United States
                        Environmental Protection
                               Office of the
                               [Mail Code 1802]
September 2000
                        Project  XLIENWEST:   Puget
                        Sound  Naval  Shipyard
                                                         IN MO VAT
Project XL, which stands for "excellence and Leadership," is a national initiative that
tests innovative ways of achieving better and more cost-effective public health and
environmental protection. The information and lessons learned from Project XL are
being used to assist the U.S. Environmental Protection Agency (EPA) in redesigning
its current regulatory and policy-setting approaches. Project XL encourages testing of
cleaner, cheaper, and smarter ways to attain environmental results superior to those
achieved under current regulations and policies, in conjunction with greater
accountability to stakeholders. It is vital that each  project tests new ideas with the
potential for wide application and broad environmental benefits. As of September
2000, over thirty pilot experiments were implemented, and several additional projects
were in various stages of development.

In 1995, a Memorandum of Agreement (MOA) between EPA and the Department of
Defense (DoD) was initiated to provide a framework for the development of regulatory
reinvention pilot  projects  at DoD facilities. This program is commonly known as
ENWEST (for Environmental Investment). This initiative offers DoD facilities an
opportunity to think "outside the box" of the current system and find ways to improve
environmental performance. Additionally, military facilities, through a unique aspect of
the ENWEST initiative, can reprogram funds to finance the implementation of pilot
projects. DoD and EPA designed the ENWEST Agreement to  reflect Project XL

Puget Sound Naval Shipyard (PSNS), a large U.S. Navy industrial facility in
Bremerton, Washington,  provides a range of services for navy submarines and surface
ships, including repair, overhaul, conversion, and  decommissioning of vessels. PSNS
proposes an ENWEST project to address water pollution associated with naval
shipyards. Through this XL Project, PSNS will develop an alternate strategy for
protecting and improving  the health of surface waters in the Sinclair Inlet by using
ecological science and risk-based management, and incorporating techniques
consistent with the EPA's guidelines for Ecological Risk Assessment.   Key elements
include developing a unified ambient monitoring program, a comprehensive electronic
database, a risk-based pollutant prioritization, and Total Maximum Daily Loads
(TMDLs)-all leading to proposed alternatives to current National Pollutant Discharge
Elimination System (NPDES) regulations. This project will be a pilot program to
demonstrate  concepts currently under development for naval shipyards. If successful,
this XL project potentially could lead to a water pollutant trading program that could
maximize water quality benefits,  and minimize costs.

The project will be implemented  in two phases. Phase I will  incorporate an extensive
study/research project involving a mapping/design process and database
development. During Phase II, the mapping/design process will be implemented
based upon  results of Phase I. This XL project, EPA's 42nd, was signed on September
25, 2000.

Some of the superior environmental benefits that PSNS expects to attain through the
unified database include: identifying areas of overlapping data collection, determining
areas where more data should be collected, and assessing the stressors affecting the
health of the  Inlet. The superior environmental performance will be measured by
changes in water quality,  sediment quality, biological health, and biodiversity within the
inlet  ecosystem.   These  data are possible metrics for evaluating the entire project

                         once TMDLs have been put in place and supported by any necessary regulatory
                         flexibility relative to point source discharges (and the Navy's NPDES permit). Superior
                         environmental performance will not flow from Phase I, but  rather from implementation
                         of the entire project. In  Phase I, the Navy expects to provide accurate loadings data
                         for the Sinclair Inlet and possibly Dyes Inlet. This data should enable the state to
                         produce the waste load allocations and TMDLs for identified pollutants.
 In Phase I, no regulatory flexibility is being sought. Rather, PSNS will conduct
 preliminary data collection and modeling for the Sinclair Inlet and watershed. Upon
 completion of the data collection and review of its findings, PSNS may determine to
 seek regulatory flexibility in Phase II.

 In Phase II, PSNS may seek flexibility to design an alternative strategy to current
 National Pollutant Discharge Elimination System (NPDES) regulations. This
 alternative, possibly in the form of a pollutant trading program, will be flexible enough
to allow regulators and the regulated community to select pollution reduction strategies
that will maximize water quality benefits and minimize costs.

 Stakeholder involvement is essential for the success of an ecosystem-wide
 environmental  program.  PSNS held a stakeholder meeting on June 15, 2000, which
was attended by local residents, representatives from Washington Department of
 Ecology (WDOE). Washington Department of Natural Resources, Bremerton City
 Council, Kitsap County, Suquamish Tribe, Kitsap Public Utility District, and local
 Restoration Advisory Boards (RAB). Stakeholder involvement will continue in the
selection of environmental goals and prioritizing the actions necessary to achieve
these  goals.

   Will the use of innovative watershed-scale ecological risk assessment tools better
   'inform TMDL development and result in a more environmentally protective strategy
   for managing pollutant sources in the Sinclair Inlet?

   Will allowing a water pollutant trading program maximize water quality benefits,
   and minimize costs?
Region  10:                                Bill Glasser           206-553-7215
EPA HQ:                                  Sherri Walker         202-260-4295
Puget Sound Naval Shipyard:              Diane Manning        360-476-7111
Washington State Department of Ecology:  John Glynn           360-407-6694
More information about this XL Project, or the Project XL Program, is available on the
Internet at http://www.epa.gov/proiectxl under "Information on Specific XL Projects," or
via Project XL's Information Line at 202-260-5754,
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