The Multinational Monitor



Get 'Em While They're Down

Michigan Corporations Are Using The State's Hard Times to Loosen Environmental Regulations

by Andy Feeney

The cozy relationship between Dow Chemical Company and the U.S. Environmental Protection Agency surfaced last month in the course of several Congressional committee investigations of the EPA. These revelations were but the latest example of the close ties between the Reagan Administration and big business.

The investigations disclosed that John Hernandez, subsequently fired from his post as acting head of EPA, allowed Dow to rewrite a 1981 study concluding that the company's Midland Michigan plants were the "major source, if not the only source" of dioxin contamination of Michigan waterways. Dioxin, one of the most toxic substances known to man, has been linked to cancer and birth defects in animals. Hernandez justified his action by saying that he believed Dow was "probably the best place" to confirm the report's validity. The incident is even more disturbing in light of recent moves by Michigan legislators to weaken the state's traditionally strong environmental regulations as a result of business pressure. Andy Feeney reports on these developments.

As the state of Michigan struggles to recover from a severe depression in the auto industry, several Michigan-based multinational corporations are using the state's hard times as an opportunity to attack tough environmental regulations.

According to environmental groups and state officials, Ford Motor Company, General Motors and Dow Chemical have, in the last two years, attempted to weaken Michigan's once-powerful Department of Natural Resources (DNR) through a pressure campaign capitalizing on Michigan's high unemployment rate and worsening economic situation. In addition, cutbacks in government expenditures - a direct result of the recession - have weakened and demoralized state environmental agencies, making regulation even more difficult.

"I think the business community's power has increased," comments David Dempsey of the Michigan Environmental Council, a statewide coalition representing a half-dozen different environmental groups. "They're making environmental laws a scapegoat for Michigan's economy. They're also making labor laws and workplace safety laws a scapegoat. And the legislature is very vulnerable to this kind of thing right now, due to its concern over economic development."

The DNR, which is responsible for enforcing state environmental laws, has been a leader in state-level regulation of the environment for almost a decade. Steve Ballou of the Iowa Department of Environmental Quality, says, "Michigan's DNR has been the leader. The rest of us used to look to them as an example of how to enforce environmental regulations." But the situation has changed, he adds, "Now I talk about Michigan a lot, as I travel around Iowa, as an example of what not to do."

Marshal Woiwode, chair of the state's Sierra Club chapter, agrees. "We have some of the best environmental laws in the country on the books, and they're on the verge of being decimated," she says.

While much of the problem result: from DNR's chronic budget problems and layoffs over the past several years, Michigan environmentalists point out that the problems are traceable to a 1981 lobbying offensive by business.

Two years ago, when Michigan's economy was sliding into crisis, the legislature took up the question of raising the DNR's "surveillance fees," the pollution taxes on business which funded about $7 million of DNR program activity. Since the surveillance fees had been a gradually growing burden on small businesses, the DNR requested an increase in the maximum charge per industrial location - an action that would place a heavier burden on big businesses. The DNR claimed that without an increase in surveillance fee revenue, environmental programs would have to be cut.

The State Chamber of Commerce, along with General Motors, Ford and other businesses, argued strongly that the surveillance fees were already having an adverse effect on the state's business climate. Big business interests conducted a "a full court lobbying effort," says Dempsey of the Michigan Environmental Council, by testifying before the legislature and "twisting arms to the maximum extent." According to DNR official Del Rector, businesses argued that state environmental rules were already tougher than any in the country, and that surveillance fees, by adding to the environmental costs facing business, discouraged industry from locating in Michigan.

Accordingly, the state legislature voted to phase out the surveillance fees and to replace the lost revenue with allocations from Michigan's general fund. But as Michigan slid increasingly into debt, the general fund was cut - 13 times in two years.

Because of the cuts, the DNR's Environmental Protection Bureau lost 95 full-time staff positions and about $950,000 in grant money designed to encourage waste treatment planning by local government. According to DNR official Richard Powers, the cuts decimated the agency's laboratory services and its monitoring of surface water quality in Michigan. The state's ability to survey toxic-waste dumps for inclusion in the federal government's "Superfund" program was also affected.

In addition, Michigan's newly elected governor James Blanchard, in a desperate attempt to cut the state's debt (estimated to be between $1 and $1.6 billion), has proposed another $3.7 million in probable budget cuts from the Environmental Protection Bureau.

"I'd have to say that these cuts are disastrous for environmental protection in Michigan, and disastrous for that state as a whole," one analyst comments. "We're not being singled out, however; the budget reductions are tough on everybody."

