Improving Technology Diffusion for Environmental Protection Report and Recommendations of the Technology Innovation and Economics Committee


EPA
             United States
             Environmental Protection
             Agency
              Office of the
              Administrator
              (A-101 F6)
EPA 130-R-92-001
October 1992
Improving Technology
Diffusion For Environmental
Protection
             Report And Recommendations
             Of The Technology Innovation
             And Economics Committee
                               The National Advisory Council
                         For Environmental Policy and Technology
                                          NACEPT
                                       Recycled/Recyclable
                                       Printed on paper that contains
                                       at least 50% recycled fiber

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CENTER FOR TECHNOLOGY, POLICY AND INDUSTRIAL DEVELOPMENT
                                                        CAMBRIDGE. MASSACHUSETTS 02139
  1 October 1992
  To the Reader:

  This report represents the first comprehensive attempt to investigate, in
  depth, the present and future role of the Environmental Protection Agency
  (EPA) in the diffusion of environmentally beneficial technologies. Diffusion
  processes are insufficiently used or encouraged as complements to regulation,
  permitting and enforcement activities in the environmental management system.
  This represents an underutilized opportunity to introduce innovative
  technological solutions into wider use that, in turn, could expand
  environmental progress in the U.S. and improve economic competitiveness.

  In issuing this report, the National  Advisory Committee for  Environmental
  Policy and Technology  (NACEPT), through the efforts of its Technology
  Innovation and Economics (TIE) Committee, has adopted a series of
  recommendations whose implementation is necessary to bring about significant
  changes in federal regulatory policy. The report strongly recommends that EPA
  take actions to make innovative technological solutions, especially those that
  prevent rather than control or treat pollution and waste, more widely
  disseminated and readily accessible through improved diffusion initiatives.

  We would like to thank EPA's Administrator William K. Reilly and Deputy
  Administrator F.  Henry Habicht II for giving the TIE Committee the direction
  and encouragement to undertake this study, and all those in industry;
  federal, state and local government; academia; and the environmental community
  who provided information and perspectives in presentations at Diffusion Focus
  Group meetings and through other mechanisms. The Focus Group that prepared
  this document deserves the highest commendations for its contribution of time
  and effort, its thoughtful  deliberations, and its creative and challenging
  recommendations.  In particular its chair, William W. Carpenter and EPA
  committee management staff David R. Berg and Morris Altschuler should be
  recognized for their outstanding leadership and support.
  Sincerely,
  Nicholas A. Ashford
  Professor of Technology and Policy
  Chair, TIE Committee

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                                      NOTICE

       The following report and its recommendations have been written in conjunction
with the activities of the National Advisory Council for Environmental Policy and
Technology (NACEPT), a public advisory committee providing extramural policy
information and advice to the Administrator and other officials of the Environmental
Protection Agency (EPA). The Council is structured to provide balance, expert assessment
of policy matters related to the effectiveness of the environmental programs of the United
States. This report has not been reviewed for approval by the EPA. Hence, the contents of
this report and recommendations do not necessarily represent the views and policies of the
EPA, nor of other agencies in the Executive Branch of the federal government.

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ABSTRACT
The United States' potential to improve the environment is directly related to our ability to
produce and apply technological solutions. The Technology Innovation and Economics
(TIE) Committee, a standing committee of EPA's National Advisory Council for
Environmental Policy and Technology (NACEPT), concluded that the environmental
regulatory system could expand environmental progress and improve economic
competitiveness if processes that diffuse environmentally beneficial technologies are used
to effectively complement regulations. Enhanced EPA technology diffusion programs,
especially those involving pollution prevention technologies and techniques, are essential to
the achievement of EPA's mission. Federal, state and local regulators, technology
developers, technology users, the financial community, environmental groups, and
academia together identified and assessed potentially practical approaches. In this report,
the Committee analyzes several critical policy issues affecting EPA's essential diffusion
roles and makes five major policy recommendations, including:

1. Making technology diffusion a major supporting mission for EPA.

2. Building a stronger partnership with technology diffusion providers and users.

3. Making diffusion and incentives the emphases of EPA's pollution prevention
programs.

4. Expanding support for the international diffusion of environmental technologies to
help meet U.S. environmental and competitiveness objectives.

5. Increasing the support of diffusion provided by EPA's environmental technology
research programs.

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                     TABLE OF CONTENTS



Note  to  the  Reader

I.    Executive   Summary                                         i

11.   Preface                                                     1

III. Introduction                                               5

IV.  Members  of   the  Technology  Innovation  and
     Economics   Committee                                     13

V.   Findings                                                   15

VI.  Recommendations  for  Action   and  Commentary          29


     Summary   of  Recommendations                           29

     Detailed   Recommendations  and   Commentary            31


     •  Recommendation   1                                     31

     •  Recommendation   2                                     57

     •  Recommendation   3                                     74

     •  Recommendation   4                                     88

        Recommendation   5                                     97


APPENDICES

1 .   Presenters and  Participants at Diffusion Focus
     Group Meetings                                            123

2.    Recommendation 4 from the TIE Committee's 1991
     Report  & Recommendations,  "Permitting and Compliance
     Policy:   Barriers to U. S.  Environmental Technology
     Innovation"                                                125

3.    TIEC s Recommendations to EPA on Technology
     Cooperation, Technology Innovation, and Trade and
     the Environment, September 1991                              139

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EXECUTIVE SUMMARY
Background The mission of the U.S. Environmental Protection Agency
(EPA) is to preserve and improve the quality of the
environment and to protect human health. EPA has made a commitment to ensure that
"U.S. policy, both foreign and domestic, fosters the integration of economic development
and environmental protection so that economic growth can be sustained over the long term"
(Strategic Direction for the U.S. Environmental Protection Agency: EPA . . . Preserving
Our Future Today. 1991). The Agency indicates that it will develop and apply incentives
that "stimulate . . . firms and consumers to take actions that serve their economic interests
while spurring progress towards environmental goals." To this end, EPA has announced
that it is:

• Initiating programs for promoting incentives and technology.
• Developing a role as a catalyst for technological innovation.
• Expanding efforts to seek technological cooperation and trade
promotion.
Supporting the use of cross-media and cross-jurisdictionally
coordinated approaches to environmental management.
• Undertaking interagency cooperation at the federal level.
• Ensuring a level playing field through strong enforcement.

Several recent reports, including Permitting and Compliance Policy: Barriers to U.S.
Environmental Technology Innovation (1991, National Advisory Council for
Environmental Policy and Technology [NACEPT] [EPA 101/N-91-001]) and "EPA Must
Help Lead An Environmental Revolution in Technology" by James Gustave Speth (in
Hazardous Materials Control, November/December 1991), stress that EPA must play a
strong role in fostering the development and use of environmentally beneficial technologies
to accomplish its goals. NACEPT noted that "the United States' potential to improve the
environment is directly related to the nation's ability to produce and apply technological
solutions." NACEPT concluded that "fundamental changes to the environmental regulatory
system" are needed "to create incentives encouraging the process of (environmentally
beneficial) technology innovation."

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     Speth stated the challenge: "to reduce pollution while achieving expected economic
growth, societies must bring about a wholesale transformation in the technologies that
dominate the world economy." He described the implications of this challenge to EPA as
"far-reaching.  They extend from devising new regulatory approaches to moving beyond
regulation and forging new patterns of cooperative interaction among business,
government, and environmental experts.... A basic need is for technology transfer and
development of assistance policies ..."
The Diffusion            In late 1990, EPA Administrator William K. Reilly
Focus Group             requested that NACEPT develop advice on two major areas:
                           trade and the environment, and pollution prevention. The
Technology Innovation and Economics (TIE) Committee was charged with considering the
role of EPA's technology transfer programs in enhancing the effectiveness of the U.S.
environmental management system, and to focus particularly on the diffusion of
environmentally beneficial technologies in the U.S. economy. Specifically, the Committee
was asked to examine "EPA's role in technology transfer, including transfer  of products,
services, research, and management systems information among EPA and other public and
private sector entities." The TIE Committee's eighteen person Diffusion Focus Group of
experts was chaired by William W. Carpenter, Vice President for Technology Applications
for Martin Marietta Energy Systems, Inc. (see Section IV). The members have a wide
range of interests and expertise related to the conduct and management of technology
development and commercialization programs, and significant experience on national
committees evaluating technology programs and technology transfer activities in the public
and private sectors.
Approach                 Over a period of sixteen months, the Focus Group held four
                           two-day public meetings and convened through a number of
conference calls. It heard the views of more than forty experts, including representatives of
EPA; other federal, state, and local agencies; industry; public/private consortia; research
institutes; universities; and environmental advocacy groups. The Focus Group visited two
EPA laboratories and extended its work through subcommittees.

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The Focus Group assessed the role of governmental technology diffusion programs in
the environmental management system, which today primarily consists of regulations,
permitting and compliance systems, and diffusion mechanisms. The Group examined eight
policy topics that are crucial to determining the strategic role of governmental programs for
the diffusion of environmentally beneficial technologies:
• The relationship between EPA's roles in technology diffusion and its
success in meeting its primary environmental protection objectives.
• The unique quality of barriers to the diffusion of environmental
technologies.
• The identity, methods, and motivations of those who diffuse
environmental technologies.
• The adequacy of EPA's diffusion organizations and activities.
• The impact of EPA's diffusion strategies on environmental investment
decisions by the private sector.
• The need to use unique approaches in EPA's role in the diffusion of
technologies that prevent pollution.
• The keys to a successful EPA effort in international technology
diffusion.
• The opportunities for EPA to make better use of the Federal
Technology Transfer Act.
The Focus Group defined the diffusion of technology as the spread and adaptation of a
technical idea following its first successful commercial use. Diffusion activities include
technical assistance, information management and transfer, training, publications, licensing
policies, marketing, education, and technology transfer programs.
Major Findings The Technology Innovation and Economics (TIE)
And Committee concluded that enhanced EPA technology
Recommendations diffusion programs are essential to the achievement of
EPA's environmental protection mission (see the Findings
and Recommendations sections of this report). The lack of strong diffusion programs in
the U.S. environmental management system - and the limited coordination among existing
programs within EPA and between EPA's programs and those outside EPA - hinders the
development, evaluation, and use of innovative environmental solutions. This increases

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costs and reinforces a tendency in regulatory mechanisms to overspecify technology. Such
a pattern is particularly detrimental to the pollution prevention and international
environmental goals of the agency. To remedy these problems, the TIE Committee
recommends that EPA integrate technology diffusion into the environmental management
system. The agency should establish the climate, culture, and incentives necessary to
encourage the widespread use of improved technology solutions that enable environmental
progress in a sustainable economy.

The TIE Committee's Diffusion Focus Group focused on three key barriers hindering
the widespread use of innovative technologies in environmental applications.
1. The way in which best available technology-based regulations are
implemented and enforced.
2. Permitting and compliance policies and practices that do not foster
technology innovation and pollution prevention.
3. Barriers to information and technology transfer.

EPA and other environmental agencies could gain significantly from increasing their
emphasis on strategies that encourage technology diffusion, such as the "Green Lights" and
the SARA Title 3 release reporting programs. The benefits of enhanced technology
diffusion include:
• Increased domestic and international environmental quality.
• Wider availability of lower cost solutions to environmental problems.
• Gains from the export of technological improvements.
• Increased use of pollution prevention technologies and techniques that
co-optimize for productivity and environmental results.
• A less adversarial relationship with regulated organizations.
. A more competitive U.S. economy.

The TIE Committee recommends several specific strategic and structural changes to
help EPA to realize its mission by making cost-effective use of technology diffusion
mechanisms. The Committee's central findings and recommendations are:
IV

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1

FINDING: EPA, which perceives itself as primarily a regulatory agency

has a mission to protect human health and the environment.

RECOMMENDATION: Make technology diffusion a major supporting
mission for EPA. The agency has moved in the right direction with its focus on themes

in the planning process and its increased attention to relative risk. It will need to reinforce

its new emphases with enhanced programs for the diffusion of technology. The TIE

Committee recommends that EPA take several critical actions:

1. Establish a high level position to advocate the role of
diffusion in accomplishing the agency's mission, to promote
changes in EPA's culture to support diffusion activities, and to
coordinate the agency's diffusion programs.

2. Redeploy EPA's diffusion resources to increase their
effectiveness and efficiency.

3. Develop the diffusion support tools that Agency employees
require, including career enhancements, training, performance
standards, information, and rotational assignments.

4. Include in EPA's approach to regulation incentives that
encourage innovation and emphasize diffusion as a major
contributing element of the environmental management
system.

Among the key specific actions recommended by the Committee are:

Modifying the agency's culture and incentives to support the concept
that the diffusion of technology can catalyze environmental
improvement.

•- Adopting a requirement that all agency program plans contain a
technology diffusion component.

•- Expanding agency resources to support increased programs for
technology diffusion.

•- Creating new partnership relationships and strengthening existing ones
to enhance the effectiveness of agency diffusion programs.

•- Learning from other agencies' diffusion programs.

•- Broadening the sources of information contained in EPA's diffusion
programs.

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2
FINDING: Coordination is lacking between EPA and its potential partners
in planning and conducting activities to diffuse technological information.

RECOMMENDATION: Build a stronger partnership with technology
diffusion providers and users. The "command and control" based environmental
management system increases the adversarial, non-supportive nature of relationships
between groups whose cooperation is needed to accelerate environmental improvement.
Increased cooperation is critical to the success of EPA in its mission and is particularly
essential in the diffusion of environmental information. Although a wide variety of
organizations fill one or more roles in the diffusion of technology, EPA could work more
systematically with many of these potential partners to make the system to diffuse
information work effectively and efficiently. The potential partners include regulated
organizations, state and local governments, entrepreneurs, research consortia, consulting
engineers, universities, information providers, and other federal agencies. EPA should:
1. Work more effectively with the full range of diffusion
partners, including information developers, diffusion providers, and
diffusers, to actively promote the increased use of innovative
environmental solutions.
2. Increase its collection and generation of credible
information about environmentally beneficial technologies.
3. Take advantage of the full range of diffusion mechanisms,
including its own and others' research, information systems, technical
assistance programs, publications, training, trade shows, professional
conferences, and cooperative research and licensing programs.
4. Define, collect, and analyze environmental business data to
understand diffusion partners and information users.
5 . Support university curriculum development to increase literacy
in environmentally beneficial technology.

Among the key specific actions recommended by the Committee are:

•- Leveraging EPA's limited diffusion resources by actively seeking out
diffusion partners and promoting others' diffusion activities.
•- Expanding efforts to understand the needs of information users.
•- Working with state and local governments as critical channels of
technology diffusion.
•- Establishing a bureau of environmental statistics.
VI

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3
FINDING: EPA has not recognized that success in pollution prevention

depends on the success of diffusion and incentive-based approaches.

RECOMMENDATION: Make diffusion and incentives the emphases of

EPA's pollution prevention programs. The unique factors that motivate pollution

prevention are particularly responsive to diffusion and incentive approaches. Pollution

prevention requires a continuing commitment that is proactive, internally maintained, and

culturally different in nature. If a "level playing field" is created by applying underlying

requirements and enforcing them against all polluters, pollution prevention can be driven by

information and incentives. The agency should:

1. Preferentially increase its use of data-based, non-
regulatory drivers, including diffusion programs, as a
feature of EPA's pollution prevention strategy.

2. Create incentives, including multi-media approaches, that
favor the choice of pollution prevention by regulated and
non-regulated organizations. Improved regulatory, permitting,
and compliance practices can place emphasis on the increased
availability of information about pollution prevention methods brought
about by stronger diffusion programs. A combination of regulatory
and non-regulatory incentives can best influence the development and
application of pollution prevention approaches, and information sharing
about them.

3. Introduce new steps to diffuse the pollution prevention
ethic within EPA and to establish a system of incentives
and support for diffusion efforts by EPA personnel. Such
support includes agency policy direction and an increased use of
incentives, rewards, training, and information.

4. Increase resources for EPA's own technology R&D efforts
focusing on pollution prevention.
Among the key specific actions recommended by the Committee are:

•- Strengthening and expanding the use of such successful data-based
drivers of pollution prevention as Section 313 of SARA, the 33 - 50
program, and the Green Lights program.

•- Strengthening programs to diffuse pollution prevention research and
development results, operating experience, and accounting methods to
regulated organizations.

•- Designing regulations and regulatory processes to encourage the use of
the widest possible range of solutions, including pollution prevention
techniques.
vn

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4

FINDING: EPA's international diffusion activities are focused almost
exclusively on developing and Eastern European nations; a much stronger

and broader role is needed to enhance U.S. competitiveness.

RECOMMENDATION: Expand support for the international diffusion of
environmental technologies to help meet U.S. environmental and

competitiveness objectives. EPA has made important progress in expanding

international diffusion activities (working in conjunction with traditional federal lead

agencies), particularly in its new pilot efforts in Eastern Europe, Latin America, and

Southeast Asia. Working with these partners, EPA should significantly increase support

for the diffusion of environmentally beneficial technologies ] h into and out of the U.S.

within the overall goal of environmental improvement. This direction is extremely

important to the pursuit of both sustainability and competitiveness. EPA should:

1. Increase support for the diffusion of environmental
technologies out of the U.S. This step may lead to greater
environmental improvements overseas, especially in developing
countries where little pollution reduction has occurred.

2. Strengthen support for U.S. exports of environmentally
beneficial technologies to the major world markets in the
industrialized nations.

3. Enhance EPA's technology diffusion efforts aimed at
expanding the range of environmental technology solutions
available domestically. An increased effort to gather information
on state-of-the-art environmentally beneficial technologies developed
abroad is needed. There is insufficient cooperation to this end between
industry and government and among governmental agencies.
Among the key specific actions recommended by the Committee are:

•- Encouraging the harmonization of international environmental
awareness and standards.

•- Supporting business development centers overseas for U.S.
environmental firms.

•- Collecting information on international environmental markets and
environmental regulations, and making that information generally
available.

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5

FINDING: EPA's research programs do not adequately support the

agency's diffusion mission.

RECOMMENDATION: Increase support for the diffusion of technology
provided by EPA's research programs on environmentally beneficial

technologies. Because the resources invested by EPA in research, development,

demonstration, and evaluation (R&D) on environmentally beneficial technologies comprise

a small fraction of the total U.S. R&D investment, EPA will have to focus its limited

efforts on the most important technology opportunities emphasize other major roles for

its environmental technology research programs. EPA's current technology research

activities should be refocused to take on a major role in the diffusion of information about

credible environmentally beneficial technologies. To accomplish this, EPA should:

1. Adopt a leadership position in environmental innovation
throughout the R&D life cycle. The R&D life cycle includes
R&D planning, the conduct of R&D (including research, development,
demonstration, testing, and evaluation), and the dissemination of the
results of these activities among all participants in the environmental
management system (including industry, other federal agencies, state
and local governments, universities, and research consortia).

2. Build and expand EPA coordination efforts in
environmental R&D programs across the public and private
sectors.

3. Use EPA's technology R&D programs to improve the
quality of environmentally beneficial technology data
generated by others.

4. Emphasize the commercialization endpoint in
environmental technology R&D programs ~ whether they are
EPA's or those that EPA influences in its leadership role.

Among the key specific actions recommended by the Committee include:

•- Taking a leadership position to increase interagency cooperation in
environmental technology R&D.

•- Involving industry, consortia, state and local governments, and other
important players in planning EPA's technology R&D.

•- Requiring EPA to attract private sector co-funding for a portion of its own
technology R&D.

•- Expanding the new program to encourage testing of environmentally beneficial
technologies at federal facilities.
IX

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5 (continued)

FINDING: EPA's research programs do not adequately support the

agency's diffusion  mission.


RECOMMENDATION: Increase support for the diffusion of technology

provided by EPA's research programs on environmentally beneficial

technologies.

Additional key specific actions recommended by the Committee are:

       Increasing EPA's cooperative research and testing efforts.

       Instituting an industrial user facility program at EPA to enable outside
       parties to make use of unique EPA facilities.

       Establishing programs for the use of EPA laboratories to test and
       evaluate technologies developed outside the agency.

       Strengthening EPA's FTTA effort, which is already growing rapidly.

       Increasing ORD's efforts, working with EPA's diffusion partners, to
       disseminate information about environmentally beneficial technologies.

       Promoting the harmonization of technology testing and reporting, so
       that performance data are useful to a broader range of users.

    •-  Building EPA's expertise in economics, marketing, and
       commercialization. (Expanding these areas of expertise would also be
       valuable in other EPA programs.)

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II. PREFACE

The U.S. environmental management system was developed to protect human health
and the environment. The environmental management system includes all legislative
authorities, regulatory processes and regulations, regulatory administrative systems
(permitting, compliance, and certification), technology transfer and other support
programs, and federal, state, and local environmental research programs. This system has
achieved significant progress toward these goals, but much greater progress is needed to
meet remaining objectives and the new needs that will surely arise. A particular challenge
for the future is to combine further environmental progress with sustainable economic
growth.

The National Advisory Council for Environmental Policy and Technology (NACEPT)
was formed in 1988 as a source of outside policy advice to the Administrator of the U.S.
Environmental Protection Agency (EPA) on improving U.S. environmental management,
with a special focus on technology. NACEPT's mission is "bridging the gap from problem
identification to environmental solutions through successful program implementation,
cooperation, and consensus-building by business, government, educational institutions,
and private organizations."

NACEPT has established five standing committees. One is the Technology Innovation
and Economics (TIE) Committee, which advises on ways to encourage the development,
commercialization, and use of optimal environmentally beneficial technologies. Such
technologies, include those that reduce the cost of performance, improve overall
performance, reduce waste, or increase productivity. They include source reduction, waste
minimization, and other pollution prevention measures, recycling technologies,
environmental control technologies, cleanup technologies, monitoring and measurement
technologies, analytical techniques, and information management systems. The TIE
Committee recognizes a hierarchy of technology approaches to environmental
improvement, with pollution prevention in general being the preferred option. It also
believes that EPA is unlikely to accomplish its goals unless the nation's ability to produce
and apply environmentally beneficial technologies is improved.

Technology diffusion is one critical element of the environmental management system.
Diffusion includes technology transfer, technical assistance, training, education, and

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information management and transfer. Through diffusion, environmentally beneficial
technologies become more accessible and more responsive to the needs of users and
government at all levels.

NACEPTs January 1990 TIE Committee report observed that simultaneously
improving environmental protection and economic competitiveness requires the
development and use of innovative technologies. Citing, lagging investment in technology
innovation, NACEPT pointed out that further study was needed of how regulation, tax
policy, and corporate decision making affect the development and commercialization of
environmentally beneficial technologies. NACEPT recommended that EPA assume
leadership in fostering environmentally beneficial technology innovation and that the
Administrator take three key steps:

Evaluate the degree to which U.S. environmental programs stimulate
technology innovation.
Issue a policy statement expanding the Agency's mission to include the
fostering of technology innovation.
Develop and implement a strategy for fostering technology innovation.
NACEPT's 1991 report on the effects of permitting and compliance policies on
environmentally beneficial technology innovation argued that the current environmental
regulatory system does not systematically address the creation and diffusion of technology.
The report identified five general areas of needed improvements:

•- Modifying permitting systems to aid the development and testing of
innovative environmental technologies.
•- Implementing permit processes to aid the commercial introduction of
innovative technologies.
•- Encouraging the use of innovative environmental technologies in
compliance programs
•- Maximizing the effectiveness of permitting and compliance
improvements by supporting stakeholders.
•- Identifying and removing regulatory obstacles to the use of innovative
environmental technologies.

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     Deliberate encouragement of all three processes of the technology R&D life cycle --

 innovation, invention and diffusion — is crucial to governmental success in promoting

 optimal environmental solutions. To help the Agency learn how to be most successful in

 encouraging technology diffusion, the TIE Committee formed the Diffusion Focus Group
 and charged it with answering the following questions:


     •-  What should EPA's role be in a market-dominated diffusion system?

     •-  How can technology and other information be diffused more effectively
        by EPA and industry?



       The Focus Group organized its 16-month investigation to address the following

 eight specific issues:


        Should there be a policy defining the relationship between EPA's role
        in the diffusion of environmentally beneficial technologies and the
        achievement of EPA's major objective of protecting human health and
        the environment?

        Are there unique barriers to the diffusion of technology for
        environmental purposes?

    •-   Who diffuses technology for environmental purposes, why, and how?

    •-   Should the organizations and activities of EPA and others be improved
        with respect  to environmentally beneficial technology diffusion?

    •-   What are the influences of EPA diffusion strategies  on private sector
        environmental investment decisions?

    •-   What are the differences and/or similarities between EPA's role in the
        diffusion of pollution prevention technologies and its role in the
        diffusion of other technologies for environmental purposes (notably,
        for pollution control and remediation)?

        What are the differences and/or similarities between EPA's domestic
        and international roles in diffusion?

        What is needed to make better use of the Federal Technology Transfer
        Act of 1986?
    The Focus Group held four two-day meetings and convened through a number of

conference calls between January 1991 and April 1992. It heard the views of a wide range

of interested parties, including representatives of EPA and other federal, state, and local

agencies, industry, public/private consortia, research institutes, universities, and

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environmental advocacy groups (see Appendix 1). The group solicited and received
comments on the report from every involved office at EPA.

    The Diffusion Focus Group unanimously approved the report on April  15, 1992 and
forwarded it to the TIE Committee for review and approval. Approval was granted by the
TIE Committee in May, 1992. The report was then forwarded to NACEPT for
concurrence and submission to the Administrator of EPA.

    This report may contain unintended omissions due to the limited time and resources
available to the Diffusion Focus Group for the preparation of this report. As stated
previously, the Group made every attempt to include all of the relevant EPA offices and
outside stakeholders in the  process of gathering facts and conducting analysis. Beyond the
limits of time and resources, it should be noted that other omissions may be examples of
failures in the diffusion system. When a significant diffusion resource was not found and
studied by the Group, that omission may be may be representative of a failure in the
diffusion process.

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III. INTRODUCTION

Although great environmental progress has been made in recent decades, there are still
significant shortcomings in the quality of America's environment today. The U.S.
environmental management system, in which EPA is a key player, has reached a point
where it has become unlikely that in their traditional adversarial roles, polluters and
regulators can work together to efficiently solve the county's current environmental
problems. A new, more cooperative approach to environmental management must be
adopted in order to simultaneously improve, i.e., co-optimize, environmental quality,
economic productivity, and international competitiveness. How can EPA adopt such a
program and still accomplish its mission of protecting human health and the environment?

One method the agency should use more of is the diffusion of environmental
technologies throughout the world. In a world of rising populations and economic
expectations, the widespread application of new and innovative technologies would seem to
be the natural answer. For example, rather than reducing the amount of light available, we
could apply new lighting methods. Rather than eliminating plastics, we might look at new
ways of recycling them into their component parts and find more environmentally benign
plastics. Rather than shutting down a refinery, we could apply advanced pollution
prevention techniques that not only reduce pollution, but also produce economic value for
the refinery owner.

The diffusion of environmental technologies world-wide is a relatively low cost way to
make global environmental improvements. Sharing an environmental technology with the
rest of the world multiplies its value. For example, if a foreign polluter can adopt an
environmental technology that is ten million dollars less expensive than the current
technology he is considering, we have in effect given that polluter a ten million dollar
subsidy to reduce pollution. Such incentives can have a powerful effect on regulated
organizations in third world countries where economic concerns often outweigh
environmental concerns.

The global diffusion of environmental technologies has two additional benefits. First,
it makes available foreign technologies to U.S. regulated organizations, potentially
lowering costs and/or reducing pollution. Second, because the U.S. is the world's leading
environmental product and service producer, global diffusion may lead to increased U.S.
exports of environmentally beneficial technologies. This may, in turn, lower the unit costs

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of U.S. environmental product and service providers and attract more capital to field. This
increased capital should result in additional environmental R&D in the U.S.

The same benefits that are received from international diffusion can be obtained on the
domestic front. Making more environmentally beneficial technologies available to regulated
organizations may reduce their costs and/or reduce pollution. Shortening the time it takes
for a new environmentally beneficial technology to get to market and be broadly adopted
may attract new capital to the field. Any time there is a lack of reliable, credible information
there is a barrier to employing a new technology, environmental or otherwise. Diffusion
reduces the barriers and encourages the use of new and innovative technologies because it
helps create and spread information about the technology.

One of the best things about diffusion is that it is relatively inexpensive for EPA.
There are no large costs for additional R&D facilities, no direct subsidies needed for users,
no restrictive regulations or long legal battles. In fact, the agency has a wide variety of
diffusion programs underway right now, some of them doing exactly what is needed. This
is the good news.

However, EPA's diffusion efforts need to be coordinated. They need to be a higher
priority for agency personnel and to be supported by agency policies and resources.
Moreover, the agency should reach out to potential diffusion partners to share the message
and the burden. There are a great many ways for EPA to get more value out of its current
diffusion programs and resources, not to mention the serious need for additional resources
in certain areas.

The remainder of the Introduction discusses what technology diffusion is and who the
diffusion "stakeholders" are: those who are in some way involved in or impacted by
diffusion. The rest of the report examines in detail the policy instruments that EPA can use
to increase the pace and probability of any environmentally beneficial technology gaining
widespread use and the findings which led to these recommendations.

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What is Technology Diffusion?


    "Diffusion" is the spread and adoption of an idea following its first successful
commercial use. When environmentally beneficial technologies are put into widespread
use, all environmental stakeholders gain — technology developers, technology users, the

public, the environmental management agencies, and the investment community. Making

more effective use of diffusion as an element of the environmental management system is

necessary if EPA is to achieve its goal of protecting human health and the environment.


    The development, innovation, and diffusion of environmentally beneficial technologies

are critical to improving environmental protection and to simultaneously promoting

environmental and productivity efficiency. Technology innovation refers to the first

commercial use of a new technical idea. Technology diffusion is the spread and adoption

of a technical idea following its first successful commercial use. Clearly, the use of

innovative environmental solutions (notably technologies and approaches that achieve
greater environmental protection or lower costs) depends on their adequate diffusion.

Diffusion can also be the most cost-effective approach to environmental protection, since it

allows the full exploitation of the best technologies already available.


    The TIE Committee chose the term "diffusion" (rather than technology transfer) for

two reasons:


    •-   Throughout the 20-year history of the federal environmental program,
        technology transfer has been regarded by many people as a stepchild
        program, in which the federal role held a lower priority when compared
        to other elements of the environmental management system. Federal
        technology transfer efforts were viewed by many to be of secondary
        value and competitive with commercial technology transfer efforts and
        were often criticized as jeopardizing the federal government's
        objectivity when compliance failures occurred. The TIE Committee
        believes that this view fails to recognize the critical role of diffusion
        programs in the environmental management system.


    •-   The term "technology transfer" does not capture the set of activities that
        constitute technology diffusion. In popular parlance, technology
        transfer means moving  a technology from government labs to industry,
        or from one community to another. Diffusion is the process of getting
        technologies that are ready for commercial use into widespread
        practice, within and between different industries and institutions.
        Diffusion is the third phase of the technology life cycle and is preceded
        by "invention" ~ the birth of a technology concept ~ and "innovation"

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— the development of a technology concept into a commercial product
and the first uses of that product. During the diffusion phase, a
product's use expands and it is adapted to fill other commercial needs.
Diffusion activities include at least the following: technical assistance,
information management and transfer, training, publications, licensing
policies, marketing, education at the college and graduate levels, and
technology transfer programs. Technology transfer is only one subset
of the activities that are relevant to diffusion.
The diffusion of a technology is supported by a wide range of groups, including those
with a proprietary interest, the government (in pursuit of its environmental protection
interest), professional groups, trade groups (in the interest of solving common problems),
consulting engineers (whose advice is used by regulated organizations), and environmental
organizations (who seek to educate the public and polluters, and to influence regulators).

Along with regulation, permitting and compliance programs, certification, grant
assistance, and research, diffusion is an important part of the environmental management
system. Diffusion receives an inadequate amount of agency attention, resources, and
perceived value.

The diffusion process embraces all types of information about environmentally
beneficial technologies, including conventional approaches, best practices, innovative
technologies, and pollution prevention methods. Strong diffusion efforts are especially
critical to the spread of pollution prevention methods, which encompass technologies and
techniques that effect changes in production activities and product designs. Diffusion is
also vital to the employment of other innovative environmental technologies. The use of
The use of both pollution prevention methods and environmental technologies is
information-intensive, depending on state-of-the-art technical knowledge, intimate
knowledge of industrial processes, and an understanding of regulatory flexibilities.

