GAO-01-283

Report to Congressional Requesters

United States General Accounting Office

GAO

February 2001 ENVIRONMENTAL

PROTECTION

EPA Should

Strengthen Its Efforts

to Measure and

Encourage Pollution

Prevention
Page i GAO-01-283 Pollution Prevention

Letter 1

Executive Summary 2

Chapter 1 Introduction 11

Chapter 2 Some Companies Have Implemented Pollution

Prevention But Full Extent is Unknown 14

Chapter 3 Key Factors Affecting the Use of Pollution

Prevention Techniques 25

Appendix I GAO Contacts and Staff Acknowledgments 46

Tables

Table 1: Pollution Prevention and Chemical Use at the Ten Largest

Users of Toxic Chemicals in Minnesota, 1995 to 1996 20

Figures

Figure 1: Facilities Reporting Pollution Prevention Activities to TRI

from 1991 through 1998 15

Figure 2: Types of Pollution Prevention Activities Reported in 1998 17

Abbreviations

ALAPCO Association of Local Air Pollution Control Officials

EMS Environmental Management System

EPA Environmental Protection Agency

GAO General Accounting Office

SEP Supplemental Environmental Project

STAPPA State and Terrirotiral Air Pollution Program Administrators

TRI Toxics Release Inventory

Contents
Page 1 GAO-01-283 Pollution Prevention

February 21, 2001

The Honorable Sherwood Boehlert

The Honorable Cal Dooley

The Honorable James Greenwood

House of Representatives

In response to your request, this report examines the extent to which

companies have adopted pollution prevention measures, the major

incentives encouraging companies to use pollution prevention strategies,

and the major disincentives that discourage their use of these strategies.

Unless you publicly announce its contents earlier, we plan no further

distribution of this report until 30 days from the date of this letter. At that

time, we will send copies to appropriate congressional committees, the

Administrator of the Environmental Protection Agency, and the Director

of the Office of Management and Budget. We will also make copies

available to others upon request.

Please call me at (202) 512-3841 if you or your staff have any questions.

Major contributors to this report are listed in appendix I.

Sincerely yours,

David G. Wood

Director, Natural Resources

 and Environment

United States General Accounting Office

Washington, DC 20548
Executive Summary

Page 2 GAO-01-283 Pollution Prevention

Each year American industry generates billions of pounds of toxic waste,

which can pose risks to the health of workers, consumers, and the public.

Traditionally, efforts to control pollution have focused on the treatment or

disposal of pollutants after they are created, often with “end-of-pipe”

pollution control technologies. In recent years, however, federal and state

regulators have given greater attention to controlling pollution at the

source by avoiding the creation of pollutants in the first place—an

approach commonly referred to as pollution prevention.

Interested in the potential for U.S. industry to make greater use of

pollution prevention activities, several Members of Congress asked GAO

to (1) examine the extent to which companies have employed pollution

prevention strategies, (2) identify the major factors that facilitate or

encourage companies to use pollution prevention strategies, and (3)

identify the major factors that discourage their use of pollution prevention.

In addressing this issue, GAO, among other things, examined quantitative

data available from EPA and other sources on companies’ pollution

prevention practices, interviewed representatives of relevant national

organizations and individual companies, and reviewed existing literature

on the subject. GAO also conducted site visits to a number of firms to

obtain detailed insights on their experiences in employing pollution

prevention measures.

While end-of-pipe pollution control strategies have helped further the

nation’s environmental goals and promote facilities’ compliance, they do

not necessarily keep “controlled” pollutants from entering the

environment. For example, a wastewater treatment plant may extract

hazardous pollutants before they are discharged into a receiving body of

water, but the resulting sludge generated by its pollution control process

may create a hazardous waste that must be disposed in a landfill—in some

cases posing continued environmental and health risks. Likewise, other

control strategies often result in the shuffling of pollution from one

medium to another without actually reducing pollution entering the

environment.

The Pollution Prevention Act of 1990 established a national policy that

pollution should be prevented or reduced at its source. Under the act,

pollution that cannot be prevented should be recycled or treated in a safe

manner; disposal or other releases should be used only as a last resort.

The act also directed EPA to develop and implement a strategy promoting

source reduction, which it defined as any practice that reduces (1) the

amount of any hazardous substance, pollutant, or contaminant from

Executive Summary

Purpose

Background
Executive Summary

Page 3 GAO-01-283 Pollution Prevention

entering any waste stream or being released into the environment prior to

recycling, treatment, or disposal, and (2) the hazards to public health and

the environment associated with the release. These measures can range

from simple techniques, such as covering exposed containers of volatile

organic compounds or tightening loose pipe connections, to completely

redesigning a production process or reformulating a product.

Among other things, the act also expanded the agency’s Toxics Release

Inventory (TRI) to include source reduction information from reporting

facilities. Created by the Congress in 1986 under the Emergency Planning

and Community Right-to-Know Act, TRI is an information system

containing data on estimated releases of hundreds of chemicals that

companies report annually to EPA and the states. However, the reporting

requirements apply only to a certain set of industries and to certain

chemicals of concern, and not all facilities. The Pollution Prevention Act

requires each of these affected facilities to report, among other things, (1)

the quantity of toxic chemicals entering any waste stream prior to

recycling, treatment, or disposal; (2) a comparison of the ratio of a

chemical’s production or use from the facility’s previous report; and (3)

the source reduction practices used, if any, to reduce chemical waste. EPA

compiles the data and makes them available to the public.

Limited quantitative data exist on the extent to which American industry

has sought to use pollution prevention methods to reduce pollutants

discharged from its facilities. Specifically, Toxics Release Inventory data

show that in each year between 1991 and 1998, approximately one-quarter

to one-third of reporting firms implemented at least one pollution

prevention measure. Nonetheless, according to studies conducted by

individual state agencies and other organizations (as well as the large

majority of industry participants, regulators, and analysts GAO contacted),

additional opportunities exist for pollution prevention that could provide

cost-effective ways to help meet environmental requirements. EPA

officials note that the limitations of available data inhibit both their ability

to ascertain the extent to which companies use pollution prevention

practices, and their attempt to target efforts to further encourage these

practices. Agency officials acknowledged that revisions in the information

companies provide TRI could significantly help address these needs.

For many companies, the opportunity for a financial return is the primary

impetus for pursuing pollution prevention. Another key factor is the

prospect that pollution prevention could improve a company’s public or

community image. Representatives of several firms told GAO, for example,

Results in Brief
Executive Summary

Page 4 GAO-01-283 Pollution Prevention

that the public availability of Toxics Release Inventory data on facilities’

discharges provided a powerful incentive to minimize releases of toxic

pollutants. Other factors that facilitate or encourage firms to pursue

pollution prevention include (1) laws and regulations that reduce

allowable pollutant discharges while allowing companies the flexibility to

achieve the reductions through pollution prevention; and (2) the

proliferation in recent years of business strategies, such as environmental

management systems, under which firms look comprehensively at the

environmental impacts of their products and services. Such strategies,

while not directly intended to promote pollution prevention, nonetheless

create an environment in which pollution prevention measures are more

likely to be adopted.

Technical challenges associated with new and sometimes unproven

techniques are one of the principal barriers hindering the wider use of

pollution prevention. While some pollution prevention techniques involve

relatively simple, common sense practices, others can involve significant

changes, such as revamped production practices or changes in raw

materials. These technical challenges are sometimes compounded by the

preference among key decisionmakers to rely on “tried and tested”

methods. Second, pollution prevention methods may be rejected because

they are not considered sufficiently profitable. The decision to adopt a

pollution prevention measure may require more justification than a

calculation that its benefits exceed its costs. Proponents of the measure

may need to demonstrate that its financial return will be greater than the

return from alternative investments competing for the firm’s capital. Third,

regulations that prescribe the use of specific techniques to meet pollutant

emission limits sometimes have the unintended effect of discouraging

pollution prevention. Recognizing the possibility that agency regulations

may have such unintended consequences, the Pollution Prevention Act

requires that EPA review its regulatory proposals and determine their

effect on source reduction. However, EPA has not systematically tracked

its compliance with this provision and therefore does not know the extent

to which source reduction has, in fact, been considered in the

promulgation of EPA regulations.
Executive Summary

Page 5 GAO-01-283 Pollution Prevention

GAO’s analysis of the Toxics Release Inventory data reveals that in each

year from 1991 through 1998, approximately one-quarter to one-third of

facilities reported implementing at least one pollution prevention activity.

The data also indicate that over the entire 8-year period, about half the

reporting companies indicated implementation of at least one pollution

prevention measure. EPA’s guidance on reporting requirements for the

Inventory also states that industrial facilities reporting prevention

activities must identify the types of strategies they use. Over the 8-year

period, good operating practices, such as improved maintenance or

covering solvent tanks when not in use to minimize evaporation, were the

most common type of pollution prevention approach, implemented in over

57,000 reported instances. Process modifications, such as installing a new

catalyst in a process that substantially reduces the generation of a

pollutant or modifying production equipment and piping in a way that

generates less waste, were cited in over 40,000 instances. Product

modifications, which include changing product design, specifications, or

packaging, were implemented in about 10,000 instances.

TRI pollution prevention data, however, should be interpreted with

caution. Although companies are required to report emissions of hundreds

of toxic chemicals, such as arsenic, benzene, and chlorine, they do not

report pollution prevention activities associated with other important

pollutants, such as sulfur dioxide and nitrogen oxide emissions from

power plants or nutrients from wastewater treatment plants. Second, as

EPA officials acknowledged to GAO, ambiguities in the guidance for

reporting source reduction activities likely result in inconsistencies in the

way sources are reporting their emissions. These officials acknowledged

that these problems inhibit their ability (1) to ascertain the extent to which

companies use pollution prevention and (2) to target efforts to further

encourage these practices. They also agreed that revisions to the

information, which the agency presently seeks from companies under

their Toxics Release Inventory reporting requirements, could significantly

help address these needs.

A number of state agencies have undertaken studies showing how

extensively specific jurisdictions or industries have used pollution

prevention. For example, in 1998, the Minnesota Office of Environmental

Assistance reported a significant use of pollution prevention measures

among the 10 largest managers of toxic chemicals in the state. Four of the

10 facilities achieved an overall reduction in chemical usage through

Principal Findings

Extent to Which Pollution

Prevention is Used
Executive Summary

Page 6 GAO-01-283 Pollution Prevention

pollution prevention. Under Massachusetts’ Toxics Use Reduction

program, reporting facilities reduced toxic waste generation by 48 percent

from 1990 to 1998—a decline state officials said could be attributed in part

to the greater use of pollution prevention. Data from EPA, state, and

industry sources also indicate that pollution prevention has generally

taken root to a greater extent among larger facilities than smaller ones.

