An electric utility reported delays that result in investment capital being unproductive

Oil and gas companies observe that regulations delay development of natural resources and increase balance of payments deficits

Scrubbers result in productivity losses

One of the electric utilities in the study reported that substantial indirect costs were incurred as a result of delays in obtaining permits for water discharge in a nuclear power plant under construction. During the period of construction, EPA regulations caused significant construction delays through delayed decisions and amended previous decisions. As a result, a large sum of investment capital was unproductive for an extended period of time and the power generation facility was late in becoming operational.

Oil and gas companies identified examples of delays which resulted in costs impacting the entire economy. One such example cited was the Trans-Alaska Pipeline which was delayed over four years. The cost of construction was estimated by one of the companies to have increased $3.4 billion due to inflation during this period. Additionally, they observed that payments for imported crude oil which North Slope production would have displaced increased the nation's trade deficit by some $20 billion. Another example cited was crude oil production from the Santa Barbara Channel, which has been delayed five years with still no assurance as to when production might begin. They estimate that to date this has cost the nation $500 million in payments for foreign crude.

Companies installed and operated scrubbers to comply with the requirements of EPA's ambient air quality standards for sulfur dioxide emissions (Title 40 CFR, Chapter 1, Part 50). Many of those companies reported that the scrubbers impose an efficiency penalty and that additional capital expenditure is required to provide extra capacity to compensate for the efficiency loss. In addition they stated that extra fuel is required for reheating stack gases after wet scrubbing.

This kind of productivity loss is not unique to the installation of scrubbers. Productivity losses often result from the modification of the original designs of a power generation facility to control emissions.

EQUAL EMPLOYMENT OPPORTUNITY

EEO regulations The incremental cost incurred by participating companies to comply with EEO regulations was $217 million. 96% of those costs were operating and administrative, as shown in Figure 1-15.

imposed incremental

costs of $217 million

Two industries account for 65% of incremental costs for EEO

Two industries - communications and machinery except electrical - accounted for 65% of EEO incremental costs. However, the two industries represent only 40% of the employees of participating companies. EEO incremental costs ranged from approximately $10 per employee per annum in several industries to approximately $150 per employee per annum in the communications industry.

Affirmative action programs for minorities and women account for 76% of

incremental EEO costs

Six areas of regulation account for 95% of the costs to comply with EEO. Figure 1-16 shows an analysis of high cost regulation. $165 million or 76% of the costs are attributable to Affirmative Action Programs for minorities and

women.

76%

$165 MILLION

Figure 1-16 Incremental Costs of EEO High Cost Regulations

$12 MILLION

$165 million of EEO costs are for labor

Compliance reviews and record

maintenance are extremely burdensome

$165 million, or 76% of EEO incremental costs, arc for labor. This is the equivalent of more than 6,000 full-time employees of the participating companies.

EEO regulations required the participating companies to complete more than three million pages of information in 1977 in order to supply and maintain records that provide proof of compliance. Participating companies reported that EEO recordkeeping and reporting requirements are inflexible, and make inadequate allowance for companies with proper records of acceptable affirmative action.

Capital expenditures for provisions for handicapped workers are expected to escalate sharply after 1977

The affirmative action program for handicapped workers caused low incremental costs in 1977. Companies reported that of the total $8 million in incremental capital costs, they incurred $1.5 million of incremental capital cost to ensure that new facilities would accommodate the physical limitations of handicapped workers in compliance with CFR Title 41, Chapter 60, Part 60, Subpart A, Section 741.6, Subsection (d). The incremental costs of these regulations in future years are expected to be much larger than those of 1977, particularly with respect to capital expenditures, if companies are required to modify existing facilities.

OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION

OSHA regulations imposed incremental costs of $184 million in 1977

$184 million of incremental costs were incurred by participating companies to comply with the regulations of the Occupational Safety and Health Administration (OSHA). Figure 1-17 shows the distribution of this total by classification of cost.

The relatively low incremental costs attributable to OSHA in 1977 are explained by the fact that many OSHA regulations which were based on national consensus standards were implemented in the early 1970s. The heaviest expenditures were therefore incurred before 1977. Companies also reported that their total expenditures in 1977 for employee safety and health were many times larger than the cost of those actions they identified as incremental for purposes of this study. For example, the participating companies have provided workers with such items as safety shoes, goggles and hard hats and have equipped their factories with certain fire suppression equipment and other extensive safety systems for many years. The cost of