Corporate Response: Pollution Control

Pollution control typified the corporate response to environmental regulations from the genesis of the modern regulatory framework in the 1970s through the 1980s. Pollution control a method to prevent the release of emissions and other by-products into the environment after they have generated those wastes. Typical techniques include scrubbers and filters to trap pollutants. is an end-of-the-pipe strategy that focuses on waste treatment or the filtering of emissions or both. Pollution control strategies assume no change to product design or production methods, only attention to air, solid, and water waste streams at the end of the manufacturing process. This approach can be costly and typically imposes a burden on the company, though it may save expenses as fines levied by regulatory agencies for regulatory noncompliance. Usually pollution control is implemented by companies to comply with regulations and reflects an adversarial relationship between business and government. The Conference Board revealed the causes of this adversarial attitude in a 1974 survey—an independent, nonprofit business research organization—that found that few companies viewed pollution control as profitable and none found it to be an opportunity to improve production procedures.^[23] Hence, from a strictly profit-oriented viewpoint, one that considers neither public reaction to pollution nor potential future liability as affecting the bottom line, pollution control put the company in a “losing” position regarding environmental protection.

The environmental regulatory structure of the United States has forced companies into a pollution control position by mandating specific technologies, setting strict compliance deadlines, and concentrating on cleanup instead of prevention.^[24] This was clear in a 1986 report by the Office of Technology Assessment (OTA) that found that “Over 99% of federal and state environmental spending is devoted to controlling pollution after waste is generated. Less than 1% is spent to reduce the generation of waste.” ^[25] The OTA noted the misplaced emphasis on pollution control in regulation and concluded that existing technologies alone could prevent half of all industrial wastes.^[26]

Economists generally agree that it is better for regulation to require a result rather require a means to accomplishing that result. They prefer requiring pollution control because it provides an incentive for firms to reduce pollution rather than simply move hazardous materials from one place to another, which does not solve the original problem of waste generation. For example, business researchers Michael Porter and Claas van der Linde distinguish good regulations and bad regulations by whether they encourage innovation and thus enhance competitiveness while simultaneously addressing environmental concerns. Pollution control regulations, they argue, should promote resource productivity but often are written in ways that discourage the risk taking and experimentation that would benefit society and the regulated corporation: “For example, a company that innovates and achieves 95% of target emissions reduction while also registering substantial offsetting cost reductions is still 5% out of compliance and subject to liability. Regulators would reward it for adopting safe but expensive secondary treatment.”^[27] Regulations that discouraged innovation and mandated the end-of-the-pipe mind-set that was common among regulators and industry in the 1970s and 1980s contributed to the adversarial approach to environmental protection. As these conflicts between business and government heated, new science, an energy crisis, and growing public protests fuelled the fire.

Global Science, Political Events, Citizen Concern

In 1972, a group of influential business executives and scientists known as the Club of Rome published a book titled The Limits to Growth. Using mathematical models developed at the Massachusetts Institute of Technology to project trends in population growth, resource depletion, food supplies, capital investment, and pollution, the group reached a three-part conclusion. First, if the then-present trends held, the limits of growth on Earth would be reached within one hundred years. Second, they could alter these trends to establish economic and ecological stability that would be sustainable far into the future. Third, if the world selected the second outcome, chances of success would increase the sooner work attained it.^[28] notion of natural limits was presented, an idea at odds with most people’s assumptions. For the people of a country whose history and cultural mythology held the promise of boundless frontiers and limitless resources, these full-Earth concepts challenged deeply held assumptions and values.

Perhaps the most dramatic wake-up call came as political revenge. Americans were tangibly and painfully introduced to the concept of limited resources when, in 1973, Arab members of the Organization of Petroleum Exporting Countries (OPEC) banned oil shipments to the United States in retaliation for America’s support of Israel in its eighteen-day Yom Kippur War with Syria and Egypt. Prices for oil-based products, including gasoline, skyrocketed. The so-called oil shock of 1973 triggered double-digit inflation and a major economic recession.^[29]As a result, energy issues became inextricably interwoven with political and environmental issues, and new activist groups formed to promote a shift from nonrenewable, fossil fuel–based and heavily polluting energy sources such as oil and coal to renewable, cleaner sources generated closer to home from solar and wind power. However, with the end of gasoline shortages and high prices, these voices faded into the background. Of course, a strong resurgence of such ideas followed the price spikes of 2008, when crude oil prices exceeded $140 per barrel.^[30]