Not surprisingly, companies are more likely to use pollution prevention

when it enhances business profitability. Representatives of four of the five

firms GAO visited and industry associations GAO contacted said that the

opportunity for a significant financial return was among the primary

reasons for pursuing pollution prevention. Company officials stated that

one key way that pollution prevention improves the bottom line is by

reducing production costs. Certain pollution prevention techniques, for

example, can help a firm lower its materials cost, improve the efficiency of

the production process, or eliminate the costs of treatment and disposal. A

printing firm representative, for example, cited his company’s use of

“direct to press” printing technology, which uses digital technology to

replace several steps in the traditional printing process. He said that direct

to press technology has not only offered the company cost savings through

greater efficiency but has also reduced pollution by (1) rendering

unnecessary the use of photographic film, plates, and processing

chemicals and (2) reducing wastewater discharges. Companies also

identified instances where they avoided having to install expensive

pollution control equipment like air stack “scrubbers” by controlling

emissions through less expensive pollution prevention techniques, such as

switching to cleaner fuels.

Several firms GAO contacted also cited a firm’s sensitivity to its

community relations and public image as an important incentive to pursue

pollution prevention. For example, the Dow Chemical Company’s Midland,

Michigan facility—in conjunction with the local community, a major

national environmental organization, and other concerned parties—agreed

to engage in a major pollution prevention experiment. In addition to

identifying numerous successful pollution prevention opportunities, Dow

officials and environmental representatives agreed that the experiment

helped to improve the facility’s corporate image.

According to some industry and regulatory officials, the public availability

of TRI data is another key factor that prods firms to use pollution

prevention to improve community and public relations. TRI contains

detailed information on the chemical releases of each reporting facility,

Key Factors That

Encourage Pollution

Prevention
Executive Summary

Page 7 GAO-01-283 Pollution Prevention

including the number and quantity of toxic chemicals used, waste

treatment methods used, and total pounds of each chemical emitted into

the environment. As a result, according to company officials, the year-toyear changes in a firm’s environmental performance are transparent and

fully available to the public.

Environmental laws and regulations can play a key role in promoting

pollution prevention in at least two ways. First, some regulations may

prompt firms to adopt pollution prevention practices to keep emissions

below regulatory thresholds. In some cases this allows them to avoid a

potentially costly and time-consuming permitting process; in other cases it

precludes the need to install costly emissions control technology. For

example, a representative of the Intel Corporation told us that, under a

major source air emissions permit, any changes to the production process,

including engineering or raw materials changes that might affect

emissions, must be reported to the permitting authority so that the

facility’s permit can be amended—an often time-consuming process. He

said that Intel could ill afford such delays, given the fast-paced and

competitive nature of the microprocessor industry. To avoid delays, the

official said, Intel facilities strive to stay below the threshold of emissions

that requires a facility to be regulated as a major source of volatile organic

compounds and hazardous air pollutants.

Similarly, regulations may encourage pollution prevention in instances

when firm emission standards are set, yet companies are given the

flexibility to determine how best to meet such standards. The Clean Air

Act’s Acid Rain Program, which set stringent performance standards for

sulfur dioxide emissions while allowing flexibility on the means of

achieving them, serves as a good example of the effectiveness of this

approach. Power plants are given the choice of reducing their emissions

either by installing “scrubbers” to trap sulfur dioxide before it enters the

atmosphere or by switching their fuel from high-sulfur coal to either

lower-sulfur coal or natural gas, thereby preventing a portion of the

pollutant from being emitted in the first place.1

 By switching fuels, some

utilities have reduced their emissions at lower cost than had they

purchased and installed scrubbers.

 1

The program also established an allowance trading system that permits electric utilities to

trade sulfur dioxide allowances and apply them against their annual emissions. The trading

system allows the utilities more flexibility in planning how to achieve the required

reductions in emissions and also enables them to minimize the costs of complying with

these reductions.
Executive Summary

Page 8 GAO-01-283 Pollution Prevention

GAO’s site visits, as well as recent studies, indicate that even after

extensive analysis and planning, some pollution prevention measures may

pose technical uncertainties and considerable risk. Officials from Kodak

Corporation, for example, cited their effort in the 1980s and 1990s to

reduce emissions of methylene chloride, a key ingredient used in

manufacturing the plastic sheeting that serves as the base of Kodak’s

photographic film. There were two paths to take to achieve reduced

emissions: significant engineering changes to the manufacturing facility,

which would reduce emissions through pollution prevention, or the

purchase of an “add-on” pollution control device. While the pollution

prevention measures met considerable internal resistance within the

project team because of concerns about regulatory deadlines, product

quality, and the potential for success with the use of pollution prevention

techniques, the measures were ultimately taken and proved to be

successful. Faced with similar technical uncertainties, however, some

companies (particularly smaller companies) have elected not to pursue

pollution prevention projects.

In many cases, financial concerns have also been a significant barrier to

companies considering whether or not to invest in pollution prevention.

Particularly for smaller firms, the up-front capital investment that some

pollution prevention measures require may deter a company from

changing long-established practices to pursue pollution prevention

opportunities. Larger firms may also find the financial threshold for

undertaking a pollution prevention project difficult to attain. A Dow

Chemical Company official told GAO that to justify undertaking a

proposed pollution prevention project, the project’s rate of return

generally has to exceed the “hurdle rate”—a rate of return at least as great

as the return expected of any alternative company investment. Similarly,

DuPont officials told GAO that the company’s environmental plan included

a database containing several thousand potential waste reduction projects.

Generally, 80 percent of the mass emissions are from 20 percent of the

sources. The firm ranks each project by cost and waste reduction

potential. The objective is to achieve for the entire list of proposals 80

percent of the benefit for 20 percent of their total projected cost. Projects

falling below this cutoff are generally not implemented.

GAO found broad agreement among industry representatives that while

regulatory standards have promoted pollution prevention by compelling

industry to lower its overall pollutant releases, certain types of regulations

can have the unintended effect of discouraging pollution prevention. In

particular, regulations that prescribe the use of specific technologies to

meet pollutant limitations can discourage (or preclude) regulated entities

Key Factors That

Discourage Wider Use of

Pollution Prevention
Executive Summary

Page 9 GAO-01-283 Pollution Prevention

from choosing alternative tools to achieve these limitations—tools that

often may include pollution prevention. The Clean Water Act and Clean

Air Act, for example, require EPA to establish technology-based discharge

rate limits based on “available” or “feasible” emission control

technologies. Such standards can discourage pollution prevention in a

number of ways, including emphasizing, or even requiring, end-of-pipe

compliance solutions instead of process or other pollution prevention

solutions. Even in instances when other preventive solutions are not

explicitly prohibited, a lack of time, resources, and willingness to accept

risk may lead state permit writers to disapprove methods of reducing

emissions other than the established control technologies.

To encourage greater consideration of pollution prevention in the

development of EPA regulations, the Pollution Prevention Act requires

EPA to review its regulatory proposals to determine their effects on

source reduction. However, the agency has not systematically tracked its

implementation of this provision and therefore does not know the extent

to which source reduction has been considered in the promulgation of

EPA regulations. According to EPA, anecdotal evidence suggests that such

consideration is, at best, inconsistent. While it may be impossible to

promote pollution prevention in all agency regulations, GAO concluded

that a greater awareness of these practices in the agency’s rule-making

process could help significantly to further this important national goal.

GAO recommends that the Administrator, EPA, amend the agency’s rule

for companies that report toxic releases to its Toxics Release Inventory

(1) to clarify reporting requirements so that facilities report their source

reduction activities in a consistent manner and (2) to obtain accurate data

on the quantity of emissions reduced so that the agency can ascertain the

extent and impact of source reduction activities.

GAO also recommends that the Administrator systematically determine

the extent of the agency’s compliance with the Pollution Prevention Act’s

requirement that EPA “review regulations of the Agency prior and

subsequent to their proposal to determine their effect on source

reduction.” If warranted by the results of the agency’s analysis, GAO

further recommends that the Administrator develop a plan to improve the

agency’s compliance.

GAO provided a draft of this report to EPA for its review and comment.

Officials from the agency’s Office of Pollution Prevention and Toxic

Recommendations

Agency Comments
Executive Summary

Page 10 GAO-01-283 Pollution Prevention

Substances said that overall the report was a balanced characterization of

the factors encouraging and discouraging pollution prevention. Among its

specific comments, the officials suggested that the report mention the

variety of programs and other activities the agency had initiated to

promote pollution prevention. While GAO’s draft report had touched on

several such activities, a fuller discussion of these activities was added to

chapter 3. GAO also added a discussion of the role of many state programs

in encouraging pollution prevention.

The officials also noted that in characterizing the impacts of its regulations

on pollution prevention, it is also important to consider the impacts on

pollution prevention of permitting, inspections, enforcement, and other

activities associated with the implementation of regulations. They further

noted that the Pollution Prevention Act encourages consideration of

pollution prevention in permitting, inspection, and enforcement; and that

consequently, any recommendation concerning the consideration of

pollution prevention in the development of regulations should also address

the way pollution prevention is taken into account in these

implementation-related activities as well. GAO’s recommendation focused

on EPA’s development of regulations because it was that part of the

process that was most frequently cited as a disincentive within the

regulated community to engage in pollution prevention. That said, GAO

acknowledged the value of any EPA effort to encourage greater

consideration of pollution prevention in permitting, inspection, and other

aspects of regulatory implementation.

Officials from EPA’s Office of Environmental Information provided

technical corrections to the discussion in chapter 2 relating to the Toxics

Release Inventory, which were incorporated into the final report. In

addition, GAO provided relevant sections of the draft report to

representatives of the companies visited during its review to verify

statements attributed to them and other information provided. Their

comments were also incorporated into the final report.
Chapter 1: Introduction

Page 11 GAO-01-283 Pollution Prevention

For many years, environmental regulation in the United States has focused

on “end-of-pipe” pollution controls to treat, store, and dispose of toxic

wastes and other pollutants. This overall strategy, however, has had

limited success in reducing the amount of pollution that ultimately enters

the environment. For example, a wastewater treatment plant may reduce

the amount of hazardous pollutants discharged into a receiving body of

water, but the resulting sludge generated by its process may create a

hazardous waste that must be disposed in a landfill—in some cases posing

continued environmental and health risks. Similarly, other control

strategies often result in a similar environmental “shell game” that

transfers pollution from one medium to another without actually reducing

the amount of pollution entering the environment. Industrial by-products,

for example, are often incinerated, but generally not without at least some

impact on air quality.

In recent years, federal and state regulators, industry, and environmental

organizations have devoted increased attention to controlling pollution by

avoiding the creation of pollutants in the first place—an approach

commonly referred to as pollution prevention. In recognition of this

growing emphasis on pollution prevention and the limitations of end-ofpipe pollution controls, in 1990 the Congress enacted the Pollution

Prevention Act, which established a national policy that pollution should

be prevented or reduced at its source. Under the act, pollution that cannot

be prevented should be recycled or treated in a safe manner, and disposal

or other releases should be used only as a last resort. The act also directed

EPA to develop and implement a strategy to promote source reduction,

which the act defined as any practice that (1) reduces the amount of any

hazardous substance, pollutant, or contaminant from entering any waste

stream or being released into the environment prior to recycling,

treatment, or disposal and (2) reduces the hazards to public health and the

environment associated with the release. Source reduction includes such

practices as modifying equipment, technology, processes, or procedures;

redesigning products; and substituting less-toxic raw materials.

