152 • Wetlands: Their Use and Regulation 



Specific Impacts of the 404 Program 



Costs related to the 404 program may be divided 

 into two categories: national costs and costs to in- 

 dividual permit applicants. 



National Costs 



Overall, the greatest potential impact on develop- 

 ment activities from the 404 permitting process is 

 the prevention of activities. In some cases, resources 

 cannot be extracted, facilities built, and so forth, 

 because of deniails of permit applications (assum- 

 ing that alternative means of conducting the activity 

 cannot be found) or if delays, modifications, or 

 other costs make the planned activity uneconomical 

 or otherwise infeasible to undertake. Activities that 

 are not prevented may be made more expensive, 

 thus increasing costs to users of the products pro- 

 duced. These general types of impacts can have 

 broader effects than just the costs to the permit ap- 

 plicants. 



Potential national costs include reductions of pro- 

 duction and price increases in regulated industries 

 and other industries dependent on regulated firms. 

 One oil company argued, for example, that 404 

 regulation is economically unproductive, adds no 

 resources to the Nation, and creates many millions 

 of dollars in costs that are "inevitably passed on 

 to consumers and contribute to America's current 

 economic malaise."" 



In addition, if regulatory restrictions make wet- 

 land portions of a resource base impossible or more 

 expensive to use, the remaining nonwetland por- 

 tions also may become more valuable as a result 

 of the diminished supply of the resource in ques- 

 tion. While this outcome may not increase costs to 

 the firms exploiting the resource, it could result in 

 increases in the prices charged to consumers of the 

 products derived. 



Some industry associations and individual firms 

 contend that the macro-level effects of the 404 pro- 

 gram are of a different type than are direct effects 

 on the gross national product (GNP) or consumer 



prices. They argue that a deleterious effect of the 

 404 program on the operations of various industries 

 adversely affects vital national interests. For exam- 

 ple, petroleum industry members have stated that 

 the 404 program has seriously interfered with the 

 ability of the oil industry to explore and develop 

 Alaskan North Slope oil reserves, which comprise 

 roughly 40 percent of U.S. domestic reserves. They 

 state that Alaskan reserves are "of obvious and cru- 

 cial importance to America's domestic oil supply, 

 and thus to American national security interest."'^ 



OTA does not have sufficient information to de- 

 termine the impacts of the 404 program on any sec- 

 tor of industry, on national indicators such as GNP, 

 or on national interests in general. At least some 

 individual firms have borne major costs as a result 

 of the 404 program, and industry associations 

 brought to OTA's attention instances in which costs 

 ran into millions of dollars. The significance of these 

 costs beyond the impacts to the firms concerned is 

 difficult to assess. To some industry associations, 

 the 404 program is one of the major sources of reg- 

 ulatory costs.* 



OTA asked associations to estimate the signifi- 

 cance of 404-related costs — e.g., the proportion of 

 the total burden of Federal and State regulation en- 

 tailed by the 404 program — and the importance of 

 404 program costs relative to other factors, such 

 as high interest rates. Several associations said that 

 the significance of program costs varies with the 

 project. Two associations made more specific esti- 

 mates. The range of the responses received by the 

 FI from 2 firms in North Carolina was 10 percent 

 and 50 percent; from 14 firms in Florida, 1 to 40 

 percent, with a median of less than 5 percent. The 

 American Paper Institute/National Forest Products 

 Association (API/NFPA) responded as follows: 



The significance of section 404-related costs to 

 our members has decreased steadily since the mid- 

 1980 publication of the regulations implementing 

 section 404(f). As a consequence, it may now be 

 less significant than requirements imposed by 

 other Federal or State programs. 



"Sohio, "Briefing Paper for Regulatory Changes to Corps of 

 Engineers Regulations Governing Section 404 of the Clean Water Act 

 and Sections 9 and 10 of the River and Harbor Act of 1899," 1981. 

 It was claimed that in one project alone, 404 problems caused tens 

 of millions of dollars in costs. 



'"Ibid. 



•For example, API listed section 404 permitting second in a list 

 of 10 highest priority issues submitted to the Reagan administration, 

 May 4, 1981. 



