One of the major challenges businesses face with respect to government
regulations is that often compliance with existing regulations during an earlier period
does not protect them against expensive problems that occur or come to light later.
The plight of General Electric (GE) with respect to its dumping of PCBs
(polychlorinated biphenyls) over 30 years ago is a classic case in point.
For decades, GE had electrical-equipment-making plants along the Hudson River in
New York. During the period prior to 1977, GE discharged more than 1.3 million
pounds of PCBs into a 40-mile stretch of the Hudson before the chemicals were
banned in 1977. In 2001, the PCB-contaminated upper Hudson River had become
the largest EPA Superfund site in the nation and has become the most expensive to
clean up.
In August 2001, the Environmental Protection Agency (EPA) circulated a draft
proposal informing GE that it would have to spend hundreds of millions of dollars to
clean up the PCBs that were legally dumped over a 30-year period that ended in
- According to Businessweek, the Bush Administration and the EPA, under
fire for its environmental policies, ordered GE to clean up the Hudson in what has
been called the biggest environmental dredging project in U.S. history. The decision
reaffirmed a plan developed in the waning days of the Clinton Administration.
A GE representative stated that the company was “disappointed in the EPA’s
decision,” which it said, “will cause more harm than good.” Environmentalists,
predictably, praised the decision, and the Sierra Club executive director called the
decision a “monumental step toward protecting New Yorkers from cancer-causing
PCBs.”
The cleanup plan became a heated and politically charged debate beginning in fall
of 2001, as an investigative report detailed how environmentalists (the Greens)
claimed that GE and the EPA used the terrorist attacks on the World Trade Center
and Pentagon as a distraction from the priority of the planned cleanup. The Greens
charged that GE and the EPA, under the leadership of EPA administrator Christine
Todd Whitman, delayed the cleanup and were “negotiating in the shadow of
September 11.” The executive director of the Clearwater advocacy groups and
spokesperson for the coalition said regarding the meetings between GE and EPA, “It
smells really bad.”
Use of Performance Standards
The Greens charged that a modification of the cleanup plan was in the works that
would favor GE. This would be the establishment of “performance standards” to
measure the effectiveness of dredging to remove the PCBs. In a change from the
original Clinton Administration plan, the revised goal of the EPA would be to roll out
the dredging project in stages with periodic testing for PCBs. EPA stated: “The
performance indicators being considered will include measuring PCB levels in the
soil and the water column, as well as measuring the percentage of dredged material
that gets re-suspended.” The agency added: “Based on these objective scientific
indicators, EPA will determine at each stage of the project whether it is scientifically
justified to continue the cleanup. PCB levels in fish will be monitored throughout the
project as well.”
Would GE Be Favored?
Environmentalists believed that the performance standards would be weighted in
ways that would favor GE’s position and would put an early lid on the project. They
communicated to the EPA that they did not want any standards built into the project
that would offer GE an “out.” Environmentalists who met with the EPA claimed they
were talking to a brick wall—that their arguments were brushed off. One stated:
“That office (EPA), with all due respect, seems to get its information from G.E. It’s a
political process being handled inside the [Washington] beltway; it’s inappropriate
and possibly illegal.” The Greens stated they planned to start an advertising blitz
hammering on its claim that terrorism was used as a cover while EPA and GE
schemed a way to dilute the plan.
The Hudson River
Close to 40 miles of the half-mile-wide Hudson River is involved in the cleanup. It is
a pastoral and wooded stretch of the river that winds in the shadows of the
Adirondacks, which serve recreational activities of numerous towns and villages. At
one time, these villages were thriving examples of American industrial power. Today,
most of the factories, mills, and plants are closed. Like in many other industries, jobs
headed south, west, across borders, or across oceans as companies tried to
extricate themselves from what they saw as devastating taxes and regulations.
Though not obvious to the observer, the hidden problem of hazardous waste
pollution has been a significant barrier to redevelopment of the area.
Superfund Site
In 1983, the upper Hudson was named a Superfund site by the EPA. This meant
that GE would be held responsible by law for cleaning up the pollution resulting from
years of disposal of pollutants, regardless of whether the disposal was legal at the
time.
John Elvin, an investigative reporter, claimed that the Hudson River was just 1 of 77
alleged sites to be in need of cleanup under the EPA’s Superfund program. Also, it is
believed that there are numerous other sites in addition to the upper Hudson River
where PCBs were dumped. In addition to the Hudson River area, the chemicals
were used at plants throughout the New England area.
