ti Incentives

0 n Prevention: and Irrationalities Michael H. Levin

Nixon, Hargrave, Devans & Doyle Washington, D.C.

Widespread pollution prevention will turn on creative use of incentives, since prevention means decentralized changes in raw materials, products, production processes and disposal practices-in short, new ways of doing business-that are difficult to achieve through information transfer or regulatory mandates alone. But past experierice with incentives and the context in which these approaches are used will shape both regulators’ attitudes and industry willingness to respond. Thus the choice of incentive mechanism(s1 may well determine the extent to which “prevention’) is implemented-as well as the extent to which implementa- tion yields environmentally-sound rather than perverse results. Approaches now being debated could produce such perverse effects by treating recyclables as pollution and assuming all reductions towards zero are equally desirable, regard- less of net risks reduced or costs incurred by waste generators. Another alterna- tive-tradeable permits progressively reducing the amount of waste received by disposal facilities-could help agencies think through such consequences, force needed decisions on how much “prevention” of which “pollution” is appropriate, and encourage investment to reduce commercial as well as municipal waste. This alternative implies that the criteria for “appropriate prevention” are reduction in waste needing disposal and in overall environmental impact; that recycling should be equated with source reduction in waste management hierarchies, not placed on a lower rung; and that Air Toxics provisions of the pending Clean Air Act may require some adjustments if prevention is not to be aborted by the threat that voluntary reduction steps will become national requirements, for existing sources as well as new ones.

With surprising speed “waste minimi- zation” (WM) has become “pollution prevention”-a term which has been forcefully incorporated in bills to make the Environmental Protection Agency (EPA) a Cabinet department,’ and im- plies reduction of residuals throughout the production cycle, not just at dispos- al. The term tends to confuse means and ends, since it implies that contin- ued reduction is good per se. But the goal must be defined reductions in risk or environmental impact. Reducing to zero is not an end in itself in a world of limited resources; if the goal cannot be stated or little reduction in risk or im- pact would result, there is no apparent justification to “prevent.” The term can also be counterproductive where- as in EPA’s draft Pollution Prevention Bill-it treats recyclables as pollution

September 1990 Volume 40, No. 9

subject to taxes or other sanctions be- cause they are not reduced a t the source. Finally, the term implies new tensions between regulatory means, since prevention entails changes in be- havior and debate is already rising over the best mechanisms-pollution fees, marketable permits, or the negative in- centives of command-and-control reg- ulation-to effect such change.

Regardless of whether prevention means more than a shift away from end-of-pipe controls to avoid interme- dia transfers and diminishing regula- tory returns-and regardless of wheth- er it applies just to hazardous waste, to solid waste, or to air and water pollu- tion as well-it envisions unprecedent- ed changes in feedstocks, products, production processes, and disposal practices. These changes will collide

with the inherent limits of traditional regulation, requiring use of incentives for their successful implementation.

This article first suggests why use of incentive approaches for pollution pre- vention will be incremental in practice, even where rules appear to be written on a clean slate. It then traces this country’s considerable use of such ap- proaches to transcend traditional regu- latory limits-experience which will shape future applications because it powerfully informs both regulators’ thinking and the willingness of indus- try to use incentive-based routes. Fi- nally, the article distills some princi- ples for implementing pollution pre- vention as that concept moves towards a reality whose full outlines are diffi- cult to foresee. Copyright 19QO-Air & Waste Management Association

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incentives as Supplements

Incentive or market-based ap- proaches will likely be used as supple- ments to current regulatory systems, not as alternatives or replacements. First, for most pollution, this country is not writing on a clean slate. Detailed regulatory systems mandated and closely monitored by Congress already exist, and the power of the familiar cannot be overstressed. Neither indus- try, states, environmental groups, nor the public is prepared to scrap those systems for uncertain and potentially disruptive alternatives. However im- perfect, they will stick with the devil they know.