Meanwhile, another state office, the Department of Management and Budget, is proposing to dismantle the DNR and send the Environmental Protection Bureau over to a new agency - allegedly so that Michigan can save money and improve administrative efficiency. According to numerous sources, the State Chamber of Commerce is one important political force behind the dismemberment proposal: Chamber spokesperson George Graff, however, declines to talk about the subject.

While the once-influential DNR tries to retain its budget and its integrity, the battle to protect Michigan's environment continues on yet another front. Strong business pressure is being brought to bear on Michigan's seven-year-old attempt to formulate a general rule for regulating toxic chemicals in the state.

The proposed general toxics procedure, called "Rule 57" by Michigan environmentalists, has been under discussion since 1976. Since 1981, a special state panel called the Rule 57 Advisory Committee has attempted to formulate a scientifically defensible procedure which is also acceptable to environmentalists, state government, and industry.

Industry has opposed the rule. In 1982 the Ford Motor Co., commenting on a draft of Rule 57, warned that it could "only increase rather than decrease the exodus of industry and its jobs from the state." General Motors likewise called for a "revised" toxics procedure which "should appropriately balance the state's economic interests against its environmental needs." An industry-backed group called the Michigan Coalition for Clean Water, has criticized the draft toxics procedure for its "unknown economic impact upon the State's regulated community in light of an already weakened statewide economy." The coalition represents Dow and the auto makers, state and national trade associations, numerous local municipal governments, and the Building Trades Department of the AFL-CIO.

Dow has also criticized official use of Rule 57 in the state's regulation of the company's Midland, Michigan chemical complex. Last year, in an attempt to include discharges of the toxic chemical dioxin in its water pollution permit for the plant, the DNR used some concepts being developed by the Rule 57 Advisory Committee to regulate the increased cancer risk which toxic discharges from Midland are expected to cause.

According to the Bay City Times, Dow and the DNR negotiated for "months" before the permit was issued. Though Dow is generally believed to have been meeting the permit's proposed standards for dioxin, the company did not like the philosophy embodied in the document. Dow official David T. Buzzelli blasted the permit for making Michigan waters into "the most restrictive of any in the country." Vowing that Dow would contest the permit, Buzzelli added: "The regulators have driven another nail into Michigan's economic coffin."

Environmentalists admit that the DNR's administration is not perfect, but many question whether industry perceptions of environmental costs are really in accordance with economic reality. Dempsey of the Michigan Environmental Council says his group is seeking a grant to fund a solid study of the economic costs of environmental rules, "in order to dispel all the myths that are being promulgated."

Michigan's badly divided environmental community, somewhat accustomed to coasting during the halcyon environmental climate of the 1970s, is now reorganizing itself and reaching out to labor groups and other constituencies in order to head off the coming threat to anti-pollution regulations and their enforcement.

Woiwode of the Sierra Club says her organization is increasing its local organizing efforts, trying to involve its new members quickly in environmental activities, and entering into coalitions with labor over occupational safety laws and "right-to-know" legislation giving workers in factories the right to information about toxic chemicals they may be handling.

The Michigan Environmental Council is also gearing up for more coalition and outreach work, trying to lay the groundwork for state-level political action committees that will involve environmentalists in local political campaigns, and preparing for debate about the DNR dismantling proposal.

The Michigan branch of the American Lung Association and the Michigan United Conservation Clubs, a powerful sportsmen's organization, were also instrumental in turning out environmentalists en masse for a recent hearing on a local utility's contribution to acid rain.

Despite these signs of renewed activity, environmentalists such as Woiwode confess that they are prepared for several hard years of challenges ahead.

"We're going to be involved in a holding action for the next two years, just to protect the environmental laws that we already have," Woiwode comments. "I think if we just succeed in staving off the wolves, we'll have done a great deal."

Andy Feeney is a freelance environmental reporter who has written for Environmental Action magazine and the Environmental Action Foundation's energy publication The Power Line

A Concerned Mother Fights A Company Town

Diane Hebert, mother of two children and a Midland, Michigan resident, has been active with the Environmental Congress of Mid-Michigan since revelations of dioxin contamination of nearby rivers first surfaced in Midland. She was interviewed recently by Multinational Monitor intern Jeff Bentoff.

MM: How have residents of Midland reacted to the dioxin problem?

