Category Archives: economics

Energy Policy Now: An EPA After Scott Pruitt

April 23, 2018

EPA Administrator Scott Pruitt has come under bipartisan fire for an array of ethical missteps that range from lavish spending on travel to the granting of illegal pay raises for select EPA staffers. Over the past week, staunch Pruitt supporters such as Senate Environment and Public Works Chairman John Barrasso have questioned the transparency with which Pruitt has run his office, and legislators from both sides of the aisle have suggested that Pruitt may not be fit to lead the agency.

Could Pruitt’s tenure at the EPA be coming to an end? And if so, what direction might the embattled agency take under new leadership, such as that of recently confirmed Deputy EPA Administrator Andrew Wheeler?

In this special episode of Energy Policy Now, Penn Law energy and environment legal experts Cary Coglianese and Daniel Walters discuss the swirl of possible ethical violations that have led to the Pruitt controversy. They explore what Pruitt’s departure could mean for his efforts—and those of the Trump administration—to deprioritize environmental protection at the EPA and roll back environmental regulations.

The Energy Policy Now podcast, now in its second season, offers insights from Penn experts, industry and policy leaders on the energy industry and its relationship to environment and society.

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Driving the New Climate Economy: How Companies and Communities Can Thrive in a Changing World

By Lisa Manley, Director, Sustainability Engagement, Mars

April 7th, 2018

There are clear signals that the climate has changed over the past century. Around the world, people are beginning to feel the effects, from increased average and extreme temperatures, to changes in rainfall patterns, to more severe and less predictable storms. At Mars, we source key agricultural materials from countries and communities that are vulnerable to the impacts of climate change. We believe it’s time to take a new approach to addressing this challenge, using our influence and reach to take action that proactively addresses the impacts of climate change within our supply chain and operations. Here are three things our business and others are doing to take action.

Setting Science-Based Targets

 More than 97 percent of actively publishing climate scientists agreehuman activity is extremely likely to be causing the climate-warming trends over the last century. To avoid the worst consequences of climate change, science tells us we should limit global warming to less than the two degree Celsius threshold outlined in the Paris Agreement on climate change. As the saying goes, you can’t manage what you don’t measure. With that in mind, the first thing business should do is trust the science; then align measurable goals and actions around that science.

We looked to the best-available science to guide us in setting our climate goals at Mars. That science says we must reduce the total greenhouse gas (GHG) emissions across our value chain by 27 percent by 2025 and by 67 percent by 2050(from 2015 levels). That means not only changing how we operate, but also working with partners and suppliers to transform entire value chains so that the ingredients we need to make our best-loved products, like M&Ms and Uncle Bens, are produced with lower environmental impacts. This isn’t an easy goal to meet. But we know it’s what’s necessary to unlock the systemic changes that are needed to benefit people and the planet.

Committing to Renewable Energy

The second thing business should do is look for the places where we can get the most immediate momentum and leverage that momentum for scale. At Mars, energy use is the major driver of our GHG emissions from direct operations. That’s whywe’re big fans of renewable electricity with a goal to eliminate 100 percent of the GHG emissions from our direct operations by 2040. This goal covers the energy use from about 420 sites in more than 80 countries around the world.

We’re already using or purchasing renewable electricity to cover 100 percent of our operations in Belgium, Lithuania, the United Kingdom and the United States. And in 2018, we plan to add Austria, the Czech Republic, France, Mexico, Poland and Spain to this list.In addition to renewable electricity, renewable thermal energy is an important part of our energy use in our factories. For that reason, we helped launch the Renewable Thermal Collaborative – a coalition for organizations that are committed to scaling up renewable heating and cooling at their facilities and dramatically cutting carbon emissions.

Fostering Executive Engagement and Advocacy

The third imperative for business action is to ensure we are aligning what we say with what we do. We need more vocal business advocates for climate action. We are walking this talk through coalitions such as We Are Still In, a declaration made by 2,700 cross-sector leaders in the U.S. to commit to tackling climate change, ensuring a clean energy future and upholding the Paris Agreement. It also can happen through executive advocacy. For example, our Mars chairman, Stephen Badger, recently authored an op/ed piecein The Washington Post,which makes a strong call to action to global businesses on climate change.

We also need to extend our advocacy to include the seats of power and influence within government. That’s why we engage with groups like the Ceres BICEP(Business for Innovative Climate and Energy Policy) Network, to bring business leaders’ voices to Capitol Hill and local legislatures on climate action and clean energy.

For global businesses, it is our time to step up and lead on climate action. This is not just the “right thing to do,” but also makes good business sense; investing in sustainable practices today will help us become stronger, more resilient businesses in the future.

 

SEM HeadshotLisa Manley, Senior Director of Partnerships & Engagement, Mars, Incorporated

Lisa is Senior Director of Partnerships and Engagement within the sustainability team at Mars, Incorporated. In this role, she works to build momentum for the company’s Sustainable in a Generation Plan through compelling communications and engagements as well as uncommon collaboration.  She works with the global sustainability team to create and oversee integrated sustainability strategy; set high-level goals and commitments; assess and drive scaled investments; and manage global sustainability partnerships and programs. Priority platforms for engagement include climate action, water stewardship and land use within Mars’ approach to healthy planet; increasing income, respecting human rights and unlocking opportunities for women within Mars’ approach to thriving people; and food safety & security, product & ingredient renovation and responsible marketing within Mars’ approach to nourishing wellbeing.

Lisa has nearly twenty years of experience working to advance sustainable business growth with consumer goods companies such as Mars and The Coca-Cola Company.

Lisa holds a bachelor’s degree in international relations and a master’s degree in higher education administration from the University of Virginia.  Outside of work, she collects photography and enjoys golf, tennis and biking.