Over time, these developments built pressure for additional regulation of business. Politicians continued to listen to the concerns of US citizens. In 1976, the Toxic Substance Control Act (TSCA) was passed over intense industry objections. The TSCA gave the federal government control over chemicals not already regulated under existing laws.^[33] In addition, the Resource Conservation and Recovery Act (RCRA) of 1976 expanded control over toxic substances from the time of production until disposal, or “from cradle to the grave.”^[34] The following year, both the CAA and Clean Water Act were strengthened and expanded. According to the US Environmental Protection Agency, “The Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. The basis of the CWA was enacted in 1948 and was called the Federal Water Pollution Control Act, but the act was significantly reorganized and expanded in 1972. ‘Clean Water Act’ became the Act’s common name with amendments in 1977.” Under the CWA, industry wastewater and water quality standards were set for industry and all surface-water contaminants. In addition, permits were required to discharge pollutants under the EPA’s National Pollutant Discharge Elimination System (NPDES) program. ^[35]

In the late 1970s, America’s attention turned once again to energy issues. In 1978, Iran triggered a second oil shock by suddenly cutting back its petroleum exports to the United States. A year later, confidence in nuclear power, a technology many looked to as a viable alternative form of energy, was severely undermined by a near catastrophe. On March 29, 1979, the number two reactor at Three Mile Island near Harrisburg, Pennsylvania, lost its coolant water because of a series of mechanical failures and operator errors. Approximately half of the reactor’s core melted, and investigators later found that if a particular valve had remained stuck open for another thirty to sixty minutes, a complete meltdown would have occurred. The accident resulted in the evacuation of fifty thousand people, with another fifty thousand fleeing voluntarily. The amount of radioactive material released into the atmosphere because of the accident is unknown, though no deaths were immediately because of the incident. Cleanup of the damaged reactor has cost $1.2 billion to date, almost twice its $700 million construction cost.^[36] In large part because of the Three Mile Island incident, they canceled all 119 nuclear power plants ordered in the United States since 1973.^[37] No new commercial nuclear power plants have been built since 1977, although some of the existing 104 plants have increased their capacity. However, in 2007, the Nuclear Regulatory Commission received the first of nearly twenty applications for permits to build new nuclear power plants.^[38]

One of the most significant episodes in American environmental history is Love CanalLove Canal, a community in Niagara Falls, New York, was saturated with over 21,800 tons of toxic chemicals between 1942 and 1953, which is when the land was sold to the city of Niagara Falls. They built a subdivision on the site, and incidences of cancer and other diseases in the 1970s sparked a public outcry.. In 1942, Hooker Electro-Chemical Company purchased the abandoned Love Canal property in Niagara Falls, New York. Over the next eleven years, 21,800 tons of toxic chemicals were dumped into the canal. Hooker, later purchased by Occidental Chemical Corporation, sold the land to the city of Niagara Falls in 1953 with a warning in the property deed that the site contained hazardous chemicals. The city later constructed an elementary school on the site, with roads and sewer lines running through it and homes surrounding it. By the mid-1970s, the chemicals had risen to the surface and seep into basements.^[39] Local homemaker Lois Gibbs, who later founded the Citizens’ Clearinghouse for Hazardous Wastes, noticed an unusual frequency of cancers, miscarriages, deformed babies, illnesses, and deaths among residents of her neighbourhood. After reading an article in the local newspaper about the history of the canal, she canvassed the neighbourhood with a petition, alerting her neighbours to the chemical contamination beneath their feet.^[40] On August 9, 1978, President Carter declared Love Canal a federal emergency, beginning a massive relocation effort in which the government purchased 803 residences in the area, 239 of which were destroyed.^[41]

Love Canal led directly to one of the most controversial pieces of environmental legislation ever enacted. On December 12, 1980, President Carter signed into law the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), or Superfund. This law made companies liable retroactively for cleanup of waste sites, regardless of their level of involvement. Love Canal also signalled the beginning of a new form of environmental problem. As environmental historian Hoffman showed, “Environmental problems, heretofore assumed to be visible and foreseeable, could now originate from an unexpected source, appear many years later, and inflict both immediate and latent health and ecological damage. Now problems could emerge from a place as seemingly safe as your own backyard.”^[42]

Faced with vehement industry opposition, the states and the federal government put in place a wide-ranging series of regulations that defined standards of practice and forced the adoption of pollution control technologies. To oversee and enforce these regulations, taxpayers’ dollars now funded a large new public bureaucracy. In the coming years, the size and scope of those agencies would come under fire from proindustry administrations elected on a platform of smaller government and less oversight and intervention.