Among other things, the act also included a mandate to expand the Toxics

Release Inventory (TRI) to include information on source reduction for

reporting facilities. Created by the Congress in 1986 under the Emergency

Planning and Community Right-to-Know Act, the TRI is an information

system to which companies report annually to EPA and the states on their

facilities’ estimated releases of hundreds of chemicals. The Pollution

Prevention Act requires each facility submitting information to the TRI to

report (1) the quantity of toxic chemicals entering any waste stream prior

Chapter 1: Introduction

Increased Focus on

Pollution Prevention
Chapter 1: Introduction

Page 12 GAO-01-283 Pollution Prevention

to recycling, treatment, or disposal, (2) a comparison showing the ratio

between a firm’s current chemical production or use and the facility’s

previous report, and (3) the source reduction practices used, if any, to

reduce chemical waste. EPA compiles the data and makes them available

to the public.

Interested in the potential for U.S. industry to make greater use of

pollution prevention activities, Congressmen Boehlert, Dooley, and

Greenwood asked us to (1) examine the extent to which companies are

employing pollution prevention strategies, (2) identify the major incentives

encouraging companies to use pollution prevention strategies, and (3)

identify the major disincentives that discourage their use of pollution

prevention.

To determine the extent to which companies employ pollution prevention

strategies, we analyzed quantitative data available from EPA and other

sources on companies’ pollution prevention practices, interviewed

representatives of relevant national organizations, and reviewed existing

literature on the subject. Our primary data source was EPA’s Toxics

Release Inventory, which agency officials cited as the most comprehensive

source of information available on pollution prevention practices

nationwide. We did not perform an independent test of the data’s accuracy

and completeness, but did obtain information on these matters from EPA

Headquarters officials. We also examined data from several individual

states, including Massachusetts, Minnesota, and New Jersey, which

experts had identified as leaders both in promoting pollution prevention

practices and in measuring the extent of implementation within their

jurisdictions.

We supplemented these data with interviews of officials representing EPA,

state environmental agencies, independent research groups such as the

Environmental Law Institute, environmental organizations such as the

Natural Resources Defense Council, and industry organizations such as

the Business Roundtable and the American Chemistry Council. We also

reviewed existing literature that addresses the extent to which pollution

prevention strategies have been employed.

To identify major incentives and disincentives affecting companies’ use of

pollution prevention, we interviewed representatives of the organizations

noted above, and reviewed published literature addressing these issues. To

obtain more detailed insights, we also conducted site visits to several firms

that had employed pollution prevention measures. In selecting the firms,

Objectives, Scope,

and Methodology
Chapter 1: Introduction

Page 13 GAO-01-283 Pollution Prevention

we considered a number of factors to help ensure that we would obtain

information on diverse pollution prevention experiences. Accordingly, we

included several different industries, such as chemical manufacturing,

microprocessor manufacturing, and printing firms. We also visited large,

diverse firms such as the DuPont, Kodak and Intel corporations, as well as

a smaller local facility (a Minnesota printing company). In making our

selections, we also sought to visit firms from different states in order to

identify what effect, if any, state pollution prevention policies had on the

firms’ pollution prevention practices.

During our site visits to these firms, we sought to obtain detailed

information concerning their decisions whether or not to pursue pollution

prevention, specific process or input changes implemented, the

environmental results of pollution prevention measures taken, and the

cost impacts associated with these measures. We supplemented these

visits by following up with other companies whose pollution prevention

practices had already been documented by other organizations. Dow

Chemical Corporation was among the companies that had recently

undertaken significant pollution prevention efforts at its La Porte, Texas

and Midland, Michigan facilities.

We conducted our work from June 2000 through January 2001 in

accordance with generally accepted government auditing standards.
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 14 GAO-01-283 Pollution Prevention

Limited quantitative data exist regarding the extent to which U.S.

companies have implemented pollution prevention measures. According

to EPA, the agency’s Toxics Release Inventory (TRI) database—while far

from a complete record on the subject—contains the most comprehensive

information of any source regarding both the type and extent of pollution

prevention methods in use. GAO analysis of TRI data showed that in each

year from 1991 to 1998, one-fourth to one-third of reporting firms

implemented at least one pollution prevention measure. Other information

supplied by EPA, as well as studies from individual states and other

sources, also documented the extent to which individual companies have

adopted pollution prevention techniques. This information was

supplemented by our contacts with industry participants, regulators, and

analysts, who conveyed a consensus that many additional opportunities

exist for companies to use pollution prevention in finding cost-effective

opportunities to meet environmental requirements.

Quantitative data on the extent to which companies have implemented

pollution prevention efforts are limited, and national data on emissions

reduced through pollution prevention measures do not exist. Data from

EPA’s TRI indicate that in each year between 1991 and 1998,

approximately one-quarter to one-third of reporting facilities implemented

at least one pollution prevention measure. Good operating practices, such

as improved facility maintenance and production process modifications,

were the most common types of pollution prevention measures reported.

Other EPA data, as well as analyses by individual state environmental

agencies and other organizations, also documented pollution prevention

efforts of specific industry sectors.

Since 1987, industrial facilities have been required to report annually to

the TRI on the types of chemicals they use and manufacture, as well as the

amounts of these chemicals that are being released into the environment

or otherwise managed as waste. Since the passage of the Pollution

Prevention Act of 1990, these facilities have also been required to report

on their efforts to prevent or reduce pollution at the source. As a result,

since 1991, the TRI has collected information on the number and type of

such source reduction activities implemented, as well as quantities of

chemicals recycled, combusted for energy recovery, and treated on and off

site.

Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Limited Quantitative

Data on the Extent of

Pollution Prevention

Implementation

TRI Data on the Use of

Pollution Prevention
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 15 GAO-01-283 Pollution Prevention

GAO’s analysis of TRI data reveals that in each year from 1991 through

1998, approximately one-quarter to one-third of facilities reported

implementing at least one pollution prevention activity.

Figure 1: Facilities Reporting Pollution Prevention Activities to TRI from 1991

through 1998

Source: GAO analysis of TRI data.

While figure 1 appears to show a steady decline in the number of facilities

engaged in pollution prevention activity, this does not necessarily indicate

a decline in the use or impact of pollution prevention measures. EPA

notes, for example, that companies may have launched their pollution

prevention efforts by focusing on a large number of simple activities and

have since moved on to larger, more complex activities. This could have

led to a decrease in the number of activities undertaken, while the amount

of effort devoted to pollution prevention may have remained

undiminished. Furthermore, the decline in the number of facilities

reporting pollution prevention does not necessarily reflect a decline in the

amount of emissions reduced through such efforts. Finally, pollution

prevention efforts are not discrete events with an impact at only one point

in time, but tend to have ongoing emissions reduction effects once

implemented. Therefore, if a company undertakes a pollution prevention

0

5000

10000

15000

20000

25000

1991 1992 1993 1994 1995 1996 1997 1998

Years

Total facilities

Total facilities reporting use of pollution prevention
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 16 GAO-01-283 Pollution Prevention

measure, such as substituting a non-toxic material for a toxic substance in

a production process, it is likely that the decrease in emissions will carry

through to subsequent years, but that the continuing impact of the

measure will go unreported.

We also identified the total number of facilities that reported implementing

pollution prevention over the course of the 8-year period. About half of the

facilities reported implementing at least one pollution prevention measure

during this period.

TRI also requires industrial facilities that report pollution prevention

activities to identify the types of strategies they use. Over the 8-year

period, good operating practices—such as covering solvent tanks when

not in use to minimize evaporation or improved maintenance scheduling—

were by far the most common type of pollution prevention approach,

implemented in over 57,000 reported instances.1

 Process modifications —

the second most commonly implemented category of pollution

prevention—were cited in over 40,000 instances. Process modifications

can include installing a new catalyst in a process that substantially reduces

the generation of a pollutant, or modifying production equipment and

piping in a way that generates less waste. Product modifications, such as

changing product design, specifications, or packaging, were the least

common form of pollution prevention—implemented in about 10,000

instances. Figure 2 illustrates the frequency at which facilities

implemented the different categories of pollution prevention practices in

1998. This distribution remained relatively consistent in each year during

the 8-year period we examined.

 1

This figure may include some degree of double counting. Facilities submit a separate TRI

form for each toxic chemical they report, and the same pollution prevention measure may

have addressed more than one chemical. Hence, a single instance of a pollution prevention

activity may have been reported two or more times.
Chapter 2: Some Companies Have

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Extent is Unknown

Page 17 GAO-01-283 Pollution Prevention

Figure 2: Types of Pollution Prevention Activities Reported in 1998

Note: The percentages in this figure do not add to 100 percent due to rounding.

Source: GAO analysis of TRI data.

There are several limitations to drawing broad conclusions from TRI data.

Facilities with fewer than 10 full-time employees are not required to report

to TRI. As a result, small facilities are excluded from reporting their

emissions even though they may collectively contribute a significant

amount. Secondly, only certain industries are required to report. Chemical

manufacturers, printers, and electric utilities must report while dry

cleaners and automotive repair shops, for example, have no obligation to

do so.2

 Finally, while hundreds of chemicals are reported to TRI, many

pollutants of concern, such as sulfur dioxide and nitrogen oxide emissions

 2

EPA has expanded the list of industries required to report over the years. For example,

metal mining and coal mining were added in 1998.

10% • Raw material modification

15% • Spill and leak prevention

• 8%

Inventory control

31% • Good operating practices

•

5%

Product modifications

•

7%

Surface preparation and finishing

•

5%

Cleaning and degreasing

•20%

Process modifications
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 18 GAO-01-283 Pollution Prevention

from power plants or nutrients from wastewater treatment plants, are not

covered. Moreover, the chemicals that are covered must be reported only

if the amount of discharge exceeds a specified threshold.

Another key limitation of TRI data is the potentially inconsistent and

incomplete manner in which companies report to the TRI. As EPA officials

noted, the guidance for reporting source reduction activities to the TRI is

ambiguous, and may result in inconsistencies in reporting. For example,

some facilities may report a source reduction activity only in the year it

was implemented, while other facilities may report the same activity year

after year. In addition, TRI gives no indication of the quantitative impact of

pollution prevention activities. EPA’s guidance on the TRI reporting

requirements states only that facilities must report on source reduction

activities. It does not require companies to report the quantity of emissions

reduced through these activities. Without data on the quantity of emissions

reduced, it is difficult to draw conclusions about the extent and impact of

source reduction activities.

