CPM Industries' Blog

The Effects of Major Regulations on Metalcasting

Posted by Gavin Mason

What are Major Regulations?

epa.previewA major regulation, by definition, is an imposed rule that would have a cost of $100 million or more in expected economic impact. Over the last five years, there have been 157 new major regulations in the United States, many of which have a direct impact on the manufacturing and metalcasting industries. From the time President Obama took office until now, there has been a record 3,659 final rules and 2.594 proposed rules that have been issued. There have been several EPA regulations introduced recently, but the Power Plant rule, Ozone Legislation, and the proposed Waters of the U.S. rule will most likely have the most impact on the metalcasting industry.

The Ozone Regulation is a topic that I have covered on our blog in the past and is fairly straight forward. The proposed regulation will reduce the national air standards to be lowered to 60-70ppb (parts per billion) from the current standard of 75ppb. The EPA estimates that if the standard is reduced to 60ppb, it would have a annual price tag $90 billion in compliance costs... well over the $100 million needed to be considered a major regulation. However, the National Association of Manufacturers' report estimates that a standard of 60ppb could cost the U.S. economy $270 billion PER YEAR and would result in the closure of about 1/3 of coal burning power plants. This is where things get tricky, reducing the standards is designed to reduce pollution to our planet, but do the benefits outweigh the costs?

The Clean Power Plan Rule introduced by the EPA proposes guidelines for states to address green-house gas emissions from existing fossil fuel power plants. This rule would affect the manufacturing industry in several ways. First of all, it would increase the costs of electricity and natural gas while simultaneously creating supply problems for both due to increased demand. All manufacturers require electricity and many of them also require natural gas, so it would have a direct effect on all manufacturers. But the worst part would come when the manufacturing industry is hit twice by the regulations; first by the increased costs of electricity/natural gas and then again when similar regulations are imposed on manufacturers specifically (which are expected). The argument here is the same as above, do the benefits outweigh the costs? "For example, EPA says the proposed rule would eliminate 730 million metric tons of carbon by 2030. From 2010 to 2011, China's carbon dioxide emissions rose by 705 million tons" (Stephanie Salmon - AFS, Modern Casting, Nov. 2014 edition).

The proposed Waters of the U.S. Rule would redefine the term "waters of the U.S." and the agencies' jurisdiction over waters they can regulate. The rule would greatly extend the federal jurisdiction beyond the traditional navigable waters to tributaries, adjacent waters (ponds), and "other waters" (with "other waters" being vaguely defined). While this makes sense in controlling the quality of our country's fresh water, it will expose new facilities and projects to new federal permits. These permits would increase upfront costs and project delays; "some permits could cost metalcasters close to $200,000 in some cases" (Stephanie Salmon - AFS, Modern Casting, Nov. 2014 edition).

These are just a few of the EPA's initiatives that could have direct affects on the manufacturing industry, specifically the metalcasting industry. Once you look at the price tag that could accompany some of these initiatives you realize just how much of an effect they can have, but we didn't even talk about OSHA's initiatives that would come with similar price tags. In previous blogs, I have discussed OSHA's proposed Crystalline Silica Standard in a previous blog that would be accompanied by an estimated $44 million in costs to the industry annually. Now don't get me wrong, I fully support the efforts to protect our natural resources and reduce pollution because simply put, the earth cannot sustain the current rate of pollution. But on the other hand, implementing many of these initiatives could negatively affect our economy and manufacturing industry. A common ground must be found and every country must work together on reducing pollution to be effective. 

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