United States
Environmental Protection
Agency
Enforcement And
Compliance Assurance
(2225)
EPA 300-R-95-006
May 1995
&EPA
Recent Experience In
Encouraging The Use Of
Pollution Prevention In
Enforcement Settlements
Final Report
"""tedoripaperthatcontains
at least 50% recycled fiber
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The research underlying this report was supported by the Office of Enforcement, U.S.
Environmental Protection Agency through a cooperative agreement (Grant No.CR 819086-01).
The opinions and recommendations contained in this report do not necessarily represent the views
and policies of EPA or MIT.
Copyright © 1994 Monica M. Becker and Nicholas A. Ashford
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EXECUTIVE SUMMARY
PURPOSE OF THE STUDY
Pollution prevention (source reduction) is one of the major priorities of the United States
Environmental Protection Agency (EPA). In June 1989, the Office of EnforcemenuLued
Enforcement Action Plan which articulated the agency's strategy for
n
The primary objective of this study was to systematically evaluate the inclusion of pollution
prevention in enforcement settlements. The specific settlements analyzed in m?s study were
drawn from the universe of judicial and administrative enforcement actions negotiated b me
EPA regions and Headquarters programs. The cases were reviewed for the incSsion of
pol ution prevention conditions either as injunctive relief or as SEPs. Empirically most of the
settlements with pollution prevention conditions were negotiated as SEPs e mTtecnniS
activity was included in exchange for some degree of penalty mitigation. One ^s^SaTSi
study raises is why there have not been more pollution prevention injunctive rLf °ases The
report makes recommendations as to the institutional changes that are; needed to expand their
U.S6* .
IN
Pollution prevention injunctive relief offers the opportunity for both the agency and firm to
r±S ^ pTf ^ envir0nmental Problem « the source, wimourcrossLdi tTansfe of
pollutants Pollution prevention SEPs, and injunctive relief in some cases, offer the possibility
of reducing environmental impacts in excess of that which is required by regt aton
wh^Ttr;eLTr°n/emedy °r SEP ^ alS° redUCe ™VactS to media °*er *an that
wluch is targeted by the enforcement action, if the technology is chosen or designed to deliver
multi-media environmental pay-offs. Taken together, these benefits can enhance the firm's
prospects for future environmental compliance. ;
Significant "indirect" environmental, health, and economic benefits can be achieved through the
transfer of pollution prevention technology to other processes in the subject plant or to other
y Um; Or8amzational changes that lead to improved environmental practices
- w ' , parcuar
in the case of SEPs (where penalty relief is granted), the option to include a pollution prevention
project creates an opportunity to turn a negative situation into a better or positive situation for
the firm and to improve the relationship between the firm and the agency.
Previous research has shown that technological innovation is one important pathway to solving
environmental, health, and safety problems. Enforcement activities can serve as a vehicle by
which the agency encourages or partially underwrites technological risk-taking in pursuit of
innovative pollution prevention solutions to challenging environmental problems. The option to
promote pollution prevention within the enforcement context permits the agency to pursue a
enVirOnmental Perfo™-ce, rather than a settlement aimed only at
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FINDINGS AND CONCLUSIONS
Environmental and Human Health Benefits
There are two categories of environmental benefits that arise from pollution prevention SEPs and
iniimctive relief projects: (1) environmental benefits directly attributable to the SEP or
iniunctive relief project; and (2) indirect benefits from pollution prevention implemented
"beyond" the enforcement settlement which are leveraged by the SEP/injunctive relief either
through technology transfer within/outside of the firm, or through organizational change within
the firm. The environmental benefits of the ten cases studied are presented in summary form
in Table 4-3.
Innovation vs. Diffusion and the Locus of Technological Change
The technological changes undertaken by case study firms can be categorized by a framework
that classifies pollution prevention projects according to the locus and innovativeness of
technological change. By locus is meant whether the change was made to a primary, secondary
or ancillary production process. A primary process is one which yields the key functiona
property or properties of the product (i.e., defines the product). Using the example of a steel
bolt tli prtaary production process is the casting of the part. An example of a secondary
process is the metal plating of the part. Plating may provide a functional (e.g., non-corrosive)
or aesthetically-pleasing finish, but it is not primary to the function of the product. An ancillary
process is, for example, cleaning of the bolt prior to plating.
Innovation is the first commercial application of a new technical idea... The innovativeness of
the technological change is categorized as: major innovation, incremental innovation and
diffusion Major innovation involves a significant shift in technology, incremental innovation
involves smaller changes or the adaptation of existing technology, and diffusion is the
widespread adoption of existing technology (i.e., involving little or no,innovation).
The characterizations of technological change in the ten case studies are depicted in Table 4-4.
Projects that are located in the upper left-hand corner of the matrix i.e., major innovation in
primary production processes, represent dramatic changes found in the core technology of the
firm.
The majority of changes in the case studies are diffusion driven, while a smaller number can be
conSed incremental innovations and only one.-Bleached Kraft Pulp Manufacturer-can be
considered a major innovation. Technological changes were found across the spectrum of
primary, secondary and ancillary processes.
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Company
SEPs;
Casted Metal Products
Manufacturer (CMPM)
Industrial Coater (1C)
Lid Manufacturer (LM)
Environmental and Health
Reduced wastewater discharges by approx. 100,000 gpd (75%
reduction), reduced energy consumption and use of Freon,
perchloroethylene, 1,1,1 -trichloroethane, r '
nitric acid, and isopropyl alcohol ' - -
Reduction in toluene use (56,000 to 5,600 Ibs) and MEK use (50%
reduction) and toluene and MEK emissions, waste and worker
exposure. Net energy savings of 890 kw per hour.
Medical Device
Manufacturer (MDM)
The Company estimated that heptane usage would decrease by 203
tons per year, resulting in a reduction in VOC emissions of 50 tons per
year. Particulates from manufacturing, natural gas usage and oven
emissions may increase by 3.65 tons per year, and NOx, CO, HC and
SO2 may increase by less than 1 ton per year each.
Elimination of the use of 16,000 Ib/yr of Freon
Metal Filing Furniture
Manufacturer (MFFM)
Metal Finishing
Company (MFC)
Metal Machining
Company (MMC)
Project designed to reduce paint and solvent use, waste and emissions.
(Small success to date.) --:•.'
Reduction in lead contaminated dust generation (83-85%), elimination
of health hazard assoc. with hexavalent chromium, reduce chromium
use (bath strength decreased by 1/30) and sludge generation (67%).
Nickel use will increase from 5,500 to 12,650 Ib/yr.
Reduction in the use (30 to 17,000 gal/yr), emission (130,000 Ib/yr)
and disposal of 1,1,1 trichloroethane--an ozone depleting substance and
a health hazard to workers.
Powder Metallurgy
Manufacturing
Company (PMMC)
Pump Service and Sales
Co. (PSSC)
In inactive Relief:
Bleached Kraft Pulp
Manufacturer (BKPM)
Elimination of ammonia release threat, elimination of
trichloroethylene use and approx. 26,860 Ib/yr of fugitive emissions
and reduction of 1,600 gal/yr of waste oil.
Elimination of the use of Freon 113, an ozone depleting chemical, at
the subject facility and another facility in another state.
Elimination of threat of chlorine gas release (a public and workplace
hazard), reductions in the creation of chlorinated organic compounds;
wastewater color, odor, and foam.
in
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Table 4-4. Characterization of Pollution Prevention Technological Changes Made by Case
Study Firms According to Locus and Degree of Change
Incremental Innovation
Primary Production
Process
Secondary Production
BKPM-rCF
bleaching
MDM-substitution of
deionized -water
degreasing system
IC-organic solvent-free
coating
IM-reformulate gasket
CMPM-redesigh of rinse
systems
MFC-nickel tank
extension
PMMC-ammonia to
nitrogen/hydrogen atm.
MFFM-paint and organic
solvent recycling/waste
reduction
MFC-conversion to
trivalent chromium
CMPM-substitution of
aqueous cleaners
MMC-substitution of semi-
aqueous cleaners
PMMC-substitution of
aqueous tapping fluid and
closed loop cooling
PSSC-substitution of semi-
aqueous cleaners
Conclusions
Through the study of the ten enforcement settlements containing pollution prevention conditions,
this report has documented many successful outcomes of agency endeavors to promote rtie use
of pollution prevention in enforcement. These successes can be measured directly by changes
in firm technology and associated environmental and human health benefits, as well as by the
manTtangible and highly valuable indirect benefits realized both within the,firms and the
aSy Within the finns, indirect environmental, health, and economic benefits were derived
from the transfer of SEP technology to other processes in the subject P^nt or to other plants
owned by the firm; organizational changes that led some firms to, view and address pollution
sources m a more holistic fashion; further implementation of other ^»^^™^
and changes in vendor/consultant relations that will facilitate future adoption of preventive
rather than control strategies. Furthermore, all of the firm representatives interviewed saw the
oppommity to implement pollution preventions ither as a SEP or as -junctive^elie --as a way
to mm a negative situation into a better or positive situation for themselves, for their firm, and
for their relationship with the agency.
IV
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s sT^r^zsr-' to-errethebarriers topoi>*-p~^
exist m firms, toouglrpenalty reduction, improved relations with the agency, and improved
F± 1 fT- ^ publlci* ^h P«» Ceases). Second, since the Inn L clSed to
mplement the innovative project in its consent agreement with the agency (or to pa
penalties) there is a strong incentive to stick with the project even wJhJ technica
arise. Enforcement thus creates a "window of opportunity" in which options for
change receive more serious consideration than usual. j
nh alS° PQintS ,t0 numerous barriers-within the agency and finns-to increasing both
number and the quality of pollution prevention SEPs and injunctive relief settlement
Barriers within the agency include: inappropriate performance evaluation criteria SmaTand
So±st0 6?° "T6111 Pr0gramS' ^ bf lndividUaI m°tivation' lack «f tSe anTtShnS
ffZT i H a feiUCtonCe t0 EPPrOVe technic^ly difficult and risky projects. Barriers wiifn
firms mclude: a desire to settle the case quickly, little or no perceived value in pollution
fnT TV , °/ tme, t0 deVdOP ^ Pr°ject proposal and ^Ple^nt the projec and
nadequate knowledge and expertise (in-house and consultant's). These barriers, coupled whh
fee agency and firm's desire to achieve compliance quickly, appear particularly significant in the
dearth-f Pollution prevent 4nctive relief
To expand and improve efforts to promote pollution prevention in enforcement, barriers must
be overcome and positive incentives must be created. Fortunately, there are numerous and
diverse unexploited or under-exploited positive incentives that the agency can take advantage of.
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This study has revealed several areas where additional use of the information contained herein,
as well as further research, would prove useful to the agency's efforts to promote pollution
prevention. First, the research embodies a rich collection of examples of pollution prevention
in enforcement and evidence of strategies that have proven successful, as well as those that fell
short of expectation.
Second once the agency negotiators offer the firm the option to pursue a pollution SEP or
™ge L firm to pursue pollution prevention inactive relief, it would be useful to provide
tos wkh information on: pollution prevention techniques, examples of pollution prevention
wotec* the EPA pollution prevention-in-enforcement and SEP policies, suggestions of
approaches for assessing the financial and non-financial benefits of pollution prevention projects ,
and sources of pollution prevention technical assistance and information.
Efforts to encourage pollution prevention in SEPs/injunctive relief should be designed and
as pit of an overall five-component pollution prevention technology policy
innovation waivers, permitting, compliance and compliance
assistance.
RECOMMENDATIONS
Further Refine the Goals and Objectives of the "Interim Policy on Pollution Prevention in
Enforcement Settlements"
The formal policy directive should encourage pollution prevention initiatives to shift from the
dimis^of established pollution prevention technologies to more innovative responses, where
Sable In7ovation may be more technically risky, but the economic and environmenta
payoffs are ^Sally more significant. Encouraging the firm to ^^^^
changes is a major step. Once the firm is persuaded, the opportunity should be seized to
mSLe theSks Rather than being satisfied to bring laggard firms up to best industrial
be broadly, rather than narrowly, construed. Obviously, however, technical sophistication is a
prerequisite to success.
A "portfolio approach" to evaluating the success of efforts to include pollution prevention in a
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Multimedia responses should be encouraged, wherever possible, as a matter of articulated policy.
Because more innovative and comprehensive technological changes are difficult, the policy
should articulate more willingness to extend the time frame for completion-beyond the normal
benefits Um°Vative and/°r siZ™ficant technological changes with multi-media environmental
Finally, the policy for encouraging pollution prevention in SEPs/injunctive relief should be
designed and implemented as part of an overall five-component pollution prevention technology
policy involving standard-setting, innovation waivers, permitting, compliance and compliance
assistance, and enforcement.
Changing Barriers and Incentives
Barriers to pollution prevention in enforcement must be overnnmp if positive incentives are to
be successful. The absence of adequate technical knowledge, pollution prevention ideas and
an understanding of what is required to implement technological innovation-on the part of both
the agency and the firm-present significant barriers to progress. j
I
Perverse incentives facing Agency personnel need to be eliminated especially those relevant to
performance reporting and evaluation. The opportunity cost for agency participants to involve
themselves in pollution prevention SEPs/injunctive relief must be recognized and accommodated
More particularly:
(1) Participation in pollution prevention enforcement activities should be made an explicit
part of performance evaluation at lower and middle levels of management.
(2) Participation in pollution prevention SEPs/injunctive relief. should be reported
alongside of traditional enforcement activities. | .
i • ' • ' •
(3) Performance evaluators should avoid setting "case equivalents" (e. ^counting a'
pollution prevention case as equivalent to two traditional enforcement cases).
(4) Quantitative measures of pollution prevention case success should be avoided (e.g.,
success measured by dollars of capital investment) as well as other "mechanical"
evaluations. i
(5) Evaluations should include the numbers and percentage of! cases with pollution.
prevention SEPs/injunctive relief (both successes and failures). ! .
(6) The agency participants involved in pollution prevention implementation and
evaluation should participate in the development of the criteria for success!
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Positive incentives creating opportunities and rewards for participation bv case officers and
attorneys need to be instituted, particularly encouragement, support, and acknowledgement from
regional administrators and managers. Improving the individual motivation of potential
participants will necessarily involve designing an appropriate performance evaluation scheme,
but more is required:
(1) Case officers and attorneys should be made aware of the indirect economic and other
benefits that can accrue to a firm from pollution prevention and, for SEPs, be encouraged
to communicate to the firm that choosing to implement pollution prevention offers a great
deal more than just a penalty reduction.
(2) Sufficient agency resources must be available to accommodate the increased time and
attention that pollution prevention enforcement activities require.
(3) Opportunities need to be created for the case officers and attorneys to engage in
multi-media enforcement activities, as well as to fashion multi-media responses on the
part of the firm.
(4) Innovative, but risky projects require a safe environment for case officers and
attorneys to take risks.
Obviously all this requires a major commitment from regional administrators and managers. The
changes in formal policy suggested at the beginning of this section would help to create this
commitment, but personal commitment on the part of the regional leadership is required as well.
Implementation Strategy Recommendations
(1) Once the agency and the firm have decided to pursue a pollution prevention project, it is
important to maintain flexibility in the fashioning of settlements. Agreements should be tailor-
made. This is especially important if innovative pollution prevention is to be attempted.
(2) The agency should use the pollution prevention SEPs/injunctive relief cases to facilitate the
development of new technologies and to discover optimum strategies for the reduction of
environmental impacts.
(3) Build into the agreements that the company will be willing to have someone within the
agency or a third party evaluator come in and follow-up the technical success of the pollution
prevention project. Highly successful projects could be advertised as "showcase" examples.
In addition, as is done in some instances, the fact that the company has agreed to undertake a
pollution prevention project can be reported to the press along with information on the violation.
via
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(4) Some enforcement settlements could be designed as demonstration projects from the start,
with joint continuous input from the agency and the firm. Demonstration projects can encourage
other companies with similar problems and/or technologies to consider implementing pollution
prevention, within or independent of, the context of an enforcement action. Additional penalty
reduction could be considered for these projects.' i
i
(5) Reference to the firm's TRI reporting data could help both the firm and the agency identify
and fashion attractive options for pollution prevention involving input substitution, product
substitution, and possibly process re-design with multi-media payoffs-especially in the cases of
non-EPCRA violations that usually involve a single-medium violation.,
(6) Use multi-media inspections to promote multi-media pollution prevention SEP/injunctive
relief outcomes.
!
(7) Encourage and utilize agency staff who are particularly well-suited and motivated to do
pollution prevention. Also, consider establishing, on an experimental basis, a pollution
prevention SEP/injunctive relief team of attorneys and case officers who do only pollution
prevention settlements and/or creating the position of "pollution prevention specialist" who
consults within the agency. j
.
l
(8) Re-examine pollution prevention SEP/injunctive relief policy in the context of the small
firm. There are two distinctly different types of small firms: (1), entrepreneurial, highly
innovative "technology-based firms", and (2) "Ma and Pa" firms that are using old technology
(often the firm is privately owned or family run). In case of the former, if the firm is interested
in and capable of fostering technological innovation, consideration should be given to a
significant reduction in penalty for undertaking the development of technically risky, but
potentially significant technology. In case of the latter, significant penalty reduction should be
considered to encourage the firm to adopt (or adapt) proven, "off-the-shelf" process/product
technology. Thus, the Agency could encourage innovation-driven pollution prevention in the
first case and diffusion-driven pollution prevention in the second. |
Education and Training
Here the goal is to develop attitudinal changes, confidence, and knowledge. There are many
different modes of providing education and training for both agency personnel and private actors.
The agency should approach these activities on an experimental basis, concentrating in the
regions. Specific options include: !
i,
(1) Give consideration to the existence and need for different levels or types of
knowledge and offer or target specialized training based on these different categories.
Consider hiring and/or creating industry experts within the regions that can act as a
source of technical knowledge on general technologies and pollution prevention
approaches within a type or a related group of industries. Specialized expertise on
pollution prevention generally, or pollution prevention within an industrial sector can be
IX
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deployed for both compliance assistance (i.e., outreach to the regulated community) and
enforcement activities.
(2) Provide team (i.e., case officer and attorney) training so that not only is knowledge
imparted, but also training in working together toward a pollution prevention goal hi the
context of a SEP/injunctive relief settlement.
(3) Build internal capacity within ORD's Research Triangle Park and Cincinnati Labs to
support the development or review of pollution prevention projects within enforcement
settlements. Improve communication and coordination with RTP and Cincinnati on
critical pollution prevention technology areas. Rotate case officers through ORD
facilities.
(4) Rotate state or federal case officers through a one-year detail with States' Offices of
Technical Assistance (pollution prevention engineering services).
(5) Educate technical consultants (who serve the private sector) hi pollution prevention
approaches to compliance and in pollution prevention in general, so that the firms can
have access to better technical advice and be apprised of the pollution prevention
SEP/injunctive relief options. This could easily be done at technical conferences on
environmental technologies and compliance, especially those at which agency personnel
are often invited to present.
(6) Educate environmental attorneys in the pollution prevention SEP/injunctive relief
option. This could easily be done at the many conferences that are put on hi
environmental law and litigation at which agency personnel are often invited to present.
(7) Establish outreach programs to firms, delivering information and making use of
showcase examples and demonstration projects discussed above.
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TABLE OF CONTENTS
I. INTRODUCTION . . . , . . ....... 1-1
A. PURPOSE OF THE STUDY 1-1
B. POLLUTION PREVENTION, TECHNOLOGY INNOVATION AND
DIFFUSION DEFINED 1-2
C. EPA'S INITIATIVE IN INCLUDING POLLUTION PREVENTION IN
ENFORCEMENT SETTLEMENTS ,. ............ . . 1-2
1. Pollution Prevention as a Means of Correcting the Violation—
Injunctive Relief , j 1-3
2. Supplementary Environmental Projects 1 1-4
D. OPPORTUNITIES AFFORDED BY INCLUDING POLLUTION
PREVENTION IN ENFORCEMENT SETTLEMENTS .......... 1-5
E. PREVIOUS STUDIES ON POLLUTION PREVENTION IN
ENFORCEMENT 1-6
F. ORGANIZATION OF THE REPORT ...'....... 1-7
I
II METHODOLOGICAL APPROACH II-l
A. CASE SELECTION PROCESS II-l
B. CASE STUDY RESEARCH APPROACH II-2
C. OVERVIEW OF CASE STUDIES II-3
D. LIMITATIONS OF THE STUDY '...'.'... II-3
III CRITERIA FOR EVALUATING THE SUCCESS OF SETTLEMENTS
CONTAINING POLLUTION PREVENTION . .j. . . , . ...... III-l
IV CASE DESCRIPTIONS AND COMMENTARY . IV-2
A. A TABULAR SUMMARY OF INDIVIDUAL CASES .! ... . . IV-2
B. A BRIEF TEXT DESCRIPTION OF INDIVIDUAL CASES IV-7
1. Supplemental Environmental Projects IV-7
a. Casted Metal Products Manufacturer (CMPM) IV-7
b. Industrial Coater (1C) i IV-10
c. Lid Manufacturer (LM) IV-12
d. Medical Device Manufacturer (MDM) IV-14
e. Metal Filing Manufacturer (MFFM) . . . .1 IV-16
f. Metal Finishing Company (MFC) ! IV-17
g. Metal Machining Company (MMC) IV-19
h. Powder Metallurgy Manufacturing Company (PMMC) . . . IV-21
i. Pump Service and Sales Company (PSSC) .; IV-22
2. Iniunctive Relief IV-24
a. Bleached Kraft Pulp Mill (BKPM) IV-24
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IV CASE DESCRIPTIONS AND COMMENTARY (cont.) . . . . . IV-2
C. CASE COMMENTARY AND ANALYSIS IV-25
1. SEPs versus Injunctive Relief IV-25
2. Companies IV-26
3. Nature of the Violation (Regulatory Program) . . . IV-26
4. Original and Final Penalties, Project Cost and Payback IV-27
5. Environmental and Human Health Benefits IV-29
6. Source of the Technical Idea IV-32
7. Type of Pollution Prevention Implemented in the Case Study Firms IV-35
8. Innovation vs. Diffusion and the Locus of Technological Change . IV-35
9. Technology Transfer Benefits IV-37
10. Organizational Change . . ; IV-38
11. The Role of Outside Counsel (Retained Private Bar) IV-39
12. Change hi Vendor/Consultant Relations IV-40
13. Projects Not Completed Under the SEP . . IV-41
14. Tune to Implement the Pollution Prevention Project IV-41
15. An Examination of Whether Pollution Prevention Projects Have
Been Implemented Without the SEP IV-43
D. IMPACT ON THE AGENCY'S ENFORCEMENT PROGRAM IV-44
1. Attitudinal and Organizational Effects . . . IV-45
2. Time Requirements , IV-46
3. Technical Resource Requirements . . IV-47
4. Advancement of the Agency's Pollution Prevention Objectives . . . IV-48
E. IMPACT ON THE FIRM IV-49
1. The Enforcement Process IV-49
2. Beyond Enforcement IV-50
3. The Impact of Pollution Prevention SEPs on the Deterrence Effect
of the Agency's Enforcement Programs IV-50
V. OPPORTUNITIES FOR IMPROVED RESULTS: BARRIERS, INADEQUATE
INCENTIVES, AND INAPPROPRIATE INCENTIVES V-l
A. AGENCY V-2
1. Pollution Prevention SEPs - Barriers, Inadequate Incentives, and
Inappropriate Incentives V-2
2. Pollution Prevention Injunctive Relief V-ll
B. FIRM V-12
1. SEPs - Barriers, Inadequate Incentives, and Inappropriate Incentives V-12
2. Pollution Prevention Injunctive Relief - Barriers, Inappropriate
Incentives and Inadequate Incentives V-l6
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VI IMPORTANT DETERMINANTS OF SUCCESS IN PROMOTING
POLLUTION PREVENTION IN ENFORCEMENT AGREEMENTS . . ... . VI-1
A. IMPORTANT DETERMINANTS OF SUCCESS PARTICULAR TO THE
AGENCY -....!. VI-1
1. Enforcement Policy and Practice VI-1
2. Multi-media Approaches and Multi-Media Pay-offs VI-2
B. IMPORTANT DETERMINANTS OF SUCCESS PARTICULAR TO
FIRMS VI-3
C. IMPORTANT DETERMINANTS OF A SUCCESSFUL POLICY:
AGENCY AND FIRMS . , VI-4
1. Timing and Time Allowed for Pollution Prevention Responses .... VI-4
2. Provision of Information VI-4
3.- Structuring the Negotiation Process . . . .j VI-4
4. Technical Knowledge and Expertise . VI-5
5. Project Monitoring . . ! VI-5
VII RECOMMENDATIONS . . . VII-1
A. FURTHER REFINE THE GOALS AND OBJECTIVES OF THE
"INTERIM POLICY ON POLLUTION PREVENTION IN
ENFORCEMENT SETTLEMENTS" VII-1
B. CHANGING BARRIERS AND INCENTIVES VII-2
C. IMPLEMENTATION STRATEGY RECOMMENDATIONS VII-3
D. EDUCATION AND TRAINING . . . . VII-5
VIII CONCLUSIONS AND LESSONS FOR FUTURE STUDY ............ VIII-1
l_
APPENDICES
APPENDIX A: QUESTIONNAIRES FOR UNSTRUCTURED INTERVIEWS A-l
APPENDIX B: DETAILED CASE STUDIES ........; . . . B-l
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TABLES
Table 4-1. A Tabular Summary of Individual Cases
Table 4-2. SEP Case Study Original and Final Penalties, and Project Costs
IV-2
IV-28
Table 4-3. Summary of Environmental and Health Benefits of Pollution Prevention IV-30
in Enforcement Case Studies
Table 4-4. Characterization of Pollution Prevention Technological Changes Made IV-37
by Case Study Firms According to Locus and Degree of Change
Table 4-5. Tune to Implement Pollution Prevention Projects
IV-42
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Recent Experience in Encouraging the Use of Pollution Prevention in
Enforcement Settlements i
I. INTRODUCTION i
i .. , .• . • - .-. •
A. PURPOSE OF THE STUDY : r';
Pollution prevention (source reduction) is one of the major priorities of the United States
Environmental Protection Agency (EPA). In June 1989, the Office of Enforcement issued the
Enforcement Action Plan which articulated the agency's strategy for pollution prevention in
enforcement. One of the primary tools identified was the settlement process. While the agency
had relatively little statutory or regulatory authority to require violators to implement pollution
prevention technology, the settlement process provided a mutual opportunity for both the
agency's negotiators and the defendants to consider pollution prevention as part of the overall
settlement process. j
i
By early 1991, the Office of Enforcement (OE) had issued an Interim Policy on the Use of
Pollution Prevention Conditions hi Enforcement Settlements and a Policy on the Use of
Supplemental Environmental Projects (SEPs) hi Enforcement Settlements. Together, these two
policies provided formal guidance and criteria for negotiating pollution prevention conditions
either as injunctive relief (i.e., the actual steps taken to correct the violation), or as supplemental
conditions incidental to the correction of the violation. i
In June 1990, former Administrator William Reilly made funds available for the agency offices
to develop regulatory, compliance and analytic pollution prevention projects.1 The Office of
Enforcement, working hi conjunction with the RCRA, TSCA, Stationary Air and NPDES
compliance programs, used these funds to help provide technical support to help incorporate
pollution prevention conditions in regional enforcement cases, as well as to conduct an analysis
of the environmental, institutional, and innovative technological impacts of pollution prevention
settlements generally. j
i
This study will provide important information for OE's ongoing analysis of the role of, and
opportunities for, the use of pollution prevention hi the agency's enforcement process; and
MIT's work on the techniques and benefits of pollution prevention, as well as approaches for
encouraging it. The primary objective of this study was to systematically evaluate the inclusion
of pollution prevention hi enforcement settlements. The specific settlements analyzed hi this
study were drawn from the universe of judicial and administrative enforcement actions negotiated
1 The Administrator took two-percent of the "extra-mural" (contract) funds allocated to each Agency
program and created a pool of money for pollution prevention projects for which each programs would compete.
A total of 25 projects were funded with these "two-percent" funds across the Agency.
1-1 . . I -
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by the EPA regions and Headquarters programs up to and including FY 1992. The cases were
submitted by the regions to the Office of Enforcement in June and October 1992. In addition, the
MIT researchers, in conjunction with regional enforcement staff, identified additional pollution
prevention settlements settled during FY 1993.
The cases were reviewed for the inclusion of pollution prevention conditions either as injunctive
relief or as SEPs. Empirically, virtually all of the FY 1992 settlements with pollution prevention
conditions were negotiated as SEPs, i.e., the technical activity was included in exchange for some
degree of penalty mitigation. One FY 1992 settlement which contained pollution prevention as
the means of correcting the violation is among the case studies analyzed in this study. One
question that this study considers is why there have not been more pollution prevention injunctive
relief cases. This report makes some recommendations as to the institutional changes that are
needed to expand their use.
B. POLLUTION PREVENTION, TECHNOLOGY INNOVATION AND DIFFUSION
DEFINED
Pollution prevention, according to the Pollution Prevention Act of 1990, is reduction or
prevention of pollution at the source by any practice which reduces the amount of any hazardous
substance, pollutant or contaminant entering any waste stream or otherwise released into the
environment (including fugitive emissions) prior to recycling, treatment or disposal; and which
reduces the hazards to public health and the environment associated with the release of such
substances, pollutants, or contaminants.
Pollution prevention technological changes may be achieved either through innovation or adoption
of existing technology. Innovation is the first commercial application of a new invention. Major
innovation represents a significant shift in technology; incremental innovation involves smaller
changes or significant adaptation of existing technology. The term diffusion is typically used to
mean the widespread adoption of existing technology (i.e., involving minor adaptation but little
or no innovation). The term technology transfer refers to diffusion between different industries
or countries.
C. EPA'S INITIATIVE IN INCLUDING POLLUTION PREVENTION IN ENFORCEMENT
SETTLEMENTS
In February of 1991, EPA transmitted its Interim Policy on the Inclusion of Pollution Prevention
and Recycling Conditions in Enforcement Settlements (referred to here as the "Pollution
Prevention in Enforcement Policy"). The purpose of the Policy was to encourage pollution
prevention and recycling both as a means of returning to compliance (i.e., via injunctive relief)
and as supplemental environmental projects (SEPs) incidental to the correction of the violation
itself. In conjunction with the Policy on the Use of Supplemental Environmental Projects in EPA
Settlements (February 12, 1991) (referred to here as the "SEP Policy"), the Pollution Prevention
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in Enforcement Policy was designed to offer incentives to the agency and companies for
including pollution prevention in settlements, preserve effective deterrence and accountability for
compliance and environmental results, and support funds to provide incentives to the agency to
address potential demand on staff resources for review of pollution prevention opportunities.
|
i
As the Pollution Prevention in Enforcement Policy points out, the agency in general cannot
require pollution prevention in enforcement settlements, nor for that matter in any capacity given
the absence of statutory or regulatory directive. Prior to an enforcement action, the regulated
community is generally free to choose the method by which they will comply with federal
environmental requirements. However, once a civil or administrative action has been initiated,
the means of returning to compliance are subject to mutual agreement between the agency and
the respondent. In addition, an agreement can be structured to include an environmentally
beneficial project, such as a pollution prevention project, that goes beyond compliance.
Therefore, the settlement process is an opportunity for the agency and companies to identify and
implement pollution prevention consistent with the agency's overall enforcement approach.
In the next few paragraphs, we highlight several components of the Pollution Prevention in
Enforcement Policy and the SEP Policy that have surfaced as important determinants of the
agency's and companies' willingness and capacity to include pollution prevention in settlements,
as well as the nature of pollution prevention projects included. These components are organized
according to their relevance to injunctive relief projects and SEPs.
1. Pollution Prevention as a Means of Correcting the Violation—Iniunctive Relief
a. Timelines for Implementing Pollution Prevention Conditions
As stated in the Pollution Prevention in Enforcement Policy, EPA's enforcement policy calls for
the "expeditious" return of the violator to compliance. The agency team is granted some
additional flexibility in negotiating an implementation schedule for pollution prevention remedies,
especially if new or innovative technology is involved. However, in determining whether to
extend the "normal" timeline for resolving the violation, the policy recommends consideration of
the following factors: seriousness of the violation, aggregate reduction in amount or toxicity of
pollution through prevention as compared to an end-of-pipe response,: reliability/availability of
the technology, applicability of the technology to other facilities, aind prospects for future
compliance (Pollution Prevention in Enforcement Policy, pages 4-6).
b. Failure in Implementation ("good-faith failure")
To insure against a situation where a respondent—despite his or her best efforts—fails to
successfully achieve compliance through an agreed-upon pollution prevention remedy, the
Pollution Prevention in Enforcement Policy requires that such agreements contain a "fall-back"
schedule for compliance using a specified proven technology. Under .circumstances of project
failure, the respondent may or may not have to pay an additional penalty, depending on the
economic benefit of further delay in compliance and expenditures on the failed pollution
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prevention remedy (Pollution Prevention in Enforcement Policy, pages 8 and 9).
2. Supplementary Environmental Projects
a. Categories ofSEPs
The SEP Policy permits five categories of SEPs, provided that they meet the criteria contained
in the policy; these categories are: pollution prevention projects, pollution reduction projects (i.e.,
a project which goes substantially beyond compliance to further reduce pollution), environmental
restoration projects, environmental auditing projects (i.e., compliance auditing), and enforcement-
related environmental public awareness projects (SEP policy, pages 2-4).
b. Nexus Requirement
The SEP policy requires that there is an appropriate "nexus" or relationship between the nature
of the violation and the environmental benefits to be derived from the SEP. For pollution
prevention SEPs (as well as for pollution reduction, environmental restoration, and environmental
auditing projects), the nexus may be either "vertical" or "horizontal". A vertical nexus exists
when the SEP reduces the emission of a pollutant to a medium that are the same pollutant and
medium addressed in the violation. A horizontal nexus exists when the SEP involves either (a)
relief for different media at a given facility or (b) relief for the same medium at different
facilities. The horizontal nexus condition is met only if the SEP would reduce the overall health
or environmental risk posed by the subject facility or reduces the likelihood of future violations
similar to those of the enforcement action. Each proposed administrative settlement which has
a horizontal nexus to the violation must be approved by the Assistant Administrator for
Enforcement or her designee.
c. Status of the Enforcement Action/Compliance History of Defendant/Respondent
Although any defendant/respondent may propose a SEP, the SEP policy recommends that the
agency consider the following factors in determining whether to accept the respondent's proposal:
the status of the action, resources committed to the case, the respondent's enforcement history,
as well as the respondent's capability, technical and economic resources to implement the project.
d. Main Beneficiary of a SEP •
The SEP policy contains a limitation on projects that represent a "sound business practice", i.e.,
capital or management improvements where the firm, rather than the public, is likely to receive
the substantial share of the benefits. However, this limitation can be waived for pollution
prevention projects having significant environmental benefit (SEP policy, page 9).
e. Penalty mitigation
The agency's penalty policies require the assessment of a substantial monetary penalty generally
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at a level which captures the defendant/respondent's economic benefit of noncompliance plus
some appreciable portion of the gravity component of the penalty (emphasis added). In addition
EPA must not lower the penalty by more than the after-tax amount the violator spends on the
project. Therefore, a portion of the gravity component of the penalty may be mitigated by an
amount up to the net present after-tax cost of the SEP, depending on the environmental benefit
ot the SEP. Where a violation is found which did not confer significant economic benefit e g
a failure to notify, the settlement must include a penalty that at least captures a portion of the
gravity component (SEP policy, page 10). j
e. Treatment of Pollution Prevention Studies as SEPs \ .
SEPs for studies are not permitted without an accompanying commitment to implement the
results. Pollution prevention studies are eligible for a penalty offset only when they are part of
an agency-approved set of actions to reduce, prevent, or ameliorate the effects of pollution at the
respondent's facility.2 The size of the penalty offset may include the costs of the studies
However, the agency retains the right to review the studies to determine the technological and
economic feasibility of the results. If the respondent is unwilling to implement the results and
the agency has determined that they are feasible, the agency can rescind the penalty offset for the
study. , i
/ Failure in Implementation
If the respondent does not comply satisfactorily with the terms of the;SEP, she or he will be
required to pay the portion of the assessed penalty that was reduced (with applicable interest).
The consent agreement should contain a mechanism for the payment of these penalties (called
"stipulated penalties"). j -
D. OPPORTUNITIES AFFORDED BY INCLUDING POLLUTION PREVENTION IN
ENFORCEMENT SETTLEMENTS
. i
Pollution prevention injunctive relief offers the opportunity for both the agency and firm to
reduce or eliminate an environmental problem at the source, without cross-media transfer of
pollutants. Pollution prevention SEPs, and injunctive relief in some cases, offer the possibility
of reducing environmental impacts in excess of that which is required by regulation.
Furthermore, a prevention remedy or SEP may also reduce impacts to media other than that
which is targeted by the enforcement action, if the technology is chosen or designed to deliver
multi-media environmental pay-offs. Taken together, these benefits can enhance the firm's
prospects for future environmental compliance. j
While studies are not by themselves eligible for penalty offset, an exception is made for
pollution prevention studies when they are part of an agency-approved plan to correct a violation.
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Significant "indirect" environmental, health, and economic benefits can be achieved through the
transfer of pollution prevention technology to other processes in the subject plant or to other
plants owned by the firm; organizational changes that lead to improved environmental practices;
and further implementation of other pollution prevention technology. Furthermore, particularly
in the case of SEPs (where penalty relief is granted), the option to include a pollution prevention
project creates an opportunity to turn a negative situation into a better or positive situation for
the firm and to improve the relationship between the firm and the agency.
By including pollution prevention in enforcement settlements, the agency can translate its stated
preference for pollution prevention into action-within the context of enforcement. Pollution
prevention knowledge and skill-gained by agency negotiators-can help to build the agency s
overall base of pollution prevention knowledge and experience (see discussion in Section V)
which can be leveraged in standard setting, permitting, and inspection activities as well as in
industry outreach programs.
Previous research has shown that technological innovation is one important pathway to solving
environmental, health, and safety problems. Enforcement activities can serve as a vehicle by
which the agency encourages or partially underwrites technological risk-taking in pursuit ot
innovative pollution prevention solutions to challenging environmental problems. This strategy
can be targeted toward certain industries, technologies, or high-risk chemicals (e.g., 33/50
chemicals) that have been assigned top priority for risk reduction, and/or where no or few cleaner
technological alternatives are available.
The option to promote pollution prevention within the enforcement context permits the agency
to pursue a settlement that optimizes environmental performance, rather than a settlement aimed
only at achieving compliance.
This vision for the agency's enforcement program begs the question of how the agency's goals
of pollution prevention and technology innovation are "expressed" in policy and action? In this
report we show that pollution prevention is a small part of the agency's enforcement strategy^
and innovation is a small component of pollution prevention enforcement activity. In Section VII,
we argue that multi-media, pollution prevention enforcement policy-along with standard setting,
permitting, innovation waivers, and compliance and compliance assistance-should be part ot a
broader agency pollution preventionjechnology policy.
E. PREVIOUS STUDIES ON POLLUTION PREVENTION IN ENFORCEMENT
At least three other studies have been conducted on the agency's experience in including pollution
prevention in enforcement. They are: "Investigation of Environmentally Beneficial Expenditures
for Settlement Agreements," by IT Environmental Programs, Inc. for U.S. EPA Otiice ot
Compliance Monitoring, Toxics Enforcement Branch, May 1992; "Pollution Prevention Through
Compliance and Enforcement: A Review of OPTS Accomplishments", U.S. EPA Office of
Compliance Monitoring, January 1992; and "Innovations in Compliance and Enforcement:
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Supplemental Environmental Projects in EPA's Toxics and Pesticides Program" U S EPA Office
of Compliance Monitoring, Office of Prevention, Pesticides, and Toxic Substances, November
1992. Our study has benefitted greatly from, and builds on, this previous work.
- . -" - • | , , .
F. ORGANIZATION OF THE REPORT I .
The remainder of this report is organized into seven sections and two appendices. Section II
contains a description of the methodological approach used in the research. Section III presents
a discussion of the criteria that we used for evaluating successful efforts iin incorporating pollution
prevention into enforcement agreements. Section IV contains a brief description of the ten case
studies conducted, in tabular and text form, and qase commentary and analysis. Section V
presents our findings on the barriers, inappropriate incentives, and inadequate incentives to
pollution prevention in enforcement. Section VI presents our findings and conclusions concerning
determinants of success in promoting pollution prevention in enforcement. Section VII contains
our recommendations for overcoming barriers and developing positive incentives, and finally,
Section VIII presents conclusions and areas for future study. i
Appendix A contains the questionnaires used for our unstructured interviews with agency
negotiators and case study firms. Appendix B contains the detailed case studies.
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II METHODOLOGICAL APPROACH
The research conducted for this project is structured around case studies of ten enforcement
settlements containing pollution prevention conditions. Case study research ^iSlSSS
primarily of interviews with agency and firm negotiators, was supplernenteT^ n^lt
discussions with media, legal, and policy office managers and staff in both H^qS^SI
the regions. In ttus section, we describe how the cases were selected and conducted a wdl S
a discussion of the limitations of our study. i
A. CASE SELECTION PROCESS
Our objective, in case study selection, was to choose a total of 10 cases that contained pollution
prevention projects involving chemical substitution, process change, and closed-loop recycl ng
that seemed: (a) technically innovative, (b) to address a category of technology or industry not
commonly found in pollution prevention case study literature (e.g., batter, maturing™
(c) that contained novel settlement features (e.g. a settlement that includes reseSch and
development). We sought cases where pollution prevention was successfully negotiated into
enforcement agreements (irrespective of whether the project had been successfully completed by
0 ™** "* ™ ™ ^^ C8SeS ***" the W^ty to negotiate a SEP
ot^tyn process, but failed to materialize (this is discussed in
we did have " °pportunity to discuss
As an ultimate objective, we chose to narrow down our selection to cases 'distributed among three
regions. This decision was made for reasons of practicality. As our study progressed we
determined that there was more noticeable diversity in strategy and content between settlements
than between regions; therefore, we felt that we would not limit our findings or conclusions by
limiting the regional scope of our study. y
As mentioned in Section I A., we began our case selection with a review of the pollution
Pr/n ^ sefQe™enV™f ies submi*ed by the regions to the Office of Enforcement in June
and October 1992. From these submittals, we selected those cases that appeared to involve
chemical substitution, process change, and product redesign/reformulation consistent with the
definition of pollution prevention. This process produced a list of 33 cases. Next we divided
tiiese cases into two categories: Tier 1 and Tier 2. Roughly, cases were assigned to Tier 1 if:
the technological or material change seemed innovative, the category of technology or industry
is not commonly found in pollution prevention literature, or the settlement contained a novel
settlement approach. We viewed Tier 1 settlements as our top choices for study. Tier 2 contains
other projects, not as novel, many of which involved a switch from organic solvent to aqueous-
based cleaning or deceasing systems. This processes yielded 18 cases in Tier 1, and 15 in Tier
AA ThlsJselectlon was ^^ucted without regard to regional distribution (this concern was
addressed in subsequent iterations). We planned to select Tier 2 cases, for the regions selected
only if there were too few cases in Tier 1, or if we could not access sufficient written
documentation or important agency or firm negotiators for Tier 1 cases.
II-1
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All but one of the 33 settlements with pollution prevention conditions were negotiated as SEPs.
The one settlement which contained pollution prevention as the means of correcting the violation
was the only pollution prevention injunctive relief case reported in the regional summaries. (This
settlement is one of the cases included in our final sample.)
Next we chose one region to pilot-test our case study research methodology We began our
conducting initial meetings with the deputy regional administrator, regional
ffice chief, and an attorney who has been designated as a SEP specialist for
* provided us with access to case files for both the Tier 1 and 2 cases that
we had pre-selected for this region. Through our review of these files, and discussions wi£ he
rlgional attorney, we selected three cases for study. (An additional case, not reported in the
Office of Enforcement submittal, was added later on in the study.)
