The impact of environmental regulations upon American industry has changed dramatically in the past 12 months. President Carter signed the 1977 Amendments to the Clean Air Act on August 7, 1977. These amendments are extra ordinarily complex and will affect industry with a severity unprecedented in recent history. Then on December 28, 1977, he signed the Clean Water Act of 1977. While this law also will affect industry, its impact is predicted to be far less severe than the Clean Air Act Amendments.
Both of these new laws hold great promise for improving the environment. They similarly hold great potential for disrupting the Nation's economy -- primarily through delays they can impose on new projects throughout the country.
We in the oil industry who could be accused of being prejudiced in such matters are not the only ones raising warnings about the potential impact of these new laws.
John Quarles, former Deputy Administrator of EPA, said in a December 28 article in the Wall Street Journal that the 1977 Clean Air Act Amendments " . . . like a loose cannon on a pitching deck threaten(s) a path of destruction." I commend his entire article to your reading.
I wish I could describe the interweavings of these laws and the multitude of ways they can touch all of our lives. That simply cannot be done in a full day and certainly hardly touched upon in this short talk . I would like to try to focus on two areas of most severe impact contained in the 1977 Clean Air Act Amendments to illustrate what can happen.
I have studied at least a dozen analyses of these Amendments by a variety of lawyers, engineers, agency personnel, and environmentalists. One striking revelation of this study is that few of the analysts agree upon what was intended or what is required by this Act. It also leads to the obvious question which most of the analysts also raised: "What did Congress have in mind when it adopted this law?"
Congress believed that it had a clear mandate from the people to clean up the environment. I think Congress was right -- the public does want the environment cleaned up -- and this is a force which all of us must recognize very clearly.
Congress had little idea what it actually was supporting in the 1977 Amendments, other than to reflect this clear mandate from the people to clean up the environment. Some of the finest environmental analysts in the country have spent literally months analyzing the 1977 Amendments, and still cannot agree on details. I think it is clear that Congress was like all the rest of us-- they simply did not fully comprehend the detailed workings of the Act, or recognize its severe adverse economic impacts.
Most thoughtful Washington observers conclude that:But regardless of any confusion or uncertainty, the simple fact is that we do have a new law, and regulations already have started to flow from that law. The question now is : How is this new law going to affect our industry's ability to produce energy? The parts of the Act which I will focus on are known as the n provisions, or PSD for short. These sections will affect industry in two basic ways:
New facilities, or modifications to existing facilities, will become much more difficult to build. Permitting requirements, delays, and costs will increase far beyond those now being experienced.
Most facilities now in operation will be required to retrofit additional controls on air emissions. The costs appear to be major.