Second, existing regimes are savage competitors against innovative alter- natives. Regulatory systems are like natural ones-they have evolved to stable equilibria, and resist attempts to push them in different directions. Less often noted are the reasons for such competition, which range from assert- ed ease of enforcement (“is the re- quired equipment installed?”) to fears that government jobs will be trans- formed. The most powerful of these reasons is the fact that the traditional approach has produced large environ- mental gains, for costs that have mostly been hidden.2 Any alternative which seems to erode such gains in the name of efficiency will be rejected. Incentives must first be justified on environmen- tal grounds-as ways to preserve or ex- tend these gains. Only a hybrid system, in which incentives supplement direct regulation by addressing specific, ac- knowledged shortfalls in securing fur- ther progress, is likely to do that.

Third, one trend on Capitol Hill has moved strongly in the opposite direc- tion-toward more detailed mandates which seek to limit both agency discre- tion and industry compliance flexibili- ty. The paradigm is perhaps the 1984 amendments to RCRA, which progres- sively banned all spent solvents and other wastes listed or characterized as hazardous from disposal even in prop- erly-permitted double-lined landfills, unless EPA promptly issued national technology-based standards requiring pretreatment to “best demonstrated technology” (BDAT) levels for each specific waste disposed in such facili- ties. When EPA defined BDAT to avoid control of risks the Agency be- lieved trivial, that effort was quashed by Congress. Even Conference-bound Clean Air bills which incorporate sweeping incentive mechanisms fea- ture stringent reductions and bristling commands-a connection which is not accidental.

Fourth, much congressional effort has been spent buffering the effects of environmental policy-in assuring there are not too many big losers too

80011.~ Yet pure incentives approaches are intended to produce large groups of winners and losers very rapidly-by efficiently “internalizing pollution costs” or “making polluters pay.” Moreover, as acid rain debates demon- strate, many of these losers are likely to be clustered in the same Congressional districts. Thus, the “pure” approach does not stand much political chance.

Finally, past experience with incen- tive approaches will critically shape both future attempts to employ incen- tives and industry’s response. For ex- ample, constraints that make it diffi- cult to use emissions trades for compli- ance with current smog rules will discourage future investment in sur- plus SO:, reductions for acid rain. In- dustry perceptions that innovative re- duction methods may become immedi- a te national requirements under MACT rules for toxic emissions or an- nual-reduction requirements for smog precursors-or that state utility com- misions will treat sales of surplus re- ductions as “imprudent”-will dis- courage use of market approaches for better control of emissions from con-. sumer products, cars and fuels. Even for pollution prevention a clean slate may be hard to find: beyond current incentives to reduce created by Super- fund or tort liability, explicit incentives for process or product reformulation to escape or mitigate the Air Toxics Titles of pending Clean Air bills mean that “prevention” has already arrived.

Llmits of Traditional Regulation

The problem is no longer large un- controlled steel plants or utilities sus- ceptible to standard engineering solu- tions. The stresses of dealing with the remaining universe, combined with budget shortfalls, trade deficits, and concerns over international competi- tion, have brought regulators face to face with the structural constraints on direct regulation: e poor agency information about

further feasible ways to control the thousands of diverse, changing prcducts and processes that con- tribute most remaining pollution; soaring control costs, estimated by EPA to have exceeded a half-tril- lion dollars since Earth Day 1970 and now run $80 billion per year, not counting state laws, record- keeping and reporting expenses (e.g., for SARA Title 111) or oppor- tunity costs; slow government response to new knowledge and rapidly-changing industrial circumstances through centralized rules tailored to indi- vidual processes or chemicals. Such rules require volumes of feasibility data, take years to complete, and

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often freeze past control technol- ogies in place rather than stimulat- ing new ones; declining real resources for agen- cies to address complex problems in an age of chronic budget deficits and expanding statutory man- dates; little motivation for regulated emitters to do or disclose more than the minimum required (or unregulated emitters to disclose anything), since disclosure offers no benefits while making them tar- gets for further regulation; and the “pollution problems of the 1990s”: filling stations, farms, com- muters and millions of other small dispersed soures of smog, runoff or groundwater contamination whose effective control often turns on lo- cal or site-specific factors, land use, or lifestyle changes; and regional or global problems caused either by hundreds of dispersed activities in- volving products rather than clas- sic pollution (stratospheric ozone depletion), or by large controlled sources whose further direct con- trol often means new ways of doing business and invokes vicious re- gional disputes (global warming or acid rain).