The Stakeholders

There are several groups of stakeholders involved in the diffusion of environmental
information, who benefit from the process in various ways: regulated organizations; new
(and possibly not yet regulated) entrants to a manufacturing or production market; federal,
state, and local regulators; providers of environmental products and services; investors; and
the public. Organizations may fall into more than one stakeholder category. They may be
producers or consumers of environmental information, and not infrequently they are both.

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All stakeholders stand to gain from the freest flow — the greatest diffusion — of
information possible, within the constraints of protecting confidential business information.

Regulated organizations. Because they must comply with regulatory
requirements, regulated organizations are uniformly concerned with obtaining accurate
information to assist their own compliance. All regulated organizations require sufficient
information on the environmental requirements, policies, and practices, at federal, state,
and local levels, with which they must comply. All are concerned with obtaining credible
information about regulatory requirements and processes, and with receiving reliable
results from their choice of environmental solutions. Many organizations choose a
compliance strategy that entails minimal risks and disrupts production the least— often an
end-of-pipe solution. Others are willing to consider a broader range of options to co-
optimize productivity and environmental results. These organizations especially require
ready access to full information about all available options.

The diffusion of information about environmentally beneficial technologies and
technical assistance are particularly important for industries dominated by small to medium-
sized firms. Such firms are less likely to be technically self-sufficient or to possess the
resources needed to access the best technical advice. Firms in these industries may prefer
to rely on "good services" third parties.

Actually, firms in all industries often choose to rely on "good services" third parties,
as well as (or instead of) government, to learn of their options. Such sources of
information include other similar firms, state commerce departments, trade and professional
associations, and university-based consortia.

Regulated organizations are both generators and diffusers of information. While firms
are naturally concerned with protecting information that provides them with a competitive
advantage (such as that embodied in special production processes), they are often willing to
share information when the result may be of mutual benefit. In some notable cases, they
have even shared information on environmentally beneficial technologies to avoid
regulators' imposition of more stringent measures, whether immediately or in the future.
In some cases, firms may establish a new profit center by selling their specialized
environmental expertise.

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The lack of adequate information on environmentally beneficial technologies clearly
adversely affects regulated firms. Aspects of diffusion systems of particular concern for
these stakeholders include: communication and cooperation with regulators about
environmental technology information; understanding regulatory, permitting, and
compliance processes and requirements; and accessibility of state-of-the-art
environmentally beneficial technology information, with concern for confidentiality.

New entrants to the areas of manufacturing or production also need accurate information
similar to that required by regulated organizations. These new entrants typically
manufacture products that are environmentally benign, but can also compete with
environmentally harmful products (e.g., carbon dioxide charging systems for aerosol cans,
silicones that substitute for PCBs in transformers). They need information about
environmental trends regarding competing products and how the competition is to be
regulated. These new entrants' products are usually unregulated by EPA because of their
benign nature.

Regulators (federal, state, and local government). Regulators, including
rulemakers, permit writers, and compliance personnel, require access to information and
also provide mechanisms to disseminate information. To fulfill their role as regulators,
they must understand and be able to communicate regulatory requirements and processes.
They must also be technically competent and understand the perspectives of regulated
communities. The latter expertise can be gained through academic training and, more
critically, from appropriate contacts within regulated organizations and their
representatives, such as trade and industry organizations. Rulemakers need ready access to
information on state-of-the-art technologies and their performance, cost, and reliability
characteristics to write regulations. Similarly, permitting and compliance personnel need
such information to perform their functions, although their ability to share it is sometimes
compromised by the regulatory nature of their contact with users.

Through regulations, permits, and compliance actions, regulators announce to all
stakeholders the availability of approved technologies and techniques. They can also
encourage the use of advanced technologies, such as pollution prevention techniques and
innovative technologies, and therefore future development and investment in new
technologies through direct and indirect means. By providing predictability, consistency,
and cross jurisdictional coordination through regulations, permit approval processes, and
compliance actions, regulators can create a powerful incentive to search for improved
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solutions. This, in turn, fuels the need for diffusion services and makes more information
available to include in them.

Through their research programs, government agencies are also important developers,
collectors, evaluators, standardizers, compilers, and diffusers of environmentally beneficial
information. These roles make government research agencies critical players whose
credibility and neutrality are essential foundations for information and technology transfer.

It is a major diffusion concern for members of this community are that they be well
informed about the regulatory system. They also need to know the characteristics of
environmentally beneficial technologies and techniques, including those representing the
state-of-the-art. Finally, they require mechanisms to make useful information widely
available to those who need it.

Providers of environmentally beneficial products and services.
Developers and marketers of environmentally beneficial technologies are major generators
and diffusers of information, though they also require access to information to fulfill their
roles. They provide technology and associated information to regulators, users, investors
and the public, on performance, costs, reliability, and risks. Results of technology
development, testing, and demonstration provide the basis for regulations, the actions of
investors and users, and the actions of the public, who may, for example, allow the siting
of technologies depending on testing and demonstration results. (Trade and professional
associations provide a trusted mechanism for the diffusion of such results.)

Technology providers are central to technology diffusion. They have large
information needs, because of their need to gauge market risks, and to satisfy regulatory
requirements. They need to develop and provide adequate information so that users,
regulators, and the public can evaluate the applicability and acceptability of technologies.
For their part, developers must anticipate environmental problems, user needs, and public
acceptability. These are the major diffusion concerns for this community.

investors. Investors support technology developers and the entire provider
community, as well as regulated organizations. They are major stakeholders in the
diffusion process, but are minimal direct diffusers of technology. Their own diffusion
needs ultimately revolve around their interest in measuring and ultimately reducing risk.
The availability of information about environmental regulations, permitting and compliance
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policies and practices, and markets is important to their measurement of risks, as is the
availability of performance, cost of performance, and reliability data derived from testing
and demonstration. Finally, investors are concerned that diffusion systems will help carry
the message about technologies they have supported to users, regulators, and the public.

    The public. The public and its representatives, the public interest groups, are large
consumers of diffusion services. They need access to credible information about the
performance, costs, reliability, and risks of innovative  environmental solutions and their
alternatives, as well as about regulations and regulatory processes, so they can decide
whether solutions that are proposed are the best choices (or an acceptable choice) for a local
environmental problem. Peoples'  fear about what they do not understand is universal, and
the public's lack of trust is only reinforced in the absence of information that is not
credible.  The public interest groups are important providers of information on the
acceptability of technologies to the public and to other stakeholders. Public acceptability,
which depends  on the good functioning of these information channels, is a major
determinant of decisions by developers, investors, and users in developing and
commercializing technologies. Regulations and permits in significant measure reflect such
public acceptance, as do the statutes that underlie them. Thus, elected officials are another
important consumer of well functioning information channels.
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solutions. This, in turn, fuels the need for diffusion services and makes more information
available to include in them.

Investors. Investors support technology developers and the entire provider
community, as well as regulated organizations. They are major stakeholders in the
diffusion process, but are minimal direct diffusers of technology. Their own diffusion
needs ultimately revolve around their interest in measuring and ultimately reducing risk.
The availability of information about environmental regulations, permitting and compliance
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  IV.  MEMBERS OF THE TECHNOLOGY INNOVATION
              AND  ECONOMICS (TIE) COMMITTEE
Members of the Diffusion Focus Group:
Mr. William W. Carpenter, Chair
Mr. Dag Syrrist, Co-Chair
Mr. John W. Adams
Dr. Edgar Berkey
Dr. David Bodde
Dr. Samuel I. Doctors
Mr. Gary Dwoskin
Dr. Robert E. Finnigan
Mr. James Hall
Mr. Richard Kibler
Ms. Cherri J. Langenfeld
Dr. Gerald Nehman
Dr. Lawrence Ross
Mr. William Sonntag
Dr. J. Kenneth Wittle
Dr. Alan Lloyd
Mr. David G. Sobers

Dr. David Thomas
Martin Marietta Energy Systems, Inc.
Technology Funding, Inc.
National Defense Environmental Corporation
National Environmental Technology Applications Corporation
Midwest Research Institute
California State University, Hayward
National Academy of Sciences
Finnigan Corporation/Thermo Instrument Systems
U.S. Department of Agriculture
U.S. Department  of Defense
U.S. Department  of Energy
University of Texas at Arlington
American Institute of Chemical Engineers
National Association of Metal Finishers
Electro-Pyrolysis, Inc.
South Coast Air Quality Management District (CA)
Montgomery County (MD) Department of
 Environmental Protection
Illinois Hazardous Waste Research & Information Center
Contributors to the Diffusion Focus Group:
Dr. John Ehrenfeld
Ms. Diane Cameron

Staff:

Mr. David R. Berg, TIEC Director
Mr. Morris Altschuler

TIE Committee Members:

Dr. Nicholas A. Ashford, Chair
Mr. Thomas Devine, Vice Chair
Mr. Paul Arbesman
Dr. R. Darryl Banks
Dr. David Bodde
Dr. Paul Busch
Mr. William W. Carpenter
Mr. William Haney III
Dr. John W. Liskowitz
Gen. James McCarthy
Mr. John Palmisano
Mr. Frank Pope
Dr. Walter R. Quanstrom
Dr. Robert Repetto
Mr. Martin E. Rivers
Dr. Manik "Nikki" Roy
Dr. Lawrence Ross
Mr. Dag Syrrist
Ms. Linda Stuntz
Mr. L. Mead Wyman
Massachusetts Institute of Technology (MIT)
Natural Resources Defense Council (NRDC)
Office of Cooperative Environmental Management
Office of Cooperative Environmental Management
Massachusetts Institute of Technology
RMT, Inc.
Allied Signal Corporation
N.Y. Department of Environmental Conservation
Midwest Research Institute
Malcolm-Pirnie, Inc.
Martin Marietta Energy Systems, Inc.
Molten Metals Technology, Inc.
New Jersey Institute of Technology
U.S. Air Force
AER*X, Inc.
Technology Funding, Inc.
Amoco Corporation
World Resources Institute
Air and Waste Management Association
Environmental Defense Fund
American Institute of Chemical Engineers
Technology Funding, Inc.
Department of Energy
Hambrecht & Quist Venture Partners
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V. FINDINGS

The findings in this section are based on an analysis by the TIE Committee of EPA's
role in the diffusion of environmentally beneficial technologies. These findings lead
directly to the TIE Committee's recommendations for improving EPA's diffusion activities
presented in the following section.
Finding 1
EPA, which perceives itself as primarily a regulatory agency,
has a mission to protect human health and the environment.
Since its founding, EPA's mission has been to protect human health and the
environment. No other department or agency of the federal government has this function
as a primary mandate.

The environmental management system, as designed in legislation, regulations,
policies, and practices, has a primarily regulatory focus. EPA's organization, activities,
budgeting, culture, and external relations have all been defined by its historical and
fundamental perception that it is primarily a regulatory agency. EPA's organization is
based on media-specific program offices, corresponding to the major pieces of federal
environmental legislation determining EPA's functions. Other EPA offices, including its
Office of Research and Development (ORD), largely support the regulatory functions of the
media-specific program offices. EPA's perception of its role as regulator permeates the
Agency's culture and external relations; EPA is deeply concerned with procedure,
compliance, documentation, avoidance of conflict of interest, and assurance of equal
treatment. Its relationships with regulated organizations can usually be characterized as
adversarial, with little or no reliance on incentives to motivate innovation for environmental
improvement.

Historically, technology diffusion has played a limited and subordinate role to
regulation, permitting, and compliance in the regulation-based environmental management
system. The "best available technology" (BAT) approach to regulation optimally offers
mixed incentives for the development and use of improved environmental and production
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technologies. Technologies must await the uncertain recognition by rulemakers before their
niches in the marketplace are assured. After regulatory requirements are imposed,
compliance with BAT-based rules requires the quick use (and diffusion) of a technology
with the requisite performance. However, this provides no rewards for the subsequent
development and use of better performing technologies, regardless of the environmental
and public health risk remaining after the use of BAT. The incentive to diffuse is largely
restricted to the BAT, and only innovation to achieve lower costs is encouraged. EPA's
and regulated organizations' adoption of innovative approaches to environmental
improvement are hindered by EPA's inadequate emphasis on supporting technology
innovation and technology diffusion.

This is ironic, because EPA determines the stringency, applicability, timing, and
longevity of environmental requirements. The environmental marketplace is largely defined
by these environmental requirements and their enforcement. Thus, federal decision making
provides critical signals for regulated communities and technology developers. Finding
regulatory signals that enhance the marketplace is a critical step.

The environmental permitting process is another important impediment to innovation,
with confusion about the federal, state, and local permitting processes seen both outside
and within EPA. Both permit applicants and regulatory staffs report they are often
confused by permitting procedures, by the different permitting requirements of different
acts and agencies, and by permitting practices that are inconsistent between media. Testing
and evaluation is significantly restricted by current permitting authorities and practices to
the point that innovation is being slowed in the U.S. These problems present obstacles to
the diffusion of new technologies.

The TIE Committee found in its 1991 report and recommendations (and reiterates this
finding here) that the lack of predictable and consistent permitting and compliance programs
at all levels of government dampens the expectation of the need to comply with
environmental requirements and, therefore, lowers the perceived need to purchase
environmental products and services. Similarly, the lack of predictable enforcement
discourages permittees from using innovative technologies, which inherently expose them
to greater risk. The lack of flexibility in permitting and compliance systems reduces the
incentive to innovate and to use innovative (and therefore more risky) solutions. All of
these factors, along with the difficulty of predicting future regulatory requirements,
increase the long-term development risks associated with environmentally beneficial
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technologies, diminishing the relative attractiveness of investment. They therefore
discourage entrepreneurs from investing money and effort in the innovation process and
dissuade regulated organizations from using the technologies and techniques that result.
Thus, the potential for the diffusion of new or newly developed technologies to support
national environmental goals is reduced.

The clients of EPA's information transfer efforts have been, by design, mostly
internal, although some efforts have been directed to attract external clients. EPA's limited
information transfer efforts, whether for internal or external audiences, have emphasized
the publication of written reports and computerized data based on the results of its own
research, the sponsorship of conferences, training courses, and seminars, and hot lines.
The program of the Technology Innovation Office (of EPA's Office of Solid Waste and
Emergency Response) is one of the notable exceptions to this rule.

EPA manifests its low priority on the diffusion of environmentally beneficial
technologies in a number of ways:

•- Having limited collaboration and coordination with other potential
partners in the diffusion of information.
•- Failing to adequately integrate the objective of the diffusion of
information and to sufficiently emphasize diffusion programs in
regulatory policies and programs. These include permitting and
compliance policies as they relate to tests, evaluations, and use of
innovative and pollution preventing technologies and techniques.
•- Failing to support the diffusion of information goal adequately in
planning and programs.
•- Failing to adequately coordinate and lead efforts to diffuse information
both within and beyond the agency.
The low priority given to technology diffusion is also seen in inadequate employee
incentives to diffuse technology (e.g., financial rewards, recognition, performance
evaluation credit); inadequate training of personnel; unspecified, nonexistent, or inadequate
budgets for diffusion; a single media character in most diffusion programs; a lack of
attention to pollution prevention in diffusion programs; and the lack of internal expertise
assigned to deal with diffusion. EPA's organizational structure also appears to discourage
accountability and coordination in technology diffusion.
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The TIE Committee believes that, while EPA's mission is unchanged, the means for
accomplishing this mission must change. An exclusive reliance on regulatory methods is
no longer sufficient for EPA to achieve its goals. EPA's failure to fully integrate
technology diffusion into the environmental management system hinders the achievement
of its mission. EPA must reverse the pattern that technical information often does not get to
those who need it.
Finding 2
Coordination is lacking between EPA and its potential partners
in planning and conducting activities to diffuse technological
information.
EPA is not now working closely with its potential partners to make the information
diffusion system work effectively and efficiently. These partners include: (1) those who
understand user needs, (2) information developers, (3) information providers, and (4)
users or consumers.

Many organizations play one or more of these diffusion roles, and if each did its part
effectively, the diffusion system would work more efficiently to expand the availability of
credible information to those who need it. Within EPA, for example, there is little
coordination of diffusion efforts across the media offices and with the research program.
With the exception of the Technology Innovation Office (in the office of Solid Waste and
Emergency Response) EPA has not built a diffusion partnership on behalf of the
environment. The resulting lack of strength in this system is a significant barrier to
innovation and to the environmental improvement that can result from the diffusion into
widespread use of innovative solutions.

Importantly, EPA should provide leadership to the diffusion partners, but it now does
not, with some exceptions. One of the barriers to working together derives directly from
the adversarial nature of regulatory relationships. EPA's credibility, on the other hand, is
not being fully exploited as an asset in the information transfer system of environmentally
beneficial technologies. Many other developers of information and providers of diffusion
services are seen by users as lacking EPA's credibility. Yet, EPA is not taking full
advantage of its credibility to improve the volume and availability of credible information,
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including information about regulatory systems and processes (e.g., permitting and
compliance systems).

EPA plays a relatively small part in any of the four diffusion roles, as it should. Yet,
its diffusion services appear to lack wide input in their planning, contain predominantly
EPA-generated data, and apply a limited range of diffusion mechanisms. The fact that
federal and state agencies account for less than 20 percent of all U.S. investment in
environmental technology innovation (and EPA only a few percent) reveals the need for
partnering in planning, generating, and disseminating technology information.

There is also no systematic EPA effort to document information about the businesses
that provide products and services used for environmental purposes. Without
understanding both the purchase and the sale sides of environmental transactions
domestically and internationally (i.e., the environmental market), EPA cannot clearly
understand the impacts of current environmental policies on the nation's ability to meet
environmental goals. Nor can it measure the national capability to innovate and adapt, and
to remain competitive internationally.
Finding 3:
EPA has not recognized that success in pollution prevention
depends largely on the success of diffusion and incentive-based
approaches.
EPA's efforts to encourage pollution prevention have made a good start in the right
direction. The tendency in EPA to think first of regulation has already been noted. The
Committee is concerned that pollution prevention programs will depend too much on
regulations. The encouragement of pollution prevention, however, requires a different
approach for success, one that emphasizes diffusion of information and incentives.

The Committee believes it is important to recognize that the motivations which drive
pollution prevention are not the same that motivate a compliance-based, end-of-pipe
strategy. Pollution prevention requires a continuing commitment that is proactive,
internally maintained, and culturally different in nature. In some organizations pollution
prevention is closely related to a commitment to total quality management. Pollution
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prevention can be information and incentive driven because of this unique culture, but only
if there is a "level playing field" created by underlying requirements that apply to all
regulated organizations.

The Pollution Prevention Act of 1990 requires EPA to promote pollution prevention.
This undertaking is vast, affecting both small and large firms. Thousands of small U.S.
businesses could benefit from pollution prevention techniques, but do not have technical
staff trained to identify and apply technological opportunities. In the case of large firms
that use complex production processes, multiple changes throughout the production system
often lead to a pollution prevention result. In small and large firms, a great deal of
information is required to carry out such changes — often far more than required by an
end-of-pipe pollution control solution.

Still, even firms seeking low-cost pollution prevention approaches to environmental
compliance — information that EPA may have ~ distrust EPA because of its regulatory role,
fearing that information about pollution prevention solutions revealed to EPA
representatives will be used to expand the regulatory grip. Fear that proprietary
information may be revealed also restricts data sharing. It will be necessary to consider the
impact of such factors that inhibit the direct flow of pollution prevention technology
information between EPA and firms.

The diffusion process for pollution prevention thus differs from the diffusion of other
environmental purposes. Pollution prevention technologies and techniques are often
information-intensive, requiring extensive knowledge of a plant's processes, feedstocks,
and products. Pollution prevention often requires the close collaboration of highly
knowledgeable partners and trust that the sources of competitive advantage within industrial
processes will not be revealed. Some types of pollution prevention, in the areas of
industrial hygiene, general housekeeping, lighting, grounds maintenance, and commuting,
are less threatening to competitive advantage and more general across industry groups.
These considerations bear directly on EPA pollution prevention R&D; EPA's potential for
success is dependent on an active partnership with the ultimate users of pollution
prevention solutions.
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Cost-accounting systems that clarify the relative costs of pollution prevention and
pollution control are needed. The cost of pollution control may be underestimated if full
accounting is not made of disposal, exposure to liability, and other expenses. Full
knowledge of costs, including those incurred and avoided across the various media, might
encourage regulated organizations to choose pollution prevention solutions more often.

Media-specific legislation, regulations, permits, and organizational structures pose
special obstacles to pollution prevention. The benefits of a multimedia approach can be
significant, because this approach can better encourage the absolute reduction of unwanted
byproducts. In power plants, for example, sulfur dioxide emissions from the burning of
high-sulfur coal are often reduced by the use of wet flue gas scrubbers. However, these
scrubbers generate solid wastes that must be landfilled and effluent discharges that must
undergo treatment. A multimedia approach would encourage whatever pollution prevention
and control measures led to the greatest byproduct reductions considering costs. For
example, performance-based standards applied site-wide would facilitate diffusion of
effective technology by allowing more flexibility to reduce pollution.

EPA, state, and local field personnel are too often unaware of technical information
that would help them encourage pollution prevention in their permitting, compliance, and
other interactions with firms. (Of course, they may not be in the best position to encourage
pollution prevention anyway.) This problem results from the lack of programs to collect
and provide this information (through sources the regulated organizations will trust and
work with readily), and from the lack of adequate technical competence on the part of
regulators. Moreover, local government agencies have problems evaluating and
implementing EPA pollution prevention guidance because of a lack of information and
expertise. They look to EPA as the provider of information on testing and evaluation, and
a partner in developing incentives, training, and other support systems.
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Finding 4
EPA's international diffusion activities are focused almost
exclusively on developing and Eastern European nations;
a much stronger and broader role is needed to enhance U.S.
competitiveness.
The Committee supports the expansion of EPA's new international environmental
programs that emphasize the diffusion of environmentally beneficial technologies to the
developing world and to Eastern Europe. There are large environmental gains to pursue in
the nations of these parts of the world, as well as opportunities to influence the direction of
environmental institutions and policies at an early stage. EPA's activities seem to be "right
on target" here.

Minimal EPA effort is allocated to the support of U.S. environmentally beneficial
technology exports to the major world markets (the other industrialized nations). These
markets together exceed the U.S. market, which is the largest in the world. Moreover,
these countries are the home to the major competitors to the U.S. environmental industry,
many of whom are active in the U.S. It is very important to the health of the U.S.
environmental industry that EPA expand its activities in this part of the world. The
Committee believes that this is the case because (1) there is benefit to being able to solve
most domestic environmental problems domestically, (2) producing industries that are most
competitive are often the cleanest (in part because they waste the least), and (3) the world
environmental market is one of the fastest growing and presents significant opportunities
for exports.

A good example of valuable government-industry cooperation has been seen in
activities of the International Organization for Legal Metrology (OIML), a treaty-based
organization whose Secretariat is the National Institute for Standards and Technology
(NIST). ANIST-led U.S. delegation secured international agreements on standards — for
gas chromatography, atomic adsorption, high-pressure liquid chromatography, field
instruments, and mass spectrometry applied to measuring pollutants (pesticides) in water, -
- standards all based on U.S.-made instruments. The cooperation of industry and
government was crucial to the international acceptance of these standards.
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Minimal EPA effort is also directed toward gathering information on technologies
developed overseas that could offer environmental and competitive benefits in the United
States. To further U.S. environmental objectives, it is important for EPA to help identify
environmentally beneficial technologies overseas for potential use in the U.S. Better
technologies, wherever they come from, help hold down the costs of environmental
improvement and of production.

EPA could contribute to higher environmental standards worldwide and to the nation's
competitiveness by being a more active partner in such areas as harmonization of
environmental standards and boosting environmentally beneficial trade. To do so,
however, the Agency must have improved coordination with other appropriate government
agencies, including the Departments of State and Commerce, the U.S. Trade
Representative, the Export-Import Bank, and the Overseas Private Investment Corporation
(OPIC), which have greater responsibility and experience in international relations and can
provide legitimacy to EPA's involvement. EPA can, in turn, lend them its central focus on
environmental improvement and its reputation and credentials as a worldwide
environmental leader.
Finding 5
EPA's research programs do not adequately support the agency's
diffusion mission.
EPA's environmentally beneficial technology research programs have three major roles
to play that relate directly to EPA's capacity to perform its key function in the diffusion
system. The first role is in planning and conducting environmentally beneficial technology
research, the results of which are a major source of credible information that can be shared
through diffusion programs. The second concerns influencing the R&D performed by
others so that the data they generate will be of enhanced quality. The third is EPA's own
role in the diffusion of credible environmentally beneficial technology information. In
general, the Committee believes that, in order for EPA to derive major support from
diffusion, ORD's role in diffusion must be sharpened and focused in each of these three
areas.
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Some of ORD's research and diffusion programs are very good. The Pollution
Prevention Information Clearinghouse and the new federal facilities testing program are
examples of a new activism by ORD in collecting and developing credible data that are
needed by EPA's diffusion partners. EPA's sponsorship of the National Environmental
Technology Applications Corporation (NETAC) represents its first venture to foster
directly the commercialization of environmental technologies (without endorsing any one
technology).

As noted earlier, EPA's environmental technology R&D spending constitutes less than
five percent of the national total, and EPA's R&D is primarily aimed at obtaining data to
support the regulatory process. The agency's environmental technology research primarily
provides baseline data to establish new regulatory standards. While there is no question
that EPA's R&D activities directly influence industry R&D decisions, the reverse is not so
clear. With the exception of what amounts to ex post facto approval from Science
Advisory Board committees, EPA R&D planners receive no direct and very little indirect
input from industry and other major players in the field. Without any R&D planning input
from regulated organizations and technology developers, EPA risks repeating research,
applying older-generation approaches to scientific problems, or otherwise inefficiently
allocating R&D resources. Compounding the lack of formal direct R&D planning input
from industry is a complete lack of trained, dedicated market research personnel who could
generate complementary information by gauging markets.

These facts ensure that EPA cannot play a leading role as a direct sponsor of
environmentally beneficial technology R&D. Broadening the base for planning its
environmental technology R&D programs would help EPA fill a serious need: that some
organization coordinate governmental environmental technology R&D. EPA's own
programs lack a clear ability to anticipate significant trends that will influence environmental
technology problems and opportunities, and to understand markets. Similarly, EPA has
only begun to implement mechanisms that ensure that the maximum leverage will be
obtained from its own technology R&D programs and has not emphasized the
commercialization end point in these programs. Co-planning and leverage will be
especially necessary for EPA to support improved industrial technology and low-polluting
products. (The Committee notes the real progress EPA has made in implementing the
Federal Technology Transfer Act, although there is a real need to expedite the process for
establishing CRDAs [cooperative R&D agreements].)
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To assess federal agencies' FTTA activities and performance, the Focus Group
established a special task force which met with representatives of EPA, DOE, USD A, and
the U.S. Army. The task force found that EPA has entered into fewer CRDAs than these
other agencies. The Department of Energy and/or its laboratories have entered into 190
CRDAs. USD A has entered into roughly 215 CRDAs, and the Army 171. EPA's current
total is 31. EPA has also signed three licensing agreements.

Many factors account for the disparities described above, the two most important being
EPA's regulatory nature and the relative size of EPA's R&D budget (e.g., the Army's
research budget is roughly four times that of EPA's). Due to EPA's regulatory nature, an
adversarial relationship has existed between EPA and its potential cooperative partners.
This mutual antagonism has only recently begun to change and is in part responsible for the
agency's slow start in developing CRDAs and licensing agreements. Five CRDAs were
finalized by EPA in 1989, 12 by 1990, and 31 by 1991. Roughly 25 EPA CRDAs are in
some stage of negotiation at the present time. EPA is to be commended for the accelerated
pace at which CRDAs have been signed over the past year.

Also owing to EPA's regulatory nature, numerous offices review CRDAs at both the
letter of intent and draft CRDA stages. (Some agencies do not even require letters of
intent.) Coordinated by EPA's ORTA, the Office of Technology Transfer and Regulatory
Support, CRDAs must be approved by EPA's Office of General Counsel, Grants
Administration Division, Inspector General, and Office of Enforcement. To qualify, the
industry CRDA partner must not be subject to sanctions resulting from a violation of a
fiduciary duty or to any EPA enforcement action. These extra approvals are not required
by agencies that play no regulatory role.

In the case of the Army, many individual laboratories have their own ORTAs and legal
support, so approval authority is close to the negotiations process. Industry has worked
closely for decades with USD A, and the transition to the CRDA format was relatively
simple. EPA currently has only one ORTA, located at headquarters. The current EPA
system may be inadequate to enter the number of CRDAs its potential suggests.

DOE, USD A, and the Army all have developed standardized CRDA documents that
accelerate the internal review process. While the work statements vary considerably from
CRDA to CRDA, clauses on licensing and confidentiality are generally non-negotiable.
EPA has just introduced its own standardized CRDA format, which should accelerate EPA
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review, and has dedicated new legal support for CRDA review. It is also preparing a draft
manual describing the review process. All of these recent steps are reflected in EPA's
improved CRDA performance and are to be commended.

In general, however, the extra approval steps required by EPA have slowed its review
and also required more resources from the industrial partner. The TIE Committee believes
that any changes lowering the transaction costs of establishing CRDAs, including the
speeding of negotiation times, will benefit industry's efforts to bring new environmental
technologies to market.

There appears to be a learning curve on both federal agency and industry sides of
CRDA negotiations. USDA and Army results indicate that the first CRDA signed with a
particular firm takes the longest time. Subsequent negotiations are far shorter. The first
step in negotiations involves the preparation of a three-page work statement by the
interested scientific or engineering personnel. Legal deliberations follow. In EPA's case,
legal questions still play a significant role early in most negotiations.

The TIE Committee believes that lack of information about the potential benefits of
FTTA cooperation is a key barrier to its expansion and ultimately to the development and
commercialization of innovative technology. Education programs to explain the procedures
for establishing CRDAs and licensing agreements and to stimulate the awareness of
benefits and possibilities derived from the FTTA could better attune EPA researchers to the
potential commercial applications of their work. The task force notes that EPA has hired a
contractor to prepare internal education materials. Similarly, efforts to diffuse information
on FTTA opportunities could inform potential industrial partners and increase their interest.
The results of such internal and external awareness campaigns would be measured by the
increase in CRDAs and licensing agreements signed by EPA and industrial partners.

Out of the group of agencies studied, the FDA appears to most closely resemble EPA
in its regulatory and technology transfer mission. The FDA's implementation of FTTA
includes the following features:

•- CRDAs received final approval from the FDA Commissioner.
•- A five member CRDA Review Board reviews all CRDAs before they
are submitted to the Commissioner. Minutes of this review board are
not published.
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The FDA principal investigator certifies the lack of a conflict of interest
in the CRDA.
The CRDA is reviewed by the division of Staff Ethics and Program
Integrity, and simultaneously the CRDA is circulated to other FDA labs
and staff offices for review. This all takes place after the lab director
signs the CRDA and before it is presented to the Review Board.
Conflict of interest investigations and Review Board actions are
completed before the 30-day mandatory review period starts. This
means that the review period is only used to obtain final approval from
the FDA Commissioner.
The task force has found that the starting point of the 30-day review period mandated
by FTTA legislation is arbitrarily determined by each of the agencies examined. For
example, the FDA defines the starting date as the date the CRDA is ready for the FDA
Commissioner's approval. The task force therefore believes that focusing on meeting the
30-day mandatory review period is not an effective measure of EPA's FTTA success. The
focus should be on the total time required to obtain CRDA approval, because environmental
technologies have a short period during which owners can profit from their use, sometimes
as little as one year. Therefore, it is imperative that EPA work to shorten the CRDA
approval process as much as possible.

Currently, when EPA research plans are developed, there are no formal requirements
to plan for subsequent diffusion and use of the research results. Valuable findings often
languish once their intended purpose (often of supporting the regulatory efforts of a
program or regional office) is achieved. This is an additional concern.

An EPA emphasis on maximizing opportunities to improve the quality of information
generated by others is important. Increasing joint or coordinated planning will help, as will
jointly conducted research. Inadequate attention is being paid to standardizing test
protocols, analysis procedures, and performance reporting.

The role of EPA's research program in the diffusion of credible environmental
technology information requires considerable rethinking. ORD appears to rely primarily on
its own R&D for information that it diffuses. Given its role as a minor developer of this
information, this practice limits the effectiveness of ORD information bases and diffusion
efforts. Another factor limiting ORD's diffusion success is its tendency to be a direct
source of information, rather than to be an indirect source. One example of this is an
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otherwise excellent ORD training program that is fully subscribed all year, but which only
reaches a small percentage of the potential audience.

