Is Change in the Air?
- Published: April 01, 2001, By John Watson Attorney-at-Law, Gardner, Carton & Douglas
With the post-election rancor clearly behind us, now it is time to contemplate what promise, problems, or other prospects await the converting industry over the next four years under the new Bush Administration.
On the topic of the environment, the task of predicting future direction and priorities and the corresponding impacts on this or any industry is no simple undertaking. President Bush's campaign rhetoric failed to offer any concrete guidance on his environmental priorities and implementation plans. To further confound us, the President's newly appointed Environmental Protection Agency administrator, Christine Todd Whitman, while not unfamiliar with environmental issues as the former governor of the environmentally challenged state of New Jersey, is by no means a seasoned environmental professional with an easily discernible track record.
Notwithstanding the hazy skies and murky waters clouding our view of the new environmental regulatory landscape, there are some general trends developing that will likely have lasting implications for the converting industry.
Only time will tell how these generalities will evolve and what specific policies and programs will emerge and define the environmental record of the Bush Administration.
Favoring Assistance Over Enforcement
One of the consistent themes of President Bush's campaigning on the environment has been the need to balance the demands of economic growth with the lofty goals of environmental protection. The result of this kind of talk from politicians usually leads to policies and initiatives aimed at achieving greater regulatory flexibility for affected industries and an increased focus on compliance assistance over active enforcement. This clearly seems to be the direction the Bush Administration is moving.
One of the big organizational issues being bandied about in the early days of Whitman's regime is whether the EPA will disband its Office of Enforcement and Compliance Assurance (OECA) created by the outgoing administrator Carol Browner. Doing away with OECA would allow the agency to return its enforcement authority to the various program offices.
The corresponding logic here is that the elimination of the office whose charge is enforcement would de-emphasize litigation as the most viable compliance tool and allow the programs to come up with creative compliance assistance alternatives for the regulated community.
In her nomination hearings, Whitman wholly endorsed this policy of encouraging compliance through flexible programs and compliance assistance efforts. In her remarks to Congress, she espoused that EPA “should try to get good voluntary compliance” and work cooperatively with industry to solve problems, as such programs will help them “clean up faster and better than the threat of a fine or penalty.”
In explaining how to accomplish these goals, Whitman pointed to market-based incentive programs and New Jersey's facility-wide permitting programs as innovative environmental initiatives that could be utilized more effectively to achieve better environmental results.
Regardless of whether EPA reorganizes itself and drops OECA, it is fair to say that one of the priorities of the Bush Administration will be to look for effective alternatives to enforcement. For many in the flexible packaging industry, this will come as welcome relief from rigid rules and overzealous regulators that remain an all too common occurrence at EPA.
How far EPA will move in this direction remains to be seen. It is a safe bet, though, that much time and effort will be expended to refine compliance assurance programs, such as EPA's Common Sense Initiative, to make these programs more user-friendly and more accessible to industry.
More Power to the States
Consistent with President Bush's political leanings, one can expect a noticeable power shift in the next four years from the once almighty EPA to the states on matters affecting the environment.
While the states have sometimes grumbled about the intrusive tendencies of EPA, historically they have conceded that the 900-lb EPA gorilla was nonetheless a valuable asset when enforcement became necessary. That view was shared by all states except one — the home state of our new President.
To give you some sense of how little regard Texas historically has had for EPA meddling in its environmental enforcement efforts, Texas remains the only state in the country to have gone on record supporting recent legal action seeking to challenge EPA's authority to file suits against offending companies where the agency determines state action to be inadequate.
This perspective seems to have followed President Bush to the White House and will likely define how EPA will interact with the states in coming years.
Importantly, this view of the proper relationship between EPA and the states also is shared and will be supported by Administrator Whitman enthusiastically. In her confirmation hearings, Ms. Whitman made it very clear that the states should be left alone to resolve their own problems. Whitman remarked that EPA will “let the states come up with programs for their own industries…we need to provide flexibility for our states.”
