[Federal Register Volume 63, Number 86 (Tuesday, May 5, 1998)]
[Notices]
[Pages 24784-24796]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11799]
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ENVIRONMENTAL PROTECTION AGENCY
Joint EPA/State Agreement To Pursue Regulatory Innovation
[FRL-6008-7]
AGENCY: Environmental Protection Agency.
ACTION: Notice of Availability of Joint EPA/State Innovation Agreement.
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SUMMARY: The U.S. Environmental Protection Agency (EPA) and senior
State environmental officials recently signed an agreement entitled
Joint EPA/State Agreement to Pursue Regulatory Innovation (hereafter
``Innovations Agreement''). The purpose of the Innovations Agreement is
to improve environmental protection in the United States, improve EPA/
State environmental management practices, and provide timely decision-
making on good ideas. These goals will be achieved through innovation
proposals by States, with the intent that many successful innovations
will lead to system-wide improvements in environmental protection.
The Innovations Agreement embodies a set of general principles and
a process for EPA/State innovation activities that includes:
--Statements of purpose and scope of the agreement;
--Over-arching principles that will govern joint EPA/State regulatory
innovation activities;
--The process EPA and the States will use to identify good ideas,
including both the continuation of existing State/EPA interactions to
start innovation projects, and the establishment of a new mechanism for
making decisions on innovative proposals that do not fit into ongoing
reinvention programs; and
--Guidelines for how EPA and the States will evaluate the success of
innovation activities carried out under this agreement.
This Innovations Agreement builds on the many reinvention efforts
that are underway in the States and EPA. It is intended to ensure joint
decision-making, timely review, broad public involvement, and continued
progress in fostering and implementing ideas that are good for our
environment and the people we serve.
ADDRESSES: An electronic version of the Innovations Agreement is
available on EPA's Office of Reinvention internet home page at http://
www.epa.gov/reinvent. Interested parties can obtain a single copy of
the report by contacting Louise McLaurin (phone 202-260-4261 or e-mail
[email protected]).
FOR FURTHER INFORMATION CONTACT: For questions on the joint EPA/State
Innovations Agreement, please contact John Glenn, U.S. Environmental
Protection Agency, Office of Reinvention, (1803), 401 M Street, S.W.,
Washington, DC, 20460, phone 202-260-5029, e-mail
[email protected]; or Bruce Brott, Minnesota Pollution Control
Agency, phone 612-297-8380, e-mail [email protected].
SUPPLEMENTARY INFORMATION: To find new, better, and more efficient and
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effective ways to improve environmental protection, the Environmental
Council of the States (ECOS) and EPA Administrator Carol Browner formed
a Task Group to develop a joint agreement on EPA/State regulatory
innovation. The Task Group developed the draft Joint EPA/State
Agreement to Pursue Regulatory Innovation (``Innovations Agreement''),
which was published for public comment last fall in the Federal
Register (62 FR 56182-89; October 29, 1997). A balanced set of eleven
comments with 31 signatories representing industry, environmental
interest groups, and government were submitted. All comments were
considered in preparing the final draft of the Innovations Agreement.
At the ECOS meeting on March 25, 1998, the State officials present
voted unanimously to approve the Innovations Agreement. In late April,
EPA and senior State environmental officials signed the joint
Agreement. The full text of the Innovations Agreement and the EPA/State
Response to Comments follow.
Part 1
Joint EPA/State Agreement To Pursue Regulatory Innovation
``* * * We must encourage innovation by providing flexibility
with an industry-by-industry, place-by-place approach to achieving
standards, * * *. But we will require accountability that such
standards be met. Rather than focusing on pollutant-by-pollutant
approaches, attention must shift to integrated strategies for whole
facilities, whole economic sectors, and whole communities.''
[Excerpt from President Clinton's ``Reinventing Environmental
Regulation,'' March 16, 1995]
The U.S. Environmental Protection Agency and senior State
environmental officials (hereafter referred to as ``States'') agree on
the need to experiment with new approaches to improve our nation's
environment. These new approaches can help us identify cleaner,
cheaper, smarter ways to ensure that all Americans enjoy a clean
environment and healthy ecosystems. Through this joint commitment, EPA
and the States agree to encourage, evaluate, implement, and disseminate
ideas that seek better ways of achieving our environmental goals. This
agreement presumes that EPA and the States will find ways to help good
ideas succeed, and that joint EPA and State efforts to promote and test
new ideas will result in the maximum benefit to the American people and
their environment.
Two years ago, EPA and the States entered into an historic
agreement to establish the National Environmental Performance
Partnership System (NEPPS). That agreement recognized that we have
achieved significant progress since environmental protection programs
were created more than 25 years ago. Yet to meet today's new
challenges, we agreed that States and EPA must manage for environmental
results, increase public involvement, and use environmental indicators
to track our progress. We agreed that States and EPA must become true
partners in implementing federal programs, and that different State
programs need different levels of federal involvement.
This new partnership creates an environment in which State and
local regulatory innovations can, and should, flourish. As the primary,
front-line delivery agent for environmental programs, States are a
natural laboratory for testing new ideas. State and local environmental
professionals are closest to environmental problems and communities,
and can often develop the most practical solutions. These professionals
should be encouraged to seek innovative solutions that may not fit
within the traditional approaches. We agree that our efforts to promote
innovation must, in the end, be directed toward achieving our public
health and environmental goals in a more efficient or effective way.
EPA also seeks to promote regulatory innovations at all levels.
This agreement complements, but does not supplant, other national or
State efforts to develop regulatory innovations. Its purposes are to:
improve environmental protection in the United States; to improve EPA/
State environmental management practices; and to provide timely
decision-making on good ideas.
States and EPA agree that the following principles should guide us
as we develop, test and implement regulatory innovations:
Experimentation: Innovation involves change, new ideas,
experimentation and some risk of failure. Experiments that will help us
achieve environmental goals in better ways are worth pursuing when
success is clearly defined, costs are reasonable, and environmental and
public health protections are maintained.
Environmental Performance: Innovations must seek more efficient
and/or effective ways to achieve our environmental and programmatic
goals, with the objective of achieving a cleaner, healthier environment
and promoting sustainable ecosystems.
Smarter Approaches: To reinvent environmental regulation,
regulators should seek creative ways to remedy environmental problems
and improve the environmental protection system, and be receptive to
innovative, common sense approaches.
Stakeholder Involvement: Effective stakeholder involvement produces
better innovation projects and catalyzes public support for new
approaches. Stakeholders must have an opportunity for meaningful
involvement in the design and evaluation of innovations. Stakeholders
may include other State/local government agencies, the regulated
community, citizen organizations, environmental groups, and individual
members of the public. Stakeholder involvement should be appropriate to
the type and complexity of the innovation proposal.
Measuring and Verifying Results: Innovations must be based on
agreed-upon goals and objectives with results that can be reliably
measured in order to enable regulators and stakeholders to monitor
progress, analyze results, and respond appropriately.
Accountability/Enforcement: For innovations that can be implemented
within the current regulatory framework, current systems of
accountability and mechanisms of enforcement remain in place. For
innovations that involve some degree of regulatory flexibility,
innovators must be accountable to the public, both for alternative
regulatory requirements that replace existing regulations and for
meeting commitments that go beyond compliance with current
requirements. Regulators will reserve full authority to enforce
alternative regulatory requirements to ensure that public health and
environmental protections are maintained, and must be willing to
explore new approaches to establish accountability for beyond-
compliance commitments.
State-EPA Partnership: The States and EPA will promote innovations
at all levels to increase the efficiency and effectiveness of
environmental programs. We must work together in the design, testing,
evaluation and implementation of innovative ideas and programs,
utilizing each other's strengths to full advantage.