    The government's role is critical. As the TIE Committee's 1991 report points out,
most innovations trigger regulatory oversight during research, development, and/or
demonstration, and all require regulatory approvals for purposes of compliance. The
government roles of gatekeeper, overseer, and diffuser transcend that of investor in
environmental technology innovation. Thus, while added government financial support
would be helpful, improved regulatory and administrative processes are vital. These would
include incentives to encourage diffusion.
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VI. RECOMMENDATIONS FOR ACTION AND
COMMENTARY
SUMMARY OF RECOMMENDATIONS.
1. Make technology diffusion a major supporting mission
for EPA.

2. Build a stronger partnership with technology diffusion
providers and users.

3. Make diffusion and incentives the emphases of EPA's
pollution prevention programs.

4. Expand support for the international diffusion of
environmental technologies to help meet U.S. environmental
and competitiveness objectives.

5. Increase the support of diffusion provided by EPA's
environmental technology research programs.
Introduction

The TIE Committee's recommendations are centered on two major areas of
environmentally beneficial technology diffusion. First, there are actions EPA can take
which will have a direct effect on the diffusion of environmentally beneficial technologies.
Second, there are actions EPA can take in other parts of the environmental management
system that support diffusion activities.

Some of the first group of recommendations will increase environmentally beneficial
technology diffusion because they promote the diffusion of environmentally beneficial
technologies, either inside or outside the agency. These actions are covered in
Recommendations 1, 2, 3, 4, and subrecommendations 5.1 and 5.2. Recommendation 1 is
the most important recommendation. The other recommendations are not prioritized in any
order other than the grouping noted herein.
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The second group of recommendations identifies actions EPA can take that lead to the
diffusion of environmentally beneficial technologies by making changes in other parts of
the environmental management system. These actions will indirectly lead to increases of
environmentally beneficial technology diffusion because activities which are related and
critical to diffusion -- but are not diffusion activities in and of themselves -- will be
promoted. For example, it is recommended that EPA foster technology testing and the
development of credible performance data by others, which it can do by increasing its
efforts to standardize test protocols. That will lead to increased diffusion because more and
better data can be made available through diffusion systems. These recommendations are
covered in primarily in subrecommendations 1.5, 5.1, 5.2, and 5.3.

The Diffusion Focus Group has reviewed and now offers its support to
Recommendation Four of the January 1991 TIE Committee Report, "Permitting and
Compliance Policy: Barriers to U.S. Environmental Technology Innovation."
Recommendation Four specifically addresses the support (diffusion) required for all
stakeholders if recommendations about how to encourage innovation through permitting
and compliance policy are to be effective. It is reproduced in Appendix 2 of this report.
The Diffusion Focus Group has also reviewed and now offers its support to the
recommendations from the TIE Committee to EPA's Committee On Technology
Cooperation, made in September 1991. These recommendations, which deal with
technology cooperation, technology innovation, and trade and the environment, are
reproduced in Appendix 3 of this report.

Each major recommendation listed in the "Summary of Recommendations" is
discussed fully in the "Detailed Recommendations and Commentary" section. The
"Detailed Recommendations and Commentary" section contains decimal-level
subrecommendations (e.g., 1.1, 1.2, 1.3) describing the types of changes needed to
implement each major recommendation. Letter subpoints (1.1 "a", 1.1 "b", 1.1 "c") under
each subrecommendation describe specific implementation actions for EPA. The items
listed in the subrecommendations and letter subpoints are a starting point for future actions
and are not intended to be an all-inclusive list.
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DETAILED RECOMMENDATIONS AND COMMENTARY.
Recommendation 1:
Make technology diffusion a major supporting mission for EPA.
1.1 Create a high-level position to advocate and coordinate
EPA's technology diffusion programs.
1.2 Modify and expand EPA's role and funding support for
technology diffusion.
1.3 Create an internal system of support for agency employees
that will promote and assist technology diffusion.
1.4 Improve the current partnership between the agency and
users and providers of diffusion services.
1.5 Change the regulatory system to allow the diffusion
system to operate more effectively.
Commentary

Technology solutions are essential to EPA's ongoing success in accomplishing its
mission of environmental protection. The diffusion process involves the set of
mechanisms that make technological solutions more useful and accessible: diffusion gives
impetus and direction to the development and commercialization of environmentally
beneficial technologies. Strong government diffusion programs play a necessary role in
the environmental management system, ensuring that the widest range of technology
solutions is available to regulated organizations and enabling them to find environmentally
and economically efficient ways to comply with and exceed environmental requirements.

The environmental management system includes regulations; administrative practices
and policies supporting the regulations; permitting programs; compliance and enforcement
programs; technology diffusion programs; EPA grants to state programs; and federal, state,
and local research programs supporting environmental objectives. The Committee believes
that it is imperative for the agency to recognize and highlight diffusion programs as cost-
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effective and efficient mechanisms that play a key and unique role in achieving EPA's
mission. This role is unique in its ability to influence, rather than command, the activities
of other environmental stakeholders.

The set of tools available in diffusion programs enables government to be an active,
positive partner with environmentally beneficial technology providers and users. Through
diffusion, EPA is able to influence a broad range of environmental stakeholders in a
cooperative manner, without having to resort to the command and control authority given it
by statute. The '1 IE Committee commends the agency for recognizing the need to
incorporate non-adversarial approaches in its environmental protection strategy.

Diffusion is particularly important to EPA's effort to reach regulated parties that are not
technologically sophisticated. These organizations have an intense need for diffusion
support because they lack the in-house technical and financial resources to either generate
technological solutions to solve their environmental problems or to fully evaluate the claims
of vendors. They are often in industries that have poor compliance records. These parties
require credible, trustworthy, and objective sources of technology information, such as
trade associations, consulting engineers, or government.

There are two different needs that environmentally beneficial technology diffusion can
satisfy on the part of regulated organizations. The first need is for environmental,
technologies that allow and enhance efficient compliance with environmental permits and
standards. The second need is for environmentally beneficial technologies that cooptimize
both environmental and economic outcomes. The technologies that satisfy these two needs
are often quite disparate. The first need is typically satisfied by end-of-pipe technologies
that are evaluated on their ability to meet minimum requirements (e.g., emissions) and their
total cost. The second need can be satisfied only with technologies that are integral to the
production process. These technologies are often more innovative and complex than
conventional environmental solutions and can affect choices from raw materials to
production processes to finished products. The user of cooptimizing technologies is able to
apply environmental solutions to do more than meet regulatory standards, since the
cooptimizer perceives innovative compliance as a competitive advantage that can convey
economic gain. Satisfying both of these needs is the ultimate task of a successful diffusion
system.
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How EPA approaches regulated organizations depends on their environmental
position, namely: leader, follower, or laggard. Leaders are at the forefront of
environmentally beneficial technology use and understanding. They are willing to apply
innovative technologies even if there are significant risks, given the expectation of a
reasonable reward. Leaders are technologically adept and are usually the larger members of
their industry. They need to get good information and support for their use of innovative
technologies, and often see innovative environmental compliance as a competitive
advantage. Leaders can often be reached directly by regulators and are often interested in
examining new technologies.

Followers are at the middle ground of the use of environmentally beneficial
technologies. They usually use technologies that are widespread and commonly available,
and are often most concerned about an environmental technology's cost. Followers often
use outside firms (e.g., engineering firms, consultants) for advice about the new use of a
technology, including evaluation and installation. They tend to be grouped at the middle
range in size when compared to the other two groups. Their interest in a new
environmentally related technology is usually based on changes in legal requirements, and
then only if the technology is well proven.

Laggards are the final group of regulated organizations in the technology arena. They
are usually the last to use innovative environmentally related technologies because they are
interested only in staying out of the legal entanglement which threatens when they are not in
compliance. Laggards tend to be much smaller firms than leaders or followers. Although
there may be many more laggards than leaders or followers, they often represent a very
small proportion of total discharge. The laggards are often single-site, privately owned
operations that usually lack the ability to absorb any complex or unique environmental
solutions.

EPA's technology diffusion role is particularly important in two areas of more recent
concern to EPA: international competitiveness and pollution prevention. The TIE
Committee concludes that it is in EPA's interest to support the international diffusion of
environmental technologies to help meet U.S. environmental and economic objectives (see
Recommendation 4). Diffusion is needed to not only increase the export of domestic
environmental technologies and the competitiveness of all U.S. producer industries that
pollute, but also to make the best environmental technologies in the world available to U.S.
polluters.

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     Technology diffusion activities are critical to the successful implementation of
pollution prevention strategies (see Recommendation 3). The TIE Committee notes that the
motivation to apply pollution prevention techniques and technologies is different from the
motivations that drive regulated organizations to comply. Government's ability to influence
the decision to prevent, rather than control, pollution can be most effective through the
creative use of diffusion programs. These programs would increase the range of choices
available to regulated organizations, offer incentives that reward pollution reduction beyond
regulatory minimums, and increase flexibility in permitting and compliance programs that
encourage innovation and experimentation (as identified in the TIE Committee's report and
recommendations on how to foster environmentally beneficial technology innovation
through permitting and compliance policy). If the agency is to be successful in its pollution
prevention efforts, it  must feature the vigorous promotion of environmentally beneficial
technologies through diffusion programs.

     The following subrecommendations describe the major steps EPA must take if it is to
mount a successful diffusion program. These steps include: establishing a person or
group responsible for coordinating and advocating  strong diffusion programs in the
agency, the redeployment of resources needed to strengthen diffusion EPA activities, the
creation of a system of internal diffusion support for agency professionals, the
improvement of partnerships with outsiders to promote diffusion, and the changes needed
in agency regulatory  programs to make them  compatible with the agency's diffusion
programs.
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     1.1    Create  a high-level position to advocate and coordinate
            EPA's technology diffusion programs.
Commentary



     The establishment of a high-level diffusion position in EPA is needed to correct a

variety of critical problems the Diffusion Focus Group found in EPA's diffusion programs
and throughout the diffusion system:


     •-  The technology diffusion leader would need to address the low
        priority, inefficiency, and lack of internal coordination of existing EPA
        diffusion activities.

     •-  The diffusion leader would help address the need for the agency to
        actively promote (through diffusion activities) multi-media
        environmental approaches, pollution prevention, and environmentally
        beneficial innovation.

     •-  Since EPA originates only a small number of environmentally
        beneficial technologies and generates only a small portion of the total
        environmentally beneficial technology information base, a critical
        function of the diffusion leader must be to pursue stronger technology
        diffusion partnerships.
     Since EPA is only one of a large number of players in the field, and the other players

have a wide variety of motivations and modes of participation, it is important that EPA take

a leadership role, coordinating disparate activities so that the diffusion system operates as

effectively as possible as a part of the environmental management system (see
Recommendation 2).


     a.  ROLES OF THE DIFFUSION COORDINATOR:  The TIE Committee

recommends that EPA create a high level position reporting to the Administrator with

responsibility to provide agency-wide advocacy, strategic guidance, and coordination to

upgraded diffusion efforts. The diffusion leader should also provide coordination for the

agency's widely dispersed, usually single media, and disparate types of technology

diffusion activities.  This diffusion leader should: promote a multi-media perspective,

provide coordination for technology diffusion activities among the program offices,
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increase the agency's gathering of credible information about innovative and pollution
prevention technologies and techniques, establish within EPA a function to aid the
collection of foreign information about environmentally beneficial technologies, and be a
primary player in building partnerships with others involved as providers and consumers of
diffusion activities in both the public and private sectors. The diffusion leader could also
provide outside parties interested in technology diffusion with an initial point of contact that
could direct them properly. The diffusion leader's first action should be to prepare a clear
statement of agency policy for the Administrator's signature identifying technology
diffusion as a major agency program supporting and complementing other agency
programs.

    b .  MODIFY THE AGENCY'S CULTURE:   If EPA is to meet the challenges
of protecting human heath and the environment in the  1990's, a culture change is needed in
the agency that reflects and encourages EPA taking a leading role in diffusion. This change
will affect training, support, and incentives for employees, as well as their understanding
of the relationship they have with other environmental stakeholders. A first step involves
changing the conceptualization of EPA's role from that of environmental regulator to that of
catalyst for environmental improvement, using the full range of tools in the environmental
management system, including regulation.  The diffusion coordinator should be at the
center of this culture change.

    This culture change should accompany and support improvements in the technology
competence, training and retention of personnel.  As described in Recommendation 4 of the
1991  TIE Report, improved data and technical information resource support is required
(perhaps from ORD) to improve the technical competence of rule writers, permit staffs,
compliance staffs,  and technical  assistance groups. Similarly, policy, job standards,
reward systems, and other tools will be needed to modify the agency's culture so that EPA
staff perceive their role as being that of catalyst for environmental improvement, rather than
merely that of regulator.

    As described in Recommendation 3, the TIE Committee believes that strong support
for  pollution prevention, innovation, and experimentation is a part of the necessary new
culture.  All of its employees need to think of, suggest, and be rewarded for working
towards a new culture that involves these concepts. Subrecommendation 1.3  below
describes the system of support that EPA staff will need, if the agency's appropriate role in
diffusion is to be effected and the new culture installed.
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1.2 Modify and expand EPA's role and funding support for
technology diffusion.
Commentary

EPA's diffusion role needs to be modified and expanded to correct a variety of
under emphasis, gaps, and inefficiencies the TIE Committee found throughout EPA's
diffusion activities. The agency's diffusion programs are largely uncoordinated and single-
media in nature, and are not designed to gain sufficient leverage from those knowledgeable
about the need for environmentally beneficial technologies, from other developers of
credible diffusion information, and from providers of diffusion services. Statutes,
regulations, permits and the resulting EPA organizational structure are all single media
oriented with little or no coordinated activity. There are numerous examples of how
pollutants are chased from one media to the next. One example is the sulfur dioxide limits
on coal fired power plants. The sulfur in the coal, combined with the coal and as iron
pyrite, produces sulfur dioxide on combustion. Flue gas scrubbers are installed to reduce
the sulfur dioxide emissions to satisfy the Clean Air Act and associated regulations, which
results in a sludge byproduct that must be landfilled. In addition, it should be noted that
current regulations do not encourage pollution prevention techniques, which might promote
the use of low sulfur coal.

EPA could also reap significant gains by modifying its role in the technology diffusion
system to recognize and take advantage of others' diffusion resources. EPA has made this
adjustment in the area of remediation technologies. Here, EPA has identified the key
stakeholders involved in making remediation decisions and strengthened its diffusion
relationship with the consulting engineering community -- the group that most supports the
responsible parties in choosing remedies. Another example, but one where EPA has not
acted consistently, involves working with the Departments of Defense and Energy. The
data produced in these programs are not systematically coordinated with EPA's testing
protocols, data quality requirements, and reporting systems to assure that they can be
directly input into EPA's information management systems. Here, and in other cases,
EPA's unique position is not being fully exploited to take advantage of the benefits
diffusion can offer.
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Expanding EPA's diffusion effort with additional resources is also needed to allow the
agency to achieve its environmental goals through the application of new and innovative
technologies to environmental problems. As discussed earlier, an historic underutilization
of diffusion programs in the environmental management system cannot be reversed merely
through better coordination, advocacy, and policy encouragement.

a. EPA AS THE ULTIMATE FACILITATOR OF ENVIRONMENTAL
TECHNOLOGY DIFFUSION: The agency's unique role at the apex of the
environmental management system pyramid requires it to be the ultimate facilitator of
technology diffusion, but does not require it to conduct all diffusion activities. EPA's
wide-ranging roles in the diffusion of information about environmentally beneficial
technologies (e.g., regulator, promoter, educator, researcher, buyer, approver, and
certifier) give the agency the ability to encourage communications (a key element of any
technology diffusion activity) across the broad spectrum of players that includes almost all
environmental stakeholders. The agency's influence can be used both internally and
externally as a powerful tool to support and promote technology diffusion, which in turn
can strongly contribute to EPA's success in its environmental improvement mission.

b . EPA'S FIRST STEPS TO EXPAND AND PROMOTE
TECHNOLOGY DIFFUSION: As a start, the Administrator should require
that all agency program plans have a technology diffusion component that clearly identifies
the users of the information contained in and generated by the program, the mechanisms for
communication, and the program's technology diffusion component(s). The role of
diffusion relative to other elements of the environmental management system should be
clearly stated in the program plan. The technology diffusion component should be clearly
labeled and have sufficient, earmarked resources. Both the labeling and the funding should
be explicitly connected with overall agency objectives in diffusion. This would make
diffusion efforts a standard part of EPA's activities, as well as make it easier to monitor,
assess, and reward successful diffusion.

In working with many potential users of diffusion services, the agency should find
ways to facilitate third-party information exchanges. These exchanges are particularly
useful in communicating with untrusting and/or uninterested regulated parties. Their
receptiveness to technology information will be greater if the diffusion process occurs
through organizations with whom the regulated organizations are comfortable.
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c - REDEPLOY EPA'S CURRENT DIFFUSION ASSETS TO
INCREASE SUPPORT FOR TECHNOLOGY DIFFUSION: The TIE
Committee recognizes the agency's wide variety of diffusion programs, which should be
redeployed since they are largely uncoordinated and single-media. Moreover, sufficient
leverage is not gained from other developers and providers of diffusion information.

The Committee believes that EPA can create additional support for the transfer of
environmentally beneficial technology information by increasing the efficiency of
technology diffusion activities inside and outside the agency. Agency personnel, facilities,
policies, and practices can all be managed more efficiently to this end. Increased support
can therefore come at little or no cost to the agency, because it can come from the better use
of current agency resources.

The TIE Committee recommends that EPA begin to examine the possibility of
redeployment by conducting a total quality management exercise for diffusion programs.
This exercise should include benchmarking with other federal, state, and local government
agencies to find out how they shape their diffusion programs.

d . PROVIDE ADDITIONAL RESOURCES TO SUPPORT INCREASED
TECHNOLOGY DIFFUSION: The TIE Committee also concluded that the
agency should provide additional resources for its environmentally beneficial technology
diffusion efforts. This increase is needed for two reasons: (1) the current resource level
for diffusion activities reflects a significant and long-term lack of emphasis on government
diffusion programs as contributors to environmental progress, and (2) the incorporation of
multi-media, pollution prevention, international, and other understated elements of EPA's
diffusion programs will require new resources.

As discussed previously, the TIE Committee believes that technology diffusion is an
appropriate, efficient, and cost effective method of fostering the application of advanced
technologies and techniques for environmental improvement. Consideration should be
given to shifting, agency resources to technology diffusion activities or to seeking additional
resources, if EPA determines that agency resource levels will be inadequate, even
considering the beneficial effects of redeployment decisions. Such consideration should be
made in the context that diffusion is one of the major, interrelated elements of the
environmental management system.
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1.3 Create an internal system of support for agency employees
that will promote and assist technology diffusion.
Commentary

The diffusion of environmentally beneficial technologies is people dependent. The
diffusion effort will ultimately succeed or fail solely based upon the efforts of agency
participants. Two key tools are essential to mobilizing people for the diffusion effort:
employee support systems and encouragement. Support systems are needed to provide the
technical expertise, training, information systems, job hierarchy, and exposure to other
organizations that are currently not sufficiently available to mobilize the diffusion effort.
EPA's people also need additional encouragement (in the form of job standards and
rewards) so that they will believe contribution to the agency's diffusion effort is in EPA's
and their interest. The TIE Committee developed a clear perception that EPA staff do not
feel that a strong diffusion role is required for success in the agency's mission.

The TIE Committee has found an additional EPA employee requirement for successful
diffusion: the technical competence of regulatory, permitting, compliance, and other
agency personnel must be improved. The Committee heard from multiple sources that
there is a widespread lack of technical competence in EPA. This problem was attributed to
two factors: a lack of technical background and the short tenure (and experience) of these
individuals, particularly in permitting and compliance programs. If diffusion is to take
place through these channels and be encouraged by them, it is important that these
problems be resolved. The TIE Committee recommends that EPA institute or strengthen
several employee support activities to advance EPA's diffusion programs and culture.
These should be made to apply to rulewriters, permit writers, compliance personnel,
diffusion staff, researchers, and others.

The rest of subrecommendation 1.3 discusses how to institute the system of support
for agency personnel that will enable them to carry out an appropriate diffusion program,
working with other environmental stakeholders.
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a. ESTABLISH A HIERARCHY OR JOB LADDER AND
INCORPORATE CRITERIA IN PERFORMANCE EVALUATIONS
ALONG THAT PROMOTIONAL LADDER TO ADDRESS THE
DEVELOPMENT OF EXPERTISE (SINGLE MEDIA, CROSS-
MEDIA, OR TECHNOLOGY-SPECIFIC, INCLUDING POLLUTION
PREVENTION): The TIE Committee's report and recommendations, titled
"Permitting and Compliance Policy: Barriers to U.S. Environmental Technology
Innovation, " describes on pages 87 - 88 how EPA might establish a hierarchy or job ladder
that would create incentives and support for permit writers involved in innovation. This
elements of this hierarchy, expanded to cover all agency personnel, has great applicability
to the support of a diffusion program, as well. The Committee reiterates its support for this
approach.

b. PROVIDE TRAINING AND MODEL TEMPLATES, BASED ON
THE PRIOR TESTING AND USE OF INNOVATIVE AND
POLLUTION PREVENTION TECHNOLOGIES AND
TECHNIQUES, TO ALL PERMIT WRITERS: A concise, yet
comprehensive, training program should explain the permit writers' role in fostering the
successful use of these technologies and techniques for environmental purposes and
identify information sources and networks with technical information. The training
program should also educate regulators on how the motivation to innovate and to prevent
pollution work in industry. It should describe the roles of government and other
technology diffusion groups, with the goal of helping permit writers network to extend the
use of environmentally beneficial technical information.

c . STRENGTHEN ORD'S ROLE AS IDENTIFIER AND CONVEYER
OF TECHNICAL INFORMATION TO PERMIT WRITERS: ORD's
roles in research and diffusion are discussed in detail in Recommendation 5. In general,
ORD should undertake a more systematic approach in its diffusion role to help permit
writers obtain performance data about the applicability of innovative and pollution
prevention technologies and techniques. ORD should also assist permit writers frame
permit conditions for unfamiliar technologies and techniques.
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d. ESTABLISH PERFORMANCE EVALUATION STANDARDS AND
REWARD SYSTEMS THAT PROMOTE GREATER SUPPORT AND
CONSIDERATION FROM PERMIT WRITERS FOR INNOVATIVE
POLLUTION PREVENTION AND POLLUTION CONTROL
TECHNOLOGIES: EPA should highlight the diffusion role by including in
performance standards and credits ("bean counting") the need and success of permit
writers' work to achieve the goals set forth in the diffusion policy statement. The TIE
Committee recognizes that extra time and risk are involved in processing permit
applications for innovative alternatives. Extra risk is associated with supporting
approaches that involve uncertainties, such as those associated with changes in standard
technologies and in performance projections for innovative solutions. Financial incentives
should be a part of this improvement, as well as recognition and merit awards. For
example, DOE labs have recognition programs including awards banquets, and a DOE
employee received "Lifetime Technology Transfer Achievement Award" at the NASA 2001
Exposition this past December. EPA might consider programs such as this one.

e. IMPROVE DATA AND TECHNICAL INFORMATION SOURCES
TO AID PERMIT WRITERS IN THEIR JOB OF REVIEWING
PERMIT APPLICATIONS INVOLVING INNOVATIVE AND
POLLUTION PREVENTING TECHNOLOGIES AND
TECHNIQUES, PERHAPS THROUGH AN EXPANSION OF THE
"ATTIC" DATA BASE, WHICH NOW CONTAINS INFORMATION
ABOUT INNOVATIVE REMEDIATION TECHNOLOGIES: As
discussed elsewhere in this report, EPA should collect credible information from the widest
possible range of sources and assemble the data and information in on-line databases for
PC/Mac users. Information should be collected and assembled in information retrieval
systems that are easily accessible to all permit writers. Information should include:
•- Media affected by the technology.
•- Emission/effluent/hazardous waste reductions achieved by the
technology.
•- Process descriptions.
•- Location and results of tests, demonstrations, and early commercial
uses.
•- Level of cleanup (remedial technologies) achieved.
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     •-  Contact owner or licensee, and ORD technical experts.
     •-  Existence of patents covering the technology and the availability of
        licenses.
     •-  Key words; similar technologies; terms of art.
     •-  Known limitations.
     •-  Potential site incompatibilities.

     f - FACILITATE THE MOVEMENT OF PEOPLE WITH ROTATIONAL
        OPPORTUNITIES BETWEEN EPA, OTHER FEDERAL
        AGENCIES, STATE AND LOCAL AGENCIES, AND THE
        PRIVATE SECTOR: Environmental managers should understand the factors
that influence the decisions of all stakeholders involved in solving an environmental
problem. Rotational assignments are the best way for professionals involved in the
diffusion effort to gain insight into the value structures and thought processes of others.
They also increase the technical knowledge of EPA's scientific and engineering staffs.

     EPA regulatory, permitting, compliance, research, and diffusion personnel need
exposure to a variety of environments so they can better understand the perspectives,
needs, and requirements of other organizations. Rotations need to include assignments:
        Between and within the regulatory, research, and diffusion programs
        within the agency.
     •-  Between the agency and other federal, state, and local government
        agencies.
     •-  Between public and private organizations.

The creation of several endowed chairs to attract senior scientists who are leaders in their
fields is a step in the right direction.

     g .  EXPAND THE RESIDENT RESEARCH ASSOCIATESHIP
        PROGRAM: One program already facilitates the movement of scientific and
technical people to EPA. Incentives should be added that increase the attractiveness EPA's
Resident Research Associateship Program to senior-level scientists from private industry,
academia, and other federal agencies. These reforms include: streamlining the paperwork
process, increasing compensation, and assisting in the visiting scientist's relocation, as
needed.
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1.4 Improve the current partnership between the agency and
users and providers of diffusion services.
Commentary

The TIE Committee found that the requirement for technology diffusion exceeds
EPA's limited resources. Moreover, a solely EPA-based diffusion effort would not be
efficient, even if the necessary resources were available; in some situations, such as
diffusing proprietary information, an EPA-based diffusion effort would be inappropriate.
The TIE Committee has concluded, therefore, that EPA must emphasize working with
others to leverage its diffusion resources and to improve the efficiency of the entire
diffusion system. Four categories of diffusion partners were identified:
•- Those who understand user needs (e.g., state and local regulators,
engineering firms, consultants, users, trade associations).
•- Developers of information about environmentally beneficial
technologies (e.g., consortia, universities, research programs of other
federal agencies, equipment and service providers).
•- Providers of diffusion services (e.g., engineering firms, trade
associations, information clearinghouses, state and local regulators,
other federal agencies).
•- Users or consumers of diffusion services (e.g., regulated
organizations, state and local regulators, engineering firms and
consultants, equipment and service providers).
Leveraging agency resources through the efforts of outsiders has additional benefits.
Outsiders have different perspectives from which EPA could benefit. They have different
relationships that also work towards environmental improvement (e.g., with consulting
engineers, who advise regulated organizations on the best solutions to their environmental
problems). Outsiders have information that EPA does not possess, but which would
benefit the environment protection effort if shared more widely (e.g., through trade
associations). Their motivations (e.g., the profit motive) differ from EPA's and are
complementary to EPA's technology diffusion goals. Some outsiders operate in a less
constrained environment than government regulatory agencies (which cannot endorse a
technology without regulatory and legal implications) and can act more quickly.
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Finally, there is the issue of credibility; people need information that is credible.
Government, particularly EPA, is widely seen as a credible source of technology
performance data. The problem is that while government is usually seen as credible, it may
also be distrusted due to its regulatory role. If EPA's diffusion programs are to be
successful, the actual diffusion of information should sometimes be carried out by EPA's
diffusion partners. Thus, mutually supportive diffusion efforts can be used to overcome
the distrust of EPA's regulatory position.

a CREATE NEW AND STRENGTHEN EXISTING PARTNERSHIP
RELATIONSHIPS: Efforts should be made to use and optimize new and
existing mechanisms for the diffusion of information. ORD and the Office of Air and
Radiation (OAR) provide technical support and guidance on air pollution control
technology through the jointly supported Control Technology Center (CTC). It describes
air emission factors and air pollution control technology for all air pollutants, including air
toxics emitted by stationary sources. The Technology Innovation Office in the Office of
Solid Waste and Emergency Response (OSWER) has a successful program that has greatly
expanded EPA's relationship with key diffusion partners in the remediation technology
field, e.g., the consulting engineering community. Consulting engineers advise
responsible parties about their technology choices in site remediations.

The Technology Innovation Office (TIO) makes information available in various
forms, including software, reports, newsletters, and seminars. These sources inform the
public and users of remediation technologies about available innovative treatment
technology products and services. TIO also provides a developers' guide to support
services, which describes regulatory requirements, assistance programs (financial and
technical), technology incubators, test and evaluation facilities, and technical expertise in
basic and applied research. In addition, TIO has user friendly software that describes the
availability and performance of a variety of innovative technologies. Another major 110
publication is the Citizen's Guide on Innovative Technologies.

Some of TIO's other efforts to reduce impediments to the use of innovative
technologies include:
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Institutional Methods:

•-  Award of a cooperative research agreement to the American Academy
    of Environmental Engineers to develop monographs containing
    operating parameters for eight innovative and established technologies.

•-  Organization of a users group of Fortune 500 companies to collaborate
    with the Air Force, Army, and EPA to evaluate innovative technologies
    at federal facilities that are applicable to corporate cleanup problems
    (see subrecommendations 5.1 and 5.2 "h").

•-  Development of a quick reference fact sheet on the regional experience
    with the procurement of innovative technologies at Superfund sites.
Regulatory Methods (see subrecommendation 1.5):

•-  Delegation of the authority to issue site specific treatability variances for
    contaminated soils to the regions.

•-  Authorization to additional states for the treatability exclusion rule,
    RD&D permit authority, and Subpart X permit authority to allow more
    flexibility for testing and demonstrating innovative treatment
    technology.
Training (see subrecommendation 1.3 "b"):

•-  Development of a series of satellite video conferences (the first on
    bioremediation).

•-  Development of teaching modules (one semester) on innovative
    technologies for use by graduate environmental engineering
    departments.

•-  Provision of two training sessions for states that are taking the lead in
    innovative technology development.
Development Activities:

•-  Development often "citizen fact sheets" to educate the public about
    innovative technologies.

•-  Development of a vendor information system for innovative treatment
    technologies (VISITT) that makes information available on hotline and
    user friendly software.

•-  Miscellaneous newsletters, publications and workshops.
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EPA will need to work with the diffusion partners to receive information on the needs
of regulated organizations for environmentally beneficial technologies. This work will help
guide the cooperative development of diffusion systems and programs. The input of state
and local governments, trade and professional associations, consortia, and other
organizations should be brought into the agency's diffusion planning processes as early as
possible.

State and local governments, for example, have networks in place for the diffusion of
information to local regulated organizations. These networks have been developed through
direct regulatory contact with local polluters. State and local agencies can be particularly
knowledgeable about local air and water pollution problems. They can help regulated
organizations by aiding in the diffusion of information about available technology
performance data and information management systems. These agencies may be strongly
motivated to help regulated organizations comply or become more efficient producers while
complying, because of their interest in the local economy. EPA could strengthen the
diffusion capability of local and state agencies by enhancing its efforts to provide
information to STAPPA/ALAPCO's (State and Territorial Air Pollution Program
Administrators/ Association of Local Air Pollution Control Officials) and others' networks.
State economic development administrations are also very important potential sources of
information that are independent of environmental regulatory organizations.