Smart City Pioneers: Forging Solutions to Early Challenges

Collaboration between SUEZ, Wharton IGEL and Knowledge@Wharton

February 14th, 2018

Many share the hope that today’s troubled urban centers can be transformed into tomorrow’s smart cities. At a recent conference, “Smart Utilities: A Bridge to Smart Cities of the Future,” co-sponsored by Suez and Wharton’s Initiative for Global Environmental Leadership (IGEL), some early pioneers in this effort shared their experiences and thoughts.

Laying the Groundwork: Philadelphia’s Strategic Approach to Becoming a Smart City

Rather than tackle individual projects piecemeal, as so many cities have done, Philadelphia’s Office of Innovation and Technology (OIT) decided to create a roadmap that would guide and ensure long-term coordination of its wide-ranging projects.

Collect, Crunch, Collaborate: Fresh Approaches to Smart Cities’ Core Functions

Utilities are among those embracing the promise of smart technology by collecting and sharing data with customers. They — and others providing critical services to cities, campuses and industry — are using human and machine intelligence to capitalize on the data pouring in from these smart systems. And they are finding ways to save money by sharing resources and collaborating.

Smart Money: Developing New Funding Mechanisms for Smart Initiatives

Few of the methods traditionally used to finance infrastructure projects are of much help when it comes to funding smart city initiatives. Fortunately, creative new approaches are being pioneered by cities, utilities, investors and businesses across the country.

Read the full report here
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Energy Policy Now: The Local View of Fracking

Featuring Daniel Raimi is a senior research associate at Resources for the Future, where he focuses on energy and climate policy. He also teaches energy policy at the Gerald R. Ford School of Public Policy at the University of Michigan, and is a faculty affiliate at the University of Michigan Energy Institute.

January 17th, 2018

The view of Americans on the environmental and economic implications of fracking continues to be sharply divided a decade after the shale revolution began. But the author of a new book, The Fracking Debate, finds more nuanced perspectives in wellhead communities.

The shale revolution in the United States is now more than a decade old.  In the intervening years, energy companies have tapped vast, previously uneconomical oil and natural gas resources through a suite of technologies, including hydraulic fracturing, commonly called fracking, and horizontal drilling. The results have been dramatic. Today the U.S. is a leading producer of oil, and the top global supplier of natural gas.

But the shale revolution has also bred controversy as the country has struggled to balance fracking’s economic and environmental impacts. Those for and against fracking have often gone to great lengths to promote their views. Along the way, previously quiet communities, from Pennsylvania to North Dakota, have struggled to accommodate waves of drilling rigs and energy workers.

Guest Daniel Raimi spent several years traveling the country to get to know the communities where fracking takes place. His travels led to a new book, The Fracking Debate: The Risks, Benefits, and Uncertainties of the Shale Revolution. In it Raimi seeks to relate the perspective of communities, and citizens, on fracking’s front lines, and provide unbiased answers to some of the biggest questions surrounding fracking.

The Energy Policy Now podcast, now in its second season, offers insights from Penn experts, industry and policy leaders on the energy industry and its relationship to environment and society. 

 

Building a Green Empire

Netronix Pic

By Julie Spitkovsky, Netronix, Inc.

You can’t solve a problem you don’t understand.  Raising awareness, sharing information and cultivating interest about indoor air quality are important tools for building design professionals to exploit at the start of the design process to achieve optimal indoor air conditions from the start of a project through building occupancy.

Getting people to break habits is extremely difficult.  Paul Scialla, Founder and CEO at Delos explains, “Our built environments can shape our habits, regulate our sleep-wake cycle, drive us toward healthy and unhealthy choices, and passively influence our health through the quality of our surroundings.  We spend 90% of our time indoors, and by incorporating a variety of healthy design, construction and operations strategies through evidence-based programs such as the WELL Building Standard, we have a profound opportunity to advance human health, well-being and productivity for everyone.”  

“Our built environments can shape our habits, regulate our sleep-wake cycle, drive us toward healthy and unhealthy choices, and passively influence our health through the quality of our surroundings.”

Occupant health is a clear economic incentive. In 2007, a study by Mudarri and Fisk estimated that annual costs of asthma attributable to dampness and mold exposure in homes were between $2.1-4.8 billion. By 2014, studies in the health sector revealed reductions in mortality rates, bloodstream infection rates, and medicine consumption in green hospitals, compared to conventional hospitals, indicating that some of these effects could occur because of improved IAQ. Fewer sick days, reduced employee turnover, and fewer medical errors are compelling incentives to design spaces that incorporate evidence based research findings.  

MATERIALS MATTER

Consumer products and building materials emit dangerous gases like VOCs, Formaldehyde and Carbon Dioxide, influencing indoor air quality.  Many of these types of compounds were not present half a century ago. According to the EPA, examples of consumer products and building materials that are also sources of indoor air pollution include office furniture, flooring, paints and coating, adhesives and sealants, wall coverings, office equipment, wood products, textiles, and insulation.  In 2010, the World Health Organization established guidelines for maximum thresholds of Formaldehyde at .08 ppm, though there are few guidelines for other gases, environmental conditions and particulate matter (the WHO only first identified particulate matter as an indoor pollutant in 2006, explicitly recognizing the limited availability of resources). Indoor air quality (IAQ) is enhanced by using materials that have negligible carcinogenic or chemical emissions, are installed with minimal VOC-producing compounds, offer moisture resistance, and require simple, non-toxic cleaning methods and products. Today, more consumer products and building materials are being studied and certified as low chemical-emitting materials in an effort to control and achieve good indoor air quality.  But is this enough?

