United States
     Environmental Protection
     Agency
Office of Policy,
Economics, and
Innovation (1801)
EPA100-K-00-001
September 2000
 PROJECT


Encouraging
 Innovation,
  Delivering
     Results
      ) Printed on paper that contains at least 30 percent postconsumer fiber.

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 With Project XL, we sent an
  important message that we




    valued innovation in
environmental protection an
above all, wanted results. We




    opened the door for a




 promising set of regulatory




    experiments to begin.

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EPA  Opens  the  Door  for
          Experimentation

   In 1995, EPA launched an unprecedented new
   program, known as Project XL to test innovative
   ideas that demonstrate environmental eXcellence
and Leadership by those who must comply with
EPA regulations and policies. Basically, we said this
to all of our partners: If you have an idea that offers
better environmental protection results than what
would be achieved under current requirements, then
we will work with you and other interested parties to
put those ideas to the test. With this single action,
we sent an important message that we valued inno-
                               vation in
                               environmen-
                               tal protec-
                               tion and,
                               above all,
                               wanted
                               results. We
                               opened the
                               door for a
                               promising
                               set of regula-
                               tory experi-
                               ments to
                               begin.
   For five years, these experiments have enabled
our society to explore fundamentally new approaches
to environmental protection. By working closely
                                with businesses,
                                communities,
                                states, and
                                other govern-
                                ment agencies,
                                we have been
                                using pilot
                                projects to test
                                bold new ideas
                                that promise
                                better results
                                for the future.
 Superior environmental protection

Cost savings and reduced paperwork

    Stakeholder involvement

  Innovation/pollution prevention
         Feasibilit
Monitoring, reporting and evaluati

    No shifting of risk burden
                                  What led
                                EPA to make
                                this offer?
                                Quite simply, a
                                strong interest in accelerating environmental
                                progress. Recognizing the growing complexity of
                                environmental problems looming before us, we
                                seized the opportunity to modify certain constraints
                                and reduce some costs that could be associated with
                                environmental regulations.  We also understood that
                                others had a great deal of insight and expertise that
                                should be applied to environmental problem solving

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                                      P ROJ ECT   XL
             Project  XL  Delivers  Results
      From the beginning, Project XL has been one of
      the most challenging endeavors EPA has ever
      undertaken. After all, we are a regulatory agency,
and with Project XL we are exploring better alternatives
to our own regulations and policies. We were able to
initiate this program because we set high goals for supe-
rior environmental performance and insisted on public
involvement in developing projects and public account-
ability for results. And yet, not surprisingly, we faced
                         difficult issues in the early
                         stages. We  wrestled with
                         questions like: "What kind
                         of flexibility should be
                         allowed? How do we define
                         "better results"? What can
                         we do within the existing
                         laws? Who needs to be
                         involved in the discussions?"
                         By investigating these con-
                         cerns,  we learned a lot,
                         made adjustments to the
                         program, and found ways to
be more responsive to stakeholder needs. As a result,
Project XL is now an active proving ground for new
environmental solutions.
   Today, EPA has experiments to improve environ-
mental protection underway with a variety of partners:
Fortune 500 companies, small businesses, and state and
local governments. Each project is  designed to produce
important benefits for the sponsor, and indeed they are
doing so. Companies are cutting costs, communities are
getting priority concerns addressed, and regulatory agen-
cies are finding ways to target their limited resources
more efficiently.
   But, the intent was  never to serve only a select few. The
goal of Project XL continues to be much broader—to find
solutions that can  be integrated into our environmental
protection system  for everyone's benefit. Today, that goal is
being achieved in two ways:
•  First, by creating more options for environmental
   management. The United States has one of the
   strongest systems of environmental protection in the
   world, but it is neither perfect nor complete.
   Everyday, conditions are changing. New technology
   is entering the market, better information is becom-
   ing available, and environmental professionals are
   gaining more understanding and experience in man-
   aging their responsibilities. These and other develop-
   ments mean the system must change too. Perhaps we
   need to modify a regulation that inadvertently dis-
   courages facilities from pursuing environmental
   improvement, or maybe we see ways to make  certain
   regulatory procedures more efficient. By giving spon-
   sors a chance to identify problems and potential
   solutions, Project XL provides a means for improv-
   ing the regulatory system that protects us all.
•  Second, by taking a more comprehensive approach
   to environmental management. In the past, most
   environmental problems have been approached
   almost entirely by media: Clean Air Act regulations
   address air pollution; Clean Water Act regulations
   focus on improving water quality, etc. This approach
   has some efficiencies  and it has helped remedy obvi-
   ous problems. But it  has not proven to be a com-
   plete solution, and in fact, serious problems have
   been left behind. By  emphasizing more comprehen-
   sive, integrated approaches to  environmental protec-
   tion, such as looking at facilities and communities as
   a whole, Project XL helps bridge this gap. It helps us
   to optimize environmental, community, and business
   outcomes by stepping back and considering all the
   issues affecting environmental quality.
   This report highlights some of the promising innova-
tions achieved through Project XL to date. EPA is
encouraged by  these preliminary results, and proud that
they have come through partnership with others.

