⚫ for companies with such policies, either no one was put in charge of overseeing their implementation or an environmental staff person was chosen (i.e. someone with no responsibility for waste generation);

⚫ the competing concept of "waste minimization", which EPA defined as referring to reductions in RCRA and which included such measures as dewatering and treatment;

• a lack of knowledge of the sources of wastes within the plant;

⚫ the lack of a system to account the full dollar costs of ongoing waste generation; and

⚫ the lack of a system of rewards or incentives that involve plant employees in finding source reduction opportunities.

These findings are nearly the same as those of the Congressional Office of Technology Assessment (OTA) in its report released about the same time (Serious Reductions in Waste) and in their subsequent reports. At that time OTA estimated that U.S. companies could probably reduce their wastes on average 10 percent per year for at least five years.

Since Cutting Chemical Wastes, INFORM has been convinced of several things. First, our findings about the untapped potential for source reduction apply both across the rest of the chemical industry, as well as other industries. In addition they apply to public sector facilities, as well as those in private industry.Second, the potential for source reduction is far greater and can happen much faster than previously estimated, if companies set-up effective programs. In our 1990 update to Cutting Chemical Wastes, the following near final figures show how much can be achieved in a very short period of time. At the very same plants studied before, a few instituted serious source reduction programs which are already achieving significant results: For example, in 1990 INFORM was able to document:

• 146 source reduction actions, 64 process modifications, 44 operational changes, 20 equipment changes, 15 chemical substitutions, and 3 product changes average reduction in waste of 68 percent

average increase in product yield of 6.8 percent

• average amount of reduction per year per action: 2.4 million pounds

• average dollars saved per activity per year: $484,616

average payback period: 12.2 months

• average length of time to accomplish: 8.8 months

[It should be noted that while some of the INFORM study plants are now making significant strides in achieving source reduction, it is equally clear that such dramatic accomplishments are as yet not being achieved at most plants across the country. For example, INFORM and others have looked carefully at plants across the country reporting the largest reductions in Toxics Release Inventory (TRI) releases and transfers. While the total releases and transfers reported to TRI have decreased over the last three years, only a tiny fraction are related to any source reduction activities. Most involve corrections to what was reported or what was typed into the computer or involve changes in what must be reported. Thus, there remains an enormous untapped potential for source reduction in this country.]

Third, the amount of source reduction achievable is very plant-specific, in part because the key factors determining what can be done varies from one plant to the next. For example, we have studied two different plants in the same State, producing the same product, using the same process, with very different opportunities for source reduction. In one plant dyes were being manufactured. With a little bit of planning this plant was able to schedule its runs so that the remnants from one batch could be left in the reaction vessel to at the start of the next. In the other, the customers required the dyes that they order to precisely match from one batch to the next and from year to year. Thus, the second plant had to wash out its reaction vessels between every change in dye colors to assure that the product color would be identical every batch. The washings resulted in considerable waste generation at the second plant that did not occur in the first. The amount of source reduction achievable is very plant-specific, also in part because of the fact that different companies may be starting with very different levels of efficiency.

Fourth, there is no set amount of source reduction achievable. Of the many companies with which we are familiar, we are aware of none with an effective source reduction program that thinks it has reached it full reduction potential or even that there is such a defined level. Invariably these companies seek continuous improvement through ongoing source reductions.

Fifth, once a plant invests in expensive waste treatment equipment source_reduction accomplishments go way down for wastes directed to such equipment. For example, in our research update none of the 146 source reduction actions were taken

of a waste being incinerated. Thus, the time to go for source reductions is before companies invest in treatment facilities, not after.

And sixth, the Federal Toxics Release Inventory and other community right-toknow programs are stimulating companies to voluntarily reduce the amount of their wastes, and making corporate officials feel more publicly accountable for the actions of their plants.

POLICY IMPLICATIONS OF INDUSTRIAL SOURCE REDUCTION

1) It is clear that the issue of industrial source reduction is extraordinary. Here's a strategy that is both environmentally desirable and in industry's own economic interest. It is clearly a desirable national strategy for environmental improvement and improved economic efficiency.

Source reduction is universally acclaimed as the top of the waste management hierarchy from an environmental perspective. If wastes are not generated they don't get into our environment and don't need to be managed.

Source reduction addresses toxics and other wastes which otherwise would go into any environmental medium, simultaneous tackling air, water, and land pollutants. Source reduction almost always involves reduced risks to workers at plants employing such strategies.