EPA agrees to establish a process that ensures timely review and
decision-making on State innovation proposals based on implementation
of the above seven principles. The States agree to consult early with
EPA, to develop proposals consistent with the above principles, and to
involve stakeholders. EPA and the States agree on the need for a
clearinghouse of regulatory innovations so that promising ideas can be
shared across state lines and within EPA.
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We agree that the principles and process described in this
agreement should be open to continual improvement. As part of ongoing
review and evaluation, EPA and the States agree to evaluate the need to
further institutionalize the broad principles and process to help
future innovations succeed.
Through this agreement, as detailed in Part 2, States and EPA are
committed to work together and with all stakeholders to apply the
lessons learned from successful innovations in creating the best
possible system to achieve greater environmental protection at a
reasonable cost.
We agree to encourage innovation that will prepare us for meeting
our environmental challenges well into the 21st century.
Carol M. Browner,
Administrator, U.S. Environmental Protection Agency.
Robert C. Shinn, Jr.,
Commissioner, New Jersey Department of Environmental Protection,
President of ECOS.
Fred Hansen,
Deputy Administrator, U.S. Environmental Protection Agency.
Robert W. Varney,
Commissioner, New Hampshire Department of Environmental Services, Vice
President of ECOS.
J. Charles Fox,
Associate Administrator for Reinvention, U.S. Environmental Protection
Agency.
Peder Larson,
Commissioner, Minnesota Pollution Control Agency, and Co-Chair, ECOS
Regulatory Innovations Task Group.
Randall Mathis,
Commissioner, Arkansas Department of Pollution Control and Ecology, and
Co-Chair, ECOS Regulatory Innovations Task Group.
Dated: April 1998.
Part 2
I. Overview of This Agreement
This agreement embodies a set of general principles and a process
for EPA/State innovation activities. This agreement includes:
--Statements of purpose and scope of the agreement;
--Over-arching principles that will govern joint EPA/State regulatory
innovation activities;
--The process EPA and the States will use to identify good ideas,
including both the continuation of existing State/EPA interactions to
start innovation projects, and the establishment of a new mechanism for
making decisions on innovative proposals that do not fit into ongoing
reinvention programs; and
--Guidelines for how EPA and the States will evaluate the success of
innovation activities carried out under this agreement.
This agreement builds on the many reinvention efforts that are
underway in the States and EPA. It is intended to ensure joint
decision-making, timely review, broad public involvement, and continued
progress in fostering and implementing ideas that are good for our
environment and the people we serve.
II. Purpose and Scope of the Agreement
A. Purpose
The Administrator of the U.S. Environmental Protection Agency (EPA)
and senior State environmental officials agree to three purposes for
this effort: to improve environmental protection in the United States;
to improve EPA/State environmental management practices; and to provide
timely decision-making on good ideas. These purposes will be achieved
through State proposals for innovation, with the intent that many
successful innovations will lead to system-wide improvements in
environmental protection.
1. Improved Environmental Protection
The Administrator of the U.S. Environmental Protection Agency (EPA)
and senior State environmental officials agree that the States and EPA
need to encourage, seek out, and try innovative approaches to improve
our nation's environment. These innovative approaches can offer
mechanisms that are more cost-effective, less adversarial and
contentious, and have a better environmental impact. While we have made
significant progress in environmental protection, much remains to be
done and no backsliding can be permitted. Innovative approaches offer
us tools to improve current environmental protection programs and to
tackle the environmental problems of the future.
Innovation can support sustainable development and continuous
environmental improvement by offering new approaches that harmonize our
progress toward environmental, economic, and societal goals. Some
innovations may address only one of these goals. Innovation proposals
that address more than one of these goals are desirable. For example,
innovations which facilitate a transition to pollution prevention and
product stewardship as primary methods of achieving environmental goals
can also have significant economic or societal benefits. To support
sustainable development and continuous environmental improvement,
innovations should utilize pollution prevention methods rather than
pollution control whenever possible.
2. Improved EPA/State Environmental Management Practices
Through this agreement, EPA and the States will test and implement
innovative approaches that lead to improved environmental programs.
This agreement is consistent with the concepts embodied in the National
Environmental Performance Partnership System (NEPPS). In fact, NEPPS
was established, in part, to encourage innovative approaches by States,
consistent with agreed-upon environmental goals and indicators. The
agreement recognizes that states and local governments are natural
laboratories for testing new ideas and that EPA has an important role
in promoting innovation at all levels, while continuing to ensure that
the States provide fundamental public health and environmental
protection. This agreement identifies how we will work together to
identify and promote innovative ideas and better ways of doing
business. It is intended to help us communicate and evaluate such ideas
and to encourage joint decision-making on how such innovations can be
fostered, designed and implemented.
3. Timely Decision-Making on Good Ideas
Finding better ways to accomplish our environmental goals is part
of the everyday practice of good government. Current processes through
which many successful State innovations have been carried out should
continue. We recognize that the most challenging regulatory innovation
proposals have been difficult to address. This agreement establishes an
optional avenue for prompt consideration and evaluation of innovation
proposals.
EPA and States may conclude that some successful regulatory
innovation projects demonstrate that changes in EPA regulations,
policies, guidance, or interpretations are needed to improve the
nation's environmental protection system. Where such changes can be
made under existing law, EPA will initiate the process for making the
changes--following applicable procedures. EPA and States may also
initiate policy discussions on potential statutory changes that may be
needed to enable nation-wide adoption of innovative approaches.
B. Scope of the Agreement
As used in this agreement, ``regulatory innovation'' is a broad
concept. It
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encompasses the process of proposing, testing, evaluating, refining and
sharing innovative approaches to environmental regulation in order to
achieve national, regional, state, tribal, and local environmental
objectives. Regulatory innovations should be more efficient and/or
provide greater environmental protection than current approaches,
foster cooperation, and include opportunities for strong stakeholder
involvement.
Many types of innovations are possible, and potential innovations
will vary in scope, complexity, ease of implementation, environmental
benefits, and other characteristics. At this point in time, it is
difficult to design a single system or process that is appropriate for
all potential innovations. Innovations should be accomplished through
the normal course of business whenever possible. This agreement
provides a clear pathway for innovative proposals that need extra
attention or are too complex to be handled through normal channels.
Proposals that are less complex can be implemented more quickly,
leading to early success, while more difficult projects will likely
need more analysis and stakeholder participation. This agreement builds
on and complements other innovation activities, but is not intended to
replace them.
This agreement signals the commitment of EPA and State
environmental agencies to work together on innovations. It does not
create any legal obligations for EPA or the States, and does not alter
EPA's or States' statutory responsibilities or the nature of authorized
or delegated State programs. Any innovations under this agreement will
be implemented within our existing legal authorities using appropriate
procedures.
III. Principles for EPA/State Regulatory Innovation
EPA and the States agree to a set of basic overarching principles
that will guide our joint regulatory innovation activities. There are
seven overarching principles relating to regulatory innovation
activities--Experimentation, Environmental Performance, Smarter
Approaches, Stakeholder Involvement, Measuring and Verifying Results,
and Accountability/Enforcement, and State-EPA Partnership.
A. Experimentation
Innovation involves change, new ideas, experimentation, and some
risk of failure. Experiments that will help us achieve environmental
goals in better ways are worth pursuing when success is clearly
defined, costs are reasonable, and environmental and public health
protections are maintained.
1. The States and EPA should recognize the value of prudent risk-
taking through experiments designed to achieve improved results.
2. The States and EPA should seek ways to make good ideas work,
presuming that innovations to help meet environmental goals are worth
our investment.
3. The States and EPA should carefully monitor and manage
innovations to ensure that problems are immediately identified and
remedied. Experimentation should be based on sound judgment, reasoning
and common sense.
