desktop: Chemical-Industry-War5sep79.pdf

Exhibit B

THE ENVIRONMENTAL MANAGEMENT COMMITTEE
OF
THE CHEMICAL MANUFACTURERS ASSOCIATION
IS
"MANAGING"
THE ENVIRONMENTAL REGULATORY ARENA AFFECTING
THE CHEMICAL INDUSTRY

A Summary of Progress
And Resource Needs For The Future

Charles L. Sercu, Chairman
Environmental Management Committee

Presented to The Board of Directors
Chemical Manufacturers Association

September 5, 1979

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Introduction

Currently, 172 professionals from over SO member .companies plus CMA Staff of 3-1/2 professionals make this happen. Welding together this many folks, all "volunteers" from many places, is an interesting management challenge, I can assure you. Thousands of pages of technical and legal comments have been sent to EPA and many weeks have been spent with the attorneys writing briefs, providing .information. and negotiating with EPA on the whole regime of regulatory initiatives. EMC Task Group personnel are also increasingly involved in the preparation of testimony ':for Congressional Committees.

The activity is very professional, very demanding and . intensive. The rewards are the court decisions we, have won, the regulations that have been modified, made more cost effective, or just dropped. The future holds more of the same, more regulatory response, more litigation plus the bigger challenge of amending the Clean Air and Water acts and handling proposed amendments to RCRA.

Resources provided have been lean and must be supplemented to insure the continued success of the program. Like the TV ad -- we can pay now - or really pay later'.

This is a summary of what we've been doing. Now, let me try to develop the picture for you in a little bit more detail, to show you why we need your continued support.

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REGULATORY CONCERNS

The social type legislation passed in the late '60's and '70's has produced regulations that have gone far beyond the intent of Congress. many of these regulations are unnecessary, overly protective, and frequently technically unsound. A game plan for correcting the situation is the main emphasis of my discussion today.

Figure 1 is a list of some of the regulatory legislation passed in the last few years. My remarks are confined to just the environmental area of air, water, and solid wastes, with special emphasis on the amendments of 1977. These regulations are just starting to be implemented and left unchallenged, will cost us billions of dollars unnecessarily in the future as a largely uncontrolled cost of manufacturing.

Figure 1

To give you a sense of the acceleration of this total regulatory process, we listed (Figure 2) the total pages in the Federal Register. This number has not changed much in the past few years because many extraneous items are no longer printed in the Register. We were able to get a breakdown of the rules and regulations sections and, as you can see on the bottom of the chart, there has been a dramatic increase, from 9,300 pages in 1976 to some 21,000 pages expected in 1979.

If we have been upset at the dollars expended in the past, just wait!!  Spending lags by two to four years.

Figure 2 (enhanced from PDF file by mindfully.org)

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As an example of an agency response to legislation, we have plotted [Figure 3) the increase in employees at EPA over the past several years, from 8,000 in 1971 to 12,500 today . . .
a terrific increase in people especially when we are all trying to reduce costs and optimize manpower. These folks produce nonproductive work for all of us.

Figure 3 (enhanced from PDF file by mindfully.org)

The overall regulatory administrative costs (Figure 4 ) have increased more than sixfold since 1970, with no apparent decrease in the rate of growth that has projected 1979 at $4.8 billion.

Figure 4 (enhanced from PDF file by mindfully.org)

The really disturbing data (Figure 5 ) is the cost of compliance of these regulations, which has been estimated at $63 billion for all the regulations written in 1976 and over $100 billion for regulations written in 1979. Again, the latter costs have not hit us yet, so we still have an opportunity to reduce or prevent them with aggressive action.

Figure 5 (enhanced from PDF file by mindfully.org)

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The chemical industry has already invested (Figure 5) more than $7 billion to control pollution. To Meet the lairs already is effect, _t is estimated. =hat another $7 billion need to be spent between 1980 and 1985.

Figure 6

Figure 7

Figure 8

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Gentlemen, this is a campaign that has the dimension and detail of a war. Let me explain. 

The Legislative and Regulatory Process (Figure 9) is fairly well understood by all of us. Industry's shortcoming has been in not participating in all of the steps in the process. We must participate at every step, all the tine, in this process.

