[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Notices]
[Pages 19872-19882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10510]
[[Page 19871]]
_______________________________________________________________________
Part IV
Environmental Protection Agency
_______________________________________________________________________
Regulatory Reinvention (XL) Pilot Projects; Notice
Federal Register / Vol. 62, No. 78 / Wednesday, April 23, 1997 /
Notices
[[Page 19872]]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-5811-7]
Regulatory Reinvention (XL) Pilot Projects
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of modifications to project XL.
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SUMMARY: This notice modifies EPA's existing guidance on Project XL and
solicits new XL proposals. This notice clarifies EPA's definition of
the three key project elements: superior environmental performance,
regulatory flexibility and stakeholder involvement. It also describes
changes intended to bring greater efficiency to the process of
developing XL projects.
EFFECTIVE DATE: April 23, 1997.
ADDRESSES: Proposals submitted to Project XL should be sent to
Regulatory Reinvention Pilot Projects, FRL-5197-9, Water Docket, Mail
Code 4101, US EPA, 401 M Street, SW., Washington, DC, 20460. The docket
does not accept faxes.
FOR FURTHER INFORMATION CONTACT: Christopher Knopes, Office of Policy,
Planning and Evaluation, United States Environmental Protection Agency,
Mall 3202, Mail Code 2129, 401 M Street, SW., Washington, DC, 20460.
The telephone number for the Office is (202) 260-2220. The facsimile
number is (202) 401-6637.
SUPPLEMENTARY INFORMATION: On March 16, 1995, President Clinton
announced a portfolio of reinvention initiatives to be implemented by
the Environmental Protection Agency as a part of its efforts to achieve
greater public health and environmental protection at more reasonable
cost. One of these reinvention priorities, Project XL, is a national
pilot program to test new approaches for meeting environmental goals
and responsibilities. Through a series of site-specific agreements with
project sponsors, EPA expects to gather data and experiences that will
help the Agency make sound decisions as we look for ways to improve the
current regulatory system.
XL projects directly benefit the local environment, participating
facilities and their communities. But those who do not participate in
XL will also benefit from its lessons. EPA, working with state
environmental agencies, intends to transfer successful approaches into
the current system of environmental protection. Broader implementation
of cleaner, cheaper and smarter ideas is the ultimate objective of
Project XL.
This objective distinguishes XL from other approaches to regulatory
change discussed in environmental policy circles, with names such as
``alternative compliance'' and ``alternative path.'' Like XL, these
approaches seek to offer site-specific alternatives to the traditional
system of environmental protection. But where XL tests ideas that, if
successful, will change our national system of environmental
protection, these approaches seek to customize the broader system to
meet the needs of a specific location. Supporters of customization want
their approach available to a large number of regulated facilities, and
focus principally on the project's benefits to the local environment
and participating facility itself. In contrast, the number of XL
experiments is limited to 50, making it vital that each project creates
lessons with broad application and potential benefits to the broader
environment.
In a May 23, 1995, Federal Register notice (60 FR 27282, May 23,
1995), EPA describes Project XL as a program that offers a balanced set
of benefits to the environment, the regulated community and the public.
In that notice, the XL program was defined through eight criteria by
which proposals are selected for participation. While all of these
criteria are still important, the first three actually define Project
XL: superior environmental performance, regulatory flexibility (termed
Cost Savings and Paperwork Reduction in the original notice), and
stakeholder involvement. These criteria are equal in stature and
together provide the context for the experimental nature of the
program.
Since the inception of Project XL, there have been requests for
clarification of EPA's definitions of these three essential program
elements. EPA recognizes the critical need to ensure that environmental
regulatory agencies, potential project sponsors, and other interested
stakeholders have a clear understanding of the concepts, definitions,
and boundaries of Project XL. Today's notice clarifies the concepts,
definitions, and boundaries of superior environmental performance,
regulatory flexibility, and stakeholder involvement, and provides
guidance on future program management. With today's notice, the
learning opportunity afforded by Project XL will proceed with greater
certainty and efficiency.
For projects that have already entered the program--where final
project agreements (FPAs) are already being developed or have been
approved--the guidance contained in this notice does not impose new
requirements or procedures. While the guidance both on Superior
Environmental Performance and on Flexibility present more fully
developed definitions of these criteria, they build on approaches
already being applied to projects in development and will generally be
familiar to current XL participants. The Stakeholder guidance does
recommend additional steps to ensure that projects garner broad
community support. As these steps are based on considerable up-front
decision-making within the stakeholder group, EPA does not expect that
sponsors will be able to retroactively implement all of these steps
into ongoing projects.
EPA seeks comment on all aspects of this notice on an ongoing
basis. The guidance as defined in this notice is the result of Agency
experience to date and ongoing dialogue with states, industry and
various stakeholders. As Project XL is a continuously evolving program,
EPA intends to continue dialogue, to receive and to review comments on
the various aspects of the program, and to update and to revise this
guidance as necessary.
Project XL conducts projects in four areas: facilities, sectors,
federal facilities, and communities. Community-based projects differ
substantially from the other types of XL projects. EPA recognized and
addressed these distinctions by issuing a separate Federal Register
notice to initiate the XL Communities program (60 FR 55569, November
11, 1995). In keeping with the recognition of communities' need for
different approaches, EPA will clarify in the near future the
applicability of this guidance to community XL projects.
This notice also includes a general solicitation for new proposals
to Project XL. This solicitation lays out some areas that have been
identified by the Agency or others in the environmental community as
important to pursue in the quest for a more efficient and results-
oriented regulatory system. EPA intends to pursue the identification of
more specific priority areas for regulatory reinvention and project
ideas that should help guide potential project sponsors, and to publish
a future notice with the results. Today's notice also solicits new
ideas from parties outside of the regulated community. The Agency is
working on a process that will facilitate the development of ideas that
may originate from these individuals, and will describe that process in
a future notice.
EPA encourages facility, sector or federal facility project
sponsors to utilize this opportunity to truly reinvent the way they
conduct environmental management. While there are many
[[Page 19873]]
proposals that may meet the criteria for inclusion in Project XL, EPA
looks to develop in Project XL those ideas that introduce fundamentally
different ways of providing environmental protection and achieving
stronger environmental results. Project XL offers good actors--
environmental leaders and today's average performers alike--a
tremendous opportunity to think ``outside the box'' of our current
system and to find solutions to obstacles that limit environmental
performance. EPA looks to leaders in the regulated and environmental
communities to identify and develop dramatically different approaches
to protecting the environment. For average performers, XL presents an
opportunity to move into a position of environmental leadership and to
create a path for others to do the same.
This notice includes revisions to the process by which an idea
becomes an XL project. New emphasis is placed on pre-proposal planning
and communication with stakeholders, EPA's internal management of
projects, and close partnership with states. Also outlined are definite
points at which information will be made widely available to the public
during the project development and negotiation processes.
Evaluation is not covered in this notice, though it is an area that
the Agency believes is critical to Project XL's success. Evaluation
will occur at many levels--project specific (e.g., Did the project
achieve its goals?), functional (e.g., Did the stakeholder process
work?), process (e.g., How can we improve the process?), and
programmatic (e.g., How do we take the lessons learned from these
experiments and transfer the successes to improve our current system?).