4. If a promising experiment encounters difficulties that likely
can be corrected and that do not jeopardize environmental protection,
project sponsors should be allowed to fix problems before the
experiment is abandoned in favor of the traditional approach.
5. Experimentation does not include relaxing health or
environmental standards or reducing protection of public health or the
environment.
6. Experiments should be designed to test new approaches and as
appropriate lessons learned should be used to improve the current
system of environmental protection.
B. Environmental Performance
Innovations must seek more efficient and/or effective ways to
achieve our environmental and programmatic goals, with the objective of
achieving a cleaner, healthier environment and promoting sustainable
ecosystems.
1. Protecting public health and the environment are the primary
goals of both EPA and State environmental agencies, and we agree that
innovations can help us find cleaner, cheaper, smarter ways of
improving our nation's environment. Innovations that facilitate a
transition to pollution prevention and product stewardship as primary
methods of achieving environmental goals are highly desirable and can
have significant economic or societal benefits to support sustainable
development.
2. Many opportunities exist to improve environmental protection
through innovations that have the clear potential to provide
environmental and ecosystem benefits. In addition, innovations may be
designed primarily to improve the cost effectiveness of achieving
environmental goals; these projects must ensure that there is no
adverse impact on: environmental protection, public access to
information, and public access to the decision-making process.
3. For projects that have a greater uncertainty of the
environmental outcome, or that involve experimental technologies or
approaches, innovations should be expected to have the clear potential
to provide increased environmental protection, promote ecosystem
sustainability, or both. EPA and the State agency, in their best
judgment and in consultation with stakeholders, will determine whether
such proposals have the clear potential to produce appropriate gains in
environmental protection, improved sustainability of the ecosystem, or
both.
4. Innovations may be designed to fit local and regional
conditions, as long as local solutions do not create environmental
problems for other localities, such as undesired downwind and
downstream effects, or undermine national standards.
5. No population group should be subjected to disproportionately
high and adverse human health or environmental impacts as a result of
the innovation.
C. Smarter Approaches
To reinvent environmental regulation, regulators should seek
creative ways to remedy environmental problems and improve
environmental protection, and be receptive to innovative, common sense
approaches.
1. Regulators should work with industry and communities to solve
environmental problems by identifying ways to remove barriers that
prevent prudent, common sense solutions.
2. Regulators should be professional, accountable and deserving of
the public's trust.
3. Regulators should seek to understand all perspectives, and help
stakeholders find common ground.
4. Regulators should act promptly to evaluate, and implement,
proposals that are straightforward, technically achievable, and have
clear advantages, while ensuring adequate opportunities for public
involvement and review.
D. Stakeholder Involvement
Effective stakeholder involvement produces better innovation
projects and catalyzes public support for new approaches. Stakeholders
must have an opportunity for meaningful involvement in the design and
evaluation of innovations. Stakeholders may include other State/local
government agencies, the regulated community, citizen organizations,
environmental groups, and individual members of the public. Stakeholder
involvement should be appropriate to the type and complexity of the
innovation proposal.
1. Innovations should include opportunities for early, open, and
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inclusive stakeholder involvement in project development, specifically
including those who may be affected by the decisions. Stakeholders
should be provided adequate time to review proposals and participate in
the process. When an innovation has the potential to result in
significant policy changes, additional efforts, that could include
incentives and assistance, should be made to provide additional
opportunities so that affected and interested stakeholders can be
meaningfully involved.
2. Consistent with the principle of providing meaningful
opportunity for stakeholder involvement, each State should have the
flexibility to use its own stakeholder participation process, as long
as applicable federal and State procedural requirements are met or
exceeded. EPA and States will identify national program issues and
ensure opportunities for active involvement from national and regional
stakeholder groups, especially where decisions on regional, state, or
local issues have broader impacts.
3. Project proposals and the process for their consideration should
be made transparent to stakeholders so that the benefits of the
proposed change can be fully evaluated. Information needed to
understand the proposed innovation and to verify compliance and
environmental performance should be publicly available in an
understandable form. EPA and States commit to provide regular analysis
of the types of innovations implemented and their environmental
impacts.
4. Because some stakeholder groups (e.g., small businesses, public
interest groups) often have a limited capacity to participate in
innovation projects, EPA and States will explore different approaches
to facilitating stakeholder involvement.
5. In circumstances where local governments share regulatory
responsibility, they should participate as partners with the State in
developing and implementing the innovation.
E. Measuring and Verifying Results
Innovations must be based on agreed-upon goals and objectives with
results that can be reliably measured in order to enable regulators and
stakeholders to monitor progress, analyze results and respond
appropriately.
1. The success of innovations should be judged by the results they
achieve. Goals and objectives should be: established in advance,
measurable, and based on the desired results.
2. Results should be verifiable by reliable measurements and both
process and results should be understandable to regulators and the
public.
3. Regulators should have access to high quality information
sufficient to verify the environmental performance of an innovation.
4. Regulators and the public should have a full understanding of
the differences between the innovation and traditional approaches,
including expectations for the project, accountability for performance,
and any potential risks.
F. Accountability/Enforcement
For innovations that can be implemented within the current
regulatory framework, current systems of accountability and mechanisms
of enforcement remain in place. For innovations that involve some
degree of regulatory flexibility, innovators must be accountable to the
public, both for alternative regulatory requirements that replace
existing regulations and for meeting commitments that go beyond
compliance with current requirements. Regulators will reserve full
authority to enforce alternative regulatory requirements to ensure that
public health and environmental protections are maintained, and must be
willing to explore new approaches to establish accountability for
beyond-compliance commitments.
1. For persons or activities not covered by the innovation project,
applicable statutory and regulatory requirements remain in effect and
fully enforceable.
2. If a promising innovation project encounters difficulties that
likely can be corrected and that do not jeopardize environmental
protection, regulatory agencies should evaluate the circumstances and
use judgment in allowing project sponsors to correct problems before a
project is abandoned in favor of the traditional approach.
3. Regulators must have authority to address such circumstances as
imminent and substantial endangerment, actual harm, or criminal
conduct.
4. Innovations may include both: (a) Enforceable ``alternative
regulatory requirements'' that provide protection equivalent to that
provided by otherwise applicable environmental standards or
requirements, and (b) other ``beyond-compliance commitments'' that seek
to exceed otherwise applicable standards or requirements. Alternative
regulatory requirements and beyond-compliance commitments should be
clearly distinguished in advance.
Alternative Regulatory Requirements:
--Alternative regulatory requirements should be enforceable with all
the remedies available under current law.
--Regulators should consider the circumstances and use their judgment
in choosing remedies when a facility fails to meet alternative
regulatory requirements.
--Potential responses for failure to meet such alternative regulatory
requirements should be identified in advance.
Beyond-Compliance Commitments:
--As part of an innovation, facilities may agree to beyond-compliance
commitments in exchange for regulatory flexibility or some other
incentive.
--Potential responses for failure to meet such beyond-compliance
commitments should be defined in advance.
--Responses for failure to meet beyond-compliance commitments should
fit the circumstances. They may include: a series of interim
accountability measures short of project termination, trying a
different approach, modifying the innovative approach, or reverting to
the traditional approach.
5. Innovations should not undermine the state's, federal
government's, or citizens' authority or capacity to enforce delegated
or authorized state programs.
G. State-EPA Partnership
The States and EPA will promote innovations at all levels to
increase the efficiency and effectiveness of environmental programs. We
must work together in the design, testing, evaluation and
implementation of innovative ideas and programs, utilizing each other's
strengths to full advantage.
1. As the primary front-line managers of many environmental
protection programs, the States and local governments are natural
laboratories for innovations. The States should manage their own
programs, adapt to local conditions, and test new approaches for
delivering more environmental protection for less.
