United States
Environmental
Protection Agency
Office of the
Administrator
EPA100-R-97-002
February 1997
3rotect people,
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TZoW/directions
A REPORT ON REGULATORY REINVENTION
JOOR97002
Project XL:
A Laboratory
for the Future
How do we improve the cur-
rent regulatory system for
protecting our people and
our environment? At EPA, that question
led to the creation of Project XL, a major
reinvention priority that is serving as a lab-
oratory for testing innovative environmen-
tal management strategies for the future.
Project XL, which stands for excellence
and Leadership, is a national pilot program
defined by three key ele-
ments: stronger envi-
ronmental perfor-
mance, meaningful
stakeholder involve-
ment, and regulatory
flexibility. It challenges
the regulated community
— facilities, industry sectors, and govern-
ment agencies — with a proven track
record of environmental performance to
find cleaner, cheaper ways of protecting
the environment. The offer is simple: if
you have an idea that promises superior
environmental protection to what would
be achieved under the current regulatory
inside
CLINTON
XL Profiles 5
XL Challenge for Communities 6
Pursuing Progress through
Partnerships 7
Growing Interest in
Environmental
Management Systems 8
system, and if you use a meaningful stake-
holder involvement process, then we will
work with the relevant state and local
agencies to grant the flexibility needed to
put those ideas to the test. The goal is to
engage those parties affected by environ-
mental regulations in an unprecedented
effort to find solutions that work better
than those currently mandated, and to
apply what is learned more broadly to
improve public health and environmental
protection.
Why Project XL?
Why Now?
In many ways, Project XL is a response
to the widely held belief that our current
system of environmental
protection is outmoded
for dealing with today's
environmental challenges.
While acknowledging the
anal Excellence and leadeisniv significant gains of the
past quarter century, EPA critics and advo-
cates alike are calling for changes. In some
cases, the demand is for fine-tuning the
current system; others insist a whole new
system is needed. Project XL offers a
sound way to explore possible changes,
one facility at a time, without putting those
people living in or around these areas at
increased risk.
EPA has set a goal of 50 XL projects
over the next several years. It does not
intend to extend this program over time or
on a broad national scale — the resource
demands of evaluating and negotiating
thousands of site-specific agreements
(CONTINUED ON PAGE 2)
-------
would simply be too great. Nor is it
anticipated that site-specific agreements
would ever replace national environ-
mental standards — a minimum base-
line of environmental performance
must be set and maintained to suffi-
ciently protect all people from environ-
mental hazards. EPA does, however,
anticipate that the results from these
site-specific case studies may produce
new solutions with broad applicability
to other regulated facilities nationwide.
Therein lies the value — with the prop-
er safeguards in place and with mean-
ingful involvement by all stakeholders,
Project XL offers the opportunity to
uncover cleaner, cheaper remedies to
those inefficiencies and obstacles that
inadvertently limit our ability to achieve
truly superior environmental perfor-
mance.
EPA docs not expect Project XL to
provide "the" definitive answer on the
next era of environmental protection
currently being debated. Rather, it is
seen as an important piece of a puzzle
that can only be solved through a con-
tinued commitment to explore innova-
tive approaches and thoroughly evaluate
and learn from their results. Other rein-
vention efforts at EPA, results from
State and local government reform
efforts, and input from other external
stakeholders are equally important fac-
tors in determining how best to meet
the challenges of today and tomorrow.
What's Involved?
In order to provide the flexibility
needed to make XL experimentation
possible, EPA carefully established eight
specific criteria for participation. These
criteria are presented in Figure 1.
EPA's national Project XL staff work
with EPA Regions and states to evaluate
proposal submissions based on these
project selection criteria. After a propos-
al is accepted for negotiation, partici-
pants develop a Final Project Agreement
(FPA) that specifies exactly what inno-
vation is to be tested, what conditions
must be met, and how results will be
monitored and reported. It is important
to note that this negotiation is not limit-
ed to the potential project sponsor and
EPA — appropriate state, local, or tribal
agencies and affected stakeholders also
play an essential role. Following signing
an FPA, the next phases include imple-
mentation and evaluation.