EPA officials told us that the agency is considering ways to address some

of these limitations through rulemaking. The agency’s effort could include

definitions and guidance to assist companies in filling out the sections

applicable to source reduction activities. For example, the new rule could

address how facilities should report pollution prevention initiatives that

have an impact over a multi-year period. This rule would also help to

ensure that the data collected are more consistent across facilities. In

addition, EPA may also add additional reporting elements, such as the

quantity of toxic chemicals reduced due to source reduction activities.

EPA officials stated that this information would help them estimate the

progress of source reduction, which in turn would help them better target

their efforts.

A variety of studies and other sources provide additional information on

industry’s use of pollution prevention, supplementing EPA’s TRI data.

These sources tend to focus on specific industries or activities within

specific states. Some suggest that implementation of pollution prevention

may be somewhat broader than that implied by the TRI data. For example,

a draft 1997 EPA study on lithographic printers and larger manufacturing

companies found the implementation of pollution prevention activities to

Other Studies Also

Document Use of Pollution

Prevention
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 19 GAO-01-283 Pollution Prevention

be fairly widespread, especially among larger firms.3 Overall, 85 percent of

the 516 production officials for large manufacturers contacted reported

implementing pollution prevention measures, with the implementation of

good operating practices and modifications to the production processes

being the most common types. In general, larger facilities—as measured

by the number of production employees per shift—were more likely to

pursue pollution prevention than smaller ones.

According to EPA, several factors may account for the differences

between TRI data and the findings of its 1997 report. First, the study

focused on larger manufacturing firms that, as discussed in the last section

of this chapter, may have a greater tendency to engage in pollution

prevention than smaller firms do. Second, the data were obtained through

interviews with production-line officials and not corporate environmental

officials. These individuals, who make the day-to-day decisions, tend to

have the best knowledge about pollution prevention activities. Finally, the

questions in the survey did not focus specifically on environmental issues,

but covered a wide range of factors. By interviewing production-line

officials and avoiding the use of environmental nomenclature, this study

may have revealed “pollution prevention” efforts that were not recognized

as such by the implementing facilities.

In addition to EPA, a number of states have also undertaken studies that

shed some light on pollution prevention activities within their

jurisdictions. For example, the Minnesota Office of Environmental

Assistance published a report in 1998 that indicated significant use of

pollution prevention among the 10 largest managers of toxic chemicals in

the state. As table 1 indicates, 9 of the 10 facilities reduced the use of two

or more chemicals through pollution prevention techniques. In addition, 4

of the 10 facilities achieved an overall reduction in chemical usage through

pollution prevention. In some cases, the reductions were quite significant.

For example, the 3M-Cottage Grove facility reduced 17 of 32 chemicals,

and reduced the total chemical usage from about 26 million pounds to

about 14 million pounds. At 5 of the 10 facilities, however, reductions in

the use of some chemicals were more than offset by greater use of the

remaining chemicals. For example, although the Ashland Petroleum

Company substantially reduced its use of phosphoric acid and ammonia,

 3

Study of Industry Motivations for Pollution Prevention (Draft report). U.S. EPA Pollution

Prevention Policy Staff, April, 1997
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 20 GAO-01-283 Pollution Prevention

total use of toxic chemicals rose from 1.1 million in 1995 to 2.6 million

pounds in 1996.

Table 1: Pollution Prevention and Chemical Use at the Ten Largest Users of Toxic Chemicals in Minnesota, 1995 to 1996

Facility

Number of TRI

Chemicals Used or

Produced

Number of TRI

Chemicals Reduced

through Pollution

Prevention

Did Facility Achieve a

Net Reduction In TRI

Chemical Discharges?

Example of

Techniques Used

3M-Hutchinson

Tape manufacturing

plant

16 9 Yes Solvent recovery

3M-Cottage Grove

Hazardous waste

incinerator

32 17 Yes Changes in

operating practices

Boise-Cascade

Paper mill

9 2 No Spill and leak

prevention

Potlach Corporation

Paper manufacturer

8 5 No Re-circulation

within a process

North Star Steel

Steel manufacturer

8 5 Yes Increase purity

of raw materials

3M Company

Consumer products

14 10 No Modified product

design/composition

Ashland Petroleum

Oil refinery

21 7 No Improved loading

procedures

Koch Refining Co.

Chemical refining

32 17 No Improved storage

Sheldahl Inc.

Printed circuitry and

other electronics

9 6 Yes Substituted raw

 materials

Mixon Inc.

Metal casting factory

1 0 No Modified

 equipment

Source: 1998 Pollution Prevention Evaluation Report, Minnesota Office of Environmental Assistance,

February 1998.

The Massachusetts Toxics Use Reduction Act established the prevention

of pollution at the source as the state’s top priority in pollution control.

Data from the Massachusetts Toxics Use Reduction Program indicate the

extent to which facilities have reduced toxic emissions through pollution

prevention. Adjusted for changes in production,4

 reporting facilities

reduced toxic waste generation by 48 percent from 106 million pounds in

1990 to 55 million pounds in 1998. Although other factors may have

contributed to this decline (e.g., substituting a toxic chemical for another

 4

Because chemical use can fluctuate with production levels, Massachusetts adjusts its data

on toxic chemical use to account for changes in production, so that the effects of source

reduction activities can be compared from year to year.
Chapter 2: Some Companies Have

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Extent is Unknown

Page 21 GAO-01-283 Pollution Prevention

similarly toxic chemical not on the list), state officials said that a

substantial portion of the decline could be attributed to pollution

prevention efforts. A 1997 study of the state Toxics Use Reduction

Program reported that 351 of 434 surveyed facilities (81 percent) stated

that they had, or would, implement pollution prevention projects identified

in their toxics use reduction plans. Finally, in-depth studies at 22 selected

facilities found that each facility had implemented one or more pollution

prevention measures since 1990, although the intensity of the efforts

varied from firm to firm. Several firms had mounted aggressive efforts to

eliminate the use of toxic chemicals while others had reported more

limited efforts, such as modifying a single production process or reducing

the generation of a specific chemical.

Given the relative paucity of complete and reliable quantitative

information on the extent of pollution prevention activities nationwide, we

interviewed a range of knowledgeable parties, including federal and state

environmental officials, industry association representatives, and

environmental representatives. These officials concurred with recent

studies on the subject that had found that although some progress had

been made in implementing pollution prevention during the past 10 years,

significant opportunities have not been realized. Their comments also

revealed a strong consensus that larger firms had made significantly more

progress in institutionalizing pollution prevention than smaller firms.

The state pollution prevention officials we interviewed concurred that

while pollution prevention has received greater attention during the past

decade, substantial opportunities exist for pollution prevention across a

range of industries that could provide cost-effective ways to meet

environmental requirements. For example, a representative of the New

Jersey Department of Environmental Protection said that not only is “low

hanging fruit” going unpicked, some is “rotting on the ground.” She noted

that there are tremendous opportunities, including ones that companies

could implement with little difficulty. The New Jersey official added that

almost all facilities could identify pollution prevention opportunities in the

pollution prevention plans they submit to the state, even if they are not

implementing the measures. Similarly, a representative from the Illinois

Office of Pollution Prevention remarked that state engineers rarely visit a

facility without finding fairly simple pollution prevention opportunities to

suggest.

Regulators and Other

Knowledgeable

Sources Agree that

Additional Pollution

Prevention

Opportunities Exist
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 22 GAO-01-283 Pollution Prevention

This perception is consistent with the data published in a 1998 Business

Roundtable report.5

 The report stated that despite significant company

experience with pollution prevention, the concept remains timely for

manufacturers it surveyed. Seventy-eight percent of facilities responding

to a Roundtable survey stated that undiscovered pollution prevention

opportunities exist in their manufacturing operations, while 95 percent of

respondents stated that new opportunities would likely emerge in the next

three years.

State officials also stated that larger firms had generally made the greatest

progress in implementing pollution prevention measures. For example, an

official from Virginia’s Department of Environmental Quality explained

that large companies such as Ford, Merck and DuPont have taken

significant advantage of pollution prevention opportunities. This view was

supported by a representative of New York’s Department of

Environmental Conservation, who stated that smaller firms were generally

less aware of pollution prevention measures than larger firms were, or less

able to implement them. She underscored the potential environmental

significance of the problem by citing the state’s metal finishing industry,

which, she indicated, was composed mainly of small to medium firms that

generally did not pursue pollution prevention. She further noted that these

facilities emit metals and other pollutants that the state has identified as

priority pollutants for reduction. Almost all of the other state

environmental representatives we interviewed reported similar disparities

in the approaches toward pollution prevention that exist between large

and small firms.

EPA’s draft 1997 study highlighted this disparity between large and small

firms, as did the industry representatives we interviewed. For example, the

EPA study found that 90 percent of firms with 100 or more employees on

the average shift had reported implementing pollution prevention

measures, whereas 76 percent of facilities with between 1 and 19

production employees per shift had implemented pollution prevention.

Similar results were found for a sample of 520 lithographic printing

companies. We were also told repeatedly by representatives of the

chemical and electronics industries that a limited number of large firms in

those industries tended to be the most aggressive, while smaller firms

 5

A Benchmarking Study of Pollution Prevention Planning: Best Practices, Issues, and

Implications for Public Policy, The Business Roundtable Environment Task Force, August

1998.
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 23 GAO-01-283 Pollution Prevention

were less aggressive. The representative of the electronics industry noted

that the reluctance of smaller firms in that industry to pursue pollution

prevention has had an industry-wide impact because the manufacture of

printed wiring boards is largely dominated by small firms. These views

were echoed in a 1999 study by the Environmental Law Institute (ELI),

which noted that industries dominated by small business lack both the

technical and financial capacity to conduct the necessary research efforts

to identify new opportunities. Among other industries, ELI cited the

example of the dry cleaning industry as one that is “dominated by very

small firms and where the industry has financed little research on

alternative processes.”

6

Limited quantitative data exist on the extent to which American industry

has sought to use pollution prevention methods to reduce pollutants

discharged from its facilities. Nonetheless, targeted studies conducted by

individual state agencies and other organizations and a widespread

consensus among industry participants, regulators, and analysts strongly

suggest that additional cost-effective opportunities exist for pollution

prevention that could help companies fulfill their environmental

requirements.

EPA officials noted that gaps exist in the information facilities report on

their efforts to reduce toxic releases. They noted in particular that

ambiguities in the agency’s guidance on how facilities report source

reduction activities to the TRI may result in inconsistencies in how this

requirement is addressed from facility to facility. In addition, TRI reports

do not provide accurate information on the quantity of emissions reduced

from source reduction activities. As agency officials acknowledged,

revising the EPA guidance could both improve the accuracy of TRI

reporting and help the agency to better target its own efforts to further

encourage pollution prevention.

We recommend that the Administrator, EPA, amend the agency’s rule on

the way companies report toxic releases to TRI to (1) clarify reporting

requirements so that facilities report their source reduction activities in a

 6

Environmental Law Institute, Innovation, Cost and Environmental Regulation:

Perspectives on Business, Policy and Legal Factors Affecting the Cost of Compliance (May

1999: Washington D.C.), p. 19.

