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Executive Update: Environmental
Rules Still Costing Business, Despite Clinton, Claims Ted Bunker. President
Clinton recently attacked a GOP drive to curb the EPA, but he founded
his criticisms on some shaky ground.
08/14/1995
Investor's Business
Daily
Page A4
Mandates
& Measures
"The House voted
to gut environmental and public health protections," he said, calling
it "a brazen display of the power of these special interest groups." And
he pledged a veto, should it reach his desk.
Plus, he challenged
those who say "crazy federal regulators" are harming the economy.
"The problem is,
there is no evidence that environmental protection has hurt our economy
at all - none," Clinton said at an event in Baltimore last week.
But what about the
cost of paying someone to fill out disclosure forms, asks Harvey Alter,
a chemist with the U.S. Chamber of Commerce. He figures it can take a
small manufacturer upwards of 300 working hours a year to do that.
Maybe Clinton should
talk to Dale Jorgenson. The Harvard University economist estimates that
at present rates of growth, and without changes in current rules, environmental
regulations will cost the economy $210 billion a year by 2005.
Beaucoup Bucks?
"That's the size
of the federal deficit," Jorgenson said. "We're talking about beaucoup
costs here."
In effect, Jorgenson
says, environmental rules will move about 3% of the economy's output from
productive uses to nonproductive ones. The Environmental Protection Agency
itself has estimated the current cost of anti-pollution rules runs about
2% of the gross domestic product.
"Environmental regulation
in this country is basically a success story," Jorgenson said. But he
adds the big question is whether it has cost too much.
George Makrauer ,
president and chief executive of Amko Plastics Inc. in Cincinnati, Ohio,
knows something about the costs of success. Makrauer has won state awards
for the way he runs his manufacturing and printing firm.
The 224,000 square-foot
plant, with 340 employees making plastic packaging, produces no hazardous
wastes at all, Makrauer says. But he still has to devote at least one
day of staff time each month to fill out waste emissions report forms.
Why? In case he opts
to change materials or a process, he keeps a permit in hand. That way,
he won't have to go through the time-consuming process of obtaining a
permit.
Why is he concerned
about delays? Not many years ago, Makrauer recalls, he tried to change
a printing process that produced 450,000 lbs of hazardous sludge.
Red Tape
"We identified a
new water treatment technology that would allow us to treat that waste
in-house to make it nonhazardous," Makrauer said. "It took us nine months
to get that system permitted because of bureaucratic delay and uncertainty."
In that nine months,
Amko generated another 340,000 pounds of hazardous waste.
"The real achievements
in pollution prevention have come from industry," Makrauer said. "They
have not come from the environmental organizations. They have not come
from regulatory screamers."
Makrauer says red
tape is driving manufacturers offshore. And that means lost investment
and lost jobs.
But Clinton claims
the EPA is reducing red tape. And he's touted his mandate to enforcers
to focus on solutions, not fines.
"You get nice soothing
sounds on top, but out in the trenches, nothing is changing," said Jim
Weidman of the National Federation of Independent Businesses. "Our members
live out in the trenches, not in D.C."
Manufacturers like
Makrauer see the need for environmental rules, to give business an incentive
to change. But they don't understand the government's adversarial, politicized
approach. And they say that hasn't changed.
How bad does it get?
Ask Kelly Hearstad, owner of United Truck Body Inc. in Duluth, Minn.
He made the mistake
of buying recycled oil from the Arrowhead Refinery, less than a mile away.
And he compounded his error by selling Arrowhead some trucks.
Arrowhead took waste
motor oil from gas stations and others, blended it with clay and then
squeezed out the oil. That left all the heavy metals embedded in the clay,
which Hearstad says piled up on Arrowhead's lot.
Arrowhead became
a Superfund hazardous waste clean-up site. Soon, Hearstad says the EPA
and state officials cast a wide net, snaring 1,800 firms that dealt with
Arrowhead.
"At no time did we
ever give them a drop of drain oil," Hearstad said. But that didn't matter.
Cost-Benefit Analysis
"They subpoenaed
all of my payables -forever - to show any transactions" with Arrowhead,
Hearstad said. If records had been destroyed, the enforcers wanted proof.
Nine years later
and $12,000 in legal fees lighter, Hearstad said he finally cleared his
firm. And only now is clean-up work starting.
"Nine years after
the first citing of it as a Superfund site," Hearstad said, "the first
shovelful is being processed just this year."
Harvard's Jorgenson
agrees with Makrauer and many members of Congress: What's needed are new
laws that force EPA staff to use cost-benefit analysis when crafting rules.
And Makrauer says
it would help to have a law that mandates EPA staff help firms find solutions
to pollution problems, not target them for fines or shut-downs.
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