Such problems already dominate the environmental universe. They are not very amenable to centralized regula- tion or enforcement. Whether the in- centives are financial, informational or technical, only a shift from regulation toward incentives can begin to over- come them by better matching individ- ual private interests with environmen- tal goals.

Expanding Experience

In response, EPA and the Congress have embraced or begun seriously ex- ploring a broad range of incentive- based approaches. EPA’s Final Emis- sions Trading Policy (51 FR 43814; Dec. 4, 1986)-which set federal rules authorizing emitters to create, store (“bank”) and substitute inexpensive “extra” emission reductions for costly required ones-is merely one example. But because this “Bubble” policy was the first, has been thoroughly tested, and provides the base for broader ap- plications, practitioners should note that it: (1) has saved American indus- try nearly a billion dollars over the cost of uniform stack-by-stack controls, with equal or better environmental re- sults; (2) affords flexible compliance and environmental integrity through stringent safeguards against “non-sur- plus” reductions, adverse ambient ef- fects or incidental toxics increases; (3) provides needed safety valves allowing adjustment of national rules to site-

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! specific conditions; and (4) offers states ways to protect sources which bank or trade against loss of credits if further reductions to meet health stan- dards are required. Moreover, the cen- tral issue it resolves-how to construct an objective, predictable “baseline” which fairly measures “extra” reduc- tions without penalizing early ones or crediting those that “would have hap- pened anyway” through routine com- pliance or business decisions--’ IS cru- cial for any use of incentives. Such cer- tainty is essential where sources are asked both to invest in extra reduc- tions, and show they have made them.4

A short list of related initiatives might include:

EPA’s NSPS Compliance Bubble Policy (52 FR 29046; Aug. 4, 1987), which expressly authorizes emis- sions trades between different “new facilities” to meet technol- ogy-based New Source Perfor- mance Standards (NSPS), and de- fines “surplus” reductions from unbuilt sources as those greater than the expected actual emissions which stack-by-stack compliance would have produced. The first ap- proved NSPS bubble was estimat- ed to save a single utility station up to one-half billion dollars over the cost of conventional compliance during its 30-year life, with about 2000 tons per year additional re- ductions in $02. EPA ‘Wetting” Guidance (Feb. 27, 1987) giving states broad discretion to allow plantwide bubbles that en- courage modernization without cumbersome “new source review” (NSR). Past “netting” transactions may have saved a t least $5 billion over the costs of conventional NSR, without adverse air quality effects. See Hahn & Hester, “Marketable Permits: Theory and Practice,” Ecology Law Quarterly, Vol. 16 No. 2 (1989). EPA’s Stack Height Policy (53 F R 480; Jan. 7, 1988) authorizing utili- ties required to reduce SO2 emis- sions under tall stack rules to make such reductions through statewide bubbles based on total loadings, without ambient modelling con- straints. The final Policy selected the most flexible proposed options; opened the door to bubble credits from Least Emissions Dispatching (under which utilities direct more generation to lower-emitting rather than lower-cost facilities); and was estimated to save affected sources as much as 60 percent of compli- ance costs, with nearly 50,000 tons per year more reductions. Leadphasedown trading which ef- fectively implemented a nation- wide marketable permit system,

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based on ordinary business records, for refiners who reduced their aver- age lead content of leaded gasoline below a shrinking EPA limit. The approach yielded “lead reduction credits” which were sold or bought by most of the industry; acceler- ated a 90 percent reduction of lead in gasoline while avoiding risks to small refiners and gasoline sup- plies; and saved several hundred million dollars over the cost of uni- form compliance at each refinery. See, e.g., Hahn & Hester, above; 50 FR 13116 (April 2,1985).