Conclusions

Recommendation
Chapter 2: Some Companies Have

Implemented Pollution Prevention But Full

Extent is Unknown

Page 24 GAO-01-283 Pollution Prevention

consistent manner and (2) obtain accurate data on the quantity of

emissions reduced so that the agency can ascertain the extent and impact

of source reduction activities.
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 25 GAO-01-283 Pollution Prevention

A number of factors affect companies’ decisions as to whether and how

they will pursue pollution prevention. The key incentives that encourage

companies’ use of pollution prevention tend to be economic in nature; a

company is more likely to use such practices when they enhance its

business profitability by making its processes more efficient. Other key

factors that affect companies’ decisions include the prospect that pollution

prevention could improve a company’s public or community image;

regulations that encourage reductions in allowable pollutant discharges

(particularly those offering companies the flexibility to choose how to

achieve such reductions); and the proliferation in recent years of business

strategies that incorporate more comprehensive environmental

management tools.

Major impediments to the wider use of pollution prevention include (1) the

technical challenges associated with new and sometimes unproven

techniques, (2) decisionmakers’ tendency to rely on methods that are

“tried and tested” and to avoid risks that could expose a company to loss,

(3) concerns over a potentially unfavorable rate of return (particularly

when compared with alternative investments under consideration), and

(4) regulations that prescribe a specific technology or method to meet

pollutant limitations, thereby discouraging or precluding the use of

alternative means of achieving necessary reductions.

Pollution prevention can offer firms a variety of financial benefits,

including lower costs for materials and more efficient processes.

Representatives of 4 of the 5 firms we visited and each of the industry

associations we contacted said that the opportunity for a significant

financial return, either by reducing production costs or by enhancing

revenues, was among the primary reasons for pursuing pollution

prevention.

The prospect of reduced production costs has been recognized as a

potential benefit of implementing pollution prevention measures. As EPA

noted in 1992, pollution prevention techniques can help a firm lower its

Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Factors That

Encourage Pollution

Prevention

Enhancing Business

Profitability
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 26 GAO-01-283 Pollution Prevention

materials cost, improve the efficiency of the production process, or

eliminate the costs of treatment and disposal.1

 A firm may reduce

materials costs by eliminating a particular ingredient or chemical, finding a

less-polluting raw material, or making adjustments to the production

process resulting in lower waste generation. In such cases, the cost of raw

materials and waste per unit of output may decline. For example, the cost

of materials can be reduced by production and packaging changes that

consume fewer resources, and thus result in less waste.

This point was further emphasized in our interview with a printing firm

representative, who characterized the printing industry as one comprised

of many small firms with narrow profit margins that are intensely

competitive. He noted that with profit margins of about 6 percent, it takes

about $450,000 in new sales to realize $25,000 in additional profits.

Therefore, a successful pollution prevention practice that reduced costs

could potentially add to the firm’s bottom line in a way that would be

difficult to achieve through increased sales. He also noted that pollution

prevention has sometimes been the indirect result of a production

innovation undertaken for non-pollution related financial reasons. As an

example, he cited “direct to press” printing technology, which uses digital

technology to supplant several steps in the traditional printing process. He

said that direct to press technology has not only offered the company cost

savings through greater efficiency, but has also reduced pollution by (1)

rendering unnecessary the use of photographic film, plates, and processing

chemicals and (2) reducing wastewater discharges.

Firms can also realize cost savings by substituting a cleaner, less-costly

material for a polluting chemical. For example, a National Pollution

Prevention Roundtable report identified an automobile parts manufacturer

that switched from a methanol-based adhesive to a water-based adhesive

to bond rubber and metal parts.2

 This practice reduced methanol

consumption at the facility from 240 to 24 drums per year, and

consequently diminished emissions of volatile organic compounds by 38

tons. As a result, the facility achieved operating savings of $21,000

annually.

 1

Environmental Protection Agency, Facility Pollution Prevention Guide, May 1992.

2

National Pollution Prevention Roundtable, A Global Pollution Prevention Compendium:

Case Studies and Legislative Efforts (Fall 1998).
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 27 GAO-01-283 Pollution Prevention

We also found instances in which pollution prevention techniques helped

firms avoid the costs of installing emissions control technology. Officials

at the DuPont Company cited one of their facilities that produces titanium

dioxide—a white pigment that gives opacity to products such as

toothpaste and paint. The emissions from the titanium dioxide

manufacturing process included sulfur dioxide and carbonyl sulfide. While

the facility had to install a stack scrubber to capture the sulfur dioxide

emissions, it was able to control 90 percent of its carbonyl sulfide

emissions through use of pollution prevention techniques. According to

DuPont officials, the company saved about $5 million at a single facility by

avoiding the need to install carbonyl sulfide control equipment, and has

since chosen to implement the same pollution prevention approach at five

other facilities.

According to the representatives of several firms and the industry trade

associations we contacted, a key incentive to engage in pollution

prevention is its potential to (1) improve a firm’s relationship with the

communities in which industrial facilities are located and (2) cultivate a

corporate image as a good environmental steward. For example,

maintaining good relations with local community activists was one of the

chief reasons the Dow Chemical Company pursued the Michigan Source

Reduction Initiative—an extensive effort to identify and implement

pollution prevention measures at Dow’s facility in Midland, Michigan. A

Dow official noted that the Midland facility had a long history with local

activists and non-governmental groups. He said these activists were well

informed about Dow’s plant and activities in Midland, and once Dow came

up with the overall goal of cutting waste by 50 percent, these activists

came up with a list of chemicals for Dow to reduce. He noted that Dow

officials might have picked different focus areas had they taken their

preference, but they focused instead on the priority areas the activists had

selected.

According to industry and regulatory officials, the public availability of

TRI data provides an additional strong incentive to use pollution

prevention techniques in a way that enhances its community relations and

public image. They noted that since TRI contains such detailed

information about reporting facilities’ use and release of toxic chemicals,

the year-to-year changes of a firm’s environmental performance are

transparent and are fully available to the public.

An official in Minnesota’s Office of Environmental Assistance agreed that

the public availability of these data has been a huge motivator for

Improving a Firm’s

Community Relations and

Public Image
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 28 GAO-01-283 Pollution Prevention

pollution prevention, and advocated that EPA strengthen its efforts to

publicize and enhance the public’s access to TRI data. Industry officials

also pointed to the public availability of TRI data as a key factor affecting

their community and public relations and therefore their incentive to

minimize discharges of TRI pollutants. A representative of DuPont said

that emissions reduction through pollution prevention remained a major

corporate goal in his firm, which had, at one time, been the largest emitter

of toxic substances under TRI. The Minnesota printing company

representative said that his firm specifically sought to reduce its overall

volume of TRI chemicals below the threshold at which it must be reported.

Other officials applauded programs that provide public recognition to

firms that minimize their discharges through pollution prevention. Several

pointed specifically to EPA’s 33/50 Program as a key impetus for engaging

in the practice. Begun in 1991, the program challenged firms to voluntarily

reduce their releases and transfers of 17 priority chemicals 33 percent by

1992, and 50 percent by 1995. Several industry and regulatory officials told

us that the 33/50 Program was a major spur for voluntary pollution

prevention activities. For example, a DuPont official stated that meeting

the goals of the 33/50 Program had had a significant public relations

benefit for the company, and the firm met its obligations largely through

pollution prevention rather than end-of-pipe controls. According to EPA,

TRI data also indicate that the 33/50 Program encouraged pollution

prevention. Specifically, a March 1999 report on the 33/50 Program

showed that participating facilities reported more pollution prevention

activities for the 17 priority chemicals under the 33/50 Program than for

other toxic chemicals reported to the TRI.

Environmental laws and regulations can promote pollution prevention in a

number of ways. First, firms may adopt pollution prevention in order to

keep emissions below regulatory thresholds. By taking these steps, they

may avoid a potentially costly and time-consuming permitting process, and

possible requirements to install costly emissions control technology. For

example, a representative of the Printing Industries of America explained

that a facility could be subject to significant regulatory requirements if its

emissions exceed the regulatory threshold for a pollutant, such as volatile

organic compounds. Accordingly, he said, many printing firms

implemented pollution prevention measures to keep their emissions below

these thresholds. He indicated, for example, that to stay beneath the

“major source” threshold, some firms have substituted other chemicals for

isopropyl alcohol, which leads to volatile organic compound emissions.

Complying With

Environmental Laws and

Regulations
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 29 GAO-01-283 Pollution Prevention

Similarly, an Intel representative told us that the Clean Air Act’s

requirement that major sources obtain federal permits is a major driver for

pollution prevention efforts at the company’s chip-making facilities. He

said that under a major source permit, any changes to the production

process, including engineering or raw materials changes that might affect

emissions, must be re-permitted. He said that Intel can ill afford such

delays, given the fast-pace and competitive nature of the microprocessor

industry. Accordingly, the official said, Intel facilities continue to strive to

stay under the threshold of being regulated as a major source of volatile

organic compounds and hazardous air pollutants.

Pollution prevention can also be encouraged by regulations and policies

that set firm emission standards for firms and industries, but allow firms

flexibility in how to meet such standards. For example, under its Project

XL and its Pollution Prevention in Permitting Program, EPA has offered

facilities operational flexibility in exchange for a commitment to maintain

emissions under a specific ceiling. In one XL project, a Merck

Pharmaceuticals plant in Virginia agreed to facility-wide caps on emission

of several air pollutants in exchange for the right to make process and

equipment changes without going through the permit review process.

Under this program, Merck converted its boiler at the facility from coal to

natural gas, thus achieving a 94-percent reduction in sulfur dioxide

emissions.3

The Clean Air Act’s Acid Rain Program serves as another example of a

flexible regulatory approach. It has encouraged pollution prevention by

setting stringent performance standards while allowing companies the

flexibility to decide the best means of achieving them. The program

requires electric power plants to reduce their sulfur dioxide emissions, by

choosing either to reduce their emissions by installing “scrubbers” to trap

sulfur dioxide before it enters the atmosphere or by switching their fuel

from high-sulfur coal to either lower-sulfur coal or natural gas, thereby

preventing a portion of the pollutant from being emitted in the first place.4

 3

National Academy of Public Administration, Environment.gov: Transforming

Environmental Protection for the 21st Century, November 2000.

4

The program also established an allowance trading system that permits electric utilities to

trade sulfur dioxide allowances and apply them against their annual emissions. The trading

system allows the utilities more flexibility in planning how to achieve the required

reductions in emissions and also enables them to minimize the costs of complying with

these reductions.
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 30 GAO-01-283 Pollution Prevention

By switching fuels, the utilities can sometimes reduce their emissions at

lower cost than if they had purchased and installed scrubbers.