ENERGY BUNNIES

One premise for green building design is its impact in the energy sector. Today buildings account for 41% of US energy consumption, with nearly half of that usage coming from the commercial sector. Designers have control over energy consumption and indoor air quality factors such as materials, systems, ventilation, the environmental control scheme, and layout. In 2016, the percentage of firms with over 60% green certified projects reached 18 % and is estimated to triple to 37% by 2018. Under LEED standards, Gold Rated buildings earning 39 points are estimated to reduce environmental impact by 50 percent, while Platinum Rated buildings earning 52 points are estimated to reduce environmental impact by almost 70 percent.

VENTILATION MATTERS

Historically the connection between buildings as repositories and gateways of resource flow and air pollution was difficult to measure.  In office buildings, over 1/2 of end use energy expenditures come from heating, ventilating and cooling.  One of the challenges with flushing ventilation, bringing in outside air at night when the building is unoccupied to cool down the building or remove heat, is the re-introduction of outdoor pollutants and generation of new pollutants.  The reaction between outdoor air and indoor materials is a break in equilibrium at the surface of materials causing the emissions of new pollutants, otherwise absorbed by building structures.  Well-ventilated work spaces proved to have lower levels of  CO2 correlating with decreased levels of worker anxiety and increased levels of productivity.  More specific findings in support of the mounting evidence demonstrating the relationship between Indoor Air Quality & productivity tells us there is 61% higher cognitive functioning in green buildings that meet occupant health and energy efficiency standards set by LEED and 100% higher cognitive functioning in buildings with twice the ventilated air rate required for LEED certification (+Green Plus Buildings).  

“…heightened levels of Carbon Dioxide over the course of a school year can have detrimental physical effects on children’s developing respiratory system.”

According to Bruce White, Vice President of Airthinx, Inc. “We are starting to see, and have a clearer picture of  the health effects of indoor contaminants like PM 1, PM 2.5, PM 10, CO2, CH2O, VOC’s on building occupants. We see from recent studies out of Harvard, Berkeley, Johns Hopkins, USGBC & IWBI, what elevated levels of CO2 alone can do to students and building occupants. Specifically, in children, elevated levels of CO2 can cause wheezing and levels over 1,000 ppm can result in a 10-20% increases in days away from school. That alone affects the school not only in lower test scores, but also in funding from the US Department of Education on attendance levels. More importantly, the prolonged exposure to heightened levels of Carbon Dioxide over the course of a school year can have detrimental physical effect on children’s’ developing respiratory system.”

HOLISTIC APPROACH

A poor indoor environment causes occupant discomfort, health problems and poor performance.  Building system performance directly impacts maintenance frequency, equipment life, and energy usage. Understanding the process and possible IAQ endpoints (moisture control, drainage, ductwork protection, HVAC production, use of low VOC building materials, minimum ventilation) encourages improved building design. For example, a life cycle assessment (LCA) addresses the impact of a product through all of its life stages. By executing sustainable design in architecture, there is an opportunity for long-term value through modifiable building systems over the life-cycle instead of least-cost investments.

The impacts of evidence based design, a once value added anomaly, are now a requirement for competitive practice.  Occupants heightened exposure to the availability of data & metrics, conditions them to demand more assured outcomes on expensive building projects.  Architects are in a position to make collective and informed choices that will have a broad impact in the aggregate, such as advising about emission testing protocols to ensure test results can be translated into real world use cases. For example, under LEED, designers can earn up to 15 points for implementing indoor air quality measures.

SMART SENSORS

When considering the options available for indoor air quality management, the exclusive reliance on cleaning the air with filtration systems may not be enough. Air filtration cleaning method results rest on the assumption that ‘dirty’ contaminants are eliminated. Rather, the systems selectively remove some pollutants but not others, and generate new pollutants when the systems are not properly maintained. A reliable counterpart and solution is continuous monitoring of air quality levels in any infrastructure, preserving the integrity of the measurements, producing never before seen analytics and information, and creating better indoor environments, everywhere in the world.  In this way, space planning can be more intuitive and give future projects a greater chance of success.   

Building a collective understanding of the indoor air quality problem and its ecosystem, creates opportunities to make informed decisions and inspires actions to transform indoor spaces. 

Mr. Valentine Lehr, of Lehr Engineering in New York weighs in, “As a consulting design engineer, I am aware that the best intentions and latest technology often fail when needed maintenance and constant monitoring are neglected.  At the heart of this is the cost and effort of monitoring these systems and validating proper operation, both tasks which require human input.  Further, while devices to monitor air content have been available, these are usually singularly specific, expensive and need frequent calibration. In that regard, the Airthinx monitor is a significant development and improvement.  It’s low cost, easy installation, ability to monitor multiple potential contaminants and ease of integration with BMS and specialized monitoring/alarm centers allows for an unprecedented number of devices to be installed, and the original design intent to be fully maintained, assuring high IAQ.”

The solution, developed by Netronix’s IoT platform, guarantees the highest standards of security, reliability, and scalability of the network, and enables quick deployment of devices in commercial, retail & residential buildings with simple, affordable integration into any built environment. Each Airthinx IAQ device has nine built-in sensors (PM 1, PM 2.5, PM 10, CO2, CH2O, VOCs, Temperature, Humidity, & Pressure), measuring air quality with industrial accuracy, at a fraction of the cost, making air quality monitoring financially feasible at room level.

“Its low cost, easy installation, ability to monitor multiple potential contaminants and ease of integration with BMS and specialized monitoring/alarm centers allows for an unprecedented number of devices to be installed, and the original design intent to be fully maintained, assuring high IAQ.”

