Point of View

Pow OF VIEW: AN INDUSTRY PERSPECTIVE ON THE CLINTON ADMINISTRATION’S PROSPECTIVE ENVIRONMENTAL AGENDA

Cynthia Johnson

ot long after I moved to Washington, DC, I had to work late one evening. I drove home through the city on a stretch of N L Street which at night is often frequented by “ladies of the

evening.” As I pulled up to a stop sign, without warning, a woman in a revealing outfit opened the passenger door and sat down in my car. I was dumbfounded.

“I need a ride,” she said. Not knowing exactly what to do with the scantily clad presence in my car, I did what made the most sense at the moment -1 started driving. Grim pictures of who or what might have caused her to seek refuge with me passed through my mind. After several blocks nothing terrible had happened; soon I blurted out, “I’m glad you’re not going to rob me . . . you see, Mace is illegal in Washington, DC, and I just had mine confiscated in the Capitol this afternoon!”

“Ha,” she said, without missing a beat, “you know that stuff‘s toxic and those guys will probably just throw it out or send it to the landfill without thinking. . . somebody really ought to make a law. . . . ”

In addition to learning to lock the car doors when driving in Washington, DC, the experience taught me that there are millions of people from all conceivable walks of life, who, like my friend from L Street, are concerned about the environment. What’s more, they’re speaking their minds . . . and Congress is listening.

More than 1,700 environmental bills were introduced in the last session of Congress, including proposals to ban certain chemicals and plans for interstate waste disposal. The results of all that work were less than dazzling. Only H.R. 776, the Energy Strategy Act of 1992, and a few narrowly focused bills were enacted and signed into law.

The New Administration & Congress This year starts off with a whole new political climate. Four of the

six congressional committees that make and oversee environmental laws have new, more active chairs. Perhaps more significantly, we have a new administration that clearly views the environment as important, and wants to work with Congress to protect it. Although one might assume that means a plethora of new command and control proposals, I believe, on the contrary, that these factors may add up to a more evenhanded approach to environmental legislation.

Cynthia Johnson is Washington, DC,

for Hewlett-Packard Company. She is responsible forenvironmentalfegislah’ve and regulatory issues, us well as science and technology public policy.

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he Clinton T administration has expressed great interest in a take- back approach to solid waste management.

Senator Max Baucus (D-MT), new chairman of the Senate Environ- ment and Public Works Committee, which has in the past been viewed as originating flagrantly liberal policy, has indicated that he wants to move his committee more to the mainstream. Committee members may now pass much more reasonable legislation knowing that they do not have to drive the extreme end of the debate and, more impor- tantly, that their proposals will not automatically be vetoed. Further- more, some of the legislative reforms that Democrats might have previously proposed in the legislative process, including parts of RCRA and Superfund, may now be achieved through regulations.

Although the administration clearly has an interest in the environ- ment, President Clinton's first priority is the economy and jobs. Just how his administration will attempt to balance environmental pro- tection with economic growth is not completely clear. However, it is likely that it will develop environmental issues as a way to create jobs, together with proposals advancing new technologies that will help to rebuild the nation's infrastructure. Here are several of the themes that I believe we can count on seeing:

Pollution prevention. New congressional leaders and admin- istration officials have indicated an interest in moving away from command-and-control solutions to "designing out" po- tential pollution problems from the very start. Managing industrial wastes is no longer enough. Businesses are now expected to design products and processes so that there is no waste in the first place. And for the waste we do generate, we'll have to be more responsible than ever before. Take-back programs. The Clinton administration has expressed great interest in a take-back approach to solid waste management. By giving credits to companies that recover some part of their waste stream, and penalizing companies that fail to do so, the take-back approach would also serve to reduce waste generated. Environmental technologies. Both the new administration and Congress are expected to explore incentives for developing more and better technologies to avoid environmental prob- lems and for cleaning them up. Market-oriented approaches to pollution control, includ- ing environmental taxes. This reflects the new Democratic approach of creating and expanding markets through indirect environmental regulation. Revenue-neutral tax incentives to favor the use of recycled materials or to discourage the use of pollutants may be one approach. Energy efficiency. President Clinton has reiterated his cam- paign promise to boost fuel-efficiency standards in new cars. Further voluntary standards, such as those called for in the Energy Strategy Act of 1992, will be encouraged by pressure from federal procurement preferences for energy-efficient and "environmentally correct" products.

