t r'H
oot,
v>EPA
Unrted States
Environmental Protection
Agency
Policy, Planning,
And Evaluation
(2125)
EPA230-R-94-006
June 1994
Sustainable Industry:
Promoting Strategic
Environmental Protection
In The Industrial Sector
Phase 1 Report
Thermoset Plastics Industry
C,9> EPA Headquarters Library
401MSt.,SW (3404)
Wnphintfon, DC 20460
Printed on Recycled Paper
-------
-------
SUSTAINABLE INDUSTRY PROJECT TEAM
UJS. Environmental Protection Agency
Pollution Prevention and Toxics Branch
Office of Policy, Planning and Evaluation
401 M Street, SW (2125)
Washington, D.C 20460
(202-260-8661 • Fax 202-260-0174)
Robert S. Benson
James E. Casey
Julie B. Frieder
Jerry L Newsome
Lucille Preston
Chief, Pollution Prevention and Toxics Branch
Overall Project Manager
Metal Finishing Industry Team Leader
Thennoset Plastics Industry Team
Administrative Coordinator
Photoimaging Industry Team Leader
Thennoset Plastics Industry Team Leader
Administrative Assistant
The EPA Project Team gratefully acknowledges the valuable contributions
of the following non-EPA project team members:
James Cummings-Saxton
Mary E. Compton
Nancy H. Hammett
David H. Haury
Margaret C.H. Kelly
Farron W. Levy
Patrick B. Marshall
Andrew M. Schwarz
Stuart W. Staley
Non-EPA Project Manager
Thennoset Plastics Industry Team
Photoimaging Industry Team
General Issues Analysis
Photoimaging Industry Team
Metal Finishing Industry Team
Thermoset Plastics Industry Team
Research Analyst
Research Analyst
Metal Finishing Industry Team
Associate
-------
-------
TABLE OF CONTENTS
1.0
EXECUTIVE SUMMARY SEE SEPARATE BOOKLET
INTRODUCTION CHAPTER 1
1.1 Historical Context 1-1
1.2 Project Goal 1-3
13 Report Organization 1-4
2.0 PROJECT METHODOLOGY CHAPTER 2
2.1 Introduction 2-1
2.2 Initial Research on Industry Decision-making 2-1
23 Taking an Industry-Specific Approach 2-4
2.4 Using a Backward Mapping Analytical Method 2-5
2.5 Selecting Three Industries for Study 2-6
2.6 Identifying Drivers, Barriers, and Policy Options 2-10
2.7 Building Peer Review and Stakeholder Networks 2-11
2.8 Next Steps 2-12
5.0 THERMOSET PLASTICS INDUSTRY CHAPTER 5
5.1 Introduction 5-1
5.2 Approach to Analysis 5-1
5.2.1 Scope 5-1
5.2.2 Overview of Industry 5-2
5.23 Information Gathering and Panel Meetings 5-5
5.3 Major Findings 5-5
53.1 Industry Characteristics 5-6
5.3.2 Drivers and Barriers 5-16
533 Possible Policy Options 5-18
53.4 High Priority Policy Options 5-23
53.5 Relationship Between High Priority
Policy Options and Drivers/Barriers 5-32
Chapter Appendices:
5.A Bibliography 5-A-l
5.B All Suggested Policy Options 5-B-l
5.C Thermoset Plastics Industry Contacts 5-C-l
5.D Panel Meeting Participants 5-D-l
-------
-------
INTRODUCTION
CHAPTER 1
1.1 HISTORICAL CONTEXT
EPA's traditional programs have focused on end-of-pipe pollution controls
implemented largely through command-and-control regulations. These programs were
effective in addressing many industrial sector pollution problems of the 1970's and 1980's.
However, these approaches may not work as well in the 1990's and beyond, as environ-
mental problems become difficult to identify and prioritize and environmental priorities shift
toward pollution prevention and waste minimization.
In addition, current and future pollution problems will have to be addressed within
an economic climate that demands cost-effective policies and business practices, a focus on
sustainable growth, and long-term technological development
Given the environmental and economic challenges of the 1990's, the Agency believes
it is increasingly important to achieve broad private sector commitment and investment in
strategic, economically-based approaches to environmental management - approaches that
will move individual firms beyond baseline compliance. For these firms, strategic
environmental management will require the permanent integration of environmental
management functions into the basic, profit-oriented activities of the organization.
Firms taking this approach will seek cost-effective pollution prevention and waste
minimization opportunities as pan of their overall commitment to develop innovative new
products, improve product and process quality, and achieve economic growth. For many
firms, this sort of commitment to a more strategic approach to environmental management
represents a difficult adjustment in corporate culture, particularly within the current
economic and regulatory climate.
In order to effectively promote industrial culture change of this nature, EPA is
rethinking its traditional approach to regulation of the industrial sector, with the goal of
harmonizing, to the extent possible, the Agency's future environmental programs with the
economic goals of society. EPA's Administrator, Carol Browner, has emphasized this
objective:
-------
President Clinton and Vice President Gore [want to achieve] real and
meaningful environmental protection, and to prove once and for all that such
protection can exist harmoniously with a growing economy.... We have
an opportunity ... to firmly establish a productive relationship between
environmental and economic policies.
At present, the strategies and policies to establish that linkage between
environmental and economic priorities have not been fully developed. However, the
Administrator has taken the lead in promoting innovative approaches to deal with
environmental issues facing the industrial sector, both within EPA and under the auspices
of the President's Council on Sustainable Development (PCSD). Administrator Browner
is committed to the development of EPA policies that promote "cleaner, cheaper, smarter"
environmental performance by industrial firms of all types and sizes.
The Sustainable Industry Project is one of the Agency's new industrial sector eco-
efficiency initiatives, focusing specifically on corporate decision-making issues that are
crucial to long-term sustainable development policies for the industrial sector. In developing
this project, EPA's Office of Policy, Planning and Evaluation (OPPE) is seeking to
complement the Agency's traditional emphasis on media-specific regulatory/enforcement
programs and recent emphasis on voluntary programs and technology transfer.
For example, pollution prevention is a critical component of any strategic
environmental management program, and thus should be a major component of EPA's
policy agenda for the 1990's. However, the principal focus of pollution prevention programs
at EPA has been on technical and outreach issues relating to the implementation of
pollution prevention in the industrial sector. While such work is of considerable value,
relatively little has been done to evaluate the economic basis upon which firms may choose
to pursue pollution prevention options, or to identify and assess incentive approaches to
promote cost-effective pollution prevention by industry sub-sectors or individual firms.
Analysis of these types of issues is crucial to the development of effective environmental
policies and programs for the industrial sector.
OPPE initiated the Sustainable Industry Project with the intent of establishing a
strong information and analytic base on which to build an industrial sector environmental
program for the 1990's. In order to accomplish the widespread adoption of strategic
environmental protection throughout U.S. industry, companies will have to permanently
integrate environmental management functions into the basic, profit-oriented activities of
their organizations. These innovative new approaches will be embodied in industrial sector
policies and programs that recognize the need for U.S. industry to remain competitive, while
also fostering a move toward sustainable production strategies through continual and
systematic improvements in environmental performance.
1-2
-------
10, PROJECT GOAL
The primary goal of the Sustainable Industry Project is to develop, test, and
implement industry-specific policy recommendations that will remove barriers to
innovation and promote strategic environmental protection in the selected
industries. The recommended policies and programs should promote a culture
change throughout the industrial sector, among firms of all types and sizes, in the
form of long-term corporate commitment to achieve cleaner, cheaper, and
smarter environmental performance. The Agency 's sustainable industry policies
and programs should be achieved with a reduced reliance by EPA on command
and control regulations. The recommended policies and programs should be
widely implementable and acceptable to all relevant stakeholders (e.g., EPA,
states, industry, and NGOs).
This goal statement is in keeping with the Clinton Administration's commitment to
the concept of sustainable development, which has been defined by the Bruntland
Commission and the PCSD as "meeting the needs of the present without compromising the
ability of future generations to meet their own needs." In the context of wealthy nations,
sustainable development involves "maintaining economic growth while producing the
absolute minimum of new pollution, repairing the environmental damages of the past, using
far fewer non-renewable resources, producing much less waste, and extending the
opportunity to live in a pleasant and healthy environment to the whole population".
Achieving sustainable development in developed economies requires promoting "eco-
efficiency" — becoming more efficient, using less energy and material, producing less waste
and pollution, and destroying less natural habitat per unit of economic growth - in all
economic sectors, including industry.
Achieving eco-efficiency in U.S. industry will require companies to build strategic
environmental protection into their business decisions. By strategic environmental
protection we mean long-term planning and investment by companies to develop the most
cost-effective and innovative environmental management approaches, starting with pollution
prevention. We want to encourage and enable companies to link those approaches to
ongoing efforts to improve product quality, process efficiency, financial performance, and
overall competitiveness. Over the long term, we seek to enhance their environmental and
economic performance and reduce unnecessary conflicts between these two priorities. In
so doing, we will demonstrate how sustainable economic growth can be compatible with
innovative environmental protection in the industrial sector.
President's Council on Sustainable Development, Task Force on Principles, Goals
and Definitions, Discussion Paper (final draft), October 1, 1993, p. 2.
2 Ibid., p. 3.
3
Ibid., pp. 2-3.
1-3
-------
-------
13 REPORT ORGANIZATION
This version of the report focuses on the thermoset plastics industry, one of the three
industries studied during the first phase of the Sustainable Industry Project The remainder
of this report is organized in two chapters. Chapter 2 presents the methodology employed
in the first phase of the study. The last chapter is listed as Chapter 5, retaining its
designation from the complete Phase 1 report Chapter 5 presents the first phase results
for the thermoset plastics industry; it describes the approach used in the initial analysis of
that industry, and the major findings with regard to industry characteristics, key drivers and
barriers affecting environmental performance, and possible policy options for EPA to
explore further.
1-6
-------
-------
PROJECT METHODOLOGY
CHAPTER 2
2.1 INTRODUCTION
Chapter 2 provides an in-depth discussion of the methodology and approach. The chapter
covers issues that are general to the entire study. Information on the methodology used that is
specific to the three selected industries is provided in the chapters that follow.
2J2 INITIAL RESEARCH ON INDUSTRY DECISION-MAKING
A key early task in the project was to gather economic and environmental data on the full
range of manufacturing industries, as a basis for selecting three industries for detailed study. This
in turn required that we first identify characteristics of industries that we thought would be relevant
to factors that drive environmental performance. Once we had selected the three industries for
initial study, this framework was also important in guiding our industry-specific research and the
topics we addressed in interviews with industry contacts.
We conducted an initial literature search to review what other studies had said about factors
that influence environmental performance. This literature review used a broad brush, including all
factors (economic, cultural, regulatory, and other) that might drive environmental practices. While
there is a large and growing literature on this topic, there does not yet exist a predictive model of
firms' environmental decision-making that is in any sense rigorous or quantifiable. In part, this is
because of two factors:
o It is difficult to develop quantifiable decision-making models that provide
valid comparisons across firms and facilities.4
4 OPPE and other EPA offices have been conducting research into ways of measuring
environmental performance, that may yield more quantifiable measures in the future. See, for
example, Industrial Economics, Inc., Pollution Prevention Frontiers (PPF1 and Other Apprpaches
to Pollution Prevention Assessment: Comparison Based on New Jersey Materials Accounting Data.
prepared for the U.S. EPA, Office of Policy, Planning and Evaluation, Pollution Prevention and
Toxics Branch, June 1994.
2-1
-------
Many of the factors that are believed to influence environmental decision-
making are "fuzzy" and not readily measured - such as various aspects of
firm culture and internal structure.
In addition, much of the information on sustainable performance in industry and on
industrial environmental performance is anecdotal in nature and incomplete. The literature
describes exemplary practices and programs, but does not provide clear evidence on why some firms
are taking these proactive measures and others in the same industry are not.
While we did not find an explicit model of industrial environmental decision-making, we
were able to compile a list of variables influencing firms' environmental decisions. Exhibit 2-1 lists
the factors we identified from the literature and that we used as a checklist of characteristics for
evaluation.
Business decisions of industry are often analyzed using a profit-maximization model. While
many factors influence business decisions, it is useful as a starting point to assume that businesses
will act in ways that maximize profits (by reducing costs and/or increasing revenues) and will choose
their least-cost option, other things being equal. Of course, other things are not always equal, and
different businesses choose different business strategies in the same markets.5
For example, one firm may take a high-quality strategy to product design or customer service
that results in both higher revenues and higher costs than another competitor that chooses a low-cost
approach to allow competing on price. Any market may offer room for different competitive
strategies. However, assuming initially that businesses will act to minimize costs provides a useful
first approximation of industry responses to policies that affect costs. A major task in analyzing
industry responses is therefore to understand how environmental policies affect their costs, revenues,
and profits.
More broadly, a number of factors affect industry environmental and economic decision-
making. These factors include federal and state regulation, changes in production technologies, and
foreign competition. Industry structure (e.g., is the industry highly-competitive or characterized by
concentrated market power?) may reflect barriers to entry such as patent ownership, economies of
scale, and substantial customer brand loyalty. These characteristics are relevant to predicting
environmental performance, both because they affect the resources available to invest in
environmental improvements (profits) and the ability to recover the costs of environmental
improvements from customers.
Other factors that are likely to affect both environmental and economic performance include
the nature and capital intensity of production technologies, the size of firms, the availability of in-
house technical expertise, the baseline rate of innovation in products and production processes, the
availability of substitutes for manufacturing inputs, and the price sensitivity of demand for the
industry's products. Identifying a list of factors that might influence environmental decision-making
was only a preliminary step in our analysis, providing some overarching information to support our
industry-specific analysis.
5 Michael Porter's work provides a framework for understanding the strategies of different firms
as the matching of firm competencies to the demands of the target market. See Michael E. Porter,
Competitive Strategy: Techniques for Analyzing Industries and Competitors. 1980, and Competitive
Advantage: Creating and Sustaining Superior Performance. 1985.
2-2
-------
Exhibit 2-1
EXAMPLES OF CORPORATE VARIABLES INFLUENCING
FIRMS' ENVIRONMENTAL DECISIONS
1.
Social Variables
Employee Recruitment
Employment Morale
Media Treatment
Corporate Reputation
Community Relations
Plant Siting
Market Variables
Growth Markets
Product Image
Customer Loyalty
Product Certification
Competitive Advantage
Industry Standards
Liability Exposure
Insurance Coverage
Damage Compensation
Credit Quality
Capital Access
Investor Relations
Regulatory Variables
Government Relations
Raw Materials Costs
Operating Costs
Litigation Costs
Disclosure/Reporting
International Competitiveness
Source: National Wildlife Federation Corporate Conservation
Council "SYNERGY '92" Conference, January, 1992.
2-3
-------
23 TAKING AN INDUSTRY-SPECIFIC APPROACH
As stated previously, the overall goal of the Sustainable Industry Project is to develop
policies that foster the permanent integration of environmental protection functions into the basic
profit-oriented activities of industrial firms. To accomplish this goal, EPA needs to understand the
factors that motivate or impede a firm's behavior with respect to investment in projects that result
in improved environmental performance. We believe that the best way to understand these factors
is to study the behavior of firms within the context of the industry of which they are a pan.