2. The federal government should ensure good science, strong
national health and environmental standards, and should work in
partnership with the States by providing analysis, expertise, and
facilitating learning among the States. EPA should promote innovation
at all levels (national, regional, state, tribal, place-based,
community, and in the private sector). EPA retains its role to set
national standards and measures, implement programs not delegated to
states or tribes, address interstate issues, apply and interpret
national statutes and
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regulations, and ensure fair and effective enforcement, thus ensuring
that all states provide fundamental public health and environmental
protection and a level playing field.
3. EPA and state roles in innovations must be clearly designed to
utilize each party's unique strengths and avoid duplication. Decision
makers should be clearly identified.
4. Assigned roles and responsibilities should be honored and
respected, and joint problem-solving should be encouraged.
5. Communication must be open, honest, frank and frequent. The
States and EPA should work to understand each other's perspectives,
achieve consensus on major issues, make decisions in a timely manner,
and resolve conflicts quickly and efficiently.
IV. Process for Considering State Innovations Proposals
EPA and the States are engaged in many successful efforts to
reinvent environmental regulation. These efforts should continue
unimpeded. EPA and the States agree that, where procedures currently
exist, innovation proposals should be handled through normal EPA/State
program activities or other ongoing reinvention activities. Proposals
that do not fit into an existing pathway can be handled via the new
process established under this agreement.
The process of developing Performance Partnership Agreements (PPAs)
under National Environmental Performance Partnership System offers one
opportunity for States and EPA, working with stakeholders, to agree on
innovative approaches to pursue. However, participation in a PPA is not
the only avenue for States and EPA to work on innovative approaches.
Memorandum of Agreements and/or Work Plans can serve the same function
as a PPA. Inclusion of anticipated innovative approaches in the PPAs or
other agreements will allow the States and EPA to allocate staff
resources and establish priorities for innovative projects. For
example, individual States may choose to place higher priority on
innovation projects which promote clear cost or environmental benefits
for the public. It is envisioned that States will include in the PPAs
or other agreements a discussion of potential innovative activities,
indicating how the innovations link to environmental goals and
providing a picture of proposed changes.
A. Use Existing Pathways
This agreement is designed to supplement, rather than replace,
ongoing innovation activities underway in EPA and the States. Such
innovation activities should continue. State innovations that do not
require a change to Federal guidance, regulations or statutes can
proceed without EPA review. EPA's role will consist of support and
advice, if requested. EPA and States should continue to work together
on innovations that may involve using existing flexibilities in current
law and regulation, and on existing innovation programs such as Project
XL.
B. New Process Established Under This Agreement
The States and EPA agree to establish an optional process, which
States may use to get timely decisions on innovation proposals. This
process includes senior-level management attention and specific time
frames to ensure prompt decisions by EPA. The following process
establishes a management framework so that actions and next steps,
along with interested participants and decision-makers, can be clearly
identified and taken into account. EPA's Regional Administrators are
responsible for ensuring that the process moves forward; individual
States are expected to establish similar senior-level points of contact
to manage the State's role in the innovation process.
This process is intended to be flexible. For example, EPA Regional
Offices, EPA Headquarters Offices, and the States are encouraged to
maintain open lines of communication at both staff and management
levels beyond the formal process described below, and States are
encouraged to invite EPA into the early discussion stages of any
project. Early consultation between EPA and the States is important in
identifying obstacles early and in determining who needs to be involved
so that the project can move forward expeditiously.
EPA will also work with individual States as needed to establish
priorities in the review of proposals based on guidance developed in
the Performance Partnership Agreement or other EPA/State agreed
mechanism. EPA and the States recognize that the success of this
process will be affected by the quality and clarity of proposals and
the effectiveness of communication between EPA, the State, and
stakeholders. The States and EPA are committed to working together to
ensure that communications are frequent, open, honest, and directed to
finding means to allow innovations to succeed.
While one of the objectives of the innovation proposals is
efficiency, the very act of designing an experiment, testing the
hypothesis, and evaluating the results may be resource intensive for
all parties. The optimum management of resources by EPA and the State
will help ensure the success of the review process, the implementation
of the projects, and adherence to time lines.
1. Stage One--Developing Quality Proposals
States and EPA recognize that clear, well-developed proposals will
facilitate review and speed decision-making. States are encouraged to
consult with EPA as early as possible in the development of a proposal.
The States should be able to use this early consultation process to
develop a clear understanding of their proposals with EPA and key
stakeholders.
During the early consultation, the State and EPA will identify
issues that need attention, possible barriers to implementation,
uncertainties regarding risks, and value added to all parties. These
discussions will be open and candid and will provide the State with
information that will be important and useful for the development of
the proposal. While early consultation is encouraged, not all proposals
will require the same degree of discussion and/or consultation.
EPA and States will bring a positive, constructive approach to
consideration of proposals and seek ways to help good ideas to succeed.
States will prepare proposals that: a) are consistent with the
principles described in this agreement, and b) clearly present the
objective of the proposal, the expected benefits, a description of the
activities, and a determination as to whether the proposal: may require
a change to Federal guidance, policy, past practices or rule
interpretation, but not regulations or statutes; may require a change
to or waiver from Federal regulations, but not statutes; or, may
require a change to a Federal statute.
EPA will: (a) Provide clear statements of its position, along with
timely and authoritative answers to questions about what changes,
variances, or associated approvals a particular proposal may require;
and (b) work with the State to identify the most efficient path by
which a particular proposal could be implemented.
In addition, States will provide meaningful opportunities for
stakeholder involvement in the design and development of regulatory
innovation proposals. The degree of stakeholder involvement depends on
the nature of the proposal. Where a proposal would involve a change in
or variance from existing national
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guidance, regulations, or statutes, early consultation among EPA,
States, and national stakeholder groups can help identify critical
issues that need to be addressed. If EPA believes that broader
stakeholder involvement is warranted, in accordance with the
Stakeholder Involvement Principle, EPA will contact the State and
identify, in partnership with the State, an approach to obtain such
involvement as early in the process as possible.
The Senior State Environmental Official or their designee then
submits a written description of the regulatory innovation proposal to
the EPA Regional Administrator, who then initiates the review process
described below. The State will designate a high-level official as the
single point of contact for each project.
2. Stage Two--Review of Proposal and Decision
a. EPA Review. The EPA Regional Office will have primary
responsibility for review of the innovation proposal. This
responsibility includes proposal distribution within the Region and to
the affected EPA National Program Managers and the Office of
Reinvention; review and response to the State; and appropriate
stakeholder involvement. In cases where national policy or regulatory
issues are involved, the Regional Administrator must ensure complete
review by relevant national program offices.
EPA will consider several factors in the review of the innovative
proposals, including:
(1) Consistency with the principles in this agreement;
(2) Comments from stakeholders;
(3) Type of flexibility from federal guidance or regulation needed
to implement the proposal;
(4) Clear presentation and analysis of issues;
(5) Expected benefits of the innovation (including net improvements
in environmental, ecosystem, and efficiency results);
(6) Potential benefits of the innovation as compared to the
investment of time and resources required for implementation, and
impact on agencies' resources and workloads.
The review process is intended to be flexible. EPA and the State
should maintain open lines of communication at all levels--staff and
management--to ensure that questions and concerns are raised and
discussed. During the review process, EPA may seek input from other
States and stakeholders, including environmental groups and the
regulated community, to fully identify the strengths and weaknesses of
the proposal.
b. EPA decision. Upon completion of the consultation and review
period, the Regional Administrator will make a decision to accept or
reject a proposal. If a proposal involves a national policy or
regulatory issue, the decision will be made jointly with relevant
National Program Managers and the Office of Reinvention. This decision
will be communicated verbally and in a written form to the designated
Senior State Environmental Official. The written decision will include
the rationale for the determination.