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             Creating  More   Options  for
           Environmental  Management
      Project XL is providing a forum for companies to
      test new technologies and alternative regulatory
      approaches that eventually might be used by
more companies to boost efficiency and achieve better
environmental protection.

Making the Most of Innovative
Technologies
   Do you remember the prevalence and importance of
typewriters just 15 years ago? If so, you can probably
appreciate the speed at which new technologies can take
hold and the boost they can provide in terms of efficien-
cy. These same types of technological leaps that have
made typewriters virtually obsolete are taking place in
the environmental field, and they hold real promise for
improving environmental results.
   Project XL provides a way to move state-of-the-art
environmental technology from the
fringes into the mainstream. It  does
so by providing companies with the
incentives they need to make the
requisite testing and evaluation
worth their time and investment. If
a technology proves successful and
the results are made known, then
others become more receptive to its
use. Over time, this means better
technology getting better results for
a growing number of people.
  Project XL provides

a way to move state-of-

 the-art environmental
Georgia-Pacific Corporation.
At its Big Island, Virginia pulp and
paper mill, George-Pacific is testing
a new "gasification" technology to
control emissions of hazardous pol-
lutants. One of the byproducts of
their manufacturing is a "black liquor," which contains
a mix of  chemicals used in pulp production. With con-
ventional technology, these chemicals are recovered
    technology from

  the fringes into the
     mainstream.
through a process of evaporation and combustion.
Preliminary testing shows the new gasification technolo-
gy uses less energy and significantly lowers emissions of
hazardous pollutants. However, the Georgia-Pacific test
is the first commercial-scale demonstration and there is
some risk the technology may not work as well as
expected. So that testing of this promising new technol-
ogy can proceed, EPA will temporarily exempt the com-
pany from new hazardous waste emission requirements
that are expected to become effective during the experi-
ment.
The United States Postal Service. In Denver,
Colorado, the U. S. Postal Service (USPS) is testing new
technology to reduce air emissions from its fleet of
delivery vehicles. This is being accomplished by replac-
ing high-emission vehicles with newer alternative fuel
vehicles that emit less air pollution. Along with replac-
                 ing more than 800 vehicles, USPS
                 will be encouraging the use of these
                 vehicles by others. They will do so
                 by demonstrating their value and by
                 developing the infrastructure that  is
                 needed to operate these vehicles.
                 Molex Incorporated.  At its
                 electroplating facility in Lincoln,
                 Nebraska, Molex is using new tech-
                 nology to reduce the metal loadings
                 in its wastewater. The new technol-
                 ogy separates the wastewater
                 streams from individual metal plat-
                 ing processes, enabling the compa-
                 ny to recover different metal con-
                 taminants, such as lead and copper,
                 from its wastewater. Molex expects
                 this new technology will reduce
metal loadings to the community's wastewater treatment
plant by 50 percent.