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there over35 ,W are additional sites that require cleanup action. Against this backdrop, both Democrats and Republicans agree that Superfund is indeed “broken.”

Given the new spirit of cooperation between Congress and the administration, legislative efforts will likely build on these “priority” themes of the Clinton administration. Several of these were in evidence with the last Congress, which means they have ready sponsors and supporters. These themes will obviously have a signifi- cant effect on the scope and order in which environmental proposals move forward in Congress. The 103rd Congress and the Clinton administration, however, face a number of important and complex environmental issues, only a few of which, if any, can be resolved in two years.

Mindful of the old saying that “she who lives by the crystal ball soon learns to eat ground glass, ” I am going to take a risk and venture a few predictions on how these themes will play out in the 103rd Congress.

1. Superfhnd reauthorization will likely leapfkog RCRA. After a decade of EPA efforts to implement the program, most

people agree that Superfund is not working. The costs of cleaning up waste sites has increased horrifically over the last decade, with the average cost exceeding $27 million per site. Permanent cleanups have been completed at fewer than 10 percent of the sites on the National Priorities List, and there are over 35,000 additional sites that require cleanup action. Against this backdrop, both Democrats and Republi- cans agree that Superfund is indeed “broken.” However, they do not agree on what to do to fix it. Congress reflects the views of the affected communities, and of course their views and interests are splintered. Legislators face two options: they could abandon the existing program and start over with a more progressive liability scheme, or they could retain the existing program and focus on tuning up its implementa- tion. The former obviously does not preclude the latter.

In order to overhaul the statute, Congress would have to resolve the liability issue. This raises two problems. First, there is significant pressure to retain the concept of “polluter pays,” but this concept is particularly questionable when it is applied retroactively. One alterna- tive is to retain strict, joint and several liability-the linchpin of Superfund-for intentional and reckless waste dumping. Second, if the liability structure is modified, it would require billions of dollars to create a no-fault fund, and raises the prospect of significantly increased taxes on industry.

Given the difficulties, it is much more likely that liability will be the subject of debate and possibly limited reform, but in the end, Congress will simply fine-tune the program and address some systemic problems. As an attorney friend of mine says, the old saying “if it ain’t broke, don’t fix it” has a Superfund corollary: “Even if it is broke, don’t fix it too quickly or too dramatically.” As a tune-up, Congress could follow up on the general consensus that EPA has not used the tools at its disposal aggressively enough. The Agency could accelerate cleanups and facilitate settlements by encouraging widely applicable remediation techniques

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and greater use of settlement incentives, such as de minimis cashouts and mixed funding. It could also ensure more equitable allocation of cleanup costs among potentially responsible parties.

There is a much more controversial level of “tune-up,” however, which would require new cleanup standards, addressing the issues of risk assessment and “how clean is clean,” and remedy selection or containment versus cleanup. Major industry groups are already push- ing for solutions to these issues. Not surprisingly, environmentalists are opposed to any weakening of cleanup standards.

2. Some RCRA issues will Zikely move forward independently! but not as part of a comprehensive reauthorization bill.

The question of whether the 103rd Congress will revisit the thorny solid waste management issues left over from the 102nd Congress remains open. A comprehensive bill such as the one envisioned by the 102nd Congress seems unlikely, but specific issues could be addressed independently. For example, it is likely that the new administration will support a take-back program along the lines of the Baucus proposal last year, providing flexibility in meeting recycling mandates for packaging materials and newsprint. This approach could be expanded to cover many more products, including batteries, appli- ances, and scrap tires.

Another approach might be a narrow RCRA bill that addresses only recycling and state waste management planning. These are popular issues, and help with state waste management is perceived as being long overdue. Other issues that may appear independently or as part of a scaleddown RCRA bill are interstate transportation of waste, an expansion of the Toxics Release Inventory, and some limited hazard- ous waste issues.

rn rn rn it that is likely the new administration will support a take-back program along the lines of the Baucus proposal last year.. .

