[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 2160 Introduced in Senate (IS)]







104th CONGRESS
  2d Session
                                S. 2160

     To provide for alternative procedures for achieving superior 
           environmental performance, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 28, 1996

 Mr. Lieberman introduced the following bill; which was read twice and 
       referred to the Committee on Environment and Public Works

_______________________________________________________________________

                                 A BILL


 
     To provide for alternative procedures for achieving superior 
           environmental performance, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Innovative Compliance Act of 1996''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) superior environmental performance can be achieved in 
        some cases by granting regulated industries the flexibility to 
        develop alternative strategies for achieving environmental 
        results;
            (2) alternative strategies also have the potential to--
                    (A) substantially reduce compliance costs;
                    (B) foster cooperative partnerships among industry, 
                government, and local communities;
                    (C) encourage greater innovation and greater 
                pollution prevention in meeting environmental goals; 
                and
                    (D) increase the involvement of members of the 
                local community and citizens in decisions relating to 
                the approach taken by a facility for achieving 
                environmental goals; and
            (3) the acid deposition control program established under 
        title IV of the Clean Air Act (42 U.S.C. 7651 et seq.), the 
        stratospheric ozone protection program established under title 
        VI of the Act (42 U.S.C. 7671 et seq.), and other initiatives 
        demonstrate that properly designed market-based approaches can 
        achieve greater environmental performance and encourage 
        innovation while saving money for regulated industries and 
        government when compared with more traditional control 
        approaches.

 TITLE I--ALTERNATIVE STRATEGIES FOR ACHIEVING SUPERIOR ENVIRONMENTAL 
                              PERFORMANCE

SEC. 101. DEFINITIONS.

    In this title:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Agency.--The term ``Agency'' means the Environmental 
        Protection Agency.
            (3) Agency rule.--The term ``Agency rule''--
                    (A) means a rule (as defined in section 551 of 
                title 5, United States Code) issued by the Agency; but
                    (B) does not include any emissions reduction 
                requirement of any rule under title IV of the Clean Air 
                Act (relating to acid deposition control) (42 U.S.C. 
                7651 et seq.) or any other requirement pursuant to any 
                other enforceable trading program.

SEC. 102. PETITION.

    A person that owns or operates a facility that is subject to an 
Agency rule may petition the Administrator to modify or waive the 
Agency rule with respect to the facility and to enter into an 
enforceable compliance agreement with the person establishing an 
alternative compliance strategy with respect to the facility in 
accordance with this title.

SEC. 103. CONTENTS OF PETITION.

    A petition under section 102 shall--
            (1) identify the Agency rule for which the modification or 
        waiver is sought and the alternative compliance strategy that 
        is proposed;
            (2) identify the facility to which the modification or 
        waiver would pertain; and
            (3) demonstrate that the alternative compliance strategy 
        meets the requirements of section 105.

SEC. 104. STAKEHOLDER PARTICIPATION PROCESS.

    (a) In General.--A person that submits a petition under section 102 
shall--
            (1) undertake a stakeholder participation process in 
        accordance with this section; and
            (2) work to ensure that there is adequate technical support 
        for an effective process.
    (b) Requirements.--The stakeholder participation process shall--
            (1) be balanced and representative of interests likely to 
        be affected by the proposed alternative compliance strategy;
            (2) ensure options for public access to the process and 
        make publicly available the proceedings of the stakeholder 
        participation process, except with respect to confidential 
        information of the petitioner;
            (3) establish procedures for conducting the stakeholder 
        participation process, including open meetings as appropriate; 
        and
            (4) if necessary, provide for appropriate agreements to 
        protect confidential information of the petitioner proposing 
        the alternative compliance strategy.
    (c) Public Notice of Petition.--A person that submits a petition 
under section 102 shall provide effective public notice of the intent 
of the petitioner to pursue the alternative compliance strategy to--
            (1) community groups;
            (2) environmental groups;
            (3) potentially affected employees;
            (4) persons living near the facility; and
            (5) Federal, State, and local government agencies in areas 
        that may be affected by the alternative compliance strategy, 
        including areas that may be affected by transport of a 
        pollutant.
    (d) Participation.--
            (1) In general.--Any person may participate in the 
        stakeholder participation process, except that a person that 
        has a business interest in competition with that of the 
        petitioner may be excluded.
            (2) Government officials.--Federal, State, and local 
        government officials in areas that may be affected by the 
        proposed alternative compliance strategy may participate in the 
        stakeholder participation process.
            (3) Limitation on number of participants.--In order to 
        provide for a manageable stakeholder process, a petitioner may 
        propose a limit on the number of stakeholder participants if 
        the petitioner demonstrates to the satisfaction of the 
        Administrator that the stakeholder participants adequately 
        represent, in a balanced manner, the full range of interests 
        (excluding competitive business interests) that may be affected 
        by the alternative compliance strategy.
    (e) Modification or Waiver of Process.--
            (1) Request.--A petitioner may request that the 
        Administrator modify or waive 1 or more of the requirements of 
        this section.
            (2) Criteria.--The Administrator may grant a request under 
        paragraph (1) if, after notice and opportunity for public 
        comment, the Administrator determines that--
                    (A) there is insufficient interest in convening 
                stakeholder participants; and
                    (B) the stakeholder participation process would not 
                be useful in view of the routine or noncontroversial 
                nature of the proposal.

