Environmental Law 101: Environmental Compliance–a Cost or an Opportunity?

American prides itself as being a country that conforms to the “rule of law.” Unfortunately, that term has become politicized and, as a result, trite. The “talking heads” in the media use the term to support whatever position they are advocating on any given day. My clients and I have always had to deal with reality and, as a consequence, the “rule of law” was actually a meaningful concept.

Decades ago, when I was asked to represent the Wisconsin paper industry on environmental issues, a member of the Governor’s cabinet (a Democrat) sought me out and said: “You will enjoy working with them; they are well motivated.” This was at a time when stretches of the Wisconsin and Fox rivers, two of the “workhorse” bodies of water on which a disproportionate number of Wisconsin’s 50 paper mills operated, were not fishable or swimmable—largely because of discharges from the paper industry. It was in the 1970’s when no industry was hit more by the Federal Water Pollution Control Act Amendments of 1972 than the paper industry. There was lots of work to do to remove biochemical oxygen demand and suspended solids from paper mill discharges; but the work got done. I was there and partook in years of negotiations on environmental laws of all types with all kinds of groups. And, importantly, I had the absolute support of the mill owners at all times. I’ve always thought that it was a mixture of, at that time, local family ownership of a number of the mills as well as the high regard that management had of the water resources of the state. They viewed the water as “their” water, in the sense that you take care of what is “yours.”

The economics of running a business is, and always well be, an important factor. Obviously no business (or municipality) wants to expend scarce resources without getting “bang for the buck.” Traditionally, there was an assumption that environmental compliance/protection was a cost with no return for the expenditure. But, over the course of time, as environmental management has matured, the ability to “make a silk purse out of a sow’s ear” has increased markedly as market principles are applied.

First, we’ve all learned that the lack of environmental policies is not cost free—in terms of the water we drink, the water that we fish and swim in and the air we breathe. As to the last issue, I recently noted some interesting information about air quality in northern China where it is estimated that, between 1980 and 2000, life expectancy was reduced by five years—for a collective loss of 2.5 billion years. That’s a big price to pay for avoiding the “cost” of effective air quality measures.

Second, American ingenuity has come into play. The fact that a problem exists doesn’t mean that it can’t be turned into an opportunity. Manufacturers have found ways of limiting or changing the inputs into their products, thereby reducing the amount of waste that needs special handling. They’ve “invented a better mousetrap.” They’ve substituted natural gas for other fuels to heat their buildings or run their implements. Managers always have had to juggle many issues and demands; environmental protection has become just another consideration. In well managed companies, operation managers and environmental managers coordinate their duties.

Third, incompetence and negligence (knowing or otherwise) ultimately cost far more than the cost of compliance because of the messes that they cause and enforcement proceedings that they provoke. The biggest compliance case that I ever handled (measured in the tens of millions of dollars) involved a huge international company that spent sparsely on environmental compliance without any appreciation that, eventually, a day of reckoning finally comes and that the “time value of money” doesn’t make up for the failure to assure compliance.

Take whatever environmental disaster of the last 40 years that you want to consider and several conclusions emerge. First, all of them could have been avoided with more foresight. Environmental disasters typically do not result from intentional misconduct; they result from carelessness, putting too much confidence in technology or the subjugation of environmental compliance to other considerations. Second, the cost of cleaning up a mess is always greater than the cost of having avoided it in the first place.

I spent a good part of my career representing businesses and municipalities that faced enforcement problems. Violations occur; they happen to the best run and most highly motivated parties. As Forrest Gump said: “Stuff happens.” Enforcement agencies and prosecutors understand that; it was my responsibility to get them take it into account.

Taking environmental compliance seriously is important as a matter of cost avoidance. Major failures are costly; people get fired, people get sued and lives and careers are ruined. Regardless, costs are important and ways must be sought to reduce them. Can other procedures or materials be used to reduce costs? Does your waste have value? Does your product have more value if it contains constituents that are deemed to be environmentally “friendly?” In the past decade, American businesses have undertaken numerous best management practices to achieve both environmental compliance and reduce costs. The best way to control environmental costs is to integrate fully environmental practices into a company’s business model.