Results to Date
Since Project XL was announced in
the Federal Register on May 23, 1995, 47
proposals have been submitted. Of
those, three FPAs have been negotiated
and are already being implemented; 23
other proposals are in various stages of
development or negotiation; 20 propos-
als have been withdrawn or rejected;
and EPA worked with one facility to
find the necessary flexibility within the
existing regulatory structure, outside
Project XL. The Project XL profiles in
this report describe the innovations
being tested and expected results for the
three projects approved for implemen-
tation.
New Directions is a report on EPA efforts to reinvent our current system of environmental protection to be
more responsive to the environmental challenges of today and the new century. The goal is to provide EPA's
own staff, as well as our many interested stakeholders with a more complete understanding of how environ-
mental programs are being reinvented, and more importantly, what is being accomplished as a result.
Readers will find in-depth feature articles and timely updates on specific reinvention activities in a variety of
areas. The report is available electronically on the Internet at (http://www.epa.gov/reinvent/new).
REPORT ON REINVENTION
February 1997
-------
While an FPA marks clear progress in
terms of program implementation, it is
important to acknowledge the value of
all proposals submitted to the Agency
through the XL process. Each one,
regardless of whether it ever reaches
the implementation stage, represents
an opportunity to learn about prob-
lems with the current regulatory sys-
tem. For example, proposals may be
rejected for many reasons, not neces-
sarily because they provide limited
environmental benefit. Some proposals
have been turned down because regu-
latory flexibility was not really needed,
and are being handled through other
Agency channels. Such was the case
for a recent proposal from IBM
involving an alternative approach to
disposal of its toxic wastewater. The
IBM facility, which manufacturers
semiconductors in Vermont, developed
a proposal to use an onsite biological
treatment system rather than the con-
ventional approach of offsite incinera-
tion. In reviewing the proposal, EPA
found the alternative to be acceptable
as an "equivalent treatment" under
Resource, Conservation, and Recovery
Act regulations, and granted IBM
approval without continued development
through the XL process. This alternative
management strategy is expected to
reduce the facility's impact on the sur-
rounding environment while also reduc-
ing annual waste disposal and transporta-
tion costs.
From EPA's perspective, even propos-
als that may be withdrawn by the spon-
sor can contribute to the learning oppor-
tunity provided by Project XL. One such
example is the ultimately unsuccessful
negotiation that occurred with the 3M
Corporation in Minnesota. In that
instance, though EPA was willing to
allow unprecedented flexibility in their
Title V air permit, 3M and the Agency
reached an impasse as a result of their
different perspectives regarding account-
Fiqure 1
Project XL Checklist:
A Look at Selection Criteria
^Environmental results — Provides better environmental results than would
be achieved under current and reasonably anticipated future regulation.
savings and paperwork reduction — Saves company money or
creates a competitive economic advantage, and/or decreases the overall paperwork
burden.
^Stakeholder support — Demonstrates that those parties with a stake in the
environmental concepts and impacts of the proposal are informed and have an
opportunity to fully participate in project development
*/ Innovation f multi-media pollution prevention —Demonstrates
innovative processes, technologies, or management practices for achieving envi-
ronmental results, preferably through pollution prevention rather than pollution
control. Should embody a systematic approach that tests alternatives to several
regulatory requirements and/or affects more than one environmental
medium.
*/ Transferability — Offers potential for broader applicability in other EPA pro-
grams, industries, or facilities within an industry,
^feasibility — Demonstrates technical, administrative, and financial
viability.
^ Monitoring, reporting, and evaluation — Identifies how performance
will be measured, how often it will be measured, and how the results will be
provided in such a way Aat EPA and interested stakeholders can ensure progress.
*^ Shifting of risk burden — Ensures worker safety, and that no one is sub-
jected to unjust or disproportionate environmental impacts,
ability for meeting permit conditions,
and which prior voluntary pollution
reductions would be included as part of
the project's performance baseline. The
latter issue helped crystallize the need to
clarify EPA's definition of "superior envi-
ronmental performance."