The advantage of a portable device that fits in the palm of a hand with data available instantaneously from a mobile phone, iPad or desktop is accessibility to information, anytime, anywhere.

Knowledge is power!

 

Economic and Health Benefits of Sustainable Innovation in Health Care

By Philip Susser and Govind Mattay; Posted October 2nd, 2017

With the devastating impact of climate change beginning to hold a more tangible space in the global consciousness, there is an ever-pressing need for the healthcare sector to innovate and adapt to a new era of environmental accountability. While accounting for 17% of the GDP, the US health care system is also responsible for 10% of greenhouse gas emissions, 12% of acid rain formation, 9% of criteria air pollutants. The population health impact of these perverse environmental contributions are staggering. A 2016 study found that 470,000 disability adjusted years of life (DALY’s) were lost associated with health care related pollution. To put that in context, preventable medical errors resulted in a similar number of DALY’s lost – a source of mortality that has historically received much negative press, and was consequently addressed in the Affordable Care Act.

The major challenge that stems from this particular source of morbidity and mortality is that the health care system is inherently complicated, with a supply chain that includes many different products coming from a wide variety of producers. Other industries have had an easier time adjusting due to the greater simplicity of their production processes. These industries have successfully addressed issues of supply chain management by creating certain “indexes” to track the impact of their products on the environment. The Higgs index, developed in 2012, is used by fashion and footwear companies to track a product’s environmental impact. Mindclick, a supply chain sustainability company, is working to develop a similar system for the healthcare system.

A culture shift in medicine requires hospital executives to recognize the immense health, environmental, and surprisingly, economic benefit of moving towards more sustainable health care delivery. Hospitals have begun to take steps to incorporate sustainability into their models by lowering anesthetic gas waste, minimizing food waste, single use reprocessing devices, and reducing operating room packaging. A 2012 commonwealth fund showed that up to $15 billion in savings could be achieved by taking measures such as these. It will be increasingly important to eliminate the commonly held misconception that these types of measures increase costs — and are only meant for brand image —, and solidify that they in fact dramatically reduce operating costs.

The reprocessing of single-use medical devices has proven to be very successful in both reducing environmental footprints and operating costs for hospitals. Single-use medical devices include surgical instruments such as scalpels, forceps, and scissors, as well as cardiac catheters, pulse oximeters, and tourniquet cuffs. The disposal of these devices is highly regulated and incurs costs that are up to 10 times greater than the disposal of regular waste. Instead of disposing single-use devices, many hospitals are deciding to send them to third-party vendors that reprocess the devices by sterilizing, testing, and repackaging them. The reprocessing process is also highly regulated by the FDA, which ensures the safety of using the reprocessed devices. Many devices can be reprocessed multiple times. Once reprocessed devices can no longer be used, most are recycled instead of being sent to a landfill. The beneficial effects of this practice are enormous. For a 200 bed hospital, reprocessing can eliminate up to 15,000 pounds of landfill waste and cut costs by a million dollars per year.

Hospitals have also begun to focus on reducing energy consumption, as current estimates indicate that hospitals use about 8% of the nation’s energy. Since lighting contributes to a significant portion of hospital’s energy costs, many are beginning to look toward alternative, efficient options such as LED lighting. Hospitals have also invested in annual infrared scanning inspections to identify faulty electrical circuits, which can unnecessarily consume energy. Up-front investments such as these can significantly reduce energy consumption to both reduce costs and improve sustainability for hospitals in the long-term.

The Healthcare Sustainability Club aims to educate future leaders in healthcare about the detrimental environmental effects of current practices and to introduce potential methods to improve the environmental impact of the healthcare industry. Our goal is to get students from a variety of backgrounds to begin to discuss the economic and environmental benefits of sustainable practices. We want future physicians and hospital executives to prioritize environmental sustainability and to innovate new ways to improve our environmental impact.

 

 

Don’t Let Funding for Our Water System Become a Pipe Dream

By Bill DiCroce, President & CEO, Veolia North America

During the campaign, President Trump frequently described a $1 trillion plan in infrastructure investments to fix crumbling roads, bridges, and airports while creating good-paying jobs. Transportation Secretary Elaine Chao also recently outlined several priorities for an upgrade to the country’s infrastructure, suggesting the administration may announce a plan sooner rather than later.

Given the Trump administration’s intention to deliver its first full-year budget to Congress this week, and with apparent plans to deal with infrastructure in a separate bill, we in the water industry want to underscore how important it is to include water and wastewater initiatives in both conversations.

Water issues once seemed a distant concern to Americans, but today we are grappling with myriad crises — from chronic droughts in the West to fast-growing metropolises in the Sunbelt unable to meet surging demand and clean drinking water challenges. Perhaps more important, as our water mains, pipes and overall systems grow older — many were first built in the early 20th century — the bill for replacing or repairing them could approach $270 billion, according to the latest estimate from the Environmental Protection Agency.

Our ability to provide safe, reliable and cost-effective water and sewer services is vital to the U.S. economy. Clean water is a valuable national asset that can attract new investment in manufacturing, research and development and can help differentiate the U.S. in the world economy. How we manage our water resources is of great strategic importance to every citizen. This investment in our infrastructure is vital to growth, and the federal government needs to play a key role in making those investments.

The president has previously said he may favor tripling the funding for the Clean Water State Revolving Fund, a loan assistance authority for addressing wastewater needs that has proven vital to jump-starting key projects. He has also shown support for the Drinking Water State Revolving Fund, a federal-state partnership to help ensure safe drinking water.

These are both strong starting points — as is this month’s announcement that the EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) program will provide $1 billion in credit to finance over $2 billion in water infrastructure investments — but a longer-term, more comprehensive infrastructure bill is necessary to repair and replace America’s many aging water and wastewater systems.

