Intel

Good Neighbors Project Comments

Comments of Sanford Lewis, Director, Good Neighbor Project

Submitted to USEPA, Arizona DEQ, Maricopa County DES, and Intel Stakeholder
Panel

I am writing to provide comment on the drafts of the Intel Project XL Final Project Agreement and the Maricopa County Air Permit. These comments have been developed based on various roles in the process. These include (a) ongoing observation and evaluation of the stakeholder process while an instructor in an environmental law reform course focusing on community based environmental protection during the winter of 1996 at the UCLA Pollution Prevention Education and Research Center, (b) serving as a negotiation advisor to David Matusow, a member of the stakeholder panel, and (c) as the Director of the Good Neighbor Project, through which I am considered a national expert on stakeholder negotiations, policies and strategies and am consulted by environmental, community and environmental justice organizations throughout the U.S.

I believe that Intel's Project XL project is singularly important to the future of flexible environmental regulation -- not only for this individual plant and the surrounding communities, but also as a key national precedent. Out of all the various Project XL endeavors, this seems the
highest profile. I have been endeavoring to track the development of this project closely, and had the honor of being the first outside observer to attend a "closed" air permitting working group meeting of the Intel XL process.

The Intel XL project is noteworthy and laudable for its broad attempted sweep, and for the extent of innovation and experimentation. In any broad effort of this kind, in which a negotiated document has implications for local conditions as well as local, regional and national policy, it is inevitable that the first draft will precipitate issues and possibilities that were unforeseen by the local negotiators. This is to be expected. Grassroots experience with similar negotiations throughout the U.S. has shown that it is necessary when reaching the point at which you have arrived today to keep an open mind, and to carefully weigh options and input that can lead to a much refined and stronger final product. So I recommend proceeding deliberatively, not hurriedly, to address the issues and options raised by commenters at this juncture.

Here are some thoughts I would like to add to your deliberations.

I. THE FINAL PROJECT AGREEMENT SHOULD INCLUDE A MUCH STRONGER POLLUTION PREVENTION ORIENTATION.

The draft FPA fails substantially to live up to its promise of serving as a national model by failing to ensure proactive pollution prevention. The proposal actually allows an increase in pollutant emissions over the existing operations. Also as noted in various other comments, it appears to
allow Intel to achieve its environmental goals by risk transfer methods -- by shipping wastes off-site to a low income/minority community, by increasing the use of innovative substances or combinations presenting enhanced workforce toxic hazards. While a future condition is apparently to be produced by January 1997 to limit pollution increases to production increases, the present FPA and draft permit which would apparently be approved before this issue is worked through could arguably even allow Intel to take its new flexible permit limits to increase pollution WITHOUT building a new fabrication unit on the site!

Due to the lack of a clearly articulated front-end pollution prevention strategy, the draft FPA plan cannot be said to assuredly produce "cleaner" results. By front-end pollution prevention strategy, I mean an intentional, goal-driven use of strategies to reduce waste quantities and toxic chemical
usage at the source so as to avoid solutions that transfer toxic substances, wastes or hazards between environmental media or between stakeholders. While Intel has already been engaging in some of those approaches, a problem with the FPA is that it does not ensure their continued usage as the preferred means of implementation of the FPA.

A. The Draft Fpa and Permit Are Leagues Behind the Leading Grassroots Examples of Pollution Prevention Agreements.

In contrast to the Intel FPA, other industries have negotiated agreements for aggressively pursuing "zero toxic emission" assessment processes and goals. For instance, in Point Comfort Texas, Alcoa Aluminum negotiated a Good Neighbor Agreement for such an assessment, with stakeholder oversight, of the feasibility of "zero discharge" water pollution technologies. The agreement included provisions for a process for engaging a mutually agreed upon expert with genuine community oversight to determine "feasibility based upon sound science, practical engineering and economics." Having gone through the process and found that such zero discharge technologies are available, the company is in the process of implementing them. A similar process is underway at a Formosa Plastics plant in the same area. These agreements and processes resulted from the strong stance taken by local stakeholders and local government working hand in hand, to press industry to do all that is feasible to maximize pollution prevention. For instance, two local governments (Seadrift, Texas City Council and the Calhoun County
Commissioners) enacted resolutions calling for studies and application of zero discharge technologies where ever feasible at local plants.

