ENGINEERING PRACTICE +E-=35\-

It makes more sense to be proactive than reactive

ES T Paul R. Ammann, Gayle S. Koch, M. Alexis Maniatis, and Kenneth T. Wise

Brattle/lRI

egulations on the discharge of hazardous sub- stances from chemical and other manufactur- ing facilities are getting stricter. Meanwhile, government agencies and public-interest groups are becoming more vigilant. Violations

can mean substantial, even multimillion-dollar penal- ties, and capital and operating costs for compliance can be extensive. Given these high stakes, companies must take pains not merely to comply with applicable regu- lations and permits but to do so as cost-effectively as possible.

Compliance can almost always take several forms, differing significantly in cost and required time. Com- panies often overreact, installing much larger systems than necessary.

The picture becomes more complex when the firm not only faces current regulations but also expects dif- ferent ones in the future. Another complexity arises when one or more compliance options can be designed (at additional cost) to achieve other, non-environmen- tal, objectives.

Whatever their situation, companies should aim not merely to be cost-effective but to also avoid the reactive approach. They should instead aim for a more proac- tive mode, in which environmental compliance options actually play a role in the strategic direction of the firm.

The regulatory push In the US., the main regulations that trigger non-com- pliance penalties for process plants are the Federal Water Pollution Control (Clean Water) Act, the Re- source Conservation and Recovery Act (RCRA), and the Clean Air Act. The Clean Water Act sets the re- quirements for getting permits to discharge process water and stormwater. RCRA mandates permitting and reporting for waste handling and storage at oper- ating facilities. The 1990 Clean Air Act Amendments include a timetable for chemical and other manufac- turing plants to obtain permits, as well as to control emissions of about 200 hazardous pollutants over the next several years.

Permits issued by state or federal regulators define the concentrations and amounts of pollutants that may be contained in streams and gases discharged. Typi- cally, they also specify the sampling methods, fre- quency of sampling, and the procedures and required frequencies (usually monthly) for reporting data.

104 CHEMICAL ENGINEERING / FEBRUARY 1995

Double trouble Poorly designed strategies for complying with permits can, of course, result in permit violations and less-cost- effective investment. In addition, such strategies can also bring about excessive penalties for past non-com- pliance [ I , 21.

This latter effect comes about because the agencies assessing penalties for past non-compliance usually base their calculations on the money a company actu- ally spends to bring a plant into compliance. In the ab- sence of careful planning, these outlays may include investments made for reasons broader than compli- ance with the permit a t issue, or simply may not be ef- ficient solutions.

Three examples make the point. First, consider a company that spends $200,000 to build a treatment fa- cility to achieve compliance as well as other objectives. Federal and state agencies alike will calculate the penalty for past non-compliance on the basis of that figure, even if the company could have achieved com- pliance by spending only $100,000.

Second, consider a manufacturer that had employed a chlorinated solvent to degrease metal parts. Solvent discharge exceeded the permit limit, so the plant engi- neer contacted vendors to seek compliance alterna- tives. The engineer first leaned toward installing a central incinerator for all of the process gas discharges from the plant. The capital cost was in the range of $1- 2 million, and the incremental operating cost was about $200,00O/yr.

But further evaluation revealed a novel method by which the residual solvent could be recaptured on the production line. The capital cost of this system was only about $150,000. And the recovery of solvent pro- vided a significant return on the modest investment.

Third, a large chemical plant whose process water discharged into a municipal treatment plant was ex- ceeding its permit limit. Several reactors a t this facil- ity produced chemical wastes, which were directed to a plant drain system and commingled with other, non- polluted streams.

