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Managing Your Way Through a ''Green'' Future

We have struggled through the environmental wars with many successed, but the battles are far from over.

With Y2K worries safely behind us, it seems only right to look ahead now] and ponder what environmental challenges await the converting industry in the new millennium.

The last quarter century saw the emergence of environmental protection concerns as a top priority for corporate America. Like many other industries, converters have spent much of this time attempting to keep pace with the dizzying array of environmental regulations metered out by federal, state, and local regulators alike.

The dawn of a new century does mark a turning point of sorts in our collective efforts to confront our environmental challenges. Many of our toughest environmental problems have been conquered. The Environmental Protection Agency (EPA) reports proudly that our air and water are cleaner than they have been in decades. Many of our country's most contaminated sites have been cleaned up. For the first time, the opportunity exists for companies to look beyond crisis management of environmental problems and adopt proactive strategies designed to ensure superior corporate environmental performance and environmental excellence.

While the environmental challenges have evolved, they have not gone away, nor, arguably, have they gotten any easier to overcome. In fact, this new millennium brings with it a whole host of environmental issues that demand new approaches and solutions. Increasingly, the challenges for the twenty-first century likely will focus more on management than individual media issues. Many companies today are consumed with the task of developing effective management systems that are designed to ensure continued environmental compliance in an increasingly global marketplace.

As for specific domestic and international regulatory issues, much emphasis likely will be placed on pollution prevention and minimizing the waste associated with packaging products. This inevitably will lead to mandated recycling and regeneration of packaging material.

As we look out into the twenty-first century, here is what we see.

Environmental Management Systems
As converters scan the environmental regulatory landscape, little is really new. Like most other industries, the converting industry has emerged from the past couple of decades of seemingly endless environmental regulation, if not somewhat battered, certainly better educated and equipped.

Perhaps one of the most significant questions companies will need to address in the environmental arena of the future is what systems and programs need to be adopted to ensure continued compliance with existing environmental rules and regulations.

As alluded to earlier, the issue is one of sound management and implementation of comprehensive programs to ensure compliance. For companies that pursue and implement successful proactive environmental management systems, the result likely will be greater operating flexibility, declining regulatory oversight, and expanded global business opportunities.

Conversely, companies that fail to respond likely will see greater regulatory scrutiny, exposure to severe fines and penalties, and lost market opportunities.

There are a couple of key forces that are driving the push toward greater emphasis on the development of environmental management systems. On the domestic front, the US EPA's adoption of its Environmental Audit Policy in late 1995 set the stage for the agency's mandate. Since adoption of the Audit Policy, EPA has been outspoken in its view that the policy erases all perceived barriers to the adoption of corporate management policies and comprehensive environmental auditing programs by providing a forum for the disclosure and resolution of environmental violations.

EPA's expectation is that all companies should be conducting regular audits of their operations and resolving instances of noncompliance through the agency's Audit Policy.

EPA has formalized this expectation by introducing auditing into its enforcement machine. Specifically, EPA's most recent enforcement initiatives with steel mills and chemical manufacturers have been pursued by first requesting affected companies to undertake internal audits and requiring disclosure of audit results through the agency's Audit Policy.

For companies that refuse to participate, EPA has threatened and, incidentally, made good on its threats, to perform multimedia inspections at nonparticipants' facilities. More of these programs are promised by EPA in the future, thus elevating the importance of effective internal audit programs.

On the international front, ISO-14000 continues to provide the primary impetus for the adoption of corporate environmental management systems. ISO-14000 is a set of voluntary environmental management systems developed by the Geneva-based International Standards Organization. The focus of ISO-14000 is on the management of environmental issues through the development of internal "Environmental Management Systems."

Since its adoption in 1996, ISO-14000 has not been embraced fully in the industrial marketplace. Companies with international operations, however, are beginning to feel real market pressure to obtain ISO-14000 certification.

Momentum in the US also appears to be growing as companies look for ways to respond to EPA pressures to adopt corporate environmental management programs.

Whether the pressure is coming from the regulators or the marketplace, the plain and simple fact is that ensuring environmental compliance through comprehensive environmental audit programs and management systems must be a priority for industries operating in the new millennium. Many options exist for companies to respond to this challenge. The commitment must exist, however, to act.

Risk-Based Cleanup Programs
This new era also ushers in dramatic changes in how companies will approach and address environmental clean-up obligations. Again, the watchword for the twenty-first century, even in the environmental remediation arena, will be the management of these clean-up obligations.

Throughout the 1980s and 1990s, many industries, including converting operations, struggled through expensive cleanups at some of our country's most contaminated sites. Many of these sites now have been fully remediated or are well on their way toward completion.

The prospect of cleaning up the thousands of remaining contaminated sites sprinkled across the country has focused attention on the need for clean-up standards more closely tied to the actual risks posed by contamination at a site.

Over the course of the last couple of years, the majority of states have adopted new risk-based clean-up programs to govern the remediation of contaminated sites. These programs, whose primary aim is to use site-specific factors to quantify risks and devise remediation strategies, have revolutionized the way sites are remediated today. In actuality, contaminated sites now can be remediated for a fraction of the costs that were required only a few of years ago.

The cost savings achieved through use of these programs have come by replacing expensive active treatment alternatives with management controls such as deed restrictions, prohibitions on groundwater use, and engineered barriers.

The effect of these controls is pervasive and dramatic. For example, under Illinois' risk-based clean-up program, any requirement to remediate groundwater within the city limits of Chicago effectively has been eliminated given the absence of risk resulting from a Chicago ordinance prohibiting the use of groundwater for potable purposes. Similarly, asphalt parking lots and building foundations now are being used to cap contamination, thus making remediation of underlying soils unnecessary.