Similarly, trade and professional associations enable the agency to make quick and
efficient contact with those whom it wishes to impact through workshops, seminars,
conferences, publications, and personnel exchange programs. Consortia and institutes,
e.g., the National Environmental Technology Application Corporation (NETAC), the New
Jersey Institute of Technology, and the National Center for Manufacturing Sciences, also
can provide strong connections between EPA and technology users and producers.

b . LEARN FROM OTHER AGENCIES' DIFFUSION PROGRAMS:
EPA should use other agencies' technology diffusion efforts as potential models for its
own. Several agencies, such as the Departments of Defense (DOD), Energy (DOE),
Agriculture (DOA), the Food and Drug Administration (FDA), and NASA, have
cooperative research and development programs with the private sector and non-profit
organizations. They have also established long-term, successful diffusion relationships
with the private sector. EPA could valuably "benchmark" with other agencies' technology
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diffusion programs to gain from their experiences. This type of learning can also come
through other types of formal and informal relationships with other agencies.

    c  BROADEN THE SOURCES OF INFORMATION  CONTAINED  IN
       EPA DIFFUSION PROGRAMS: The TIE Committee has found that EPA is
not taking full advantage of external sources of credible performance data about
environmentally beneficial technologies in its diffusion programs. There is a considerable
amount of performance data that can be evaluated, and if it is found to be credible, gathered
and input into EPA's information management systems. Increased EPA efforts,
particularly by ORD, to standardize the protocols and procedures for developing,
collecting, and analyzing data to make it more acceptable to EPA and more useful would be
beneficial (see Recommendation 5). The TIE Committee commends EPA for establishing a
Federal Facilities Testing and Demonstration Program with the Departments of Energy and
Defense (in response to an earlier TIE Committee recommendation). This program should
expand the availability of credible performance data about environmentally beneficial
technologies.
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1.5 Change the regulatory system to allow the diffusion
system to operate more effectively.
Commentary

The TIE Committee found that the regulation-based environmental technology demand
system, with its current uncertainty and unpredictability, poses major barriers to technology
innovation and diffusion. Regulators, technology developers and users, investors, and the
public will perform their roles better when the regulatory system gives clear, predictable
signals regarding objectives, processes, timing, risks, rewards, and uncertainties, and
when it creates incentives to develop and apply innovative solutions. As discussed in the
TIE Committee's report and recommendations on permitting and compliance policy,
regulations and their strong, predictable enforcement "trigger and define the environmental
marketplace. The federal signals dominate in the minds of regulated communities and
technology developers. ..." (Permitting and Compliance Policy: Barriers To U.S.
Environmental Technology Innovation, page 27).

Uncertainty and unpredictability can be reduced, and greater flexibility introduced, in
regulations and in permitting and compliance systems without compromising enforceability
and assured compliance. The incorporation of these concepts in the environmental
management system will encourage technology risk taking and experimentation, providing
a constant incentive to innovate and to apply innovative technologies and techniques in the
choice of environmental solutions. Both investment in the development of innovative and
pollution preventing solutions and the widespread diffusion of environmentally beneficial
technologies will thereby be encouraged.

The TIE Committee believes that the following very important steps should be taken in
rulemaking, permitting policy, compliance systems, and support for regulatory personnel
and non-regulatory partners. These steps suggest how EPA can encourage risk taking and
experimentation, and make optimal use of diffusion among the tools available in the
environmental management system.
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a. INTEGRATE TECHNOLOGY DIFFUSION CONCERNS INTO
RULEMAKING: Regulations can encourage the diffusion of innovative and
pollution preventing technologies and techniques if they are cast in terms that specify
performance, rather than technology. These performance standards need to include floors
that prescribe regulatory minimums for all polluters, and offer incentives to those who
successfully develop and/or apply approaches that exceed requirements (see
Recommendation 3). In the long run, multi-media approaches to rulemaking should be
developed.

Market-based approaches, such as the emission trading policies, being pioneered by
EPA, South Coast Air Quality Management District, and others, may prove to be
successful in encouraging regulated organizations to exceed minimum standards and in
increasing the market for innovative and pollution preventing technologies and techniques.
Full cost pricing of environmental services is another market based approach that is aimed
at the consumer. In general, by creating win-win situations, market-based approaches are
thought to provide encouragement for efficient environmental solutions, innovation, and
cooptimization of environmental and productivity results.

Regulations can encourage the diffusion of advanced environmental practices when
they are both predictable and flexible. The regulatory process can become more predictable
by giving an earlier and clearer goal-setting signal, by making known earlier in the
rulewriting process when regulations will become effective, and by having a known
schedule for regulatory revisions. The technique of negotiating regulations has increased
predictability in some cases. EPA's recent regulatory innovation — "regulatory clusters,"
under which the consideration of all pending regulatory actions related to a single industrial
category are linked - will increase predictability by focusing attention on the most
important environmental problems.

b . DESIGN DIFFUSION CONCERNS INTO PERMITTING
PROGRAMS: The TIE Committee has concluded that current permitting
policies are strongly at odds with the initiative and risk taking that are necessary for
innovation and pollution prevention. This conclusion pertains both to the permitting of
tests and evaluations of these technologies, and to the permitting of proposed use of these
technologies for compliance purposes. The TIE Committee report, Permitting and
Compliance Policy: Barriers to U.S. Environmental Technology Innovation, enumerates
and discusses in detail the suggested specific improvements. The TIE Committee reiterates
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these recommendations, noting that EPA has made some progress in their implementation.
The inflexibility of present federal, state, and local permitting practices also restricts the
diffusion of innovative and pollution preventing solutions to environmental problems.

The flexibility to evaluate the capability of promising technologies under safe testing
conditions is not adequately provided under current permit and associated administrative
processes related to testing and demonstration. The Committee heard several examples
where the time and the cost of testing became exaggerated by permit procedures, while the
range of conditions tested was limited. One company told the Committee that it maintains a
money-losing international operation primarily because of the lack of a reasonable,
predictable testing process in the U.S. The inability to test sufficiently to define the useful
range of performance limits knowledge about innovative approaches to environmental
improvement, and in so doing, restricts the data available for diffusion programs.

The Committee recommends that permitting programs be modified to create specialized
permit processes for the testing and demonstration of innovative environmentally beneficial
technologies. Permitting processes for tests and demonstrations of innovative technologies
should be instituted, expanded, and streamlined, and designed to encourage technology
innovation under each of the major "media" statutes. At a minimum, existing statutory
provisions should be fully employed to increase opportunities for and flexibility in
permitted tests. The Committee recommends coordination of these specialized permitting
programs across the environmental media. In addition, a new permitting process for tests
and demonstrations might be created under a single authority. These processes should be
designed to yield a predictable and timely process for regulatory oversight of testing, one
that protects human health and the environment and simultaneously affords flexibility
during testing.

The risk associated with early commercial uses for compliance purposes of an
innovative technology is greater than risks associated with using known technologies in
similar applications. Uncertainty about the capability of a newly-available innovative
environmentally beneficial technology is greatest when it is first proposed for use in
gaining compliance. At this time, permit writers and the public are unfamiliar with the
technology and have a higher level of concern about it than about a well-proven
technology. In some cases this concern may be well founded. In other cases it may not
be. The record shows that the lack of public confidence and trust stands as a major
impediment to the development and use of innovative technologies. This leads to
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difficulty, delays, and extra expense associated with reviews of applications for operating

permits. These problems are made worse by the need to satisfy, simultaneously and

without coordination mechanisms, the requirements of various levels of government in

potentially more than one of the environmental media.

These uncertainties combine to create a perception of excess risk that deters investors

and technology developers from innovating, which in turn inhibits the introduction of

innovative technologies into commercial use. The extra cost, time, and uncertainty

associated with application drafting, negotiation of permit terms, and pre-permit data

gathering for a proposed use of an innovative technology are so excessive as to discourage

innovation and the use of innovative technologies Consulting engineers and prospective

users of the innovative technologies thus tend not to recommend or use these technologies.

The TIE Committee recommended that permitting requirements must simultaneously

protect human health and the environment, and be sufficiently flexible to encourage
regulated facilities to cooptimize for environmental and productivity objectives. Several

"characteristics of permitting systems that encourage technology innovation for

environmental purposes" were identified by the TIE Committee:

•- Flexibility: Permitting processes should authorize the permit writer
to incorporate a greater degree of flexibility into each permit for testing
or use of an innovative technology. The developer of innovative
technology needs sufficient flexibility to define the performance
envelope of a new technology. Facility operators should have the
flexibility to focus on the result, rather than on the means used to
achieve it.

• Compliance: People need to be confident that compliance will be
required during testing, demonstration, and early commercial use of
innovative technologies. Compliance efforts must therefore be
consistent, predictable, and systematic. This is vital to allowing
markets to develop for technologies, as well as for assuring that testers
and users operate responsibly, knowing that enforcement programs
will assure compliance. The need to protect human health and the
environment during testing and early commercial use is considered
paramount by the TIE Committee.

•- Enforceability: Permit conditions must be enforceable. Introducing
flexibility into permit conditions in the interest of technology innovation
cannot be allowed to diminish the enforceability of their terms.

•- Predictability: The schedule for processing permit applications for
testing and early commercial uses of innovative environmental
technologies needs to be consistent and predictable. The lack of
predictability reinforces investors' perception of excess risk.
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•- Clarity: Clarity in permitting processes and in permit conditions are
important to the testing and early commercial use of innovative
technologies. Clarity is important to technology developers,
technology users, regulators, and the public.
• Confidentiality: To encourage early discussions with regulators and
other interested parties, assurance must be provided that secret
information about innovative technologies will be protected.
Confidentiality is particularly important when approaches that prevent
pollution are involved, because they may involve the key competitive
advantages that differentiate and sustain businesses.

The TIE Committee also recommends revitalized waiver authorities, greater flexibility
to innovate without triggering facility repermitting, a two-phase permitting process, multi-
media coordination and innovation in permitting programs, and top priority status for the
review of permit applications involving innovative and pollution prevention technologies
and techniques.

The TIE Committee recognizes that there is a pressing need to map the permitting
process because how it works in practice is unclear both to applicants and to EPA
employees who are part of the process. EPA should first develop detailed flow charts
describing the permitting process and then seek input from applicants and EPA staff
involved on streamlining measures. Appropriate measures should then be implemented.

c. DESIGN DIFFUSION CONCERNS INTO COMPLIANCE
PROGRAMS: The TIE Committee has called for the coordination of permitting
and compliance policies to encourage the diffusion of innovative environmentally beneficial
technologies.

c (1). THE NEED FOR FIRM AND PREDICTABLE
ENFORCEMENT: The Committee stresses that it is important that
industrial, commercial, and other facilities subject to environmental requirements expect
routine and rigorous enforcement of permit requirements. Otherwise, most will not
purchase and use pollution prevention or innovative technologies. Without the expectation
of the need to comply with environmental permit requirements, the market stability and
consistency necessary to promote the use of innovative environmental technologies and
pollution prevention solutions will be lacking. Consistent and predictable environmental
compliance systems provide an incentive for the development and diffusion of both
pollution control and pollution prevention technology because they assure that a market for

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such technologies will exist (and be of predictable size and character). As is the case under
EPA's current policies, penalties must be sufficient to remove any economic benefits that a
facility might gain from non-compliance.

Such an approach to enforcement and compliance is fully consistent with the flexibility
inherent in providing limited time delays in permit conditions, in the form of waivers for
genuine, good-faith efforts, to develop and implement innovative technology. But it is
important that the criteria for such waivers be clear and consistent, so that they cannot in
any way be used as vehicles for avoiding compliance by facilities which are not genuinely
attempting to implement an innovative approach and/or provide an overall, multi-media
environmental benefit.

c(2). STATE EXPERIMENTATION WITH PREDICTABLE
ENFORCEMENT: EPA can promote the necessary market consistency
both through firm and predictable enforcement actions, and through support for and
coordination with state and local enforcement efforts. One role which EPA is in an
especially strong position to play, and which the Committee believes would be of great
value, is to track innovative programs in state and local enforcement agencies. New
approaches are being tried to provide consistency and predictability, to test multi-media
inspection and permitting of entire facilities, and to stimulate information exchange between
programs in different parts of the country. A number of new experiments in enforcement
are currently underway in various states and localities, e.g., Minnesota, Massachusetts,
and the South Coast Air Quality Management District (in California). EPA should promote
the sharing of information on the results of these efforts.

The Committee notes that, with most compliance activities taking place at the state and
local levels, it is imperative that EPA, State and local agencies coordinate their enforcement
strategies to encourage experimentation, innovation, and wide use of improved solutions.

c(3). FLEXIBILITY IN MEETING ENVIRONMENTAL
COMPLIANCE REQUIREMENTS IS ESSENTIAL: The agency
must provide the freedom necessary to make the initial commercial applications of
promising innovative pollution control or pollution prevention technologies. The TIE
Committee believes strongly, however, that flexibility only works in a context of strong
enforcement and meaningful penalties, so that there is no reward for making perfunctory
efforts to comply.
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    Within a strong enforcement context, the Committee believes that flexibility is essential
when innovative and pollution prevention technologies and techniques are involved.
Approaches which may provide long-term environmental benefits often cannot meet short-
term compliance deadlines. In addition, multi-media benefits which might result from
innovative environmentally beneficial technology are not addressed by EPA's and states'
media-specific programs. Further, the potential for a risk management strategy that is
multi-media in scope can only be possible if greater flexibility is instituted in operating
guidance and, potentially, statutory language. Flexibility in compliance situations is
necessary when innovative and pollution prevention technologies and techniques are
involved because they are inherently less certain than conventional technologies. A multi-
media approach to compliance would include the development of multi-media inspection
teams.

    The TIE Committee has recommended that in order to deal with these factors, it is
important to have effective programs for environmental waivers and variances (as
discussed in subrecommendation 1.5 "b"). These programs should contain provisions for
soft landings and for the creative use  of compliance penalties, to the extent consistent with
legal and regulatory requirements protecting human health and the environment, and for
good-faith efforts which fall minimally short of compliance requirements. Flexibility has
theoretically been introduced into EPA's enforcement programs in the "Interim Policy on
Pollution Prevention and Recycling in Settlement Agreements" and the "Policy on
Supplemental Environmental Projects."

    These new policies allow the partial abatement of penalties and fines in exchange for
the development of pollution prevention plans, along with the implementation of these
plans and/or of innovative solutions at violators' facilities. In particular, where the  agency
and/or a state deems that an attempt to implement an innovative technology has met clearly
delineated criteria for a good-faith effort, the punitive portion of penalties might be reduced
for some predetermined period. During this period, the facility would be required to come
into compliance  by improving the performance of innovative technologies, or through the
use of more traditional technologies.  To the extent that these policies are highlighted in
operating  policies, training, and data  base support, they are potentially important tools for
encouraging flexibility through compliance policy.

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    The Committee commends the EPA Office of Enforcement for its National
Enforcement Training Institute (which is diffusing information on pollution prevention),
multi-media inspection encouragement to states, training for compliance officers, and
penalty assessment reduction programs to encourage pollution prevention, which maintain
a floor to insure that economic benefit from non-compliance is fully recovered.

    It is important that support of various types be provided to compliance personnel in
federal, state, and local agencies. Subrecommendation 1.3 discusses a system of support
that is recommended by the TIE Committee.

    d. IMPROVE THE  SYSTEM OF SUPPORT FOR  REGULATORY
       PERSONNEL TO ENCOURAGE DIFFUSION: The TIE Committee
recognizes that EPA personnel are the most important component of the agency's
regulatory programs. In order to encourage diffusion, the agency must provide additional
support for staff, which should include: job hierarchy, training, performance evaluation
standards and reward systems, data and technical information sources, expansion of the
Resident Research Associate Program, and rotational opportunities (within and outside the
agency). These recommended actions are covered in detail under Subrecommendation 1.3.
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Recommendation 2:

Build a stronger partnership with technology diffusion providers
and users.

2. 1 Work with the full range of partners to actively promote
the widespread diffusion of environmentally beneficial
technologies.

2.2 Collect and generate credible information about
environmentally beneficial technologies.

2.3 Strengthen and use the full range of technology diffusion
mechanisms, and help make them widely available to
other diffusers.

2.4 Define, collect, and analyze environmental business data
to understand diffusion partners and information users.

2.5 Collect international environmental business and
technical data to help U.S. firms compete domestically
and abroad.

2.6. Support university curriculum development to increase
literacy in environmentally beneficial technology.
Commentary

Recommendation 1.4 calls on EPA to strengthen its partner relationship with diffusion

users and providers. The "Commentary" section of Recommendation 1.4 describes the

critical need to strengthen relationships among the diffusion partners. Recommendation 2
describes how EPA can act to address this need.

EPA's historic role as regulator in a command and control based regulatory system has

led to an adversarial, arms-length relationship between the agency, regulated organizations,
and providers of environmental products and services. The historic nature of this

relationship, and the resulting barriers between the players, makes it difficult for federal,

state, and local regulators and regulated organizations to work together, even when it is in

their mutual interest. These barriers must be reduced and the possibility enlarged for

cooperation if the agency and regulated organizations are to work most effectively and

efficiently for environmental improvement.
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Diffusion programs play a key role in building this cooperation in that they expand the
availability of information helpful to regulated organizations and regulators. Expanded
information about environmentally beneficial technologies is essential to an expanded range
of choices of solutions for regulated organizations and, therefore, to a more efficient market
for environmental solutions. Regulated organizations should be apprised of environmental
concerns, and regulatory requirements and procedures. Regulatory personnel should
become aware of industrial concerns. Above all, the two groups need to communicate
effectively. This will ultimately advance regulators' primary objective of protecting human
health and the environment.

Regulators must build a partnership with those who can help them understand the
environmental information needs of regulated organizations, those who develop
environmentally beneficial technologies, those who develop credible information, and
provider industries. EPA should become an active partner in the diffusion of
environmentally beneficial technology to ensure the maximum use of improved these
technologies within the shortest time frame. A stronger partnership relationship will help
reduce the currently existing barriers to the diffusion of environmentally beneficial
technologies and increase the availability of such information to those who need it.
Clearly, EPA will not be the direct source of all such information, but it should work with
the diffusion partners to their mutual advantage. EPA's environmental goals can be
furthered by the increased availability of information about a wide range of choices of
environmental solutions. The diffusion system is key to increasing choice.

One commendable example of agency-industry partnership building is the Green
Lights program. In this program, EPA facilitates cooperation between users and providers
of efficient lighting technologies. The diffusion efforts in EPA's Green Lights program
also directly and indirectly help make potential users aware of cost-effective opportunities
for lighting improvements. EPA's support for the project gives lighting technology
providers extra legitimacy in dealing with potential users. There are now over 200
participants in each of the Green Lights user program and supplier programs.

There are not enough training programs available at the university level that teach
tomorrow's managers and technologists how to effectively employ environmentally
beneficial technologies. These programs would reach a wide range of individuals and
affect the way environmentally beneficial technologies are used in the future. EPA should
support these programs, like the one at the University of Michigan.
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    2.1   Work with the full range of partners to actively promote
           the widespread diffusion of environmentally beneficial
           technologies.
Commentary

     The TIE Committee found that the need for technology diffusion is simply too large
for EPA's limited resources, even if they were redeployed to maximize results. EPA
cannot understand all diffusion user needs, nor develop all credible diffusion information,
nor provide comprehensive diffusion services to all consumers. EPA cannot rely on its
own resources to generate the data to be diffused because its resource base is so small.
Moreover, an EPA-dominated diffusion effort would be inefficient even if the resources
could be made available because other technology diffusers have unique capabilities that
enable them to perform some diffusion roles more effectively than EPA.

     In this subrecommendation, the TIE Committee suggests with whom EPA  should
forge a diffusion partnership, and how cooperative efforts can make the system work most
efficiently and effectively.  Notwithstanding the need for excellence in the agency's own
diffusion activities, the Committee believes that it is essential for EPA to emphasize
working with others to gain leverage (see subrecommendation 1.4 for list).

     Thus, EPA should build and utilize a strong partnership for the widespread
dissemination of environmentally  beneficial technology. The TIE Committee believes that
if it does, the technology options available to regulated organizations will increase,
environmental efficiency gains will be obtained, and the marketplace for environmental
products and services will work better.

     a.-LEVERAGE  EPA'S LIMITED DIFFUSION  RESOURCES BY
        ACTIVELY SEEKING OUT DIFFUSION PARTNERS AND
        PROMOTING DIFFUSION ACTIVITIES: EPA must seek out  as wide a
range of diffusion partners as possible. It must work with the diffusion partners to define
the various routes by which valuable information gets to those who make environmental
decisions and those who influence those decisions. EPA and its diffusion partners must
also  consider the various motivations of each information receiver to tailor the information
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to their individual needs. The pathways for the transfer of information must be considered,
and feedback loops installed, so that EPA and its diffusion partners will know if the
information is being received and utilized.

It is critical for EPA to recognize at the outset that it will rarely be the logical choice as
the lead technology diffuser (for reasons previously explained in subrecommendation 1.4).
The actual diffusion, when done by others, can still be greatly assisted by EPA, making
EPA a key player in the diffusion process.

The TIE Committee commends the EPA's Office of Air and Radiation for sponsoring
the "Clean Air Marketplace Conference." The conference was an open forum for a wide
range of environmental stakeholders to learn about environmental issues, including newly
available environmental and environmentally beneficial technologies.

b . WORK WITH STATE AND LOCAL GOVERNMENTS AS
CHANNELS TO DIFFUSE TECHNOLOGICAL INFORMATION:
State and local governments have identified diffusion support as a primary component for
an improved relationship with and support from EPA. State and local agencies are in an
excellent position to be main sources of information for a wide variety of technology users
because they are the principal regulatory contact for most regulated organizations. The
close relationship of these agencies with local regulated organizations and others interested
in environmentally beneficial technology information has been described above. EPA
should strengthen its working relationship with the technology diffusion parts of state and
local agencies, and should seek to help them diffuse credible environmental information
and information services.

c - WORK WITH OTHER MAJOR POTENTIAL AND CURRENT
PROVIDERS TO DIFFUSE ENVIRONMENTAL INFORMATION:
To be effective, EPA needs to work with other technology diffusers, such as engineering
firms, other federal agencies, state and local governments, public-private technology
consortia, trade and professional associations and academia. EPA should actively seek out
diffusion partners through a variety of channels to ensure the widest range of available
potential partnerships. The search for diffusion partners would be led by the EPA's
diffusion leader, as explained in subrecommendation 1.1.
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    EPA must examine the role of each technology diffuser and tailor EPA's support of
individual users to simultaneously advance the agency's diffusion (and environmental)
goals with those of the diffuser. In a few cases, EPA will be the lead diffuser, but more
often it will find itself supporting the activities of its diffusion partner. This support can
take many forms, including technical assistance, publication, technical review, promotion,
contacts, access to data, and money among the many support tools available.
Relationships with many diffusion partners will be new and unique to EPA and may
require extreme patience and understanding before EPA's diffusion agenda can be
advanced with those partners.
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2.2 Collect and generate credible information about
environmentally beneficial technologies.
Commentary

Technology users have a variety of biases against using a new technology. In the
environmental arena, these biases are difficult to discern from real problems or willful non-
compliance. These biases can include: concern about costs, lack of understanding about
processes, lacking information about the existence of technology options, cultural attitude
against change, and bias against the technology supplier (e.g., "I won't use any technology
that was developed in Japan!"). A relatively easy way to overcome resistances expressed
by technology users is through the dissemination of credible information.

Credible information about environmentally beneficial technologies can overcome
many of the biases expressed by technology users when they consider a new technology
for installation. The desired data includes detailed analysis of the cost of performance,
process and engineering details, case studies showing how prior users obtained significant
benefits from the new technology, and announcements about newly available technologies.
By overcoming these biases, diffusion can allow new technologies to gain acceptance.
EPA can also supply testing protocols, arrange physical inspections, provide technical
reviews, and conduct user polling and case study research to ensure that the information
about a new technology will be credible.

The TIE Committee recommends that EPA undertake two critical activities to build a
strong diffusion program: (1) understand the pollution problems and environmental
technology needs of regulated organizations, and (2) collect credible information about
needed technologies and disseminate it through appropriate diffusion mechanisms. The
Committee found that EPA is not taking advantage of the full range of sources of
understanding about problems and needs in its diffusion programs. Indeed, the agency
should do more to increase the credibility of information developed by potential partners
(see subrecommendation 5.3). This subrecommendation, 2.2, discusses how EPA can be
most successful in collecting and generating credible information, and emphasizes that
EPA's most important role is in collecting information, rather than in generating it.
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The TIE Committee's perspective about EPA's role in increasing the pool of credible
performance data about environmentally beneficial technologies is discussed in detail in
Recommendation 5. The Committee believes that the critical focus for EPA should be on
collecting credible information developed by others on working with others to expand
their generation of credible data. An outstanding example of how EPA accomplish this
exists in the new program, conducted cooperatively among EPA, DOD, DOE, and the
private sector, to test and evaluate innovative technologies and techniques at DOD and DOE
facilities (see subrecommendation 5.1 and 5.2 "h").

a . IDENTIFY AND WORK WITH THOSE WHO UNDERSTAND
INFORMATION USERS' NEEDS: There are a wide variety of groups that
have particularly good "windows" on the technology information needs of regulated
organizations and others. It is extremely important for EPA to identify each of these
groups and understand its special perspective, form a systematic working relationship with
each, and apply the insight gained to the design and information contents of diffusion
mechanisms. This information can also be valuable in the ORD research planning process.
For illustrative purposes, the sections below discuss some of the groups with special
"windows."

a( 1). WORK WITH STATE AND LOCAL GOVERNMENTS TO
IDENTIFY INFORMATION USERS' NEEDS: State and local
governments are particularly aware of the diffusion needs of regulated organizations and
others. This awareness is derived from their direct role in helping solve local pollution
problems, their understanding of stakeholder perspectives and information needs, their
understanding of permit and compliance status and schedules, and their appreciation of
local economic conditions and trends.

a(2). WORK WITH CONSULTING ENGINEERS TO IDENTIFY
INFORMATION USERS' NEEDS: Consulting engineers have a unique
position in the diffusion system that can be particularly useful to EPA. Consulting
engineers are often called in by regulated organizations as a "third party" to assist in the
application of technical solutions to pollution problems. They have great insight into the
environmental problems of regulated organizations, and can supplement this insight with
their special knowledge about a regulated firm's proprietary manufacturing processes and
competitiveness considerations. Consulting engineers often are the outside technical
experts supporting in-house design, production, and/or environmental engineering staffs.
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As noted in the commentary to Recommendation 1, consulting engineers play a particularly
important role in reaching environmentally beneficial technology followers.

EPA should work closely with consulting engineers to identify information user's
needs. Their special insight into the technology concerns of regulated organizations make
them extremely valuable diffusion partners. The TIE Committee commends the
development of a diffusion strategy by EPA's Technology Innovation Office (TIO) that is
founded in large part on forming a working relationship with consulting engineers to help
them give better advice to their clients. This relationship is a two-way street, with the
insights of the consulting engineering community being brought to bear on the diffusion
systems EPA is establishing to support faster, lower cost, more effective cleanups. Other
areas of EPA could benefit from similar diffusion programs.

a(3) WORK WITH OTHERS TO IDENTIFY INFORMATION USERS
NEEDS: A broad range of other organizations possess insight about the
information needs of technology users. These groups include: trade associations, research
consortia, state technical assistance programs, other federal agencies, and universities.
Research consortia, such as the National Center For Manufacturing Sciences, and the
Center for In-Process Analytical Chemistry (CPAC), can be useful for reaching a large
number of firms simultaneously.

The TIE Committee commends EPA's diffusion work with the National
Environmental Technology Applications Center (NETAC), and believes that this program
may be a useful model for future EPA diffusion partnerships. Through a 4-year
cooperative agreement that emphasizes a partnership arrangement, EPA/ORD, through its
Office of Environmental Engineering and Technology Demonstration (OEETD), and the
University of Pittsburgh Trust, created NETAC in 1988 to assist in the commercialization
of environmental technologies. Since then, NETAC has worked closely with industry,
government, and academia to help guide environmental technologies to the marketplace.
Two factors that make NETAC attractive to industry are its ability to engage in
confidentiality agreements and its ability to help companies overcome the regulatory and
other hurdles of the commercialization process. NETAC offers industry services in the
following areas: technical and commercial assessments; technology development
assistance; permitting and regulatory assistance; and patent, royalty, and licensing
agreements. It is most helpful to small to medium sized businesses that do not have this
capability in-house.
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    b .  WORK WITH OTHERS WHO GENERATE AND COLLECT
        CREDIBLE INFORMATION ABOUT ENVIRONMENTALLY
        BENEFICIAL TECHNOLOGIES: Since EPA's environmental technology
research resources constitute only a small fraction of the nation's total investment, the
agency cannot become a self-sufficient generator of information. Therefore, EPAs
principal roles are to help others: (1) improve the quality of data they generate (see
subrecommendation 5.3) and (2) collect information on environmentally beneficial
technologies. Just as EPA must work to identify users' information needs, it must form
partnerships with others who generate and collect the needed information. This will give
the agency the technological information it needs to aid the diffusion process. The
diffusion partners discussed in subrecommendation 2.1 "c" are all potential sources of
information for the diffusion system.
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2.3 Strengthen and use the full range of technology diffusion
mechanisms, and help make them widely available to
other diffusers.
Commentary

As discussed above, a major role for EPA is to improve the quality of data included in

diffusion mechanisms (and the quality of the vehicles for diffusion themselves), help make
credible technology information available on a timely basis, and promote the use of the full

range of available technology diffusion mechanisms, including its own and those of other

diffusion partners. A wide variety of technology diffusion mechanisms is available today,

including:

•- Automated and non-automated technical information systems of various
kinds (e.g., design manuals, expert systems, databases,
clearinghouses, interactive videos).

•- Technical assistance programs (from a variety of sources).

•- Training programs based in universities, government, industry, and
other places. These programs include seminars, forums, training
courses, society meetings, short courses, workshops).

•- Educational programs at the graduate and undergraduate level (covered
in2.3e).

•- Publications.

•- "Hot lines" (phone lines from which people can get quick answers and
assistance).

•- Trade fairs and conferences.

•- Peer to peer matching programs.

•- Rotational assignments.

•- Licensing programs.

•- Libraries.
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Subrecommendation 2.1 enumerates the diffusion partners and suggests how EPA
could work with them to strengthen and promote the widest possible use of the diffusion
mechanisms. This Subrecommendation (2.3) discusses what methods are available to
accomplish diffusion and outlines suggestions for EPA's relationship with them. All types
of credible environmental information should be addressed, including environmental
business data (see Subrecommendation 2.4) and international environmental business and
technical data (see Subrecommendation 2.5).

EPA should develop and maintain technology diffusion systems that contain the widest
possible variety of credible information about environmentally beneficial technologies, and
support others as they develop technology diffusion efforts. This support should include
helping others disseminate information through all available means. EPA's position of
credibility is a strength, but as noted in the Findings, EPA is so limited in the information it
collects and in its ability to improve the quality of data produced by others (see
Subrecommendation 5.3) that its efforts in this area are insufficient and not adequately
leveraged. It is similarly not possible for EPA to understand all users' needs for diffusion
services, nor can it provide all services.

a. EXPAND EPA'S CURRRENT DIFFUSION MECHANISMS: The
Committee believes that the agency's current diffusion programs should be reviewed and
revised. The value and impact of ORD's efforts can be increased. ORD's emphases now
are publications, information systems, and training-based diffusion programs. The agency
also has a number of hot lines. Libraries are available in regional offices. In addition, the
agency, and particularly ORD, coordinates and participates in trade fairs. Many of these
activities are high in quality. Some of them, however, reach only a small percentage of
their intended audiences.

b. NEW AND IMPROVED DIFFUSION MECHANISMS MUST BE
INCLUDED IN EPA'S PROGRAMS: To reach a larger audience and make
a greater impact, the Committee suggests that ORD become less insular and more of a
partner, expanding the impact of its programs through leveraging of the efforts of the many
other groups who have a diffusion interest and possess diffusion capabilities. ORD should
work with its partners to broaden its use of less-emphasized diffusion methods and
broaden the informational content of its diffusion data bases. For example, EPA has
undertaken a valuable effort, in conjunction with DOD and DOE as part of the Strategic
Environmental Research and Development Program (see Subrecommendation 5.3 "a") to
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expand the reach and impact of federal environmental technology research by coordinating
federal approaches to producing and transferring environmental technology related data.

     Similar efforts should be made to extend this type of coordination. The Committee has
suggested that more attention be paid to a variety of steps to enhance the expertise of EPA
personnel, such as rotational assignments, peer-to-peer matching programs, and
educational programs (see subrecommendation 1.3). These types of effort would improve
the ability of EPA personnel to communicate with their counterparts in industry and
elsewhere. As discussed in subrecommendations 5.1 and 5.2 "1", expansion of CRDA's
and licensing agreements would provide benefits. Also, as discussed in
subrecommendation 3.1, ORD diffusion programs need to particularly support the
agency's pollution prevention program.  In order to accomplish this, the PPIC
clearinghouse needs to be given a higher profile both inside and outside the agency.
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2.4 Define, collect, and analyze environmental business data
to understand diffusion partners and information users.
Commentary

There are two major types of environmental business data: (1) data documenting the
national expenditure for pollution abatement, capital investment, and operating costs, and
(2) data documenting the business that provides products and services used for
environmental purposes, from consultants to equipment supplies to clean-up services to
research laboratories. In short, these two types represent the two sides of environmental
transactions: the purchase and the sale.

