20 ELR 10532 | Environmental Law Reporter | copyright © 1989 | All rights reserved

The Corporate Compliance System: Panel Discussion

[20 ELR 10532]

PATRICK PARENTEAU: I would like to organize this discussion a little differently, by opening the floor to questions for the panel, and then permitting panelists to make longer follow-up remarks.

PARTICIPANT: I would like to ask Mr. Strelow about the impact of global competitiveness on American industry. In the United States, we have regulatory system gridlock. What is your perspective, or the perspective of a firm like General Electric, on the fact that most other countries have no equivalent to our environmental regulatory system? What will be the impact of the presence of such a system here and the absence of one elsewhere in the global market?

ROGER STRELOW: Several factors must be considered. First, in recent months, we have begun to see a distinct increase in environmental concern around the world, although it is not uniform. By and large, the Third World nations are still far behind and feel they have compelling reasons for that lag. They are annoyed when the developed nations — nations that exploited so many resources — tell them not to do the things that the developed nations did for so long before their actions began to catch up with them.

Concurrent with the move to an all-European entity of some kind in 1992 — with many of the economic barriers being eliminated and more governmental authority being given the European Community — is an upsurge in European commitment to environmental protection. We are going to see stringent auto-emission standards, long overdue in Europe, and other measures. That will help level the playing field.

Second, at present, the Superfund phenomenon is confined almost entirely to the United States. But in the coming years, we will see more and more Superfund-type programs develop overseas. If American industries abroad are wise, they will begin to put into practice overseas the kind of preventive measures that we are taking in this country in order to avoid more Superfunds in the future.

Of course, in the Superfund arena, there are particular challenges because so much of the ability to prevent Superfund [20 ELR 10533] problems — such as contamination, particularly of ground water and soil — rests upon having adequate facilities. Unlike air and water pollution control, which always have been accomplished plant by plant, many of the hazardous waste technologies operate on a much larger scale.

Unless a company happens to have a huge facility overseas, so that, for example, a high efficiency incinerator is economically feasible, there will be a need for some infrastructure — for public or group hazardous waste treatment facilities. In many of these countries such an infrastructure simply does not exist.

For example, General Electric runs some operations on the Mexican border in the so-called Queretaro area. Production there is duty-free, which has encouraged U.S. businesses to operate there. But we have had to ship hazardous waste back into the United States because there are no available treatment facilities in Mexico, and any one of our relatively small plants can't cover the costs of an adequate facility.

I hope that we can develop some industry consortiums to establish such facilities jointly. We need more concerted effort of that sort, and in more countries.

PARTICIPANT: I would like the panelists to offer one piece of advice to a state agency: what might an agency do to increase its effectiveness while benefitting both business and the environment?

JOAN BERNSTEIN: If I had just one suggestion to make, I would say: it would benefit all concerned if the state agencies and the regional offices would confer regularly regarding their priorities, attempt to agree on a set of mutual priorities, and, if possible, eliminate the inconsistencies in their positions.

The disputes between state agencies and regional offices of EPA, and the ensuing delays, make it difficult, if not impossible, for the regulated community to obtain clear answers. Then paralysis sets in. The negotiations — sometimes non-existent ones — between the state and the federal government raise serious obstacles to a company's effort to comply with the law or to resolve a problem.

JOSEPH HIGHLAND: I will offer an observation based on my work with a number of companies, both large and small: when a message is given with a regulatory compliance requirement, that requirement applies to all. It is not a matter of saying that large companies must comply and small companies need not. But often, the ability to respond and the considerations to be addressed in responding are different for different sized firms.

For example, in New Jersey, in trying to implement one of its programs, the state agency found that timing, or the manner of handling certain matters, impaired the ability to continue operation for small companies versus large companies.

The New Jersey ECRA statute — the Environmental Cleanup Responsibility Act — requires industrial sites involved in certain manufacturing activities to undergo an audit and cleanup procedure prior to sale. ECRA is applied without regard to the size of the company affected. In the beginning it was applied without an understanding that certain issues — primarily those of timing — were critically different for small businesses and large ones. Large, multinational firms are no less responsible for getting through this process. But the process can take two or three years and entails certain costs.