EPA and the State will determine the category into which the
proposal falls. The type of proposal will have an impact on the time
frame for implementation. The categories are:
Category 1: Straight-forward, transparent proposal with clear
advantages, few obstacles, technically achievable, and minimum
environmental risk.
Category 2: Experimental proposal that has a greater uncertainty of
environmental outcome; requires more attention to design,
implementation, and evaluation; and may involve some risk of failure.
The unpredictability of the experiment means that it will be more
resource intensive and may require more time.
Category 3: Strategic proposal that involves broad-based, new
approaches (e.g., statutory changes) and requires policy discussion to
further develop concepts. Proposals may be assigned to an existing
policy forum for discussion or a new forum could be established.
If the proposal requires changes of interpretation or substance
regarding national statutes, regulations or policies before proceeding
with an innovation project, both EPA and the State will reach agreement
on all proposed changes. These projects will be accomplished through
mechanisms available under Federal law and regulation, which may
include variances, site-specific rules, legal interpretations, or other
means.
c. Appeals. In the event that a dispute arises during this process
or a State disagrees with a Region's decision, the State may appeal in
writing to the EPA Deputy Administrator. The State may also request a
review by a panel consisting of EPA Senior Managers and State
Commissioners. The panel will review the proposal, the issues, and
merits of the dispute, and submit recommendations to the EPA Deputy
Administrator for a final decision.
d. Time frames for decision. EPA and the States are committed to
working together to ensure timely responses to State proposals.
Initial response to proposal: EPA will respond to the State with
follow-up questions, clarifications, and initial reactions including an
initial identification of obstacles to approval within four weeks of
its receipt of a written innovation proposal from the State.
Decision to proceed with proposal: EPA will make a preliminary
decision to accept or reject a proposal within 3 months of the receipt
of a proposal from the State. If, during the review, EPA determines
that additional information is needed from the State, EPA will promptly
notify the State, and EPA and the State will agree on an appropriate
schedule for completing the review.
Decisions on proposals may be reached more quickly for proposals
that are straight-forward, with clear advantages, widely supported,
technically achievable, and implementable in the short-term. A
preliminary decision to accept a proposal will be accompanied by an
explanation of subsequent actions needed before a final decision can be
made or implementation can begin. For example, a proposal that involves
amending an EPA regulation would require a notice and comment process
in accordance with the Administrative Procedures Act.
V. Measuring and Evaluating Success
Before an approved proposal is implemented, we must define success
and how we will measure it. This can help eliminate misunderstandings
about whether or not the process and innovation as a whole is
progressing effectively, and if it is not, what steps need to be taken
to correct any problems.
Therefore, EPA and the States agree on the importance of evaluating
the success of regulatory innovation activities that flow through the
process outlined in Section IV. The challenge is to develop useful
measures without choking the very creativity we seek to stimulate. We
want to ensure that a variety of ideas are being proposed, that robust
stakeholder participation processes are utilized, that decisions are
made in a timely fashion, and that the most promising innovations are
being implemented successfully. To accomplish this, we must measure
both the success of the innovations and the success of our decision-
making process. Performance measures that emphasize environmental
results, including pollution prevention, are most desirable, although
we may have to rely
[[Page 24791]]
more on process measures in the near term.
A. Measuring the Innovation's Impact
The success of the innovation project's impact will depend on how
well it was designed and the results achieved. Successful innovation
project designs should be clearly described so successful projects can
be used to improve the entire system, and/or adapted to other site
specific situations. The quality of the projects implemented can be
measured by: (1) Environmental impact, (2) efficiency, and (3) other
relevant indicators. In addition to providing information about the
success of an individual innovation project, these measurements also
provide guidance on improving future innovation projects. States and
EPA should agree in advance who is responsible for collecting and
disseminating this information.
The proposed measures in Appendix A provide a starting point for
discussion in terms of a framework and some common criteria for
innovations. Common criteria allow the States and EPA to evaluate the
progress in innovations state-wide and nationally.
B. Measuring the Process
We must ensure that the decision making process is effective, or
the process will not be used. The success of the process depends on the
effectiveness of the communications between EPA and the States and the
timeliness of decisions. Measurements include: (1) The number and
quality of innovation projects proposed, (2) the number and quality of
innovations implemented, (3) the timeliness of the actions taken in the
process, (4) the number of proposals appealed, and (5) the speed with
which information about successful innovations are disseminated to
other States. The success of the process is enhanced by the development
of effective partnerships across all interested and affected
stakeholder groups to design innovations which will meet multiple
objectives and to build broad support for their implementation. EPA and
States will evaluate factors that are difficult to measure but are
critically important to successful outcomes, including the degree of
EPA-State cooperation and stakeholder participation. EPA should collect
this information and make it available at a central location so it can
be used by the States, EPA, and stakeholders. Within 60 days of signing
this agreement, EPA and the Environmental Council of the States (ECOS)
will designate a central location.
VI. Information Sharing
Accepted State innovation proposals and completed projects are most
valuable when widely available to State and local regulators, the
regulated community, environmental organizations and the public at
large. We agree on the need to share information, track commonalities
and analyze barriers to promising State innovations. Knowledge of both
successes and failures will help the States, EPA and stakeholders
develop better approaches for achieving our environmental goals.
Because sharing information and innovative ideas among the States is
key to the success of this agreement, the States, through ECOS, will
set up a regulatory innovation clearinghouse that serves to notify
potentially affected States of innovation proposals and highlights the
results of this agreement and other State/EPA innovations that EPA
Reinvention Ombudsmen or State Commissioners deem appropriate.
VII. Next Steps
EPA and the States agree on the following steps to ensure prompt
implementation of the agreement:
A. Joint Evaluation
By October 1999, States, EPA and other interested parties will
begin to evaluate the success of regulatory activities that have been
reviewed under the new process. The evaluation will consider both the
environmental and efficiency benefits derived from each innovation, and
the efficiency of the new review process. The results of the evaluation
will be shared with EPA, the States and stakeholders.
B. Modifications to the Agreement
If the evaluation indicates a need to modify or amend this
agreement, EPA and the States agree to discuss such modifications or
amendments and make needed changes by January 2000.
Attachments
A. Proposed Core Performance Measures
B. Examples of Regulatory Innovations
Attachment A--EPA/State Environmental Regulatory Innovations,
Proposed Core Performance Measures
Environmental Goal
A sustainable environment with healthy communities and
ecosystems
Environmental Objectives
--Air quality improvements
--Water quality improvements
--Land quality improvements
Program Objectives (Outcomes)
--More effective and efficient environmental regulatory systems
--reductions in releases to the environment
--reductions in resources expended to implement the regulatory process,
by regulators, regulated entities, other stakeholders: time, work
years, money
--increased stakeholder participation in the regulatory process
--Large majority of high priority, high quality innovation projects
are successfully implemented
--Successful results of innovation projects are: clearly described,
widely disseminated, adopted in other site specific situations, used
to improve entire systems
Program Activities (Outputs)
--Number of innovation projects proposed
--Number of innovation projects implemented
--Quality of projects implemented: environmental, efficiency, other
indicators
--Stakeholder participation
--Timeliness of actions taken in process
Attachment B--Examples of Regulatory Innovations
To encourage creative thinking and the development of good
regulatory innovation proposals, EPA and the States have developed
the attached examples of regulatory innovation projects. Four
examples of potential regulatory innovations are provided. Examples
1, 2 and 3 are suggestions of innovative ideas that States have
developed--they are intended to illustrate the kinds of proposals
that may be developed. These examples have not been reviewed or
accepted by EPA as projects for this process. Example 4 describes an
innovative proposal that was recently implemented in North Carolina.
