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The green carrot and a stick: what kind of environmental policy will Clinton and Bayh run?

Last year, Gov. Evan Bayh and Democratic presidential candidate Bill Clinton campaigned on the theme that environmental protection was not to be achieved at the expense of economic development.

Both promised a "new covenant for environmental progress" which would reconcile environmental activism with economic growth. The catch phrases for this "new covenant" echoed from Indiana to Washington, D.C.: "working with industry," "streamlining environmental regulations," "benefitting business as well as environment," "market incentives," "compliance through innovation and flexibility." Now that the dust of the campaigns has settled, Indiana businesses are waiting to see how "green" the federal and state environmental agenda actually will be.


At the federal level, it is too early to know which of President Clinton's many environmental concerns discussed during the campaign now will have priority in his environmental agenda. Some of Clinton's more memorable campaign agenda items included raising the automobile fuel-efficiency standards, stabilizing carbon-dioxide emissions to 1990 levels by the year 2000, protecting the wilderness and old-growth forests, and enforcing the no-net-loss wetlands policy. However, as the new president moves forward with an environmental agenda, one can expect that he will attempt to balance environmental activism with the promised economic-development programs.

Applying market forces to environmental problems--One of the most notable environmental priorities set by Clinton during his campaign, and one that will surely flavor his environmental agenda, was the need to "bring market forces to bear" on environmental problems. During a fall 1992 campaign stop, Clinton told the audience the government's environmental policy should recognize that "Adam Smith's invisible hand actually can have a green thumb."

How will Clinton now apply "market forces" to environmental problems? The president certainly has received ideas from many varied sources. One of the more influential sources may be the Progressive Policy Institute--the think-tank of the Democratic Leadership Council, of which Clinton was founder and past chairman. The institute's ideas for the "greening" of the market are set forth in the recent book "Mandate for Change." Among other ideas, the institute promotes a green tax imposed on those who pollute--from a household generating solid waste to an industry producing air and water pollution; a national deposit-refund system for lead-acid batteries and solvents; and a system of tradeable credits which a business earns by recycling waste materials.

Browner named as EPA administrator--Another indicator of Clinton's environmental agenda is his nomination of Carol M. Browner as administrator of the Environmental Protection Agency. Browner, the 36-year-old secretary of Florida's Department of Environmental Regulation, has served as that state's top environmental official since January 1991. She previously served as legislative director for Vice President Gore's Senate office, and worked closely with Gore on his book "Earth in the Balance."

While administering Florida's environmental programs, Browner focused on imposing a moratorium on the construction of solid-waste incinerators; reducing the number of leaking underground storage tanks; pushing aggressive enforcement efforts; and negotiating between federal officials, local water managers and farmers in Florida's efforts to restore the Everglades.

Reauthorization of Clean Water Act and Superfund on the agenda--Specific environmental programs which will demand attention from Clinton (as well as from Congress) include the reauthorization of the Clean Water Act and Superfund. A major issue likely to generate great debate during the Clean Water Act reauthorization process includes a pollution fee assessed against a point-source wastewater discharge, with the collected fees to be used to build municipal sewage waste systems and other water projects. Consistent with Clinton's priorities, this program would give wastewater dischargers an incentive to reduce pollution, while providing funds which will create jobs and rebuild the nation's infrastructure.

Another major Clean Water Act issue already brewing is the debate over controls on non-point-source water running off farm fields and city streets. While EPA has already devised a set of recommendations calling for more stringent controls and funding to implement such a program, businesses are concerned about the lack of data regarding appropriate controls and the economic impact of such regulations.

The debate surrounding the reauthorization of Superfund is already steaming. The basic issue confronting Congress is whether to cut up Superfund and carve out exceptions for special interest groups--such as lenders, deminimis parties and local governmental units--or whether to overhaul Superfund's liability scheme, which presently imposes strict, joint and several liability on parties facing an average Superfund cleanup cost of $25-30 million per site.

Clinton himself has characterized Superfund as "disastrously mismanaged." The reauthorization of Superfund will provide Clinton with an opportunity to turn catch phrases like "streamlining," "flexibility and innovation," and "market-based incentives" into real solutions.


At a recent seminar, the topic of Bayh's environmental agenda was taken up by Kathy Prosser, the commissioner of the Indiana Department of Environmental Management. Prosser stresses that during Bayh's first term, the message to business was "if you pollute, you will pay." Now, in Bayh's second term, it appears that IDEM will seek to balance its aggressive enforcement program with a "partnership" between government and business. According to the commissioner, IDEM wants to work together with business to develop better ways to protect the environment.

As IDEM struggles with implementing more than 50 state or federally mandated programs--often with limited staffing or funding for such programs--Indiana businesses may wonder what impact this new partnership may have. Prosser has pointed out several "partnership" programs already under way, including a joint project with the Indiana Chamber of Commerce and Indiana Manufacturers Association to prepare a business handbook on air permitting.

Another significant program developed by IDEM includes the recent establishment of an Office of Business Relations. Michael O'Conner, who has worked with the secretary of state's office and as political director of the Indiana Democratic Party, has been named director of that office, which will report directly to the commissioner. O'Conner sees his role as a liaison between IDEM and the regulated community: to communicate IDEM's goals and agendas to those who are regulated and to communicate their concerns back to IDEM. Consistent with the themes of the 1992 election campaign, O'Conner will be promoting Indiana's economic development alongside environmental protection.

Other programs evidencing IDEM's "partnership philosophy" are those being developed by the Pollution Prevention Board and IDEM's Office of Pollution Prevention and Technical Assistance. In October, the Indiana Pollution Prevention Board met for the first time and, since then, proposed a $2 million biennial budget to establish a 20-person Pollution Prevention Institute. This institute would provide industrial pollution-prevention training and technical assistance to Indiana businesses, as well as conduct research and development of pollution-prevention programs and technologies.

Meanwhile, IDEM's Office of Pollution Prevention, headed by Assistant Commissioner Joanne Joyce, already is implementing programs to educate and assist businesses in pollution-prevention efforts. The state has committed $1.5 million to this office to pay for increased staffing and to fund grant programs for pollution-prevention projects by businesses and not-for-profit organizations.


The fact that government--at both the federal and state levels--has offered a "green carrot" to businesses and the regulated community does not mean that the enforcement stick will be put aside. Those companies who misinterpret the "new covenant for environmental progress" as a "business first--environment second" policy are likely to encounter aggressive enforcement actions, large fines and potential criminal liability.

Whether Clinton or Bayh can achieve both economic growth and environmental protection may depend as much upon a revived economy as it does on the implementation of campaign promises for market-based approaches to environmental regulation. Regardless of what the future holds, it appears that the campaign of 1992 already has modified the dialogue between business and government on the role of environmental protection and economic development.

Anne Slaughter Andrew is a partner and Susan B. Gregory an associate in the Indianapolis office of Baker & Daniels.
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Title Annotation:Bill Clinton; Evan Bayh
Author:Andrew, Anne Slaughter; Gregory, Susan B.
Publication:Indiana Business Magazine
Date:Feb 1, 1993
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