Comments and
Criticisms
Not surprising, given it's potentially
precedent-setting nature, Project XL has
received varying degrees of support —
and resistance. Many companies wel-
come the opportunity to advance an idea
that they have longed to put into prac-
tice. "What I see in Project XL is a real
paradigm shift," said Gordon E. Moore,
Chairman of the Board of Intel, "the old
way of doing business was that govern-
ment dictates every move a business
must take to protect the environment.
The new system, envisioned by Project
XL, is to work cooperatively and focus
on the results: a cleaner environment; a
faster, less costly system; with more
input from the local community."
Critics, however, have concerns over
potential weaknesses. First, many point
to the need for more guidance on what
an XL project should be. The initial
guidance stated that projects must
"achieve environmental performance that
is superior to what would be achieved
through compliance with current and
reasonably anticipated future rulemak-
ings." Questions have been raised about
February 1997
REPORT ON REINVENTION
-------
the definition of "superior" and whether
such performance can be determined
without a more clearly defined baseline
for measuring improvement. In particu-
lar, concern has been raised about how
to address "credits" for past voluntary
control measures, as well as how to mea-
sure improvements in projects that
involve cross-media pollutant trading,
given the scientific uncertainties that still
exist.
Second, critics call for better defini-
tion of "regulatory flexibility" so that
stakeholders and project sponsors will
have a better understanding of what
types of variances could be expected.
Some have taken this position further
and recommended that legislation is
needed to provide a measure of assur-
ance that final agreements will not be
challenged through citizens suits.
The new system, envisioned by
Project XL, is to work coopera-
tively and focus on the results: a
cleaner environment; a faster, less
costly system; with more input
from the local community.
Third, questions continue to arise
about whether the XL process provides
for meaningful stakeholder involvement.
EPA refers to stakeholders as "communi-
ties near the project, local, state, or tribal
governments, businesses, environmental
and other public interest groups, or
other similar entities." The Agency
makes it clear that this definition
includes both those stakeholders physi-
cally impacted by the project, such as
local community members, and those
stakeholders interested in the broader
implementation of the concepts being
tested in the project, such as national
environmental groups. The Agency
notes that the extent to which the spon-
sor has sought and achieved the support
of stakeholders is an important factor it
considers when deciding whether to
approve a project for implementation.
But early on, critics argued that without
a better definition of superior environ-
mental performance, stakeholders may
have a difficult time judging a project's
true merits and, therefore, influencing
the final decision by providing or with-
holding their support.
Fourth, states are concerned about
their role in the XL process. EPA recog-
nizes the need to involve its most critical
partners in the development and
approval of these projects, and states
have a seat at the table during the project
negotiation process. But, some states
have an interest in participating in the
project selection process as well. They
also are eager participants in dialogues
related to defining "superior environ-
mental performance."
Finally, businesses have complained
about the pace of the process and their
ability to get decisions from EPA. Also,
some businesses have been frustrated by
their efforts to achieve stakeholder
involvement and support.
EPA recognizes the validity of these
concerns, some of which have been
raised by its own staff. In a major effort
to help provide resolution and to clear
the air for continued progress, deputy
administrator Fred Hansen has taken
steps to ensure a greater level of senior
Agency management involvement in
these projects. He designated deputy
assistant administrators and deputy
regional administrators to serve as
"Reinvention Ombudsmen" to ensure
significant legal and policy issues,
including those related to Project XL,
receive appropriate attention and timely
resolution. He appointed Lisa Lund to
fill the newly established position of
deputy assistant administrator for Project
XL within the Agency's Office of Policy,
Planning, and Evaluation. Additionally,
based on input from a broad range of
stakeholders involved in Project XL, the
Agency is preparing new guidance to
clarify and refine the concepts and
boundaries of the three basic XL princi-
ples—superior environmental perfor-
mance, stakeholder involvement, and
flexibility. In working to improve its
management of the XL process and pro-
jects, EPA realizes that better definitions
are key to its success.
What's Next?
