The Steel Industry Compliance Extension Act Brought About Some Modernization and Unexpected Benefits

GAO assessed the impact of the Steel Industry Compliance Extension Act, which allowed the Environmental Protection Agency (EPA) to defer, for approved steel companies, the date for meeting air pollution requirements. To approve a company under the act, EPA had to: (1) determine that the deferral of air pollution control spending was necessary to improve the efficiency of company facilities; (2) find that the company would spend on modernization an amount equal to the amount of air pollution control spending deferred; (3) reach agreement with the company for a judicial consent decree to ensure that company facilities would comply with federal law; (4) find that the company had sufficient funds to comply with federal law; and (5) determine that approval of the company would not degrade air quality during the compliance extension.

GAO found that 10 companies representing about 50 percent of U.S. steel production applied for benefits under the act. EPA determined that six of the applicants were eligible to participate in the program, and GAO found that the five firms that participated spent about $49 million on modernization. GAO noted that, while spending under the program was less than expected, unexpected benefits that were realized included: (1) one corporation's sharing of a proprietary emission control process with other firms in the steel industry; and (2) an increased number of consent decrees, which EPA prefers over other compliance mechanisms. GAO also found factors that limited eligibility for benefits under the act. While the act provided that firms applying for benefits were required to comply with existing judicial decrees, it also provided that de minimis, or negligible, violations could be excused. However, the act did not define de minimis violations and EPA eventually used a strict interpretation of such violations. In addition, GAO found that companies' spending under the act was limited by: (1) EPA or corporate determinations that funds were not eligible to be diverted to modernization; (2) overestimated spending commitments; (3) proposed pollution control projects that were either ineligible under the act or were not necessary; and (4) poor economic conditions, which limited companies' willingness to divert pollution control funds to modernization.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Hugh J. Wessinger Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 275-5489