Taken together, collecting and analyzing the two types of data would add a missing
piece necessary for EPA to clearly understand the impacts of current environmental
programs and policies on the nation's ability to meet environmental goals, to innovate and
adapt, and to remain competitive internationally. This understanding is critical to our ability
to predict the impact of future policies. It is also important to have an understanding of the
limits of the national economy to reduce pollution and the need for efficiencies in specific
sectors of the economy in meeting environmental objectives. It is, after all, the private
sector in the U.S. that provides most of the products and services that clean up
environmental problems.

EPA has little data characterizing the industries that provide these products and
services (e.g., data on the markets for environmental products and services in the U.S. and
internationally, data on the financial health of these industries, or data on research and
development investment for better technology). Without these data, EPA is restricted to
interpreting the national ability to abate pollution in terms of scientific (or technological),
statutory, or political limitations.
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a. ESTABLISH A BUREAU OF ENVIRONMENTAL STATISTICS: A
Bureau of Environmental Statistics should be created. The Bureau would serve to
coordinate planning, execution, analysis and diffusion of environmental data, including the
necessary collection, analysis, and dissemination of environmental business data described
below.

b . DETERMINE HOW ENVIRONMENTAL BUSINESS DATA CAN BE
USED EFFECTIVELY FOR POLICY PURPOSES, WHAT DATA
ARE NEEDED, AND IN WHAT FORM: EPA should organize an effort to
work with the potential information sources, analyzers, and users, as well as with its other
environmental partners, to determine how environmental business data can best be used by
government and industry to select policies that support a successful partnership. This
effort should include an evaluation of what kinds of data and analyses are required and how
the results will be used. Partners should include the Census Bureau, the National Science
Foundation, and other organizations to develop a concept for an ongoing system for
environmental data gathering, analysis, and dissemination. The effort should also address
a means for sharing data with industry and other interested parties.

Studies should be conducted both domestically and abroad to determine the major
users of environmental business data (e.g., federal, state and local government, users and
developers of technologies). Surveys and other data collection efforts should be conducted
to determine the needs of EPA and other users, to determine what data are available, and to
understand how to obtain data that are not available. The above research should be carried
out keeping in mind the confidentiality requirements of business.

At a minimum, data should be obtained on: markets, the financial health of the
environmental industry, who is doing what R&D, how much is being spent on R&D in
various sectors, and the purposes of the R&D. To accomplish this, a breakdown of data
among the categories of technologies, e.g., pollution prevention, pollution control,
remediation, is required. This information should be generated for the recent past and
present time and continue to develop trends. Data should be related to SIC codes to the
extent possible.

In an allied" effort, an analysis of the role that EPA's R&D funds have played in
stimulating and supporting private sector environmental spending should be conducted for
all categories of environmentally beneficial technology. An effort should be made to
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quantify expenditures (absolute and as a percentage of R&D) on diffusion by EPA and
others (e.g., federal agencies, private industry), and to measure of their impact on
technology application both domestically and abroad.

c . WORK WITH OTHERS TO COLLECT NEEDED DATA: EPA should
determine what required information has already been collected and how to access it. EPA
should also determine where additional required data are located or can be collected.
Moreover, the agency should create and implement a cost-effective plan to collect it, using
existing data-gathering sources to the extent possible (e.g., publications, survey
organizations). In doing this, EPA should take advantage of all existing sources of
information and data-gathering services, including the National Science Foundation and the
Bureau of the Census of the Department of Commerce. EPA should consider going
beyond these sources as needed to develop its own data gathering resources. This can be
done through contracting agencies or universities. On-going reviews and modifications of
the data collected, the data collection process, and data dissemination systems should be
made.

d . IMPLEMENT A PLAN TO ANALYZE AND APPLY THE DATA FOR
POLICY MAKING AND TO SUPPORT DIFFUSION PROGRAMS:
EPA should develop and implement a plan to analyze environmental business data and to
disseminate the data and the results of analyses. Data analysis should include reviews of
the business strategies of different firms to determine the relative technology posture of
each. Additional analysis tasks will be identified as a result of subrecommendation 2.4
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    2.5   Collect international environmental business and
           technical data to help U.S.  firms compete domestically
           and abroad.
Commentary


    American business has a strong interest in more active support from EPA and other

government agencies (e.g., the Departments of State and Commerce) in the international

environmental arena. Government's role has two elements:

        On the one hand, the export of U.S. environmental values and
        technologies can be a significant factor favoring both an improved
        world environment and an improved trade balance. Working with
        others in and out of government to help collect environmental business
        data about foreign markets is an important and underemphasized role.

        On the other hand, governmental efforts to collect and disseminate
        information about environmentally beneficial technologies that exist in
        foreign countries can be helpful to U.S. firms in a competitive world
        market.


EPA should expand its diffusion activities internationally. The TIE Committee's

recommendations in this area are discussed specifically in Recommendation 4.
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2.6. Support university curriculum development to increase
literacy in environmentally beneficial technology.
EPA should expand its work with universities under the Environmental Education Act
of 1990 to expand environmental technology literacy. This recommendation applies to at
least business, engineering, scientific, and political science curricula. Curriculum
development support should be aimed at expanding the perspective of future technologists
and managers so that they understand the cultural and technological implications of: (1) the
concepts of cooptimization of productivity and environment (in other words, that
productivity and environmental outcome are related), (2) multi-media (or comprehensive)
approaches to environmental management, (3) pollution prevention, and (4) alternative
ways to set environmental priorities.

The TIE Committee commends the University of Michigan and EPA for the new
pollution prevention course development program, and recommends that similar programs
be supported by EPA at other leading universities to develop courses at the undergraduate
and graduate levels. EPA should also support the efforts of business, science,
engineering, and political science schools to develop and teach courses on the management
of technology, including government-industry relations. These schools should also be
assisted in their efforts to design exercises that improve students' cooperative skills. In
addition, public policy departments should be aided in their efforts to educate students on
the policy aspects of technology as it relates to the environment and the economy. By
reaching students at the early stages of professional development, the agency can ensure a
long term awareness of the techniques and benefits of the roles and uses of technology in
environmental management by future technologists and managers.
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Recommendation 3:
Make diffusion and incentives the emphases of EPA's pollution
prevention programs.
3.1 Increase the use of data-based, non-regulatory drivers,
including diffusion programs, in EPA's pollution
prevention strategy.
3.2 Create pollution prevention incentives, including
multi-media approaches, for regulated and non-regulated
organizations.
3.3 Diffuse the pollution prevention ethic within EPA, and
establish a system of incentives and support for diffusion
efforts by EPA personnel.
3.4 Increase resources for EPA's pollution prevention
technology research and development.
Commentary

The TIE Committee has long felt that pollution prevention is the preferred approach to
environmental improvement. Preventing pollution is preferable to correcting it after it is
generated. Further, cooptimizing environmental and productivity objectives can lead to the
lowest overall costs of production and pollution reduction, and often lead to competitive
advantages.

The Committee is concerned that conventional regulation will become the
government's predominant approach to encouraging pollution prevention. It is important to
recognize that a continuing commitment for pollution prevention has unique drivers; these
are internally maintained and cultural in nature, and in some organizations are related to a
commitment to total quality management. Compliance-based environmental management
strategies by regulated organizations, on the other hand: (1) are usually motivated most by
the threat of penalties associated with non-compliance, (2) do not benefit from incentives to
exceed required performance (and are therefore usually merely compliance oriented), and
(3) usually do not involve technological risk taking (outside the application of the best
available technologies on which the regulatory requirements were based).
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Regulated parties that take a pollution prevention approach involve a different in-house

team than do organizations taking a compliance-oriented approach. This is because the

identification of prevention approaches requires the collaboration of process and product
design engineers with environmental staffs. Together, they design products and

production processes that waste less, are more efficient, and produce fewer toxic wastes

(and less of them). Waste treatment has a greatly reduced role in the pollution prevention

approach. Regulated parties that do not look first to pollution prevention focus on the

measurement and control of production wastes; they rely primarily on separate

environmental staffs.

The TIE Committee found that many regulated organizations and others believe that

additional fundamental problems exist that doom a regulation-first pollution prevention

strategy by government.

• First, this strategy is considered by many to contain regulations and
permitting and compliance policies that are too rigid. Experimentation,
innovation, and the use of innovative solutions are all perceived to be
bad risks, particularly as a result of inflexibility in permitting and
compliance policies and the lack of diffusion support.

• Second, many regulated organizations perceive a pattern that
government agencies, including EPA, require the application of best
practices used at any one site at many or all sites. Thus, regulatory
requirements are seen by many to be ratcheted, capturing every
advance, in an ad hoc manner that makes the regulatory process even
more unpredictable. This practice constitutes a major disincentive to
innovation and pollution prevention.

• Third, government staff is criticized by others as lacking technical
competence, both in general and especially with respect to production
processes and industrial decision making practices. In combination
with the second problem, this perception generates great fear in
regulated communities about the potential extension of regulatory
intervention beyond the end of the pipe into production processes and
product design.

It should be noted that the protection of confidential business information will become

an even more prominent issue as environmental agencies increase their involvement in

pollution prevention. This will be the case in both regulation-based and in diffusion and

incentive-based programs. The public disclosure of environmental information already

creates a window on businesses that can be used to gain competitive advantage. To the

extent that government agencies become more knowledgeable about confidential business

information, there will need to be greater care taken that it is not inadvertently revealed.
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    As discussed in subrecommendation 1.5, the Committee believes that regulations and
their strict, predictable enforcement trigger and define the environmental marketplace.
While the Committee believes that relying on regulatory approaches to encourage pollution
prevention can work against the internally motivated drivers involved in pollution
prevention, weak and/or inconsistent enforcement undermines the drivers of pollution
prevention in permitted organizations. Federal regulatory and enforcement signals are
critical in setting a baseline for the minimum environmental performance that helps level the
playing field in the minds of regulated communities and technology developers. To make
pollution prevention work, government will also need to make credible information as
widely available as possible to increase options and create incentives to go beyond
regulatory minimums.

    Uncertainty and unpredictability can be reduced, and greater flexibility introduced, in
regulations and in permitting and compliance systems without compromising their
enforceability and the assurance of compliance. The incorporation of these concepts in the
environmental management system will allow greater risk taking and experimentation,
providing a constant incentive to innovate and to apply innovative technologies and
techniques in the choice of environmental solutions. Both investment in the development
of innovative and pollution preventing solutions and the widespread diffusion of
environmentally beneficial technologies will thereby be encouraged. Support and
collaboration from EPA's research and development program on pollution prevention
technologies and techniques can also provide encouragement.

    Based on this analysis, the TIE Committee recommends that EPA's pollution
prevention programs have a diffusion and an incentive focus. As discussed above, though,
the establishment of regulatory minimums and their strict, predictable enforcement are
considered critical to create a level playing field of across-the-board improvement for all
regulated organizations. An internal system of incentives and support for this focus is
needed to ensure that the pollution prevention ethic is understood and practiced by
regulatory, permitting, and compliance personnel at the federal, state, and local levels. The
subrecommendations below describe how to use data-based, non-regulatory drivers,
including diffusion programs and incentive strategies, to foster pollution prevention.
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3.1 Increase the use of data-based, non-regulatory drivers,
including diffusion programs, in EPA's pollution
prevention strategy.
Commentary

Information-based, non-regulatory approaches to pollution prevention are important
when seen from the perspective of leaders, followers, and laggards. As discussed in
subrecommendation 1.5, leaders are usually the larger, more successful, and more
technologically sophisticated regulated organizations. They are also more self-sufficient
than other organizations. Followers, the middle ground organizations, are cost-conscious,
and are compliance oriented. They usually use technologies that are widespread and
commonly available, and use third parties for technology advice and procurement.
Laggards are usually the last to use innovative technologies and often comply under
duress. They are typically the small firms in an industry and usually lack in-house
technological capability. Followers and laggards generally outnumber leaders.

If EPA seeks to encourage pollution prevention successfully, data-based, non-
regulatory drivers are particularly important for the followers and the laggards. In each
case, a regulatory "push" is seen as needed by the Committee to create a market "pull."
But, because followers and laggards seek help from third parties that are credible
information sources, the ability of EPA to increase the availability of information through
its own and others' diffusion systems and to establish drivers that make people want to
improve environmental outcome is important.

This subrecommendation discusses how EPA can succeed with this approach. It
should be noted that the need to create support systems for rule writers, permit staffs, and
compliance personnel is discussed in subrecommendation 3.2; such support systems are
critical if environmental agency personnel are to consider their diffusion role to be
important on a daily basis. The role of the diffusion coordinator which is discussed in
subrecommendation 1.1, also has great value in promoting pollution prevention.
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a. STRENGTHEN THE USE OF DATA-BASED, NON-REGULATORY

DRIVERS TO FOSTER WIDESPREAD ADOPTION AND USE OF

POLLUTION PREVENTION CULTURE AND APPROACHES TO
ENVIRONMENTAL IMPROVEMENT: In the past few years, federal,

state, and local governments have initiated trials of data-based, non-regulatory drivers of

environmental improvement. These include the SARA Section 313 release reporting

requirements, facility planning requirements that are now in place in nearly half of the

states, the "33 - 50" program, the "Green Lights" program, and expanded training

programs and information clearinghouses. The Committee believes that most of these

either already have or will prove to have been valuable expansions of traditional

government interventions on behalf of the environment.

• Section 313 of SARA (the Superfund Amendments and
Reauthorization Act) requires regulated organizations who release
certain toxic substances to make an annual report giving an inventory of
the amount of each released. This toxic release inventory has proven to
be a significant driver of industrial change and pollution prevention-
based environmental improvement because it creates accountability
through internal data management and public reporting. Since SARA
Section 313, regulated organizations can no longer operate on the
theory that what cannot be measured can be ignored. Regulated
organizations now have a clear knowledge of their waste of certain raw
materials, and many are taking steps to prevent some or all of that
waste. Thus, SARA 313 encourages pollution prevention through
environmental accounting and reporting, rather than through regulation.

• Facility plans are now required in at least fifteen states. This
requirement obligates facilities to undertake a series of pollution
prevention evaluative steps as a condition of continued operation.
Some programs emphasize planning for toxics use reduction, rather
than just reductions in generation or release of hazardous wastes or
toxics. Whether planning is linked to more extensive pollution
prevention permitting requirements or enforcement actions depends on
the individual program, but even in those where there is no "hammer,"
these facility plans are an effective tool to focus facility designers and
operators on the toxicity and hazardousness of feedstocks, processes,
and waste. The exercise of writing a plan allows these managers to
identify opportunities to improve their productivity and environmental
performance.

• The 33-50 program encourages voluntary participation by
industry to reduce toxic releases and off-site transfers of seventeen
specific chemicals from all media. The program has targeted reductions
of 33 percent by 1992 and 50 percent by 1995. Begun as a national
effort, it is now augmented by several regional programs. The 33 - 50
program is "back stopped" by regulatory carrots and sticks and is
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therefore only partially non-regulatory in nature. However, it has
produced significant results: over 600 companies have agreed to
eliminate 290 million pounds of emissions.
Green Lights is a voluntary EPA program that encourages industry
and states to install high efficiency lighting. The agency also works
with suppliers under the Green Lights Ally Program to promote the
benefits of energy efficient lighting. There are over 200 participants in
each of these programs. In this program, EPA has successfully
encouraged significant capital investment in environmentally beneficial
lighting technology. If this program can help increase the market
penetration of high efficiency lighting significantly, environmental
contaminants associated with the production of electricity will be
proportionately reduced.
b . STRENGTHEN PROGRAMS TO DIFFUSE POLLUTION
PREVENTION R&D RESULTS, OPERATING EXPERIENCE, AND
ACCOUNTING METHODS TO REGULATED ORGANIZATIONS.
USE MECHANISMS SUCH AS THE POLLUTION PREVENTION
INFORMATION CLEARINGHOUSE (PPIC): For data-based, non-
regulatory drivers to successfully foster pollution prevention practices, credible information
from a wide variety of sources should be made available. EPA's diffusion functions
should have prominence in the Office of Pollution Prevention and Toxics (OPPT), ORD,
and the media-specific programs, where pollution prevention opportunities should be an
area of emphasis and multi-media information should be provided. EPA regional offices
should become more visible and aggressive in support of pollution prevention, and EPA
should continue, but upgrade, its work with the states.

Credible information on contacts, costs, techniques, technologies, as well as impacts,
should be made available, whether originated by EPA or not. EPA has begun a potentially
major program to disseminate pollution prevention information. This system is called the
Pollution Prevention Information Clearinghouse (PPIC), which offers users several
services at no charge, including a pollution prevention hot line, a 24-hour on-line electronic
information system ( called PIES), a repository of pollution prevention research data, and
an outreach program. The TIE Committee supports PPIC, and believes that it should be
given a higher profile both inside and outside the agency. The section of the electronic
database dealing with industrial case studies should be showcased. Credible data from a
wide number of sources should be added.
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An effort should be made to develop standardized accounting procedures to determine
true costs and to calculate whether a pollution prevention approach is more cost effective
than pollution control and remediation technology options. Costs associated with pollution
control are relatively simple to ascertain, based upon the cost of the control and costs
associated with the disposal of waste materials. Costs associated with pollution prevention
are more difficult to ascertain, since they may involve process changes, feedstock changes,
efficiency savings, and savings associated with avoiding the need for additional permits.

The agency should develop specific initiatives for technology diffusion within its
program offices that include at least the following three elements: (1) targeting specific
technologies and techniques, and potential users, based on the severity of environmental
hazards associated with production processes and products, and multi-media opportunities
for improvement, (2) providing multi-media information on costs and economic benefits,
and (3) linking providers of technology and potential users. The agency should also
facilitate the early use of pollution prevention techniques. To this end, R&D performance
data (both favorable and unfavorable) on pollution prevention technologies and techniques
should be documented and made available to information diffusers and regulated
organizations. Additionally, the agency should continue to sponsor conferences and
workshops on pollution prevention. The more EPA promotes successful pollution
prevention technologies and techniques, the more these technologies will become available,
and the more the agency's goal of increased pollution prevention will be advanced.

c . USE OTHER ORGANIZATIONS TO DISSEMINATE
INFORMATION: To repeat an earlier point, EPA cannot be the sole or even
the major diffuser of environmentally beneficial technologies, especially pollution
prevention technologies and techniques. It should share the effort with consulting
organizations, professional associations, trade associations, and state and local
governments. The users of diffusion services are in many cases reluctant to work closely
with regulatory agencies. It is therefore very important that the agency redirect its diffusion
efforts to take advantage of partnerships with these other organizations.

State and local governments are today much closer to most regulated organizations,
and are in truth the regulating arm of the system. The agency should make a special effort
to assure that it works closely with state and local agencies in planning diffusion programs,
that it satisfies state and local government needs, and uses the diffusion paths they already
have in place.
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3.2 Create pollution prevention incentives, including
multi-media approaches, for regulated and non-regulated
organizations.
Commentary

In moving the environmental management system towards strategies that encourage
pollution prevention, the TIE Committee recommends that EPA apply both regulatory and
incentive approaches. Together, these two approaches establish a foundation of progress
that levels the economic "playing field" for all regulated organizations and reinforces
management philosophies and practices that seek continuous improvement in productivity
and environmental outcomes. Significantly, the combination of regulations and incentives,
supported by diffusion, encourages regulated organizations to gain the greatest economic
and environmental results most efficiently. What is needed is for EPA to define, promote,
and implement an environmental management system that demonstrates the benefits of
pollution prevention.

The Committee therefore recommends that careful consideration be given by EPA and
other environmental agencies to instituting in all parts of the regulatory system incentives
for the encouragement of pollution prevention. Incentives reward a desired behavior, and
can work in conjunction with a regulatory/compliance-based approach. Effective
incentives introduce flexibility and foster innovation. As discussed in subrecommendation
3.1, the TIE Committee believes that EPA's pollution prevention strategy should feature
data-based, non-regulatory drivers, especially diffusion. The following sections
recommend specific steps that EPA should take to incorporate incentives in the
environmental management system. The sections on support (see subrecommendation 1.3)
and multi-media offer a more complete discussion.

a . EXPAND MULTI-MEDIA APPROACHES TO ENVIRONMENTAL
MANAGEMENT: The Committee emphasizes that although EPA is organized
on a media-specific basis through legislation and the administration of regulatory programs,
pollution prevention would be best supported by a multi-media approach. The multi-media
perspective should be built into regulatory, permitting, and compliance programs, as well
as diffusion programs.
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Several experiments are underway within EPA and state and local authorities to
expand multi-media thinking. In regulations, the Office of Water is exploring how to build
pollution prevention into the effluent guidelines by considering how to bring to bear the
concepts of multi-media, innovation, and flexibility. The agency's efforts to work with
three "model states" in an experiment with multi-media, facility-wide (or coordinated)
permits that encourage pollution prevention has been discussed earlier. Nearly half of the
states have been exploring the idea of a multi-media approach to enforcement, and EPA
enforcement policies now are beginning to encourage pollution prevention planning by
non-compliers.

b. PROVIDE POLLUTION PREVENTION INCENTIVES, TRAINING,
AND OTHER SUPPORT TO REGULATORY PERSONNEL: Support
for the people involved in the regulatory system is also critical. Subrecommendations 3.3
and 1.3 discuss the need for a system of incentives and support for regulatory agency
personnel to play an effective role in implementing a pollution prevention approach. Both
general technical and pollution prevention training should be provided to EPA's (and other
environmental agencies') rulemakers, permit writers, and compliance personnel. Allowing
the use of pollution prevention approaches requires regulatory personnel to have a better
understanding of industrial processes and other technical areas. Similarly, better
technically trained personnel are needed to write regulations and permits and to evaluate
compliance options that encourage pollution prevention. Recommendation 5 discusses an
increased role for ORD in providing technical support rulemakers, permit writers, and
compliance personnel.

c. DESIGN REGULATIONS AND REGULATORY PROCESSES TO
ENCOURAGE POLLUTION PREVENTION: Regulations and regulatory
processes should be designed to encourage pollution prevention. Technology-based
regulations provide a foundation for environmental improvement, but may not encourage
wide choices of approach to compliance, pollution prevention, continuous improvement, or
going beyond the minimum. Where possible, regulations should encourage the use of
pollution prevention procedures to meet the regulatory requirements.

As discussed in subrecommendation 1.5, there is a need to increase regulatory
certainty and predictability to encourage technology innovation and diffusion. This same
point applies to pollution prevention. The ability to anticipate regulatory targets,
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promulgation dates, and compliance dates is critical to all technology developers and
regulated organizations that seek improved manufacturing technologies and techniques to
meet environmental objectives. The ability to anticipate regulations is equally important to
regulated organizations seeking environmental solutions that cooptimize between
environmental and productivity objectives. Effective regulatory encouragement of the use
of pollution prevention solutions will facilitate the application of innovative and efficient
technologies and techniques to environmental problems.

Technology-based standards have an important role to play in encouraging pollution
prevention in that they establish a base for environmental improvement. Thus, these
standards can create a level playing field for all regulated organizations. A total reliance by
regulators on the "best" available technology approach, however, can reduce the incentive
to find innovative technology solutions that prevent pollution, both with respect to cost of
the same performance and of improved performance. In this approach, technology tends to
become frozen with respect to environmental performance.

Moreover, media-specific requirements for industrial categories have been developed
independently of regulations for the same industrial categories in other media. In some
cases, more important environmental problems associated with that industrial category have
gone unaddressed, while regulatory requirements are set for less important problems.
EPA's recent regulatory innovation — "regulatory clusters," under which the consideration
of all pending regulatory actions related to a single industrial category are linked - is a
strong step in the right direction.

d . BUILD ENCOURAGEMENT FOR POLLUTION PREVENTION IN
PERMIT AND COMPLIANCE POLICIES AND PROGRAMS: As
discussed in the Commentary and in subrecommendation 1.5, permitting and compliance
approaches are widely seen as being strongly at odds with the initiative and innovation that
are necessary for pollution prevention. This conclusion pertains both to the permitting of
tests and evaluations, and of proposed uses of these technologies and techniques. Because
the development and use of pollution preventing approaches is reduced by existing
permitting and compliance policies and programs, data is not generated that can be made
available through diffusion systems. The TIE Committee reiterates its conclusions and
recommendations in its report, Permitting and Compliance Policy: Barriers to U.S.
Environmental Technology Innovation.
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The Committee further recommends that permitting and compliance systems should be
modified to increase flexibility. Greater flexibility aimed at encouraging regulated
organizations to consider alternatives to best available technology in permit applications is
particularly important. In some locations, the use of best available technology has become
a de facto requirement. Multi-media approaches to permitting and compliance programs
and policies are important to the encouragement of facility-wide environmental planning,
which in turn provides greater opportunities to discover pollution prevention approaches.
Permitting and compliance policies also need to be coordinated across federal, state, and
local jurisdictional lines to maximize the effort to favor pollution prevention. An easy step,
discussed in subrecommendation 1.5, would be to assign top priority status for the review
of permit applications involving innovative and pollution prevention technologies and
techniques.

Flexibility with respect to compliance schedules and penalties should also be provided.
Flexibility features might include the possibility of compliance waivers and extensions for
bonafide efforts to comply using pollution prevention and other innovative solutions. In
subrecommendation 1.5, the TIE Committee commends the supplementary enforcement
policy which encourages a non-complier to institute pollution prevention techniques in lieu
of fines or penalties. This policy change is a step in the direction of encouraging pollution
prevention options in compliance systems.

In addition, efforts to achieve compliance through pollution prevention techniques
should be encouraged through "soft landings." Soft landings can take the form of
postponement or reduction of penalties for a specified period to allow the regulated
organization, acting in good faith, to make the necessary changes to bring the new
equipment and/or procedures into compliance or to use conventional approaches to comply.
These modifications will send clear signals to all environmental stakeholders that the
agency supports pollution prevention solutions to environmental problems.

Pollution prevention training for permit writers and compliance staff to improve their
technical competence and to provide a better understanding of pollution prevention practices
is necessary. The Committee notes that EPA has initiated pollution prevention education
programs, one at the American Institute of Chemical Engineers and the other at the
University of Michigan. Technical support should be provided on a standby basis by ORD
and/or others to assist permit writers and compliance staffs involved in reviewing pollution
prevention techniques.
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3.3 Diffuse the pollution prevention ethic within EPA, and
establish a system of incentives and support for diffusion
efforts by EPA personnel.
Commentary

As discussed in subrecommendation 1.3, the diffusion of environmentally beneficial
technologies is peopledependent. Whereas diffusion is critical to the success of
pollution prevention, so too pollution prevention success depends on the activities of the
people of EPA. Many of the actions needed to support this recommendation have already
been discussed in detail in subrecommendation 1.3. To gain the full support of EPA's
personnel for its pollution prevention diffusion effort, the TIE Committee recommends the
following additional actions:

a. CREATE SUPPORT SYSTEMS FOR RULE WRITING,
PERMITTING, AND COMPLIANCE PERSONNEL INCLUDING
POLLUTION PREVENTION INCENTIVES, TRAINING AND
OTHER SUPPORT: EPA should provide its personnel with incentives to
demonstrate their support of pollution prevention activities. The pollution prevention
support activities should be clearly measurable and rewarded in a public and timely manner.
Awards should be provided both within and outside the agency to those personnel who
surpass agency standards. Pollution prevention should be built into agency personnel
evaluations. EPA should consider methods of extending this support to state and local
regulatory personnel.

Both general technical and pollution prevention training should be provided to EPA
rulemakers, permit writers, and compliance personnel. The nature of pollution prevention
procedures requires a better understanding of the industrial processes than pollution control
and remediation technologies. Therefore, better technically trained EPA personnel are
needed to write regulations and permits and to evaluate compliance options. Such training
could be provided by a number of organizations familiar with industrial processes and
pollution prevention techniques (e.g., AIChE). In addition, technical support should be
provided to EPA rulemakers, permit writers, and compliance personnel from within the
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agency (e.g., ORD). The additional training will allow the agency to increase the use of
pollution prevention technologies.

b . USE THE DIFFUSION COORDINATOR POSITION TO PROMOTE
POLLUTION PREVENTION: As mentioned in subrecommendation 1.1, the
diffusion leader would actively promote pollution prevention through his/her diffusion
activities. The diffusion leader would steer EPA's gathering and dissemination of credible
information about pollution prevention technologies and techniques, inside and outside the
agency. In addition, the diffusion leader would be a key supporter of action item "c",
which follows.

c . MAKE A STRONG POLICY STATEMENT IN SUPPORT OF
TECHNOLOGY DIFFUSION: The agency has made a strong policy
statement favoring pollution prevention. EPA should make a similar statement about the
future role of technology diffusion, and use this policy statement to encourage its
employees to increase the use of diffusion and incentive approaches that prevent pollution.
One step is to ask for suggestions about how to implement pollution prevention procedures
agency-wide.

The Diffusion Focus Group recognizes the recent organizational change involving the
Pollution Prevention Office. It hopes that this will raise the visibility of pollution
prevention within the agency and place greater emphasis on promoting pollution
prevention. A policy statement related to technology diffusion should reinforce the
pollution prevention focus within EPA's environmental management strategy.
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    3.4   Increase resources for EPA's pollution prevention
           technology research and development.
    This new area of R&D is an important one for EPA, but EPA's potential for success is
dependent on an active partnership with industry and others who will be the ultimate users
of the prevention solutions. A partnership is needed at the planning stage, in the conduct of
R&D, and in developing and carrying out a diffusion strategy for promising prevention
technologies and techniques. The need for these partnerships is so great in this program
that EPA should seriously consider requiring that private sector co-funding be obtained for
any pollution prevention technology and technique R&D project (see subrecommendations
5.1 and 5.2 "f). EPA resources to support pollution prevention R&D are also a potentially
important incentives to be used in conjunction with other aspects of an overall agency
approach to encourage pollution prevention, as suggested elsewhere in Recommendation 3.

    Other recommendations made in this report are important to the success of this EPA
R&D program. These include the need to (1) increase the technical expertise of EPA staff
in areas that are relevant to pollution prevention technologies and techniques, such as the
design and operation of manufacturing processes and products (see subrecommendation
1.3), (2) focus on the commercialization end point in this research (see subrecommendation
5.4), (3) protect proprietary information EPA acquires about the processes and operations
of its R&D partners (see subrecommendation  1.5 "b"), and (4) require careful plans for the
diffusion of R&D results to be developed during the design of research programs and
updated throughout the R&D life cycle (see subrecommendation 5.1).
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Recommendation 4:
Expand support for the international diffusion of environmental
technologies to help meet U.S. environmental and
competitiveness objectives.
4.1 Help U.S. firms market environmental technologies in
developing countries.
4.2' Help U.S. firms market environmental technologies in
developed countries.
4.3 Assist in gathering information on state-of-the-art
environmentally beneficial technologies developed abroad.
Commentary

A complete international "technology cooperation" program at EPA requires two
complementary parts: (1) support for the diffusion of domestically developed
environmental technologies into foreign markets, and (2) making information on innovative
technologies developed overseas available to U.S. regulated organizations. The diffusion
of domestically developed environmental technologies in new markets will promote
domestic investment in these technologies. This will make more environmental
technologies available for domestic and international application, and help improve the
environment locally and globally. The expanded availability of environmentally beneficial
technologies from overseas will give U.S firms a broader range of production and
environmentally beneficial technologies to choose from, resulting in increased efficiency
and possible competitive advantage.

Technology diffusion depends both on demand (technology pull) and supply
conditions (technology push). Attempts to promote environmentally beneficial U.S.
technologies overseas may be ineffectual without the strong demand created by effective
environmental regulations and strong public awareness.

EPA recently initiated an international diffusion ("technology cooperation") program to
diffuse information about environmental technologies to developing nations and Eastern
Europe. This pilot program is coordinated with other relevant federal agencies. The
increase in EPA's international efforts is a positive step (although since they are only pilots,

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they are not sufficient); EPA is doing more than ever to help other countries build
institutional systems for the environment. These systems support sustainable economies
with strong environmental values, and help create a lasting demand for U.S. environmental
products and services where the need for them is acute.

Unfortunately, these pilots highlight a significant gap in EPA's international diffusion
effort. There is insufficient aid to the diffusion of U.S. technologies to developed
countries, working with the private sector and others. Developed countries represent the
majority of the international market for environmental products and services and the homes
of the major competition for U.S. environmental technology developers. By ignoring these
markets, EPA fails to help U.S. companies make the diffusion connection with the largest
international markets. The largest export opportunities for U.S. firms exist in these
markets. The TIE Committee believes that it is in the U.S. interest to have strong domestic
providers of environmentally beneficial products and services, and to involve and
strengthen U.S. firms in these markets.