The company built an end-of-pipe facility to treat all of the discharge, a t a significant cost, which formed the basis of a large penalty. A retrospective analysis showed that compliance could have been achieved more simply with controls a t the reactors, a t a savings of 75% in capital cost, negligible added operating costs, and significantly lower Penalties. 0

ENGINEERING

tors to reduce the amount of liquids or gases discharged from a process oRen has a large return on investment while contributing to compliance. Such changes usually require only limited engineering study.

he engineer can choose from three T strategies for complying with envi- ronmental discharge permits: (1) apply the end-of-pipe approach, treating the overall plant discharge just upstream of the regulators’ stipulated compliance point; (2) treat the pollutant source streams throughout the plant individu- ally; or (3) modify or replace the overall process to avoid generating the pollu- tants in the first place. Each option has advantages and drawbacks.

The end-of-pipe approach is the most obvious, and probably most widely used. Centralizing all of the treatment equipment a t one point, it simplifies compliance, a t least conceptually. Un- fortunately, it requires treating all the liquid and gaseous streams generated at the plant, including un- polluted ones, which re- quires much investment. Operating cost, on the other hand, may well be only slightly higher than for treating smaller flowrates.

The second option, source control, recognizes that in many plants, the pollu- tants arise a t only a few points. Nevertheless, de- signing control alternatives for these sources requires analysis of the overall man- ufacturing process. And be- cause exercising this option ordinarily leads to the in- stallation of control systems at differ- ent locations in a plant, reagents must be supplied to each of these locations and the responsibility for managing the control systems must be divided among several operators.

take many forms. For instance, they may derive from unreacted feed materi- als, compounds produced by undesired side reactions, or materials such as par- ticulates that are not removed from process streams. (Continues)

The third option, changing the man- ufacturing process, does away with the need for environmental controls. But process change generally requires re- search and development, and lead- times of one or more years. It can also raise complications regarding the spec- ifications for and marketplace accep- tance of the plant product, because the latter is now being made via a different process. Investment in the process and product development, and in the new production facilities, oRen can only be justified by future business prospects and improved economics of manufac- turing, and not by environmental com- pliance alone.

Nevertheless, modest process changes may be justified in some situations. For example, adding non-contact heat- ing or cooling systems to chemical reac-

SEVEN STEPS Finding the best compliance strategy for a given situation can be aided by following the sequence outlined in this section. To apply it properly, the engineer should be careful to take into account not only the immediate permit limitations, but also any an- ticipated future regulatory or busi- ness requirements.

1. Analyze pollutant sources In most cases, regulators are con- cerned with not one but a number of pollutants or compliance parameters. These include not only standard items, such as stream pH or oil-and-grease content, but also the presence or con- centration of substances that are spe- cific to the particular operation. Such pollutants usually arise at certain

ENGINEERING PRACTICE

2. Make a pollutant balance Once the sources have been identified, the pollutant mass flows and concen- trations at various locations in the plant should be determined. From a knowledge of the process and calcula- tion of a simple material balance, one can in many instances then estimate the total flow of principal pollutants discharged into a common plant drain or stack. Sampling and analysis of var- ious streams may be required in cer- tain circumstances.

An audit in which detailed measure- ments are made on every polluted stream can aid the analysis. It is espe- cially valuable when streams contain pollutants whose concentrations may vary significantly with slight changes in process conditions.

The engineer should draw a schematic diagram showing the main streams and the pollutants. Figure 1, for instance, shows the reactor referred to in Step 1. Gases it emits pass through an aqueous scrubber that col- lects acidic compounds, and the result- ing small aqueous stream goes into a plant drain system.

"he reactor is cleaned periodically with rinse water that, when dis- charged, is also acidic. The process drain system collects solutions from various sources, some free of pollu- tants, and discharges these solutions to an outfall. 3. Develop control schemes The description of the waste-stream flows and compositions suggests sites for controls. In Figure 1, the pollutant arises &om only one reactor unit. Treatment or control systems could be placed either a t this unit or near the plant's discharge point. The choice, as in any situation, will determine the vol- ume of wastes to be handled and, con- sequently, the investment and operat- ing costs.

