Environmental Legislation and the Costs of Compliance

By Hicks, Richard C. | Government Finance Review, April 1992 | Go to article overview

Environmental Legislation and the Costs of Compliance


Hicks, Richard C., Government Finance Review


Columbus, Ohio, estimates that complying with current federal and state government environmental requirements will cost the city $1.6 billion between 1991 and the year 2000. A study of the annual burden for each of 13 programs shows exactly where and how much the antipollution and clean-up regulations impact the city budget.

A study completed by city officials in Columbus, Ohio, has raised disturbing questions concerning the cost of environmental compliance and the way in which environmental standards are derived. Environmental Legislation: The Increasing Costs of Regulatory Compliance to the City of Columbus, released in May 1991, examines the number of state and federal government environmental mandates affecting the city, the changing nature of environmental mandates and the increasingly aggressive enforcement mechanisms being established by the U.S. Environmental Protection Agency. It reports that the price to the city for complying with current federal and state government environmental requirements is estimated to be more than 1.6 billion during the next nine years. According to the study, much of this money will go to comply with environmental standards that are based on "perceived" rather than measurable health risks.

Among the report's findings are: * There has been a change in federal and

state legislative policy that is having a

significant impact on local government.

More than 75 new federal and state

environmental mandates were implemented

from 1988-1991; prior to 1988,

less than 40 were in effect. Exhibit I

illustrates the steep rise in newly imposed

mandates during the late 1980's. * Additional federal and state mandates

are being passed with little or no

accompanying funding, despite the fact

that their passage places increasing

burdens on local government. For

Columbus and other cities, this means

that an increasing percentage of local

budgets must be allocated for environmental

compliance, leaving fewer funds

for traditional government services and

allowing city leaders less freedom in

budgeting. * The study estimated that 10.6 percent of

the city's 1991 budget, or $62 million,

was spent for environmental compliance

on the regulations studied. In 1995, the

study estimated, this total will rise to

$107 million, or 18.3 percent of the city

budget. Environmental compliance costs

for the years 1996-2000 will average

$135 million annually, or 23.1 percent

of the total budget, according to the

study. * The federal government is actively

pursuing compliance with federal

mandates. The U.S. Environmental

Protection Agency (EPA) has undertaken

an aggressive enforcement policy, this is

illustrated by the fact that 1990

accounted for 25 percent of all fines ever

levied by the EPA. In one recent

enforcement adjudication, the city of

San Diego was fined $500,000, made to

pay $2.5 million into a water

conservation program and forced to

spend $2.5 billion for secondary sewage

treatment capacity. Efforts to improve

compliance have been further

strengthened by recently enacted laws

giving private citizens the right to take

direct enforcement action aainst

violators of environmental regulation.

A Shudder and a Study

The Columbus study grew out of discussions on required environmental clean-up costs for a particular city site, as mandated by the Resource Conservation and Recovery Act (RCRA). While the city officials' most immediate concern was solving the RCRA site clean-up question, they knew that there were other pressing environmental needs that were going to cost the city significantly, and they set about gathering preliminary data. …

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