EPA intends to issue its current think-
ing on superior environmental perfor-
mance, stakeholder involvement, and
flexibility in a Federal Register notice in
early March. While this guidance will be
helpful in addressing many concerns
with Project XL, EPA does not expect it
to satisfy all critics, nor provide the ulti-
mate answers on every implementation
issue. Project XL was launched based on
the belief that better ways of protecting
the environment are possible, and that
EPA should use its authorities, expertise,
and guidance to make experimentation
possible. EPA still believes that it has
made the right offer. Project XL is a con-
tinually evolving program — one where
EPA strives to incorporate "lessons
learned" in a timely way that fosters con-
tinuous environmental improvement. As
such, EPA will be reviewing and amend-
ing its thinking when needed. The
upcoming Federal Register notice will
reflect EPA's strong, continuing commit-
ment to this program and should serve
to clarify expectations for project spon-
sors and for other regulated facilities
interested in participating in this bold
experiment known as Project XL.
For more information about Project
XL, contact the Information Line at 703
934-3239, or request information by fax
by dialing our automated phone system
at 202 260-8590. Information is available
also on the Internet at (http://www.
epa.gov/ProjectXL).
REPORT ON REINVENTION
February 1997
-------
XL Profiles
The Jack M. Berry
Corporation
Industry: Citrus Juice Processor
Location: La Belle, Florida
Innovation Being Tested: Facility-wide
"Comprehensive Operating Permit" that
consolidates all federal, state, and local
environmental requirements into one per-
mit for the facility.
Environmental Benefits: Reduces water
use through more efficient management
practices and technologies.
Reduces air emissions of volatile organic
compounds, sulfur dioxide, and nitrous
oxide.
Reduces solid waste generation through
increased recycling.
Produces cleaner drinking water through
voluntary commitment to higher safety
standards.
Eliminates potential ground water contami-
nation source.
Eliminates spray site as an industrial
wastewater disposal area and reuses
treated wastewater as irrigation water.
Company Benefits: Eliminates the
requirement of preparing multiple permit
applications approximately every five
years, a benefit that should save the com-
pany several million dollars.
Reduces lender concern about future
operational status, concern that can trans-
late into higher interest rates when pursu-
ing long-term loans.
Increases compliance with environmental
requirements by involving staff in develop-
ment of a facility-wide environmental plan
and by using plain language that
describes more clearly what is required
by law.
Other Features: Allows for certification
under ISO 14001 international environ-
mental management standards.
Weyerhaeuser
Industry: Pulp and Paper Manufacturing
Location: Flint River, Georgia
Innovation Being Tested: A Minimum
Impact Manufacturing proposal aimed at
further reducing environmental impacts on
the Flint River and surrounding water-
sheds.
Environmental Benefits: Reduces water
usage by about 1 million gallons a day to
11 million gallons a day—compared to an
industry average of 25 million gallons a
day.
Cuts bleach plant effluent by 50 percent.
Reduces pollutant runoff in half the water-
sheds in Georgia through improved man-
agement of Weyerhaeuser timber lands.
Improves wildlife habitat in company-
owned forests and investigates ways tim-
ber companies can contribute to saving
threatened and endangered species.
Company Benefits: Allows for the consol-
idation of all routine reporting require-
ments into a biannual report.
Provides greater flexibility in meeting
EPA's proposed standards for hazardous
air emissions from pulp and paper mills.
Allows some production expansion and/or
process changes without having to modify
permits for non-hazardous air emissions
—as long as emissions do not exceed cer-
tain limits.
Other Features: Increases monitoring fre-
quency and makes results universally
available to government agencies and the
public through the Internet.
Implements an environmental manage-
ment system in accordance with ISO
14001 international environmental man-
agement standards.
Intel Corporation
Industry: Semi-conductor manufacturing
Location: Chandler, Arizona
Innovation Being Tested: An
Environmental Management Plan that
includes a facility-wide cap on air emis-
sions to replace individual permit limits for
different air emission sources.
Environmental Benefits: Reduces air
emissions — carbon monoxide, nitrogen
oxide, sulfur dioxide, toxic pollutants, and
particulate matter, such as dust and soot
— below current standards for minor air
pollution sources.
Recycles up to 65 percent of the fresh
water used at the facility.
