United States
                  Environmental Protection
                 Office of the
                 TMail Code 18021
September 1998
Project XL Preliminary
Status Report
An Evaluation of Projects in Implementation

Executive Summary
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 Project XL Preliminary Status Report	September 1998

                                   Executive Summary

    On March 16, 1995, the Clinton Administration announced a portfolio of reinvention initiatives to
 be implemented by the U.S. Environmental Protection Agency (EPA) as a part of its efforts to achieve
 greater public health and environmental protection at a more reasonable cost.  For one of these
 initiatives, Project XL-which stands for excellence and Leadership-EPA entered into a series of
 specific project agreements to produce data and experiences to help the Agency make improvements in
 the current system of environmental protection. The goal of Project XL is to test ways of producing
 superior environmental performance with improved economic efficiencies, while increasing public
 participation through active stakeholder processes. As of August 1998, there are 10 XL projects in the
 implementation phase and 20 XL projects under development. As the Agency works to  streamline and
 improve current procedures for designing and implementing XL projects, a number of important
 lessons can be learned from XL projects in the implementation phase. A review of the projects in the
 implementation phase can offer EPA, industry, and stakeholders valuable insights into the
 development, implementation, and, ultimately, the transferability of XL projects.

    This Preliminary Status Report examines three XL projects that implemented Final Project
 Agreements (FPAs) in January 1998: Weyerhaeuser-Flint River Operations, Oglethorpe, Georgia; Intel
 Corporation-Ocotillo Site, Chandler, Arizona; and Berry Corporation Facility, Labelle, Florida. This
 report covers the projects' progress in meeting FPA commitments, stakeholder participation outcomes,
 environmental performance, and lessons learned. This report also presents the data available on
 economic and environmental costs and benefits to the public and private sectors involved in the three
 XL projects. With this information, Agency senior management-as well as other XL project
 stakeholders-will gain a  better understanding of the projects underway and how the Project XL process
 can be improved.

 Environmental and Economic Performance

    Gaining superior environmental performance and economic efficiency are major objectives for each
 XL project. The data for the projects indicate that, overall, the projects result in key benefits for the
 environment, the project sponsors, and stakeholders, such as:

 For the Environment:
        Decreased waste, water, and air emissions.
        Eliminated hazardous waste streams and sources of odor problems.
        Increased  recycling.

 For Project Sponsors:
        Substantial cost savings on capital and process expenditures.
        Better stakeholder relationships.
        Improved  ability to adapt processes  and products due to changes in consumer demand.
        Improved  environmental control programs with reduced  costs in employees' environmental
        management training.

For Stakeholders:
        Improved  availability of information from the companies.
        Environmental mentoring and educational activities for local students and community groups.

Project XL Preliminary Status Report	September 1998

    Although this report shows that all three project sponsors gained economic benefits as a result of
participating in Project XL, at this time the projects do not have enough quantitative date available for
indepth costfoenefit analysis, including:

       Assessing what the potential cost outlays and savings could be at a national level for an industry
       sector or sectors to implement specific regulatory innovations.
       Comparing the costs of operating under the XL projects' innovations with the costs of
       operating under the conventional programs for coregulators (e.g., federal, state, and local
       Understanding the economic costs and benefits of the XL innovations for local community'
       representatives and national environmental nongovernmental organizations.
Innovation and System Change

    The Weyerhaeuser, Intel, and Berry experiments provided EPA with demonstrations of site-specific
stakeholder participation models and opportunities for close collaboration with state and local
programs. These projects also have provided arenas for testing innovations such as:

       Allowing alternative ways to meet maximum achievable control technology standards required
       by the Clean Water Act.
       Using the Internet to give greater public access to environmental information and to end
       fragmented reporting to coregulating agencies.
       Employing methods that incorporate broad environmental management system approaches,
       Comprehensive Operating Permits (COPs), and flexible permitting requirements that allow
       facilities to reduce sources of air, water, or waste regardless of expansion or production

    As a result, these projects have lead agency to improve the federal Pulp and Paper Cluster Rules;
cite the XL program in a Federal Register notice announcing EPA's intent to support and help promote
the development and use of Environmental Management Systems; explore the use of the Internet
reporting for facilities; and consider designing a "how to" process guide for completing a COP.
XL Project Development-Lessons Learned

    An analysis of each project in this report reveals challenges experienced by those involved in the
projects' development. As EPA makes progress toward its goal of 50 XL Projects in implementation
or development by September 1999, the Agency will continue to work on improving the project
development process and can draw on these lessons learned to do so. The individual projects'
experiences, for example, demonstrate that clearly outlined goals are needed at the beginning of each
XL project. Early identification and understanding of goals by the project sponsor, EPA, and other
project participants allows for a smoother process of proposal and FPA development and helps to
ensure project stakeholders move in the direction of a sound partnership.

 Project XL Preliminary Status Report    	September 1998

    Also, the individual projects' experiences clearly demonstrated that having Agency "champions"
 for specific projects at senior management and stafflevels enhanced the quality of a project's
 development process and outcome. More specifically:

       Strong support from Agency management is critical. This support includes ensuring clear
        direction, empowering Agency staff that participate in negotiations, and providing travel
        resources for onsite visits.
       EPA must recognize and develop the organizational structure necessary for project decision-

    Meaningful and organized participation on the part of community and national nongovernmental
 organization representatives has been recognized as a cornerstone of a successful XL project and is a
 criterion of the project selection process. This report documents valuable lessons in facilitating and
 attaining a meaningful stakeholder participation process, for example:

       Building trust is critical. Facilitated stakeholder processes, face-to-face meetings, and site visits
        are demonstrated mechanisms for building trust.
       Input needs to be obtained from local stakeholders early in the process. Resources should be
       made available to ensure local stakeholders have the resources to assess the technical and
        environmental issues.
      National nongovernmental organizations should be involved earlier in the negotiation process.
       When these organizations are not fully engaged in the stakeholder process in an early and direct
       way, their participation in the negotiation process is hampered.
      Clarity of the XL process and objectives is an essential criterion for stakeholder involvement
       and progress in developing the FPAs.
Next Steps for Evaluating the XL Program

    Using this report as a starting-point, EPA plans to continue tracking and evaluating the progress of
the XL program. The goals of evaluating XL include three areas: developing assessments of individual
XL projects from the perspectives of the stakeholders, project sponsors, and regulatory entities;
cataloging program contributions to testing innovations and developing "cleaner, cheaper, and smarter"
alternatives to the current environmental regulatory system; and identifying areas where the XL
program can be strengthened. Specifically, future evaluation efforts will include:

       Case studies of all projects implementing FPAs (on-going).
       Evaluations of XL stakeholder processes (in  1999 and 2000).
       A cos^enefit analysis framework that will allow EPA to quantify the economic and
        environmental impact of XL projects-from the perspective of project sponsors, regulators, and
        environmental and community stakeholders (1999).
       Annual reports of program progress (January 1999 and January 2000).
       Communicate evaluation results to the public via the Project XL home page (on-going) and
        other mechanisms.