INTERVIEW
Benchmarking Industry Views of Environmental Issues? Chamber President Tom Donohue contends that the cumulative impact of environmental initiatives will reduce the nation's ability to protect its environment. he United States Chamber of Commerce, the world's largest business federation, often finds itself at odds with environmental organizations and regulators. Chamber spokespersons assert that many proposals supported by environmental groups, as well as actions taken or proposed by the U.S. EPA—particularly those of the current Clinton Administration—are inappropriate and ill-advised. The Chamber opposes any EPA action to implement the Kyoto Protocol prior to ratification by the U.S. Senate. It also contends that environmental justice initiatives run contrary to federal programs designed to bring jobs and cleanup to low-income and minority areas. Current Clean Air Act compliance requirements are viewed as inflexible, as are those of the Clean Water Act. Chamber representatives believe, moreover, that costs associated with cleanup of contaminated sites are unreasonable, that voluntary industrial initiatives aimed at environmental improvements are not adequately encouraged, and that too little emphasis is placed on cost-benefit analyses in proposed environmental policies. Despite the view of some environmental groups that such a stance is unreasonable, Chamber President Tom Donohue considers U.S. industry to be highly supportive of environmental protection. "Over the last 20 years, the American business community has spent more than a trillion dollars—that's with a 'T—to clean the air, the water, and the land," he said during a recent discussion of environmental issues with ES&T. Differences arise, contends Donohue, because many environmental actions, such as
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initiatives aimed at strengthening the impact of Clean Air Act provisions or implementation of the Kyoto Protocol, have the potential to impose what he sees as unreasonable costs upon the American economy. He believes that little, if any, environmental protection will be achieved and severe economic disturbances will result if industry is compelled to simultaneously comply with Kyoto climate change mandates as well as new EPA rules for controlling ozone, particulate matter, and haze. Although industry in its entirety clearly does not speak with one voice about environmental issues, the chamber— with almost three million businesses and organizations as part of the federation—does represent the views of a large segment of existing business enterprises, spanning a broad-spectrum of industrial sectors. ES&Ts interview of Tom Donohue last December reveals how, from his perspective, many American businesses may perceive developments within the environmental arena and suggests industry concerns about recent environmental initiatives. The environmental community often criticizes the business community for never wanting to invest money in environmental protection. In fact, some environmental groups portray industry as so greedy for profits that it harms the environment. What's your response to that assertion? It's not true. Clearly, there are some companies that have acted in that manner, but the assertion flies right in the face of the fundamental facts, and these are © 1999 American Chemical Society
the facts: Over the past 20 years, the American business community has spent more than a trillion dollars—that's with a "T"—to clean the air, the water, and the land. It is true that they didn't wake up one morning and say, "Let's go do this"; the government had a role in motivating us in this direction. But these environmental improvements were made by business . . . through business with their money, with technical skills that were developed to reach these objectives, and witii fheir management skills. Without business contributing the money and the technical management skills, none of the massive improvements in the environmental situation in this country would have been achieved, and the environmental movement would have been talking to themselves. Now, I believe that everybody in the United States—or most people in the United States, if I might say—have strong feelings about the environment. Nobody wants to live in a garbage pit. People want to live in a nice neighborhood. They want to go into the outdoors. They like to camp; they like to walk; they like to exercise; they like to bring up their children in nice areas. The question at hand is what makes common sense from a scientific point of view? From an economic point of view? From a common sense point of view? Further, and if I might just end my answer by saying not only did we spend a trillion dollars over 20 years to do this, we're going to spend a trillion-and-a-half dollars over the next 20 years if we don't do anything different than what is already in the pipeline. Now, that's twoand-a-half trillion dollars in 40 years to clean the water, the air, and the land in this country. No other nation in the world has invested so much wealth to protect its environment. This investment has come from the wealth generated by our enterprise. Those that want to criticize the investment made by business for environmental protection are people who haven't put up any money to protect the environment. Yet these "environmentalists" have benefited from the cleaner air, water, and land, and, by the way, mey benefit from the largesse that is created in this country by American business. You can't be against business and be for jobs; you can't be against business and be for a clean environment, because you can't get either without business. You see, only by creating wealth through business, do we, as a nation, have the assets to put into environmental protection. Just look at the developing nations: They do not have a strong business base, and they have a poor environment. Only by creating wealth can we protect our environment.