Figure 9

As a problem surfaces, whether or not there is industry negligence, the media--not exactly pro-business--jumps on it full force. There is a barrage of stories, often full of misinformation...editorials, scare documentaries and like reaction from environmentalists, public interest groups and sometimes the clergy.

The media has an unquenchable thirst for bad news because it sells best. If public opinion succumbs to the media treatment of an issue, the politician takes note. No politician will vote against an issue less popular than himself; if he can't do anything else, he can count votes.

So another round of regulatory legislation is spawned from the office of a staffer in Washington or a regulatory agency which needs issues to promote its own growth and survival.

Until recently, we have not been involved very much in the writing of regulations, the first draft, the preproposal or writing the proposed regulation. We normally see the proposed regulation and then scurry like crazy to change the recommendation

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or try to torpedo the whole thing. Then after the regulation is passed, we say, "Let"s sue the bastards". And sometimes this is right and the judge sends the regulation back to the agency. Other times, the regulation is upheld and we must comply or- go to jail or pay a fine.

Amendments to the law are always possible, but require a lot of effort and time. The Point is, there are many opportunities to effect a change and we must be alert to these opportunities and be set to mobilize whatever effort is necessary to get our position in place. These efforts must frequently extend over many weeks and involve many folks for a single issue. This is the real advantage of CMA. We can share the burden, spread the work and effectively engage in all of the battles in this complex paper war.

Several other points are ignored or not understood. Noteable are timing, specificity of legislative demands and state action. (Figure 10)

Figure 10

The specificity of legislative demands is not so well understood. Simply said, the amendments of 1977 to both the Clean air act, and Clean Water Act (Figure 11) demand control of specific chemicals, with "best available technology" or "lowest

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Figure 11

Our Environmental Management Committee is responding to all t_ these points. We are engaged on many fronts in an effort to manage an effort to gain control over "noncontrollable" cost.

ENVIRONMENTAL MANAGEMENT COMMITTEE

The Environmental Management Committee acts as a Board of Directors managing the environmental issues of the chemical industry. Each member is a sponsor of one or more Task Groups. We have met some 22 times since May, '78. The EMC members spend 40 to 100 percent of their time on this effort. I can tell you I could use them all, full-time.

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Our approach is through Task Groups who have the complete responsibility for accomplishment of their tasks. The EMC workload is heavy and we have little time to second-guess. Having an EMC member as sponsor gives us monthly contact and usually very good understanding of the different issues. In '78/'79 we had 15 Task Groups manned by over 100 professionals from 38 companies who spent some 25 man-years' effort.

The split [Figure 13) effort among the companies last year was pretty much as you might expect. With 12 companies supporting over 50 percent of the effort.

Figure 13

ENVIRONMENTAL MANAGEMENT COMMITTEE ISSUES

The issues we have been working on (Figure 14) are too many to detail here. They vary from litigating regulations already promulgated to working on criteria previous to 

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regulation and interacting with EPA as necessary. We do support rather minimal research and have Task Groups on Environmental Monitoring and Economics.

Figure 14

PERFORMANCE

The Environmental Management Committee has provided some 35 technical advisories and formal responses to proposed rules with thousands of pages of comments. Nine issues are in litigation. We have had nine workshops and two environmental briefings attended by over 1,000 company members. We feel we have had a large part in effecting a $500 million avoidance of regulatory costs by our activities in '78/'79.

ONE EXAMPLE

Pretreatment Regulation is a good example of the work of one Task Force.

Many of our plants discharge to municipal sewers were treatment is provided by the city. This is by contract and usually a fee is paid by the plant for this service.

In February, 1977, "c.4 proposed regulations for Pretreatment and asked for comments. In June, 1978, the final regulations were promulgated. It was obvious that the 400 plus comments had been disregarded and that EPA had ignored prior technical and administrative advice.

EMC queried the member companies because we were not sure how much impact this regulation would have on CMA. The response 

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indicated impact on 55 percent of the plants $650 million capital cost. EMC then set up a Task Force and put together the case. Ed Frost, who should get much of the credit for out litigation efforts.

The analysis o f the regulations confirmed four major issues and 50 technical errors. Suit was brought, with others in the D.C. Circuit Court. The Task Group worked almost continuously from June, 1978, to June 1979, analyzing the regulation, the public record and providing comments for the brief prepared by the attorneys.