CFC permits to reduce strato- spheric ozone depletion. U.N. pro- tocols mandating a freeze and 50 percent phasedown in 1986 levels of manufacture of these substances provide a continent-wide bubble for EEC countries and transboun- dary bubbles for others. GPA is im- plementing this f i t global regula- tory effort through a system of marketable phasedown permits for domestic CFC manufacturers and importers, allocated by historical production factors. Proposed sup- plementary fees to remove windfall profits have been superseded for these substances by Congress’ f i s t - ever environmental excise tax. See Levin & Elman, n. 4 below; 54 FR 6376 (Feb. 9, 1989). Claims that marketable permits make addi- tional reductions easier and less disruptive to achieve-ironically, advanced by both opponents and proponents-will be tested as the phasedown is tightened to a phase- out under pending protocol revi- sions and the new Clean Air Act.

e Mobile source trades. EPA has long allowed use of emission reduc- tion credits from mobile sources to meet stationary-source require- ments 51 FR a t 43834 (April 7, 1982). It has also authorized use of fleetwide bubbles to comply. with truck emission standards under the Clean Air Act, saving an estimated several hundred million dollars per year over the costs of engine-by- engine compliance. See 50 F R 10606 (March 15,1985). It recently approved use of interfleet, mui- tiyear trading among different en- gine makers to expand these ef- fects. 55 FR 30854 (July 26,1990). Risk bubbles. In 1986 the Conser- vation Foundation proposed au- thorizing EPA to approve up to 10 applications waiving compliance with traditional regulatory require- ments if applicants showed under specified criteria that significantly greater risk reduction would result from alternative actions. The ap- proach, meant to use existing rules as an engine for obtaining better

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knowledge and better risk reduc- tion, has effectively been included in EPA’s draft pollution preven- tion bill (March 15, 1990 draft, 9 203).5 The new Clean Air Act, which fea- tures use of a national trading/ banking/auction system of true marketable permits for SO2 credits to achieve a 10-million-ton annual reduction in acid rain precursors at roughly half the cost of plant-by- plant controls. The Act may also allow plantwide bubbles to meet new air toxics requirements, plus broad regional trades to meet man- dates for stationary-source smog reduction, clean cars and clean fu- els. It represents a quantum leap in Congressional and environmental- group acceptance of market ap- proaches (as well as in industry re- liance on them for flexible compli-. ance), and has already accelerated their use elsewhere.6

Recycling tickets. EPA’s 1986 Re- port to Congress on Waste Mini- mization suggested that if further controls on waste generation be- come needed, a route preferable to WM standards or bans on waste streams might be tradeable phase- down permits which let market forces determine the location and pace of individual reductions. Un- der a similar approach developed by EPA to address the millions of gallons per year of used engine oil that are dumped due to negative prices, virgin oil refiners would have needed tickets representing one gallon of properly recycled oil for every four new gallons pro- duced; tradeable tickets would have been generated by oil re- cyclers or rerefiners; and recycling could have yielded substantial re- turns from these tickets’ sale, pro- viding cash for recyclers to buy used oil.

This approach was meant to help finance recycling facilities by al- lowing them to generate a double revenue stream (from sales of tick- ets plus recycled oil). But it could also have endangered lube oil sup- plies if the recycling ratio was set too high or the recycling market could not promptly respond. Pend- ing House and Senate bills to estab- lish similar ticket systems seek to correct this problem by imposing on producers or importers of virgin oil, newsprint and tires an escalat- ing recycling mandate (rather than a production constraint), which can be met either by self-recycling or purchase of covering tickets from downstream recyclers. See, e.g., H.R. 3735, 0 208 (used oil); H.R. 3483 (newsprint); H.R. 4147 (scrap

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tires). The tire bill attempts to ad- dress the fact that scrap tires can- not be recycled into new virgin product, through a differential credit system aimed a t drawing scrap tires towards their highest- value secondary use.7

Like Superfund, but with mar- ket-based flexibility, these bills would make producers responsible for minimizing waste caused by their products. They provide sug- gestive models for aspects of pollu- tion prevention discussed below.