I have worked with small companies for whom the timing, and the agency handling, processing, and review of applications filed, caused the businesses — probably not worth a great deal in terms of asset value to begin with — to be chewed up over time. A company would announce that it is closing, would think it would close quickly, but then would undergo this process, paying taxes and rent without a revenue base. Small businesses are very adversely affected by simple timing considerations.

One agency change that could benefit business, as well as agency efficiency, is to realize the difficulty of compliance for smaller firms and to fast-track these firms through agency processes. Such changes wouldn't lower the standards, but would take into account the disproportionate impact of processing delays on a small business.

EUGENE BERMAN: Resolution or settlement of a federal agency lead environmental matter requires the federal agency to recognize the importance of the state's formal or informal "signoff," since parties need a degree of finality.

LESLIE NUTE: In my opinion, the best source of expertise in this area is large companies. They have professionals who have been in the business a long time and have creative ideas about what needs to be done. The states in which we have conducted business that have done the most effective work are those in which the regulators were not afraid to sit down and talk with industry about how to solve problems — to ask industry what their counsel would be. I would encourage agencies to do that.

Obviously, this is not the answer when a state is contemplating action against a company.

PARTICIPANT: I have a question for Gene Berman. We have heard about values, morals, and ethics and their relation to environmental goals and objectives. What role do they play in business compliance decisions?

BERMAN: We approach compliance decisions in a variety of ways. Obviously, compliance and the law are major motivators. But, for any given decision, a responsible corporation (and I think most are responsible) focuses on several constituencies.

First are its employees. Corporate programs are directed largely at ensuring that employees are happy and healthy, if for no other reason than to maintain good employee relations. Acrimonious unionization activities typically have followed poor environmental or health practices in a company. A number of companies have learned from that.

Second is the community in which employees live. Company towns, where one company (or a few companies) supplies jobs and dollars in the community are towns in which, generally, companies are welcome in the community. But, more and more, members of these communities are asking of the companies: are you good corporate citizens? Are you complying with the law? Communities are looking more searchingly at the environmental record when inquiring into whether or not companies are welcome.

A third constituency to be considered in corporate compliance decisions is customers — customer relations. A responsible company knows that lack of compliance with environmental laws will have an impact in its marketplace. Given the effect of SEC reporting on corporate share values in the marketplace, environmental liabilities and a poor environmental program can have a significant negative impact upon share value. In its own self-interest, any company will consider that.

[20 ELR 10534]

I cite these examples as practical and basic considerations. Together, I believe they work in a positive, synergistic way to encourage corporate compliance.

PARENTEAU: I would like to pose a question of Joan Bernstein: how successful are businesses at tracking and understanding regulatory requirements?

BERNSTEIN: For the most part, companies directly affected by one or two statutes and the federal regulations are fairly successful. I am referring to my own experience, of course. I am in a company where the environment and environmental protection are central to our business. Nearly everybody in our company understands that without regulations of this complexity we would not be in the successful business that we are in.

We spend a great deal of time and money trying to understand and explain to management the meaning of regulations. The more complex they become, the more difficult it is to cope with them. Once in a while I am asked about the logic of a regulation, and I have to reply that regulation often has nothing to do with logic. It is hard for a business person to cope with that.

For us — and perhaps for others as well — a company finds it much more difficult to deal with regulatory areas that are not central, or perceived as central, to its business. Examples are changes in the work force — the need for day care, split shifts, flexible work hours, and all the other means of providing for a diverse work force. Companies don't deal with that in the same way because it is not yet viewed as central to the core business.

STRELOW: Virtually anything most of us could state from our own experience about compliance and the ability to comply has to be enormously discounted when applied to the huge number of smaller businesses, particularly, as Joan says, if the very nature of their business doesn't involve environmental issues.

The simple fact is that there are plenty of people who are totally bewildered by the enormous flood of regulations in the Federal Register, by the jargon and complexity.

Considering the 50- to 100-page preambles to any set of RCRA or Clean Air Act regulations, it is not surprising that many people have trouble simply keeping their heads above water. I am not trying to excuse anyone. I did mention earlier the frustration that some of us in large companies feel when we see the "little guys" getting away with non-compliance. Often, though, they are not intentionally failing to comply. They simply are befuddled and, to some extent, unaware of what they should do, despite increasing efforts by EPA and some states to ensure that they are aware. It is a bimodal world. The answers for the big companies aren't the same as those for the small ones.

