DRAFT-FOR DISCUSSION PURPOSES EFFECTIVE ENVIRONMENTAL STRATEGIES: OPPORTUNITIES FOR INNOVATION AND FLEXIBILITY UNDER FEDERAL ENVIRONMENTAL LAW June, 1993 Prepared By Bradley I. Raffle, Esq., Debra F. Mitchell, Esq., Amoco Corporation Chicago, Illinois The authors also acknowledge the assistance of J.B. Ruhl, Eva Fromm and Charles E. Sullivan, Jr., Fulbright & Jaworski L.L.P. DRAFT-FOR DISCUSSION PURPOSES FOREWORD The Yorktown Project (a joint study conducted by the United States Environmental Protection Agency and Amoco Oil Company at Amoco's Yorktown Virginia Refinery) demonstrated that it was possible for industry and government to work together to achieve more cost effective and more environmentally effective results than either group could achieve separately. A key question from the Yorktown study was "why don't we reach these results more consistently and frequently?" The Project Workgroup identified several institutional obstacles. Of concern for this report is the continued use of a "command-and-control," "one-size-fits-all" approach to environmental legislation and regulation. This approach essentially dictates which pollutants and sources to control, to what extent, and which technology to use for a broad spectrum of industrial facilities. Innovation--one of America's greatest strengths--is neither encouraged nor rewarded in a command-and-control framework. Environmental protection is complex and becoming more so. While early efforts to reduce pollution were successful, they did not deal with the unintended consequences of these activities. We now know our current, fragmented administrative approach is not well suited to addressing the fully integrated, multimedia environment in which we live and work. Yesterday's administrative methods are at times poorly equipped for dealing with today's (and tomorrow's) more subtle and complex environmental issues -- issues that cross national boundaries and physical air-water-land interfaces. As a followup to the Yorktown Project, this report identifies opportunities for new approaches to environmental management under existing federal environmental statutes. The report identifies and discusses 17 such options. Four other options are identified that would also provide innovative approaches to managing complex industrial facilities, but would almost certainly require some new statutory authority. We are encouraged by the range of possibilities suggested by this limited analysis and hope this report will be a starting point for further discussion about opportunities for environmental innovation, new regulatory policy approaches and improved environmental performance. We offer this report as a draft, a starting point for further discussions with the many people and organizations who share our concern about achieving real environmental protection and a healthy economy--state and federal regulatory agencies, Congress, the environmental community, business concerns, policy institutes, the environmental law profession, and many others. We look forward to working together with you. Specific CAA Program Analyses A. Statutory Barriers to Regulatory Flexibility Under Federal 2.1 2.2 2.3 Overview of the Purposes and Structure of the Clean Air Act ("CAA") Flexibility vs. Command and Control Under the CAA 2.2.1 Definition of "Source" 2.2.2 Emission Standards vs. Design Specifications 2.2.3 Emissions Trading 2.2.4 Market Incentives 2.2.5 Pollution Prevention 2.3.1 Flexibility Under State Implementation Plans (SIPS) 1. Flexibility for Establishing SIP "Emission Limitations" 1. 2. 2.3.2 Flexibility Under Section 112 of the Clean Air Act Emissions Averaging to Achieve MACT Compliance 2.3.3 NSPS Innovative Technology Waivers 19 20 20 23 26 28 36 38 38 40 44 45 3.3 3.2.3 Section 301(g) "No Unacceptable Impact" Modifications 56 57 57 58 59 4.0 4.1 THE RESOURCE CONSERVATION AND RECOVERY ACT (RCRA) 61 61 5.1 5.2 Consideration of Cross-Media Impacts In Media-Specific Rulemaking 73 75 75 78 Rulemaking Consistency Within the CAA, CWA and RCRA Programs DRAFT-FOR DISCUSSION PURPOSES EXECUTIVE SUMMARY In 1992, Amoco Oil Company and the U.S. Environmental Protection Agency completed a voluntary, joint project studying pollution prevention opportunities at Amoco's Yorktown, Virginia refinery. The Project's Workgroup, with representatives from EPA, Amoco, and the Commonwealth of Virginia, conducted a comprehensive inventory of releases from the refinery to the environment and evaluated options for reducing these releases. A key conclusion of the Yorktown Project is that the objectives of environmental regulations --less pollution and reduced risk--can be achieved more effectively if facility managers are allowed to devise plant-specific compliance plans. The participants in the Yorktown Project Workgroup agreed on the four most effective pollution prevention options based in part on the unique geographical and process characteristics of the particular site and facility. The selected options did not coincide with existing regulatory requirements. By prioritizing environmental protection efforts based on their effectiveness in reducing or preventing pollution and risk at Yorktown, equivalent levels of protection could have been achieved at 25% of the cost of current regulatory programs. The Project also demonstrated that today's environmental mandates, with their single-media focus, often ignore (1) the technological and logistical issues associated with overlapping regulatory programs, (2) the multimedia impacts of a particular rulemaking, and (3) the speed of technological progress which can make mandated technologies obsolete even before compliance begins. For example, some water and air pollution control systems create additional solid, potentially hazardous, waste. Some control systems convert pollutants from one form into another. Yet, compartmentalized regulatory agencies do not comprehensively consider or address these impacts. Suppose a facility wants to take a coordinated, site-wide, multimedia approach to pollution reduction. Today's regulatory structure, at both the federal and state level, provides no established mechanism for allowing it to do so. There is little or no opportunity to coordinate conflicting technical requirements or compliance schedules. Highly prescriptive technology mandates, which define approved technologies and their efficiencies, leave little room for alternatives. In this regard, single-media requirements can present a significant disincentive to innovation and discourage more effective, coordinated environmental management strategies. The EPA has also recognized the limitations of a segmented approach to environmental management. In its "Unfinished Business" analysis, the EPA for the first time compared many environmental problems to each other in a non-programmatic context. The value of the report, then and now, rests not so much on the rankings but on the realization of the |