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EPA's relationship with industry
[November 8, 1993]
Q: We're down to talking about industry. What goals did you want to achieve in dealing with industry? How did you balance the need to get industry's support and cooperation with the need to enforce the laws? And generally, how would you characterize EPA's relationship with industry during your tenure?
MR. REILLY: I had the sense going into EPA that the relationship with industry had been episodic and at times less productive than it could have been. It seemed to me that the better, more sophisticated industry leaders understood that the nation's environmental commitments were here to stay, that the support for the environment had stayed high in the polls, that even through the recessions of the '70s and early '80s there had been no roll-back in air and water law. Moreover, I thought that business leaders' calls for less bureaucracy, more efficiency in permitting, more predictability in administration of environmental laws on the part of EPA, were reasonable.
I immediately found myself, in dealing with the Alar controversy, faced with the asymmetry between the chemical industry - the manufacturer of Alar - and the agricultural industry - the farmers and growers of apples who were people really hurt by that scare. I tried to get voluntary cooperation, finally succeeded, from the manufacturer, though EPA didn't have sufficient statutory authority to compel it.
I think my next encounter with industry was over the Exxon Valdez issue where we dealt with Exxon, which substantively did very well, in my view, in responding to the cleanup, once you got beyond recognizing that, inexcusably, no one was prepared for it. In public relations terms, however, I think Exxon lost the war. Their Chief Executive Officer (CEO) was so aggressive and conveyed such an odd sense of victimization on television and publicly that it set the company back more than it might have.
I did learn from those experiences and tried to be careful, particularly in crafting the Clean Air Act, to consult with industry and did so with the oil, auto, and chemical industries particularly. Those relationships had their ups and downs. I think the chemical industry relationships were largely quite good in my tenure at EPA. I viewed them as having become quite progressive. Even some of the companies that had been laggards in the '70s, like Dow, became leaders in the late '80s and early '90s. I dealt extensively with Dupont on the elimination of chlorofluorocarbons, of which they were the largest manufacturer.
I had good relations with some of the oil company leaders. In fact, I supported development of a project to review the Amoco refinery at Yorktown to test the long-standing arguments of engineers that more environmental quality could be achieved by paying less attention to specific emissions and effluents and more attention to total plant impact on the environment. The project proved that hypothesis correct. That project had some rocky moments. EPA's Philadelphia enforcement people, with exquisitely poor timing, went after Amoco and slapped a big fine on their Yorktown refinery. I had to recuse myself from anything affecting the decisions on enforcement and call up Amoco CEO Larry Fuller and ask him to keep Amoco engaged. That was not easy to do, the $500,000 fine enraged Amoco people as bad faith, but Fuller responded to me and we kept the project on track.
I can recall dealing with various of the industry groups, which I made a point of talking to regularly right from the beginning. I had them in along with everybody else. I talked to trade associations, talked to the electric power people about the acid rain provisions of the Clean Air Act, which were very upsetting to them. I dealt, of course, throughout my term, with the coalition that industry had put together on climate issues. I think, given the nature of the history and the inherent adversarial character of a regulator dealing with regulated entities, we had a reasonably good relationship.
I suppose the auto industry probably would not consider that I was as responsive to some of their concerns as I might have been. The industry, I thought, in various ways failed to perceive and act on its own interests. It left too much to its Congressional spokespeople in Washington. But, by and large, I think the Clean Air Act worked well for the auto industry. It was the first such Act that had ever focused on fuels and that asked as much of the fuel suppliers and manufacturers as it did of the automobile engine makers. The auto manufacturers should appreciate that our new emphasis on fuels was an acknowledgement that they had already cleaned up their cars to the point where new 1990 cars were about 96 percent cleaner than they had been 20 years ago. With our Clean Air Act, we moved that another 2 percentage points up but looked to changes in the composition of fuels to achieve additional pollution reductions.
Pulp and paper, which had a bad enforcement history, was very constructive, in my view, in dealing with the dioxin issue in terms of researching the question jointly with EPA, and in terms of getting dioxin releases way, way down, about 90 percent in our time.
I believed very strongly that because of the leadership that was in industry and the sense that environment was a concern and real commitment, an enduring concern of the American people, that we could craft a different kind of program in response to that. It would draw out the energies and creativity of industry to help solve problems, rather than just simply have them fight us. And so, I proposed the Volunteer Programs, 33/50 to reduce toxic emissions - 17 toxics by 33 percent by 1992 and 50 percent by '95. The response to that was enthusiastic. Companies chose the means and achieved the first goal a year early, eliminating 33 percent of these critical toxics by 1991. I'm sure they will do better than 50 percent by 1995. Companies routinely took credit for that in their Annual Reports, they wrote me letters proudly touting their achievements, they emphasized them with their workers and stockholders and others. In every way, the participating companies demonstrated a capacity to go beyond the law. That is admirable.
In the process, they learned some things technologically, which helped them save money, make money, reduce pollution, and allowed EPA, then, to understand more about possibilities of solving problems cooperatively. In fact, a not very widely understood purpose of the 33/50 program was to educate the EPA workforce that at the same time and without compromising either your regulatory responsibilities or your enforcement responsibilities, you can work cooperatively with people who, most of them, have the same objectives you do. And you can learn from them. Incidentally, no conceivable regulation would have allowed me to obtain elimination of a third of the worst toxic emissions - 400 million pounds - in little more than a year.
The other programs, the Energy Star Computers Program, which awards recognition to computer companies which reduce by about 50 percent their energy needs; Environmental Leadership Program; Design for Leadership Program, which builds on 33/50 to craft a new relationship with companies that have demonstrated they deserve it, also saving on oversight on the part of EPA; the Green Lights Program that gets commitments to reduce energy use very substantially without any loss in quality using new lighting technologies; the Safer Pesticides Initiative that puts applications for non-toxic pesticides at the front of the line for registration - all of those were part really of a new generation of environmental policies and, I think, a new direction that the country badly needed.
The United States has a distinctly adversarial concept of environmental protection. It is, in my view, excessively adversarial. It has been wasteful of time and money. We have it in everything from rule makings to cleanup. I wanted to change that and I hope that I laid the foundation to do that. The regulatory negotiations proved very popular, the ones that we did with industry, and that represents a new mode of determining what a regulation should be. We did one on fuels and we did one on ethanol - unfortunately had to repudiate that in the heat of the 1992 electoral season. Those negotiations were constructive and were welcomed by all the parties with one possible exception, the Office of Management and Budget, which has never liked them. It's unfortunate that that is true, but OMB believed, and probably still believes, that a regulatory negotiation, to the extent that it unites all of the participants around a single regulation, dilutes the single OMB representative and prevents OMB from having another bite of the apple, which it likes to have when it reviews regulations. I think that is very short-sighted and turf-conscious, but it happens to be the OMB attitude toward consensual regulatory development.
I think regulatory negotiations are extremely productive at getting a result that works for everybody-where people don't hold back their best ideas so they can litigate them later; where you have a regulation promulgated that will, in fact, be the regulation, is not contested or litigated, permitting the regulated sector to invest on the basis of it. We don't typically get that. Four out of five regulations signed by an EPA Administrator are contested in court; regulatory negotiations are not. That points to a different kind of relationship. It points to the kind that we need and the kind that I think we demonstrated is possible. So, I feel quite good about the relationship finally that we built with industry. I simply hope that it endures.