EPA's traditional one-size-fits-all approach to policy-making, often dictated by statute,
establishes requirements and programs that are applicable to many industries. This approach does
not take into account differences among industries, such as available resources, prevailing corporate
culture, market trends, and corporate decision-making factors in different industries. A one-size-fits-
all approach for the industrial sector therefore may result in programs that effectively achieve
environmental goals in some industries, but fail to do so (or even impose barriers to effective
environmental performance) in others.
On the other hand, an industry-specific approach to policy-making offers opportunities to
design policies that fit the particular characteristics of the industry of interest. An understanding
can be gained of industry-specific decision factors and behavior that can then be used to identify
incentive (driver) factors or barriers to improved environmental performance. Since operating
environments and processes vary a great deal across the industrial sector as a whole, policies that
are tailored to unique characteristics of specific industries are likely to be more effective in
promoting cleaner, cheaper, smarter environmental performance by individual firms in those
industries.
Additional factors support an industry-specific approach. Although a wide range of firm
sizes, types and scales of production processes, and levels of technical and environmental
sophistication may coexist within an industry, the participating firms frequently face similar
environmental issues with respect to types of emissions. Development and implementation of EPA
policy options at an industry level is thereby simplified because attention can be focused on
promoting improved environmental performance through management of a limited number of
processes.
Firms within industries classified at the 4-digit SIC level generally utilize similar technologies
and production processes, purchase raw materials from the same types of suppliers, and compete
with each other in many of the same markets on the basis of product design and performance, price,
quality, and service. These upstream and downstream relationships can be very important with
respect to environmental decision-making within an industry.
Because a relatively limited number of markets are served by a given industry, competitive
imbalances that may be caused by a specific policy option can be more accurately assessed prior to
implementation of the policy because EPA can more easily understand the competitive dynamic
occurring among the various firms within an industry than it can assess the effects of controlling a
specific pollutant across many industries. The Agency can use this knowledge of the competitive
dynamic of an industry to identify points within the industry's structure and culture where policies
can have the broadest, long-term impact.
2-4
-------
While it has many advantages, an industry-based approach is not the only method that can
be used to assess policy options. Historically, EPA's efforts to address environmental problems have
employed geographic, industry, and/or chemical-based approaches. While all three approaches have
their place, the industry-based approach has received less attention in recent years. The Sustainable
Industry Project is founded on the premise that the increased tension between economic and
environmental objectives in recent years demands a more sophisticated understanding of the
interrelationship between these objectives, and that this understanding can be best achieved via an
industry focus.
2.4 USING A BACKWARD MAPPING ANALYTICAL METHOD
"Backward mapping" is an approach to policy implementation described by Richard Elmore.*
He distinguishes two approaches to implementation analysis:
o "Forward-mapping" begins by defining a policy objective, elaborates
increasingly specific steps for achieving that objective (starting with the top
of the implementation hierarchy and working down), and identifies outcomes
by which success or failure will be measured. It relies on the implicit
assumption that policymakers can control the organizational, political, and
technological processes that determine outcomes.
o "Backward-mapping" begins not with a statement of policy objectives, but
with a description of the behaviors that the policy seeks to influence. Only
when the behavior creating the need for a policy is fully understood is a
policy objective defined and desired outcomes identified. The policy is
developed by working backward from the most directly involved parties, and
asking at each level of the system what would encourage a desired change in
behavior. This analysis focuses on what incentives and resources each stage
would need to make the desired changes.
As applied to environmental policy, a forward-mapping approach would yield hierarchical,
"command-and-control" policy solutions, with a distrust of discretion at lower levels in the system
and an emphasis on compliance with inflexible standards. A backward-mapping approach seeks to
capitalize on knowledge and skill at the point of impact to achieve environmental policy objectives,
by creating incentives or removing barriers to the desired behavior. In Elmore's words, backward
mapping emphasizes "that it is not the policy of the policymaker that solves the problem, but
someone with immediate proximity.... Rather than reasoning from top to bottom, trying to discover
how each layer can control the next, one begins at the point of the problem and tries to find the
most parsimonious way of reaching it."7
6 Richard F. Elmore, "Backward Mapping: Implementation Research and Policy Decisions,"
Political Science Quarterly. Vol. 94, No. 4, Winter 1979-80, pp. 601ff.
7 Ibid., p. 612.
2-5
-------
Based on the backward mapping approach, the sustainable industry project emphasizes
understanding the factors that influence the behavior of different players in each industry, before
recommending any policy prescriptions. We use the concepts of "drivers" and "barriers" to
distinguish factors that encourage or hinder, respectively, improved environmental performance in
industry. Drivers and barriers include any variables that influence decision-making with respect to
environmental performance. For example, if a firm has to undertake an investment in pollution
controls to comply with a specific regulation, then the regulation acts as a driver of environmental
improvements. If the firm is contemplating an environmental investment but cannot obtain the
necessary financing, then financial constraints act as a barrier to environmental improvements.
Understanding the factors that influence environmental performance provides the basis for
designing policies to encourage improved performance. Starting with a thorough understanding of
the factors that influence the key industrial actors gives EPA the opportunity to align policy
objectives with their business objectives. With this insight into the dynamics of the industry, EPA
has the opportunity to use a broader and potentially more effective set of policy levers, rather than
being limited to traditional command-and-control options.
25 SELECTING THREE INDUSTRIES FOR STUDY
Our intended scope for this project was to work with a set of two to four industries. We
started with a preliminary list of about ten industries, identified by 4-digit Standard Industrial
Classification (SIC). We collected economic, environmental, regulatory, and other data on the
original list of industries, and selected three for the first phase of this project: photographic
manufacturing and processing (photoimaging), metal finishing, and plastics and resins. (We
subsequently focused on the thermosets subset of the plastics industry.) The types of data and the
selection criteria are summarized below. A more extensive discussion of the "candidate" industries
is provided in the Appendix of this report.
We conducted the industry selection process using Standard Industrial Classifications (SICs),
because most data sources that provide comparable data across industries report data aggregated
by SIC.8 The following measures of economic and financial characteristics were collected for all
manufacturing SICs:
8 SICs are two- and four-digit codes that group similar establishments by industry. An
establishment is a single location: a manufacturing facility, a headquarters location, a retail outlet,
and the like. Most establishments in the manufacturing SICs (SIC 20 through 39) are manufacturing
facilities. The basis for defining SICs varies, and the categories are often not ideally defined for the
purposes of a particular analysis. Some SICs combine industry subsectors that have very different
characteristics, and in other cases a single "industry" (as defined by the markets served or the type
of processes used) includes several SICs. In addition, establishments report data based on their
primary product, but may produce products associated with other SICs as well. Therefore, some of
the products or services which define the primary SIC may be produced as secondary products by
establishments in other SICs. While the SICs provide a useful standardized reporting system for
data, it is important to realize that there may be a discrepancy between an "industry" and the most
closely related SIC.
2-6
-------
o Number of establishments;
o Size distribution of establishments;
o Production characteristics (capital versus labor intensive);
o Market concentration (based on share of value of shipments);
o Geographical concentration; and
o Economic performance (using capital utilization as a proxy).9
We also collected data on various environmental outcomes as a measure of environmental
performance. The available data give only a general picture of the environmental characteristics of
an industry, however, and do not reveal the extent to which industry participants have taken full
advantage of all existing methods for improving performance - that is, how many industry players
are operating with state-of-the-art production processes and pollution controls. We used two sources
of environmental data in the industry selection process: Toxics Release Inventory (TRI) releases
and transfers of toxic chemicals (total and by media), and energy consumption (a proxy for emissions
from fuel combustion and potential for energy efficiency improvements).
Finally, we investigated the current regulatory status of the candidate industries. For each
industry, we considered the size of current and historical pollution abatement and control
expenditures, and the extent of current and future EPA regulation (particularly under the Qean Air
Act, the Clean Water Act, and the Resource Conservation and Recovery Act).
The selection of the industry sectors for detailed investigation in the first phase of the
Sustainable Industry Project was guided by the following criteria:
o We wanted to select industry sectors that present significant opportunities for
EPA to encourage movement toward sustainable practices. This criterion
suggested that we pick industries with substantial releases to the
environment, as reported in the Toxics Releases Inventory.
o In addition, we wanted to select industries that might benefit from use of
innovative policy approaches that go beyond the traditional command-and-
control paradigm. This goal encouraged selection of industries (1) with
multi-media rather than single-medium releases, (2) with significant historical
expenditures on pollution abatement and control, and (3) facing significant
current and future regulatory requirements.
9 Later research on the three selected industries also included other important economic
variables, such as extent of foreign competition, growth rates, and financial characteristics.
2-7
-------
Similarly, we were interested in picking industries that would particularly
benefit from an industry-wide, life-cycle focus. Therefore, we picked
industries that appeared to present life-cycle issues, and to present interesting
relationships among suppliers, manufacturers, downstream businesses, and
end-users.
We also wanted to select a set of industries that appeared to have different
characteristics from one another, so that we could learn as much as possible
about the applicability of our analytical approach to different types of
industries. A more diverse set of industries, in terms of company size, scope
of environmental issues, and market and product trends will provide us with
a broader range of experience as we seek to implement the policy options
developed through this project.
Finally, we wanted the results of the sector studies to provide insights into
influences on environmental performance and the effects of different policy
strategies for other industries as well. This goal of generalizing results
required that we pick industries that presented common rather than unique
environmental issues, and that we pick a set of industries that together would
cover a range of economic and environmental characteristics.
The selection of three industries for detailed study was necessarily judgmental. Other
industry sectors could easily have been chosen, applying the same decision criteria. Exhibit 2-2
summarizes some of the key data for the three selected industries.
As a group, these three industries provide us with a variety of economic characteristics which
we expect to influence environmental performance, including establishment size, difference in capital
versus labor intensive production, and more and less concentrated markets. All present multi-media
pollution problems, when viewed from a life-cycle perspective, and are subject to current and
forthcoming regulations at the federal level.
As for the desired diversity of characteristics, the three selected industries clearly reflect
different types of companies and issues. The metal finishing industry includes a large number of
relatively small operations, often with limited resources and a large set of regulatory requirements
with which to comply. The photoimaging industry is highly concentrated on the manufacturing side
and widely diffuse on the processor side, with fewer environmental issues but significant
opportunities for cleaner, cheaper, smarter initiatives nonetheless - particularly in view of the highly
technical, innovative nature of the industry. The plastics and resins industry was selected to
represent a typical huge, widely diverse industry, with many different types of companies, products,
and issues. Even with the subsequent change in focus to the thermoset plastics subsector, these
characteristics remain valid.
As discussed in the industry-specific chapters, further work led us to refine our focus in each
of the three sector studies; we narrowed the scope of our analysis enough to allow us to understand
technical, economic, management, and environmental issues in detail, and to identify the key
leverage points for each industry. Despite these adjustments in focus, the desired variety in issues
and industry characteristics has been retained from the initial selection process.
2-8
-------
Exhibit 2r2
I
KEY CHARACTERISTICS OF SELECTED INDUSTRIES
Total Number of
Establishments*
Number of Establishments by
Employee Size Category:*
1-19 employees
20*249 employees
250+ employees
Concentration Ratios - Share of Value
of Shipments by:*
4 largest companies
8 largest companies
20 largest companies
Ratio of Capital to Labor
Expenditures**
Capacity Utilization Rate (1990)***
TRI Releases (1990):
Air
k Water & POTWs
W Land & Underground
Offsite Transfers
Total
Pollution Abatement and Control
Expenditures (&
percent of total expenditures)**, ***,T
Purchased Fuels and Electricity as
Percent of Total Expenditures**,*
Future Federal Rule-Makings
Photographic
Equipment A
Supplies
(SIC 3861)
787
508 (65%)
242 (31%)
37 (4%)
77%
84%
90%
30.3
77%
29,968,807
1,153,916
115,244
6,156,799
37394,766
S157 mill
(1.4%)
1.7%
CA: VOC
limits
RCRA:
Solvents
listings
Electroplating
& Polishing
(SIC 3471)
3,451
2,408 (70%)
1,032 (30%)
11 (<1%)
7%
10%
16%
10.0
82%
11,830449
3,963,623
45,252
16,480,193
32,319,617
$236 mill
(7.0%)
6.2%
CArMACT
for surface
coating,
degreasing/
metal
cleaning
RCRA:
Solvents
listing
Plastics Materials
A Resins
(SIC 2821)
480
160 (33%)
266 (55%)
54 (11%)
20%
33%
61%
722
96%
102,874,467
16,27,877
4,452^26
39,730,186
163,284,856
$929 mill
(3.9%)
4.4%
CA: MACT for
numerous
individual plastics
& resins
RCRA: solid
waste legislation
affecting end-uses
of plastics
CA: Effluent
guidelines
Photographic
Pimn....:.... /VJf
rocessiug IOIL,
7384 & 7819)"
580,000
522,000 (>90%)
58,000 (< 10%)
0
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
$45 mill
NA
CWA: Effluent
Guidelines
RCRA: SUver
listing
* 1987 Census of Manufactures
** 1991 Annual Survey of Manufactures
*** furron* Tru^nctMil l?Av\s\**r Cimrair f\f Dlort* firta^i**/ t QQ{\
Total expenditures includes capital equipment, labor and materials.
Values for this industry were obtained from the National Association of Photographic Manufacturers
(persona] communications) and The Silver Coalition (An Economic Assessment of the Impact Resulting
from Silver Pretreatment Standards. June 26, 1992).
2-9
-------
2.6 IDENTIFYING DRIVERS, BARRIERS, AND POSSIBLE POLICY OPTIONS
Once the three industry sectors were selected, our goal was to gather extensive information
on each industry, including corporate decision-making factors in the industries, in order to create
the knowledge base necessary to support policy recommendations that would meet the goal of the
project. A team of OPPE and contractor staff from Industrial Economics, Inc. (lEc) was formed
for each of the industries. The Phase 1 work for each industry followed the same major steps, but
each industry study differed somewhat in the topics emphasized and the results achieved to date.
The first step of the data-gathering process was to develop a thorough understanding of the
relevant characteristics of the industries - the industry-specific economic, institutional, cultural,
technical, life-cycle, and regulatory factors - that may promote or hinder environmental
improvements. A key aspect of this characterization of the selected industries was the identification
of the driver factors and barriers that influence corporate decision-making and environmental
performance. The drivers and barriers represent the key leverage points for the industries — the
regulatory, informational, economic, or other factors — that provide the greatest incentives or impose
the most significant obstacles to improved environmental performance. Our emphasis here was on
the identification and prioritization of corporate decision factors, rather than on EPA's traditional
role of assessing and managing environmental risks. The driver factors and barriers provided the
basis for subsequent policy development.