"You will clean the air, the water, or the land and do it in a very specific way, that is, command and control." Prescriptions are written by EPA bureaucrats who have no more idea how to achieve the established standards man the man in the moon. Many of these bureaucrats have never even worked in business. And so companies have to go through a whole set of very specific processes and paperwork and forms. The procedures themselves add billions of dollars to the cost of complying with EPA's standards. So we're not arguing that there should be no federal regulation, rather we are asserting that performance standards should be established, and business should be allowed to meet these standards in the most efficient and technologically practical manner possible. Second, I think that some of the standards, particularly those now being proposed, seek to establish a pristine environment and establish goals that are not scientifically or technologically possible— not to mention the fact that implementation would require financial commitments that are impossible in a world of limited reMany of sources. In fact, when an unrealistic regulation is isthese new sued, it takes resources away from other serious environmental problems that would provide greater benefit to regulations could health and safety per dollar spent than [the same not stand the amount of money spent] on environmental regulation. test of real Many of these new environmental regulations could science. not stand the test of real science. They are not subjected to peer review, cost-benefit analysis, or risk analysis. These proposed regulations merely attempt to achieve marginal benefit—at extreme cost.
My third concern with environmental regulation is that some of it is ideological, patently political, and has little or nothing to do with how clean the environment actually is; it has to do with the passionate views of the environmentalists. Many environmentalists make proposals without fact, with high passion, and without any regard to the benefit to society. Now, let me give an example. Today, we're spending a trillion dollars and will spend a trillionand-a-half over me next 20 years. Now, what the administration says is, "Well, that's great, but we have five You've often criticized the cumulative and excessive cost or six or seven new things we want you to do: of government regulations. What do you mean by such We want you to reduce the use of energy to achieve a criticism?Are you implying that we should do away the Kyoto [global warming] agreement; we want you to implement new regulatory programs to reduce NO^ with federal regulation of the environment? and haze; we want to eliminate new diesel engines (and I hope you'll ask me about that. I have someNo, I don't think it would be a good idea to do away with federal regulation of the environment. I believe that thing significant to say about that); and now we want sensible regulations provide a guidepost, provide ob- to impose environmental justice standards on all jectives, give people a reason to move quickly to achieve businesses operating in urban areas." If you put all their objectives. However, I have three fundamental of those together, to the extent that people are sugproblems with the federal regulation of the environ- gesting that they ought to be implemented, you're ment: The first is mat meeting these objectives is much going to create a cost on American business— more expensive than it needs to be. EPA commands, remember, these will be design standards "You will APRIL 1, 1999/ENVIRONMENTAL SCIENCES TECHNOLOGY/NEWS* 1 5 5 A
do it my way"—that is greater, in my opinion, than all of the federal government's regulation of American business of any kind or any type put together. How much are we talking about? On an annual basis, it could be an additional 500 to 700 billion dollars. Now, if we take hundreds of billions of dollars—a big number—out of the productive economy and put it into complying with these many regulations, there won't be any money for health care, or for charity, or for retirement, or for raises, or any of the many programs that are the foundation of our way of life. I mean, we're talking about a lot of money. Now, I don't want to get emotional about this; we are going to find some common ground here. Sound heads will prevail, and I don't get involved in personalities, but it is clear that the head of the Environmental Protection Agency and the Vice President of the United States have a view about the environment that is extreme, not based on fact, and is being implemented in ways that try to get around the conWe are going gressional limits imposed by federal law and the procedures to find some established by the Administrative Procedure Act. This is an efcommon fort by a small group of people to impose environmental policy ground here. while ignoring congressional intent and the role of Congress unSound heads der our Constitution. It's very unfortunate, because we're making will prevail. tremendous environmental progress, and we could continue to make progress, and yes, we could even spend more money on it—where there is a definable objective, where there's something everybody agrees ought to be done, and we would go do it.
ample, they will provide technology, and they will help the environment of foreign countries [in which they operate]. But they will not be demagoged and attacked and sued the way they are in the United States. And, by the way, do you know what our biggest export is in the United States? Chemicals. You show me the next new big chemical plant that will be built in the United States instead of somewhere else. The chamber opposes EPA's environmental justice policy. Where would you hope that the matter stands a year or two from now?