Tradeable “Pollution Prevention” Phasedown Permits: Another Route?

Information clearinghouses for fur- ther WM seem unlikely to provide in- centives to use that data beyond those already created by landfill bans, poten- tial Superfundhort liability, and rising tip fees.* Indeed, to the extent down- stream liabilities cannot be quantified to overcome internal company “hurdle rates” for returns on additional WM investment, such data may not be used a t all.

Two major models currently seek to accelerate pollution prevention by overcoming this barrier: proposals for (1) mandatory WM audits and reduc- tion plans, applicable to facilities that must file annual Toxics Release Inven- tory (TRI) reports under SARA Title I11 and enforceable by public disclo- sure; and (2) per-pound or differential fees, imposed either on facilities’ TRI inventories or on new materials ending as solid waste (e.g., plastic resins). There are arguments for both. But mandatory WM plans turn on com- panies’ good-faith execution of WM audits, could promote risky substitutes because they cover only a small seg- ment of the HW universe, and will gen- erate a flood of paperwork seldom re- viewed. Meaningful fees require de- tailed data on industry cost curves and total releases; could not be set high enough to affect behavior because new materials represent only a small part of most finished products; and imply re- ductions to zero regardless of risk or location. Moreover, even a small fee imposed on the last slice of allowable pollution-meant to move those as- sessed in desirable directions and get company management involved- ducks the issue of how much reduction is enough. And fees of any size could undermine valuable behavior if, for ex- ample, materials being recycled are also taxed, or if waste needed for recy- cling facilities in which new industries have invested shrinks to the vanishing point. Thus, while fees appear to pro- vide agencies more flexibility, and in- dustry more compliance freedom as well as reduced transaction costs, there are problems with fees too.s

Tradeable phasedown permits for solid or HW generators based on his- torical waste generation could over- come many of these problems, link means with ends, and force decisions on how much prevention is appropri- ate. What follows deals with SW, where the general goal is simply reduction in volume. But the same implementation issues apply to HW, since “toxic hot- spot” concerns are reduced by the fact that all HW generated remains subject to RCRA Subtit le C management rules.1° Those issues include who to permit; how to measure creditable re- ductions; whether and how to use “trade ratios” to encourage reduction of riskier substances; how to minimize such perverse effects as use of riskier nonpermitted substitutes; and how to construct safety valves that will allow the permit system to be expanded or tightened without penalizing those who have already participated. Past experience suggests answers.

Suppose EPA, instead of mandating reductions by generators, were to issue tradeable permits requiring municipal/ private landfills to receive 2 percent less waste per year for the next 10 years, beyond pending mandates for 25 percent recycling. A city like Seattle which recycles 40 percent would get both assets to sell and a double revenue stream (from sale of credits plus ex- tended landfill capacity). A city like New York which bought those credits to cover excess landfilling would pay a double penalty, since it both exhausts capacity more rapidly and pays Seattle to do so. This approach would mirror the proposed credit system for used oil, with responsibility imposed on the “end-user” rather than the producer. It raises classic questions, not least of which is whether and how to credit landfills that shut down. But it could reward innovative SW management steps and provide funds for such mea- sures. Moreover, it would strengthen recycling and recognize that the test is reduction of overall environmental im- pacts, not source reduction or reduc- tion of waste per se. It also suggests one non-disruptive way to start dealing with industrial non-hazardous waste- an unmapped universe many times larger than America’s 180 million tons per year of municipal solid waste, and the next major regulatory target under RCRA Subtitle D.ll

In implementing such approaches, some do’s and don’t’s drawn from expe- rience should be kept in mind. The do’s include: (1) keep the approach small so bugs can be worked out, but address the ability to expand it up front (e.g., by incorporating “trade ratios” for dealing with incidental toxics). Note that “small” can refer either to the uni- verse of sources covered, the number of pollutants covered, or the initial size of

the reduction required; (2) keep it sim- p le and easy to use; (3) keep itpredict- able, so potential preventers feel com- fortable that they will not be penalized for their actions and can make rational investment decisions; (4) get it out o n the street to be used, so specific appli- cations can provide vehicles for mid- course corrections and dispel regula- tors’ fears; (5) include safety valves that allow for such corrections and for inevitable evolution, without penaliz- ing those who have already participat- ed.