The next crucial step in the analytical approach of this project was the development of a
menu of policy options and recommendations that we would anticipate having the greatest long-term
impact on the selected industries in terms of achieving the overall goal of the project — to promote
strategic environmental protection in the industries. The identification of these policy options is
based on our knowledge of the industries, their characteristics, unique driver factors, and barriers
to innovation. The recommended actions are both regulatory and non-regulatory in nature.10 The
actions may be taken by EPA headquarters or regions, states and localities, the industries themselves
or their suppliers or customers, or other entities.11 Some actions might require statutory changes,
while many are achievable within existing statutory mandates.12 Our approach was to link the
10 The description of policy options as regulatory or non-regulatory is somewhat arbitrary, and
the line between the two categories is blurred. Strict use of the term "non-regulatory1* would include
only those options that rely solely on incentives to influence behavior, without any mandatory
provisions. In practice, a very wide range of incentives, quasi-regulatory, and regulatory policies are
typically discussed in studies of "non-regulatory" options. For example, deposit-refund systems used
to encourage the return of materials to a central location include both incentives (for the ultimate
customer to return the materials) and regulations (requiring intermediaries to accept the materials
and return them to a central location). Similarly, marketable rights are typically used within the
context of a regulatory program, e.g., trading of rights to emit criteria air pollutants in a given area,
subject to a regulatory maximum on total emissions or minimum standard for ambient air quality.
In this case, the creation of markets promotes compliance with the regulatory standard at the lowest
aggregate cost to the regulated facilities.
11 In all cases, we will identify steps that EPA could take to promote adoption of the best
policies, even if EPA would not be the lead agency implementing the policy.
12 However, when evaluating potential difficulties in implementing the options, we will clearly
distinguish options requiring statutory changes from those that do not.
2-10
-------
policy options to the key leverage factors for the industries, so as to promote cleaner, cheaper,
smarter environmental outcomes over the long-term future, preferably with less Agency involvement
over time.
An important aspect of our policy development process was to look at each industry and at
policy options with a broad, holistic perspective. Often, policy strategies are considered only in the
context of a single rulemaking. Many regulatory decisions are highly constrained by specific
legislative mandates and by the precedents set by earlier rulemakings. This narrow focus may miss
opportunities to take positive, non-regulatory actions or to coordinate and rationalize regulations
and enforcement across programs. Also, the general applicability of regulations to many industries
may fail to reflect unique factors that affect environmental performance in specific industrial sectors
or sub-sectors.
By contrast, the approach used in the Sustainable Industry Project involves looking at
environmental issues in a comprehensive life-cycle context, considering all the environmental
dimensions of industrial products and processes (all media and all important end-points) and a full
range of policy options. The broad perspective is necessary to ensure that policies promote true
movement toward sustainability, not just shifting of problems from one medium, source or type of
adverse outcome to another.
2.7 BUILDING PEER REVIEW AND STAKEHOLDER NETWORKS
Our initial outreach efforts for this project focused on peer review of our overall concepts,
goal, and intended approach. Since early 1993, we have discussed the project with close to 100
individuals in EPA and other federal departments and agencies, industry, state governments,
academia, the media, and other non-governmental organizations (NGOs). We have actively solicited
suggestions for improving our methodology, and have attempted to be responsive to all comments
about the project as a whole. This peer review effort will continue throughout the life of the project.
As we moved into the data-gathering phase of the project in mid-1993, we began the
essential process of developing stakeholder networks for each of the three selected industries. In
view of our intent to focus first on characteristics of the three industries, we made a significant effort
early in Phase 1 to identify and connect with the key individuals and organizations in each industry,
in order to begin to understand the issues as industry perceives them. These interviews with industry
contacts provided an important initial source of information on drivers and barriers. These early
rounds of interviews generated a wider range of hypotheses about drivers and barriers of
environmental performance, which we were able to test in discussions with an expanding set of
stakeholders in later stages of the Phase 1 work. Major trade associations for each industry were
important sources of contacts in individual companies. In addition, we had the help of consultants
with expertise in the particular industries.
2-11
-------
In addition to interviews with trade associations and company contacts, we conducted site
visits to manufacturing facilities to enhance our understanding of the manufacturing technologies
and plant-level environmental issues. We also conducted a review of the trade literature and the
pollution prevention and control literature for each industry.
During the course of our research and interviews, we began identifying industry and other
contacts who might participate in an expert panel for each industry. The first set of expert panel
meetings was held in January, 1994. The primary purpose of these meetings was to verify our
understanding of the economic and environmental characteristics of each industry, and to determine
the key drivers and barriers affecting performance. The initial expert panel discussions of drivers
and barriers provided a preliminary list of policy options that might enhance incentives or reduce
barriers to more sustainable industry practices.
After the first round of industry expert panel meetings, we began to expand our stakeholder
networks to include other important, non-industry participants. These non-industry stakeholders
include members of EPA offices that are responsible for programs of particular significance to the
industries; NGO representatives from environmental organizations and other groups with interest
in the industries (e.g., the Association of Metropolitan Sewage Agencies, representing POTWs); and
representatives of relevant federal, regional, state, and small business interests.
A second round of expert panel meetings, involving more diverse groups of participants,
occurred in February and March of 1994. The goals of these meetings were to verify our
understanding of key industry characteristics, drivers, and barriers - this time through a dialogue
with a wider set of stakeholders - and to select key policy areas for focus in Phase 2 of the project.
As with our peer review efforts, the development of industry-specific stakeholder networks
is an ongoing process. We want all interested viewpoints to be represented in our data-gathering
and analytical processes, to ensure the accuracy of our substantive findings, to elicit innovative ideas
to the maximum extent possible, and to enable stakeholders with divergent points of view to engage
in constructive dialogue. Over the long-term future, these networks will help to provide a solid
substantive basis for our policy recommendations and a broad participant base for future
public/private partnerships to implement those policies.
2,8 NEXT STEPS
This report reflects work completed through the second round of expert panel meetings for
each of the three industries, the last of which occurred on March 15,1994. The remaining chapters
of the report provide in-depth discussions of the three industries that were the subject of this study,
including the top policy options identified for each industry.
The Sustainable Industry Project remains a work in progress. Each of the industry sectors
will need additional investigation to clarify the issues that have been raised. More work is also
needed to continue broadening the stakeholder network, and involve some groups whose views have
not yet been adequately represented.
2-12
-------
During Phase 2 of this project we will further develop and characterize potential
implementation projects for each industry that will test the environmental and economic impacts of
the industry-specific policy options identified in Phase 1. The implementation projects, which are
the logical next step of our backward mapping analytical approach, will be undertaken in Phase 3.
The projects may include implementation and testing of policies on a pilot basis, cooperative efforts
to develop definitions or information needed to implement new policies, tests of innovative
compliance and enforcement approaches, and further research on key scientific or technical issues.
We will use the implementation projects to assess whether the specific policy options effectively
address the key drivers and barriers that affect long-term environmental performance in each
industry.
We believe that the following tasks will likely be a part of Phase 2, subject to change as we
continue to be responsive to new information, input from stakeholders, and the views of EPA
management:
o Holding additional meetings with industry/stakeholder expert panels, and
interviews with parties involved in each of the policy areas selected for focus,
to clarify the issues involved and understand what specific actions would be
required to implement a new policy to address the issues. The project team
will continue to contact stakeholders whose views have not yet been fully
represented in the expert panel discussions and interviews. In particular,
more involvement by environmental groups, state regulators, EPA regional
representatives, and groups with practical experience with various non-
regulatory policies will be solicited.
o Developing EPA cross-office teams to work with OPPE project managers -
in particular, to review, assess and revise the findings for each industry and
to comment on the design of useful implementation projects. These teams
will include regulatory, compliance, and permitting representatives whose
selection will be based on the specific issues and options identified for each
industry.
o Preparing strategic plans for individual implementation projects, along with
background materials on the issues motivating consideration of each project,
for review by all major stakeholders, including EPA program offices and
senior management. The plans will define the purpose of the projects and
success measures by which the results can be evaluated. Gear definition of
"success" and concrete ways of determining success will be critical to making
the project results a valid basis for broader policy decisions.
We anticipate that the implementation stage of the Sustainable Industry Project will require
broad stakeholder participation, with OPPE playing a coordinating and facilitating role, but not
necessarily a leadership role in every implementation project. The strategic plans, participants,
resource requirements, timeframe, and success measures of each project will differ based on the
industry-specific driver factors and barriers that are being addressed.
2-13
-------
Once implementation projects are developed and underway, OPPE will assess environmental
and economic results of policy options, to test whether the anticipated payoffs of the recommended
policies are in fact being achieved. On this basis, we can with greater confidence make broad policy
and programmatic recommendations to the Administrator.
2-14
-------
THERMOSET PLASTICS INDUSTRY
CHAPTERS
5.1 INTRODUCTION
Chapter 5 discusses the background information and preliminary findings of the thermoset
plastic resins sector of the Sustainable Industry Project. This introduction outlines the contents of
this chapter. The approach to our analysis, including the scope of the project, an industry profile,
and our information sources are addressed Section 5.2. Section 5.3 presents our findings to date,
including:
(1) Information on economic and environmental characteristics of the industry;
(2) Descriptions of key factors that influence environmental and economic
performance in this industry (drivers and barriers); and
(3) A list of key policy options that might enhance the drivers and reduce the
barriers to improved, more cost-effective environmental performance by
thermoset resin manufacturers.
52 APPROACH TO ANALYSIS
5.2.1 Scope
The present study examined the manufacture of a subset of thermoset resins (polyurethanes
and epoxies) and composites and their subsequent use in manufacturing thermoset plastic products.
These activities fall primarily within Standard Industrial Classification (SIC) codes 2821 and 308, as
defined in the 1987 Census of Manufactures:
5-1
-------
SIC 2821: Establishments primarily engaged in producing synthetic resins,
plastics materials, and non-vulcanizable elastomers.1
SIC 308: Establishments primarily engaged in manufacturing plastic products from
purchased resins or resins produced in the same plant2
The study team selected the thennoset subsector in order to explore a particular segment
of the plastics industry in more detail than would be possible in a study of the entire industry.
Nevertheless, we have highlighted general industry characteristics in order to provide context for the
more specific focus on thermosets. The selection of thermosets was influenced by the following
factors:
o A decision to emphasize "upstream" resin manufacturing processes and
procedures, instead of "downstream" recycling issues which have already
received a great deal of attention.
o A desire to involve smaller manufacturers that have more limited resources
for undertaking proactive pollution prevention actions of the type pursued
by the larger firms in the industry.
5.22 Overview of Industry
Exhibit 5.2-1 schematically depicts how, from a materials-flow perspective, the plastics
industry converts basic hydrocarbon feedstocks into a larger variety of monomer and polymer
intermediates, which are then used to produce an extremely diverse group of plastic products. Resin
manufacturers play a central role in this sequence by convening monomers, produced by chemical
manufacturers, into polymers. Compounders (or fonnulators) mix in additives to achieve a desired
set of properties. Additives include: fillers that reduce unit cost while adding bulk; and materials
that provide color, increased flame retardance, UV stability, specific rheological characteristics, and
other properties desired for downstream processing. Resins are compounded by manufacturers (SIC
2821) in vertically integrated firms, by independent compounders (SIC 3087), and by manufacturers
at the point of product formulation. Following compounding, plastics manufacturers (or processors)
convert the resins into an almost countless spectrum of products, including such items as packaging
materials, vehicle dashboards, boat hulls, an high tolerance engine components. These products are
manufactured by firms in SIC 308, as well as other industry SIC codes (e.g., SIC 3523, SIC 3792, SIC
3995).
1 An elastomer, as defined by Patty's Industrial Hygiene and Toxicology (Volume lie), is a
substance in "bale, crumb, powder, latex, and other crude forms that can be vulcanized or similarly
processed into materials that can be stretched at 68 degrees Fahrenheit to at least twice their
original length and after having been stretched and the stress removed, return with force to
approximately their original length."
2 SIC 308 comprises SIC codes 3081-3089. As defined by the 1987 Census of Manufactures
Industry Series, these SIC codes include: Industry 3081, Unsupported Plastics Film and Sheet;
Industry 3082, Unsupported Plastics Profile Shapes; Industry 3083, Laminated Plastic Plate, Sheet,
and Profile Shapes; Industry 3084, Plastic Pipe; Industry 3085, Plastic Bottles; Industry 3086, Plastic
Foam Products; Industry 3087, Custom Compounding of Purchased Plastics Resins; Industry 3088,
Plastics Plumbing Fixtures; and Industry 3089, Plastics Products N.E.C.
5-2
-------
Exhibit
PLASTIC INPUTS AND PRODUCTS
Petroleum,
Natural Gas,
&Coal
additives
Thermoplastics Thermosets
(90% of production) (10% of production)
5-3
-------
Resins produced by SIC 2821 firms fall into two categories: thermosets and thermoplastics.
Hie characteristics of these two resin types are as follows:
1. Thermosets: These resins are cured, set, or hardened into a permanent
shape through an irreversible chemical reaction known as "cross linking."
The cross linking that occurs in the curing reaction is brought about by the
linking of atoms between or across two linear polymers, forming a "rigidized"
three-dimensional molecular network that cannot be softened without
decomposing this network. As a result, thermosets can be recycled only
through processes such as pyrolysis, which break polymers into their basic
hydrocarbon components. Thermosets have excellent electrical properties,
are stable under extreme chemical and temperature exposure, and frequently
are used in building, construction, and transportation materials. Of the 480
establishments that manufacture plastic resins, 130 (27 percent) primarily
produce thermosets.3
2. Thermoplastics: These resins are characterized by their formation process,
known as addition polymerization, which creates a linear molecular structure.
This structure allows thermoplastics to be re-softened or remelted at high
temperatures without damage to the polymer. As a result, thermoplastics can
be recycled with relative ease. Thermoplastics accounted for approximately
90 percent (by weight) of 1990 U.S. plastics production. Forty-two percent
(203 establishments) of the total firms in SIC 2821 primarily produce
thermoplastics.4 Thermoplastic resins include both commodity resins (e.g.,
polyethylenes) and lower volume, higher priced specialty plastic products.
While most resins exclusively fall into one of these two categories, a particular resin can
belong to more than one classification depending on how it is blended, catalyzed, or cured.
Polyurethane, for example, can be either a thermoset or a thermoplastic. Likewise, composites can
be manufactured from either thermosets or thermoplastics.5 Also, a recent market trend involves
mixing thermoset resins with thermoplastics to either increase the performance of less expensive
resins or reduce the cost of specially products.
3 1987 Census of Manufactures. Plastics Materials. Synthetic Rubber, and Manmade Fibers.
Percentage of thermoset resin manufacturing facilities represents only those firms where the primary
SIC code is representative of thermosets (SIC 28214).
4 1987 Census of Manufactures. Plastics Materials. Synthetic Rubber, and Manmade Fibers.
Percentage of thermoplastic resin manufacturing facilities represents only those firms where the
primary SIC code is representative of thermoplastics (SIC 28213).
5 Composites, or reinforced plastics, consist of a reinforcing fiber (e.g., glass, aramid, carbon,
graphite, or boron) and a plastic resin. The major plastic resin systems used are unsaturated
polyester, epoxies, silicons, vinyl esters, and various thermoplastic resins. Composites are valued for
their ability to be molded in large, complex structural shapes; their use in achieving parts
consolidation; and because of their high strength-to-weighl ratios.
5-4
-------
5.23 Information Gathering and Panel Meetings
In order to better understand the thermoset resin industry and identify current drivers and
barriers to sustainable operating and decision-making processes, we conducted an extensive series
of discussions with trade groups and resin manufacturers.6 These discussions included:
o Numerous telephone conversations and conference calls;
o A plant tour of Allied Signal, Green Island, NY;
o Three panel meetings in 1994 in Washington, D.C. - January 11, March 10
and March 15; and
o Smaller meetings with industry trade groups (e.g., The Society of the Plastics
Industry (SPI) and the Chemical Manufacturers Association (CMA)) and
focus on subgroups of the thermoset industry (e.g., epoxies, poiyurethanes,
and composites).