In this example, the pollutants are present in a combination of continuous and intermittent flows, and the concen- trations are variable. During reactor operation or rinse, the pollutant-con- taining flow from the reactor unit (in- cluding the scrubber) to the drain is 10 to 45 gamin . At the plant discharge point, the same pollutants are con- tained in solutions flowing at up to 175 gal/min. In this example, it seems sen-

106 CHEMICAL ENGINEERING I FEBRUARY

FIGURE 1. Aqueous solution, containing pollutants, that is discharged by the reactor- overhead scrubber can be treated (after it has become commingled with other liquid wastes) at the plant outfall, or it can instead be handled as-is at the process unit itself. In the example discussed in the text, the latter option proves to be the more cost-effective

sible to control the pollutant discharge at the source, where the volumes to be treated are smaller.

As already noted, major process changes require significant outlays of time and money, and usually require other justifications besides meeting permit requirements. On the other hand, minor process modifications that eliminate one or more waste streams may be feasible, and the engineer mak- ing a compliance analysis should be on the lookout for such possibilities.

Furthermore, if broader company strategies indicate that major process changes are likely to be made in the fu- ture, such intentions may influence the compliance strategy for the present. This point is discussed in more detail later.

Inmost cases, the alternatives from Steps 3 and (if relevant) 4 utilize commercial equipment. So, the engineer can develop at least preliminary cost estimates.

In our example, the capital cost for the end-of-pipe system is estimated at $450,000. This is nearly three times higher than for the source-control sys- tem, because of the need for new infra- structure to collect the solutions, a flow-equalization system, and larger equipment to accommodate the higher flowrates.

Operating-cost difference between the options is estimated to be negligi- ble; the major new cost is for chemicals, which is about the same in either case. Probably, no new labor would be needed for either alternative.

As mentioned earlier, there is a basic difference between pollution control at

4. Consider process changes

5. Make a rough cost estimate

6. IS compliance assured?

95

the source (i.e., the process unit) and at one centralized downstream point. It concerns the responsibility for operat- ing the treatment unit.

Treatment at the source implies that the control is the responsibility of the process-unit operator. Indeed, the con- trol of the treatment module may be integrated into that for the process it- self. In centralized treatment, the re- sponsibility for consistent compliance is usually instead vested in a person who has that as his or her main (or sole) task.

The end-of-pipe system can cope with pollutants that arise from unforeseen sources. If there is any likelihood of oc- casional entry of such pollutants into the drain system, the end-of-pipe ap- proach may be required to avoid violat- ing the permit.

Engineers should not only be aware of such possibilities, but should also es- timate the risks involved. A high risk of failures leading to non-compliance may justify a comparatively expensive treat- ment system.

Compliance alternatives may present considerably different trade-offs in in- vestment, operating cost, and penalty :xposure, so the comparative econom- ics should be developed thoroughly, I'his usually takes into account any zosts or savings associated with future mk-onmental regulations.

Applying traditional economic-evalu- ation tools (e.g., Net Present Value malysis) to compliance situations in- folves considerations that do not regu- larly arise in conventional application If these tools. Accordingly, the rest of ;his article discusses the economic- malysis step in more detail. 0

7. Analyze the economics

ECONOMIC ANALYSIS

here are three major steps in analyz- T ing compliance options from an eco- nomic perspective. Adhering to them can help companies make better busi- ness decisions in selecting compliance systems, even without costly and com- plex engineering analyses.*

First, assess the alternatives from a total-company perspective, to uncover long-term opportunities that may be created or lost with each. Choosing a particular alternative today might cre- ate or eliminate important options for future compliance, or for changes in the manufacturing processes themselves.

Next, estimate the incremental cash flows associated with each alternative. As explained later, it is important to identify the incremental flows, rather than other common cost-engineering measures, such as allocated or account- ing costs.

Finally, discount the cash flows to determine the present value of each al-

* Many of the concepts discussed in this section may also be applied to valuing the “economic bene- fit” associated with delayed compliance with envi- ronmental laws. This concept becomes an element of penalty calculations for a wide range of regula- tions. For more details, see References [l] and [21.

