The manufacturing industry in the US has been affected by the new regulations that have been passed by a number of government agencies over the last thirty years. In a recent report by the Manufacturers Alliance for Productivity and Innovation (MAPI), approximately 2,183 unique regulations had been passed that affect the growth of the manufacturing sector. The majority of these regulations had been passed by the Environmental Protection Agency (EPA), while smaller numbers had been passed by Department of Transportation, Department of Labor, Department of Homeland Security, and the Department of Energy. The EPA has passed 972 new regulations since 1981 that directly affect the manufacturing sector. The regulations passed by these agencies are in the most part to make the environment cleaner and to make the working environment safer for workers. However, the sheer number of regulations that have been passed force companies to spend large amounts of money to comply with each regulation, whether it is through changes to equipment or time spent creating the documentation required by the agencies. The resources spent on these regulations directly detract from a company's ability to create growth.
Cost of Regulations on the Manufacturing Industry
The EPA has imposed the largest number of regulations on the manufacturing sector over the last thirty years. The number of regulations that affect the manufacturing industry is 972 of which 122 are major regulations. Only the Department of Transport comes close to the EPA, as it has adopted 880 regulations, but only 69 are major regulations. The cost of these EPA regulations on the US manufacturing industry is estimated to be $117 billion, while the cost the Department of Transport regulations is only estimated to be $25 million. The report from MAPI estimates that the US gross domestic product (GDP) loss in 2012 which can be attributed to the burden of regulation could be as much as $630 billion.
EPA Regulations That Affect Manufacturing
There are a number of agency regulations which affect US manufacturing more than others. The EPA has been cited by manufacturing leaders as an agency that over regulates, based on the number of regulations it has passed and the cost burden to the manufacturing industry. There are a number of regulations identified in the MAPI report that are specific environmental regulations.
- National Ambient Air Quality Standards for Particulate Matter - In the Clean Air Act the EPA is required to set National Ambient Air Quality Standards (NAAQS). One measure is the level for Particulate Matter, also called PM, which refer to a complex mixture of small particles and liquid droplets in the air. These microscopic particles can be breathed into the lungs and cause a number of health problems, including asthma and chronic bronchitis. Because the source of fine particles can be formed from chemical reactions of gases during manufacturing, or power plants, engines, and heavy manufacturing, these companies have had to reduce emissions at a cost to their business.
- National Ambient Air Quality Standards for Ozone - Ozone is created by chemical reactions between oxides of nitrogen (NOx) and volatile organic compounds. The main source for these gases can be found in manufacturing facilities, electric utilities and chemical plants. Breathing ozone can inflame the airways and reduce lung function, and the EPA has introduced levels which have to be adhered to by the manufacturing industry.
- National Ambient Air Quality Standards for Sulfur Dioxide - Sulfur Dioxide is colorless gas produced during the burning of sulfur containing fuels such as coal and oil, and other manufacturing processes, such as industrial boilers, petroleum refineries, smelters, iron and steel mills. In 2010 the EPA totally revised the limits on Sulfur Dioxide removing many of the standard measurements and imposing new much stricter limits.
- Cross State Air Pollution Rule (CSAPR) - This regulation was directed at the Eastern half of the US and aimed at the power generation industry in 28 states. The rule was designed to reduce sulfur dioxide emissions by 73 percent and nitrogen oxide by 54 percent at coal-fired power plants. The EPA believes that hundreds of counties in the Eastern US are in violation of particulate matter and ozone limits due to the power generation companies. In August 2012 US Court of Appeals for the D.C. Circuit sent the rule back to the EPA for revision.
- Greenhouse Gas (GHG) Reporting Rule - The EPA adopted this rule to collect accurate and timely GHG data to inform future policy decisions. It requires reporting of GHG data and other relevant information from large sources and suppliers in the US. Facilities that emit 25,000 metric tons or more per year of GHG's are required to submit annual reports to EPA.
- New Source Performance Standards (NSPS) - The Clean Air Act requires the EPA to develop technology based standards. These standards are referred to as New Source Performance Standards (NSPS). The NSPS are developed and implemented by EPA and are delegated to the states, but the EPA retains authority to implement and enforce the NSPS.
The EPA has to create regulations that are required by certain laws that relate to public health and the environment. The issue for the manufacturing sector is that the cost of adopting these regulations is massive, and on occasion companies feel over regulated by the EPA. The cost of adoption is not always considered by the EPA and on many occasions it is not possible to calculate the costs to the manufacturing industry.