PCBs
PCBs are a large family of fire-retardant chemicals that GE once used in the
production of electrical products. There are over 200 variations of the chemical,
which were, for the most part, dumped legally in the years before it was determined
they posed a possible cancer risk. The PCBs were oily and tarry and were disposed
of as fill for roadbeds, housing developments, and other such uses. It was reported
that GE often dispensed the material free to residents surrounding its factories. In
various forms, the company sold or gave away what is now considered a
contaminated waste product to be used as a wood preservative, fertilizer, termite
inhibitor, and component in house paints. As for directly dumped wastes, the PCBs
are thought to be leaking into groundwater from landfills that GE had put caps on.
The Dangers of PCBs
According to the EPA, PCBs have been found to cause cancer and can also harm
the immune, nervous, and reproductive systems of humans, fish, and wildlife. They
think the chemicals are especially risky for children. David O. Carpenter, the
director of the Institute for Health and the Environment at the State University of
New York at Albany and professor of Environmental Health Sciences within the
School of Public Health, has been a critic of GE. According to Carpenter, all experts
except those allied with GE believe PCBs to be a “probable” cause of cancer in
humans. Carpenter lashed out at GE for “deceitful and unscientific” claims that are
“preposterous.” Carpenter claims that PCBs are linked to reduced IQs in children,
attention deficit disorder, suppressed immune systems, diabetes, and heart disease.
Controversy Over Safety
There is controversy over whether PCBs are dangerous or not. Like the EPA,
environmental groups believe they are dangerous. A handout from the Friends of a
Clean Hudson coalition states strongly: “PCBs are a class of synthetic toxic
chemicals universally recognized as among the world’s most potent and persistent
threats to human health.” On the other hand, a former GE employee who worked
intimately with PCBs for 25–30 years offered a different perspective. To put it in
layman’s terms, he said, “You’re talking about a big, fat, slippery, stable molecule
that doesn’t break down. That’s why it was used in lubrication and cooling in the
manufacturing process. It’s just plain sludge, that’s all.”
Another hazardous-waste-management expert was reported as saying that he had
been in PCBs up to his armpits and so had many others working with GE and other
firms. He also affirmed that he had drunk half a glass of PCBs accidentally 25 years
earlier. (But, we don’t know what happened to him after that period.) The expert
went on to say that there are no reported cases of cancer traced to PCBs. He
expressed the opinion that this controversy is 25 percent an environmental concern
and 75 percent politics in a state and towns abandoned by GE that are left with no
industry and a lot of trash. In spite of his views, the expert does think that GE should
clean up the “hot spots” where dumping was most severe and the rest of the river
should be left to heal on its own.
Ge’s Position on Cleanup Plan
GE did not accept EPA’s cleanup plan as a done deal. The huge, wealthy company,
one of the largest in the world, cranked up a barrage of TV infomercials, radio and
TV ads, and initiatives by top-tier Washington lobbyists to sway the public, media,
and government. The company fielded an imposing cadre of Washington lobbyists.
Among these lobbyists were former Senator George Mitchell, former House
Speaker-Designate Bob Livingston, and several other prominent people.
Former CEO Jack Welch Chimes In
Retired former chief executive officer (CEO) of GE, the legendary Jack Welch, was
negotiating with regulators over this issue as far back as the 1970s. Welch
summarized the company’s position in a statement he made to GE stockholders
while he was the CEO: “We simply do not believe that there are any adverse health
effects from PCBs.” At the time, GE has already spent millions of dollars fighting
the proposal to clean up the river. The company contended that the proposed
dredging would actually be more destructive because it would stir up PCBs buried in
the mud and recontaminate the river. Supporting GE’s position, Rep. John Sweeney
said that he would continue to fight the dredging plan because it would have an
adverse impact on local residents.
One journalist estimated that GE would end up spending as much fighting the EPA
plan as it would if they just went ahead with the cleanup. This raises the obvious
question as to why GE would fight the plan. According to John Elvin, investigative
reporter, it was because the company thought it was a precedent-setting case that
would leave the company open to a tobacco industry-sized settlement claim. As it
turns out, this was only one of the many sites GE used legally to dispose of
manufacturing by-products, and PCBs were just one of the many possibly
hazardous wastes that the company had to deal with over the years. Apparently, GE
used as many as 77 sites alleged to be in need of cleanup under the Superfund
program.
Citizens and Environmental Groups’ Chime In
Many of the residents of the upstate area that would be most affected by a GE
cleanup preferred to just leave the situation alone and let the river heal itself. A poll
commissioned by GE and handled by Zogby International found that 59 percent of
the residents in the region favored letting the river deal with the pollutants naturally.
Another poll done by Siena College Research Institute found that 50 percent of all
the residents along the entire length of the Hudson wanted the river to be left alone.
On the other side of the issue, polls showed that a large majority of the citizens did
want a cleanup. The survey results seem to depend on which citizens are
chosen to be polled, how the questions are framed, and who was doing the polling.