The second and third regions were chosen primarily on the basis
interesting pollution prevention settlements, as determined by our initial screening. The final case
sSn process wiL these regions was similar to that used in the first region, as discussed in
Ae preceding paragraph. Three cases were selected in each of these two regions.
B. CASE STUDY RESEARCH APPROACH
^=^
MeS questions dealt with both specific aspects of the cases as well as genera questions
regS stotegies used to negotiate pollution prevention into enforcement settlements. At each
interview, we requested the name of a contact at the respondent firm.
We conducted interviews with a representative(s) at each of the ten
interviews were conducted in person and the remaining four were conducted over the
sent a questionnaire prior to the unstructured interview (See Appendix A to
of questions that we planned to ask. In all but one case we interviewed two
presentatives who were involved in negotiating and/or developing and
poUution prevention projects. Interviews lasted from one to two hours and
*ough not always, conducted with all representatives together in one room.
Given the potential for disclosure of sensitive information, we chose to mask the names of the
tos ForPreasons of sensitivity and in order to confirm the accuracy of our impressions, we sent
write-ups back to the firms for their review, corrections and suggestions for the
information. We obliged all requested revisions since none were critical to
of the interview. None of the tos objected to having the write-up included
II-2
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in the report; in fact, most were very pleased with the objectivity and accuracy of our writing.
We noted that some firms were at first reluctant to participate because they were apprehensive
about us reporting something that might jeopardize their relations with the agency. This was a
particular concern for those firms that had not yet completed their projects.
Draft case studies were also sent to EPA region negotiators for comments and corrections.
In retrospect, we believe that the case study research approach utilized here was both appropriate
and effective in evaluating the agency's experience in encouraging the use of pollution prevention
in enforcement. While there are some limitations to this approach (as discussed in Section D
below), we believe in particular that the collective perspectives of our interviewees, i.e., those
directly involved in the negotiation process, is an extremely informative and valuable window on
the current state of, and potential for, the agency's efforts to promote pollution prevention in the
enforcement context, and in general.
C. OVERVIEW OF CASE STUDIES
!
The detailed case studies (in Appendix B) contain three sections: Section I Case Overview,
Section II Description of Pollution Prevention SEP, and Section III Analysis. Information for
the case overview and pollution prevention project came primarily from documents contained in
case files, particularly the consent agreements and final orders (CA/FO). Case file information
was supplemented, as needed, from data collected during firm and agency interviews.
EPA and Company perspectives, as detailed in the analysis sections, came from interviews.
These sections vary in depth and coverage from case-to-case; this is a function of the both the
diverse nature of the cases as well as the willingness and level of interest/enthusiasm of our
interviewees to discuss the specific details of the case. ;
D. LIMITATIONS OF THE STUDY j s ,
As our description of the case selection process indicates (Section A), this study was specifically
designed to focus (to the greatest degree possible) on settlements that involved innovative
pollution prevention technology and settlement approaches, as well as cases where the technology
or industries involved are not commonly addressed in the pollution prevention literature. In other
words, this study was not designed to evaluate a representative sample of pollution prevention
settlements. As a result, we are limited in our ability to comment on the overall nature (or cross-
section) of pollution prevention technological changes made within enforcement settlements, and
the environmental, health, and other outcomes associated with a representative sample.
The study of cases where pollution prevention was successfully negotiated permits evaluation of
elements of success and barriers that might have either made the negotiation or monitoring
process difficult and/or limited the success of the final outcome. However, this research approach
II-3
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does not directly capture, i.e., through case;study analysis, the lessons that can be learned from
"failed attempts" and "missed opportunities". By "failed attempts" we mean cases where the
opportunity to negotiate pollution prevention arose—either at the suggestion of the agency or the
firm—but never materialized. By "missed opportunities" we mean instances where the possibility
of including pollution prevention in a settlement was never raised during the negotiation process,
either by the violator or the agency. Questions surrounding failed attempts are researchable, in
a fashion similar to that which was employed here, since these cases can be probably be located.
Missed opportunities, on the other hand, would be quite difficult to study.
Although we did not directly study instances of failed attempts and missed opportunities, we
gained significant indirect evidence through our interviews about the kinds of barriers and
concerns that lead to these scenarios.
Finally, a limitation associated with interview research is that the data obtained is self-reported
and often difficult to verify. There are two general types of data contained in this study: factual
information and personal impressions/opinions. We attempted to verify certain factual.
information by duplicating some questions on the agency and firm questionnaires and by cross-
checking certain questionable information during interviews. Personal impressions and opinions
of, for example success or failure of a process or outcome, and conjecture (e.g., when a firm
states that they would have implemented the pollution prevention project eventually, in the
absence of the enforcement action) must be taken at face value.
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Ill CRITERIA FOR EVALUATING THE SUCCESS OF SETTLEMENTS CONTAINING
POLLUTION PREVENTION
Prior to initiating the case study research, and during the course of our research, we developed
criteria to evaluate the success of settlements containing pollution prevention conditions. These
criteria are drawn from goals and objectives of the Interim Policy on Pollution Prevention in
Enforcement, verbal and written communication with our project sponsors, as well as on our
own observations. i -
,|
The criteria are divided into two major categories: (a) pollution prevention project success from
the agency and firm perspectives, and (b) settlement process success from the agency
perspective. Project success is further subdivided into direct measures of success, i.e., measures
that evaluate changes in firm technology and associated environmental and human health
benefits, and indirect measures of success stemming from project implementation. Criteria listed
in the second section—process success—are designed to evaluate the success of the settlements
(and enforcement approaches in general) in translating stated agency goals for pollution
prevention into action. j
Pollution Prevention Project Success (Agency and Firm Perspectives)
A. Direct environmental, energy and economic measures
1. Risk Reduction and Material/Energy Conservation
a. reduction in pollution volume I
b. reduction in the level of toxicity of materials used in manufacturing and
of pollution .1
c. reduction in raw and process materials and energy used
d. reduction in worker exposure to toxic chemicals
e. reduction in community exposure to toxic chemicals
f. reduction in product toxicity I
2. Economic Benefits
a. reduction in raw material; waste disposal,
compliance costs
b. avoided future liability
pollution control, and
B. Indirect economic benefits and other measures
1. settlement technology implemented in other parts of the
owned by the company
2. additional pollution prevention projects implemented as 2
project
plant or at other plants
result of the settlement
III-l
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3. organizational changes that lead firms to view and address pollution sources in a
more holistic, preventative manner
4. subsequent compliance performance of the firm improved as a result of the
project
5. resulting major or incremental technological innovation
6. changes in vendor/consultant relations that will facilitate future adoption of
preventative rather than control strategies
7. transformation of a negative situation into a better or positive situation for the
firm, and for the relationship between the firm and the agency
8. improvement in the firm's public and product image
Settlement Process Success (Agency Perspectives)
A. Pollution prevention technology transfer
1. inclusion of a technology potentially having wide applicability to the same or
other industries
2. inclusion of a technology of which the agency had little prior knowledge
B. Pollution prevention technology development
1. construction of a settlement that led to the development and/or implementation of
a new pollution prevention technology, or a new adaptation of an existing
technology
2. construction of a settlement that led to the development and/or implementation of
a new pollution prevention technology, or a new adaptation of an existing
technology where such achievement was necessary to attain a specific
environmental objective (e.g., an alternative to chlorine-based bleaching of kraft
pulp)
C. General agency goals
1. contribution to the agency's stated goal of making pollution prevention a major
component of all agency programs
2. preserving the deterrence impact of the agency's enforcement programs
These criteria of success were used throughout our research and analysis. First, the criteria
were used in the development interview questionnaires (see Appendix A) and to guide the
unstructured interviews. Second, they were used to guide the case study analysis presented in
Section IV. Third, they were used as a guidepost to evaluate barriers to (Section V), and
determinants of success (Section VI), hi the agency's efforts to promote pollution prevention
through enforcement. Finally, the criteria were used to develop policy recommendations
(Section VII), research conclusions and suggestions for further research (Section VIII).
III-2
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IV CASE DESCRIPTIONS AND COMMENTARY
In this section we present descriptions of our ten case studies, analysis and commentary.
Subsections A and B, respectively, present a tabular and text summary of the full cases contained
in Appendix A. Subsection C contains case commentary and analysis. Finally, subsections D
and E contain commentary on the impact of pollution prevention on the agency's enforcement
programs and on the firms, respectively. i
A. A TABULAR SUMMARY OF INDIVIDUAL CASES ;
The next five pages contain a tabularized summary of the individual cases. SEPs are presented
first, in alphabetical order (by pseudonym), followed by the injunctive relief case. '
IV-l
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B. A BRIEF TEXT DESCRIPTION OF INDIVIDUAL CASES
1. Supplemental Environmental Projects
a. Casted Metal Products Manufacturer (CMPM)
CMPM produces casted ferrous metal products using a variety of operations, including: wax
pattern and sand/plaster mold production; mold dewaxing with heat; acid and caustic cleaning,
degreasing, bluing, phosphate coating, and tumbling of metal parts. CMPM has approximately
1,200 employees and 3 buildings at the subject facility. The company owns two other plants; one
plant makes similar products, another produces only aluminum products.
The company was cited with two violations under the Clean Water Act: failure to file a Baseline
Monitoring Report (Section 403.12) and exceeding the chromium discharge limits and effluent
pH. The company was originally fined $95,000. In consideration of their willingness to include
a SEP in their settlement, EPA reduced the fine to $30,000.
The SEP has two parts. The first part consists of process and facility modifications to be made
by the company to reduce water and chemical use, and wastewater and hazardous waste. The
second part consists of a Water Use and Wastewater Reduction Program designed to identify
further measures to reduce water use and wastewater generation.
I
Part I requires the company to: - '•
A. Reduce flow in its dewax cooling plates to reduce non-contact cooling water to the
maximum extent safely possible.
B. Implement the following measures in the acid cleaning process:
1. Install a countercurrent rinse tank following the Hydrochloric Acid baths;
and
2. Route caustic rinse water as a reactive rinse to ;the countercurrent rinse
tank.
C. Implement the following measures in the acid cleaning area:
1. Eliminate the use of Nitric Acid;
2. Install countercurrent rinse tanks following the Sodium Hydroxide bath and
the caustic neutralizer baths;
3. Route water from the countercurrent rinse tank following the caustic
neutralizer bath to the cold water rinse following the Hydrochloric Acid
bath; and
4. Route the water from the cold water rinse following the Hydrochloric Acid
bath to the countercurrent rinse following the Sodium Hydroxide bath.
D. Implement the following measures in the bluing area:
1. Install a two-stage bluing bath on the electric bluing line;
2. Install flow control devices;
3. Investigate during summer shutdown, and if doing so will not negatively
IV-7
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impact product quality or manufacturing efficiency, route rinse water from
the cold water rinses following the bluing tanks in both lines to the cold
water rinses following the caustic cleaner baths; and
4. Investigate during summer shutdown, and to the extent doing so will not
negatively impact product quality or manufacturing efficiency, reduce flow
hi all process lines.
E. Implement the following measures in the phosphate coating area:
1. Replace caustic water rinse with a dead rinse and a countercurrent rinse;
2. Use rinse water from the dead rinse as make-up water for caustic cleaner;
3. Use a single cold water rinse following the phosphoric acid solution;
4. Use a cold water rinse following the phosphoric acid solution bath as a
reactive rinse for the countercurrent rinse; and
5. Install a timer or conductivity flow controls to limit flow to after usage
necessary for product quality or manufacturing efficiency.
F. Install flow control devices as appropriate in the tumbling area of Building C to
reduce water use to the maximum extent possible without negatively impacting
product quality or manufacturing efficiency.
G. Eliminate the use of perchloroethylene, Freon, and nitric acid in those processes
discharging wastewater.
H. Reduce the use of 1-1-1 trichloroethane and isopropyl alcohol to the extent
possible.
Part II includes implementation of a Water Use/Wastewater Reduction Program designed to
reduce the Facility's water consumption and wastewater generation to the maximum extent
practicable without negatively impacting product quality or manufacturing efficiency as follows:
A. The company shall complete and provide to EPA a Water Balance Survey of the
Facility and a report describing all sources and amounts of intake water, all points
of wastewater discharge, including evaporation, and a description of the Facility's
processes and activities that generate wastewater, including contact and non-
contact cooling water. The report shall include a water balance schematic diagram
illustrating the above information, including daily volumes of water used and
wastewater generated.
B. The company shall complete and provide to EPA a Water Use/Wastewater
Reduction Study for the Facility. The Study shall include plans and a schedule
for, facility and process modifications that the company will implement to
minimize the Facility's water use and wastewater generation.
C. The company shall implement those plant and process modifications identified in
the Water Use/Wastewater Reduction Study to minimize the Facility's water
consumption and wastewater generation.
IV-8
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I
Through process modifications, the company has reduced wastewater discharges by approximately
100,000 gallons per day (approximately 75% reduction) and energy consumption by close-looping
water cooling processes. The SEP will leverage additional wastewater and energy reductions
since the company's ultimate goal is to close-loop the entire plant. The following table illustrates
chemical use reductions made by the company from the period of 1989 to May of 1991.
Chemical Use Reduction
(Pounds Purchased, 1989 to 1991)
Freon
Perchloroethylene
1 , 1 , 1 -Trichloroethane
Nitric Acid
Isopropyl Alcohol
1989
55,280
35,700
30,000
2,275
32,485
Pounds
1990 i
I
51,060
14,000
27,000
3,500
24,525
1991*
0
0
9,000
0
4,683
* Quantity of chemical purchased from January 1, 1991 through May 31,. 1991. Source:
CMPM's Environmental Program Summary, June 1991.
While the changes made by the company are significant, they have not fundamentally changed
their core manufacturing processes, e.g., metal casting, acid and caustic cleaning, bluing, and
phosphate coating.
j
The average payback period of all SEP projects implemented is 5 |to 8 years. While the
company's investment threshold is one year, they believe that the projects were in their best
interest-economically and environmentally. They have realized water savings of about 100,000
gallons per day and energy savings from close-looping water cooling processes.
The company was dissatisfied with their technical consultants-a geotechnical/environmental
engineering consulting firm. In the course of the negotiations, the consultants recommended a
large and expensive treatment plant that the company ultimately realized was not needed. The
consultant contributed to some degree with process change ideas—by reviewing and modifying
recommendations from the EPA case officer-but largely recommended traditional technical
problem-solving approaches. The EPA attorneys, however, trusted the consultants and therefore,
the consultants helped to win agency approval for the technical changes that the company sought
to implement. The consultants were "educated" in the course of this process and they now use
the company as a reference for their pollution prevention work. The company would not use
them again. I
IV-9
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EPA compelled the company to implement water-use reduction measures far in advance and in
excess of what they would have done without the enforcement action.- In addition, the company
has implemented some waste and water reduction measures in another plant.
Many of the technical ideas for the SEP came from the EPA case officer, who obtained insight
and project ideas from the shop floor, particularly from the line supervisors. Often, when the case
officer had a question about a process, he was invited to talk to the supervisors for explanations
and suggestions.
The company now sees the connections between all of their emissions/waste compliance
obligations and source reduction activities; they have "tied it all together." They will not allow
any new chemicals into the plant without prior approval from the environmental engineer and
compliance officer.
Because the company did not initially have the capacity (i.e., mode of inquiry and knowledge of
basic techniques), it was necessary for the EPA case officer to take a very technically involved
role hi the process. Today, the company does not need an external actor to play this role, they
now have the in-house capacity to pursue further pollution prevention. Prior to the complaint,
the company had one person in charge of environmental compliance, and compliance was only
one of his many responsibilities. Today, there are four people with environmental compliance
responsibilities—one full-time and three part-time.
b. Industrial Coater (1C)
Industrial Coater manufactures coated plastic film. In 1989,1C had projected sales of $20 million
and employed 150-170 people. The company is a wholly-owned subsidiary of a foreign
corporation. This parent corporation operates a coating research and development facility at the
same site. The research facility provides R&D support to Industrial Coater.
In August 1989, EPA issued a complaint against the company stating that they had failed to file
Form Rs for toluene and methyl ethyl ketone under EPCRA 313.
During the settlement process, the company proposed, and ultimately agreed to, implement a SEP
consisting of the reformulation of a toluene-based coating to a low or non-organic solvent-based
coating and alteration of the production process used to apply this coating to plastic film. The
settlement requires the company to reduce by, 90% the concentration of toluene {as compared to
dry chemical) in the coating and reduce by at least 50% the ratio of methyl ethyl ketone used in
cleaning to production volume. , , , ,
The current process of applying a coating to film involved the liquefaction, floating or dissolving
of a dry chemical in a solution with the solvent toluene. The new process will use a heat source
to melt the dry chemical mix to a point where its liquefaction will be sufficient for it to coat the
film without the use of toluene. The project will include the installation of two banks of high
IV-10
-------
intensity infrared heat lamps to flow the coating prior to curing, and to stabilize and dry the
coating on the plastic web. While solventless coating technology is not new in other industrial
applications, to the company's knowledge, this was the first attempt at solventless coating in this
niche of the coatings industry. i
The company expects the new infrared heat lamps to dry the product more quickly thereby
allowing them to increase the speed of the coating machine. With increased speed, the company
can produce the same quantity of product during fewer production runs; fewer runs means fewer
clean-ups; 1C estimates that this changes will enable them to reduce its use of methyl ethyl ketone
in cleaning by an estimated 50% of current levels, from 4,600 to 2,300 pounds of MEK per
million-feet of product. ,; >
' , " ' - I
The current solution of dry chemical and toluene applied as a coating consists of approximately
70% toluene and 30% dry chemical. Approximate levels of use in 1991 were 24,000 pounds of,
dry chemical and 56,000 pounds of .toluene. The proposed change to the process would,
assuming a constant level of production, reduce the level of toluene used by 90%, to 5,600
pounds annually, The amount of dry chemical used would remain the same.
The coating process currently uses an estimated total of 3.7 million Btus per hour, of which
approximately 525,000 Btus come from burning solvent and the balance (3.2 million Btus) from
natural gas. Approximately 3,500 cubic feet per hour of natural gas are currently used in the
process. The process also uses approximately 9.7 kw per hour of electricity. The project is
expected to eliminate the use of natural gas and the burning of solvent in the coating process.
It will, however, require an increase of approximately 190 kw per hour of electricity to operate
the infrared heaters. Because the project is expected to reduce gas and solvent energy use by the
equivalent of 1,080 kw per hour, the project is projected to reduce net energy use by 890 kw per
hour. I
The total cost of the project was>projected at $54,000, including $5,000 for development of the
new coating formulation done under contract by a consultant (Phase I), $25,200 for installation
and testing of new infrared lamps (Phase II), $19,000 for installation and testing of new coating
heating unit (Phase III). The CA/FO stipulated that the company shall expend not less than
$25,000 on the project. In consideration of the SEP, the penalty was reduced from $50,000 to
$30,000. . i
The company estimated the payback for this project to be 6 months to 2 years, including
approximately $800 saved per day in energy conservation alone.
In developing their SEP proposal, the company had assumed that they could use their existing
coating equipment to apply the new formulation. During pilot testing, they experienced problems
with this equipment and sought alternatives; as a result/they were not able to switch to the new
formulation in time to meet the SEP implementation deadline. The company asked for an
extension and EPA granted one. However, the company found it necessary to pay the penalty
and table the project because of seasonal, high production demands, and the time and
IV-11
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administrative pressures created by the SEP process. They are planning to re-initiate the project
in the near future since they consider it to be a "bonefide win-win situation" for the environment
and [their] enterprise.
The environmental benefits from this project derive from reductions in toluene and MEK use.
Based on the CA/FO Scope of Work, the quantity of MEK used would be reduced by 50%, or
2,300 pounds of MEK per million feet of product. Since the CAFO did not contain an annual
production figure, we are unable to estimate MEK reductions in pounds per year. Assuming a
constant level of production, toluene use would drop from 56,000 to 5,600 pounds annually—a
90% reduction. The amount of dry chemical used would remain the same.
Fugitive toluene and MEK air emissions are released into the plant and to the outdoor
environment in virgin and waste material handling and storage. Fugitive toluene emissions (i.e.,
emissions not captured by the thermal oxidizer) are also released from the coating process.
Toluene emissions from the coating operation may not be completely combusted in the thermal
oxidizer or may react under high temperature with other volatile materials in the coating to form
toxic substances. These emissions are released into the environment. Waste MEK solvent from
cleaning activities and waste coating containing toluene is sent to a hazardous waste incinerator.
By reducing the use of toluene and MEK, both fugitive and point source emissions from the
thermal oxidizer will be reduced. A reduction in fugitive emissions inside the plant will reduce
exposure of workers to these solvents. The reduction of MEK and toluene waste will result in
reduced hazards associated with transport of waste as well as reductions in emissions from
hazardous waste incineration.
Recently, the company has used the services of the state technical assistance office and was very
pleased with their service and the fact that they are separate from the regulatory process. They
now use the state office for technical advice and a private consultant for compliance audits.
c. Lid Manufacturer (LM)
The subject plant is one of several owned by a large manufacturing company. The plant
employees approximately 200 people in the production of metal lids with gaskets on four
production lines.
The company applied coatings containing VOCs in excess of limitations set forth in the federal
revisions to the State Implementation Plan under the Clean Air Act, Section 133d, and failed to
certify to EPA that its coating lines would either be exempt or in compliance with SIP emissions
limitations. The subject plant is located in a non-attainment area for VOCs. The complaint was
issued hi July 1992.
Prior to the implementation of the SEP, the company produced a gasket material by blending
rubber, heptane and other substances (the mixture is referred to as "compo"). Compo was coated
IV-12
-------
onto a metal lid and sent through curing ovens to drive off the heptane arid form the gasket. The
heptane vapors were pulled into a recovery system. Since this system operated at approximately
76% efficiency, almost a quarter of the heptane emissions (VOCs) were released to the
environment. j
i
The SEP consisted of the conversion of one of four production lines (constituting 1/3 of total lid
production) from the rubber and heptane-based gasket formulation to a new material containing:
PVC, BaSO4, dioctyl phthalate (DOP), soybean oil, CO2, and carbon black (the mixture is called
Plastisol). DOP--20% of the new formulation—is an organic plasticizer and is not listed as a
toxic substance under the Clean Air Act Amendments of 1990. The formulation does not contain
VOCs other than soybean oil which has a negligible vapor pressure. !
i
The conversion requires the modification of the gasket coating applicator and purchase of a new
curing oven. The company elected to equip the new process with a thermal oxidizer (afterburner)
to control air opacity if the Plastisol smokes in the drying oven. It was not necessary to modify
its coating formulation process or change its operation of the gasket coating process. The cost
of the SEP, according to the company's October 1992 estimate was $298,000, and includes the
purchase price of the curing oven, thermal oxidzer (18% of the total cost), and lid curing trays;
in addition to oven installation, lid curing tray R&D, modifications to and relocation of the dryer
front. i
i
The company estimated that heptane usage would decrease by 203 tons per year, resulting in a
reduction in VOC emissions of 50 tons per year. They projected a potential emissions rate of
particulates from manufacturing, natural gas usage and oven emissions of 3.65 tons per year, and
less than 1 ton per year of each NOx, CO, HC and SO2 from the new process.
I
!
The original penalty of $123,947 was reduced to $76,000 for good faith and to $38,000 for the
SEP. j
i
The company utilized a technical consultant who is a former employee of the state environmental
agency. Her knowledge of environmental regulations and the materials and techniques that satisfy
regulatory requirements was extremely beneficial to the company. Her main focus was technical
assistance for compliance, but she assisted in the design of the new system as well.
i
The company is working to ensure that all of their plants are in compliance with environmental
regulations. It held a compliance workshop for representatives of each plant to stress the
importance of environmental compliance. LM has a corporate environmental manager and each
plant has an on-site person who is responsible for plant environmental compliance.
i
The environmental benefit of the project is the elimination of 203 tons per year of heptane usage,
resulting in a reduction in VOC emissions of 50 tons per year. The subject plant is located in
a non-attainment area for VOCs.
i
The conversion may increase the plant's particulate emissions by 3.'65 tons per year from
IV-13
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manufacturing, natural gas usage and oven emissions, and less than 1 ton per year of each NOx,
CO, HC and SO2.
Plastisol contains PVC. Thermal decomposition products of PVC have been shown to cause
(1asthma"-like symptoms in workers who were heat sealing PVC films, although proper ventilation
and worker protection have tended to minimize toxic effects.1 This may be a concern in the
subject facility since the Plastisol gaskets are dried with heat.
Dioctyl phthalate (DOP) is one of a number of commonly used organic plasticizers which has
shown a low order of acute toxicity in laboratory animal trials2. In studies of teratogenic effects,
DOP and other esters of Phthalic Acid showed deleterious effects on the developing embryo
and/or fetus although DOP was considered one of two of the least toxic esters of the eight
phthalate esters evaluated in this study.3 Barium sulfate, an insoluble form of barium metal has
been found to be non-toxic owing to its inability to absorbed by the body.4
d. Medical Device Manufacturer (MDM)
MDM is a medical device manufacturer that is highly regulated by the FDA. In 1991, MDM
generated more than $50,000,000 in annual sales from several manufacturing facilities. Today,
through acquisition of several small companies, sales are considerably greater. At the time of
violation, the subject plant employed approximately 100 people.
MDM failed to file Form Rs for xylene, trichloroethane and trifluoroethane. They agreed to
include a SEP in their settlement with the agency and, as a result, the agency lowered their
penalty from $31,350 to $24,000.
i
The medical device manufactured in the subject plant is degreased and sterilized using freon. At
the time of the agreement, the company used approximately 16,000 pounds of freon per year.
For their SEP, the company agreed to engineer and test deionized water degreasing machinery
to determine if deionized water can be used in place of freon. If the testing demonstrated that
the new machinery is effective, the company will purchase, install and calibrate the machinery.
If the new machinery is not effective, the company will either stop manufacturing products that
require the use of freon, or pay an additional penalty.
1 Casarett and Doull's Toxicology: The Basic Science of Poisons. Doull, J., Klaassen, C.D., and
Amdur, M.O. (ed.) New York, New York: Macmillan Publishing Co., Inc., 1980, page 551.
2 ibid, page 547
3 Ibid, page 549.
'• Ibid, page 438.
IV-14
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The deionized water system uses a two-step cleaning process. First the product is washed with
deionized water and detergent; second, it is rinsed with deionized water in an ultrasonic bath.
The vendor has sold this system, with and without ultrasonic cleaners, for degreasing computer
chips in clean room environments.
The cost of the project is approximately $80;000, including second-stage testing, design
engineering and equipment purchase. The project is not considered to be economically beneficial
to the company; it is favorably regarded by the Division Head for its environmental father than
economic benefits.
The SEP stipulates that the company will incur no less than $10,000 for engineering and testing
of deionized water process machinery and not less than $65,000 to purchase, install and calibrate
machinery (unless they choose to discontinue production of products that use freon).
The company required FDA approval prior to changing their manufacturing process. This
requirement complicated the negotiation process—the company was able to test the new process
but had to submit the test data to the FDA prior to implementation and wait for FDA approval.
This additional step made it difficult for the company and EPA to structure the agreement, and
particularly to develop the implementation schedule. The CA/FO had to be designed to give the
company an alternative to implementing the deionized water process in the event that: (a) the
tests were unsuccessful, (b) their process change proposal was rejected by FDA, or (c) FDA
approval was not received prior to the SEP deadline. In addition, the time line had to be
sufficiently long (16 months), and structured in several steps, to allow for the FDA approval
process.
The company undertook the second stage evaluation, as outlined in the SEP, and considered the
new system to be a technical success. However, for two reasons they have chosen not to
purchase the equipment and to pay the stipulated penalty. First, the subject facility is scheduled
to close in February of 1994. The company is moving its operations to another plant. Second,
the company is in a long and complex FDA product approval process and the submission of a
request to modify their process at this time could jeopardize the entire approval.
MDM's engineering group has advanced the deionized project to a point where they have shown
that it can work well on their products. The engineer that had worked on this project in the
subject plant will be transferred to the new site and will work to secure FDA approval for the
deionized system on that production line. This line will use a freon-based degreasing system until
FDA makes a decision.
If the company had implemented the deionized water system in the subject plant, the SEP would
have accelerated the elimination of Freon in this facility. The company, however, is planning
to pursue FDA approval for the deionized system in their new facility, based in part on the
research and development conducted under the SEP. The SEP, therefore, may have had the
effect of accelerating Freon reduction in the new facility. Additionally, the deionized water
equipment vendor may be able to use the results of its evaluations on the company's product in
IV-1.5
-------
other applications and for other Companies. To this extent, there may be future technology
transfer benefits associated with this project.
e. Metal Filing Manufacturer (MFFM)
MFFM employs 65 factory workers in the manufacture of steel filing equipment and steel
shelving, using a thermal setting paint resin on an automatic electrostatic paint line. Paint
overspray is captured by filters and cardboard on the floor of the spray booths. This waste and
straight paint waste are considered hazardous wastes. When these wastes are dried in a curing
oven they are no longer considered hazardous waste; just as the products painted and dried are
not considered hazardous waste. Therefore, this company and many others like it sought to
reduce their hazardous waste disposal costs by drying their paint wastes. Under RCRA, this
activity is considered waste treatment and in October 1991, the company was cited for conducting
this activity without a waste treatment permit.
The company agreed to a SEP which required them to investigate, and insofar as practicable
implement several identified process changes in an amount not less than $218,000. The company
committed to, and ultimately implemented, the following: installation of an on-site solvent
recycling system, installation of a baffle collection system for paint overspray in their electrostatic
sprayer, installation of unproved paint collection systems in paint bays and electrostatic sprayer
to prevent overspray from collecting on floor, installation of paint drum agitators and pumps for
nonstandard color paint transfer, improvement of spray efficiency of the electrostatic sprayer and
hand held spray guns, and continuous training of painters and operators in efficient painting
techniques.
As agreed to in the SEP, the company instituted several administrative measures, including:
development of a pollution prevention policy, promotion of plant engineer to vice president for
manufacturing and environmental quality to carry out the pollution prevention policy and
Program, training of all plant employees on pollution prevention strategies and opportunities for
waste reduction, attendance by management personnel at pollution prevention seminars for the
industry, development of an inventory control system, improve the spray efficiency of the
electrostatic sprayer and hand held spray gun, and continuous training of painters and operators
in efficient painting techniques.
The original penalty was reduced from $360,000 to $330,000 as a result of a downward
recalculation of the willfulness/negligence component of the penalty, and to $93,130 for the SEP.
All capital projects implemented under the SEP were completed in beginning of June 1993. It
is too early to tell whether the projects are economically successful. The President has not seen
any payoffs so far from these changes although he thinks they may payoff in the future. He
thinks that they are reducing pollution to a small extent.
IV-16
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/ Metal Finishing Company (MFC) \
\
MFC manufactures solid cast brass nuts and bolts and chrome plated tubular plumbing supplies.
In 1991, they employed approximately 80 people and sales were in the range of $18 million. The
company operates one nickel and chrome plating line. They discharge directly, after treatment,
to a canal with low water flow.
Prior to the SEP, the company generated a variety of hazardous wastes: metal hydroxide sludge
(F006) and spent alkaline solution (which were manifested as characteristically hazardous for
chromium and lead), and lead contaminated polishing waste and spent chromic acid. The facility
is a treatment, storage and disposal facility (TSDF). !
i .- •
The company was found to be out of compliance with several requirements under RCRA,
including: failure to properly close hazardous waste storage containers of oil and alkaline
solutions from machine shop and chromic acid from plating area; failure to label hazardous waste
containers of lead contaminated polishing dust, mixed oil and alkaline solutions, and chromic
acid.
After the EPA inspection, the V.P. of Operations learned of EPA's SEP policy in a class that he
attended on environmental compliance and pollution prevention. This class is sponsored in part
by the state's technical assistance program. He decided to propose a SEP to EPA that would
eliminate the activities that contributed to the company's violations. The SEP proposed by the
company consists of significant modifications to the company's automatic plating line to reduce
the generation of lead contaminated polishing dust waste and to convert from hexavalent to
trivalent chromium plating solution. At the request of the EPA negotiators, the company agreed
to implement a second SEP which was a measure designed to collect lead containing polishing
dust waste more effectively.
In order to reduce the generation of lead contaminated polishing dust waste, the company
replaced the existing nickel tank with a longer tank. The longer tank, plus an increase in the part
cycle time, is designed to improve the surface finish of the part so that a larger percentage of
parts do not need polishing to achieve satisfactory chrome plating. Prior to the SEP, the
company generated 77 cubic yards of polishing dust waste annually. The reduction in polishing
was designed to reduce generation of polishing dust by 65 to 85%, and to decrease the lead
content in the dust. The change was projected to increase the company's use of nickel by 130%,
from 5,500 to 12,650 pounds per year.
!
To reduce the generation of metal hydroxide sludge, the company proposed to convert the chrome
bath from hexavalent chromium to trivalent chromium. The company generated 16,700 gallons
of F006 metal hydroxide sludge from its nickel and chromium plating operation prior to the SEP.
They projected this change to reduce the proportion of solids in the waste stream (metal
hydroxide sludge) by 33% and reduce metal hydroxide sludge generation by 5,500 gallons per
year.
IV-17
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Prior to the SEP, the company generated approximately 330 gallons of chromic acid per year
during their annual clean up and disposal of the chrome plating tank—a source of one violation
alleged in the complaint. The switch to trivalent chromium eliminates this activity and the
resultant wastestream. In addition, the elimination of hexavalent chromium decreases their use
of sulfur dioxide which is used to reduce hexavalent chromium in the waste water treatment
process.
The company estimated that the lengthening of the nickel tank and conversion to trichrome (i.e.,
the first SEP) would cost $167,149, take two to four weeks to implement, and would require the
company to invest $70,000 in inventory to supply their customers while the conversion is under
way. The company was required to spend not less than $165,000 (including capital, design and
engineering labor costs, and construction labor) on these two components of the SEP, according
to the CA/FO. The actual cost, determined after implementation, was $244,110. The estimated
cost for the second SEP (i.e., the dust collection system) was $5,400; the actual 'cost was $5,173.
The original penalty was set at $325,000, was revised to $150,900 as a result of documentation
and affidavits provided by the company. The final penalty was set at $23,300 in consideration
of the two SEPs.
The company projected a net yearly positive operating cash flow of $4,000 in the first year of
full operation.5 This includes a reduction in hazardous waste disposal costs of approximately
$29,000 per year and a reduction in chromic acid costs of $1,000 per year. Increased nickel and
utility costs (100% increase due to increased cycle time and size of nickel bath) were projected
at $38,000 and $2,000 per year, respectively. By planning to reconfigure product holding racks,
the company did not project a slow down in output or increased labor costs.
Finally, at the request EPA, the company agreed to modify their polishing dust collection system
by the constructing a fixed sheet metal waste collection unit that, when closed, provides
secondary containment around fifty-five gallon storage drums. This system is intended to provide
additional protection to the environment which is beyond the requirements of existing law and
regulations. The company was required to spend not less than $5,000 on these modifications.
The SEP promised a 65 to 85% reduction in the generation of polishing dust waste. The
company has cut its waste by 83 - 85%. By reducing the generation of lead contaminated
polishing dust and the lead content in the dust, the SEP reduces worker lead exposure and
disposal of lead and nickel waste generation. However, the company accomplished this by
increasing its use of nickel and electricity and consequently their associated environmental and
resource utilization impacts.
The switch from hexavalent chromium to trivalent chromium, results in several environmental
and worker health and safety benefits. First, less chromium is used in trivalent chrome systems
5 This calculation included depreciation. However, the agreement subsequently reached prohibited the
company from depreciating its capital costs for the SEP. When recalculated omitting depreciation, the net yearly
operating cash flow is reduced to-$10,000.
IV-18
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than in hexavalent systems (their trivalent chromium bath is 1/30 as strong,as their former
hexavalent bath and is considered about 1/10 as toxic). In addition, the trichrome process has
decreased their F006 metal hydroxide sludge generation by,about 2/3. This has the benefit of
reducing environmental, public and worker health and safety impacts all along the lifecycle of
the product: chromium extraction, processing, transportation, use in plating, and ultimate.product
disposal. • , ;, , --?.
Hexavalent chrome has been shown to cause adverse health effects in workers. While hexavalent
.is considered more harmful, health effects from trichrome have not been well researched or
documented. Trivalent baths have a higher pH than hexavalent and thus pose less of. an acute
hazard to workers when bath materials are handled. In addition, trivillent chromium systems
produce less hazardous chromium hydroxide sludge waste, eliminate the need for annual cleanup
and disposal of chromic acid bath, and elimination of use of sulfur dioxide in wastewater
treatment
i
The company thinks that the change to trivalent chromium is in their long term interest. They
believe that regulations are getting tighter and that all companies will eventually be required to
eliminate hexavalent chromium from their process. They feel that they have an advantage over
companies who have not yet made this change—trivalent technology may get more expensive and
they will have the experience of operating the system. The company instituted three major
changes in its operating procedures as a result of the enforcement action and SEP. First, they
set up a chemical laboratory to monitor and maintain proper plating bath chemistry. Second,
the Vice President takes an "environmental compliance" tour of the facility every six weeks; the
President participates in every second tour. Third, the company will not bring new chemicals
into the plant without: a thorough review of the Material Safety Ejata Sheet (MSDS) for each,
consideration of the type of waste that will be created by the use of the material, and
consideration of how the waste will have to be handled if the material is used. If the material
will pose problems in waste management and/or disposal, the company will not purchase the
material: = . i
While the company did not use the state technical assistance program prior to or during the SEP
process, they are working with them now and are satisfied with their assistance.
g. Metal Machining Company (MMC)
, ' - ' '• ' -:"''!,".
'MMC is a plant owned by a multinational corporation; the plant employs 1,000 people and
generates sales of about $200 million per year. The company produces engineered pump
components from metal and ceramic materials using machining and lapping6 equipment.
In April of 1990, a EPA issued a complaint stating that MMC failed to file Form R's in 1988
A process designed to accurately refine the surface of parts using abrasive, rotating plates.
iv-19 :
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for phosphoric acid; 1,1,1 trichloroethane; xylene; methyl ethyl ketone under EPCRA 313. In
October 1991 the company signed a CA/FO agreeing to implement a SEP. In consideration of
the SEP and good faith efforts, the-original assessed penalty was reduced from $76,000 to
$11,400.
Prior to the SEP, the company utilized 1,1,1 trichloroethane (abbreviated 1,1,1) solvent immersion
cleaning units for the majority of both in-process and final cleaning operations. Cleaning is done
for both functional and aesthetic reasons. The SEP consists of several changes to a subset of
the company's parts cleaning systems designed to reduce the amount of 1,1,1 used by 130,000
pounds per year. MMC agreed to spend no less than $201,000, by September 30, 1991, to
retrofit a 1,1,1 degreaser used on non-metal lapped parts to reduce organic solvent use and
emissions (estimated reduction in use of 1,1,1 of 3,000 gallons per year); and purchase, install
and test equipment to switch from organic solvent to semi-aqueous-based cleaning of ferrous and
non-ferrous metal parts.
The primary environmental benefit of this project is the reduction in the use, emission and
disposal of 1,1,1 trichloroethane~an ozone depleting substance. 1,1,1 is also a central nervous
system depressant7 and is therefore hazardous to workers. Since emissions within the plant will
be reduced, the project will have a positive effect on worker health. Since 1,1,1 is slated for
phase-out under the Montreal Protocol, this and many other companies have been working toward
the elimination of this ubiquitous and effective cleaning solvent. The SEP has accelerated the
company's reduction and ultimate elimination of this substance.
In addition, the company conducted extensive evaluations of aqueous and semi-aqueous cleaning
systems at a tune when there was relatively little field experience with this technology. This
project has paid-off hi several ways: in-plant 1,1,1 reductions; transfer of knowledge and
experience to other parts of the plant, other plants, and repair shops owned by the company;
transfer of knowledge and experience to other companies invited to examine the equipment and
talk to plant technical staff; and education of the manufacturers and vendors of cleaning systems
that plant personnel dealt with during the course of their cleaning system evaluations.
The company considers the return on investment (ROI) for the project to be good, particularly
given the rising cost of 1,1,1s. 1,1,1 use in the plant has been reduced from 30,000 to 17,000
gallons per year.9
Ibid.
* 1,1,1 trichloroethane is an ozone-depleter and is being phased-out under the Montreal Protocol. Phase-out
is scheduled to begin in 1994 and prices for this widely-used solvent have been escalating.
' This converts to approximately 300,000 and 170,000 Ibs per year (based on a specific gravity of 1,1,1 of
1.3390), for a reduction of 130,000 Ibs per year of 1,1,1'trichloroethane.
IV-20
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There are about 43 other MMC plants and maintenance shops. All of these plants are moving
to eliminate the use of 1,1,1, in part because of the work done at the subject plant. Other plants
have contacted the subject plant's plant engineer for information on alternatives. Some plants
have already eliminated 1,1,1.
The company has recently engaged the services of a consulting branch of a organic solvent
manufacturer to help them convert their remaining 1,1,1-based cleaning systems over to non-
organic solvent systems. They chose this company because they are a manufacturer of 1,1,1 and
other organic solvents used for cleaning and they specialize in cleaning operations. The
manufacturing engineer is not satisfied with the consultants because they proposed a very
expensive new cleaning system and the engineer does not trust that they are providing complete
information. Therefore, the company is conducting their own investigation of the systems that
the consultants have suggested as well as other alternatives.
h. Powder Metallurgy Manufacturing Company (PMMC)
PMMC uses brass, steel, stainless steel, and metal alloy powders to produce machine screw nuts,
steel structural and special parts, and steel fasteners. Powder metallurgy technology produces
precision parts that require little or no secondary machining. The company has 50 employees
and sales of between $5-6 million per year. The company is a member of the Metal Powder
Industrial Federation~a federation of four trade associations. There are about 140 similar
companies in this country.
In 1989, the company was cited with failure to file Form R's under EPCRA 313 for the reporting
year 1987, for copper, chromium, trichloroethylene, and ammonia. |
Prior to the SEP, production of a finished part typically included the following steps: (1)
compaction of metal powder in a mold to create "green" parts, (2) sintering of "green" parts in
electric ovens in either a disassociated ammonia (hydrogen-nitrogen) or methanol/nitrogen
atmosphere to prevent oxidation and corrosion, (3) burnishing of sintered parts to remove excess
metal and provide a smooth finish, (4) brightening of brass parts with chromic acid, (5) drying,
(6) resin impregnation for corrosion prevention, (7) tapping (thread cutting) of brass parts using
a water soluble cutting fluid or a heavy black sulfur oil cut with kerosene, (8) water washing to
remove the tapping fluid, (9) vapor degreasing with trichloroethylene in a vapor degreaser.
In their settlement with the agency, the company agreed to implement a SEP costing $78,300.
The SEP consisted of five components: an environmental audit ($4,350), the implementation
of a blended hydrogen/nitrogen sintering atmosphere system to eliminate the use and storage of
anhydrous ammonia ($50,598), decontamination and replacement of an existing 10,000 gallon
anhydrous ammonia storage tank, with a 1,000 gallon tank ($2,400), elimination of a
trichlorethylene vapor degreaser by switching from an oil-based tapping fluid to a water-based
alternative ($500), and the implementation of a closed loop cooling system for non-contact
furnace water which will reduce the discharge of non-contact cooling water to the POTW and
IV-21
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conserve water ($20,451).
By switching from ammonia to blended hydrogen/nitrogen gases, the company eliminated the use
of 1.5 million pounds per year of ammonia and the threat of a catastrophic release of ammonia
gas. By eliminating the trichloroethylene vapor degreaser, the plant cut approximately 26,860
pounds per year of fugitive trichloroethylene air emissions. Trichloroethylene is an ozone
depleting substance, targeted for phase-out under the Montreal Protocol. In addition, the company
significantly reduced its generation of waste oil by switching to a water-based coolant. The
company generated 1,600 gal per year of waste oil prior to this change.
According to the company, the projects implemented under the SEP are expected to payback in
the "long run"~5 to 7 years.