The don’t’s include avoid: (1) over- loading incentive approaches with con- straints aimed a t achieving other pro- gram or environmental goals; (2) defin- ing the experiment t o fail by seeking optimality in credit markets or reduc- tions to zero, both of which are unreal- istic and divert resources from tasks based on sensible expectations; (3) be- lieving that every *problem will be solved by mandated technology or re- duction requirements; (4) discouraging new technologies (e.g., by treating po- tential recyclables as pollution); (5) be- lieving thatgovernment has all the an- swers and knows “how to do it” better, or that states are incompetent and spineless, therefore not to be trusted; and (6) believing that incentive ap- proaches (or conventional rules) must be written to treat all industrial man- agers like criminals by precluding ev- ery chance of abuse, rather than being written to be usable and leave abusers to enforcement.

Conciuslons

Like the concept itself, incentives to implement “pollution prevention” can be dangerous and environmentally- counterproductive where they are es- sentially unmoored. It is by no means true that all reductions in waste are equally good, that all reductions a t the beginning rather than the end of a pro- duction cycle are preferable, or that re- ductions to zero are a goal to be desired regardless of risk, cost or the benefits secured. Where this country may al- ready be spending as much as $150 bil- lion annually for pollution control--an amount soon to be augmented by $25 to $50 billion under the new Clean Air Act, not to mention oil spill legislation, RCRA/Superfund reauthorizations, or global warming accords-reduction for reduction’s sake is no longer a consum- mation to be wished. That is especially true where reduction of relatively be- nign wastes displaces efforts to reduce more harmful ones. If increasingly scarce resources are not to be squan- dered and well-meant goals are not to cancel each other, there must be stop- ping points which define which “pre- vention” is valuable and when compa- nies have done enough-as well as mo-

1230 J. Air Waste Manage. Assoc.

’ , tives for them voluntarily to do more, when, “doing more” makes economic and environmental sense.

One underlying test is reduction in waste needing disposal, not how that reduction occurs. Under this test, whether the specific problem being ad- dressed is reduced by source reduction or recycling would be largely irrelevant. Indeed, source reduction might be dis- favored because it can drive affected parties towards riskier raw-materials substitutes, or undermine recycling that may produce jobs and beneficial products as well as larger environmen- tal gains. Another underlying test is re- duction in overall environmental im- pacts, which would fulfill the cross-me- dia spirit behind pollution prevention by considering the potentially perverse impacts on all environmental media- not just solid waste-of such “preven- tion” steps as product bans.12 Both tests suggest that EPA’s influential sol- id waste hierarchy should place recy- cling in its first tier along with source reduction, not on a rung farther down.

But whatever the test, incentives will be needed to implement prevention; and the incentive mechanisms selected can crucially influence how these issues are addressed. Raw materials or prod- uct fees tend to avoid hard choices and focus on politically-safe targets whose reduction may have little impact even on the specific problem sought to be remedied. Recycling tickets for makers of products that end as waste, like tradeable phasedown permits for waste received for disposal, tend to force pub- lic decisions on the degree and type of appropriate reduction, and may better mobilize private-sector efforts to “pre- vent.”

Permits are no panacea either; they do not assure markets for recyclables, which are demand-pulled rather than supply-driven. Assurance implies mar- ket stimulation-the second half of the recycling equation. It suggests such pump-priming steps as radical surgery on the current RCRA procurement- guidelines program.I3 Such surgery might include automatic “hammers” mandating government procurement of products substantially composed of post-consumer materials, if EPA has not issued procurement guideiines by a fixed date. It might also include life- cycle cost evaluations which avoid price preferences (i.e., federal subsi- dies) while reducing the government’s post-purchase costs. But that is a sub- ject for another article.