Grassroots Opposition
There was even some grassroots opposition to EPA’s dredging plan. An example is
found in Citizen Environmentalists Against Sludge Encapsulation (CEASE) and
Farmers Against Irresponsible Remediation (FAIR). CEASE proposed acts of civil
disobedience to prevent the government from coming onto private property.
According to one CEASE activist, “the downstate enviros are only interested in
punishing GE at the expense of agriculture, recreation, and other economic interests
in our community.” FAIR, for its part, asked a federal district court in Albany, New
York, for a preliminary injunction blocking EPA from issuing a final decision until it
provided additional information on the impact of the dredging project. However, the
U.S. District Court for the Northern District of New York ruled that it did not have
jurisdiction over the case because the Superfund Amendments and Reauthorization
Act of 1986 prohibited judicial review at that point in the case.
Supporters of the Cleanup
For their part, most of the environmental groups continued to think that the cleanup
was the right thing to do. Advocates of the cleanup said that the project would be a
“gift from heaven” to the rustbelt towns along the Hudson River. Friends of a Clean
Hudson, a coalition of 11 major environmental groups, commissioned a study in
which they concluded that thousands of jobs and hundreds of millions of dollars
would come into the area once the project was under way. The coalition claimed
benefits that could include the creation of close to 9,000 new jobs with annual
payrolls of up to $346 million. In a reaction to this report, Rep. Maurice Hinchey,
whose district includes a downstate portion of the river, claimed that as a result of
the dredging, “tourism will increase, the fishing industry will be revived, thousands of
jobs will be created and property values will rise.”
According to reporter John Elvin, there are many festering grudges still held against
GE. GE was once the centerpiece of the bustling and prosperous area. He contends
that GE eventually left the region because of New York’s antibusiness environment
and that, in recent years, legislators have felt free to tax the company to their heart’s
content, but the company expressed its own right to pack up and leave. Elvin
maintains that many state and local officials, and some citizens, just wanted a last
piece of GE’s hide—a last chance to make GE pay.
Working Toward a Settlement
Companies may resist, but government agencies do not go away. Such is the case
in the continuing saga of the Hudson River cleanup. In 2001, the Bush
Administration ordered a full-scale dredging of a 40-mile stretch of the river. It was to
be the largest environmental dredging project in history. GE was expected to pay
the estimated $490 million charge for the cleanup and the project was expected to
take about a decade, with plans for the dredging to begin in 2005.
In 2003, it was reported that the Hudson River cleanup was moving on schedule
although at the time GE was withholding payments, according to environmental
groups. A spokesman for Environmental Advocates, one of 13 concerned groups
that formed the Friends of a Clean Hudson coalition said, “contrary to dire
predictions of two or three years ago, the project is on track.” Critics said that GE
had not been cooperative, but the company denied this evaluation of its efforts. At
that time, the environmental groups graded the key players in the cleanup. The EPA
got a “B” and GE got a “D.”
Performance Standards Finalized
In May 2004, the EPA finally released its final quality of life performance standards
for the Hudson River cleanup. By March 2004, an environmental progress report
was released in which it was stated that more than 290,000 pounds of PCBs had
been removed from the Hudson Falls Plant Site. GE installed a comprehensive
network of collection and monitoring wells to capture PCBs in the bedrock and
prevent them from reaching the river. Also in 2004, the New York State Department
of Environmental Conservation (DEC) approved GE’s plan to build innovative underthe-river tunnels to capture the final few ounces a day of PCBs that are thought to
trickle out of the river bottom near the Hudson Falls Plant.
Dredging Delayed, Backroom Deals
According to environmental groups, GE dragged its feet in moving forward with the
cleanup. Initially, dredging was to begin in 2005, but due to GE-requested delays,
the start date got pushed back to 2009. Also, the Natural Resources Defense
Council (NRDC), an environmental group, claimed that in 2005 the EPA rewarded
GE’s foot dragging by striking a backroom deal that required GE to commit only to
completing the Phase 1 of the cleanup—just 10 percent of the total job.
Settlement Reached
On November 2, 2006, the federal district court signed off on the EPA–GE
settlement. This agreement allowed for the dredging of the PCB-contaminated river
sediments to proceed. GE continued to challenge the EPA over important details,
and it continued to press a federal lawsuit challenging the EPA’s authority to require
GE in the future to complete Phase 2 of the cleanup. If GE got out of the second
phase, taxpayers would have to foot the bill to clean up the remaining mess, face
protracted legal battles with GE to get it to complete the job, or else be forced to live
with a polluted river indefinitely. Much of the upper Hudson River had already been
closed to fishing. South of Troy, New York, women of childbearing age and children
have been advised not to eat fish at all. In addition, according to the NRDC, the
pollution was spreading, continuing to move downriver from Albany.