Each level of evaluation will involve collaborative efforts on the part
of the Agency, states, other affected regulatory agencies, project
sponsors and stakeholders. In some cases, outside groups may also be
interested in evaluating aspects of projects or the program. At a
minimum, project agreements will contain clear performance measures to
help EPA and interested stakeholders verify progress with project
goals, and then use the results to find better solutions to today's
environmental management challenges.
Solicitation for New XL Project Proposals
Today EPA is renewing its invitation, first issued in the Federal
Register on May 23, 1995, (60 FR 27282, May 23, 1995), for regulated
facilities, sectors, and regulated federal facilities, and interested
stakeholders, to submit XL pilot project proposals. The goal of
implementing a total of approximately 50 projects remains. To date, EPA
has approved 3 XL projects for implementation, has proposed approval of
a fourth, and is developing 10 additional XL projects with state and
local governments, project sponsors and stakeholders.
Potential Project Themes
EPA did not originally identify the specific types of proposals it
hoped or expected to result from its May 23, 1995, solicitation,
preferring instead to encourage others to respond with their own ideas.
A September 11, 1996, Federal Register notice supplemented the general
solicitation with an invitation for projects specifically aimed at
creating innovative environmental technologies, and EPA retains a
strong interest in proposals in this area. But the open invitation for
all proposals still exists, and today's notice does not change EPA's
general invitation for all kinds of ideas. Nevertheless, EPA does wish
to describe several general themes that have been identified as
important to pursue in the context of testing innovations for 21st
century environmental protection. Many of these themes are based on the
need to incorporate more incentives for pollution prevention in our
system of environmental protection:
Regulatory approaches that encourage source reduction and
recycling of hazardous waste or materials produced or used during
manufacturing or commercial operations, and the on-site reuse of wastes
or by-products in production processes;
Incentives for greater or continuous collection of
emissions data, particularly for hazardous air pollutants, to enable
performance-based approaches and to increase public understanding;
Approaches that minimize the generation of wastes
containing persistent, bio-accumulative, and toxic chemicals;
Facility-wide emissions limits under the Clean Air Act
that also incorporate continuous emissions reduction;
Enhanced systems for data collection on employee health
and exposure to environmental pollutants to aid company efforts to
minimize work-related health problems;
Regulatory mechanisms to encourage consideration of the
environment throughout the entire life cycle of a product;
Incorporation of environmental stewardship in the customer
and supplier relationships of regulated facilities; and
A multi-media closed-loop approach to environmental
technology development.
EPA and state environmental agencies intend to identify more
specific priority areas and additional themes in the near future, in an
effort to inform potential project sponsors. Efforts will be made to
seek the input of a wide range of interested parties, including other
regulators, environmental and environmental justice groups, trade
associations, and academic institutions with an interest in
environmental policy. The results of these efforts will be published in
the Federal Register and made available through other media.
Stakeholder Initiated Projects
Today's notice reaffirms EPA's interest in having stakeholders not
directly connected with regulated facilities come forward with XL
proposal ideas or to co-sponsor projects with companies. While the
development of an XL proposal is more typically initiated by a
regulated firm or co-sponsoring organization, it may also be initiated
by EPA, by a state environmental agency, or by other non-regulated
parties. EPA encourages stakeholders to bring their own ideas forward.
Those stakeholders who wish to initiate projects may discuss the
proposal concept with EPA or the state environmental agency; contact
firms directly to discuss proposal concepts; or engage the assistance
of EPA or the state environmental agency in identifying potential
participants from among the regulated community. EPA will, upon the
request of stakeholders who wish to initiate projects, consider using
its own resources (e.g., the Federal Register and the Agency's Project
XL Internet Web Site, www.epa.gov/ProjectXL) to identify potential
participants from among regulated firms. Beyond its openness to
stakeholder initiated proposals, EPA is developing a process to solicit
themes and specific ideas from groups outside of the regulated
community, and to turn those ideas into fruitful XL projects.
Superior Environmental Performance
In order to test innovative approaches to reinvent environmental
protection for the 21st Century, Project XL offers potential project
sponsors and co-sponsors the opportunity to develop and implement
alternative strategies that produce superior environmental performance,
replace specific regulatory requirements, and promote greater
accountability to stakeholders. The May
[[Page 19874]]
23, 1995, Federal Register notice defining the XL program stated EPA's
intent to approve only those projects that ``achieve superior
environmental performance relative to what would have been achieved
through compliance with otherwise applicable requirements.'' This
notice further refines the definition of superior environmental
performance to assist future applicants, stakeholders and those
evaluating the program.
EPA is establishing a two tiered assessment of superior
environmental performance for Project XL proposals. Tier 1 is a
quantitative benchmark of the project against the environmental
performance that would have occurred absent the program. It establishes
a baseline of equivalence from which superior environmental performance
can be measured. A project that is not at least equivalent, based on
the factors discussed in Tier 1, can not be considered superior
overall. Tier 2 is an examination of factors, both quantitative and
qualitative, that lead EPA to judge that a project will produce a
superior level of environmental performance that merits testing the
innovation being proposed. This two tiered approach should aid EPA and
others in evaluating proposal merits and deciding what should or should
not be tested. It is not EPA's intent to suggest a hierarchy. Tier 1
and Tier 2 are both essential in determining whether a project is
likely to achieve superior environmental performance.
Parenthetical examples are included throughout this notice. These
are meant to aid the reader in understanding the general discussion,
but not to signal EPA's preferences or requirements for specific XL
projects.
These guidelines on superior environmental performance reflect
EPA's experience with Project XL to date. Because the guidelines
measure performance levels relative to today's system of environmental
regulation, the results achieved through the use of these guidelines
will be incremental improvements over the current system. EPA
recognizes that these guidelines may be too limited in their definition
of superior environmental performance in some cases, particularly where
a project involves a radical departure from our current environmental
regulatory system. In these cases, EPA encourages the sponsors to
propose and provide a rationale for alternative definitions of superior
environmental performance. EPA will consider these alternatives, as
appropriate.
Tier 1: Is the Project Equivalent?
Tier 1 establishes an environmental performance benchmark for an XL
project. This benchmark provides a reasonable estimate of what would
have happened to the environment absent Project XL. It quantifies
current performance levels and sets a baseline against which the
project's anticipated environmental performance can be compared.
These benchmarks are expressed in terms of loadings to the
environment. The term loadings is meant by EPA to incorporate a broad
set of stressors to the environment, such as emissions of specific
pollutants or generation of waste streams released to the environment
by disposal.
The project benchmark will be set at either the current
actual environmental loadings or the future allowable environmental
loadings, whichever is more protective.
Where the project includes new facilities that have not
yet been built or expansion of existing facilities for additional
production of a current product or for new products that have not yet
been produced, the benchmark will be set at the level of performance
generally representative of industry practice, or the future allowable
environmental loadings for such a facility or production process,
whichever is more protective.