References and Notes

1. See, e.g., H.R. 3847, 101st Cong. 2d. Sess., Title I, 5 110, passed by House March 28, 1990 (requiring a new EPA Assistant Secretary for Pollution Pre- vention).

2. See, e.g., U.S. Council on Environmen- tal Qualitv. Twentieth Annual Report (199i)), pp..469-472, detailing subs’tan- tial reductions in most criteria pollut- ants over the period 1976-87, despite geometric growth in coal-fired electric- ity and GNP.

3. See, e.g., Ackerman & Hassler, Clean CoallDirty Air (1981) (mandatory scrubbing to preserve high-sulfur coal mining jobs).

4. See, e.g., Levin, “Statutes and Stopping Points: Building a Better Bubble a t EPA.” Resulation IMarch/Aoril 1985). See also, cevin & Ei”, “TLe Case for Environmental Incentives,” Environ- mental Forum (Jan./Feb. 1990); “The CIean Air Act Needs Sensible Emissions Trading,” Id. (March 1986).

5. Similar developments include: expand- ed ability to use emissions credits from past shutdowns for offset purposes, 54 FR 27274,27290 (June 28,1989); plant- wide trades to meet effluent guidelines under the Clean Water Act, 49 FR 21024 (May 17, 1984); interplant trades to meet ambient water quality standards, 40 CFR 6 130.2(1), 130.7 (1989); point/ non-point source trades to reduce non- conventional or toxic loadings, EPA/ OW, Draft Final Guidance: $304(1) of the Clean Water Act, 0 IV.C.d.2. (Sept. 1987); differential user fees for pesticide registrations, see 51 FR 42974 (Nov. 26, 19861, 53 FR 19108 (May 26: 1988); a pending measure to automatically cre- ate market niches by phasing out risky chemicals as safer substitutes become available, see Memo, “Proposed ‘Safer Pesticides’ Federal Register Notice,” D. Campt, Director, OPP/EPA, t o J. Moore, AA (OPTS), (June 17, 1987); and use of wetlands mitigation banks to reclaim ecological values a t Superfund sites or preserve them a t others. See Memo. “Wetlands Mitieation Bank- ing,” R. Hanmer, Acting .6A (OW) to L. Fisher, AA (OPPE) (May I, 1989).

6. See, e.g., Project 88: Harnessing Mar- ket Forces to Protect Our Environment: Initiatives for The New President, A

trades were only the first step. 7. E.g., the bill provides one full recycling

credit for reuse of a scrap tire in prod- ucts, 1/2 credit for incineration with en- ergy recovery, and 1/4 credit for each scrap tire shredded. See Levin, Written [Testimony], Hearing on Scrap Tire Management & Recycling Opportuni- ties, House Small Business Subcanni t - tees on Environment & Labor etc. (April 18,1990).

8. See, e.g., Levin, “The Trash Mess Won’t Be Easily Disposed Of,” Wall Street Journal (Dec. 15,1988), p. A 18.

9. Despite their attraction as potential revenue-raisers and possible use as a “Clarke tax” to encourage more accu-

rate pollution reporting, see, e.g., “Ap- ple-Pie Aspect of Envirymental Taxes Draws Proponents. . . , Wall Street Journal (May 21,1990), p. A 30; “Truth or Consequences,” Sonstelie & Portney, Journal of Public Policy Anulysis & Management, Vol. 2 No. 2 (1983), fees represent a declining revenue stream if they work properly, and could become “deficit-reduction bait” which distorts other environmental programs by di- verting industry choices to counterpro- ductive ends.

10. Cf., e.g., S. 1113, lOlst Cong. 2d Sess., Title 111, 0 305, tacitly authorizing plantwide bubbles by SARA 313 facili-

substance releases to no more than 5 percent “of production throughput” of such substances within 10 years. There seems no reason why facilities reducing more or earlier could not be allowed to sell credits nationwide to those whose reduction costs are much higher.