While not included as part of the CA/FO, the company also eliminated their chromic acid-based
brightening process. This action eliminated the chromic acid treatment sludge generated in this
process. In addition, through a series of energy conservation projects, the company has cut its
energy costs by $4,000 per month.
In consideration of the SEP, the agency reduced the company's fine from $76,000 to $30,550.
The company was required to implement all components of the SEP within a 360 day time line.
The projects implemented under the SEP policy had been considered by various members of the
company prior to the issuance of the complaint. The SEP process was the impetus for their
implementation.
Through the process of implementing "environmental investments" under the SEP, the company
President has "changed his thinking" about "environmental investments." He realized that
environmental standards are going to get tighter and decided that instead of trying to keep up
with them, it is better to lead them. He decided to eliminate trichloroethylene, chromic acid and
ammonia. While it has not been easy, the company has been able to move away from certain
hazardous operations and these changes have been economically and environmentally sensible for
the company.
The President believes that a vision of cultural change must come from the top. He is trying to
apply TIM principles to productivity, quality, environment and worker health and safety.
/. Pump Service and Sales Company (PSSC)
The subject facility is one of several owned by a large, diversified holding company. The plant
markets, sells and services pumps manufactured by a sister plant. Pumps received for repair by
the plant must be decontaminated and degreased for service and testing. As a result of PSSC's
failure to file a Form R for Freon (under EPCRA 313), the company entered into a Consent
Agreement and Order with EPA on October 1991.
IV-22
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Prior to the Consent Agreement, the company was using freon for decontamination and
degreasing. The company had begun efforts to reduce Freon use in late 1988 with the purchase
of a soap and water-based spray washer for some decontamination of its pumps. In the their
settlement, the company agreed to reduce, by not less than 66%, its December 1990 Freon use
rate in connection with its pump repair processes both at the subject facility and at a second
facility owned by the company. :
The SEP consisted of two phases: the first phase consisted of the installation at the subject
facility of two semi-aqueous cleaning units, each of which includes an in-line particulate filtration
system, and the conversion of the facility's existing ultrasonic finishing system from a freon-
based system to an agitation/filtration system utilizing a biodegradable cleaning agent. The
second phase consisted of the installation at a second facility, in a different state and EPA region,
two semi-aqueous cleaning units of the same type as described above.
The company estimated the cost for the two plants to be $69,475, including $56,475 for
equipment and $13,000 for installation. The Original penalty was reduced from $17,000 to
$8,500.
The environmental benefits associated with the project is the elimination of the use of Freon 113,
an ozone depleting chemical, at two plants-the subject facility and another facility in another
state and EPA region. While the company agreed to a 66% reduction in Freon, the project
resulted in the complete elimination.
According to the Material Safety Data Sheets (MSDS), the cleaning agent contains: 1-T-Butoxy-
2-Propanol, Dipropylene Glycol 1 Monoethyl Ether, and Monocyclic Terpene Hydrocarbons.
While animal studies conducted by NIOSH has found that certain glycol ethers10 are fetotoxicants,
such evidence has not been found for Dipropylene Glycol Monoethyl Ether. Monocyclic terpene
hydrocarbons are a class of plant-based materials which many companies are turning to as an
alternative to chlorinated organic solvents. Recent discoveries, however, have linked water
effluent containing terpenes with ecotoxicty. |
Through the SEP, the company has completely eliminated their freon use. The project had an
8 month payback period and the company estimates that it has saved them between $300-
$400,000 over the past four years.
10 Ethylene glycol monomethyl ether (EGME), ethylene glycol monoethyl ether (EGEE) and their acetates.
Based on evidence of fetotoxicity in animals, for these glycol ethers, OSHA has proposed a downward revision in
the TLV for certain glycol ethers from 100 to 0.1 ppm.
IV-23
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2. Injunctive Relief
a. Bleached Kraft Pulp Mill (BKPM)
BKPM is a manufacturer of bleached kraft pulp from woodchips.
In July 1991, the Company entered into a Consent Decree with EPA and a citizen's group to
come into compliance with chronic toxicity limits under the Clean Water Act and to minimize
potential impacts of effluent on recreational users. The CA/FO required the Mill to study a range
of potential remedial measures (including fluent treatment systems and in-plant process changes)
and propose to EPA a measure(s) to bring the Mill into compliance with chronic toxicity limits
under the Clean Water Act. In addition, the mill was required to construct an outfall extension
pipe capable of ensuring that the surf zone will be essentially free of mill effluent.
The mill conducted a variety of effluent treatability studies, trials involving different levels of
chlorine dioxide substitution and use of hydrogen peroxide, and five full-scale trials of totally
chlorine-free (TCP) bleaching. The mill assessed the environmental benefits (e.g., chronic
toxicity, dioxin levels and AOX11; and effluent color), pulp quality, and production cost
differentials during each trial. Based on information generated during treatability studies and
bleaching trials, chose to propose the TCP pollution prevention project highlighted here. This
remedial measure, as well as the construction of an extended outfall pipe and a system for steam
stripping of condensate from digesters and black liquor recovery system12 was agreed upon, in
a second Consent Order (signed by company in September 1992), as the means by which the Mill
would come into compliance with the chronic toxicity limit established in the Clean Water Act
and improve surf zone water quality for recreational use.
The pollution prevention project consists of the total elimination of chlorine in pulp bleaching.
The Mill will eliminate their use of both elemental chlorine and chlorine dioxide and substitute
other process steps. In the new process, the pulp will be bleached with hydrogen peroxide and
oxygen, rather than chlorine and chlorine dioxide. Anthraquinone will be added to the digester
to increase lignin removal. The Mill's conversion to chlorine-free bleaching will also include
the re-routing of bleach plant wastewater from the sewer to the oxygen delignification system and
ultimately to the black liquor recovery cycle and incineration in the recovery boiler. As a result,
the organic materials (BOD) in the bleach plant effluent will be removed from the wastewater
stream and burned for energy in the recovery boiler.
The conversion requires the construction of new chemical storage tanks and replacement of
certain equipment such as pumps, chemical mixers, piping and possibly corrosion-resistant linings
in retention towers (to handle different bleaching chemicals). The project must be completed in
A measure of chlorinated organic compounds.
Condensates contain toxic materials that, in part, end up in discharged effluents. Steam stripping removes
most of these materials for wastewater streams.
IV-24
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September 1995. The cost of the project is not available.
From the Mill's standpoint, the advantages of eliminating chlorine were improvements in
environmental quality, occupational health and safety, public health and "psychological comfort".
This strategy results in maximum reductions in chlorinated organic compounds, color, odor, foam,
and contact irritation for a wide array of Mill constituencies: beach walkers, surfers, kayakers,
and anglers. During the first trial they realized that the Mill was a more hospitable place without
the use of chlorine and chlorine dioxide. This translates into worker health and safety
improvements (e.g., eliminating the occasional acute hazard of inhalation of high concentrations
of chlorine and chlorinated byproducts) and reduced public health hazards associated with the
elimination of chlorine transport and storage. i
I • •
The Mill will benefit economically from TCP pulping through savings in such things as: worker
safety training and safety equipment purchases (e.g., self-contained breathing apparatus),
expensive metals needed to provide resistance to the corrosive properties of chlorine), expensive
corrosion-resistant plastic, and paint films (chlorine is inhospitable to paint). During a recent
two-week run, the Mill saw improvements in operating costs, but it is still more expensive to
product TCP pulp than the normal chlorine bleached product.
A key factor in considering chlorine elimination was market demand for TCP pulp. The mill is
not able to achieve maximum pulp brightness, as seems to be required by a large share of the
bleached kraft pulp market. In some U.S. markets, in Germany, and in other parts of the world,
TCP pulps are in demand because of the environmental concerns associated with chlorine
bleaching. The Mill has not fully developed a marketing strategy. They have located end-users
for whom chlorine use or chlorine content in the final .product is a concern. They are promoting
the use of TCP pulp to governmental and institutional purchasing agents.
As a result of this experience, the company has changed the way it approaches regulatory matters.
Although they have traditionally involved technical personnel early in the process, they will seek
to involve these personnel in initial discussions with Regulatory Agencies and bring attorneys in
later on in the process. In this way, the company believes that they can have more productive
discussions about the technical aspects of the project and then negotiate a final agreement.
C. CASE COMMENTARY AND ANALYSIS j
i
1. SEPs versus Iniunctive Relief |
I
Of our ten case studies of pollution prevention in enforcement, only one case involves pollution
prevention as a means to come into compliance (i.e., injunctive relief). The other nine cases
involve SEPs. As we discussed in Section II, our case study selection criteria were not inherently
biased toward SEPs; rather we sought innovative, somewhat unique pollution prevention projects
from among our sample population of both SEPs and injunctive relief cases. One case that we
selected, Bleached Kraft Pulp Manufacturer (BKPM), was the only injutictive relief case reported
that contained a pollution prevention compliance strategy. We selected it because the pollution
IV-25
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prevention project-elimination of chlorine in kraft pulp bleaching--was innovative and had great
technology transfer potential. (In Section V, we discuss why pollution prevention is not
commonly used as injunctive relief).
2. Companies
Since our selection of case studies was made largely on the basis of the nature of the
technological change, the distribution of company type and size are an artifact and not criteria
of, our selection strategy. Our sample is dominated by metal products manufacturers (six out of
ten companies). Considering that many processes used by these manufacturers are
environmentally problematic (e.g., metal plating, painting, and degreasing), and that historically,
a great deal of attention has been focused on pollution prevention in these industries, the
dominance of these firms in our sample is not surprising. The other four case study firms
represent a rather broad array of industries: plastics coating, medical device manufacturing, pump
service and sales, and bleached kraft pulp production.
With regard to size, three case study firms-MFFM, MFC, and PMMC--are single plant
companies ranging from 50 to 80 employees. Two case studies-IC and PSSC-involve small,
autonomous divisions of larger holding companies. Four case studies-CMPM, LM, MDM, and
MMC--involve small/medium-sized plants (100 to 1,200 workers) that are owned-by medium-
sized, multiplant companies. The injunctive relief case--BKPM--is a large manufacturing plant
owned by a large corporation.
3. Nature of the Violation (Regulatory Program')
Of our ten case studies, five arose out of violations of Form R reporting requirements under
EPCRA, Section 313; two stem from CWA violations; one from a CAA violation; and one from
RCRA. The predominance of EPCRA cases in our study sample reflects the relatively large
number of pollution prevention SEPs in the larger sample population that were negotiated in
EPCRA 313 settlements. There are several reasons why the majority of SEPs have arisen in
EPCRA cases. EPCRA violations occur in companies that are using or producing toxic chemicals
(so called 313 chemicals). In recent years, pollution prevention efforts within and outside the
agency have focused heavily on the elimination, reduction or recycling of toxic substances (e.g.,
EPA's 33/50 Program). Thus, EPCRA cases tend to be natural candidates for pollution
prevention SEPs. This is particularly true for companies using chlorinated organic solvents that
are slated to be phased-out under the Montreal Protocol and amended U.S. Clean Air Act.
Spurred by the London Amendments (1990) to the Montreal Protocol, the amended U.S. Clean
Air Act established a phase-out of CFC-113 (also called Freon) and 1,1,1-trichloroethane (also
called TCA or 1,1,1) in the years 2000 and 2002, respectively. HCFCs will be banned between
2020 and 2040 or earlier as spelled-out in the London Amendments. As these dates approach,
the costs of these materials are increasing and, as a result, the alternatives are becoming more
economically favorable. Numerous, relatively low-cost aqueous or semi-aqueous systems are now
widely available. A switch to these alternatives typically poses relatively low or no technological
IV-26
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risk to the firm13 and may save the firm considerable amounts of money.14 These features are
motivations for both the firm and the agency to negotiate SEPs into these cases.15
Finally, according to one regional attorney, since the penalty assessed for 313 violations constitute
"gravity" only, and not "economic benefit" (because there is no economic benefit to be gained
by not filing a Form R), a large percentage of the penalty can be used to leverage a SEP.16
4. Original and Final Penalties. Project Cost and Payback
Table 4-2 summarizes the penalty information and pollution prevention project costs for the nine
SEP case studies. Penalty reductions granted for SEPs range from $7,350 to $237,000. In seven
of nine cases, the penalty reduction leveraged a significantly greater pollution prevention
expenditure by the firm. One notable case is LM which expended $298,000 to reformulate their
lid gasket material for a penalty reduction of $38,000. In one case, MFC, the cost of the
pollution prevention project was 25% higher than the penalty reduction.
13 FDA-regulated firms, such as pharmaceutical and medical device manufacturers, are a notable exception.
In these cases, manufacturers must obtain FDA approval to switch from solvent to aqueous-based cleaners (FDA
regulates product and process). The approval process can take several years and can be very costly. Therefore, these
firms tend to choose solvent recycling strategies rather than chemical substitution since recycling does not generally
require FDA approval. ;
14 The SEP policy contains a limitation on projects that represent a "sound business practice",' i.e., capital-or
management improvements where the firm, rather than the public, is likely to receive the substantial share of the
benefits. However, this limitation can be waived only for pollution prevention projects having significant
environmental benefit (SEP policy, page 9). ;
15 Region V Attorneys and Case Officers offered several other reasons for the preponderance of 313 SEPs.
The EPCRA 313 reporting requirement is relatively new (since 1988); it virtually "grew up" with the Agency's
initiative to include SEPs and pollution prevention in enforcement agreements. According to a Case Officer m the
Region's Pesticides and Toxic Substances Branch (housing the TSCA and EPCRA programs), company attorneys
and private law firms are as unfamiliar with 313 as they are with SEPs, and it is easier to couple SEPs with 313
settlements than with settlements arising out of other regulatory programs.
16 According to the SEP Policy, only the gravity portion of the penalty can be mitigated by the SEP (refer to
Section I).
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Table 4-2. SEP Case Study Original and Final Penalties, and Project Costs
Company
CMPM
1C
LM
MDM
MFFM
MFC
MMC
PMMC
PSSC
Original Penalty
$ 95,000
$ 50,000
$123,947/$76,000*
$ 31,350
$360,000/$330,000*
$150,900
$ 76,000
$ 76,000
$ 17,000
Final Penalty
$30,000
$30,000
$38,000
$24,000
$93,130
$23,300
$11,400
$30,550
$ 8,500
Penalty
Reduced for
SEP
$ 65,000
$ 20,000
$ 38,000
$ 7,350
$218,000
$127,600
$ 64,600
$ 45,450
$ 8,500
Project Cost
not avail.
$ 54,000
$298,000
$ 80,000
$218,000
$249,000
$201,000
$ 78,300
$ 69,475
*First number is original penalty. Second number reflects a reduction for good faith.
We obtained payback information from case study firms during our interviews. In one case,
MFC, we acquired a copy of the company's profitability analysis which they had submitted to
EPA during their SEP negotiations. Our data are a mixture of numerical payback estimates and
qualitative impressions of project profitability. In some cases we were unable to gain this
information, either because it was too soon for the company to know (MFFM) or because they
considered this information to be somewhat sensitive (LM).
Project payback ranges from a very profitable 8 months ($300-400,000 saved over a four year
period) to a less profitable 5-8 years. Projects that involve the reduction or elimination of ozone-
depleting chemicals seem to be more profitable than others because the cost of these organic
solvents is steadily increasing as the final phase-out date approaches.
It is important to note that profitability analysis of pollution prevention investments is highly
subjective. In particular, companies tend to omit certain financial benefits of pollution prevention
projects, such as avoided liability and regulatory costs, because these costs are difficult to
estimate and are speculative. Therefore, caution should be exercised in drawing conclusions from
reported payback data.
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5. Environmental and Human Health Benefits I
There are two categories of environmental benefits that arise from pollution prevention SEPs and
injunctive relief projects. The first category constitutes environmental benefits directly
attributable to the SEP or injunctive relief project; these benefits are the subject of this section.
The secondary category consists of the indirect benefits from pollution prevention implemented
"beyond" the enforcement settlement which were leveraged by the SEP/injunctive relief either
through technology transfer within/outside of the firm, or through organizational change within
the firm. While the former is easier to measure and evaluate, the latter may be significant and
should not be overlooked. We address indirect benefits in the section on technology transfer
below. !
I
To evaluate environmental benefits of pollution prevention, used as a means to compliance, i.e.,
injunctive relief, we can analyse the absolute benefits of the project and the benefits relative to
the technology that the company might have implemented had they not chosen a preventative
strategy. In the case of BKPM, the absolute benefits of eliminating chlorine are quite significant,
'they include: the elimination of chlorinated organic compounds from wastewater; reductions in
wastewater color, odor, and foam; elimination of worker hazards associated with chlorine and
chlorine dioxide; and public health hazards associated with the elimination of chlorine transport
and storage. In addition, by eliminating chlorine, the mill can cycle bleach plant effluent into
their black liquor recovery system to recover energy and pulping chemicals from bleach plant
effluent and reduce BOD in discharged effluent. i
When considering how to meet the wastewater toxicity limits in their Consent Decree, BKPM
initially considered increasing chlorine dioxide and hydrogen peroxide substitution of elemental
chlorine-process changes that constitute preventative strategies for reducing chlorinated organic
compounds. In addition, they considered conventional secondary wastewater treatment and non-
traditional treatment technologies (e.g.coagulation/precipitation, ultrafiltration, and catalyzed
ultraviolet light treatment). The mill's chosen strategy appears far superior on environmental,
occupational/public health grounds to both the alternative prevention strategies and the treatment
alternatives. The TCP option will eliminate rather than simply reduce chlorinated orgamcs in
effluent, will eliminate chlorine hazards to workers and the public rather than reducing them
under the other prevention options -- or having no effect under the treatment strategies.
To evaluate the environmental benefits of pollution prevention SEPs,' we can also consider the
absolute benefits of the project and the benefits relative to a hypothetical scenario of the
settlement without a SEP. The environmental benefits of SEPs-summarized in Table 4-1 and
in more detail in the full case studies (Appendix B)~are presented again in summary form in
Table 4-3 for ease of reference. !
i
The following is an characterization of the types of environmental benefits achieved.
The implementation of five of the nine SEPs have/will result in significant
reductions in use and emissions of ozone-depleting chlorinated organic solvents-Freon
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and 1,1,1 trichloroethane. While the use of these solvents will be phased-out under the
Montreal Protocol, and amended U.S. Clean Air Act, these SEPs achieve an accelerated
reduction of long-lived ozone-depleting substances.
The use and emissions of seven of the list of 17 target chemicals of EPA's
Industrial Toxics Project were/will be reduced in the nine SEPs studied: chromium and
compounds, lead & compounds, methyl ethyl ketone, nickel and compounds, toluene,
1,1,1-trichloroethane, trichloroethylene.
Two SEPs-IC and MFFM-will/have achieved reductions in non-chlorinated
solvent use (including methyl ethyl ketone and toluene) that will, among other benefits,
improve the quality of the work environment.
• MFC switched from hexavalent to trivalent chromium, resulting in an improvement
in conditions for workers as well as reduced chromium emissions to the environment. By
reducing the generation of polishing dust containing lead and nickel, MFC's SEP reduces
worker lead exposure and environmental loading of lead and nickel.
• Through the reformulation of jar lid gaskets, LM has significantly reduced its VOC
emissions in a non-attainment area for VOCs.
While the pollution prevention projects implemented under the nine SEPs studied result in
significant environmental and human health benefits, it is important to point out that in some
cases new sources of exposure or pollution are created by the new technology. For example,
aqueous and semi-aqueous cleaning agents, used in several SEPs to replace organic solvents^
become a new wastestream either released in wastewater to wastewater treatment plants or
drummed and disposed of as hazardous waste. Aqueous cleaners are not typically hazardous but
may become contaminated with hazardous substances during cleaning.17 If this is the case, spent
cleaner must either be treated to remove contaminants before discharge to the sewer or, like the
organic solvents they replaced, must be disposed of as hazardous waste. In these cases' it is the
contaminant (i.e., the material "cleaned-off' the product) that is the culprit, not the aqueous
cleaner itself.
U.S. Environmental Protection Agency. "Guide to Clean Technology: Alternatives to Chlorinated Solvents
for Cleaning and Degreasing." July, 1992.
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Table 4-3. Summary of Environmental and Health Benefits of Pollution Prevention in
Enforcement Case Studies
Company
SEPs;
Casted Metal Products
Manufacturer (CMPM)
Environmental and Health Benefits
Reduced wastewater discharges by approx. 100,000 gpd (75%
reduction), reduced energy consumption and use of Freon,
perchloroethylene, 1,1,1-trichloroethane,
nitric acid, and isopropyl alcohol ___^__'
Industrial Coater (1C)
Reduction in toluene use (56,000 to 5,600 Ibs) and MEK use (50%
reduction) and toluene and MEK emissions, waste and worker
exposure. Net energy savings of 890 kw per hour.
Lid Manufacturer (LM)
The Company estimated that heptane usage would decrease by 203
tons per year, resulting in a reduction in VOC emissions of 50 tons per
year. Particulates from manufacturing, natural gas usage and oven
emissions may increase by 3.65 tons per year, and NOx, CO, HC and
SO2 may increase by less than 1 ton per year each. =====
Medical Device
Manufacturer (MDM)
Elimination of the use of 16,000 Ib/yr of Freon
Metal Filing Furniture
Manufacturer (MFFM)
Project designed to reduce paint and solvent use, waste and emissions.
(Small success to date.)
Metal Finishing
Company (MFC)
Metal Machining
Company (MMC)
Powder Metallurgy
Manufacturing
Company (PMMC)
Pump Service and Sales
Co. (PSSC)
Iniunctive Relief;
Bleached Kraft Pulp
Manufacturer (BKPM)
Reduction in lead contaminated dust generation (83-85%), elimination
of health hazard assoc. with hexavalent chromium, reduce chromium
use (bath strength decreased by 1/30) and sludge generation (67%).
Nickel use will increase from 5,500 to 12,650 Ib/yr.
Reduction in the use (30 to 17,000 gal/yr), emission (130,000 Ib/yr)
and disposal of 1,1,1 trichloroethane-an ozone depleting substance and
a health hazard to workers.
Elimination of ammonia release threat, elimination of
trichloroethylene use and approx. 26,860 Ib/yr of fugitive emissions
and reduction of 1,600 gal/yr of waste oil. ,
Elimination of the use of Freon 113, an ozone depleting chemical, at
the subject facility and another facility ia-another state.
Elimination of threat of chlorine gas release (a public and workplace
hazard), reductions in the creation of chlorinated organic compounds;
wastewater color, odor, and foam.
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While semi-aqueous cleaners are biodegradable, non-ozone depleting and often recyclable, they
may contain slightly hazardous constituents. For example, the cleaner adopted by PSSC contains
terpene, a plant-based hydrocarbon material which pose the risk of flashing at room temperature.
While EPA has not fully studied terpenes, limited testing of a terpene called d-limonene by the
National Toxicology Program in 1990 has shown positive carcinogenicity in male rats. The
strong odor of terpenes may be offensive to workers, requiring adequate ventilation.18 Like their
aqueous counterparts, semi-aqueous cleaners may be contaminated by hazardous materials during
cleaning. For example, spent semi-aqueous cleaner used to de-contaminated pumps at Pump
Service and Sales Company (PSSC) is disposed of as a hazardous waste.
In the case of LM, reductions of VOC emissions came at the price of small increases in NOx,
CO, HC and SO2 emissions and MFC reduced the generation of lead contaminated nickel dust by
increasing its overall use of nickel by 130%.
What would have happened if SEPs were not included in these nine settlements? Certainly, the
nine companies would have paid higher penalties to the U.S. Treasury. Beyond this, in some
cases it is possible and in some cases it is virtually guaranteed (e.g., Freon users), that the
pollution prevention projects implemented as SEPs would have been implemented by the firms
some time in the future. Several firms stated that they would have eventually implemented the
projects. This issue will be examined in a subsequent section. It is relevant to consider the
environmental benefits of accelerated implementation where projects would most likely have been
implemented eventually. The environmental benefit of accelerated elimination of long-lived
ozone-depleting substances-the outcome of five SEPs studied here~is probably most profound.
All but one case study consisted either entirely or partially of multi-media pollution prevention
projects, i.e., they reduced or eliminated two or more of the following: emissions to air,
emissions to water, generation of waste, and exposure of workers to hazardous substances. The
exception is the gasket reformulation project implemented as a SEP by LM which was designed
as a VOC reduction measure and had no positive impacts on other media. None of these SEPs
with multi-media impacts, however, were explicitly negotiated via a multi-media enforcement
initiative.
6. Source of the Technical Idea
Case study companies sought and obtained technical ideas from: their own staff, environmental
consultants, technical consultants, trade journals, vendors, and their EPA case officer. Several
companies used more than one source.
Companies switching from organic solvent to aqueous degreasing relied heavily on the expertise
of equipment/chemical vendors. MFC learned of trivalent chromium technology from the
chemical supplier. One company, MDM, saw an advertisement for deionized water cleaning
Ibid.
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equipment in a trade journal. One company, LM, used a technical rather than environmental
consultant, to help with equipment design.
In only one case, CMPM, did the case officer play a significant role in providing technical
expertise and specific suggestions. In the case of MFFM, all technical ideas contained in the SEP
came from an environmental consultant hired by the firm. The company did not feel that they
had the necessary expertise to develop pollution prevention ideas. j
Most case study firms stated that they would prefer not to involve the agency in the process of
developing technical proposals for a SEP, particularly if it would require repeated agency site-
visits Many of these firms typically had, or quickly developed, project ideas that were
on/consistent with their long-term critical technology path. One firm stated that they would not
reject a good idea provided by the agency, but they were certainly not Ipokmg to the agency for
ideas.
In one exceptional case, MMC, company representatives indicated that they sought technical
assistance from the regional case officer but the case officer was unwilling to provide help.
MMC's manufacturing engineer was seeking (and was strongly encouraged by the agency to seek)
alternatives to 1,1,1-trichloroethane-based cleaning systems for technically demanding
applications, at a time when aqueous and semi-aqueous technology was fairly immature.
Several case officers reported that they were reluctant to provide technical advice for two
principal reasons. First, they are concerned that if the company follows their advice and the
project fails, the case will be jeopardized and the case officer will be reprimanded. Second,
because companies understand their processes better, they are in a better position than case
officers to develop appropriate and creative technical ideas. A suggestion from a case officer
may also short-circuit the company's own creative technical process and lead to a less innovative
and/or less effective project. Generally, case officers prefer to have the violator propose a SEP,
and then once proposed, the case officer can perform their role as ^valuator of the project s
environmental merit and technical feasibility. j
The role of the environmental consultant19 in the CMPM and MFFM cases was particularly
important and worth noting. At the outset of the enforcement process, neither company was
familiar with pollution prevention concepts or techniques, nor did they have the technical
capability to develop or implement prevention projects. Therefore, these companies .entrusted
their hired consultants with the development of project proposals and implementation during the
settlement process. In addition, the regional negotiators, knowing that the companies lacked
necessary capabilities, openly relied on the expertise of the consultant:* (and in some ways used
the consultants as neutral arbiters) and thereby invested these consultants with significant power
in the settlement process. These factors elevated the role of the consultants in this process and,
19 By environmental consultant, we mean consultants engaged primarily in studies, engineering design, and
implementation projects for environmental compliance, remediation and pollution prevention.
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to a large degree, the outcome was determined by the consultant's knowledge expertise
experience with specific technologies (e.g., baffle collection system for paint overspray) and
technical orientation (e.g., waste minimization, vs. product reformulation), rather than the
knowledge, etc. of the companies.
In the case of 1C, the environmental consultant designed the SEP and assumed a primary role in
monitoring and reporting project progress during the implementation phase. It may be that the
focus m this case-waste minimization as opposed to more "up-stream" process changes-is a
result of the technical orientation of the consultant rather than a factor of what made most sense
from a technical/environmental and economical standpoint. If this is so, both the lack of
technical expertise within the company and the orientation of the consultant may help to explain
why the projects implemented are not performing well environmentally or economically.
At first, CMPM's environmental consultant-a geotechnical/environmental engineering firm-took
a major role in making technical recommendations for bringing the company into and beyond
compliance. The consultants recommended a $250,000 combined-flow treatment plant that the
company realized they did not need.20 This realization came about as a result of a process
investigation that the company performed at the request of the regional case officer. At this
point, the company lessened the role of the hired consultant and, to a significant degree, the
regional case officer assumed the consultant's role in developing pollution prevention options.
The outcome of the case~a SEP consisting mainly of the redesign of several rinsing and coating
lines in the metal finishing area-is largely a function of the case officer's expertise. The case
officer had just finished a year-long rotation with the state's pollution prevention technical
assistance program which has participated in'numerous metal finishing, plating/rinsing redesign
projects. According to CMPM, the regional attorneys trusted the consultants and therefore, they
assisted the company throughout much of the negotiation process by helping to win EPA approval
for the technical changes that the company sought to implement.
In contrast to 1C and CMPM is the case of PMMC: PMMC hired an environmental consultant
to perform an audit (one part of the SEP), but all of the pollution prevention ideas included in
the audit came from within the plant. The consultant served primarily to endorse the ideas. It
is interesting to note that in this case, the company became extremely motivated by the success
of the pollution prevention projects implemented in the SEP.
In Sections V and VI, we discuss the role of the consultant in the development of pollution
prevention ideas and how the consultant could be either a barrier to, or promoter of, innovative
pollution prevention. Given the absence of pollution prevention technical assistance'office
participation in developing pollution prevention SEPs, Sections V and VI include a discussion
on barriers to, and the potential for, involvement of these organizations, respectively.
If CMPM built this plant, they would have had significantly less incentive to implement pollution prevention
in the context of the SEP and into the. fiii™-*
in the context of the SEP and into the future.
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7- Type of Pollution Prevention Implemented in the Case Study Firms
The case studies contain a wide array of pollution prevention techniques, including: chemical
substitution, product reformulation/redesign, process modifications to conserve water/energy, and
waste reduction measures.
Six SEPs dealt with chemical substitution in cleaning processes. Four consisted of substitution
of chlorinated, organic' solvent-based cleaning/degreasing systems with aqueous/semi-aqueous
degreasing or deionized water-based processes. In-one case, PMMC, the company switched its
tapping fluid: to an aqueous formulation which enabled them to shut-down their 1,1,1
trichloroethane degreasing unit-formerly needed to remove an oil-based tapping fluid.
Three cases involved chemical substitution in non-cleaning processes. MFC substituted trivalent
chromium for hexayalent chromium in its chrome plating line. PMMC replaced its ammonia
sintering atmosphere with a safer blend of nitrogen and hydrogen gases. BKPM eliminated
chlorine use in bleaching by ..making significant changes to the chemistry of its pulping and
bleaching processes.. . • !
Three cases involved product reformulation/redesign (usually necessitating process changes as
well). LM reformulated their gasket coating material to eliminate VOG-producing heptane frbm
the recipe. This change required modifications to drying equipment. 1C agreed to reformulate
their coating in order to eliminate the toluene coating vehicle. This change required significant
equipment redesign. MFC reduced lead contaminated dust generation by redesigning their
product. They increased the thickness of the nickel plate on the product to improve surface finish
so that a larger percentage of parts do not need .pdlishing-the dust-generating process. This
change also required significant process modifications.' ,
Two cases involved process modifications to conserve water and energy, and to reduce
wastewater. CMPM redesigned rinsing systems on several process lines to conserve water and
reduce wastewater discharge. PMMC implemented a closed-loop cooling system.
One case, MFFMj implemented a SEP consisting of several waste reduction measures designed
to reduce organic solvent and paint waste generation; these included a solvent recycling system
and a paint overspray recycling system (baffled collection system).
8. Innovation vs. Diffusion and the Locus of Technological Change !
The technological changes undertaken by case study firms can be categorized by a framework
that classifies pollution prevention projects according to the locus and innovativeness of
technological change. By locus we mean whether the change was made to a primary, secondary
or ancillary production process. A primary process is one which yields the key functional
property or properties of the product (i.e., defines the product). Using the example of a steel
bolt, the primary production process is the casting of the part. An example of a secondary
process is the metal plating of the part. Plating may provide a functional (e.g., non-corrosive)
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or aesthetically-pleasing finish, but it is not primary to the function of the product. An ancillary
process is, for example, cleaning of the bolt prior to plating. Ancillary does not mean
unimportant. As any metal plater will tell you, dirty parts do not plate properly.
Innovation is the first commercial application of a new technical idea. To categorize the
innovativeness of the technological change, we use three general headings: major innovation,
incremental innovation and diffusion. Major innovation involves a significant shift in technology,
incremental innovation involves smaller changes or the adaptation of existing technology, and
diffusion is the widespread adoption of existing technology (i.e., involving little or no
innovation).
When the "locus" and "innovativeness" characterizations of technological change are combined,
we produce the three-by-three matrix pictured in Table 4-4. Projects that are located in the upper
left-hand corner of the matrix, i.e., major innovation in primary production processes, represent
dramatic changes in the core technology of the firm. Generally, these projects tend to require
relatively high capital investment and pose greater risk to the firni, particularly when changes in
product characteristics may disrupt established markets or when new technical expertise is needed
and old expertise becomes obsolete.21
When we locate the technological changes made by case study firms within this matrix (Table
4-4), we can see that the majority of changes are diffusion driven, while a smaller number can
be considered incremental innovations and only one~BKPM~can be considered a major
innovation. There is a fairly even distribution of technological changes across the spectrum of
primary, secondary and ancillary processes.
When this distribution is considered in the context of the selection criteria used to choose case
studies, we note that although we selected the most innovative projects for study, our sample was
largely made up of diffusion-driven technological changes. In addition, by seeking case studies
involving process redesign and product reformulation, our sample contains a significant number
of changes to primary or secondary production processes. If we had used a random case study
selection process, our sample would have been much more heavily weighted toward the lower
right-hand corner of the matrix, i.e., diffusion-driven changes to ancillary production processes,
since a large number of SEPs consisted of the replacement of organic solvent-based cleaning
systems with aqueous/semi-aqueous-based systems.
In Section 14 below, we discuss the length of the project implementation period as a factor in
the inclusion of innovative projects hi enforcement settlements.
21
Abemathy, W.J., Clark, K.B., "Innovation: Mapping the Winds of Creative Destruction" in Tushman, M.W.
& Moore, W.L. Readings in the Management of Innovation, 2nd edition. Cambridge: Ballinger, 1988.
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Table 4-4. Characterization of Pollution Prevention Technological Changes Made by Case
Study Firms According to Locus and Degree of Change
Locus of Change
Primary Production
Process
Major
Innovation
BKPM-rCF
bleaching
Degree of Change
Incremental Innovation
IC-organic solvent-free
coating
LM-reformulate gasket
Diffusion
PMMC-ammonia to
nitrogen/hydrogen aim.
Secondary
Production Process
CMPM-redesign of
rinse systems :.
MFC-nickel tank
extension
MFFM-paint and
organic solvent
recycling/waste
reduction
MFC-conversion to
trivalent chromium
Ancillary Process
MDM-substitution of
deionized water
degreasing system
CMPM-substitution of
aqueous cleaners
MM.C-substitution of
semi-aqueous cleaners
~PMMC-substitution of
aqueous tapping fluid
and closed loop cooling
PSSC-substitution of
semi-aqueous cleaners
9. Technology Transfer Benefits j
-I
In two cases, CMPM and MMC, the companies have transferred the ideas for solvent use
reduction and water use reduction, respectively, to other plants. The SEP implemented in the
PSSC settlement included the substitution of aqueous cleaning systems in both the subject plant
and another plant in another state and EPA region (even though no violation had been cited in
the second region). j
1C and LM will evaluate the success of the SEP projects to decide whether to implement the
technology on other product lines within the subject facilities. In two cases, MFC and PMMC,
there is particularly significant potential for technology transfer to
participates in a state-sponsored pollution prevention group of industries and uses the state
IV-37
other firms since MFC
-------
pollution prevention technical assistance office; the President of PMMC is active in his trade
association.
In the case of MDM, the company will not implement the deionized water degreasing system in
the subject facility, since this facility will soon close. However, the company will seek FDA
approval to install the system in a new facility that will replace the production capacity of the
subject plant.
Finally, the technology transfer benefits arising from the implementation of TCP pulping in
BKPM are quite significant. When the project is completed, BKPM will be the first mill in the
U.S. to produce bleached kraft pulp without the use of chlorine. Since the company has disclosed
information regarding process changes that they are implementing, the project will certainly push
an important technological/environmental frontier in pulp and paper industry.
10. Organizational Change
In our interviews with case study firms, we attempted to identify whether and how the company
has made organizational changes as a result of implementing pollution prevention SEPs or
injunctive relief projects. It is difficult, in some cases, to determine whether changes made were
a result of implementing pollution prevention or a result of the enforcement action in general.
With this caveat in mind, this section contains an overview of the organizational changes made
by case study firms as communicated to us by the companies.
• In the case of PMMC, the President's perception of environmental investments has
changed. He now believes that it is economically sensible to stay one step ahead of
environmental regulations by eliminating hazardous operations.
* CMPM increased their environmental staff by adding one full time engineer and
three part-time technicians.
• Through the SEP process, technical staff at CMPM and MMC developed
knowledge and skills to enable them to pursue pollution prevention beyond the SEP, and
they are applying their abilities to management goals of total elimination of organic
solvents and zero-discharge, respectively.'
• MFFM's SEP contained specific organizational change initiatives, proposed by the
firm's environmental consultants, including pollution prevention training and the
promotion of plant engineer to vice president for manufacturing and environmental quality
to carry out a pollution prevention policy and program.
• It was not apparent that the SEP process catalyzed organizational change in MDM.
Prior to the enforcement action, a new state hazardous waste reduction law motivated the
company to reevaluate their approach to environmental compliance and the true cost of
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the materials they use. They had already made significant strides toward reduction of
Freon use and pollution prevention in general. j
• BKPM had also implemented many process changes, prior to their consent order,
to improve the efficiency and reduce the waste generated by its processes. Their
experience in seeking EPA approval for the TCP project has changed their views on the
best way to approach regulatory matters in the future. They will seek to involve technical
people only in initial discussions with EPA and bring attorneys hi later on in the process.
• Two companies have instituted new policies that prohibit riew chemicals from the
plant without approval of environmental personnel. !
Two companies started working with state pollution prevention technical assistance
offices. !
• No organizational change was apparent in either LM or PSSC.
i
It is also important to consider whether in-house counsel or retained private bar were supportive
or skeptical of SEPs and whether their views changed. With respect to in-house counsel, we have
only one case upon which to draw insight. In the case of MDM, we interviewed the company's
in-house corporate environmental attorney who played a significant role in negotiating the SEP.
The attorney was, and continues to be, supportive of the SEP policy as ;a way to recognize the
efforts of a violator (via penalty mitigation) to make environmental improvements through a
project that is beneficial to the company as well. j
I
The majority of case study firms relied primarily on outside counsel! during the negotiation
process. The next section considers the role of outside counsel in the settlement process.
11. The Role of Outside Counsel (Retained Private Bar') j-
i
Six out of the ten case study firms stated that their outside counsel was instrumental in
negotiating SEPs and, in particular, helping to establish implementation schedules, milestones,
and stipulated penalties. The following summarize relevant portions of our interviews.
MFC stated that they had a good outside attorney~with experience in
environmental litigation-who was instrumental in crafting the company's SEP proposal.
MDM's in-house environmental counsel gives substantial credit for the successful
inclusion of the SEP to their outside counsel. The idea of a SEP came out of an initial
meeting between EPA negotiators and the outside attorney who conveyed to the company
that the agency was very interested in including a pollution prevention SEP in the
settlement and asked the company if they had an appropriate project. The attorney was
both assertive and creative in his dealings with the company and EPA and he managed
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to work out an agreement between the two parties despite the difficulties that arose over
the implementation schedule.
• According to EPA negotiators, MFFC's outside counsel was formerly with the
U.S. Attorney General's Office and had worked on EPA settlements in that capacity. She
was very familiar with the settlement process and this made the negotiations much
smoother. The region considered her involvment to be a contribution to the success of
the SEP negotiation.
• The regional negotiators stated that LM used an outside attorney who understood
the SEP policy well and was very proactive.
• PMMC stated that their outside counsel Was very helpful in negotiating the SEP,
particularly in establishing the implementation schedule.
In one case, CMPM, the firm stated that their outside attorney hampered the process because he
was unfamiliar with environmental regulations and agencies.
Although we did not have the opportunity to directly interview the outside counsels spoken of
by the case study firms and described above, our general impression is that these counsels were
supportive of SEPs. Since the firms view SEPs positively, the outside counsels role is viewed
as a beneficial contribution since they helped the firm to negotiate a SEP. For their part, the
counsels can point to their role in reducing the penalty—a tangible "value added" service.
We were not able to determine whether the views of outside counselors changed in the course
of the settlement process.
12. Change in Vendor/Consultant Relations
Two case provide contrasting experiences in changed relations with consultant/vendor. CMPM
was dissatisfied with their technical consultants—a geotechnical/environmental engineering
consulting firm that contributed to some degree with process change ideas—by reviewing and
modifying recommendations from the EPA case officer—but largely recommended traditional
technical problem-solving approaches. The company would be hesitant to use them again. LM
was very pleased with their technical consultants who were knowledgeable about both
manufacturing technology and environmental regulations.
Two companies now have begun to use state pollution prevention technical assistance programs.
MMC hired a consulting branch of a chemical manufacturing company. MMC's manufacturing
engineer has found that his knowledge of pollution prevention technology has enabled him to be
a better evaluator of technical options for his company than these potentially biased consultants.
In four cases, no change in vendor/consultant relations was apparent.
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13. Projects Not Completed Under the SEP
In two cases, 1C and MDM, the companies did not fully implement the SEP projects within the
established timeline and, as a result, paid stipulated penalties to the agency. During project
implementation, 1C experienced unanticipated technical problems in using their existing coating
equipment to apply the new coating formulation. Therefore, they were not able to meet,the SEP
implementation deadline. Despite the.regions' willingness to grant an extension, the company
paid the penalty to eliminate the SEP deadline pressures. They are planning to re-initiate the
project in the near future since they consider it to be a "bonafide win-win situation for the
environment and [their] enterprise."
MDM has chosen not to purchase the deionized water cleaning system for the subject plant
because they will be closing the subject facility in February.of, 1994 and will be moving its
operations to another plant. However, given the success of the technical evaluation conducted
under the SEP, the company will seek FDA approval for the deionized system at the new site and
implement it if approval is granted.22
14. Time to Implement the Pollution Prevention Project
For each case study, Table 4-5 below presents information on the timeline established in the
consent agreement and final order (CA/FO) for SEP/injunctive relief project implementation.
Specifically, the table contains: the date of the agency's complaint23, the date of the CA/FO (i.e.,
the date it received final signature(s)), and the implementation deadline contained within the
CA/FO.
By reading the notes that accompany the entries, one can see that these dates do npt always
present a clear picture of the actual time taken to implement the projects. In three cases~CMPM,
MMC, and PSSC~the companies began implementation of the projects prior to the finalization
of the CA/FOs. In two cases~IC and MDM-the projects were hot completed as SEPs (see
Section 13 above). Looking only at those SEPs where project implementation began at or near
the CA/FO date, and was completed under the agreement (i.e., LM, MFFM, MFC, and PMMC),
implementation periods ranged from 3 to 17 months. The shortest period, 3,months for,the MFC
case, is a result of the fact that the company needed to compress the implementation process into
its one-week scheduled shut-down period, which fell within 3 months of CA/FO finalization.
22 Given the uncertainty of FDA approval and the need for R&D, agency and company negotiators put
significant effort into developing the stipulated penalty schedule. Stipulated penalties did not appear to be. ,a major
concern, or to require much negotiation effort, in other cases. .., ,
23 The agency files a complaint, after an inspection, if violations were found during the inspection. The
complaint typically contains the findings of the violation, notice of the proposed assessment of a civil penalty against
the respondent, and notice of respondent's opportunity to request a hearing on the proposed penalty assessment.
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Table 4-5. Time to Implement Pollution Prevention Projects
Company
SEPsi
Casted Metal Products
Manufacturer (CMPM)
Industrial Coater (1C)
Lid Manufacturer (LM)
Medical Device Manufacturer
(MDM)
Metal Filing Furniture
Manufacturer (MFFM)
Metal Finishing Company
(MFC)
Metal Machining Company
(MMC)
Powder Metallurgy
Manufacturing Company
(PMMC)
Pump Service and Sales Co.