A recent study prepared for EPA shows that many utilities have, in fact,

exercised their flexibility to employ the preventive fuel-switching

approach to achieve their required reductions.5 Specifically, between 1995

and 1997, fuel switching accounted for 63 percent of the total sulfur

dioxide emissions reduced under the program.

The benefits from this preventive option were underscored by

environmental officials at Dominion Virginia Power, who told us that the

flexibility under the program to switch to low-sulfur coal has the potential

to save them millions of dollars at a single power plant. Specifically, the

company is evaluating the feasibility of using imported, low-sulfur coal to

reduce sulfur dioxide emissions sufficiently to avoid the use of stack

scrubbers at the company’s Mount Storm power plant in West Virginia.

Company officials estimated the cost to add the three scrubbers to be

roughly $300 million.

Pollution taxes serve as an alternative regulatory approach that offers

strong financial incentives, rather than a strict mandate, to reduce

pollution. They also offer the flexibility to reduce pollution using

techniques, including pollution prevention, that go beyond conventional

pollution control. Under this approach, emission charges are levied on the

discharge of pollutants into the environment, and product charges are

levied on products deemed harmful to the environment when produced,

used, or disposed of. Thus, for example, taxing each pound of a facility’s

air pollutant emissions may give that facility an incentive to find ways to

prevent emissions in the first place. Generally, a pollution tax gives firms

an incentive to reduce pollution as long as the tax remains higher than the

cost of controlling the pollution. As polluters seek new ways to lower their

taxes by reducing pollution, the approach provides them both the

flexibility and the incentive to experiment with technical innovation,

including the development and use of pollution prevention techniques.

Finally, EPA officials pointed out that strong incentives to engage in

pollution prevention might result not just from laws and regulations

themselves, but from the compliance process associated with the

 5

A.D. Ellerman, P.L. Joskow, R. Schmalensee, J.P. Montero, and E.M. Bailey, Markets for

Clean Air: The U.S. Acid Rain Program.
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 31 GAO-01-283 Pollution Prevention

regulations. For example, EPA policy encourages pollution prevention

when negotiating enforcement settlements with industrial facilities that

have committed violations. During the settlement process, EPA uses two

basic avenues to promote pollution prevention. First, the agency may

require the respondent/defendant to use pollution prevention methods to

redress the original violation and to achieve compliance.6 Second, EPA and

the respondent/defendant may agree to the inclusion of a Supplemental

Environmental Project (SEP) as part of a settlement agreement. Under an

SEP, the respondent/defendant agrees to conduct one or more projects

that reduce risks posed to human health and the environment beyond

what the law requires. SEPs are not designed to redress the original

violation, but rather to mitigate the size of an assessed penalty. According

to EPA, innovative pollution prevention approaches have been used in

undertaking SEPs.

In recent years, American industry has engaged in an increasing number of

business practices that promote a more systematic and thorough approach

to environmental protection. While these practices may not have been

designed to promote pollution prevention, they nonetheless create an

environment in which pollution prevention measures have a greater

chance of being adopted.

One important example involves the use by a growing number of

companies of environmental management systems (EMSs). EMSs are

intended primarily to ensure that facilities are in full compliance with

applicable regulations. However, they also routinely encourage firms to go

beyond compliance, focusing on ways a facility can continue to improve

its environmental performance. Of particular note, according to an

international standard for environmental management systems,7

 firms

adopting a management system are to identify all facility operations and

processes that have negative environmental impacts, evaluate the

 6

In the absence of statutory, regulatory, or permit language, members of the regulated

community are free to choose how to comply. However, once a civil or administrative

action has been initiated, the specific means of returning to compliance are subject to

administrative or judicial orders, and/or mutual agreement between EPA and the

respondent/defendant. As part of this process, pollution prevention compliance methods

can be utilized along with more traditional end-of-pipe compliance methods.

7

Developed by the International Organization for Standardization, this standard is

commonly referred to as ISO 14001.

Implementing

Environmentally-Friendly

Business Practices
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 32 GAO-01-283 Pollution Prevention

significance of the impacts, and set objectives and targets for reducing

these negative impacts.

A 1998 analysis by the National Pollution Prevention Roundtable found

that the ISO 14001 standard’s emphasis on involvement of top-level

management and a systematic approach to environmental management

could encourage the use of pollution prevention.8

 This finding was

substantiated when the regulatory and industry officials we interviewed

indicated that a facility that adopted an environmental management

system would be more likely to pursue future pollution prevention

opportunities. For example, in exchange for granting flexibility in the

state’s environmental permitting process, Oregon’s Green Permits

Program requires participating firms to adopt an EMS, with the

expectation that this would move facilities to systematically identify,

monitor, and reduce environmental impacts. A representative of the

Oregon Department of Environmental Quality said the adoption of

management systems is beneficial, because it is one way to get businesses

to think about their processes—the first important step in pollution

prevention. Similarly, an official with the Wisconsin Electric Power

Company noted that the company routinely conducts environmental

audits of its facilities, primarily to ensure their compliance with

environmental requirements. According to the official, however, these

audits identify pollution prevention opportunities as well.

Environmental cost accounting can be an important element of an EMS.

According to EPA and others, the full costs of a firm’s environmental

impacts are often obscured by traditional accounting systems. Such

systems often obscure such items as the costs of obtaining an

environmental permit, evaluating alternative pollution control equipment,

and training employees. In addition, intangible costs, such as the costs a

facility incurs in maintaining a good relationship with customers and the

host community, may not be recognized as environmental costs. Instead of

explicitly recognizing such costs, firms often allocate them to other

categories such as overhead, and research and development. A 1998

analysis by Resources for the Future noted a widespread belief that sound

environmental accounting will help firms identify and implement

 8

The National Pollution Prevention Roundtable is a national organization of officials

representing state, local, and tribal pollution prevention programs. The analysis also noted

several drawbacks to the ISO 14001 standard as it pertains to pollution prevention.
Chapter 3: Key Factors Affecting the Use of

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Page 33 GAO-01-283 Pollution Prevention

financially desirable environmental innovations, such as pollution

prevention.9

Some firms, such as Kodak, have used a technique known as life cycle

assessment that, in effect, promotes pollution prevention in the design of

products. Life cycle assessment is primarily a tool for assessing the

environmental impact of a product or a material through its entire life

cycle, including the impacts of raw material extraction and processing,

manufacturing, distributing, product use, recycling, and disposal. For each

stage of the life cycle, analyses are performed on a wide range of

environmental and health impacts, such as energy consumed in product

manufacture or use; impacts of raw material utilization; the emissions

occurring as a result of processing or manufacture; and the prospects for

recycling or reusing the product. A representative of Kodak told us that

the firm had used life cycle analysis to compare the environmental impact

of 3 alternative designs for its one-time-use cameras. In this case, the

scope of the assessment was limited to raw material extraction and

manufacturing of the camera body and associated electronics. Analysts

assessed the alternatives’ impact on a wide array of environmental

indicators, including energy use, ozone depletion, and air and water

toxicity. In the end, one alternative proved to be superior to the other two

alternatives for all indicators. As a result, according to the Kodak official,

the pollution was minimized in the design phase of the camera.10

In addition to the incentives discussed above, EPA has initiated a number

of programs and other activities to promote the wider use of pollution

prevention. One example is the Design for the Environment Program, in

which the agency enters into partnerships with industry sectors to develop

products, processes, and technologies that have been designed with

environmental considerations in mind. One goal of the program is to

encourage the use of pollution prevention to reduce potential risks to

human health and the environment as an alternative to relying solely on

end-of-pipe controls. EPA’s Environmental Accounting Project encourages

 9

The Benefits of Improved Environmental Accounting: An Economic Framework to

Identify Priorities, Discussion Paper 98-49, James Boyd, Resources for the Future,

September 1998.

10Kodak officials also noted that life cycle assessment is an emerging science, and further

developments are needed before it can be used effectively and broadly during product

design.

EPA and State Pollution

Prevention Programs
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 34 GAO-01-283 Pollution Prevention

businesses to understand the full spectrum of their environmental costs

and integrate those costs into the decision-making and capital-budgeting

processes. EPA has also encouraged the use of pollution prevention by

providing grants to states. Under the Pollution Prevention Incentives for

States (PPIS) grant program, for example, funds are used to assist

businesses and industries in identifying better environmental strategies

and solutions for complying with regulations. Specifically, grants are

provided for state and tribal pollution prevention projects, such as

technical assistance, training, education, outreach, and awards and

recognition programs.

Many states also have programs that focus on promoting the adoption of

pollution prevention. Some states target their efforts toward

environmental assistance programs. For example, the Minnesota

Technical Assistance Program is a state-supported, non-regulatory

program under which technical staff help businesses and industries

identify opportunities where pollution prevention can help solve

environmental problems. Other states have regulatory integration

programs under which a facility’s compliance record is considered

holistically rather than just on a statute-by-statute basis. Under these

programs, pollution prevention opportunities are often encouraged during

the permitting, inspection, and enforcement processes. Other states

maintain clearinghouses to gather and disseminate information on

pollution prevention to interested organizations and the public at large.

Among the primary barriers hindering the wider use of pollution

prevention are the technical challenges associated with new and

sometimes unproven techniques. While some pollution prevention

techniques involve relatively simple, common sense practices, others can

involve significant changes, such as revamped production practices or

changes in raw materials. These technical challenges are sometimes

compounded by the preference among key decision-makers to rely on

“tried and tested” methods. Second, pollution prevention methods may be

rejected because they are not considered to be sufficiently profitable. The

decision to adopt a pollution prevention measure may require more

justification than a calculation showing that its benefits exceed its costs.

Rather, proponents of the pollution prevention measure may need to

demonstrate that its financial return will be greater than the return from

alternative investments competing for the firm’s capital. Third, regulations

that prescribe the use of specific techniques to meet pollutant limitations

have sometimes had the unintended effect of discouraging pollution

prevention. Recognizing the possibility of these unintended consequences,

Factors That

Discourage Wider Use

of Pollution

Prevention
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 35 GAO-01-283 Pollution Prevention

the Pollution Prevention Act requires that EPA review its regulatory

proposals to determine their effect on source reduction. However, EPA

has not systematically tracked its own compliance with this provision, and

therefore does not know the extent to which source reduction has, in fact,

been considered in the promulgation of EPA regulations.

Some pollution prevention techniques involve little more than the exercise

of common sense over such matters as how materials are labeled, stored,

or handled by facility personnel. Such measures require little investment in

time and money, and pose little chance that the steps taken will be

unsuccessful or result in unanticipated risk. In many cases, however,

pollution prevention measures can involve significant changes to

established practices, such as revamped production processes or changes

in raw materials used. Such measures can be significantly more difficult to

pursue. In addition, technical issues can pose substantial risks if changes

are costlier than anticipated, affect the company’s compliance with

environmental or other requirements, or affect the quality of its product.