These benchmarks may be on a per-unit of production basis
or other comparable measure (e.g., volume of liquid hazardous waste
generated per unit of product), as appropriate, to distinguish real
environmental gains relative to what would happen absent XL from
fluctuations in production.
Except in outstanding site-specific circumstances,
voluntary measures that are in place at the time the project is
proposed and remain in place during the project (e.g., previous
installation of on-site wastewater treatment not for compliance
purposes) should be included in the benchmark. This distinction assumes
that these voluntary measures would have been in place already and
remained in place absent XL (e.g., include in the benchmark the effect
of the pre-existing wastewater treatment system, as long as that system
continues to operate).
EPA will also seek to benchmark the project from a pollution
prevention perspective. While other Tier 1 benchmarks are expressed in
terms of loadings to the environment, this benchmark may be expressed
in terms of inputs to production (e.g., use of toxic chemicals, fresh
water, or other natural resources). EPA will be most interested in
inputs of specific environmental and/or stakeholder concern. EPA will
compare the project's use of those inputs against the volume of the
inputs that would be used absent Project XL. This attention to
pollution prevention is meant to encourage projects that reduce the use
of materials of environmental or public health concern, as well as
projects that reduce ultimate loadings to the environment.
The project will be benchmarked against each environmental loading
in each environmental medium (e.g., air, water, land). However, EPA
will consider projects involving tradeoffs among loadings as part of a
test of innovative environmental management. These projects may exceed
the appropriate benchmark for one loading but fall short of it for
another. To address the imprecision inherent in evaluating tradeoffs
among environmental loadings and environmental media, projects of this
type should demonstrate, with an adequate margin of safety, overall
superior environmental performance over what would be achieved absent
XL. Benefits should be measurable through an analytic methodology
acceptable to regulatory agencies and to stakeholders. EPA will not
approve projects that threaten ecological health or risk-based
environmental standards (e.g., Water Quality Standards).
Tradeoffs may be allowed among different loadings that contribute
to a single environmental outcome (e.g., VOC and NOX
emissions contributing to smog formation). In this case, project
sponsors should evaluate the tradeoff using the best available analytic
methodology. In these evaluations, however, project sponsors should
consider the risk or benefits arising from situations in which one of
these loadings might also contribute to other environmental outcomes
(e.g., VOC emissions that also contain hazardous air pollutants).
Tradeoffs may also be allowed among different loadings that produce
different environmental outcomes (e.g., waste minimization technology
that reduces hazardous waste incineration but increases waterborne
pollutant discharge) where there is a demonstrable net benefit to
public health and the environment. Project sponsors should clearly
define the various environmental outcomes and the project's effect on
them. A project involving such tradeoffs may pose challenges beyond
analytics. EPA will not approve projects that create a shifting of risk
burden (e.g., diversion of hazardous air pollutant emissions from
stacks to the work area, or lower net
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level of remediation at a waste disposal site in a low income
community). To the contrary, in entertaining projects that incorporate
tradeoffs, it is EPA's intent to produce clear risk reduction.
Tier 2: Superior Environmental Performance
Tier 2 is an examination of factors that lead EPA to judge that a
project will produce truly superior environmental performance. Although
the weighting of factors in Tier 2 is necessarily subjective, the
factors themselves should be expressed in quantitative terms wherever
possible. Tier 2 factors include, but are not limited to:
The increment by which the project exceeds the appropriate
Tier 1 benchmarks.
Pollution prevention upstream from end-of-pipe releases
(e.g., a project that alters production processes to eliminate the need
for toxic ingredients, instead of just disposing of toxic waste
created).
Environmental performance more protective than the best
performance practices of facilities with comparable products or
processes (e.g., closed loop production at a steel mill).
Incorporation of continuous improvement towards ambitious
quantitative environmental aspirations (e.g., project with a zero
emissions goal).
The extent to which the project produces clear reduction
of risk.
Historic demonstration of leadership in environmental
performance of the facility (e.g., through voluntary measures taken
prior to XL).
Improvement in environmental conditions that are
priorities to stakeholders, including issues not governed by EPA rules
(e.g., habitat preservation, green space, parks or other protected
areas, odors, noise).
The extent to which the project substantially addresses
community and public health priorities of concern to stakeholders,
including issues not governed by EPA rules (e.g., identification of
community health patterns, employee safety issues beyond those
regulated by EPA).
Where projects involve areas regulated by agencies other than EPA
or state environmental agencies, those other agencies should be brought
into the process.
Accountability for Environmental Performance
Project documents should clearly distinguish among the different
ways in which facilities may be held accountable for commitments to
superior environmental performance. There are two broad types of
accountable commitments: enforceable commitments and voluntary
commitments. These should not be confused with broader corporate
aspirations, which may be ambitious and set without prior knowledge of
the means to achieve them.
Enforceable commitments are those levels of performance
which can be compelled by government. Failure to achieve these
commitments constitutes grounds for government or citizen enforcement
action, with all of the remedies generally available absent Project XL.
XL Projects redefine compliance on a site-specific basis, and EPA will
ensure a level of enforceability that is, in its own judgment, at least
equivalent to the level which would be achieved absent the project.
Each project will have an enforceable component, described in the final
project agreement (FPA), but also contained in a legally binding
document, such as a permit, rule-making, or administrative order.
Voluntary commitments are those for which a facility may
be held accountable through means other than injunctive relief, penalty
or other conventional legal enforcement action. Failure to achieve
these commitments is an appropriate basis for termination or
modification of the XL project. Voluntary commitments will be contained
in the FPA, which is not itself legally binding on the parties.
Accordingly, both the FPA and associated legal implementing mechanisms
should reserve EPA's discretion to terminate a project and to return
the facility to compliance with otherwise applicable requirements where
voluntary commitments have not been met.
Accountability for commitments--whether enforceable or voluntary--
is most effective where project goals and results are transparent.
Projects should include mechanisms to provide government and
stakeholders with access to data sufficient to verify whether
commitments have been met. In making decisions related to Project XL
and other matters, EPA relies upon the statements and representations
made by project sponsors. Federal laws intended to ensure the accuracy
and truth of such statements apply. Project sponsors should know that
failure to meet commitments or failure to act in good faith in
reporting related to these commitments, will draw a strong response
from the Agency.
The type of accountability appropriate for a particular commitment
should be discussed within a project's stakeholder process and
incorporated into the FPA. There may be cases, for example, where
stakeholders believe that a particular commitment is critical to the
success of a project and may wish accountability for that commitment to
reflect this (e.g., by more detailed reporting of a voluntary
commitment, or by incorporating that commitment into the enforceable
component of the project).
Project XL is intended for good actors. Those companies and
facilities with a history of violations of enforceable commitments pose
additional issues to be factored into consideration of XL proposals and
projects. EPA generally will not approve XL projects for facilities
that are the subject of an on-going enforcement action unless the
facility resolves outstanding compliance issues (e.g., through payment
of penalties and, where applicable, completion of all injunctive relief
and obligations under an administrative order or judicial decree)
before participating in Project XL. Occasionally, a past or ongoing
violation may be discovered in the course of project development. Such
violations, if discovered and reported by the project sponsor during
the course of project development, will be handled in accordance with
EPA's Audit Policy.