This ideological shift will have very concrete implications for regulated industries across the country. Certainly, compliance with state environmental rules and the resolution of local enforcement issues with local regulators will take on increased importance.
More emphasis also will need to be placed on innovation at the state level to maximize the results of compliance assistance endeavors. It is important, then, that converters develop close working relationships with their state regulators and ensure that compliance issues are resolved at the state level. Less of a concern will need to be focused on whether Big Brother — EPA — is satisfied, since one can expect intervention in state compliance issues only in rare and egregious cases.
While the direction and details are fuzzy, one certainty for the flexible packaging industry is that air pollution control, as it has in the past, will continue to be the industry's principle environmental challenge under the new Bush Administration.
As governor of an eastern state ravaged by air pollution problems from midwestern power plants, Whitman is acutely aware of the need for tight regulatory controls on air emissions. And while many in the environmental community are quick to criticize former Governor Whitman's poor enforcement record in New Jersey, most are willing to acknowledge the state's admirable record on strict air regulations, including the fact that New Jersey is the only state in the country to have committed formally to reducing emissions of greenhouse gases.
Flex-Pack Industry Airs Concerns
The importance to the packaging industry of controlling air emissions cannot be overstated. The agenda at the Flexible Packaging Assn.'s annual Environmental Summit held earlier this year was dominated by presentations highlighting significant air issues.
On the enforcement front, the primary concern for converters seems to focus on whether manufacturing operations over time have resulted in increased emissions of air contaminants, thus requiring greater emission controls. Enforcing these New Source Review (NSR) regulations under the Clean Air Act has been a priority for EPA in the past several years and has led to numerous recent multimillion-dollar settlements with industry.
Thankfully, most of these enforcement efforts have been confined to the utility, refinery, and pulp and paper industries and have yet to hit the converting industry in a significant way. However, as flexible packagers explored at length at the FPA's Environmental Summit, EPA's expansive interpretation of the NSR rules makes every industry vulnerable to enforcement.
While the NSR rules are riddled with problematic provisions, the real cause for concern is the way in which normal manufacturing “routine maintenance, repair, and replacement” activities might be viewed by EPA as constituting a physical or operational change in the production process sufficient to trigger the stricter NSR regulations.
Winding one's way through the complex maze of NSR regulations and EPA interpretations continues to be a task fraught with peril. Converters, however, need to be sensitized to these important NSR issues as they are likely to stay firmly planted on EPA's enforcement radar screen under President Bush's new regime.
The other significant air issue that was discussed at length at the recent FPA meeting was the latest round of proposed National Emission Standards for Hazardous Air Pollutants (NESHAP) affecting the converting industry.
Back in 1996 the NESHAPs for the printing industry were adopted and required significant action and expenditures on the part of the packaging industry to ratchet down air emissions. In September of last year, similar rules were proposed for paper and other web coating facilities. The intent of these proposed rules is to reduce emissions of hazardous air pollutants by more than 80% over time.
The NESHAPs for these coating operations are expected to be finalized this year and will impose new regulatory burdens on the industry. While the new EPA administration apparently is taking another look at these rules, little change is anticipated.
Converters will need to follow these developing rules closely to ensure that operations are being conducted in compliance with these new standards.
All sides in the environmental debate seem to be content to sit back and wait for EPA's next move on advancing a more concrete agenda for the Bush Administration. Criticism of President Bush's choice of Ms. Whitman to lead EPA was fairly muted, with the nomination ultimately gaining approval from both industry and environmental groups.
Before we can see clearly what opportunities or obstacles lie ahead for converters under our new President, we will have to wait for the clouds to pass.
Contributing editor John Watson, a partner with Chicago-based Gardner, Carton & Douglas, regularly provides PFFC with feature articles that focus on legislative and regulatory issues within the converting environmental area.