Investment is also needed for training. About one-third of the current water workforce is eligible for retirement, a phenomenon that will slow our efforts to modernize infrastructure and could lead to dangerous quality control issues. State and local governments must work with the private sector, trade schools, community colleges and universities to close this emerging skills gap.

Not only are these jobs important for our water quality and safety, they’re economic drivers. According to a study from the Value of Water Coalition, for every $1 million earmarked for water projects, upwards of 15 jobs are created, either to support water infrastructure design and construction directly, or in related industries.

And here’s the thing about water-related jobs — they can’t be exported or outsourced overseas. These employees work right here, in cities and towns across America.

While healthcare, tax reform and the budget dominate the congressional agenda, we believe it is critical that they find the time to take up water-related issues. Creating incentive programs such as tax credits to facilitate water reuse projects, co-digestion and resource recovery would strengthen already existing sustainability efforts.

Supporting private investment in water and wastewater infrastructure would go a long way to supplement any legislation passed by Congress. Finding the right regulatory balance would encourage innovation by providing incentives for new private investment in green infrastructure and energy derived from the wastewater treatment process.

The American water industry — both the public and private sector — delivers safe, clean water to homes, schools, farms and businesses in cities and towns across the U.S. each day. But the burgeoning infrastructure crisis casts doubt on our collective ability to deliver.

It’s time for all of us to come together — private companies and local officials, state and federal governments — to make water part of our national infrastructure renewal.

 

This piece was originally posted as an op-ed for The Hill. That article can be found here.

U.S. Environmental Regulatory Trends: Past, Present and Future

By Larry Cahill, CPEA, Wharton IGEL Alumni Advisory Group member

“The care of human life and happiness, and not their destruction, is the first and only object of good government.”  Thomas Jefferson

 

Thomas Jefferson was a very smart man.  Perhaps though, his view of the purpose of government has been lost over time.  Recently there has been much discussion on the economic damages inflicted by the federal government related to the regulatory burden that industry faces in the United States.  Although these discussions are not solely limited to environmental regulatory burdens, many do believe that the pendulum has swung too far in controlling industrial operations and their air, water, and waste discharges.  I am not one of those individuals.  Yes, the Cuyahoga River in Cleveland no longer catches fire.  And Pittsburgh’s success as a city is no longer defined by the smoke being emitted from the stacks of its steel industry plants.  And the hidden Love Canal surprises are hopefully behind us.  Yet, there continues to be noteworthy cases of major environmental incidents and non-compliances across the nation. The 2015 Volkswagen “clean diesel” scandal is only one of many.  Did you know that every single year for the past 20 years the U.S. Department of Justice has charged some 200 to 300 individuals with committing environmental crimes?  That might not seem like many but in total these are criminal charges against over 5,000 individuals, not simply civil charges for exceeding permit limits or discharge standards.

One could logically ask the question – Where does the U.S. stand today with regard to environmental regulations and enforcement as the country experiences a new presidential administration with an uncertain regulatory philosophy and strategy?  Are we indeed better off and is it time to take the foot off the gas or is there still much work that needs to be done?  Recent regulatory and enforcement data released by the U.S. EPA help us to better understand where we are presently as a country and where we might be headed.

Environmental Laws: The Historical Setting

The First Earth Day occurred on April 22, 1970 in the midst of a nationwide college campus strike protesting the Vietnam War.  Protests in the streets all over the land.  Hmmm… Sound familiar?  That year of 1970 became a springboard for the passing of major federal environmental laws in the U.S.  As shown in Table 1, in the next two decades, some 12 critically important environmental, health and safety laws were passed.  Interestingly enough, eleven of the twelve were authorized and signed by Republican presidents; a legacy that is sometimes forgotten or ignored.  Each law, of course, required the creation of regulations to accomplish the stated goals.  And indeed that has occurred.

TABLE 1:  Major U.S. Federal Environmental Legislation (1969-1986)

No.

Year Title

Signing President

1. 1969 National Environmental Policy Act (NEPA) Nixon (R)
2. 1970 Clean Air Act (CAA) Nixon (R)
3. 1970 Occupational Safety and Health Act (OSHA) Nixon (R)
4. 1972 Federal Water Pollution Control Act (FWPCA) Nixon (R)
5. 1972 Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) Nixon (R)
6. 1972 Noise Control Act (NCA) Nixon (R)
7. 1973 Endangered Species Act (ESA) Nixon (R)
8. 1974 Safe Drinking Water Act (SDWA) Ford (R)
9. 1976 Resource Conservation and Recovery Act (RCRA) Ford (R)
10. 1976 Toxic Substances Control Act (TSCA) Ford (R)
11. 1980 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Carter (D)
12. 1986 Emergency Planning and Community Right-to-Know Act (EPCRA) Reagan (R)

 

Environmental Regulations: The Current Setting

All federal regulations, including those created by the EPA, are codified in the Code of Federal Regulations (CFR), published annually by the Government Printing Office.  That is, each year the CFR is released to the public and it contains all current and updated regulations effective on July 1st of that year.  The individual volumes for each year are usually available in January or February of the following year.  The EPA is responsible for the 37 volumes of Title 40 of that Code.  By early 2017 the EPA had released the 2016 CFRs effective July 1, 2016.  The total page count for EPA’s Title 40 regulations in 2016 was 27,074, the most on record. (See Figure 1) Combined with OSHA’s 3,096 pages in Title 29 there were, for the first time, over 30,000 pages in total, with EPA regulations accounting for 90% of that total.