In addition, we discussed the project and on-going developments with representatives of
environmental groups (e.g., the Environmental Defense Fund and the National Wildlife Federation)
and other non-governmental organizations (NGOs). The third panel meeting included
representatives from the EPA's program offices: the Office of Pollution Prevention and Toxics
(OPPT), the Office of Emergency and Remedial Response (OERR), and the Office of Air Quality
Planning and Standards (OAQPS).7 In Phase 2 of this project, we will continue to gather feedback
from non-industry stakeholders and appropriate EPA program and policy offices.
Our discussions with industry focused on resin production, compounding, and manufacturing
by large and small producers. While our attention has been confined to thermosets, we expect that
the policies and issues discussed in this chapter will in many respects pertain to thermoplastics as
well.
5.3 MAJOR FINDINGS
The thermoset industry comprises a broad range of firms in terms of size, level of
sophistication, and manufacturing techniques. For instance, one firm may produce large batches of
commodity resins, while another might manufacture specialized composite panels for architectural
and construction applications. This section serves to characterize the context within which these
diverse firms operate and compete by providing general economic and environmental information
on the plastics industry as a whole (SIC codes 2821 and 308), and information specific to the
thermoset resins segment-of the industry where available.
6 For a complete list of contacts, refer to Appendix 5-C.
7 For a complete list of panel participants, see Appendix 5-D.
5-5
-------
While reviewing this section, it is important to remember that the information provided is
based on SIC code designations, which has limitations. Thermoset operations contained within firms
primarily engaged in other manufacturing operations - SIC categories not discussed here - are
subsumed by that other SIC code; data on these captive operations usually cannot be extracted.
Industry representatives stress this as a significant issue. Conversely, though likely less of a problem,
some operations unrelated to thermoset operations may be included within data for that SIC code,
because they are a small part of a firm which is predominantly a thermoset manufacturer. Thus,
while the Census of Manufactures SIC code-based information may be consistent and comparable,
its limitations in regard to this industry should be considered when analyzing the data.
53.1 Industry Characteristics
Sales of thermoset resins -- compared to thermoplastics -- are shown for 1992 in Exhibit
5.3-1. Sales are broken out by major market area, highlighting other industries that may contain
captive thermoset formulators. Overall, thermosets occupy approximately 10 percent of the total
market, in terms of quantity.
Exhibit 53-1
THERMOSET AND THERMOPLASTIC SALES BY MAJOR MARKET 1992
(Millions of Pounds, Dry Weight)
Major Market
Transportation
Packaging
Building and Construction
Electrical/Electronic
Furniture and Furnishings
Consumer and Institutional
Products
Industrial/Machinery
Adhesive/Inks/Coatings
AH Other
Exports
Total
Total Thennosets"
Quantity
364.9
52.7
4,259.3
182.7
178.8
189.7
44.5
558.1
311.0
177.5
6,319.2
Percent
5.9
0.8
67.4
2.9
2.8
3.0
0.7
8.8
4.9
2.8
100.0
Total Thermoplastics*
Quantity
2,452.1
18,230.9
7,617.2
2,582.9
2,379.8
5,903.5
572.1
1.164.9
6,566.4
6,772.2
54,242.0
Percent
45
33.6
14.0
4.8
4.4
10.9
1.1
2.1
12.1
12.5
100.0
* Does not include polyurethane resins.
Source: SPI 1993.
5-6
-------
A large number of downstream users of thermoset plastics may mix or compound resins on
site as part of their manufacture of thermoset components or products. For example, a boat yard
may buy resins that they mix on site in the process of building or patching a boat hull. These
manufacturers of thermoset products fall either into SIC 308 or into a host of SIC categories
determined by the manufacturing entity within which the thermoset component is subsumed. In a
similar fashion, resin compounders, or formulators, who work exclusively with a particular industry
may consider themselves part of that industry for SIC identification purposes. Industries outside of
the plastics industry that often contain plastic processing facilities are medical instruments and
supplies, electronic components, metal working machinery, toys and sporting goods, and motor
vehicles (Rauch 1990). While it is beyond the scope of this analysis to elaborate on each of these
industries, it is important to note their ties to thermoset resins.
Exhibit 5.3-2 highlights the major production steps from plastic monomers to compounded
resins, and indicates the different SIC codes that apply to firms that are the principal focus of this
study.1
Exhibit 53-2
THERMOSET PLASTICS INDUSTRY
Chemical
Manufacturers
SIC 281.286
Resin
Manufacturers
SIC 2821
Compounders
SIC 3087
Finished Plastic
Products
SIC 308
(except 3087)
480 establishments
405 establishments
11.639 establishments
Note SIP's Thermoset Plastics Industry Study primarily focuses on firms (classified by SIC code)
contained within the dashed line.
8 As industry members have pointed out and as previously addressed, SIC codes represent an
oversimplified picture of the industry. In practice, a fair amount of overlap occurs between SIC
codes and many firms fall into more than one classification.
5-7
-------
Thennoset Resin Manufacture
According to the 1987 Census of Manufactures survey, 130 of the 480 firms in SIC 2821 (27
percent) are dedicated thermoset resin manufacturers. These firms employ 11,300 people, of which
6,800 (60.2 percent) are production workers. On average, thermoset resin manufacturing facilities,
with 87 employees per establishment, are smaller than their thermoplastic counterparts, which have
an average of 211 employees. Likewise, on average, the value of thermoset shipments per firm
($31.3 million) is significantly less than the value of shipments for thermoplastic producers ($106.2
million). This is logical considering that thermoplastic material inputs are more expensive (by a
factor of more than three) on a per firm basis (DOC 1990). Cost of materials includes direct
charges paid or put into production during the year, such as freight charges and fuel costs.
Exhibit 53-3
THERMOSET EMPLOYMENT RELATIVE TO THERMOPLASTICS
Plastic Materials & Resins -
SIC 2821
Thermosets - SIC 28214
Thermoplastics - SIC 28213
Number of
Establishments
480
130
203
Total Number of
Employees
(1,000)
56.3
113
42.8
Total Number of
Production Workers
(1,000)
34.9
6.8
26.8
Source: DOC 1990.
Exhibit 53-4
THERMOSET VALUE ADDED, COST OF MATERIALS, AND VALUE OF SHIPMENTS
RELATIVE TO THERMOPLASTICS
Plastic Materials & Resins -
SIC 2821
Thermosets - SIC 28214
Thermoplastics - SIC 28213
Value Added by
Manufacture
(million dollars)
10,873
1,547
9,083
Cost of Materials
(million dollars)
15,410
2,529
12,500
Value of Shipments
(million dollars)
26,246
4,072
21,551
Source: DOC 1990.
5-8
-------
We were able to obtain limited information on environmental issues specific to thermoset
resin production. To a certain extent, this is because resin producers of all types - thermoset and
thermoplastic - face similar challenges since basic feedstock chemicals and production processes are
used universally. In fact, firm size and availability of capital are likely to be larger determinants of
a company's environmental proactiveness than the type of resin being manufactured. The following
section contains a discussion of environmental issues relevant to SIC 2821 as a whole, including both
thermosets and thermoplastics.
All Plastics Resin Manufacture
Economic
Substantial research and development investments by plastic materials manufacturers and
an intensely competitive market for resins based on price and value-added characteristics have
resulted in dynamic growth for the plastic resins sector. For the plastics industry as a whole, physical
output of plastics has grown at about 8.3 percent annually since 1960. Between 1980 and 1990, the
annual average growth rate slowed to 5.2 percent, but has remained healthy in comparison to other
manufacturing industries (Rauch 1991).
With 1992 industry shipments valued at $32.7 billion, the plastic materials and resins sector
(SIC 2821) is the fifteenth largest manufacturing industry in the U.S. (SPI 1993). In general, the
plastics industry can be characterized as pro-cyclical, with average annual growth rates greater than
real GNP. Future sales are dependent upon the strength of the economy — especially the housing,
automobile, appliance, and durable goods sectors - as well as the ability of plastics to make further
inroads into other material markets. The price elasticity of demand for plastics in general is very
high because substitution for other materials, such as wood, metal, and glass, is primarily a function
of price and performance factors.
Industry Concentration and Firm Size
According to data contained in the latest (1987) Census of Manufactures report, the plastic
materials and resins sector is not heavily concentrated; the largest four manufacturers account for
20 percent of value of shipments. By comparison, in the concentrated industries of tobacco products
and motor vehicle manufacturers, the four largest companies make up 82 percent and 90 percent
of the value of shipments, respectively.
As illustrated in Exhibit 5.3-5, the Census of Manufacturers reports that among 480 facilities
in SIC 2821, 75 percent have fewer than 100 employees and a 33 percent have fewer than 20
employees. At the other end of the spectrum, six establishments employed more than 1,000 persons.
Thus, while most operations appear to be small scale, a handful of mega-producers exist.
5-9
-------
Exhibit 53-5
BREAKDOWN OF PLASTICS INDUSTRY BY NUMBER OF EMPLOYEES
SIC Code
2821
Total*
Establishments
480
Percent
establishments
with
1-4 employees
13.5
Percent
establishments
with
<20 employees
333
Percent
establishments
with
<100
employees
74.8
Percent
establishments
with
>100
employees
25.2
Source: DOC 1990.
The data suggest that a large number of small producers manufacture specialty resins for
particular end-uses. Their business is price sensitive and buyer-driven, and barriers to entry are not
capital oriented. On the other end of the scale are large, vertically integrated resins producers that
manufacture all, or most, of the chemicals and feedstocks required to produce resins. Their business
is both capital- and research and development-intensive, with high barriers to entry. For the most
part, competition takes place within each of these groups, with new competition provided principally
by overseas competitors and new resin developments.
Employment
The entire plastics industry directly employed close to 680,000 people in 1990 — about 2.7
percent of total employment for all manufacturing industries. In 1992, the plastics materials and
resins sector (SIC 2821) employed 61,400 people. Of this total, slightly more than 60 percent are
production workers. Both the total number of workers and the number of production workers has
fallen by five to six thousand since 1989, suggesting that recessionary demand has resulted in lower
production, while research and development, and sales activities have continued to operate at pre-
recessionary levels.
International Trade and Competition
The United States -- the largest producer -- contributes about 36 percent of the world supply
of plastic materials. Japan and Germany follow with 16 percent and 9 percent of the global market,
respectively.
Exports of resins more than doubled during the 1980s, increasing $2.7 billion to $5.7 billion
during this time to an estimated $6.7 billion in 1992 (SPI1993).- In 1991,25 percent of U.S. exports
went to Canada and Mexico, 24 percent went to East Asia, and 23 percent went to the European
Community.
5-10
-------
Historically, imports have not been a significant contributor to domestic supply, but the
development of natural gas-based ethylene production infrastructures in Canada and Saudi Arabia
has led to an increase in ethylene derivative imports. Although imports have increased, they
represent only 10 percent of total U.S. domestic consumption, as compared to the 24 percent of U.S.
production that is exported. Future expansions in overseas plastics production capacity are expected
in South Korea and Taiwan (Rauch 1991).
Environment
Plastics pose an environmental challenge on several fronts: solid waste disposal, non-
biodegradability, and toxic emissions and residues from incineration and some manufacturing
operations. Because plastics production processes and disposal techniques are multi-media in
nature, the Clean Air Act (CAA), the Clean Water Act (CWA), the Resource Conservation and
Recovery Act (RCRA), the Toxic Substances Control Act (TSCA), and the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA, or "Superfund") are all
relevant to the industry.
In the last several years, the issues of non-biodegradability and disposal have been the main
topics of debate among industry advocates and environmentalists. Recycling, a popular issue with
environmental groups and consumers alike, has been a money-loser for all but the polyethylene
terephthalate (PET) plastics (Chemical Marketing Reporter, June 28,1993). These are important
and relevant environmental issues; however, we have focused principally on upstream, or
manufacturing related aspects of the thermoset industry during the initial phase of the project.
Larger producers (i.e., those with more than one hundred employees) may desire regulatory
flexibility and the opportunity to use their substantial research and development funds to identify
creative, cost-effective ways to reduce waste in order to lessen their regulatory burden. Smaller
concerns (i.e., those with 20 or fewer employees), however, may be less likely to view certain types
of flexibility as a plus. Since most small firms do not have the R&D resources of their larger
counterparts, flexibility may require time and money that they can ill-afford to spend. It also may
disturb any competitive equilibrium existing prior to the introduction of more flexible, and less
certain, regulations.
While smaller firms may be less interested in flexibility than their larger counterparts, they
are likely to want more guidance and predictability from regulators. With multiple applicable
environmental regulations and limited staff and environmental expertise, these firms want and need
to minimize the amount of time that they spend deciphering and understanding new regulations.
Likewise, small firms are less likely to voluntarily move "beyond compliance" without an incentive
(e.g., adherence to industry best management practices in return for fewer on-site inspections by
regulators). It should be noted that this is a generalization and that there are exceptions to these
industry characterizations.
5-11
-------
In addition to downstream residues, resin manufacturing generates six common wastestreams,
according to a report for the New Jersey Hazardous Waste Facilities Siting Commission (1987
Environmental Resources Management, Inc.). These wastestreams include:
o process residues;
o excess/off-spec processed materials;
o miscellaneous contaminated materials, process related;
o miscellaneous contaminated materials, other,
o laboratory wastes; and
o air pollution control residues.
Many firms, especially larger ones, have already allocated resources toward waste
minimization. At the simplest level, this may involve retraining personnel, or at a more complex and
costly level, redesigning production processes to reduce or modify inputs, and/or to reuse or recycle
wastes. In determining whether reducing/re-using/recycling result in a net cost reduction to the firm,
the liabilities and regulatory requirements associated with disposal play a large role.
The 23 percent decline between 1988 and 1990 in total Toxic Release Inventory (TRI)
chemical releases for the plastic resin manufacturing sector is indicative of industry waste
minimization efforts,9 In 1990 air releases represented 59 percent of total emissions, followed by
off-site disposal (17 percent) and underground injection (12 percent). In terms of quantity of
effluent, releases to bodies of water (three percent) and transfers to publicly owned treatment works
(POTWs) (seven percent) are less significant.
Pollution Abatement Costs
Pollution abatement costs during 1991 represented 13 percent of total capital expenditures
for SIC code 2821 (Exhibit 5.3-6). Air pollution control devices represented the largest portion of
pollution abatement capital expenditures for this sector (46.7 percent), while solid waste (both
hazardous and non-hazardous) accounted for the largest share (42 percent) of operating costs
(Exhibit 5.3-7).
9 To some degree, TRI accounting and reporting changes may have created "paper" emission
and effluent reductions. There have, however, been a series of industry and EPA initiatives that
have produced actual reductions.
