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 DRAFT-FOR DISCUSSION PURPOSES long-term public policy importance of understanding relative risks. In a report to EPA Administrator Reilly in 1989, EPA's Science Advisory Board's Relative Risk Reduction Strategies Committee noted that, "despite the demonstrable success of past efforts to protect the environment, many national goals still have not been attained. With hindsight, it is clear that in many cases those efforts have been inconsistent, uncoordinated, and thus less effective than they could have been." The report recommended that environmental efforts should be targeted on the basis of opportunities for the greatest risk reduction. b/ To promote innovation and provide the flexibility to use innovative solutions, three fundamental elements must exist. First, the facility must have the regulatory opportunity to prioritize environmental efforts based on their effectiveness in reducing or preventing pollution, no matter what the source. Second, institutional obstacles and disincentives (in both the public and private sector) must be minimized. Finally, a partnership must exist between EPA, the facility, the state and the community which focuses more on the results of environmental protection, rather than strictly on the methods used to achieve them. In time, it is possible that these "partners" will develop greater levels of trust between each other. That is certainly not the case today. Until trust is sufficient, more detailed emission inventories, more appropriate (and possibly more extensive) monitoring requirements, and informed enforcement must underlie these innovative pollution prevention efforts. As a followup to the Yorktown Project, Amoco and outside counsel conducted a legal analysis of federal environmental laws to identify opportunities for innovation and flexibility. This resulting report identifies over 20 different options, some of which have also been identified and considered by EPA. For example, EPA recently proposed the Economic Incentives Program under the Clean Air Act, promoting a number of market-based incentives for controlling air pollution. EPA is also reviewing a number of hazardous waste regulations as part of an internal RCRA Reform Initiative. This report reviews these EPA initiatives, but goes further by identifying many other potential opportunities for encouraging innovation and promoting flexibility, including the following: "Unfinished Business: A Comparative Assessment of Environmental Problems," USEPA Office of Policy Analysis, Office of Policy, Planning, and Evaluation, February, 1987 b/ "Reducing Risk: Setting Priorities and Strategies for Environmental Protection," EPA SAB EC-90-021, September, 1990 DRAFT - FOR DISCUSSION PURPOSES OPPORTUNITIES FOR INNOVATION AND FLEXIBILITY UNDER EXISTING CLEAN AIR ACT 1. 2. 3. 4. Encourage innovation by using emission or performance standards rather than design or technology standards. For example, EPA's suggested changes to its benzene waste operations rule, discussed in §5.1, will allow entire facilities to devise individualized risk-reduction plans for benzene. This is a positive step in the right direction. Encourage emission trading and averaging by expanding opportunities to implement alternative compliance strategies, e.g., by broadening the definition of "source." A good example is the "source" definition proposal in the agency's hazardous organic national emission standard. Encourage flexibility in state air programs, e.g., generic bubbles under the operating permit program, market incentives, mobile/stationary source trading, and NSR emission netting. EPA has taken major strides in this direction through its nonattainment area SIP guidance and its new economic incentives program rules. See $2.3.1. Encourage states to prioritize SIP control measures based on appropriate criteria, such as cost effectiveness or effectiveness in reducing pollution or risk. Historically, EPA SIP guidance has placed nearly all of its emphasis on ensuring the "effectiveness" of various air quality improvement strategies. Relatively little emphasis has been placed on encouraging or helping to devise SIP strategies that maximize cost-effectiveness or to prioritize SIP strategies that simultaneously achieve air quality and non-air quality environmental objectives. 5. Encourage emission averaging under CAA Section 112 (or the "MACT," maximum achievable control technology) program, e.g., by allowing trading across source categories. Again, EPA's proposed hazardous organic national emission standard is a positive step forward in this regard. 6. 7. Create a source category or subcategory for facilities which meet the residual risk criteria and delist the category from MACT requirements. Exempt certain pollution control projects from NSR, e.g., projects which: result in a significant overall net emission reduction result in a net risk reduction, when considering multimedia impacts are required by another regulatory program (such as the construction of an DRAFT - FOR DISCUSSION PURPOSES 8. 9. EPA is currently reviewing the NSR program with the aim of simplifying the NSR process and providing incentives for projects that will enhance air quality. See §2.3.1. This initiative should be applauded. Revise emission netting procedures to compare actual emissions with future actuals rather than future potentials, such as the procedures employed in the so-called WEPCO rule for electric utilities. EPA is currently considering an extension of the "WEPCO rule" to non-utility source categories. Give priority to innovative technology waivers and allow flexibility in achieving CLEAN WATER ACT 10. Avoid specifying required technologies in permits; specify effluent limitations and give the facility flexibility with respect to the technology. Where effluent limits are based on water quality goals, local rather than national concerns must be recognized in the standard setting and permit-writing processes. RESOURCE CONSERVATION AND RECOVERY ACT 11. Revise the mixture and derived-from rules and definition of hazardous waste to tailor requirements to environmental risks and to promote pollution prevention (and, if necessary, revitalize the delisting process). 12. Revise the definition of solid waste to encourage recycling. 13. Address regulatory obstacles to cost-effective remediation and corrective action. 14. Adopt contingent management standards to promote pollution prevention and to 15. Streamline permitting by adopting expedited procedures, as well as class permits and permits-by-rule, for selected activities. EPA's RCRA Reform Initiative has identified each of these areas as needing regulatory retooling. This reform initiative is desperately needed, long overdue and holds great promise. DRAFT -FOR DISCUSSION PURPOSES MULTIMEDIA 16. Ensure consistency of regulations, e.g., regulations from air, water and waste program offices regulating wastewater treatment facilities should have consistent objectives, definitions and requirements. 17. Assess the impact of a regulation on all media and justify a regulation based on the net environmental benefits. EPA's new multimedia cluster team concept, discussed in §5.1 of this report, is a positive step in this direction. STATUTORY CHANGES TO FOSTER INNOVATION AND TECHNOLOGY 18. 19. 20. Amend the CWA to expand the purposes of the Act to expressly require consideration of multimedia impacts when promulgating rules or issuing permits. Amend the CWA to expand the scope of several variances and modifications under CWA §301, based on site-specific factors, economic capabilities, "no unacceptable impact" and innovative technologies. These variances and waivers are currently extremely limited by the statute. Amend the environmental statutes to establish "risk reduction" or "release reduction" target levels, providing opportunities for facilities to meet such targets in the most efficient and cost-effective manner. A demonstration program may be appropriate to address implementation issues associated with this concept. 21. Amend the environmental statutes to allow for compliance time frame incentives and alternate compliance strategies to promote multimedia pollution prevention. CONCLUSION Congress, EPA and industry have grown accustomed to and have accomplished much through command and control approaches. There is a natural reluctance to change, especially where a new approach requires different thinking and greater effort by all parties. However, as the cost and complexity of environmental laws continue to escalate, the benefits of tailored approaches to pollution control and prevention are increasingly evident. Our hope and intent is that this report will facilitate discussion among all interested parties in order to realize more effective and innovative approaches to environmental protection. |