B. The Chandler Draft Permit Does Not Even Adopt the Pollution Prevention Requirements of Intel's Own P4 Permit in Oregon.

The Chandler draft permit and FPA are not even as strong as the"P4" permit issued to Intel by the state of Oregon's Department of Environmental Quality. Among the pollution prevention elements contained in the Oregon permit, but not in the proposed FPA and air permit, are the following:

--a process to formulate performance goals and objectives to
comply with VOC and HAP limits through the implementation of
pollution prevention

--requirement for documenting employee training on pollution
prevention

--documentation of the management planning process (i.e. how are
plans generated prioritized and implemented)

--issuance of a plant level stated of commitment to pollution
prevention

--formation of purchasing agreements with materials suppliers and
vendors in pursuance of the goal of continuously trying to devise
new methods of decreasing pollution

--data collection necessary for the evaluation of pollution
prevention effectiveness

The FPA, by comparison, starts from a "compliance mentality" -- to simply keep under federal limits. This is not a national model. Indeed, many would say that it is business as usual. In order to rise to the level of "model" the Intel FPA can and should explicitly establish goals and planning processes for working with stakeholders toward zero toxics usage and zero emissions where feasible.

II. The Fpa Fails to Control Newly Introduced "Exotic" Substances And Synergistic Chemical Impacts.

A special pollution prevention issue presented by the Intel proposal has to do with the deployment of exotic substances in the production process. In this context, by exotic I mean substances which are not on existing regulatory lists.

The high tech sector is renowned for its continuous improvement and experimentation with new substances and processes to improve and expedite production and products. The continued experimentation and introduction of new substances is simply a part of doing business.

The FPA would lead to a standing air permit that addresses existing regulated substances by an aggregate emissions limit and modeling process; however, it is ill-suited to this high tech company because it fails to ensure that accountability will keep pace with innovation. Accountability built upon existing regulatory lists is in danger of slippage when dealing with an innovative firm like Intel: it gives an incentive to use substances not yet on the regulatory lists as a means of meeting the FPA goals.

The firm's principle response to this concern is to note that when new substances are introduced in the workplace they are subject to scrutiny by a company-wide Strategic Chemicals Committee (SCC). This SCC screens new chemicals for worker or environmental health concerns. However, little information seems to have been provided in the FPA development process about the extent and criteria used for screening. This issue remains underdeveloped despite its potentially major importance to the workforce and community.

In addition, the draft FPA provides that when otherwise unregulated substances are introduced to the site the firm will "undertake a special analysis for other new chemical substances that are introduced to the Site in the future which generate air emissions and have not already been
evaluated under the air permit, or under the AAAQG screen modeling procedure set forth above, and which present potential concerns to human health or the environment. In such a case, Intel agrees to consult with MCESD and the Arizona Department of Health Services to determine if emissions from such a chemical may pose a concern based on screen modeling of potential property line concentrations. Intel will use its best efforts to initiate consultations as early as practicable before the new chemical substance is used in production quantities at the Site. If it is determined that an emissions limit at the property line is necessary to protect human health, Intel will limit its annual emissions below the limit which is identified."

This proposal seems to only look at property line levels of these innovative substances (i.e. to ignore workforce exposures, even if hazardous), and to shut out public stakeholders from the dialogue on the introduction of these chemicals. It lacks the kind of base of public accountability that lie at the core of Project XL. (It also is a nonbinding "commitment" and thus may not necessarily be expected to be followed should Intel's convenience or urgent production decisions dictate otherwise. See footnote 5 of the draft FPA.)

Recommendation: The health-related criteria used by Intel's "Strategic Chemicals Committee" for screening of new chemicals could be subjected to a systematic stakeholder review. Special attention could be given to ensuring that this internal Intel process reflects state of the art precautionary principles regarding potential employee and environmental impacts of chemicals, and identifying specific chemicals of concern beyond the regulated chemical lists. The SCC could be required to present their criteria to internal and external stakeholders for review, and report on
new chemicals slated to be introduced in production quantities at the Chandler plant. The process of identifying substances of concern could also incorporate acute and chronic symptoms reported or experienced by workers -- i.e. there could be a direct feedback loop between what is happening to health in the workplace and the examination and decisionmaking regarding chemicals. This process could ensure sufficient external feedback before the introduction of innovative substances, as well as an assessment of potential or emerging synergistic effects of chemical mixtures or combined chemical exposures in the workplace. To the extent that such feedback can
be timed consistent with the reporting mechanisms defined in the FPA, this can be done consistent within the existing review processes of the FPA. However, if the company needs more rapid turn-around for rapid introduction of new substances, it could be required and empowered to trigger special external processes to address newly proposed substances.

