National

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Harvard Business School                                                   9-183-133

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Gartland Steel

        Thursday, October 11, 1979.  Dan Crossan, Director of Environmental Engineering at Gartland Steel, returned from lunch and found a memo left for him by Jay Peeler, Senior Project Engineer.  Crossan had spent a good deal of time in the past year promoting the new “bubble” method of determining air pollution emissions compliance for industrial plants.  Rather than restricting pollution from each individual point source (smokestacks, vents, etc.) within the plant, the bubble method restricted the total pollution output of a plant – as if it were under a bubble.  This new method promised both capital spending reductions and energy savings to industry while giving the same pollution emissions performance, since industry would be left to meet the goals in the most cost-effective production processes at Gartland’s Salem, Ohio steel mill.  Crossan, who was attempting to convince the EPA to approve a bubble plan for the Salem mill, felt this information would be very helpful.

Gartland Steel: 

        Gartland Steel was a fully integrated steel producer.  In 1978, it had nine plants in the US and was the country’s fourth largest steel maker in tonnage and third largest in sales.  Gartland, since its founding in 1901, had led the industry in method and product innovations, starting with commercial development of taconite ores, large-scale direct reduction furnaces, continuous flat rolling, development of electrical steel products and many grades of stainless steel, among others.

        Gartland had also led the industry in both sensitivity to environmental questions and in actions to alleviate pollution.  By the end of 1978, Gartland had spent over $300 million on pollution control; 85% of this was spent before being required by state or federal authorities.  A 1977 report, by the Council on Economic Priorities, concerning pollution in the steel industry placed Gartland’s performance first, with the other six major firms “tied for last.”

The Clean Air Act and the EPA:

        The Clean Air Act (CAA) of 1970 created the Environmental  Protection Agency (EPA) to establish and enforce air quality goals.  (The EPA was also responsible for control of water pollution and solid wastes).  The EPA set up National Ambient Air Quality Standards (NAAQS) for six airborne pollutants: sulphur oxides, nitrogen dioxide, carbon monoxide, photochemicals, hydrocarbons, and particulates.  These standards postulate “threshold levels” beyond which ambient pollutants are damaging to health and welfare.  States were given the primary responsibility to develop and implement programs to achieve these standards.  In the attempt to bring regions or firms into compliance, emission rate standards were also set “stack-by-stack” for most industrial