11. See, e.g., H.R. 3735, 10lst Cong. 1st Sess., Title 111, Q 324 (as introduced No- vember 19, 1989) (the “Luken BiIl”).

12. See, e.g., Lifset & Chertow, “The Poli- tics of Product Bans,” Environmental Forum (March/Apri11990).

13. See, e.g., Kovacs, “The Coming Era of Conservation and Industrial Utilization of Recyclable Materials,” 15 Ecology Law Quarterly 537, at 546-557,573-576 (1988).

ties required to reduce total b azardous-

Mike Levin, a former director of the US. EPA’s Regulatory Reform and Regulatory Innovation Staffs (1979-88), practices environmentel law and environmental facilities fi- nance in Nixon, Hargrave’s Washin ton office, One Thomas Circle, D.8: 20005. This article was adapted from a speech to the Intemational Confer- ence on Pollution Prevention in Washington, D.C., June 1990.

September 1990 Volume 40, No. 9 1231

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AIR &WASTE Management Association

= SEPTEMBER 1990 VOLUME 40 NUMBER 9

Sources and Fates of Lead and Cadmium in Municipal Solid Waste A stud investigates the sources and fates of lead and cadmium contained in MSW and RRA

resiiues. E. A. Korzun, H. H. Heck 1220

Implementing Pollution Prevention: Incentives and Irrationalities The incentive mechanisms selected to implement pollution prevention will crucially influence

the outcome of this goal. AI. H. Levin 1227

Soil Remediation.Techniques at Uncontrolled Hazardous Waste Sites:

Prepared Discussions Critical Review Discussion Papers

R. Anderson 1232 R. E. Woodward 1234

S. I. Shah 1237 J. N. Hartley 1237

S. C. James 1238 R. C. Sims 1239 Closing Remarks

The 83rd A&WMA Annual Meeting & Exhibition: A Summary of Activities Keynote Address: Focus on Pollution Prevention M. R. Deland 1241 Keynote Address: A Federal Tax on Energy P. H. O'Neill 1243 Keynote Address: The Beginning of Survival R. L. Herbst 1245

J. F. Thielke 1246 Presidential Address: Making the Right Choices Annual Report: A Very Successful Year M. E. Rivers 1246 Honors and Awards 1249 Call for Papers for 84th Annual Meeting Technical Program 1304

TECHNICAL PAPERS

Indoor Nitro en Dioxide Exposure and Children's Pulmonary Function Results do not $early demonstrate that indoor exposure to NO2 affects lung function in

children. B Brunekreef, D. Houthuijs, L. Dijkstra, J. S. M. Boleij 1252

Evaluation of the Use of Solar Lrradiation for the Decontamination of Soils

A study assesses the nature of soil photoloysis reactions to the degradation of a simulated Containing Wood Treating Wastes

complex organic waste in model soil systems. R. R. Dupont, Joan E. McLean, R. H. Hoff, W. M. Moore 1257

A Microcomputer-based Forecasting Model: Potential Applications for

4n examination of a gecasting that can predict changes in wind and turbulence Emergency Res

conditions.

nse Plans and Air Quality Studies

M. Williams, T. Yamada 1266

Emission Impacts of Electric Vehicles Emission impacts of electric vehicles in California are analyzed for the target years 1995 and

2010. Q. Wang, M. A. DeLuchi, D. Sperling 1275

NOTEBOOK

Soiling by Atmospheric Aerosols in an Urban Industrial Area 4 description of the influences of particle size and rainfall on the deposition, and on the

soiling of different surfaces. P. J. Creighton, P. J. Lioy, F. H. Haynie, T. J. Lemmons, J. L. Miller, J. Gerhart 1285

CONTROL TECHNOLOGY

Ihe Impact of Particulate Emissions Control on the Control of Other MWC

i discussion of the relationship between MWC air emissions control and particulate Air Emissions

control. T. G. Bma, J. D. Kilgroe 1324

J. Air Waste Manage. Assoc.