legislative calendar did not suggest their likely return to visibility, these issues would be forced upon the national agenda by their inherent importance-- and their inescapable association with the development of modern industrial and "post-industrial" society. When the debate is reopened, one must hope that it may proceed on a more rational basis than when last it was visible — hence, the title of this paper: Toward Regulatory Reasonableness . Indeed, it would be difficult for debate not to be more rational than it has typically been with regard to major regulatory issues . This was impressed upon me particularly by the Clean Air Act debate in the latter portion of the last Congress. As a new Secretary of Commerce, and one who v/as new to this debate, I was somewhat surprised to discover buried in a staff economist's memorandum a bland note that the pending Clean Air Act amendments could mean the end of U.S. economic growth. If any reasonably plausible analysis could support this assertion--as , given certain assumptions, it might — then, at a minimum, it could be said that, as a society, we were misleading ourselves about the nature of the issues before us. For the debate could not properly be cast as a "clean air" debate — as in general it was--when in fact it also involved fundamental issues of economic (and indirectly, of social) development, issues which surely should merit direct and explicit treatment. And if there were a respectable divergence of opinion as to the character of the economic effects which might be involved--as , upon examination, it was clear that there was*--then clearly it was at best unfortunate that, as a society, we would seriously consider such potentially far- reaching legislation without further study. The tendency to proceed dramatically without clearly identifying possible consequences and without an adequate factual base, as suggested by the clean air example, is hardly unique. Nor is it the only respect in which our approach to regulatory policymaking may properly be viewed as irrational. Indeed, it has been obvious that the very tone of the debate has often been excessively emotional, self-righteous, simplistic and ideological. The phrase "regulatory reform" itself has become a codeword, capable in some quarters of engendering immediate excited reaction. * At Appendix C is a review of major studies of the possible effects of Clean Air Act amendments. The phrase, of course, is so vague as to embrace a wide range of interests. (In this respect, "regulatory reasonableness" is hardly better--except that it suggests a less ideological quest.) For some, "reform" has meant tighter governmental regulation and more distant connection between regulators and regulatees; for others--the "de-regulators "--it has meant far looser governmental regulation and greater reliance on the disciplinary forces of the private marketplace. Often the differing would-be reformers have addressed themselves to entirely different substantive problem areas; and it should not have been surprising that their differing procedural recommendations would seem so far apart. Nonetheless, the emergent character of the policy debate (when last it was visible) was increasingly polarized. There were those ostensibly for the "public interest , " e.g. , protection of the environment and the consumer, and those ostensibly for "private interests" — as if these were neatly and simply opposed. The polarization involved a fair degree of apparent anomaly and confusion. Some public interest advocates showed great sensitivity to consumer price effects in areas of traditional economic regulation, but relatively little sensitivity to consumer price effects in areas of environmental regulation; great concern for the regulation of workers' health and safety, but relatively little visible concern for the effects of regulation upon the very existence of workers' jobs. Similarly, private interest advocates showed great positive interest in the application of "deregulatory" principles to environmental health and safety areas--matched, however, by a visible negative interest in deregulating areas of traditional economic regulation, where protected economic interests might have been threatened. But more fundamentally, the presumption that "public" and "private" interests could be neatly separated and opposed was itself--and it remains — a basic confusion. This is particularly problematic in the emergent area of environmental, health and safety regulation. The simple fact is that jobs, prices, health, safety, environmental protection--these are general interests, both public and private. On particular issues, the weighting of concern among these interests may vary among different concerned parties. But it borders on the ridiculous — and it is, in any case, unhelpful — to suggest that one class of concerns or one class of concerned parties might be exclusively representative of "the public interest." The public interest includes interests in jobs and prices and health and safety and environmental protection. It derives from the fact that these interests are all widely shared private interests — which the private marketplace alone cannot adequately serve. The practical point of difficulty is that in a world of limited resources — our world--these general interests are often in competition with one another. And what requires attention is not some drastically oversimplified choice between private and public interest (as if these were perfectly clear) or between market and non-market solutions (as if the alternatives should be so stark) . What requires attention is the need for an improved regulatory policy system--to expose more fully relevant issues, interrelationships and facts; to represent more fairly competing general interests; and to determine more satisfactorily the preferred balance for their resolution. This paper is intended to help focus attention on the need for such systemic reform. It is more concerned with the transcendent issues of process which determine the substantive character of regulations than with individual regulations themselves. The paper concentrates on environmental, health, and safety regulation. That is, it does not treat traditional economic regulation, as in the areas of transportation and energy; nor does it treat a widely irritating problem often associated with regulation, the excessive burden of "red tape" and paperwork. The latter is of less significance in economic terms; but its aggravating characteristics seriously disturb the climate of public sector-private sector relations. However, it is well understood now to be a problem — and steps have been taken to address it through the Commission on Federal Paperwork and through the President's Management Initiatives program. The former, traditional economic regulation, has received a high degree of analytic attention and is relatively well understood intellectually — even if there is not yet political consensus on how best to proceed. The area of environmental, health and safety regulation--which is unquestionably of major economic and social import--is, by contrast, not yet well understood. In part, this is because of inherent scientific and methodological difficulties. But importantly it is because the proliferation of governmental regulatory interventions in this area is largely a recent phenomenon--the very scope of which is not yet even widely appreciated. Direct governmental expenditures in this area, although increasing, remain relatively modest. But the private resources redirected by governmental regulatory action are not modest at all. They are now roughly comparable to direct expenditures for defense procurement, or twice the federal expenditures for education, training, employment and social services. And, one might well suggest that like newly emergent defense programs in the late 1950s and early 1960s, and like emergent social programs in the late 1960s and early 1970s, the recently emergent areas of environmental, health and safety regulation are now in need of improved policy analysis and policy development systems. The paper gives what might be viewed as disproportionate attention to the costs of environmental, health and safety regulation — and less attention to benefits than one might wish. In part, this is because empirical information about benefits remains highly f ragmentary-- a problem which requires systematic attention. In part, it is because assessment of benefits involves difficult problems of value judgment — problems which empirical analysis alone cannot address. And in part, it is because cost information — itself heretofore, and to some extent still, highly inadequate-- is more easily identified. It is important that the costs of regulation be better appreciated--and in this respect the paper makes a useful contribution, synthesizing information not previously brought together. But the relative emphasis given to costs should not in any way be taken to suggest that the current or projected costs of environmental, health and safety regulation make the regulation unjustifiable. The extreme form of this position would, of course, be absurd; for some amount of environmental, health and safety regulation is clearly essential for a modern society: the market alone cannot do the job which the continued health of our society requires. The more complicated question is: "How much is enough?" This, of course, is the same general question which has seriously troubled defense policy analysts since the 19 50s. The paper does not answer this question. The question involves problems of empirical evidence, problems of judgment and problems of values. The paper seeks only to present some of the relevant empirical evidence and to discuss the way in which our system develops and acts upon such evidence. It leaves the problems of values and judgment, however, to the political system. The paper makes clear that the costs of supporting our environmental, health and safety values are very high indeed. But it must, of course, be equally clear that no cost is necessarily "too high "--provided society is willing and able to pay it. And these costs, though high, appear to be within a plausible range of our likely ability to pay--provided we are willing to sacrifice the allocation of resources to other possible values. For the investment required by environmental, health and safety regulation could, of course, be put to alternative uses — ranging all the way from expanded productive capacity and less inflation to government taxation and, say, income redistribution . What is inescapably involved is a matter of choice. And this paper seeks simply to help move us toward a system in which the elements of choice are more fully exposed. This paper does not offer detailed solutions. Rather, it simply points to directions for possible improvement in our regulatory system — directions toward regulatory reasonableness. Had the present Administration remained in office, detailed work on solutions would have continued, and this report would probably not have been released until that detailed work were further developed. Given the current transition, however--and with the public debate on environmental , health and safety regulation about to resume — I would hope it may be helpful to the debate that this work-in- process is now placed in the public domain. The debate, of course, will be an extended one. Environmental, health and safety problems will not go away. Indeed, they will demand increasing attention as our economy continues to develop. This is partly because development itself tends to compound the problems. But it is also importantly because economic development, beyond the point where traditional basic needs are satisfactorily addressed, brings with it increased sensitivity to higher needs--including needs not only for improved health and safety, but for greater aesthetic satisfaction. Many of these needs can only be satisfied through one form or another of collective action and collective choice. We have only recently begun to develop our approach to the management of these emergent problems of choice. And it is natural that our starts have been somewhat clumsy. One must hope — -and, indeed, one should expect--that the system we evolve for choice and action will move in directions that are more fully and efficiently democratic, and more thoroughly informed. The shaping of such a system will require — as, I am pleased to note, the incoming Chairman of the Council of Economic Advisers, Charles Schultze, has recently argued — that there be a "rebuttable presumption" in favor of private market-oriented 8 incentives. As a complex society interested in preserving both the values of the marketplace and certain human, social and environmental values, America will have to invent new means of intervention — means which mix direct regulation with more market-oriented incentives--in order to foster a more efficient and more creative inter- relationship of the public and private sectors. In any case, regulatory policy development will require significant improvement in the current quality of analysis. This report will have served its purpose if it provides further impetus toward such improvement. * <^/^» ' ^ Elliot L. Richardson Secretary of Commerce January, 1977 JKi-"^*--, *r . ►* *Nrc$ o» UNITED STATES DEPARTMENT OF COMMERCE Washington. D.C. 20230 ACKNOWLEDGEMENT This report is based upon work performed under the direction of the Department of Commerce's Regulatory Policy Committee — and particularly upon work of the Office of the Assistant Secretary for Policy and its Office of Regulatory Economics and Policy, the Office of the General Counsel, the Office of the Chief Economist, the Bureau of the Census, the Bureau of Economic Analysis, the Office of Business and Legislative Issues of the Bureau of Domestic Commerce, and the Office of Environmental Affairs. Overall responsibility for the contents of this report, however, remains our own. RICHARD G. DARMAN Assistant Secretary for Policy / /V / / gOHN T.^MITH II /General Counsel Co-chairmen, Regulatory Policy Committee I. TOWARD REGULATORY REASONABLENESS Page A. "BIG GOVERNMENT" IN PERSPECTIVE; AND THE IQ LIMITS OF "CORPORATE RESPONSIBILITY" The Growth of "Big Government" and lo Environmental^ Health and Safety Legislation The Limits of "Corporate 28 Responsibility" B. REGULATORY INTERVENTION: BALANCING COSTS 34 AND BENEFITS NOW Major Characteristics of the Current 34 Legislative Framework: The Inflexible Quest for Benefits Costs and Benefits: A Review of Current Empirical Evidence 58 (1) Review of Aggregate Economic Impact 58 Data (2) Review of Industrial Economic ' 64 Impact Data (3) Review of Regional Data 69 (4) Review of Benefit Data 94 (5) Discussion of Selected Costs and 101 Benefits (6) Summary and Exhibits 109 (7) Bibliographical Notes 119 C. DIRECTIONS FOR CHANGE: FASHIONING A 123 BALANCED FUTURE Increasing the Recognition of Economic 126 Reality and Relevance m the Regulatory Process Increasing the Quality and Credibility 12 8 of Relevant Technical Information Devolving and Coordinating Regulatory 129 Discretion Increasing the Flexibility and 132 Efficiency of the Regulatory System 10 A. "BIG GOVERNMENT" IN PERSPECTIVE; AND THE LIMITS OF "CORPORATE RESPONSIBILITY" This section is in two major parts. The first — The Growth of Big Government (pp. 10-27) — briefly provides perspective for consideration of environmental, health and safety regulation with regard to the more general concern for "big government." The second — The Limits of Corporate Responsibility (pp. 28-33) — provides perspective on the extent to which reliance on "corporate responsibility" might reasonably be expected to address either the "big government" problem generally, or the problems of environment, health and safety in particular. Together, these two perspectives comprise an argument as to both the importance and the likely inescapability of environmental, health and safety regulation — and serve, thereby, to provide a frame through which to view the analysis which follows. The Growth of "Big Government" and Environmental, Health and Safety Legislation That government has somehow grown "'too big" has become a widespread and even hackneyed observation — a perspective shared now by the leadership of both major political parties. While valid in several respects as a general observation, it is one which requires analysis if it is to be sensibly interpreted. For the matter is not as simple as those concerned with "burgeoning budgets" and "sprawling bureaucracy" might suggest. It is, of course, obvious and indisputable that, by several conventional measures, government has been growing In current dollars, the federal budget has grown from 41 billion in 1950 to 358 billion in 1975; and all government expenditures have increased from 61 billion to 531 billion. In the same 2 5 year period, federal government employment has increased from 2.0 million employees to 2.8 million; and all government employment has increased from 5.7 million to 13.0 million. The ratio of public sector employment to total civilian employment has increased from 12.2 percent in 1950 to 18.1 percent in 1975. 11 stated somewhat more dramatically these figures might be read to suggest that: "In the past quarter century, government spending has increased nine-fold; and now almost one out of every five workers is employed by the government . " Although accurate as stated, these points do need to be put in better perspective, for they — and the current conventional wisdom with which they are often associated--are misleading in several respects: • First of all, they require adjustment for inflation. Measured in constant (1972) dollars, the growth in total government spending from 1950 to 1975 becomes a three-fold increase--as opposed to the unadjusted nine-fold increase. • Viewed in another way — measuring, in constant dollars, total government spending as a percent of Gross National Product (GNP) — the increase from 1950-1975 has been more modest, from 25.8% to 32.5%. The federal component of this measure (including grants-in-aid to states and localities but excluding transfer payments) has hardly increased at all in the past two decades — 21.6% in 1955 to 21.9% in 1975. • Although the conventional wisdom emphasizes the growth of the federal "central" government, the larger portion of the growth has been at the state and local ("decentralized") levels of government. If grants-in-aid to states and localities are removed from federal expenditures, federal expenditures since 19 55 show a net decline of 2.2 percentage points since 1955. Federal employment, as a percentage of total civilian employment, has also declined — from 4.3 percent in 1950 to 3.9 percent in 1975; whereas the proportion for state and local government employment has doubled--from 7.9 percent to 14.2 percent. In absolute terms, federal employment in this 25. year period has increased by 800 thousand, whereas state and local government employment has increased by 6.5 million employees . 12 The forms which the increase in governmental expenditures have taken also merit consideration. A major component of the increase in governmental expenditures has been in transfer payments — which now excede 10% of GNP-- essentially a check-writing form of government, as opposed to that ordinarily associated with a "heavy hand." The second major component of the increase has been in the form of federal grants-in-aid to states and localities — which have more than tripled as a percentage of GNP, from 1.1% in 19 50 to 3.5% in 1975. Here it is noteworthy that there has typically been a "heavy hand" effect — but that it has fallen primarily on other units of government. And further, the implication that past rates of increase in governmental expenditure promise the continuation of such trends requires considerable qualification. The largest category of growth in public expenditures in the past twenty years has been social human investment. It has grown from 31.5% of total public sector expenditures to 54 . 0%--whereas national defense has decreased from 39.9% to 18.1%. The trend in defense expenditures will have to be modified somewhat--if only to keep up with inflation, and to correct for the sacrifices in modernization which helped to finance the Vietnam War. But public attitudes seem likely to limit seriously the growth of defense expenditures. Similarly, public attitudes seem likely now to limit the rate of increase in social human investment programs. Even if this were not the case, the rate of increase would likely be slowed. Grants-in-aid for education and public assistance comprise nearly half the total; and growth in these should slow because the rapid growth in school enrollment is not likely to continue, and because participation rates for welfare programs have now risen to approximately 13 90% of the eligible population. The major expansion of transfer payments, particularly in social security, has also begun to approach its limits--as, on the one hand, coverage has been widely expanded and benefit levels have been adjusted upward significantly; while, on the other hand, resistance to further social security tax increases has also markedly increased. And although welfare reform and national health insurance may require increased expenditures in those programmatic areas, they can be expected to relieve somewhat the pressures for expansion of categorical programs which might otherwise increase on grounds of both need and equity. In short, as always, the past is a highly imperfect guide to the future. Sensationalist extrapolations are not appropriate. It is highly probable that the rate of growth of governmental expenditures for the coming quarter century will be considerably less than it has been in the past one. These points of qualification suggest that "big government" (or "Washington") — measured in terms of expenditures and employment — is, from some perspectives, neither so big nor so likely to become monstrous as conventional wisdom would argue. On the other hand, it is obviously the case that the absolute growth of American government in the middle third of the twentieth century — however it may be discounted by relativist argument--has brought with it problems attributable to scale. With increased scale there is increased complexity. In the absence of adequate technological adaptation--an absence which has been characteristic of the public sector — these increases compound the burdens of governmental responsiveness, and compound the image of government as a pitiless, unhelpful giant. They also render government less readily comprehensible and, thereby, compound individuals' sense of alienation from government. 