China Petroleum Co. and the residents of the Houchin district of Kaohsiung had been deadlocked over the company's plans to build a fifth naphtha cracking plant there for more than three years. Construction of the plant got under way smoothly in September only after Premier Hao Pei-tsun and Economic Affairs Minister Vincent Siew communicated with the residents in person and China Petroleum provided three major guarantees--it would close down its heavily polluing first and second crackers at the start and at the completion respectively of construction of the fifth naphtha cracking plant; it would set up a community chest fund of NT$1.5 billion to further local development; and it would move its main petroleum plant at Houchin to a new location within the next 25 years.

But the curtain still hasn't closed on the affair. The huge "community chest fund" paid out by the corporation has set off a series of chain reactions:

The residents of the Linyuan, Jenwu and Tashe districts of Kaohsiung, which are themselves home to large-scale petroleum plants, have demanded that they be treated comparably to the "Houchin model."

Although China Petroleum clearly indicated that the fund is to be used for local construction projects instead of going to individuals, if it's used to pay residents' water and electric rates, as has been suggested, what's the difference between that and a private payoff, some people wonder.

And why NT$1.5 billion? Was the figure arrived at according to objective criteria? China Petroleum is a state-run firm, so the taxpayers have a right to ask.

With cries of "comparability" going up all over the place, businessmen have begun worrying how much profit they can earn if they have to fork over a hefty sum as a guarantee of good faith every time they want to build a factory. "How you can talk about a community chest fund if you don't even know whether you can make any money?" says Y. T. Wang, president of the Formosa Plastics Group.

Although the controversial fund in question was provided by China Petroleum so it could begin work smoothly on its fifth cracker, in fact the corporation was also dearly making up for the damage caused by pollution from its number one and number two crackers and other plants over the past forty years.

The economy always comes first for developing industrial nations, and they only start to pay attention to the environment after they have reached a certain stage of development. That's when the bill comes due, and it's time to settle up. Taiwan has now reached that stage. Cases of industrial pollution are cropping up all over the place, and everyone is asking for compensation according to their own terms. The company thinks the sum sought by the victims is astronomical and refuses or is unable to pay. The victims don't want to go through time-consuming, troublesome and hard-to-win legal channels, and the result is often demonstrations and factory shut-ins.

To make up for such deficiencies, the burden of proof in pollution cases in many countries in Europe and North America rests on well-heeled corporations, to show that they haven't caused harm to victims. And even if victims can't prove any direct causal link to pollution, a showing that the occurrence of a certain disease in their area is abnormally high is allowed as a basis for compensation. Japan even has a law that permits people who have lived in certain industrial areas for a number of years and suffer from pulmonary diseases related to air pollution to apply for reimbursement for medical expenses.

Determining cause-and-effect relationships and reasonable compensation requires in-depth, case-by-case research and objective criteria, but Taiwan is behind in these areas and the figures for long-term pollution claims and compensation still have to be hammered out in negotiations by the parties involved.

Whatever number the parties come up with, many scholars believe the money shouldn't be divvied up among individuals but should be used as lump sum to clean up the environment. The NT$1.2 billion that was allocated to house-holds in Linyuan in 1988 as compensation for waste water spillages was termed "thieves' loot" by some. But now the money's gone, and the environment still hasn't improved. Kao Ch'eng-shu, chairman of the sociology department at Tunghai University, thinks that "at a bare minimum they should have used some of the money to clean up the seriously polluted sewers there."

From a legal point of view, says Yeh Jium-rong, an associate professor of law at National Taiwan University, as long as no illegal behavior -- such as violence or coercion--takes place, the two sides can reach any agreement they want to. "Even though the results may be unreasonable, it's more efficient that way."

As as long as both sides are amenable then, it doesn't really matter how Houchin's NT$1.5 billion figure was arrived at or whether it's handed out to individuals or not. If China Petroleum had gone along, the demand the people made for "NT$100 million a year for 40 years of pollution" would have been all right, too.

Even if both sides are satisfied and the agreement holds up legally, there still ought to be some principles so that talks can be carried out in a more "healthy" manner. Except for the portion to be applied to residents' water and electric bills, the NT$1.5 billion community chest fund has been earmarked for the construction of public facilities, a use that scholars consider more rational, but how will the money be managed? Who will supervise it? What will the scope of the water and electric supplemental assistance be? And how long must people have lived there to receive it?

"All kinds of details have to be spelled out in black and white. It's not a case of everybody hitting the jackpot," says Cheng Chinlong, an associate researcher at the Chung Hua Institution for Economic Research. Since it's state-run enterprise and taxpayer's money that is involved, fairness is a must.

An overseas scholar pointed out as far back as 1960 that the problem of "not in my backyard"--of where to build polluting facilities that are necessary but that no one wants near them--has to be resolved by finding mutually acceptable conditions through talks between the company and the local community.

With that in view, "good neighbor policies" have become more and more in vogue among domestic corporations. Firms have always been able to write off funding for scholarships or local construction, and now state-run enterprises allow communities to decide for themselves what facilities and funds they need. The Commission of National Corporations in the Ministry of Economic Affairs has established a review board and stipulated application procedures to keep the funds out of private hands. Says commission vice chairman Chang Zeu-yuan: "The good-neighbor policies of state-run enterprises have gradually been systematized and made a part of the process."