The briefs were filed in December, 1978, and the court suggested that due to the number of items EPA and CMA should negotiate a settlement out of court. Intensive negotiations continued till the end of May, 1979, with favorable resolution of all but two issues stipulated by EPA to the court. The two issues that remain are cross references to the other Acts and authority to measure process waste streams within the plant.

Essentially, as seen in Figure 15, the Task Group worked very hard, paid attention to detail, went to court and won.

Figure 15

CMA staff helped immeasurably. The sad part is that if EPA had followed proper procedures this could have been avoided. On the other hand, if we had not litigated, the regulation would have cost us over $.5 billion to satisfy.

We won a battle -- not the war.

S W Y

On ~ 5 s

We believe EMC is managing the situation. We have won some, lost some. We have avoided over $500 million in capiltal.

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But, we have problems. ',We are burning out company folks who are worried about jobs back home -- a very real consideration.

And we are overworking the CMA staff. Cur workload is accelerating much faster than even the new CIA Organization can handle.

Which is why I liken this to a war. We may have to conscript some troops and take over some vital resources to win. COLA and member company people must get much closer together.

HEADLINES

And right in the middle of getting this all underway, Love Canal hit the headlines. (See following pages)

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Hooker and the Chemical Industry are tied together as negligent and the cause of a national problem. Toxic wastes become the key phrase in Washington and old dumpsites are found in Kentucky, Texas and elsewhere.

The headlines continue through spring of '79 pointing out the immensity of the problem and the need for billions of dollars to clean up. "Superfund" emerges as a national need.

This is a classic legislative situation. Remember the legislative-regulatory process? (Figure 16) We are at the beginning with a problem and headlines. And the legislation is now spewing into the "hopper".

Figure 16

The EPA-Legislative solution is a "Superfund", $500 million to cover oil spills, hazardous chemical spills and old dumpsites. The monies to be derived from a fee on oil and feedstocks.

CMA ACTION

CMA set up a Special Committee on Chemical Incidents (Figure 17) which met under Bill Stover's whip during the winter and spring. For once CMA was up to speed. The issues have been debated and position papers written and testimony given to the Congress and carried to the states. The Legislative Committee will be reviewing this in detail.

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EMC ACTION

The Environmental Management Committee was also active during this time. We had many meetings of a Select Committee and came up with a program to handle the situation. (Figure 18)

We will put on workshops in six cities to educate member companies as to what can be done to evaluate and control landfills.

The Siting-Regional Demonstration Unit Task Group is just beginning t o grapple with these kinds of problems . . . . .
questions like : What should model legislation be for siting? Where are disposal sites doing a good job.? Should CMA support a demonstration site?

The Technology Development Task Group is looking at existing processes, equipment, facilities with a view to what else should be done.

And the Hazardous Waste Management Response Center is getting organized to work with federal and state folks to help them analyze old site problems. EPA is working with us on this project and, frankly, they appreciate the offer of assistance and have asked for help in training agency personnel.

'79/'80 EMC TASK GROUPS

The EMC now has the following Task Groups. (Figure 19) The most recent additions are the Data Analysis Group to evaluate the Eckhardt data and Communications Task Group which is still in the formative stages. We feel that there is a real need to educate our member companies, plant folks, and others to the work we are doing, to the specifics of the regulations, and how to posture themselves to operate best in this environment.

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EMC TASK GROUPS

Acoustic Research    Process Emissions

$1.10

Oats Attest"

Fps

4111".1 Reassess Cast.,

JIM

C~s. 34" waste

Wit"

AN .

assets

t no asa tr

Figure 19

Figure 20

Then we added in the-old sites, "Superfund" problems and the

level is 6.S now and 8.5 to 10.0 next year. (Figure ?1)

Figure 21

EMC "MANAGES" THE NEW SITUATION

9-78 3-79

Task groups 15 23

Company professionals 128 :80

Company man-years 25 38

Companies involved 40 445

Demands on staff Excessive Brutal

Figure 2:

DuPont L :1

e u s

L a

Union Carbide il 1

Exxon u ·

ear u t

American Cyanamide u s

Eastman Kodak u a

- u

rrar u s

Air Products u

PPG INdustries 1.2 a

t·

``` y

a a7

Figure 23

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-- More CMA staff and staff support

-- Meeting rooms are a real problem

-- More corporate support

-- We need a state program to work with legislatures and agencies on the legislation that is being proposed.

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