14 Notwithstanding these thoroughly valid points about the inherent problems of increased governmental scale, there are two further lines of qualitative argument which tend to suggest that a focus on the "bigness" of government, viewed in terms of expenditures and employment, may be misplaced. The first line of argument is simply this: that rising antipathy toward the "bigness" of government is overstated, insofar as it is a symptom of more general alienation, for which an oversimplified focus on a ready target --"government" — provides an outlet for relief. Other elements of the general alienation, in some ways more unsettling for individuals, are harder to focus upon. They include the increase in transiency, the increase in the apparent pace of change, the decline of the family, the destruction of neighborhoods, and the loss of a "sense of community." Arguably, American society is now in the process of healthily adapting to, or modifying, these trends. But be that as it may, they have been, and they remain, deeply troublesome. The growth of government has been partly a cause of these trends--but partly a consequence, and partly too an independent phenomenon consciously and unconsciously blamed, from time to time, as if it were the sole cause of modern alienation. The second line of argument is the essential entry point for this paper: A proper perspective for the analysis of "big government" (one which has not yet been treated adequately as such) must focus on the recently emergent role of the central government ( "Washington" ) --not as a taxer or a spender or an employer — but as a direct prophylactic, social and aesthetic regulator of the human work and leisure environment . This, of course, is not an entirely new kind of role for the federal government. But in the past decade and a half, the change in degree has been fundamental . That this is not a matter properly viewed in terms of federal budgets or employment should be obvious. The point is suggested by considering the relative effects of the past decade's civil rights social regulatory interventions versus the "Great Society" social expenditure program.s . The federal expenditure and employment allocations for the former have been trivial by 15 comparison with the allocations for the latter. But it would not be stretching a point much to suggest that, in terms of effects, the relationship has been roughly the reverse--i . e . , the effects of "great society" social program expenditures have been close to trivial by comparison with the effects of civil rights regulatory intervention. Or perhaps more to the point: A very few executive branch employees have the authority, as an obvious example, directly to regulate emission standards for all new automobiles--with the indirect authority, thereby, to regulate not only air quality, but also the fundamental patterns of private automobile production, purchases and use. It is similarly noteworthy that the federal Occupational Safety and Health Administration (OSHA) has authority to regulate almost every conceivable characteristic of over 5 million private workplaces--with an annual budget of less than $100 million and total employment of slightly more than 2000. The point is not that federal budgets and employment allocations are somehow out of line. The point is that in areas of regulatory policy they are largely irrelevant. For it is private resources and private patterns of behavior which are reoriented--of ten on a major scale--by low-budget federal actions of regulatory standard-setting and enforcement. What is^ relevant is the scope of federal authority for regulatory intervention — and the process by which it is exercised . And in the past decade and a half the proliferation of federal authorities for environmental, health and safety regulation has been dramatic--and , to a considerable extent, under-appreciated. Total resources (overwhelmingly private) now expended in this emergent regulatory area now exceed those allocated to defense procurement, and are double the federal expenditures for education, training, employment and social services. But, perhaps more importantly, the reach of federal regulatory authority is into virtually every element of the "private" sector. A partial list of environmental legislation enacted in the past decade and a half includes the following: 16 Water Resources Research Act of 1964 (P.L. 88-379 - 7/17/64) . To establish water resources research centers, to promote a more adequate national program of water research, and for other purposes. In order to assist in assuring the Nation at all times of a supply of water sufficient in quantity and quality to meet the requirements of its expanding population, it is the purpose of the Congress, by this Act, to stimulate, sponsor, provide for, and supplement present programs for the conduct of research, investigations, experiments, and the training of scientists in the fields of water and of resources which affect water. Water Resources Planning Act (P.L. 89-80 - 7/22/65) . To provide for the optimum development of the Nation's natural resources through the coordinated planning of water and related land resources, through the establishment of a water resources council and river basin commissions, and by providing financial assistance to the States in order to increase State participation in such planning. In order to meet the rapidly expanding demands for water throughout the Nation, it is declared to be the policy of the Congress to encourage the conservation, development, and utilization of water and related land resources of the United States on a comprehensive and coordinated basis by the Federal Government, States, localities , and private enterprise with the cooperation of all affected Federal agencies. States, local govern- ments, individuals, corporations, business enterprises, and others concerned. Solid Waste Disposal Act (Title II of P.L. 89-272 - 10/2 2/6 5) (as amended by the Resource Recovery Act of 1970, P.L. 91-512 - 10/26/70 and P.L. 93-14 - 4/9/73) . (1) To promote the demonstration, construction, and application of solid waste management and resource recovery systems which preserve and enhance the quality of air, water, and land resources; (2) to provide technical and financial assistance to States and local governments and interstate agencies in the planning and development of resource recovery and solid waste disposal programs; (3) to promote a national research and development program for improved management techniques, more effective organizational arrangem^ents , and new and improved 17 methods of collection, separation, recovery, and recycling of solid wastes, and the environmentally safe disposal of non-recoverable residues; (4) to provide for the promulgation of guidelines for solid waste collection, transport, separation, recovery, and disposal systems; and (5) to provide for training grants in occupations involving the design, operation, and maintenance of solid waste disposal systems. Clean Air Act (42 U.S.C. 1857 et seq., as amended by the Air Quality Act of 1967, P.L. 90-148, by the Clean Air Act Amendments of 1970, P.L. 91-604, by Technical Amendments to the Clean Air Act, P.L. 92-157, by P.L. 93-15 and by P.L. 93-319) . (1) To protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the produc- tive capacity of its population; (2) to initiate and accelerate a national research and development program to achieve the prevention and control of air pollution; (3) to provide technical and financial assistance to State and local governments in connection with the development and execution of their air pollution pre- vention and control programs; and (4) to encourage and assist the development and operation of regional air pollution control programs. Air Act to Require Aircraft IJoise Abatement Regulation (P.L. 90-411 - 7/21/68) . To amend the Federal Aviation Act of 1958 to require aircraft noise abatement regula- tion, and for other purposes. In order to afford present and future relief and protection to the public from unnecessary aircraft noise and sonic boom, the Administrator of the Federal Aviation Administration, after consultation with the Secretary of Transportation, shall prescribe and amend standards for the measurement of aircraft noise and sonic boom and shall prescribe and amend such rules and regulations as he may find necessary to provide for the control and abatement of aircraft noise and sonic boom, including the application of such standards, rules and regulations in the issuance, amendment, modification, suspension, or revocation of any certificate authorized by this title. 18 The National Environmental Policy Act of 1969 (P.L. 91-190, as amended by P.L. 94-52 and P.L. 94-83 - 1/1/70) . (1) To declare a national policy which will encourage productive and enjoyable harmony between man and his environment; (2) to promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man; (3) to enrich the understanding of the ecological systems and natural resources important to the Nation; and (4) to establish a Council on Environmental Quality. Environmental Quality Improvement Act of 19 70 (Title II of P.L. 91-224 - 4/3/70) . (1) To assure that each Federal department and agency conducting or supporting public works activities which affect the environment shall implement the policies established under existing law; and (2) to authorize an Office of Environmental Quality, which, notwithstanding any other provision of law, shall provide the professional and administrative staff for the Council on Environmental Quality established by Public Law 91-190. Fede ral Water Pollution Control Act Amendments of 1972 (P. L. 92- ■500 - 10/18/72) (replacing the Act of 1956 , as ; amended. by- the Water Qual ity Act of 1965, the Clean Wate !r Restoration Act of 1966 and the Water Quality Improvement Act of 19 70) . To restore and maintain the chemical, physical, and biological integrity of the Nation's waters. In order to achieve this objective it is hereby declared that, consistent with the provisions of this Act — (1) it is the national goal that the discharge of pollutants into the navigable waters be eliminated by 1985; (2) it is the national goal that wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water be achieved by July 1, 1983; (3) it is the national policy that the discharge of toxic pollutants in toxic amounts be prohibited; (4) it is the national policy that Federal financial assistance be provided to construct publicly owned waste treatment works; (5) it is the national policy that areawide waste treatment management planning processes be developed and implemented to assure adequate control of sources of pollutants in each State; and (6) it is the national policy that a major research and demonstration effort be made to develop technology necessary to eliminate the discharge of pollutants into the navigable waters, waters of the contiguous zone, and the oceans. 19 Federal Environmental Pesticide Control Act of 1972 (-P . L . 92 -516 - 10/21/72) ( includes the Federal Insecti- cide, Fungicide and Roden ticide Act, so-called "FIFRA" , 7 U.S. C. 135, et seq. ) as amended by P.L. 94-51 and P. L. 94-140 . The Act establishes a comprehensive regime to regulate, including banning, the manufacture, commer- cial sale and use of pesticides. The Administrator of EPA is charged to register, reregister, and classify pesticides, insure that pesticide containers are labeled according to regulations developed by the Administrator, and insure that pesticides classified as restricted be applied by a certified applicator or according to any other criteria deemed appropriate by the Administrator, • Marine Mammal Protection Act of 1972 (P.L. 92-522 - 10/21/72) . To protect marine mammals; to establish a Marine Mammal Comjiriission; and for other purposes. The Act provides for the regulation of the taking of marine mamm.als so that certain species and population stocks will not diminish beyond the point at which they cease to be a significant functioning element in the ecosystem of which they are a part, and consistent with this major objective, they will not be permitted to diminish below their optimum sustain- able population. Further measures are to be taken to replenish any species or population stock which has already diminished below that population. In particular, efforts are to be made to protect the rookeries, mating grounds, and areas of similar significance for each species of marine mammal from the adverse affect of man's actions. Negotiations are to be undertaken to encourage the development of international arrangements for research on, and con- servation of, all marine mammals. • Marine Protection, Research, and Sanctuaries Act of 1972 (P.L. 92-532 - 10/23/72) . To regulate the transportation for dumping, and the dumping, of material into ocean waters, and for other purposes. It is the purpose of this Act to regulate (1) the transportation by any person of material from the United States and, in the case of United States vessels, aircraft, or agencies, the transportation of material from a location outside the United States, when in either case the transportation is for the purpose of dumping the material into ocean waters and (2) the dumping of material transported by any person from a location outside the United States if the dumping occurs in the territorial sea or the contiguous zone of the United States. 20 • Noise Control Act of 1972 (P.L. 92-574 - 10/27/72) . To control the emission of noise detrimental to the human environment and for other purposes. The Act is designed to promote an environment for all Americans free from noise that jeopardizes their health or welfare. To that end, it is the purpose of the Act to establish a means for effective coordination of Federal research and activities in noise control, to authorize the establishment of Federal noise emission standards for products distributed in commerce, and to provide information to the public respecting the noise emission and noise reduction characteristics of such products. • Coastal Zone Management Act of 1972 (P.L. 92-583 - 10/27/72) . To establish a national policy and develop a national program for the management, beneficial use, protection, and development of the land and water resources of the Nation's coastal zones, and for other purposes. The purposes of the Act are: (1) To preserve, protect, develop, and where possible, to restore or enhance, the resources of the Nation's coastal zone for this and succeeding generations; (2) to encourage and assist the States to exercise effective- ly their responsibilities in the coastal zone through the development and implementation of management programs to achieve wise use of the land and water resources of the coastal zone giving full considera- tion to ecological, cultural, historic, and aesthetic values as well as the need for economic development; (3) for all Federal agencies engaged in programs affecting the coastal zone to cooperate and participate with State and local governments and regional agencies in effectuating the purposes of this title; and (4) to encourage the participation of the public, of Federal, State and local governments and of regional agencies in the development of coastal zone management programs. With respect to implementa- tion of such mianagement programs, it is the national policy to encourage cooperation among the various State and regional agencies including establishment of interstate and regional agreements, cooperative procedures, and joint action particularly regarding environmental problems. 21 Endangered Species Act of 1973 (P.L. 93-205 - 12/28/73) To provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved; to provide a program for the conservation of such endangered species and threatened species; and to take such steps as may be appropriate to achieve the purposes of relevant treaties and conventions. Energy Supply and Environmental Coordination Act of 1974 (P.L. 93-319 - 6/22/74) . (1) To provide for a means to assist in meeting the essential needs of the United States for fuels, in a manner which is consistent, to the fullest extent practicable, with existing national commitments to protect and improve the environment; and (2) to provide require- ments for reports and respecting energy resources. Toxic Substances Control Act (P.L. 94-469 - 10/11/76) . To regulate commerce and protect human health and the environment by requiring testing and necessary use restrictions on certain chemical substances, and for other purposes. It is the policy of the United States that (1) adequate data should be developed with respect to chemical substances and mixtures concerning their effect on health and the environment and that such data development should be the responsibility of those who manufacture and those who process such chemical substances and mixtures; (2) adequate authority should exist to regulate chemical sub- stances and mixtures which present an unreasonable risk of injury to health or the environment, and to take action with respect to chemical substances and mixtures which are imminent hazards; and (3) authority over chemical substances and mixtures should be exercised in such a manner as not to impede unduly or create unnecessary economic barriers to technological innovation while fulfilling the primary purpose of this Act to assure that such innovation and commerce in such chemical substances and mixtures do not present an unreasonable risk of injury to health or the environment. Federal Land Policy and Management Act of 19 76 (P.L. 94-579 - 10/21/76) . To establish public land policy; establish guidelines for its administration; to provide for the management, protection, development and enhance- ment of the public lands; and for other purposes. 22 Provides an organic act for the Bureau of Land Management of the Department of the Interior and, among other things, directs that management of the public lands be on a multiple use and sustained yield basis, unless otherwise specified by law. Further, requires that the public lands be managed in a manner that will protect the quality of scienti- fic, scenic, historical, ecological, environmental, air and atmospheric, water resource, and archelogical values; that, where appropriate, will preserve and protect certain public lands in their natural condi- tion; that will provide food and habitat for fish and wildlife and domestic animals; and that will provide for outdoor recreation and human occupancy and use. Resource Conservation and Recovery Act of 19 76 (P.L. 94-580 - 10/21/76) . To amend the Solid Waste Disposal Act to provide technical assistance for the develop- ment of management plans and facilities for the recovery of energy and other resources from discarded materials and for the safe disposal of discarded materials and to regulate the management of hazardous waste. This Act authorizes State program and implementation grants to provide incentives for the recovery of resources from solid wastes, to control the disposal of hazardous wastes, and for other purposes. It provides for Federal regulation of hazardous wastes, the establishment of a grant program for State solid waste management planning, and the expansion of Federal solid waste research and development. National Forest Management Act of 1976 (P.L. 94-588 - 10/22/76) . To amend the Forest and Rangeland Renewable Resources Planning Act of 19 74, and for other purposes. The Act provides that in order to serve the national interest, the comprehensive assessment of present and anticipated uses, demand for, and supply of renewable resources from the Nation's public and private forests and rangelands, through analysis of environmental and economic impacts, coordination of multiple use and sustained yield opportunities as provided in the Multiple-Use Sustained-Yield Act of 1960, and public participation in the development of the program. 23 It also provides that recycled timber product materials are as much a part of our renewable forest resources as are the trees from which they originally came, and in order to extend our timber and timber fiber resources and reduce pressures for timber production from Federal lands, the Forest Service should expand its research in the use of recycled and waste timber product materials, develop techniques for the sub- stitution of these secondary materials for primary materials, and promote and encourage the use of recycled timber product materials. A partial list of health and safety legislation enacted in the past decade and a half and not previously described as environmental legislation, includes- the following: • Federal Hazardous Substances Labeling Act (P.L. 86- 613 - 7/12/60) . To regulate the interstate distribu- tion and sale of packages of hazardous substances intended or suitable for household use. • Service Contract Act of 1965 (P.L. 89-286 - 10/22/65) . This Act provides, among other things, that every contract entered into by the United States or the District of Columbia in excess of $2,500, except as provided in section 7, whether negotiated or advertised, the principal purpose of which is to furnish services in the United States through the use of service employees shall contain a provision that no part of the services covered by this Act will be performed in buildings or surroundings or under working conditions, provided by or under the control or supervision of the contractor of any subcontractor, which are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to furnish the services. • National Traffic and Motor Vehicle Safety Act of 1 966 (P.L. 89-563 - 9/9/66) . To provide for a coordinate national safety program and establishment of safety standards for motor vehicles in interstate commerce to reduce accidents involving motor vehicles and to reduce the deaths and injuries occurring in such accidents. 24 The Act provides for the establishment of motor vehicle safety standards for motor vehicles and equipment in interstate commerce, necessary safety research and development, and expansion of the national driver register. Federal Metal and Nonmetallic Mine Safety Act (P.L. 89-577 - 9/16/66) . To promote health and safety in metal and nonmetallic mineral industries , and for other purposes. The Act provides, among other things, that the Secretary of the Interior shall develop, and from time to time revise, after consultation with advisory committees, and promulgate health and safety standards for the purpose of the protection of life, the promotion of health and safety, and the prevention of accidents in mines which are subject to this Act. Natural Gas Pipeline Safety Act of 1968 (P.L. 90-481 - 8/12/68) . To authorize the Secretary of Transportation to prescribe safety standards for the transportation of natural and other gas by pipeline, and for other purposes . Federal Coal Mine Health and Safety Act of 1969 (P.L. 91-173 - 12/30/69) . To provide for the protection of the health and safety of persons working in the coal mining industry of the United States and for other purposes. (1) To establish interim mandatory health and safety standards and to direct the Secretary of Health, Education and Welfare and the Secretary of the Interior to develop and promulgate improved mandatory health or safety standards to protect the health and safety of the Nation's coal miner; (2) to require that such operator of a coal mine and every miner in such mine comply with such standards; (3) to cooperate with, and provide assistance to, the States in the development and enforcement of effective State coal mine health and safety programs; and (4) to improve and expand, in cooperation with the States and the coal mining industry, research and development and training programs aimed at preventing coal mine accidents and occupationally caused diseases in the industry. 25 Federal Railroad Safety Act of 19 70; Hazardous iMaterials Transportation Control Act of 19 70 (P.L. 91-458 - 10/16/70) . To provide for Federal railroad safety, hazardous materials control and for other purposes. To promote safety in all areas of railroad operations and to reduce railroad- related accidents, and to reduce deaths and injuries to persons and to reduce damage to property caused by accidents involving any carrier of hazardous materials . Occupational Safety and Health Act of 1970 (P.L. 91-596 12/29/70) . To assure safe and healthful working conditions for working men and women; by authorizing enforcement of the standards developed under the Act; by assisting and encouraging the States in their efforts to assure safe and healthful working conditions; by providing for research, information, education, and training in the field of occupational safety and health; and for other purposes. Federal Boat Safety Act of 1971 (P.L. 92-75 - 8/10/71) . To provide for a coordinated national boating safety program. To improve boating safety and to foster greater development, use, and enjoyment of all the waters of the United States by encouraging and assisting participation by the several States, the boating industry, and the boating public in development of more comprehensive boating safety programs; by authorizing the establishment of national construction and performance standards for boats and associated equipment; and by creating more flexible regulatory authority concerning the use of boats and equipment. It is further declared to be the policy of Congress to encourage greater and continuing uniformity of boating laws and regulations as among the several States and the Federal Government, a higher degree of reciprocity and comity among the several jurisdictions, and closer cooperation and assistance between the Federal Government and the several States in developing, administering, and enforcing Federal and State laws and regulations pertaining to boating safety. 