HIGHLAND: I would agree in large part with that differentiation between small and large companies. But there are further points to be made along that line.

I can offer numerous examples of small businesses in full compliance with the regulatory requirements, while some large firms for which I work are entirely lacking in compliance. It is not a black and white situation.

First, the reasons a company is or is not in compliance depend on a number of factors. Certainly, the ability to understand the laws and regulations is of primary importance. Without question, this is an overwhelming problem for a number of small businesses. In some areas, however — for example, the land ban issue — understanding the regulations is an overwhelming problem regardless of the size or asset value of a firm.

So, to the extent that the question, "How well does business comply?" is asked in the context of how well business can read and understand and comply with regulations, I would agree: many of the larger firms with centralized environmental groups and the time, money, and ability to put good technical and legal people to work have an easier time than some of the smaller firms.

But Mr. Strelow and others have raised other issues that influence compliance, for example, toxic tort litigation and continuing liability associated with the disposal of waste materials. A number of other factors affect how a company deals with compliance and the management of its business and environmental affairs, beyond how well it can read and understand the regulatory information it has received.

I worked with one small company in New Jersey that made tennis rackets. They didn't know about environmental compliance in a number of areas. Some rags containing a solvent were thrown into a dumpster and the firm ended up with a ground water problem and a toxic tort suit. After this process the firm became fully compliant with a number of regulations it previously hadn't known existed. And it has maintained that compliance. In fact, I would say it went beyond asking "What do we do to avoid problems?" to asking, "What solvent changes can we make? What do we do in our manufacturing process to eliminate waste and the types of waste we are generating?" This company was revolutionized by the fact that it wound up out of compliance and in trouble.

Recently, I completed work at a site where precious metals were handled. I would have assumed, based on the security simply to get in the front door, that there was strict environmental compliance — because, economically, loss of this material is costly. At one point, walking around the site, I picked up some soil that felt odd to me. An analysis showed that it contained 50 percent silver by weight. Now they are tearing off roofs and digging up floors because there is more money in precious metals that went out into the environment, through cracks in the floor or through downspouts, than one can believe. That shocked me. I had always thought that if it were economically viable, firms would control their emissions. Generally, that is true. But this is a world where one can always find examples that don't fit the general pattern. A company's ability to comply with environmental regulation is a function of a number of influences, not the least of which is, as someone mentioned earlier, the people and the processes at work within the company.

PARTICIPANT: Mr. Strelow discussed companies cooperatively working out environmental compliance problems, and everyone, thus far, has averred that the problems are so great that, of necessity, there will be non-compliance with many of the regulations. Do these issues cause some concern that, in talking together and trying to work out what to do, companies might develop parallels among the regulations with which they are not in compliance?

STRELOW: When we established the Environmental Management Roundtable, we carefully thought through such issues, and feel comfortable that we are not even approaching antitrust problems.

The Roundtable is made up of about a dozen companies, in a wide range of industries, working together with the simple aim of sharing experiences. If one company has found a good method of keeping track of compliance through new or improved data or reporting systems; if another has found a better way to audit or to automate the permit process — that is the type of information that is shared. We don't share pricing [20 ELR 10535] information or discuss competitive positions. We act on the simple notion that whoever has the best ideas about meeting regulatory obligations will share these ideas in the spirit that on the next issue they will learn something from another member of the group. Furthermore, we have made a commitment to maintain the Roundtable as a relatively small group, to facilitate manageable discussions.

The discussions are not closed or confidential. Nothing is said that we aren't willing to share. Sometimes, in fact, we share with other companies on our own initiative. Often the information shared is discussed with EPA. So I think we are all comfortable in the belief that what we are doing truly benefits each of the companies involved — allowing each to better meet its regulatory responsibilities. Further, we believe that by enabling those involved to better comply with the regulations, what we do will benefit the public. And non-member companies can benefit as well, since we are more than willing to share our results with the rest of the corporate community.

BERNSTEIN: I agree. We work in just that way. Most companies use the penumbra of the trade association, which is carefully monitored and public in its discussions and does not allow prohibited subjects to be discussed, in order to achieve the goals just outlined.