5-12
-------
Exhibit 53-6
TOTAL CAPITAL EXPENDITURES AND POLLUTION
ABATEMENT CAPITAL EXPENDITURES 1991
(Million Dollars)
SIC
Code
2821
Total
Capital
Expenditures
1990
2,436.6
Total
Capital
Expenditures
1991
2,251.7
Pollution
Abatement
Capital
Expenditures
1991
292.6
Percent
Air
46.7
Percent
Water
30.9
Percent
Solid
Waste
22.4
Sources: DOC (1991 Survey of Manufacturers; 1991 Pollution Costs and Expenditures).
Exhibit 53-7
TOTAL GROSS ANNUAL OPERATING COSTS FOR
POLLUTION ABATEMENT EQUIPMENT 1991
(Million Dollars)
Total Gross Annual
Pollution Abatement
Operating Costs
635.9
Percent
Air
21.3
Percent
Water
32.9
Percent Solid
Waste
42.0
Source: DOC (1991 Pollution Costs and Expenditures).
Tbermosct Plastic Compounding and Finished Product Manufacturing
The SIC. 308 codes are not broken down according to thermoset and thermoplastic
compounding and product manufacture. Since some SIC 308 firms compound and/or manufacture
finished plastic products that are both thermosets and thermoplastics, it is not always possible to
designate facilities according to resin type. In general, we assume that as with SIC 2821 there are
fewer thermoset firms than thermoplastic firms.
The following section contains a discussion of economic and environmental issues relevant
to SIC 308 as a whole, including both thermosets and thermoplastics.
5-13
-------
^Ul Plastics Compounding and Finished Product Manufacturing
Economic
Shipments of compounded plastics and finished products in 1990 were valued at $68.1 billion.
In 1987 dollars, the value of shipments rose steadily from $60.9 billion to $64.6 billion between 1989
and 1992 (up six percent), outpacing the more modest one percent increase in value of shipments
for resin manufacturing (SIC 2821).
Tnrimtrv Concentration and Finn Size
Like resin manufacturing, the plastics compounding and finished product manufacturing
sector (SIC 308) is not heavily concentrated; according to data contained in the latest (1987) Census
of Manufactures report, the largest four manufacturers account for 15 percent of value of shipments.
The Census of Manufacturers reports that among 12,044 facilities in SIC 308, 87 percent
have fewer than 100 employees and 50 percent have less than 20 employees. Only 11 establishments
employed more than 1,000 persons. Thus, it appears that the range of firm sizes also is similar to
SIC 2821.
Exhibit 53-8
BREAKDOWN OF PLASTICS INDUSTRY BY NUMBER OF EMPLOYEES
SIC Code
308
Total*
12,044
Percent
establishments
with
1-4 employees
20.5
Percent
establishments
with
<20 employees
50.2
Percent
establishments
with <100
employees
86.9
Percent
establishments
witt»100
employees
13.1
Source: DOC 1990.
Employment
In 1992, the compounding and finished plastic products sector (SIC 308) employed 585,000
people. Of this total, nearly 78 percent are production workers.
Between 1989 and 1992 the total number of workers fell two percent, while the number of
production workers dropped 1.3 percent during the same period (SPI 1993). This suggests that
weaker recessionary demand had less of an effect on the compounding and finished plastic products
sector than it had on-the™ resin manufacturing sector. Strong demand for exports may have
cushioned the industry from more of a recessionary slump.
5-14
-------
Internatiooal Trade
Exports of compounded resins and finished plastic products were $4.7 billion in 1992, up 58
percent from $3.0 billion in 1989, based on strong overseas demand. Imports rose as well during
this period, but less significantly, from $3.5 billion to $4.4 billion (24 percent).
Compared to the resin manufacturing sector (SIC 2821), exports of compounded and finished
plastic products rose by more than twice as much on a percentage basis. Imports, however, rose at
the same pace for both SIC 2821 and SIC 308.
Environment
Total TRI releases for SIC 308 rose by nearly 200 percent between 1988 and 1989, and then
fell by 23 percent between 1989 and 1990. Overall, total TRI releases rose 129 percent between
1988 and 1990.
In 1990, air releases represented 63 percent of total emissions, followed by off-site disposal
(30 percent), and transfers to POTWs (seven percent). Releases to bodies of water, underground
injection (on site), and on-site land disposal were less significant, at less than half of one percent
each.
Pollution Abatement Costs
Pollution abatement costs represented a modest 2.1 percent of total capital expenditures for
SIC 308 during 1991, versus 13 percent for SIC 2821 (Exhibit 5.3-9). Air pollution control devices
represented the largest portion of pollution abatement capital expenditures (68.3 percent), while
solid waste (both hazardous and non-hazardous) accounted for the largest share (48.1) of operating
costs (Exhibit 5.3-10).
Exhibit 53-9
TOTAL CAPITAL EXPENDITURES AND POLLUTION
ABATEMENT CAPITAL EXPENDITURES 1991
(Million Dollais)
SIC
Code
308
Total
Capita]
Expenditures
1990
3,200.8
Total
Capital
Expenditures
1991
3,293.3
Pollution
Abatement
Capital
Expenditures
1991
68.3
Percent
Air
62.3
Percent
Water
23.0
Percent
Solid
Waste
14.7
Sources: DOC (1991 Survey of Manufacturers, and 1991 Pollution Costs and Expenditures).
5-15
-------
Exhibit 53-10
TOTAL GROSS ANNUAL OPERATING COSTS FOR
POLLUTION ABATEMENT EQUIPMENT 1991
(Million Dollars)
Total Gross Annual
Pollution Abatement
Operating Costs
334.3
Percent
Air
29.7
Percent
Water
7.2
Percent Solid
Waste
48.1
Source: DOC (1991 Pollution Costs and Expenditures).
532 Drivers and Barriers
The following thermoset plastics industry drivers and barriers were developed through
discussions with industry representatives. As discussed in Chapter 2, these factors motivate or
discourage resin manufacturers, compounders, and plastic product manufacturers in their
considerations regarding sustainable industry practices. The policy options that are identified for
the thermoset industry in the next section are designed to reinforce the drivers or mitigate the
barriers.
Significant Drivers
Product Innovation and Customer Specifications: Product innovation is
driven by customer needs and specifications. Because consumers are
increasingly emphasizing "green products," new products that satisfy
environmental criteria (e.g., recyclability, freedom from consent orders) gain
a competitive edge.
Environmental Regulations: For many small and medium thermoset plastics
firms, environmental performance is driven by compliance with existing
regulations. Lacking the staff or the expertise to engage in long-range
planning, these operations for the most part modify processes only when such
a change is mandated.
Public Image: Public image is a key driver in the chemicals/resins industry.
In response to public perception that petrochemical industry operations are
unsafe and have an adverse impact on the environment (i.e., images of Love
Canal, Times Beach, and Bhopal), industry has initiated unilateral, proactive
environmental. and safety. programs (e.g., the Chemical Manufacturers
5-16
-------
Association's "Responsible Care" program).10 In its continuing effort to
educate the public, the plastics industry recently launched a media campaign
highlighting the benefits and important uses of plastic materials.
life-Cycle Analysis and Product Stewardship: Emerging concepts of life-
cycle analysis and product stewardship from "cradle to grave" (conceived and
nurtured in Europe) are forcing resin manufacturers to consider ways to
either recycle or reuse their products. Furthermore, purchasers of resins,
who strive to meet public and government recycling demands, are pushing
plastic makers to develop an infrastructure that can collect and recycle or re-
use post-consumer plastics « even thermosets. This driver poses a complex
challenge for the thermoset sector because of the chemical and physical
properties of the resins.
Significant Barriers
Environmental Regulations: Compliance with existing regulations can also act
as a barrier to further innovation. At smaller firms especially, the cost of
compliance (e.g., monitoring, filling out paperwork) can absorb the full effort
of the allotted staff and prevent investment in innovative source reduction
technology. The mentality of many small resin manufacturers is, How can
I survive until the next quarter?, not How can I plan for the future, increase
efficiency, and pollute less? However, regardless of firm size, excessive
compliance procedures and duplicative efforts waste resources that could be
employed more productively elsewhere within the firm.
Regulatory Disincentive for Innovation: Regulation creates another barrier
for firms that might wish to experiment with new, unproven technologies and
move ahead of the regulatory curve, in that complying with ajl applicable
regulations frequently leaves little room for tradeoffs. For example, if a firm
moves well beyond compliance in one aspect of production, but is unable to
achieve compliance in another, there is little room for negotiation — even if
there is a net environmental gain. Instead, the firm may be required to
install the end of pipe controls it was trying to avoid in the first place by
embarking in pollution prevention/sustainability efforts. Such rigidity of
regulation serves as a disincentive to innovation and proactive firm behavior.
Overlapping Federal/State/Local Regulations: Multiple, overlapping, and
sometimes conflicting regulations at the federal, state, and local levels pose
a significant burden for this industry. Even within a single state, operations
can be complex (e.g., California's 34 different air quality districts). On the
federal-level, the-interaction between statutes (e.g., the CAA and CERCLA)
10 Smaller firms that are privately owned and do business with a limited number of customers
may be somewhat less affected by public opinion, but still must answer to the community in which
they operate, and to their employees.
5-17
-------
can trigger new restrictions on industry with little warning and limited
explanation. Keeping up with multiple federal/state/local requirements and
the interactions between federal statutes takes time and resources.
Pre-Manufacturing Notice Process: The Pre-Manufacturing Notice (PMN)
process causes delays in the commercialization of safer, cleaner chemical
inputs to thermoset plastic production. The already risky R&D process is
complicated by having to deal with a PMN process that is time intensive and
uncertain in outcome. If a substance fails the PMN test, then virtually all of
the sponsor firm's investment is lost. If a chemical does satisfy the PMN
criteria, it may still be subject to a TSCA Section 5(e) consent order, which
requires certain restrictive actions by users of the substance. This may create
a competitive disadvantage for the new substance because it is subject to
more use restrictions than older, currently used (and perhaps less
environmentally safe) compounds.
533 Possible Policy Options
Two sets of panel meetings were held to address the issues, barriers, and drivers specific to
large and smalt thermoset plastics firms. The meeting with small manufacturers was held on March
10; the large manufacturers' meeting was held on March IS. The discussion at each meeting was
initially framed by a set of criteria EPA formulated to guide the selection of policy issues. These
criteria are summarized in Exhibit 5.3-11. Each panel added criteria that addressed their specific
concerns.
Exhibit 53-11
EPA CRITERIA FOR IDENTIFYING POLICY ISSUES
Criteria
Cleaner
Cheaper
Smarter
Do-able
Long-term Effects
Definition
Promote compliance and commitment to continuous
improvement across industry.
Reduce compliance costs, identify cost-effective
approaches, enable firms to redirect resources to the
most beneficial uses.
Promote eco-efficiency through flexibility, certainty,
consistency, simplicity, and sound science. Reward
firms that perform well. Help firms that need help.
Enforce against firms that cause environmental harm.
Eliminate options that are impossible - not those that
have promise but may face obstacles.
Promote long-term cultural change, not short-term
fixes.
5-18
-------
Small Business
The small business panel meeting primarily included representatives from industrial firms
manufacturing plastic products. These firms are classified in SIC 308, or in the SIC sector
corresponding to the manufactured product employing thermoset resins as one or more of the
inputs, e.g., boat manufacturing (SIC 3732). In addition, other participants in the March 10 meeting
included representatives from the Society of the Plastics Industries, the Composites Fabricators
Association, the Small Business Administration, and EPA's Small Business Ombudsman's office.
All attendees are identified in Appendix 5-D.
The small business panel participants added the following three criteria to those listed in
Exhibit 5.3-11:
o Enhance businesses' ability to compete in a changing marketplace (i.e.,
"survivability");
o Better define EPA's mission statement and encourage outreach and service
by the Agency; and
o Provide consistent guidance to the regulated community.
Using the selection criteria, the small business panel members identified more than 20 policy
options that they feel would enable the thermoset industry to achieve better economic and
environmental performance. After further discussion, the panel members selected the ten best
candidates, including five policy options that they give highest priority.
Top Five Policy Options:
o Evaluate potential for Best Management Practices (BMP)-based regulations
incorporating provisions such as CMA's "Responsible Care." Complying
BMP subscribers would receive a negotiated amount of regulatory relief as
incentive to continually move beyond compliance.
o Promulgate National Emissions Standards for Hazardous Air Pollutants
(NESHAP). This could be accomplished by re-funding development of
NESHAPs, or by orchestrating an industry/EPA cooperative effort to
determine interim Maximum Achievable Control Technology (MACT)
standards.
o Establish systematic process to review reasonableness of paperwork fines.
Assess the need for paperwork fines (versus risk-based fines) and seek
alternatives to paperwork that encourage compliance without placing a drain
on limited firm resources. (This priority could be linked to BMP-based
regulations.)
5-19
-------
Allow for in-plant treatment of "non-product output" without a Treatment
Storage, and Disposal Facility (TSDF) designation. This proposal would
allow resin and product producers to combine waste materials using their
standard manufacturing techniques to render wastes inert.
Expand polymer PMN exemption to cover pre-polymers so that resin
manufacturers and compounders could pre-mix monomers to form safer,
more stable intermediaries. The PMN process is presently too lengthy and
too costly for most small and medium-sized firms.
Other Recommended Policy Options:
o Consider exemptions from Local Emergency Planning Committee (LEPC)
and TRI reporting based on facility-specific demonstration of de minimis
emissions, in order to reduce the reporting/paperwork burden on the smallest
firms.
o Invoke federal preemption except in special cases. This proposal seeks to
eliminate the discrepancies between federal, state, and local regulations.
o Establish EPA "Green Teams" for technology assistance to small and medium
sized businesses (as in the "OSHA Services" model). State/local Green
Teams would be distinct from enforcement and would be designed to serve
the regulated community, as well as educate environmental agency staff
about industry problems and concerns.
o Promote realistic risk assessment based on "sound science" and consider
cost/benefit implications of regulatory decisions.
o Communicate rule-making information in "plain english." Currently, trade
associations translate regulations from legal and technical jargon to plain
english for their members. However, trade associations only cover a
percentage of the industry, leaving many small firms to either decipher the
new rules, or ignore them.
Large Business
The March 15 pane! primarily consisted of representatives from large thermoset resin
manufacturers, categorized in SIC 2821. In addition, representatives from The Society of the
Plastics Industries, the Composites Fabrications Association, and several EPA program offices also
participated in this meeting. All attendees are identified in Appendix 5-D. The panelists augmented
the selection criteria in Exhibit 5.3-11 by adding the following eight criteria:
o Emphasize getting products to market;
o Cut through red tape and make a difference;
o Build an EPA/industry partnership;
5-20
-------
o Provide significance and relevance;
o Satisfy all stakeholders;
o Enhance the service orientation of EPA;
o Provide consistent guidance to the regulated community; and
o Demonstrate EPA commitment to the sustainable industry/partnership
approach to regulation.
Having agreed upon selection criteria, the large business panel reviewed the policy options
suggested by the small business panel, and identified additional candidate policies. From among
these candidates, the panel identified 13 policy options they recommend, including five on which
they place highest priority. All candidate policy options identified by the two panels are listed in
Appendix 5-B.11 The top 13 candidates identified by the large business panel are as follows:
Top Five Policy Options:
o Study impact of 5(e) designation on product development and marketing, and
determine viable alternatives to S(e) stigma. The 5(e) consent orders have
a negative affect on the marketability of new chemical substances, and are
time consuming from the Agency's perspective.
o Involve stakeholders in the standard-setting process at the earliest possible
stage. Often industry is invited to participate in the regulatory dialogue after
standard-setting has begun. Earlier participation by industry might provide
EPA with better insights into risk, exposure, manufacturing methods, and
alternatives to standard end-of-pipe prescriptions.
o Allow for in-plant treatment of "non-product output" without TSDF
designation. (See description of this issue in notes on the small business
meeting.)
o Establish systematic process to review reasonableness of paperwork fines.