Source reduction is very important to promote as a national strategy for economic reasons as well.

Source reduction can significantly improve the competitiveness of U.S. plants with effective programs for several reasons:

• The potential for source reduction is large, probably larger than any other waste strategy. For example, high temperature incineration has never been proposed as appropriate anywhere even approaching half of the amounts of wastes being generated, by even its most the ardent advocates.

• Source reduction actions have typical returns on investment far exceeding that of virtually any other use of corporate dollars (approaching 100 percent at INFORM study plants).

• Source reduction actions can improve manufacturing efficiencies significantly (average yield improvement per source reduction action at INFORM's study plants was 6.8 percent).

• Source reduction programs often carry with them improvements in energy efficiency and in product quality.

• Source reduction actions often involve low-technology or no-technology approaches (e.g. improved house keeping measures).

Source reduction is a particularly important strategy for the chemical industry, which inherently handles many toxic chemical intermediates to make the thousands products that it sells to individual and industrial consumers.

2) Government regulations and programs are not significantly impeding source reduction (except at government facilities). Rather, environmental regulations both increase the costs as well as limit the options of less desirable waste management approaches. Government must exercise care not to impose requirements that require the use of pollution control devices. In general it should establish performance rather than design standards. Also, care must be taken to allow companies enough time to research and implement source reduction actions involving chemical substitutions and major process changes, actions that often lead to the largest gains. If timetables are set too short, companies may be forced to build expensive treatment facilities that cut down upon the incentive for source reduction.

In fact, one of the good news aspects of source reduction is that environmental quality doesn't cost as much as previously thought, and the corollary, that we don't need to compromise our environmental goals for economic reasons nearly as much as previously thought.

3) Source reduction actions by industry reduces the adverse impacts of uncoordinated government environmental regulations developed separately under the many different Federal, State, and local environmental statutes.

4) Government should not prescribe source reduction for several reasons:

• As mentioned above, the source reduction potential differs widely from plant to plant.

• If government were to set source reduction standards, many companies might wait to find out what will be required, rather than exercising currently available options.

• Government is ill-equipped to write such standards. U.S. EPA and State environmental agencies are typically staffed by lawyers, policy analysts, environmental engineers, and risk assessment scientists. It is very hard for governmental programs to pay comparable salaries to those that can be earned in industry by chemical and

process engineers or industrial chemists. Only in EPA's Office of Toxic Substances is there a significant concentration of industrial chemists and chemical engineers, and they are nearly fully occupied reviewing the nearly 2,000 premanufacture notices received annually by EPA on new chemicals.

Government standards would almost invariably be relatively lowest common denominator. Thereby not adequately achieving desired environmental ends.

Yet, even lowest common denominator standards would likely unfairly impact some companies unable to meet the standard (e.g. the dye manufacturer mentioned above that had to wash its equipment between every batch to meet customer requirements).

• Each significant regulation costs taxpayers large sums of money to develop, track, and enforce.

Significant regulations take five to ten years or more to develop-far slower than the pace that industry can achieve source reduction, if it establishes serious source reduction programs and far slower than the state-of-the-art of process technologies is changing.

• The purpose of regulations is to achieve social goals that are not achievable through market forces (i.e. internalize costs). But, large amounts of source reduction are achievable at a cost savings to industry. Thus, government regulations should not be needed to achieve such reductions. (For the same reason, government subsidies, in whatever form, seem equally inappropriate.)

5) While government is generally much less able to determine the potential for source reduction at facilities than the facility operators, government can play an important technical assistance role in at least two important respects. First, government can help companies wake up to the potential for serious source reduction. And second, it can help some (generally small) facility operators identify and evaluate their source reduction options.

6) The information available to the Federal Government and the public is woefully inadequate to track source reduction actions and trends, either nationally or at the facility-level. The recently enacted Federal Pollution Prevention Act is a major improvement in the information to be gathered, but more is needed. With better information and data available on source reduction accomplishments at individual facilities around the country, the powerful forces of public accountability can stimulate companies to pursue their source reduction potential.

For whatever the reason, U.S. EPA is not exercising its discretionary authorities to supplement the Congressional mandated minimums of data collection to obtain the additional types of data needed to track progress in this field. For example, while the State of New Jersey is effectively collecting and using throughput data on TRI chemicals (i.e. the amounts of the chemical purchased and sold, produced and consumed in manufacture), there is no indication that EPA will ever move to collect such data, if not mandated to do so by Congress by statute.