For the past eight years of Republican Administration, however, we have had practically no antitrust enforcement. This is a problem — one that I hope eventually will be addressed, because people now simply ask, "They don't enforce those laws any more, do they?" And one is hard pressed to say, "Well, they do, but only in the most extreme circumstances."

Beyond that, I am concerned about what I consider to be the anticompetitive aspects of many EPA regulations. I don't believe EPA has much sensitivity to the fact that, in mandating a certain type of technology, it sometimes keeps other technologies out of the market. This is a serious problem, because if we are to improve pollution control, we must have a market that encourages the development of new technology rather than one that discourages, or worse, prohibits it. I find that a far more serious and plausible problem than parallel actions in non-compliance among industrial groups.

NUTE: Most of the environmental discussions in which I have taken part over the last fifteen years have been through inter-industry groups or trade associations. Mr. Strelow has set up a group that is headed in the right direction, and there has been some discussion about similar groups. There are many cross-industry discussions as a result of environmental concerns.

There may not have been much activity during the Reagan Administration, but I can assure you that the private bar has been very active over the last five years. We probably have seem more private antitrust cases in the last five years alone than in the preceding twenty. Antitrust is a real concern, despite the inactivity of the Administration. Quite frankly, often the private bar is more feared than the government, anyway.

STRELOW: Let me mention that, in addition to the Roundtable effort, at least two cross-industry groups retain a common consultant to check different hazardous waste management facilities and ensure, on a current basis, that they are meeting environmental requirements. In both those contexts an important ground rule is that, while in the one case we can share the reports of the consultants as to the status of a waste management facility, and in the other we can share information on a new and better way of doing something, there is no discussion of what any one company is going to do to comply. Each company has input. It then is left entirely up to each company to decide what to do with the information, how far it will go beyond the minimal regulatory requirements, or even how it will construe the regulations. There is no intent to achieve an accord on what we will do.

PARENTEAU: What is the potential for significant waste minimization efforts? What are some of the creative ideas that corporations are developing along these lines? Where are the most promising areas for this to occur?

NUTE: In a general sense, particularly in a large chemical company, industry is dealing with two things: energy and raw materials. The better their utilization, the more profitable the product. We began worrying about energy in the late 1960s and early 1970's, because of OPEC activities. When the price of oil rose, we began to think about how best to use raw material.

We have taken several steps that have been mirrored by other large companies. In the early 1970s, Dow initiated a campaign about the prevention of pollution paying. In the mid-1970s, we started a program called " product stewardship." The emphasis of the program is to follow up on our products — to learn what our customers are doing with them. Originally, the emphasis was primarily on human health concerns. That interest is still present, but another, the environmental fate of products, has emerged.

More and more, companies are beginning to investigate the ways in which their products are disposed of and how long they remain in the environment. A number of factors drive this. Perhaps product stewardship is one. The liability of potential toxic torts is another.

In addition, recently, we started a program called WRAP — Waste Reduction Always Pays. It is grounded in a philosophical position that it is cheaper in the long run to stop pollution problems up front than at the back end. The program operates through a series of incentives in the plants — awards and so forth.

Another step we have taken is to have our environmental law group talk to production and design engineers about what the regulations are at present and where they think they are going to go in the future so that the engineers can design plants and products accordingly.

I would like to mention the origins of the many creative programs being initiated. Three or four of the programs that we started at Dow were generated by suggestions from company employees. The WRAP program developed out of conversations with environmental groups regarding their primary concerns. These conversations caused us to look ahead and see the need for a waste reduction program.

Not one of our programs that is of any value came out of EPA. They originated with our employees or environmental groups.

HIGHLAND: I would also like to point out that, while legislation may be useful, a good deal of front-end work is occurring already. For some time, at least two strong motivators have existed for concentrating on front-end work. One is cost — the cost of dealing with waste disposal or environmental releases and the need to clean them up. A second is liability — either future liability from disposal of waste materials of environmental concern, or toxic tort liability.

Let me offer three examples of changes that have already occurred. First, in the area of solvent substitutions, one can switch from one type of solvent material that is more hazardous [20 ELR 10536] and more difficult to dispose of to a material that is less hazardous and more readily disposed of.