SEC. 105. REQUIREMENTS FOR APPROVAL.

    (a) In General.--The Administrator may approve a petition under 
section 107 if the Administrator determines that--
            (1) the facility is in compliance with all applicable 
        environmental and public health regulations and other 
        requirements;
            (2) the alternative compliance strategy will achieve better 
        overall environmental results than would be achieved under the 
        current regulatory requirements and any reasonably anticipated 
        future regulatory requirements;
            (3) the alternative compliance strategy will not result in 
        adverse cross-media impacts;
            (4) the alternative compliance strategy provides 
        accountability, monitoring, enforceability, and public and 
        Agency access to information at least equal to that provided 
        under the Agency rule that is modified or waived;
            (5) the alternative compliance strategy provides for access 
        to information adequate to enable verification of environmental 
        performance by any interested person;
            (6) the alternative compliance strategy ensures worker 
        health and safety;
            (7) no person or population would be subjected to unjust or 
        disproportionate environmental impacts as a result of 
        implementation of the alternative compliance strategy;
            (8) the alternative compliance strategy will not result in 
        transport of a pollutant to another area;
            (9) the alternative compliance strategy will not result in 
        a violation of a national environmental or health standard;
            (10) all State and local environmental agencies in areas 
        that may be affected by the alternative compliance strategy 
        support the petition;
            (11) the stakeholder participation process met the 
        requirements of section 104;
            (12) as determined on the basis of a well accepted, 
        documented methodology, the alternative compliance strategy 
        will not result in any significant increase in the risks of 
        adverse effects, or shift any significant risks of adverse 
        effects, to the health of an individual, population, or natural 
resource affected by the alternative compliance strategy;
            (13) the agreement is for a specified term not to exceed 10 
        years; and
            (14) in the case of a petition involving more than 1 
        pollutant or more than 1 medium, a broad consensus of the 
        stakeholder participants has approved the alternative 
        compliance strategy.
    (b) Better Overall Results.--
            (1) Criteria.--For the purposes of subsection (a)(2), the 
        achievement of better overall environmental results shall be 
        measured as follows:
                    (A) For existing facilities, the benchmark shall be 
                the lesser of--
                            (i) the level of releases of pollutants 
                        into the environment being achieved prior to 
                        the date of submission of the petition; or
                            (ii) the level of releases of pollutants 
                        into the environment allowed under the current 
                        regulatory requirements and any reasonably 
                        anticipated future regulatory requirements;
                except that the Administrator may modify the benchmark 
                on a case-by-case basis for a facility that has reduced 
                releases significantly below applicable regulatory 
                requirements prior to the date of submission of the 
                petition.
                    (B) For existing facilities being modified to 
                significantly expand production, the benchmark shall be 
                the lesser of--
                            (i) the level of releases of pollutants 
                        into the environment being achieved (on a per 
                        unit of production basis) prior to the date of 
                        submission of the petition; or
                            (ii) the level of releases of pollutants 
                        into the environment allowed under the current 
                        regulatory requirements and any reasonably 
                        anticipated future regulatory requirements on a 
                        per unit of production basis.
                    (C) For new facilities, the benchmark shall be 
                based on the lesser of--
                            (i) the level of releases of pollutants 
                        into the environment allowed under the current 
                        regulatory requirements and any reasonably 
                        anticipated future regulatory requirements; or
                            (ii) the level of releases of pollutants 
                        into the environment being achieved by the best 
                        performance practices of similarly situated 
                        facilities.
            (2) Other considerations.--In addition to determining that 
        the criteria of paragraph (1) are met, the Administrator may 
        consider other factors supporting superior environmental, 
        social, and economic benefits set forth in the petition.
    (c) Objection by Stakeholder.--Notwithstanding subsection (a)(14), 
the Administrator shall deny a petition involving more than 1 pollutant 
or more than 1 medium if--
            (1) 1 or more stakeholders object to the alternative 
        compliance strategy; and
            (2) the Administrator determines, based on the objection, 
        any response to the objection, and all other relevant facts, 
        that--
                    (A) the objection relates to any of the criteria 
                stated in paragraphs (1) through (13) of subsection 
                (a); and
                    (B) the objection has a clear and reasonable 
                foundation.