3. Clean Water will be discussed early and open! but given the firZl environmental agenda i t is unlikely to pass within the first two years.

The Clinton environmental agenda sets ambitious goals for a new Clean Water Act with standards for non-point source pollution, incen- tives to reduce and prevent polluted runoff at its source, and meaningful wetlands protection. Other issues likely to be raised are increased use of watershed management, reducing the release of industrial toxics to publicly owned treatment works, increasing the emphasis on pollution prevention by incorporating it directly into the permitting process, and expanding the criteria by which water pollution is measured. Given the .full environmental agenda facing the 103rd Congress, it seems unlikely that it will enact comprehensive Clean Water reform. However, funding for select provisions is likely to be included as part of a larger infrastructure bill, to provide resources for such things as municipal wastewater con- struction grants, non-point source management assistance, and water quality management grants.

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tp”‘ olitical new environment presents business with a real opportunity to initiate changes in our internal processes that will help us better respond to the demand of our markets.

4 . Bet on seeing environmental taxes. The 102nd Congress saw an increasing call from then-Senator

Gore, and others, for environmental taxes. In one sense, this isn’t anything new. To some degree we already have an “environmental Tax Code.” It’s not in one single place, but is scattered throughout the Code. For example, excise taxes on feedstocks fuel the Superfund program; there are new taxes on ozone-depleting compounds; there is a series of tax preferences for alternative energy and for mass transit commuting. The 102nd Congress made attempts to tax hazardous waste, virgin paper products, and groundwater depletion. The Clinton- Gore administration will likely further expand this trend, and use the Tax Code, much more directly and dramatically, to achieve environ- mental objectives. Effluent taxes, energy taxes, and lead production taxes are possible candidates.

So what does all of this mean for those of us in business? In short, the new political environment presents business with a real

opportunity to initiate changes in our internal processes that will help us better respond to the demand of our markets. The challenge associated with that opportunity will be to exert a positive, constructive influence as new policies are shaped-to ensure that they will be appropriate to the real demands of the marketplace. Speafically, this means:

Business must take the lead. In the last decade or two, business came to rely on government gridlock as a protection against unwanted environmental policies. An issue could be ignored knowing it would be in the pipeline for months or years. The pace will pick up with this administration, which views the environment as a priority and is supported by a Congress of the same party. Seeking to avoid the appearance of gridlock, it will succeed in developing and putting through a number of environmental initiatives.

The danger is the possibility of a legislative and regulatory system characterized by mandatory goals, backed with rigid, command-and- control enforcement. There could be a legislative stampede to short- term solutions that ignore whether they are best approaches or whole solutions or whether the solutions themselves cause problems. This could lead to a cycle with Congress legislating, agencies regulating, and industry spending inordinate amounts of time filling out forms and working to comply. And, all the while, the public would become increasingly frustrated as real environmental problems seem to be getting worse.

This is an opportunity to reflect customers’ concerns. It is clear that our customers, the public, are becoming increasingly sensitive and sophisticated about the environment. This concern, increasingly, will be directly reflected on the bottom line, as customers demand prod- ucts they perceive as being environmentally sound. Public environ- mental policies must mesh with businesses’ responsive internal pro- cesses to satisfy marketplace demands.

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C m u JOHNSON

e...need to think about

what happens to our products when their usefirlness is over- how our customers dispose of our products.

Business must set the agenda. We need to restructure our internal business processes for market-based reasons to incorporate real solu- tions to environmental problems. Our emphasis must be on prevent- ing problems rather than fixing them afterward.

This means including environmental quality criteria as we design products, build manufacturing processes, and choose vendors. We even need to think about what happens to our products when their usefulness is over-how our customers dispose of our products. The more effectively we work internally to address environmental needs, the greater our opportunity to eliminate the potential for governmen- tal command-and-control regulation.

Our customers, the marketplace, will be the source of continuing public pressure to deal effectively with environmental issues. Our response must come, simply, of good business practice. We have the energy, the resources, and the sense of urgency to come up with constructive ways of dealing with these issues. It is up to us to take a creative, constructive approach that policymakers can use as a basis for designing workable and practical public policies. +

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