Second has been a switch from oil-based paints to water-based systems using less toxic materials, again, posing fewer disposal difficulties.

Third is in packaging, where companies are concerned about consumer disposal of the packaging material used to ship a product. An emphasis is being placed on the use of recyclable packaging and materials that are easily biodegraded.

It would be faulty to think of the process as being entirely back-end directed and to expect a large change in the future through legislation. A good deal already is happening. That is not to say that enough is being done. But changes are occurring.

PARTICIPANT: We have not yet touched on the subject of criminal enforcement. We are dealing with a problem as much of perception as of reality, and I offer two examples. As Mr. Strelow has noted, there is the corporate view that environmental concerns are receiving the attention of top management. I am not at all sure that view is shared by many regulars. Right or wrong, there is a perception among regulars that, if it is getting management's attention, it is not getting enough of it. On the other hand, from the government perspective, stringent enforcement of regulations creates a motivating influence.

But in New Jersey, people are afraid to do anything. Many companies seem to believe that it is better to stand pat in terms of historical contamination, because they believe that if you stir up the dirt you will stir up trouble.

A major public policy debate in New Jersey is the possible enactment of amendments to our water pollution control act. Essentially, these would state that if a company violates a permit five or six times over a six month period, it would become a significant violator, and mandatory criminal sanctions would be imposed not only upon middle level employees but right on up to the corporate officer.

This proposal may stimulate motivation — or paralysis. There is a real fear of moving ahead. Companies ask, "Do we give agencies the information? If so, what kind of information? And how will it be used?" The perceptions — perhaps not the realities — are creating problems for compliance.

PARENTEAU: I believe you are asking about the role of criminal prosecution. In particular, if a criminal action were taken, would it have the desired result of improving corporate policies concerning prevention of violations?

Those of us in the enforcement field generally assume that criminal prosecution is the strongest deterrent possible. Some people may want to challenge that. As with most types of white collar crime, we have a class of individuals who can be deterred by the threat of personal culpability. They are less deterred by the notion of corporate responsibility,which imposes a criminal fine on a corporate entity in lieu of a civil penalty against the individual. The corporate criminal prosecution penalty, in which no one goes to jail, does have some significant deterrent effect — more from the resulting publicity, certainly, than from the amount of the fine. But it is the prosecution of an individual, with the threat of not only a jail sentence but also a ruined career hanging over the individual, that carries the greater deterrent significance. The consequences are quite sobering.

Throughout the corporate world and the industrial sector some fairly dramatic policy changes are taking place. CERCLA's unreasonable liability scheme has produced enormous changes in corporate attitude, behavior, industrial policy, real estate transactions, bank screening, and so on. It has swept the commercial market, touching every aspect, and continues to do so. It does not always affect the market in ways that are friendly, but in many ways it is improving environmental compliance. At the very least, it is getting serious problems addressed sooner than they would be otherwise.

Having said all that, I believe criminal prosecution is a weighty matter when applied to individuals, and the usual caveats apply about using it prudently, judiciously, and circumspectly. The casual suggestion of criminalizing heretofore accepted corporate practice is antithetical to American jurisprudential values. Every governmental program, enforcement included, must be held to standards that go beyond the objectives of the program to satisfy basic concepts of fairness and justice.

I feel quite strongly that criminal prosecution should be available. I do not believe that environmental crimes are victimless crimes. Criminal enforcement should be weighed and used where it is called for — where the actions are deliberate, where there is a suggestion of conspiracy, where there is recalcitrance, where there is reckless endangerment. It should apply where there is some extra element that justifies putting an individual's liberty on the line.

STRELOW: Concerning the awareness and knowledgeability of senior management, let me underline what I said earlier about my own company. The point I wanted to convey is that we have not achieved perfection, but there are areas in which we are moving in a positive, correct direction. That must be emphasized. There probably is still not enough knowledge in enough cases, but the trend is certainly in the right direction. More and more CEOs, senior vice presidents, and executive vice presidents are more personally aware of the regulatory scheme than was the case ten or twenty years ago.

In general, criminal enforcement has a legitimate place in the environmental arena. I would endorse Mr. Parenteau's comments on the types of circumstances calling for its use. In order to be meaningful and fair when you are going to employ weaponry of that kind, it should occur in a situation in which there is an element of, if not deliberateness, then at least knowledge in the broad sense of a knowing violation, or perhaps of reckless endangerment if that is carefully defined. Otherwise, there is tremendous potential for abuse.