In the meantime, the creation of the EPA compelled many states to create their own equivalent departments for environmental protection, often to administer or enforce EPA programs if nothing else. According to Denise Scheberle, an expert on federalism and environmental policy, “few policy areas placed greater and more diverse demands on states than environmental programs.”^[43] Some states, such as California, continued to press for stricter environmental standards than those set by the federal government. Almost all states have seen their relationships with the EPA vary from antagonistic to cooperative over the decades, depending on what states felt was being asked of them, why it was being asked, and how much financial help was being provided.

Despite growing public awareness and the previous decade of federal legislation to protect the environment, scientific studies were still predicting ecological disaster. President Carter’s Council on Environmental Quality, with the State Department, produced a study in 1980 of world ecological problems called The Global 2000 Report. The report warned that “if present trends continue, the world in 2000 will be more crowded, more polluted, less stable ecologically, and more vulnerable to disruption than the world now. Serious stresses involving population, resources, and the environment are clearly visible ahead. Despite greater material output, the world’s people will be poorer than they are today.”^[44]

Despite forecasts like this, the election of Ronald Reagan in November 1980 marked a dramatic decline in federal support for existing and planned environmental legislation. With Reagan’s 1981 appointments of two aggressive champions of industry, James Watt as secretary of the interior and Anne Buford as administrator of the EPA, it was apparent that the nation’s environmental policies were a prime target of his “small government” revolution. In its early years, the Reagan administration moved rapidly to cut budgets, reduce environmental enforcement, and open public lands for mining, drilling, grazing, and other private uses. In 1983, however, Buford was forced to resign amid congressional investigations into mismanagement of a toxic waste cleanup, and Watt resigned after several statements he made were widely viewed as insensitive to actions damaging to the environment. Under Buford’s successors, William Ruckelshaus and Lee Thomas, the environmental agency returned to a moderate course as both men attempted to restore morale and public trust.

Environmental crises continued to shape public opinion and environmental laws in the 1980s. In December 1984, approximately forty-five tons of methyl isocyanine gas leaked from an underground storage tank at a Union Carbide pesticide plant in Bhopal, India. The accident, which was far worse than the Seveso incident eight years earlier, caused 2,000 immediate deaths, another 1,500 deaths in the ensuing months, and over 300,000 injuries. The pesticide plant was closed, and the Indian government took Union Carbide to court. Mediation resulted in a settlement payment by Union Carbide of $470 million.^[45] In 2010, courts in India were still determining the culpability of the senior managers involved.

This disaster produced the community “right to know” provision in the Superfund Amendments and Reauthorization Act (SARA) of 1986, requiring industries that use dangerous chemicals to disclose the type and amount of chemicals used to the citizens in the surrounding area that might be affected by an accident.^[46] The right to know provision was manifested in the Toxics Release Inventory (TRI), in which companies made public the extent of their polluting emissions. This information proved useful for communities and industry by making both groups more aware of the volume of pollutants emitted and the responsibility of industry to lower these levels. The EPA currently releases this information at http://www.epa.gov/tri; other pollutant information is available at http://www.epa.gov/oar/data.

In 1990, Thomas Lefferre, an operations vice president for Monsanto, highlighted the sensitizing effect of this new requirement on business. He wrote, “If… you file a Title III report that says your plant emits 80,000 pounds of suspected carcinogens to the air each year, you might be comforted because you’re in compliance with your permit. But what if your plant is two blocks from an elementary school? How comfortable would you be then?”^[47]

Until the mid-1980s, environmental disasters were perceived to be confined to geographically limited locations and people rarely feared contamination from beyond their local chemical or power plant. This notion changed in 1986 when an explosion inside a reactor at a nuclear plant in Chernobyl in the Ukraine released a gigantic cloud of radioactive debris that standard weather patterns spread from the Soviet Union to Scandinavia and Western Europe. The effects were severe and persistent. Because of the explosion, some 21,000 people in Western Europe were expected to die of cancer and even more to contract the disease. Reindeer in Lapland were found to have levels of radioactivity seven times above the norm. By 1990 sheep in northwest England and Wales were still too radioactive to be consumed. Within the former Soviet Union, over 10,000 square kilometres of land were determined to be unsafe for human habitation, yet much of the land remained occupied and farming continued. Approximately 115,000 people were evacuated from the area surrounding the plant site, 220 villages were abandoned, and another 600 villages required “decontamination.” It is estimated that the lives of over 100,000 people in the former Soviet Union have been or will likely be severely affected by the accident.^[48]