Construction of Taipei's three new incinerators began smoothly only after the Taipei City Environmental Protection Department recently decided, at the demand of local residents, that 55 percent of the income from recycling would be applied toward community construction.

Many businesses insist that providing funds for community development has nothing to do with restitution for pollution and is only a way of making up for local inconveniences and building good feelings with the public to further communications. But the rise of the practice, besides cheering environmentalists that environmental consciousness is spreading, also has them worried. "It shows that businesses have begun to attach importance to community reactions," says Lin Chun-i, a biology professor at Tunghai University, "but it could mislead the public into being flexible about pollution as long as they get money, which would skew the demand for environmental protection."

"It was one of our principles not to seek compensation," says Liu Yung-ling, one of the leaders of the movement against the number five cracker at Houchin. Even though China Petroleum's main plant in Houchin produces a lot of pollution, he still doesn't approve of compensation because "once the environment is ruined, there's usually no way to restore it. The public has to learn that the environment is a priceless commodity that money can't buy."

In Japan, where environmental disputes used to be rampant, the biggest help for businesses and communities in solving disagreements have been "pollution prevention agreements." Whether it's a new or existing factory that's involved, any demands or ideas that the local populace may have can all be listed in the agreement following coordination, communication and negotiation.

"Almost all the items in the agreements demand that the firms improve their environmental protection measures," says Kuo Tzu-che of the R.O.C. Environmental Protection Administration, flipping through a copy of an agreement. Some of the demands overlap with standard government regulations, but even more of them are based on special local needs, such as a requirement that the firm adhere to effluent standards higher than the national standard, that an environmental impact statement be drawn up, that an inspection team be set up, that the factory reach certain standards within a certain period of time or else be shut down. "You very rarely see stipulations asking for such and such an amount of money as compensation or for a community chest fund," he stresses.

That no one's interests should be over-looked is a basic democratic principle, and that local communities should themselves be allowed to decide what environmental standards they need is a growing trend in democratic societies today.

In France, for example, the whole country has been divided into six major river basins, and management committees from each area consider the condition of each river and the tolerance of the local population in deciding what kinds of factories to permit. The people can choose to forego economic prosperity in exchange for a better environment or to enjoy greater economic prosperity by opting for less stringent standards.

The noted British scientist Eric Ashby once warned that for industrial societies to continue to exist, mankind must reconcile itself in three areas: besides reconciling itself with nature and learning to allocate limited resources fairly and rationally, people must also learn to get along with those of a different ideological persuasion.

The three-year-long controversy over the fifth naphtha cracking plant has resulted in a formula for communication and interaction between corporations and local communities. It's not perfect, but at least it has struck a balance between environmental protection and economic development that is acceptable to both sides. In the end, it's better for everyone if businesses take practical measures to fight pollution and protect the environment than try to buy off "those of a different persuasion" by forking over cash.

[Picture Caption]

After China Petroleum set up a NT$1.5 billion community chest fund and took a series of other actions, work finally got under way on the number five naphtha cra cker, which had been caught up in deadlock for three years because of opposition by the local community.

Living next to China Petroleum's main plant, the residents of Houchin have been subjected to relatively high risks from pollution.

(Above) The Taiwan Power Company had to put out a lot of effort to enable work to start smoothly on its fourth nuclear power plant.

(Below) Lukang's rejection of DuPont was the first case in Taiwan of a corporation being unable to build a factory in a locality because of local opposition to pollution. (photo from Sinorama files)

(Left) Over the past three years the residents of Houchin have held countless rallies like this one to discuss whether or not to accept the number five cracker and if s o under what conditions. The scene is the square in front of Feng Ping Temple.

To earn favor with local communities, corporate "good neighborliness" has become a growing trend. Taipower invited the village heads and ward leaders of surrounding communities to Teh-chi Reservoir for an outing.

Thorough pollution prevention is still the best way for companies to earn public trust.

(Left) Taiwan civil right groups are increasingly playing a role in arbitrating industrial pollution disputes. Photo shows a fact-finding visitto Houchin by the Consumers' Foundation early this year to gain a clearer picture of the local pollution situation.

Living next to China Petroleum's main plant, the residents of Houchin have been subjected to relatively high risks from pollution.

（Left） Over the past three years the residents of Houchin have held countless rallies like this one to discuss whether or not to accept the number five cracker and if s o under what conditions. The scene is the square in front of Feng Ping Temple.

（Above） The Taiwan Power Company had to put out a lot of effort to enable work to start smoothly on its fourth nuclear power plant.

（Below） Lukang's rejection of DuPont was the first case in Taiwan of a corporation being unable to build a factory in a locality because of local opposition to pollution. （photo from Sinorama files）

To earn favor with local communities, corporate "good neighborliness" has become a growing trend. Taipower invited the village heads and ward leaders of surrounding communities to Teh-chi Reservoir for an outing.

（Left） Taiwan civil right groups are increasingly playing a role in arbitrating industrial pollution disputes. Photo shows a fact-finding visitto Houchin by the Consumers' Foundation early this year to gain a clearer picture of the local pollution situation.

Thorough pollution prevention is still the best way for companies to earn public trust.