Finally, enforceable and voluntary commitments should not be
confused with corporate aspirations. Corporate aspirations are not
commitments for which a facility should expect to be held accountable
through government action or citizen enforcement. However, ambitious
corporate aspirations (e.g., zero content of a priority pollutant in a
facility's effluent, 100% reclamation of a raw material, or elimination
of a potential toxic from use in production) are important drivers for
superior environmental performance and will be assessed accordingly by
EPA in the context of Tier 2, as discussed above. Corporate aspirations
will be contained in the FPA as part of the project description and as
elements that help to make up the project's superior environmental
performance, but should be clearly distinguished from accountable
commitments.
Historic Voluntary Controls
These guidelines aim to ensure that XL projects will achieve a
better environmental outcome in the future than would have occurred
absent the program. EPA recognizes, however, that future progress is
often built on a foundation of historic environmental leadership. Many
of the facilities that will participate in XL have already taken
voluntary measures to achieve a level of environmental performance far
better than is required by applicable regulations. EPA wishes here to
offer guidance on the treatment of these pre-
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existing voluntary measures in the context of evaluating the
environmental performance of an XL project.
In the Tier 1 analysis discussed above, EPA seeks to benchmark the
XL project against a reasonable estimate of what would have happened to
the environment in its absence. In general, pre-existing voluntary
measures should be included in this benchmark. EPA believes it
reasonable to assume that voluntary measures that are in place at the
time a project is proposed and remain in place during the project's
life would also have remained in place without the project. The
alternative assumption--that pre-existing voluntary measures are
creditable to the XL project itself--could create a bank account from
which a company could draw, potentially resulting in a lower level of
environmental performance.
However, in outstanding site-specific circumstances, the potential
negative effects of crediting a pre-existing voluntary measure to the
XL project may be outweighed by other positive elements of superior
environmental performance contained in the XL project (e.g., where a
credit provided for performance in one environmental area is more than
outweighed by superior performance in another area). In these cases,
EPA would consider crediting the pre-existing voluntary control to the
XL project.
In the Tier 2 analysis discussed above, EPA seeks to determine
whether the net environmental performance achieved by the project
beyond its benchmark is superior. Pre-existing voluntary measures play
an important role in this determination. For example, facilities that
have not implemented significant voluntary measures to control
pollution prior to XL should be able to achieve a far greater
environmental improvement via XL than those facilities that have
implemented such measures. Facilities in the latter category may not be
able to achieve additional improvements through end-of-pipe controls
and may, thus, look to innovative, but untested, pollution prevention
and technology strategies for additional environmental improvements.
EPA recognizes the need to accommodate the uncertainties inherent in
these strategies in project design.
Regulatory Flexibility
In order to test innovative approaches to reinvent environmental
protection for the 21st Century, Project XL offers project sponsors and
co-sponsors the opportunity to develop and implement alternative
strategies that produce superior environmental performance, replace
specific regulatory requirements, and promote greater accountability to
stakeholders. This notice discusses further the ways in which the
regulatory flexibility available in XL can enhance operations at
participating facilities, to assist future applicants, stakeholders and
those evaluating the program.
Regulatory flexibility and its potential to reduce costs and
improve the operating efficiency of facilities is the principal reason
for firms to voluntarily participate in Project XL. The success of
Project XL depends on providing to participating regulated firms
incentives that are significant and tangible. Projects that test truly
innovative alternative strategies for environmental protection will in
many cases require regulatory flexibility to overcome barriers to
achieving objectives. Such flexibility will be necessary to create the
opportunity for superior environmental performance, stakeholder
accountability and other benefits. Where a project meets the other XL
decision criteria, EPA will aggressively offer flexibility needed to
produce superior environmental performance and promote greater
accountability to stakeholders.
Sponsors should articulate the link in their project between the
flexibility sought, the superior environmental performance expected,
and other benefits. Where that link is strong (i.e., where flexibility
and other benefits are factually or legally linked) the project's ideas
are more likely to be applicable at other sites. The closer the factual
link between the requested flexibility and anticipated environmental
benefits, the more likely EPA is to approve the project. Recognizing
the experimental nature of Project XL, EPA will use tools that ensure
project sponsors who operate in good faith a smooth transition back to
the traditional regulatory system, where projects do not meet
expectations.
Tools for Creating Flexibility
EPA and state regulators have the tools under existing authority to
provide appropriate flexibility from otherwise applicable regulatory
requirements. These tools include alternative permits and existing
waiver mechanisms, generally applicable interpretive statements, and
site-specific rules that replace otherwise applicable requirements.
Other tools may be identified as projects are developed. Ultimately,
however, the selection and development of flexibility tools requires a
case-by-case assessment.
The tools noted above provide a firm legal foundation for XL
projects in cases where project sponsors, government and stakeholders
construct a project that produces superior environmental performance,
promotes greater accountability to stakeholders, and meets the other XL
decision criteria. These tools are strongest when tailored to be only
as broad as needed for implementing the project terms.
Flexibility provided in XL projects establishes new conditions that
must be met by participating facilities. As discussed above, some, if
not all, of these conditions will be legally binding and enforceable
requirements. EPA and state environmental agencies will select tools
that ensure that project sponsors, in exchange for meeting these new
requirements, have protection from liability for non-compliance with
previously and otherwise applicable requirements replaced by XL
actions.
Specific statutory provisions may limit the scope of flexibility
available to certain XL projects. To date, however, this concern
generally has not been a real barrier to implementation of projects
that meet the XL decision criteria.
Selection of Flexibility Tools for Specific Projects
The need to select tools to fit the conditions of a project is
secondary to the creation of the project itself. Project sponsors and
stakeholders, along with regulators, should first develop a project
that incorporates superior environmental performance, flexibility and
stakeholder accountability, and then seek tools that authorize the
project they have created.
EPA has developed a hierarchy for the selection of flexibility
tools to fit the conditions of a project. Investigation of tools should
begin with exploration of the full range of discretion and flexibility
available under the combination of existing federal and state
regulatory and statutory mechanisms. Options may include use of
existing statutory and regulatory variance and waiver mechanisms,
deviation from existing practices and policies to the extent permitted
by statute and regulation, flexible interpretations of regulatory
requirements, and other such regulatory and statutory mechanisms. Under
these kinds of approaches, some projects may be implemented, in whole
or in part, through permit modifications or the issuance of new permits
incorporating the terms of the project.
EPA expects that the flexibility tools needed for many projects
will not be found within the range of discretion afforded by existing
federal and state regulatory mechanisms. In these cases, site specific
rule-making, which can authorize projects that do not fit within
[[Page 19877]]
existing regulatory requirements, should be explored. EPA wishes to
emphasize that the creation of a site-specific rule need not delay a
project or create additional resource burdens for project sponsors or
stakeholders. The legal steps required in rule-making (e.g., public
notice and comment) are already part of XL project development, whether
or not a site-specific rule is used. The other formal steps typically
encountered in national rule making (e.g., EPA's standard regulatory
development process and review by the Office of Management and Budget)
have been modified or tailored to fit the needs of Project XL.