These new risk-based clean-up programs certainly provide substantial opportunities to control remediation costs and devise very pragmatic approaches to site clean-up challenges. Significantly, the legacy of these clean-up programs will be the continued obligation to manage and maintain these caps and other controls to ensure the absence of future risks. Companies will need to plan carefully for the future to provide for the proper care and maintenance of these controls. The continued viability of these programs will need to be monitored in the coming years as these revolutionary risk-control concepts are put in place and tested over time.

Waste Minimization
One of the most publicly charged and politically sensitive issues confronting converters in the years to come is the industry's position on and response to the challenge of waste minimization.

Innovation in packaging products is fueling tremendous growth within the packaging industry. The public's zest for convenience is creating great opportunity for converters to infiltrate many new and untapped markets. At the same time, however, there is a rising tide of sentiment--fueled by environmental groups and growing concerns regarding rapidly decreasing landfill space--calling for greater efforts at waste minimization and better recycling of packaging products.

Clearly, in the coming years, the converting industry will need to grapple with these competing interests and come up with solutions that adequately balance environmental demands with consumer needs. Much emphasis will need to be placed on developing packaging products that eschew excess, are light and simple in form and substance, and maximize recycling opportunities. More and more pressure also will be placed on mandatory recycling of and industry accountability for packaging products.

The movement toward mandatory recycling and producer stewardship already has established strong roots in Europe. In 1994 the European Union adopted its Packaging Directive that mandates the recovery of 50% of packaging waste by 2001 and 75% by 2006.

Latest reports anticipate that the goal for 2001 is achievable, although serious questions remain regarding the ability to meet the 75% threshold and the quality of the recycling activities that are being performed today. The European Commission currently is discussing the need to further tighten the directive's requirements. Industry expectations are that more will be required to ensure the effectiveness of these recycling mandates.

In the US the packaging industry thus far has been able to avoid enforceable recycling limits on packaging products. More and more pressure is being applied on the state and federal levels to beef up the voluntary recycling and waste minimization programs in existence today. Clearly, more will be required in the coming years as these issues are subjected to greater public scrutiny.

For its part, EPA continues to work on shifting its resources toward programs that promote waste minimization and pollution-prevention activities. Many of the agency's "re-invention" programs, including WasteWise, Design for the Environment, and the P3 and P4 initiatives, have at their core a real focus on minimization, recycling, and innovations designed to spur new ways of producing products and packaging goods.

EPA's budget for 2001 provides increased funding to focus on these initiatives. EPA's long-term "sustainability" rhetoric also includes at its core fundamental notions of waste reduction and increased waste regeneration.

Finally, EPA is nudging industry along as we see a dramatic increase in mandated waste reduction programs being included in agency settlements for past violations.

All of these signs point to a greater emphasis on waste minimization and recycling in the next ten years, both at home and abroad. Forward-thinking converters that view these challenges as an opportunity likely will gain a competitive advantage as more and more pressure is applied on the industry to achieve measurable improvements in these areas.

Controlling Air Emissions
While much of what we have identified as important issues for converters in the coming years have tended toward notions of environmental management and proactive environmental policy, our crystal ball continues to highlight one domestic regulatory program that bears mention. Without exception, the biggest environmental challenge the converting industry has confronted in the past ten years has been complying with the myriad of new rules and regulations emerging from the passage of the Clean Air Act Amendments of 1990. While much has been done over this period of time, including, most significantly, the submission of extensive Title Vpermits, clean-air issues will continue to dominate the converting industry's environmental agenda for the foreseeablefuture.

As if the cost and energy expended in the development of Title V permits were not enough, the process has altered forever the regulatory landscape for affected facilities. In the short term, converters will continue to fight to ensure the state acceptance of Title V permits with which facilities can live. Significantly, though, over the longer term, Title V permits and the annual obligation to self-certify compliance with these permit obligations will invite greater scrutiny of facility compliance and expose companies to much stricter regulatory enforcement and, perhaps more troubling, citizen actions.

Consequently, much more attention will have to be paid to air compliance issues in the coming years. This is especially true given EPA's renewed vigor in pursuing enforcement actions against companies for significant air emission violations.

As impossible as it seems, the ratcheting down of air emissions and the imposition of further regulatory controls on the converting industry is not done. The first round of Maximum Achievable Control Technology (MACT) standards affecting converters was completed in 1996 with the establishment of the Printing MACT. The Coating MACT was scheduled to be completed in November of this year, although a 2001 promulgation date appears more likely. Currently, EPA is working with converting industry representatives on the Coating MACT, and this rule certainly will affect the industry in significant ways.

Based on the schedule, it appears that the Coating MACT will be completed just before EPA embarks on its review of existing MACT standards to determine the existence of "residual risks" and the need for even tighter controls.

The schedule for EPA's review of residual risk is set for 2003 and 2004. Converters will need to stay on their toes to ensure that good science and thoughtful regulatory approaches make their way into these important rules.

The environmental challenges facing the converting industry today continue to evolve. Effective management and creativity will be in great demand as the industry considers appropriate responses.

Converters must pursue a course of active engagement and proactive participation in response to these environmental challenges to ensure that their interests are protected and their viability as a thriving industry is preserved.

Contributing editor John Watson, a partner with Chicago-based Gardner, Carton & Douglas, has contributed to PFFC feature articles focusing on legislative and regulatory issues within the converting environmental arena for the last ten years.

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