Other environmental problems of an international scale made headlines during the 1980s. Sulfur dioxide and nitrogen oxides from smokestacks and tailpipes can be carried over six hundred miles by prevailing winds and often return to ground as acid rain. As a result, Wheeling, West Virginia, once received rain with a pH value almost equivalent to battery acid.^[49] Because of such deposition, downwind lakes and streams become increasingly acidic and toxic to aquatic plants, invertebrates, and fish. The proportion of lakes in the Adirondack Mountains of New York with a pH below the level of 5.0 jumped from 4% in 1930 to over 50% by 1970, resulting in the loss of fish stocks. Acid rain has also been implicated in damaging forests at elevations above two thousand feet. The northeastern United States and eastern Canada, located downwind from large industrialized areas, were hard hit.^[50] Rain in the eastern United States is now about ten times more acidic than natural precipitation. Similar problems occurred in Scandinavia, the destination of Europe’s microscopic pollutants.

A 1983 report by a congressional task force concluded that the primary cause of acid rain destroying freshwater in the northeastern United States was probably pollution from industrial stacks to the south and west. The National Academy of Sciences followed with a report asserting that by reducing sulphur oxide emissions from coal-burning power plants in the eastern United States, acid rain in the northeastern part of the country and southern Canada could be curbed. However, the Reagan administration declined to act, straining relations with Canada, especially during the 1988 visit of Canadian Prime Minister Brian Mulroney.^[51] Acid rain was finally addressed in part by the Clean Air Act Amendments of 1990.

The CAA, a centrepiece of the environmental legislation enacted during what might be called the first environmental wave, was significantly amended in 1990 to address acid rain, ozone depletion, and the contribution of one state’s pollution to states downwind. The act included a groundbreaking clause allowing the trading of pollution permits for sulphur dioxide and nitrogen oxide emissions from power plants in the East and Midwest. Plants now had market incentives to reduce their pollution emissions. They could sell credits, transformed into permits, on the Chicago Board of Trade. A company’s effort to go beyond compliance enabled it to earn an asset that could be sold to firms that did not meet the standards. Companies were thus enticed to protect the environment to increase profits, a mechanism considered by many to be a major advance in the design of environmental protection.

This policy innovation marked the beginning of market-oriented mechanisms to solve pollution problems. The Clean Air Interstate Rule (CAIR) expanded the original trading program and was reinstated after various judicial challenges to its method. Whether direct taxes or market solutions are best continues to be debated, however. With President Obama’s election in 2008, the question of federal carbon taxes in the United States versus allowing regional and national carbon markets to develop became a hot topic for national debate.

Another problem that reached global proportions was ozone depletion. In 1974, chemists Sherwood Rowland and Mario Molina announced that chlorofluorocarbons (CFCs) were lowering the average concentration of ozone in the stratosphere, a layer that blocks much of the sun’s harmful ultraviolet rays before they reach the earth. Over time, less protection from ultraviolet rays will lead to higher rates of skin cancer and cataracts in humans and crop damage and harm to certain species of marine life. By 1985, scientists had observed a 50% reduction of the ozone in the upper stratosphere over Antarctica in the spring and early summer, creating a seasonal ozone hole. In 1988, a similar but less severe phenomenon was observed over the North Pole. Sensing disaster, Rowland and Molina called for an immediate ban of CFCs in spray cans.

Such a global-scale problem required a global solution. In 1987, representatives from thirty-six nations met in Montreal and developed a treaty known as the Montreal Protocol. Participating nations agreed to cut emissions of CFCs by about 35% between 1989 and 2000. This treaty was later expanded and strengthened in Copenhagen in 1992.^[52]. The amount of ozone-depleting substances close to Earth’s surface consequently declined, whereas the amount in the upper atmosphere remained high. The persistence of such chemicals means it may take decades for the ozone layer to return to the density it had before 1980. The good news was that the rate of new destruction approached zero by 2006.^[53] It is interesting to note that businesses opposed restrictions on CFC use until patent-protected alternative materials were available to substitute for CFCs in the market.