(See description of this issue in notes on the small business meeting.)
o Communicate rulemaking information in "plain english" and focus on
dissemination to small businesses. (See description of this issue in notes on
the small business meeting.)
11 The potential policy options identified by the small and large firm panel members represent
an initial set of candidates. These candidates will be subjected to review and potential revision by
industry, EPA, and other stakeholders during the second phase of the Sustainable Industry Project.
5-21
-------
Other Recommended Policy Options:
o Provide a clearer explanation of new chemical evaluation criteria. This would
enable industry to better understand which new chemicals would have little
or no chance of passing EPA's screen, and would save firms the trouble and
cost of developing and/or testing these "high risk" substances.
o Coordinate international registration and review of new chemicals. By
allowing firms to complete a single registration process for all markets for a
new chemical, the cost and effort of this process would be significantly
reduced.
o Reward proactive behavior and establish forgiveness provisions for firms that
undertake innovative pollution prevention strategies. This would encourage
firms to take the risks frequently involved in developing new, improved
control technologies and methods of pollution prevention by allowing for tax
breaks, extended compliance schedules, and relaxed fines if firms meet
appropriate EPA criteria.
o Consider potential for BMP-based regulations. (See description of this issue
in notes on the small business meeting.)
o Consider TRI reporting exemptions based on facility-specific demonstration
of de minimis emissions. (See description of this issue in notes on the small
business meeting.)
o Place greater emphasis on EPA technical assistance to state environmental
regulatory agencies, in order to facilitate outreach where it is most needed
and most likely to be used.
o Coordinate uniformity among state reporting forms to the extent possible.
Such a proposal might make sense when a cluster of states have similar
environmental regulations and reporting requirements to begin with. For
example, it may not be possible to reduce all 50 states to a single form, but
it may be possible to consolidate to 10 -15 different versions.
o Extend coverage provided by TSCA testing consent orders to all panics -
not just those who use the substance at the time of testing. This would
ensure that when it is necessary to write a consent order for a new chemical,
all users of that substance going forward would be forced to comply with the
order, and reimburse the sponsoring company(s) for the cost of PMN
submission and testing.
5-22
-------
53.4 High Priority Policy Options
The top five industry priorities from each of the large and small business panel meetings,
when combined, result in eight candidate policy options. This section provides additional detail on
each of these high priority policy options and shows how they are related to the thermoset drivers
and barriers discussed earlier.
BMP-Based Regulations
Under this proposal, resin manufacturers, EPA, and other stakeholders would define best
management practices for each of the major resin types or production processes, subject to approval
by EPA and other stakeholders. These BMPs would describe principles, processes, and procedures,
not specific technologies. In return, resin manufacturers, compounders, and product manufacturers
that subscribe to the approved BMP would be eligible to receive a negotiated amount of regulatory
relief. In order for BMPs to be effective they would need to combine the Agency's need for
documented proof of results, with industry's desire for less cumbersome and repetitive reporting and
paperwork.
BMP-based regulations have the potential to address the following drivers and barriers for
the thermoset plastics industry:
Product Innovation and Customer Specifications (Driver): An important advantage
of BMP would be the evolving nature of the specified practices as additional
information is gained regarding risks and new technological approaches are
developed. The BMP could be developed in such a way to provide an incentive for
product innovation that generates more environmentally friendly products or
manufacturing practices.
Life-Cycle Analysis and Product Stewardship (Driver): Life-cycle analysis and
product stewardship would be important components of developing BMP within a
sustainable industry framework.
Environmental Regulations (Driver): Small and medium size manufacturers would
benefit from clear specification of management practices that conform to acceptable
environmental performance. Industry trade and professional organizations would be
able to provide more focused technical support to manufacturers that have limited
internal technical resources.
Public Image (Driver): The public would be reassured by clear definition of the
management practices being applied by complying firms. Concerns regarding safety
could be addressed within the process for specifying and reviewing the BMP.
Environmental Regulations (Barrier): The evolving nature of BMP would enable
both continuous improvement in environmental performance and adjustment to
eliminate non-productive elements of the BMP. It would also potentially provide an
opportunity for some degree of regulatory relief for BMP-certified facilities.
5-23
-------
Regulatory Disincentive for Innovation (Barrier): The evolving nature of BMP
would provide flexibility to assess innovative technologies in terms of their multi-
media life-cycle implications.
Overlapping Federal/State/Local Regulations (Barrier): Development of BMPs that
are widely accepted within the technical, regulatory, and environmental communities
would provide a basis for minimizing divergent regulations at the federal/state/local
levels.
Unlike negotiated rulemakings (or "reg-negs"), where stakeholders debate a certain level of
performance, BMP would seek to map out ways for resin manufacturers to continually manage and
improve their performance, incorporating both environmental and economic goals. BMP was
described by one member of the discussion as a "living and on-going process," as opposed to a fixed
set of standards.
Trade organizations might play a significant role in developing BMPs and educating the
various industry sub-sectors - especially those industries where most manufacturers or compounders
are small businesses. One possible approach could involve a modification of the Chemical
Manufacturers Association's "Responsible Care" program. Under Responsible Care, CMA members
pledge to manage their businesses according to 106 expected management practices in the following
areas: pollution prevention, community awareness and emergency response, process safety,
distribution, employee health and safety, and product stewardship. EPA would need to implement
a system for reliably verifying that the stated practices were in place and the necessary management
systems were operational. Verification might also involve the establishment of a Community
Advisory Panel for each site.12
Under the BMP scenario, facilities that are certified as in compliance with the program
would be eligible for regulatory relief and other privileges that would not require statutory changes.
For instance, firms might not be subject to targeted inspections, and a more direct framework for
resolving compliance/complaint issues might be established. Paperwork requirements might also be
reduced in instances where BMP provides assurance that the facility is seeking full compliance, as
opposed to monitoring requirements which focus on a facility's non-compliance.
The following example was put forth to illustrate the type of changes that could benefit both
the regulated community and EPA:
Under the Boilers and Industrial Furnaces (BIF) rule, when unloading a tank truck
that is directly hooked up to a boiler, the operator is required to walk the line each
hour if the line is not double walled. Thus, if a leak develops one minute after the
walk, it could continue for 59 minutes unchecked. An alternative that would seek
to assure compliance versus measuring non-compliance (i.e., checking to see if the
12 This scenario was provided by Fred Moore, Assistant Director, Environment of Union Carbide
and member of CMA's Pollution Prevention Task Force, in a letter to Jerry Newsome, EPA/OPPE,
March 15, 1994.
5-24
-------
operator checked off the check sheet) might require the implementation of a
maintenance test and inspection program that would drastically reduce the likelihood
that a leak would ever occur."
In conjunction with the BMP approach, EPA might establish an office of technical support
for regulatory interpretation and implementation (e.g., Washington State's "WISHA" program). This
office would clarify regulatory issues and recommend compliance and pollution prevention
alternatives without involving EPA enforcement officials, so long as non-compliance issues are
resolved on a timely basis, and there is no imminent hazard.
Another example of industry/stakeholder cooperation and consensus is the Memorandum
of Understanding (MOU) recently signed with EPA by Dow, Shell, and Ciba-Geigy. While this
agreement is limited to the three largest epoxy resin manufacturers, it covers 95 percent of domestic
epoxy resin production, and serves as an example of how Agency/industry teamwork can result in
benefits for both manufacturers and EPA.
The development of thermoset resin BMPs for the different industry sectors would be a long-
term process with risks for industry and the Agency. If successful, however, a BMP-based regulatory
system might help industry move toward a more flexible, efficient means of complying with
environmental standards. From the Agency's perspective, this quasi-regulatory approach could give
firms the flexibility to move beyond compliance while using limited resources more effectively.
lo-Plant Treatment of Non-Product Output
This proposal addresses on-site treatment of thermoset resin non-product outputs (NPO).
Much of the NPO from thermoset facilities consists of reactive materials that could be stabilized
prior to disposal or incineration using the same technologies and processes as those used to
manufacture thermoset resin products. In doing this, manufacturers could render significant
portions of the NPO inert, making it acceptable for disposal in municipal landfills or conversion to
functional items. Currently, manufacturers are not allowed to treat (or combine) these feedstocks
without a Treatment, Storage, and Disposal Facility permit, which is prohibitively expensive for small
and medium size resin manufacturers.
Since manufacturers are not allowed to in-plant treat NPO materials, the untreated wastes
are currently considered hazardous and must be disposed of following RCRA guidelines. This is
expensive and requires that reactive substances be transported to and from approved TSDFs.
Furthermore, the NPO is eventually either landfilled, where it may leach into soil and groundwater,
or incinerated; in either case, it may do more damage than if it had been neutralized on-site.
Allowing in-piant treatment of NPO without TSDF designation would address the following
drivers and barriers:
13 Ibid.
5-25
-------
Life-Cycle Analysis and Product Stewardship (Driver): This option facilitates
product stewardship through minimization of risk and waste. Allowing in-plant
treatment of NPO that is not recyclable or reusable could enable small and medium
size firms to dispose of waste in an inert and benign form. Through consideration
of factors relevant to how this waste should be transported (e.g., risk of accident or
spill) and disposed of (e.g., leaching and long-term stability), this proposal would
allow manufacturers to consider the post-disposal - or downstream life-cycle -
impact of waste NPO.
Environmental Regulations (Barrier): Since small and medium size firms do not
have the staff, time, or financial resources to apply for TSDF permits that would
allow them to treat in-plant NPO, they continue to dispose of this waste in a
hazardous, unreacted form. This is not only environmentally unsound, but it is
expensive as well. This proposal would enable firms to avoid hazardous waste
compliance and/or disposal costs by rendering these substances inert prior to
transport and disposal.
If on-site treatment were permissible, two issues would need to be addressed: concerns
regarding sham recycling, and maintaining the economic incentive to reduce waste. Related research
would analyze the current status of the existing applicable treatment exemption for labs and small
quantity generators under RCRA. It appears that not all states have adopted this exemption.
Expansion of Polymer PMN Exemptions to Cover Pre-Poryoiers
In the intermediate stages of creating a plastic resin, monomers are mixed together to form
pre-polymers (e.g., MonomerA and Monomer,, are combined to form PrepolymerAB). While
polymers are presently covered by a PMN exemption, pre-polymers are not. This means that
although the inputs are the same and the molecular weight (and, typically, stability) have increased
through the creation of the pre-polymer intermediary, the pre-polymer is subject to PMN review.
The PMN process is costly and lasts a minimum of 90 days. For these reasons, most firms -
- especially smaller firms — are reluctant to pre-mix monomers, even though the pre-polymer mix
may be a superior ingredient for certain customer or equipment specifications. It may also be less
volatile and less skin sensitizing. However, because most firms exceed the low volume exemption
clause, they would not be able to pre-mix without PMN approval. Lacking this, they are restricted
in how they make their product.
Expanding the polymer PMN process to cover pre-polymers would address the following
drivers and barriers:
Product Innovation and Customer Specifications (Driver): Through inclusion of pre-
polymers in the polymer PMN exemption, small and medium size businesses that
cannot afford to go through the expensive, time-consuming PMN process would be
allowed to create pre-polymer compounds that are possibly safer and more
efficacious than the current monomer options.
5-26
-------
Regulatory Disincentive for Innovation (Barrier): The time and expense associated
with the new chemical PMN process inhibits small and medium-size firms from
developing pre-polymers that might be safer and more stable than the monomer
inputs. This is both a barrier to safety and innovation.
Pre-Manufacturing Notice Process (Barrier): Examination of whether pre-polymers
should be granted a Section 5 exemption review would contribute to the overall
assessment of the PMN process and its affect on firms that manufacture and mix
resins.
The present system for evaluating new chemicals under the PMN process does not consider
comparative risk. It is possible that consideration of pre-polymer exemptions could include
information of the relative toxicity or the monomer and pre-polymer inputs. For example, if pre-
polymer^ were less toxic than monomerA and/or monomerB then it would be approved in a timely
and less costly manner.
The Office of Pollution Prevention and Toxics (OPPT) has expressed a willingness to
consider changes to the rules governing implementation of Section 5 of the Toxics Substance
Control Act. One possibility is that a working sub-group within the Sustainable Industry Project's
thermoset plastics group could advise and work with OPPT on proposed changes to the PMN rules
to incorporate changes like the pre-polymer exemption. In the short run, a proposed change to the
small volume exemption may somewhat alleviate the pre-polymer problem.14
Impact of 5(e) Designation qo Product Development an<^ Marketing
EPA processes about 2500 Pre-Manufacturing Notices (PMNs) each year." Of this annual
total, the Agency writes 40 to 50 5(e) consent orders.16 The 5(e) consent process is both time and
energy intensive from an EPA perspective, and has significant negative marketing implications for
the product so designated.
Examination of the impact of 5(e) designation on product development and marketing has
the potential to address the following barriers:
Regulatory Disincentive for Innovation (Barrier): Examining the impact of 5(e)
consent orders would allow for a better understanding of how this designation may
reduce firm innovation and encourage customers to continue to use chemical
products that are less safe simply because they are "grandfathered" and do not have
5(e)s.
14 The low volume exemption currently stands at 10,000 pounds. According to the panel
discussion on March 10, 1994, the ceiling will shortly be raised to 25,000 pounds.
15 Paul Campanella, EPA, OPPT, New Chemicals Program. From discussion of TSCA 5(e)
designation and the PMN process at SIP Stakeholders' meeting, March 15,1994.
16 Ibid.
5-27
-------
Pre-Manufacturing Notice Process (Barrier): Addressing industiy concerns regarding
5(e) consent orders would be a step toward removing the perceived barrier posed by
the PMN process.
From industry's perspective, the biggest problem lies in the chain of distribution. If the
company that submitted the chemical for review planned to use it only for its own production
processes then it would prefer to work with the Agency to agree on a Significant New Use
Restriction, or SNUR. A SNUR is a generally applicable rule that removes the need for the
manufacturer to take responsibility for its customers' actions. A 5(e) designation, however, means
that (1) the company must take responsibility for the appropriate use of the substance by any
customers and/or downstream users, and (2) any purchaser of this substance is restricted in terms
of use, application, and disposal.
Under this proposal, a necessary level of regulatory oversight would be maintained over the
use of new chemicals, but various types of restrictions and their impact on chemical sales and use
would be considered. As a first step, large resin manufacturers recommend that the Agency study
the effect of 5(e) designations of the sale of chemicals. While EPA may not perceive any difference
in the percentages of 5(e) and non-S(e) chemicals that ultimately advance to market, industry's
experience is that new substances with restrictions attached are inherently disadvantaged.
