Shades of Green

How state regulators and the private sector are making environmental policy more effective and less intrusive

Alexander Volokh from the May 1998 issue

(Page 2 of 3)

Last November, under intense criticism from state environmental officials, the U.S. EPA withdrew the guidance document, but it has yet to develop a policy of encouraging state experimentation with brownfield cleanup programs. To many state officials, the best federal policy on the matter would be to butt out. "We think that the federal government needs to basically stay out of state business when it relates to brownfields and cleanup programs," says Jim Snyder, director of the Bureau of Land Recycling and Waste Management at the Pennsylvania DEP. The feds "see themselves as being Big Brother and Big Sister to the states, and the states are not interested in that."

In Search of XL-ence

Roger Kanerva, an environmental policy adviser with the Illinois EPA, bristles at the mention of the letters XL. "Please don't use the XL word," he admonishes. "We are not fans of XL." He rolls his eyes and shakes his head.

Project XL is a U.S. EPA program for companies with "XL-ent" environmental performance. Introduced by the White House in 1995 as an "enforcement experiment," it was designed to provide an alternative to the standard system of one-size-fits-all regulations. In theory, facilities that showed they could attain superior environmental results would be granted more flexible permit conditions. The EPA would refrain from punishing violations if a participating facility was acting in good faith.

3M, which makes a wide range of consumer products, medical supplies, and manufacturing materials, applied to the XL program for plants in Minnesota, Illinois, and California. The Illinois EPA supported the Illinois part of the effort and worked with 3M to get the XL project approved. U.S. EPA approval for the XL program was contingent on "superior" environmental performance, but the standard turned out to be a moving target. "What you thought was superior before," Kanerva recalls, "suddenly [wasn't]. We were always one step behind their new definition of how wonderful your project had to be." For instance, while "superior" started out meaning "better than required by existing laws," it ended up meaning "better than the company was performing already"--which penalized companies like 3M, which were already performing substantially better than laws required. Finally, 3M dropped out of the XL program. Frustrated with the vagueness and inconsistency of the federal criteria, the Illinois EPA refused to participate further.

Other companies that have explored the XL program have had experiences similar to 3M's. Part of the problem seems to be the U.S. EPA's inflexibility. The Environmental Council of the States, which represents state environmental agencies, charged that the U.S. EPA mishandled the project by adopting "rigid criteria...in the eleventh hour" and by not allowing a larger role for the states. But even if federal regulators wanted to be flexible, the laws wouldn't give companies much leeway to pursue innovative approaches. Regardless of whether the U.S. EPA punishes a violation, a private individual could always sue over a company's statutory violations.

Disappointed with the XL program, the Illinois EPA prepared its own Environmental Management System (EMS) legislation, which was signed into law in June 1996. The statute gave the agency five years, from 1996 to 2001, to enter into agreements with companies that want to try out new ways of complying with regulatory requirements. This pilot EMS program is open to companies that seek to streamline their permitting procedures or adopt "innovative environmental measures." The Illinois EPA insists that a company's EMS emphasize actual environmental performance, focus on pollution prevention, and guarantee extensive consultation with community groups and leaders. "For this program," says the Illinois EPA, "the most important ingredient is the desire of a regulated entity to chart its own course for environmental progress and to be fully accountable for its performance."

The program is voluntary: No company must join, and the Illinois EPA is not bound to enter into an agreement with any company. The fact that a company chooses to participate means that the agreement makes sense for the company, and the fact that the Illinois EPA agrees means that it expects environmental improvements. The agency doesn't require that the potential for improvement be demonstrated beyond a doubt, which is what stymied the XL program. It reserves the right to approve interesting, innovative projects that might lead to significant environmental benefits.

3M was the first company to negotiate an EMS agreement with the state. The agreement would require 3M to set a waste reduction goal for its adhesive tape factory in Bedford Park and to measure its progress toward that goal. It would lower the ceiling on 3M's emissions while giving the company more flexibility in its day-to-day operations. To avoid problems with the U.S. EPA, the agreement does not address any issues of federal law or permitting.

State officials expect to finalize the agreement with 3M by the end of the summer. Tom Zosel, 3M's manager of environmental initiatives, says the company is optimistic about the arrangement: "We get some operational flexibility, we get better relations with the local community, and the agency gets more information and oversight on our facilities in a way that is less regulatory and less command-and-control. We're making commitments on what we're going to achieve that are better than what the regulations require."

The Illinois EPA hopes to approve a few dozen EMS agreements over the next five years and use the experience to develop new regulations. This learn-by-doing strategy contrasts sharply with the federal approach, which Kanervadescribes as a "one-size-fits-all, cookie-cutter, do-it-our-way-or-take-the-highway type of thing." As the Illinois EPA's Bharat Mathur puts it, "One of the reasons XL didn't work is because, typically, when we do something new, there is this great desire to put it into regulation, rules, and guidance. And that's where it gets sticky, because you cannot accommodate all new, emerging situations into rules and guidance right off the bat."

Comical Solution

"I'm not a warm and fuzzy person," says Jim Morgester, compliance division chief for the Air Resources Board at the California EPA. "I am a dyed-in-the-wool enforcement type. I have a military background." But while Morgester was brought up on enforcement, he sees it as a tool, not as an end in itself.

Morgester regulates businesses that generate air emissions, including gas stations, dry cleaners, auto repair shops, paint manufacturers, and furniture factories. Several years ago, he found that only 60 percent of the businesses inspected by the Air Resources Board were staying within emission limits, handling volatile chemicals properly, and completing required paperwork. His goal was to get that number up to 95 percent. The main reason for the widespread failure to follow the law, he concluded, was that people couldn't understand the law. Environmental rules and regulations, he points out, are written by technical people whose terminology is difficult to understand, and then rewritten by attorneys in their own language, with politicians looking over their shoulders and second-guessing the outcome. The result, he says, is "not intelligible to a lot of people."

"I don't care about being nice," Morgester insists. "I care about getting people to comply, and I will use whatever it takes. If I thought that if I put half the population in jail I could get what I wanted, that would be fine by me. But that doesn't work." He divides businesses into three groups: big companies that understand the regulations and can afford environmental auditors; smaller businesses that want to do the right thing but don't have the resources to figure out what that is; and those who, "even if they knew what the right thing was, weren't going to do it anyhow." He adds, "I would rather spend my traditional law enforcement resources on the third class, because it's easier for me socially and politically to bust the bad guys." For the others, he says, an educational approach makes more sense.