SEC. 106. PRIORITY.

    The Administrator shall give priority to petitions with alternative 
compliance strategies using pollution prevention approaches and to 
petitions submitted by persons with a strong record of outstanding 
environmental performance and worker health and safety protection.

SEC. 107. DETERMINATION OF PETITION.

    Not later than 180 days after receiving a petition under section 
102, the Administrator, subject to section 112, shall--
            (1) propose to approve the petition and enter into an 
        enforceable compliance agreement; or
            (2) submit a written explanation to the petitioner of the 
        basis for determining that the requirements of section 105 are 
        not met.

SEC. 108. PUBLIC NOTICE OF INTENT TO APPROVE PETITION.

    The Administrator shall publish notice of the intent to approve a 
petition in the Federal Register at least 60 days prior to approving 
the petition.

SEC. 109. ENFORCEABILITY.

    (a) In General.--If the Administrator and a person enter into an 
enforceable compliance agreement under this title, the person shall 
comply with the agreement in lieu of any Agency rule modified or waived 
by the agreement, and compliance with the agreement shall be considered 
to be compliance with the Agency rule for all purposes.
    (b) Specification of Agency Rules to Which Agreement Applies.--An 
agreement under subsection (a) shall specify each Agency rule that is 
modified or waived.

SEC. 110. PRELIMINARY COMMENT PROCESS.

    The Administrator shall establish a process for providing 
preliminary comments by the Administrator on a petition.

SEC. 111. JUDICIAL REVIEW.

    A decision by the Administrator to approve or disapprove a petition 
under this title shall constitute final agency action and shall be 
subject to judicial review.

SEC. 112. LIMITATION ON PETITIONS CONSIDERED.

    The Administrator shall not consider more than 50 petitions for 
alternative compliance strategies unless--
            (1) a petitioner demonstrates that, because the petitioner 
        is situated in a position that is virtually identical to that 
        of another person that has been granted approval of a petition, 
        the petitioner may be at a substantial competitive disadvantage 
        if the petition is not considered; or
            (2) at the sole discretion of the Administrator and taking 
        into account the full range of the Agency's obligations, the 
        Administrator determines that adequate resources exist to 
        evaluate a greater number of petitions and to oversee 
        implementation of a greater number of enforceable compliance 
        agreements.

SEC. 113. SMALL BUSINESS PROPOSALS.

    The Administrator shall establish a program to facilitate 
development of proposals for alternative means of compliance from 
groups of small businesses and to provide expedited review of proposals 
for alternative means of compliance from groups of small businesses.

SEC. 114. REPORT AND EVALUATION.

    Not later than 3 years after the date of enactment of this Act, the 
Administrator shall submit a report to Congress on the aggregate effect 
of the enforceable compliance agreements entered into under this title, 
including--
            (1) the number and characteristics of the agreements;
            (2) estimates of the environmental and public health 
        benefits, including any reduction in quantities or types of 
        emissions and wastes generated;
            (3) estimates of the effect on compliance costs and jobs 
        creation;
            (4) the degree and nature of public participation and 
        accountability;
            (5) the incidence of noncompliance with the agreements 
        entered into under this title compared to the incidence of 
        noncompliance with relevant Agency rules by similarly situated 
        facilities;
            (6) conclusions on the functioning of stakeholder 
        participation processes; and
            (7) recommendations for legislative action.

SEC. 115. SAVINGS CLAUSE.

    A decision by the Administrator to enter into an enforceable 
compliance agreement under this title shall not create any obligation 
of the Agency to modify any Agency rule insofar as the rule applies to 
any facility other than the facility subject to the enforceable 
compliance agreement. Nothing in this title shall affect the ability of 
the Administrator to enter into or carry out enforceable alternative 
compliance agreements under other law.

SEC. 116. COMPUTER ACCESS.