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Project XL: Searching for Solutions
        International Business Machines (IBM)
        Incorporated. In Essex Junction, Vermont, IBM is
        testing another technology for reducing metal contami-
        nants in its waste stream. The new process, which is
        approximately 30 to 40 percent more efficient than the
        previous one, enables IBM to deposit a layer of metal on
        its wafers much more efficiently, maximizing metal use
        in manufacturing and minimizing releases into the
        plant's wastewater system.
t                            International Paper. At its
                            pulp and paper plant in Jay, Maine,
                            International Paper is testing new
                            technology for monitoring air emis-
                            sions. Under current EPA regula-
                            tions, the company is required to
                            measure specific pollutants in stack
                            emissions once a year. But through
                            Project XL,  International Paper is
                            developing and testing an alterna-
                            tive monitoring system that will
                            provide the  company and sur-
                            rounding community with much
                            more information about the facili-
                            ty's emissions. This will be accom-
                            plished with a computer-based sys-
                            tem that can accurately predict pol-
                            lutant emissions on a continuous
                            basis. The results should enable mill
        operators to identify opportunities to reduce emission
        rates and prevent pollution from occurring in the first
        place. In addition, it will provide the surrounding com-
        munity with better information about emissions from the
        facility.
        Progressive Insurance Company. This national
        insurance company is showing that "service" industries
        also have a role to play  in advancing environmental
        technology. Progressive  Insurance proposed a unique
        voluntary program that will base  automobile insurance
        rates, in part, on specific driving  factors, such as mileage
        and time of travel, that affect emissions and ultimately
        the atmosphere. This new program is made possible
        through the use of a global positioning system, which is
        installed in customers' vehicles. Information is recorded
        by the device, and the company then sets its rate based
        on the collected data. As a result, customers have an
        incentive to carefully consider the consequences—for
        the environment and their own pocketbook—associated
        with their driving patterns.
Flexible Compliance With
Environmental Requirements
   One criticism of federal environmental protection
efforts is that EPA's regulatory requirements can be too
prescriptive. For years, EPA has heard: "Give us environ-
mental goals to  meet, but don't tell us how to meet
them." For the past decade, EPA has been building
greater flexibility into regulatory programs through trad-
ing of emission  "allowances" and other approaches.
Through Project XL, EPA is providing companies and
other project sponsors with additional opportunities to
demonstrate their abilities to find innovative approaches
to environmental protection. As the following examples
show, we are finding that a little flexibility can go a long
way toward getting better results.
Denton, Texas. Rather than spending its resources
monitoring and inspecting wastewater treatment facilities
that have excellent performance histories, officials in
Denton requested regulatory flexibility to redirect these
resources to develop a comprehensive watershed protec-
tion program. This approach will support site-specific
watershed protection activities, such as developing buffer
zones along underdeveloped areas, that we expect will
result in better water quality.
Albuquerque, New Mexico.  In an attempt to
reduce pollution loadings at its wastewater treatment
plant, the City of Albuquerque proposed shifting
resources previously used for traditional industrial pre-
treatment practices to  an alternative method of monitor-
ing and additional pollution prevention activities. This
cost-effective approach focuses on  preventing pollution
before it happens rather  than treating it afterwards. The
goal of this pilot is to reduce 13 pollutants  by 10 percent
to 20 percent over the life of the project.
New England University Laboratories. In the
Northeast, a consortium of university laboratories pro-
posed a new approach for managing hazardous wastes  in
laboratory settings. The project enables laboratories to
integrate some EPA  hazardous waste requirements with
Occupational Safety and Health Administration  (OSHA)
standards for managing chemicals. This approach will
lead to better management of the chemicals, which
should help prevent pollution and improve worker and
student safety.