26 Safe Drinking Water Act (P.L. 93-523 - 12/16/74) .. To assure that water supply systems serving the public meet minimum national standards for protection of public health. To authorize the Environmental Protection Agency to establish Federal standards with respect to harmful contaminants, applicable to all public water systems; and to establish a joint Federal-State system for assuring compliance with these standards and for protecting underground sources of drinking water. Ports and Waterways Safety Act of 1972 (P.L. 92-340 - 7/10/72")" ! To promote the safety of ports, harbors, waterfront areas, and navigable waters of the United States. To, among other things, regulate vessels carrying oil and hazardous substances for safety and environmental protection purposes. t Hazardous Materials Transportation Act (P.L. 93-633 - 1/3/75) . To regulate commerce by improving the protections afforded the public against risks connected with the transportation of hazardous materials, and for other purposes. To improve the regulatory and enforcement authority of the Secretary of Transportation to protect the Nation adequately against the risks to life and property which are inherent in the transportation of hazardous materials in commerce. - i Consumer Products Safety Act (P.L. 92-573 - 10/27/72) . To protect consumers against unreasonable risk of injury from hazardous products. » National Mobile Home Construction and Safety Standards Act of 1974 (P.L. 93-383 - Title VI) . To reduce the number of personal injuries and deaths and the amount of insurance costs and property damage resulting from mobile home accidents and to improve the quality and durability of mobile homes. ► Motor Vehicle and Schoolbus Safety Amendments of 1974 (P. L. 93-492) . To require, among other things, that schoolbus safety standards be prescribed. 27 • Child Protection and Toy Safety Act of 1969 (P.L. 91- 113) . To amend the Federal Hazardous Substance Act to protect children from toys and other articles intended for use by children which are hazardous due to the presence of electrical, mechanical, or thermal hazards. • Flammable Fabrics Act Amendments (P.L. 90-189) . To amend the Flammable Fabrics Act to increase the protection afforded consumers against injurious flammable fabrics. This burgeoning of federal regulatory authority has not, of course, gone unnoticed. But there is far less than a full appreciation of the extent to which it — in addition to other elements of the growth of "big government "--has contributed to the sense that power in the American federal system has moved away from the individual and the local environment to some rather uncontrollable central authority, viewed with contempt by the alienated as, simply, "Washington." This is by no means to argue that the centripetal forces of modern industrial development which account for burgeoning federal regulation can or should be reversed. It is to suggest that the way in which the American system of environmental, health and safety regulation is developed must affect not only environment, health and safety, and not only the pattern of economic development--but it must also, inescapably and fundamentally, affect the relationships' between individuals and their government, and ultimately the basic attitudes with which individuals view their governmental system generally. 28 The Limits of "Corporate Responsibility" Among those who most vociferously lament the growth of "big government," a majority wishes, in one way or another, to return to (or to leave with) the private sector many of the responsibilities recently determined to be public and to require governmental action. This direction of argument may be applied to both "big government" viewed in terms of expenditures and employment, and "big government" viewed in terms of emergent regulatory responsibilities. There are two associated lines of argument as to the directions for increased "corporate responsibility, One tends to rely on the superior technological and managerial capability--the improved efficiency and responsiveness--associated with the dynamics of private action in a competitive, profit-motivated market environment. The second tends to rely on hopes for the improved moral sensitivity and responsiveness of the private sector in addressing what would otherwise be shortcomings of the competitive marketplace--through direct charitable contributions and/or through ethically determined policies above and beyond the dictates of competition. (Note: This form of "corporate responsibility" goes beyond "enlightened self-interest "-- which is, ultimately, a response to an investment calculus and a conception of the dictates of the market, broadly conceived. It should be noted further that "enlightened self-interest" is not fixed; it is evolving — and there is some reason to believe that both breadth of concern and length of time-perspective are expanding for many corporations. Nonetheless, self- interested corporate behavior continues to fall well short of what many view as appropriate from a social perspective . ) It is necessary to consider the limits of such arguments, before turning to the analysis of environmental, health and safety regulation which forms the body of this paper. For that analysis, although critical of the current regulatory system, and particularly sympathetic to the arguments for market efficiency, is not oriented toward the radical reform which these arguments might suggest. If these arguments were to be accepted without serious limitation, that analysis would clearly be of less importance and of less relevance. But there are obvious limits to the applicability of arguments for increased corporate responsibility. 29 There is no plausible reason whatever to expect that the public will seek a significant reduction in the percent of GNP allocated through governmental expenditure. It is analytically conceivable that private charitable contributions, as supplements to public expenditures, might relieve some of the pressures on the public financing of the general welfare. But, as a matter of practical fact, the record of private corporate charitable giving does not give reason for significant positive expectations. Since 1935 when the "five percent amendment" of the Internal Revenue Code allowed private corporations to claim deductions on up to 5% of pre-tax income, corporate giving as a whole has never come close to the limit. Before World War II, contributions averaged less than .5% of net pre-tax corporate income; and although the average increased to a high of 1.24% in 1969, it has since declined steadily. It is conceivable that the private sector could and would, on a for-profit basis, assume greater responsibility for the general welfare by applying its strengths to the performance of a larger share of publicly- financed activities. There are significant limits to this potential, however. American government already is highly reliant upon the private sector for the provision of publicly-financed goods and services — to a greater extent, perhaps, than is generally appreciated. While all government expends a total of 32.5% of GNP, 22.6% of GNP is in direct government purchases of goods and services. A study by the Office of the Assistant Secretary for Policy has concluded that the principal opportunities for increased "privatization" lie in portions of the recently fast-expanding area of municipal and social services. An extensive analysis of these opportunities--and of currently associated regulatory obstacles — is at Appendix D . (It should be noted, of course, that increased "privatization" requires not only the removal of certain regulatory obstacles, but the imposition, in some cases, of new regulations to assure that publicly-determined performance standards are met.) 30 If "privatization" were to have major potential, it might be argued that a set of "big government" problems — particularly those concerning inefficiency, remoteness and unresponsiveness — would be reduced. And an extension of this argument might then be that the social tolerance for the centripetal tendencies now associated with environmental, health and safety regulation would, accordingly, be increased. But while analysis suggests that there are some significant opportunities for increased "privatization", the scale of these opportunities does not seem sufficient to constitute the major potential necessary to support this line of argument. There remains then the question as to the extent of likely increases in "corporate responsibility" defined in terms of improved corporate social behavior based on improved moral sensitivity--above and beyond the dictates of law and market pressures. Hope for significant increases here must be limited by several considerations . First, there is need to consider the historical record. The American private sector has an unrivaled record for producing a rising standard of living for a major population--within a framework which has favored both profit-oriented private competition and increasing legal protection of individual rights and collectively defined social values. That said — and it is in no respect to be diminished by the qualification which follows--it is also the case that the private sector has tended to lag in the voluntary service of social values. It has, in general, "voluntarily" responded to the pressures of workers and of communities when economic interest has dictated; and it has, in general, responded to the evolving dictates of law. But, in general, private corporations have not been lead institutions in the evolution or service of social values. 31 It is of course true that the percentage of employees covered by some form of health insurance, for example, has consistently and dramatically increased; or that similarly, the coverage, number and funding of private pension plans have significantly increased. But such evolution has been primarily in response to the power of labor unions (and secondarily, in response to changes in workers ' preferences as to the form in which to take rising compensation) . There is now evident a greater employer interest in the "quality of the work environment "--but largely in response to consideration of the economic effects of worker alienation, turnover and productivity; not as an independent matter of humane or aesthetic concern. In the areas of equal employment opportunity and environmental protection, the socially desired corporate response has generally required law and regulation to produce it. The record of wholly voluntary pursuit of higher social values is, in short, rather thin. A second consideration is one of economic theory. The American profit-and market-oriented system assumes that, under conditions of competition, there will be pressures to minimize costs required to produce a given product for which there is demand. This is, on the whole, a favorable characteristic of the system. And the fact that history does not reveal the voluntary pursuit of higher social values by corporations, in circumstances which might put them at a competitive disadvantage, should not be surprising or disturbing. Indeed, to assume that corporations in general would go beyond enlightened self-interest would be to deny the basic psychological premise of the theory on which the American system is based. A third, related consideration is one of philosophy. If corporations were to be expected to go beyond what enlightened self-interest would otherwise dictate — but to do so without putting themselves at a competitive disadvantage with respect to each other--there would have to be a code applied equitably to all competitors. This might be done through some form of guild system--as is theoretically the case in the self-regulation of law and medicine. But this then raises two obvious points of difficulty: It is difficult to reconcile the legitimizing of this collusive behavior with the principles of competition 32 which, as noted, underlie the American system. And even if this were not a problem, it would be difficult to justify the delegation of the determination of "social interest" or "public interest" to a guild which would have no special claim to relevant training or to peculiarly inaccessible expertise or to democratic representativeness. Indeed, it would seem impossible to make the case, for the American system, that any such code should be developed and applied through a mechanism other than one which derives its authority from a democratically representative system — i.e., through a system of democratically determined law and regulation. In sum, it seems reasonable to assume: that neither charity nor "privatization" is likely to reduce to any significant degree the size of government as conventionally measured, nor the prevalent concern with "bigness"; and that reliance on private corporations' moral sensitivity, above and beyond law and enlightened self-interest, would be inconsistent with principles of competition (and, in some cases, of equity) . Hence, the perspective adopted for the analysis which follows is one which, on the one hand, presumes a need for continuing concern with the social and political problems of alienation associated, in part, with the modern shift in the balance of governmental power away from the private sector and toward "Washington." While on the other hand, it presumes that, notwithstanding the values of efficiency and responsiveness associated with the flexibility and competitiveness of the private sector, the equitable pursuit of several classes of social objectives requires governmental regulation. The pursuit of regulatory reasonableness, then, cannot be one which would seek some radical shift away from the current system. Rather, it must seek to assure balanced consideration of interests in national environmental, health and safety objectives; interests in the avoidance .of excessive centralization; and interests in economic efficiency and flexibility. 33 The second part (B) of this paper, which follows, analyzes first the current legislative framework--and the extent to which it permits such balancing. It then reviews available empirical evidence as to the costs and benefits associated with regulation in this framework. The third part (C) discusses approaches which might improve the process of balancing. 34 B. REGULATORY INTERVENTION: BALANCING COSTS AND BENEFITS NOW Major Characteristics of the Current Legislative Framework Three statutes — the Clean Air Act Amendments of 19 70, the Federal Water Pollution Control Act Amendments of 19 72, and the Occupational Safety and Health Act of 1970 — are by far the most significant of the host of environmental health and safety measures adopted during the past two decades. They resulted from a heightened national concern for environmental issues and an impatience with the pace and efficacy of state regulation of environment, health and safety. They are a testament to Congressional confidence in the effectiveness of federal regulation as a means to cure national ills. Enacted in the period between our "conquest" of the moon in 1969 and the Arab oil embargo of 19 73, these statutes are founded upon vast technological and economic optimism. These three statutes must, therefore, be at the center of any responsible, critical analysis of our current approach to environmental health and safety goals. This section reviews the major provisions of these statutes and the implementation of these provi- sions in order to assess the extent to which they permit rational, effective regulation. The assessment suggests that these statutes contain rigidities which preclude full and appropriate consideration of costs of implementa- tion and that, therefore, they may command unreasonable outcomes. While many critics of environmental, health and safety regulations take as their targets the "regulators" themselves — the OSHA and EPA "bureaucrats" — this critical focus is, in considerable measure, misdirected. To an extent seldom publicly understood, regulatory unreason- ableness is a product of legislative mandate.*/ It is jj[_/ Of course, the degree to which the regulators are a fair target of criticism can depend on the scope of Congress' delegation of regulatory discretion. As will be shown in the ensuing analysis, the Congress, in the Clean Air and Clean Water Acts,, legislated with con- siderable specificity and, in so doing, limited somewhat the scope of regulatory discretion. In the case of the Occupational Safety and Health Act, the legislative dele- gation, and hence the discretion of its executors, is quite broad. 35 regulators and not legislators who stand accused of unreasoning and unwarranted interference with the commerce of the Nation, yet, the former are usually carrying out tasks that are legally compelled by Congress--or in some instances, by federal judges construing Congressional intent. In fact, the regulators have, with considerable courage and creativity, begun to exercise administrative discretion, in the face of an apparently contradictory statutory mandate, in order to reach reasonable regulatory results. Their actions in so doing have become subject to court challenge by environmental plaintiffs seeking to guard the letter of the law. The enthusiastic assault by Congress on the Nation's substantial and too-long neglected environmental, health and safety problems is not criticized here for its intentions. This paper does, however, seek to raise question with some of the results of this assault. The complexity of the issues addressed by environmental health and safety legislation, has only made itself fully manifest after the legislative process has been completed. For instance, individual statutes such as the Clean Air and Clean Water Acts were passed as ends in themselves without a full understanding of their potential interrelationships. Yet, environmental legislation, once enacted, is extremely difficult to amend, since amendment is too often perceived as a retreat from the goals of the assault as opposed to a tactical adjustment. The following discussion does not purport to contain a complete or comprehensive discussion of the requirements of the three statutes or of the problems encountered in their implementation. Rather it will outline their principal goals and schemes for attaining these goals to determine the extent to which they allow reasonable consideration of the costs — specific and general — of their implementation. The Clean Air Act Amendments of 19 70 • Summary of Provisions A stated, principal purpose of the Clean Air Act Amendments of 19 70 is "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the produc- tive capacity of its population." To this end, the Act requires the Environmental Protection Agency (EPA) to establish nationally uniform ambient air quality 36 standards for major air pollutants emitted from "numerous or diverse mobile or stationary sources." To promote the public health, EPA is required to promulgate so-called "primary" standards which allow an "adequate margin of safety." To promote public welfare — this term has been interpreted to require the limiting of pollutant emissions which may harm soil, water, crops or aesthetics — EPA is required to issue "secondary" standards. The Act seems to assume that it is possible to define a point, below which pollu- tion is not harmful. However, scientific evidence is ambiguous and often does not provide such benchmarks. These national standards are to be based upon the best available scientific evidence regarding the effects of various pollutants on public health and welfare and not upon any consideration of the costs or technological feasibility of the attainment of such standards. This fact was recently confirmed by the U.S. Supreme Court_^/ which stated that Congress specifically contemplated that some existing sources of pollution would have to be shut down to meet the requirements of these standards as applied. The Act requires states to develop and enforce implementation plans for the achievement of these standards. While this scheme gives states a substantial and important role in the implementation of the Clean Air Act, the Act requires EPA to substitute its judg- ment whenever a state's implementation plan does not meet the requirements of the Act. Thus, a state which might act upon a concern for the technological or economic feasibility of implementation of a national standard in the context of a state imiplementation plan may be overruled by the EPA. Conversely, EPA is with- out authority to reject a state's plan on the grounds of economic or technological infeasibility . The Clean Air Act also requires EPA to establish nationally applicable standards to govern emissions of "hazardous" pollutants — defined as those which "may cause, or contribute to, an increase in mortality or an increase in serious irreversible, or incapacitating reversible illness." These hazardous pollutant standards must be set at a level which EPA believes will provide an "ample margin of safety" to protect the public health. •/ Union Electric Co. v. EPA. 96 Sup. Ct. 2518 (1976) . 37 With regard to these standards, the Act makes no specific allowance for consideration of economic or technological feasibility — a fact that has caused, as will be discussed below, significant difficulty in the formulation of such standards. EPA is also required to establish nationally applicable performance standards for new sources of air pollution. In contrast to hazardous pollutant standards and to primary and secondary standards , these so-called "new source performance standards" specifically require consideration of cost and avail- ability of technology. Both hazardous pollutant and new source standards, in contrast to primary and secondary standards, directly establish federal limits on emissions from point sources, not subject to the exercise of state discretion within state implementation plans. Finally, the Clean Air Act requires EPA to set emission standards for new automobiles necessary to achieve specified reduction in automotive emissions. These specified reductions are stated in relatively rigid terms--a 90 percent reduction on a five to six year timetable — without regard to costs or technological feasibility. However, the Act gave EPA the authority to set interim standards based upon best available technology. Standards originally set with 19 75 and 19 76 deadlines have been extended to 19 77 and 19 78, respectively. Flowever, it is currently apparent that they will not be achieved by the 19 78 model year and thus action in the new Congress to define reasonable automotive emission standards is imperative. Much of the public debate regarding the Clean Air Act has focused upon means and timetable for re- ducing automotive emissions. Less public scrutiny has been given the other provisions of the Clean Air Act, and, therefore, the highly limited discussion in this paper is directed to the implementation of the non- automotive sections of the Act. As will be shown below, these sections have substantial implica- tions for U.S. energy supplies and for the pattern and scope of future economic development. Since energy is a "cost" of extreme national concern, it is appropriate first to address the energy consequences of our clean air aspirations. 