EPA recognizes the possibility that specific statutory provisions
may limit the scope of flexibility available to certain XL projects by
limiting the authority of EPA or the states to promulgate site-specific
rules. These situations must be addressed on a case-by-case basis among
project sponsors, stakeholders and regulators. Options include
modification of the project to avoid these issues and the use of
carefully tailored compliance mechanisms.
Value of Flexibility
Firms participate in XL for many reasons. However, in general,
firms that successfully develop and implement XL projects utilize the
flexibility offered by the program to reap financial, competitive, and
community benefits.
The flexibility available to facilities in XL creates real cost
savings and opportunities to use environmental budgets efficiently. By
implementing performance standards in lieu of other requirements, for
example, XL lowers the cost of pollution control by giving a facility
the ability to choose the most cost effective means of achieving those
standards. XL performance standards and other innovations can act in
lieu of pre-construction or other permit reviews, speeding new products
to market and giving participating firms a leg up in an increasingly
time-driven business environment. XL projects that remove the barriers
to recycling of metals or reuse of chemicals allow firms to recoup
their value as useful products, avoid disposal costs and potential
environmental liabilities. Streamlined reporting requirements reduce
administrative overhead.
XL also strengthens participating firms' competitive position in
other ways. XL participants are helping to define a regulatory system
for the 21st Century, a system designed to meet their needs as well as
those of the environment and communities. These firms will be in a
better position to respond as the innovations tested in XL are
implemented more broadly, and to anticipate or suggest future changes.
The regulatory innovations developed through XL support and
encourage pollution prevention and technological innovation at
participating facilities by giving firms greater flexibility to
experiment and reducing barriers to trying new technology. New
technologies may reduce compliance costs or create new market
opportunities for their developers. XL may, for example, remove
regulatory barriers to the marketing of goods created through pollution
prevention or recycling.
Participation in XL strengthens the community ties of participating
firms, creating a basis in trust for resolution of other conflicts that
may arise in or outside of the context of environmental regulation. XL
firms typically enter the program with strong environmental reputations
from which to build. However, the extensive interaction of community
and facility representatives in the course of XL project development
may help both groups forge real and informed trust. The regulatory
flexibility offered in XL creates an opportunity to make community
participation more meaningful, for example, by allowing firms to
redesign reporting mechanisms in ways that enhance community
understanding and trust, or by permitting a new kind of public
involvement that is more substantive than conventional processes.
Other incentives for participation in XL are case-specific. For
example, firms may gain favorable tax treatment for certain
environmental control or pollution prevention expenditures made in the
context of Project XL. In other cases, firms may reduce their health
care costs by creating an XL project that better identifies and
eliminates environmentally connected work force health concerns.
EPA encourages firms to view the flexibility afforded by XL as an
opportunity to create real incentives for environmental improvement,
whether they be financial, competitive, technological, community-
related, or otherwise.
Stakeholder Involvement
In order to test innovative approaches to reinvent environmental
protection for the 21st Century, Project XL offers potential project
sponsors and co-sponsors the opportunity to develop and implement
alternative strategies that produce superior environmental performance,
replace specific regulatory requirements, and promote greater
accountability to stakeholders. The May 23, 1995, Federal Register
notice defining the XL program made clear that an important factor in
EPA's approval of projects is ``the extent to which project proponents
have sought and achieved the support of parties that have a stake in
the environmental impacts of the project.'' Stakeholders were defined
as including ``communities near the project, local or state
governments, businesses, environmental and other public interest
groups, or other similar entities.'' This definition includes both
those stakeholders in the proximity of the project and those
stakeholders interested in the broader implementation of the concepts
being tested in the project, such as state, regional or national
environmental groups. In today's notice, EPA offers guidelines on
meeting the stakeholder involvement criterion to assist future
applicants, stakeholders and those evaluating the program.
Stakeholder involvement is critical to the success of each XL
project. Stakeholders provide information about the preferences of the
community. They may identify issues that have escaped the notice of
project sponsors and regulators. And stakeholder support is essential
if the knowledge gained in facility-based experiments is to be
transferred to the generally applicable system of environmental
protection. An effective process for stakeholder involvement is an
acknowledgment that today's regulators and regulated community do not
have a monopoly on the best ideas for tomorrow's system of
environmental protection.
In this notice, stakeholders are grouped into three categories,
each with a distinct role in project development and implementation.
Those stakeholders interested in the broader implementation of the
concepts being tested in the project, as well as those stakeholders in
the local community or directly affected by the project, should have
the opportunity to place themselves in any one of these three
categories. Direct participants in project development work intensively
with project sponsors to build a project from the ground up. The views
of direct participant stakeholders will strongly influence the details
of the project as well as EPA's ultimate decision to approve or not to
approve the project. Commentors have an interest in the project, but
not the desire to participate as intensively in its development. The
project development process should inform and be informed by commentors
on a periodic basis. The views of informed commentors are a strong
indicator of the broad potential for wider applicability of the
innovation being tested in a project. Members of the
[[Page 19878]]
general public should have easy access both to the project development
process and to information about the environmental results of the
project once it is implemented, and should have the ability to
participate more actively if they so choose. Actions for involvement of
each of these three categories of stakeholders at each step in the
process--from pre-proposal to implementation of an FPA--are discussed
here.
Over and above these three categories of stakeholder involvement,
EPA strongly encourages firms and established non-governmental
organizations to partner as co-sponsors of XL projects. For example, a
firm and a state citizens group may join together and propose an XL
project to EPA and the state environmental agency. Co-sponsors are
distinct from the three categories of stakeholders described above and
discussed in this notice, and co-sponsorship has many advantages over
individually sponsored projects. The participation of the non-regulated
partner lends credibility to the broader stakeholder involvement
process discussed in this notice. It also builds the capacity of non-
governmental organizations and industry to work directly with each
other. This notice does not discuss the relationship among project
sponsors in a co-sponsorship situation, but rather details EPA's
expectations with regard to the involvement of a broader group of
stakeholders beyond the project sponsors themselves.
Pre-Proposal Activities
Project sponsors should do as much groundwork as possible to engage
appropriate stakeholders before formally proposing an XL project to
EPA. There are four actions project sponsors should take at this step
in the process:
Gain from EPA, the relevant state, tribal, local, or other
regulatory agencies their support of the proposal and their commitment
to participate in project development;
Develop as part of the proposal itself a stakeholder
involvement plan consistent with the guidance contained in this
document;
Identify and contact potential direct participants to gain
their commitment to participate early in potential project development;
these direct participants may be stakeholders already known to the
project sponsor or may be identified through referrals (e.g., through
environmental interest group networks); and
Identify and contact potential commentors on the proposal.