In taking a closer look at the data, some interesting additional facts emerge.  For example:

  • Recent Growth.  There was an approximately 800 page, or 3%, increase in the number of pages in Title 40 in 2016.  This increase was almost twice as large as the total page count in 1972, the first year of regulatory codification.
  • Distribution by Media.  Approximately 66% of the pages in Title 40 are devoted to Clean Air Act regulations.  This represents roughly 17,750 pages, meaning that the Clean Air Act alone has almost six times as many pages of regulations than all of OSHA’s Title 29 Code.
FIGURE 1: Growth of U.S. EPA Regulations (1972-2016)

Fig1

  • Comparison with the U.S. Tax Code.  By comparison, the 30 thousand pages of EHS regulations is only about 40% of the total page count of ~75,000 pages in the federal tax code.
  • Comparison with the Dow.  Interestingly, if one does the calculations for the 1972-2016 period, there is a 95% statistical correlation between the growth of environmental regulations and the growth of the Dow Jones Industrial Average (DJIA).  Granted this is some outside-the-box thinking, but could this mean that regulatory growth is good for the economy!?

Will Environmental Regulations Continue to Grow?

Will the growth of federal environmental regulations continue or has it peaked?  One way to anticipate the answer to the regulatory growth question is to take a look at the Agency’s Semi-Annual Regulatory Agenda, which was last released on November 17, 2016 (as part of the Executive Branch’s Unified Agenda) in the Federal Register.  This is a spring and fall requirement for all regulatory agencies[i].  In November the EPA listed 203 additional regulations (not pages, but individual regulations) that either had been recently promulgated (but not yet codified) or were under development.

Eventually, all of these new regulations will be added to Title 40, continuing the growth, unless there is a concerted effort to halt the regulatory development process; more on that later in this chapter.  It is very interesting to note, as depicted in Figure 2, that each of EPA’s Semi-Annual Regulatory Agendas from 1999 to 2011 listed somewhere between 350 and 450 regulations under development, a consistency that is stunning.  This means that for over a decade, there were always around 400 regulations under development on the docket.  Interestingly, there has been a dramatic reduction in the number of regulations listed to roughly 200 from years 2012 to 2016.  Maybe the regulatory pipeline is beginning to empty.

FIGURE 2: EPA Semi-Annual Regulatory Agenda Trends

Fig2

Yes, there are still regulatory gaps

In spite of the fact that there are now over 27 thousand pages of federal environmental regulations, there remain some additional risks and vulnerabilities that have yet to be addressed appropriately at the federal level.  Three of those that have surfaced on environmental audits of industrial facilities over the past 30 years are:

  • Water Storage Tanks. For large firewater and other water supply above-ground storage tanks, there is no requirement for tank integrity testing or secondary containment protections.  These tanks are often located adjacent to electrical substations and transformers in utility areas where a tank breach could short out the entire electrical system of the site and possibly the surrounding community.  And history tells us that large volumes of unexpected water releases can do considerable damage to facility equipment.  In 2011 a tsunami disabled the backup generators at the Fukushima, Japan nuclear power plant resulting in a meltdown of three nuclear reactors.  One global consumer products company has recognized this water storage issue as an unacceptable risk and has developed a corporate standard that requires secondary containment for all above ground storage tanks worldwide.
  • Hazardous Waste Storage.  Hazardous waste stored at 90-day accumulation areas require only that drums and containers be labeled, physically intact, and inspected weekly.  Surprisingly there is no federal requirement that containers be placed on an impervious surface incorporating secondary containment protections.  Thus, a pretty much unlimited amount of containers and drums holding hazardous waste can be stored directly on the ground for up to 3 months at these locations. Several states, including Massachusetts, have recognized this as a gap and require additional protections such as secondary containment for accumulations areas.
  • Accidental Discharges of Hazardous Substances.  Spill Prevention, Control and Countermeasure (SPCC) Planning requirements promulgated under Section 112.7 of the Clean Water Act regulations are designed to prevent the accidental release of only oil-containing substances into the nation’s waters.  Facilities subject to the regulations must develop an SPCC Plan that is certified by a Professional Engineer and must provide appropriate containment and/or diversionary structures or equipment to prevent a discharge of oil. New Jersey is one state that has recognized that regulating only oil in this way is a gap and has promulgated Discharge Prevention, Containment and Countermeasure (DPCC) regulations that cover not only oil but numerous other hazardous substances.

There are certainly other gaps as well and also existing regulations that require additional clarification.  A great example of the need for clarification are the “weekly”, “monthly”, and “annual” requirements found in many environmental regulations.  Be assured that there have been many lively discussions among site staff, regulators and auditors over whether “annual” means every 12 months or once a year.  There is a big difference in the two interpretations.

U.S. EPA Enforcement Activity Remains Substantial

The EPA has had a substantial enforcement program throughout its history.  EPA’s current Enforcement budget is approximately 10% of its total $8.1 billion budget and, for comparison purposes, is 35% more than the entire budget of the Occupational Safety and Health Administration (OSHA).  On December 19th, the EPA released its enforcement results for fiscal year 2016, which ended on September 30, 2016.[ii]  Included in those results were data on administrative, civil judicial penalties, and criminal fines assessed.

As shown in Figure 3, EPA issued $5.8 billion in civil and criminal penalties in FY2016, the most ever in history.  However, the great majority of the penalties issued were due to a $5.6 billion settlement with BP Exploration & Production for Clean Water Act violations stemming from the April 20, 2010 Deepwater Horizon blowout and subsequent oil spill.  Note further that the 2013 penalty amount of approximately $2.6 billion was impacted significantly by billion dollar penalties against Transocean and BP, again for the Deepwater Horizon incident.