_*.-e- l

ternative. This may require advanced option-valuation techniques, such as ones described in Reference [31.

Total-company perspective Often, control technologies developed to satisfy one regulation can also help the plant to comply with other present- day ones, or to achieve compliance with stricter future regulations. Try to iden- tify as many such options as possible. In our experience, options that provide valuable flexibility are often over- looked.

For example, one particular way for a plant to treat process wastewater might, at little additional capital or op- erating cost, also be able to handle small amounts of process waste that are now shipped offsite. Or, the same or a different option might also be able to meet fkture regulations concerning stormwater runoff.

The fast pace of technological change often creates future options that may be overlooked if the engineer thinks only in terms of today’s technology. Sol- vents represent a good example.

Faced in the early 1980s with onsite treatment or offsite disposal of spent cleaning solvents, many companies in- stalled costly onsite-treatment equip- ment, correctly expecting dramatic in-

creases in offsite-disposal costs. How- ever, more-knowledgeable engineers or consultants would have also taken into account the likely switchover to sol- ventless, aqueous cleaners in the fu- ture. This may well have given the nod to offsite treatment, even though it was less attractive in the short run.

Once future options have been iden- tified, a probability should if possible be assigned to each outcome. With these probabilities, the options and their ex- pected cash flows can be incorporated directly into an expected-value analy- sis, using a probabilistic approach illus- trated later. Our examples have been simplified to illustrate the concepts; in actual applications, these analyses can be extremely complex.

One must also consider the effect of each compliance alternative on product quality and manufacturing cost. “his may best be done by staying in touch with the firm’s product managers. They may be aware of expected changes in ;he manufacturing process, which night entail a different set of waste jtreams.

[ncremental cash flows Nanagers and engineers often look at xoject costs in accounting or tradi- ional cost-engineering terms (for in-

EFFECT OF CHOSEN DISCOUNT RATE

Proper selection of discount rate can be essential for choosing correctly between environmental-compliance options. In this exam- ple (discussed in the text), an inappropriate 15% rate favors System 2, whereas the more-realistic 8% rate gives the nod to System 1

CHEMICAL ENGINEERING / FEBRUARY 1995 107

stance, by including overhead ex- penses). Such approaches are inappro- priate for evaluating compliance alter- natives. Instead, as when evaluating any proposed investment, the analyses should be based on only the incremen- tal cash flows associated with each measure: the cash outlays or savings that would occur as a result of each al- ternative, and that otherwise would not have been realized. Be sure to in- corporate every incremental cost sav- ings or outlay, including such not-obvi- ous matters as materials savings or heat recovery.

Allocated costs need scrutiny, and should be excluded if they are not truly new cash costs that will arise as a re- sult of the project being analyzed. In many instances, for example, little or no incremental labor may be required for a particular pollution-control sys- tem, even though labor might be allo- cated to the activity for internal ac- counting purposes.

The incremental analysis should lay out, year by year, the cash outflows and inflows of the alternative being consid- ered. Typically, this includes an initial capital-cost outlay, annual operating and maintenance (O&M) costs, and material or other savings (ifany). If the equipment is expected to have a sal- vage value or decommissioning cost, it should be included. The life of the equipment must also be considered, and outlays provided for replacement anticipated,

As discussed in the next section, the timing of each cash flow is important and care should be taken to place each outlay or receipt in the appropriate pe- riod. Enter the capital costs in the year they occur, rather than allocating them over time as happens in many account- ing systems.

Include the tax consequences of each investment. Among these are cash flows associated with depreciation or expense tax shields, and any invest- ment or other tax credits.