38 • Energy and Clean Air Prior to 19 73, a significant portion of the Nation's air pollution clean up efforts had been predi- cated upon the availability of ample quantities of low- sulfur content oil for use in electrical generating facilities. The 19 73 Arab oil embargo led to a re- evaluation of the "costs" of our clean air objectives in face of energy scarcity. After a review of energy requirements in light of the Clean Air Act, the Congress in 19 74 enacted the Energy Supply and Environmental Coordination Act. The purpose of this enactment is to encourage burning of coal in place of oil and natural gas to generate electricity. To facilitate coal burning, EPA was given authority to suspend, temporarily, emission limitations for specific facilities, providing primary, health-related standards would not be violated. While this limited legislative redress is impor- tant, our national energy objectives and clean air aspirations remain importantly--and not always felicitously — intertwined. _^/ One important example of this interdependency is the controversy over the use of "scrubbers" versus "intermittent" and "dispersive" control systems to abate sulfate emissions from industrial and especially electric generating plants. Intermittent controls involve curtail- ment of plant operations during periods where atmospheric conditions will cause violation of air quality standards. Dispersive controls use tall smoke stacks to disperse or dilute emissions in order to comply with air quality standards. Scrubbers or scrubbing systems operate continuously to remove sulfur dioxide emissions from the burning of fossil fuels. Not only are scrubbers costly in contrast to intermittent or dispersive controls, they involve an energy cost which can total three to five percent of the production of a generating plant. In addition, they create a sludge by-product which is difficult of disposal. Thus, while it is strong national policy to reduce dependency on imported low-sulfur oil by using j^/ For a stimulating discussion of this interdependency see the essay by Marc J. Roberts and Richard B. Stewart in Setting National Priorities , Henry Owen and Charles L. Schultze, Editors, The Brookings Institution, at 440-447 (1976). 39 coal in electrical generating facilities, use of coal increases the need to abate sulfur dioxide emissions to meet national air quality standards-- and consequently the need for scrubbers with their attendant costs and energy penalties. An even more substantial national cost may be incurred because of insistence on scrubber technology as best available control technology for new source performance standards. Since it is predictable that, in the next decade, new technologies will emerge that will obviate the need for scrubbers, utilities may be deferring needed expansion of capacity in order to avoid installation of scrubbers, pending development of preferable technology. The controversial insistence on scrubbers by EPA results from Congressional mandate, for the Clean Air Act apparently does not allow use of intermittent or dispersive control techniques in lieu of scrubbers. The Act speaks in terms of emission limitations and this fact has been construed to proscribe primary reliance upon control systems--such as intermittent and dispersive ones — which do not limit emissions in meeting primary and secondary air quality standards. NRDC V. EPA, 479 F.2d 390 (5th Cir. 1974). • Nonde gradation The federal courts have held that, since a primary purpose of the Clean Air Act is to protect and enhance the Nation's air quality, no state in its implementation plan could permit "significant deterioration" of air quality in areas where air was already cleaner than required by national air quality standards .jj^/ Literally construed, the concept of nondeterioration would require no growth or industrializa- tion in "clean air" areas and would raise the specter of national land-use planning. The courts directed EPA to develop regulations to implement the no significant deterioration concept. EPA's final regulations — issued after long public debate-- separate clean air areas into three classifications: V Sierra Club v. Ruckelshaus, 344 F. Supp. 253 (D.DC. 1972), aff 'd per curiam 4 ERC 1815, aff'd by an equally divided Court 412 U.S. 541 (1973). 40 -- Class I, where air quality is protected at essentially existing levels, — Class II, where moderate growth would be permitted, and -- Class III, where major industrialization and growth would be allowed to a point at which air pollution reaches uniform national standards . The regulations further require that, in all three area classifications, major new industrial facilities must control emissions at a level of control equivalent to application of the best available control technology, regardless of cost , (new source performance standards generally require best available control technology taking account of costs) . EPA initially designated all areas as Class II and gave authority to Governors of each state to submit proposals to EPA to redesignate any such area as Class I or III. Proposed redesignations must be based on the record of a public hearing held near the area proposed to be redesignated and must include consideration of anticipated growth, social, environmental and economic effects of the proposed redesignation, and any impact of the proposed redesignation on regional or national interests. EPA must approve any proposed redesignation unless the Administrator finds such redesignation to be arbitrary and capricious. By this means, EPA has avoided direct federal land-use planning on the basis of air quality considera- tions. Nevertheless, the no significant deterioration concept requires states to impose a land-use regime based on an air quality standard, a process which does not allow adequate accommodation of the complex relation- ships between air quality and other factors which must affect land use. Debate continues to rage regarding the impact of EPA's regulations on new industrial develop- ment in "clean air areas." Also, doubts persist whether present air quality can even be measured with sufficient precision to apply the prescribed standards. American businessmen and especially electric power companies remain fearful of the implications of the nondeterioration concept. It can, they believe, lead to nationwide land- use planning. On the other hand. 41 environmental advocates are not content with the EPA's approach to nondeterioration. During consideration of the Clean Air Act Amendments in the last Congress, statutory nondeterioration provisions were proposed, but not enacted. It can be argued that stringent nondeterioration measures are prerequisites for effective air pollution abatement, since pollutants emitted to the ambient atmosphere can have consequences for wide areas extending beyond individual pollution control regions. Resolution of the nondeterioration issue by additional legislation, if not responsibly drawn, can have dramatic consequences for the Nation's economy. • Hazardous Pollutants In face of a growing belief that emissions from petrochemical facilities may contribute to the incidence of human cancer, the as of yet, little-used hazardous pollutant section of the Clean Air Act has startling implications. As already noted, the Clean Air Act (Section 112) requires EPA to establish nationally applicable emission standards for "hazardous pollutants" applicable to new and existing sources — at levels sufficient to provide an " ample margin of safety" to protect the public health from such hazardous pollutants. Similar language requiring that primary national air quality standards provide an adequate margin of safety to protect the public health has been construed to require that the standard be set without regard to economic or technological feasibility. In the case of so-called "non-threshold pollutants" — those which may create some degree of health risk at any ambient level above zero — EPA faces a quandary in establishing an "ample margin of safety" without demanding a halt in production. EPA most recently addressed this issue in establishing a hazardous pollutant standard for ambient emissions of vinyl chloride — a cancer causing petrochemical gas which is the basic ingredient for a significant portion of the plastics manufactured in this country. Since a zero emission limit is technologically infeasible and, therefore, would cause very substantial economic dislocation, EPA adopted an interpretation of the Clean Air Act which would avoid such dislocation. EPA determined, in the case of vinyl chloride, since a 42 zero emission would result in widespread industry closure, the costs of which would be grossly dispro- portionate to the benefits, that imposition of a require- ment of best available control technology was the soundest means to regulate. Thus, EPA undertook a very gross cost/benefit analysis — even though the Act appears to preclude such considerations with regard to hazardous pollutants. EPA's vinyl chloride standard has recently been challenged in federal court, on the grounds that EPA exceeded its authority in taking such economic considerations into account and that, absent scientific evidence of a safe level of emissions, vinyl chloride emissions must cease. The outcome of this lawsuit has dramatic implications for the future of the petro- chemical industry--if , as is entirely possible, other basic petrochemicals are demonstrated to have serious human health effects. • Summary The Clean Air Act imposes an ambitious and in some measure inflexible scheme for the clean-up of the Nation's ambient atmosphere. Its provisions are designed to "force" technology — a not unworthy legislative objective — to enable this clean-up. The changes in the Nation's energy and economic outlook since its enactment in 19 70 continue to compel close scrutiny of the feasibility and consequence of strict adherence to the Clean Air Act's statutory mandate. Creative and balanced administration of the Act by EPA, including the nondeterioration requirement and the hazardous pollutant section, has avoided gross near-term economic penalties disproportionate to the perceivable near-term benefit of cleaner air. Never- theless, the statute's literal, rigid requirements-- always subject to court mandate that they be fully enforced--can have most serious consequences for the Nation's energy and economic goals. 43 The Federal Water Pollution Control Act Amendments of 19 72 • Summary of Provisions In adopting a national, regulatory approach to achieve clean water. Congress, in 19 72, chose means which differ radically from those contained in the Clean Air Act to achieve clean air. Under the Clean Air Act, nationally uniform air quality standards are prescribed. Individual sources of pollution are assigned emission limits by state authorities under state implementation plans designed to achieve the national air quality standards. Under the Water Pollu- tion Control Act, water quality is rejected as a primary benchmark for regulation. Instead, each point source of pollutant discharge (effluent) is required to meet nationally uniform, technologically-based, effluent limits regardless of water quality considerations. Water quality becomes relevant only where it is adjudged necessary to apply effluent limitations more stringent than the nationally prescribed standards in order to meet state water quality requirements. Water pollution control legislation prior to 19 72 more closely modelled the Clean Air Act, and had water quality as its primary focus. Difficulties of enforcement by state authorities and controversy regarding proper gauges of water quality led, at best, to imperfect progress toward cleaner water. The 19 72 Amendments are a testament to frustration with the state and water quality-based approach. The result is a statute which inadequately accounts for costs and benefits of water pollution control as applied to individual plants and derogates, in undesirable measure, state-level discretion to tailor pollution abatement plans to local circumstances. While its means are "blind" to water quality variables, the Act's ends are of course stated in terms of water quality. To the end of restoring and maintaining "the chemical, physical, and biological integrity of the Nation's waters," the Water Pollution Control Act declares a national goal of eliminating the discharge of pollutants into the Nation's waters by 1985. It sets an "interim goal" of achieving, by 1983, water quality which provides for "the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water. " 44 The Act makes it unlawful to discharge any pollutant into the Nation's waters except in compli- ance with its terms and pursuant to a permit specifying the rate and amount of such effluent discharge. Each pollutant source must, therefore, obtain a permit from EPA or from state authorities exercising delegated authority from EPA. The terms of such permit are required to conform with limitations and guidelines established nationally by EPA for all point sources of a given "class or category. " The federally-established guidelines and limita- tions must be designed to compel achievement of techno- logically-based standards — "best practicable control technology currently available" (BPT) by July 1, 19 77 and a more stringent standard, "best available technology economically achievable" (BAT) by July 1, 19 83. The Act applies to municipal sewage treatment plantsjj^^/ as well as to industrial point sources and industrial sources are given the option of "pretreating" their wastes and routing them through a municipal facility, where feasible or desirable. New sources of pollutant discharge must meet standards of performance based upon "the greatest degree of effluent reduction" which EPA determines to be achievable through application of "the best available demonstrated control technology, processes, operating methods . . . including, where practicable, a standard permitting no discharge of pollutants." The Act directs EPA, in setting such standards , to take account of the cost, non-water quality environmental impact, and energy requirements involved. The Act also requires regulation of "toxic" effluent discharge by effluent standards or prohibitions to provide a level of control that allows an "ample margin of safety" taking account of the toxicity, persistence, and degradability of the pollutant and its affect on organisms living in the receiving waters. The foregoing description of the principal features of the Water Pollution Control Act, perforce, omits a great deal. A full description of this complex ^/ Municipal treatment facilities are governed not by BPT and BAT but by analagous standards — secondary treatment by 1977 and more stringent controls by 1983. 45 and detailed Act is beyond the scope of this paper. Each of the requirements described above carries with it a timetable for accomplishment, most of which have proven grossly inadequate. The Act's requirements with regard to thermal pollution — immensely important to the nuclear power industry — are omitted. The following discussion of some of the costs and difficulties en- countered in the Act's implementation is similarly limited and is designed to be suggestive rather than comprehensive . • Inflexibility of the Permit System As already noted, the Act requires each industrial point source of pollutant discharge to secure a permit from EPA or from state officials exercising delegated authority from EPA. This permit system contains sub- stantial inflexibilities which place in question the reasonableness of the Act's regulatory scheme. These permits must require enforcement of certain technological controls — BPT by 19 77 and BAT by 19 83 — regardless of the quality of the waters into which the facility discharges. Water quality only becomes relevant if water quality considerations dictate controls more stringent than those required as a statutory minimum. Thus, in the case of a given point source, the permitting authorities are not allowed to relate the costs of pollu- tion reduction to water quality benefits. As noted in the beginning of this section, this particular inflexi- bility is fundamental to the regulatory scheme of the Act. Additional inflexibility, however, has been encountered in the definition and application of BPT and BAT standards to individual point sources. In defining BPT, EPA is charged to take into account: "... the total cost of application of technology in relation to the effluent reduction benefits to be achieved from such application, . . . the age of equip- ment and facilities involved, the process employed, the engineering aspects of the application of various types of control techniques, process changes, non-water quality environmental impact (including energy requirements) , and such other factors as [EPA] deems appropriate." 46 However, once BPT has been defined, it must be applied to "classes or categories of dischargers." Thus, despite the specificity of the enumerated factors, the Act does not appear to allow their application to individual plants on a case-by-case basis. Consequently, EPA has faced a Herculean task of developing guidelines which, on the one hand, apply to a fairly defined class or category of plants, and on the other, equitably accounting for relevant diversity among plants within a given class or category. EPA's solution has been to analyze various industries in light of the relevant statutory factors, form subcategories based upon production processes employed and to develop single number pollutant parameters for those subcategories. For instance, BPT for a given subcategory of pulp mills might be stated in terms of 20 pounds of biochemical oxygen demand (BOD) per ton of pulp produced. Not surprisingly, the guideline development process has lagged far behind statutory deadlines and has been subject to frequent and extensive court challenge. The Supreme Court currently has pending before it the issue of whether EPA must specify a "range," rather than a single number as a definition of BPT. If the Supreme Court agrees with the contention that BPT should be stated as a range, e.g ., 20 to 30 pounds of BOD per ton of pro- duction, it would allow permitting authorities to tailor BPT requirements to individual point sources taking more precise account of the statutory factors , than is currently possible under the single number approach. Nevertheless, one thing remains clear—the statute's reference to "effluent reduction benefits" refers only to the reduction in the amount of effluent and not the effect of the effluent on receiving water quality. • Rigidity with Regard to Water Quality - Puget Sound The inflexibility of the permit system has been highlighted by the case of Pacific northwest pulp and paper mills which discharge into Puget Sound — a deep, fast moving body of water with great "assimilative" capacity. Under the terms of the Act, these facilities must meet the same technological standards as pulp and paper mills located on small, inland streams. One consequence is that these mills may have to reduce, to an extent that is arguably unreasonable, effluent dis- charges into that portion of their immediate environ- ment — Puget Sound — which has the greatest capacity 47 to assimilate them. Instead, they will have to treat their wastes to high degrees, creating sludge which will have to be disposed of by landfill or incineration — consuming substantial amounts of increasingly scarce electrical energy and possibly contributing to substan- tial Pacific northwest air pollution problems. Similar circumstances are faced by certain public treatment plants which discharge into the ocean for the Act requires that they apply the full requirements of secondary treatment. • Cost Rigidities - the Mahoning Decision The insensitivity of the Act to cost considerations is aptly demonstrated by last year's Mahoning decision of EPA. Very early in the formulation of the 19 77 BPT standards for the iron and steel industry, which were being set based upon the best practical control techno- logy for the entire industry in the United States, it became apparent that there was a problem in the Mahoning Valley of Ohio. Many of the aging, marginal steel plants in the country were grouped there. Little pollution control equipment had been installed. The region is substantially dependent upon the 25,000 or more jobs directly and indirectly involved in those steel plants. It became clear that, if the iron and steel BPT require- ments were applied according to the Act, the plants would close, causing massive regional unemployment and economic dislocation. EPA's solution was to subcategorize the iron and steel plants in the Mahoning Valley from the rest of the plants in the country and to set for them a BPT level significantly less stringent than that applied generally. Both the Sierra Club and the State of Pennsylvania (which is "downstream" from the Mahoning Valley) have challenged the Mahoning decision in court. The Sierra Club suit alleges that EPA's failure to require Mahoning plants to meet BPT requirements is a violation of its duties under the Act, particularly the requirement that effluent limitations be applied to all point sources in an appropriate category and that such limitations be as uniform as possible. It alleges that EPA is not empowered to distinguish the Mahoning plants from other iron and steel plants on economic grounds. The letter of the law supports the plaintiffs. Considera- tions of regulatory reasonableness are on the side of EPA, the defendant. 48 • Regulation of Toxic Substances Though the Act requires regulation of discharge of toxic substances so as to provide an "ample margin of safety," only nine such substances have been listed and regulated under the toxic regulation section of the Act (Section 307(a)). The problems faced in the case of toxic substances under the Water Pollution Act are similar to those faced under the counterpart section of the Clean Air Act. Scientific uncertainty abounds. Regulation once undertaken cannot, on the face of the statute, account for technological or economic feasibility Environmental litigants, the EPA, and certain industrial interveners, recently settled a legal action which should compel regulation of numerous substances under Section 30 7(a).^/ As a condition of settlement, EPA agreed to regulate 65 substances under the general limitations and guidelines sections of the Act, which, as noted above, allow consideration of costs and technological feasibility. This is a vast undertaking which may add considerable stringency and complexity to the already overburdened regulatory scheme. On the other hand, it avoids the potentially drastic inflexi- bility of the toxic pollutant section of the Act. • Non-Point Source Discharges A most significant source of water pollution, so-called "non-point source discharges," such as rain runoff from agricultural lands, is also subject to control under the Act. However, the federal mandate with regard to non-point source discharges is less well defined than is the case with point source dis- charges. A complicated scheme is created whereby states and local agencies are to establish comprehen- sive plans to control non-point source pollution and submit such plans to EPA for approval. However, based on current technology, control of non-point source pollution presents intractable problems. Little pro- gress has been made toward non-point source control. In assessing the costs and benefits of our national commitment to extensive point source controls , one must keep in mind that clean water goals will not be attained if non-point source pollution cannot be controlled. This feature of the regulatory scheme is brought starkly into focus in assessing the overall benefits of moving from BPT to BAT for point source discharges, before a solution is found to the massive problem of non-point source discharges. 49 • Diminishing Returns? A number of critics of the approach contained in the Act to abate water pollution, including a National Commission chaired by Vice President Rockefeller, have pointed out that the zero discharge goal is in- feasible of attainment. Question has also been raised regarding the cost/benefit efficacy of reduction in basic pollutant parameters such as biochemical oxygen demand below the level required by BPT. The costs to achieve BAT, employing in most cases "process changes" as opposed to "end of pipe" treatment contemplated by BPT, may not be justified. As is usually the case, the last increments of pollution reduction — say from 85 per- cent abatement to a level approaching 100 percent, are progressively more costly and the total cost of the last 15 percent is much greater than the cost of the first 85 percent. Focus instead, it is argued, should be placed on reduction of toxic effluent. All agree that the original statutory timetable will not be met — municipalities have lagged behind industry in progressing toward the 19 77 goal and have slowed accomplishment of BPT by those industrial firms planning to pretreat wastes for processing and discharge through municipal facilities. Toxic controls have proved infeasible under Section 30 7(a) The appropriate means to define and apply the 19 77 standard of BPT to individual point sources is an issue before the Supreme Court. Non-point source discharges remain an essentially uncontrolled and major source of pollution. 