III. THE REPORTING APPROACH IN THE FPA SHOULD BE OVERHAULED TO ADDRESS POLLUTION PREVENTION, EXOTIC SUBSTANCES AND EMPLOYEE IMPACTS.

To allow public tracking and ensure accountability for the concerns noted above, I would suggest inclusion of some additional data points in the quarterly and annual reports.

A. Pollution Prevention Reporting Can Help Induce Pollution Prevention and Accountability.

In order to ensure pollution prevention, the identities and amounts of chemical usage (including known regulated substances and other substances that are potentially emitted to air) should be disclosed as part of the company's reports required under the FPA. Present law, under the Emergency Planning and Community Right to Know Act and Pollution Prevention Act requires reporting only of "maximum amounts stored on-site" during the year of a specified list of chemicals. Chemical throughput data is much more indicative of workforce hazards and toxics use reduction opportunities than such storage quantities. Here are four suggestions for data points to include in the annual reports to better inform the local community and encourage more aggressive pollution prevention:

1. Reporting of the amounts of emission of all chemical
substances, regardless of whether they are known HAPs or AAAQS
regulated substances. This is necessary to cover exotic
substances that may be introduced at the plant site so as to
comply with overall emissions limits.

2. Reporting maximum amounts of storage of all chemical
substances regardless of whether they are specifically listed
under EPCRA section 312 (i.e., addressing exotic substances that
are not covered by EPCRA).

3. Reporting the total throughput (usage) of all chemical
substances on an annual basis. This is a much better indicia for
toxics use reduction evaluation than the total amount stored.

4. Identifying the company's toxics use reduction priorities and
numerical goals. (A similar requirement exists under the Federal
Pollution Prevention Act. Inclusion of the full range of
substances used on site rather than only the TRI substances would
be helpful here.)

B. Reporting Requirements for Workforce Monitoring And Protection Can Help
Monitor Risk Transfer Concerns.

Quarterly reporting could include the following data points:

1. Identify when equipment or production lines are shut down for
health or safety reasons.

2. Report employee health statistics including the following:

a. Sick time. Broken down by specific conditions such
as asthma, cardiovascular conditions, or neurological
conditions;

b. Cancer. Specific types of cancer such as leukemia,
lymphoma, bladder cancer, kidney cancer or liver
cancer.

c. Symptoms. e.g. ringing of ears, eye irritation,
throat irritation, nausea, dizziness, vomiting,
metallic taste, bitter taste, breathing difficulty,
asthma, chronic runny nose, fatigue, coughing up blood,
blood in stool, headaches/migraine, heart palpitations,
chest pain, darkening skin, hair loss, skin irritation,
rashes/dermatitis, mental slowness, clumsiness,
problems with menstruation, miscarriage/infertility,
low birth weight baby/developmental delay.

Local stakeholders could scrutinize this reported data, as well as scanning data regarding hazardous air pollutants for materials that present potential workforce concerns as well as employee health and symptoms data, and could be entitled to technical assistance for this purpose. In a more ambitious approach, as data on the workforce are reported, an expert panel
funded by Intel, with community and workforce oversight, could review the results of medical monitoring and produce periodic reports that are public and available to workers and their advisors.

C. FURTHER DISCLOSURE AND GROUNDRULES ARE NECESSARY TO ADDRESS CHALLENGES PRESENTED BY INTEL'S CONFIDENTIALITY CLAIMS.

A worst case scenario for accountability of Intel under this new model program is that the stakeholders and EPA will fail to live up to their duties as watchdogs of the public interest and will allow Intel to create a "High Tech mystique" built around the confidentiality of such matters as production figures, modeling assumptions and chemical use data. If this mystique takes hold, as it already seems to be doing, one can foresee the various players simply rendering these key data points as unreported or publicly unaccountable. It is essential that the stakeholder group and the relevant officials develop an effective accountability system which does not inappropriately veil critically important issues from public view and accountability.