Stakeholder Initiated Proposals
While the development of an XL proposal is more typically initiated
by a regulated firm or co-sponsoring non-governmental organization, it
may also be initiated by stakeholders themselves, by EPA, or by a state
environmental agency. EPA encourages stakeholders to bring their ideas
forward. Stakeholders who wish to initiate projects may:
Discuss the proposal concept with EPA or the state
environmental agency;
Contact firms directly to discuss proposal concepts; or
Engage the assistance of EPA or state environmental agency
in broadly soliciting potential participants from among regulated
firms.
EPA will, upon the request of stakeholders who wish to initiate
projects, consider using its own resources (e.g., the Web site and
Federal Register) to broadly solicit potential participants from among
regulated firms. However, to be considered by EPA, a formal XL proposal
must ultimately include the voluntary participation of the owner or
operator of facilities addressed in the proposal.
Proposal Development
Once received by EPA, XL proposals enter the proposal development
stage. During this stage, EPA and state environmental agencies
determine whether a proposal should advance as an XL project, advance
in some other forum, or not advance at all.
The first step in proposal development is an intake process, in
which EPA determines whether a proposal is within the scope of Project
XL based on the eight XL proposal selection criteria as refined in this
notice. If the answer is yes, EPA consults with the appropriate state
environmental agency, forms an internal proposal review team consisting
of regional and headquarters staff, and immediately places the
following information on EPA's Project XL Web site to inform
stakeholders of the proposal:
The full proposal, including the stakeholder involvement
plan; and
The names and contact information for the EPA regional and
headquarters project leads and project sponsor leads.
The second step in proposal development is an effort by the EPA
proposal team to analyze, in consultation with the state environmental
agency, the merits of the proposal, including its stakeholder plan.
During this step, EPA will generally provide feedback to the project
sponsors. Stakeholders aware of the proposal at this early stage may:
Contact the project sponsors directly, or contact EPA
project leads via phone, electronic mail, or the Web site with
pertinent questions or other feedback for the project sponsors; and
Contact the project sponsors to express interest in
becoming a direct participant or a commentor, should the proposal move
forward and become a project.
EPA will then transmit its own findings and questions, in addition
to stakeholder feedback, to the project sponsors and make them
available on the Web site. The project sponsors' response to feedback
may be in the form of a revised proposal, answers to questions, or
withdrawal of the proposal. In developing their response, the project
sponsors should confer with the stakeholders whom they have identified,
particularly direct participants. EPA will post the project sponsors'
response to feedback on its Web site.
Based on its assessment of the information provided up to this
point by the project sponsors, with special attention given to the
issues raised by stakeholders, and in consultation with the state
environmental agency, EPA will decide whether a proposal should advance
as an XL project. EPA will notify the project sponsor and post its
decision on the Web site.
Project Development
A proposal that advances is described as an XL project, and enters
the project or FPA development stage. FPAs are developed through a
sponsor-led process of dialogue and negotiation among states, sponsors,
EPA, and stakeholders who are direct participants. That process is made
visible and accessible so as to invite response from commentors while
informing the general public.
Further Identification of Stakeholders
The first step in the FPA development process is to notify the
general public of the project and more formally invite stakeholders to
become direct participants or commentors. The project sponsors should:
Notify the general public via local media of their intent
to develop an FPA and invite direct participants to identify themselves
within a set time period (e.g., 30 days); (The public notice should
include a brief description of the project, including the stakeholder
plan, and the name and contact information for a person in the
sponsors' organization, at the state environmental agency, and at EPA);
Make special efforts to recruit:
[[Page 19879]]
--Potential direct participants and commentors from among economically
disadvantaged stakeholders and among stakeholders most directly
affected by the environmental and health impacts of the project;
--Potential direct participants and commentors who have specific
interest or expertise in the issues addressed in the project from among
the national environmental and environmental justice communities and
the industry segment of which the facility is a part; and
--Potential direct participants and commentors from among participating
facilities' non-managerial employees.
Stakeholders should be aware that direct participation in an XL
project involves a substantial personal commitment of time and energy,
requiring consistent attendance at meetings, a willingness to abide by
the agreed upon process, and intensive work over the project
development period. EPA encourages direct participant stakeholders to
seek input from others in their work on project development. However,
stakeholders are not expected to represent larger social, economic or
demographic groups except in cases where they are authorized to do so.
In general, all stakeholders who express a timely desire to be
direct participants and understand the commitment involved should be
given the opportunity to do so. However, there may be a need for
project sponsors to limit the number of direct participants (e.g., to
maintain a balanced or workable process). EPA will not determine the
membership of the group of direct participants, but may advise sponsors
of whether it believes the group as assembled is consistent with the
guidance contained in this document.
Team Training
Once direct participants have been identified, EPA encourages
project sponsors to discuss with them the need for team training at the
outset of project development activities. Where training has been
requested by direct participant stakeholder groups, the project
sponsors should:
Provide training to direct participants on the technical
issues addressed in the project, including the overall environmental
and health impacts of the test facility; and
Provide training to sponsors' own representatives and to
direct participants on meaningful participation in a collaborative
process, such as XL project development, with special emphasis on
addressing the issues of concern to the local community, to members of
minority communities and to non-managerial employees; and
Permit EPA and state environmental agency representatives
to participate in these training opportunities.
As added assurance that direct participants have an opportunity for
meaningful participation, EPA will make its own expertise available for
the purpose of team training in the technical issues addressed in the
project and in participation in collaborative processes. EPA strongly
encourages state environmental agencies to do the same.
Ground Rules
Ground rules are the first order of business before proceeding with
the project development process. The project sponsors may propose
ground rules in the stakeholder plan. Before beginning, direct
participant stakeholders and the project sponsors should agree on a set
of ground rules to guide project development. All effort should be made
to create ground rules that are generally acceptable to direct
participant stakeholders.
EPA encourages examination of the ``Model Plan for Public
Participation'' developed by its National Environmental Justice
Advisory Council, as ground rules are developed that:
Define the relationship of direct participant
stakeholders, as individuals and as a group, with respect to the
project sponsors (e.g., advisory, consultative, or decision-making);
Clarify how and whether direct participant stakeholders
will decide on group views (e.g., by consensus, majority vote, or sub-
group consensus);
Determine whether direct participant stakeholders, as
individuals or groups, would sign the FPA;
Agree on time lines for the development of the project as
a whole and for appropriate short-term milestones;
Contain a process for documenting proceedings and
decisions, including dissenting opinions;
Contain a process for changes in membership to the direct
participant group as needed or desired;
Determine how the project development process will be
managed, including whether a third-party facilitator is desirable (EPA
encourages the use of neutral, local third-party facilitators);
Decide and document how the project development process
will reach out to educate commentors and the general public beyond the
means discussed in this notice (e.g., when and how to notify these
groups of the significant milestones in project development, beyond the
specific points for notification discussed in this document); and
Establish procedures for participation and involvement of
the general public in the process.
Because XL projects and the circumstances that affect them (e.g.,
stakeholder, demographic, geographic, ecosystem, economic, community
concerns) differ, there can be no single model stakeholder involvement
process that is appropriate for all projects. Attention to the ground
rules by all participants is vital to ensuring that the project
development process is appropriate to the circumstances.