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                                                  i
                                    P ROJ ECT   XL
       Taking  A  More   Comprehensive
           Approach  to  Environmental
                              Management
       Despite strong environmental progress over the
       past three decades, gaps in environmental pro-
       tection remain. Communities and facility own-
ers are considering how to address multiple environ-
mental challenges and how to meet multiple objectives.
To optimize environmental,
community, and business out-
comes it helps to step back and
consider all the issues affecting
environmental quality. This
means looking at facilities and
communities as a whole.
 Communities and businesses
   This more comprehensive
approach to environmental man-
agement is reflected in many of
the projects being conducted
under Project XL. As the follow-
ing examples show, communities
and businesses alike are finding that a broader view
often leads to better results.

Common Sense  Strategies  that
Integrate Community Needs
   Local communities play an increasingly important
role in environmental and public health protection.
Through Project XL we are seeing numerous ways to
meet federal and state standards while also addressing
local  priorities.
Atlantic Steel  Redevelopment. In Atlanta,
Georgia a unique  public/private endeavor has the poten-
tial to serve as a national model for creative environ-
mental problem-solving. Real estate developers, neigh-
borhood groups, the City of Atlanta, Georgia
Department of Transportation, Georgia Environmental
Protection Division, and other government agencies, are
working toward redevelopment of a 138-acre steel site
 alike are finding that a more

comprehensive view often leads
       to better results.
formerly owned by Atlantic Steel. This project, pro-
posed by Jacoby Development Corporation, includes a
multimodal (automobile, pedestrian, bicycle, rail) bridge
that would cross and provide access ramps to the adja-
cent highway as well as connect the site to a nearby
                  MARTA (mass transit) station.
                  When the transportation ele-
                  ments of this project were pro-
                  posed, Atlanta was out of com-
                  pliance with federal transporta-
                  tion conformity requirements,
                  and as a result, Atlanta was not
                  allowed to use federal funds to
                  add to its highway system or to
                  construct certain types of trans-
                  portation projects that require
                  federal approval, even if they are
                  not federally funded. This prohi-
                  bition extended to the proposed
17th Street bridge (and associated highway ramps)  from
the former Atlantic Steel site to MARTA. EPA believes
that the combination of the site's location in a central
urban area, connection to the existing transit system, a
design that promotes pedestrian access, participation in
a Traffic Management Association, and provision of
bicycle and pedestrian conveniences will work together
to reduce growth in automobile traffic in the Atlanta
region. This redevelopment project will demonstrate
that the application of smart growth concepts can make
a difference in travel patterns.
Chicago Development Zones. In Chicago, Illinois
another innovative solution has been crafted to address
air quality concerns. Under a  section of the  Clean Air
Act that has never before been implemented, officials are
creating "development zones" that create incentives for
development in targeted areas. This regional approach
requires the state to track emissions reductions by

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Project XL: Searching for Solutions
                             municipalities in the Chicago area.
                             These reductions will be used to cre-
                             ate an emissions growth allowance.
                             Businesses locating in the develop-
                             ment zones would draw upon the
                             growth allowance and avoid the
                             expense of having to purchase emis-
                             sions "offsets" elsewhere. This pro-
                             vides obvious economic benefits for
         business, but it provides other important regional benefits
         as well. This sort of development targeting will rejuvenate
         city neighborhoods and reduce sprawl and the traffic and
automobile emissions that come with it. This project is
significant also because of the emphasis being placed on
mobile and area source emissions, such as lawn mowers
and small incinerators. This is important given that these
sources account for about 80 percent of emissions overall.