Example 1: Mercury in Wastewater Effluent
Objective: Substitute sludge testing and limit requirements for
mercury in place of effluent limits and monitoring requirements in
NPDES permits for municipalities.
Description and expected benefits: Mercury cannot be detected
accurately in municipal wastewater effluent. Dilution of mercury in
effluent leads to non-detectable monitoring results. In addition,
mercury test methods at the low levels seen in municipal effluent
can easily pick up contamination of sampling and analysis and lead
to false positives. As a result, most municipalities can show
compliance with mercury effluent limits and need take no steps to
reduce mercury in their effluent.
This proposal would eliminate effluent limits from NPDES permits
for municipalities, and instead substitute sludge monitoring (where
mercury concentrates in the wastewater treatment process). If
mercury in sludge exceeds federal clean sludge levels,
municipalities would be required to develop mercury source reduction
programs. Since mercury can be more accurately detected in sludge,
this would lead to better targeting of
[[Page 24792]]
the municipalities that need to develop mercury source reduction
programs.
Federal obstacle halting or hindering progress: Requires changes
in either federal statute or variance/change in federal regulations.
Attorneys state that sludge requirements as proposed cannot be tied
to surface water standards.
Additional background information: This proposal was strongly
supported by municipalities, environmental groups, Wisconsin DNR
staff, and EPA staff. All saw that this proposal would lead to
greater environmental benefits than the current NPDES system.
State: Wisconsin Department of Natural Resources, Bureau of
Watershed Management.
Example 2: Continuous Emissions Monitoring for Air Pollutants
Objective: Create a flexible approach to compliance
demonstration for air emission limits that have been consistently
achieved. In exchange, install continuous emissions monitoring for
other toxic pollutants for which more data is needed. This approach
would reward facilities which have demonstrated superior
environmental performance with simplified compliance demonstration
requirements.
Description and expected benefits:
--Federal guidance on practical enforceability requires that
compliance demonstration schemes use available technology which
produces verification of compliance data as frequently as
practically possible.
--A facility is required to use continuous emission monitors (CEMs)
to show compliance with an air emission limit. Data has been
gathered for several years and it shows consistent emission levels
at or lower than 50% of the limit. In addition, other surrogate
process parameters are continuously monitored.
--The permittee wishes to show compliance by an alternative
compliance method which requires periodic testing to assure
continued compliance. The surrogate parameters will continue to be
monitored and will be used to ensure that the operating conditions
remain within the range under which compliance has been demonstrated
by periodic testing.
--In exchange, the facility agrees to install CEM for certain toxic
organics from certain processes. The nature and levels of these
toxics are not very well defined based on mass balance approaches.
The information generated by these CEMs will be useful for an air
toxics analysis being conducted in the area.
Federal obstacle halting or hindering progress: Requires change
or deviation from established EPA policies regarding federal
enforceability as a practical matter on emission limits. However,
the demonstrated level of confidence on compliance warrants a less
rigorous approach, particularly because it includes a periodic
verification process.
Additional background information: The permittees believe that
it is important to build a trust relationship with regulators to be
able to re-direct resources to areas where the need is greater to
realize further improvements or to generate new information on
environmental matters.
State: Minnesota Pollution Control Agency, Air Quality Division,
Permits Section.
Example 3: Tiered Permitting System for Hazardous Waste Facilities
Objective: Create a permitting system for hazardous waste (HW)
management facilities that are presently exempt from the existing
RCRA Part B permitting system but still pose a potential threat to
human health and the environment if improperly designed and
operated.
Description and expected benefits:
--Current RCRA regulations exempt recycling facilities from any
permitting requirements, but require a Part B permit if HW is stored
prior to recycling.
--Environmentally safe recycling is preferable to disposal and
should be encouraged.
--Recycling facilities can be as complicated as treatment and
disposal facilities and require some oversight to ensure that they
are protective of human health and the environment.
--Requiring the standard Part B permit for recycling facilities
creates a disincentive and may greatly limit the number of recycling
facilities.
--A less onerous tiered permit provides regulatory oversight and
does not pose the same disincentive as a Part B permit for recycling
facilities.
--The tiered permit incorporates performance standards and financial
assurance as appropriate and is custom tailored to the facility
without requiring all of the elaborate features of a Part B permit.
Federal obstacle halting or hindering progress: May require a
variance from federal statutes and regulations that prescribe
standards and require a Part B permit for storage of HW depending on
what type of storage activities are covered under the tiered permit.
Additional background information: State legislation required
fluorescent lamp recyclers to be permitted. Rules are in the
development stage with extensive regulated community involvement.
The tiered permitting system will be extended to all types of HW
facilities for which a Part B permit is not required or not
appropriate, including recyclers and some types of storage
facilities.
State: Minnesota Pollution Control Agency, Hazardous Waste
Division, Regulatory Compliance Section.
Example 4: River Basin-Based Planning and Permitting
Objective: To coordinate stream modeling and permitting on a
river-basin or sub-basin scale instead of in a piecemeal fashion.
Description and expected benefits:
River-basin based planning and permitting would:
--Enable better planning and resource allocation
--Increase consistency between permits
--Increase consideration of basin-wide pollutant inputs (point and
nonpoint) for better decision-making and planning
--Improve efficiency of modeling, data collection for modeling, and
permitting activities
--Provide opportunity for greater stakeholder involvement in the
planning process Federal statutes prohibit permits with a term
greater than five years
To synchronize NPDES permit renewal for an entire river basin,
the State had to issue five year permits followed by an additional
short-term permit. The burden on permitting and modeling staff was
further increased because EPA Region IV was also pressing NC to
address its permit backlog. The State lacked sufficient modeling
resources to address the existing backlog and also issue short term
permits in selected basins. The State proposed to reissue the short-
term permits with existing limits without modeling and to refocus
its permitting staff away from the permit backlog and toward the
basin-wide permitting approach. Region IV was hesitant to endorse
the basin-wide concept.
Contact with EPA Headquarters (Office of Water) convinced EPA to
hire a facilitator to help the State develop an implementation
strategy for the basin-wide planning and permitting approach. EPA
Headquarters also sponsored a workshop to obtain input from
surrounding States. This involvement allowed the State to develop a
convincing strategy, and subsequently, Region IV agreed to the
proposal. EPA also provided a 104(b)(3) grant to increase monitoring
and modeling in the Tar-Pamlico River Basin to help pilot the
approach.
Federal obstacle halting or hindering progress: Required change
in EPA past practice.
Additional background information: At first, permittees reacted
to the short-term permits due to the extra burden of completing
permit applications and paying application fees. However, the
concerns of permittees were quelled by pointing out the long-term
improvements in consistency among permits in the river basin and in
efficiency of issuing these permits. Environmental stakeholders were
supportive of the approach from the start due to a greater
opportunity for involvement in the planning process.
State: North Carolina.
Joint EPA/State Agreement to Pursue Regulatory Innovation, Response
to Comments
Purpose of the Agreement and Environmental Performance
Summary of Comments: A number of commenters were concerned that the
agreement did not emphasize the importance of innovation as means to
move toward environmental sustainability. They suggested focusing the
agreement on holistic pollution prevention and product stewardship
approaches, because these approaches can help address the root causes
of pollution and move toward a more
[[Page 24793]]
sustainable system. Also, these commenters felt that the agreement
emphasized efficiency over environmental gains, rather than advocating
innovations that can simultaneously achieve environmental, economic,
and social goals. These commenters felt that environmental gain should
be a key factor in prioritizing innovations. An opposing view was
expressed by some commenters, that the agreement should put more
emphasis on economic gains as incentives for innovation. A number of
commenters expressed support for ``efficiency only'' projects that
would achieve the same level of environmental quality. Conflicting
comments were received about whether better environmental performance
should be required in proportion to any regulatory flexibility granted.