In sum, the country has a real environmental and economic interest in having industry pursue source reduction to its full limits. Government can play an important role by improving the information publicly available on source reduction being achieved at local facilities around the country. It can stimulate further source reduction by not compromising necessary environmental protection mandates. It can also offer some technical assistance to firms that have not yet learned about the potential of source reduction and for small firms that have limited ability to assess available alternatives. However, government should avoid prescribing source reduction accomplishments by regulation.

TOXICS USE REDUCTION AND ITS POLICY IMPLICATIONS

For most of industry source reduction and toxics use reduction are virtually identical. By chemical substitutions, product reformulations, and the efficiency improvements of source reduction result in reduced use of toxic chemicals. At these facilities toxic use reduction strategies have the same environmental and economic benefits as source reduction.

However, source reduction/toxic use reduction by individual and industrial users can have adverse economic consequences for any supplier that defines its business in terms of marketing such toxic chemical. For example, reduced use of asbestos in the manufacturing of roofing materials may save the roofing industry current and future costs and protect the environment, but it certainly doesn't help economically those companies that are major miners and millers of asbestos. Similarly, chemical companies that are heavily committed to the manufacture and sale of specific toxic chemicals can be adversely affected economically when its customers or its customers' customers successfully reduce their use the toxic chemical in their operations.

Looking at it another way, plants in the extraction and chemical industries typically have strong economic incentives for source reduction, but much less often will have compelling economic interests in selling less of any toxic product that they make. Thus, to the extent that individual and industrial users cannot create enough economic incentives to stimulate the availability of less toxic substitutes for their uses, government regulations may be needed to restrict the toxic chemicals and thereby stimulate the availability of such substitutes. Any such substitutions will have their attendant effects on those individuals and industries tied to the chemical. [Comment: The Federal Government has for 15 years had a toxics use reduction regulatory statute in the Toxics Substances Control Act (TSCA). However, the Office of Toxic Substances has been noteworthy in how few chemicals it has restricted under this statute. As a former head of this program, I can say that one important reason for this dearth of action has been the fact that regulations under TSCA must be made upon a finding of unreasonable risk. However, it is very hard to conclude that anything less than a rare emergency constitutes an unreasonable risk, if there is no adequate substitute for a chemical. Therefore, TSCA is not innovation forcing. For example, even as risks to stratospheric ozone from chlorofluorocarbons (CFCs) were becoming scientifically more certain in the late 1970's and early 1980's, because there were no commercially available substitutes for many CFCs, EPA found it impossible to make an unreasonable risk finding. On the other hand, few companies were putting any effort into the development of substitutes because CFCs were relatively inexpensive and they dominated the market. Users had no choice but to buy CFCs for their applications.

In this case, the increasing body of scientific knowledge about the ozone depleting potential of CFCs combined with unexpected identification of greatly reduced ozone levels over the Antarctic resulted in an international decision to phaseout all uses of these chemicals. A time table was developed for the phaseout intended to allow time for the development of new substitute chemicals and processes. Progress on substitutes is being made both by the chemical industry and users are changing their processes even more quickly to cutdown on CFC use.

Were this innovation-forcing phase-out not agreed upon under the Montreal Protocol, it is doubtful that CFC use would be much diminished in the 1990's, as market forces were not driving such innovation. Moreover, without alternatives, EPA wasn't prepare to find the only fluid used in refrigerators and air conditioners an unreasonable risk under TSCA.]

COMMENTS ON S. 976

I believe that S. 976 takes a sound approach to the promotion of source reduction and toxics use reduction. By referencing the Federal Pollution Prevention Act (FPPA), it recognizes the strength of the multimedia technical assistance and information provisions contained therein. By incorporating facility planning provisions it seeks to address an important impediment that we found to source reduction, namely the lack of knowledge by facilities of their waste sources. In addition, it avoids taking a prescriptive approach to source reduction. Thus, it is this context that we offer the following comments and suggestions.

1) INFORM believes that the FPPA represents an important step forward in Federal environmental policy. We feel that if EPA effectively implements this law industry will be assisted in achieving its source reduction potential. To date, however, EPA's implementation of the Act to date has been unfocussed and directed by a small office within the Office of Planning and Evaluation. Thus, we were very encouraged when the Administrator proposed to move implementation of this important act to the Office of Toxic Substances, the one large EPA program with sufficient expertise in industrial processes and products and the one program with a multimedia mandate to offer the statute a strong home. While we believe that source reduction and toxics use reduction is important enough that it should report to the Administrator, we believe this is best accomplished by recognizing that the new combined office will be something very different than the media programs, with its toxic chemical information authorities under TSCA and TRI and with its pollution source reduction and toxic use reduction authorities under the FPPA and TSCA. With leadership from the program and from the Administrator and support from the outside, we believe that there is a chance that this proposed reorganization will strengthen substantially both the source reduction and toxics use reduction functions of the Agency.