Well, let's let the people know what "environmental justice" is. This is a policy of the EPA that holds that the concentration of industry in urban areas is a violation of the civil rights of the minorities living in these areas. As a result of this policy, any person can file a lawsuit against any business operating in the urban area any time that business is seeking an environmental permit or the renewal of an existing permit. This means every business operating in an urban area will never have certainty because it is at risk of losing its operating permit at any time. No business can operate under these conditions, and they will move out of urban areas. EPA's policy completely undercuts federal efforts for the last decade to bring jobs into urban areas. The Chamber has supported these efforts, for example, Enterprise Communities, Empowerment Zones, welfareto-work, and tax credits for locating in inner cities— all to bring jobs to urban areas. Now EPA, without any statutory authority undercuts a decade of effort. Even more frustrating, EPA has set itself up as the judge in these cases, which are heard by its Office of Civil Rights. This policy will greatly harm the minorities and poor in urban areas. In effect, EPA, without statutory authority has established itself as You've claimed that EPA and other federal agen- a National Zoning Board, and its decisions impact cies are drivingAmerican business out of the United what facilities can operate in the communities around the nation. States. What do you mean by this? The Chamber is trying to encourage companies to Well, it means that if you want to set up a chemical go into cities and get rid of those brownfields—cover plant in the United States, or a steel mill, or a new them over, build factories and distribution centers and foundry, or a plant to produce fertilizer, you ought telephone centers, and all that sort of thing—and hire not to do it here. You ought to do it somewhere else people in the inner city, train them. Beyond that, for for a couple of reasons: First of all, you can go some- the first time in a long while, the cities are where busiwhere else and protect the environment of the peo- ness has to go to find workers. As you know, business ple in the country where you are operating without is running out of workers. We need to go into urban the risk of the amount of litigation, design rules, pub- areas and, hire and train the unemployed and underlic demagoging, and other factors that businesses face employed. We need to change the economic wellin the United States, and still provide safe, high- being of these people, which by the way, will provide quality, environmental and worker protection. New more health care, a better standard of living, and a businesses can be established in developing coun- longer life. But what the EPA has said is, it will allow tries at a lot less cost, a lot less intrusion, and a lot anyone opposed to business in urban areas to use the less demagoging. Quite frankly, if I ran any one of Civil Rights Act to stop any economic growth in that those companies, I'd never build another facility in area, even if it's underway." At which point, if a business can't get its permits, it will have to fire all of its peothe United States; I'd move them all off-shore. People say, "That's awful! That's scary! We're go- ple—and move someplace else. ing to go on and poison people overseas!" Not true. Now, the government has to decide. Is its objecAmerican companies will provide greater environ- tive to get rid of the brownfields? To create enterprise mental protection in foreign countries than the cit- zones? To employ more people? To establish a higher izens of those countries are getting from their present and a safer standard of living? To remove crime and submanufacturers. American companies will set an ex- stitute economic development for it, which is a highly
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desirable objective? Or, does the government want to empower, without ever passing a law, die EPA to use an existing law with a totally different intention and stop all of those economic benefits in the inner city? Somebody has to ask, "What the hell is going on here?"
