This paper analyzes the effect of pollution abatement costs on the productivity of manufacturing industries. Two opposing views prevail on the topic: One view criticizes regulations for imposing excessive cost and reducing competitiveness of domestic firms. The second view, on the other hand, argues that regulations might encourage firms to seek for cleaner technologies hence, promote innovation and productivity. Using US industry data from 1988 to 1994, I find productivity is negatively related to pollution abatement costs. However, when analyzed separately, pollution abatement operating costs and pollution abatement capital expenditures produce different results. While the former is always negatively correlated with productivity, the results for the latter are not significant or even positive under some specifications. This reveals that how industries choose to comply with regulations might matter.