The TIE Committee has found, however, that smaller and medium sized firms lack the
resources to promote their environmental products and services internationally. Most
environmental firms with over $100 - 150 million in annual sales appear to have sufficient
resources. Firms with sales under $10 million appear to be unlikely to have a commercial
technology. Their first priorities are usually commercialization and the pursuit of
undeveloped domestic markets. Firms between $10 and $100 - 150 million in annual sales
probably have environmental products or services of interest to international markets, but
they lack the resources to reach those markets. Aiding them should be a particular focus of
the activities recommended herein.

Since EPA is the only federal government agency with the protection of the
environment as its highest priority, it should act as a national leader to advance
environmental aspects of the international agenda. Other federal agencies have competing
goals, so if EPA does not take the leading role, no other agency will. The TIE Committee
recognizes, however, that the several agencies — the Departments of State and Commerce,
along with AID, the U.S. Trade Representative, the Export-Import Bank, and the Overseas
Private Investment Corporation — all have leading roles in various aspects of international
environmental activities. EPA will need to work closely with these organizations in the
technology diffusion arena, on both imports and exports.
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4.1 Help U.S. firms market environmental technologies in
developing countries.
4.2 Help U.S. firms market environmental technologies in
developed countries.
Note to the Reader: Subrecommendations 4.1 and 4.2 are very similar, and therefore
share many of the actions recommended by the TIE Committee. In the interest of brevity
the action items for these two Subrecommendations are listed together. Their applicability
to developing and developed countries where appropriate, and a concluding reference to the
appropriate subrecommendation(s) is included with each action item.

Commentary

EPA's current international diffusion efforts in support of the export of environmental
products and services are focused on the developing countries, and very little effort is being
expended on the developed country markets. The TIE Committee is very supportive of
EPA's new international activism with respect to technology diffusion (in the broadest
sense) to developing communities (although large unmet needs associated with severe
environmental problems in these communities will not be fully addressed by EPA's new
international programs.) The TIE Committee believes, in addition, that the lack of
significant effort in the developed countries constitutes a severe deficiency in EPA's
international diffusion program (see Recommendation 4).

As discussed in the Commentary for Recommendation 4, the TIE Committee
commends EPA for its efforts in the international diffusion of environmental technologies.
It believes that the international diffusion of environmental institutions and environmental
technologies to developing countries carries with it the potential for large environmental
gains. There is a large need associated with sometimes severe environmental problems for
which a large number of potential applications of technological solutions exists. Other
countries need help building institutional systems that are supportive of a sustainable
economy, and possess strong environmental values that could create a lasting demand for
environmental products and services.
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The TIE Committee recommends that EPA, in conjunction with traditional lead
agencies in some of these areas, take the following actions to help build environmental
institutions abroad and to support U.S. firms in the marketing of their environmental
technologies overseas:

a. PROMOTE ENVIRONMENTAL CONCERNS INTERNATIONALLY:
EPA should promote environmental concerns in other countries to help improve
environmental quality worldwide and to "level the playing" field for U.S. industry. Both
steps will help establish new markets and expand existing ones for U.S. environmental
technologies because U.S. environmental requirements are stronger than those in most
countries. Moreover, these requirements are associated with environmental technology
leadership and industrial competitiveness. EPA has enormous technical knowledge on the
fundamentals of running environmental protection programs (monitoring, permitting, risk
assessment, source inventorying, etc.) which could strengthen programs in other countries
and build the demand for clean technology. The U.S. Environmental Training Institute and
the Asia Environmental Partnership are steps in the right direction.

As noted above, EPA's promotion activities should be coordinated with all other
federal agencies which have international operations. The expansion and elevation of
environmental concerns has the potential to reduce pollution in a large number of areas of
the world where environmental problems have a low priority. In several newly democratic
countries of Eastern Europe and South America, laws have been passed expanding the
public's right to know of environmental risks and decisions. Duly recognizing
international differences in political philosophies and systems, EPA should stand ready to
cooperate with other countries when asked, and provide technical assistance in the design
of regulatory procedures. This would ensure public participation and rights to information.
Although, this is a long range effort with an uncertain outcome, it represents the best
chance for world environmental improvement. This action item particularly supports
subrecommendation 4.1.

b . ENCOURAGE INTERNATIONAL HARMONIZATION OF
ENVIRONMENTAL STANDARDS: EPA could simultaneously promote
environmental improvement and U.S. firms through the international harmonization of
environmental standards. As noted in the Commentary, there is a strong relationship
between stringent standards and environmental improvement, and between stringent
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standards and technology leadership, both with respect to productivity and environmental
outcome. NACEPT's Trade and Environment Committee has developed recommendations
on this subject.

    EPA recently established the U.S. Environmental Training Institute, which is training
foreign technology experts in U.S. environmental management standards, practices, and
technologies. EPA should take additional actions to encourage exports, such as by helping
trade associations and others promote the use of U.S. measurement standards and
technology protocols worldwide. Importantly, EPA's work to encourage exports  should
complement the work of the private sector; it is in the interest of U.S. firms to work
together to establish a unified position on environmental technology specifications  and to
encourage the harmonization of environmental standards worldwide. These firms should
lead the effort to have the U.S. standards formally adopted worldwide. For example,
ICOLP (the Industry Cooperative for Ozone Layer Protection), a voluntary industry effort
to diffuse technology on CFC (chlorofluorocarbon) substitutes, embodies an effective
pioneering approach that has received EPA support and encouragement. EPA could
beneficially expand its successful cooperation with ICOLP to allow it to expand its
operations internationally.  Action item "b" supports subrecommendations 4.1 and 4.2.

     c .  HELP DEVELOP INFORMATION ON INTERNATIONAL
        MARKETS: EPA and other agencies should gather,  disseminate, and deploy
information on foreign environmental technology developments, markets, and barriers to
competition. "Environmental Attaches," similar in function to Agricultural Attaches, are
valuable.  One of their roles should be to promote the use of U.S. environmental products
and services abroad. With the help of other agencies and the private sector, assessments
should be conducted to develop data on overseas needs and markets, as well as to evaluate
areas where the U.S. is a global technology leader. Information should also be gathered
and transmitted on the performance and cost of state-of-the-art environmentally beneficial
technology. Information of value would be sent throughout EPA and other environmental
agencies and made available to American firms. Increased information availability to U.S.
firms will reduce the risks and/or costs associated with their own environmentally
beneficial technology investment, thereby encouraging increased investment in this area.
This action item supports subrecommendations 4. Land 4.2.
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d. PROVIDE SUPPORT FOR TRADE SHOWS SHOWCASING
DOMESTICALLY DEVELOPED ENVIRONMENTAL
TECHNOLOGIES: In the past few years EPA has begun to co-sponsor trade
shows for U.S. environmental products and service firms. The TIE Committee commends
this action, and believes it should be expanded to help U.S. firms compete internationally.
EPA should expand relationships with other government agencies to help promote the sale
of U.S. environmental technologies in foreign markets through conferences, trade shows,
and other means. These shows should be held as closely as possible to the target market of
the conference or trade show. The presence of EPA in all-industry trade shows and
conferences will indirectly provide a boost for U.S.-made products and services because of
EPA's international credibility. This activity is not to be confused with an endorsement for
the use of any individual environmental technologies. This action item supports
subrecommendations 4.1 and 4.2.

e . PROVIDE SUPPORT FOR BUSINESS DEVELOPMENT CENTERS:
As noted in the Commentary, small and medium-sized firms lack the resources to
independently develop international markets for their environmental products or services.
These firms are large enough to develop and commercialize innovative technologies.
However, they lack the resources to market them overseas. One goal of these firms, for
example, may be to test and demonstrate technologies overseas, in light of severe testing
constraints in the U.S. EPA and other federal agencies can help address this problem by
supporting the establishment of business development centers.

These centers could provide three general types of assistance for firms that want to
develop an international market for their environmental technologies: (1) technology
brokerage, (2) project management, and (3) financial services. The technology broker
function would include some or all of the following activities: (1) gathering and
disseminating information on U.S. environmentally beneficial technologies developed by
small and medium firms with promising overseas applications: (2) gathering and
disseminating information on overseas market opportunities in the application of
environmentally beneficial technologies, and (3) bringing together potential importers and
U.S. technology exporters. The project management function could help lower the costs
and risks to small and medium sized technology exporters and importers, by (1) providing
information and assistance on meeting foreign regulatory, technology licensing and
patenting, and investment requirements; (2) facilitating negotiations; (3) providing services
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in monitoring license agreements; and (4) assuming or reducing some of the risks of
technology transfers through arranging or providing tests, demonstrations, insurance, and
performance bonds. The financial services function could help assemble private and public
capital for investment projects and joint ventures, including participation from such sources
as OPIC and the EXIM Bank. This action item supports subrecommendation 4.2 and 4.1.

f ENCOURAGE PERSONAL INTERACTION WITH FOREIGN
TECHNOLOGISTS: EPA should expand opportunities for direct contact
between U.S. and foreign environmental stakeholders, including technologists, technology
users, and government and business managers. EPA's establishment of a U.S. training
institute for foreign environmental managers, technologists, and business operators will
help create these opportunities. The institute could promote U.S. environmental
perspectives and institutional systems (see action item a), help establish marketing contacts
for U.S. environmental product and service vendors (see action item c), and encourage
harmonization of environmental standards (see action item h). These contacts will increase
the diffusion of technologies across international boundaries and make cooperative
activities on an international level more likely. This action item supports
subrecommendations 4.1 and 4.2.

g HELP U.S. SELLERS OF ENVIRONMENTAL TECHNOLOGY
DEVELOP MARKET CONTACTS: EPA has a broad range of contacts that
should be made available to U.S. environmental technology vendors. (Additional contact
mechanisms are suggested in action items a, b, c, e, f, and g). There should be a central
area established for these contacts, so that firms do not have to become engaged in long and
costly searches for contact persons. The agency needs to create a foreign contact reporting
system to gather contact data, coordinate it within the agency, and make it easily available
to outsiders. This action item supports subrecommendations 4.1 and 4.2.

h . OBTAIN ADDITIONAL EXPORT PROMOTION ASSISTANCE
FROM OTHER FEDERAL OFFICES: EPA should also work with the
Export-Import Bank and the Overseas Private Investment Corporation to provide
additional financial support for U.S. environmental technology firms. These agencies
provide loan guarantees, investment insurance, and pre-feasibility studies to U.S. firms to
promote U.S. exports. The Export-Import Bank is currently limited to developing
countries. However, its mission should be expanded to developed countries, where the
largest environmental products and services markets currently exist. The Trade and
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Development Program at the Department of State provides market studies and reverse trade
missions. This program should be asked by EPA to focus on the markets for
environmental technologies and services. The resulting studies should be shared
throughout the domestic environmental industry. The diffusion coordinator (mentioned in
Recommendation 1) should have responsibilities that include promoting U.S.
Environmental exports. This action item supports subrecommendations 4.1 and 4.2.

    i   SUPPORT PROTECTION OF INTELLECTUAL RIGHTS  TO
        TECHNOLOGY:  With respect to a relatively small number of countries, one
problem with U.S. technology exports is protecting them from intellectual theft and re-
export by unscrupulous parties.  While this is not the major problem in exporting to most
developing nations and to nations complying with international agreements on this subject,
it can be an impediment to exports to certain areas of the world. EPA should encourage
other agencies (such as the U.S.  Trade Representative and the Department of Commerce) to
provide legal and structural support to discourage piracy of environmental technology
overseas. One use of data gathered and made available on foreign environmental
technology developments, markets, and barriers to competition is helping to protect U.S.
technology firms from patent or license infringements. This action item supports
subrecommendations 4.1 and 4.2.
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4.3 Assist in gathering information on state-of-the-art
environmentally beneficial technologies developed abroad.
Commentary

The U.S. has a tremendous need for new and innovative solutions to environmental
problems. EPA has not emphasized in its programs the potential to find better
environmental solutions overseas. The developed world, however, has been successful in
developing innovative technologies to improve environmental quality and sustain industrial
activities. EPA must now increase its efforts to help make technologies developed overseas
available to domestic regulated organizations so that they can reduce their waste and
emissions, and remain competitive. The task of forming business relationships to bring
these environmentally beneficial technologies to the U.S. must remain in the private sector,
but it is in the interest of both government and industry to identify and bring to the U.S.
technologies that may convey environmental and productivity benefits. The TIE Committee
therefore recommends that EPA:

a.- COOPERATE WITH OTHER AGENCIES IN GATHERING STATE-
OF-THE-ART INFORMATION ABOUT ENVIRONMENTALLY
BENEFICIAL TECHNOLOGIES : As explained in the Commentary for
Recommendation 4, other federal agencies have overseas activities that could gather data on
EPA's behalf. Both the National Science Foundation and the Agency for International
Development have established environmental technology institutes overseas that could help
gather information. Since these institutes are funded by the United States, they could
provide a ready conduit for information about environmentally beneficial technologies.
EPA should expand its international technology information gathering activity to cooperate
with federal agencies that possess the necessary resources for cooperation.

b. INCLUDE CREDIBLE FOREIGN ENVIRONMENTALLY
BENEFICIAL TECHNOLOGY INFORMATION IN U.S.
INFORMATION SYSTEMS: The data gathered should be made widely
available through the diffusion system described in Recommendation 2.3. The data should
also be used to guide U.S. governmental R&D efforts and other policies.
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    Recommendation 5

    Increase support for the diffusion of technology provided by
    EPA's research programs on environmentally beneficial
    technologies.

    5.1   Adopt a leadership position with respect to U.S.
          environmental technology R&D throughout the research
          and development life cycle.

    5.2   Build and expand efforts to coordinate environmental
          technology R&D among all participants (including
          industry, federal agencies, state and local governments,
          universities, and research consortia).

    5.3   Use EPA's R&D program to improve the quality of data
          generated by others about environmentally beneficial
          technologies.

    5.4   Emphasize the commercialization end point in EPA's
          and in EPA-led R&D on environmentally beneficial
          technologies.
    Commentary


    The TIE Committee has concluded that EPA's research program, centered in the Office

of Research and Development (ORD), should become a primary focal point for increased

support of the diffusion of technology by EPA. As the Committee previously noted, ORD

should become "a more systematic provider of credible information about environmentally

beneficial technologies." The Committee believes that if EPA intends to make the diffusion

of technology a major element of the environmental management system, it will need to

focus and sharpen ORD's activities throughout the technology life cycle. The terms

"technology life cycle" and "R&D life cycle" includes R&D planning, the conduct of R&D

(including research, development, demonstration, testing, and evaluation), and the
dissemination of the results of these activities.


    There is no EPA office other than ORD that has a technology-neutral, multi-media

perspective about environmental problems and their technological solutions.  Thus, while

the media-specific regulatory offices build a stimulus for experimentation, innovation, and

pollution prevention into regulations, permitting programs, and compliance policies, the
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Committee recommends that ORD become the operating spearhead of EPA's diffusion
activities, working closely with the high-level diffusion advocate/coordinator (discussed in
subrecommendation 1.1).

    EPA, whose environmental technology R&D spending comprises a very small
percentage of the national total, cannot play a leading role as a direct sponsor of
environmental technology R&D. EPA's environmental technology R&D spending ranks
at most as the fourth largest among the federal agencies. The Departments of Defense and
Energy (DOD and DOE) and the National Aeronautics and Space Administration (NASA)
each has a much larger program in this area than EPA. All told, federal environmental
technology R&D spending is less than one-fourth of the national total. If spending on the
development and demonstration of technologies that prevent pollution are included, the
federal percentage declines even further.

    This leads the TIE Committee to conclude that EPA must concentrate on two important
areas of emphasis in its R&D programs on environmentally beneficial technologies:
    •-  Maximizing the impact of ORD's technology research, in large part by
        leveraging and influencing the much larger R&D spending of others
        inside and outside of government through an increased coordination
        role.
    •-  Sharpening and emphasizing ORD's role in the technology diffusion
        partnership.

There are very specific steps that EPA and ORD can take to realize the first emphasis. They
include modifying the research planning process to incorporate more input from
knowledgeable and affected groups outside EPA, leveraging its research spending by
increasing cooperation with non-EPA researchers, improving the quality of information
about environmentally beneficial technologies generated by others, and emphasizing the
commercialization end point in ORD's environmental technology research program.
Similarly,  there are specific steps EPA and ORD can take to realize the second emphasis,
that ORD become a more systematic provider of credible information on environmentally
beneficial technologies. Unless the agency takes these or equivalent steps, the Committee
believes that EPA will remain a minor "player" in the environmental technology field and
will lose a major opportunity to increase its effectiveness as the leader of the environmental
management system.
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    The Committee notes that EPA's lack of understanding about the marketplace and of
industry needs and perspectives is particularly acute in the research program (although it is
also apparent in other programs). This shortcoming, among other factors, dulls ORD's
ability to anticipate market needs and trends, and has hampered that office's ability to
maximize the value of its environmental technology research programs. Customer-oriented
organizations work with consumers to understand their needs and with suppliers to
understand their capabilities. In R&D, projects that contain some degree of "market pull"
are more readily successful  than those that are driven by "technology push." The planning
of these programs must take into account such factors as changing socioeconomic trends --
including shifts in industrial patterns, technologies, consumption, and products — to
anticipate future environmental opportunities and problems. EPA's R&D on
environmentally beneficial technologies of all types must be anticipatory, precisely targeted,
and leveraged. Its R&D will have to be carefully designed to fill critical technology niches,
have a high rate of commercial success in development efforts, and become a primary force
in EPA's diffusion programs as a collector,  developer, and provider of credible
performance information.

    The Committee is optimistic that, after getting a slow start, EPA is accelerating its
program to establish CRDAs (cooperative R&D agreements with non-governmental
organizations) and licensing agreements. These agreements lead to the commercialization
of proprietary products emerging from EPA's environmental technology R&D.

    The Committee is favorably impressed with the breadth of EPA's environmental
technology research program, with the energy and talent of its researchers, and with the
value, and in some cases, the uniqueness of its facilities and expertise. The Committee
believes that ORD should continue its R&D program in pollution prevention (see
Recommendation 3) and in other areas (without commenting on  any individual research
projects or the overall strategic approach of the individual programs, which it did not
review). It is important, however, that when EPA becomes a developer or co-developer of
innovative environmental solutions, it emphasize the commercialization end point (see
subrecommendation 5.4). Subrecommendations 1.3 and 5.4 describe the value to EPA of
building expertise in marketing, economics, and commercialization, and of increasing the
overall technical competence of its staff through a variety of means, including rotational
assignments in the public and private sectors.
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    The Committee wishes to reemphasize, however, that EPA should not intend to
become a major developer of environmental technologies. Further, the agency has no
significant independent role to play in developing industrial technology improvements that
are useful to preventing pollution. EPA's primary role will be to foster and to influence the
technology development and commercialization efforts of others, and to increase the rate at
which better technological solutions gain wide use for environmental improvement.
Assuming this role requires ORD leadership. This is the case regardless of ownership or
whether technologies prevent, control, remediate, measure, analyze, or process
information.

    Recommendation 5 focuses on actions that ORD can take throughout the technology
life cycle so it can carry out an expanded diffusion role: (1) adopting a leadership position
in planning and conducting R&D on environmentally beneficial technologies and in
reporting credible results, (2) building and expanding efforts to coordinate R&D on
environmentally beneficial technologies with all participants, (3)  enhancing the quality of
technology performance data generated by others, and (4) emphasizing the
commercialization end point in EPA's and in EPA-led R&D on environmentally beneficial
technologies. The recommendation thus describes how EPA can play a more effective role
in the diffusion of credible information about environmentally beneficial technologies from
all sources.
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5.1 Adopt a leadership position with respect to U.S.
environmental technology R&D throughout the research
and development life cycle.
5.2 Build and expand efforts to coordinate environmental
technology R&D among all participants (including
industry, other federal agencies, state and local
governments, universities, and research consortia).
Note to the Reader: Subrecommendations 5.1 and 5.2 are closely related, and
therefore share many of the actions recommended by the TIE Committee. In the interest of
brevity, actions recommended by the Committee for these two Subrecommendations are
listed together. These two Subrecommendations are closely linked in that they outline
actions the Committee believes would optimize EPA 's leadership and coordination role
throughout the R&D life cycle process so that the agency is better positioned to emphasize
its diffusion role. Proposed actions cover all integral components of the R&D life cycle —
the areas of planning, conducting, and coordinating research in the public and private
sectors, and disseminating technology information.

Commentary

If EPA is to emphasize technology diffusion in its environmental management
strategy, the TIE Committee believes that it is necessary for the agency to adopt a
leadership and coordinating role in R&D on environmentally beneficial technologies. As
noted above, EPA is a small-scale player in the world of environmental technology R&D,
even within the federal government. There is no federal or national environmental
technology leader throughout the R&D life cycle -- in planning and conducting R&D, and
in the reporting of results. This anarchic condition operates to the clear detriment of the
overall federal effort. It also represents a major missed opportunity for federal leadership
in fostering environmental and economic gains from improved technology. Ultimately,
EPA's influence in environmental technology R&D must transcend the immediate power of
its resources.
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    The Committee did not seek out examples of duplicative or other wasteful practices
that could result from this lack of coordination, and is confident that EPA managers attempt
to avoid them. It did hear, however, of results of federal R&D on environmentally
beneficial technologies that had limited value because protocols, data quality requirements,
and reporting were too different. The Committee also heard examples in which a lack of
EPA leadership contributed to a lengthened, more costly technology development processes
in both the public and private sectors — even cases of total failure.  While recognizing that
Cabinet status would perhaps convey more "clout" to EPA, the Committee notes that EPA
has not visibly attempted to take on a leadership role throughout the R&D life cycle for
environmentally beneficial technology, to the detriment of the overall federal program.

    The TIE Committee is concerned that environmental technology R&D programs  at
EPA, DOD, DOE, and NASA are not coordinated at the planning stage, and that
coordination during research and the reporting of results is sporadic. A critical need  exists
for EPA's ORD to spearhead an effort within the federal government to coordinate the
planning and conduct of environmental technology R&D and the diffusion of R&D results.
To accomplish this, EPA must make the most efficient application of its own scant
resources toward realizing its most important priorities. EPA's must extend its influence
beyond its limited resources with respect to both public and private sector R&D on
environmentally beneficial technology. EPA should begin to prepare ORD for its
leadership role by redirecting agency resources toward broadening the scope of ORD's
planning process.

    ORD's planning is focused around the "research committee" process,  in which EPA's
media regulatory programs and, to a lesser extent, regional offices help ORD plan future
research agendas. In addition, for many years the external reviews of the Science Advisory
Board have been invaluable in commenting on ORD research strategies from the
perspective of scientific excellence. The limits of this planning process give rise to the TIE
Committee's concern that ORD's planning has focused on providing support to regulatory
offices, without also fostering a technology partnership on behalf of the environment
among EPA, the providers and users of environmentally beneficial technologies, and the
regulators who oversee the application of these technologies for environmental
improvement. Even in working with in-house clients, it is difficult for ORD to draw
general and multi-media lessons from the separate planning inputs received from each
media regulatory office. Except in a few programs, such as the remediation technologies
research program, there remains a great need for ORD to put in place feedback loops with
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non-EPA sources. Feedback loops should be constructed with consulting engineers, trade
associations, state and local environmental authorities, and others who are knowledgeable
about the technology needs of polluters, today and in the future, and the productivity and
environmental R&D developments of external research programs.

    The best opportunity for EPA to establish a leadership and coordination role in the
performance of environmental technology R&D is through pursuit of a strategy of
partnership and leveraging involving all participants. The Committee will recommend that
EPA apply a variety of approaches to accomplish this objective, including:  the institution
of a co-funding requirement for a portion of its technology research, broadening avenues of
cooperative research, expanding its use of the Federal Technology Transfer Act (FTTA),
and aiding others' R&D through the establishment of a formal industrial user facility
program. Through such mechanisms as increasing co-planning of research with other
sponsors of environmentally beneficial technology and expanding its support for research
consortia (sponsored by universities, other federal and state agencies,  and trade groups or
others), EPA can establish a leadership role and gain a significant leveraging effect on its
own resources.

    The Committee believes that a major purpose of the new approaches discussed above
is to enable ORD to become a more systematic provider of credible information about
environmentally beneficial technologies. ORD's leadership and coordination roles in
planning and conducting R&D will create opportunities to collect and compile credible
performance information ~ most of it generated outside of EPA's R&D program ~ and to
work with EPA's diffusion partners to facilitate its dissemination. The Committee believes
that ORD's current technology transfer efforts require significant reorientation and
redeployment to achieve this goal.

    The Committee suggests that ORD's new effort to engage in cooperative research
through joint planning, leveraging, cooperating, testing, and evaluating will directly
encourage others to generate credible information about environmentally  beneficial
technologies. The Committee also believes that ORD's activities to help others improve the
credibility of data they generate are important to the effort to sort "good"  from "bad"
information; the standardization of protocols, QA/QC, analysis procedures, analytic
procedures, and reporting requirements will  ease the effort to distinguish what information
is credible.  Additionally, the Committee notes that by increasing its understanding about
the marketplace, EPA can learn to focus its data sorting efforts, attending earliest to areas of
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greatest need, controversy, or opportunity. EPA's greater anticipatory ability will also be
very useful here.

     In summary, the specific action items recommended below propose how EPA's
environmental technology research program should change to (1) maximize its impact on
the much larger spending of others and thereby become a more effective partner with the
broader research community in the public, private, and non-profit sectors and (2) address
how EPA's research program can sharpen its effectiveness in the technology diffusion
partnership, becoming the operating spearhead of EPA's diffusion activities:

     a .  INVOLVE INDUSTRY  IN THE PLANNING OF  EPA'S
        TECHNOLOGY RESEARCH: EPA should create direct mechanisms for
meaningful exchange with industry in the planning process for its R&D on environmentally
beneficial technologies. Both users and providers of environmentally beneficial
technologies should be involved. In the case of users, EPA should establish contact to
ascertain what problems they feel most need better technology solutions. In the case of
providers, EPA should develop close R&D relations so that reported research results are
compatible and, when possible, complementary. Subrecommendation 5.3 discusses the
need for EPA to work with others who conduct research to improve the quality of the data
about environmentally beneficial technology they generate. This Subrecommendation, on
involving others in EPA's R&D planning, discusses how EPA can better target its R&D,
build relationships with other research organizations, and establish a better basis for a
strong EPA role in diffusion activities.

     By working more closely with industry and other major technology developers, ORD
could also better anticipate future technology and societal trends that affect the environment,
along with the industrial and environmental technology fields. The ability to provide a
warning about emerging environmental threats associated with socioeconomic and
technology trends is essential to managing EPA's technology R&D programs. A closer
working relationship with the private sector and others during R&D planning will help in
this regard by influencing the research of others and by guiding the direction of EPA's own
research.

     Involving industry in EPA research planning can be accomplished in a variety of
ways, which include establishing joint R&D advisory committees with industry and trade
associations, holding R&D planning workshops, directly consulting industry experts, and
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establishing more CRDAs. Research planning relationships with university-based and
other consortia (e.g., the National Center for Manufacturing Sciences) constitute another
important vehicle. Technology user and provider input should be sought for both long-
term planning and current year planning. For example, the National Institute of Standards
and Technology (NIST) uses an "Assessment Board" of outside advisors (academia,
industry and researchers) that meets at least annually to review the programs at each NIST
Center.

EPA should also expand and upgrade its Resident Research Associateship Program,
making it more attractive to senior-level private sector scientists, who can then provide
insight valuable for EPA's R&D planning and create other opportunities for the exchange
of professionals, as discussed in subrecommendation 1.4.

b . INCLUDE CONSORTIA AND OTHERS IN EPA RESEARCH
PLANNING: In the past several years, EPA and other federal and state agencies
have helped establish research and commercialization consortia, often university-based.
Examples of these include the Hazardous Waste Institute at the New Jersey Institute of
Technology, and the National Defense Environmental Corporation at Johnstown,
Pennsylvania. Although they differ in mode of operation, membership and contributors,
and area of technology focus, in general they combine governmental, university, and
industrial and other polluters as co-sponsors. Dedicated to finding technical solutions to
mutually identified environmental problems, they are natural and neutral places where all
parties can come together to identify R&D needs, co-sponsor R&D, and share results by
some formula. These centers arc potentially extremely valuable to EPA R&D planning, and
EPA should devise a systematic approach to working with them in the planning process.

c . INCREASE THE ROLE OF STATE AND LOCAL GOVERNMENTS
IN EPA RESEARCH PLANNING: EPA should work more closely with
state and local agencies in its R&D planning. These agencies today play a leading role in
the environmental regulatory system in that the administration of about eighty percent of the
regulatory programs are delegated to the states. Accordingly, states write most permits and
initiate most compliance actions. Thus, it is the states that have a "hands on" relationship
with most regulated parties.

The state and local regulatory role establishes a unique level and character of
communication with polluters sited in their areas. As discussed in Recommendation 2,
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state and local agencies are most aware of the pollution problems and technology needs of
local polluters. They are concerned that cost-effective solutions be found to help the local
environment improve and the local economy to thrive. It is therefore in the mutual interest
of EPA and state and local agencies to make use of these regulatory networks to identify
R&D needs (and to work through them to disseminate needed information on
pollution preventing and other environmental technologies).

EPA should take maximum advantage of the STAPPA/ALAPCO network, its own
networks, and other information distribution channels to determine needs and supply the
needed information. This new intergovernmental coordination of R&D planning will help
EPA play the leadership role it should in environmental technology R&D and lead to
increased technology diffusion involving the wide variety of stakeholders.

d . REQUIRE DIFFUSION PLANS IN EPA ENVIRONMENTAL
TECHNOLOGY R&D PLANS: EPA environmental technology R&D plans
should explicitly describe what the expected commercialization end point is for each
research project, and how the end point will be reached. In addition, EPA's research
project plans should be required to state the market objective, the clients (or anticipated
users), what the clients' intended uses are, and most importantly, EPA's approach to
diffusing the information to clients, and in what form, so it is most useful and accessible.
In order for EPA planners to accomplish this, EPA should either develop in-house, or
obtain contracted, expertise to understand clients' orientations and needs. This new
emphasis on commercialization will increase the value of agency R&D results by focusing
R&D resources on market needs and requirements (see subrecommendation 5.4).

e TAKE A LEADERSHIP POSITION TO INCREASE INTERAGENCY
COOPERATION IN ENVIRONMENTAL TECHNOLOGY R&D: As
discussed in the Commentary, EPA is a small-scale player in the world of environmental
technology R&D, even within the federal government. Far larger programs exist at DOD
and DOE and at NASA. As noted in the Commentary, there is no federal, or national,
environmental technology R&D leader — in planning, conducting, or reporting results from
environmental technology R&D. This anarchic condition operates to the clear detriment of
the overall federal effort.

The TIE Committee is concerned that the various federal programs are coordinated
only to a limited extent at the planning stage, and that coordination during research and the
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reporting of results is sporadic, at best. The Committee believes that EPA will become
more effective in its diffusion focus if ORD undertakes to facilitate cooperation among
federal agencies' R&D programs on environmental technologies.

The Committee recommends that EPA (ORD) take the leadership position in
coordinating federal environmental technology research throughout the R&D life cycle.
EPA should spearhead the formation of an "R&D cooperation council" for environmentally
beneficial technology that would be made up of representatives of all sponsoring agencies.
This council should have as its purpose the steady increase of federal-wide coordination
and cooperation throughout the R&D life cycle.

f.- REQUIRE PRIVATE SECTOR CO-FUNDING FOR PART OF
EPA'S TECHNOLOGY R&D: The TIE Committee recommends that, to
ensure that its efforts to develop environmental solutions be focused on specific market
needs, a portion of ORD's research on environmentally beneficial technology be subject to
a requirement for co-funding by the private sector. While it does not suggest a specific
percentage of this research for a mandatory co-funding requirement, the Committee
suggests that the percentage be significant and that it be reviewed and revised, depending
on the success of this strategy. The increased resources recommended for EPA's pollution
prevention technology R&D program (see subrecommendation 3.4) are a prime candidate
for the co-funding requirement because the need for partnering is so great in carrying out
this program successfully.

