The Michigan Department of Environmental Quality should follow the lead of other state environmental agencies and contract with private sector air quality firms to help administer its air permitting program. States that have or are privatizing some of their air permitting include: Iowa, Indiana, Kentucky, Minnesota, Missouri, New Jersey, Tennessee and Texas. There are several benefits that could be realized almost immediately by utilizing private contractors in the processing of air permits:

With state budgets remaining tight and Michigan’s economy stuck in neutral, there has never been a better time to harness the expertise of the private sector in adjudicating air permits.
  • Scarce state resources would be freed up to do final review, conduct public hearings and perform other administrative tasks.

  • "High tech" private sector jobs would be created that help grow Michigan’s economy.

  • The state would save money that could be used for other purposes.

  • The state would not need to increase the number of permanent employees to deal with temporary increases in air permit workload.

The Air Permit Program administered by MDEQ under delegation from the national EPA is critical to the retention and creation of manufacturing jobs in the state. An "Air Permit to Install" must be obtained before a manufacturing plant can start operations. Most changes to an existing plant, whether for expansion or for a change in process that involves air emissions, trigger the requirement for a new air permit. In an auto assembly plant, merely changing the brand of paint used to paint vehicles often results in the need for a new air permit. Many facilities must also obtain a "Permit to Operate" which must be renewed every 5 years.

Obtaining permits in a timely manner is an important issue for firms doing business in the state. Industry simply can not tolerate permit delays if they are going to remain competitive in a global marketplace. During the late 1980s and early 1990s, Michigan’s environmental agency had a backlog of over 1,000 permit applications. It was not unusual for companies to wait 18 months or more to obtain an air permit. MDEQ should be commended for having instituted a number of much needed reforms in the air permitting program, which have reduced permit backlogs. However, there is no guarantee that when economic activity picks up in the state, backlogs of air permit applications will not become a problem again.

One way to ensure that permit backlogs are a thing of the past is to contract with private air firms for review of permit applications. Dr. Howard Ellis, whose firm Enviroplan Consulting has successfully operated air permit programs for state and local government, lists the following as essential elements in privatizing an air permit program:

  1. Establish a management process that is the same as a successful process for managing a state permitting section.

  2. Compensate the contractor on a fixed fee basis by permit type and stage.

  3. Address conflict of interest issues by hiring a contractor not currently working for Michigan companies.

  4. Have a penalty provision in contracts so a contractor is not paid for poor quality permits.

  5. Give permit applicants the option to expedite the processing of their permit applications by paying an expediting fee to cover some or all of the costs of contractor permit preparation.

  6. Retain state responsibility for final review and approval of each draft and final permit prepared by a contractor in the same way that a Michigan DEQ Section Chief reviews a permit writer’s permit.

  7. Protect Michigan jobs by requiring a contractor to have a Michigan office for the permitting work.

With state budgets remaining tight and Michigan’s economy stuck in neutral, there has never been a better time to harness the expertise of the private sector in adjudicating air permits. If the state bureaucracy continues to resist the involvement of the private sector in processing air permits it may be necessary for legislators to mandate private sector participation.

Russ Harding is senior environmental policy analyst with the Mackinac Center for Public Policy.