FIGURE 3: U.S. EPA Enforcement Penalty Trends

Fig3

Notwithstanding the two Deepwater Horizon enforcement actions in 2013 and 2016, on average, over the past ten years the EPA has issued approximately $200 million in civil and criminal monetary penalties each year.  This should be viewed together with the over 5,000 individuals that have been charged with environmental crimes by the DOJ over the past 20 years.  These numbers are not inconsequential.  And with almost a billion dollars being spent annually by EPA on enforcement, environmental noncompliance remains a serious issue, unmatched by any other country.  As EPA has stated in its FY 2013 OECA National Program Manager Guidance, we will “aggressively go after pollution problems that make a difference in communities.  EPA will use vigorous civil and criminal enforcement that targets the most serious water, air and chemical hazards, as well as advance environmental justice by protecting vulnerable communities”.[iii]

The Cautionary Tale of December 2016

So where does that leave us?  Should there be a continuing emphasis on environmental regulatory compliance and enforcement or should we indeed take the foot off the gas as some would propose.  Well, if the fortnight in the middle of December 2016 tells us anything, this is not the time to ease up.  Take note of the following headlines taken from that very short period:

  • DuPont agrees to pay $50 million in natural resource damages to resolve claims stemming from the release of mercury in the 1930’s and 1940’s from its Waynesboro, VA plant (December 16th).
  • Michigan’s Attorney General brings more criminal charges over the Flint, Michigan water crisis, including felony charges against two former state appointees and two former city officials (December 20th).
  • Volkswagen reaches $1 billion deal with the USDOJ and California in the ongoing diesel emissions scandal (December 21st).
  • A federal jury finds DuPont liable for $2 million in compensatory damages for an individual’s cancer stemming from the dumping of Teflon manufacturing chemicals (C8) into the Ohio River. An additional 3,500 cases are pending (December 21st).
  • Shell Oil will pay $22 million to the city of Clovis, California for chemical (TCP) found in drinking water supply (December 27th).

Frankly, it’s hard to believe that all five of these incidents occurred over a two-week period in the last month of 2016.  They suggest that the U.S. is nowhere near where it needs to be with respect to the environment.  Continuing oversight is needed and both public and private sector institutions need to be held accountable for meeting, if not exceeding, regulatory requirements.

What Might Change

During the 2016 presidential campaign and now with the new Trump Administration in place concern has been expressed over the regulatory burden placed on U.S. industry and the regulated community in general.    It should be noted that this concern is nothing new.  For example, on January 18, 2011 President Obama issued Executive Order 13563, “Improving Regulation and Regulatory Review”.  The Order required a government-wide review of existing rules “to remove outdated regulations that stifle job creation and make our economy less competitive.  It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules…”[iv]  In response to President Obama’s Executive Order, EPA created the Regulatory Development and Retrospective Review Tracker (Reg DaRRT), which provides information on the status of EPA’s priority rulemakings, as well as information on the status of retrospective reviews of existing regulations.  One positive outcome of the Executive Order was the July 31, 2013 issuance of a final EPA rule on solvent-contaminated wipes that reduced the regulatory burden on tens of thousands of facilities using these wipes routinely.

What is different today is the approach that is being proposed by the current Administration.  President Trump has said numerous times that his goal is to eliminate as many as 75% of all existing federal regulations.  The first step in that effort was the January 30, 2017 issuance of an Executive Order: “Reducing Regulation and Controlling Regulatory Costs.”  This Order calls for every “one new regulation issued, at least two prior regulations be identified for elimination with the goal of zero incremental costs.”  As with most Executive Orders further guidance will be required and the Director of the Office of Management and Budget is required to develop that guidance.  In fact, on February 2, 2017 the White House issued guidance stating that the Order would only apply to “significant” regulations, as defined in Executive Order: “Regulatory Planning and Review”, issued by the Clinton Administration in 1993.  Significant regulations are those imposing an annual economic cost ≥$100 million.  The Director must also identify the total amount of incremental costs that will be allowed for each agency for each fiscal year.

This “one in, two out” approach, if enacted as stated, obviously will have significant impacts on federal rulemaking within all agencies including the EPA.  As stated previously, the EPA in its November 2016 Semi-Annual Regulatory Agenda listed 203 new regulations under development or review.  Will this mean that if all of these regulations are put forward that over 400 other, existing regulations must be eliminated?  As arbitrary as this sounds, the answer today is yes.

Another potential impact caused by the Executive Order would come from the new chemical requirements in the Frank R. Lautenberg Chemical Safety for the 21st Century Act signed into law on June 22, 2016.  The Act requires that the EPA evaluate and communicate the risks of existing chemicals from the current inventory of 83,000 chemicals in use in the U.S.  The first 10 chemicals were identified on November 29, 2016 and include asbestos, carbon tetrachloride, methylene chloride, and trichloroethylene.  If an assessment determines that a chemical poses an unreasonable risk the Agency must mitigate that risk within two years.  Further, for each risk evaluation completed, another must be initiated with at least 20 ongoing evaluations being conducted by the end of 2019.  Does this mean that any resultant rule addressing mitigations for a particular high-risk chemical cannot be promulgated unless two other unrelated rules are eliminated?  This seems rather arbitrary as well.  Perhaps in this and other cases the “significant regulation” threshold will have a moderating impact and the effects will not be as severe as expected.

Another regulatory reform initiative taking place but receiving considerably less attention is the use of the Congressional Review Act enacted in 1996, which allows lawmakers to take certain actions for those laws enacted during the waning days of an administration.  The Congress has already used this power to rescind EPA’s Stream Protection Rule promulgated in December 2016, which sought to protect the nation’s waterways from debris generated by coal surface mining activities.  Congress is also attempting to rescind the EPA’s revised Accidental Release Prevention Requirements contained in its Risk Management Program final rule issued on January 13, 2017.  A bill to rescind the rule has been introduced in the House as of this writing.  Historically, the Congressional Review Act has been used sparingly but this has not been the case in early 2017.