Determining present value To place cash flows that occur in differ- ent future years on a comparable basis, employ discount rates. Future cash amounts are discounted back to a given date (usually the present) via a dis- count rate that reflects the time value

io8 CHEMICAL ENGINEERING I FEBRUARY 1995

of money and the risk of the cash flowr at issue. "he relationship is the well known present-value equation

PVICJ = Ct/(l+ rIt where PV[C,] is the present value of C, the cash flow in year t, and r is the an. nual discount rate; t is expressed if years from the date of the calculation Present values obtained via this equa. tion are tabulated in finance hand. books for a wide range of discount rates and time periods.

The net present value of an invest. ment is the sum of all of the cash flows involved. This includes the initial out- lay, annual O&M costs and any rev- enues or savings created.

According to a key axiom of modern hance theory, the appropriate dis- count or interest rate for a particular situation is the prevailing cost of capi- tal for that kind of situation when its riskiness is properly taken into account [41. Cost of capital is defined as the ex- pected rate of return in capital markets on alternative investments having equivalent risk [5,61. While measuring the precise cost of capital for pollution control investments may be difficult, it is generally likely to be considerably lower than the overall cost of capital for the company as a whole. This is because pollution-control expenditures or sav- ings are inherently low in risk."

Ignoring this difference and thus using too high a discount rate has an important consequence. The resulting analysis will tend to understate the net present value of annual operating and maintenance costs. This will bias the lecisions in favor of less-capital-inten- sive projects.

Consider this simple example. The 4BC Company, reviewing its options %r a new pollution-control system, has iarrowed the choice to two. System 1 requires an immediate capital invest- Bent of $10 million and annual O&M :osts of $600,000 in today's dollars. system 2 requires a much smaller cap-

' The company's cost of capital is typically a weighted average of the firm's after-tax cost of leht and equity. The cost of capital thus measures he riskiness of the cash flows received hy the iolders ofthe company's debt and equity (interest m& dividends or earnings). These cash flows are ypically quite volatile (nsky) relative to the cash lows that are expected to be p a d for pollution- ontrol mvestments, and therefore require a ligher discount rate. For more on cost of capital, md risk measurement, see [3].

ital investment, only $6 million, but has annual O&M costs of $1.25 million in today's dollars. For simplicity, as- sume that all O&M costs are incurred at the end of each period. Inflation is expected to be 2% annually over the ten year life of the project. The company's weighted-average cost of capital is 15%.

Using the present-value equation, the company determines the present value of the two cash flow streams as shown in the table on the previous page. The outlays required for System 1 have a net present value of $13.2 mil- lion, and those for System 2, $12.7 mil- lion. Because System 2 appears to have a lower overall cost, it would be chosen.

But the appropriate discount rate for this project is virtually sure to be lower, because the risk associated with pollu- tion-control expenditures is lower than that for the company's expenditures as a whole. Table 2 demonstrates that if the same cash flows are valued using an 8% discount rate (arbitrarily chosen for this example), System 1 becomes the better choice, as the present value Bf its required outlays is now smaller.

While this example ignores tax ef- fects, a more-complete analysis would :onsider the afker-tax cash flows, in- :luding the firm's ability to write off an- nual O&M charges to expenses as well 2s the depreciation tax shields created ~y capital investments. Be sure that if &er-tax cash flows are used, the dis- :ount rate is also calculated on an fier-tax basis.

Elusive discount rates Appropriate discount rates for environ- nental projects are hard to develop with any precision. If the engineer is mable to come up with an accurate *ate, sensitivity analysis can be used to dentify those situations in which the fiscount rate is critical to the decision.

In many cases, a single test can iden- ,lfy the most cost-effective solution vithout a precise discount rate. "he irst step is to calculate the discount *ate that equalizes the net present val- ies of the alternatives under considera- ion. Then, compare this calculated *ate with the company's financial spe- ialists' educated (though imprecise) pess as to the appropriate discount ate for environmental projects in gen- Lral. If these two rates are close to each

- .

other, then the right decision between the projects unfortunately remains un- clear. But if the two rates are not close, then a comparison of the projects’ net present values calculated at the “edu- cated guess’’ discount rate should lead to a reasonably reliable decision. A more complex analysis will compare the net present values over a range of discount rates to identify the ranges in which the decision is sensitive to the choice of discount rate.