This endeavor should be guided by a "new paradigm" ethic that assume transparency except where it is shown that there is truly a sound and overriding jusitification for concealment. This new ethic has been expressed in the scholarly literature from both positive (pro-disclosure) and negative (anti-secrecy) perspectives. The positive version is expressed by Kim Lane Scheppele in Legal Secrets (1988) is that "Disclosure is required (or put more straightforwardly, privacy is not allowed) when the information has been judged necessary for someone else to know in order to make decisions that she is entitled to make." In this vein, various scholarly works have suggested in particular that data relevant to health, safety and environmental concerns require the informed consent and participation of government and local stakeholders -- thereby overshadowing secrecy claims. Mary L. Lyndon, Secrecy and Innovation in Tort Law and Regulation, 23 NM L. Rev 1, 1993.

The "antisecrecy" view is concerned with preventing "temptation" to be extended by allowing public processes to rely too heavily on assumptions of good will and good faith. This view would recognize that even though friendly stakeholder dialogues have built a level of trust in this process, secrecy allows and encourages deception. This is not to suggest that Intel is intent on deception, but that framework in this new paradigm must neither invite or encourage deception. Sisella Bok in her ethical treatise "Secrets" notes: "Lies are part of the arsenal used to guard and to invade secrecy; and secrecy allows lies to go undiscovered and to build up." Regardless of how trustworthy Intel may be, the model is not transferable and also should not be accepted locally, unless it has sufficient transparency both to prevent deception and to allow local stakeholders to effectively watchdog the process and evaluate progress.

The following points are intended to help demystify the issue of trade secrecy as applied to the FPA and permit:

1. Generally, Confidentiality Is Limited by Statutory and Common
Law Disclosure Requirements.

a. This process is guided by Arizona Statutory law
which does not leave leeway for concealment of
non-Trade Secret information. The Arizona Air Pollution
law provisions relating to protection of Trade Secrets,
ARS 49-487(c) were amended in 1992 to eliminate
protection of generally defined "confidential business
information" and instead to protect only bona fide
trade secrets. (The law formerly protected: "C. Any
records or other information... which records and
information relate to production or sales figures or to
the processes or production unique to the owner or
operator or which would tend to adversely affect the
competitive position of such owner or operator....")
Perhaps most importantly the new law provides that a
regulated party and government may not conceal: "2. The
chemical constituents, concentrations and amounts of
any emission of any air contaminant." In other words,
if Intel is going to emit substances to the local air,
they are obliged to disclose them.

b. It should be understood that a "Trade Secret" which
qualifies for protection under the Arizona Air
Pollution law is well defined by the common law as "a
process or device for continuous use in the operations
of a business." Restatement of Torts section 757. This
may be for instance, "a formula for a chemical
compound, a process of manufacturing, treating or
preserving materials, a pattern for a machine or other
device, or a list of customers." One thing that a trade
secret is not is "information as to single or ephemeral
events in the conduct of business as for example the
amount or other terms of a secret bid for a contract...
or the security investments made or contemplated, or
the date fixed for the announcement of a new policy or
bringing out a new model or the like...." Moreover, for
data to win protection as a trade secret it is
appropriate to apply the four criteria of EPCRA 42 USC
11042 (b) (Federal Right to Know Law) for determining
bona fide trade secrets. This provides that:

No person required to provide information under this
chapter may claim that the information is entitled to
protection as a trade secret ... unless such person
shows each of the following:

(1) Such person has not disclosed the information to
any other person, other than a member of a local
emergency planning committee, an officer or employee of
the United States or a State or local government, an
employee of such person, or a person who is bound by a
confidentiality agreement, and such person has taken
reasonable measures to protect the confidentiality of
such information and intends to continue to take such
measures.

(2) The information is not required to be disclosed, or
otherwise made available, to the public under any other
Federal or State law.

(3) Disclosure of the information is likely to cause
substantial harm to the competitive position of such
person.

(4) The chemical identity is not readily discoverable
through reverse engineering.

From these criteria it should be apparent, for instance
that the fact that chemical information or modeling
assumptions needed for accountability may provide some
information useful to competitors IS NOT sufficient to
justify concealment. Instead, the *substantiality* of
the competitive impacts must be evaluated and
demonstrated before confidentiality is allowed.
Moreover, a key issue regarding the trade secrecy of a
chemical is likely to be whether information is already
in publicly available literature.

c. Aside from legal strictures preventing overreaching
trade secrecy claims, to the extent that Intel
identifies a safe alternative compound to employ in a
process it could be environmentally advantageous and
appropriate as a "leadership" project to devise a means
of disclosing and sharing such information with the
rest of the industry. This should be weighed by Intel
and its stakeholders prior to deciding to treat a
substance as confidential, even if it would be legally
permissible to do so.