(PSSC)
Iniunctive Relief:
Bleached Kraft Pulp
Manufacturer (BKPM)
Date of
Complaint
September
1989
August 1989
July 1992
April 1991
October 1991
February 1992
March 1989
September
1989
March 1990
September
1989
Date of CA/FO
(signature date)
August 1992
(company began studying
and implementing pollution
prevention process changes
in August 1990)
March 1992
December 1992
April 1992
May 1992
July 1992
October 1991
(project initiated in April
1990)
January 1992
October 1991
(company initially
proposed, and began to
implement, SEP in
September 1990)
September 1992
Project Implementation Deadline
(per CA/FO)
September 1993
(per CA/FO, extended to
September 1994)
December 1992
(project not completed, see
Section 13 above)
May 1993
(plus 4 month grace period)
September 1993
(project not completed, see
Section 13 above)
November 1992 - project
implementation,
May 1993 - documentation of
P.P. program implementation
September 1992
September 1991
(protracted negotiation period
led to project implementation
prior to official signing of
CA/FO)
January 1993
December 1991
September 1995
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The unique circumstances of each case, and the limited size of our sample, make it difficult to
draw generalizations on the length of time needed to implement projects. However, it is worth
noting one point that relates the type of technological changes made (as discussed in Section 8
above) to implementation periods. The changes characterized as incremental innovations in Table
4-4 are: CMPM (redesign of rinse systems), 1C, LM, MDM and MFC (nickel tank extension
project), and with the exception of MFC, each of these required more than one year for
implementation. The single case of major innovation--BKPM--is on a 3-year implementation
timeline. With the exception of 1C, agency negotiators were willing to accommodate longer
timelines in these cases. The approximately 10 month timeline established hi the 1C case was
a factor in the company's inability to complete the project as a SEP. These observations provide
a preliminary indication that innovative projects may often require more than the "maximum 1-
year implementation timeline rule-of-thumb" that is often applied by agency negotiators.
15. An Examination of Whether Pollution Prevention Projects Have Been Implemented Without
the SEP
i
Most of the projects implemented as SEPs had been considered by the case study firms before
they were cited for violations by the agency. It is difficult to know whether, and when, these
projects might have been undertaken if the regions had not granted penalty reductions in
exchange for the firm's commitment to implement the projects. By examining the information
that the companies provided during our interviews, we can gain insight into this question.
• 1C considered reformulating their coating prior to the SEP, but the concept and
implementation had been accelerated through the SEP process in two principal ways: the
project was initiated sooner and it maintained high priority status despite difficulties in
development and pilot testing. i
a LM had considered the gasket formulation project prior to the enforcement action
and may have otherwise implemented it. The SEP provided an impetus to undertake the
project and was, from the company's perspective, an alternative to litigation over the
penalty amount and to spending additional money on attorneys' fees.
•
i
• The projects implemented by PMMC under the SEP policy, had been proposed by
various members of the company (in manufacturing) prior to the issuance of the
complaint. The SEP process was the necessary impetus for implementation.
• In the months prior to the complaint, MDM explored the possibility of eliminating
freon use in degreasing through the substitution of a deionized waiter degreasing system.
They began conducting first-stage evaluations of the performance of the equipment on the
company's products. j
• MMC's plant engineer stated that the plant would have eventually moved to
eliminate their use of 1,1,1-trichloroethane, particularly given the increasing cost of the
material. The SEP process was considered a stimulus. j
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• The facilities manager at PSSC stated that the SEP did not accelerate the aqueous
degreasing system; the company would have implemented the project on roughly the same
schedule without the SEP.
• Prior to EPA's complaint, CMPM realized their water usage costs were high and
that they should reduce water consumption but had made no efforts to do so. The
company stated that EPA compelled them to implement water-use reduction measures far
in advance and in excess of what they would have done without the enforcement action.
• MFC had reviewed vendor information on trivalent chromium plating prior to the
complaint, but there were no plans to convert over at that time since the trivalent system
produced an unacceptable surface finish. They felt able to propose the trichrome system
as a SEP because by that time, the process had been sufficiently improved.
• It is unlikely that MFFM would have implemented the pollution prevention
measures without the SEP.
• The EPA case officer believes that BKPM chose to implement the TCP project to
meet the toxicity limits in the consent order in anticipation of state promulgation of new,
stringent effluent limitations for dioxin.
It is difficult to evaluate the validity of these statements particularly because discretionary projects
(e.g., many pollution prevention projects) are often carried along from year-to-year and only
implemented when and if the will and resources exist to do them. In many cases it appears that
the SEPs serve as a catalyst to pollution prevention implementation by overcoming financial and
institutional barriers within firms.
D. IMPACT ON THE AGENCY'S ENFORCEMENT PROGRAM
In the course of our case study research, we observed several types of impacts on the agency's
enforcement programs stemming from the inclusion of pollution prevention in enforcement
agreements. Given that only one of ten cases involved pollution prevention as injunctive relief,
the majority of our observations came about in the context of studying SEPs. However, we
believe that most of this section applies both to SEPs and injunctive relief. In addition, we did
not conduct an extensive study of the impact of this policy on the agency and most of our agency
interviews were with staff involved in and supportive of, pollution prevention SEPs/injunctive
relief. Therefore, our ability to draw general conclusions on this subject is necessarily limited.
However, the observations and commentary contained herein can be regarded as an indication of
a subset of impacts arising from this policy.
IV-44
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1. Attitudinal and Organizational Effects i
!
The EPA attorneys and case officers who negotiated the settlements studied here are very
motivated by their experiences in negotiating SEPs in general and pollution prevention SEPs in
particular, into enforcement agreements. As related to us by one EPA attorney who has
negotiated many SEPs, "in spite of resource constraints, I would like to see a SEP in every case
because it gives me a sense that [the region] is really doing something beneficial for the
environment. Even if it is just a paperwork violation, we can turn it into something better.
Many people in the region feel this way." One case officer said that the satisfaction he gets from
negotiating SEPs helps to overcome certain frustrations in his job. In title case of MFFM, the
case officer was disheartened over the prospect of levying a large fine on this small company for
violations that stemmed not from egregious and willful violations but from a lack of
understanding and information on regulatory requirements. The pollution prevention SEP was
a way to turn this situation into something positive for the environment, the agency and the
company. j
We observed in two out of three regions within which the case studies reside, a small number of
largely motivated case officers and attorneys who have become active and expert on pollution
prevention SEPs. These people are known as experts by administrators and managers within and
outside of the region (i.e., in Headquarters), were recommended to us as iiiitial regional contacts,
and were involved in negotiating many of the SEPs we selected for study. These staff are
personally motivated to include pollution prevention in enforcement settlements and seem to find
this activity an added and enjoyable challenge. Stemming largely from their interest, they have
developed the necessary technical and/or negotiation skills.
c
While pollution prevention SEP activity is not the sole province of these "experts", this activity
is not evenly distributed throughout the regions. However, according to one so-called expert,
their numbers are slowly growing as more and more case officers amd attorneys have an
opportunity to be involved in this process. Enforcement cases are assigned to a team of one or
more case officers and attorneys. If, according to one case officer, the team contains a case
officer who is a pollution prevention SEP enthusiast, the case is more likely to have a SEP. A
supportive attorney on the case can help to guide the negotiation process toward SEP inclusion.
There are attorneys and case officers who see SEPs as a complication and are not interested in
including them in settlements. Some individuals are philosophically opposed to reducing a
penalty in exchange for a prevention or other type of project. These staff are unlikely to change
their opinions and will tend to not include SEPs in cases they are involved in.
i
It appears motivated individuals are either hampered, simply allowed, or in some cases,
encouraged by their management to pursue pollution prevention SEPs. The EPA Administrator's
clear statement that pollution prevention is an agency priority, said one case officer, has helped
to get more support from management within the region. But still, there are both supporters and
detractors all through the ranks of management and regional administration. His immediate
supervisor is not supportive of pollution prevention SEPs, seeking to maximize the final to
proposed penalty ratio statistic for the Section. But the case officer's division director and the
IV-45
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regional administrator are supportive and therefore, overall, the climate for SEPs is friendly.
Another picture was painted by a case officer in the region that was not one of the two regions
discussed three paragraphs above. She noted that she encountered a great deal of resistance from
her managers when she decided to incorporate the SEP, but after she settled the case no -one
"bothered" her. She observed that staff within her region are afraid to include SEPs because
regional managers do not want to reduce the overall dollar value of fines paid. Some managers
and some case officers find SEPs personally too risky, and younger staff in particular-are afraid
to jeopardize their careers at the agency if projects are deemed'failures. If this is widespread in
this region, the increase in the number of individuals involved in, and enthusiastic about, SEPs
will be slow. : , i
' • • '•' - ••• ' "•..,.' t'r ... '
While a primary reason for resistance to SEPs seems to be the traditional, internally and
externally (e.g., Congress)-driven perception that a successful enforcement program is one that
maximizes the final to proposed penalty ratio, there does not seem to be a discernable pattern of
support or resistance in management. For example, it does not appear, that one can explain the
pattern of resistance by assessing who is held most accountable in the penalty incentive system.
Resistance seems to be a function of an individual's adherence to a, traditional view of the
penalty-based metric of success. Support is based either on a true belief in the advantages of the
pollution prevention/SEP approach, or on a duty-based desire to follow a high-level administrative
mandate. One case officer believes that if the full value (i.e., level of company investment,
environmental benefit, etc.) of pollution prevention SEPs was evaluated by the critics, they would
see that the benefit of the projects bring the proposed to final penalty ratio to one, or greater.
2. Time Requirements • > , « . . ,
There is an obvious and important correlation between the time needed by case officers and
attorneys to settle and monitor cases and the number of cases that can be settled during a given
period of tune—the more time needed per case, the fewer cases that can be settled. We heard two
viewpoints on time requirements. Most case officers and attorneys asserted that on average,
settlements with pollution prevention SEPs required more time to negotiate and monitor than
settlements without them. Alternatively, several case officers and attorneys contended that SEPs
are not more difficult or more time consuming if you structure them correctly (e.g., requiring
third party certification and documentation).24
/ '•,'"'.
It appears that time requirements for inclusion of pollution prevention can vary greatly depending
on many factors, including: '
24 One finding reported in the ITEP study of EPCRA pollution prevention EBEs was that only a small
oversight burden was placed on the Agency from each case studied. This determination, however, was based on the
fact that facilities were not typically visited by EPA to assess the projects. (Many Regional Offices did not find it
practical or necessary to follow-up with site visits since agreements typically contain documentation and reporting
requirements to verify expenditures.) ITEP did not consider the negotiation process and review of documentation.
IV-46
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• time needed by the violator/time given to the violator to develop a proj ect proposal
(may be a function of the technical sophistication of firm, complexity of project, need for
a consultant's pollution prevention audit, etc.)
• time needed for case officer to determine environmental merit and technical
feasibility (may be a function of the knowledge and expertise of the case officer, project
complexity, etc.)
• the length of the implementation/monitoring period and number of progress reports
needing review (may be a function of the technical difficulty of the project, etc.) •
We did not try to deduce the average time needed to negotiate and,monitor settlements with and
without pollution prevention in the course of our research. Based on our observations, however,
we would expect that an EPCRA 313, Form R reporting case would take longer to settle with a
pollution prevention SEP than without, because Form R cases tend to be (but are not always)
straightforward. SEPs negotiated in the context of violations of pollution limitations might not
take all that much longer to conclude. However; if the case officer and attorney have experience,
knowledge in pollution prevention and SEPs/injunctive relief, and are motivated, the additional
time requirement may be minimal. i; '•""• : .;,•'•
If the project is not particularly novel or complex, or if the ease officer and the firm arexonfident
in the technical feasibility of the project (even if the project is innovative), it is likely that little
extra time will be needed for settlement negotiations. On the other hand, if the violator sought
to incorporate a more innovative and complicated project which requires R&D, or if the case
officer is not confident of the project's technical feasibility,'the time needed to review the
project/negotiate the settlement would likely increase. •'.- '-, V
In one region, it was apparent that there was a troubling lack of consensus among management
and staff on the appropriate time trade-off between numbers of settlements and numbers of SEPs.
While the degree to which this trade-off exists is not clear, it was evident that open dialogue on
the question was needed. Further, the basis for staff evaluations vis-a-vis SEP versus traditional
settlements remains an unresolved important issue.
In Section V, we discuss how the issues raised here manifest themselves m a variety of barriers
to pollution prevention SEPs and injunctive relief. . . r .
. > , • *. ' , •.'-...
3. Technical Resource Requirements . ,• f - > :->
We expected, but did not find among the case officers we interviewed, a demand for either
published information on pollution prevention (e.g., technicarcase studies) or training. Case
officers, for example, often either never heard of or never used, the Pollution Prevention
Electronic Information System (PPEIS). One reason appears to be that case officers are primarily
in a reactive mode, i.e., they generally prefer to rely on the companies to propose projects and
are not, by-and-large, helping companies to come up with specific technical ideas (although they
IV-47
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might provide examples of "acceptable" pollution prevention projects). Typically, case officers
use their own technical knowledge and/or their colleagues' knowledge to evaluate company
proposals.25 If they have questions on the environmental impacts of the technology proposed
(e.g., where chemical substitution is involved), they might seek out advice from a technical expert
within another branch of the region. One case officer stated that there is not enough time in the
day to peruse technical documents.
With respect to training, a case officer active in negotiating pollution prevention SEPs stated that
it would be useful to provide training on pollution prevention concepts and techniques. However,
full-day intensive training sessions are not effective. Training must be structured in short sessions
(i.e., 2 hours), over a longer period of time, in regular intervals, to be effective. In addition,
trainees should be given an opportunity to apply the concepts to reinforce them. Effective
training can support the personal communication-based information-sharing network, described
in the preceding paragraph.
4. Advancement of the Agency's Pollution Prevention Objectives
By negotiating pollution prevention into an enforcement settlement, case officers and attorneys
not only gain knowledge and experience in pollution prevention for us in future enforcement
cases, but they can also bring the knowledge into the organization for either their direct use in
other activities (e.g., permitting) or as a source of information for other individuals in the
organization. One EPCRA case officer, actively involved in negotiating SEPs, has become a
well-known pollution prevention resource within the regional office. His pollution prevention
expertise, gained hi part through SEP negotiations, is leveraged both within the regional office
as well as in EPCRA's outreach programs to the regulated community. With regard to the latter,
the Pollution Prevention Act of 1990 requires that companies submitting Form R's under EPCRA
313 include a report of toxic chemical source reduction and recycling activities for each toxic
chemical reported. The case officer assists companies in this endeavor and, in the process,
transfers his pollution prevention knowledge to the firm. The case officer lends also uses his
expertise in leading the pollution prevention section of EPCRA's compliance workshops. An
attorney in another region commented that SEPs are an excellent way for her and her colleagues
to learn about new technology; this knowledge has been very useful to her in permitting
activities.
The degree to which pollution prevention knowledge gained through enforcement is leveraged
in other activities is not only a function of the flow of information into the enforcement program
but also a function of how interested and capable other programs are in getting the knowledge
and incorporating it into their activities.
25 Technical staff in companies also tend to prefer to acquire environmental/technical ideas through verbal
communication with their colleagues in other companies either through one-on-one interactions or at trade
associations or conferences.
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E. IMPACT ON THE FIRM
There are many impacts on the firm stemming from the inclusion of pollution prevention in
enforcement. In this section we present our observations and analysis, organized into two parts:
impact during the enforcement process and impact beyond enforcement. We note the same
limitation of our study here as is given in Section D above, namely that the majority of our
observations came about in the context of studying SEPs; however, we believe that most of the
conclusions reached in this section apply both to SEPs and injunctive relief.
1. The Enforcement Process
All nine SEP case study firm representatives interviewed stated that they support the SEP policy.
Whether or not their projects were successfully implemented as spelled out in the CA/FO, and
whether or not they expended far more or slightly more resources on the project than they
received in penalty relief, they were gratified to have had the option to implement a pollution
prevention project in exchange for some penalty reduction. Before discussing the reasons why
these companies support this policy, it is important to note that while in the final analysis, the
SEPs took some of the sting out of the enforcement process for our case study companies, it did
not eliminate the very significant economic and psychological impacts associated with being
caught out of compliance by EPA. , ,
With or without a SEP, attorney's fees and staff resources needed to negotiate the settlement take
a direct economic toll on the firm. Some firms, particularly those still in the implementation
stages of their projects, were initially reluctant to talk to us. This indicated to us that these firms
were concerned about continued agency oversight. This factor may be more pronounced in our
SEP case study firms because they tended to be either small or mediiim-sized companies for
which the impact of an enforcement case was particularly significant.
In most of our cases, the companies were pleased to have negotiated a pollution prevention SEP
because they could achieve a reduction in the fine for implementing a project that was beneficial
to them either because the project cut their costs, eliminated a source of current26 or future
regulation, or gave them a competitive edge (e.g., switching from hexavalent to trivalent
chromium). In some cases, pollution prevention projects secured a combination of these benefits.
In many cases the projects had been considered prior to the enforcement action. The reasons why
these firms did not implement the projects prior to the enforcement action vary from the lack of
top management interest/approval, to a profitability estimate that did not meet company
performance criteria, to the absence or shortage of the necessary in-house technical staffer time
burdens on existing staff.
26 This does not mean being required by the Agency to implement the project under current regulations.
Rather, this refers to, for example, eliminating a wastewater pollutant for which the company has a permitted
discharge limit. The SEP policy explicitly excludes projects that are.required by regulation.
IV-49 ;
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All companies see SEPs as an opportunity to turn a negative situation into a more positive one.
Some companies stated that SEPs help to recognize their efforts to make improvements. They
rekindle staff morale because they send out a message that while the company broke the law,
EPA reduced the fine because the company elected to implement an environmentally beneficial
project.
2. Beyond Enforcement
While the pollution prevention projects themselves create environmental benefits, greater benefits
may be realized if pollution prevention implemented in an enforcement context is a catalyst for
additional prevention beyond the enforcement process. The discussions on technology transfer
and organizational change in Section C demonstrate that many of the firms studied have taken
or are working toward, further pollution prevention steps and that these steps seem to be linked
to their experience with SEPs.
It is difficult to tell, at this stage, which firms will implement the most pollution prevention
beyond their SEP/injunctive relief project. It appears that within the most active firms-CMPM,
MFC, MMC--there is great potential for further pollution prevention. At this early stage, we
cannot conclude that the type of project implemented-classified by the framework presented in
Table 4-4--is a strong determinant of the company's pollution prevention activities beyond the
enforcement settlement.
3. The Impact of Pollution Prevention SEPs on the Deterrence Effect of the Agency's
Enforcement Programs
Based on our interviews, we learned that none of the case study firms knew of the SEP policy
prior to EPA's inspection.27 This is not surprising since the policy is relatively new and many
of the inspections were conducted between 1988-91. We can be reasonably sure, that within our
sample, knowledge of the SEP policy did not act to compromise the deterrence effect of the
agency's enforcement programs. This profile is changing. According to one EPCRA case
officer, several attorneys representing EPCRA 313 violators have asked him at the outset of the
negotiation process whether a SEP can be included in the settlement. As more and more
companies and corporate attorneys learn of the SEP policy this may become the norm.
It is difficult to predict whether and to what degree, the SEP policy will compromise the
deterrence impact of the agency's enforcement programs. Some critics believe that firms will
make a calculated decision to save money by not investing in pollution control or prevention
because the financial risk of enforcement coupled with the "relief offered through SEPs is less
than the savings associated with non-compliance.
17 One firm, MFC, learned about SEPs after the EPA inspection and before the first settlement conference.
IV-50
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Under this scenario, our research tells us that these incentives for non-compliance should be
weighed against incentives for compliance, such as: j
• a company's desire to avoid bad publicity and the associated negative outcomes
from their geographical community, community of manufacturers, and current/potential
customers
a company's desire to avoid future regulatory scrutiny and the financial risk that
such scrutiny poses
• a company's desire to avoid the expenditure on attorney's fees and staff resources
in negotiating an enforcement settlement
• a company's desire to avoid closure costs for improper waste treatment operations
the agency's right to refuse to negotiate a SEP based upon a company's prior non-
compliance history or "bad faith" negotiating posture.
The collective experience of our case study firms illustrates a different scenario since these firms
believed, through their ignorance or misunderstanding of the regulations, that they were in
compliance. Thus, for them there is no balance sought between incentives for compliance and
incentives for non-compliance; SEP policy would not be expected to encourage non-compliance.
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V. OPPORTUNITIES FOR IMPROVED RESULTS: BARRIERS, INADEQUATE
INCENTIVES, AND INAPPROPRIATE INCENTIVES.
From the perspective of the agency, the process of including pollution prevention in enforcement
can be broken into two major categories: (1) creating the opportunity for a firm to consider
pollution prevention either as injunctive relief or as a SEP; and (2) assessing, assisting with, and
deciding on, a firm's proposal for a specific pollution prevention project and developing
associated settlement terms (e.g., implementation schedule and penalty mitigation). Within these
two steps, there are numerous actors and factors that contribute to the outcome of the process.
The agency actors include: the Regional Administrator, division/branch managers, case officers,
and regional attorneys. The factors influence both the opportunity for pollution prevention within
each step and the willingness and capacity of the actors to seize this opportunity. The following
are a subset of agency factors that arise from our research: ;
•
• Encouragement, support, and rewards from Regional Administrator and managers (i.e.,
opportunities created for case officers and attorneys to implement pollution prevention in
enforcement settlements) j
• Case officer's and attorney's desire (or willingness) to include pollution prevention in a
settlement and to include projects in a settlement that entail some level of technical
uncertainty or R&D j
• Case officer's knowledge of pollution prevention (i.e., capacity to facilitate pollution
prevention in a settlement) !
From the firm's perspective, a different set of actors influence the process-owners, CEOs, line
management, engineers, in-house attorneys, outside attorney, and technical consultants to the
company. There is a set of firm-level factors that influence the outcome of the process; these
factors may act synergistically with, or in opposition to, agency-level factors. Firm-level factors
that we documented include: j
I
• The firm's desire to mitigate the penalty
• The firm's view of pollution prevention generally, or the specific prevention project as
being in the firm's self-interest !
• Opportunity for pollution prevention capital projects (i.e., previously unexploited pollution
prevention opportunity) i
I
• Sophistication of the firm's technology and technical knowledge
• Availability and quality of external sources of technical information
V-l
-------
• Willingness to implement a project with technical uncertainty (risk-taking vs. risk
avoidance)
In this section and in Section VI, we address the factors that emerge from our research as either
hindrances to or key ingredients for the process of including pollution prevention in enforcement
settlements. In this section we address barriers, inadequate incentives, and inappropriate
incentives from the standpoint of the agency and the firm, for both pollution prevention SEPs and
injunctive relief. By inadequate incentives we mean appropriate, existing incentives that are not
strong enough to consistently lead to a pollution prevention outcome; by inappropriate incentives
we mean incentives that encourage a non-pollution prevention course. In Section VI we examine
factors that contribute positively to successful pollution prevention outcomes.
A. AGENCY
1. Pollution Prevention SEPs - Barriers. Inadequate Incentives, and Inappropriate Incentives
a. Inappropriate performance evaluation criteria
In Section IV D. we presented our findings regarding the general agency climate for including
pollution prevention SEPs in enforcement, as related to us by the case officers, attorneys, and
managers that were interviewed. We stated that case officers and attorneys appear to be either
hampered, simply allowed, or infrequently encouraged by their managers to pursue pollution
prevention SEPs. On average, the environment for pollution prevention in enforcement can be
described as tolerant. Perhaps the most important barrier to transforming this climate of tolerance
into a climate of encouragement is the system of existing incentives that may act to discourage
the inclusion of pollution prevention SEPs.
The existing institutional system for evaluating the success of regional, program, and individual
efforts in enforcement does not formally reward efforts to include pollution prevention in
settlements. The success of an enforcement program is currently evaluated on the basis of the
numbers of plants inspected, numbers of cases settled, and dollars of penalties collected (or
aggregate ratio of proposed penalty to final penalty collected). Programs and regions receive the
same amount of credit for cases settled regardless of whether or not the case includes a pollution
prevention SEP, whether pollution prevention rather than pollution control is used as injunctive
relief, or whether the technology adopted is innovative. While the agency's policy statements
encourage pollution .prevention in enforcement, the incentive system may actually encourage
management to act otherwise.1
1 This issue is raised in the October 15, 1992 memo from the Senior Policy Council SEP Workgroup which
addressed barriers to pollution prevention hi enforcement and recommendations for overcoming these barriers. The
memo contains the following issue statements:
"• Better need to articulate environmental/enforcement purpose/goals of SEPs and how much the
V-2
-------
Three specific ways in which this incentive system biases against SEPs--encouraging 'simpler,
quicker and low-risk settlements—are discussed in the sections that follow.
b. Lack of individual motivation to include pollution prevention in enforcement: • case
officers and attorneys '
Given the absence of a system of rewards for pollution prevention in enforcement and the
resulting lack of managerial support, the individual motivation of case officers and attorneys has
become a critical factor. Consequently, the absence of motivation~on the part of these actors-is
a significant barrier to the inclusion of pollution prevention in enforcement.
Based on our research, it appears that a settlement has a significantly greater chance of including
a pollution prevention SEP if the case is assigned to a case officer who is personally motivated
to include a pollution prevention SEP.2 A case officer's motivation seems to derive primarily
from the personal satisfaction gamed by facilitating pollution prevention and the ability to give
firms an opportunity to turn a bad situation into a positive one. Personal motivation of attorneys
is another important factor though it may not be as critical as that of the case officer. Most
often, if a case officer decides to pursue a pollution prevention SEP the attorney will provide the
necessary support. If the attorney assigned to a case has had experience with pollution prevention
SEPs, and is enthusiastic about them, he or she can certainly facilitate the inclusion of a SEP.
When, for example, a firm is interested in implementing a project that requires a relatively long
implementation period, involves R&D, or a regulatory approval process (e.g., obtaining
environmental permits or FDA approval), a motivated and creative attorney might be necessary
to develop settlement terms that are mutually acceptable to the agency and the firm.
Some case officers and attorneys view SEPs as an unnecessary complication and are not
motivated to include them in settlements; others believe that enforcement should be used only to
punish non-compliers and not to leverage pollution prevention. Some case officers and attorneys
view pollution prevention SEPs as a potential risk to their careers since projects may fail in the
implementation phase and they may be blamed for approving the' project. Given the current
environment, it is unlikely that cases assigned to attorneys and case officers with these views will
include pollution prevention SEPs. As a result, the lack of motivation on the part of these critical
Agency would like to encourage SEPs relative to other enforcement goals (e.g., deterrence).
• Regional perception of tension between aggregate enforcement numbers approach and complex
settlement approach, including SEPs. Similar perception of mixed message regarding which is more
important, i.e., complex settlements take resources away from aggregate numbers.
• Need more Agency systems for providing "credit" [for pollution prevention enforcement
activity] and recognizing program performance, e.g., STARS, workload models, annual reports, etc."
2 Enforcement cases are assigned to a team of one or more case officers land attorneys on the basis of
workload and expertise.
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actors can be a significant barrier to the inclusion of pollution prevention SEPs.
If other barriers (such as penalty-based incentive systems) are overcome, and pollution prevention
becomes the primary modus operand! in the enforcement arena, the degree to which a pollution
prevention outcome is determined by one individual's motivation may be diminished, though it
is always likely to be an important factor in determining overall success.
c. Lack of sufficient time: Real and perceived
If additional time is needed to negotiate and monitor a pollution prevention SEP, time constraints
act as a barrier. In Section IV D. we reported our findings on the time needed to include
pollution prevention in enforcement. We concluded that time requirements can vary depending
on many factors—in some cases little or no extra time is needed and in other cases additional time
requirements may be significant. Consequently, if staff resources are not increased, it may be
necessary to reduce the expected number of settlements per year if the number of pollution
prevention SEPs is to increase. It is likely that as the regions gain more experience with
pollution prevention SEPs, the time required to settle a case with a SEP and then monitor project
implementation will decrease.
d. Inability to leverage entire penalty for SEP
As stated in Section I. C.2.e., in exchange for a SEP, a portion of the gravity component of the
penalty may be mitigated by an amount up to the net present after-tax cost of the SEP, depending
on the environmental benefit of the SEP. Where a violation is found which did not confer
significant economic benefit, e.g., a failure to notify, the settlement must include a penalty that
at least captures a portion of the gravity component.3
Several EPA case officers and attorneys interviewed have been constrained in their ability to
leverage pollution prevention SEPs as a result of not being able to reduce the economic benefit
portion ("BEN") of the penalty. This is particularly problematic when proposed penalties (gravity
plus economic benefit) are rather small—there is little financial incentive for the firm if a part of
the economic benefit portion cannot be leveraged. This is generally not a problem in EPCRA
313 cases where the penalty consists only of a gravity component. In these cases, virtually all
of the penalty can be used to leverage a SEP.
e. SEP policy nexus requirement
We described the SEP policy nexus requirement in Section I C.I.a. This policy is specifically
designed to restrict the regions to SEPs that have a reasonable connection to the source of the
violation or to the type of harm that was done as a result of the violation. In their report
EPA SEP Policy, February 12, 1991, page 10.
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"Pollution Prevention Through Compliance and Enforcement"4, OPTS reported the concern raised
by their staff on the nexus requirement as a limitation on their flexibility to develop pollution
prevention SEPs. The concerns were fairly general in nature. i
Our case study research did not reveal tangible evidence of the nexus requirement as a barrier
since we studied projects that had successfully navigated through the ;nexus screening process.
We can conclude that the nexus requirement was not a barrier to the rather rich array of projects
studied here.5 We cannot, however, draw conclusions about the projects that did not materialize
(i.e., the "missed opportunities") as a result of nexus requirements, although we will present
several observations. \
The nexus requirement was raised as a barrier to pollution prevention SEPs by case officers,
attorneys and management in two out of the three regions studied. In one region, a Division
Manager stated that he can no longer leverage projects at another plant in another region, or
leverage penalty monies to implement projects such as harbor dredging.6 In the other, an
experienced pollution prevention SEP attorney stated that the nexus requirement is a barrier to
the implementation of projects that reduce pollutants in a medium different from the medium that
is the subject of the violation.7 ;
- I
In the third region, two attorneys who have negotiated many pollution prevention SEPs said only
that they seek to avoid "labelling" pollution prevention SEPs as projects that fall under the
horizontal (rather than vertical) nexus category because this designation requires Headquarters
approval and guaranteed process delays of between 6-8 months. These attorneys expressed
concern that since Headquarters is so "removed" from the substance of the case, it does not make
sense for Headquarters staff to review the substantive elements of the SEP. Headquarters should
conduct only a cursory review to see if the SEP meets basic policy guidelines.
/ Difficulty in negotiating projects that require multi-media institutional approaches
Since none of the cases in this study involved multi-media enforcement efforts, we can not
provide a first-hand evaluation of the barriers to including pollution prevention SEPs in these
types of cases. However, noteworthy is a set of comments made by an attorney active in pollution
prevention SEP negotiations. This Attorney stated that it can be difficult to achieve consensus
among two or more divisions with differing priorities. For example, if EPCRA is the lead on
4 U.S. EPA, Pesticides and Toxic Substances, "Prevention Through Compliance and Enforcement." January
1992.
5 On case study-Pump Service and Sales Company-included a SEP which involved the installation of semi-
aqueous degreasing systems at the subject plant and at another plant in another region.
6 This is accurate if the other plant in the other region is a totally different type of facility than the one in
violation. However, it is possible to negotiate a "multiple SEP" in which the defendant makes the same kind of
changes at other plants similar to the violating facility.
7 The "horizontal nexus" provision hi the SEP policy is designed to allow for cross-media remedies within
the same facility.
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a case that involves Clean Water Act violations the Water Division does not always want to
devote time and effort to devising a SEP, in part because the Water Division would not get credit
for their efforts.
In other cases, there are disagreements, among the Divisions, over the environmental merit of the
SEP. The Attorney cited an example where EPCRA and the Air Division disagreed over a SEP
involving a switch from a lead dust-generating process to a process where lead would be fully
encapsulated in a component material (and in the product). EPCRA argued that this project did
not reduce or eliminate the use of lead and that the hazard may simply be shifted from the subject
plant to the plant that produces the encapsulated lead material. The Air Division supported the
project because it eliminated lead dust~a priority for this Division. Ultimately, the project was
not accepted as a SEP.
Not all pollution prevention SEPs with multi-media payoffs require a multi-media institutional
effort. Most pollution prevention SEPs negotiated under EPCRA, for example, have multi-media
payoffs but do not require the involvement of other .programs.8
g. Lack of knowledge and expertise in pollution prevention
It is useful to begin this section with a short summary of a typical (though simplified) pollution
prevention SEP process scenario, starting at the first settlement conference. This description is
based on our case study research and is designed to illustrate the existing flow of pollution
prevention/technical information within the region and between the region and the firm.
As indicated in Section IV D, once the regional negotiators raise the option of a pollution
prevention SEP, case officers may provide an overview of the concept of pollution prevention
and give examples of acceptable pollution prevention projects (e.g., aqueous-based cleaning
systems). The region negotiators will then suggest that the company submit a technical SEP
proposal, thereby relying on the company to develop and propose a specific project. When the
proposal is submitted, the case officer will generally use his or her own technical knowledge and
colleague's knowledge to evaluate the environmental merit and technical feasibility of the
company's proposal and to monitor project implementation. If the case officer has questions
regarding possible environmental impacts in another media, he or she might seek advice from a
technical expert in another branch. Case officers typically do not seek out published material on
pollution prevention, pollution prevention case studies delivered through electronic databases (e.g.,
PPEIS), or general technical information (e.g., texts or journal articles) on the specific industry
involved.
It should be emphasized that not all cases or case officers proceed according to this scenario.
However, we believe that this is a good working, base-line model upon which to elaborate the
8 For example, the elimination of a SARA Title IV organic solvent reduces worker exposure, ,air emissions
and hazardous waste generation.
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remaining discussion in this section.
We note five major activities within the pollution prevention SEP process where the case officer's
knowledge of, and expertise in, pollution prevention can be an asset. The five activities are:
1. encouraging the firm to propose a pollution prevention SEP;
2. facilitating the development of a SEP proposal;
3. evaluating the SEP proposal; i
4, monitoring the implementation phase; and ;
5. evaluating the success of the SEP. . • .
Three types of pollution prevention knowledge and expertise appear to be important for
supporting and enhancing these five activities: (1) a clear general understanding of the concept
and benefits of pollution prevention, (2) a case officer's ability to ask exploratory questions that
generate "pollution prevention thinking" on the part of the firm, and (3) a case officer's
knowledge of pollution prevention techniques. In this section we address the lack of type 1, 2,
and 3 knowledge and expertise as barriers to the performance of the five tasks listed above. In
addition, we discuss barriers associated with building a pollution prevention knowledge and
expertise-base within the regions.
In order to encourage a firm to propose a pollution prevention SEP, and to elicit a suitable
project proposal, it is important for the case officer and attorney to clearly convey the concept
and benefits of pollution prevention as well as the oft-mentioned list of pollution prevention
strategies—process modifications, reformulation or redesign of products, substitution of raw
materials, good housekeeping practices, etc.9 To the degree that this does not happen, the lack
of knowledge about pollution prevention can serve as an important barrier. The case officers and
attorneys interviewed evidenced a range of type 1 knowledge; some appeared fairly well versed
and others had a very sophisticated understanding of pollution prevention concepts and benefits.
Our research does not permit us to determine how well versed the Regions are, on-the-whole, on
the concept and benefits of pollution prevention. However, it is worth noting that we
encountered inappropriate use of the definition of pollution prevention in the classification of
SEPs reported by the Regions to Headquarters10. In some cases, SEPs involving removal of
underground fuel storage tanks and PCB contaminated transformers were inappropriately labelled
pollution prevention. i .
Beyond a general understanding of the pollution prevention concept and general prevention
strategies, the case officer may be able to stimulate and direct a firm's "pollution prevention
9 A 1992 Office of Pesticides and Toxic Substances study cited the inconsistent and inappropriate use of the
term pollution prevention as an important issue in the implementation of pollution prevention SEPs ("Pollution
Prevention Through Compliance and Enforcement, A Review of OPTS Accomplishments", January 1992).
10 These reports were submitted in accordance with the Office of Enforcement's May 18, 1992 memo
(Assessing the Overall Value and Impact of Enforcement Actions) requesting information on, among other things,
settlements containing SEPs. , j
I
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thinking" when the firm is beginning to consider a SEP proposal.11 Using even a limited amount
of information on the firm's technology—gathered during the inspection12 or during subsequent
discussions—a case officer can ask open-ended questions which may prompt the firm to recognize
pollution prevention opportunities. Examples of open-ended questions are as follows: "why are
you using a solvent in this process?" and "do you know the source of this contaminant?" Broad
familiarity and experience with pollution prevention approaches is necessary to effectively use
this approach, though this tact does not require specific expertise in the subject technology.13
In cases where the firm is unwilling to engage region negotiators in a discussion about their
manufacturing processes (possibly fearing further incrimination), this approach may not be
feasible.
The lack of knowledge of specific pollution prevention techniques may be a barrier to negotiating
pollution prevention SEPs or, more likely, a barrier to fully exploiting the "pollution prevention
potential" associated with a particular settlement. For this discussion, the definition of "pollution
prevention techniques" is important. Used here, the term includes both "general" and
"particularized" pollution prevention techniques. General techniques can be thought of as
universal pollution prevention techniques that apply to many industries; examples are: switching
from organic solvent to aqueous-based cleaners, solvent distillation systems, closed-loop cooling,
etc.. The term particularized refers to those techniques that apply to a given manufacturing
process; examples are: replacing solvent-based coatings with powder coatings in the coatings
industry and switching from hexavalent to trivalent chromium in metal finishing. General and
particularized knowledge are important for all five activities listed above. At minimum, case
officers need to be able to determine whether the project is environmentally beneficial and
whether there is unreasonable risk of failure (i.e., whether or not the project is on sound technical
footing). Ideally, the case officer should be able to provide guidance; general ideas (if the
company is open and receptive), constructive feedback on project shortcomings; and suggestions
for project improvements during the SEP proposal development, evaluation and implementation
stages (i.e., activities 2, 3, and 4 above). The post-implementation evaluation (activity 5) may
require less technical expertise but can provide an excellent opportunity for case officers to learn
about pollution prevention, and to critically evaluate the technological changes made and their
associated environmental benefits.
As we saw in our case studies, the relative importance of a case officer's pollution prevention
knowledge and expertise may be less critical to the success of a SEP negotiation if the firm is
11 As mentioned in Section IV C, most of the projects studied had been considered by the companies prior to
the violation. In these cases, it is likely that companies will simply propose these familiar projects, particularly if
they had already determined that the projects have technical and/or economic merit.
12 The case officer can increase his or her knowledge of the facility (and potentially opportunities for pollution
prevention) by conducting the inspection with pollution prevention as well as regulatory compliance in mind. This
strategy was used by the case officer in the CMPM case.
13 Greiner, T.J., Richard, P.H., and Dillard, L.A., "Facility Inspections-Obstacles and Opportunities." in
Pollution Prevention Integration. A Practical Guide for State and Local Government, Boca Raton, FL: Lewis
Publishers, 1994. pp. 45-54
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already well versed in pollution prevention, is technologically sophisticated/has retained a skillful
pollution prevention technical consultant, and has a good "ready-waiting" pollution prevention
project.14 Several of the more innovative or technically complex pollution prevention SEPs and
the sole injunctive relief project in our sample were negotiated by case .officers with little or no
prior knowledge or experience in pollution prevention.15 The companies involved in these cases
were quite technologically sophisticated and/or had good technical consultants. In these cases,
the technical challenge for the case officer was to apply good engineering judgement to determine
whether the project seemed technically feasible and implementable within a given time period.
However, there may have been missed, better opportunities stemming from the case officers' lack
of pollution prevention expertise. Unfortunately, this type of missed opportunity is difficult to
uncover in retrospective case study research. j
i • •
This section has focused on the lack of pollution prevention knowledge and expertise as a
potential barrier to including pollution prevention in enforcement settlements. Based on our
research, it appears that there are also barriers to developing this knowledge and expertise-base
within the regions.16 With regard to pollution prevention knowledge, we stated in Section IV D.
that there is little or no demand for either published information on pollution prevention (e.g.,
technical case studies or reports) or other data sources (e.g., TRI emissions for the plant) among
the case officers interviewed. Case officers, for example, often either;never heard of or never
used, the Pollution Prevention Electronic Information System (PPEIS).17 Even the most
motivated case officers that we interviewed do not seek out these resources.18 We conclude that
case officers do not find much value in these modes of information transfer.
i
Pollution prevention technical expertise-either general or particularized--is gained primarily "by
14 These issues are discussed further in Sections VI and VII dealing with firm-level barriers and elements of
success, respectively. ' !
15 Industrial Coater, Metal Finishing Company, Medical Device, Manufacturer and Bleached Kraft Pulp
Manufacturer. „
16 This issue was raised in the October 15, 1992 memo from the Senior Policy Council SEP Workgroup. The
memo contains the following issue statement: "The Agency needs to make available more training in pollution
prevention as a general approach as well as provide more technical expertise, training in, and examples of, cross-
media and media-specific pollution prevention activities which enforcement personnel can use in negotiations." This
memo was followed-up, in February of 1993, by a pollution prevention SEP needs assessment survey that was sent
to all Regional Program Division Directors, Pollution Prevention Enforcement Contacts, and Counsels.
17 Those engineers who we interviewed that knew about PPEIS are not comfortable with PPEIS' electronic
database delivery system, and they do not trust the accuracy or "freshness" of PPEIS information.
18 This finding is consistent with research conducted on the ways that engineers in research and development
organizations acquire technical information. One researcher, Tom Allen, showed that the engineer's favored source
of information is colleagues in the same organization~in the same and in other groups (Allen, T., Managing the Flow
of Technology. Cambridge, Mass.: MIT Press, 1977, Chapter 5. Micheal Tushman cites field studies indicating
that engineers spend 50 to 75 percent of their time communicating with others. , Tushman asserts that verbal
communication for problem-solving is a more efficient medium than written or more formal media and permits
timely information exchange, quick feedback, and critical evaluation. Research has consistently shown a link between
verbal communication and individual as well as project performance. (Tushman, M.L.., "Managing Communication
Networks in R&D Laboratories," Sloan Management Review. Volume 20 (2), 1979, pp. 37-49.)
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doing", by verbal information sharing/pooling among technical colleagues,19 and can probably be
supplemented by effective training. As more and more case officers are given the opportunity
to negotiate pollution prevention into enforcement settlements, the expertise base will grow. This
process could be supported by encouraging and providing opportunities-formally and informally--
for case officers to share knowledge and experience. " - .
h. Reluctance to approve technically difficult or risky projects
Technically difficult pollution prevention .projects, projects that require R&D, and technologically
innovative projects can be particularly vulnerable to a subset of barriers listed above. These
projects may require relatively long implementation periods, require fairly complex settlement
terms (e.g., a complex schedule of stipulated penalties where R&D is required), and carry a
higher risk of failure. However, these projects may generate environmental benefits in excess of
low risk, diffusion-based pollution prevention projects at the subject plant. Agency barriers that
may hinder the inclusion of these projects are those that reduce the willingness of agency
negotiators to establish long implementation periods,20 "creative" or somewhat flexible settlement
terms, and risk-taking and risk-sharing.21 Specifically, these barriers are: inappropriate
performance evaluation criteria, lack of individual motivation, and lack of sufficient time, as
discussed in the preceding sections. > .
Clearly, not all technically difficult projects should be accepted as SEPs. There are many
concerns that case officers and attorneys have, beyond the barriers cited here, that need to be
considered in a SEP decisionmaking process (e.g., if the company has not'sufficiently
demonstrated technical feasibility (i.e., is going on a "fishing expedition"), or if the time needed
for implementation is so long that it creates a risk of either company personnel or EPA'personnel
changing). (The latter concern was cited by several case officers and attorneys as a reason why
they prefer not to extend the implementation schedule beyond one year.)