Don’t overlook options It is important to consider the future options that may be created or lost with a particular investment. Suppose the XYZ Company has narrowed its alter- natives to two. System A requires an initial $4” investment and an annual O&M outlay of $250,000 in today’s dollars. System B has no initial capital cost but requires annual O&M spending of $750,000 in today’s dollars.

System B (unlike System A) gives the company the chance to switch after three years to a new technology, Sys- tem C. This system would require an additional initial investment of $1 mil- lion but is expected to require only $75,000 of annual O&M, both figures being in today’s dollars.

Company engineers see a 50-50 chance that System C will be commer- cially viable and appropriate for XYZ’s waste stream; they also know that if it is not available after three years, it will never become available. Inflation is ex- pected to be 2% throughout the life of the 15-year project. The appropriate discount rate is assumed to be 8%. Again, taxes are ignored to simplify the example. Which system should the company install?

An effective way to analyze this kind of problem is to map out the possible outcomes [7, 81. Figure 2 illustrates a decision tree for this problem. Each of the alternatives is laid out along a branch, and probabilities are assigned where uncertainty exists.

In this case, System A is repre- sented along the left branch while Sys- tems B and C are to the right. For clar- ity, System B is broken down into two components: System B1 represents the first three years of the project, while System B2 represents the final twelve years in the event that Sys-

FIGURE 2. A graphic decision-tree a p proach (typified above, with present val- ues omitted for simplicity) often aids the analysis of process situations entailing uncertainty. The findings of this analysis are summarized in the bar graphs below.

tem C is not chosen or is unavailable. Each box shows the cash flow (out-

lay) for the given year. The flows have been corrected for inflation but, for vi- gual simplicity, their present values are not shown.

A simple net-present-value (NPV) lnalysis of these data, ignoring the pos- gibility of switching from System B to 3ystem C, reveals that the NPV of Sys- ;em A’s outlays is $6.4 million while ;hat of System Bs is $7.2 million. This suggests choosing System A.

Now, however, take into account the 3ossibility of making the switch. If the

new technology, System C, becomes available and is appropriate for XYZs waste stream, the NPV of the outlays for System B1 for three years followed by those for System C in the remaining twelve years is $3.2 million.

Since there is a 50% chance that Sys- tem C will be implemented, the ex- pected value of the combined System B1 and System C is K50% X $7.2 mil- lion (if System C is not available)] + [50% X $3.2 million (if System C is available)l), or $5.2 d o n . The value of the option to install System C aRer three years is therefore ($7.2 million - $5.2 million), or $2 million.

This example illustrates the most simple case, where investments and payoffs occur discretely and there is only one decision point. In practice, op- tions may be much harder to value, es- pecially if the costs involved are subject to large uncertainties, and decision trees can reach hundreds or even thou- sands of branches

Furthermore, the option-valuation methods employed in practice are more :omplex than the approach shown here. Discussion of these methods is be- yond the scope of this article. Instead, the aim here is to sensitize the engineer ;o the likely need for option-valuation in real-life situations.

Who pays for the R&D? &is second example illustrates a situ- ition in which a delay in major capital nvestment in pollution control systems ias overall economic benefit. Note, iowever, that the cash flows assume ha t the development costs of the fu- me technology (System C) are borne )y its vendors. In many other cases, the :lient company itself may have to in- rest in technology development.

To take account of the latter circum- itance, the analysis could incorporate he estimated R&D outlays. By review- ng their present values, the engineer :an assess the justification for this ;pending.

In summary, engineers evaluating bompliance alternatives can face diE- :ult decisions in selecting a system. Booking for creative solutions and )reparing a carel l economic analysis an often have a big payback. Projects ,hould be evaluated from a company- vide perspective, and important op-

CHEMICAL ENGINEERING / FEBRUARY 1995 109

Before y reciprocating mew

r your next low tempemture or chiller, be sure to

We’ll put a smile on your face.