Mandatory leveraging requirements between government and industry for
development, testing, and demonstration should help increase the currently low level of
investment in environmental technology because risks will be spread. This requirement
will also support the idea that EPA's selection of R&D projects should be market-focused
and needs-based. It should be noted that it is important to recognize in any management
design that mandates leveraging to distinguish between the risk levels associated with stage
of development (i.e., to recognize that early stage technologies are the most risky).

g. EXPAND SUPPORT FOR THE ENVIRONMENTALLY
BENEFICIAL TECHNOLOGY R&D OF OTHER FEDERAL
AGENCIES: As discussed previously in this report, EPA's resources for R&D
on all environmentally beneficial technologies stand in a poor fourth place, at best, among
the federal agencies. EPA should therefore become directly involved in other agencies'
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environmentally beneficial technology R&D throughout the R&D life cycle, even to the
point of co-funding research with them.

    It is important here to draw attention to the large government programs that support the
development of advances  in a variety of technologies that have potentially large positive or
negative environmental implications. DOE, for example,  in addition to having a larger
program than EPA's for R&D on environmental control and remediation technologies, has
large R&D programs to advance a number of environmentally significant technologies,
including clean coal combustion, fuel cells, solar energy,  wind energy, electric cars,
industrial energy conservation, solar energy, and energy  efficient buildings. It is very
important for EPA to become involved in and supportive of these R&D programs, both to
ensure that environmental problems and opportunities are considered and to promote the
use of environmentally beneficial technologies that emerge. The "Green Lights" program,
which promotes the use of energy efficient lighting in industrial and commercial buildings,
is an example of the environmentally positive diffusion that can result from successful
energy technology research. The Committee believes that EPA will be better able to
develop programs that are analogous to the Green Lights program if it becomes more
involved with these R&D programs. Such involvement will also be important to the
success  of EPA's expanded R&D program on pollution prevention technologies and
techniques  (see subrecommendation 3.4).

    h .  EXPAND EPA'S PROGRAM WITH THE DEPARTMENTS  OF
        DEFENSE AND ENERGY  FOR THE TESTING OF
        ENVIRONMENTALLY BENEFICIAL TECHNOLOGIES AT
        FEDERAL FACILITIES: The TIE Committee commends EPA for
establishing an important new program with the Departments of Defense (DOD) and
Energy (DOE) to facilitate the testing of environmentally beneficial technologies at federal
facilities. Private  parties,  as well as government researchers, are allowed to conduct
cooperative technology trials at some federal sites in this new program. Rigorous, but
expedited, regulatory oversight is provided, and cost sharing is encouraged. Using federal
sites accelerates the testing of innovative technologies because EPA and states work closely
with DOD and DOE to assure compliance with environmental requirements, while
encouraging the testing and evaluation of better environmental solutions. Some potential
sites have facilities or other conditions that would enhance the safety of testing and
evaluation with respect to  environmental and public health protection.
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     The first federal facility has been designated a "testing center" under this program
(McClellan Air Force Base in California). EPA hopes to establish others. At a recent
meeting, EPA invited major private parties to participate in the program, and several tests
and evaluations are already being conducted or negotiated.

     This program is a model for several of the recommendations being made in this report.
EPA will be working jointly with other federal agencies and the private sector on joint R&D
on environmentally beneficial technologies. Leveraging of EPA's resources will be
obtained.  Results of tests and evaluations will be shared to the greatest extent possible
while protecting confidentiality, and credible performance data will be made available
through the widest possible set of information management systems.

     i   CONTINUE AND EXPAND COOPERATIVE ENVIRONMENTAL
        TECHNOLOGY R&D EFFORTS: Over the past five years, EPA and other
federal agencies have used a new mechanism to bring government, academia, and industry
together to work on environmental problems in a neutral setting. Among the most
successful of these are research consortia, or institutes, that may involve federal or state
sponsorship, university or other neutral institutional bases, and participation by public and
private sector organizations, including technology developers and industrial polluters.
These institutes have great value as a venue for the cooperative support of research on
environmentally beneficial technologies.

    The TIE Committee supports this approach, and encourages EPA to exploit this
mechanism further. Recently, for example,  the agency signed a memorandum of
understanding (MOU) with the National Center for Manufacturing Sciences (NCMS), a
consortium of industrial and government organizations (with Department of Defense
support) that is involved in improving U.S. manufacturing technology. This MOU is
designed to enable EPA to become involved with the NCMS partners in their R&D on
environmentally beneficial technology advances, including pollution controls and
manufacturing advances that prevent or reduce the formation of pollution. Because one
criterion for NCMS resource support for any project is the partnership and co-support of at
least two companies on a common problem, EPA will be assured of joint planning with
industry and another federal agency, a commercial end point for the R&D, significant
leveraging of any EPA resources supporting the project, and diffusion of the results,
subject to the protection of the proprietary interests of the developers.
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j . INSTITUTE AN INDUSTRIAL USER FACILITY PROGRAM: EPA
should also institute an industrial user facility program. Under this program, EPA would
invite industrial and other outside organizations to use the agency's unique and specialized
facilities (e.g., containment facilities) for testing, evaluation, and/or demonstration. Such a
program would provide an excellent opportunity for government/industry and
government/university cooperation. This concept creates a routine and systematic process
to allow outside organizations to make use (whether fees are charged or not) of EPA's
unique and specialized facilities that they otherwise would have to duplicate at potentially
great expense and delay. EPA would have to impose reasonable constraints (e.g., time of
use, suitability of activity) on the use of its facilities so that government use will be
unhindered. If fees are charged, EPA could at least cover the costs of external use, if not
gain a small source of revenue.

Opening up agency testing facilities is more than a new source of funds to the agency.
It also represents a significant opportunity for the agency to clearly demonstrate its support
for private sector technology investment and innovation. The ability to share facilities, and
thereby costs, with the private sector is an additional efficiency benefit derived from this
recommendation.

This program could be similar to the extensive and successful user facility program
described to the Diffusion Focus Group by representatives of the Department of Energy's
Oak Ridge National Laboratory (ORNL). Many companies have located their facilities
nearby ORNL to take advantage of the user facility program, which has resulted in
extensive government-industry, person-to-person technical exchange.

To turn the concept of an industrial user facility program into a reality, EPA will need
to develop guidance about at least the following: criteria for selecting facilities to be
included in the program, the types of use that are contemplated; the legal mechanisms (e.g.,
contract, CRDAs) for use agreements with EPA; the required relationship of outside uses,
if any, to EPA's mission; the basis for determining fees; and the basis, if any, for abating
fees. Further, the lessons learned from other agencies' programs should be examined and
a program should be developed to make potential users aware of the availability and
capability of EPA's facilities.
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    EPA should establish a joint EPA/industry  team to identify facilities that should be
considered for inclusion in the program. Among the possible ORD facilities that could be
included in this program are the Edison underground storage tank leak detection test
apparatus, the air testing chamber in Research Triangle Park, the test and evaluation facility
at the City of Cincinnati's sewage treatment works, the Center Hill stabilization research
facility in Cincinnati, and the incineration research facility near Pine Bluff. EPA should
also determine the availability and procedures for using other federal agencies' facilities for
industrial environmental R&D.

    k . ESTABLISH PROCEDURES FOR THE USE OF EPA
        LABORATORIES FOR THE TESTING  AND EVALUATION OF
        TECHNOLOGIES DEVELOPED  OUTSIDE EPA:  There is a great
demand for EPA to provide a testing and evaluation function for environmentally beneficial
technologies, but not necessarily a technology  or approval function. EPA is currently
performing both a testing and evaluation role and a certification function (in the test and
measurements areas), but is not certifying technologies.  The TIE Committee recommends
that EPA should establish procedures defining how private parties can obtain testing and
evaluation services at ORD's and other EPA laboratories.

    The TIE Committee found that there is a strong demand for credible data about the
performance of environmentally beneficial technologies and that this demand is not being
satisfied. Indeed as discussed earlier, the Committee believes that the deficiency in the
availability of credible performance data is a serious problem and that an important role of
ORD's research programs is to help satisfy this  need, directly and indirectly.

    Both providers and users of diffusion services are attracted to ORD's objectivity about
technology performance and to its  capability to  develop its own and to guide the
development of others' credible performance data. These people want EPA to publish (and
make otherwise available) performance results of technologies under a variety of operating
conditions, without giving them a "stamp of approval."  This increased availability of
credible data would facilitate  decision making about use. An expanded testing and
evaluation function would benefit U.S. industry and other polluters both domestically and
internationally by clarifying and verifying  performance claims. ,
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1. CONTINUE AND EXPAND ON CURRENT IMPROVEMENTS IN
EPA'S IMPLEMENTATION OF THE FEDERAL TECHNOLOGY
TRANSFER ACT OF 1986 (FTTA): The TIE Committee has found that
time is a critical element in the development of Cooperative Research and Development
Agreements (CRDAs) and licensing agreements. In the environmental field many, though
not all, innovations experience a rapid loss of value because they have a short product life
cycle.

In light of this conclusion, the TIE Committee is optimistic that, after a slow start,
EPA's FTTA performance has improved over the past year. The agency is to be
commended for this turnaround. It should take immediate steps, however, to further
streamline and expand the use of the CRDA and licensing negotiation processes. EPA
should look for efficiency-enhancing measures, and implement them. For example, the
Committee found that the disbursement of "reward" dollars to the originators of EPA-
licensed technologies has been very slow, sometimes taking up to one year or even more.
These disbursements appear to be low in priority, and are not made in a timely manner.
Correcting this practice would create a positive incentive for EPA researchers to participate
in the FTTA program and, more importantly to EPA's mission, to concern themselves with
commercially and therefore environmentally beneficial innovation.

EPA should also launch outreach programs which invite industry to establish CRDAs
and licensing agreements. Many institutions (such as universities) offer to license
technologies and establish joint projects. EPA should view its licensing and CRDA efforts
as a marketing opportunity with other technology providers. The Committee expects the
agency's expansion of current FTTA activities to yield increased CRDAs and additional
R&D funding from the private sector.

1(1) . CONTINUE AND EXPAND CRDA TRAINING AND
PROMOTION ACTIVITIES: EPA should continue to develop and launch
its comprehensive, agency-wide, ongoing internal training on the processes and benefits of
FTTA CRDAs and licensing. To create a positive motivation for the researchers,
laboratories, and the agency to use the FTTA, an understanding of the benefits is
particularly important, along with an understanding of how to prevent conflicts of interest
and other abuses. EPA has engaged a contractor to develop internal training materials for
ORD laboratory personnel on the benefits and mechanisms for CRDAs and licensing
agreements. Training should occur at all EPA laboratories (not only at ORD's), with
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particular emphasis on laboratories involved with technology research. Training should
include success stories and other motivational elements, as well as detailed descriptions on
how EPA personnel can participate in FTTA. There should be an effort to compare the
EPA's FTTA activities to those of other federal agencies.

Similarly, EPA should launch a campaign to make U.S. firms aware of the
possibilities for beneficial cooperation with EPA through CRDAs and licensing
agreements. This campaign could take the form of successful efforts made by universities
and other federal agencies to attract cooperation with industry. For example, the U.S.
Army reports that its FTTA representatives advertise in industry publications, undertake
direct mailing campaigns, and participate in conferences and trade fairs.

1(2) . MAKE THE CRDA APPROVAL PROCESS FAST: EPA has made
numerous strides to improve the speed of CRDA and license negotiation and approval. For
example, a standardized CRDA format which should speed negotiation and approval times
was recently introduced. As reported by USDA representatives, the closer the final
agreement is to the standard document, the quicker the approval process will be. As
discussed above in 5.2 "1" above, however, time is very important to EPA's
commercialization partners; it is therefore essential that EPA continue efforts to expedite the
process as much
as possible.

The Committee believes that EPA should continue gathering performance data,
including numbers of CRDAs signed, licenses issued, fees paid to the agency, numbers of
training sessions held, and length of time from first contact to final agreement. Analysis of
this data will point out areas for streamlining and improvement. Another valuable step
would be to "benchmark" with other agencies' active FTTA programs.

To further speed the CRDA review process, EPA should delegate approval authorities
to one office, consistent with the need to prevent conflicts of interest and other abuses. For
example, the Grants Administration Division could delegate its authority to the Office of
General Counsel, which could then make all rulings, except in extraordinary cases. EPA
should also increase the Office of General Counsel staff available for CRDA review.
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1(3). EXPAND THE CAPACITY OF THE CRDA APPROVAL
SYSTEM: The agency expects the expansion of current FTTA activities to
yield increased CRDAs and additional R&D funding from the private sector. If this
happens, EPA's current organization of having one Office of Research and Technology
Applications (ORTA) for the entire agency could become a bottleneck. EPA should
consider establishing ORTAs in major laboratory complexes like Research Triangle Park
and Cincinnati. The creation of additional ORTAs will create the capacity needed for this
expected increased level of FTTA effort.

m.- STRENGTHEN EFFORTS BY ORE) TO COLLECT AND REPORT
CREDIBLE INFORMATION ABOUT ENVIRONMENTALLY
BENEFICIAL TECHNOLOGIES: Previous sections of Recommendation 5
and subrecommendation 2.2 have discussed that wide range of potential EPA R&D
partners on environmental technologies. The interests of nearly all of these groups make
them willing to engage now with EPA — whether in co-planning; in cooperatively
conducting R&D, testing, and evaluation; or in collecting and reporting credible
performance data. Moreover, the motivational structures of the remaining groups make
them potential diffusion partners. EPA's Technology Innovation Office in OSWER has
recognized this potential and designed programs to take advantage of their mutual interests
with EPA. In particular, TIO's diffusion programs target a partnership with the consulting
engineers who advise responsible parties on cleanup technology options.

The Committee noted that EPA's efforts to collect and report this information are not
well coordinated. This is the case across the agency, throughout the major offices
(although with a few notable exceptions, as noted above). It is also the case within ORD,
which has a number of disparate data bases, many of which do not have a cross-media
perspective. Some data bases contain information that is reported as anecdotal but which
actually has broader applicability. Moreover, ORD's data reporting is usually not
coordinated with efforts outside EPA, such as those of DOE, DOD, professional
associations, state and local networks, consulting engineers, and consortia. The
Committee recommends that ORD assign responsibility to a small group to sort out its data
collection and reporting programs, discover what is working well and what could use the
most improvement, and take action to improve ORD's efforts.
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n . INCREASE ORD'S EFFORTS, ,WORKING WITH EPA'S
DIFFUSION PARTNERS, TO DISSEMINATE INFORMATION
ABOUT ENVIRONMENTALLY BENEFICIAL TECHNOLOGIES:
As discussed in subrecommendations 2.3 and 5.3, a major role for EPA is to work with its
partners to improve the quality of data included in diffusion mechanisms (or vehicles) and
the effectiveness of the vehicles for diffusion themselves. Further, EPA should promote
the use of the full range of available technology diffusion mechanisms, including its own
and those of other diffusion partners. The wide variety of available technology diffusion
mechanisms is listed in subrecommendation 2.3. As the operating spearhead of EPA's
technology diffusion programs and the technology neutral, multi-media oriented part of
EPA, ORD has a special and key role to play with the diffusion partners inside and outside
of EPA to strengthen and broaden U.S. information dissemination patterns.

The Committee believes that ORD's diffusion efforts need to be reviewed and revised
to increase their value and impact. Its diffusion program incorporates publications,
information systems, and training. These activities are high quality in every respect. Some
of them, however, reach only a small percentage of the intended audiences for a variety of
reasons. To remedy this, the Committee suggests that ORD needs to become less insular
and to develop its partnership capacity. ORD will then be able to expand the impact of its
programs through the leverage of the efforts of the many other groups that have a diffusion
interest. This implies a planning, as well as a performance, involvement with the diffusion
partners, and a more multi-media approach in its diffusion programs. ORD should also
work with its partners to broaden its use of less-emphasized diffusion methods and to
broaden the informational content of its diffusion data bases (discussed in
subrecommendation 5.3 above). As discussed in subrecommendation 3.1, ORD's
diffusion programs also need to support the pollution prevention programs of the agency.

Support by EPA for technology diffusion must be extended to other agencies and
areas beyond EPA. By encouraging the diffusion of technology across current barriers and
into these areas, EPA stands to receive the benefit of the technical resources of all of these
players. Very importantly, it is only by taking this approach that EPA can demonstrate its
leadership and make diffusion a major part of the environmental management system. As
noted throughout this report, the benefits of such information sharing are potentially very
large for environmental improvement.
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    5.3   Use EPA's R&D program to improve the quality of data
           generated by others about environmentally beneficial
           technologies.
Commentary

    As discussed earlier, because EPA's environmental technology R&D program is so
small relative to the total U.S. effort, the agency should adopt a strategy of leveraging its
efforts whenever possible. The practice of leveraging is crucial to producing useful
performance, cost, and reliability data. Its  importance cannot be overstated; every
stakeholder group presented itself to the Committee as being limited by the lack of credible
information about innovative and pollution preventing solutions. In any technology field
related to the environment —  environmental restoration, environmental compliance,
hazardous assessment, pollution prevention, etc. - the usefulness of a technology or
technique for a compliance purpose (to potential users, regulatory overseers, and other
stakeholders) requires that acceptable data exist describing performance that meets
regulatory standards.

    Research results that are not generally accepted as credible have little potential to have
an impact, to be transferable, to satisfy the needs of potential users, and to thereby meet the
needs of those who produce  them. The Committee heard a number of cases in which data
provided to EPA by federal agencies and private organizations were not of acceptable
quality for a variety of reasons. (It has commented in subrecommendation 5.1 and 5.2
about the need for greater coordination among the federal agencies in planning, conducting,
and reporting results from environmental technology R&D.) The  Committee also heard
many times that potential users or financiers of innovative or pollution preventing solutions
were deterred by a lack of data they could trust and the inability to obtain approval from
federal, state, or local permit writers to use these solutions due to the lack of credible data.
Finally, the Committee was informed of many situations in which public concerns about
the capability and safety of a proposed solution could not be allayed using available data,
because it was not considered credible.
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    The TIE Committee has concluded that a much greater emphasis should be placed by
ORD on helping others improve the quality of the data and information they generate about
environmentally beneficial technologies. In this subrecommendation, the Committee
emphasizes the value and necessity of this activity to all environmental stakeholders, and
suggests some of the steps that will help accomplish it. This conclusion is also reflected in
subrecommendations 5.1 and 5.2 (involving others throughout the life cycle of EPA's
environmental technology R&D), 5.1 and 5.2 "g" (increasing coordination with other
federal agencies), 5.1 and 5.2 "h" (expanding the program for coordinated testing and
evaluation of environmentally beneficial technologies at federal facilities), 5.1 and 5.2 "i"
(expanding cooperative R&D efforts on environmentally beneficial technologies through
consortia and other arrangements), 5.1 and 5.2 "k" (establishing procedures for the testing
and evaluation of privately developed technologies by EPA), and 5.1 and 5.2 "1"
(expanding cooperative R&D under the  FTTA).

    There are two additional points that reinforce the need for ORD to place an emphasis
on helping others improve the credibility of data they generate. First, the Committee
believes that the technology conclusions of industrial scientists are often considered by
regulators to be biased, sometimes with good reason. Second, EPA researchers often look
upon working with any company as favoritism and hence undesirable. The Committee
believes that by engaging with the private sector specifically on the point of improving the
credibility of data they produce, EPA will be  performing a task that is important to all
environmental stakeholders.

    a.- USE EPA'S R&D PROGRAM  TO INCREASE  THE
        STANDARDIZATION OF TEST PROTOCOLS, ANALYSIS
        PROCEDURES, AND PERFORMANCE DATA  REPORTING:  One
key leadership role that EPA must play is in expanding the pool of data produced by R&D
on environmentally beneficial technology that have mutually acceptable quality,
comparability, and transferability. It is in the interest of the credibility of the agency to seek
and gain a consensus about data quality, comparability, and transferability. It is extremely
important for EPA to lead an effort to reach agreement about the approaches for planning
and conducting technology tests and demonstrations, for gathering and analyzing test data,
for producing predictive models, for quality assurance and quality control (QA/QC),  for all
associated assumptions, and for reporting results. This task could be undertaken by the
"R&D cooperation council" for environmentally beneficial technology that would have as
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its purpose the steady increase of federal coordination and cooperation throughout the R&D
life cycle (see subrecommendation 5.1 and 5.2 "e").

     The Committee was informed that EPA plans to initiate an effort to increase the
standardization of approaches to R&D, in conjunction with DOD and DOE, as a part of the
Strategic Environmental Research and Development Program (SERDP). This important
effort, if successful, would immediately expand the reach and impact of federal research on
environmental technologies and environmentally beneficial technologies by coordinating
federal approaches to producing and transferring environment-related  data. The Committee
commends its staff and the Office of Cooperative Environmental Management for
spearheading this effort. Analogous efforts should be made to extend  this coordination to
include other public sector R&D partners and the private sector.

     b . ESTABLISH PROCEDURES FOR  THE USE  OF EPA
        LABORATORIES FOR THE TESTING AND EVALUATION  OF
        TECHNOLOGIES DEVELOPED OUTSIDE EPA: In subrecommendation
5.1 and 5.2 "k", the TIE Committee points to the need for EPA to provide a testing and
evaluation function ~ or service — for environmentally beneficial technologies developed
outside EPA, but not necessarily a technology certification or approval function. EPA is
currently performing both a testing and evaluation  role and a certification function (in the
analytic testing and measurements areas), but is not otherwise  certifying technologies. An
expanded testing and evaluation role would benefit the U.S. by helping technology
developers produce better and more  credible performance data about their technologies, as
well as by helping clarify and verify performance claims. EPA has taken on just this role at
the underground storage tank leak detection test center in Edison, N.J., to the great
advantage and plaudits of all concerned.

     This suggestion relates to the need to leverage EPA's scarce environmental technology
R&D resources. It will contribute to realizing the data quality recommendations in this
section, which are critical to EPA's  ability to play  amore successful role in diffusion.
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     5.4-   Emphasize the commercialization end point in EPA's
            and in EPA-led R&D on environmentally beneficial
            technologies.
Commentary

    As discussed earlier in Recommendation 5, EPA's resources supporting technology
innovation represent only a small portion of the total national investment for this purpose.
Within the federal government alone, EPA is at best the fourth largest financing source. It
is therefore critical for EPA to get a large "bang for the buck" in its R&D programs on
environmentally beneficial technologies. One key way to do this throughout the R&D life
cycle is to increase EPA's focus on the commercialization end point.

    Improving the productivity of its environmental technology R&D is a management
issue  of significant dimension to EPA. The lack of credible cost of performance
characteristics for some environmental technologies, whether EPA has a proprietary interest
in them or not, limits the nation's ability to meet its declared environmental objectives.

    Accordingly, it is important for the agency to focus its efforts on the commercialization
end point when it plays the role of technology developer, when it acts as a tester and
evaluator of new technologies, and when it functions as a designer or certifier of test
methods and protocols. The following discussion suggests some specific steps that EPA
should take to build the commercialization end point into its technology R&D activities:

    a  BUILD THE COMMERCIALIZATION END  POINT  INTO EPA'S
        TECHNOLOGY R&D EFFORTS: Commercialization potential should
become an explicit consideration in R&D planning, targeting, and funding decisions;  in
decisions about whether to continue support for individual lines of research; as a factor in
designing test protocols; and as a focus of data analysis and reporting. The agency should
think  of the internal transfer of technology information as a "first use" of the information,
and plan for subsequent uses by permitted organizations. EPA should similarly encourage
the "R&D cooperation council" for environmentally beneficial technology to focus on the
commercialization end point throughout the R&D life cycle (see subrecommendation 5.1
and 5.2 "e").
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    The trend for EPA to support university-based consortia, combining the efforts of
government, industry, and academia to develop and commercialize environmentally
beneficial technology, has been an important development over the past several years. This
trend should continue, because it encourages cooperation, leveraging, and
commercialization potential (see subrecommendations 5.1 and 5.2 "i"). The proposal of a
mandatory leveraging requirement for a significant portion of EPA's annual investment in
technology-related R&D is made in large part to encourage EPA to focus on high potential
technologies (see subrecommendation 5.1 and 5.2 "f). Further, as discussed in
subrecommendation 5.1 and 5.2 "d", EPA's environmental technology R&D plans should
explicitly describe what the expected commercialization end point is for each  research
project, how progress towards the end point will be evaluated, how the end point will be
reached, and how the results will be diffused. This new emphasis on commercialization
will increase the value of agency R&D results by focusing its R&D resources on market
needs and requirements.

    b. BUILD EXPERTISE IN ECONOMICS, MARKETING, AND
        COMMERCIALIZATION:  To become a partner with industry,  EPA will have
to become more knowledgeable about market trends and behavior, and develop the skills
necessary to recognize what is commercially relevant. EPA should develop expertise in
market planning, product development, and the dynamics of  supply and demand in
regulated industries. These skills should be widespread and  decentralized. All parts of
EPA will need to increase their capacity in this area, including the regulatory programs
which will find these skills particularly useful in light of their experimentation with
incentive based environmental management strategies. Every technology laboratory should
have these skills in house, as well as ORD headquarters and the media offices.

    This expertise can enhance the agency's R&D efforts on environmentally beneficial
technologies throughout the R&D life cycle by making them  more able to detect and more
responsive to market needs. The expertise is needed to help  strengthen EPA's
effectiveness as a key player in the diffusion system, as well  as in conducting R&D and in
writing regulations. It is also important to the efficient allocation of resources for the
diffusion of EPA-owned technologies, which requires knowledge of what regulated
industries are demanding and what provider industries can do.
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Although EPA is not a major developer of environmentally beneficial technologies, the
agency should be careful that what it does develop meets real world needs. Careful market-
based planning and a strengthened relationship with industry can increase EPA's ability to
anticipate these needs in R&D programs. Commercializing promising technologies
requires expertise in market analysis and product development. Even if EPA does not
actually commercialize and market technologies itself (which is not recommended by the
TIE Committee), the ability to engage in systematic, mutual feedback with technology
developers and users will enhance and focus all environmentally related technology
development, testing and evaluation, data collection, and commercialization efforts, both
public and private. This ability will therefore enable EPA to increase the leverage it gains
with its research resources.

This new expertise will enhance the agency's environmentally beneficial technology
diffusion efforts by making them more responsive to market needs and requirements.

c .- MAXIMIZE THE USE OF ETTA TO ENSURE
COMMERCIALIZATION OF EPA'S ENVIRONMENTAL
TECHNOLOGY RESEARCH SUCCESSES: In subrecommendation 5.1
and 5.2 "1", the TIE Committee suggests steps that EPA should take to make greater use of
the Federal Technology Transfer Act (FlTA) to enhance the commercialization chances of
EPA's environmental technology research successes. These suggestions are important to
the realization of the commercialization recommendations in this section.

d . REQUIRE PRIVATE SECTOR CO-FUNDING FOR PART OF
EPA'S TECHNOLOGY R&D: In subrecommendation 5.2 "f', the TIE
Committee points to the necessity of leveraging EPA's scarce environmental technology
R&D resources through the requirement of private sector co-funding for part of EPA's
program. These suggestions are also important to realizing the commercialization
recommendations in this section.
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    Appendix  1:    Presenters and  Participants at
                   Diffusion Focus  Group Meetings
Presenters' and Participants at the Diffusion Focus Group Meeting, January
15-16, 1991 Research Triangle Park, North Carolina
Mr. John W. Adams
Mr. Benjamin Bochenek
Mr. William W. Carpenter
Mr. John Convery
Mr. James Hall
Ms. Margaret Kelly
Mr. Calvin Lawrence
Mr. Blair Martin
Mr. Michael Mastracci

Mr. Bruce Mattson
Mr. Scott McMoran
Mr. Michael Moore
Mr. Ronald Patterson

Ms. Francis Richards
Dr. Jon Soderstrom
National Environmental Technology Applications Corp.
EPA Office of General Counsel
Martin Marietta Energy Systems, Inc.
EPA Risk Reduction Engineering Laboratory
U.S.D.A. Agricultural Research Service
EPA Office of Solid Waste and Emergency Response
EPA Center for Environmental Research Information
EPA Air and Energy Engineering Research Laboratory
EPA Office of Environmental Engineering and Technology
  Demonstration
National Institute of Standards and Technology
EPA Grants Administration
EPA Office of Technology Transfer and Regulatory Support
EPA Atmospheric Research and Exposure Assessment
  Laboratory
EPA Research Triangle Park Grants
Martin Marietta Energy Systems, Inc.
Presenters and Participants at the Diffusion Focus Group Meeting, July 29-
30, 1991, Cincinnati, Ohio
Mr. John W. Adams
Mr. Frank Altmayer
Mr. Jay Benforado
Mr. William W. Carpenter
Ms. Patricia Cook
Mr. William Copa
Dr. Robert Detroy
Mr. Charles (Ed) Gross
Ms. Katherine Hain
Mr. Richard Kibler
Mr. Calvin Lawrence
Mr. Michael Moore
Dr. Peter Preuss
Mr. John Schofield
Mr. Joel Szabat
Mr. Thomas Zosel
National Environmental Technology Applications Corp.
Scienfic Control Laboratories, Inc.
EPA Office of Technology Transfer and Regulatory Support
Martin Marietta Energy Systems, Inc.
EPA Office of Research and Development
Zimpro-Passavant
Allied Signal Corporation
EPA Office of Water
Department of Energy Technology Development Office
Department of Defense
EPA Center for Environmental Research Information
EPA Office of Technology Transfer and Regulatory Support
EPA Office of Technology Transfer and Regulatory Support
IT Corporation
EPA Committee on Technology Cooperation
3M Corporation
Presenters and Participants at the Diffusion Focus Group Meeting, October
22-23, 1991,  Washington, D.C.
Mr. John W. Adams
Mr. John Cross
National Environmental Technology Applications Corp.
EPA Office of Pollution Prevention
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Presenters and Participants at the Diffusion Focus Group Meeting, October
22-23, 1991,  Washington, D.C. (continued)
Dr. Samuel Doctors
Mr. Robert Finnigan
Dr. Bruce Guile
Mr. Brent M. Haddad
Mr. Alan Hecht
Mr. Michael Mastracci

Mr. Richard Marczewski
Ms. Jan Me Alpine
Mr. Rodney Sobin
Mr. Donald Walukas
California State University, Hayward
Finnigan Corporations
National Academy of Engineering
Technology Transfer Consultant
EPA Office of International Activities
EPA Office of Environmental Engineering and Technology
  Demonstration
General Motors Advanced Engineering Staff
EPA Office of Cooperative Environmental Management
World Resources Institute
National Center for Manufacturing Sciences, Inc.
Presenters and Participants at the Diffusion Focus Group Meeting, January
22-23, 1992, Washington, D.C.
Mr. Keith Betton
Mr. John Cross
Mr. Alan Ehrlich
Mr. Daniel Esty
Mr. Robert Finnigan
Mr. Tom Gorman
Mr. Peter Green
Mr. Brent M. Haddad
Mr. Mark Joyce
Mr. Steve Lingle
Dr. Alan Lloyd
Mr. Jim Lund
Mr. Michael Mastracci

Ms. Emma McNamara
Mr. David Osterman
Ms. Kathy Porter
Mr. Alex Ross

Mr. Ronald Slotkin
Mr. Joel Szabat
EPA Office of General Counsel
EPA Office of Pollution Prevention
EPA Office of General Counsel
EPA Office of Policy Planning and Evaluation
Finnigan Corporations
EPA Office of General Counsel
Department of Energy
Technology Transfer Consultant
EPA Office of Air and Radiation
EPA Office of Research and Development
South Coast Air Quality Management District
EPA Office of Water
EPA Office of Environmental Engineering and Technology
  Demonstration
EPA Office of Administration and Resources Management
EPA Office of Administration and Resources Management
Kerr & Associates
EPA Office of Environmental Engineering and Technology
  Demonstration
EPA Office of Technology Transfer and Regulatory Support
EPA Committee on Technology Cooperation
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APPENDIX 2: Recommendation 4 from the TIE
                     Committee's  1991 Report &
                     Recommendations, "Permitting and
                     Compliance Policy: Barriers to U.S.
                     Environmental Technology
                     Innovation"
    Recommendation 4:

    Support regulators and other involved communities to maximize
    the effectiveness of improvements recommended in permitting and
    compliance systems.

    4.1   Institute a system of incentives, training, and support to
         retain experienced state and federal permit writers who
         participate in permitting decisions involving the testing or
         early commercial use of innovative environmental technologies.

    4.2   Institute a system of incentives, training, and support to
         retain experienced state and federal inspectors and compliance
         staff who participate in decisions involving innovative
         environmental technologies.

    4.3   Provide support to prospective innovative technology
         permittees (including technology developers and technology
         users).

    4.4   Emphasize the role of EPA's Office of Research and
         Development (ORD) as consultant to federal, state, and
         local government permit writers and inspectors to provide
         information on innovative technologies for environmental
         purposes.