50 The Occupational Safety and Health Act of 19 70 • Summary of Provisions The Occupational Safety and Health Act of 1970 establishes a comprehensive federal regulatory scheme to promulgate and enforce standards of occupa- tional safety and health, which affect, with few exceptions, all employers engaged in a business having an effect on interstate coirjnerce. Farmers with ten or fewer employees are exempted from the Act. The Act's stated goal is, "to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources." To accomplish this goal, the Act requires employers to: (1) furnish to their employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to their employees, and (2) comply V\?ith the occupational safety and health standards promulgated under the Act. Each employee is charged to "comply with occupa- tional safety and health standards and all rules, regulations, and orders issued pursuant to [the] Act which are applicable to his own actions and conduct." As will be discussed below, the Act places significantly different obligations on employers and employees in that the Act lacks any penalty or enforcement mechanism with regard to employees' obligations. The Act is administered primarily by the Assistant Secretary of Labor for Occupational Safety and Health, who is the Administrator of the Occupational Safety and Health Administration (OSHA) . In addition, the Act created within the Department of Health, Education and Welfare a National Institute for Occupa- tional Safety and Health (NIOSH) . NIOSH conducts research and develops criteria for occupational safety and health standards. 51 The Act charged OSHA with promulgating, as binding federal standards under the Act, as soon as practicable, during a two-year period from the effective date of the Act, certain pre-existing voluntary standards--so-called "national consensus standards." In addition, OSHA was directed to issue, during this period, as an OSHA standard, any "established federal standard. " Further, OSHA was authorized on a continuing basis to promulgate any occupational safety or health standard upon determination that such a standard was necessary to serve the objectives of the Act. Under its standard setting authority, OSHA, in cooperation with NIOSH, must regulate workplace exposure to "toxic materials or harmful physical agents." The Act provides that NIOSH must, on receipt of a request by an employer or authorized representative of employees, determine whether any substance normally found in the workplace has "potentially toxic effects in such concen- trations as used or found." If such a determination is made, NIOSH is required to submit it immediately to OSHA so that OSHA can issue a standard. With regard to OSHA's general standard setting authority, the Act prescribes no criteria other than the requirement that standards serve the purposes of the Act, i.e ., assure safe and healthful working condi- tions. However, in the case of toxic materials and harmful physical agents, OSHA is required to set a standard: "which most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life." The extensive scope of this criterion is somewhat balanced by the further requirement that such standards are to be based on "research, demonstrations, experi- ments, and such other information as may be appropriate," considering not only "the attainment of the highest degree of health and safety protection for the employee" but also the "latest available scientific data in the 52 field, the feasibility of the standards, and experience gained under this and other safety laws." The Act establishes an administrative body, the Occupational Safety and Health Review Commission to adjudicate appeals from agency enforcement actions. Standards promulgated by OSHA are not reviewable by the Commission, but rather are subject to judicial review in the various federal circuit courts of appeal. The statute states that the determinations underlying an OSHA standard shall be conclusive if supported by "substantial evidence in the record considered as a whole." The Occupational Safety and Health Act is much less detailed in its regulatory scheme than are the Clean Air and Water Acts already described. Neverthe- less, the foregoing sketch of some of its principal provisions is not intended to be complete or comprehen- sive. Rather, it is intended to lay the predicate for a brief discussion of some of the problems encountered in the Act's implementation. Like the other two major environmental, health and safety statutes, the Occupa- tional Safety and Health Act has proved overly ambitious in its goals and has encountered significant problems in its execution. • "National Consensus Standards" Within weeks of the effective date of the Act, OSHA promulgated a torrent of national consensus standards — many of which were completely unfamiliar to the affected employers. As noted above, OSHA was statutorily charged with adoption of such standards within two years and "as soon as practicable" during that period. Many of these standards originated as aspirational recommen- dations of private standards setting organizations — describing optimum workplace safety and health — without intention or expectation that they be given the force of law. Many employers affected by these national consensus standards, v/hen issued as mandatory OSHA standards, had not in fact participated in any signifi- cant manner in their formulation. Their immediate adoption without full, formal administrative process, denied such employers an opportunity to comraent upon them. In addition, many of these national consensus standards, when given the force of law, appeared silly or inappropriate, undercutting em.ployer respect for the regulatory process. 53 Of course, this unfortunate outcome is, in measure, the result of statutory mandate rather than bureau- cratic ineptitude, for the statute, in prescribing a two-year deadline and an abbreviated administrative process did not allow OSHA time to consider the reasonableness of applying all such standards across the board to widely varying industries with differing workplace characteristics. In part because of the frustration and contro- versy caused by its safety standards--many of them national consensus standards — and because of criticism that it has not acted with adequate vigor to regulate worker health problems, OSHA has recently determined to place emphasis upon the development of health standards regulating toxic substances or harmful physical agents. • Emphasis on Engineering Controls While the Act contemplates the promulgation of standards which assure the greatest feasible protection to the employee's safety and health, it contains no specific requirement that engineering controls be preferred over administrative controls ( e. g . , duration of work shifts) or personal protective devices ( e.g . , ear muffs, respirators, etc.). OSHA, however, has taken the position that engineering con- trols are preferable to administrative controls and especially to personal protective devices, and that the latter will not be considered a substitute for the former. OSHA's insistence on engineering controls has shown itself most strongly in its noise abatem.ent efforts Engineering controls to reduce noise are, in many cases, very costly; yet personal protective devices such as ear plugs or ear muffs may often lower the effective noise levels for individual workers significantly below the level now established in guidelines. However, only when engineering and administrative controls fail to bring noise levels, or duration of exposure to them, below permissible levels, is the use of personal protective equipment allowed (and is, at that point, required) . One consequence is that an employer may undergo substantial expense to institute engineering controls which must still be supplemented by personal protective devices (at an additional cost) , when use of the personal 54 protective devices alone would have eliminated the noise level problem. OSHA's strong emphasis on engineering controls may, therefore, place significant financial burdens on employers while achieving only marginal improvements over alternative methods such as personal protective devices. As OSHA will likely place continued emphasis on setting standards for reducing worker exposure to toxic and carcinogenic substances, its rigid adherence to engineering controls, in preference to lower cost personal protection devices, has very substantial economic implications for American industry. • Responsibility Exclusively the Employers OSHA's strong emphasis on engineering controls can be explained in part by the fact, already noted, that the Act contains no enforcement mechanism with regard to employee obligations. While the Act purports to recognize the "separate but dependent responsibilities and rights" of employer and employee "with respect to achieving safe and health- ful work conditions," the obligation for such achievement is placed totally on the shoulders of the employer. The employer's obligation to adhere to standards and to furnish a workplace free from recognized hazards is enforced through the inspection and citation procedures established in the Act. On the other hand, the Act does not provide any procedures to enforce the employee's statutory "obligation" to comply with OSHA standards. In one closely followed case, a stevedoring company was cited by an OSHA inspector for violation of a regulation requiring the use of hard hats. The employer defended itself on the grounds that, notwith- standing various exhortations, posting of signs and other means of persuasion, the longshoremen had con- tinually refused to wear hard hats. Moreover, the employer produced evidence that any attempt to enforce the standard would have resulted in a wildcat strike by its employees. A federal court accepted the employer's evidence that in the circumstances enforce- ment efforts would indeed have resulted in a strike. Nonetheless, the court held that employee non-compliance was not a defense under the Act and that it was the employer's responsibility, through collective bargaining. 55 to obtain the right to discipline its employees for violation of safety standards ._^/ Thus, it is fair to conclude that OSHA's pre- dilection for engineering controls is, in measure, a result of the statutory scheme. Since the Act requires OSHA to assure the greatest feasible protec- tion of workers' health, and because it provides no direct means to enforce employee compliance with pro- tective device requirements, OSHA finds it prudent and necessary to place emphasis on steps solely within employer competence, such as engineering controls — despite their very high relative cost. • Costs and Benefits in Standard Setting As already noted, the Act requires OSHA to regulate workplace exposures to "toxic materials or harmful physical agents" in a fashion that most adequately assures " to the extent feasible ," protection of worker health, despite regular worker exposure to the hazard through a working life. Neither the Act nor its legislative history elaborates the meaning of this feasibility requirement. It has, therefore, become the centerpiece in continuing legal controversy regarding the scope of OSHA's regulatory discretion. Businessmen have argued that economic costs are a criterion in setting toxic standards. Public interest groups have argued that the only "feasibility" intended by the statute is technological feasibility. Thus these latter groups argue that if engineering controls to reduce worker exposure are technically feasible, they should be mandated for application, regardless of their cost and the ensuing economic consequence for the affected industry. The ramifications of this debate are very substantial. NIOSH has prepared a list of approximately 1,600 potential carciogens. To date, however, only 16 health-related standards have been promulgated by OSHA. As numerous additional standards are prepared, the willingness and legal capability of OSHA to take account of economic feasibility will be of vital V Atlantic & Gulf Stevedores v. OSHRC, 534 F.2d 541 (3rd Cir. 1976) . 56 importance in assessing the "reasonableness" of the regulatory scheme of the Act. The criterion of feasibility has not, to date, been accorded any unequivocal interpretation by OSHA or by federal courts. In the case of vinyl chloride, OSHA sought to "force" technology, and when the industry appealed the standard, OSHA's action was approved by the reviewing federal court. In regulating asbestos, OSHA allov/ed a four-year period for industry to come into compliance. Labor unions appealed the exercise of discretion. The court found that the Act did not "require immediate implementation of all protective measures, technologically achievable without regard to their economic impact," and that a "prohibitively expensive" standard would not be considered feasible. _^/ In effect, courts have been willing to give great weight to OSHA's exercise of delegated "legislative" discretion to make essentially "political" judgments and have not been disposed to read into the requirement of feasibility anything but a "gross" concern for costs of compliance. Recently, in promulgating standards for occupa- tional exposure to coke oven emissions, OSHA showed responsiveness to both technological and economic concerns. However, economic concerns were addressed only to determine whether the impact of the proposed standard was "within the financial capability" of the steel industry. No precise analysis was done of the economic cost of the standard in relation to the likely human health benefits of its implementation. **/ In assessing likely human health consequences of degrees of regulation of potentially harmful or carcinogenic substances, OSHA faces the same dilemma encountered by EPA in its regulation of "hazardous pollutants." Scientific evidence is not available to establish a "safe" threshold of occupational exposure, In addition, the capability to monitor actual emissions to a level of accuracy necessary to enforce such a V Industrial Union Department, AFL-CIO v. Hodgson, 499 F.2d 467, 477-478 (D.C. Cir. 1974). **/ See 41 Fed. Reg. 46742 (1976). 57 regulation may not exist, even if such thresholds could be scientifically established. The greater the nature and degree of risk posed by failure to regulate stringently, the greater the political and legal pressures for vigorous regulatory inter- vention--despite uncertainty regarding actual costs and benefits of such intervention. Where "non- threshold" carcinogens are involved, it is argued that "zero" exposure is the only permissible standard. The net result may be a regulatory goal of "no cancer" regardless of the cost of attainment, while a less stringent regulation allowing the possibility of "some cancer" is not politically tolerable, however merited on grounds of "regulatory reasonableness." • Uncertainty and the Future The degree of scientific uncertainty that attends these issues, together with the vague breadth of the statutory requirement that OSHA consider "feasibility," endows the Administrator of OSHA with imjnense discretion which, in turn, must be exercised in a political and legal crucible. The potential for regulatory intervention by OSHA "to assure . . . that no em.ployee will suffer material impairment of health ..." throughout a working lifetime, is immense. The possible cost of such intervention, large on its face, is compounded by the statutory and administrative predilection for engineering controls instead of personal protective devices. While the Toxic Substances Control Act, passed by the 9 4th Congress may, in the future, have the effect of reducing the number of toxic sub- stances requiring OSHA regulation, presently OSHA is invested with vast discretion to regulate toxic sub- stances. The exercise of this discretion is not circumscribed by statute or practical expectation so as to require other than the most rough consideration of costs as compared to the benefits of regulation. 58 Costs and Benefits; A Review of Current Empirical Evidence* The recitation of evidence which follows in this section will undoubtedly prove tedious for some. The short of the matter is that current empirical evidence is mixed as to the rationality of current regulatory policy, and in any case, highly inadequate. That fact, in and of itself, is significant, The section reviews available evidence as to costs and benefits as follows: (1) review of aggregate economic impact data (pp. 58 -63 ) ; (2) review of industrial economic impact data (pp. 64 -68 ) ; (3) review of regional data (pp. 69 -93 ) ; (4) review of benefit d^ta (pp. 94 - 100) ; (5) discussion of selected costs and benefits (PP- 101-109) ; (6) summary and exhibits; (7) bibliographical notes. (1) Review of Aggregate Economic Impact Data ** Legislation, particularly regarding the environment, represents a heterogeneous mix of objectives, which range from aesthetics to matters of life and death. The concept of environmental protection is often vague, difficult to define with any precision, and not readily reducible to a common denominator. In contrast, economic growth, with which environmental protection is frequently compared, refers to the growth rate of some national accounting aggregate, usually the Gross National Produce (GNP) . It is a precise concept, operationally defined and capable in principle of exact measurement- even if in several respects it is unsatisfactory. Not surprisingly, reliable economic impact information is far more readily available than reliable benefit data. * The principal drafting of this section, drawing on sources noted, was by the Office of Regulatory Economics and Policy. Bibliographical references cited in this section are listed as a note at the end of the section (p. 119) . ** Because of the nature of the data, a distinction must be made between national expenditures and business expenditures . National expenditures data are available from BEA for the years 1972-1973. Forecasts of national expenditures are made by the Council on Environmental Quality (CEQ) . National expenditures include capital, operating, and maintenance costs of business, consximers, and government. Business capital expenditures data are available from McGraw-Hill for the years 1967-1975 and from BEA for the years 1973-1976. Unless otherwise noted, McGraw Hill data have been used throughout this paper. 59 studies of the impact of regulations issued in accordance with environmental, safety and health legislation are not numerous, even though the subject has gained widespread interest. Studies of the impact of regulations taken together have been initiated only recently; most have not yet been completed. The Recent Picture . Business, consumer, and government expendi- tures to achieve environmental, safety and health objectives were $22 billion in 1972 and $25.5 billion in 1973. These estimates are incomplete since they do not include operating and maintenance costs for the Occupational Safety and Health Administration (OSHA)- issued regulations and they do not include all operating and maintenance costs of business for environmental protection. Ex.~ penditures for pollution abatement and control were estimated by the Bureau of Economic Analysis (BEA) to be $19.5 billion in 1972 and $23 billion in 1973(^^'^^-^ Expenditures by business to comply with OSHA regulations were estimated by McGraw-Hill to be $2.5 billion in 1972 and $2.5 billion in 1973 A^-/ National expenditures for environment, safety and health repre- sented 1.9 percent of Gross National Product (GNP) in 1972 and 2.0 percent in 1973. Preliminary data indicate that national expenditures exceeded 2.0 percent of GNP in 1975. Business spent $34,8 billion from 1967 to 1974 to achieve environ- mental, safety and health objectives.* Approximately $15.7 billion (45%) of this total were spent for control of air pollution. Eleven billion dollars (32%) were spent on water pollution control. The balance of $8.1 billion (23%) was spent for compliance with OSHA regulations . In 1975, capital expenditures by business for pollution control totaled $7.7 billion, of which $4.3 billion went for air, $2.4 billion went for water, and $1.0 billion went for solid waste. ♦These estimates do not include operating and maintenance costs associated with environmental and employee protection. Estimates of business operating and maintenance costs are not available for the 1967-1974 period. Estimates of capital and current account expenditvures by consumers and government are also not available for the 1967-1974 period. 60 Projected Expenditures . Over the period 1975 through 1984, the Nation will spend $486.2 billion, according to CEqA^-' Of this total, $258.8 billion is due to environmental legislation. The capital costs of employee safety and health have been averaging $2.7 billion a year. Accordingly, one would expect OSHA to add $25 to $30 billion capital expenditures to the 1975 to 1984 expenditures estimate. Operating and maintenance costs of employee protection, for which data are unavailable, would be additional. The CEQ projections include only the compliance costs of existing environmental legislation and regulations. They do not include costs associated with regulations which are forthcoming. Costs associated with forthcoming regulations are sizable, as can be seen in the following examples: The Environmental Protection Agency (EPA) estimated that the significant deterioration provisions included in the proposed Senate amendments to the Clean Air Act would increase the capital requirements of the electric utility industry by more than $11 billion over the next 15 years. These costs are in addition to the $44 billion to be spent between 1975 and 1984 for pollution controlt 42 7 The significant deterioration provi- sions will increase the capital and operating costs of other industries also. As yet, there are no estimates of these costs. • According to EPA, implementation of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) , as amended, will require one-time costs to industry of $495 million and annual costs of $106 million^'l^ -^ The projected costs of toxic substance control to the chemical industry vary widely P--^"^ EPA estimates control will cost $80-140 million. The Manufacturing Chemists Association (MCA) estimates control will cost from $358 million to $1.3 billion, depending on the degree of control. Dow Chemical Company estimates the cost of control to be in the neighborhood of $2 billion. The General Accounting Office (GAO) review of these estimates con- sidered the EPA estimate to be the most reliable, Dow Chemical's to be overly high, and the MCA estimate to be believable. 61 According to a Synthetic Organic Chemical Manufacturing Associa- tion (SOCMA) -sponsored study by Foster D. Snell, the cost to the chemical industry of OSHA's Standards Completion Project (SCP) — a program to protect workers from potentially harmful substances — will cost the chemical industry $421 million in capital costs, $422 million in non-capital start-up costs, and $367 million • fooJ annually for continuing costs: OSHA estimates that industry will have to spend $10.5 billion in capital expenditures to meet the existing 90dBA noise level requirements. Since much of industry is not in compliance with the 90dBA level, presumably all or a sizable portion of the $10.5 billion has yet to be spent. The cost of moving from the 90dBA level to the 85dBA level will cost an additional $8 billionf'^^ The OSHA-proposed coke oven standards will result in increased capital and operating costs for the steel industry. Estimates of the capital requirements to comply with these regulations range from $451 million to $760 million according to studies for OSHA and the American Iron and Steel Institute. The estimates of additional operating expenses range from $173 million to over $1 billion annuallys33j OSHA estimates that its proposed arsenic standards will result in increased capital and operating costs to nonferrous metal smelting, agricultural chemicals (wood preser-vative and pesticide manufacturers) and glass manufacturing^^/ Capital requirements to comply with the four microgram arsenic standards are estimated to be $273 million; operating and maintenance costs are estimated to be $56 million. On an annualized cost basis, this translates into $111 million per year in compliance costs. There are indi- cations that some OSHA estimates are low. Kennecott and American Smelting and Refining Company (ASARCO) , for example, estimate that their costs are nearly double the OSHA estimate, $40.5 million rather than $22 million^^^^ If the costs reflected in these examples are taken into account, total costs to industry will be increased by $65 to $68 billion. 