From your brief description of the New Jersey proposal and from what I have heard about it elsewhere, I have some concern about defining a set of circumstances as requiring criminal liability. It seems to me that this goes well beyond anything that has ever been accepted in the criminal law in other areas, and I see no rationale for singling out the environmental area.

Let me mention another interesting dimension. One of the most vexing problems in private industry is tort litigation, particularly involving punitive damages. Sometimes you will see a case where even the best the jury can do on compensatory damages is a trivial amount. In one case about two years ago, the compensatory damages were nearly nonexistent, but the jury awarded 16 million dollars in punitive damages on the theory that when a rail car spill took place it was reprehensible that the community wasn't given an alert, even though the trial found that there was no harm and no real threat of harm that would have called for such a notice.

Many of us are concerned about the use of punitive damages becoming a "terrorist" tactic. Don Elliott at Yale Law School has made the point that the kinds of concerns that often give rise to punitive damage requests should more properly be [20 ELR 10537] handled through the criminal system. If the view of a plaintiff or the government is that a company has not only violated an environmental restriction but also has engaged in reprehensible conduct, that is the province of the criminal law. Perhaps it should be considered more often as an alternative to punitive damages where so many other factors are involved.

Finally, a concern about criminal liability in large companies like mine is how far one goes to impute liability, either to the company or to the senior officials of the company. GE is in the defense industry, and we have had our share of defense industry problems. For example, we had a situation where employees in a subsidiary took illegal and unethical actions. As a result, their work cost the government some extra money. As soon as we discovered it, we reported it to the government. Now the government has decided it wants to prosecute the company for the acts of people way down the line. Clearly the acts were not motivated by company interests; quite the contrary. They were entirely in the self-interest of the individuals involved. But, as a result, we are now a more expensive defense contractor, one less able to get the next job.

The entire experience flew in the face of truly extraordinary efforts on the part of the company to prevent just that sort of conduct. It highlighted for us the question of just how far we can, in any realistic way, carry the belief that a misdeed, even an admitted misdeed, should be or can be imputed to the company as an entity and/or to the senior officials of the company. If company officers are aware of something, are blinking at it, or failing to take reasonable steps to uncover facts, that is one thing. But to impute responsibility in a blanket sense is troublesome to me.

BERNSTEIN: One of the areas in which Walt Barber, environmental manager at our company, and I have spent a great deal of time is in persuading our organization of the rightness of and reasons for letting us know at the top when there is a problem below. We need to be able to get down there and try to work the problem through. We need to find out whether it was a mistake, and, if so, what to do about it — how to deal with it in accordance with agency standards and regulations. It is our general corporate policy to report everything.

We want to report, whether we have to or not, because we want EPA to know. But the fear of criminal prosecution that Mr. Strelow just described raises a significant obstacle to our ability to persuade people in the company that it is not in their interest to cover up problems.

It is very important that for the most part enforcement depends on self-reporting. Almost 75 percent of all enforcement actions are the result of self-reporting. Creating this significant negative motivation or disinclination does us a great deal of harm. I endorse a balanced approach.

Perhaps more statements from states and the federal government as to the value of self-reporting and how it is taken into consideration when considering enforcement action, would help remove the disinclination to report.

WILLIAM A. ANDERSON, II: I would like to posit what I believe are three fundamental fallacies underlying the topic of this program.

Our title is, "Environmental Compliance: Is the System Working?" The first fallacy to which we fall prey is the assumption that compliance with the present environmental laws, as written and as interpreted in the regulations, will advance us toward a mutual goal of environmental protection. I am not at all sure that is the case.

The second assumption that I find fallacious is that there is, in fact, a system. I think there is not a system. A system implies a conscious, rational method or group of methods working cumulatively toward a defined objective or set of objectives. We do not have that, as the matrices prepared by Mr. Morell's company demonstrate.

The third fallacy is that compliance is possible in the first place. Mr. Strelow said earlier that there is no excuse for violating the law. I would like to disagree. In this area, at least, I can think of three excuses for violating the law. Perhaps none of them should exculpate the violator, but they strike me as drawing into question our assumption that compliance is possible.