Reduces up to 60 percent of the solid
waste generated and up to 70 percent of
the non-hazardous chemical wastes gen-
erated (by 2000).
Company Benefits: Allows a firm within a
fast-paced industry to respond to chang-
ing market conditions with rapid product
development—operational changes can
be made without permit review as long as
permit limits are met.
Establishes an aggregate ceiling rather
than individual limits for air toxics, provid-
ing additional flexibility in managing opera-
tions.
Simplifies reporting requirements and
reduces overall regulatory burden—allows
submission of a single environmental
report to one State agency rather than
multiple submissions to different agencies.
Other Features: Rrst company to agree
to make all of its environmental data pub-
licly available on the Internet.
In a unique outcome, addresses a broader
array of community environmental con-
cerns (e.g., set-backs, water conservation)
than are normally considered in the per-
mitting process—a result of strong stake-
holder involvement.
February 1997
REPORT ON REINVENTION
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The XL Challenge
for Communities
he XL challenge isn't
limited just to industry.
Consistent with its
focus on delivering Community-
Based Environmental Protection
(CBEP), EPA also makes the
same offer to local governments,
business associations, neighborhood
groups and other public and nonprof-
it organizations. Announced in the
Federal Register on November 1, 1995,
Project XL for Communities (XLC)
features additional selection criteria
with a distinct community- based
focus. These criteria include:
• Capacity for stakeholder
involvement: Builds, supports,
and promotes broad-based com-
munity involvement in determin-
ing how project goals will be pur-
sued.
• Economic opportunity:
Demonstrates ways of creating
economic opportunity through, or
in conjunction with, improved
environmental quality.
• Community planning: Uses a
consensus-based approach to build
community support for project
goals that are consistent with, or
begin, community planning
efforts.
By emphasizing these project char-
acteristics, along with the other
Project XL criteria, EPA supports
innovative projects that take a com-
prehensive approach (e.g., multi-
facility, multi-jurisdictional, or other
community-based environmental
protection approaches) to ensure
environmental quality. Through
XLC, EPA promotes strategies that
build cooperation among citizens,
businesses, nonprofit organizations,
and governments at the community
level to achieve superior environmen-
tal results.
To date, EPA has received 15 XLC
proposals—four are being negotiated
with the project sponsors and stake-
holders; three are under review by
EPA; and eight have been withdrawn
or rejected. EPA anticipates the first
XLC project agreement will be signed
later this spring with the City of
Anaheim, California.
For more information on XLC,
contact the XLC Information Line at
703 934-3241, or request information
via fax by dialing our automated sys-
tem at 202 260-8590. Information is
also available on the Internet at
(http://www.epa.gov/ oppe/
xlcomm/xlc_home.htm).
v«
• v>°
REPORT ON REINVENTION
February 1997
-------
Pursuing Progress
Through Partnerships
Project XL is not the only
program seeking better envi-
ronmental results outside the
regulatory arena. Throughout the
Agency, EPA is developing and aggres-
sively promoting voluntary partnerships
as an alternative to the traditional com-
mand-and-control regulatory approach.
Programs such as Green Lights, the
33/50 Program, WasteWi$e, Climate
Wise, and WAVE challenge businesses to
prevent pollution and help their compa-
ny's bottom line. Collectively, these part-
nership programs are known as Partners
for the Environment, and they are pro-
ducing impressive results. In 1995, over
6,000 participants saved $435 million
while helping to:
• Cut toxic pollution by 750 million
pounds—the equivalent of 3 pounds
for every man, woman, and child in
America.
• Eliminate nearly 2 million tons of
solid waste.
• Reduce greenhouse gas emissions by
preventing over 13 million metric
tons of CC>2 emissions.
Interest in these programs continues
to grow—participation increased 25 per-
cent in the last year alone. EPA now pro-
jects that by the year 2000, the number
of partners will nearly triple and the total
savings to firms will approach $7 billion
a year. Given this interest, one of the
biggest challenges now is to continue
making participation as attractive and
simple as possible. EPA is working on a
variety of improvements aimed at
increasing operational efficiency in the
programs, strengthening program mes-
sages, and improving services to partici-
pants. For example, EPA is exploring
how to simplify participation for partners
interested in joining more than one pro-
gram. In addition, common measures of
performance are being developed so that
results can be evaluated and reported in
easy-to-understand terms.
