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Reconstructing the regulatory framework.

Cooperative agreements and relevant regulations based on sound science could be the cornerstone of unified environmental and economic responsibility.

Improving environmental performance is on the "A" list of every right-thinking industrial executive. This growing list of essential concerns also includes employee safety, productivity, quality and, yes, profits. Each of these vital undertakings competes for the same limited pool of capital and intellectual resources. If American business is to improve its global competitiveness, we must deftly balance all of these essentials.

It is my firm conviction that America's business leaders today are committed to doing the right thing when it comes to the environment. The unfortunate reality is that we cannot do everything at once. Clearly, our society must properly define its environmental priorities. At the same time, American business must fully merged environmental and economic responsibilities.

As a nation, we must consider a new framework for addressing environmental issues. There is a need to focus the standard "command and control" environmental regulations on the problems of proven significance -- significance defined by sound science and intelligent risk assessment.

A new approach is needed in the absence of clear threat. Voluntary actions and flexible regulations can offer a hedge against the possibility that continuing scientific research will reveal a need for stricter measures. Cooperative agreements that bypass the familiar "thou shall" or "thou shall not" aspect of environmetal regulation could be the corner-stone of unified environmental and economic responsibility.

Recent events in the regulatory arena provide some reason for hope. Spurred by the Bush administration's recent deregulatory emphasis, the Environmental Protection Agency has now proposed for comment several approaches for narrowing the scope of hazardous waste rules which have burdened industry with unnecessary costs. The proposal would allow waste that poses little or no risk to public health and the environment to be exempt from the extremely stringent recordkeeping and disposal requirements of the federal Resource Conservation and Recovery Act (RCRA). Under the current system, any wast is considered hazardous if mixed with or derived from a substance that no matter how minute the quantity, is officially classified as hazardous.

One approach would maintain the current identification system while permitting exemptions from federal controls if hazardous constituents of a waste are below a certain level. The other suggested alternative would involved changing the way toxic wastes are defined so that determinations on substances would be based on the level of contaminants regardless of whether they are mixed with or derived from hazardous substances. Either approach offers improvement and closer application of the concept of proven significance.

Voluntary action is also demonstrating its worth. In 1991, the EPA initiated a voluntary program covering 17 chemicals intended to achieve a 33% reduction in emissions by the end of this year and a 50% cut by 1995. The EPA's challenge was issued to 600 companies and nearly 40% accepted. Some participants, including International Paper, expect to exceed the program's goals. Participation in the program might have been higher had the EPA offered incentives for involvement.

An Idea for the Times

An idea receiving attention today is an incentive-based comprehensive compliance assurance program. Advantages for qualified companies would include reduced enforcement response in certain circumstances and the ability to protect the confidentiality of information gathered through self-policing audits.

While the FPA appears ready to consider new, more positive approaches to compliance, the news is not all good. There have been instances where state and federal regulators have been guilty of "pilling on," each insisting on pursuit of its own penalties and remedies, with the resultant publicity, for the same infraction. In some states, a majority of the agency's budget today comes from the fines to collects, leading to the lingering suspicion that a "kill to eat" philosophy sometimes prevails. There is also a great deal of concern that those who are most diligent about policing their own practices and voluntarily disclosing what they find -- warts and all -- will be subjected to substantial civil and even criminal penalties based on voluntarily disclosed information.

Moreover, federal and state environmental regulatory requirements are proliferating. The sheer number and intricate form of the regulations means that 100% compliance is increasingly difficult to maintain. Power failures, excesive rainfall, and equipment malfunctions do occasionally occur. It is incredibly expensive to have redundant systems in place and ready to become operational on literally a moment's notice.

True enough, strict regulations helped guide industry to its current level of environmental performance. Today, however, the stakes are too high in terms of job development and America's prosperity to add regulatory requirements without a careful grounding in scientific need and an examination of the cost and benefits of each action. The bottom line is clear. The global competitive ability of American business will improve, as will the environment itself, if relevant regulations are based on sound science and if voluntary, innovative approaches to compliance are encouraged.

John A. Georges is Chairman and CEO of International Paper Co. He is a member of President Bush's Commission on Environmental Quality.
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Title Annotation:Meeting the Environmental Challenge; environmental regulation
Author:Georges, John A.
Publication:Directors & Boards
Date:Jun 22, 1992
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