According to industry, the stigma of a Section S(e) order significantly diminishes the
commercial potential for a new chemical since, given a choice between a non-5(e) and a 5(e)
substance, most potential customers would rather purchase the compound with the fewest regulatory
restrictions and responsibilities. This has two potential impacts. First, it discourages innovation in
the form of developing and distribution of new chemicals. Second, if the issuance of a Section 5(e)
consent order results in the continued use of an existing chemical that is more toxic than the new
chemical, increased risk to society can result. OPPT is already changing the PMN rules by allowing
companies to skip the Section 5(e) step in some instances, and instead issuing SNURs for new
chemicals. Under this proposal, other alternatives to SNURs and 5(e)s would be discussed and
explored by EPA program representatives, industry representatives, and other stakeholders familiar
with the PMN process.
Involvement of Stakeholders in Standard-Setting Process
Panelists were concerned with the method by which the EPA gathers information about the
industry targeted for regulation. Currently, industry is invited to participate in the regulatory
dialogue after the standard-setting process has begun, instead of before, when the regulated
community might be able to provide insight into risk, exposure, and manufacturing processes, or
suggest more efficient or innovative alternatives to end-of-pipe prescriptions.
Certain restrictions have been imposed upon EPA by the Administrative Procedures Act
(APA). The APA governs the behavior of federal regulatory agencies during these rulemaking
discussions, and stipulates..when contact between industry and EPA may and may not occur during
this process. However, the suggestion discussed at the March 15 Stakeholders' Meeting goes beyond
rulemaking procedures and considers the longer-term relationship between EPA and industry.
The barriers and drivers addressed by involving stakeholders throughout the standard-setting
process include the following:
5-28
-------
Environmental Regulations (Driver): Through industry participation in the
rulemaking process, environmental regulations could be crafted to further enhance
incentives for compliance, and beyond.
Environmental Regulations (Barrier): Early and active participation by industry
members and trade groups would benefit both industry members (e.g., opportunity
for comment; reduction of resources expended to keep up with regulatory efforts;
and enhancement of planning capabilities) and EPA (e.g., better understanding of
industry processes and economics; and potential for industry buy-in). This
interaction is likely to produce effective, well-designed regulation.
Overlapping Federal/State/Local Regulations (Barrier): By improving the
regulatory/industry dialogue and facilitating industry participation in the regulatory
process, there will be an opportunity to discuss overlaps and possible inconsistencies
between federal/state/local, federal/federal, or state/state regulations. If overlap
cannot be eliminated, reporting and/or monitoring efficiencies may be achievable.
By "re-engineering" the traditional relationship between the regulators and the regulated, and
incorporating means of on-going information flow and better understanding of environmental goals
on the one hand, and industry processes and economics on the other, regulatory outcomes might
be more effective and more palatable. This approach involves asking two questions: (1) where are
the disconnects today, and (2) how can a process be designed that encourages the "right" types of
interactions?
This proposal could be approached in several ways:
Enhancing and encouraging negotiated rulemaking (or "reg-neg") procedures.
This established process brings all stakeholders to the table to determine a
rule that is fair to all parties. Stakeholders who sign off on the reg-neg agree
not to challenge the rule in court.
Developing BMP-based approach to regulation. This concept would
encourage a great deal of interaction between EPA and the industry. (See
previous discussion of BMP-based regulations.)
Establishing sector-specific "industry desks" within EPA. For example, a
plastics desk would facilitate the flow of information between industry and
the Agency. This staff person would be able to refer rulemaking bodies
within EPA (e.g., OAQPS) to industry sources, and conversely, would be able
to notify the plastics industry of any opportunities for comment and input.
5-29
-------
This proposal would reduce the resources expended by industry to keep up with regulatory
efforts, and would instead allow firms, tradegroups, and other stakeholders to be openly and
proactively involved in rule-making. Furthermore, it could enable stakeholders to help rule-makers
craft environmental regulations that offer incentives for environmental improvement.
Process to Review Reasonableness of Paperwork Fines
Facilities are fined for two types of violations: (1) those associated with some increase in risk
(e.g., the release of a toxic substance to the environment in excess of permitted levels), and (2) those
that are in response to missing, or incorrectly filled-out paperwork. Since EPA has limited staff,
paperwork allows the Agency to assess whether or not industry is in compliance with the law. The
fines serve to discourage firms from avoiding this onerous requirement.
Industry asserts, however, that more efficient means of assuring compliance can be identified,
and the existing level of paperwork imposes unreasonably large burdens on business. According to
industry sources, fines for a single missing valve plug or tag can be as high as $5,000." In a facility
with thousands of valves, which already has a documented inspection process and/or an on-line
monitoring system, the fines for missing paper work can be large. Industry contends that, rather
than encouraging the facility to improve inspections and preventative maintenance, these fines often
lead firms to allocate staff to patrol the facility full-time to prevent future paperwork transgressions.
A process to review the reasonableness of paperwork fines would address the following
barrier to improved environmental performance:
Environmental Regulations (Barrier): The effort necessary to properly complete
paperwork and the fines that are levied when required paperwork is inadequate use
up resources that might be employed more productively elsewhere within the firm.
Evaluating this policy option requires ascertaining the extent to which, and circumstances in
which, paperwork requirements could be reduced while measures such as continuous monitoring
insure that the same or a greater level of environmental protection is available. This issue might
be examined within the overall context of BMP-based regulation, as discussed above.
Communicate Rulemaking Information in "Plain English"
The participants in the small business panel meeting felt strongly that "plain english"
communication of regulations is EPA's responsibility. Presently, EPA places greatest emphasis on
writing and promulgating rules, with less emphasis given to facilitating their implementation. EPA's
choice of emphasis is made-in response to an expanding set of regulatory requirements, limited staff,
and the threat of legal action by NGOs when statutes are not issued according to the legislated
17 Letter from Fred Moore, Assistant Director, Environment of Union Carbide to Jerry
Newsome, EPA/OPPE, March 15, 1994.
5-30
-------
schedule. As a result, industrial firms - especially small businesses - rely on trade groups to
interpret regulations and keep members apprised of any changes. These groups, which also have
limited resources, must rapidly interpret rules that EPA has spent months or years developing.
Communication of rulemaking information in plain english would address the following
barrier to improved environmental performance:
Environmental Regulations (Barrier): By converting legally complex jargon to plain
english, thereby reducing the amount of time required to decipher new statutes, firms
would be able to shrink the cost of regulatory compliance and devote additional
resources to proactive environmental actions. This would be especially helpful for
small and medium size firms.
Implementation of this policy is conceptually straightforward, but would require EPA to fund
translation of rules by outside parties (e.g., trade groups, contractors) or to allocate Agency staff to
this effort. The recent reorganization of the Office of Enforcement - now the Office of
Enforcement and Compliance Assistance « may provide a context within which to address this issue.
Fund Study of National Emissions Stanford* fipr Hazardous Air Pollutants fNESHAPs1)
Under the Clean Air Act Amendments of 1990, EPA is required to promulgate source
category NESHAPs for manufacture of plastic composites and some polyurethane resins by
November 1990. However, while the responsibility for developing source category NESHAPs is
placed on EPA, the ramifications of failure to fulfill this responsibility fall heavily on the states and
regulated community. This occurs because under the Section 112 "MACT Hammer11 provisions of
the Act individual states and facilities must, in the absence of a source category NESHAP, conduct
case-by-case MACT determinations prior to constructing new sources or modifying existing sources.
Such case-by-case determinations will be expensive and time consuming for both states and facilities,
and at smaller firms may effectively freeze new construction or modifications.
NESHAPs funding for several subsectors of the thermoset plastics industry, including
composites and polyurethanes, was eliminated from the EPA budget in October, 1993. Industry
maintains that without EPA funding for this effort, growth opportunities for all but the largest firms
will be compromised. Furthermore, since case-by-case NESHAPs determinations are only
temporary, firms that achieve interim standards may be required to modify their practices once the
negotiated MACTs are replaced by overall source category standards. Based on these
considerations, the small business panel urged that EPA restore funding of the NESHAPs effort.
Funding the study of NESHAPs would potentially address the following driver and barrier
for the thermoset plastics industry:
Environmental Regulations (Driver): Funding for the development of NESHAPs
would allow industry and other stakeholders to participate in a dialogue with the
Agency whereby the most efficient, effective standards could be promulgated for all
firms within a particular source category. In addition, industry would become
knowledgeable regarding the regulatory requirements in a timely fashion.
5-31
-------
Environmental Regulations (Barrier): Without EPA funding for the development of
source category NESHAPs, firms would be required to allocate significant resources
to negotiating facility-level MACT standards.
5.3.5 Relationship Between High Priorit
The relationships between the major thermoset plastics industry drivers/barriers and the eight
high priority policy options are summarized in Exhibit 5.3-12. BMP-based regulation is the most
comprehensive policy option, addressing four drivers and three barriers. How the relevant
driver/barriers relate to each of the high priority policy options is discussed in Section 5.3.4.
5-32
-------
Exhibit 53-12
LINKAGE BETWEEN DRIVERS/BARRIERS
AND HIGH PRIORITY POLICY OPTIONS
Drivers
Product Innovation and Customer Specifications
Environmental Regulations
Public Image
Life-Cycle Analysis and Product Stewardship
Barriers
Environmental Regulations
Regulatory Disincentive for Innovation
Overlapping Federal/State/Local Regulations
Pre-Manufacturing Notice Process
Policy Options
• Implement BMP-Based Regulations
• Expand Polymer PMN Exemptions to
Cover Pre-Polymers
• Implement BMP-Based Regulations
• Involve Stakeholders in Standard Setting
Process
• Fund Study of NESHAPs
• Implement BMP-Based Regulations
• Implement BMP-Based Regulations
• Allow In-Plant Treatment of Non-
Product Output
Policy Options
• Implement BMP-Based Regulations
• Involve Stakeholders in Standard Setting
Process
• Allow In-Plant Treatment of Non-
Product Output
• Review Reasonableness of Paperwork
Fines
• Communicate Rulemaking Information
in "Plain English"
• Fund Study of NESHAPs
• Implement BMP-Based Regulations
• Expand Polymer PMN Exemptions to
Cover Pre-Polymers
• Study Impact of 5(e) Designation on
Product Development and Marketing
• Implement BMP-Based Regulations
• Involve Stakeholders in Standard Setting
Process
• Expand Polymer PMN Exemptions to
Cover Pre-Polymers
• Study Impact of S(e) Designation on
Product Development and Marketing
5-33
-------
-------
Appendix 5-A
BIBLIOGRAPHY FOR THE THERMOSET PLASTICS INDUSTRY
-------
-------
Appendix S-A
BIBLIOGRAPHY FOR THE THERMOSET PLASTICS INDUSTRY
Bland 1967. Bland, William F., and Robert L. Davidson, co-editors, Petroleum Processing Handbook,
McGraw-Hill, 1967.
CMA 1993a. Chemical Marketing Reporter, The Green Report," Schnell Publishing Co., June 28,
1993.
CMA 1993b. Chemical Marketing Reporter, Schnell Publishing Co., July 26,1993.
CMA 1992-93. Responsible Care Progress Report, On the Road to Success. Along with other
Responsible Care program materials.
Cole, Henry S., Ph.D., and Kenneth A. Brown, Advantage Glass! Switching to Plastic Is An
Environmental Mistake, sponsored by the Glass Packaging Institute, September 15,1993.
DOC 1990a. 1987 Census of Manufacturers, "Plastics Materials, Synthetic Rubber, and Manmade
Fibers," Industries 2821, 2822, 2823, and 2824, U.S. Department of Commerce, Bureau of
the Census, March 1990.
DOC 1990b. U.S. Commodity Exports and Imports as Related to Output: 1986 and 1985, U.S.
Department of Commerce, Bureau of the Census, June 1990.
DOC 1990c. 1987 Census of Manufactures, "Miscellaneous Plastics Products, Not Elsewhere
Classified," Industries 3081, 3082, 3083, 3084, 3085, 3086, 3087, 3088, and 3089, U.S.
Department of Commerce, Bureau of the Census, May 1990.
DOC 1992a. 1991 Annual Survey of Manufacturers, "Statistics for Industry Groups and Industries
(Including Capital Expenditures, Inventories, and Supplemental Labor, Fuel, and Electric
Energy Costs)," U.S. Department of Commerce, Bureau of the Census, December 1992.
DOC 1992b. 1991 Annual Survey of Manufacturers, "Value of Product Shipments," U.S.
Department of Commerce, Bureau of the Census, November 1992.
DOC 1992c. 7957 Census of Manufacturers, "Concentration Ratios In Manufacturing," U.S.
Department of Commerce, Bureau of the Census, February 1992.
DOC 1992d. Current Industrial Reports, "Survey of Plant Capacity, 1990," U.S. Department of
Commerce, Bureau of the Census, March 1992.
DOC 1993a. 1991 Annual Survey of Manufacturers, "Geographic Area Statistics," U.S. Department
of Commerce, Bureau of the Census, February 1993.
5-A-l
-------
Appendix 5-A
(continued)
BIBLIOGRAPHY FOR THE THERMOSET PLASTICS INDUSTRY
DOC 1993b. Current Industrial Reports, "Pollution Abatement Costs and Expenditures, 1991," U.S.
Department of Commerce, Bureau of the Census, January 1993.
DOC 1993c. U.S. Industrial Outlook 1993, "Plastics and Rubber," U.S. Department of Commerce,
International Trade Administration, p.p. 12-1 to 12-3.
EPA 1984a. EPA Guideline Series, "Control of Volatile Organic Compound Leaks from Synthetic
Organic Chemical and Polymer Manufacturing Equipment," U.S. Environmental Protection
Agency, Office of Air Quality Planning and Standards, March 1984.
EPA 1984b. EPA Guideline Series, "Control of Volatile Organic Compound Emissions from Air
Oxidation Processes in Synthetic Organic Chemical Manufacturing Industry," U.S.
Environmental Protection Agency, Office of Air Quality Planning and Standards, December
1984.
EPA 1990. Methods to Manage and Control Plastic Wastes, Report to Congress, U.S. Environmental
Protection Agency, Office of Solid Waste and Emergency Response, Office of Water,
February 1990.
EPA 1993. EPA Guideline Series, "Control of Volatile Organic Compound Emissions from
Manufacture of High-Density Polyethylene, Polypropylene, and Polystyrene Resins," U.S.
Environmental Protection Agency, Office of Air Quality Planning and Standards, November
1983.
FR 1992a. Federal Register, "Initial List of Categories of Sources Under Section 112(c)(l) of the
Clean Air Act Amendments of 1990", Vol. 57, No. 137, Thursday, July 16,1992, p.p. 31576-
31592.
FR 1992b. Federal Register, "National Emission Standards for Hazardous Air Pollutants; Availability:
Draft Schedule for the Promulgation of Emission Standards," Vol. 57, No. 186, Thursday,
September 24, 1992, p.p. 44147-44149.
Hollod 1988. Hollod, G.J. and R.F. McCartney, "Waste Reduction in the Chemical Industry; Du
Pont's Approach," JAPCA, Vol. 38, No. 2, February 1988, p.p. 174-179.
Modem Plastics 1992. Modem Plastics, "Special Buyers' Guide & Encyclopedia Issue for '93,"
McGraw-Hill, December 1992.
Modem Plastics 1993a,b,c. Modem Plastics, McGraw-Hill, April, May, July, August 1993 issues.