    The Administrator shall establish, and provide on-line computer 
access to, a national repository of enforceable compliance agreements 
entered into under this title.

SEC. 117. FUNDING.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Agency to carry out this title such sums as are 
necessary for fiscal years 1997 through 2000.
    (b) Authorization of Fees.--
            (1) In general.--The Administrator may assess reasonable 
        fees for consideration of petitions.
            (2) Offset.--Fees assessed under paragraph (1) shall offset 
        the expenses incurred by the Administrator and may be used only 
        for processing, administering, implementing, and enforcing 
        enforceable compliance agreements.
            (3) Other fees.--Fees assessed under this subsection shall 
        be collected in lieu of fees associated with otherwise 
        applicable rules or requirements modified by an enforceable 
        compliance agreement.
            (4) Waiver.--The Administrator may waive any fees under 
        this subsection for any proposal for an alternative means of 
        compliance from a small entity (as defined under section 601 of 
        title 5, United States Code) or group of small entities.

            TITLE II--ENVIRONMENTAL MARKET-BASED STRATEGIES

SEC. 201. CONSIDERATION OF MARKET-BASED MECHANISMS.

    Before issuing a rule establishing a new program intended to limit 
the discharge or emission of a pollutant into the environment, the 
Administrator of the Environmental Protection Agency shall, in 
appropriate circumstances, consider including market-based mechanisms 
in the design and implementation of the program.

SEC. 202. MARKET-BASED MECHANISMS.

    (a) In General.--Subject to subsection (b), a market-based 
mechanism shall include--
            (1) the imposition, on each regulated person, of express 
        legal accountability for an explicit performance objective 
        expressed as a quantity of actual discharges or emissions (and 
        each such person's emissions or discharge limit shall represent 
        a share of a total limit on emissions or discharges from all 
        sources affected by the rule); and
            (2) the authorization of the regulated person to comply 
        with the requirements described in paragraph (1) by 
        transferring or acquiring increments of emissions or discharge 
        reductions, which shall represent reductions in emissions or 
        discharges in excess of those required to be made by a 
        regulated entity to meet its emissions or discharge limits.
    (b) Other Appropriate Factors.--
            (1) In general.--If the Administrator of the Environmental 
        Protection Agency determines that a program with the elements 
        specified in subsection (a) is not appropriate, the 
        Administrator may include in a market-based mechanism a method 
        by which a regulated person subject to emissions or discharge 
        limits that are not expressed as a quantity of total emissions 
        or discharges may--
                    (A) elect to meet the applicable emissions or 
                discharge limits by limiting the person's total 
                emissions or discharges to a specified quantity that 
                corresponds to the regulated person's initial emissions 
                or discharge limits; and
                    (B) achieve compliance with the emissions or 
                discharge limits established under subparagraph (A) by 
                acquiring or transferring increments of emissions or 
                discharge reductions.
            (2) Incremental reductions.--Subject to paragraph (3), 
        increments described in paragraph (1)(B) shall--
                    (A) represent reductions in emissions or discharges 
                in excess of reductions required to be made by a 
                regulated entity to meet its emissions or discharge 
                limits; and
                    (B) be permanent, enforceable, and nondiscrete.
            (3) Exclusion as part of mechanism.--A rule permitting 
        sources to acquire increments of emissions or discharge 
        reductions when increments represent reductions that are 
        discrete, nonpermanent, or discontinuous and are generated by 
        sources the total emissions or discharges of which are not 
        subject to a quantified emissions or discharge limitation 
        requirement shall not be part of a market-based mechanism.
    (c) Limitation.--Notwithstanding any other provision of this title, 
the Administrator of the Environmental Protection Agency may not 
consider market-based mechanisms for a program if--
            (1) the program would result in levels of emissions or 
        discharges of the pollutant regulated by the rule in excess of 
        those that would be achieved under an alternative program, 
        taking into account any incentives for generating and retaining 
        excess reductions created by the opportunity to acquire and 
        transfer increments of emissions or discharge reductions as a 
        means of meeting the emissions or discharge limitation 
        requirement applicable to the source; or
            (2) the program pertains to a pollutant the properties of 
        which are such that the environmental or human health purposes 
        for which the pollutant is subject to regulation, taking into 
        account any disproportionate or unjust environmental impacts to 
        an individual, population, or natural resource, and any 
        transport of the pollutant that may result, may be achieved 
        only through the imposition of nontransferable source-specific 
        emissions or discharge limitation requirements.
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