Lead Safe  Boston. In Boston, Massachusetts a  feder-
ally funded program that removes lead from residential
homes and apartments asked for approval to use less
expensive method for handling and disposing of lead-
based paint debris. Massachusetts and EPA regulations
currently require extensive lead testing on architectural
debris and disposal in  costly hazardous waste landfills.
                                     Companies Test Facility-wide Emission Caps
            One of the most significant examples of how companies
            are taking a more comprehensive approach to environ-
            mental management is the use of facility-wide emissions
            caps.  Under the Clean Air Act, companies must obtain
            permit approvals from EPA and delegated state agencies
            whenever they make an equipment or process change
            that significantly increases their emissions. Each process
            or type of equipment may have its own permit require-
            ments, yet some industries require changes frequently to
            keep up  with new technological developments and cus-
            tomer demands. The paperwork and time required for
            these  approvals can be costly, both for the companies
            and the government agencies charged with permit
            review.
            Some  companies have developed projects under Project
            XL to make the permitting process more efficient and
            predictable for their quick-to-market manufacturing
            needs. These projects are based on facility-wide air
            emission caps, which prevent the facility from increasing
            its emissions, but allow process or equipment changes
            without regulatory approval.  Under this approach, facili-
            ties must offset any emission increases with a reduction
            somewhere else within the facility.  EPA generally sets
            the cap below the facility's regulatory threshold for com-
            pliance,  thus ensuring that the project achieves better
            environmental results than would otherwise  be achieved
            under current regulatory requirements.
            Intel Corporation EPA and the Arizona Department
            of Environmental Quality approved a facility-wide emis-
            sions  cap for Intel's semiconductor manufacturing plant
            in Chandler, Arizona. The new limits allow Intel to make
            equipment and process changes and to expand produc-
            tion capacity, without regulatory reviews, as long as the
            total emissions stay below the specified cap.  Since the
project began, the company has remained well under its
emission limits for all applicable pollutants. Intel also has
avoided millions of dollars in production delays by elimi-
nating 30 to 50 new source permit reviews a year. The
company has found the emission caps so successful that
it will invest $2 billion to build a new wafer fabrication
facility (Fab 22) at the site. Under the existing cap, Intel
can proceed with expansion without first going through
regulatory review. In announcing this decision, Intel
noted that "the new facility will help us maintain our
leadership in the extremely competitive world of semi-
conductors. Fab 22 will give us more manufacturing
capacity in order to help us better address our cus-
tomers' growing need for high-performance  micro-
processors."
Merck & Company In a move similar to that of the
Intel project, EPA and the Virginia Department of
Environmental Quality created a facility-wide emissions
cap for Merck's  Stonewall pharmaceutical manufactur-
ing plant in Elkton, Virgina. Developed under a Clean Air
Act permit that prevents significant deterioration of air
quality, Merck's  cap also eliminates regulatory review for
equipment or process changes as long as the facility's
emissions stay below the specified cap. With this
approach, Merck is reducing the plant's total emissions
of criteria air  pollutants by 20 percent, sulfur dioxide
emissions by 25  percent, and nitrogen oxide  emissions by
10 percent, thus ensuring better environmental results. In
addition, Merck  will have flexibility under future regula-
tions to lower its cap instead of implementing specific
control technologies that might be required for other
facilities. Merck expects that reducing permit reviews
and potentially avoiding new technology investments will
save the company millions of dollars.

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                                                                                        Project XL: Searching for Solutions
But Lead Safe Boston saw a more cost-effective option of
using a household hazardous waste exception that allows
such debris to be disposed of in a municipal solid waste
landfill that meets certain performance criteria. Through
this action, Lead Safe Boston expects to substantially
reduce disposal costs. This will enable them to remove
lead from more homes and protect up to 30 more chil-
dren from lead exposure. But these benefits will extend
much more broadly. As a result of the Lead Safe Boston
project, a new policy issued by EPA this summer allows
residential lead debris to be  disposed in municipal land-
fills, thus enabling contractors across the country to per-
form lead abatement more quickly and cost-effectively.