Partners for the Environment
Participation Continues to Increase
20,000
15,000
10,000
5,OOC
18,566'
6,695 7,246 i ? •' -
1991 1992 1993 1994 1995 1996 2000*
* Projected
The percentage of all companies
represented in the Standard and
Poors' (S&P) indices that
participate in one or more
EPA partnership programs:
EPA does not expect that these volun-
tary programs will solve all of today's
environmental problems or replace tradi-
tional regulatory approaches. Neverthe-
less, for many companies, membership
in partnership programs can deliver envi-
ronmental benefits more quickly and
with less cost than would be achieved
through traditional regulatory approach-
es. As such, they are likely to receive
more attention and emphasis within EPA
and from those business decision-makers
faced with the daily challenge of making
cost-effective improvements in environ-
mental performance for their company
or community.
To find out more about EPA's
Partners for the Environment pro-
grams, or to receive Partnerships in
Preventing Pollution, a new EPA catalogue
describing all of the Agency's partner-
ship programs in more detail, contact
the Pollution Prevention Information
Clearinghouse at 202 260-1023 or the
Pollution Prevention Policy Staff at 202
260-8624. "You can also find information
about these programs on the Internet at
(http ://www. epa.gov/partners).
February 1997
REPORT ON REINVENTION
-------
XL Proposals Reflect Growing Interest in
Environmental Management Systems
Two of the three XL pro-
ject agreements featured in
this report, Weyerhaeuser
and Jack M. Berry Corporation, include
commitments by the companies to
develop and maintain environmental
management systems (EMS). Essentially,
a working EMS provides a company with
a framework for managing all of its envi-
ronmental responsibilities so they
become more efficient and more inte-
grated into overall business operations. It
should be a tool to help companies not
only stay in compliance with legislated
and voluntary environmental require-
ments, but also continuously improve
their overall environmental performance.
The Weyerhaeuser and Jack M. Berry
Corporation EMSs are based on stan-
dards of the International Organization
for Standardization. Known as ISO
14001, this EMS standard specifies a
process, not performance. Or put anoth-
er way, it specifies how, not what, levels
of environmental performance are to be
achieved. ISO 14001 is one in a series of
voluntary international industry stan-
dards that are being developed in order
to avoid international trade barriers that
might arise if individual nations or
regions continue to develop their own
environmental standards.
EPA does not recognize conformance
with ISO 14001—or any EMS—as
"compliance" with regulatory require-
ments. From a company's perspective,
the primary benefits from adopting and
implementing an EMS are that they
remove much of the uncertainty and
inconsistency that can be associated with
managing environmental responsibilities.
Conformance with EMS standards may
provide a competitive advantage if cus-
tomers—domestic or international—
demand certification as a condition for
doing business. EPA is evaluating
whether, how, and to what extent such
standards can be used to improve perfor-
mance under regulatory and voluntary
programs. Currently, EPA encourages
use of management systems which
improve environmental performance
through voluntary policies and programs
such as EPA's Audit/Self-Policing Policy
and the Environmental Leadership
Program.
For more information on the ISO
14001 standard—or EMSs in general—
contact Mary McKiel with EPA's
Voluntary Standards Network at 202
260-3584. The network coordinates the
Agency's activities related to the develop-
ment of a number of national and inter-
national environmental standards,
including the ISO 14000 series.
For More
Information
Do you have questions about EPA's
reinvention activities? Would you like
copies of this report? if so, contact
EPA's Regulatory Reinvention Team at
(2(01) 260-4261. Or look for more
information on the Internet at
(http^/www.epa.gov/reinvent). You'll
find special reports, remarks from
senior Administration and Agency
officials, detailed factsheets, and
much more.
&EPA
United States
Environmental Protection Agency
Washington, DC 20460
Official Business
Penalty for Private Use
$300
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