Phase 1 (2009) of Dredging Project Completed
After legal squabbling, Phase 1 of the GE dredging project began and was
completed in 2009. The work spanned the period of May 15 to November 15, 2009.
The task focused on removal of PCB-contaminated sediment from a six-mile stretch
of the upper Hudson River. GE removed approximately 10 percent of the
contamination scheduled to be dredged during the expected six-year project. During
this time, the depth of contamination was found to be greater than expected due to
dense logging debris.
In addition to the PCB removal, Phase 1 was intended to allow GE and EPA to
evaluate project progress and to make program adjustments to improve compliance
with EPA’s performance standards. The standards were intended to ensure that
dredging operations were done safely and with public health being protected at all
times.
At the same time that GE was pursuing Phase 1 of the dredging, it had an
outstanding lawsuit filed in 2000 in which it challenged the EPA Superfund law’s
application to the Hudson River case as unconstitutional. In June 2010, GE lost this
lawsuit and its appeal to the U.S. Court of Appeals. A spokesman for the company
said, “GE is evaluating the decision and reviewing its options.”
Phase 2 (2011–2015)
According to the Phase 2 Fact Sheet issued by the EPA, Phase 2 of the dredging by
GE took place between 2011 and 2015. In November, 2015, the EPA approved
the PCB Facility Demobilization Restoration Plan that allowed GE to dismantle and
decontaminate the 110 acre sediment processing facility that was built to support
the dredging of the Hudson River by GE. With the dredging now complete, the
demobilization process will run into 2016. In general, the multistep demobilization
process includes:
Decontamination of equipment and infrastructure (e.g., unloading equipment,
buildings, concrete surfaces)
Sampling of equipment/materials
Final placement of equipment/materials (e.g., sale, reuse, salvage/recycling,
or off-site disposal)
Environmental sampling (soil, groundwater, sediment, and surface water)
Property restoration
For GE, even winding down has been a complicated process and differences of
opinion about what to do and when to do it generated considerable discussion.
Some commenters did not want the EPA to allow the demobilization to occur in case
there is an opportunity for more dredging. Other observers requested that the
infrastructure remain in place to support future development of the site for the
economic benefit of the local municipalities. The final determination as to what will
be left in place is still ongoing.
The Hudson River cleanup turned out to be the “largest environmental riverdredging project in the history of the nation,” said the EPA’s regional administrator,
Judith Enck. Even as the cleanup was ending, GE has received overtures from
the state to move its corporate headquarters back after 40 years in Connecticut.
In 2016, GE announced they would move their headquarters to Massachusetts.
Is It Ever Over?
As GE is wrapping up the $1.6 billion, seven-year dredging project, environmental
groups, and some government agencies say that it still has not done enough. The
Natural Resources Defense Council and other agencies that have a role in the next
stage of river restoration say that GE is being allowed to exit the project despite
solid evidence that the dredging has worked as planned. The National Oceanic &
Atmospheric Administration (NOAA) and the Fish and Wildlife Service, the
appointed trustees for the cleanup, have said that the PCB levels will not fall enough
to levels allowing safe consumption of fish for decades longer than EPA’s projection.
EPA issued a white paper in which it responded to NOAA’s predictions. EPA
says that NOAA’s conclusions about delayed fish recovery were based on an
analysis of a limited number of fish species collected at only one location. Further,
EPA claims that NOAA’s study does not reflect fish and water data that have been
collected over a long period of time.
Both GE and the EPA reject the idea that more dredging may need to be done. The
EPA says that 65 percent of the contaminants have been removed, and it thinks
PCB levels will decline significantly in the coming years. A GE spokesman asserts
that the company has met every obligation it had imposed on it. Next, GE and EPA
will commence the next phase of the cleanup; a $20 million study trying to estimate
how much GE will have to pay to clean up some related land projects that could
take another decade.
Questions for Discussion - What are the social, ethical, and political issues in this case? Which are
major and which are minor? - Who are the stakeholders and what are their stakes? Assess the different
stakeholders’ legitimacy, power, and urgency. - Do your own research on PCBs. Do your findings clarify their status as
being so hazardous they must be removed? Or should they best have
been left where they had been settled? - When GE contaminated the Hudson River, it was not breaking the law.
Who is responsible for the contaminated Hudson River? GE? EPA? State
of New York? Local citizens? What ethical principles help to answer this
question? - Do research on the EPA Superfund. Does it appear to be fair
environmental legislation? Should a company have to pay for something
that was legal at the time they did it? - Do research on this case and update the case facts. Has anything
changed since the facts were presented that affects its resolution? - What lessons about environment and sustainability do you take away
from this complex, lengthy pollution and cleanup of the Hudson River?
Will it ever be over?
Sample Solution