Offering Businesses  Incentives
to Improve  Environmental
Performance
   What really drives businesses to improve environmen-
tal performance at a manufacturing facility? Is  it granting
regulatory flexibility to businesses that demonstrate
strong performance? Maybe, but perhaps there are other
incentives that are equally or more important.  Project XL
is enabling  EPA to understand the priorities that moti-
vate companies to stronger environmental stewardship.
Often we must consider an operation in full to find cre-
ative solutions that get better environmental and eco-
nomic results.
Crompton (formerly CK Witco). A strong interest
in getting better results  and lowering costs led  Crompton
to take a more comprehensive approach to environmen-
tal management at its chemical manufacturing facility in
Sistersville, West Virginia. To start, the company
launched a  facility-wide waste management and pollu-
tion prevention study. Employees identified and charac-
terized all plant wastes and emissions, identified and pri-
oritized pollution prevention opportunities, and devel-
oped plans  to implement the most feasible options for
improving environmental management. An internal pol-
lution prevention council was organized to select the
most promising opportunities and to pursue and moni-
tor progress. In all, more than 350 pollution prevention
opportunities were identified, and more than 60 waste
minimization or pollution prevention projects are being
implemented. This action, along with other environmen-
tally-beneficial projects, earned the company regulatory
flexibility in complying
with new air emission
regulations. Rather than
control air emissions
from the facility's haz-
ardous waste impound-
ments, the company
found a more cost-effec-
tive alternative. They are
cutting their emissions by
installing new air pollu-
tion control equipment
on production units well
ahead of the date required.
Andersen Corporation. In Bayport, Minnesota,
EPA and the Minnesota Pollution Control Agency
signed an agreement with one of the nation's largest
manufacturers of windows and doors to test an alterna-
tive permit that includes incentives for lowering emis-
sions of volatile organic compounds.  This novel
approach involves an emissions cap and a performance-
based ratio that links the facility's emissions  and produc-
tion capacity. It is intended to "lock-in" existing manu-
facturing methods  and processes that have grown more
efficient over the years while encouraging continued
improvement.  By continuously improving its efficiency,
Andersen gains the flexibility to increase its production
without sparking regulatory review. This approach rep-
resents a break from traditional permitting, which
imposes penalties for failure to comply with require-
ments, but often does not provide incentives to perform
better than required.

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                                   P ROJ ECT  XL
T
                    Key  Lessons   Learned
he experiments being conducted under Project XL are in various stages: some are just getting started; others
are in their second or third year. So, what are the key lessons we've learned from this unique program, to
date? There are many, but here are some of the most important:
   It is possible to experiment with new approaches out-
   side the traditional regulatory arena as long as you
   put strong, reliable safeguards in place.
   Some businesses and communities are not only will-
   ing, but eager, to take greater responsibility for envi-
   ronmental results if they are given flexibility in meet-
   ing the goals.
                                            If given an opportunity, citizens and other stakehold-
                                            ers can play an active, creative role in finding solu-
                                            tions to problems.
                                            The opportunities to improve become more visible,
                                            and the results potentially more significant, when you
                                            step back and look at a community or facility as a
                                            whole, rather than as a set of separate, unrelated com-
                                            ponents.
                                        8

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               Building  On  a  Legacy  of
               Environmental   Progress
       As a national laboratory for testing new ideas in
       environmental protection, Project XL is
       unprecedented.
Predictably for an experimental
program, it has experienced
some conflict and controversy.
But it also has brought impor-
tant new discoveries and insights
about ways to improve environ-
mental results.
   With experiments now
underway, we are carefully
watching the results. This is an
important step if we are to
progress toward our ultimate
goal—scaling up successful con-
cepts and approaches for broad-
er application. We know that in
order for these experiments to realize their true poten-
tial, we must use what we learn to make improvements
in our national programs. In some cases, existing poli-
We believe that sustaining our

   strong national legacy of

   environmental progress

depends on innovation in all

    parts of our society.
cies and regulations may have to be adapted to reflect
more up-to-date knowledge and technology.
                    We believe that the type of
                 experimentation allowed under
                 Project XL is fundamental to
                 continued advances in environ-
                 mental protection. Indeed, we
                 believe that sustaining our strong
                 national legacy of environmental
                 progress depends on innova-
                 tion—at EPA, in state environ-
                 mental programs, in local gov-
                 ernments, in businesses, in com-
                 munities—in all parts of our
                 society. That is why EPA
                 launched Project XL, and it is
                 why we will continue supporting
                 and encouraging those that are
willing to search for a better way of achieving environ-
mental goals.
                      For more information on Project XL, go to the
                           website atwww.epa.gov/projectxl.

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