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Summary of Analysis and Conclusions This report examines key institutional, or nontech- nical, factors that affect the generation of hazardous waste by industry. It provides a framework for evaluating public policies, both regulatory and nonregulatory, to reduce the generation of hazardous waste. In undertaking its task, the committee recognized that the report itself was not expected to provide detailed solutions; rather it was expected to provide a foundation upon which improved public policies for hazardous waste management could be built. The report's underlying premise is that waste reduction should be an integral component of any national waste management strategy. For the purposes of this report, "waste reductions refers not only to in-plant process modifications that reduce the volume or degree of hazard of hazardous waste generated, but also to reuse and recycling practices. This report is one of the first to deal with nontech- nical factors affecting the generation of industrial hazardous waste. Because little study has been devoted to this topic, committee members have relied on the presentations made to the committee, reports cited in Appendix C, workshop discussions, and ultimately their own experience-and judgment in formulating their recommendations. The committee hopes that this report will stimulate public discussion of this subject. FINDINGS 1. Development of industrial waste reduction programs is a dynamic process that can be expected to grow in sophistication over time in three identifiable phases. 1

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2 The considerations affecting decisions by individual firms to reduce hazardous waste depend on the phase of development of the individual waste management programs. The committee has distinguished three phases in the development of industrial waste reduction programs. In reality, the phases overlap; they nonetheless provide a helpful guide for discussing the relative importance of different considerations at different times and for different firms. In the initial phase, firms consider for the first time changing their current waste management practices in order to exploit low-cost waste reduction opportunities. These first steps typically involve relatively unsophis- ticated technical approaches such as "good housekeeping" practices and separation of waste streams. Although they are technically simple, these first steps often achieve substantial waste reductions. The second phase of waste reduction programs is the development phase. In this phase, firms review and implement more comprehensive strategies. The principal characteristic of waste reduction activity in the development phase is the increasing sophistication of the technology of waste reduction and the associated challenge to the engineering, operating, and financing skills of the firm's management. The capital expenditures in this phase are often greater than in the initial phase. In the third phase of waste reduction efforts, designated in this report as the mature phase, firms begin to confront the political, economic, and technical limits of waste reduction activities. This phase is marked by requirements not only for technical sophistica- tion in waste reduction, but also for a sophisticated risk assessment and management program for both industry and the nation. 2. Nontechnical considerations critical to waste . . reduction decisions vary in importance as waste manage- ment programs become more sophisticated. In the initial phase, when firms first confront the need to change waste management practices, public policies, to be effective, should emphasize the dissemination and use of available technologies through the following: Educational programs for waste generators and engineers

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3 Dissemination of information through state- established authorities, university-based groups, trade associations, and other appropriate groups Fostering of competition for novel means to reduce generation Public demonstration of existing methods in a wide variety of actual situations Assistance to waste exchanges to enable them to play a more active role in arranging for recycling and reuse of materials Programs to improve information dissemination and use are worthwhile in all phases of the waste reduction effort, but they are especially useful in the initial phase because of the relative lack of knowledge about waste reduction practices among many firms. Also, they are especially appropriate for small businesses, which may lack specially trained personnel. Public policies in the initial phase should also be sensitive to the incentives for waste reduction created by "command and control" regulatory means. This sensitivity requires the following: . Evaluation of existing legal exemptions to determine whether such exemptions inadvertently reduce incentives for waste reduction Changes in procedural requirements to allow greater flexibility for recycling and reuse Strengthening some standards to encourage waste reduction practices: (1) restrictions on materials allowed in landfills, (2) rapid phase-out of old, inadequate fills, and (3) strengthened long-term care requirements for land disposal options Effective program implementation to assure that the incentives for waste reduction reflected in regulatory standards are also reflected in actual practice Increasing the cost to waste generators for land disposal to a level consistent with the total social cost of land disposal options Programs of regulatory reform and improvement are especially important in the initial phase because regulation can impart a critical strategic direction to the nation's waste reduction effort. In the development phase of the nation's waste reduction effort, other factors can have priority. Because many of the least costly approaches have been