19 According to one EPCRA case officer actively involved in pollution prevention SEPs, the group works
effectively as a team, discussing projects and pooling their technical resources. This group is relatively small and
this facilitates information sharing. ' '
20 Implementation periods over a year are generally considered long. ,
21 "Risk-taking" in this context implies a strategy where the agency would agree to a pollution prevention SEP
that involves a higher than average level of technical uncertainty if the short and long-term potential benefit
associated with the project is great. "Risk-sharing" implies that the agency is sharing the risk (and very likely the
cost) of developing and implementing a technically difficult/potentially high payoff project with the firm. In Section
VII we suggest that this strategy requires the agency to take a "portfolio approach" to pollution prevention SEPs by
allowing or expecting some technical failures, thereby encouraging some risk-taking as described here. Since
pollution prevention SEPs are, by definition, supplemental and not designed to bring the company into compliance,
there is less environmental and political risk associated with a SEP that fails as a result of technical reasons as
compared to pollution prevention-based injunction relief. Therefore, within reasonable bounds, SEPs may be an
ideal context for risk-sharing where a firm is a willing participant and has shown good faith.
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2. Pollution Prevention Iniunctive Relief ; • .••!.-'
Since only one often cases studied here involved injunctive relief, our ability to evaluate barriers
to the use of pollution prevention as injunctive relief is necessarily limited. In this section we
use our limited data and insights gained through the study of SEPs to discuss barriers to using
pollution prevention to remedy a violation: This discussion should be considered a first step that
should be expanded in future research efforts. ;
Many of the barriers discussed in the preceding section apply here, either directly or in slightly
modified form. Therefore, we will frequently refer .the reader to Section 1, above.
a. Desire to bring company into compliance quickly and to avoid risk of return to non-compliant
status
Unlike SEPs,, the question of whether pollution prevention is included in a settlement as
injunctive relief is typically a question of whether pollution prevention will be used instead of
pollution control to bring the company back into compliance. In essence, the stakes for the
agency are higher in this context--as compared.to the SEP context-because the agency has a duty
to the immediate and larger community to bring the violator into compliance and keep it there.
In the case of SEPs, the inclusion of pollution prevention represents an extra benefit, albeit at the
price of a reduced penalty. Therefore, where a firm is in violation of an emissions limit and must
effectuate a technology-based remedy (rather than, for example, a paperwork filing response), the
agency negotiators must agree to a technological response that has a low risk of failure and will
bring the plant into compliance quickly; To the degree that an effective, established, and familiar
end-of-pipe technology will achieve this objective, it will be an attractive choice. If a pollution
prevention alternative is not well understood by the case officer, appeal's to have a higher risk
of failure, or will take longer to effectuate, it will be a less desirable option.
The agency has tried to address this issue in its Pollution Prevention and Enforcement Policy.
The Policy "grants" agency negotiators the flexibility to extend the average timeline for resolving
the violation with a pollution prevention remedy, if: (a) the prevention option will produce an
aggregate gain in pollution reduction over the pollution control option, (b) the prevention
technology is reliable and available, (c) the prevention technology is applicable to other facilities,
and (d) the prevention approach offers the best prospects for permanent return to compliance!
The agency negotiators must make this determination. The degree to which this provision helps
to even the playing field for pollution prevention is difficult to determine. However, without
sufficient institutional encouragement (i.e., in the form of credit systems and managerial support)
or personal motivation on the part of the negotiators (as discussed ire Section 1), the safer
pollutipn control option may often seem the better choice. , .
b. Lack of pollution prevention knowledge and expertise
Where both pollution prevention and control remedies exist, the pollution prevention option will
be implemented only if the benefits associated with this choice are perceived to be superior by
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the firm and the agency to the pollution control strategy. In the Bleached Kraft Pulp
Manufacturer (BKPM) case, the company determined that total chlorine elimination was
environmentally (and possibly economically) superior to all pollution control strategies evaluated
and was eventually able to gain approval from the region.
The conclusions drawn in Section 1 g. above are relevant here. Pollution prevention knowledge
and expertise within the agency are important to encourage and guide a firm to consider pollution
prevention, as well as to evaluate the merits of the firm's pollution prevention injunctive relief
proposal. The absence of such knowledge may be a barrier to either initiating a search for a
preventative remedy or approving a prevention technology.
c. Lack of opportunity
Not all violations provide equal opportunity for firms to use pollution prevention as injunctive
relief. Where a violation constitutes a failure to file (e.g., EPCRA 313), failure to label (RCRA),
improper waste storage (RCRA), coming into compliance does not require a technological
remedy. Therefore, in these cases, the inclusion of pollution prevention in the settlement will
generally necessitate an inducement to the firm such as a penalty reduction (i.e., a SEP).
d Inappropriate performance evaluation criteria
As we mentioned above, the existing institutional system for evaluating the success of
enforcement efforts does not formally credit efforts to include pollution prevention in settlements.
The incentive system encourages simpler, quicker, and low-risk settlement conditions and may
bias the agency negotiators in the direction of a well established pollution control strategy over
pollution prevention.
The discussions in Section 1 (2) on lack of individual motivation to include pollution prevention
in enforcement, (3) lack of sufficient time seem to apply to pollution prevention in injunctive
relief as well. We refer the reader to those sections and do not repeat them here.
B. FIRM
1. SEPs - Barriers. Inadequate Incentives, and Inappropriate Incentives
a. Absence of support from top-level decisionmakers
For pollution prevention SEPs to be included in negotiated settlements, firm owners, CEOs, or
senior managers must be supportive of the SEP concept and must approve the use of resources-
in-house staff, technical and legal consultants, and other development and implementation
expenditures--to support the SEP process. We found that a decision, by these actors, to pursue
a pollution prevention SEP is typically based on some combination of a desire to mitigate the
penalty and recognition of the benefits of the pollution prevention project to the firm. Top-level
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decision-makers typically desire to settle the case quickly to avoid a prolonged negotiation or
"contractual relationship" with the agency and the accompanying added legal and financial
uncertainty. Therefore, the desire to mitigate the penalty plus the perceived value of the pollution
prevention project will have to outweigh the desire to settle quickly. To the degree that the
former does not outweigh the latter, the firm will be unlikely to choose to implement a pollution
prevention SEP.
From our case studies, it appears that the desire to reduce the penalty is based primarily on the
degree to which the firm believes that it was unjustly penalized (i.e., level of outrage)22, the
firm's ability to pay the penalty, and the size of the proposed penalty. With regard to the value
of the pollution prevention project, it appears that the value is perceived to be higher if the
project had been considered prior to the violation but not implemented because it could not be
financially justified23, because of resource constraints (e.g. available capital, too few hands and
too many projects), or a lack of a sufficiently powerful project champion24. The penalty
reduction, the ability to get a concession from agency negotiators (particularly when outrage is
high)25 and, more generally, the negative psychological impact of the enforcement process became
the necessary impetus for the implementation of the project. ,
b. Lack of sufficient time for proposal development and implementation
Once the EPA negotiators offer or agree to allow the firm to submit a SEP proposal, the firm will
need time for proposal development. The amount of time needed depends on many factors,
including: whether or not the firm had considered or evaluated the project prior to the violation,
the firm's familiarity with pollution prevention, the firm's technological sophistication, the
decision to use a technical consultant, and the complexity of the project. The lack of sufficient
time for a firm to develop a pollution prevention proposal may be either a barrier to
implementing a pollution prevention SEP or may lead to a sub-optimal project proposal.
In Sections A.I (2), (3), and (8), we discussed the agency-level barriers to establishing relatively
long project implementation periods (i.e., over one year). From the firm's point of view, getting
enough time to implement the pollution prevention project is a critical part of the negotiation
process. While the firm's we interviewed seem to be fairly sympathetic to the agency's desire
to keep the implementation period short, some firms were either uncomfortable with the timeline
that they were able to negotiate or felt time pressure to complete the: project(s) during the
implementation period.26
22 This was particularly evident in the Metal Filing Furniture Manufacturing (MFFM) and Lid Manufacturer
(LM) cases. i
23 See the Lid Manufacturer (LM) case. . . j
24 See, for example, the Powder Metallurgy Manufacturing Company (PMMC) case.
25 This was particularly evident in the Lid Manufacturer (LM) case. I , •
26 In one case—Industrial Coater~the company stated that they felt pressure from EPA negotiators to choose
the shorter time line and they agreed to it despite their reservations about their ability complete the rather complex
project. As a result of difficulties in the implementation stage, the company was unable to meet the SEP deadline.
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From our research, time limits were most problematic for firms that agreed to implement
technically difficult or innovative projects-Industrial Coater (1C) and Casted Metal Products
Manufacturer (CMPM). We could not determine, from our research, the degree to which SEP
negotiations breakdown over an inability to gain consensus over implementation periods.
c. Inadequate knowledge and expertise: within the firm and on the part of hired consultants
Firms come to the negotiation table with vastly different levels of pollution prevention
knowledge, expertise, and general technological sophistication. Larger companies tend to have
greater in-house technical and regulatory resources -and therefore are more likely than smaller
companies to have prior knowledge of pollution prevention. Larger companies are also more
likely to have one or more pollution prevention projects "in the wings" at the time of the
violation; making the task of proposing a SEP to the agency negotiators somewhat simpler.
For smaller companies with little or no prior knowledge and experience in pollution prevention,
the pollution prevention SEP process presents many challenges, including: learning the pollution
prevention concept and how the techniques can be integrated into their existing manufacturing
processes, developing a SEP proposal that is acceptable to the regional negotiators, and instilling
confidence in the regional negotiators with respect to their ability to execute the project. All of
these challenges must be met in the context of an oftentimes threatening enforcement situation.
To meet these challenges, small firms tend to rely on outside technical consultants. Outside
consultants not only fill a need for additional technical expertise, as we heard in several company
interviews, the consultants also help to build confidence for the SEP proposal in the regional
negotiators (whether the technical ideas originated by the firm or the consultant). Therefore,
smaller firms may face a barrier to SEP inclusion if they do not use a technical consultant.
The small firm's choice of consultant will, in part, determine the type of project proposed. If the
company hires a consultant to assist in correcting the violation, we would expect that the
consultant will be retained to develop the pollution prevention SEP proposal.27 Few
environmental consulting firms, i.e., those firms that have traditionally focused on compliance
audits, design and implementation of pollution control systems, and other regulatory services,
have experience in assisting firms to implement pollution prevention. Many environmental
consulting firms have strong incentives to recommend capital intensive pollution control projects
to solve environmental problems, since these firms derive a large share of their income from
pollution control system design and construction (not recommending that firms redesign their
production processes or to switch to a new process chemical).28 In addition, these consulting
firms (particularly the larger firms) prefer to recommend and install the same pollution control
system as often as possible since it is cost effective to duplicate plans and specifications (e.g.,
27 See Metal Filing Furniture Manufacturing (MFFM) and Casted Metal Products Manufacturer (CMPM) cases.
28 See the Casted Metal Products Manufacturer (CMPM) case.
V-14
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recommending a cyanide chlorination system rather than cyanide elimination).29 Consulting arms
of equipment vendors have great incentive to sell their equipment or chemicals and will tend to
solve problems accordingly (see for example, the Metal Machining Company (MMC) case).30
!
Increasingly, environmental consulting firms are upgrading their services to include
recommendations and design services for waste minimization techniques. For example, the
environmental consultant hired by the Metal Filing Furniture Manufacturer (MFFM)
recommended and facilitated the installation of a solvent recycling system, a baffle collection
system for paint overspray, and several other paint and solvent waste minimization systems. The
type of knowledge needed to recommend these waste minimization options is analogous to the
"particularized" pollution prevention knowledge that we discussed (in the context of the EPA case
officer) in Section A.I (7).31 The consultant that assisted the development and implementation
of the gasket reformulation project at the Lid Manufacturer (LM) plant, was an engineering
consultant (not an environmental consultant) who had good knowledge of environmental
regulation. The company was very pleased with her performance. '
•
d. Lack of capital or financial incentive . j
i
Parallel to the discussion in Section A. 1 (4) Inability to leverage entire penalty for SEP. where
the capital cost of the project is high, the financial payback of the project is low, and the penalty
reduction is relatively small (as a percentage of capital cost), the firm may have little financial
incentive to implement a pollution prevention SEP or may have difficulty raising the necessary
capital (particularly in the case of small firms). None of our case study firms faced this barrier
as such, therfore, we cannot assess the number or type of SEP opportunities that were missed for
this reason. As discussed in Section A. 1 (4), several EPA case officers arid attorneys interviewed
stated that their inability to reduce the economic benefit portion of the penalty has constrained
their ability to leverage pollution prevention SEPs.
j
e. Lack of good legal support i
Several firms stated that their outside attorney was instrumental in negotiating the SEP. In these
cases, the attorneys had prior experience with environmental regulatory;settlements or with the
SEP process specifically. In one case—Casted Metal Products Manufacturer (CMPM)~the firm
representatives stated that their attorney had no previous experience with environmental law and
29 Personal conversation with Daryl Beardsly, pollution prevention consultant, August 4, 1993.
30 Alternatively, a firm that hires a consultant with pollution prevention expertise may constrain the
consultant's ability to propose certain projects either by giving them a fairly narrow compliance problem to solve,
requiring a quick-fix solution, a low-risk solution, or a "low maintenance" solution (e.g., a metals precipitation system
as opposed to a recommendation that the plant optimize their production process to reduce metals dragout which may
require operator education and training and may at times affect product quality), (personal conversation with Joseph
Conzano, Case Officer, EPA Region I.
31 The small consulting firm, or the one or two-person operation, with pollution prevention knowledge and
experience (of which there are a few) are less likely to be encumbered by the issues raised in this paragraph.
V-15 i
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that they felt disadvantaged in the negotiation process. We conclude, therefore, that an attorney
with little or no experience in environmental settlements may be a barrier to negotiating a
pollution prevention SEP, particularly where the nature of the technological change or the firm
requires complex settlement terms.32 ,
/ Opportunity for pollution prevention capital projects (i.e., previously unexploited pollution
prevention opportunity) ,, ,
One EPCRA case officer stated mat in some instances where a company is particularly aware and
active in the area of environmental management, few or no pollution prevention SEP
opportunities33 may be available. In these cases, there may be a lack of opportunity for a firm
to receive a penalty reduction in exchange for a pollution prevention SEP.34
In Section VII, we recommend that these "leader firms" be given special consideration for shared-
risk, innovative pollution prevention projects.
2, Pollution Prevention Iniunctive Relief - Barriers. Inappropriate Incentives and Inadequate
Incentives
As discussed hi Section A.2 above, we are limited in our ability to evaluate barriers to the use
of pollution prevention as injunctive relief since only one of our cases involved pollution
prevention as a means to come into compliance. This section, draws on limited data and insights
gained through the study of SEPs.
Many of the barriers discussed in the preceding section apply here, either directly or in slightly
modified form.
a. Lack of pollution prevention knowledge and expertise
When a technology-based remedy is necessary to come into compliance, a pollution prevention
technological response can only be considered if: (a) the firm itself, its consultant or the agency
recognizes an opportunity to use pollution prevention as injunctive relief, and (b) if the benefits
associated with the prevention choice are perceived to be superior by both the firm and the
agency (see Section A.2 (2)). For example, hi the Bleached Kraft Pulp Manufacturer (BKPM)
32 See Section 1 (8) for a discussion of complex settlement terms.
33 For the purposes of this discussion, it is important to note that this case officer tends to view the SEP
context as appropriate only for pollution prevention projects that pose low-risk of technical failure, and require
relatively short implementation periods.
34 On the other hand; there are firms that have a,history of poor environmental management where there are
many "low-hanging fruit" pollution prevention opportunities. The case officer that raised this point was concerned
that the "laggard" companies would, in a sense, ;be rewarded with a penalty reduction in excess of the "leader"
companies given the greater number of pollution prevention opportunities for the "laggards."
V-16
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injunctive relief case, the mill recognized that they could meet the requirements of the Clean
Water Act by totally eliminating chlorine from their bleaching process, ttiey determined that this
option was environmentally (and possibly economically) superior to all pollution control strategies
evaluated, and the Regional Office accepted this compliance strategy. Leaving aside the agency's
role (discussed in Section A), we can conclude that if the firm has no familiarity with, or no
experience in, implementing pollution prevention; and if the firm's consultant is. also
inexperienced or has an incentive not to recommend a pollution prevention remedy (see
discussion in Section B.l.c), then a pollution prevention remedy will not be considered.
Furthermore, if a pollution prevention remedy is considered, but the benefits (including cost) of
pollution control appear to outweigh the benefits of prevention, the eontror option will be
selected.35 '
• • • : . • . , i,
The discussion, hi Section B.l.c, concerning the role of the environmental consultant is
particularly important here and should be referred to in the context of injunctive relief. We do
not repeat it here. .... . - „ . ; .<•• ,
b. Fear of technical failure
When considering technology options for injunctive relief, the firm has great incentive to pick
an option that is perceived to have a low risk of failure since, if the project fails to meet the
regulatory requirement, the firm will incur: additional cost in developing and implementing
another technical option, additional legal and administrative costs, as well as prolonging the
uncertainty associated with a pending enforcement case. Therefore, where pollution control and
prevention options exist, if a pollution control option appears to have a lower risk of failure, it
will have greater appeal to the firm. -
35 One important consideration is the way in which the fjrm and/or the consultant evaluates the costs and
savings of the pollution prevention option compared to the pollution control option. Current financial analysis
practices tend to skew investment choices in the direction of pollution control technologies because preventatiye
strategies tend to yield benefits in many indirect ways and over longer periods of time, and include numerous
contingency savings (e.g., avoided Superfund liability or fines) in the spectrum of benefits that they create. (White,
A., Becker, M. and Goldstein, J. "Total Cost Assessment: Acceleratirig Industrial Pollution Prevention through
Innovative Project Financial Analysis, with Applications to the Pulp'arid Paper Industry." A report to the ILS.
Environmental Protection Agency, Office of Pollution Prevention and Toxics. May 1992.)' ; ••'••^•''
V-17 I
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VI IMPORTANT DETERMINANTS OF SUCCESS IN PROMOTING POLLUTION
PREVENTION IN ENFORCEMENT AGREEMENTS
In the previous section we identified barriers, inadequate incentives and inappropriate incentives
for incorporating pollution prevention in enforcement agreements, that were suggested from our
research. Here we discuss the important determinants of success for pollution prevention in
settlement agreements which are particular to the Agency and to the firm, and those important
to both. This section contains both empirically-derived determinants of success-specific to our
case studies and from general interviews with agency persormel-and determinants that were not
derived empirically but that we consider to be important based on prior research conducted by
the authors and by other researchers.
A. IMPORTANT DETERMINANTS OF SUCCESS PARTICULAR TO THE AGENCY
1. Enforcement Policy and Practice
In order for the agency to succeed at promoting pollution prevention in enforcement agreements,
EPA needs to integrate pollution prevention as the preferred response into all relevant
enforcement policies and practices. The bulk of enforcement activity is organized around
securing compliance for single-medium regulatory requirements. Superimposed upon this
inherited fragmented structure is the "Interim Policy on Pollution Prevention in Enforcement"
which states that pollution prevention shall be the favored means of achieving and maintaining
compliance.1 Despite this statement of agency preference for pollution prevention, the policy
is simply one of the options that enforcement personnel may utilize; on the other hand it may
be ignored. Critical to translating this policy into enforcement activities is a concern within
enforcement programs for the means as well as the fact of compliance, i.e., an articulation of
pollution prevention responses within enforcement programs as the preferred means to achieving
compliance. This concern appears to be missing and its absence may be the reason why, in
particular, we found only one reported case of pollution prevention injunctive relief.2
To promote pollution prevention SEPs, the agency should articulate within the SEP policy a
Interim Policy, page 1. i
Administrator Browner's reorganization of the new Office of Enforcement and Compliance Assurance will
result in a more integrated enforcement program which should address many of the issues raised in this section.
The principles underlying the reorganization include measuring enforcement success through improvement in
compliance rates and environmental results, rather than through an exclusive relieince on the "number" of
enforcement actions, as well as instituting a "multi media," "whole facility" compliance and enforcement approach
organized around major sectors of the economy. This approach will result in more "particularized" sector expertise
within the Agency, which will enhance the use of pollution prevention and other innovative techniques in the
enforcement program.
j
VI-1
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preference for pollution prevention over other types of SEPs. One attorney active in negotiating
pollution prevention SEPs encourages violators to propose pollution prevention, rather than other
types of SEPs, by advising companies that they will receive greater penalty mitigation for
pollution prevention.
The agency has taken a first, and important, step by issuing the "Interim Policy on the Pollution
Prevention in Enforcement" and the "SEP policy." It appears that these policies have been
successful in providing administrative support and guidance for motivated individuals and
branches within the regions, however, greater effort is needed to overcome the disjuncture
between what the agency articulates as its philosophy and what it directs its agents to do in
enforcement of environmental requirements. As stated by one case officer, enforcement
personnel should abandon their current approach of asking "is the firm out of compliance? and
what should the penalty be?" and ask instead "if the firm is out of compliance, is this an
opportunity for pollution prevention?"
2. Multi-media Approaches and Multi-Media Pav-offs
While there were several cases of multi-media improvements (including worker health and
safety) in our case studies, none involved multi-media settlements. However, we believe that
the adoption of pollution prevention technologies with multi-media pay-offs will be facilitated by
a shift, wherever possible, from single-medium enforcement strategies to a multimedia approach.
Through multi-media inspection, the firm may listen with a "number of ears" and be prompted
to think of more comprehensive solutions to their pollution problems. Multi-media inspection
and enforcement can provide an opportunity for single-medium technical experts within the
agency to pool their pollution prevention know-how to create multi-media pollution prevention
expertise within the agency. Particularly in the context of injunctive relief, where a multi-media
pollution prevention response can be identified, the firm may be more economically attracted to
this option—than to a single-medium pollution prevention project or pollution control—because
a single production change may solve several problems simultaneously.
3. Willingness and Capacity
The agency must have both the willingness and the capacity to change its approaches to
compliance and enforcement. We documented a number of individuals who are willing and able
to act as "change agents" by seeking out and exploiting opportunities to facilitate pollution
prevention through SEPs. Some agency employees must be willing to engage in risk taking if
real progress is to be made hi shifting agency policies to pollution prevention in a meaningful
way. That willingness and capacity requires adequate incentive systems, training, and education
geared toward changing both attitudes and requisite knowledge.
VI-2
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4- Providing Adequate Incentives to Firms Without "Giving Away the-.
Even though the agency should ensure that the penalty mitigation conferred does not exceed the
direct economic benefits to the firm, the agency should exploit and leverage the substantial
indirect economic and other benefits that accrue to firms undertaking a significant technological
transformation. Firms are motivated by hard economic factors (e.g., material, energy, water
and waste disposal cost reductions) and soft economic factors (e.g., improved future
compliance/liability position, improved rapport with agency, public image, etc.). Where
economic benefits are direct, traceable, and quantifiable, agency negotiators should not, and tend
not to, confer significant credit in penalty reduction. Where benefits axe indirect, difficult to
trace, and to quantify (e.g., longer-term benefits such as avoided future liability), agency
negotiators should be, and tend to be, willing to confer these benefits upon the firm'through
penalty mitigation. Our cases and general interviews demonstrated that agency negotiators are
generally prudent in determining the appropriate level of penalty mitigation-they are willing to
provide incentives for pollution prevention but are not willing to subsidize those projects with
sizable direct economic benefits.
Providing penalty mitigation for a pollution prevention project can be used to "reward" those
firms that have a history of compliance, employ good environmental practices, have shown
good faith in coming into compliance and in settlement negotiations, and in cases where the
violation or its impact are not egregious (e.g., failure to submit a Form R under EPCRA).
B. IMPORTANT DETERMINANTS OF SUCCESS PARTICULAR TO FIRMS
The firm too must have the willingness and capacity to change its production system and be
willing to take some risks. This would be greatly facilitated by so-called "change agents" and
"technical gate-keepers" within the firm itself. A change agent may be a technical or non-
technical person that sees, and can champion, the benefits of pollution prevention within the
firm. The technology innovation literature documents the importance of a technical gatekeeper
to the innovation process. A technical gate-keeper is an individual that effectively brings into
the firm, and disseminates within the firm, the technical information needed to fuel the research
and development processes that are key to the creation and implementation of new technical
ideas.3
I
It is especially important that the firm be cognizant of the indirect economic and other benefits
that can accrue from undertaking pollution prevention. These may well be more important that
the monetary reductions to penalties. i
Additionally, the firm must be acting in good-faith to come into compliance and/or to mitigate
3 See for example, "Chakrabarti, A.K. and Hauschildt, J., The Division of Labour ii
R&D Management, Vol. 19, No. 2, 1989, pp. 161-171. and Allen, T., Managing
Cambridge, Mass.: MIT Press, 1977.
in Innovation Management."
the Flow of Technology.
VI-3
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the penalty through a carefully-considered pollution prevention project.
C. IMPORTANT DETERMINANTS OF A STTr.r.RSSFTTT/POTJCY: AGENCY AND FIRMS
While the above discussion has emphasized elements that each of the parties to a negotiated
settlement should have to bolster the chances of a successful outcome (particularly those related
to willingness and capacity to change), here we discuss elements that are crucial to ensuring that
the interaction amongst the parties leads to a fruitful result. Thus, the factors discussed below
largely refer to process elements that enhance the opportunity for change.
1. Timing and Time Allowed for Pollution Prevention Responses ' .
The timing of the agency's recommendation that the violator pursue pollution prevention for
compliance or the timing of the agency's "offering" of a SEP option may be particularly
important. The suggestion or offer should occur early enough in the agency-company dialogue
to receive serious consideration by the firm and not too far along such that the .interaction
becomes too adversarial. The firm should te granted adequate time for proposal development
and implementation.
2. Provision of Information
It is important that the agency give pollution prevention/enforcement policy and SEP policy
information to the company early on in the process and to stress that pollution prevention
responses are at the top of the EPA hierarchy.- Policy information can be delivered, as done by
several attorneys, by giving the violator copies of the actual policies. Ideally, industry should
be provided with a handbook on pollution prevention in general and in the context of an
enforcement action. '
3. Structuring the Negotiation Process
The negotiation process itself should be specifically designed to encourage and accommodate
pollution prevention SEPs and injunctive relief in the context of the particular situation facing
the parties, rather than letting an ad hoc process evolve. For example, when violators have little
or no familiarity or experience with pollution prevention, pollution prevention audits should be
encouraged and the cost of these audits should be considered in the determination of the
appropriate level of penalty mitigation (particularly for smaller firms).
For both the agency and the company, the different roles of the technical and legal participants
must be carefully delineated. It may be difficult to have a constructive technical discussion in
a charged atmosphere characteristic of the adversary process. Preparing ahead of time and
charting the evolving roles of the various players would be worthwhile. Furthermore, because
the interactions of the parties will .continue over a year or more, continuity of personnel assigned
to a particular negotiated settlement is important.
VI-4
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Where innovation rather than diffusion-driven technological solutions offer the greatest
environmental benefit, if necessary, the pollution prevention agreement should contain
appropriately flexible terms and conditions to permit some experimentation and technology
development. The Medical Device Manufacturer (MDM) settlement contained such terms In
tins case project milestones and stipulated penalties where structured to allow the firm to test and
develop the deiomzed water degreasing system before committing to purchase the equipment
These types 9f settlements should be reserved for those firms that have: demonstrated good faith.
4. Technical Knowledge and Expertise ,
•It appears that while the provision of technical information or suggestions by the agency to the
company can help secure success, it is particularly advantageous if technical expertise in
pollution, prevention approaches exists within the company itself. In-house technical
sophistication might be expected to lead to more innovative (and environmentally beneficial)
results, since the company is most familiar with its own technology and (usually the) sources of
'environmental problems. In the CMPM case, where the case officer had substantial knowledge
>of pollution prevention and provided numerous ideas and information, the pollution prevention
project development process was very time and resource intensive-for both the agency and the
firm. •'•;•::•.-,-,
If the company lacks in-house expertise, a second best scenario would be for the company to
have access to a good consultant. The use of technical consultants by the company can add
significantly to both the initial negotiation of a pollution prevention settlement and to its
successful implementation. As discussed in Section IV, consultants skilled in pollution control
are not necessarily the best positioned to offer pollution prevention advice. Private consulting
firms are only recently beginning to develop this expertise, and where it exists it tends to focus
on proven pollution prevention techniques that can be purchased "off-the-shelf". Thus, tailor-
made changes that are optimal for a given production situation are unlikely to be suggested from
sources outside the firm. These changes are generally too risky for the pedestrian consultant to
undertake. • , : . ,
• ' ' '•-••"',•'''.' ' , ' 'b •;'''•
5. Project Monitoring
Obviously, adequate monitoring of project progress is essential for a variety of purposes: to keep
sufficient pressure on company to pursue and complete the project, to ensure continuing agency
interest and support, and to promote both agency and firm learning in the implementation
process. Settlements with pollution prevention SEPs generally have more milestones than the
usual settlements. Regions are beginning to implement Local Area Network-based computer
tracking systems to follow compliance milestones-these systems can ease somewhat the
additional monitoring burden associated with SEPs.
VI-5
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VII RECOMMENDATIONS
The previous sections of this report address the barriers, inadequate incentives and inappropriate
incentives (faced by both agency and company players) that need to be corrected to optimize
opportunities for pollution prevention (Section VI) and the positive features that would facilitate
these opportunities (Section VII). Obviously, correcting defects in the existing system and
shoring up the determinants of success comprise part of the recommendations that emerge from
this research effort. In this section, we specify actions that the agency might take.
A. FURTHER REFINE THE GOALS AND OBJECTIVES OF THE "INTERIM POLICY ON
POLLUTION PREVENTION IN ENFORCEMENT SETTLEMENTS"
The formal policy directive should encourage pollution prevention initiatives to shift from the
diffusion of established pollution prevention technologies to more innovative responses, where
desirable. Innovation may be more technically risky, but the economic and environmental
payoffs are potentially more significant. Encouraging the firm to undertake technological
changes is a major step. Once the firm is persuaded, the opportunity should be seized to
maximize the results. Rather than being satisfied to bring laggard firms up to best industrial
practice, opportunities to "leap frog" to superior production systems should be identified and
pursued within the constraints of practicality. The range of possible technological options should
be broadly, rather than narrowly, construed. Obviously, however, teclinical sophistication is a
prerequisite to success.
j
A "portfolio approach" to evaluating the success of efforts to include pollution prevention in a
particular enforcement program is recommended whereby some failures are tolerated in order
to encourage a level of risk taking and thereby extending the number of higher payoff initiatives.
Innovative policies require that there be failures as well as successes. Where innovative
pollution prevention is included as a SEP, a technical failure would not jeopardize the
compliance status of the firm; therefore, SEPs can be an ideal vehicle for innovative projects.
The consequence of a technical failure in the context of injunctive relief requires more caution
and warrants consideration of the risk to the community and environment of prolonged non-
compliance should the innovative strategy take longer to effectuate or fail in implementation.4
Multimedia responses should be encouraged, wherever possible, as a matter of articulated policy.
Because more innovative and comprehensive technological changes are difficult, the policy
should articulate more willingness to extend the time frame for complet ion-beyond the normal
period--for innovative and/or significant technological changes with multi-media environmental
benefits.
The agency has sought to address this issue in its Pollution Prevention in Enforcement Policy by requiring
the inclusion, within the consent agreement, of a "fall-back" schedule for compliance using a specified proven
technology (see Section I.l.b).
VIM I
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Finally, the policy for encouraging pollution prevention in SEPs/injunctive relief should be
designed and implemented as part of an overall five-component pollution prevention technology
policy involving standard-setting, innovation waivers5, permitting, compliance and compliance
assistance, and enforcement.6
B. CHANGING BARRIERS AND INCENTIVES
Barriers to pollution prevention in enforcement must be overcome if positive incentives are to
be successful. The absence of adequate technical knowledge, pollution prevention ideas, and
an understanding of what is required to implement technological innovation~on the part of both
the agency and the firm-present significant barriers to progress.
Perverse incentives facing Aeencv personnel need to be eliminated, especially those relevant to
performance reporting and evaluation. The opportunity cost for agency participants to involve
themselves in pollution prevention SEPs/injunctive relief must be recognized and accommodated.
More particularly:
(1) Participation hi pollution prevention enforcement activities should be made an explicit
part of performance evaluation at lower and middle levels of management.
(2) Participation hi pollution prevention SEPs/injunctive relief should be reported
alongside of traditional enforcement activities.
(3) Performance evaluators should avoid setting "case equivalents" (e.g.,counting a
pollution prevention case as equivalent to two traditional enforcement cases).
(4) Quantitative measures of pollution prevention case success should be avoided (e.g.,
success measured by dollars of capital investment) as well as other "mechanical"
evaluations.
5 Innovation waivers are incentive devices that were built into the Clean Air Act, the Clean Water Act and
RCRA. Generally, the waivers extend deadlines by which industry must install pollution control equipment to meet
emissions permit limitations. In essence, the innovation waiver exempts industry from penalties and offers it the
prospect of cost savings derived from a superior technology. See the following for an examination of the
effectiveness of innovation waivers: Ashford, N.A., Ayers, C., Stone, R.F., "Using Regulation to Change the
Market for Innovation," Harvard Environmental Law Review. Vol. 9, No. 2, Summer 1985, pp. 419-446.
6 EPA's Innovative Technology Council (ITC), in its capacity as an internal advisor and advocate of
innovative technology, can assist the agency in designing and implementing a pollution prevention technology policy.
This would include facilitating the inclusion of innovative pollution prevention into compliance and enforcement
activities.
VII-2
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success measured by dollars of capital investment) as well as other "mechanical"
evaluations.
(5) Evaluations should include the numbers and percentage of cases with pollution
prevention SEPs/injunctive relief (both successes and failures),
(6) The agency participants involved in pollution prevention implementation and
evaluation should participate in the development of the criteria for success.
Positive incentives creating opportunities and rewards for participation by case officers and
attorneys need to be instituted, particularly encouragement, support, and acknowledgement from
regional administrators and managers. Improving the individual motivation of potential
participants will necessarily involve designing an appropriate performance evaluation scheme,
but more is required:
(1) Case officers and attorneys should be made aware of the indirect economic and other
benefits that can accrue to a firm from pollution prevention and, for SEPs, be encouraged
to communicate to the firm that choosing to implement pollution prevention offers a great
deal more than just a penalty reduction. {
i
(2) Sufficient agency resources must be available to accommodate the increased time and
attention that pollution prevention enforcement activities require.
(3) Opportunities need to be created for the case officers and attorneys to engage in
multi-media enforcement activities, as well as to fashion multi-media responses on the
part of the firm. !
,!
(4) Innovative, but risky projects require a safe environment for case officers and
attorneys to take risks. ,
Obviously all this requires a major commitment from regional administrators and managers. The
changes in formal policy suggested above in Section A would help to create this commitment,
but personal commitment on the part of the regional leadership is required as well.
i
C. IMPLEMENTATION STRATEGY RECOMMENDATIONS j
(1) Once the agency and the firm have decided to pursue a pollution prevention project, it is
important to maintain flexibility in the fashioning of settlements.7 Agreements should be tailor-
made. This is especially important if innovative pollution prevention is to be attempted.
7 See for example the Metal Filing Furniture Manufacture (MFFM) case.
VII-3 !
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(2) The agency should use the pollution prevention SEPs/injunctive relief cases to facilitate the
development of new technologies and to discover optimum strategies for the reduction of
environmental impacts.
(3) Build into the agreements that the company will be willing to have someone within the
agency or a third party evaluator come in and follow-up the technical success of the pollution
prevention project. Highly successful projects could be advertised as "showcase" examples.
In addition, as is done hi some instances, the fact that the company has agreed to undertake a
pollution prevention project can be reported to the press along with information on the violation.
(4) Some enforcement settlements could be designed as demonstration projects from the start,
with joint continuous input from the agency and the firm. Demonstration projects can encourage
other companies with similar problems and/or technologies to consider implementing pollution
prevention, within or independent of, the context of an enforcement action. Additional penalty
reduction could be considered for these projects.
(5) Reference to the firm's TRI reporting data could help both the firm and the agency identify
and fashion attractive options for pollution prevention involving input substitution, product
substitution, and possibly process re-design with multi-media payoffs-especially hi the cases of
non-EPCRA violations that usually involve a single-medium violation.8
<"6) Use multi-media inspections to promote multi-media pollution prevention SEP/injunctive
relief outcomes.
(7) Encourage and utilize agency staff who are particularly well-suited and motivated to do
pollution prevention. Also, consider establishing, on an experimental basis, a pollution
prevention SEP/injunctive relief team of attorneys and case officers who do only pollution
prevention settlements and/or creating the position of "pollution prevention specialist" who
consults within the agency.9
(8) Re-examine pollution prevention SEP/injunctive relief policy in the context of the small
firm. There are two distinctly different types of small firms: (1) entrepreneurial, highly
innovative "technology-based firms", and (2) "Ma and Pa" firms that are using old technology
(often the firm is privately owned or family run). In case of the former, if the firm is interested
hi and capable of fostering technological innovation, consideration should be given to a
significant reduction in penalty for undertaking the development of technically risky, but
potentially significant technology. In case of the latter, significant penalty reduction should be
8 The agency's December 3,1990 guidance, "Regional Enforcement Management: Enhanced Regional Case
Screening," encourages regions to consider TRI data during its deliberations to determine whether violations at a
facility warrant a multi-media enforcement action or present opportunities to negotiate cross-media SEPs.
9 The Multi-Media Division, which is part of the Office of Regulatory Enforcement in the newly reorganized
Office of Enforcement and Compliance Assurance, would be the appropriate "home" for this expert team.
VII-4
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considered to encourage the firm to adopt (or adapt) proven, "off-the-shelf" process/product
technology. Thus, the Agency could encourage innovation-driven pollution prevention in the
first case and diffusion-driven pollution prevention in the second.
D. EDUCATION AND TRAINING
Here the goal is to develop attitudinal changes, confidence, and knowledge. There are many
different modes of providing education and training for both agency personnel and private actors.
The agency should approach these activities on an experimental basis, concentrating in the
regions. Specific options include:
i
(1) Give consideration to the existence and need for different levels or types of
knowledge (see Section V A.!.(!)) and offer or target specialized training based on these
different categories. Consider hiring and/or creating industry experts within the regions
that can act as a source of technical knowledge on general technologies and pollution
prevention approaches within a type or a related group of industries. Specialized
expertise on pollution prevention generally, or pollution prevention within an industrial
sector can be deployed for both compliance assistance (i.e., outreach to the regulated
community) and enforcement activities. j
i
(2) Provide team (i.e., case officer and attorney) training so that not only is knowledge
imparted, but also training in working together toward a pollution prevention goal in the
context of a SEP/injunctive relief settlement.
(3) Build internal capacity within ORD's Research Triangle Park and Cincinnati Labs to
support the development or review of pollution prevention projects within enforcement
settlements. Improve communication and coordination with RTP and Cincinnati on
critical pollution prevention technology areas. Rotate case officers through ORD
facilities.
(4) Rotate state or federal case officers through a one-year detail with States' Offices of
Technical Assistance (pollution prevention engineering services).
(5) Educate technical consultants (who serve the private sector) in pollution prevention
approaches to compliance and in pollution prevention in general, so that the firms can
have access to better technical advice and be apprised of the pollution prevention
SEP/injunctive relief options. This could easily be done at technical conferences on
environmental technologies and compliance, especially those at v/hich agency personnel
are often invited to present. j
(6) Educate environmental attorneys in the pollution prevention SEP/injunctive relief
option. This could easily be done at the many conferences that are put on in
environmental law and litigation at which agency personnel are often invited to present.
VII-5
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(7) Establish outreach programs to firms, delivering information and making use of
showcase examples and demonstration projects discussed above.10
The recommendations above and earlier observations concerning barriers, incentives, and
determinants of success should be packaged in a guidance document for regional
administrators, managers, and enforcement personnel.
10 The three sector divisions in the newly reorganized Office of Enforcement and Compliance Assurance
would be an appropriate place to house outreach programs.
VII-6
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VIII CONCLUSIONS AND LESSONS FOR FUTURE STUDY
Through the study often enforcement settlements containing pollution prevention conditions, this
report has documented many successful outcomes of agency endeavors to promote the use of
pollution prevention in enforcement. These successes can be measured 'directly by changes in
firm technology and associated environmental and human health benefits, as well as by the many
tangible and highly valuable indirect benefits realized both within the firms and the agency.
Within the firms, indirect environmental, health, and economic benefits were derived from the
transfer of SEP technology to other processes in the subject plant or to other plants owned by
the firm; organizational changes that led some firms to view and address pollution sources in a
more holistic fashion; further implementation of other pollution prevention projects; and changes
in vendor/consultant relations that will facilitate future adoption of preventative rather than
control strategies. Furthermore, all of the firm representatives interviewed, saw the opportunity
to implement pollution prevention-either as a SEP or as injunctive relief--as a way to turn a
negative situation into a better or positive situation for themselves, for their firm, and for their
relationship with the agency. j
i
i
The case studies are also illustrative of the ways in which the agency cari-and to a limited extent
does-translate its stated preference for pollution prevention into action (within the context of
enforcement). Our cases revealed that the opportunity to negotiate pollution prevention into
enforcement agreements provides both personal and professional satisfaction for the agency
negotiators involved and, where there is managerial support, motivates these negotiators to seek
out further opportunities to facilitate pollution prevention. Additionally, pollution prevention
knowledge and skill-gained by case officers and attorneys hi the course of negotiating and
monitoring pollution prevention SEPs and injunctive relief-helps to build the agency's overall
base of prevention expertise which can be leveraged in standard setting, permitting, and
inspection activities as well as in industry outreach programs. Furtherm.ore, our study indicates
that the use of pollution prevention hi enforcement is unlikely to compromise the deterrence
impact of the agency's enforcement programs, particularly .given the limitations contained within
the policy guidelines.
A subset of cases studied demonstrate that enforcement settlements can be structured to facilitate
the adoption of innovative pollution prevention technology, and by doing so, push the
"technological frontier" to help overcome tough technology-based environmental problems.
Although the enforcement setting, with its adversarial backdrop and somewhat rigid legalistic
framework, is a challenging setting within which to facilitate innovation, evidence from the cases
demonstrates that the enforcement context has two distinct advantages. First, firms can be
motivated to innovate, i.e., to overcome the barriers to pollution prevention innovation that often
exist in firms, through penalty reduction, improved relations with the agency, and improved
public relations (via publicity through press releases). Second, since the firm has committed to
implement the innovative project in its consent agreement with the agency (or to pay stipulated
penalties), there is a strong incentive to stick with the project even when technical difficulties
j
VIII-1
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arise. Enforcement thus creates a "window of opportunity" in which options for technological
change receive more serious consideration than usual.
Our research also points to numerous barriers-within the agency and firms-to increasing both
the number and the quality of pollution prevention SEPs and injunctive relief settlements.
Barriers within the agency include: inappropriate performance evaluation criteria internal and
external to enforcement programs, lack of individual motivation, lack of time and technical
resources, and a reluctance to approve technically difficult and risky projects. Barriers within
firms include: a desire to settle the case quickly, little or no perceived value in pollution
prevention, lack of time to develop the project proposal and implement the project, and
inadequate knowledge and expertise (in-house and consultant's). These barriers, coupled with
the agency and firm's desire to achieve compliance quickly, appear particularly significant in the
context of injunctive relief, as evidenced by the dearth of pollution prevention injunctive relief
cases reported by the regions (as of FY 1992).
To expand and improve efforts to promote pollution prevention hi enforcement, barriers must
be overcome and positive incentives must be created. Fortunately, there are numerous and
diverse unexploited or under-exploited positive incentives that the agency can take advantage of,
as Section VII points out.
