Effects of air quality regulations on polluting industries

This paper examines unintended effects of air quality regulation, using pla nt data for 1963-92. A key regulatory tool since 1978 is the annual designa tion of county air quality attainment status. Nonattainment status triggers specific equipment requirements, with the severity and enforcement of regu lations rising with plant size. The differential in regulation favors attai nment areas, reducing births for polluting industries in nonattainment area s by 26-45 percent. Industries and sectors with bigger plants are affected the most, shifting industrial structure toward less regulated single-plant firms. Large preregulation plants do benefit from grandfathering provisions , but both grandfathering and shifts to small-scale new plants contribute t o environmental degradation.