Ground Rules on Authority of Direct Participants With Respect to the
Project Sponsors
As discussed above, the authority of direct participant
stakeholders should be determined at the outset by the stakeholders
themselves, along with the project sponsors. In some cases, the
authority of stakeholders will be consultative in nature. In others,
there will be a desire to provide direct participant stakeholders with
greater authority over project sponsor's decisions. Project sponsors
and direct participant stakeholders should agree at the outset on
whether stakeholders, individually or as a group, have the ultimate
ability to veto project sponsors' plans.
Importance of Stakeholder Views in EPA's Decision to Approve or
Disapprove a Project
EPA maintains its authority to ultimately approve or disapprove an
XL project. However, EPA wishes here to offer guidance on the influence
that final stakeholder decisions on a project's desirability have on
its own decisions to approve or disapprove an XL project.
As stated in the May 23, 1995, Federal Register, an XL final
project agreement must be approved by EPA, the state environmental
agency, and the project sponsors in order to be implemented. EPA's own
decisions are very directly affected by the views of direct participant
stakeholder groups. These individuals, more so than other members of
the general public or even commentors, will have examined the project
in all its detail. The expression of support for a project by its
direct participant stakeholder group is among the strongest possible
indicators of broad community support for that
[[Page 19880]]
project. Where a direct participant stakeholder group has the ability
to veto a project sponsor's plans, and exercises its veto, EPA will
generally conclude that the project has not achieved broad community
support, and thus will not approve the project. Even in cases where the
ground rules vest a direct participant stakeholder group with strictly
consultative authority over the project sponsor's plans, or where the
views of the group are not expressed in terms of acceptance or
rejection, EPA will give significant weight to the views of these
direct participants in determining whether the project has broad
community support.
However, as stated above, EPA will not delegate its authority to
approve or disapprove an XL FPA. That is to say, EPA will not approve
or disapprove an FPA based solely on the support of a direct
participant stakeholder group or other party.
Ground Rules for Communicating to Commentors and the General Public
EPA encourages project sponsors and direct participant stakeholders
to develop ground rules that promote an open and inclusive project
development process. For example, EPA encourages an approach in which
all meetings are accessible in some form to members of the general
public who express an interest in observing the process. For its part,
EPA will:
Make available updated drafts of the FPA and related
documents on its Web site and in the administrative record (the
comprehensive record maintained by EPA to document the history of all
input and decisions impacting the project since it was submitted as a
proposal);
Make available any other materials requested by the
project sponsors, direct participants, or state environmental agency,
except confidential business information, on its Web site and in the
administrative record;
Notify commentors directly of the availability of this
material;
Convey to the project sponsors, direct participants, and
the state environmental agency any comments it receives during the
project development process, and post pertinent comments on its Web
site and in the administrative record; and
Respond, on its own behalf and for the record, to
significant comments (those comments specifically impacting EPA
management or decision-making).
Access to Information
All documents provided to EPA in the context of Project XL, with
the exception of confidential business information, are in the domain
of the general public. Readers should note in these guidelines EPA's
intent to use its Project XL Web site on the Internet as the primary
but not sole means of disseminating information for which it is
responsible. The Web site is not only a repository of information, but
has the capability to notify interested stakeholders electronically
when new information of relevance to them is posted.
These guidelines specifically identify points where use of local
media and/or the Federal Register is appropriate. For those who do not
have Internet access, the information maintained on the Web site is
available in several other formats. As noted above, EPA maintains an
administrative record that includes hard copies of all materials
referenced in these guidelines. (The record can be accessed by
contacting Lutithia Barbee of EPA at 202-260-2220). Most materials
referenced in these guidelines are also available through the Project
XL fax-on-demand line (202 260-8950). EPA will make every effort within
the constraints of available resources to provide interested citizens
with the easiest possible means of access to XL-related documents.
Closure
The final stage in the project development process is closure. An
FPA is not approved until signed by EPA, the state environmental agency
and the project sponsor, and by direct participants where provided for
in the ground rules.
The first step in EPA's own closure process is an internal
concurrence. To make commentors and the general public aware that the
project has reached this stage, EPA will:
Make the final draft available through its Web site and in
the administrative record; and
Indicate on the Web site that this draft is being
circulated within EPA for formal concurrence; and
Convene--at the request of a project sponsor, direct
participant stakeholder, commentor, or the state environmental agency--
a meeting of these groups to discuss the project, hear views of
individual direct participants or commentors, and provide feedback.
As stated in the May 23, 1995, Federal Register notice, EPA will
not approve a project that does not have the support of the relevant
state environmental agency. EPA also recognizes the possibility that it
might disapprove of a project that has the support of the state
environmental agency. In either case, EPA and the state environmental
agency will consult with each other prior to making their final
decision, in an effort to reach consensus among regulators at all
levels of government.
Where formal concurrence within EPA has been achieved, and where
the project has gained the support of the state environmental agency,
project sponsors, and direct participants (as discussed above), the
agreement is known as a ``proposed'' FPA. At this stage, EPA will:
Make the proposed FPA available through its Web site and
in the administrative record;
Notify commentors of the availability of reviewable
material;
Issue the FPA for a thirty-day local notice and comment
period for the general public;
Publish in the Federal Register a notice of availability,
briefly describing the project, and providing instructions for
receiving a copy of the proposed FPA; and
In appropriate situations, publish in the Federal Register
for notice and comment any proposed site-specific rulemaking associated
with an FPA, or conduct public notice as appropriate for any permitting
action associated with an FPA.
As part of its final decision to approve (or disapprove) an FPA,
EPA will respond for the record to all significant comments received
during the notice process. In developing its response to comments, EPA
will:
Share comments received with the project sponsor, state
environmental agency, and direct participants;
Discuss with those parties the changes made to the FPA,
permit, site-specific rule, or other documents to address public
comments;
Consider fully the public comments and changes made to the
FPA and other documents to address public comments in making its final
decision to approve (or disapprove) an FPA; and
Post on the Web site the changes made to the FPA and other
documents to address public comments, its own response to comments, and
any additional responses prepared by the project sponsors, state
environmental agency, or direct participant stakeholders.
Implementation and Evaluation
Once approved, a project enters its implementation stage. During
this stage, the project is monitored for compliance with the terms of
the FPA and associated documents, and evaluated for lessons that can be
transferred to the more generally applicable system of environmental
regulation and applied to improve the XL program itself. While
[[Page 19881]]
this notice does not provide substantial guidance on the role of
stakeholders in project implementation and evaluation, EPA wishes to
emphasize points that were made on this topic in the Federal Register
notice that originally announced Project XL.
As stated in the May, 23, 1995, Federal Register notice,
project proponents should identify [in the FPA] how to make
information about the project, including performance data, available
to stakeholders in a form that is easily understandable. Projects
should have clear objectives and requirements that will be
measurable in order to allow EPA and the public to evaluate the
success of the project and enforce its terms. (60 FR 27282, May 23,
1995)
EPA recommends that the FPA delineate the intended role of stakeholders
during the implementation and evaluation of the project. The FPA may,
for example, provide for re-examination or periodic evaluation of the
project by direct participant stakeholders.