Our study has revealed several areas where additional use of the information contained herein,
as well as further research, would prove useful to the agency's efforts to promote pollution
prevention. First, our research embodies a rich collection of examples of pollution prevention
in enforcement and evidence of strategies that have proven successful, as well as those that fell
short of expectation. This material will be compiled in a handbook for agency case officers and
attorneys.
Second, once the agency negotiators offer the firm the option to pursue a pollution SEP or
encourage the firm to pursue pollution prevention injunctive relief, it would be useful to provide
firms with information on: pollution prevention techniques, examples of pollution prevention
projects, the EPA pollution prevention-in-enforcement and SEP policies, suggestions of
approaches for assessing the financial and non-financial benefits of pollution prevention projects,
and sources of pollution prevention technical assistance and information.
As stated in Section VII A., efforts to encourage pollution prevention in SEPs/injunctive relief
should be designed and implemented as part of an overall five-component pollution prevention
tecfmology policy involving standard-setting, innovation waivers, permitting, compliance and
compliance assistance, and enforcement. A parallel study of the use of pollution prevention in
permitting would similarly elucidate the elements of success, barriers, and opportunities for
improved results in this important area of agency activity. Additionally, an evaluation of agency
experience with innovation waivers would shed light on why this innovation-promotion tool is
largely unutilized by the regions.
Finally, referring to the discussion hi Section II D, the findings of this study can be expanded
VIII-2
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by an additional effort to study those cases that we call "failed attempts", i.e., cases where the
opportunity to negotiate pollution prevention arose-either at the suggestion of the agency or the
firm-but never materialized; and "missed opportunities", i.e., cases related to failed attempts
where pollution prevention options could have been raised, but were not. The barriers and
concerns that led to failed attempts and missed opportunities can be researched in a fashion
similar to the research pursued here. An evaluation of missed opportunities hi the context of
specific industrial categories can reveal technology areas where "cleaner" alternatives exist, but
are not being pursued; and where alternative technologies do not exist, and are in need of
development. Insight into the former can assist in efforts to strategically target agency activities-
-in enforcement and generally-designed to enhance the diffusion of existing pollution prevention
technology; and insight into the latter can help target efforts to stimulate research and
development in areas where cleaner alternatives are undeveloped. ;
VIII-3
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APPENDIX A: QUESTIONNAIRES FOR UNSTRUCTURED INTERVIEWS
I
i
I
A-l. Questionnaire for Unstructured Interviews with EPA Regions '
A-2. Questionnaire for Unstructured Interviews with Case Study Finns
A-l
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A-l. QUESTIONNAIRE FOR UNSTRUCTURED INTERVIEWS WITH EPA REGIONS
A. GENERAL QUESTIONS ON POLLUTION PREVENTION IN ENFORCEMENT
1. Generally, do you favor certain types of pollution prevention projects over others (e.g.
product reformulation vs. recycling vs. process redesign; innovative projects vs. off-the-shelf
technology)?
Do firms tend to favor certain types of projects?
2 On average, how much extra time/resources are required to (1) include and (2) to monitor
a'pollution prevention SEP in an enforcement agreement (legal and technical staff)? Is special
or additional technical support ever needed?
3 Has the inclusion of pollution prevention in enforcement had an effect on inspection
strategies in general or on the use of inspection resources (e.g., reducing inspection frequency
for a plant that has implemented pollution prevention, targeting certain facilities to promote a
certain type of PP technology or to promote change within a certain industrial sector)?
4 Are there any elements of the "Interim Policy on the Inclusion of Pollution Prevention and
Recycling Provisions in Enforcement Settlements" (Feb. 25, 1991) that, constrain your ability
to (1) incorporate pollution prevention into settlements or (2) incorporate innovative (rather than
off-the-shelf) pollution prevention projects?
5 Are there elements of the Interim Policy that act as barriers/disincentives to more innovative
approaches (e.g., the reinstatement of the "relieved" portion of the penalty if the project fails)?
6. What type of technical information do you use to identify/evaluate pollution prevention
options? Where do you get this information?
What additional technical information would be useful?
7 What type of guidance documentation on including pollution prevention in enforcement would
be useful to you (e.g., identification of projects that facilitate long-term compliance, evaluating
the economic benefit to the company of project, establishing implementation schedules,
determining penalty mitigation)?
B. QUESTIONS ON EACH SETTLEMENT:
1. Who initiated the SEP process and suggested the specific project: EPA engineer, attorney,
company?
A-2
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Where did engineer/attorney/company get the information/know-how about the technology (e.g.
in-house, equipment vendor, chemical supplier, state technical assistance office, pollution
prevention information clearinghouse)?
2. Why was this particular project chosen?
3. Were other projects suggested? If so, why were they not chosen?
4. How was the implementation schedule established?
5. Does this project enhance the company's ability to comply with regulations?
6. Was the company considering this project prior to the violation? If so, would they have
eventually implemented it? If not, why not?
I
7. Does the project have the potential to be implemented in other parts of the plant, or at other
locations? Was that a factor in choosing the project? !
8. Was this the first time the company implemented a pollution prevention project?
9. Did the company make changes to its organizational structure or change any policies or
procedures as a result of the SEP (e.g., changes in capital budgeting/planning, institute an
environmental auditing program, include environmental personnel in production decisions)?
| •• • '.
10. Did the company perceive an economic/regulatory benefit from the project beyond the
reduction hi penalty? I
j
11. Do you think that company is likely to implement other pollution prevention measures as
a result of the SEP? .
A-3
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A-2. QUESTIONNAIRE FOR UNSTRUCTURED INTERVIEWS WITH CASE STUDY
FIRMS1
A. QUESTIONS ON THE SEP PROCESS:
1. Did EPA have sufficient latitude to consider the pollution prevention proposals that your
company developed?
2. Was your company given sufficient encouragement and incentive to consider pollution
prevention projects? ' ,
3. What were the key aspects of the negotiation process that led to the incorporation of a
pollution prevention project into the settlement?
4. What concerns do you have, if any', and what suggestions do you have to improve the
negotiation process with respect to the inclusion of pollution prevention projects?
5. What concerns do you have, if any, and what suggestions do you have to-improve the
monitoring process with respect to the inclusion of pollution prevention projects?
B. SPECIFIC QUESTIONS ON THE POLLUTION PREVENTION SEP
1. Could you describe the general nature of the technical changes that were made?
2. Do you think that EPA staff understood/were able to evaluate the technical details of the
project? . , , ,
3. Where did you get the idea and the information about the technology (e'.'g; in-house,
consultant, equipment vendor, chemical supplier, state technical assistance office, pollution
prevention information clearinghouse)?' . ';
r • . •. . ••;.-• .',..-»-''.:.-,_
Had you suggested other projects? ' ' •
4. Did the Agency provide any technical knowledge that was useful in developing or executing
the project?
1 Slight modifications were made,to this questionnaire for our interview with the sole
injunctive relief case study firm~BKPM. , .
A-4 .
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5. Was the implementation schedule reasonable?
6. Does the project have the potential to be implemented in other parts of the plant, or at other
locations? Was that a factor in choosing the project?
Would you have adopted a different approach if more time were allowed?
7. Does this project enhance your company's ability to comply with environmental regulations
in the future?
8. How has your Company measured the environmental benefits of implementing the prevention
project? •
9. Had the company previously implemented a pollution prevention project on its own? or as
a result of state requirements? , ; ,, . ..:'.'...
i
10, Did you perceive an economic benefit from the project beyond the reduction in penalty?
How has your Company measured the economic costs and benefits of the project?
'. '. ! "r • '' ' K '' ' ' ' ••' '
Do you see long term savings associated with this project?
C. QUESTIONS RELATING TO ORGANIZATIONAL CHANGE 1
1. Did you make changes to your organizational structure as a result of this project?
2. Did you make any changes to policies or procedures as a result of the project (e.g., changes
in capital budgeting/planning, institute an environmental auditing program, include environmental
personnel in production decisions)? . , ,
3. Do you think that company is likely to implement other pollution prevention measures as a
result of the project?
D. GENERAL QUESTIONS
1. If asked by another company, would you recommend that they include a pollution prevention
project in their settlement?
A-5
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APPENDIX B: DETAILED CASE STUDIES
A. Supplemental Environmental Projects
Casted Metal Products Manufacturer (CMPM)
Industrial Coater (1C)
Lid Manufacturer (LM)
Medical Device Manufacturer (MDM)
Metal Filing Furniture Manufacturer (MFFM)
Metal Finishing Company (MFC)
Metal Machining Company (MMC)
Powder Metallurgy Manufacturing Company (PMMC)
Pump Service and Sales Company (PSSC)
B. Injunctive Relief
Bleached Kraft Pulp Manufacturer (BKPM)
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CASTED METAL PRODUCTS MANUFACTURER (CMPM)
I. Case Overview
Monitoring Report. September
Violation CLaw and Date^: CWA. Failure to file a Baseline
1989.
Date of Consent Agreement and Order: August 1992.
Description of Company:
; I
The Company produces casted ferrous metal products using a variety of operations, including:
wax pattern and sand/plaster mold production; mold dewaxing with heat; acid and caustic
cleaning, degreasing, bluing, phosphate coating, and tumbling of metal parts. CMPM has
approximately 1,200 employees and 3 buildings at the subject facility. The Company owns
two other plants; one plant makes similar products, another produces only aluminum products.
Date of Project Completion: September 1994 (original completion date was September 1993,
region granted a one-year extension of time)
SEP Costs: Not available
Original/Final Penalty: $95,000/$30,000
II. Description of Pollution Prevention SEP
The SEP has two parts. The first part consists of already identified process and facility
modifications to be made by the Company to reduce water and chemical use and wastewater
and hazardous waste generation. The second part consists of a Water Use and Wastewater
Reduction Program designed to identify further measures to reduce water use and wastewater
generation.
I. By September, 1992, the Company shall: |
I
i
A. Reduce flow in its dewax cooling plates to reduce non-contact cooling water to
the maximum extent safely possible.
B. Implement the following measures in the acid cleaning process:
i
1. Install a countercurrent rinse tank following the Hydrochloric Acid
baths; and |
i
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I
2. Route caustic rinse water as a reactive rinse to the countercurrent rinse
tank. i
CMPM-l
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C. Implement the following measures in the acid cleaning area:
1. Eliminate the use of Nitric Acid;
2. Install countercurrent rinse tanks following the Sodium Hydroxide bath
and the caustic neutralizer baths;
3. Route water from the countercurrent rinse tank following the caustic
neutralizer bath to the cold water rinse following the Hydrochloric Acid
bath; and
4. Route the water from the cold water rinse following the Hydrochloric
Acid bath to the countercurrent rinse following the Sodium Hydroxide
bath.
D. Implement the following measures in the bluing area:
1. Install a two-stage bluing bath on the electric bluing line;
Install flow control devices;
2.
3.
Investigate during summer shutdown, and if doing so will not negatively
impact product quality or manufacturing efficiency, route rinse water
from the cold water rinses following the bluing tanks in both lines to
the cold water rinses following the caustic cleaner baths; and
4. Investigate during summer shutdown, and to the extent doing so will not
negatively impact product quality or manufacturing efficiency, reduce
flow in all process lines.
Implement the following measures in the phosphate coating area:
1. Replace caustic Water rinse with a dead rinse and a countercurrent rinse;
2. Use rinse water from the dead rinse as make-up water for caustic
cleaner;
3. Use a single cold water rinse following the phosphoric acid solution;
4. Use a cold water rinse following the phosphoric acid solution bath as a
reactive rinse for the countercurrent rinse; and
5. Install a timer or conductivity flow controls to limit flow to after usage
necessary for product quality or manufacturing efficiency.
CMPM-2
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F. Install flow control devices as appropriate in the tumbling area of Building C to
reduce water use to the maximum extent possible without negatively impacting
product quality or manufacturing efficiency.
G. Take measures necessary to see that all employees are properly replacing lids
on baths not in use to reduce evaporation.
H. Eliminate the use of perchloroethylene, Freon, and nitric acid in those processes
discharging wastewater. (Perchloroethylene was replaced with an aqueous
detergent; Freon was replaced with a citrus-based .aqueous cleaner.)
I. Reduce the use of 1,1,1 trichloroethane and isopropyl alcohol to the extent
possible. (1,1,1 trichloroethane was replaced with a citrus-based aqueous
cleaner.)
II. The Company shall implement a Water Use/Wastewater Reduction Program designed
to reduce the Facility's water consumption and wastewater generation to the maximum
extent practicable without negatively impacting product quality or manufacturing
efficiency as follows:
A. The Company shall complete and provide to EPA a Water Balance Survey of
the Facility and a report describing all sources and amounts of intake water, all
points of wastewater discharge, including evaporation, and a description of the
Facility's processes and activities that generate wastewater, including contact
and non-contact cooling water. The report shall include a water balance
schematic diagram illustrating the above information, including daily volumes
of water used and wastewater generated.
B. The Company shall complete and provide to EPA a .Water Use/Wastewater
Reduction Study for the Facility. The Study shall include plans and a schedule
for, facility and process modifications .that the Company will implement to
minimize the Facility's water use and wastewater generation to the maximum
extent without negatively impacting product quality or manufacturing
efficiency. '
C. The Company shall implement those plant and process modifications identified
in the Water Use/Wastewater Reduction Study to minimize the Facility's water
consumption and wastewater generation to the maximum extent without
negatively impacting product quality or manufacturing efficiency^
CMPM-3
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The SEP also includes a time extension provision:
If measures identified in the Water Use/Wastewater Reduction Study cannot
practicably be implemented prior to September 1, 1993, the Company may request an
extension of time for completion of such measures.
In addition, it requires that all reports submitted in accordance with the SEP reporting
requirement include schematic diagrams illustrating any process or facility modifications
completed as part of the SEP.
Many components of the SEP were completed before the CA/FO was signed. In December of
1990, the Company had submitted a letter to the Region detailing process changes that they
had or were hi the process of implementing; these included: installation of water flow control
devices, elimination of Nitric Acid, replacement of a Perchloroethylene vapor degreaser with
an aqueous/citric acid-based cleaning system, and reduction in overall organic solvent use by
80%. Some of these process change ideas came from the recommendations of the Company's
environmental consultant. The letter also contained three changes that the Company was in
the process of investigating: the installation of countercurrent rinse tanks in the acid cleaning
areas, spray rinse equipment, and reuse of non-contact cooling waters.
In January of 1991, the Case Officer wrote and sent to the Company, an 11 page letter
(including 4 pages of process schematics) containing detailed comments on, and suggested
modifications to, the Company's December 1990 letter and Consultant's recommendations in
addition to further recommendations for process modifications. In June of 1991, at the
request of the Case Officer, the Company submitted to EPA an Environmental Program
Summary (EPS) which contained a detailed account of the Company's activities regarding
environmental quality and compliance. The EPS included a description of the Company's
efforts to implement water use and waste reduction process modifications and to identify and
evaluate the feasibility of additional measures. The technical ideas for process modifications
were in part based on the recommendations contained in the Case Officer's letters and
ultimately these modifications became part of the SEP.
CMPM-4
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III. Analysis
i
EPA Perspective . ,|
EPA's inspection of CMPM in 1989 was part of a regional enforcement sweep of companies
that were required to pretreat wastewater before discharging to POTWs. The Company is a
large employer/economic force in the area.
The Case Officer and Attorney.decided early on, based on the Case Officer's initial inspection
of the facility, that this would be a good case to include pollution prevention because the
company was generating large quantities of hazardous waste and using water inefficiently. At
the time, pollution prevention in enforcement was a new idea for the Agency. The Case
Officer had just returned from a year-long detail with a State Pollution Prevention Technical
Assistance Office. ,
. . i .
To obtain information about the Company's manufacturing processes, the Case Officer
modified the Region's standard CWA Section 3081 information request letter asking the
Company for more than the usual information, including schematic diagrams of water and
wastewater flows and descriptions of the industrial process operations at the facility, and all
chemicals used (including chemical composition of process solutions).
i.
The Case Officer asked the Company to come up with a wastewater reduction plan. The
Company, in turn, gave this task to their environmental consultant. The Consultant put
together a plan that involved the construction of a $250,000 pretreatment plant to remove
chromium from combined wastewater streams from all process, and a series of flow reduction
measures that involved conventional water conservation techniques (e.g., flow restrictors).
The Company submitted this plan to the Region. The Case Officer asked the Company to
look closely at each process, develop mass balances, and generally to develop a better
understanding of how materials were being used and wastewater generated in each process
before choosing to implement the combined wastewater pretreatment plant.
During this investigation, the Company realized that their chromium discharge came from
only one process-metal molding and stripping--and that a $60,000 pretreatment plant for only
one wastewater stream would be sufficient to effectively minimize chromium discharge.
The Case Officer wanted to take a proactive role, to work with the Company on developing
pollution prevention measures for inclusion in the enforcement agreement; he could see that
the Company had the technical ability but needed help in "harnessing" this ability to apply it
1 Under Section 308 of the Clean Water Act, 33 U.S.C. §1318, EPA i
submission of any information necessary to determine whether any person is in
pretreatment standard promulgated under the Clean Water Act §1251.
CMPM-5
authorized to require the
volation of an effluent or
-------
to pollution prevention objectives. He concedes that the Agency was sending mixed messages
to the Company, and the Company was initially confused about the Case Officer's role--
Regulator or Technical Assistance Provider?
He sought to win the trust of the Company to encourage them to consider his technical
advice. By suggesting the "close look" at their processes that ultimately led to their
abandonment of the large pretreatment plant, the Case Officer began to win their confidence
on his technical approach and expertise. The relationship between the Company's
Environmental Engineer and Case Officer evolved to a point where the Engineer began to call
the Case Officer to solicit his advice on projects-even those that were being considered
outside of the enforcement context. The process was an education for the Environmental
Engineer who had little practical experience before starting the job. The Company now has
the capacity to pursue pollution prevention on their own, and they are.
The process was also a learning experience for the Case Officer and Attorneys who were
involved in the settlement process. To some extent, the EPA negotiators were experimenting
with pollution prevention in enforcement. The Case Officer sees this case as a success in
terms of the technical measures that were implemented and the organizational change that the
Company underwent. However, success came at the price of a protracted negotiation process
which required significant resources on the part of the Region and caused the Company some
discomfort and confusion.
The key elements of success were: The ability of the Case Officer to take the time to
understand the Company's processes and to work with the Company to develop technical
ideas, the ability of the Case Officer to show a level of "sensitivity" to the technical needs and
constraints of the manufacturing processes, and the support of the EPA Attorney for this
proactive, technically involved approach.
To assist the Company in generating technical ideas, the Case Officer consulted with a State
Pollution Prevention Technical Assistance Office, read pollution prevention case studies, and
talked with Plant Operators to find out how the processes worked, to solicit their ideas, and to
get their opinions about the technical options that he was considering. He applied the
technical strategy that he had learned during his detail at the State Pollution Prevention
Technical Assistance Office.
The Case Officer believes that the approach used by EPA for this Company may not be
appropriate in all cases. A Case Officer must win a company's trust in order to play a
technical assistance role, there must be potential for pollution prevention in the plant, and the
Case Officer must have sufficient time and support from the case Attorney. The additional
time required to settle and monitor the case may make it difficult for a Case Officer to
perform his or her other duties.
The Case Officer believes that state offices of pollution prevention technical assistance should
be brought into enforcement cases to conduct a pollution prevention assessment. The results
CMPM-6
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of the assessment should be given to EPA and the Company. In addition, the Case Officer
thinks that it would be very valuable for EPA Case Officers to spend one year at a state office
of pollution prevention technical assistance. !
i
He suggests that Case Officers consider early on in the inspection stage whether the potential
exists for a pollution prevention settlement, e.g., whether the process is inefficient, whether
waste generation and water usage rates are high, whether the company is unaware of pollution
prevention, companies that are medium-sized and have a diverse array of operations—and
begin to plan a pollution prevention enforcement strategy at the outset. Asking'for process
flow diagrams in initial information requests can help determine the potential for pollution
prevention.'" I
Company Perspective i
Background
'
i
Prior to EPA's complaint, the Company realized their water usage costs were high and that
they should reduce water consumption. They had not, however, made efforts to do so. EPA
conducted their inspection in 1989, sampled wastewater streams and found that the Company
had not submitted a Baseline Monitoring Report to the POTW nor EPA, as required by the
Clean Water Act at least as of 1986. The Company was in compliance with Town/POTW
requirements for wastewater discharge and thought that meeting POTW requirements was all
that was necessary. Neither the town nor the State were aware of the Baseline Monitoring
Report requirement.
i
During a two year negotiation period, EPA put pressure on the Company to provide, under
extremely tight timelines, a variety of information on their "operations (process flow diagrams,
historical operations data, material balances, wastewater sampling and analysis, and metering
of water usage) and to institute waste and water reduction projects. During this period, the
Agency would neither tell the Company whether they were in violation of other regulations
nor the expected magnitude of the fine. They were told, however, that if they cooperated
with the Agency, their "good faith efforts" would be taken into consideration.
Finally, EPA assessed a penalty of $125,000 for failure to submit the Baseline Monitoring
Report and borderline violations of discharge limits for metals. The Company felt it had not
exceeded discharge limits and was very surprised at the magnitude of the penalty considering
all they had done to show good faith. The Case Officer and Environmental Engineer
developed the SEP proposal and the Agency agreed to reduce the fine to $30,000 for the SEP.
The Company developed a constructive relationship with the Case Officer from the start; he
was sympathetic to the company's constraints and limitations. He sought to develop a
cooperative relationship between the Company and EPA but was constrained by the EPA
attorneys who both wanted to maintain an adversarial relationship and were eager to close the
case in time for the end of their fiscal year. While the Case Officer's intentions were good,
i
CMPM-7 i
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and while he provided good technical advice to the Company, he did not initially understand
the production processes and needed time to study them. This slowed the process.
The Company's outside attorney was unfamiliar with environmental regulations and agencies
and this was a disadvantage to the Company in the settlement negotiation process. They were
also dissatisfied with their consultants—a geotechnical/environmental engineering consulting
firm. In the course of the negotiations, the Consultants recommended a large and expensive
treatment plant that the Company realized was not needed. They contributed to some degree
with process change ideas—by reviewing and modifying recommendations from the EPA Case
Officer—but largely recommended traditional technical problem-solving approaches. The EPA
attorneys, however, trusted the consultants,1 and therefore, the consultants helped to win
Agency approval of the technical changes that the Company sought to implement. The
consultants were "educated" in the course of this process and they now use the company as a
reference for their pollution prevention work. The Company would be hesitant to use them
again. , . ' ' '"'".,!'
The Environmental Compliance Officer proposed an unconventional CO2 pH treatment plant
to EPA; he had read about the technology and thought it would be appropriate and better than
conventional systems. The Company had installed this system at another one of their plants.
EPA was not familiar with the technology and was reluctant to consider it. Ultimately the
Agency accepted the plant proposal and it has been working very well.
EPA compelled the Company to implement water-use reduction measures far in advance and
in excess of what they would have done without the enforcement action. In addition, the
Company has implemented some waste and water reduction:measures hi another plant. The
enforcement action highlighted the need for a proactive approach to environmental issues.
CMPM believes that it was wise to mitigate the penalty with an SEP; they think in general
that the SEP policy is a good one. However, they strongly believe that EPA needs to adopt a
new, non-adversarial, cooperative approach in dealing with companies. They found the
process to be unreasonably adversarial, extremely costly (legal and technical costs) and
inefficient.
SE Project: .
Some of the technical ideas for the SEP came from the EPA Case Officer, who obtained
insight and project ideas from the shop floors particularly from the Line Supervisors. Often,
when the Case Officer had a question about a process^ he was invited to talk to the
Supervisors for explanations and suggestions.
The solvent elimination projects were motivated by a desire to eliminate SARA 313 chemicals
and improve worker health and safety. The source reduction projects have had positive
effects on worker health and safety-fewer bath changes, tank cleaning and sampling has led
to less worker exposure. Nitric Acid was replaced by a weaker acid. None of the projects
CMPM-8 . ,
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represent a modification to the basic technologies or operations used by the company to
manufacture their products. Some projects suggested by the Company were rejected by EPA
because the Agency viewed them as too profitable for inclusion in an SEP.
The SEP consisted of projects that the company had implemented both during the period
between the inspection and fmalization of the consent agreement, and after consent agreement
finalization. The Company has completed all but one project under the SEP; they required
more time to complete the remaining project and the Agency granted them a one-year
extension.
I
The average payback period of all the SEP projects implemented is 5 to 8 year. While the
company's hurdle rate is one year, they believe that the projects were in their best interest-
economically and environmentally. They have realized water savings of about 100,000
gallons per day and energy savings from close-looping water cooling processes. Their
ultimate goal is to close-loop the entire plant to reduce water usage and eliminate wastewater
discharges (i.e., to achieve a "zero-discharge plant").
Organizational Change: \
Prior to the complaint, the Company had one person in charge of environmental compliance,
and compliance was only one of his many responsibilities. Today, there are four people with
environmental compliance responsibilities in addition to the Compliance Officer-one full-time
Engineer and three part-time Technicians. |
)
The Company now sees the connections between all of their emissions/waste compliance
obligations and source reduction activities; they have "tied it all together." They will not
allow any new chemicals into the plant without prior approval from the Environmental
Engineer or the Compliance Officer. i
i
The Company tried recently to send lead waste to a secondary lead smelter for recycling.
After some delay, their state and the receiving state's environmental agencies blocked the
transaction because of concerns over slag from the smelter. The Company thought this was
unreasonable since these agencies are promoting recycling and the material was no different
than the raw material typically used by the smelter. i
MIT Analysis:
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator? Some projects suggested by the Company were rejected by EPA
because the Agency viewed them as too profitable for inclusion in an SEP. Other than this,
the Region succeeded in included a great many projects in the enforcement agreement.
CMPM-9
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EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
Given the way that the case was handled by the Region, the Company had a significant
amount of incentive to implement pollution prevention as well as comply with the unusual
requests for detailed information about their manufacturing practices. The Region withheld
judgement, for a long period of time, on the specific violations and potential penalty that the
Company would face. Therefore, the Company had a strong incentive to cooperate with the
Agency in the hopes that their good faith efforts would be taken into consideration.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
From the Case Officers point of view, the key factors for success were: time to study the
process and for an iterative study/technical feasibility/proposal process, to be able to show a
level of "sensitivity" to the Company, and the support of the EPA case Attorney.
Given the number and nature of process modifications undertaken, and the fact that the
Company was "starting from scratch" in thinking about and applying, pollution prevention to
their processes, time was a key element in this case. Time was needed for the Company and
the Case Officer to educate themselves about the way in which water is used and waste is
produced and the ways in which the two could be reduced without adversely affecting product
quality and productivity. ......
Pollution prevention knowledge was another key element. As the Case Officer stated, the
Company had in-house technical capabilities, but did not know how to direct those abilities
toward pollution prevention. The Case Officer introduced both a new mode of technical
inquiry (e.g., how and why is water being used in this process, and how can water use be
reduced) and transferred his knowledge of basic pollution prevention techniques; in effect, he
played the role of a "pollution prevention consultant". Because the Company did not initially
have the capacity (i.e., mode of inquiry and knowledge of basic techniques), it was necessary
for the Case Officer to take a very technically involved role in the process. Today, the !
Company does not need an external actor to play this role, they now have the in-house
capacity to pursue further pollution prevention.
The role played by the Case Officer, could have largely been played by a good pollution
prevention technical consultant or a state office of pollution prevention technical assistance.
The Consultant or State Technical Assistance Provider would have reduced significantly the
time spent by the EPA Case Officer~the Case Officer could have used his knowledge to
review and react to the proposals drawn up by the Company/Consultant/Technical Assistance
Provider instead of educating himself on the Company's processes and developing the
pollution prevention ideas~and the confusion over the role of the Agency (i.e., enforcer or
technical assistance provider) would have been diminished. In this case, the Company's
Technical Consultant did not have the capacity to play this role. However, it is not clear that
a Consultant/Technical Assistance Provider could have achieved the same results in a shorter
CMPM-10
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amount of time.
The early decision by the Case Officer and Attorney to include pollution prevention in the
settlement was another important element. By requesting process information in the initial
stages, the Case Officer was able to determine the particular areas within the plant where
prevention potential existed and by encouraging the Company to look closely at their water
use wastewater generation activities, the Company was able to avoid the large and
unnecessary expenditure on a combined-flow pretreatment plant. If the Company had
invested $250,000 in this plant to treat all their wastewater, they would have had much less
incentive to pursue pollution prevention either during or after the settlement negotiations.
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
It was not apparent that the policy helped or impede the process. ]
EPA Q; Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
The Case Officer consulted with a State Pollution Prevention Technical Assistance Office,
read pollution prevention case studies, and talked extensively to Plant Operators. He used
the knowledge and skills that he had learned during his detail at the State Pollution Prevention
Technical Assistance Office. j
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
i
'i' ' • • •,. ' •
Through process modifications, the Company has reduced wastewater discharges by
approximately 100,000 gallons per day (approximately 75% reduction) and has reduced
energy consumption by close-looping water cooling processes. The SEP will leverage
additional wastewater and energy reductions since the Company's ultimate goal is to close-
loop the entire plant. The following table illustrates chemical use reductions made by the
Company from the period of 1989 to May of 1991. i
CMPM-11
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Chemical Use Reduction
(Pounds Purchased, 1989 to 1991)
Freon
Perchloroethylene
1,1,1 -Trichloroethane
Nitric Acid
Isopropyl Alcohol
1989
55,280
35,700
30,000
2,275
32,485
Pounds
1990
51,060
14,000
27,000
3,500
24,525
1991*
0
0
9,000
0
4,683
* Amount of chemicals purchased from January 1, 1991 through May 31, 1991.
Source: CMPM's Environmental Program Summary, June 1991.
While the changes made'by the Company are significant, they have not fundamentally
changed their core manufacturing processes.
CMPM-12
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INDUSTRIAL COATER (1C)
I. Case Overview
Violation (Law and Date): EPCRA 313, August 1989 The company failed to file Form R
for toluene and methyl ethyl ketone.
. ,- j
Date of Consent Agreement and Order: March 1992 i
Description of Company: Industrial Coater manufactures coated plastic film. In 1989,
Industrial Coater had projected sales of 20 million dollars and employed 150-170 people.' The
company is a wholly-owned subsidiary of a foreign corporation. This parent corporation
operates a coating research and development facility at the same site. The research facility
provides R&D support to Industrial Coater. !
Date of Project Completion: CA/FO date - 12/31/92. (Company was not able to
complete the project by this date and decided to pay the stipulated penalty. See Company
Perspective below.)
SEP Costs: $54,200 (CA/FO estimate).
Original/Final Penalty: $50,000 / $30,000
II. Description of Pollution Prevention SEP
The project involves the reformulation of a toluene-based coating to a low or non-solvent-
based coating and alteration of the production process used to apply this coating to plastic
film. The settlement requires the Company to commence the project within 30 days of the
signing of the CA/FO and, by December 1992, reduce by 90% the concentration of toluene
(as compared to dry chemical) in the coating and reduce by at least 50% the ratio of methyl
ethyl ketone used to production volume.
The CA/FO stipulated that the Company shall expend not less than $25,000 on the project
and contains the following reporting requirements:
"Respondent shall submit an Interim Project Report to EPA by September 30, 1992
and a Final Project Report by December 31, 1992. The Interim Project Report shall
contain the following information:
(i) A description of the progress made in completing Phases I and II of the
Project. '
IC-.1
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(ii) A description of Project system operation and performance, any operating
problems encountered and the solutions thereto.
(iii) Itemized costs of implementing Phases I and II, documented by copies of
purchase orders and receipts or cancelled checks.
The Final Project shall contain the following information:
(i) A detailed description of the installed system.
(ii) A description of system operation and performance, including monitoring
data and documentation of reduction in levels of toluene and methyl ethyl
ketone used in the Process, and a description of any operating problems
encountered and the solutions thereto.
(iii) Itemized Project system cost, documented by copies of purchase orders
and receipts or cancelled checks."
The current process of applying a coating to film involved the liquefaction, floating or
dissolving of a dry chemical in a solution with the solvent toluene. The resultant coating
solution (comprised of the dry chemical and toluene) can then be flowed onto a web of
plastic film on an industrial coating and laminating machine. Once the coating solution has
been flowed onto the film, the film and the coating are passed upward and through a closed
tunnel oven.
The oven is divided into three sections, each with a different function and each set at a
different heat level. The first two sections, with increasing heat, further flow the chemicals
while removing, by evaporation, successively greater amounts of toluene, the fumes from
which are gathered and burned in a thermal oxidizer. The last section of the oven removes
the small residual amount of toluene and stabilizes the coating, keeping it hot as it passes on
past the ultra violet (UV) curing lamps, where the coating is cured onto the film with UV
rays.
The new process will use a heat source to melt the dry chemical mix to a point where its
liquefaction will be sufficient for it to coat the film without the use of toluene. The coated
film will then be passed through the ovens at a low heat, keeping the coating stable and
warm until just prior to the UV lamps. At that point, the coated film will pass by a bank of
high intensity infrared heat lamps, which will flow the coating to an even mix across the web
and heat the material for curing. Next the coated film passes by another bank of infrared
lamps, which quickly heat it again for final stabilization and drying once cured.
The Company expects the new infrared heat lamps to dry the product more quickly thereby
allowing them to increase the speed of the coating machine. With increased speed, the
Company can produce the same quantity of product during fewer production runs Fewer
IC-2
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MF few%clean-uJ^C estimates that this changes will enable them to reduce its use
of MEK by an estimated 50% of current levels, from 4,600 to 2,300 pounds of MEK per
million feet of product.
The current solution of dry chemical and toluene applied as a coating consists of
approximately 70% toluene and 30% dry chemical. Approximate levels of use in 1991 were
24,000 pounds of dry chemical and 56,000 pounds of toluene. The proposed change to the
process would, assuming a constant level of production, reduce the level of toluene used by
90%, to 5,600 pounds annually. The amount of dry chemical used would remain the same.
The coating process currently uses an estimated total of 3,683,925 Btus per hour of which
an estimated 525,000 Btus come from burning solvent and the balance (3,158,925 Btus) from
natural gas. Approximately 3,500 cubic feet per hour of natural gas are currently used in
the process. The process also uses approximately 9.7 kw per hour of electricity The
project is expected to eliminate the use of natural gas and the burning of solvent in the
coating process. It will, however, require an increase of approximately 190 kw per hour of
electricity to operate the infrared heaters. Because the project is expected to reduce gas and
solvent energy use by the equivalent of 1,080 kw per hour, the project is projected to reduce
net energy use by 890 kw per hour. :
The total cost of the project was projected at $54,000, including $5,000 for development of
the new coating formulation done under contract by a consultant (Phase I) $25 200 'for
installation and testing of new infrared lamps (Phase II), $19,000 for installation and testing
of new coating heating unit (Phase III). . j - .
HI. Analysis
EPA Perspective: j« • ;
i , . • ,.
Since the pollution prevention project included in this case constitutes both process and
product redesign and is innovative, regional staff involved in negotiating the case view it as
highly successful model of a pollution prevention SEP. The EPA engineer responsible for
reviewing the company's technical proposal thought that it was adequate as submitted She
was concerned, however, that the IR heat lamps may cause an occupational hazard Upon -
conferring with the region's radiation expert, she determined that the radiation was not
hazardous. ,
Company Perspective:
The SE Project:
After EPA negotiators suggested that the company pursue a SEP, the company sought to
develop a project that had a large environmental benefit and one that would be on their
IC-3
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critical technology path. The subject project, proposed by the company, met these criteria
and was considered to be both innovative and cost effective. While solventless coating
technology is not new in other industrial applications, to the company's knowledge, this was
the first attempt at solventless coating in this niche of the coatings industry.
The company estimated the payback for this project to be 6 months to 2 years, including
approximately $800 saved per day in energy conservation alone. A similar project had been
under consideration prior to the SEP but its concept and implementation had been accelerated
through the SEP process, in two principal ways: the project was initiated sooner and it
maintained high priority status despite difficulties in development and pilot testing. Although
not part of the SEP, the company hopes to apply the principles of this project to further
reduce or eliminate its use of solvents hi other manufacturing processes.
The SEP Process:
The SEP implementation deadline established in the SEP was based on what the company
considered to be the earliest possible date for completion, rather than on a reasonably
achievable time frame. The company felt pressure from EPA negotiators to choose the
shorter time line and they agreed to it despite their reservations about their ability to
complete this rather complex and somewhat technically uncertain project in the time allotted.
In developing their SEP proposal, the company had assumed that they could use their
existing coating equipment to apply the new formulation. During pilot testing, they
experienced problems with this equipment and sought alternatives. They were unable to
meet their product specifications with either new/"off-the-shelf" equipment or
custom-designed/manufactured application equipment, and therefore were not able to switch
to the new formulation in time to meet the SEP implementation deadline. The company
asked for an extension and EPA granted one. However, the company found it necessary to
pay the penalty and table the project because of seasonal, high production demands.
Furthermore, by continuing the SEP process the company would incur additional
administrative costs and inconvenience from "unnecessary pressures of time deadlines.
They have already incurred administrative costs for SEP development and oversight in excess
of the penalty reduction. They are planning to re-initiate the project in the near future since
they consider it to be a "bonefide win-win situation for the environment and [their]
enterprise."
The company was disappointed that the press coverage that it received for its violation did
not mention that they implemented an environmentally beneficial SEP. Rather, the coverage
mentioned onlv that their penalty had been reduced.1
1 In an earlier article, the EPA Case Officer was quoted as saying, "the fine could significantly be reduced
if the company were to develop anew, environmentally safer production system, or if it were to stop using the two
solvents altogether."
IC-4
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Industrial Coaler's Operations Manager believes that EPA should take a more pro-active role
in promoting pollution prevention (to help companies stay in compliance) by instructing
companies on how and why pollution prevention makes economic and environmental sense,
particularly when companies are acting in good faith. In addition, he suggested that EPA
could provide companies with information on the laws that they need to comply with, before
they are enacted, so that it is easier for companies to understand what is required of them.
The Company has used the services of the state technical assistance office and was very
pleased with their service and the fact that they are separate from the regulatory process.
They use the state office for technical advice and a private consultant for compliance audits.
MIT Analysis
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator? ,
A. Yes. The Regional officials involved in this case were able to accept the proposal made
by the company, without alteration.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
A. Yes. Based upon their decision to choose a rather innovative and complex
project, we can deduce that the company had sufficient incentive to consider
and implement a pollution prevention SEP.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
A. The major elements that led to the success of this project were: (a) the company's
desire} to choose a project that had significant environmental benefit and one that would
contribute to the technological progress of the company, and (b) the willingness of the
Region to accept a project that had some level of technical uncertainty and risk.
' i
The company's assessment of uncertainty and risk of failure may have; been too optimistic.
This observation is based on the absence of any discussion of uncertainty or risk in the
company's proposal or in the CA/FO, and subsequent discussions with the company about
their expectations for their existing coating equipment. Mention of uncertainty/risk may have
been deliberately left out of the CA/FO, by the company/EPA/both, to avoid raising doubt or
i
i
suspicion over a project that all were enthusiastically supporting. The CA/FO contains a
provision that allows the company to only pay 85% (rather than 100%) of the forgiven
penalty if the project failed to meet the established success criteria. While this can be
considered a fail-soft mechanism, the actual incentive associated with this provision seems
IC-5
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very small considering the magnitude of the project.
EPA Q. To \vhat extent, if any, did the specific terms of the interim pollution
prevention hi settlements guidance help or impede the process?
A. Based on our discussions with the Regional officials involved in this case, it appears that
the guidance neither helped nor hindered this project. There was a clear nexus between the
violation and the pollution prevention SEP.
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
A. The Regional engineer involved hi the case sought, and received
information on the potential hazards of the IR drying system from the Region's
Office of Radiation. The engineer did not seek additional technical
information concerning the company's proposal. The proposal was considered to
be technically acceptable.
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
A. The environmental benefits from this project derive from reductions in toluene and MEK
use. Based on the CA/FO Scope of Work, the quantity of MEK used would be reduced by
50%, or 2,300 pounds of MEK per million feet of product. Since the CAFO did not contain
an annual production figure, we are unable to estimate MEK reductions in pounds per year.
Assuming a constant level of production, toluene use would drop from 56,000 to 5,600
pounds annually—a 90% reduction. The amount of dry chemical used would remain the
same.
Fugitive toluene and MEK air emissions are released into the plant and to the outdoor
environment hi virgin and waste material handling and storage. Fugitive toluene emissions
(i.e., emissions not captured by the thermal oxidizer) are also released from the coating
process. Toluene emissions from the coating operation may not be completely combusted in
the thermal oxidizer or may react under high temperature with other volatile materials in the
coating to form toxic substances. These emissions are released into the environment. Waste
MEK solvent from cleaning activities and waste coating containing toluene is sent to a
hazardous waste incinerator.
By reducing the use of toluene and MEK, both fugitive and point source emissions from the
thermal oxidizer will be reduced. A reduction in fugitive emissions inside the plant will
reduce exposure of workers to these solvents. The reduction of MEK and toluene waste will
result in reduced hazards associated with transport of waste as well as reductions in
emissions from hazardous waste incineration.
IC-6
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LID MANUFACTURER (LM) |
I
I. Case Overview .
Violation (Law and Date): CAA, Section 133d. The Company applied coatings containing
VOCs in excess of limitations set forth in the federal revisions to the State Implementation
Plan and failed to certify to EPA that its coating lines would either be exempt or in
compliance with SIP emissions limitations. Complaint issued in July 1992.
The subject plant is located in a non-attainment area for VOCs.
j
Date of Consent Agreement and Order: December 1992
Description of Company: The subject plant is one of several owned by a large
manufacturing company. The plant employees approximately 200 people in the production of
metal lids with gaskets on four production lines. • r
Date of Project Completion: May, 1993 (with 4 month grace period), per CA/FO.
SEP Costs: $298,000 (October 1992 Company estimate)
Original/Final Penalty: Original penalty $130,312
Recalculated penalty $123,947 (disputed fines)
Penalty after good faith $ 76,000
Final penalty after reduction :
for SEP $ 38,000 (final penalty)
i • • . • •
II. Description of Pollution Prevention SEP j
Prior to the implementation of the SEP, the Company produced a gasket material by blending
rubber, heptane and other substances (the mixture is referred to as "compo"). Compo was
coated onto a metal lid and sent through curing ovens to drive off the heptane and form the
gasket. The heptane vapors were pulled into a recovery system. Since this system operated
at approximately 76% efficiency, almost a quarter of the heptane emissions (VOCs) were
released to the environment. ,
The SEP consisted of a conversion of one of four production lines (constituting 1/3 of total
lid production) from the rubber and heptane-based gasket formulation to a new material
containing: PVC, BaSO4 , dioctyl phthalate (DOP), soybean oil, CO2, and carbon black (the
mixture is called Plastisol). DOP~20% of the new formulation-is an organic plasticizer and
is not listed as a toxic substance under the Clean Air Act Amendments of 1990. The
formulation does not contain VOCs other than soybean oil which has a negligible vapor
pressure.
LM-1
-------
The conversion requires the modification of the gasket coating applicant and purchase of a
new curing oven. The Company elected to equip the new process with a thermal oxidizer
(afterburner) to control air opacity if the Plastisol smokes in the drying oven. It Was not
necessary to modify its coating formulation process or change its operation of the gasket
coating process. The SEP cost was estimated at $298,381 and includes the purchase price of
the curing oven, thermal oxidzer (18% of the total cost), and lid curing trays; in addition to
oven installation, lid curing tray R&D, modifications to and relocation of the dryer front.
The SEP requires the following steps, as outlined in the CA/FO:
a. application for necessary air permits, ,
b. design engineering of a new dryer oven,
c. installation of a natural gas dryer supply line,
d. removal of the old dryer oven,
e. purchase and installation of a new dryer oven,
f. installation of a new gasket material supply line,
g. production test run, and . , .
h. full-scale operation. , .