the Protocol? What is even more frustrating is that when U.S. companies locate in developing countries, they will be free of the restrictions that would be placed on them in their home country. These companies will then build new facilities using the best technology and will significantly improve the environment of the host naIt's likely that the U.S. Senate will not ratify the Kyoto tion. These companies will do this in the most effiProtocol any time soon. However, if ratification oc- cient way possible. Why could not the present curs, how will the treaty impact the ability of U.S. Administration allow the same thing to happen in this nation? If it did, it would see even greater technologbusinesses to conduct their operations in the gloical development and environmental improvement. bal marketplace? First of all, the Senate will not vote for it. Why would they vote for a treaty that 130 nations are excluded from, including China, India, and the other developing countries that will produce the majority of the greenhouse gases in the future? Why would they vote for a treaty whose Draconian agreements would seriously impede the economic progress of this country and add hundreds of billions of dollars to the cost of cleaning the air without, by the way, necessarily making any serious impact on reducing greenhouse gases? Why would they agree to a treaty that benefits 130 other countries around the world and says to American industry, "Why don't you go move there?" The Senate is not going to approve something as unworkable as the Kyoto Protocol. Moreover, the structure of the Protocol makes it impossible to amend. For example, to amend the protocol, three-fourths of the participating countries must agree. But three-fourths of the participating countries—these are the developing countries—are exempt from the protocol. Why would they ever agree when they have already negotiated a favorable treaty that requires others to make the sacrifices while they get all the benefits? But the real problem is that the harmful impacts of the Protocol on the United States doesn't bother the EPA and the Administration. The Administration is implementing the Kyoto Protocol de facto, not de juris. They're implementing parts of it through executive action without even having a rulemaking. And, by the way, their basic philosophy, which they've articulated, is, "If we can't get it all at once, we'll get it one piece at a time." Now, I think there are probably some pretty good ideas in the discussions about climate change. As a nation, and as businesses that compete worldwide, we need to find ways to reduce carbon and hydrocarbons going into the atmosphere. But American business is advancing environmental improvements every day. We are constantly improving the technology we use. We have made tremendous progress in the last two decades. Every environmental indicator is showing significant improvement. So there are some objectives in the Protocol that we should strive to achieve, but we ought to achieve them in a cost-effective way and with full recognition that the United States has been the technological leader for the last five decades, and most of the improvements are attributable to our innovation. But why do we want to set up two classes of nations: a few developed countries that are going to make all of the sacrifices and incur all of the costs, while exempting three-fourths of the world from the terms of
You said you had some comments about diesel engines. Would you care to get back to that? Sure. I have some knowledge about diesel engines because I spent 13 years with die American Trucking Association as president and CEO. There are probably 4 million trucks with diesel engines on die road. The diesel engine is also used in trains, power generation for hospitals, ships, die large vehicles that pull planes at airports and many other types of uses requiring the application of a powerful motor. Over the last 15 years the diesel engine has improved dramatically, not only in terms of performance, but also the emissions generated by the engine have been reduced by well over 50%. All of this progress in die environmental field was made through an effort between the industry and die EPA. As part of this effort, EPA praised the industry for its progress. Then in December 1997, EPA decided it did not like die tests the industry was using because the results differed between the simulated tests and the road tests. Well anyone could have told EPA simulated results and real-world results would be different. But the important fact is that EPA knew for 15 years exactly what was going on, and they kept applauding the industry. They applauded for new diesel fuel; they applauded for electronic engines; they're applauded for ceramic interiors in the engines. They knew exactiy how the measurement system was going. They'd written about it, and then what did they do? In their effort to collect more money and make themselves look good, they decided to destroy the diesel engine industry— they and the Justice Department. At one point, EPA was going to deny companies the ability to manufacture any more engines unless the companies agreed to pay some huge tribute [penalty] to the agency, an amount in the billions of dollars. I would have dared them to do it. The next day we would have a damn-near new EPA because nothing in this country would move—nothing, nada. EPA finally entered into a deal with the companies in which the companies agreed to pay the agency 1 billion dollars, most of which is to go into research, which is what they are going to spend anyway. But it was the most intellectually dishonest exercise that I have seen since I came to the Chamber. EPA and the Department of Justice ought to be ashamed of themselves. EPA and the Administration have to stop attacking American industry in this manner. All of the nations of the world would love to have our industry. We must constantly remember that it is only because of our industry that we have the wealth to protect our environment. Moreover, the best environAPRIL 1, 1999 / ENVIRONMENTAL SCIENCE & TECHNOLOGY / NEWS • 1 5 7 A