Independent Technical Assistance to Direct Participant Stakeholder
Groups
EPA has recognized its responsibility to ensure meaningful
participation in the stakeholder process, and, in some cases, has
provided support (e.g., by making available facilitation services, and
by distributing and making available information about project
development).
EPA wishes to offer here guidance on its ability to support
technical assistance. Beyond making available its own technical
expertise, EPA looks to project sponsors to provide assistance in
understanding and evaluating technical issues surrounding a specific
project. EPA recognizes that, in some cases, there will be a need for
the Agency to offer some additional support for technical assistance to
direct participant stakeholder groups. To that end, the Agency is
committing to provide up to $25,000 per project in order to assure that
necessary technical assistance is available to support meaningful
stakeholder involvement. These funds will be made available on a task-
specific basis and will not be in the form of grants to direct
stakeholder groups. These funds may be used in project development,
implementation or evaluation.
Technical assistance needs must be determined within the direct
participant stakeholder process described in this notice. Stakeholder
needs should be examined carefully and fully. The best means of meeting
those needs should be identified by the direct participant stakeholder
group as a whole. Project sponsors as well as regulators should
participate in these discussions and have the chance to provide input
on how the necessary technical services can be provided. Requests for
technical assistance must come from the direct participant stakeholder
group rather than from individuals. Technical assistance funds are not
available to address strictly individual needs. In order to build trust
and local capacity, local resources should always be explored as both
the source of expertise and the financial means of obtaining technical
services. These options should be explored before EPA funds are sought
for the provision of technical assistance.
When it is necessary to utilize EPA funds to obtain assistance,
appropriate financial management controls must be in place to assure
the most focused, cost effective and accountable use of taxpayer
dollars. Resources for assistance will not be given directly to
stakeholder groups, but will be made available to identified experts
for a specific assistance activity. The Agency may choose to utilize a
variety of approaches to access either local expertise or experts
agreeable to the direct participant stakeholder group. These include
cooperative agreements to local and state regulators or other
procurement options available to the federal government.
As an example of an innovative approach to providing technical
assistance, EPA is exploring the creation of a public/private
partnership to handle technical assistance requests from direct
participant stakeholder groups. In this partnership, EPA, other
regulatory agencies, potential project sponsors, trade associations,
non-profit organizations and other interested parties would provide
resources to a neutral third party which would in turn manage and
fulfill technical assistance requests. This neutral third party would
be guided by a partnership of EPA, state environmental agencies,
national stakeholder groups, and other parties that provide resources
to the partnership, in terms of what type of assistance should be
available, who could provide assistance when no local experts are
known, and at what cost.
Regardless of the mechanism used by EPA to fund technical
assistance requests, the goal will always be to ensure that specific,
objective expertise is available, when necessary, and is provided in a
credible fashion that preserves and fosters the integrity of a
meaningful stakeholder involvement process.
Proposal and Project Development Process
The May 23, 1995, Federal Register notice that announced Project XL
included a brief description of the XL process. The notice described
four stages: solicitation and selection of XL proposals, project (or
FPA) development, project implementation, and evaluation. The notice
contained additional information, including time frames, for the first
two steps. In today's notice, EPA offers information on changes to the
process of creating XL proposals and developing XL projects for
implementation, to assist future applicants, stakeholders and those
evaluating the program.
Pre-Proposal Activities
Today's notice encourages project sponsors to do significantly more
to improve proposal ideas prior to formal submission of an XL proposal
to EPA. First, EPA and its state partners stand ready to discuss
project ideas at any time. Second, EPA encourages project sponsors to
have substantive discussion with stakeholders prior to submission of a
formal proposal. The Agency encourages the development of co-
sponsorship relations among facilities and non-governmental
organizations. Third, this notice envisions that proposals themselves
will be much more substantive and detailed. While addressing the eight
XL criteria, a proposal should include a more detailed analysis of
superior environmental performance consistent with the principles
included in this notice; a description of pre-proposal stakeholder
activities and fully developed stakeholder plan; and a discussion of
the specific regulatory flexibility sought and barriers to providing
that flexibility in otherwise applicable requirements. In addition, EPA
encourages all potential applicants to meet with EPA and the affected
state prior to submission of any proposal to clarify the XL program,
principles, expectations, and guidance provided in this notice.
Proposal Development
After proposals submitted to the XL program are received in EPA's
Regulatory Reinvention Docket, they will proceed through a proposal
intake process. EPA will briefly evaluate the proposal with input from
potentially affected offices and states in order to determine whether
the proposal appears to consist of environmental and regulatory
concepts worth testing in Project XL. If EPA determines that the
proposal should continue through the proposal development process, a
cross-
[[Page 19882]]
agency proposal team will be established. The team--consisting of
representatives from EPA headquarters XL Staff and each affected
headquarters office, EPA region, and state--will review the proposal,
discuss it throughout their respective offices as necessary, and
together establish specific questions or outstanding items in the
proposal that may hinder a thorough understanding of the proposal.
Along with any feedback received from interested stakeholders, EPA will
communicate its own feedback to the project sponsors.
At this stage, responsibility for the timing of the proposal
process shifts to the project sponsors. The sponsors may consider EPA's
appraisal and determine the next step: to provide additional
information requested by EPA, to submit a revised proposal, or to
withdraw the proposal. In responding, the project sponsors are strongly
encouraged to raise important issues to any stakeholders who have been
identified at this point.
With complete information, EPA will develop an assessment of the
merits of the proposal relative to the Project XL decision criteria.
The decision to advance or reject the proposal will be made by the
Associate Administrator for Reinvention in consultation with other
members of EPA's senior leadership team. Such decisions will be made in
close consultation with the relevant state environmental agency, and no
XL project will proceed without its approval.
Project Development Process
Proposals that advance are at this point described as XL projects
in development. This is the stage in which FPAs are developed. Once a
project enters the project development phase, the Agency, in
consultation with the state, will expand or modify its staff team as
needed to ensure coordination and continuity throughout development of
an FPA. Guidance on some of the details of the project development
process is contained in the stakeholder involvement portion of this
notice.
Closure
Once a draft FPA has been developed, EPA will conduct a final
internal review of the project and solicit formal notice and comment.
The decision to approve or disapprove an FPA will be made by the
Associate Administrator for Reinvention and the relevant EPA Regional
Administrator, in consultation with other members of EPA's senior
leadership team.
Paperwork Reduction Act
The information collection provisions in this notice, including the
request for proposals, have been approved by the Office of Management
and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et
seq. An Information Collection Request document has been approved (ICR
No. 1749.01). Additional copies may be obtained from Sandy Farmer,
Information Policy Branch, US EPA, Mail Code 2136, 401 M Street, SW.,
Washington, DC 20460, or by calling (202) 260-2740.
Dated: April 16, 1997.
Fred Hansen,
Deputy Administrator.
[FR Doc. 97-10510 Filed 4-22-97; 8:45 am]
BILLING CODE 6560-50-P
