Lean and Green? Environmental Law and Policy and the Flexible Production Economy

Abstract:     
Driven by global competition, American manufacturing is undergoing a fundamental transformation from mass production to flexible or lean production. Mass production is premised on the stable, high-volume manufacture of identical goods. Flexible production engages all workers in a system-wide search for continuous improvement. It is characterized by constant innovation and rapid change to products and processes. Intel Corporation, a flexible producer, averages forty-five process changes per year.

This article begins by identifying two implications of this industrial shift for environmental law and policy, particularly the Clean Air Act (CAA). First, flexible production's continuous improvement culture provides an ideal platform for pollution prevention and should enable facilities adopting it to achieve improved environmental performance. Second, the rapid change that characterizes the new production method is in tension with Clean Air Act provisions, originally designed for mass production plants, that require facilities to complete a months-long permitting process prior to undertaking each individual change.

The article argues that major recent environmental policy initiatives can be understood, in part, as early attempts to adapt the regulatory system to the new conditions of flexible production. Experimental Clinton Administration programs replaced traditional permitting with plantwide emission caps. These innovative permits allowed flexible production facilities to make changes without delay, so long as their overall air emissions remained within the limit. The programs set the cap at a level more stringent than that which traditional permitting would have required, thereby both providing flexible producers with regulatory speed and pushing them to achieve better performance. Recent Bush Administration rules also offer plantwide caps. However, they do not require more stringent performance and may, in fact, allow pollution increases. They fail to capitalize on flexible production's green potential.

While the Clinton Administration initiatives represent a better approach, they are far from perfect. The article spells out specific legal and policy recommendations that would strengthen this approach and so point the way towards an effective regulatory strategy for the coming era of flexible production.

Keywords: Environment, Environmental Law, Environmental Policy, Manufacturing, Lean Manufacturing, Lean Production, Flexible Production, Mass Production, Pollution Prevention, Clean Air Act, New Source Review, Reinvention

JEL Classifications: K20, K23, K32, L50, L60, M11, O38, Q25, Q28

Accepted Paper Series