62 In addition to expenditiores inciirred directly by business and by government, public costs are incurred by budget allocations for pro- grams to alleviate adverse effects upon individuals (workers who are unemployed as a result of plant closings) , industries (small business firms which obtain fimding from federal agencies) , and commvinities (which may suffer relatively heavy unemployment and become eligible for federal assistance) . Macroeconomic Impacts . The CEQ and EPA periodically estimate the impacts of environmental expenditures on the U.S. economy. A com- parable analysis of the effects of safety and health related expenditures is not available. The most recent CEQ-EPA analysis indicates that over the period 1976 to 1983, the aggregate impacts of pollution control on key economic aggregates will be substantial, and will greatly exceed earlier projected impacts. Projected real GNP is slightly higher in 1976 as a result of pollu- tion control expenditures. However, in 1977 and siibsequent years, GNP will be lower as a result of pollution control — 2.2 percent lower by 1983. The slower growth after 1975 is primarily a result of the dampening effect of price increases resulting from environmental expenditures and a decline in the growth of environmental expenditures, Prices, as measured by the Consumer Price Index (CPI)_, will be 4 percent higher in 1983 with pollution control than they would be without pollution control. Although prices are expected to increase by 4 percent, relative prices, which are not fully reflected in aggregate price indexes, will change by considerably greater amounts. For example, the price of electric power will increase from 7 percent, EPA estimate,'^°^to 15 percent, electric utility industry estimate .^^ 7 J 63 Many industries predict (see industry discussion) that compliance with environmental, safety and health regulations will slow their rate of capacity expansion. It is likely that reductions in capacity expansion will interrupt the smooth flow of goods and services. These bottlenecks will tend to increase prices and reduce output. Among manufacturing industries pollution control expenditures tend to be concentrated in a few industry groups. In 1973 and 1974, 66 percent and 69 percent, respectively, of all abatement expenditures for capital equipment were concentrated in four major industries: primary metals, chemicals and allied products, paper and allied products, and petroleum and coal. Prices in these industries will be more strongly affected than in industries with relatively low rates of environmental expenditures. CEQ and EPA estimate that environmental expenditures will add to total employment over the period 1976-1981. The employment rate will be roughly one-half percent higher in 1977. The differential will decline to zero by 1981. After 1981 environmental expenditures will have a small negative effect on the employment rate. The small negative effect coincides with economic recovery. Overall, in the long-run, the net impact on employment is not expected to be significant. It is difficult to determine with precision and in total the ramifications of environmental expenditures on the U.S. economy. The interrelationships between economic variables and activities are numerous and complex. Macroeconometric models provide a frame- work for the assessment of the impacts of regulations. However, the nature of these models, as well as the complexity of the problem, is such that their results can be taken as only rough indications of the ultimate impacts of the environmental expenditures. Typically, the models are demand oriented with a limited ability to reflect the effects of regulations on supply. They do not adequately allow for potential bottlenecks nor do they capture the responses to these shortages. A major shortcoming is the level of disaggregation in the industrial sectors of the models; the sectors are too broad to identify specific products or materials, the supplies of which may be adversely affected by regulatory requirements. The assessments of the impacts of environmental regulations made by macroeconomic models must be supplemented by a consideration of impacts on specific industries and products. Some indication of these micro level impacts is given in the section on Industrial Impacts . 64 (2) A Review of Industrial Impact Data Industrial Expenditures . Between 1967 and 1975, business made capital expenditures of $45 billion to comply with environmental, safety and health regulations — $34.8 billion for environmental protection and $10.3 billion for safety and health, (exclusive of operating and maintenance costs, for which there are no estimates) . The available estimates of environmental operating and maintenance costs, covering manufacturing industries and electric utilities in 1973, suggest that business incurred in excess of $3.5 billion in operating and maintenance costs to comply with environmental regulations alone. The burden of pollution abatement capital expenditures falls most heavily on a few industries. From 1967 to 1975, six industries spent in excess of $2 billion each on pollution abatement capital goods. Electric utilities spent over $6.5 billion. Petroleum spent over $4.5 billion. Chemicals and paper spent over $2.5 billion each. Iron and steel and nonferrous metals spent over $2 billion each. Expressing the capital requirements to meet regulatory requirements as a percent of total capital spending enables more meaningful com- parisons and better indicates the potential impact of regulations. Using Bureau of Economic Analysis (BEA) estimates in 1975, the following industries had the largest antipollution spending ■^'~ percent of total capital spending: as a Nonferrous Metals 24.2 percent Paper 16 . 8 Stone, Clay, and Glass 14.3 Blast Furnaces, Steel Works 13.5 Petroleum 11.8 Chemicals 10.9 Electric Utilities 9.7 Capital expenditures to meet Occupational Safety and Health Administration (OSHA) standards affect a somewhat different group of industries. In 1975, the six industries spending the most were: 65 Commercial, $494 million; Communication, $268 million; Petroleiim, $263 million; Chemicals, $200 million; Electric utilities, $170 million; Nonferrous metals, $150 million. As a percent of capital spending, the top spenders for OSHA were: Instruments 10.1 percent Nonferrous Metals 6.6 Stone, Clay, and Glass 5.9 Rubber 5 . 7 Textiles 5.7 The combined impact of total expenditures to meet environmental, safety and health regulations is impressive in terms of the percent of total capital spending for compliance. The following lists for high impact industries the combined percentage of capital spent in 1975 for environmental, safety and health:* Nonferrous Metals 30.8 percent Paper 19.0 Stone, Clay, and Glass 20.2 Blast Furnaces, Steel Works 15.4 Petrole\xm 14.3 Chemicals 14.1 Electric Utilities 10.7 Projected Impacts . There are numerous indications that existing and proposed environmental regulations are stringent and that compliance with the regulations will have adverse effects on produc- tivity and growth. It appears that some industries will not be able to finance investment for both compliance and capacity growth, and that industry will be unable to maintain U.S. self-sufficiency in critical materials. For example: *These percentages are based on BEA data for pollution spending and McGraw-Hill data for OSHA. BEA data tend to be of a lower magnitude and percent than McGraw-Hill data. For example, using all McGraw-Hill data for 1975, the nonferrous metals industry devoted 34.1 percent of its total capital expenditures to anti- pollution and safety and health. The differences between BEA and McGraw-Hill estimates of expenditures are being explained in a forthcoming Regulatory Policy Committee technical paper. 66 • Environmental regulations will constrain the electric power industry's use of coal, consume large amounts of capital — $44 billion over the next ten years, and increase consiomer costs by an average of 15 percent^-^^^ • The copper industry finds that each layer of new or reinterpreted regulations adds another layer of cost. An example is the pro- posed disallowing of supplemental control systems (SCS) as a control strategy. This will add $500 to $700 million to the $1 billion base compliance cost of the Clean Air Act. Consequently, the copper industry may encounter difficulties in adding new capacity and maintaining U.S. self-sufficiency in coppers ■^^-' The OSHA-proposed arsenic standards may force the closing of the American Smelting and Refining Company (ASARCO) , Tacoma, Washing- ton smelter. This smelter is the only U.S. producer of metallic arsenic and arsenic trioxide. The annual cost of compliance for the Tacoma smelter is estimated to be $9.9 million by OSEft-^-'and $14.3 million by Arthur D. Little, Inc. (TUDl/ ■'in an analysis performed for ASARCO. The average net pretax income of the Tacoma smelter is $1.9 million per year. Clearly, the Tacoma operation cannot absorb these costs. The ADL analysis concludes that the costs cannot be passed back to the mines supplying smelter feed nor forward to purchasers of copper or arsenic. If the Tacoma smelter is closed, the U.S. will lose 7 percent of U.S. copper smelting capacity and be completely dependent on foreign suppliers for arsenic trioxide. Additionally, the arsenic standards will result in the loss of 3,000 jobs (3,700 if Tacoma closes) and result in a 21 percent increase in the price of arsenic-preserved wood products. The petroleum industry expects to spend $19.2 billion for environmental control. The industry projects that if it is unable to increase capital expenditures , domestic oil imports could rise to 70 percent of U.S. consumption by 1990. The industry estimates that only half of the $19.2 billion for environmental control is net beneficial and that society would benefit more by investments in new productive capacity^ -^ Another area of concern is the effect of pollution control on employment. The Environmental Protection Agency (EPA) monitors job losses attributable to plants closed because of pollution control regulations r^ 5-7 gPA has determined that about 82 plants have closed because of environmental regulations . These closings affected approximately 17,000 to 18,000 employees. The bulk of 67 the plants closed were old plants with dated facilities and high costs of production relative to other plants in the industry. The EPA estimates exclude plant closings and job losses where environ- mental requirements were not the primary reason for closing. This practice underestimates the actual impact on employment. For example : Kennecott Copper recently curtailed copper production in its Nevada Mines Division. This action was taken because of the current weak market for copper and air emission regulations which were more stringent than necessary to meet National Ambient Air Quality Standards (NAAQS) . If this plant is closed, it is likely that the job loss (1,200) would be attributed solely to economic conditions /397 Ford Motor Company estimates that price increases to cover the cost of complying with 1977 emission controls will lower their auto sales ^^9 J >phe reduction in auto sales would force a reduc- tion of 75,000 in Ford's work force. To accommodate new entrants to the work force, the U.S. must create 1.5 to 2.0 million jobs per year. The Council on Environmental Quality (CEQ) and EPA argue that abatement expenditures will create more jobs than are lost through plant closings. For example, the CEQ argues as follows: • During 1976, abatement expenditures will be approximately $35 billion, or about 2 percent of Gross National Product (GNP) . If these expenditures result in an additional 2 percent of the labor force being employed, then almost 2 million jobs will be created f-^'-' There is no reason to expect that such a correspondence really exists. Environmental expenditures do create jobs. The question is the net number of jobs created. The CEQ-EPA estimate is a gross estimate and, therefore, does not consider how many jobs were lost or not created. The magnitudes can be significant, as the following examples show. The paper industry projects that by 1984 compliance with existing environmental regulations will preclude the creation of 63,000 paper industry jobs. Taking into account the effect on supplier and customer industries, a total of 440,000 jobs will not be created4'^7-7 68 The steel industry calculates that a billion dollars invested in environmental controls will create 610 new jobs, while a billion in new productive capacity will create 7,800 jobsP^^ Preliminary estimates by the chemical industry suggest that a million dollars invested in manufacturing facilities results in 13 jobs while the same amount invested in environmental protec- tion facilities results in 5 jobs. Each manufacturing job creates 2 to 3 jobs in customer and supplier industries. Environmental protection jobs have little, if any, such etfectA.J The National Bureau of Economic Research (NBER) has been exploring the industrial impacts of the Federal Water Pollution Control Act (FWPCA) (30 J Preliminary findings indicate "impacts" occur at the industry level and at the plant level. The plant level impacts are the most significant. On the industry level, the near-term effects of water pollution controls can lead to short-term capacity con- straints, which in turn can lead to price increases in excess of any direct cost increases associated with controls. Impacts are most noticeable during periods of high capacity utilization, which implies that the timing of controls with respect to the state of the business cycle is an important determinant of "impact." In the long-run, pollution control requirements cause changes in an industry's cost structure. These changes can have significant effects not readily observable in product price changes. Economies of scale in wastewater treatment are less available to small plants; the size of the economically minimum sized plant is increased. The first effect tends to reduce the number of small plants and the second effect acts to raise barriers to entry into the industry. The economic impacts of environmental, safety and health regulations on industry have been studied separately. It is difficult to ascer- tain whether the combined costs of all regulations will drastically affect a firm's or industry's prices, profits, productivity, or employment when the available studies presumably show that the effects of different regulations estimated separately are minor. In terms of magnitudes, in 1974, approximately 7 percent of GNP was allocated to all educational programs and a similar percentage to health. In comparison, the National Economic Research Associates (NERA) estimates that between 3 to 6 percent of GNP will be allocated to compliance with the requirements of the Clean Air Act and the FWPCA. The NERA estimate does not include the impact of safety and health regulations. For an illustrative, more detailed examination of the impacts of regulation on two industries which are particularly adversely affected — the copper and paper industries — see Appendix A. 69 (3) A Review of Regional Data: Regional Impacts of Environmental Regulations The local or regional implications of achieving environmental, safety and health improvements have received very little attention. Most analyses of the costs and benefits of regulations have stressed the macroeconomic and industrial implications. The allocation of resources to meet these objectives has been signif- icant and is growing rapidly — national expenditures for these purposes represented 2.0 percent of GNP in 1973. While these expenditures have significant implications for specific industries and the economy as a whole, their impacts on regions may be even greater. In a macro sense, some of the negative impacts associated with these efforts may be offset. For example, while employment may decline or growth in jobs diminish in some industries, jobs may be created in other industries. However, the reallocation of resources between economic activities very likely will involve substantial reallocations between regions as well. The spatial shifts of population, resources, and production may be detrimental to some regions and beneficial to others. In some areas, the disruptions may involve production and job losses. These losses may impose additional costs on the local communities — revenue losses as the revenue base is eroded or additional expendi- tures for relief to lonemployed workers. To the national economy, the costs of meeting these national objectives may be transitory. To specific regions, the costs may be permanent. The essential issues in the consideration of the regional impacts of federal regulations are: • Do uniform federal regulations have uniform regional impacts? Will federal regulations significantly constrain economic growth in some regions? • Do federal regulations conflict with goals for the development of economically depressed areas? 70 The available data are inadequate to address these issues. The analy- sis that follows deals with the narrow issue of the regional costs of environmental regulations. The purpose of the analysis is to demon- strate the extent to which the costs and impacts of environmental regulations vary between regions. Measuring Regional Costs and Benefits To date, very little work has been done to allocate the costs of environmental regulations to regions or to relate those costs to regional benefits. The data and projections presented below provide a preliminary assessment of the regional distribution of some of the costs associated with pollution abatement. Where possible, an assess- ment is made of the benefits the regions will gain." It should be noted that the costs and benefits cited are not incremental, i.e., are not those occurring solely because of regulations. A measurement of incremental costs and benefits to regions is not possible, given current data limitations. The size of region selected for study is important. A small region (county, SMSA) may be necessary to thoroughly measure the direct costs and benefits associated with pollution control. However, too small a region may not be operational for national policy analysis. On the other hand, a large region (multi-state) may be useful to reveal major geographical cost differences, but may be too large to identify the regional implications of national policies. Selection of region size is determined by the availability of data. A case study approach at the community level is costly, time consuming and typically limited due to data problems. A few studies of this nature have been done and will be reviewed below. The analysis pre- sented here concentrates on larger areas — states and multi-state areas.* Data and projections are more numerous for these areas. Also, they are adequate for the purpose of this paper — to demonstrate that there is considerable regional variation in costs and benefits associ- ated with achieving national standards. Historical Estimates; Capital Expenditures . The Bureau of the Census has published survey-based estimates of pollution abatement costs and *See page 77 for a listing of the BEA regions and their composition by states. 71 expenditures by major manufacturing industries for 1973 and 1974 A-'-' ^^"' The estimates are published for multi-state regions, states, and major SMSAs. Pollution abatement capital expenditures by manufacturing industries vary considerably between regions (Table 1) . These differences re- flect the size and structure of the industrial sector of the regions. Pollution abatement expenditures (adjusted for size of the region) represented 15 percent of the total capital expenditures made by manufacturing industries in the Southwest region in 1973 (Table 2) . The comparable figure for all U.S. manufacturers was 9 percent. Manufacturers in the Rocky Mountain region devoted 11 percent of capital expenditures to pollution control. The smallest percentage, 5 percent, occurred in the New England region. Historical Estimates: Annual Costs . There are regional differences in the distribution of annual costs between forms of pollution abate- ment (Table 3). Relative to the U.S. as a whole and the other regions, annual costs in the Rocky Mountain, Far West, and Mideast regions were more concentrated in air pollution abatement. Costs in the Southeast, Southwest, and New England regions were relatively more concentrated in water pollution abatement. The annual costs per unit of pollutant removed* for air were several times higher in the New England region than in the other regions, according to data for 1973 and 1974 (Table 4) . The unit costs for air pollution control were $81 in 1973 and $89 in 1974 for the New England region. The comparable figures for the U.S. were $15 in 1973 and $20 in 1974. The costs per unit of pollutant removed through solid waste collection and disposal were also considerably higher in both years in the New England region — $13 and $12 for New England, $5 and $5 for the U.S. as a whole. *The calculation of annual costs per unit of pollutant removed from only two years of data may be misleading. The amount of pollutants removed in a region may vary significantly from year-to-year (see Table 9) . These amounts may reflect any number of current and previous control activities and, therefore, may not be directly attributable to the annual costs reported in the same year. Quantities of pollutants removed through water pollution control are not reported by the Bureau of the Census. 