I raise this because my reading of S. 976 suggests there may be a risk of diminishing the FPPA by narrowing its focus to RCRA hazardous wastes. I understand that the FPPA is authorized for a limited period of time. I assume that Congress will want to extend the authorization of this important new law and assume that such

extension was the intent of S. 976. However, most of S. 976 is focussed upon RCRA wastes. While it is entirely appropriate for S. 976 to have such a focus, we feel it would be a serious mistake for such a focus to narrow the FPPA, which we feel is a well crafted multimedia statute. [Note, for example, 42 percent of the 1989 TRI releases and transfers are released to the air and another 10 percent are discharged to public sewers, neither of which are covered by RCRA.]

We would encourage the FPPA be extended at the time of RCRA reauthorization, but not subsumed into RCRA.

2) One of the main reasons industrial facilities are falling short of their source reduction potential is that they are unaware of their sources (i.e. the specific places in their processes and activities giving rise to material losses). INFORM has found that virtually every facility that carefully looks at is operations finds significant opportunities for source and toxic use reduction. Therefore, anything the government can do to stimulate companies to take such a look when they otherwise wouldn't should promote significant source reduction progress.

To date numerous States have enacted or are considering enactment of facility planning statutes with a source and toxic use reduction focus. The most recent was signed into law only last week in New Jersey.

Unfortunately these State initiatives are still so new that hey remain largely untested in terms of the source reduction achieved. INFORM expects to study the impact of such requirements in the future.

We believe that such requirements are likely to be effective. However, it is possible that companies will hire consulting firms that can crank out reports to meet the requirements of the Act without the company becoming actually engaged in the type of self evaluation desired.

3) INFORM believes that one of the most important features of any facility planning statute, if it is to succeed is the public disclosure of industrial reports to the government. We understand that the chief argument raised about such disclosure is industrial concerns about the disclosure of trade secrets to competitors. We believe that this issue should not inhibit an effective planning statute.

If a facility has any trade secrets associated with the way that it operates, then an effective analysis of sources for plant management should contain trade secret information. However, we are convinced that it is possible to write-up a meaningful summary of such analysis and to outline goals and plans for reduction in a way that does not compromise such secrets. Such a write-up should be able to fulfill the legitimate interests of the public and of government in understanding the nature and extent of source reduction being planned and achieved at individual facilities around the country. Cutting Chemical Wastes and other INFORM source reduction reports are a testament to this belief. In the course of our research INFORM refused to receive or protect any corporate trade secrets. Yet, we believe that our industrial profiles provide detailed insights into the source reduction accomplishments of the plants that we have studied. Moreover, we believe that so long as it is clear that the company has done an honest and detailed analysis of its sources, there is no need for trade secret information to be reported to the government. Thus, we support a system where government auditors have a right to inspect corporate files for the underlying studies with source reduction summary plans submitted by facilities that are completely and actively disclosed in conjunction with a facility's TRI and FPPA data.

4) INFORM believes that the type of throughput data collected in New Jersey is essential for a better understanding of TRI data and for toxics use reduction purposes. We further believe that Congress may need to mandate the collection of such data, if it is to be collected by EPA in conjunction with TRI and FPPA data.

5) Among the problems relating to prescriptive approaches toward source reduction is the facility-specific nature of the what's achievable. We believe that this facility-specificity will result in any advisory group, such as that proposed under S. 976 being one that can only reach the most general of conclusions or one which can recognize only the most egregious cases of facilities missing their source reduction potential. Moreover, we believe that such a group, if codified, should have significant representation from disinterested scientists and engineers. As currently formulated it consists primarily of representatives of interest groups.

6) INFORM believes that S. 976 wisely covers both source and toxics use reduction. By including toxics use reduction explicitly, Congress will start to grapple with the extent to which it seeks to reduce the use of toxics in our economy through innovation forcing approaches such as chemical sunsets or continue the existing policies implicit in TSCA that can be expected to result in regulation of toxic chemical uses only under the most extreme circumstances.