The increasingly global scale of environmental threats and the growing awareness among nations of the interrelated nature of economic development and stable functioning of natural systems led the United Nations to establish the World Commission on Environment and Development (WCED) in 1983. The commission was convened the following year, led by chairwoman Gro Harlem Brundtland, former prime minister of Norway. In 1987, the so-called Brundtland Commission produced a landmark report, Our Common FutureOur Common Future is a report produced in 1987 by the so-called Brundtland Commission, or the UN World Commission on Environment and Development (WCED), created in 1983 and led by chairwoman Gro Harlem Brundtland, former prime minister of Norway. The landmark report tied together concerns for human development, economic development, and environmental protection with the concept of sustainable development. Although this was certainly not the first appearance of the term sustainable development, to many the commission’s definition became a benchmark which tied together concerns for human development, economic development, and environmental protection with the concept of sustainable development. Although this was certainly not the first appearance of the term sustainable development, too many the commission’s definition became a benchmark for moving forward: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Around that same time, the phrase environmental justice was coined to describe the patterns of locating hazardous industries or dumping hazardous wastes and toxins in regions predominantly home to poor people or racial and ethnic minorities.

Pollution Prevention

By the mid-1970s, companies had acted to prevent pollution rather than just mitigate the wastes already produced. Pollution prevention, a method to reduce the generation of waste and other by-products in the first place so that they cannot accumulate in the environment. Typical techniques include dramatic improvements in the efficiency of production refers to actions inside a company and are called an in-the-pipe as opposed to an end-of-the-pipe method for environmental protection. Unlike pollution control, which only imposes costs, pollution prevention offers an opportunity for a company to save money and implement environmental protection simultaneously. Still used today, companies often enter this process tentatively, looking for quick payback. Over time, it has been shown they can achieve significant positive financial and environmental results. When this happens, it helps open minds within companies to the potential of environmentally sound process redesign or re-engineering that contributes both ecological and health benefits and the bottom line of profitability.

There are four main categories of pollution prevention: good housekeeping, materials substitution, manufacturing modifications, and resource recovery. The aim of good housekeeping is for companies to operate their machinery and production systems as efficiently as possible. This requires an understanding and monitoring of material flows, impacts, and the sources and volume of wastes. Good housekeeping is a management issue that ensures preventable material losses are not occurring and all resources are used efficiently. Materials substitution seeks to identify and eliminate the sources of hazardous and toxic wastes such as heavy metals, volatile organic compounds, chlorofluorocarbons, and carcinogens. By substituting more environmentally friendly alternatives or reducing the amount of undesirable substances used and emitted, a company can bypass the need for expensive end-of-the-pipe treatments. Manufacturing modifications involve process changes to simplify production technologies, introduce closed-loop processing, and reduce water and energy use. These steps can significantly lower emissions and reduce costs. Finally, resource recovery captures waste materials and seeks to reuse them in the same process, as inputs for another process within the production system, or as inputs for processes in other production systems.^[54]

One of the earliest instances of pollution prevention in practice was 3M’s Pollution Prevention Pays (3P) program, established in 1975. The program achieved savings of over half a billion dollars in capital and operating costs while eliminating 600,000 pounds of effluents, air emissions, and solid waste. This program continued to strengthen within 3M and became integrated into incentive systems, rewarding employees for identifying and eliminating unnecessary waste.^[55] Other companies, while not pursuing environmental objectives per se, have found that total quality management (TQM) programs can help achieve cost savings and resource efficiencies consistent with pollution prevention objectives through conscious efforts to reduce inputs and waste generation.

Though pollution prevention is a significant first step in corporate environmental protection, Joseph Fiksel identifies several limitations to pollution prevention as typically practiced. First, it only incrementally refines and improves existing processes. Second, it focuses on singular measures of improvement, such as waste volume reduction, rather than on adopting a systems view of environmental performance. Renowned systems analyst Donella Meadows offered a simple definition of a system as “any set of interconnected elements.” A systems view emphasizes connections and relationships.^[56] Third, as most of the gains are often in processes that were not previously optimized for efficiency, the improvements are not repeatable. Fourth, pollution prevention is detached from a company’s business strategy and is performed piecemeal. ^[57]