The Company estimated that heptane usage would decrease by 203 tons per year, resulting in
a reduction in VOC emissions of 50 tons per year. They projected a potential emissions rate
of particulates from manufacturing, natural gas usage and oven emissions of 3.65 tons per
year, and less than 1 ton per year of each NOx, CO, HC and SO2 from the new process.
III. Analysis
EPA Perspective
The company had considered reformulating the gasket prior to the violation but had rejected
the idea because the capital cost was high and the plant is old—they did not want to invest in
the plant at that time. The company agreed to reformulate the gasket and redesign the process
for only a part of their production capacity because the project cost was high and they wanted
to evaluate the plastisol system before deciding to expand to other lines.
Even though the SEP dealt with a process (gasket forming) that was different from the
process for which the fine was levied (VOCs from coating of metal lids), the SEP resulted in
VOC reduction and was considered a vertical nexus. The company reformulated their coating
to reduce VOC emissions in response to the enforcement action, but this was not included as
an SEP.
The time frame for project implementation was not an issue in this case. The Case Officer
inquired about the chemical constituents of plastisol and in response, the company provided
information on the chemical make-up of plastisol and certified that there were no VOC
emissions from the process. The Case Officer did not investigate the environmental or health
LM-2
-------
impacts associated with plastisol constituents. , .-•'•, .
t i
The Regional negotiators thought the Company showed good faith in negotiating the
settlement. They used an outside attorney who understood the SEP policy well and was very
proactive. In the SEP negotiations, the Region considered their role to be one of a
"responder", rather than "initiator". , , , • . ..
Company Perspective , !
|
EPA introduced the concept of an SEP during pending negotiations with the Company. LM
saw the SEP option as an opportunity to reduce the penalty, as an alternative to litigation over
the penalty amount, and to spending additional money on attorney's fees. The SEP saved
time for both parties in negotiating an agreement. While the Agency did not introduce the
SEP option at the beginning of the negotiation process, this was not, considered to be a
disadvantage because the Company was able to discuss the appropriateness of each component
of the original penalty before exploring options for mitigating it. Overall, the negotiation
process was considered worthwhile and successful since the Company and EPA were able to
come to mutually agreeable terms which included mitigation of the penalty through an SEP.
The SEP provided an impetus to undertake the gasket reformulation project. The project was
costly, but it was considered to be a "good business decision" from regulatory compliance,
technical, and economic standpoints. The project had been considered before the SEP-and
may have otherwise been implemented. While the $38,000 reduction in penalty is small
compared to the total cost of the project, and was not considered to be a significant ;financial
incentive for the investment, it allowed both parties to leave the negotiating table with the
knowledge that they had achieved an agreeable concession.
LM was convinced of the superiority of Plastisol to compo, from an environmental.standpoint,
because the new material contained no VOCs. Its only concern was that Plastisol would
smoke in the curing oven, potentially creating an opacity problem. They addressed this
potential problem by including a thermal oxidizer in the project design. If Plastisol does not
smoke, the Company will not utilize the device, thereby conserving the energy needed to
operate it. Wastes generated by both the new and former processes are considered non-
hazardous and the quantity of waste generated will not.be affected by the switch.
After investigating the technical details of the project, the Agency negotiators considered the
Plastisol project appropriate for an SEP. The implementation schedule established in the SEP
was acceptable to the Company and, in retrospect, was sufficient for the completion of the
project.
The Company is currently in the start-up phase of the new process. At some point in the
future, LM may switch their other, compo coating lines to, Plastisol if the process proves itself
technically and economically. , ,, ;;
LM-4
-------
The Company utilized a technical consultant who is a former employee of the state
environmental agency. Her knowledge of environmental regulations and the materials and
techniques that satisfy regulatory requirements was extremely beneficial to the Company. Her
main focus was technical assistance for compliance, but she assisted in the design of the new
system as well.
The Company is working to insure that all of their plants are in compliance with
environmental regulations. It held a compliance workshop for representatives of each plant to
stress the importance of environmental compliance. LM has a Corporate Environmental
Manager and each plant has an on-site person who is responsible for plant environmental
compliance.
MIT Analysis
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
Yes. They determined that the proposed project met the definition of vertical nexus.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
Yes. The respondent saw the penalty reduction for the SEP as an incentive to implement the
project, despite the smallness of the reduction relative to the cost of the project. The
incentive was not primarily a financial one. Rather, since the Company considered the fine
unjustified, and since the plastisol conversion was considered a good business decision, the
SEP was seen as a concession that could sufficiently ease the Company's ability to settle the
complaint.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
The key aspect of the process that led to the inclusion of the pollution prevention SEP was
the Company's desire to mitigate the penalty and the Region's willingness to do so in
exchange for a SEP.
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
The terms of the Pollution Prevention policy did not help or impede the process.
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
The Case Officer did not seek technical information to evaluate the technical feasibility of the
LM-5
-------
plastisol proposal or the health and environmental impacts associated with plastisol ,:
constituents (PVC, BaSQ4, dioctyl phthalate (DOP)). - , :
EPA Q. Where the environmental benefits obtained as a result oif implementation of
pollution prevention in this case?
i
The environmental benefit of the project is the elimination of 203 tons per year of heptane
usage, resulting in a reduction in VOC emissions of 50 tons per year. The subject plant is
located in a non-attainment area for VOCs. ..,-}.. . •/••'
i
; - i • r' :' ••• . • -.' •,''••. .': • •
The conversion may increase the plant's particulate emissions by 3.65 tons per year from
manufacturing, natural gas usage and oven emissions, and less than 1 ton per year of each
NOx, CO, HCandSO2. .
i
Plastisol contains PVC. Thermal decomposition products of PVC have been shown to cause;
"asthma"-like symptoms in workers who were heat sealing PVC films,, although proper ,,,,;.,,
ventilation and worker protection have eliminated toxic effects.1 This may be a concern in
the subject facility since the Plastisol gaskets are dried with heat. ' >.; ., ••:.>
Dioctyl phthalate (DOP) is one of a number of commonly used organic plasticizers which ;.;
have shown a low order of acute toxicity in laboratory animal trials2. In studies of teratogenic
effects, DOP and other esters of Phthalic Acid showed deleterious effects qn the developing
embryo arid/or fetus although DOP was considered one of two of the least toxic esters of the
eight phthalate esters evaluated in this study.3 , ,
Barium sulfate, an insoluble form of barium metal has been found to be non-toxic owing to
its inability to absorbed by the body.4 ; .
While it is not clear that there would have been a better alternative than the Plastisol material
that the Company chose, the question of safety of Plastisol ingredients was worthy of, the Case
Officer's investigation. i
1 Caserett and Poult's Toxicology: The Basic Science of Poisons. Doull, J., Klaassen, C.D., and Amdur,
M.O. (ed.) New York, New York: Macmillan Publishing Co., Inc., 1980, page 551. , ,
2 ibid, page 547
3 ibid, page 549.
4 ibid, page 438.
LM-6
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MEDICAL DEVICE MANUFACTURER (MDM)
I. Case Overview
Violation (Law and Date): EPCRA, 313, April, 1991 (issuance of complaint). The
company failed to file Form Rs for xylene, trichloroethane au^
trifluoroethane.
Date of Consent Agreement and Order: April 1992. I
Description of Company: The Company is a medical device manufacturer that is highly
regulated by the FDA. In 1991, MDM generated more than $50,000,000 in annual sales
from several manufacturing facilities. Today, through acquisition of several small
companies, sales are considerably greater. At the time of violation, the subject plant
employed approximately 100 people.
Date of Project Completion: September 1, 1993 (Per CA/FO)
SEP Costs: $10,000 for R&D, $65,000 for equipment purchase (see
below) i
i
Original/Final Penalty: $31,350/$24,000. Original penalty reflects reductions
for submittal of reports during the settlement process and good faith.
II. Description of Pollution Prevention SEP
i
After manufacture, medical devices are degreased and sterilized using freon. The company
agreed to engineer and test deionized water degreasing machinery to determine if deionized
water can be used hi place of freon. If the testing demonstrates that the new machinery is
effective, the company will purchase, install and calibrate the machinery. If the new
machinery is not effective, the company will either stop manufacturing products that require
the use of freon, or pay an additional penalty. The company uses approximately 16,000
pounds of freon per year. ;
MDM-1
-------
The SEP consists of the following components:
Project Description
Capital
Cost*
Deadline
(a) engineering and testing of deionized water
process machinery to replace freon as a
degreaser, and
$10,000
(b-1) purchase, installation and calibration of the $65,000
deionized water process machinery,
OR
(b-2) stop manufacturing all products that use
freon degreaser in the manufacturing process,
May 1, 1992
September 1, 1993**
September 1, 1993
*From CA/FO. Costs could exceed, but not be less than cost indicated.
**The expenditure of this money is phased in from September 1, 1992 to September 1, 1993.
The CA/FO established a schedule of stipulated penalties for failure to carry out items (a),
(b-1) and/or (b-2) above.
EH. Analysis
EPA Perspective
The company was very eager to find a way to mitigate the penalty. EPA negotiators
informed them about the SEP policy and encouraged them to look for options to reduce the
use of a 313 chemical. The Company submitted to the Agency a description of several
pollution prevention initiatives that it was undertaking as part of its pollution prevention
program. These initiatives included the replacement of freon used in degreasing with a
deionized water process and the reduction of xylene use in a thinning operation. The EPA
negotiators felt that the freon project was acceptable from the standpoint of the SEP policy
since it reduced the use of a 313 chemical (i.e., it met the nexus requirement). The xylene
reduction project was not accepted by the EPA negotiators. The Company had identified
three potential alternatives to xylene but had not begun to evaluate their feasibility. EPA was
concerned that the time it would take to identify, test, and implement an xylene alternative
MDM-2
-------
would be too long and the outcome would be too uncertain for inclusion as an SEP. While
the freon project too would require some testing, the company had already identified a
feasible alternative. i
The company is regulated by the Food and Drug Administration (FDA) and requires FDA
approval prior to changing their manufacturing process. This requirement complicated the
negotiation process-the company was able to test the new process but had to submit the test
data to the FDA prior to implementation and then wait for FDA approval. This additional
step made it difficult for the company and EPA to develop the implementation schedule
and generally to structure the overall agreement . The CA/FO had to be designed to give the
company an alternative to implementing the deionized water process in the event that: (a)
the tests were unsuccessful, (b) their process change proposal was rejected by FDA, or (c)
FDA approval was not received prior to the SEP deadline. In addition, the tune line had to
be sufficiently long and structured in several steps to allow for the FDA approval process.
i
The company stated that a 16 month time line (established in the CA/FO) would be sufficient
for testing, approval and implementation. The EPA Case Officer was willing to accept this-
despite the fact that 16 months is relatively long for an SEP timeline—in consideration of the
FDA approval requirement. The EPA attorney was reluctant to establish a 16 month
timeline because it is considered rather long for administrative cases, could raise concerns
within the Region, and may increase the risk that the company defaults on the CA/FO.
Ultimately, he agreed to the accept the timeline given the innovative nature of the SEP and
the associated environmental benefits. I
In March of 1993, the company sent a letter to the Region stating that they will not incur the
agreed upon expenses for the machinery prior to the deadline and therefore have chosen to
pay the stipulated penalty. They also stated that they are continuing to work on the
deionized water process and intend to implement it in the future. The EPA attorney stated
that they had the option to request a time extension and did not know why they chose not to
exercise it.
The company was permitted to apply both capital costs and reasonable costs for labor (in-
house or contract) to the SEP expenditure agreement. j
The Case Officer did not need or obtain any additional information on the technical
feasibility of the proposed project. Drawing on his 35 years of experience hi the chemical
industry, he determined that this was a reasonable approach. j
i
Based on a letter submitted to the Region at the outset of the negotiation process, the
company had implemented measures prior to this violation to reduce use of xylene, ethylene
oxide, and other solvents.
MDM-3
-------
Company Perspective
Background
MDM is in a state of transition. The Company had undergone substantial growth during the
late 1980's through the acquisition of several small companies. The subject product is in the
midst of a second phase FDA regulatory approval process that began prior to the issuance of
the EPA complaint. In addition, the Company decided to move its operations to another site
in early 1994; this decision was made after the CA/FO was finalized.
All MDM's plants have a person hi charge of environmental compliance. The Corporate
Attorney deals with corporate and plant environmental compliance matters.
Prior to EPA's issuance of the complaint, the State enacted a hazardous waste reduction law
that requires companies to develop a hazardous waste reduction plan. The Manager of
Manufacturing Engineering considers this law to be the best initiative to come from the State
environmental agency. The law motivated the Company to reevaluate their approach to
environmental compliance and led them to a better understanding of the "true costs" of the
materials they use. The Manager of Manufacturing Engineering estimated that it costs the
company 50% of original material cost to handle wastes generated from material use (e.g.,
solvents for degreasing). This estimate is used as a rule of thumb for allocating the cost of
waste management to material use.
In the late 1980's, hi consideration of the CFC phase-out under the Montreal Protocol, the
Company began to scrutinize and seek reductions in its use of freon. Freon is used to
degrease products prior to shipment. They began by instituting freon conservation measures
through good housekeeping practices. They made further reductions by installing a freeboard
chiller on the freon degreasing system to reduce both loss of material and freon emissions1.
These measures reduced freon emissions from 15,000 Ib to 4,000 Ib/year.
Negotiation process
Along with their outside counsel, the Company's Attorney and Manager of Manufacturing
Engineering had the most involvement in the settlement negotiation process. The Manager
heads the Manufacturing Engineering Group and is responsible for environmental compliance
for the plant.
The Company's Attorney gives substantial credit for the successful inclusion of the SEP to
their outside counsel. The idea of an SEP came out of an initial meeting between EPA
negotiators and the outside attorney. The outside attorney conveyed to the company that
1 A freeboard chiller is a series of refrigerated coils that form a cold air blanket in the top portion of the
degreaser. This blanket serves as a barrier to escaping freon. The payback for this project was 8 months.
MDM-4
-------
EPA was very interested in including a pollution prevention SEP in the settlement and asked
the Company if they had an appropriate project. The attorney was both assertive and
creative in his dealings with both the Company and EPA and he managed to work out an
agreement between the two parties despite the difficulties that arose over the implementation
schedule. i
The Company wanted to resolve the complaint through a settlement rather than court process
(for business reasons) and was eager to include a project that they considered beneficial to
their operation.
The EPA negotiators wanted the Company to agree to a one-year implementation schedule.
The Company knew that this would not be a sufficient amount of time given the FDA
approval requirement and necessary approvals from the local building department. The
Company projected that they would need three years to complete the project. The outside
attorney suggested a milestone approach to address the uncertainty associated with the FDA
approval process. The Company's attorney understood that the EPA attorney needed to wrap
up the case within a reasonable amount of time. i ,.
The Company felt that the EPA negotiators understood the technical aspects of the project.
i ..'.,"•-
SE Project
|
In the months prior to the complaint, the Company explored the possibility of eliminating
freon use in degreasing. They considered substituting an ultrasonic cleaner using isopropyl
alcohol (alcohol is a commonly used cleaner in this industry) but rejected this alternative
because it would result in airborne emissions of alcohol. The Manager of Manufacturing
Engineering learned of a deionized water degreasing system from an advertisement in a trade
journal. He sent product samples to the vendor for a first-stage evaluation of the
performance of their equipment on the Company's products. The results were very good
from the standpoint of both cleanliness and sterility. .
The deionized water system uses a two-step cleaning process. First the product is washed
with deionized water and detergent; second, it is rinsed with deionized water in an ultrasonic
bath. The vendor has sold this system-with and without ultrasonic cleasners-for degreasing
computer chips in clean room environments. i
The cost of the project is approximately $80,000 including second-stage testing, design
engineering, and equipment purchase. The project is not considered to be economically
beneficial to the Company; it is, however, favorably regarded by the Division Head for its
environmental rather than economic benefits.
The Company undertook the second stage evaluation, as outlined in the SEP, and considered
the new system to be a technical success. They have chosen not to purchase the equipment
MDM-5
-------
for two reasons. First, prior to the finalization of the CA/FO, the Company submitted a
premarketing approval (PMA) request to the FDA. FDA's approval is in part based on a
detailed description of the manufacturing process. The Company expected a decision from
FDA prior to the SEP implementation deadline, but FDA has not yet ruled on this
submission. During the waiting period, if the Company chooses to modify their production
process they are required to conduct additional testing and submit a substantial amount of
additional paperwork to FDA. FDA would then decide whether the Company is permitted to
change their submission or whether they must modify and resubmit the entire PMA. Since a
switch from freon to deionized water cleaning could impact upon product sterility, this
change would trigger this process and would pose risk of additional cost and PMA process
delay.
In addition, the subject facility is scheduled to close in February of 1994. The company is
moving its operations to another plant. Given the FDA approval process and the impending
move, the Company has chosen not to implement the deionized system in the subject plant.
They have paid the stipulated penalty for not completing a portion of the SEP.
The Engineering Group has moved the deionized project to a point where they have shown
that it can work well on their products. The Engineer that had worked on this project in the
subject plant will be transferred to the new site and will work to secure FDA approval for
the deionized system on that production line. This line will use a freon-based degreasing
system until FDA makes a decision.
While the Company would have pursued this project even without the SEP, the inclusion of
the project hi the SEP has accelerated the R&D process. The Company considers the SEP
process to be worthwhile alternative. It sends a message to a Company that while you are in
violation, we will recognize your efforts to make improvements. This approach seemed
particularly appropriate given that the fine arose out of a recordkeeping violation. The SEP
also sends a message to employees that the government recognizes that they are doing
something positive and therefore the penalty is being reduced.
General
The company would have been receptive to EPA guidance on SEP policy and referrals for
technical assistance although they think that this information would be a greater asset to
smaller companies with fewer technical and legal resources.
MIT Analysis
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
Yes. Since Freon is a 313 chemical, the Region considered the project to constitute a
suitable nexus to the violation.
MDM-6
-------
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
Since the respondent was pursuing the Freon elimination project prior to Region's complaint,
and since the Region was ultimately willing to agree to extend the timeline beyond one year,'
the Company had sufficient incentive to include the Freon project in the agreement. The
Company was not, however, given sufficient incentive to include the xylene reduction
project. The Region considered the inclusion of a xylene project in a settlement to be too
premature since the Company had not yet found a single feasible alternative; they considered
the uncertainty of a successful outcome too high. . ,
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
According to the Region's negotiators, the key aspects of the process mat led to the inclusion
of the Freon project were the Company's desire to mitigate the penalty and the Region's
ability to extend the timeline beyond one year. The Company gives substantial credit to their
outside Attorney who was assertive in encouraging the Company to pursue an SEP and
creative in designing the milestone approach that gave the Company some flexibility in case
the final R&D stages were unsuccessful. ;
!
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
The Pollution Prevention and SEP policies did not help or impede the process.
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
' | ' "'I'';
The Region did not seek any additional information on the technical feasibility of the project.
The Case Officer stated that he relied on his 35 years of experience in 1:he chemical industry
to determine that the approach that the Company proposed was reasonable.
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case? i
! ' '
If the Company had implemented the deionized water system in the subject plant, the SEP
would have accelerated the elimination of Freon in this facility. The Company, however, is
planning to pursue FDA approval for the deionized system in their new facility, based in'part
on the research and development conducted under the SEP. The SEP, therefore, may have
had the effect of accelerating Freon reduction in the new facility. Additionally, the deionized
water equipment vendor may be able to use the results of its evaluations on the Company's
product in other applications and for other Companies. To this extent, there may be
technology transfer benefits associated with this project.
MDM-7
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METAL FILING FURNITURE MANUFACTURER (MFFM)
I. Case Overview
Violation (Law and Date): RCRA, Company treated hazardous waste without a permit.
October 1991.
Date of Consent Agreement and Order: May 1992.
Description of Company: !
x * •'— ]
At the time of EPA's inspection, this plant was one of two small manufacturing plants owned
by the company.1 MFFM employs 65 factory workers in the manufacture of steel filing
equipment and steel shelving, using a thermal setting paint resin on an automatic, electrostatic
paint line. Paint overspray is captured by filters and cardboard on the floor of the spray
booths. This waste and straight paint waste are considered hazardous wastes.. When these
wastes are dried in a curing oven they are no longer considered hazardous waste; just as the
products painted and dried are not considered hazardous waste. Therefore, this company and
many others like it sought to reduce their hazardous waste disposal costs by drying their paint
wastes. Under RCRA, this activity is considered waste treatment and the company was fined
for conducting this activity without a waste treatment permit. I
Date of Project Completion: November 1992 for equipment installment and May 1992 for
written documentation of pollution prevention program implementation (per CA/FO).
SEP Costs: $218,000 i
i
1
Original/Final Penalty:
original penalty- $360,0007
first reduction- $330,000 (downward recalculation of willfulness/negligence component
of penalty)
final penalty $ 93,130 (plus $218,000 SEP offset) j
II.Description of Pollution Prevention SEP i
I
The Company proposed to select from among the following, and investigate and, insofar as
practicable, implement the following pollution prevention measures in sin amount not less than
$218,000.
The company has since closed the plant that is not the subject of this case study.
MFFM-1
-------
I. Administrative Measures
A. Development of Pollution Prevention Policy,
B. Promotion of Plant Engineer to Vice President for Manufacturing and
Environmental Quality to carry out Pollution Prevention Policy and Program,
C. Train all plant employees on pollution prevention strategies and opportunities
for waste reduction,
D. Attendance by management personnel at pollution prevention seminars for the
industry,
E. Research the environmental and economic costs of waste producing
technologies,
F. Develop an inventory control system to minimize the amount of hazardous,
materials on-site at any given time. (This includes purchasing in appropriate
quantities, timing of waste transport off-site and scheduling of orders to
minimize paint changes)
G. Evaluation of and decision on operation, administrative, production process and
raw material changes other than those listed in II, III and IV, below, to
minimize waste production.
II. Operational Changes ,
A. Implementation of an on-site solvent recycling system,
B. Implementation of a baffle collection system for paint overspray in the
Ransburg electrostatic sprayer,
C. Implementation of improved paint collection systems in paint bays and
Ransburg electrostatic sprayer to prevent overspray from collecting on floor,
and
D. Implementation of paint drum agitators and pumps for nonstandard color paint
transfer
III. Production Process
A. Improve the spray efficiency of the Ransburg electrostatic sprayer and the hand
held spray guns through parts replacement and equipment adjustments, and
B. Continuous training of painters and operators in efficient painting techniques.
IV. Raw Materials
A. Purchase and test an alternative cleaning solution for the metal furniture parts,
and
B. Continue to monitor the development of water-based and other coatings to
obtain a suitable cost effective alternative.
MFFM-2
-------
The projects were to be implemented within a period of 180 days after signing of the CA/FO
Within one year, the Company was required to submit written documentation that the program
implemented pursuant to the SEP is operating so as to prevention pollution to the maximum
extent attainable. i
• j
According to the Company's June 1993 progress report, the Company had reduced its paint
use by 20% as a result of improved painting methods and installation of efficient paint
nozzles. Paint drum agitators have reduced spillage and employee exposure. The Company
also indicated that it had implemented a measure not included in the SEP-replacement of
cleaning solvents with citrus-based solvents. This measure reduced the company's solvent
purchases from 21,000 in 1990, to 12,000 Ibs in 1992, resulting in a material costs savings of
III. Analysis
i
EPA Perspective ' ' j
i
After original penalty was assessed, the Company asked how it could mitigate the penalty.
The Case Officer gave the Company a copy of the EPA's Interim Policy on the Inclusion of
Pollution Prevention and Recycling Conditions in Enforcement Settlements. The Company
had a good outside attorney with experience in environmental litigation and an Environmental
Consultant. The Attorney and Consultant were instrumental in crafting the Company's SEP
proposal.
» ' ,.{'•'
i
The Regional negotiators suggested the 180 day schedule for project implementation and a
one year follow-up reporting requirement. The Company was amenable to this schedule.
, -. ' ' i
The Region was favorable toward structuring the SEP to allow the Company some flexibility
in its expenditure of the $218,000. The Case Officer thought that all the options that the
Company could choose from (i.e., the items listed above) were good technical ideas. The
Company was at minimum committed to implementing the four changes listed in Section II.
Operational Changes (The penalty offset was based on the estimated cost of these changes,
which totalled $218,000). If the company came up with another project not listed in the
CA/FO, it would have had to renegotiate the CA/FO. j
The CA/FO required monthly progress reporting including certifications of compliance and
documentation of money spent on the SEP. The certification was prepared by the
Environmental Consultant who assembled all the necessary material. This process made
monitoring compliance simple, particularly since the Company agreed to implement many
administrative measures for which there were no capital expenditures. I
i
The Case Officer is very satisfied with the Company's performance; the plant looks much
neater and cleaner now. She attended one of its pollution prevention training sessions and
MFFM-3
-------
was very impressed, particularly because the company had to train in three languages--
English, Spanish and Romanian.
The Case Officer did not require any technical assistance for this SEP. She has 22 years of
engineering experience in the U.S. military. The Base she worked on had a plating, stripping
and painting shop and she was familiar with the technology that Company proposed~she
knew it made sense. The Case Officer is wary of any attempt by the Region to set up a
formal technical review process for SEPs because it would slow the negotiation process. The
Case Officer received helpful assistance from the EPA's Office of Waste Programs
Enforcement in Washington. Her contact helped the Case Officer to understand the SEP
policy and whether the project that the Company proposed was suitable.
The Case Officer considers the success of the settlement to be primarily a result of the"""'" •"
"direct" and "up-front" approach that he took with the Company, in particular by giving the
Company a copy of the Agency's policy on pollution prevention in enforcement so that the
Company knew exactly what the Agency is looking for and what is and is not allowable.
Also, the Case Officer credits the Company's outside Attorney for contributing to the success
of the negotiation.
Company Perspective
Background
The steel filing cabinet manufacturing industry is very competitive. Several years ago, the
state mandated that coaters switch to high solids paint to reduce VOC emissions. This put the
company in a difficult competitive position vis-a-vis the company's competitors outside of the
state. At the time, high solids paint technology was relatively new and the company
experienced significant problems in obtaining and applying the new paints.
MFFM is small and relatively unsophisticated, according to the President, and they rely
heavily on its suppliers for technical information. It was a supplier who recommended that
the company bake its cans of paint waste, paint-soaked filters and cardboard, to "convert"
these materials into non-hazardous waste. The supplier told the company that most of its
competitors do this to reduce cost, that it is "standard industry practice."
EPA, from the beginning, took a very adversarial approach. The reports that appeared in the
newspaper made the company look terrible. EPA's position was that since they cannot catch
everybody, when they catch someone, they want to make an example of them. The company
felt that this was inappropriate because they did not intentionally break the law.
MFFM-4
-------
SEP Process , , , .....,..r ....... ....
The company hired an outside environmental attorney who had been part of the RCRA Office
in Region II. MFFM's attorney, not EPA, initiated the discussion about an SEP At the
recommendation of its law firm, MFFM engaged an environmental consulting company The
environmental consultants came up with the SEP proposal with minimal input from the plant
The President stated: "our people are not experts in [pollution prevention], our people -
manufacture furniture." .
EPA was very receptive.to MFFM's SEP proposal because the consultant had prior experience
with this process, they knew what would be acceptable to EPA, and they had developed a
very detailed plan. According to the President, this was critical to the success of the SEP. If
he brought only his manufacturing people to the negotiations, he does not think that EPA
would have been at all receptive to its proposal. The company came in so well prepared with
a proposal that it did not need nor did it seek input from EPA on the technical aspects of the
SEP. • .
EPA developed trust in the consultants and, as a result, were willing to build some flexibility
into the agreement by structuring the CA/FO to include a long list of projects that the
company would evaluate and then choose among to expend not less than $218,000. While
this feature gave the company some additional time to evaluate its options, it still felt under-
the-gun to spend $218,000-on projects that EPA would approve-within a specified period of
time. It did not have the time to do a. thorough evaluation of each option before choosing
which to implement.
Neither the company nor its consultant quantified the economic or environmental benefits of
the manufacturing changes prior to proposing them to EPA or prior to implementation. The
consultant told the company that it did not know the extent to which these changes, will
reduce pollution or cost, but that they were sure to have some impact. If it had more time,
the company would have done a better job of quantifying the costs and benefits of each
project. However, the President was sympathetic to EPA's desire to limit the implementation
period.
After the CA/FO was signed, the EPA Case Officer left and another was assigned. The
' company thought that the new Case Officer was extremely fair and reasonable. For example,
the company experienced a delay in hooking up its solvent recovery system because the
equipment arrived damaged. The EPA Case Officer was very reasonable in granting the
company extra time to implement this part of the SEP. : ,
The company with assistants from its consultant provided EPA will monthly documentation of
implementation progress. Since the company does not have the expertise to provide proper
explanations of implementation progress, the process would have been burdensome without
the services of its consultant. EPA was very receptive to the monitoring reports.
MFFM-5
-------
The company examined water-based coatings and powder coatings-two options listed in the
SEP--as substitutes for its solvent-based paints and rejected both. Water-based coatings do
not work in an electrostatic painting system. Powder coatings are not practical because the
company offers 31 different colors and custom matches others regularly. Powder coatings
take too long to change (approximately 15 minutes) and are appropriate only when there are
long production runs with the same color. In addition, if powder coated products are
scratched in the assembly process, they can not easily be touched up. Workers would have to
sand them down first and this is not considered to be cost effective. Components painted with
its current system can be easily touched-up, allowing the company to salvage scratched
products.
The company estimates that it cost over $550,000 to settle the complaint. This estimate
includes legal and technical consultant fees, penalty, closure of the ovens, and SEP costs.
This cost almost "wiped out" the company.
Through the use of its consultant, the company found other areas where it was out of
compliance and it has addressed these areas. The company would be willing to implement
further pollution prevention measures if they can be proven to have an economic payback.
SB Project:
All capital projects implemented under the SEP were completed in beginning of June. It is
too early to tell whether the projects are economically successful. The President has not seen
any payoffs so far from these changes although he thinks they may payoff in the future. He
thinks that they are reducing pollution to a small extent..
The President is strongly in favor of putting penalty monies into productive/pollution
reduction SEPs.
Small companies are in a difficult position because environmental laws are very complex and
difficult to understand. EPA needs to make companies more aware of what the laws are and
to provide technical advice on how to comply. EPA in this situation took a much more
"police-style" role than a role designed to "help" the company "abide by the law."
Companies now know that if you break the law you are personally on the line; you can no
longer hide behind the corporate shield. Given this, EPA no longer needs the stick to enforce
environmental laws. While there are some who deliberately break the law, the majority do
not fall into this category.
MFFM-6
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MIT Analysis '
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
Yes. . ;
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
Given the magnitude of the original penalty, the size of the Company, and the Company's
belief that the violation and penalty were unjustified, the Company had sufficient incentive to
mitigate the penalty. Since the Case Officer was direct about the type of effort that would
permit"a penalty offset--a pollution prevention SEP--the Company had an incentive to
consider pollution prevention.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
The Case Officer was straightforward with the Company, giving them a copy of the EPA's
Interim Policy on the Inclusion of Pollution Prevention and Recycling Conditions in
Enforcement Settlements. The Attorney and Consultant were instrumental in crafting the
Company's SEP proposal. EPA was very receptive to the proposal because the consultant had
prior experience with this process. EPA developed trust in the consultants and, as a result,
were willing to build some flexibility into the agreement.
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
The guidance actually helped to guide the company/consultant in developing a proposal.
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
No. - . • . i . .
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
According to the Company's June 1993 progress report, the Company had reduced its paint
use by 20% as a result of improved painting methods and installation of efficient paint
nozzles. Paint drum agitators have reduced spillage and employee exposure. The Company
also indicated that it had implemented a measure not included in the SEP-replacement of
cleaning solvents with citrus-based solvents. This measure reduced its solvent purchases from
21,000 Ibs in 1990, to 12,000 Ibs in 1992.
MFFM-7
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METAL FINISHING COMPANY (MFC)
I. Case Overview
Violation (Law and Date): RCRA. Violations included: failure to properly close storage
containers of hazardous waste (oil and alkaline solutions from machine shop and chromic
acid from plating area); failure to label hazardous waste containers (lead contaminated
polishing dust, mixed oil and alkaline solutions, chromic acid) and cyclone collection hoppers
containing lead contaminated polishing dust.
Date of Consent Agreement and Order: July 1992. (Inspection June 1991, complaint
issued February 1992).
Description of Company: ;
The company manufactures solid cast brass nuts and bolts and chrome plated tubular
plumbing supplies. In 19.91, they employed approximately 80 people and sales were in the
range of $18 million. The company operates one nickel and chrome plating line. They
discharge directly, after treatment, to a canal with low water flow.
j-
Prior to the SEPs, the company generated a variety of hazardous wastes: metal hydroxide
sludge (F006) and spent alkaline solution (which were manifested as characteristically
hazardous for chromium and lead), lead contaminated polishing waste and spent chromic
acid. The facility is a RCRA treatment, storage and disposal facility (TSDF).
Date of Project Completion:
September, 1992
SEP Costs: The settlement contained two SEPs. The pollution prevention SEP was
estimated to cost $170,000 (based on company estimate in SEP proposal, includes capital,
design and engineering labor costs, and construction labor), and actually cost $244,110 (per
company documentation sent to EPA case officer). The non-pollution prevention SEP was
estimated at $5,400 and actually cost $5,173. i
Original/Final Penalty: Proposed penalty was $325,000 (per Complaint). Company
provided information and affidavits for certain violations and was reduced to $150,900.
Final penalty reduced to $23,300 for implementation of the SEPs.
I
II. Description of Pollution Prevention SEP I
This settlement contained two SEPs. The first SEP (that we will refer to as the "pollution
prevention SEP") consists of significant modifications to the company's automatic plating
line. The second SEP is a measure designed to more effectively collect polishing dust waste.
Prior to the SEPs, the company generated 77 cubic yards of polishing dust waste annually.
MFC-1
-------
Polishing dust is generated when brass tubing parts are polished to improve surface finish in
preparation for chromium plating. To reduce polishing dust waste, the company replaced the
existing nickel tank with a longer tank. The longer tank, plus an increase in the part cycle
time, is designed to improve the .surface finish of the part so that a larger percentage of parts
do not need polishing to achieve satisfactory chrome plating. The reduction in polishing was
designed to reduce generation of polishing dust by 65 to 85%, and to decrease the lead ;
content in the dust. The change was projected to increase the company's use of nickel by
130%, from 5,500 to 12,650 pounds per year.
The company generated 16,700 gallons of F006 metal hydroxide sludge from its nickel and
chromium plating operation prior to the SEP. To reduce the generation of this sludge, the
company proposed to convert the chrome bath from hexavalent chromium to trivalent
chromium. This modification was designed to significantly reduce the company's generation
of F006 wastes--the trivalent chromium process would pass substantially less chromium to
the rinsewater, prior to wastewater treatment, than the hexavalent chromium plating bath.
The company projected that this change to reduce the proportion of solids in the waste
stream (metal hydroxide sludge) by 33% and reduce metal hydroxide sludge generation by
5,500 gallons per year. „ •, , :
Prior to the SEPs, the company generated approximately 330 gallons of chromic acid waste
per year during their annual clean up and disposal of the chrome plating tank—a source of
one violation alleged in the complaint. The switch to trivalent chromium eliminates this
activity and the resultant wastestream. In addition, the elimination of hexavalent chromium
decreases their use of sulfur, dioxide which is used to reduce hexavalent chromium in the
waste water treatment process. ,
The company estimated that the lengthening of the nickel tank and conversion to trichrome
would cost $167,149, take two to four weeks to implement, and would require that the
company to invest $70,000 in inventory to supply their customers while the conversion is
under way. The company is required to spend not less than $165,000 on these two
components of the pollution prevention SEP. ?
The company projected a net yearly positive operating cash flow of $4,000 in the first year
of full operation.1 This includes a reduction in hazardous waste disposal costs of
approximately $29,000 per year and a reduction in chromic acid costs of $1,000 per year.
Increased nickel and utility costs (100% increase, due to increased cycle time and size of
nickel bath) were projected at $38,000 and $2,000 per year, respectively. By planning to
reconfigure product holding racks, the company did not project a slow down in output or
increased labor costs. .
1 This calculation included depreciation. However, the agreement subsequently reached prohibited the
company from depreciating its capital costs for the SEPs. When recalculated, omitting depreciation, the net yearly
operating cash flow is reduced to -$10,000.
MFC-2
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Finally, at the request EPA, the company agreed to the second SEP which constituted a
modification to their polishing dust collection system by the construction of a fixed sheet
metal waste collection unit that, when closed, provides secondary containment around fifty-
five gallon storage drums. This system is intended to provide additional protection to the
environment which is beyond the requirements of existing law and regulations. The
company was required to spend not less than $5,000 on these mpdifications.
i --'•-'''• '
in. Analysis
i
EPA Perspective
• j '....•
During their inspection in June 1991, the EPA inspector noted that the company: (a) did not
employ state-of-the-art technology, (b) employed "sloppy" hazardous waste management
practices, (c) had poor personnel training and record maintenance procedures, (d) had an
under-experienced and over-worked individual assigned to manage environmental
compliance. j
During an inspection at the end of 1992, the same inspector noticed: '(b) improvements in
hazardous waste management practices, (b) better personnel training, and (c) a new, more
experienced engineer in charge of environmental compliance. j
' ' ! •'...--
The Negotiation Process:
At the settlement conference in February of 1992, the company said that they wanted to
include an SEP in their settlement, and they specifically wanted the SEP to consist of the
nickel tank extension and chromium conversion. The company had already run a pilot test of
the new process and determined that it would be technically feasible. By April, they had
submitted a cost analysis and schematics to EPA. ! . -. • ,..-,..-
The EPA Case Officer surmised that the company saw the SEP as an opportunity to upgrade
their equipment while mitigating the penalty. During the negotiations, the company said that
they did not have sufficient capital to implement the project and pay the full penalty.
The company's outside Attorney was formerly with the U.S. Attorney General's Office and
had worked on EPA settlements in that capacity. She was very familiar with the settlement
process and this made the negotiations much smoother. EPA considered this to be a
contribution to the success of the SEP negotiation.
i ' ' - ' • -••'"•
The EPA Attorney considers the 70% penalty reduction given in this case as "unusually
high." However, she believes that the reduction is warranted since each component of the
SEPs constitutes a vertical nexus, the company agreed not to depreciate the capital costs of
the project, and the pollution reduction levels were substantial. j
•I-' . • : • -, . •
The Case Officer checked plating periodicals in the course of evaluating the company's
MFC-3
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proposed SEP. He was not familiar with PPEIS or other pollution prevention literature.2
Company Perspective
Prior to the EPA inspection, the company had received information on trivalent chromium
("trichrome") plating systems from a chemical vendor. The company had looked at the
process, but there were no plans to convert the system to trichrome at that tune because the
system produced an unacceptable cosmetic appearance on the plated parts. The supplier was
marketing the system as a more environmentally benign process than its hexavalent '
counterpart. At this tune there were companies in the U.S. that were using the trichrome
system, but none of these companies were making products similar to MFC's. When the
company converted to trichrome, they became the first in "their industry" to move to this
system.
After the EPA inspection, the V.P. of Operations learned of EPA's SEP policy in a class that
he attended on environmental compliance and pollution prevention. This class is sponsored
in part by the state's technical assistance program. He decided to propose an SEP to EPA
that would eliminate the activities that contributed to the company's violations. He
considered projects hi the context of the question: "where do we want to be 10 years from
now?" The company proposed the pollution prevention SEP, complete with plans, at the
first settlement conference. They stated "this is what we are willing to do."3
Since one of the violations dealt with improper storage and labeling of hexavalent chromium
waste, the Company decided to eliminate, hexavalent chromium. They were able to switch to
the trichroirfe system at this tune because the process had been improved and the cosmetic
problem had been solved. Currently, their trivalent chromium bath is 1/30 as strong as their
former hexavalent bath and is considered about 1/10 as toxic. In addition, the trichrome
process has decreased their F006 metal hydroxide sludge generation by about 2/3.
To address polishing dust waste, they chose to redesign their plating system to minimize
waste generation. The pollution prevention SEP promised a 65 to 85% reduction in the
generation of polishing dust waste. The company has cut its waste by 83 - 85%.
Taken together, the switch from hexavalent to trivalent chromium and the lengthening of the
nickel tank represent a significant redesign of their plating process. The changes required a
significant amount of planning and preparation and required that the entire plating line be
shut down to institute the changes. The company typically shuts down for two weeks in
July, however, given the delivery schedules for new equipment needed to implement the
2 Researchers found an extensive case study on substitution of trivalent chromium to hexavalent chromium
in PPEIS.
3 The dust collection SEP was developed later in conjunction with EPA.
MFC-4
-------
SEP, they had to move their annual shut down to August.
While product made with the new process does not match the exact cosmetic appearance of
product made prior to the changes, the company considers the product made with trichrome
to be acceptable.
The company thinks that the change to trivalent chromium is in their long term interest.
They believe that regulations are getting tighter and that all companies will eventually be
required to eliminate hexavalent chromium from their process. They feel that they have an
advantage over companies who have not yet made this change-trivalent technology may get
more expensive and they will have the experience of operating the system.
SEP Process:
Although the company felt that the size of the original penalty was extremely high, given
their violations, they thought that the settlement negotiation process went well. They believe
that the primary reason that the SEPs were negotiated successfully was because they were
assertive about stating that they wanted to include an SEP right from the outset of the process
(i.e., at the first settlement conference). In their words, they "put it up front", by saying
"this is what we want to do."
EPA did not tell the company about SEPs. They think that it would be useful for EPA to
inform company's about the SEP policy and to suggest that they contact their state technical
assistance program for technical support in developing SEP proposals.
During the settlement process, the company received no technical input from EPA. They
had submitted technical proposals and plans and received approvals without any suggestions
for changes, or rejections. They do not see this as a drawback.
Other Pollution Prevention Activities \
• -!.'•'
Prior to the SEPs, in an effort to eliminate lead from their production processes, they had
switched from a lead to an antimony-based soldering material and had installed energy
efficient light fixtures. They also made a change to their process to capture the zinc that is
carried over from the soldering process to the plating process to reduce; the quantity of zinc
in their metal hydroxide sludge.
!'
Organizational Change
The company instituted three major changes in its operating procedures as a result of the
enforcement action and SEPs. First, they set up a chemical laboratory to monitor and
maintain proper plating bath chemistry. Second, the Vice President takes an "environmental
MFC-5
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compliance" tour of the facility every six weeks; the President participates in every second
tour. Third, the company will not bring new chemicals into the plant without: a thorough
review of the Material Safety Data Sheet (MSDS), consideration of the type of waste that
will be created by the use of the material, and consideration of how the waste will have to be
handled if the material is used. If the material will pose problems in waste management
and/or disposal, the company will not purchase the material.
While the company did not use the state technical assistance program prior to or during the
SEP process, they are working with them now and are satisfied with their assistance.
Analysis:
The company used the opportunity of the SEPs to upgrade their production process with an
eye toward the future of environmental regulation. While they knew about the trichrome
system prior to the violation, the SEP vehicle was an incentive for them to seriously
consider, and then ultimately implement it. It seems unlikely that they would have made
these changes on then- own, at least within the foreseeable future, if it were not for the SEP.
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
Yes. In particular, the Region was able to significantly reduce the penalty to provide
incentive for the company to include the SEP.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
Yes.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
EPA thought that the company's knowledgeable outside attorney contributed to the success of
the negotiation process. From the company's standpoint, the key aspect of the successful
negotiation process was their early knowledge of the SEP policy and their assertive approach
to negotiating the SEPs backed up by a concrete technical plan.
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
The SEP policy was not an impediment to the process since the company's proposal
constituted a clear vertical nexus to then: violations.
EPA Q. Did the Region need/seek/have access to technical and other information
MFC-6
-------
required for decision making during the negotiation process? j
, i. -•..'.-.
The Case Officer consulted plating periodicals in the course of evaluating the company's
proposal. Beyond this, he did not feel a need, or seek out other material. He is unaware of
pollution prevention case studies and other literature or the PPEIS database. ,
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
By reducing the generation of lead contaminated polishing dust and the lead content hi the
dust, the SEPs reduce worker lead exposure and disposal of lead and nickel waste generation.