RMA 1992. RMA Annual Statement Studies, 1992, Fiscal Year Ends 4/1/91 through 3/31/92, Robert
Morris Associates.
5-A-2
-------
Appendix 5-A
(continued)
BIBLIOGRAPHY FOR THE THERMOSET PLASTICS INDUSTRY
Rauch 1991. The Rauch Guide to the U.S. Plastics Industry, Rauch Associates, Inc., 1991.
SPI 1993a. Facts &. Figures of the U.S. Plastics Industry, The Society of the Plastics Industry Inc.,
1993 edition, Washington, D.C, August 1993.
SPI 1993b. SPI Issues, The Society of the Plastics Industry, Inc., Vol. IV, No. 9, June 25,1993.
SRI 1967. Chemical Origins and Markets, Chemical Information Services, Stanford Research
Institute, Menlo Park, CA, 1967.
SRI 1987. 2987 Directory of Chemical Producers, United States of America, SRI International,
Menlo Park, CA, 1987.
Ulrich 1982. Ulrich, Henri, Introduction to Industrial Polymers, Hanser Publishers, distributed by
Macmillan Publishing Company, New York, 1982.
Waddams 1980. Waddams, A.L., Chemicals from Petroleum, 4th edition, Gulf Publishing Company,
1980.
Wirka, Jeanne, Wrapped In Plastics, The Environmental Case for Reducing Plastics Packaging,
Environmental Action Foundation, August 1988.
5-A-3
-------
-------
Appendix S-B
ALL SUGGESTED POLICY OPTIONS
-------
-------
Appendix 5-B
MX SUGGESTED POLICY OPTIONS
Evaluation of New
• Base evaluations of new chemicals on comparative risk assessment
• Promote realistic risk assessment based on sound science
• Accept epidemiological data for risk assessment where available
• Establish pre-PMN advisory service
• Expand polymer PMN exemption to cover pre-polymers
• Evaluate impact of TSCA section 5(e) on product development and marketing
• Designate SNURs based on existing practices rather than 5(e)s
• Coordinate international registration and review of new chemicals
• Provide clear explanation of new chemical evaluation criteria
Development of Regulations
• Involve stakeholders in standard setting process (e.g., MACTs)
• Consider potential for BMP-based regulations incorporating provisions such as CMA's
"Responsible Care"
• Fund study of NESHAP standards
• Allow for in-plant treatment of "non-product output" (NPO) without TSDF designation
• Reevaluate CAA definition of Volitile Organic Compounds (VOCs) taking volatility into
account
• Make special efforts to include small businesses in rulemaking process
• Consider exemptions from TRI and LEPC reporting based on facility-specific demonstration
of de minimis emissions
• Reward proactive behavior that leads to advanced compliance
5-B-l
-------
Appendix 5-B
(continued)
ALL SUGGESTED POLICY OPTIONS
• Establish forgiveness provisions for firms that undertake innovative pollution prevention
technologies
• Invoke federal preemption except in special cases
* Establish a "Carol Browner Award" for Total Quality Environmental Management (TQEM)
Provision of Tcchnnlpgy and/or Financial Assistance
• Provide small business loans for pollution prevention
• Establish EPA "Green Teams" for technology assistance to small and medium-sized
businesses
• Establish EPA outreach to regions/states on risk and technology assessment
• Augment outreach with retiree and/or insurance company expertise
• Offer voluntary inspections by state personnel (unrelated to enforcement)
• Enhance service orientation of EPA
• Reinforce EPA mission statement of environmental protection
Streamline Information Collection and Processing
• Establish an electronic data management system to facilitate submission of required reports
• Reduce paperwork-intensive nature of LEPC reporting
• Accept report-by-exception if firms have approved BMP program
• Reduce record-keeping requirements in situations covered by area monitors
• Establish systematic-process to review reasonableness of paperwork fines
• Communicate rulemaking information in "plain english"
• Make special efforts to disseminate rulemaking information to small businesses
5-B-2
-------
Appendix 5-B
(continued)
ALL SUGGESTED POLICY OPTIONS
• Coordinate uniformity among state reporting forms to extent possible
» Inform small companies of their rights prior to inspection by regulatory agencies
5-B-3
-------
Appendix 5-B
(continued)
TOP 10 INDUSTRY PRIORITIES
SELECTED DURING SMALL BUSINESS PANEL MEETING
March 10,1994
1. Fund study of NESHAP standards (a)
2. Consider potential for BMP-based regulations incorporating provisions such as CMA's
"Responsible Care" (a) (b)
3. Allow for in-plant treatment of "non-product output" without TSDF designation (a) (b)
4. Expand polymer PMN exemption to cover pre-polymers (a) (b)
5. Establish systematic process to review reasonableness of paperwork fines (a)
6. Consider exemptions from TRI and LEPC reporting based on facility-specific demonstration
of de minimis emissions
7. Invoke federal preemption except in special cases
8. Establish EPA "Green Teams" for technology assistance to small and medium sized
businesses (as in the "OSHA Services" model)
9. Promote realistic risk assessment based on sound science
10. Communicate rule-making information in "plain english"
(a) Selected by panel participants as one of top five policy options
(b) Discussed aspects of implementation in-depth at second panel meeting. See section
5.3.3 for more details.
5-B-4
-------
Appendix 5-B
(continued)
TOP 13 INDUSTRY PRIORITIES
SELECTED DURING LARGE BUSINESS PANEL MEETING
March 15,1994
1. Study impact of 5(e) designation on product development and marketing, and determine
viable alternatives to 5(e) stigma (a)
2. Provide (more) clear explanation of new chemical evaluation criteria
3. Coordinate international registration and review of new chemicals
4. Involve stakeholders in standard-setting process at earliest possible stage (a)
5. Reward proactive behavior and establish forgiveness provisions for firms that undertake
innovative pollution prevention strategies
6. Allow for in-plant treatment of "non-product output" without TSDF designation (a)
7. Consider potential for BMP-based regulations
8. Consider exemptions from TRI reporting based on facility-specific demonstration of de
minimis emissions
9. Place greater emphasis on EPA technical assistance to state environmental regulatory
agencies
10. Establish systematic process to review reasonableness of paperwork fines (a)
11. Coordinate uniformity among state reporting forms to the extent possible
12. Communicate rulemaking information in "plain engiish" and focus on dissemination to small
businesses (a)
13 Extend coverage provided by TSCA testing consent orders to alt parties -- not just those who
use the substance at the time of testing
(a) Selected by panelists as one of top five policy options and discussed in detail at
March 15, 1994 meeting. See section 5.3.3 for further details.
5-B-5
-------
-------
Appendix 5-C
ALL PLASTICS INDUSTRY CONTACTS
-------
-------
APPENDIX 5-C
Thermoset Plastics Industry contacts
Mr. Ed Abrams
Harcros organics
Mr. Charles Bartish
Air Products and Chemicals
Dr. Gert Baumann
Miles (Polymers Division)
Director, Environment & Industry Issues
Mr. Scott Berner
Allied-Signal, Inc.
518-270-0200
Mr. Don Billheimer
Thermoset Plastics, Inc.
Ms. Lynne Blake-Hedge
EPA, OPPT
202-260-7241
Mr. Paul Campanella
EPA, OPPT, New Chemicals Program
Mr. Charlie Cappannari
American Cyanamid-or Cytec .Industries
203-284-4210
5-C-l
-------
APPENDIX 5-C
Thermoset Plastics Industry Contacts
Mr. Jim Casey
EPA, OPPE
Mr. Janes Chapman
Miles (Polymers Division)
Manager, Product Safety
Ms. Marian Chertow
Yale University, Program of Solid Waste Policy
Director, Partnership for Enviro Mgmnt.
203-432-3253
Mr. Peter Davies
Dow Chemical Company (Dow Plastics)
Business Operations Mgr., Polyurethanes
Mr. Richard Doyle
Chemical Manufacturers Association
Vice President
202-887-1100
Ms. Sharon Eisel
Dow Chemical
Manager, Environmental Reg. Activities
517-636-8291
Mr. Lew Freeman
Society of the Plastics Industry
Ms. Edie Grashik
Foam Seal
5-C-2
-------
APPENDIX 5-C
Thermoset Plastics Industry Contacts
Mr. David Griffen
Plastics Engineering Corporation
Director, Environmental Department
414-458-2121
Mr. Paul Haas
Allied-Signal, Inc.
Sr. Safety and Health Administrator
Mr. Thomas Harrick
Miles (Polymers Division)
Senior Vice President, Polyurethanes
Mr. Lynn Harris
Society of the Plastics Industry
Associate Technical Director
202-371-5200
Ms. Maureen Healy
Society of the Plastics Industry
Director, Federal Env. and Trans Issues
Ms. Lynn Hutchinson
EPA, OAQPS
919-541-5624
Mr. Larry Jackson
Dow Chemical Company (Dow Plastics)
Manager, Health, Env. and Reg. Affairs
Mr. Lance King
Californians Against Waste
914-943-5422
5-C-3
-------
APPENDIX 5-C
Thermoset Plastics Industry Contacts
Mr. Greg Koontz
Small Business Administration
Mr. Robert Lacovara
Composites Fabricators Association
Mr. Craig Larson
Allied-Signal, Inc.
Manager, Environmental Quality
Mr. Robert Lawrence
BASF Corporation
Group Vice President
Ms. Fran Lichtenberg
Society of the Plastics Industry
Executive Director, Polyurethane Div.
212-351-5424
Mr. Reid Lifset
Yale University, Program on Solid Waste Policy
203-432-3253
Ms. Theresa Maene
Flexible Products Company
Mr. Stephen McNally
Composites Fabricators Association
Director, Government Affairs
5-C-4
-------
APPENDIX 5-C
Thermoset Plastics Industry contacts
Mr. Patrick McNamara
ICI (Polyurethanes)
Manager, Public Affairs
Mr. Dennis Miller
BASF Corporation
Environmental Coordinator, Urethanes Grp
Ms. Denby Misurelli
US International Trade Commission
Rep., Syn. Org. Chem.,Plas., & Resin
202-205-3362
Mr. Frederick Moore
Union Carbide Corporation
Asst. Dir., Env. Chair-CMA P2 Task Force
Ms. Christine Mueller
League of Women Voters, Natural Resources Division
202-429-1965
Mr. Geraine Perry
EPA, Office of Solid Waste & Emergency Response
Mr. William Robert
BASF Corporation
Manager, Product Stewardship & Reg. Comp
Mr. Robert Rose
EPA, Office of the Admin., Small Business Office
5-C-5
-------
APPENDIX 5-C
Thermoset Plastics Industry Contacts
Mr. Manik Roy
Environmental Defense Fund
Pollution Prevention Specialist
202-387-3500
Mr. Richard Sayad
Dow Chemical Company (Dow Plastics)
Manager, Health, Env. and Reg. Affairs
Mr. John Schweitzer
Society for the Plastics Industry
Technical Director, Composites Institute
Mr. John Shafer
EPA, OAQPS (Research Triangle Park)
919-541-2096
*
Ms. Betsy Shirley
Society of the Plastics Industry
Executive Director, Styrene Info Center
Mr. Earl Simpson
Independent consultant
713-558-1031
Mr. Jack Snyder
Society of the Plastics Industry
Asst. Manager, Styrene Scientific Affair
Mr. Martin Spitzer
EPA, Pollution Prevention and Toxics
5-C-6
-------
APPENDIX 5-C
Thermoset Plastics Industry Contacts
Mr. David Svensgaard
EPA, OAQPS (Research Triangle Park)
919-514-2380
Mr. David Tarnowski
Allied-Signal, Inc.
Manager, Health, Safety, and Environment
Mr. Robert Thoma
BASF Corporation
Vice President, Government Relations
Mr. Thomas Walsh
Bendix (Allied-Signal)
Project Engineer
Mr. Bernie Weckstrom
Perstorp Incorporated
413-584-2472
Mr. Jonas Weiss
ciBA-Geigy
Dr. George Youngblood
Shell Oil and Society of the Plastics Industry
Chair, Epoxy Resins Task Group
Mr. David Zoll
Chemical Manufacturers Association
General Counsel
5-C-7
-------
-------
Appendix 5-D
PANEL MEETING PARndPANTS
-------
-------
• Appendix 5-D
| PANEL MEETING PARTICIPANTS
Organization
Representative
Attended Panel Meetings
1 - Jan. 11, 1994,
2 - March 10, 1994 or
3 - March 15, 1994
Indusby Trade Groups and Resin Manufacturers
The Society of the Plastics Industry (SPI)
SPI
SPI
SPI
SPI
Air Products and Chemicals
Dow Chemical Company
Dow Chemical Company
Dow Chemical Company
1 Miles, Inc.
L.
H^es* inc-
^IBA Geigy
1 BASF
| Composites Fabricators Association
j Composites Fabricators Association
1 Shell Chemical Company/SPI
Union Carbide/Chemical Manufacturers Association
1 (CMA)
| Thermoset Plastics, Inc.
Harcos Organics
Foam Seal
| Flexible Products Company
Lew Freeman, Government Affairs
Fran Lichtenberg, Polyurethane Division
John Schweitzer, Composites Institute
Maureen Healey, Government Affairs
Lynne Harris, Technical Affairs
Charles M. Bartish
Richard Sayad
Larry Jackson
Peter Davies
Gert Baumann
James Chapman
Jonas Weiss
Dennis Miller
Robert Lacovara
Steve McNally
George Youngblood
Fred Moore
Don BUlheimer
Ed Abraras
Edie Grashik
Theresa Maene
2
1,2,3
1,2
1,3
1,2,3
3
3
3
3
3
3
3
3
3
2,3
1,2,3
1
2
2
2
2
5-D-l
-------
Appendix 5-D
^continued)
J
1
PANEL MEETING PARTICIPANTS |
OrvaniTsitifin
Representative
i
Attended Panel Meetings
1 - Jan. 11, 1994,
2 - March 10, 1994 or
3 - March 15, 1994
Other Stakeholders
Yale University, Partnership for Environmental Policy
Small Business Administration
Reid Lifset
Greg Koontz
1
2
U.S. Environmental Protection Agency
EPA, Office of Solid Waste and Emergency Response
EPA, OPPT, Pollution Prevention
EPA, OPPT, New Chemicals Program
EPA, Office of Air Quality Planning and Standards
(OAQPS)
EPA, OAQPS
EPA, OAQPS
EPA, Office of the Administrator, Small Business
Ombudsman (OASBO)
EPA, Office of Policy Planning and Evaluation (OPPE)
EPA, OPPE
EPA, OPPE
EPA, OPPE
Geraine Perry
Martin Spitzer
Paul Campanella
Bob Rosensteel
Randy McDonald
Madeleine Strum
Robert Rose
Jerry Newsome, Project Lead, Plastic Resin
Manufacturing Sector
Bob Benson, Branch Chief, Project Lead,
Metal Finishing Sector
Jim Casey
Julie Frieder, Project Lead, Photoimaging
Sector
3
3
3
3
3
3
* i
1, 2, 3 ^1
1,3
2
1,3
EPA Contractor Support
Industrial Economics, Incorporated (lEc)
lEc
James Cummings-Saxton, Principal
Meg Kelly, Associate
1,2,3
1,2,3
5-D-2
-------
-------
------- |