In sum, there is strong evidence that significant regulatory reform is ahead driven by a Republican Congress and Presidency.  One can only hope that logic will prevail and that protection of human health and the environment will continue as a fundamental goal for the nation.

Why the EPA’s Mission Remains Critically Important

With good reason President Nixon created the EPA in 1970.  The Agency’s basic mission is to protect human health and the environment.  This is accomplished with an $8 billion budget and 15,000 full time equivalent staff.  Although it often is not evident in our daily lives, we have all been impacted in a positive way by the Agency’s efforts and programs.  Consider if you will the scope of the Agency’s oversight and responsibilities:

  • Nationwide Facility Coverage.  Over 800,000 facilities in the U.S. generate air emissions, wastewater, and hazardous waste at a level sufficient to require regulatory oversight through mechanisms such as Title V air permits, NPDES wastewater discharge permits, and/or hazardous waste generation and disposal requirements.  That’s an average of 16,000 facilities per state where there is regulatory oversight and controls over the release of pollutants.
  • Hazardous Waste Generation.  There are over 26,000 large quantity hazardous waste generators in the U.S., generating over 33 million tons of hazardous waste annually.  These generators are required to manage the wastes properly and report to the EPA every other year on their activities.
  • Toxic Releases.  There are over 22,000 facilities in the U.S. that release listed toxic chemicals at a sufficient level to require reporting under the Toxics Release Inventory (TRI) requirements of the Emergency Planning and Community Right-to-Know Act.  Over 3.3 billion pounds of toxics were released nationally in 2015.  TRI reporting has resulted in a better understanding of pollutants in our environment and has driven a reduction over time of releases.
  • Superfund Sites.  As a result of the 1980 passage of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) some 1,188 “Superfund” sites have been cleaned up as of November 30, 2016.  However, there remain 1,337 National Priorities List (NPL) Superfund sites yet to be cleaned up.
  • Toxic Chemicals.  There are 85,000 chemicals inventoried and regulated under the Toxics Substances Control Act.  These include materials containing asbestos and PCB’s, which were considered “miracle” products when first produced.  Very few of the inventoried chemicals have undergone meaningful risk assessments to determine hazards posed to human health or the environment.  The Frank R. Lautenberg Chemical Safety for the 21st Century Act signed into law on June 22, 2016 contains provisions to assure that these assessments are conducted.

It is important to note that, save for the Superfund sites, all of the chemicals, wastes, releases, and discharges discussed above are being managed in compliance with existing environmental regulations.  Do we really want to eliminate 75% of these regulations resulting in fewer controls over discharges and releases?

Closure

The future of environmental regulation in the U.S. is cloudy indeed.  It is really too soon to tell exactly what might be the impact of President Trump’s Executive Order and other pending regulatory reform initiatives.  It would be prudent to keep a close watch…

 

[i] The Regulatory Flexibility Act and Executive Order 12,866 require Spring and Fall Regulatory Agendas.

[ii] U.S. Environmental Protection Agency, “Fiscal Year 2016 EPA Enforcement and Compliance Annual Results,” Office of Enforcement and Compliance Assurance, December 19, 2016.

[iii] U.S. Environmental Protection Agency, FY 2013 Office of Enforcement and Compliance Assurance (OECA), National Program Manager (NPM) Guidance, April 30, 2012, p. 6.

[iv] Obama, Barak, “Toward a 21st-Century Regulatory System”, Wall Street Journal, January 18, 2011.

Kleinman Cetner’s Energy Now Podcast – The Many Fronts of Trump’s Environmental Deregulation Effort

Submitted by Andy Stone, Communications Manager, Kleinman Center for Energy Policy

President Trump is moving forward with his campaign pledge to roll back environmental protections, most notably with his late March executive order instructing EPA administrator Scott Pruitt to withdraw the Clean Power Plan.  In the latest episode of the Kleinman Center for Energy Policy’s podcast series, Energy Policy Now, Penn law professor Cary Coglianese takes a look at the multiple legal and political tools the Trump administration is using to reduce protections, including executive orders, defunding of agencies with environmental oversight, and use of the previously obscure Congressional Review Act.   Coglianese lays out the challenges each strategy will face, and the potential for regulations to be rolled back or to endure.

 

Closely tied to the issue of climate change is the economic outlook of the electric utility industry, which is increasingly tasked with the role of enabling the transition to clean power, yet will face lower electricity demand as a result.  In a second new episode, former Pennsylvania Consumer Advocate Sonny Popowsky takes a look at the challenge that distributed energy presents to electric utilities’ profitability.  Popowsky, who is an advisory board member of the Kleinman Center, also explores the costs to consumers that could result from efforts to balance the growth of rooftop solar, energy efficiency and related technologies with the need to maintain a power grid that equitably serves all.

Energy Policy Now Podcast – Carbon Reduction Strategies

Submitted by Andy Stone, Communications Manager, Kleinman Center for Energy Policy

Two strategies stand out in the effort to reduce carbon emissions on an economy-wide scale. Carbon Cap and Trade, and Carbon Taxation, have been implemented with varying degrees of success in recent years, while taking very different approaches to reducing emissions.

The latest episode of the Kleinman Center for Energy Policy’s Energy Policy Now podcast takes a look at the mechanisms by which these strategies seek to reduce emissions, and the political and economic considerations that may make one or the other a best fit for a particular nation or region.

The episode features James Hines, Professor of Law and Economics at the University of Michigan, and an editorial adviser to the Kleinman Center.