Both our site visits and recent studies indicate that even after extensive

analysis and planning, some pollution prevention measures may pose

technical uncertainties and considerable risk. Officials from Kodak

Corporation, for example, cited their effort in the 1980s and 1990s to

reduce emissions of methylene chloride, a key ingredient used in

manufacturing the plastic sheeting that serves as the base of Kodak’s

photographic film. Officials saw two possible paths to take to achieve

reduced emissions: (1) significant engineering changes to the

manufacturing facility, which would reduce emissions through pollution

prevention, or (2) the purchase of an “add-on” pollution control device.

There was considerable internal resistance within the project team,

because it was uncertain whether the proposed pollution prevention

pathway could achieve the necessary emissions reductions, especially

considering the need to meet regulatory deadlines for achieving the

reductions. Concerns were also raised about the potential adverse effects

that the changes with the pollution prevention effort could have on

product quality. The pollution prevention measures were ultimately taken,

resulting in the attainment of emissions reduction goals within the

required regulatory timeframe. The measures also prevented emissions

that would have resulted from operating a large air pollution control

device; avoided the high cost of operating that device; and did not result in

negative impacts on production equipment or product quality.

Technical Challenges

Associated With New and

Sometimes Unproven

Techniques
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 36 GAO-01-283 Pollution Prevention

Similar concerns surfaced at the Dow Chemical Company’s La Porte,

Texas, facility as officials there launched efforts to determine whether

emissions of monochlorobenzene could be eliminated through in-process

recycling.11 This pollution prevention opportunity presented an attractive

alternative to the company because the successful recycling of the

pollutant could facilitate the closure of a waste incinerator—which would

otherwise require a major upgrade costing millions of dollars in order to

meet regulatory standards. To shut down the incinerator, however, the

facility found itself faced with a series of cascading issues. For example, it

had to find ways of addressing other waste streams that were also burned

in the incinerator, such as phosgene and methanol. These wastes would

either have to be eliminated, recycled, or treated in another way if the

incinerator were shut down, leading to a number of complications. The

methanol, for instance, could be addressed in a number of ways, but each

of the two options evaluated raised additional problems. For example, it

could be sold to another firm for recycling, but the methanol itself was

contaminated with impurities that would have to be removed before sale.

Similarly, it could be burned off site, but this would incur transportation

costs and the costs of off-site burning, which are typically higher than onsite burning. Shutting down the incinerator would also create

“downstream” technical challenges. A wastewater treatment plant located

at the facility used the incinerator’s water to keep its own effluent within

an acceptable range of salinity. Without the water from the incinerator, the

biological treatment that removes organic compounds from the

wastewater would be disrupted. These technical issues were critical

factors leading to the project’s deferral.

Smaller firms face even more significant technical challenges in pursuing

pollution prevention than their larger counterparts. According to the

industry and regulatory officials we interviewed, smaller firms often do

not have the technical ability or resources to pursue many pollution

prevention alternatives. One expert explained that pollution prevention

measures tend not to be “plug-in” technologies, but instead can require a

great deal of technical sophistication and resources. Small firms generally

do not have the technical ability and resources to identify such practices.

The Environmental Law Institute also made this point in a 1999 study that

showed that in the dry cleaning industry, “the small size and lack of

 11A fuller discussion of this experience is contained in Searching for the Profit in Pollution

Prevention: Case Studies in the Corporate Evaluation of Environmental Opportunities, by

James Boyd, Resources for the Future, May 1998.

Technical Uncertainties Are

Particularly Challenging for

Small Firms
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Pollution Prevention Techniques

Page 37 GAO-01-283 Pollution Prevention

research or financial capacity in virtually all firms in the industry

precluded research or development of several promising alternatives to

the use of perchloroethlyene, the principal solvent used in dry cleaning.”

12

The study concluded that industries dominated by small business lack

both the technical and financial capacity to conduct the necessary

research efforts to identify new opportunities.

Pollution prevention officials from Delaware, Illinois and New York also

emphasized that a lack of knowledge and technical sophistication inhibits

the wider use of pollution prevention by small and medium-sized firms. An

official at the New York Department of Environmental Conservation told

us that smaller firms face many barriers, including a lack of resources for

the initial outlay, a lack of expertise, an unwillingness to change timehonored practices, and time constraints. An official of the Illinois

Environmental Protection Agency raised similar issues, noting in

particular that the main barrier affecting small- and medium-sized firms

was a lack of information and technical sophistication. He said such firms

typically do not have the time and resources to research and evaluate their

options, and therefore need mentors, such as experts from larger firms, to

help them identify and implement various options. Accordingly, many

states have established technical assistance programs specifically

designed to assist smaller firms identify and implement pollution

prevention measures.

These difficult technical challenges are sometimes compounded by the

common phenomenon in many organizations to rely on “tried and tested”

methods and to avoid significant risks that could expose a company to

financial loss, liability, or other problems. This point was raised during

many of our interviews with state and industry officials. For example, a

representative of the Delaware Department of Natural Resources and

Environmental Control said that long established practices and habits can

be hard for a firm to break, especially when there are concerns about the

market and customer preferences. The official recalled a visit to a maker

of filing cabinets that had painted the inside of their high-end cabinets,

even though the metal was pre-coated. The official pointed out that the

company could save material and reduce waste by ending this practice,

but the company was reluctant to do so because it feared customer

 12Environmental Law Institute, Innovation, Cost, and Environmental Regulation:

Perspectives on Business, Policy, and Legal Factors Affecting the Cost of Compliance, May

1999.

Technical Challenges Are

Sometimes Compounded by

Institutional Resistance
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Pollution Prevention Techniques

Page 38 GAO-01-283 Pollution Prevention

reaction. After a few years, the company stopped painting the inside, and

the feared loss in sales did not materialize.

Similarly, the organization and allocation of responsibility for

environmental matters within a firm can impede identification and

implementation of pollution prevention measures. More complex pollution

prevention approaches require intimate familiarity with the production

process, such as that possessed by line workers, managers, and engineers.

However, as a 1994 report by the Office of Technology Assessment noted,

“Responsibility for finding pollution prevention solutions may not rest

with those most capable of doing so.”

13 Indeed, they may oppose pollution

prevention measures over concerns that the measures will divert

resources away from production, or over concerns that pollution

prevention initiatives may harm product quality. Environmental

management is often the responsibility of a separate department in a firm,

which may not have effective communication or working relationships

with other more knowledgeable staff.

As noted above, the prospect of financial gain has perhaps been the

primary impetus behind many successful pollution prevention efforts. In

other cases, however, concerns over financial risk or a poor rate of

return—particularly when compared to other candidates for capital

investment—often act as a deterrent to undertaking pollution prevention.

Particularly for smaller firms, the up-front capital investment required for

some pollution prevention measures may be enough of a deterrent to

discourage a company from changing long-established practices to pursue

pollution prevention opportunities. A pollution prevention official from

New York’s Department of Environmental Conservation reinforced this

point, noting that smaller firms in particular are generally unwilling or

unable to make the initial outlay for process changes or additional

equipment. The point was also made in the 1994 Office of Technology

Assessment report, which noted that some industries with low profits and

mature markets and equipment, such as metal finishing, invest less in new

 13U.S. Congress, Office of Technology Assessment, Industry, Technology, and the

Environment: Competitive Challenges and Business Opportunities, January 1994.

Pollution Prevention

Measures May Not Be

Sufficiently Profitable
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 39 GAO-01-283 Pollution Prevention

facilities. 14 As a consequence, making investments in pollution prevention

equipment can be more difficult, regardless of the expected payback.

Ironically, in the case of large corporations, a comparatively small

investment required by some pollution prevention efforts can become a

barrier, if the small size of the proposed project provides it with

insufficient visibility for corporate management. Such was the case in the

Michigan Source Reduction Initiative involving Dow Chemical Company,

the Natural Resources Defense Council, and other participants. Under the

initiative, participants sought to reduce releases of 26 priority chemicals

by 35 percent using only pollution prevention techniques. To do so, the

company’s Midland, Michigan facility identified and implemented 17

projects with capital costs ranging between zero and $330,000. According

to the report documenting the results of this initiative, a key lesson

learned from the project was that low-cost projects are often overlooked

by the engineering staffs of large companies even when they have the

potential to realize large reductions.15 A Dow official told us that the

company only pursued so many relatively small-scale measures because

they were treated as a group of projects under the company’s Source

Reduction Initiative. He suggested that had the measures been outside the

context of the Initiative, they probably would not have caught the

attention of upper management or the interest of engineering staff.

An additional key message stemming from the Dow experience is that it is

not necessarily sufficient that a project have a net positive return for it to

be viewed as a worthwhile investment. As a Dow official told us, a

proposed pollution prevention project has to have a projected return on

investment greater than or equal to the return expected of any company

investment—the “hurdle rate.” The environmental official participating in

this process noted that the concept of a hurdle rate was surprising, as she

had previously assumed that it would be sufficient incentive if a pollution

prevention project “paid for itself.”

The notion that pollution prevention proposals must often compete with

other projects—and therefore do more than simply pay for themselves—

was also cited by other industry and state pollution prevention officials we

 14Ibid.

15Dow Chemical Company, Natural Resources Defense Council, et. al., Preventing

Industrial Pollution at Its Source: The Final Report of The Michigan Source Reduction

Initiative, September 1999.
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Page 40 GAO-01-283 Pollution Prevention

interviewed. DuPont officials, for example, told us that the corporate

environmental plan has a database of several thousand potential waste

reduction projects. Generally, 80 percent of the mass emissions are from

20 percent of the sources. The firm ranks the proposals by cost and waste

reduction potential. Its objective is to achieve 80 percent of the benefit

from the entire list of proposals for 20 percent of their total projected cost.

Projects falling below this cutoff are generally not implemented. Similarly,

the representative of the Minneapolis printing firm told us that his

company had considered purchasing equipment that would have expanded

its ability to extract solvent from soiled shop towels on-site, as opposed to

shipping the soiled towels off-site for laundering. The representative

explained that after comparing this pollution prevention proposal to other

investments, the firm ultimately chose not to go ahead with the $135,000

proposal.

Broad agreement exists among environmental experts and practitioners

that in some respects, regulatory standards have been an important

catalyst in promoting pollution prevention by compelling industry to lower

their overall pollutant releases. However, certain types of regulations can

have the unintended effect of discouraging pollution prevention. In

particular, regulations that prescribe the use of specific technologies to

meet pollutant limitations can discourage (or preclude) regulated entities

from choosing the best tools to achieve these limitations—tools that may

often include pollution prevention.

The prescriptive nature of some environmental regulations has been the

subject of an extensive literature. In summarizing this literature, the

Environmental Law Institute (ELI) notes that a central problem has been

that the design of most standards under the Clean Water Act and Clean Air

Act require EPA to establish technology-based discharge rate limits based

on “available” or “feasible” emission control technologies.16 For air, such

standards include “reasonably available control technology” for existing

sources, “best available control technology” for new sources, and

“maximum achievable control technology” for hazardous pollutants. Water

standards include “best available technology economically achievable.”

