State  Innovation   Grant  Program:   Kentucky
                          Implementing Kentucky's Environmental Leadership Program -AVertical
                          Start-up Model with Multi-State Applicability (2005 Competition)
                                                             Project Background:
In 2002 EPA introduced the State Innovation Grant Program to support
efforts led by state environmental agencies to test innovative approaches for
achieving better environmental results and improved efficiency in permitting
programs. Between 2002 and 2007, the State Innovation Grant program
competition awarded over six million dollars to support 35 state projects that
test permitting innovation for a variety of regulated entities including several
small business sectors. A summary of the awards by year appears in the
table below.
   State Innovation Grant Program Statistics, 2002-2007
I Competition   Proposals   Proposals
    Year      Submitted   Selected
  2002/2003  I     9Q     i     fi
Total Program
 Funding ($)
                                       $1.425 Million
                                       $1.479 Million
                                       $1.243 Million
                                       $1.611 Million
                                       $6.376 Million
"Innovation in Permitting" has been the theme of the State Innovation Grant
competition since its inception.  In the last three competition cycles states
received awards for projects in the following three categories:
  The Environmental Results Program (ERP) is an innovative
  approach to improving environmental performance based on a system
  of the interlocking tools of compliance assistance, self-certification
  (sometimes, where permissible, in lieu of permitting), and
  statistically-based measurement to gauge the performance of an entire
  business sector. The program utilizes a multimedia approach to
  encourage small sources to achieve environmental compliance and
  pollution prevention. (See:
  Environmental Management System (EMS) is a system involving a
  continual cycle of planning, implementing, reviewing and improving the
  processes and actions that an organization undertakes to meet its
  business and environmental goals. EMSs provide organizations of all
  types with a structured system and approach for managing environmental
  and regulatory responsibilities to improve overall environmental
  performance and stewardship. (See:
  Performance Track is a partnership that recognizes top
  environmental performance among participating US facilities of all types,
  sizes, and complexity, both public and private.
NCEI has provided awards also for projects testing watershed-based
permitting, and for permit process streamlining in past competitions.  For
more information on the history of the programs, including information on
solicitations, state proposals, and project awards,  please see the EPA State
     tion Grants website at httD://www.eDa.aov/innovation/statec
The Kentucky Department for Environmental Protection
(KYDEP) has established a strategic priority of facilitating
enhanced environmental performance by both Kentucky's
regulated and non-regulated  entities (e.g., businesses,
municipalities, etc.). Under the current regulatory system,
facility performance is  measured  against minimum
regulatory standards and the  system  ensures the
maintenance of only minimum thresholds of protection.
Additionally, non-regulated entities who contribute to the
environmental health of the state through their voluntary
efforts are often at odds with  regulated entities who are
interested in  reducing their regulatory burden without
sacrificing environmental benefits. The lack of voluntary
efforts on the part of both regulated and non-regulated
entities has not encouraged cooperation. The  current
system does little to  foster environmental stewardship
through  innovation focused on achieving greater
environmental performance  and business efficiency.
Reflecting Kentucky's strategic priorities and with the
support from a US EPA State Innovation Grant, the
KYDEP  is  implementing a  performance-based
environmental leadership program to enhance the existing
compliance-based  regulatory  structure  through
encouragement of efforts to reach beyond compliance.
This  program, titled KY EXCEL,  will encourage
cooperation between regulated and non-regulated entities
(e.g., manufacturers and their  supply chain) to improve
Kentucky's environment.
                       Project Description
                        The mission of Kentucky's environmental leadership
                        program is to promote, reward, and encourage superior
                        environmental   performance    throughout   the
                        Commonwealth of Kentucky. The goal of the program is
                        to positively impact the quality of life for Kentucky
                        residents by encouraging  continual improvement in
                        environmental performance through commitment,
                        partnerships, systemic management, and thoughtful growth.
                        The program members will enhance the environment and
                        society through public and private partnership, expansion
                        of collaboration through networking, the development and
                        adoption of newer, better  manufacturing and control
                                                NATIONAL CENTER FOR
                                                ENVIRONMENTAL INNOVATION

 technologies, and the application of sustainable strategies.
 Specific program objectives are to:

   Improve comprehensive, multi-media compliance
    among the regulated community.
   Reduce pollution and measure results.
   Enroll, recognize, and encourage leaders who commit
    to improving Kentucky's environment.
   Sustain and continually improve results over time.
   Leverage Kentucky's environmental excellence as
    an  economic  advantage.
   Strengthen Kentucky's posture  as an innovative
   Prepare Kentucky for a future  of performance-
    based environmental improvement.
   Build partnerships between Kentuckians (both
    public and private entities) and with regional
   Improve efficiency and reduce  costs for Kentucky
    businesses and for the Department for
    Environmental Protection.
   Align synergistic programs that  encourage
    leadership   across all media.
   Document the design and implementation process
    for use by other states.
 KY EXCEL is  designed to appeal to a broad range  of
 businesses, industries, and non-governmental organizations
 (NGOs). By encouraging a diverse membership, the
 program will provide an  innovative opportunity to build
 networks not only within like-businesses and NGOs, but
 also across boundaries that currently  exist  between
 regulated entities, NGOs, and government.  Candidates
 enter the program through  the portal of the newly
 established Division of Compliance Assistance where they
 received a level of enforcement  protection during the
 assessment process via Kentucky statute. After completion
 of entry requirements, regulated entities may choose  to
 participate in one of three membership  tiers: Master,
 Leader, or Partner.  Each tier requires correspondingly
 higher levels of  environmental performance and provides
 additional incentives for meeting/exceeding goals and for
 completing state priority projects. In addition to the three
 tiers, a fourth membership category will be established for
 Advocates, who are typically non-regulated entities with a
 strong interest in environmental improvement.
 This grant-funded project will last three years until February
              Connection to EPA's Goals

                This program directly supports EPA's Strategic Goals as
                well as several Cross-Goal Strategies. By improving overall
                compliance performance  and developing the concept of
                environmental stewardship, the program specifically aligns
                with Goal 5. In addition, the program supports EPA's goals
                (Goals  1 and 2)  by encouraging pollution prevention
                practices and directly measuring the amount of pollution
                reduced to each media. The program  also will  enhance
                these goals (Goals 3 and 4) by identifying and rewarding
                the completion of projects that specifically improve the
                community through  cooperative efforts. Cross-Goal
                Strategies that are used in the program include developing
                partnerships, sharing information through reporting,
                networking,  documentation, education, and rewarding
                innovation in practices and technology.
                Project Contacts:
                Cheryl Taylor
                Office of the Commissioner
                Frankfort, KY 40601
                (502) 564-2150 ext. 125 phone; FAX (502) 564-4245

                Betty Winter
                US Environmental Protection Agency  Region 4
                61 Forsyth Street, SW
                Atlanta, GA 30303-8960
                (404) 562-8279; FAX (404) 562-8269

                Eileen McGovern
                U.S. Environmental Protection Agency
                Washington, DC 20460; MC (1807T)
                (202) 566-2881; FAX (202) 566-2989
                Program Contact:
                Sherri Walker
                State Innovation Grant Program
                U.S. Environmental Protection Agency
                Washington, DC 20460 (MC1807T)
                (202)-566-2186; FAX (202) 566-2220
United States
Environmental Protection
Office of Policy,
Economics and Innovation
    October 2007