72 The extreme variation between New England and the other regions in terms of costs per \anit of pollutant removed may result in part from economies of scale in the removal of pollutants. Annual costs per unit for air pollution abatement and solid waste disposal were more than three times greater in the New England region than in the South- east region. The New England region accounted for only an average of 1.3 percent of the total pollutants removed in the U.S. for the two years and 3.5 percent of the total annual costs. On the other hand, the Southeast region accounted for an average of 28 percent of total pollutants removed and 20 percent of total annual costs. There are exceptions to the relationship between quantities of pollut- ants removed and unit costs per unit of pollutant. The Rocky Mountain region, which had the lowest costs per unit of pollutant removed, accovmted for less than 4 percent of the total pollutants removed. The overriding factors explaining the regional cost differences are more likely to be the types and quantities of pollutants generated, which, of course, depend on the size and structure of the industrial sector in each region. Though regional data on pollution abatement costs and expenditures by industry are sketchy due to disclosure problems, some tentative conclusions can be made about regional variations. It is apparent that there are considerable cost differences between industries with- in a region and between regions for a given industry. Tables 5 through 8 provide information on costs of air pollution abatement and solid waste collection and disposal for selected industries, by state. The implications of these regional and industry cost differences have not been fully analyzed. However, to the extent that environmental costs differ for industries between regions, competitive cost advan- tages may be created. (The allegations regarding the Mahoning Valley are an example.) Firms incurring higher pollution abatement costs in one region may be at a competitive price disadvantage in comparison with firms operating in regions with lower industry abate- ment costs. The result may be a shifting of production and employment to the lower cost region. This geographical reallocation of resources might occur even though the resource and production levels for the industry as a whole remain the same. Thus, while the aggregate impacts may be small, the regional implications may be considerable. Historical Estimates: Benefits . The quantity of pollutants removed is, at best, a crude proxy for the myriad benefits of pollution con- trol. The quantity of pollutants removed indicates nothing about the resulting condition or quality of the environment; it does not 73 measure the enhancement of the health, safety, esthetic, or recrea- tion value of the environment. However, it is the most generalized, quantifiable information currently available for numerous regions. As in the case of costs, the quantities of pollutants removed vary considerably between regions (Table 9) . The regions with large polluting industries recorded the largest quantities of pollutants removed. The Southeast region accounted for 28 percent of total pollutants removed in two years. Figures for the other regions were Great Lakes, 25 percent; Mideast, 16 percent; Far West, 11 percent; Southwest, 10 percent; Plains, 6 percent; Rocky Moiontain, 4 percent; New England, 1 percent. Projected Costs . Projections have been made of the aggregate costs, and expenditures for pollution abatement that will be made over the next ten years by the business and piiblic sectors of the U.S. economy. No comparable projections have been made for the various geographical regions of the country. To provide a projection of business capital expenditures for pollu- tion abatement on a regional basis, the Bureau of Economic Analysis (BEA) national estimates ■'have been allocated to the eight regions. The allocation was based on historical and projected regional industry earnings data. The earnings projections y^^ developed by the Regional Economic Analysis Division, BEA. The regional projections, by manufacturing industry, are presented in Table 10. The estimates are cumulative for the period 1971-1980 and are in constant (1972) dollars. The largest expenditures will be made by the petroleum, primary metals, chemicals, and paper industries. Based on the current and projected geographical distribution of these industries, the major impacts will be concentrated in only a few regions. The Great Lakes and Mideast regions together will account for approx- imately half of the total pollution abatement investment expenditures. The Southeast region will account for about 17 percent of the total and the Far West about 12 percent. The remaining regional shares are: Southwest, 10 percent; Plains, 6 percent; New England, 5 per- cent; Rocky Mountain, 2 percent. 74 Water Quality Improvement . Available case studies show the variation that will jDccur in regional costs and benefits from water pollution abatement. ■'••'Evidence gleaned from these studies indicates that: Water quality improvements, the allocation of compliance costs between industry and local government, and the ability to protect water quality and support economic growth vary significantly between regions. In general, the abatement programs are more stringent for the private sector. The relative portion of the total pollutant load discharged by publicly-owned treatment plants increases as more stringent requirements are met. In addition, the relative cost for the private sector is generally higher than its contribution to the total discharge. Three examples illustrate the cost burdens and the degree of abate- ment achieved in situations typical of the regional studies. In Atlanta, the vast majority of discharges is from pioblicly-owned treatment works. In the Huntington, West Virginia/Ashland, Kentucky/ Portsmouth, Ohio (HAP) area, the relative discharges from the public and private sector are approximately equal and in Charleston, the industrial discharges dominate. The 1973 point-source Biochemical Oxygen Demand (BOD) load in the Atlanta area averaged 54,305 pounds per day. The municipal sector contributed about 52,179 pounds per day or 96 percent of the load. Compliance with the 1983 abatement level will reduce the BOD load to 24,300 pounds per day, an 11 percent reduction from the estimated 1977 load and a 55 percent reduction from the 197 3 load. The total cost to go from the 1973 level of treatment to the 1983 level is about $185 million. The municipal share is about $181 million or 98 percent. The average cost per poiand of pollutant BOD abated will be $6,381 for municipal governments and $2,439 for industry. Tiuntington/Ashland/Portsmouth is representative of an area with major pollution problems, a high population out-migration rate and an economic dependence on a few industries siibject to high abatement costs. The 1973 total BOD load in the HAP area from municipal and industrial point sources was 37,150 pounds per day, with industiry contributing about 68 percent. Compliance with the 1983 requirements will reduce the BOD load to 8,520 pounds per day. The incremental cost to reach the 1983 level is $135.7 million. Industry's share is estimated to be 89 percent or about $120.6 million. The average cost per pound of pollutant BOD abated will be $5,156 for industry and $2,080 for mvinicipalities. 75 In the Charleston, West Virginia area, industrial pollutant loadings far outweigh the municipal loadings, and water quality needs dictate stringent treatment levels to meet the 1983 goals of the Act. Indus- try contributes 84 percent of the BOD load to the Kanawha River; almost all of this is from the chemical industry. Upon compliance with the 1983 effluent limitations, the 1973 BOD load will be reduced by about 81 percent. The estimated cost of going from the 1973 to the 1983 level is $170.3 million. The industrial share is $161.2 million or 95 percent. The average cost per pound of pollutant BOD abated will be $3,613 for the industrial sector and $1,573 for the municipal sector. Job Dislocations . It is difficult to measure the full impacts of pollution abatement costs and expenditures on regional economies. In lieu of making the necessary expenditures to achieve environmental standards, some plants may close. Plant closures may represent lost production to the region and Nation. Or, production may be curtailed at plants with severe pollution problems and transferred to plants in other regions where plant or region characteristics ar-e such that abatement costs are lower. Either of these adjustments involves regional economic dislocations. The Environmental Protection Agency (EPA) monitors actual and potential job losses resulting from pollution control legislations^^^-^To date, actual job losses (adjusted for size of region) have been unevenly distributed across regions (Table 11) . The distribution of job losses that would occur from threatened plant closings is even more concentrated. In 82 plant closings, pollution control costs were alleged to be a primary factor. These closings have resulted in the loss of nearly 18,000 jobs. Nine of the ten EPA regions have incurred plant closings.* The regional concentration of job losses is indicated by the figures below. 27% of closed plants (29% of lost jobs) were in Region II 18% of closed plants (24% of lost jobs) were in Region V 2% of closed plants ( 2% of lost jobs) were in Region VII 0% of closed plants ( 0% of lost jobs) were in Region VIII ''See Table 12 for a listing of the EPA regions. 76 Environmental requirements may force the closing of 32 plants, with 37,831 affected jobs. The bulk of these plants is in two EPA regions; 78 percent are located in EPA Region V and 17 percent are in Region IX. Twenty-four thousand of the reported potential job losses (64 percent of the total) are employed at four primary metals plants located in Ohio (Mahoning River Valley) . The steel companies that operate these plants have argued that the plants are too old to justify the instal- lation of expensive pollution controls. They have threatened to close the plants rather than spend an estimated $140 million for pollution controls to reduce effluent discharges into the Mahoning River. These expenditures would be in addition to $150 million on equipment needed to reduce air pollutants from the plants^ "^^-^ One economic stimulus which will occur from abatement expenditures is the creation of jobs associated with the production, operation, and maintenance of pollution abatement facilities and equipment. Estimates of the regional distribution of this activity are not available. 77 O *J o m flj •H 0) g X ni 3 o 0) c x: JS W s o ■u ITJ <0 N p fH X > •r^ o J1 O c « o •w 4J ■p c (0 en M 0) c c n5 o (0 •H s -H o ■d <4-l ^ -^ jc CT" ra •H U) •0 V4 (n 0) > t-t lO ? <0 10 ^ 0) m 3 rtj b S o is u a: (0 e o < u 0) rd Id p p o 10 ■p •H 10 (d Id u a a M u OT M 10 c 0) o £ j= Id Id •H c cd w -P -p n u Id c U) U P A c 1-1 •^ o •r^ o o 0) 5 (i. 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In the context of environmental, safety and health regulations, bene- fits are the value of preservation and restoration of, and avoidance of unnecessary risks to, natural and human resources. Thus, benefits include the value of preserving the status quo where the status quo is perceived to be satisfactory and the value society places on the damages attributable to actions which degrade natural and human resources . Most studies have measured changes in air or water pollutant emission levels or changes in ambient air or water quality. A few studies have estimated the economic cost of damages caused by air or water pollutants. These approaches to measuring benefits must be inter- preted carefully. They are not all measures of benefits and are limited in their value for comparison with costs. Specifically: — Measures of changes in emission levels are indicative only of the success of control programs to abate and control pollutants, — -Measures of changes in ambient air or water quality are physical measures of the benefits of air or water pollution abatement and control. This approach indicates whether control programs are achieving the environmental objectives. More importantly, this approach facilitates cost effectiveness comparisons between industries, regions or alternative pollution control programs. —Measures of the economic cost of damages attributable to air or water pollutants are proxy measures of the value of benefits which would accrue if we were able to avoid the damages. Economic measures enable direct comparison of costs and benefits. There is, of course, a major set of value problems associated with the economic quantification of nany classes of benefits. Air Pollutants Abated . Compliance with the Clean Air Act (CAA) has markedly reduced the quantity of air pollutants dischargedP-^-^In 1970, 221.6 million tons of criteria air pollutants (particulates, sulfur oxides, carbon monoxide, hydrocarbons and nitrogen oxides) were discharged to the atmosphere. By 1974, criteria pollutant 1 95 discharges had been reduced 10.5 percent to 198.4 million tons. The overall reduction in emissions represents a 29 percent reduction in particulates, from 27.5 to 19.5 million tons; a 12 percent reduction in carbon monoxide, from 107.3 to 94.6 niillion tons; an 8 percent reduction in sulfur dioxide, from 34.3 to 31.4 million tons; a 5 percent reduction in hydrocarbons, from 32.1 to 30.4 million tons; a 10 percent increase in nitrogen oxides, from 20.4 to 22.5 million tons. Mobile source emission control is an important component of these pollutant reductions. Over the period 1965 to 1975, the average per mile emissions of hydrocarbons declined 57 percent. Carbon monoxide emissions per mile declined 44 percent, while nitrogen oxides emitted per mile increased 2 percent. The overall reductions, an average emission decline of 5.8 million tons per year, are impressive in light of the previous trends in air pollutant discharges. Over the 30 years 1940 to 1970, total emissions grew at an average of 3.3 million tons per year. Air pollution con- trol programs are bringing about a reduction in total air pollution emissions. Ambient Air Quality . The success of the control programs aside, the more pertinent question is, to what extent are air quality goals being achieved? As of 1975, only one-third of the 247 Air Quality Control Regions (AQCR) met ambient air quality standards for all criteria air pollutants. The standards were violated for particulates in 118 regions, for sulfur dioxide in 34 regions, for 'carbon monoxide in 69 regions, for oxidants in 79 regions, and for nitrogen oxides in 16 regions. These estimates may be low since many AQCR do not monitor all of the criteria pollutants. Knowledge of anibient air quality is increasing. The network of monitoring stations is expanding. The analytic methods used are being standardized and monitoring activities are covering more pollutants. These actions will improve the measurement of changes in ambient air quality. Increased knowledge of changes in ambient air quality will facilitate moving from estimates of physical benefits to estimates of economic benefits, especially if a single ambient air quality index is used to report air quality. Recently, a Federal task force developed and recommended for adoption by local and State pollution control agencies a new air pollution index ^■'■^^The index was designed to reduce piiblic 96 confusion and scientific inconsistency in the reporting of air quality by disparate locations. Currently, there are at least 14 different air quality indices in use. Adoption of the index is voluntary. If adopted on a widespread basis, use of the index will facilitate estimates of damages, comparisons between regions, and comparisons between control efforts. Incidence of Air Pollutants . An Environmental Protection Agency (EPA) study provides information on the demographic and socioeconomic characteristics of populations exposed to different air pollution levels in the United States^ -'-^-^In 1973, most of the U.S. population was not exposed to short-term particulate levels, short- or long- term sulfur dioxide levels, or short-term carbon monoxide levels exceeding the Federal primary standards. However, significant proportions were exposed to long-term particulate and short-term oxidant levels exceeding the Federal standards. Exposure by age, race, income and employment groups to different levels of pollution was in most cases very siudlar to that, of the whole population. There was no consistent pattern across age groups. For particulates and carbon monoxide, the aged tended to be exposed slightly more than the average; for sulfur oxides, the young tended to be exposed slightly more. In terms of income groups, the poor tended to be exposed slightly more and the wealthy slightly less. In terms of occupation, manufacturing workers tended to be exposed more than other working groups. The estimates are crude approximations because of the problems of accurately measuring pollution levels and of estimating pollution levels throughout a metropolitan area from a limited number of sampling stations. The analysis relates pollution levels to place of residence and does not take account of exposures at the workplace, If workplace exposure data were available, we would expect somewhat different results. Nevertheless, the study gives a preliminary indication of the incidence of air pollution exposure. Future Air Quality . Recent work projects that compliance with existing air pollution standards will result in a continued improve- ment in ambient air quality^^^JThis improvement will be due largely to the replacement of older polluting vehicles with new vehicles which meet Federal standards. Continued tightening of stationary and mobile source emission standards will add further improvement to ambient air quality. 97 By the yecir 2000, average oxidant concentrations will range from about 40 percent below the early 1970s average, if current standards are continued, and 50 percent below, if more stringent standards are applied. However, even with the stringent level of control many urban areas will not meet the hydrocarbon standard. Carbon monoxide concentrations will decrease from 75 to 85 percent depending upon the stringency of the standards. Nitrogen oxide emissions will tend to increase under all but the most stringent levels of control. The projected improvements in ambient air quality will have health benefits. Stringent control of hydrocarbon emissions is expected to reduce persons days of chest discomfort by about 5,000 cases by the year 2000. Current carbon monoxide control levels should reduce to zero, by the year 2000, cardiac deaths and person days of discomfort attributable to carbon monoxide . More stringent carbon monoxide control would not add more health benefits. Reduction of nitrogen oxides emissions should reduce attacks of lower respiratory disease in children by about 600,000 cases per year by 2000. Control of nitrogen oxides emissions to the most stringent level would reduce such attacks by an additional 600,000 cases per year. Ambient Water Quality . The 1974 National Water Quality Inventory found much improvement in the Nation's water and the need for con- siderably more improvement. -'The pollutants receiving widespread control (coliform bacteria and oxygen demanding materials) are showing nationwide improvement. Municipal and industrial waste treatment have reduced the discharge level of harmful substances such as heavy metals and toxic chemicals. However, significant problems remain. Temperature and turbidity are problems in some Western and Southern States. High levels of phosphorous and nitrogen, an indication of eutrophication potential, are reported by most states. Acid mine drainage and high salinity levels are reported by many areas. Dissolved oxygen levels are improved in most states although almost all states report specific areas where dissolved oxygen criteria are violated. In general, nutrient parameters were the only parameters for which a significant number of states report worsening trends. The most common water quality problems are low dissolved oxygen levels, health hazards from excessive coliform counts, and high nutrient concentrations. Despite these widespread problems, 2 3 of the 32 states which performed overall evaluation of their waters report that most of their waters are of good quality or already meet the 1983 goals of the Act. 98 The problem of high nutrient levels was confirmed by the National Eutrophication Survey. The survey found that phosphorous concen- trations in 73 percent of 298 eastern lakes are high and are likely to produce symptoms of eutrophication in these lakes. The lakes are representative of the eastern half of the Nation. The data imply that eutrophication potential is increasing at a considerable rate. Expected Water Quality . Additional improvements in water quality are expected as a consequence of municipal and industrial compliance with the requirements of the Federal Water Pollution Control Act (FWPCA) . However, compliance with the FWPCA will not enable all waters to meet the goals of the Act. Forty- five states estimate that some of their waters will not meet the 1983 goal of fishable and swimmable waters. The states attribute the projected failures to: point-source discharges (30 states), non-point sources (37 states) , natural conditions (21 states) , and administrative problems (20 states) . Thirty states report that point-source discharges, urban stormwater runoff released through storm or combined sewer systems or through municipal and industrial discharges, will preclude attainment of fishable swimmable waters. These factors are most likely to preclude compliance in the Northeast and Great Lakes regions. Other areas of the Nation are not likely to have significant point-source compliance problems. Non-point sources are expected to preclude compliance with the 1983 goals of the FWPCA in 37 states. The non-point sources most responsible for this prediction are: Agricultural activities — including soil erosion and runoff containing nutrients, pesticides and heavy metals. • Silvicultural activities. • Mining and acid mine drainage . • Land development and urbanization. • Runoff from abandoned oil fields. 99 Twenty-one states cite natural conditions as the reason they will not attain fishable and swimmable waters. The term "natural conditions" covers two situations. The first is where conditions not due to human activity preclude attaining fishable, swimmable waters, for example, where swampy conditions result in low dissolved oxygen or where water quality is degraded by toxic metals dissolved from rocks. This type of condition does not preclude meeting the goals of the Act in that presumably these waters have, "... chemical, physical, and biological integrity." The second is where natural conditions and the activities of man interact. For example, natural low water flow and discharges of pollutants combine to violate the water quality standards. Twenty states report that the Act directly interferes with State pollution control efforts and has interrupted progress toward improving water quality. Problems common to many of the states include: permit issuance problems, missed compliance dates, inade- quate data management, unrealistic permit requirements, and money. These problems are common to many of the states. It is not clear how extensive the problems are within the particular states. A few states estimated the percentage of their waters that will not meet the fishable, swimmable waters criteria. In terms of miles of stream or number of stream segments, less than 10 percent of their waters will not meet the criteria. This finding is encouraging although not conclusive. Economic Benefits of Pollution Abatement . National estimates of the economic cost of pollution damages have been made for air pollu- tion in 1968 and air and water pollution in 1970 and 1973p-^^In 1958, estimates of air pollution damages range from $6 to $20 billion with the best estimate being $15 billion. In 1970, esti- mates of air and water pollution damages range from $7.5 to $35 billion with the best estimate being $2 3 billion. In 1973, estimates of air and water pollution damages range from $14 to $54 billion with the best estimate being $30 billion. The estimates are of the total damages caused by pollution. The estimates can be viewed as a proxy measure of the benefits which would occur if we were able to stop polluting air and water and thereby avoid the damages. Damage estimates most probably represent a minimum estimate of the value of not polluting. 100 The National Cominission on Water Quality (NCWQ) has estimated the benefits of water pollution control programs undertaken to comply with the FWPCAf^^'^In the aggregate, direct benefits are estimated to increase from $3.1 to $4.2 billion per year in 1980, to $4.8 to $6.2 billion per year in 1985, and reach $6.3 to $8.5 billion per year in the year 2000. These estimates measxare changes in land values and in recreational activities. They do not include potential health benefits, the monetary value of avoiding irreversible environ- mental damages, or the value of preserving water quality at specified levels. The benefits are distributed as follows: • Increased values in marine fishing will result in annual economic gains of $2.4 billion in 1980, $3.9 billion in 1985, and $5.2 billion in 2000. • Increased fresh water fishing activities will yield annual gains of from $218 to $527 million in 1980, from $220 to $558 million in 1985, and from $217 to $800 million in 2000. • New flows of economic activity will result from the reopening of beaches. The annual values of this increased activity will range from $142 to $471 million in 1980, from $158 to $521 million in 1985, and from $212 to $701 million in 2000. Real estate near recreation type water bodies will experience an increase in value of $62 million in 1980 and $92.5 million annually for the period 1985 to 2000. • Other types of boating activity will increase dramatically. The annual values of these increases range from $306 to $695 million in 1980, from $498 million to $1.2 billion in 1985 and from $528 million to $1.7 billion in 2000. 