2. Product Pricing as a Trade Secrecy Issue Is Limited in Scope.

Any competitive concerns regarding disclosure of Intel's
production output data and chemical usage information would seem
most likely to be raised in the context of competitive product
pricing. Intel appears from its financial reports to have
concerns about competitors underpricing competitive products, and
also notes that to the extent competitors make products available
at less cost than Intel, "If the market demand does not continue
to grow and move rapidly toward higher performance products,
[the] Company may continue to reduce microprocessor prices
aggressively and systematically to bring its technology to
market." So, on the one hand, the firm is concerned about
competitors' under-pricing strategies. On the other hand, it is
concerned with consumer demand that might cause Intel to drop its
prices further. Any analysis of the potential competitive impact
of annual disclosure of chemical usage data and production output
figures in this sector should ask at a minimum the following:

a. Are there actual competitors for the product line in
question? If there are no real competitors likely for
the product line, then price-related data seems
unlikely to present a bona fide trade secret.

b. Can the "units of production" be disclosed in a
manner that is broadly enough characterized so as to
avoid giving competitors information needed for
pricing?

c. Can the timing of disclosure be structured to
prevent it from having competitive pricing impacts? The
actual, practical cycles by which competitors gain
information in any event, by normal pathways of
information leakage and accumulation need to be
considered before designating information as trade
secret. There is such aggressive intelligence gathering
and information leakage in this industry, it would seem
likely that production estimates for Intel products are
common knowledge by the time last year's production
outputs would be disclosed. In the high tech industry
in particular, massive leakage of information occurs by
the close proximity of individuals in the industry --
by the sharing of consultants, by the movement of
employees from firm to firm, by trade meetings and
literature and by the sharing of research and product
development information across firms. Some of the
information is also ascertainable from SEC filings.
While Intel and other firms attempt to slow some of the
free flow of information via these channels, the
reality is that a lot of the information readily
available. As Intel notes in its 1995 SEC 10K report
(filed March 1996) "The industry in which Intel
operates is characterized by very short product life
cycles." These life cycles continue to get shorter and
shorter over time; it seems likely that a sufficient
lagtime can be defined between when production occurs
and when production output data are reported so that
the information will lose its value to competitors.

3. Design-Related Trade Secrecy is probably not a major
impediment to disclosure in this arena.

One needs to contrast "production output" secrecy from other more
dramatic issues and secrecy that are of greatest renown and focus
in this sector -- for instance the theft of chip design, which is
protected by the Federal Chip Protection Act, and which was noted
in a recent case in which an Intel employee engaged in theft of
the entirety of the product design. It seems unlikely, though
possible, that chemical usage and modeling assumptions will
implicate confidential process design information. Certainly in
the event that data which stakeholders or government seek raises
such an issue for Intel, it can be evaluated as such and then
identified trade secret information can be withheld from public
disclosure on the merits of a true design trade secrecy claim.
This should not, however, be made an excuse for not reporting ANY
chemical use data, nor for failing to disclose the use of exotic
compounds. Instead, the overseeing agencies should commit to
evaluating such claims on their merits as they arise.

As with production output data impact of disclosure of trade
secret design information should be assessed for its timing as
against inevitable leakage, utility replication, and general
information flows. Despite all of the efforts made in industry,
for instance, it is estimated that the actual time for
duplication of a major design innovation when patented is one to
three years, and when unpatented is six to twelve months. Richard
Levin, et al., Appropriating the returns from Industrial Research
and Development, Brookings Papers on Econ. Activity 783 at 810.
(1987) Edwin Mansfield, "How Rapidly Does New Industrial
Technology Leak Out?" 34 J. Indus. Econ. 217-24 (1985).
Additional specific information on the high tech industry's pace
of replication or duplication of utility (speed of
microprocessors for instance) could shed useful light on this
issue and should be part of the stakeholder deliberation process.

D. Employee Records and Employee Statistics are Reportable without Invading Privacy

Some of the minutes of the Intel Project XL process may have reflected potential confusion on the part of some participants regarding the potential for disclosure of employee health data. In a reporting mechanism of the type described above, the data needed relates to statistics, not individual employee files. This does not raise a substantial privacy issue.

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