United States
           Environmental Protection
Office of the
September 1998
            Evaluation  of Project XL
            Stakeholder Processes
            Executive Summary
     Environmental Excellence and Leadership
                                     HI I IIYI MTI ON


Evaluation of Project XL Stakeholder Processes	September 1998
                    Executive Summary and Recommendations

       Project XL—which stands for excellence in Leadership—is a U.S. Environmental
Protection Agency (EPA)-sponsored pilot test of facility-specific innovative strategies to produce
superior environmental performance. In accepting proposals for initial XL projects, EPA
established a criteria of demonstrated stakeholder support as one of the conditions for obtaining
EPA approval of the project. When Project XL was first announced in May 1995 in the Federal
Register., EPA outlined its desire for stakeholder involvement, but did not make specific
recommendations  about the design of the stakeholder processes, leaving the responsibility for
creating a process that would meet the criteria to the industry sponsor or applicant.

       This report provides a review of the design and conduct of the stakeholder processes at
four of the initial XL projects to reach Final Project Agreements (FPAs). It outlines the varieties
of models developed by company sponsors, and reports stakeholder perspectives on the processes
as gathered in a stakeholder survey.

       Several different models of stakeholder involvement resulted from the original call from
EPA for XL project sponsors to design a site-specific model for stakeholder participation. The
four sites examined in this report demonstrate two basic models:

       •      Consensus Decision-Making with Stakeholders
       •      Public-Consultation and Information Sharing

The processes used by Intel and Merck fall into the first category; HADCO and Weyerhaeuser are
examples of the second.

       The interviews, observations, and survey data gathered for this analysis provide an initial
view of the strengths and weaknesses of the two basic models of stakeholder involvement that
emerged in early XL efforts. Neither the consensus decision-making model nor the public-
consultation and information sharing model was clearly determined  to be a superior method of
involving stakeholders in the XL FPA development process.

       The survey and observation results showed clarity of structure and objectives for the
process is more important to success  and credibility than type of stakeholder involvement
process. The  XL project rated as  most effective by survey respondents was a public-consultation
process at Weyerhaeuser that relied heavily on long-standing community-company relationships to
establish support for the regulatory experiment. The project rated least satisfactory on most
measures was the  public-consultation and information sharing process conducted by HADCO.
The two consensus decision-making processes were ranked in between the other two.

Evaluation of Project XL Stakeholder Processes	September 1998	

       Benefits of the XL stakeholder processes noted in the survey of stakeholders also provide
indications of desirable elements to preserve in any model. The benefits noted include:

       •      Improved, flexible, and realistic environmental planning

       •      Involvement of all interest groups, including community and intergovernmental

       •      Opportunities for citizen involvement in future monitoring of project

       The weaknesses noted in the survey of stakeholders provide indications of pitfalls and
conditions to avoid. They include:

       •      Confusion about, and time consuming nature of, procedures for approval of the

       •      Perceptions that the company could "orchestrate" stakeholder support.

       •      Intervention by national environmental groups that is disconnected from local
              citizen involvement.

       The survey conducted for this  report found that processes rated as highly effective (i.e.,
clearly structured with adequate resources) had a combination of broad distribution of benefits
and high individual and organizational satisfaction with the outcome of the negotiation. Processes
with perceived barriers to participation (e.g., lack of technical information, unclear objectives,
inadequate resources to participate) had lower satisfaction with the distribution of benefits and
with the outcome Thus, process satisfaction and substantive results were closely linked; both
are critical elements of the success of future XL projects.


Consensus Versus Advisory Role for Stakeholders

       •      Determine up front what type of process is appropriate, to allow stakeholder
              responsibilities regarding time commitment and authority to commit to be
              addressed in a realistic  way before the process starts.

       •      Use consensus decision-making processes when:
              —Serious objections to the final outcome might succeed in blocking
              implementation, and options exist for addressing the objections.

Evaluation of Project XL Stakeholder Processes	September 1998	

              —Strong community ownership of outcome is desired.

       •      Use public-consultation and information sharing processes when:
              —Issues in proposal are not controversial.
              —Public notices do not generate much comment.
              —Issues are narrow in scope and don't impact policy concerns.

       •      If a consensus decision-making process is the  desired approach, allocate time for
              training in collaborative process negotiations and on the technical issues likely to
              be the subject of discussion. Time also will be needed in the initial meetings for
              procedural negotiations to ensure all stakeholders feel the process is fair and likely
              to produce an outcome they can live with. If consensus is the goal, agreement on
              the definition of consensus will be a key procedural negotiation. Defining
              consensus as "all can agree to live with, and support, the outcome" is a practical

Consider the use of a facilitator to prevent inadvertent bias from arising when company sponsor is
both negotiator and mediator of disputes arising in consensus decision-making processes.

       •      Through consultation with stakeholders, each XL stakeholder process should be
              developed into a well-defined structure. The experiences outlined in this report
              should assist participants anticipate time commitments and other responsibilities
              new projects will require. The development of a shared understanding of what all
              participants can gain from the process is an important first step in building
              stakeholder support. This could require initial one-on-one conversations with
              affected interests and a synthesis of concerns and issues raised in the one-on-one
              discussions for all to read and understand. Neutrals often can help with these tasks.

National and Local Environmental Group Participants

       •      National environmental groups have commented extensively on past FPAs, but
              have not participated directly in stakeholder groups. In consensus decision-making
              processes, communication between the national  environmental group and some
              local environmental groups needs to be improved. Methods for addressing this
              —Identifying opportunities for national environmental groups to participate in
              the stakeholder process.
              —Developing viable links between national groups and the local groups who
              are direct participants.
              —Establishing consultation with national groups by the stakeholder group as a
              formal part of the process of public consultation throughout the FPA

Evaluation of Project XL Stakeholder Processes	September 1998	

              development process.

Technical Expertise for Citizen Stakeholders

       •      Funding for limited technical expertise already has been adopted by EPA as a
              strategy for supporting citizens in the technical discussions. Ensuring the funds are
              used to answer questions important to all involved in the specific negotiations will
              be essential. The technical assistance program should be monitored and evaluated
              by EPA and environmental groups.

       •      National environmental group staff often have the substantive expertise that citizen
              environmentalists lack. Implementing recommendations noted above for pairing
              national and local environmental group direct participants also can improve the
              technical resources available to local groups.

       •      To address perceptions identified in RESOLVE'S survey that local groups achieve
              less than other constituencies of what they seek in the XL stakeholder processes,
              the following strategies might be useful: provide training in negotiation,  scope out
              the stakeholder negotiation issues with the local groups in advance, coach the local
              negotiating team as the process  proceeds, and clarify expectations with local
              representatives at the outset.

Costs and Benefits

       •      Improving the integration of the XL process with government agency approval
              processes might reduce concerns about the time-consuming nature of the
              stakeholder processes.

       •      Monitoring stakeholder involvement as implementation of the FPAs proceed will
              help to further evaluate whether the time spent resulted in the benefits predicted by
              the stakeholder group.


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   Environmental Protection Agency
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