101 (5) A Discussion of Costs and Benefits Government agencies responsible for regulations are sometimes given a general mandate to maximize public welfare and are then left with considerable freedom to translate the goal into concrete regulations. The result is often an ambiguity about the weight to be given to various factors in making choices and leads to decisions which are vulnerable to criticism on grounds of inconsistency or of lack of adherence to the mandate. (A discussion of the extent to which there is room for flexibility and/or ambiguity in the major pieces of environmental health and safety legislation is at pp. 34-57 above.) In some cases, it may be conceivable that total prohibition of an action may be the best possible alternative. This may be the case if: (1) the cost of measurement is so high that only a yes- no decision is feasible, or (2) the threat of damage is so extreme that marginal reasoning underlying a cost-benefit analy- sis cannot be legitimately applied. An alternative is to limit prohibition to cases of clear and present danger, and, in the meantime, to develop technology to deal with the current problem. More generally, a somewhat arbi- trary standard is selected as portraying an acceptable environ- ment. Such standards are determined from scientific research into safe levels of various agents in the environment. In some cases, research may find that a 99.9 percent standard is not needed to safeguard the health of the population and more appropriate stand- ards should be established to lessen the economic impact of the regulation. It is essential that the costs and benefits of an agency's regulations be examined in relation to the targeted or presumed risk. Although attempts have been made to estimate the direct costs of specific regulations to specific industries (as noted in the discussion of industrial impacts) , such estimates are under- estimates to the extent that the followircf costs are not taken into account: (1) costs of regulations taken together, (2) costs of regulations arising from the interrelationship among inputs, processes, and outputs, and (3) costs associated with longrun effects . Fiirther, it is evident that emissions, damages, and benefits have yet to be brought together and related to costs in a way that will permit comparisons of the benefits per dollar of expenditures on various regulations. 102 For example, the Council on Environmental Quality (CEQ) reports that if the controls prescribed by the 1972 Amendments to the Federal Water Pollution Control Act (FWPCA) were achieved, industrial discharges would be reduced from 4.3 billion poxonds of Biological Oxygen Demand (BOD) in 1973 to 0.5 billion pounds in 1977 and 0.3 billion pounds in 1983/^^-' Total Suspended Solids (TSS) would be reduced from 117.9 billion pounds in 1973 to 11.8 billion pounds in 1977 and 4.2 billion pounds in 1983. These reductions have yet to be given meaning in terms of human health, crop losses, damage to materials, reductions in land use values, or other economic measures of welfare, or to be related to the $68.5 billion in incremental costs to industry. As the CEQ recognizes: "For all pollutants, there is a need to develop more accurate descriptions of the human health risks and more sophisticated indicators that include such factors as how many persons are exposed, how individuals differ in their sensitivity, and how pollution levels vary within a region." Aggregate Benefit-Cost Estimates : National expenditures for pollution abatement and control in 1973 were estimated to be $2 3 billion. National estimates of air and water pollution damages in 1973 range from $14 to $54 billion, with a best estimate of $30 billion. Comparing the best estimates, we see that benefits were greater than costs in 1973. It should be noted that the estimates are not directly comparable. The cost estimate is of total expenditures made by business, consumers and government for pollution abatement and control. The effect of these expenditures is to avoid a portion of pollu- tion-caused damages. The estimate of benefits is of the total damages attributable to air and water pollutants. To gain these damage values as benefits would require a cessation of polluting activity. In short, the benefit estimates cover a broader range of benefits than resulted from the expenditures for pollution abatement and control. Consequently, in comparing the costs and benefits, the cost estimates are a low estimate of what would be necessary to gain the full range of benefits. Over the period 1972 to 2000, using NCWQ cost estimates, a conservative estimate of the net present value of compliance with the Federal Water Pollution Control Act is $195.8 billiont^-'- This estimate is low because it does not include the costs of operating municipal wastewater treatment facilities or the costs of controlling agricultural and nonpoint sources. Further, it does not account for the time phasing of the costs. For the same period, the NCWQ estimates benefits to have a net present 103 value of from $67.2 to $88.1 billion.* Comparing the benefits and costs, we see that the benefits are less than half of the estimated costs over the period 1972-2000. Consequently, it appears that the costs of compliance with the FWPCA over the period 1972-2000 would exceed the benefits of compliance. The NCWQ also developed benefit estimates for the years 1980 and 1985. The NCWQ estimates that in 1983 annual costs of compliance will range from $12.6 to $13.9 billion. Bracketing this 1983 estimate with the benefit estimates for 1980 and 1985 we see that in 1980 benefits are expected to range from $3.1 to $4.2 billion per year and in 1985 to range from $4.8 to $6.2 billion per year. Consequently, on the basis of this very crude comparison it appears costs would exceed benefits in the early 1980s. We are left with global estimates of benefits and of costs, on the one hand, and scattered estimates of costs relative to pollutant reduction, on the other hand: In the case of the steel industry, compliance with Best Practicable Control Technology Currently Available (BPT) (1977 FWPCA requirements) — removal of 96 percent of contaminants — will entail operating costs of $2.00 per pound and capital costs of $8.00 per pound of pollutants removed. The incremental cost to achieve Best Available Technology Economically Achievable (BAT) (1983 require- ments) — an additional 3.6 percent removal of contaminants — will entail operating costs of $29.00 per pound and capital costs of $118.00 per pound of pollutants removed. Achievement of the BPT control level will presumably improve markedly the water quality of the waterways to which the steel industry discharges effluents. The benefits of the additional 3.6 percent pollutant removal have not been determined. In the case of the chemical industry, the costs of water pollution abatement are expected to increase from 1.4 per- cent of the industry's value of production in 1974 to 2.9 percent in 1977 and to 5.0 percent in 1983(^^The corre- sponding annual costs of water pollution abatement are $180 million in 1974, $407 million in 1977, and $709 million in 1983. Using 1970 as a base, the percent reductions of pollutants associated with these costs are: * These estimates are based on NCWQ data which considered only changes in land values and recreation values. 1974 1977 1983 51 86 93 43 74 88 31 93 97 104 BOD^ Biological Oxygen Demand COD Chemical Oxygen Demand TSS Total Suspended Solids The annual cost of control per poxond of pollutants (BOD, COD, TSS) removed per day in 1974 is $47, the capital requirement per povind is $124. The incremental annual cost per pound in 1977 is $52 with incremental capital requirements of $160 per po\and. The incremental annual cost per pound in 1983 is $358 with incremental capital requirements of $1150 per pound. Again, the benefits associated with these costs are not known. The Environmental Protection Agency (EPA) has promiiLgated New Source Performance Standards (NSPS) for copper, lead, and zinc smelters which, in effect, will require in most instances use of double contact acid plants for control of S0„ emissions in gas streams generated by new or modified smelters .^ "double contact acid plants, when operating, capture slightly more SO2 than do single contact acid plants. This increment of SO2 recovery is attained with a very heavy energy penalty. For the typical smelter gas stream, the electrical power require- ment for a single contact acid plant capturing approximately 97 percent of input S0_ amount to about 125 kilowatt hours per ton of acid produced. Assuming the electrical power to be generated in a steam-electric plant burning typical Western coal, this electrical power requirement is roughly equivalent to 402 pounds of coal per ton of sulfur recovered. On the other hand, the electrical power requirement for a double contact acid plant capturing approximately 99.4 percent of input SO amounts to about 175 kilowatt hours per ton of acid produced or the equiv- alent of 563 poionds of coal per ton of sulfur recovered. This means, then, that the coal equivalent of electrical power required to capture the increment of sulfvir amoiants to approx- imately 7100 pounds per ton — almost an eighteen- fold increase in energy resource consumption as compared to achieving 97 percent SO2 recovery in a single contact acid plant. This is a substantial energy penalty to pay for a small increase in SO2 recovery. In the case of the petroleum industry, an American Petroleum Institute (API) sponsored study by Battelle Columbus Laboratories, now nearing completion, compares the impacts of "anticipated" and "restrictive" (worst case) environmental regulations on oil indus- try capital investment over the ten-year period 1976-1985 as follows r'^^^-^ 4 105 Incremental Anticipated Restrictive Differences Federal Regulations 11.4 26.9 15.5 State & Local Regulations 6-5 10-7 ^•^■. All Regulations 17.9 37.6 19.7 Assuming that the restrictive case adds projects where incremental costs exceed marginal benefits, the oil industry may be forced to spend some $20 billion on programs with no net societal benefits. Although this incremental $20 billion may represent only 5 to 10 percent of anticipated total industry capital expenditures for the 1976-1985 period, this expenditure could be more productive in new energy development, domestic refinery expansion, develop- ment of the Outer Continental Shelf (OCS) , and the like. The issue of the elasticity of the capital market aside, this $20 billion could be utilized to finance roughly: 1 MM bbls/day of shale oil development; or 4 MM bbls/day of domestic refining capacity; or 1.2 MM bbls/day (crude oil equivalent) of OCS oil and gas production. (During the past 20 years, the oil industry has spent approximately $25 billion on Federal leases in the Gulf of Mexico which are currently producing: crude plus condensate of 0.834 MM bbls/day and gas production (9.672 billion c.f./day of 0.647 MM bbls/day equivalent.) While we are not able to compare benefits and costs directly, we can evaluate the cost impact between industries of air and water pollution abatement and solid waste disposal. The annual cost per million gallons of waste-water treated in 1973 varies widely between industries. The cost varies from $45.48 per million gallons in primary metals to $2,385.24 in fabricated metal products . For air pollutant removal , the annual cost per ton in 1974 varies from $5.74 per ton in stone clay and glass products to $173.08 per ton in miscellaneous manufacturing industries. The annual cost per ton of solid waste disposal in 1974 ranges from $1.71 per ton in primary metals industries to $25.72 per ton in instruments and related products. From 1973 to 1974 the per unit cost of air pollutant abatement increased an average of 40 percent. The changes by individual industries range from a 5 percent decrease in petroleum to a 125 percent increase in leather and leather products. Solid waste per unit disposal cost shows a decline of 2 3 percent from 1973 to 1974. Solid waste disposal cost also varies widely by industry from a 57 percent decline in chemicals to a 51 percent increase in tobacco products . 106 The national data on tmit cost of wastewater treatment do not allow inferences as to the trend of wastewater treatment costs. It is expected that the unit cost of water pollution abatement will increase overall and continue to show wide variation between industries. For example, the figures below show for four industries differences in average annual cost and capital investment per pound of water pollutants in 1974 and the incremental annual cost and capital investment per pound in 1977 and 1983.'-'-^ Annual Cost 1974 1977 1983 $0.24 . $2.11 $7.87 .ting 0.89 1.02 2.42 5.62 0.43 1.22 Copper Mining & Smelting Other Metal Mining Nonmetallic Mineral Mining, except Fuels * 1.25 17.19 Capital Investment 1974 1977 1983 Copper Mining & Smelting $1.54 Lead & Zinc Mining & Smelting 3.69 Other Metal Mining 305.41 Nonmetallic Mineral Mining, except Fuels * 5.38 51.06 In -a broader context, there is a question whether our control strategies are efficient. Efficiency dictates that when controlling specific pollutants we should develop strategies which maximize the quantity of pollutants removed for a given expenditure. The preceding shows marked variations between industries in the per \init removal costs. The following implies the same between munic- ipal, industrial and nonpoint sources of water pollutants. In 1973, 54.9 billion pounds of BOD and 3821.8 billion pounds of TSS were discharged to the Nation's waterways ^3 2 These pollutants were contributed by source as follows : $7.17 $55.86 3.91 15.39 2.97 21.61 *Not Available. 107 Pollutant Loadings 1973 Billion Pounds Percent of Total Municipal Wastewater Industrial Discharges Nonpoint Sources BOD Total 54 . 9 TSS 5.6 5.9 4.3 117.9 45.0 3698 3821.8 BOD TSS 10.2 0.2 7.8 3.0 82.0 96.8 If all municipal wastewater is controlled to the secondary treat- ment level, discharges will be reduced to 2.6 billion pounds of BOD and 3.0 billion pounds of TSS. Control of industrial discharges to the BPT level will reduce industrial discharges of BOD to 0.5 billion pounds and TSS discharges to 11.8 billion pounds. Control of industrial discharges to the BAT level will reduce industrial discharges to 0.3 billion pounds of BOD and 4.2 billion pounds of TSS, The contribution of nonpoint sources could be reduced by 50 percent. If urban runoff is controlled by storrawater collection, storage and treatment at municipal treatment works, nonpoint source contri- butions would be reduced for BOD from 45.0 to 22.9 billion pounds and for TSS from 3698 to 1866 billion pounds. Thus, after institu- tion of controls (industrial discharges controlled to the BPT level) the quantities and distributions of pollutants are as follows: Pollutant Loadings After Control Billion Pounds Percent by Source BOD TSS BOD TSS Municipal Wastewater 2.6 3.0 Industrial Discharges 0.5 11.8 Nonpoint Sources 22.9 1866 Total 26.0 1880.8 10 0.16 2 0-63 88 99.21 On a combined basis, BOD and TSS loadings in 1973 and after control are: 108 1973 Loadings Loading After Control Billion Pounds Percent Billion Pounds Percent Municipal Wastewater 11.5 0.3 5.6 0.3 Industrial Discharges 122.2 3.2 12.3 0.6 Nonpoint Sources 3743.0 96.5 1888.9 99.1 3876.7 1906.8 As can be seen, nonpoint sources are by far the largest contributor of BOD and TSS pollutants. To date, water pollution abatement strategies have focused on abating municipal wastewater and indus- trial discharges. There is a question whether this is the most efficacious strategy. Calculating the capital requirements per poimd of combined pollutant removal, we find that there is wide variation in the cost of abate- ment between sources. Capital Requirements Per Pound of Combined Pollutant RemovedL ^-*- ' -^^j Capital Pollutants Removed $ Capital (Billions $) (Billions of Pounds) per pound Municipal Wastewater 10.8 5.9 1.83 Industrial - BPT 36.0 109.9 0.33 Incremental BPT to BAT 2 3.0 7.8 2.98 Industrial - BAT 59.0 117.7 0.50 Nonpoint Sources 305.0 1854.1 0.16 The estimates of capital required per pound of combined pollutant removed are rough estimates of the cost effectiveness of the assumed control levels. It should be noted that these calculations assume away many complexities. Control of the common pollutants BOD and TSS is at best crudely indicative of water cleanup. There are other common pollutants and toxic pollutants . The control technologies underlying the above calculations remove some of these other pollutants. Consequently, the cost effectiveness comparisons do 109 contain biases. As rough estimates of cost effectiveness, these estimates imply that we should review our control strategies. It appears that the quantity of pollutants removed can be substantially increased without an increase in expenditures by a reallocation of expenditures between sources. (6) Summary and Exhibits The foregoing review of available data would support the following general observations as to current evidence. --As noted, data remains highly inadequate; although it is improving, there is clearly a need for major additional improvement . — Costs of regulation are clearly major. — In some cases, benefits clearly outweigh costs; in others, the benefits are uncertain and/or the relationship to costs would be favorable only with very high assessment of — The impact of regulation varies very considerably by industry and by region. Regional analysis is at a particularly early stage of development — and there is little evidence of its having been systematically considered in the framing of regulatory policy. — The incremental cost of specific regulations, beyond a point, appears to increase dramatically with respect to benefits. There is little evidence of a rational regulatory strategy in this respect — i.e., focusing incremental demands for limited resources on standards, or industries, or sectors, or regions in a manner which would optimize the aggregate level of benefits achieved , given what are limited total resources with which to pursue benefits. The exhibits which follow summarize selected data identified in the foregoing discussion. 110 Cumulative Business Expenditures To Achieve Environmental, Safety and Health Objectives, 1964 Through 1975 Solid Waste 2.2% = $1.0 bil Total: $45.1 Billion Projected National Expenditures to Achieve Environmental, Safety and Health Objectives, 1975 Through 1984 Other Due to Federal Legislatic Safety and Health ' ro.6% = $3.4 bil. $228.8 Bil. / 5.8% = $30 bifp^W ~~~~-^ ^^^ ^^vj /Solid\ / Waste \ 1 / 11.6% =\ /^^9.6 bil.\ \ / Private / - 40.8% = /. $92.8 bil Air \ 33.9% = \ $174.9 bil. Water \ 48.1% = $248.3 bil. Public / \ 59.2% = / \ $134.6 bil. / Private 82 1% = $237 1 bi \ / \ /publicV N. j/ X /i7.9% 4isii>P ^^.^ ^y^ \y$5i.7 bil.ViiiX^ Total: $516.2 Billion Total: $516.2 Billion Source: CEQ 7th Annual Report: McGraw-Hill Publications Co. series on expenditures for employee safety and health and pollution control; DOC projections of expenditures for employee safety and health. S/fr. 0) ■D Vi ^ C CO 0) a > X UJ "D 0) (0 c o 0) o 0) (0 C/) z ^ o ^^" «^i (0 -«-• ^^ o o K c "D o o o a> c 'o o ^ ■4-" Q. _D "D o C Q. CD 15 D ^-i O < "o Q c o CD +-" CD CD o ■D C CD Q) •♦-' U) CD O C/) in CD P7 ^ lili: :CO:lco| CJ) C/) ■4— • o a (D cr Id C C < T3 C CD jf to >• "to a c E c o > c c o 5 c o o O k_ D o CO — o o o O O O O m 00 [^ CD LO ^ CO CM 1 1 12 Billions of 1975 Dollars Estimates of the Net Present Value of Benefits and Costs of the Federal Water Pollution Control Act, 1972 Through 2000 200 180 7 100 80 60 40 20 ^MunicipaT^ 88.1 High Estimate :;Low Estimate: Fishing, Recreation & : Land Values* 7 Costs Benefits Cumulative Amounts 1972 to 2000 * Does not include the cost of operating municipal wastewater treatment facilities or the cost of controlling agricultural and nonpoint sources. * * Does not include the value of abatement of human health hazards and of some nonuse related benefits. 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Because of the widespread interest in this issue and because a synopsis of the major studies on the subject is not available in convenient form, this brief survey of the literature has been prepared as a source document. It contains a summation of findings to enable the reader to gain a broader perspective of this complex issue — and of the extent to which important elements of uncertainty remain with respect to key elements of the debate. This survey of the literature makes no claim to being exhaustive. To the extent possible, the major studies have been included. This is a factual report on their findings and their derivation. The report is in three sections. Section I provides an overview of the studies. Section II contains summaries of the studies. Section III is a bibliography. C-4 I . OVERVIEW Seventeen studies are covered in the individual summaries contained in Part II of this report. • These analyze six Senate proposals and five House proposals made during the period 1975-1976, as well as earlier proposals. • Of the 17 studies, nine are basically technical analyses, four are economic analyses, and four are both technical and economic analyses. • Some analyses are based on actual plants in specific locations; other analyses are based on "model" plants in generalized locations. "Model" plants vary as approximation to actual plants. • Geographically, the analyses attempt to cover the implications of nondeterioration for the following localities: Colorado Boston 1 Florida Dallas-Fort Worth Iowa Four Corners Maine "East" Minnesota "Central" New Mexico "West" Texas-Louisiana Rural Areas West Virginia Urban Areas Wisconsin Regions, General • The analyses cover 11 major industrial sources and industry in general. This is only part of the industry source coverage , as shown in Table 1 . • The analyses cite a number of factors which enter into considerations of the impact of nondeterioration proposals. These are the major ones: Industry factors Size of plant Location of plant Configuration of plant Energy source and use Stack height Water and raw material availability C-5 Regional factors Meteorological considerations Terrain Background emissions Dispersion patterns Availability of land Individual studies vary in the extent to which these factors are taken into account. • The assumptions, methodologies, and analytical measures of impact vary widely between the studies. - Methodologies used include model plants, state of the art air diffusion models, and cartographic analysis using the "buffer zone" concept. - Impact measures used include dollar cost estimates of compliance with nondeterioration, calculation of the number of years an industry's historical growth can continue, determination of constraints on plant size and location, and cost estimates of plant size reduction or plant relocation. • The wide differences in methods and objectives in most cases preclude comparisons between the studies and prevent putting together an overall picture. However, certain conclusions are common to many of the studies . - Class I areas, including "buffer zones," appear to be a major obstacle to economic growth for the industries analyzed. - Capital costs required to meet the nondeterioration regu- lations are higher than the Clean Air Act requirements without nondeterioration requirements . - Nondeterioration requirements will necessitate the use of smaller size plants, the installation of additional control technology, the construction of taller stacks, the relocation of plants at alternative sites. - Future growth opportunities will be restricted without a Class III designation or a variance from Class II requirements . C-6 These studies have contributed valuable insights on the technological and economic ramifications of nondeterioration proposals. In the process of doing so, they have shown the difficulties involved in developing an overall assessment. 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