    4.5   Institute systems  to provide the public with information
         and support related to the testing and use of innovative
         environmental technology.
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4 . 1 Institute a system of incentives, training, and support to
retain experienced state and federal permit writers who
participate in permitting decisions involving the testing or
early commercial use of innovative environmental technologies.
Commentary

The TIE Committee recommends that a systematic program be instituted for the
purpose of retaining experienced permit writers, and to encourage, support, reward, and
train those permit writers to be better prepared, and more favorably disposed, to
processing permits involving testing and/or introduction of innovative technology. Both
increased continuity and specialized support and training are critical to the success of
permitting systems to encourage testing and implementation of new technologies because,
at present, there is little or no incentive for permit writers (who often have limited
experience) to take the risk of recommending or authorizing testing or use of a new
technology.

a. THE IMPORTANCE OF RETAINING PERMIT WRITERS: The TIE
Committee believes that improving the continuity of permit writers would be an important
step towards ensuring the timely and consistent permitting of innovative environmental
technologies. The Committee heard evidence of cases where, in attempting to permit a
new technology, technology developers had to deal with a seemingly constant stream of
new permit writers. All of the hard-won verbal agreements that were reached with the old
permit writer were nullified when the new permit writer came on board. Other developers
presented case studies of how the rapid turnover rate of permit writers had protracted the
permitting of a new technology to such a degree that the expected market niche
disappeared by the time the technology finally received permits. Regulatory agencies
indicated that the turnover rate problem damaged their ability to adequately consider permit
applications on a timely basis, both in terms of staff and their knowledge base.

b. ENCOURAGING FEDERAL AND STATE PERMIT WRITERS:
Comments heard during the Fact Finding meetings indicated, however, beyond the issue
of experience, that permit writers are often discouraged, by unwritten policy, by the lack
of guidance, or by other factors, from writing permits for testing and/or implementation of
new technology. The results were often counterproductive to the development and use of
innovative technology. For example, in those cases where RCRA permits were
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entertained for testing new technology, the regulators pushed for full permitting -- e.g.,

for RCRA technology testing, essentially a complete Part B ~ that limited testers' ability to
define performance envelopes, restricting the value of testing and increasing its cost. This

situation must be reversed, so that permit writers are encouraged to and rewarded for
issuing permits/or safe testing of innovative technology for environmental purposes.

It should be noted that changes at the federal level will have little actual impact if there

are not corresponding changes in state programs. State laws and regulations for the
various programs are generally modelled on those of EPA — but there can be significant

differences, such as California's "permit by rule" for mobile treatment units for treating

non-RCRA wastes. Permit writers in state programs will also have to be brought into the

incentives "loop." State and local participation in the permit team strategy outlined in
subrecommendation 2.3 should be encouraged.

c INCENTIVES SUPPORTING PERMIT WRITERS: As one possible
model of an incentives program aimed at encouraging, supporting, and training permit

writers at federal, state, and local agencies, the TIE Committee recommends the following:

1.- Establish a hierarchy or job ladder for permit writers and incorporate criteria in
performance evaluations along that promotional ladder to address the permit
writers'development of expertise (either single media, cross-media, or
technology-specific). The ladder might include the following elements:

Single-media permit writers. Single media permit writers should be
networked to facilitate information sharing within regions. These
media representatives could serve as team members on the coordinated
permit review teams described in subrecommendation 2.3.

National expert single-media permit writers. A national expert permit
writer program could be established within each of the single media
areas as a next step in the ladder. National single-media experts could
serve as a nationwide information (both technical and regulatory)
resource locus in dealing with innovative technologies. They would
also provide institutional memory in cases where local conditions favor
high turnover rates. (State experts might also be eligible for this
program.)

Cross-media permitting experts within each region,. A rung in the
ladder could be for permit writers who obtain expertise across the
media. In designing the cross-media permit expert role, much use
could be made of the experience gained in current EPA and state (e.g.,
Massachusetts, New Jersey) cross-media inspection and integrated
permitting pilot projects. Team leaders for the coordinated permit
reviews discussed in subrecommendation 2.3 should be drawn from
this pool.
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 1-  Regional liaison permit writers. Regional liaison permit writers would
    serve as coordinators, facilitating access to regional and state single-
    media and cross-media expertise.

 2.  Provide training and model templates, based on the prior testing of innovative
    technologies, to all permit writers.  A concise, yet comprehensive, training
    program should explain the permit writers' role in fostering the successful use of
    innovative technologies for environmental purposes and on information sources
    and networks for identifying technical information. The training program should
    also educate the regulators on how industry innovation works, and on the role of
    ORD and technology groups within other federal agencies, with the goal of
    improving the permit writers potential networking base for technical information.

 3. Strengthen ORD's role as identifier and conveyer of technical information to permit
   writers.  Establish a centralized clearinghouse where permit writers can easily
   access needed information. ORD should help permit writers sift through the
   technical details of newly proposed technologies, explaining how, and if, the
   innovation will be beneficial, and under what conditions, and help the permit
   writer frame permit conditions for unfamiliar technologies. ORD might also be the
   Agency lead for the ombudsman function (see subrecommendations 1.3 and 4.4).

 4. Establish performance evaluation standards and reward systems that promote
   greater support and consideration from permit writers for innovative pollution
   prevention and pollution control technologies.  The first step, as mentioned
   elsewhere throughout this report, would be develop a clear, strong  policy
   statement about EPA's role in promoting technology innovation. Other steps
   could include modifying performance standards and credits ("bean counting") to
   reflect the degree to which a permit writer works to achieve the goals set forth in
   the technology innovation policy statement. The TIE Committee recognizes that
   extra time and risk are involved in processing permit applications for innovative
   alternatives, and for the risk associated with supporting approaches which involve
   the uncertainties in changes in standard technologies and the uncertainties in
   performance projections for innovative solutions. Financial incentives should also
   be considered, as well as recognition and merit awards.

5. Improve data and technical information sources to aid permit writers in their job of
  review ing permit applications involving innovative technologies, perhaps through
  an expansion of the "A TTIC" data base, which now contains information about
  innovative remediation technologies. EPA should collect the information from
  federal, state, and other sources and assemble the data and information in on-line
  databases for PC/Mac users. Information should be collected and assembled in
  information retrieval systems easily accessible to all permit writers.  Information
  should include the following:

       Media affected by the technology
       Emission/effluent/hazardous waste reductions achieved by the technology
       Process descriptions
       Location and results of tests, demonstrations, and early commercial uses
       Level of cleanup (remedial technologies) achieved
       Contact persons, including owner or licensee, plus ORD technical experts
       Existence of patent covering the technology and the availability of licenses
       Key words; similar technologies; terms of art
       Known limitations
       Potential site incompatibilities.
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4.2 Institute a system of incentives, training, and support to
retain experienced state and federal inspectors and
compliance staff who participate in decisions involving
innovative environmental technologies.
Commentary

The TIE Committee recognizes that the need to both maintain continuity of personnel
and promote a more positive approach to innovative environmental technology applies to
inspectors and compliance staff, as well as to permit writers. Asa result, the TIE
Committee recommends that measures to train and support compliance and inspection
personnel be undertaken by EPA and the states.

a . THE SUPPORT ROLE OF FEDERAL AND STATE COMPLIANCE
POLICIES: If EPA and state agency compliance staffs and their respective
compliance policies are not supportive of measures to promote innovation in pollution
prevention or pollution control technology, compliance requirements will remain a barrier
to efforts to innovate. The Committee therefore recommends that EPA open discussions
with state enforcement officials on how best to promote such changes. Some state
programs (e.g., New Jersey and Massachusetts) are already in the first stages of
implementing compliance programs to promote multi-media pollution prevention. The
Committee also recommends that EPA provide support for evaluation, implementation and
expansion of existing state efforts, and for communication between the states on the
success of alternative approaches. Coordination with state efforts to implement HSWA
land disposal phaseout provisions consistent with their SARA corrective action plan
responsibilities are of particular importance from a technological perspective.

b . THE NEED TO REFORM REWARD PRACTICES: Standard bean-
counting approaches to measuring the performance of inspection and enforcement officials
are a disincentive for these officials to support innovative responses to compliance
requirements. Few compliance officials have experience with multi-media approaches to
evaluating facility compliance options. In addition, working with facilities with the
opportunity to develop or implement innovative alternatives presents potential significant
risks and few potential rewards for the compliance official. Reviewing an innovative
approach, or working with a facility to develop such an approach, is almost certain to
require more time than imposing a standard compliance requirement and may involve
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increased scrutiny by managers. Evaluation of an innovative approach is intrinsically

more difficult, since operational capabilities and parameters are generally more uncertain

than standard alternatives, whether for innovative manufacturing evolutions or innovative

pollution control methods. This poses the risk that the compliance official will be held

responsible for blessing an alternative that fails.

c ELEMENTS OF A SUPPPORT SYSTEM FOR COMPLIANCE

PERSONNEL: ifcompliance officials are to be willing to undertake the greater

difficultiesposedbyinnovative alternatives, there must be clear volicv direction, support.

and rewards for their efforts. Three mutually reinforcing elements are key:

L_ First and foremost. EPA or the relevant state agency must have articulated a
compliance policy which clearly establishes promotion r>jenvironmentally
beneficial innovation as a major goal. Once such a clear policy is established,
many of the necessary tools are available. For example, the Agency could
more effectively implement the innovation waiver tools which it has largely
neglected in the past. The TIE Committee reiterates its January 1990
recommendation (1.4.h) that EPA expand the use of existing statutory provisions
which trade compliance delays for improvements in technology (e.g., CWA
Sections 301(k) and 301(n); CAA Sections lll(j) and 113(d)). The Office of
Water has plans to draft revised guidance for the Section 301(k) waiver process,
but in most cases the authorities carry little practical guidance and are seldom
used. (See a further discussion of waivers under subrecommendations 2.1 and
3.3.) The Enforcement in the 1990s Project describes several innovative
enforcement approaches that the Committee believes are compatible with the
greater risk-taking necessary to encourage technological innovation.

2.. Second, the performance evaluation and reward system must be amended to
provide special credit for the compliance official who takes the risk of seriously
evaluating and encouraging such approaches.

5.. Third, in order to promote attention bv compliance officials to innovative
technology alternatives and to promote the retention of inspectors and compliance
staff knowledgeable of and favorably disposed to considering the use of
innovative technologies, the TIE Committee recommends a parallel incentives
program to that outlined above for permit'writers. The major headings below
identify the basic program content (see subrecommendation 4.1 for details):

• Establish a hierarchy or job ladder for compliance staffs and
incorporate criteria in performance evaluations along that promotional
ladder to address the staffs' development of expertise (either single
media, cross-media, or technology-specific).

• Provide training and model templates, based on the prior testing of
innovative technologies, to all compliance personnel. Such training
should include explanation of the role of inspectors and compliance
staff in promoting technology innovation for environmental purposes.
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Strengthen ORD's role as identifier and conveyer of technical
information to compliance personnel.

Improve data and technical information sources to aid compliance
personnel in compliance situations involving innovative technologies.
4.3- Provide support to prospective innovative technology
permittees (including technology developers and technology
users).
Commentary

The TIE Committee has previously recommended (January 1990, recommendations

1.2 and 1.7) that the Agency should build into its technology innovation promotion

strategies comprehensive approaches to inform regulated parties, particularly small and

medium-sized businesses, about (a) applicable environmental requirements; (b) the

advantages of developing and using innovative technologies to meet these requirements;

and (c) EPA's specific programs to foster innovative problem solving. The current

recommendation builds on the January 1990 recommendations and provides some
concrete details on possible informational approaches, some of which are being used

today and all of which can be put to greater use in cost-effective fashion. Many of the

support functions for prospective permittees which follow might be carried out by the

"technology advocate" (see 1.3 and 4.4). These functions include the following:

1.- Outreach seminars on innovative technology permit and compliance policies and
processes.

2.- Information dissemination programs related to innovative technologies. These
can involve coordinated efforts by EPA offices (especially ORD [see January
1990 recommendation l.S.b]), industry associations, state agencies, economic
development authorities, local authorities, professional associations, and others.
Opportunities to assist executive branch organizations and non-governmental
organizations inform their memberships have particular potential. Examples of
potential dissemination mechanisms are:

• Newsletters
• Press releases
• Reports
• Seminars.

3. Access to the on-line database to be developed under subrecommendation 4.1
(item 9). Additional information relevant to technology users and potential
permittees might be added to the database, including permit requirements used in
similar technologies and other permit application informational needs. Technical
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   information might also be added to the RCRA/CERCLA "Hotline." Similar
   mechanisms could also be found for water and air. Consideration should be
   given to enlisting the cooperation of a private service (e.g., DIALOG) to ensure
   wide access to the information. Among the advantages of an environmental
   technology clearinghouse are that it would help innovators track the state of the art
   and it would promote selection of appropriate technologies and invention of new
   ones.

4.- Utilization of ORD personnel for technical assistance and subsidized testing.  This
   would coincide with establishing an ombudsman function, as described in
   subrecommendations 1.3. and 4.4. Subsidized testing should be increased,
   although note should be taken of the January 1990 recommendation 1.5.a, which
   calls for expanding testing protocols in the SITE program and analogous testing
   efforts to define performance envelopes.

5.-Assure that the confidentiality of applicants' trade secrets is maintained. The TIE
   Committee notes that the statutory language for trade secret protection varies from
   statute to statue in terms of the procedure for asserting trade secrets. This can
   create confusion among technology owners, licensees, and users, and
   complicates the role of permit writers and compliance personnel involved in the
   consideration of tests and uses of innovative technologies. Trade secret
   protection information and procedures should be readily available, and to the
   extent that there are substantive differences among the environmental media
   statutes, these should be normalized.
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    4.4-  Emphasize the role of EPA's Office of Research and
          Development (ORD) as consultant to federal, state, and
          local government permit writers and inspectors to provide
          information on innovative technologies for environmental
          purposes.
Commentary

    The TIE Committee reiterates its previous recommendation (January 1990 TIE
Recommendation l.S.b) that the Agency should investigate ways to strengthen ORD's
roles in fostering technology innovations (a) identifier and conveyer, with the regulatory
offices, of information about present and future technology gaps; and (b) a non-regulatory
forum that works closely with technology user communities, as in the SITE program, to
evaluate and guide technology development efforts. An analogous role for ORD within
the federal government, the need for which has become more prominent, is to maximize
the flow of environmental technical information among all parts of the government,
including the Departments of Energy and Defense and the national laboratories.

    a. "TECHNOLOGY ADVOCATE":  Subrecommendation 1.3 calls for EPA to
consider establishing a "technology advocate." Its function would provide a single point
of contact for technology developers, prospective users of innovative technology, permit
writers and compliance officers at all levels of government, and the public so that people
can find out information about:

    1.- The policies relating to technology innovation

    2.- Permitting processes relevant to proposed tests, demonstrations, or uses of an
        innovative technology

    3.- The status of permit applications -- for individual tests and demonstrations,
        testing centers, and early commercial uses -- at both federal and state agencies

    4.- The results of tests, demonstrations, and early commercial uses of innovative
        technologies, including information about the performance envelopes of
        individual technologies.
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The function could also profitably include the ability to intervene to encourage timely
consideration of permit applications or even to mediate between permit applicant and
permit writer.

    Currently, the EPA office most closely matching the requirements for the ombudsman
role is ORD.  ORD has strengths in its knowledge of and objectivity about technology,
and in its multi-media orientation, and would need to strengthen its knowledge with
respect to permit processes and permit status.

    b . ORD ROLE WITH PERMIT TEAMS:   ORD also should play a
complementary and significant role in the permit team concept propounded in
subrecommendations 1.3 and 23.  Other roles for ORD in fostering technology
innovation in this document include (a) developer of guidance documents on permitting
technology testing centers and (b) collator of information (e.g., clearinghouses, on-line
databases) discussed under incentives for permit writers and compliance staff
(subrecommendations 4.1 and 4.2). These roles should be made prominent within the
ORD system and integrated with existing technology transfer and regional scientist
processes.
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    4.5 Institute systems to provide the public with information
          and support related to the testing and use of innovative
          environmental technology.
Commentary

    The Committee believes that one of the most significant barriers to implementation of
innovative environmental technology is lack of public trust in the information presented
during the permitting process, as well as in the actual process of permit review and
approval.  As a result, siting of new facilities, or use of new technologies in existing
facilities, often faces insurmountable public resistance.

    a. THE-NEED FOR AN EARLY, SUBSTANTIVE ROLE FOR  THE
        PUBLIC WITH RESPECT TO INNOVATION: The public concern and
fear of things that are new, whether associated with innovative technology or not, must be
understood and addressed. It is important to realize that no study can prove the absence of
an adverse effect. Every effort must be made to supply the public with as much data as is
available (with understandable explanatory information) and to involve the public in the
permitting process as early as possible. If this is done, by the time permits are issued for
a facility it may not seem as "strange" or "new" but, in fact, very familiar. In addition, for
this reason, care should be taken in the permitting processes with the designation "new",
whether with reference to entire facilities, production processes, or changes to facilities
and processes.

    b . STEPS  FOR PUBLIC PARTICIPATION:  The Committee recommends
two measures which EPA should undertake to improve the quality of public participation
in permitting. Implementing these measures  may involve statutory, as well as
administrative, changes:
    1. Provide detailed information on all facets of a new technology for which apermit
        is sought, and provide (or require the applicant to provide) substantial information
        on all known risk factors relevant to  any permit application.
    2. Redesign permitting processes to afford the public an early and more substantive
        role in the actual design  requirements for facilities that affect them.  An improved
        use of public hearings should be considered, but it should be noted that public
        involvement can occur in other ways, as well.
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     c . TECHNICAL SUPPORT TO LOCAL COMMUNITIES: One way
would be to address the limited resources available to communities that are wrestling with
the problem of how to respond to proposals for environmental compliance made by local
regulated organizations. In particular, communities find it difficult to obtain adequate
technical expertise to assist the community in evaluating the potential contribution of a new
technology and in developing a confident understanding of the level of safety being
provided. Communities often lack knowledge about the regulatory and administrative
processes associated with innovative technologies.

     Environmental policy makers must consider how to provide neutral technological and
regulatory process advice beyond that provided by the regulated organization involved or
the governmental authorities who must approve permits. The Committee notes that some
communities are now entering into agreements to purchase neutral expert advice, using
funds provided by the regulated organization and, in some cases by governmental units.
EPA, for instance,  can provide such support under the "Technical Assistance Grant"
authority of CERCLA (Superfund). Such community-chosen experts may provide the
confidence bridge necessary for having a fair and equitable decision making process. The
Committee suggests that environmental policy makers consider how to make it possible
for local communities to obtain such neutral advice as a matter of routine and on demand,
whenever the use of an innovative technology for environmental purposes is proposed.
One suggestion to this end is that EPA consider the idea that an independent foundation be
established, with partial government funding, to provide communities with access to
independent expert technical and process support.

     d. THE TWO-TIERED PERMIT PROCESS:   The two-tieredpermitting
process recom m ended earlier could help achieve positive public involvem ent.  Under such
a process (see subrecommendation 2.2), phase one — a screening step — would consider
the basic principles and parameters for a potential facility permit, and phase two -- the
detailed consideration step ~ would weigh detailed technical information and result in the
issuance or denial of permits. Phase two would commence on if issues identified in the
phase one have been resolved.

     The public would be involved deeply in each phase. Use of the two-tiered process
could reduce the time and investment required to explore permits for innovative
technologies, either by identifying and resolving basic issues (e.g., characterization of
wastes produced, environmental and health risks,  and process efficiency) early in the
process, or by reaching the point during phase one that no agreement is possible. In this
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latter case, public input to the project could be made earlier, and the project modified or
abandoned before regulators, applicants, and the public have expended as much time and
resources as they would have to if a complete permit application has to be provided.
Importantly, by involving the public in the process early and in a substantive way, the
two-tiered process allows all parties to build the confidence necessary for a successful
dialogue.
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       Appendix 3: Recommendations  to EPA on
                          Technology Cooperation,
                          Technology Innovation, and  Trade
                          and the Environment
Recommendation 1:   Adopt as a major supporting mission of EPA fostering
efforts by the industrial and academic communities to develop and evaluate
environmentally beneficial technology (to improve environmental quality
and also to improve the competitiveness of U.S.  firms in the domestic and
international marketplace).

Commentary: Technology solutions are essential to the successful execution of EPA's
mission. EPA needs to recognize its role in maintaining the viability of the environmental
technology industry, in its broadest sense, by supporting its competitiveness in domestic
and international markets. Some of EPA's programs present barriers to innovation and to
the use of innovative technologies; these need to be addressed, if technology solutions are
to be developed and applied to meet domestic goals. Further, advancing economic well-
being should be a part of the environmental mission. This can best be accomplished and,
indeed, gains efficiency when cooperation and teamwork are established, without
sacrificing desired environmental results.

       Working relationships must be strengthened between governments at the federal,
state, and local levels, and with industry, academia, and environmental groups. To this
end, regulatory and regulatory administrative systems (e.g., permitting, compliance,
certification programs) must encourage regulated entities to consider the widest possible
range of technology options for maintaining compliance and, more broadly, for solving
environmental problems. (The term "widest range of technology options" is meant to
include pollution prevention, pollution control, remediation technology, measurement and
analytic technology, and information management technology.) Further, the technical
competence of government personnel, a  system of incentives and support for these people,
and technical assistance programs must be improved for regulated entities and others who
need information about technology.

Actions:

•- Draft statement for Administrator's signature stating the objectives of this
   recommendation.

•- Establish the technology advocate function, the function of which is to:

       Be a spokesperson for EPA regulations, and supporting policies and
       programs that encourage the development and use of innovative
       technologies to solve environmental problems and maintain compliance.

       Act a as single point of contact for all EPA activities relating to
       technology innovation and diffusion (e.g., regulations, permit
       programs, guidance, R&D, technology performance and availability).

•    Foster information transfer.
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Encourage industry/government interaction (i.e., dialogue, exchange of
personnel).

Maintain clearinghouse on innovative technologies and techniques.

•- Implement regulations and supporting programs that enable environmentally
beneficial innovation to occur domestically.

Write regulations and regulatory administrative actions that encourage
innovation and diffusion.

Provide opportunities (e.g., facilities, regulations, permits, compliance
policies) for testing, demonstration, evaluation, and communication of
innovative technology.

•- Create a performance evaluation and a reward system to encourage and
recognize- government personnel who take actions to promote
environmentally beneficial innovation, a system that recognizes the risk
taking associated with some innovation.

•- Establish TIE Committee activity to maintain a long term
industry/government/public dialogue on innovative technology.
Recommendation 2: Promote professional competence and technical
capability of EPA and state and local rulemakers, permitters, and
compliance staffs.

Commentary: Industry has consistently and pointedly informed the TIE Committee that
EPA staff lacks adequate technical competence and has an insufficient understanding of
industrial processes and outlook. Strengthening technical capability will be important to the
efficiency of transactions between regulators and regulateds, whether about rules, pending
regulations, permit applications, permits, and compliance situations. The Committee notes
that, in response to its previous recommendations on this point, the American Institute of
Chemical Engineers (AIChE), working with EPA, UCLA, and MIT, has begun to develop
training courses that will help elevate the technology competence of federal, state, and local
staffs.

Actions:

•- Strengthen technical training programs for existing EPA staff involved in
rule writing, permitting, and compliance activities, and provide on-site
industrial experience for rulemakers, permit writers, and compliance staffs.

•- Implement exchange programs for EPA staff and industrial personnel so
that each has a better idea of the other's outlook and experience.

•- Strengthen programs that provide technical information to governmental
personnel and make them readily available to rule writers, permit writers,
and compliance staffs.

•- Provide the flexibility to change career paths between Agency divisions.
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•- Create a reward system to recognize improved technical competence (and
risk taking associated with the encouragement of innovative solutions,
including pollution prevention).

•- Create a system for detailing ORD staff into programs that write rules, issue
permits, and perform compliance functions to provide technical support and
to raise their level of technical competence.

•- Establish and strengthen technical and industrial criteria for employment and
continuing training of rule writers, permit writers, and compliance staffs.

•- Work with the Pollution Prevention Education Committee of NACEPT to
establish standards for technical education and criteria for evaluation at the
K-12 grade levels and beyond to increase the pool of technically competent
personnel.

•- Provide environmentally oriented education for scientists and engineers.

Recommendation 3: Clearly define and map the process required to obtain
permits for testing and demonstration, and for operation (for compliance
purposes) of innovative technology.

Commentary: The risks faced by investors, developers, and users of innovative
environmental technology are amplified by the lack of general availability of knowledge
about permitting processes. The unpredictability of these processes compounds these
risks. This situation is not in the public interest, because it stifles the development and
availability of innovative technology for environmental purposes. Further, it weakens the
domestic environmental industry by increasing the cost of innovation. By making the
permitting process explicit, this risk would become more predictable, would be reduced,
and development would be encouraged.

Actions:

•- Each EPA program should map its permit processes and make the "maps"
widely available.

•- Improve the clarity of permit processes and more clearly state the
information required of the permittees.

•- Clarify the roles/responsibilities of all parties.

•- Analyze the processes to streamline them and make them more predictable.
Consider the TIE Committee's recommendation of a "two-tiered" permit
process when innovative technologies, and (therefore) greater risk, are
involved in a permit application.

•- Build into the process encouragement to choose from among the widest
range possible of applicable technologies, including innovative technology
and pollution prevention solutions.

•- Assign high priority to permit applications involving innovative
technologies.
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•-  Establish a program to encourage and facilitate "benchmarking" among
    regional, state, and local permit programs.

•-  Assign responsibility within EPA to one group to track the progress of EPA
    in implementation of the 1991 NACEPT recommendations on permitting
    and compliance policy.
Recommendation 4:   Adopt policies in EPA research and other programs
that ensure that EPA resources devoted to enhancing the nation's
technology base for environmental purposes will gain leverage from private
and other supporters of technology innovation, will be targeted more
frequently to technologies  that are successfully commercialized, and will
more frequently achieve significant market impact.

Commentary:  EPA's resources supporting technology innovation represent only a small
portion (perhaps 5%) of the total national investment for this purpose.  Within the federal
government alone, EPA is only the third largest financing source. These scarce funds
should be applied more effectively by EPA to leverage private sector funds. Improving the
"bang for the buck" is a management issue of significant dimension to EPA: the (lack of)
availability and cost of performance characteristics of some available technologies limit the
nation's ability to meet its declared environmental objectives, and increasingly the
international environmental marketplace represents a "lost opportunity." Serious
consideration should be given to a mandatory leveraging requirement for a significant
portion of EPA's annual investment in technology-related RD&D. The trend  for EPA to
support university-based consortia, combining the efforts of government, industry, and
academia to develop and commercialize environmentally beneficial technology, has been an
important development over the past several years. This trend should continue, because it
encourages cooperation and leveraging. The leveraging effect also could be created with
federal investment support for the testing, development, and demonstration of innovative
environmental technologies (perhaps in the form of a public-private investment fund), with
required matching non-governmental sources in each case.  This approach might require
new resources, however. It should be noted that it is important to recognize in any
management design that mandates leveraging to distinguish between the risk levels
associated with stage of development (i.e., to recognize that early stage technologies are the
most risky).

Actions:

•- Establish mandatory leveraging requirements for a substantial portion (e.g.,
   25 percent) of EPA's technology related spending.

•- Institute planning processes for EPA technology programs that involve
   industry, university-based consortia, and other technology experts who are
   concerned about commercialization and market impact.

•- Assure data compatibility between EPA, DOE, and DOD environmental
   technology RD&D products to enhance the efficiency of federal
   environmental  management efforts and to speed the availability of
   innovative solutions developed in whole or in part with federal support for
   private applications.
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•- Increase the technology market and commercialization expertise within EPA
   and introduce an evaluation of commercialization potential as one criterion in
   RD&D funding decisions.

•-  Study investment fund experience of other governmental entities, and
   consider establishing a public-private investment fund.

•- Assure that EPA policies involving CRADAS seek that greatest reasonable
   degree of commercialization, assure confidentiality, and properly handle
   intellectual property, patents, licenses, and royalties.


Recommendation 5: Establish an industrial user facility program at
specialized EPA facilities.

Commentary: Establishing a mechanism for the private sector or other outside
organizations to avail themselves of the cost-effective use of specialized EPA facilities is a
strong opportunity for government/industry cooperation. EPA has built and operated
several unique and/or specialized facilities that other organizations might find useful for
research, for developing performance data, or for other purposes. These potential outside
users might be willing to pay user fees for the opportunity to conduct trials at these
facilities, of course within the constraints that a reasonable person might impose (e.g.,
limiting outside use to times and types of activity that do not interfere with EPA's
programmatic use of the facility). Their use could also be subsidized as part of EPA's
support mission.

Actions:

•-  Study how other government agencies operate such programs.

•- Establish EPA/ industry team to study EPA facilities, especially those in
   ORD, to determine usefulness and availability for industrial use.

•- Develop necessary procedures and management systems to guide such
    activity.
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Improving Technology Diffusion for Environmental
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6. AUTHOR(S)
David R. Berg, Ronald Vaughn, Morris Altschuler,
Camille Richardson for the TIE Committee
7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)
National Advisory Council for Environmental Policy and
Technology/ Technology Innovation and Economics Committee
U.S. Environmental Protection Agency (A 101-F6)
401 M Street, SW
Washington, DC 20460
8 PERFORMING ORGANIZATION
REPORT NUMBER

EPA/OA/OCEM
EPA 130-R-92-001
9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES)

U.S. Environmental Protection Agency
Office of Cooperative Environmental Management
499 South Capitol Street, SW Rm. 115 (A101-F6)
Washington, DC 20460
10.
SPONSORING/MONITORING
AGENCY REPORT NUMBER
11. SUPPLEMENTARY NOTES
12a. DISTRIBUTION/AVAILABILITY STATEMENT
12b. DISTRIBUTION CODE
13. ABSTRACT (Maximum 200 words)
The United States' potential to improve the environment is drectly related to our ability to produce and apply technological
solutions. The Technology Innovation and Economics (TIE) Committee, a standing committee of EPA's National Advisory
Council for Environmental Policy and Technology (NACEPT), concluded that the environmental regulatory system could
expand environmental progress and improve economic competitiveness if processes that diffuse environmentally beneficial
technologies are used to effectively complement regulations. Enhanced EPA technology diffusion programs, especially those
involving pollution prevention technologies and techniques, are essential to the achievement of EPA's mission. Federal, state
and local regulators, technology developers, technology users, the financial community, environmental groups, and academia
together identified and assessed potentially practical approaches. In this report, the Committee analyzes several critical policy
issues affecting EPA's essential diffusion roles and makes five major policy recommendations, including:
1.-
2.-

3.-
4.-
Making technology diffusion a major supporting mission for EPA.
Building a stronger partnership with technology diffusion providers and users.
Making diffusion and incentives the emphases of EPA's pollution prevention programs.
Expanding support for the international diffusion of environmental technologies to help meet U.S. environmental
and competitiveness objectives.
Increasing the support of diffusion provided by EPA's environmental technology research programs.
14. SUBJECT TERMS
National Advisory Committee for Environmental Policy and Technology (NACEPT),
Technology Innovation and Economics (TIE) Committee, Diffusion Focus Group, technology
innovation, technology diffusion, technology transfer, technical assistance, (continued)
15. NUIVIBES OF PAGES
16. PRICE CODE
17. SECURITY CLASSIFICATION
OF REPORT

Unclassified
18. SECURITY CLASSIFICATION
OF THIS PAGE

Unclassified
19. SECURITY CLASSIFICATION
OF ABSTRACT

Unclassified
20. LIMITATION OF ABSTRACT
-01-280-55
Standard Form 298 (Rev. 2-89)
Prescribed by ANSI Std. 239 -13
298 102

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14. SUBJECT TERMS (Key Words) continued: information management and transfer, training, education,
environmental publications, R&D process, environmental technology research and development (R&D),
pollution prevention, environmental permits, compliance, environmental enforcement, environmental
incentives, non-regulatory environmental approaches, environment, environmental management system,
environmental regulations, technology advocate, environmental partnerships, multi-media, competitiveness,
environmental technology markets, environmental technology imports and exports, technology
commercialization, Federal Technology Transfer Act (FTTA), licensing and royalty policies, cooperative
research and development agreements (CRDAs), environmentally beneficial technologies, environmental
business data, public private partnerships, leveraging, state and local environmental agencies, research
consortia, coordinating environmental technology research and development (R&D), industrial user facility
program, Environmental Protection Agency (EPA), environmental stakeholders

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