mental protection in the world is a good job which allows a family the ability to have a home, food on the table, schools for their kids, and the ability to get medical care. EPA has to realize that the one thing that works in this nation is business, and it is business that allows us to have all of the other benefits. EPA needs to put its zeal for a pristine environment into perspective before it screws up the nation. The Chamber has indicated a need for greater flexibility in complying with regulatory standards, the Clean Air Act, for example. How could flexibility and simplification of regulatory standards be achieved, and what would you see as benefits? Well, this is really very simple: State the objective. These are standards based on the objective. To what level—assuming that it's reasonable—do you want to clean the air, the water, or the land? Then take all of the paperwork and reports and all of the process and design standards that you have to do it and set them aside and say, "You will reach this objective, which we agreed to, in two years.".. .Or four years. And then let the people that run the companies, create the technology to achieve the objective. And if the companies do not achieve the objective, then they're out of compliance. Why should we continue a regulatory system that requires compliance with details rather than enhancing environmental protection? Why should we continue with a system that increases costs of compliance while discouraging innovation? Regulators must be made to state their objectives. Once stated, it becomes much more difficult to hide the real objective, to penalize business, to use regulation for other societal and political aims. What we're saying is that the federal regulatory process ought not to be a paperwork morass; it ought not to be a process that allows everybody to sue everybody. The federal regulatory process should be a very simple deal. Agencies ought to state: "Here's what we want to get done. Help us do it." Why does it have to be adversarial? Why does it have to be "Got'cha!"? Why does it have to be a lifetime living for lawyers? Look at Superfund. We have spent billions of dollars on Superfund, and we have cleaned up hardly any sites. We're spending all of our time suing each other. You have no idea how this is slowing down the American economy. If we could clean the air, the water, and the land—and by the way, I accept that it ought to be done—based on clear national objectives, not on bureaucratic design standards and mandated compliance with details, we'd free up billions of dollars in the economy of this country for other needy issues, such as children's health, job training and medical care for the working poor. Your membership includes a wide spectrum of businesses with regard to the size of their operations. There are large, multinational organizations on the one hand, and small- and medium-sized business enterprises at the other end of the spectrum. In addressing the environmental issues that are of concern to your members, is the size of business operations an important factor to consider? 1 5 8 A • APRIL 1, 1999 / ENVIRONMENTAL SCIENCE & TECHNOLOGY / NEWS
Well, there are a number of factors. Big companies are always targeted by EPA because they have more activity, are more visible, have more money, and therefore, are more susceptible to political pressure. And I think they've done a phenomenal job in developing new technology for implementing environmental requirements. These companies are going to do a lot more. Remember, we're going to spend a trillion-and-a-half dollars in the next 20 years, and probably more. Now, smaller companies... there are two things. First of all, the government doesn't generally beat too much on smaller companies because it doesn't play very well in Congress. But many of the regulatory demands, in terms of everything from printer ink, to what kind of emissions can come out of your heating system, to what kind of ventilation and how many bathrooms are required in their facilities, put a tremendous burden on small companies. There's no environmental officer in a small company; it's the president—the guy that owns it. I asked the members of Congress to spend two days out of the year working in a small business doing one thing: complying with federal paperwork regulations. Not a lot of them have done it, but if they did, they'd be all over the place trying to reduce paperwork burdens. They couldn'tfillit [paperwork] out; nobody is smart enough. Have you ever seen some of those forms? You ought to go get them all. When you do this article, you ought tofigureout how many forms a small business gets in a year, stack it up, and take a picture of it. One more question, ifyou don't mind. In your view, how can the transaction costs of cleaning up abandoned hazardous waste sites be lowered? Superfund sites? Get rid of the lawyers. I'll bet you 85% of the money that has been spent in almost 20 years, has gone to lawyers and consultants, and 15% on cleanup. If we took all of the billions of dollars spent on transaction costs, we'd have cleaned up most of the sites. The second thing is, there are some sites we ought not to clean up. There are better ways that science has proven that you canfixthem. For instance, you can pave them over because nothing's going to happen to the stuff underneath—it's not going to go in the water. Put the money into cleanup instead of having everybody running around and hiring dozens and dozens of lawyers to fight over the allocation of liability among companies [that] did not have any control over the management of the site in question. Finally, Superfund is the prime example of a federal statute that is more interested in punishing business than it is in cleaning up contaminated sites. Superfund imposes joint and several liability, and this liability is imposed retroactively, that is, from the beginning of time. Since most of the bad actors are outof-business, the liability is being imposed on businesses that had little to do with causing the harm. Superfund is just another attack on business. If the nation really wanted to clean up contaminated sites, the government should only be going after the entities that caused the problems and the focus should be on cleanup, not the punishment of business generally. Going after everyone that did business at the site is merely a punitive action.