However, the company accomplished this by increasing its use of nickel and electricity and
consequently their associated environmental and resource utilization impacts.
The switch from hexavalent chromium to trivalent chromium, results in several
environmental and worker health and safety benefits. First, less chromium is used in
trivalent chrome systems than in hexavalent systems (trichrome baths are operated at lower
concentrations and less chromium is dragged out). This has the benefit of reducing
environmental, public and worker health and safety impacts all along the lifecycle of the
product: chromium extraction, processing, transportation, use in plating, and ultimate
product disposal.
Hexavalent chrome has been shown to cause adverse health effects in workers. While
hexavalent is considered more harmful, health effects from trichrome have not been well
researched or documented. Trivalent baths have a higher pH than hexavalent and thus pose
less of an acute hazard to workers when bath materials are handled. -;••
In addition, trivalent chromium systems produce less hazardous chromium hydroxide sludge
waste, eliminate the need for annual cleanup and disposal of chromic acid bath, and
elimination of use of sulfur dioxide in wastewater treatment. .
MFC-7
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METAL MACHINING COMPANY (MMC)
I.
Case Overview
Violation (Law and Date): EPCRA 313, March, 1989 (inspection), April 1990 (filing of
complaint). Company failed to file 1988 Form R's for: phosphoric acid; 1,1,1
trichloroethane; xylene; methyl ethyl ketone
Date of Consent Agreement and Order: October, 1991 (signature date)
Description of Company: MMC is a plant owned by a multinational corporation; the
plant employs 1,000 people and generates sales of about $200 million per year. The
company produces engineered pump components from metal and ceramic materials using
machining and lapping1 equipment. :
Date of Project Completion: September, 1991 (per CA/FO). As a result of a
protracted negotiation process, the company initiated and completed prior to actual signing of
the CA/FO. i
SEP Costs: $201,000 (company must spend no less than this amount, per CA/FO)
Original/Final Penalty:
and inclusion of SEP.
$76,000/$11,400. Final penalty based on Company's good faith
II. Description of Pollution Prevention SEP
Prior to the SEP, the company utilized 1,1,1 trichloroethane (abbreviated 1,1,1) solvent
immersion cleaning units for the majority of both in-process and final cleaning operations.
Cleaning is done for both functional and aesthetic reasons. The SEP consists of several
changes to a subset of the company's parts cleaning systems that are designed to reduce the
amount of 1,1,1 used by 130,000 pounds per year. The Company agreed to spend no less
than $201,0002, by September 30, 1991, on the following:
1. Retrofit 1,1,1 degreaser used on non-metal lapped parts, to reduce solvent
emissions and use (estimated reduction hi use of 1,1,1 of 3,000 gallons per
year). Retrofit consists of: freeboard extension, cover and freeboard chiller.
i
A process designed to accurately refine the surface of parts using abrasive, rotating plates.
2 Eligible expenses are: purchase of equipment, labor (excluding fringe benefits) for installation and testing,
and materials directly associated with installation and testing. Expenses associated with project feasibility research
are expressly excluded except insofar as the use of the ultrasonic testing unit identified below.
MMC-1 !
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2.
Purchase, install and test the following equipment to switch from solvent to
aqueous-based cleaning of ferrous and non-ferrous metal parts:
a.
b.
c.
d.
e.
f.
g-
h.
two heated and agitated immersion systems for final part cleaning,
one ultrasonic test cleaning unit for use in cleaning trials,
minimum of six in-process cleaning units,
one holding tank,
one belt skimmer to skim oil off aqueous cleaning liquids,
two evaporator units to evaporate the water portion of spent aqueous
cleaning liquids to reduce the volume of this waste to the relatively
small amount of free oils and precipitated solids,
one portable retrieval unit, and
four chemical mixing systems.
III. Analysis
EPA Perspective
Both the Case Officer and Attorney on this case changed mid-stream. The Plant Engineer,
largely in charge of SEP development, was hired by the Company after the enforcement
action had begun. He had a personal goal of ridding the plant of 1,1,1 for environmental
and health reasons. The Company and the Region reached an agreement on the SEP and
then the Company sought and received approval from its foreign owner.
The Company conducted a "cleaning study" (i.e., a study of cleaning needs and alternative,
non-solvent cleaning alternatives) in response to the enforcement action; it was completed in
October of 1990 (i.e., prior to the signing of the CA/FO). EPA and the Company met
several times to consider technical options. The amount of time that the Agency gave the
company to evaluate and choose projects was considered unusually long, but this phase
included a period of little progress when both Agency and Company personnel changed and
while there were disagreements over specific violations. The Regional representative thought
that the Company was given sufficient time to develop their strategy.
/
The Company has completed their SEP, has been inspected by Agency, and has demonstrated
their systems to other companies.
Company Perspective
SE Project:
While at the tune of their inspection the company was in compliance with VOC emissions,
EPA negotiators put pressure on them to reduce their use of 1,1,1 trichloroethane.
Therefore, the focus for the SEP quickly became 1,1,1 reduction in parts cleaning.
MMC-2
-------
The Manufacturing .Engineer was given the task of evaluating cleaning alternatives under a
tight timeline. At that time, there was very little information on aqueous and semi-aqueous
systems. He compiled information from technical journals, trade shows and conversations
with suppliers. Suppliers, however, seemed to know relatively little about what would and
would not adequately clean the parts manufactured by the company. The Engineer produced
a comprehensive report of cleaning alternatives and a set of proposals for the SEP. The SEP
chosen came from this report. • . . j
According to the Plant Engineer, the return on investment (ROI) for the project is good,
'particularly given the rising cost of 1,1,13. 1,1,1 use in the plant has been reduced from
30,000 to 17,000 gallons per year.4 '.
Currently, the company no longer uses 1,1,1 in cleaning of stainless and forged steel parts.
They have not been able to find a replacement for 1,1,1 in cleaning phenolic
(carbon/ceramic) parts where 1,1,1 is used to remove lapping oil-an oil used as a lubricant
in a process designed to accurately refine the surface of parts using abrasive, rotating plates.
The company has been looking, but has not found either an aqueous or semi-aqueous
replacement for 1,1,1 to remove the lapping oil, nor have they found a non-oil lapping
material that could be cleaned with an aqueous cleaner.
SEP Process:
It took about two years from the time the complaint was issued to the tune the CA/FO was
signed. The original Plant Engineer at Crane was not knowledgeable hi compliance issues
and the original Attorney at EPA left the Agency. These factors caused delay and animosity
between EPA and the Company.
i ..-,-.-'.
i
The current Plant Engineer was hired slightly less than two years after the complaint was
issued. He had previous experience with environmental compliance arid had a personal goal
to eliminate 1,1,1 and other solvents from the plant. By the time that he joined the
company, the plant was under a great deal of pressure to propose an SEP for 1,1,1
reduction. Despite their requests for assistance, neither EPA nor the state environmental
agency would offer technical ideas (the state did not have a technical assistance office at this
tune). i
While not part of the SEP, EPA encouraged the Plant Engineer to replace MEK used in
cleaning with acetone. The Engineer went along with this but did not think it was sensible
1,1,1 trichloroethane is an ozone-depleter and is being phased-out under the Montreal Protocol. Phase-out
is scheduled to begin in 1994 and prices for this widely-used solvent have been escalating.
4 This converts to approximately 300,000 and 170,000 Ibs per year (based on a specific gravity of 1,1,1 of
1.3390), for a reduction of 130,000 Ibs per year of 1,1,1 trichloroethane. r ';
MMC-3
-------
because he has simply traded one risk for another: acetone is a solvent and is flammable.
The company's overall opinion of the SEP process is that it was worthwhile. While they
would have eventually moved to eliminate then- use of 1,1,1, particularly given the
increasing cost of the material, the SEP process was a stimulus.
Organizational Change:
There are about 43 other MMC plants and maintenance shops. All of these plants are
moving to eliminate the use of 1,1,1, in part because of the work done at the subject plant.
Other plants have contacted the subject plant's Plant Engineer for information on alternatives.
Some plants have already eliminated 1,1,1.
The company has recently engaged the services of a consulting branch of a solvent
manufacturer to help them convert their remaining 1,1,1-based cleaning systems over to non-
solvent systems. They chose this company because they are a manufacturer of 1,1,1 and
other solvents used for cleaning and they specialize in cleaning operations. The
Manufacturing Engineer, however, is not satisfied with the consultants. They proposed a
very expensive new cleaning system and the Engineer does not trust that they are providing
complete information. Therefore, he his doing his own investigation of the systems that the
consultants have suggested as well as other alternatives.
MIT Analysis
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
The Company's proposal was, in part, an outcome of the Region's request that the Company
include 1,1,1 reduction measures in the settlement. The Region had sufficient latitude to
accept the Company's SEP proposal.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
The Company was given sufficient incentive to implement the SEP. In addition, the project
was on their critical path for environmental and economic reasons.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
The Plant Engineer's own goal to eliminate the use of solvents, and the Manufacturing
Engineer's efforts in systematically evaluating cleaning alternatives (particularly at a time
when there was little information, relative to today, on aqueous and semi-aqueous cleaning
systems) were key elements of success in this case.
MMC-4
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EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
This was not raised as an issue by either EPA or the Company. Since the Company failed to
file a Form R for 1,1,1 trichloroethane, there was a clear vertical nexus to the violation.
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
No. ,v ". .- - -.--.•.- . .•••";- .'•:• ' -. '
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
The primary environmental benefit of this project is the reduction in the use, emission and
disposal of 1,1,1 trichloroethane-an ozone depleting substance. 1,1,1 is also a central
nervous system depressant5 and is therefore hazardous to workers. Since emissions within
the plant will be reduced, the project will have a positive effect on worker health. Since
1,1,1 is slated for phase-out under the Montreal Protocol, this and many other companies
have been working toward the elimination of this ubiquitous and effective cleaning solvent.
The SEP has accelerated the Company's reduction and ultimate elimination of this substance.
In addition, the Company conducted extensive evaluations of aqueous and semi-aqueous
cleaning systems at a time when there was relatively little field experience with this
technology. This project has paid-off in several ways: in-plant 1,1,1 reductions; transfer of
knowledge and experience to other parts of the plant, other plants, and repair shops, owned
by the company; transfer of knowledge and experience to other companies invited to examine
the equipment and talk to plant technical staff; and education of the manufacturers and
vendors of cleaning systems that plant personnel dealt with during the course of their
cleaning system evaluations.
The company has chosen not to filter and discharge the aqueous cleaners to the sewer;
Therefore, unlike many other firms using aqueous cleaners they will not create a new
wastewater discharge. Instead, they chose to install an evaporation system to minimize waste
volume and disposal costs. They will dispose the residue of this system-as a hazardous
waste. The constituents of this residue are unknown. They will also increase electricity
usage for evaporator operation.
Casarett and Doull's Toxicology: The Basic Science of Poisons. Doull, J., Klaassen, C.D., and Amdur,
M.O. (ed.) New York, New York: Macmillan Publishing Co., Inc., 1980.
MMC-5
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POWDER METALLURGY MANUFACTURING COMPANY (PMMC)
I. Case Overview
Violation (Law and Date): EPCRA 313, the company failed to file Form R's in 1987 for
copper, chromium, trichloroethylene, and ammonia. September 26, 1989.
Date of Consent Agreement and Order: January 1992.
Description of Company: Powder Metallurgy Manufacturing Company (PMMC) occupies
a 28,000 square foot plant that has operated since 1955; today PMMC plant has 50
employees and sales of between $5 - 6 million per year. PMMC uses brass, steel, stainless
steel, and metal alloy powders to produce machine screw nuts, steel structural and special
parts, and steel fasteners. Powder metallurgy technology produces precision parts that
require little or no secondary machining. Prior to the SEP. production of a finished part
typically included the following steps:
1. compacting - metal powder is placed in a mold and compacted into "green" parts with a
mechanical press.
2. sintering - "green" parts are sintered in electric ovens at a temperature just below the
metal's melting point. The sintering process occurs in either a disassociated ammonia
(hydrogen-nitrogen) or methanol/nitrogen atmosphere to prevent oxidation and corrosion.
3. burnishing - cooled parts are either rotated or vibrated with a ceramic medium to remove
excess metal and provide a smooth finish.
4. brightening - brass parts are placed in a chromic acid, "Brite-Dip" bath to brighten the
surface.
5. drying - parts are dried in an oven to prevent corrosion.
i
6. resin impregnation - some parts that are shipped off-site for plating or difficult to
machine are placed hi a resin impregnation bath under vacuum.
7. tapping - brass parts are machined or tapped (thread cutting) using a water soluble cutting
fluid. Steel and stainless steel parts are tapped using a heavy black sulfur oil cut with
kerosene.
8. water wash - brass parts and nuts from the tapping operation are placed hi a water wash
to remove the tapping fluid. '
9. vapor degreasing - steel and stainless steel parts and nuts are placed in a vapor degreaser
using trichloroethylene as the degreasing agent.
i
i
PMMC-1
-------
The company is a member of the Metal Powder Industrial Federation-a federation of four
trade associations. There are about 140 similar companies in the country.
Date of Project Completion: January 1993
SEP Costs: $78,299 (CA/FO estimate)
Original/Final Penalty:
considerations.
$76,000/$30,550. Penalty reduction for SEP and other
II. Description of Pollution Prevention SEP
The SEP consisted of five components:
Project Description
(a) an environmental audit
(b) the implementation of a blended hydrogen/nitrogen sintering
atmosphere system which eliminated the use and storage of anhydrous
ammonia,
(c) the decontamination and replacement of an existing 10,000 gallon
anhydrous ammonia storage tank, with a 1,000 gallon tank. This
project eliminated a source of ammonia emissions,
(d) the elimination of a trichlorethylene vapor degreaser which
eliminated trichloroethylene waste generation and fugitive air
emissions. This was accomplished by switching from an oil-based
tapping fluid-which required solvent degreasing--to a water-based
alternative-which can be removed via water washing, and
(e) the implementation of a closed loop cooling system for non-contact
furnace water which will reduce the discharge of non-contact cooling
water to the POTW and conserve water.
*From CA/FO. Costs could exceed, but not be less than cost indicated.
The company was required to implement all components of the SEP within a 360 day time
line.
By switiching from ammonia to blended hydrogen/nitrogen gases, the company eliminated
the use of 1.5 million pounds per year of ammonia and the threat of a catastrophic release of
Capital Cost*
$4,350
$50,598
$2,400
$500
$20,451
PMMC-2
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ammonia gas. Prior to the SEP, the company released 26,860 pounds of fugitive
trichloroethylene to the air. Trichloroethylene is an ozone depleter and is targeted for phase-
out under the Montreal Protocol. These emissions were eliminated under the SEP. In
addition, the company significantly reduced its generation of waste oil by switching to a
water-based coolant. The company generated 1,600 gal per year of waste oil prior to this
change. I
i
While not included as part of the CA/FO, the company also eliminated their chromic acid-
based brightening process. This action eliminated the chromic acid treatment sludge
generated in this process. This was done for brass parts only, since these parts turn dark
after sintering. The company switched to a new burnishing compound that produced a finish
on the brass parts that was acceptable to their customers. EPA did not grant any penalty
reduction for this process change. i
i
III. Analysis
EPA Perspective |
l
I •
A the time of the inspection, the company, along with other companies in the region, had
come under regulatory scrutiny in an effort to reduce emissions in the area. At the first
settlement conference, the company started the meeting with a review of their production
process and passed around samples of their products. The EPA attorney suggested that they
conduct an audit to identify compliance issues and SEP ideas.
Company Perspective
SE Project
- |
The projects implemented under the SEP policy had been proposed by various members of
the Company (in manufacturing) prior to the issuance of the complaint. The SEP process
was the impetus for their implementation. |
The Plant Manager advocated a switch from dissociated ammonia to a blended hydrogen and
nitrogen system prior to the issuance of the complaint. While they had. only one ammonia
release in 35 years of operation, he was concerned about the potential for a future
catastrophic release. The company did not implement the blended system because they could
not justify the capital expense. In addition, while the blended system requires less energy
and produces better quality product than the dissociated ammonia system, it costs more to
operate. j
i
The company knew that they would eventually have to eliminate their u,se of
trichloroethylene and were considering alternatives prior to the complaint. Once they
committed to switching, however, it took 14 months to find a water-based coolant that would
be adequate. The company relied heavily on the technology and advice of their suppliers,
PMMC-3
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who had professional chemists on staff. During the past 6 months, the workers-whose
hands are constantly immersed in the coolant-have developed dermatitis. The plant project
engineer is in the process of resolving this problem.
The closed-loop non-contact cooling water system project idea was generated within the
plant. The project had a significant payback and conserves approximately 750,000 gallons of
water per month.
SEP Process
The company President expressed his displeasure over the magnitude of the original penalty1
and the low rate of penalty relief granted for the SEP. However, he stated that the EPA
negotiators were reasonable and not antagonistic. He thought that the company was given a
"fair" implementation schedule and he believes that the negotiators would have granted the
company more time if it were needed.
The company's outside counsel was very helpful hi negotiating the SEP, particularly in
establishing the implementation schedule. The company procured approximately $44,000 of
legal services from their law firm.
According to the Project Engineer, during the settlement process EPA did not encourage the
company to propose an SEP. In addition, EPA provided very little technical assistance. The
Project Engineer stated that he would be hesitant to ask for EPA's technical advice because
he does not want to "invite" visits by EPA representatives. He is not familiar with the
State's technical assistance program, but was interested in finding out about it. The
President prefers to obtain and transfer technical information through one-on-one contact with
other powder metallurgy company representatives and suppliers.
The company has chosen not to publicize their SEP experience, either through contact with •
other companies or through their trade association. The Project Engineer likened this to
"airing their dirty laundry." EPA sent out a press release on the fine that was levied against
the company. The story was picked up in the popular and trade press. The company
received a letter from one of its customers stating that they do not do business with
companies that are not hi compliance with environmental laws. By explaining that the
violation was for a reporting requirement, the company was able to retain the customer's
business. ,
The President suggested that a regional committee be established to provide support for
companies on pollution prevention hi general, and in the context of enforcement. He also
1 The company had 51 employees at the time of the complaint which put them into the 50+ employee
category for purposes of penalty calculation. If they had 50 or fewer employees the fine would have been $30,000
rather than $76,000. They were placed in the same penalty category as a medium-sized corporation. The President
stated that the fine policy should be more sensitive to small companies.
PMMC-4
-------
suggested a televised broadcast of a discussion of these topics by a panel of businesspeople.
Organizational Change ;
Through the process of implementing "environmental investments" under the SEP, the
company President has "changed his thinking" about "environmental investments." He
realized that environmental standards are going to get tighter and decided that instead of
trying to keep up with them, it is better to lead them. He decided to eliminate
trichloroethylene, chromic acid and ammonia. While it has not been easy, the company has
been able to move away from certain hazardous operations and these changes have been
economically and environmentally sensible for the company. The projects implemented
under the SEP are expected to payback in the "long run"-5 to 7 years (not the 3 to 4 year
time frame that small companies tend to set as a hurdle rate). Through a series of energy
conservation projects, the company has cut its energy costs by $4,000 per month.
The President believes that a vision of cultural change must come from the top. He is trying
to apply TQM principles to productivity, quality, environment and worker health and safety.
MIT Analysis:
i
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator? The Region was able to accept the pollution prevention proposals
offered by the company.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention? It
appears that the company had sufficient incentive to consider pollution prevention,
particularly as evidenced by the number of breadth of prevention projects that were
implemented under the SEP.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
i
From the company's standpoint, their outside counsel was very helpful and skillful in
negotiating the SEP. Given that the company required time to evaluate alternatives to their
oil-based tapping coolant, they required a time schedule that permitted this evaluation. The
flexibility of the Region on this issue was important to the success of the project.
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
The interim policy did not appear to help or hinder the process.
PMMC-5
-------
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
The Region did not need or seek technical or other information during the negotiation
process.
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
By switching from anhydrous ammonia to a blended hydrogen/nitrogen system, the plant
eliminated the threat of a catastrophic release of ammonia. By eliminating the
trichloroethylene vapor degreaser, the plant cut approximately 26,860 pounds per year of
fugitive trichloroethylene air emissions. Trichloroethylene is an ozone depleter and is
targeted for phase-out under the Montreal Protocol. The company reduced its generation of
waste oil by switching to a water based coolant. (The company generated 1,600 gal per year
of waste oil prior this change).
While not included in the CA/FO, the company also eliminated their chromic acid-based
brightening process, thereby eliminating the generation of chromic acid treatment sludge, and
the environmental impacts associated with its disposal..
PMMC-6
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PUMP SERVICE AND SALES COMPANY (PSSC)
I. Case Overview
Violation (Law and Date'):
113, March 1990.
EPCRA 313. The Company failed to file a Form R for Freon
Date of Consent Agreement and Order: October 1991. (Company initially proposed, and
began to undertake, SEP in September of 1990.)
Description of Company: :
The subject facility is one of several owned by a large, diversified holding company. The
plant markets, sells and services pumps manufactured by a sister plant. Pumps received for
repair by the plant must be decontaminated and degreased for service and testing. Prior to
the complaint, the Company was using freon for decontamination and degreasing.
The plant's Facilities Manager is responsible for environmental and occupationalhealth and
safety compliance, : :
Prior to the SEP, the Company used Freon 113 for pump decontamination and degreasing.
The Company had begun efforts to reduce Freon use in late 1988 with the purchase of a soap
and water-based spray washer for some decontamination of its pumps.
Date of Project Completion:
December 1991
SEP Costs:
Equipment - $56,475
Labor Installation - 13.000
Total - $69,475
Original/Final Penalty: $17,000/$8,500
II. Description of Pollution Prevention SEP
The Company agreed to reduce by not less than 66% by December of 1991 its December
1990 freon use rate in connection with its pump repair processes at the subject facility and at
the second facility.
The SEP consisted of two phases: the first phase consisted of the installation at the subject
facility of two semi-aqueous cleaning units, each of which includes an in-line particulate
filtration system, and the conversion of the facility's existing ultrasonic finishing system from
a freon-based system to an agitation/filtration system utilizing a biodegradable cleaning agent.
PSSC-1
-------
The second phase consisted of the installation at a second facility, in a different state and
EPA Region, two semi-aqueous cleaning units of the same type as described above.
The semi-aqueous cleaner is biodegradable, specifically formulated to displace petroleum-
based oils, greases and machining fluids from metal substrates. The cleaner is a
displacement cleaning agent, so called because it displaces rather than emulsifies the oil.
The system is designed to skim the oil from the cleaning liquid and recycle the regenerated
liquid back into the cleaning tank. Displacement cleaners generate less hazardous waste and
require less virgin product replenishment than emulsifying cleaning agents by allowing
regeneration/recycling of the cleaning agent and fewer wash tank dumps.
According to the Material Safety Data Sheets (MSDS) for the cleaning agent, it contains: 1-
T-Butoxy-2-Propanol, Dipropylene Glycol Monoethyl Ether, and Monocyclic Terpene
Hydrocarbons.
HI. Analysis
EPA Perspective
The Regional Attorney and Case Officer knew that the Company was considering the
elimination of Freon for cleaning, at both the subject facility and at the second plant, but
they considered the environmental benefit to outweigh concerns of it being a good business
practice.
Company Perspective
Prior to EPA's complaint, the Company recognized that they needed to reduce or eliminate
their freon use; they were spending $150-$180,000 per year on freon. During the
negotiation process, they began to investigate alternatives to freon by sending parts to several
aqueous and semi-aqueous degreasing system manufacturers. Only one vendor, the one
ultimately chosen, responded with good results. The company proposed the Freon
elimination system to the agency as a SEP.
Through the SEP, the Company has completely eliminated their freon use. The project had
an 8 month payback period and the Company estimates that it has saved them between $300-
$400,000 over the past four years.
The SEP did not accelerate the process of implementing the aqueous degreasing system. The
Company would have implemented the project, on roughly the same schedule, without the
SEP.
The Company considers the project a benefit to workers because they no longer have to
breath freon vapors. While the state environmental agency stated that the Company could
discharge the spent aqueous cleaner to the POTW, the Company has chosen not to. Rather,
they dispose of spent cleaner as hazardous waste, generating approximately 5 barrels per
PSSC-2
-------
year. I
The Facilities Manager feels that EPA should better inform companies of their obligations
under environmental regulatory programs and educate companies on how to come into
compliance. He suggested that EPA publish concise notices of upcoming compliance
deadlines in trade journals. The Manager reads environmental and occupational reporters but
still finds it difficult to keep abreast of the numerous environmental and occupational safety
and health regulatory requirements. I
. i -
i •
The Company was recognized by the Regional Office of EPA for eliminating their use of
Freon in cleaning processes. The Regional Administrator and the State environmental
agency head toured the subject facility. The Company publicized EPA's commendation in
their newsletter. ,
MIT Analysis i
j
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
Yes. Region was included a project at a second facility in another state and Region.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
Yes. The Respondent knew that the project was quite profitable and the penalty relief made
it more so. i
i
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
I
i . . . •
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
i
i
The specific terms of the policy did not particularly help or impede the process.
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
No
]
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
The environmental benefits associated with the project is the elimination of the use of Freon
PSSC-3
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113, an ozone depleting chemical, at two plants-the subject facility and another facility in
another state and EPA Region. While the Company agreed to a 66% reduction in Freon, the
project resulted in the complete elimination.
According to the Company and the Regional negotiators, the Company would have
implemented the project even without the SEP. Given the very favorable economic return, it
was certainly in the Company's best interest to do so. However, their agreement to include
the project as an SEP might have expedited their implementation.
According to the Material Safety Data Sheets (MSDS), the cleaning agent contains: 1-T-
Butoxy-2-Propanol, Dipropylene Glycol Monoethyl Ether, and Monocyclic Terpene
Hydrocarbons. While animal studies conducted by NIOSH has found that certain glycol
ethers1 are fetotoxicants, such evidence has not been found for Dipropylene Glycol
Monoethyl Ether. Monocyclic terpene hydrocarbons are a class of plant-based materials
which many companies are turning to as an alternative to chlorinated solvents. Results of
manufacturer's studies of health effects associated with Hie use of semi-aqueous cleaners
suggest that the risks are low. EPA has not fully studied these materials. Limited testing of
a terpene called d-limonene has shown positive carcinogenicity in male rats. The strong odor
of terpenes may be offensive to workers, requiring adequate ventillation.2
1 Ethylene glycol monomethyl ether (EGME), ethylene glycol monoethyl ether (EGEE) and their
acetates. Based on evidence of fetotoxicity in animals, for these glycol ethers, OSHA has proposed a downward
revision in the TLV for certain glycol ethers from 100 to 0.1 ppm.
2 U.S. Environmental Protection Agency. "Guide to Clean Teclinology: Alternatives to Chlorinated Solvents
for Cleaning and Degreasing." July, 1992.
PSSC-4
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BLEACHED KRAFT PULP MILL'„
I. Case Overview
Violation (Law and Date): CWA, violation of NPDES permit's effluent
toxicity and narrative standards protecting recreational users of receiving
issued hi September 1989.
limits for dhronic
waters. Complaint
Date of Consent Decree and Order:
July 199-1, modified in September 1992
Description of Company: The subject facility is a manufacturer of bleached kraft pulp
from woodchips. I
i ; .' ' .
„!''"''
In July 1991, the Company entered into a Consent Decree with EPA and a citizen's group to
come into compliance with chronic toxicity limits under the Clean Water Act and to
minimize potential impacts of effluent on recreational users. The Consent Decree required
the Mill to: j
• . ' • I , ' ' '
(a) construct an outfall extension pipe capable of ensuring that the surf zone will be
essentially free of mill effluent;
(b) study and propose to EPA (by a date certain) an effective outfall pipe length;
(c) study the effectiveness of a range of potential remedial measures (including
effluent treatment systems and in-plant process changes) that could achieve
compliance with chronic toxicity limits1; and
(d) propose to EPA (by a date certain) a remedial measure(s) to bring the Mill into
compliance with chronic toxicity limits. I
i
,
The mill conducted a variety of effluent treatability studies, trials involving different levels of
chlorine dioxide substitution and use of hydrogen peroxide, and five full-scale trials of totally
chlorine-free (TCP) bleaching. Thie^nill assessed the environmental benefits (e.g., chronic
toxicity, dioxin levels and AOX2; and effluent color), pulp quality, and production cost
differentials during each trial. Based on information generated during treatability studies and
bleaching trials, chose to propose the TCF pollution prevention project highlighted here.
This remedial measure, as well as the construction of an extended outfall pipe and a system
1 The Consent Decree stated that the Mill "shall, at minimum, evaluate
biological treatment, chemical coagulation arid precipitation, ultrafiltration, carbon adsorption
condensates from the kraft recovery system], chemical oxidation, ozonation, enhanced
hydrogen peroxide, and enhanced photooxidation using ultraviolet light and hydrogen
2 A measure of chlorinated organic compounds.
BKPM-1
the following wastewater treatments:
, steam stripping [of
oxidation using ozone and
peroxide."
-------
for steam stripping of condensate from digesters and black liquor recovery system3 was
agreed upon, in a second Consent Order (signed by company in September 1992), as the
means by which the Mill would come into compliance with the chronic toxicity limit
established in the Clean Water Act and improve surf zone water quality for recreational use.
Date of Project Completion: Scheduled for September 1995
*
Pollution Prevention Project Costs: not available .
Original/Final Penalty: no change
H. Description of Injunctive Relief Pollution Prevention Project
The Pollution Prevention Project consists of the total elimination of chlorine in pulp
bleaching (referred to as totally chlorine-free (TCP). The Mill will eliminate their use of
both elemental chlorine and chlorine dioxide and substitute other process steps.
The existing bleaching operation consists of the following steps:
1. oxygen delignification;
2. exposure to chlorine and chlorine dioxide;
3. lignin extraction with sodium hydroxide, hydrogen peroxide, and oxygen;
4. exposure to chlorine'dioxide;
5. lignin extraction with sodium hydroxide and hydrogen peroxide; and
6. final exposure to chlorine dioxide.
The mill will make the following modifications to its processes to switch to TCP bleaching:
1. addition of anthraquinone to the digester to increase lignin removal in digestion;
2. substitution of the chlorine and chlorine dioxide step (2 above) with a chelant step
to bind metal ions that would otherwise impair hydrogen peroxide activity;
3. substitution of the chlorine dioxide step (4 above) with an alkaline hydrogen
peroxide bleaching step;
4. Replacement of the second extraction stage (5 above) with a second alkaline
hydrogen peroxide bleaching step;
5. substitution of the final chlorine dioxide stage (6 above) with a third alkaline
hydrogen peroxide bleaching step;
6. addition of a sodium bisulfite stage to neutralize the remaining peroxide and
stabilize the pulp pH.
3 Condensates contain toxic materials that, in part, end up in discharged effluents. Steam stripping removes
most of these materials for wastewater streams.
BKPM-2
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In the new process, the pulp will be bleached with hydrogen peroxide and oxygen, rather
than chlorine and chlorine dioxide. The Mill's conversion to chlorine-free bleaching will
also include the re-routing of bleach plant wastewater from the sewer to the oxygen
delignification system and ultimately to the black liquor recovery cycle and incineration in
the recovery boiler4. As a result, the organic materials (BOD) in the bleach plant effluent
will be removed from the wastewater stream and burned for energy in the recovery boiler.
The conversion requires the construction of new chemical storage tanks and replacement of
certain equipment such as pumps, chemical mixers, piping and possibly corrosion-resistant
linings in retention towers (to handle different bleaching chemicals).
j
III. Analysis
EPA Perspective
The Mill's proposal to convert to TCP pulping came after a lengthy, adversarial negotiation
process with region and DOJ negotiators. The Mill made the initial proposal to
headquarter's Pulp and Paper Cluster, and not to the regional negotiators, because the Mill
thought that the cluster would be more favorably disposed to this non-conventional strategy
(given the adversarial relationship between the Mill and the Region). The Mill's initial
proposal included conversion to TCP pulping, a one year compliance extension, and the
elimination of requirements for the construction of an extended outfall pipe and any other
remedial measures. ;
The region viewed the TCP conversion as an option that offered certain important benefits,
such as the elimination of dioxin and furan (that appeared to be bioaccumulating hi local
marine populations) and a dramatic improvement in receiving water diiscoloration stemming
from effluent discharge. It was not clear, however, from TCP trial runs that TCP alone
would solve the chronic toxicity violations and adverse impacts on recreational uses—the
primary bases for the enforcement action. Moreover, while the environmental benefits of
reducing chlorinated organics in the Mill's effluent were clear-from a regulatory and legal
standpoint-the chronic toxicity violations arguably more significant given that the Mill did
not have an effluent limit for dioxin or furan (and therefore was not in. violation of such a
limit). The Region had more evidence that the end-of-pipe treatment options, studied
pursuant to the first Consent Decree, would bring the Mill into compliance with its chronic
toxicity limit, compared to the available evidence for the TCP option. Finally, the Region
was concerned about allowing the Mill to have an additional year to come into compliance
with the Clean Water Act. j
i
Despite these concerns, the Region accepted the Mill's proposal for two reasons. First, the
Wastewater from oxygen delignification is recycled to the brown stock washers. Wastewater from the
brown stock washers is recycled to the pulp digester. Spent chemicals from the pulp digester are sent to the black
liquor recovery system.
BKPM-3
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Region viewed the Mill's demonstration that the TCP process is a feasible alternative to the
use of chlorine bleaching to produce bleached pulp as a very important national precedent.
Second, the Mill agreed to additional measures that increased the chances that the TCP
process would bring the Mill into full compliance with the Clean Water Act. Specifically,
the Mill agreed to include steam stripping of condensates and to extend its ocean outfall pipe.
The former removes "pre-bleaching" toxic material from wastewater and substantially
reduces surf-zone odor; the latter improves the quality of surf zone waters where recreation
occurs by removing effluent from the area and increasing effluent dilution. Furthermore, the
Mill agreed to conduct an additional toxicity reduction evaluation if these measures alone
proved insufficient to bring them into full compliance with its chronic toxicity limits ^ Given
these additional measures, the Region accept the TCP process, despite the fact that there was
some uncertainty as to whether the TCP alternative would be as effective as conventional
end-of-pipe treatment methods.
Region negotiators believe that the Mill proposed the TCP project knowing that they were
going to have to reduce dioxin emissions under forthcoming CWA 304C regulations. By
switching to TCP pulping, the Mill will not have to build a secondary treatment system in
order to meet the performance standards established in the Consent Decree. Furthermore,
they believe that the eventual outcome of the case was unaffected by the involvement of the
Pulp and Paper Cluster (except that this extra step might have delayed the final settlement).
None of the Cluster members were involved hi settlement negotiations.
When the Mill proposed the TCP project, the Case Officer consulted with EPA's pulp and
paper technical expert.
Company Perspective
Background:
In 1980, the Mill began to recognize that there were opportunities for improving the
efficiency of their operations. They began to evaluate their brown stock washing system and
realized that washing efficiency had an effect downstream in the bleach plant and ultimately
hi the wastewater. Furthermore, operations upstream of the washers—chip pile operation and
pulp digesting—affected washing operations. Through the 1980's, the Company made several
significant process changes to increase delignification prior to the bleach plant, thereby
reducing bleaching chemical and energy consumption as well as reducing the BOD5 load to
the receiving waters of the Pacific Ocean. This included many changes to the digester,
screening room, and, in the late 1980's, the installation of an oxygen delignification system
5 Biochemical oxygen demand. A measure of the organic content of effluent, and an indication of the oxygen
depleting impact of the effluent on the receiving waters.
BKPM-4
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and the elimination of the hypochlorite bleaching stage.6 ,
The Mill does not have secondary treatment. While secondary treatment of pulp mill effluent
is effective for reducing effluent BOD, these systems are not effective for reducing effluent
color or chlorinated organic material, and secondary treatment creates significant quantities
of solid waste (activated sludge), foam, odor and fog. In addition, secondary treatment
systems require large tracts of land (except for high efficiency plants which produce more
solid waste). In general secondary treatment seemed like "transplanted technology" that was
not an appropriate solution to the problem of pulp mill effluent; the Miill thought that they
could be more successful by attacking the problem within the plant. This idea had been
suggested, in the late 1970% by a consulting engineer who thought thait the best way to
operate a secondary treatment plant is to minimize the quantity of material that is put into it.
The Mill tried to use this advice to make changes in the plant so that if the ultimate decision
or need was to install secondary treatment, they would have significantly reduced pollutant
loading to the treatment plant. As the Mill began to make changes in the plant, management
began to see more and more opportunities for improvement.
Pollution Prevention Project
When considering how to meet the wastewater toxicity limits in the Consent Decree, the ;
Company initially considered changes that were common to the industry such as wastewater
treatment techniques and greater C1O2 and hydrogen peroxide substitution. The Company
also evaluated non-traditional technologies such as: coagulation/precipitation; ultrafiltration;
catalyzed ultraviolet light treatment and other technologies. They subsequently realized that
the elimination of chlorine and recycling of bleach plant effluent (i.e., recovering it in the
black liquor recovery system) was the best approach to substantially reduce environmental .
impacts and to meet the requirements of the Consent Decree. From the Mill's standpoint,
the advantages of eliminating chlorine were improvements in environmental quality, •,-••
occupational health and safety, public health and "psychological comfort". This strategy
results in maximum reductions in chlorinated organic compounds, color, foam, and contact
irritation for a wide array of Mill constituencies: beach walkers, surfers, kayakers, and
anglers.7 I
6 By installing oxygen delignification and eliminating hypochlorite, the Mill reduced their chloroform,
emissions by approximately 60%. The Company exceeded their emissions reduction commitment under the 33/50
Program ahead ,of the program schedule.
Steam stripping of wastewater streams that originate from the pulp digestion and black liquor recovery
processes—another component of the Consent Decree—will result in reductions in wastewater odor and toxicity.
Reduced sulfur compounds and methanol stripped out of the wastewater, will become part of a non-condensible
incineration network. Energy will be recovered from the Methanol fraction and a portion of the sulfur will be
recovered and reused in the process. ]
BKPM-5
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When the Mill conceived of the TCP project, it was not immediately apparent that worker
benefits would be significant. During the first trial they realized that the Mill was a more
hospitable place without the use of chlorine and chlorine dioxide. This translates into worker
health and safety improvements (e.g., eliminating the occasional acute hazard of inhalation of
high concentrations of chlorine and chlorinated byproducts) and reduced public health
hazards associated with the elimination of chlorine transport and storage.
The Mill will benefit economically from TCP pulping through savings in such things as:
worker safety teaming and safety equipment purchases (e.g., self-contained breathing
apparatus), expensive metals needed to provide resistance to the corrosive properties of
chlorine), expensive corrosion-resistant plastic, and paint films (chlorine is inhospitable to
paint).
The Mill was particularly well-suited for a transformation to TCP pulping: they had already
implemented oxygen delignification, their Kaymr digester is relatively well suited to the
wood they use, they have a new and oversized recovery boiler (which enables them to
recover their bleach plant effluent), and they have highly efficient black liquor concentrators.
This Mill was a "natural" candidate for this change over; other mills may be less well suited.
The Mill has moved from the "trial" to "production run" stage and considers the TCP
product fairly well developed. During a recent two-week run, the Mill saw improvements in
operating costs, but it is still more expensive to product TCP pulp than the normal chlorine
bleached product.
A key factor hi considering chlorine elimination was market demand for TCP pulp. The mill
is not able to achieve maximum pulp brightness, as seems to be required by a large share of
the bleached kraft pulp market. In some U.S. markets, in Germany, and in other parts of
the world, TCP pulps are in demand because of the environmental concerns associated with
chlorine bleaching. The Mill has not fully developed a marketing strategy. They have
located end-users for whom chlorine use or chlorine content in the final product is a concern.
They are promoting the use of TCP pulp to governmental and institutional purchasing agents.
Negotiation Process
The Regional Office granted the Company one additional year to come into compliance with
a specific toxicity test. As part of an effluent improvement project, the Mill chose to
propose the TCP project to members of the Pulp and Paper Cluster at EPA in Washington.
They found that this group was interested in this technology and both understood and were
supportive of the Mill's proposal.
The implementation of TCP technology was to be complete in 3 years. The Mill was
satisfied with the implementation schedule; however, in retrospect, they would like to have
had more tune hi light of the delays that have resulted in the getting necessary permits. The
Mill required DOT and the Region, on a number of occasions, to intervene/speed up the
BKPM-6
-------
permitting processes in order for the Mill to meet their injunctive relief implementation
deadlines. DOJ and the Region was instrumental in removing permitting roadblocks. Part of
the problem was in the lack of integration of Federal air and water.permitting processes
which had different procedures and requirements (i.e., lack of coordination among many of
the Federal, State, Regional, and Local agencies governing air, water, wildlife, etc.).
The Mill believes that the Region recognizes the "magnitude" of the changes that they are
making. The Case Officer was quoted in a journal article saying that "we applaud them for
boldly going where no mill has gone before", and "this was an aggressive solution on their
part and we realize that they are taking a huge business risk by revamping their process and
product line".
Two factors are primarily responsible for the successful inclusion of the TCF project hi the
settlement: The Mill's ability to win approval for the TCF project as facilitated by the
interest of the previous and current EPA Administration's interest in pollution prevention,
and the culture of innovation and risk taking in the Corporation as well as Board of
Director's support for the project.
Organizational Change j
As a result of this experience, the Company has changed the way it approaches regulatory
matters. Although they have traditionally involved technical personnel early in the process,
they will seek to involve these personnel in initial discussions with Regulatory Agencies and
bring attorneys in later on hi the process. In this way, the Company believes that they can
have more productive discussions about the technical aspects of the project and then negotiate
a final agreement.
The Regional Office of EPA recently conducted a Chemical Safety Audit; they reviewed and
made recommendations on process chemical and hazardous material handling. The Mill
thought that the auditors were very knowledgeable and provided useful information to the
Mill.
MIT Analysis j
EPA Q. Did the Region have sufficient latitude to entertain pollution prevention
proposals by violator?
The Region was not constrained by the Clean Water Act or other policies and was able to
agree to the TCF project once it was convinced that the technology (coupled with other
measures) had a sufficiently high probability of meeting chronic toxicity limits.
EPA Q. Did the violator have sufficient incentive to consider pollution prevention?
I
I
BKPM-7
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Ultimately, yes.
EPA Q. What were key aspects of the negotiation process that led to successful
adoption and implementation of pollution prevention approaches?
From the Mill's viewpoint, the support of the Pulp and Paper Cluster in Headquarters was
the key aspect of the negotiation process that led to the Region's acceptance of the TCP
project. One Region representative views this as the least important factor; in fact, this was
seen as a settlement delay. It appears that the ability to reach an agreement involving both
the TCP conversion and the outfall pipe and steam stripping system gave the region
negotiators sufficient confidence that the benefits of the TCP project could be realized with
greater assurance of meeting the objectives of the enforcement action (i.e., achieving the
chronic toxicity limits and improving water quality for recreational use).
EPA Q. To what extent, if any, did the specific terms of the interim pollution
prevention in settlements guidance help or impede the process?
According to one Regional negotiator, neither the EPA Regional negotiating staff, DOT staff,
nor the EPA staff and managers in Headquarters who negotiated or approved the BKPM
settlement made any reference to the Pollution Prevention in Enforcement Policy during
briefings and deliberations concerning the settlement. From the Region's perspective, the
Policy at that time was not widely publicized nor routinely considered in enforcement
settlements (at least one regional negotiator was unaware of the existence of the Policy).
EPA Q. Did the Region need/seek/have access to technical and other information
required for decision making during the negotiation process?
The Region sought technical assistance from the Agency's pulp and paper expert in Region
10. The Company did not think the Region had sufficient understanding of pulping
technology; this appears to be part of the reason why the Company proposed the TCP project
to Headquarters rather than the Region. A Regional representative disagreed with this
assertion.
EPA Q. What were the environmental benefits obtained as a result of implementation
of pollution prevention in this case?
stated above
BKPM-8
*U.S. GOVERNMENT PRINTING OFFICE: 1995-621 -751 / 82108
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