A study of some 500 U.S. manufacturers found that the cost of applying for air emissions permits under new national regulations is lower than industry estimates. The Georgia Institute of Technology research is believed to be the first detailed examination of business costs involved in applying for permits under Title V of the 1990 Clean Air Act Amendments.
The study also produced one surprising result: three quarters of the responding companies saw important business benefits in the new regulations.
Title V requires companies that emit certain amounts of air pollutants to document their emission sources, air pollution control equipment, and regulatory requirements in a single document. By providing a centralized source of information, the legislative goals were to help regulators enforce air quality standards, to help companies understand and comply with them, and to help citizens monitor industry compliance.
"Before Title V was implemented, industry officials were concerned that the law would be costly, with no benefit to them," said Dr. Barry Bozeman, lead author of the study and a researcher in Georgia Tech's State Data and Research Center. "But the study results show that this is not the case. More often than not, the cost was modest and complying companies found positive aspects to the law."
Corporate environmental managers responding to the survey reported their firms spent an average of $113 per employee to apply for the air emissions permits. For an average 566-person company, that translates to $63,958 per facility. Applying these costs to the estimated 20,000 facilities covered by Title V suggests the total bill for national compliance will be approximately $1.3 billion.
These numbers are lower than the estimates reported recently by an industry group, said Leisha DeHart-Davis, a co-author of the study and a research associate in Georgia Tech's Air Quality Laboratory. An April 1999 report released by Washington law firm Morgan, Lewis & Bockius, LLP, estimated that the average company would spend $100,000 per facility, with a total bill of $2 billion for the 20,000 locations.
The Georgia Tech study, sponsored by the U.S. Environmental Protection Agency (EPA), provides a direct measure of permit application costs for manufacturers. DeHart-Davis cautioned that the costs reported are a "moving target" because the permitting work continues in some cases -- though some 97 percent of respondents had filed applications at the time the survey was conducted.
The most significant direct costs were for outside consultants, but also included time of company personnel and expenses for new administrative systems.
The researchers used a mail survey to contact environmental managers at 1,614 randomly-selected companies in Wisconsin, Oregon, Georgia and South Carolina. These states were chosen to provide a cross-section of industry types and sizes. State response rates for the confidential surveys ranged from 31 percent to 43 percent, and yielded 542 completed questionnaires.
The researchers also contacted state environmental regulatory agencies to gain their assessment of the regulations. They obtained 90 agency responses.
Among the other key findings:
- Two aspects of the regulations were considered significant
benefits by the companies. Seventy-seven percent of the
respondents cited operational flexibility that allowed them to
make minor process changes without obtaining a new permit.
Nearly as many (73 percent) cited Title V's protection against
enforcement action during the application process.
"Given the uproar over Title V implementation and its rampant claims of red tape, we thought that companies would have little good to say," noted DeHart-Davis. "But on the contrary, they ended up claiming as benefits some of the goals of the original legislation: a permitting shield that protects them from enforcement during the application process and operational flexibility that allows them minor operational changes without wholesale permit revisions."
- State agencies charged with administering the regulations
got good grades from the regulated companies for helping them
navigate through the process. Both companies and agencies
reported a higher level of communication as a result of the
regulation: on average, companies contacted the agencies 10
times, and the agencies made six contacts with the companies.
"The increased communication flow supports two of the goals of Title V," explained DeHart-Davis. "First, companies learned from permitting officials a lot more about what was expected of them in terms of air regulation compliance. This protects companies from unintentional noncompliance, which was widespread prior to Title V. The increased communication flow has also given state permitting officials a much better understanding of the emissions from their regulated communities, a benefit which ultimately translates to more accurate emission inventories."
- The survey produced conflicting data on whether Title V had encouraged the adoption of new technology or pollution prevention techniques. State regulatory officials saw little evidence that the new regulations had brought about change in this area, though 68 percent of companies applying for a simpler class of permits reported using a technological fix to limit emissions. This discrepancy may be due to the fact that companies simply put existing technological fixes into their permits, rather than innovating to reduce emissions, said DeHart-Davis.
Note: Leisha DeHart-Davis may be contacted at (404-894-9345), or by e-mail: (leisha.davis@aql.eas.gatech.edu).