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The Legacy of the Clean Water Act on Small Food Manufacturers:

The Legacy of the Clean Water Act on Small Food Manufacturers:. A National Cross-Sectional Study for 1992. What relationships am I attempting to connect?.

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The Legacy of the Clean Water Act on Small Food Manufacturers:

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  1. The Legacy of the Clean Water Act on Small Food Manufacturers: A National Cross-Sectional Study for 1992

  2. What relationships am I attempting to connect? I am trying to link the Clean Water Act to the small food manufacturing sector to examine the effect of pollution taxes on the lowest paid workers in the food industry

  3. What question does this attempt to answer? • Who bears the brunt of the taxation burden from pollution abatement and control legislation stemming from the Clean Water Act?

  4. Clean Water Act - Partially funded mandate (less since 1980) • Established in 1972 – Originally called the Federal Water Pollution Control Act Amendments • Original Objective: “Elimination of the discharge of pollutants into navigable waters by 1985” • Amended in 1977 • Amended in 1981 • Amended in 1987

  5. What did the Clean Water Act actually do? • Established the basic structure for regulating the discharge of pollutants into navigable waters • Point-source dischargers are now required to obtain a permit to discharge their wastewater directly into creeks, streams, and rivers

  6. How did this effect municipal treatment plants? Municipal treatment plants are a point source. They must obtain an NPDES permit and abide by the concentration limits of certain pollutants

  7. What is an NPDES permit? • NPDES stands for the National Pollutant Discharge Elimination System • It is a regulatory program aimed at preventing pollutant discharge into our streams, rivers, and lakes • Each discharger has a list of pollutants and acceptable discharge limits of those pollutants

  8. How do these discharge limits effect municipal treatment plants?

  9. How do these discharge limits effect businesses? • Municipal treatment plants had to upgrade their equipment in order to meet the new pollution standards. • This forces the municipalities, counties, districts, and states to raise revenues for sewage treatment.

  10. Important Fact • Section 204 of the Clean Water Act explicitly states that: Administrators shall … issue guidelines applicable to payment of waste treatment costs by industrial … receipts of waste treatment services … and determine … categories of industrial users … [and] criteria against which to determine … charges ** This section essentially decentralizes authority to the regional level and allows the various local authorities the power to dictate who pays for their pollution and how much they owe.

  11. EPA establishes Clean Water Act Creates a regulatory program for discharging pollutants Concentration limits are now enforced on municipal treatment plants Municipalities, counties, districts, and states are forced to find new revenue streams to pay for the Clean Water Act General Summary

  12. Municipal treatment plant discharge is primarily measured with two tests: • BOD and TSS • BOD stands for Biological Oxygen Demand. It measures the nutrients present in the wastewater (essentially, it is a measure of its ‘dirtiness’) • TSS stands for Total Suspended Solids. It measures the amount of silt and sediment in the waste stream

  13. What industries contribute a significant portion of BOD and TSS loadings to treatment plants? • The Food Industry

  14. Why is the link between BOD, TSS, and the Food Industry significant? • Because many municipal, county and special district governments have devised ‘User Charge’ payment systems to meet the Federally mandated Clean Water Act pollution control limits • Many of these User Charge programs are based on manufacturing companies BOD and TSS loadings

  15. Examples of User Charge Programs in nearby cities • Metropolitan Water Reclamation District of Greater Chicagoland Website: “Recovery of District operating costs for treating excess industrial wastes is accomplished via administration of the USEPA approved User Charge Program for collection of revenues from tax-exempt and large commercial and industrial dischargers” Metropolitan St. Louis Sewer District Currently undergoing a proposal to dramatically hike User Charge rates

  16. Proposed User Charge rate increase in St. Louis and its effects on local industry (Source: http://www.msd.st-louis.mo.us/Govern/RateComm/RateChange/WastewaterRateIncreaseAmendment.pdf)

  17. Actual Proposed Rate Increases for St. Louis (Example of BOD and TSS concentration levels and their effect on business expenditures)

  18. My question: What effect does User Charge fees have on Small Food Businesses? • I defined small food businesses as those employing 19 or less associates • My hypothesis was that small food manufacturers suffer because they have higher pollution costs per unit of output • In other words, I believe that there are economies to scale for sewerage payments to municipal, county, and special district governments. • If my hypothesis were true, we should see less small food businesses per capita in regions with higher sewerage costs per small food manufacturing plant

  19. Data Collection Problems • It is difficult to measure User Charge payments directly • There are no standard payment systems. Some regulatory agencies do not even charge industries directly. • Those User Charge payment systems that do exist rarely publish any data • Economic models easily suffer from omitted variable bias

  20. What data did I actually use? • I used data on sewerage revenues from municipal, county, and special district governments • This was analyzed against the number of small food manufacturers across states for the year, 1992 • I used a two-stage least squares regression model to eliminate any problems with omitted variable bias

  21. What are the limitations of the model? • There is ‘noise’ inherent in the model (sewerage charges picks up more than just User Charges on industry) • This prevents an accurate measurement of the effect of sewerage charges on small food businesses • However, I believe the model is still accurate enough to predict the direction of movement (negative in this case)

  22. What can I summarize from this research? • First and foremost, User Charge fees adversely effect small food businesses

  23. What is the link between small food manufacturers and pay? • The lowest paid workers tend to work for the smallest businesses

  24. Suggestions for further research in this area • Eliminate ‘noise’ in the data by obtaining accurate measurements of User Charge sewerage fees only • Examine the relationship between User Charge programs and other manufacturing sectors

  25. Questions and Comments

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