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4 implemented in the initial phase, public policy must address the financial challenges associated with the implementation of increasingly sophisticated technologies Loan or subsidy programs that were less important to the first phase may become more important. Regulatory approaches to provide the flexibility firms need to exploit increasingly sophisticated and innovative waste reduction methods are also needed. Specific public policies important to this development phase include the following: Increased public education to ease siting difficulties for recycling facilities Support for research and development needed to adapt existing waste reduction technologies to individual applications . Increased procurement of recycled goods for use by government and other organizations Low- or no-interest loans, guaranteed loans, or direct subsidies for waste reduction Tax deductions or credits for waste reduction expenditures Support for joint reduction strategies and facilities for small waste generators . Modification of product quality standards on a case-by-case basis to encourage waste reduction Greater use of EPA authority to List and delist" materials to encourage recycling and reuse Incorporation of the degree-of-hazard concept in the regulatory framework In the mature phase of the waste reduction effort, research and development and risk assessment and management programs are especially useful. Firms are approaching the limits of technical sophistication in waste reduction. Accordingly, basic research to develop improved waste reduction methods is needed. Moreover, because waste reduction is so sophisticated and costly in this phase, there is a need for risk assessment and management programs, which attempt to balance the inevitably costly trade-offs that must be made between competing social interests. During the mature phase of the waste reduction effort, public policies should therefore do the following:

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5 Define acceptable limits of waste reduction through a program of risk assessment and management Support research on new waste reduction technologies CONCLUS IONS 1. The major portion of the industrial effort in the nation is now in the initial phase of hazardous waste reduction. The committee observed that some firms and individual plants are already well along in implementing sophis- ticated waste reduction programs. In the committee's judgment, however, most of the industrial efforts in the nation are currently in the initial phase in the develop- ment and implementation of hazardous waste reduction programs. Significant opportunities exist to reduce the generation of hazardous waste; priority should be given to those public policies most suited to encourage such efforts in the initial phase. 2. Two general policy principles apply to all phases of the hazardous waste reduction effort: . It is essential to properly price treatment and disposal during all phases of the waste reduction effort. Industrial management will not have an incentive to undertake waste reduction if waste treatment and disposal options are priced below the true costs to society. In particular, the committee believes that it is essential to increase the cost of land disposal options, such as landfills and surface impoundments, to bring their costs more in line with the true social costs of such options to the degree that these costs are currently understood. It is generally desirable to reduce the generation of hazardous waste. However waste reduction , should not be viewed as an end in itself. Regulatory standards ought to be based on health and environmental , considerations. Waste reduction policies should always be motivated by the concern for environmental protection. This principle applies in all phases of the waste reduction effort, although it is especially important in the mature phase, when the limits of technical, political, and economic feasibility are approached.

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6 3. While policies appropriate to the initial phase of the waste reduction effort are now needed, some actions must also be taken now in anticipation of the nation's transition to the second and third phases. In particular, A clear definition of hazardous waste and improved methods for obtaining data and tracking success in waste reduction are needed. Efforts are needed today to assure the regulatory flexibility necessary to accommodate the anticipated growth in the technological sophistication of the nation's waste reduction effort. Basic research on new waste reduction techniques is central to success in the third phase. Research is an activity requiring a long lead time, and basic research should begin while the nation is still in the initial phase. . Effective risk management is essential to success in the mature phase, when the trade-offs between protection of public health and the environment and costs must be understood. Risk management requires a long lead time and should begin while the nation is still in the initial phase. 4. Regulation must play a continuing role in the nation's overall waste treatment and disposal policy, but nonregulatory means are currently most likely to lead to waste reduction. In encouraging the identification and implementation of cost-effective and innovative ways to reduce the amount of hazardous waste that will be generated, nonregulatory approaches do not suffer from the same constraints inherent in regulatory mechanisms that directly control industrial processes. Nonregulatory approaches extend the range of waste reduction alternatives available to industrial management. As examples, information dissemination programs make more waste generators aware of waste reduction possibilities; financial incentives make more of these options feasible; and support for basic research on new waste reduction techniques increases the options available in the mature phase. These nonregulatory approaches to encourage waste reduction should play a major role in the nation's waste management strategy and should be discussed, evaluated, and implemented as soon as possible.