 16Environmental Law Institute, Innovation, Cost and Environmental Regulation:

Perspectives on Business, Policy, and Legal Factors Affecting the Cost of Compliance, May

1999. The Environmental Law Institute is an independent research and education center

that seeks to develop effective solutions to pressing environmental problems.

Prescriptive Regulations

Often Discourage Pollution

Prevention Techniques
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 41 GAO-01-283 Pollution Prevention

Although such standards do not necessarily preclude companies’ use of

pollution prevention, ELI notes that such standards can discourage

pollution prevention in a number of ways. For example, they can

emphasize, or even dictate, end-of-pipe compliance solutions instead of

process or other pollution prevention solutions. Even in cases where other

preventive solutions are not explicitly prohibited, the lack of time,

resources, and willingness to accept risk may lead state permit writers to

disapprove methods of reducing emissions other than through established

control technologies. ELI also notes that fixed rate standards do not

provide incentives for further progress. Consequently, firms that have

installed end-of-pipe control technologies may have little reason to pursue

pollution prevention efforts and instead focus mainly on staying in

compliance. ELI summarizes the effect of prescriptive standards by noting

that they “may severely limit innovation, creating higher costs than

necessary.”

While acknowledging that such regulations are framed to some extent by

their governing statutes, ELI also asserts that many of the problems in the

current system could be avoided by better designed regulations—ones that

set overall performance standards while allowing for greater flexibility on

how to achieve those standards. ELI cites the history of regulation of

sulfur dioxide emissions by electric power plants as perhaps the best

example of the problems with technology prescriptions. ELI notes that

cost estimates for mandated scrubbers “which allows no room for

innovation except in scrubber technology” were about $7 billion per year.

By contrast, the use of a performance standard (adopted in 1990)—which

included an emissions cap for facilities which could be achieved flexibly

through emissions trading, switching to less-polluting fuels, and other

innovative techniques—was estimated to cost about $2.5 billion.

Another example raised by state regulatory officials we contacted focused

on a key aspect of EPA’s Maximum Achievable Control Technology

(MACT) policy. Referred to as EPA’s “once-in, always-in” policy, this

requirement permanently subjects firms to detailed administrative

requirements. According to an EPA guidance issued in May 1995, facilities

classified as major sources of hazardous air pollutants on the first

compliance date after a new MACT standard is promulgated are

permanently required to comply with the requirements for major sources,

even if their emissions are subsequently reduced below the “major source”

threshold. EPA explains that a facility’s reduced emissions would not be

federally enforceable, and that emissions may not always stay below the

MACT threshold once they go below it. According to the State and

Territorial Air Pollution Program Administrators and the Association of
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 42 GAO-01-283 Pollution Prevention

Local Air Pollution Control Officials (STAPPA/ALAPCO), however, the

policy discourages pollution prevention methods, such as new

manufacturing techniques, which could lower emissions well below

specific MACT standards. Moreover, there is no incentive for a facility to

consider further reductions or to investigate new, less-polluting

technologies, since they remain subject to the MACT standards regardless

of their emissions. In a 1998 letter to EPA, the STAPPA/ALAPCO Pollution

Prevention and Sustainability Committee cited an example of a furniture

manufacturing facility that switched from solvent-based to ultraviolet

light-cured coatings, and thereby reduced its emissions of hazardous air

pollutants from 50 tons to 200 pounds annually, below the MACT

threshold. Had the switch been made before the MACT compliance date,

the facility would still have been subject to the MACT requirements. The

Committee further stated that the ultraviolet light curing technology

should increasingly be available to other sources. However, due to the

“once-in, always-in” policy, there was no incentive for a source to commit

capital to changing its processes since it would still be subject to the

MACT threshold. While EPA has not yet resolved this issue, the agency is

currently considering several rulemaking approaches to address the

problems identified by state regulators, including regulatory language that

can be included in existing and future MACT rules.

Beyond the impacts of any particular regulation on pollution prevention,

an Intel representative also suggested that the cumulative effect of

numerous regulations might have an additional dampening effect on

companies’ use of these practices. He stated that the sheer volume and

complexity of these regulations often overwhelm environmental staffs,

whose primary job is to keep their firms in compliance. Their efforts to

comply with regulations often divert them from focusing on preventive

approaches that could help them achieve more optimal environmental

results. Several other state and industry officials we contacted echoed

these sentiments. For example, a representative of a printing industry

trade association said that many firms see pollution prevention as a way of

going “beyond compliance,” but that they may have little incentive to do

so. He explained that if they must devote time and money to meet detailed

permit requirements, they see no compelling reason to go further.

Thus, while the goal of pollution prevention has broad support within and

outside EPA, and is explicitly supported by the Pollution Prevention Act,

agency regulations have sometimes had the unintended effect of

discouraging these practices. In recognition of the problem, the act

required the EPA Administrator, as part of a strategy to promote source

reduction, to “review regulations of the Agency prior and subsequent to
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 43 GAO-01-283 Pollution Prevention

their proposal to determine their effect on source reduction.” Importantly,

the provision does not preclude the adoption of regulations, such as those

discussed above, but rather requires that pollution prevention be

considered in their development, and that they be reviewed to determine

their effect on pollution prevention.

Yet according to EPA officials, the agency has not systematically tracked

its implementation of this provision and therefore cannot identify the

extent to which source reduction has been considered in the promulgation

of EPA regulations. A 1996 EPA study, however, suggested that

consideration of source reduction in the development of regulations has

been, at best, inconsistent.17 The report, which examined the agency’s

efforts to incorporate pollution prevention in a sample of its regulations,

concluded that “pollution prevention approaches are still not used

consistently in EPA rule development and implementation,” and that in the

case of many rulemakings, goals are set “in a way that discourages people

from seeing [pollution prevention] as their principle of first choice in the

environmental management hierarchy.”

The report noted that requirements of other statutes have the potential to

preclude or discourage wider consideration of pollution prevention in

rulemakings.18 However, it also cited instances where the belief among

staff that statutes prohibit pollution prevention approaches may in fact be

unwarranted. It noted, for example, that “the lack of explicit direction in

statutory language in [the Resources Conservation and Recovery Act and

the Clean Water Act] on prevention fosters a perception that these statutes

do not make prevention a priority, but it is not clear whether they pose

actual barriers.” Indeed, the report cited a number of obstacles other than

the statutes that “detract from a consistently strong multi-media and

[pollution prevention] perspective in rulemaking.” Among the obstacles

discussed were the lack of incentives for multi-media coordination in

planning and budgeting, difficulties in promoting pollution prevention

process changes and innovative technologies within the agency, a lack of

understanding about cross-media impacts, and the lack of clarity as to

 17Environmental Protection Agency, Preventing Pollution Through Regulations: The Source

Reduction Review Project, February 1996.

18For example, the report cites the Clean Air Act’s requirement to address 189 Hazardous

Air Pollutants, noting that “the inflexibility of this requirement can often mean requiring

expensive control devices even when prevention options exist.”
Chapter 3: Key Factors Affecting the Use of

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Page 44 GAO-01-283 Pollution Prevention

how leadership for pursuing pollution prevention should be shared among

all major EPA offices.

Given the prospect that pollution prevention may be used as an option

more frequently than currently recognized by agency rulemakings, we

believe it is all the more important for the agency to ascertain its

compliance with the Pollution Prevention Act’s requirement that it

determine the effect of its regulations on source reduction efforts.

Many of the factors that influence a company’s decisions concerning

pollution prevention practices are beyond the purview of government

policy. Whether to undertake pollution prevention is typically a business

decision that is influenced largely by a company’s judgment as to whether

an investment in pollution prevention will benefit it financially.

One notable exception, however, is in the design of environmental

regulations, some of which have had the unintended consequence of

discouraging pollution prevention practices. In some cases, EPA may have

no means to address them. The design of some regulations, for example,

may be constrained by their governing statutes. In other cases, however,

EPA may be better able to take the national goal of promoting pollution

prevention into consideration in developing its regulatory proposals.

To encourage greater consideration of pollution prevention in

development of EPA regulations, the Pollution Prevention Act requires

EPA to review its regulatory proposals to determine their effects on

source reduction. However, the agency has not systematically tracked the

implementation of this provision, and therefore does not know the extent

to which source reduction has, in fact, been considered in the

promulgation of EPA regulations. Anecdotal evidence suggests that, at

best, such consideration is provided on an inconsistent basis.

While it may be impossible to promote pollution prevention in all of the

agency’s regulations, a greater awareness of these practices in the

agency’s rulemaking process can help significantly to further this

important national goal. Accordingly, we believe it would be useful for

EPA to undertake a systematic analysis to determine its compliance with

this provision, and if necessary, develop a plan to improve its compliance.

We recommend that the Administrator, EPA, systematically determine the

extent to which the agency is complying with the Pollution Prevention

Conclusions

Recommendation
Chapter 3: Key Factors Affecting the Use of

Pollution Prevention Techniques

Page 45 GAO-01-283 Pollution Prevention

Act’s requirement that EPA “review regulations of the Agency prior and

subsequent to their proposal to determine their effect on source

reduction.” If warranted by the results of the agency’s analysis, we further

recommend that the Administrator develop a plan to improve the agency’s

compliance.

EPA commented that our report could mention a variety of agency

programs and other activities initiated to promote pollution prevention.

While our draft report had touched on several of these activities, we added

a fuller discussion of them to this chapter. We also recognized the role of

many state programs in encouraging pollution prevention.

The officials also noted that in characterizing the impacts of its regulations

on pollution prevention, it is also important to consider the impacts on

pollution prevention of permitting, inspections, enforcement, and other

activities associated with the implementation of regulations. They further

noted that the Pollution Prevention Act encourages consideration of

pollution prevention in permitting, inspection, and enforcement; and that

consequently, any recommendation concerning the consideration of

pollution prevention in the development of regulations should also address

the way pollution prevention is taken into account in these

implementation-related activities as well.

The draft report had acknowledged that these implementation activities

can significantly affect pollution prevention efforts. It cited the

enforcement process as an example, noting that innovative pollution

prevention measures are often included in enforcement settlement

agreements. Our recommendation, however, focused on EPA’s

development of regulations (as opposed to their implementation) because

it was that part of the process that was most frequently cited as a

disincentive within the regulated community to engage in pollution

prevention. That said, we acknowledge the value of any EPA effort to

encourage greater consideration of pollution prevention in permitting,

inspection, and other aspects of regulatory implementation.

Agency Comments
Appendix I: GAO Contacts and Staff

Acknowledgments

Page 46 GAO-01-283 Pollution Prevention

Steven Elstein, (202) 512-6515

In addition to the individual named above, Mike Hartnett and Stephanie

Luehr made key contributions to this report. Important contributions were

also made by Chuck Bausell,Tim Guinane, David Henry, Karen Keegan,

and Jonathan McMurray.

Appendix I: GAO Contacts and Staff

Acknowledgments

GAO Contact

Acknowledgments

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