Hebert: There have been a variety of responses, really. Certainly the area's businesses are outspoken and fully supportive of Dow's position., though they don't seem very will informed about dioxin. They say, "If Dow says its OK, it's OK." If you talk to the people in town they say, "No, its not a problem. Dow has all these great scientists�"

MM: What has it been like working on this issue when many of your neighbors support Dow's position?

Hebert: It's uncomfortable. We're not a large group. This is their home, but it's also my home.

MM: How gas your daily life changed with your involvement in this struggle?

Hebert: It does get very stressful. In a personal sense, it's very disruptive, it's like having two full-time jobs. Yet we don't have the money to run ads and hire PR firms.

MM: Do you worry about the potential for harm to you or your family from the dioxin contamination?

Hebert: It's something I wake up with in the morning. It's not that I'm in a panic, but I'm extremely concerned that I've kept my kids here for six years. I wish we had known more, and been given the opportunity to make the decision (whether to stay in Midland.)

MM: How would you characterize your dealings with Dow over this issue?

Hebert: I've found them to be very evasive. I don't feel real comfortable with Dow's position. I would feel better if Dow would at least say, "Dioxin is toxic, we'll clean it up." They could avoid a lot of grief by cleaning it up� I see a real long battle.

MM: What have your children said to you about all the commotion now surrounding Midland?

Hebert: My daughter did ask me, "If we get rid of the dioxin, could we please stay?" (The Heberts are planning to move from Midland to a nearby town because of fears for their health." I said, "I don't think so."

Industry Fights New York Laws As Well

Regulators in New York' State - home of the Love Canal " - are also facing pressure from the multinationals.

More than 1300 "potentially hazardous" chemical waste dump sites are scattered across the Empire State, according to federal investigators. An environmental researcher with the New York State Assembly adds that "we have now found toxic organic chemicals almost everywhere, across the state, in the groundwater."

New York last year passed a state "Superfund" program to force generators of hazardous wastes to pay for some of the costs of toxic cleanup. New York's Department of Environmental Conservation (DEC) is also trying to provide independent monitoring of the 1400 "priority" waste; generators in the state - sending inspectors out to check on companies which either have histories of non-compliance with environmental laws, or which emit wastes posing particular dangers to fragile ecosystems downstream.

Gov. Mario Cuomo is also attempting to impose an $11.5 million "pollution fee" system on industry to fund some of the DEC's budget. The pollution fees, similar to Michigan's discarded surveillance fees, are envisioned as a way to free state revenues for use in reducing New York's massive budget deficit.

Industry has fought all three measures, says researcher Gail McFarland-Benedict, of the State Assembly's Committee on Environmental Conservation. But corporate lobbyists haven't done so openly: Instead, "they just go quietly behind the scenes breaking arms."

Last year, McFarland-Benedict reports, industry warnings about the state Superfund's impact on New York's investment climate helped to reduce the fund's size from a proposed $15 million to only $10 million. Then the fund's first quarter of operations -- which ended last December, and which was supposed to generate $2.5 million for the state - brought in only $657,000. Regulators are uncertain whether this reflects the chemical industry recession, mistaken predictions by the state, or deliberate cheating by waste generators. But the effect has been to hobble waste cleanup efforts.

Olin Corp., a Connecticut-headquartered chemical firm, has challenged New York's ability to levy fees on "priority" waste generators. New York's powerful Business Council has likewise attacked the priority inspection program for not "solving our problems through teamwork" and as indicating a lack of trust between industry and government regulators. As of the New York legislature's Easter recess, the State Senate appeared to have cut all reference to priority inspection fees out of the state's proposed budget. -

The Business Council has joined corporations like Occidental Petroleum Co. and FMC Corp. (a Chicago-based chemical company) in opposing the proposed "pollution fee" system. FMC in particular has warned that the fees would make New York industries less competitive with those in other states. The Council's written testimony adds:

"As we all work together to support the Governor's program for attracting new high-technology industries, we must recognize that there is great competition among the states for these businesses and jobs. It is important for the legislature not to create any disadvantages to the state by imposing significant additional environmental costs."

According to McFarland-Benedict, business now appears to have compromised on the pollution fees. The State's budget will probably contain a provision for fees - but levied at levels which the Committee on Environmental Conservation calls "woefully inadequate" for funding DEC activities.

"It's the good old boys in the back room dictating what's going to happen again," she says. "The public is aware only of a great fuss being made, great lip service being paid to environmental quality goals. What they don't realize is the lobbying which is going on to make sure there will be no resources to make those goals into a reality."

- A.F.

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