Response: EPA and the states agree that the concept of innovations
leading to environmental sustainability should be emphasized (added
language to Purpose section and Environmental Performance sub-principle
on this concept). Innovations that simultaneously address
environmental, economic and social objectives are highly desirable.
However, the agreement recognizes that, in some cases, it will make
sense to pursue innovations that are primarily targeted at efficiency
improvement, as long as environmental protections are fully maintained.
The agreement does not include a specific ``proportionality'' test that
would require increased environmental performance in return for
regulatory flexibility. However, innovations which have a greater
uncertainty of the environmental outcome, or are more experimental in
nature, will be expected to have the potential for improved
environmental results. Also, as proposals are reviewed, the potential
benefits of a proposal will be weighed against the resources needed to
implement the proposal, and if resource limitations become an issue,
priority will be given to proposals that appear to have a greater
return on investment.
Specific Comments
Comment: The agreement speaks several times of innovations that
have the clear potential to provide environmental benefits. Other
principles are not similarly qualified in the agreement. The italicized
phrase should be replaced with a positive concept such as ``clearly.''
Response: The phrase ``have the clear potential'' is appropriate
for projects that have a greater uncertainty of the environmental
outcome, or that involve experimental technologies or approaches.
However, we agree that it is important that the intent of the project
is to achieve better environmental results, even if those results
cannot be guaranteed, and we expect that experimental projects will be
designed to achieve increased environmental protection.
Comment: A commenter said that the agreement will result in
numerous waivers of EPA requirements, based only on ``equivalency,''
and will eliminate incentives to achieve superior environmental
performance.
Response: EPA and the states are not entering into this agreement
simply in order to provide a pathway for obtaining waivers of
regulatory requirements. The purposes of this agreement are clearly
stated: to improve environmental protection, to improve EPA/State
environmental management practices, and to provide timely decision-
making on good ideas. We believe that this agreement will foster
cooperative exploration of innovative approaches that can potentially
lead to substantial improvements in both our management system and in
the level of human health and environmental protection. It is not our
intent to undermine incentives for achieving superior environmental
performance. For example, EPA's Project XL offers regulatory
flexibility in return for superior environmental performance,
stakeholder involvement, and several other criteria. If under this
agreement, EPA receives proposals that are more appropriate for Project
XL (e.g., proposals requesting significant regulatory flexibility for a
single facility) then EPA will recommend that those proposals will be
directed to the XL process.
Experimentation
Summary of Comments: A commenter said that the agreement should
more clearly acknowledge that ``experimental'' efforts may at some
future time be incorporated into the mainstream of environmental
protection. Other commenters said that the agreement speaks of
``maintaining'' or ``not jeopardizing'' environmental protections,
rather than enhancing them, and doesn't address the value of interim
incentives or enforcement responses.
Response: EPA and the states agree that a main purpose of
experimentation is to test approaches that may later be appropriate to
be applied more broadly. A sub-principle has been added to the
Experimentation principle which states ``Experiments should be designed
to test new approaches and as appropriate lessons learned should be
used to improve the current system of environmental protection.'' The
idea of using interim accountability measures has been added to the
Accountability/Enforcement principle.
Stakeholder Involvement
Summary of Comments: Many commenters addressed the issue of
stakeholder involvement in the development of innovation proposals. A
number of commenters agreed that ``stakeholder involvement should be
appropriate to the type and complexity of the innovation proposal.''
Some commenters raised concerns that stakeholder processes can become
too elaborate or can delay a project for too long, and that consensus
should not be required. Other commenters emphasized that the agreement
did not convey a true partnership approach, lacking elements such as:
firm requirements for inclusiveness, addressing the need for technical
assistance, and success measures that evaluate the effectiveness of the
stakeholder process. These commenters also felt that the linkage
between stakeholder involvement and the process for different
categories of projects should be addressed.
Response: EPA and the states believe that stakeholder involvement
is important to successful innovation projects, and we are adding a
clear statement to the Stakeholder Involvement principle that
stakeholder involvement is important because it produces better
innovations. We believe that the stakeholder principle provides
sufficient flexibility for EPA and States to design stakeholder
processes that are appropriate for different types of innovations and
as appropriate, allows states to use existing stakeholder participation
processes. There is a range of opportunities for stakeholder
involvement that may be appropriate, depending on the type and
complexity of the innovation. For a straight-forward innovation
designed to streamline an existing process, providing opportunity for
participation and comment may be sufficient. For proposals with
significant policy implications, the need for public involvement will
likely be greater, and it is the responsibility of government agencies
to take extra steps so that active involvement can occur. Some changes
were made to the stakeholder principle and sub-principles to clarify
this intent.
EPA and the states realize that it is often difficult for some
parties, such as small businesses and public interest groups, to
actively participate in stakeholder processes. EPA and the states will
try different approaches to
[[Page 24794]]
facilitating stakeholder involvement, such as: providing easily-
accessible information about new project proposals (e.g. via the
Internet), providing assistance in understanding proposals to help
focus on priority issues and projects, and pursuing other creative
mechanisms that foster participation. Issues such as technical
assistance for stakeholder participants will be addressed on a project-
by-project basis. Also, language was added to the section on
``Measuring and Evaluating Success'' to emphasize the need to evaluate
the effectiveness of the stakeholder process.
Specific Comments
Comment: A commenter expressed the need for affirmative language on
all levels of government working together and to more clearly recognize
and define the role of local governments in the regulatory system and
in innovation.
Response: EPA and the States agree that local governments are
essential partners in innovations that come under the jurisdiction of
local regulatory authorities. A sub-principle has been added to the
Stakeholder Involvement principle to recognize the importance of
working cooperatively with local governments.
Comment: Several commenters stated that the reference to involving
national stakeholder groups to examine national issues should be
broadened to recognize the important role of state groups, and the
interest of national groups in important state and local issues.
Criteria, and an accountability mechanism, are needed to help identify
cases where national (or state) stakeholder involvement is needed.
Response: EPA and the states agree that stakeholders should have
the opportunity to be involved in design and development of proposals,
and that both national and regional groups may be interested in
important regional, state, and local issues that are likely to have
broader impacts (added clarifying language to stakeholder sub-
principle). At this time, we do not think it appropriate to develop
specific criteria for national stakeholder involvement. We will make
every effort to make information available and to keep stakeholders
informed about proposals under this agreement, so that stakeholders
will have the opportunity to participate. As we gain experience with
the process, we will consider whether it is possible and appropriate to
develop criteria for national stakeholder involvement.
Comment: Several commenters pointed to the need for special efforts
to involve stakeholders such as small business and public interest
groups in innovations, due to their limited resources.
Response: EPA and the States agree that creative approaches to
foster such involvement should be encouraged. A new sub-principle was
added to Stakeholder Involvement to encourage these efforts.
Comment: A commenter expressed concern that the EPA review process
includes the active solicitation of comments after the stakeholder
process has been completed.
Response: EPA and the states agree that in cases where there has
been a robust stakeholder process, that no additional input would be
needed. However in some cases, such as a proposal that comes to EPA in
a preliminary stage of development, EPA may need to consult with
stakeholders to ensure that all points of view are considered, prior to
making a decision. In cases where a federal or state regulation will be
changed, public notice and comment may be part of the required legal
process that would occur following the preliminary decision.
Comment: A commenter asked for clarification about subprinciple D.2
(the requirement that stakeholder processes meet or exceed applicable
state and federal requirements) and whether this refers to procedural
or environmental requirements.
Response: The language has been added to indicate that this
statement refers to procedural requirements.