Call 1-800445-9929 For More Information, Clrcle 74

110 CHEMICAL ENGINEERING FEBRUARY 1995

ENGINEERING PRACTICE

tions associated with each system iden- tified to achieve compliance with the most cost-effectiveness possible.

Edited by Nicholas P. Chopey

References 1. Wise, KT., Ammann, P.R., others, EPA’s ‘BEN’

Model: Challenging Excessive Penalty Calcu- lations, Tmic Law Reporter, May 6,1992

2. Wise, K.T., Maniatis, M.A., others, EPA’s New ‘BEN’ Model: A Change for the Better?, Tonic Law Reporter, Feb. 24,1993

3. Brealey, R.A., and Myers, S.C., “Principles of Corporate Finance,” 3rd ed., Chap. 9, McGraw- Hill, New York, 1988

4. Brealey, R.A., and Myers, S.C., op. crt., Chap. 9 5. Brealey, R.A., and Myers, S.C., op. cit., Chap.7 6. Kolbe, A.L., and Read, J.A., Jr., with Hall, G.R.,

Cost of Capital,” Chap. 2, MIT Press,

7. Koch, G.S., Ammann, PR., and Wise, KT., Evaluating Environmental Costs: Accounting for Uncertainties, Chemical Wuste Litigation Reporter, Vol. 27, No. 3, pp. 554-559, February 1994

8. Koch, G.S., Ammann, P.R., and Wise, KT., Using Decision Analysis to Manage Ennron- mental Costs, presented at 87th Annual Meet- ing of the Air & Waste Management Assn., June 1994, Cincinnati, Ohio

bridge, Mass., 1984

The authors Paul R Ammann is a Principal with Bra t t lmI , 30 Church St., Cambridge, MA D2138; Tel. 1617) 864-7900. He has over 30 years Df exuerience in the develonment. costing and an- ptica&on of environment&, chemical an-d met& urgical technologies. In the past decade, he has Focused on environmental consulting in the areas 3f non-compliance matters, Cercla cost-recovery reviews, environmental-liability evaluation, R&D planning, and technical and market-feasibility analysis. Mr. Ammann holds B.S. and M.S. de- grees in chemical engineering from the Massa- thusetts Institute of Technology.

Gayle S. Koch, also a BrattlemtI Principal, is ex- perienced in evaluating environmental liabilities in mnnection with settlements, insurance arbitra- tions, mergers and acquisitions, real estate trans- fers, litigation, and strategic planning. She has also mnducted detailed market assessments for numer- 3us new technologies. Ms. Koch holds a B.S. in :hemid engineering and an M.S. in management seienee &om the Massachusetts Institute of Tech- nology, as well as a B.S. in that university‘s Science, l!echnology and Society Program.

M Alexis Maniatis, an Associate with Brattle/IRI, has dealt with a wide range of envi- ronmental and financial issues, including work ivith companies involved in non-compliance wnalty matters to identify cost-effective com li mce strategies and calculate economic benekts: He has also helped companies evaluate ability-to- pay issues. Mr. Maniatis holds a B.A. in econom- ics from Wesleyan University and a Master’s de- Fee in Public and Pnvate Management from Yale University.

Kenneth T. Wise, a Principal of BrattlemtI and liredor of the firm’s environmental practice, has rorked on environmental issues for 20 years. He ias testified in litigation on recovery of haz- udous-waste-cleanup costs, impacts of hazardous raste sites on property values, alIocation of Su- ”d liabilities, and challenges to non-compli- mce penalties. He has also helped companies d u e insurancerecovery settlements and poten- ial litigation risk. He holds a B.S. in physics ?om Harvey Mudd College and a Ph.D. in eco- iomics from the Massachusetts Institute of Tech- lO1Ogy.