One excuse is that the regulations are incomprehensible. We have created a system of such inordinate complexity that many people affected by the system cannot even understand it. Not only are smaller companies totally befuddled by the 1,500 pages of preamble to the regulations in the Federal Register, we have people who can't even spell "Federal Register" affected by the regulations.

The second excuse is that one doesn't have to look far to find basic inconsistencies in the requirements. All of us probably can think of examples where one is prohibited by one law or regulation from doing that which one is required to do by another regulation.

The third excuse for non-compliance is that in some respects compliance is impossible to achieve and maintain.

I would like to hear the Panel comment on these fallacies.

PARENTEAU: Your first point was that compliance does not necessarily mean environmental protection. I take it you mean that compliance too often serves the ends of the regulator but not the ends of environmental protection?

ANDERSON: There are a number of Superfund sites in the United States in which the disposal occurred in total compliance with the law. Yet, today they are on the National Priorities List and we are setting about spending 12 million to 50 million dollars on these sites, individually, to clean them up.

PARENTEAU: It is difficult to address that kind of question. There is more than a kernel of truth to the point you raise that compliance does not always equal environmental protection. But it is hard to address that in the abstract. There are probably instances where it is true, but there must be at least some instances where it is not true — where regulations do serve a purpose. They may not be efficient. They may be terribly inefficient, as is most of what goes on in a democracy. Nevertheless, they muddle toward some kind of socially desirable end.

I don't agree that environmental requirements, as complex and frustrating as they are, have nothing to do with environmental protection. I don't know that that was your point. But if it was, I can't accept that as a blanket evaluation. You can find instances where compliance is required for the sake of compliance, but I do not think you can infer much from that.

PARTICIPANT: Many people in this room probably would agree that there are large areas of the law beyond virtually all comprehension. We have all been saying so. There are many concerns about the fact that it is only at the fringes that anything gets attended to, while the central issues go on like a great lumbering beast that no one can change.

PARTICIPANT: About three or four months ago there was a short article in an Environmental Law Institute publication, by a gentleman from Colorado, that attracted some attention. His argument was that the most effective step that has been [20 ELR 10538] taken in the environmental area to protect the environment was creation of the concept of retroactive liability, as evidenced in Superfund. He went on to say that compliance with the regulations is virtually meaningless because industry, with all its lobbyists, has been able to reduce compliance to the lowest common denominator. The only way to get industry to do something right, he asserted, is to impose retroactive liability so that they will do what they know is right in the first place.

I don't think we have heard the last of that particular argument. I don't know how one deals with the situation, when one is out there, day to day, trying to figure out what one should be doing as well as what the regulations say one should do. But, Mr. Anderson, there are people who agree with you, who, I think, want to go in the wrong direction.

PANELIST: As with anything, the question here is one of "compared to what?" Does anyone have a model he or she would advance for consideration if the current system is bankrupt? The only decision in this field is which set of problems and anomalies we want. If we are smart enough to identify those, and the choices that go with them, then at least we can make an intelligent decision about what is good about the system that we are going to implement. No system that I know of is free from much of what we are talking about.

PARTICIPANT: I don't have a model, but I do have a modest proposal that underlies what almost all of you have said. Whether we like it or not, we are confronted with a system that is not likely to change. We have an enormous mass of regulations — a mass so large that, in fact, most of the people that affect our environment are not capable of understanding and reading even a fraction of them and are on the verge of giving up trying because it is such a hopeless task.

My modest proposal is that no regulation be issued unless it is accompanied by an enforcement and penalty policy. We must give people some clue to what is more important than the rest — some sense of what counts more than other things.

In the absence of that kind of prioritizing, people have to make their own decisions. And they make them by looking at what has the most likely and the most serious consequences for them. What they see is that the most likely and the most serious consequences exist under regulations that are easy to enforce and to identify. But those regulations rarely are the ones directed at the most serious problems or implementing policies that have the greatest consequence for our environment.

If we give people a sense of which of the thousands of regulations should be looked at first and which we should make the greatest effort to understand and comply with, perhaps we could start moving in a rational direction.

20 ELR 10532 | Environmental Law Reporter | copyright © 1989 | All rights reserved