Smarter Approaches
Comment: A commenter pointed out the need to ensure that proposed
innovations do not undermine the original purpose of ``regulatory
barriers.''
Response: EPA and the states agree that the underlying regulatory
objectives of a ``regulatory barrier'' need to be carefully considered
in the development of innovations. The language in the ``Smarter
Approaches'' subprinciple indicates that the purpose of removing
``regulatory barriers'' is to solve environmental problems. In deciding
whether a proposed innovation is helping to solve an environmental
problem, regulators will need to ensure that the underlying
environmental purpose of the ``regulatory barrier'' will still be
achieved.
Accountability/Enforcement
Summary of Comments: Some commenters raised concerns that all
conditions that are integral to an innovation project should be
enforceable, and that accountability could be strengthened by including
a series of interim accountability measures as part of the project
design. Another commenter suggested that EPA and the states should not
pursue traditional enforcement mechanisms such as penalties if problems
are encountered during implementation of an innovation project.
Response: EPA and the States agree that accountability and
enforcement remedies should be used that are appropriate to the
circumstances of an innovation project, and the language of the
Accountability/Enforcement section has been clarified to reflect this
intent. For example, it may be appropriate for project participants to
agree on a series of interim accountability measures that will be
tracked as the project is implemented. In order to preserve enforcement
authority for use in serious circumstances, we cannot rule out the use
of penalties. The agreement indicates that ``alternative regulatory
requirements'' will be enforceable with all the remedies available
under current law. ``Beyond compliance commitments'' may also be part
of some innovation agreements, and accountability measures for these
commitments should be determined when the innovation is designed. In
some cases, if innovations include a set of activities, it may
difficult to distinguish between ``alternative regulatory
requirements'' and ``beyond compliance commitments.'' In these cases,
EPA and the state will carefully evaluate all proposed activities and
determine an appropriate requirement category based on the projected
net result of the proposed activities.
Specific Comments
Comment: A commenter said that clarification was needed to convey
that current requirements are enforceable only to the extent that they
are not modified by an approved innovation project.
Response: EPA and the States agree that the intent of the agreement
is that all applicable statutory and regulatory requirements, other
than those included in the innovation project, remain in effect for all
entities and are fully enforceable.
Roles of Project Proponents and Stakeholders
Summary of Comments: Several commenters raised questions about
whether sponsors other than a state could initiate projects. A
commenter suggest that more incentives for industry to participate
should be provided. Several commenters also raised the issue of
appeals, and whether parties other than the state could appeal an EPA
decision on a proposal.
[[Page 24795]]
Response: We are committed to working with partners in the
regulated community, and other stakeholders, to develop successful
innovation projects and have a variety of mechanisms in place to do so.
The focus of this agreement is to facilitate state proposals for
innovative environmental management approaches. States are co-
regulators with EPA and are responsible for implementation of delegated
or authorized environmental programs. We encourage non-state sponsors
to partner with states in moving innovations forward under the
agreement. Other pathways (such as Project XL) are available for other
sponsors to work with directly with EPA on innovation projects.
Similarly, because this agreement is designed for state proposals,
states are the appropriate parties to appeal decisions. Input of
interested stakeholders will be considered throughout the review and
appeals processes.
Relationship of Categories of Projects and Application of Principles
Summary of Comments: A number of commenters stated that the
agreement should include objective criteria for deciding how projects
should be classified and where certain principles may vary based on the
category.
Response: While the principles articulated in this agreement will
set a standard for all innovation proposals, we expect some principles
or sub-principles to be more relevant to certain types of projects. For
example, while stakeholder input will be important for all innovations,
we anticipate increasing levels of stakeholder involvement in
Categories 2 and 3, as compared to Category 1. In terms of
environmental performance, cost-effectiveness projects would generally
be expected to fit in Category 1. More experimental proposals that fall
in category 2 would generally be expected to have the potential to
provide increased environmental protection. Other principles may also
vary somewhat in their applicability across categories.
EPA Review and Decision on Proposals
Review Criteria
Comments: A commenter stated that the agreement should further
define the decisional criteria that EPA will use to approve or
disapprove a proposal. Several commenters said that the criteria
addressing resources should also include impact on stakeholders'
resources and workloads.
Response: The agreements lists several criteria EPA will use in
reviewing proposals. We believe these criteria can only be refined
through some direct experience in evaluating project proposals. The
first criterion is ``consistency with the principles in the
agreement.'' Evaluation of proposals against this criterion will
include an evaluation of whether stakeholder involvement in design and
development of the innovation is consistent with the Stakeholder
Involvement principle.
Statutory Change
Comments: A commenter said that where statutory impediments are
identified, EPA should be willing to entertain statutory revisions and,
together with states, advocate these revisions to Congress. Another
commenter said that EPA should not indicate that it will reach
agreement with all the states before pursuing any changes in
interpretation or statutes.
Response: EPA and the states believe that exploration of innovative
approaches may, in some cases, point to the need for regulatory or
statutory change. Where such changes will promote effective, common
sense solutions to environmental problems, EPA is committed to pursuing
change through appropriate mechanisms. In all cases, we believe there
must be an open process and full public discussion and debate.
Handling Numerous Proposals and Setting Priorities
Comments: A commenter pointed out that the management of numerous
state innovation proposals may become an overwhelming task for EPA, the
states, and interested stakeholders, and therefore, EPA and ECOS should
focus first on those innovation proposals having the greatest potential
for success.
Response: EPA is concerned about the difficulty of managing
appropriate participation and review for numerous proposals while
upholding high standards of review and meeting ambitious time frames
for decisions. EPA will strive to address all State innovative
proposals promptly and carefully. It is difficult to anticipate how
many projects may be proposed. If a large number of projects are
submitted, EPA will likely need to use a screening and priority-setting
process to ensure that available resources are used effectively.
Time Frames for Decision
Comments: One commenter suggested that the agreement include a
forcing function to ensure that deadlines are met, such as a default
mechanism that the project is approved if time expires. Another
commenter said that the agreement should clarify that the 3-month
decision is a definitive decision by EPA to accept or reject the
proposal.
Response: EPA is committed to responding as promptly as possible to
innovation proposals, as reflected in the ambitious 3-month target for
decision-making. However, the 3-month deadline will not be met in all
cases--a great deal will depend on the quality and completeness of the
proposal, and, in a number of cases, more information will likely be
needed to augment the initial proposal submission. EPA and the state
will jointly agree on extending the deadline as appropriate to the
circumstances. Additionally, the 3-month decision is a preliminary
decision to go forward with a project. EPA must follow all legal
requirements that are applicable in each situation in order to reach a
final decision and begin implementation. Thus, ``default approval,'' in
cases where EPA does not meet the target, is not possible. For example,
a proposal that involves change to a regulation must be carried out
through notice-and-comment rulemaking, and under the law, EPA cannot
make a final decision until public comment has been considered.
Other Comments
Stakeholder Evaluation of Proposals and Results
Comments: A commenter recommended establishing a national advisory
committee, perhaps including stakeholder representatives from the
local, state, and national level, that would evaluate proposals,
analyze ongoing progress with innovations, and evaluate the
transferability of successful results.
Response: The Stakeholder Involvement principle provides for the
participation of stakeholders in the evaluation of project proposals.
EPA and the states agree that stakeholders also need to be involved in
evaluating the success of innovations implemented under this agreement.
The Next Steps section has been modified to say that EPA, states, and
other interested parties will work jointly on evaluating both the
results of innovations and the process for review and implementation of
the projects.
Confidential Business Information
Comments: A commenter said that information sharing is an important
part of the process, however, the agreement lacks guidance regarding
protection of confidential business information.
Response: EPA and the states feel that there are adequate
provisions in place, outside of this agreement, in federal and state
law and regulation, to adequately
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protect confidential business information. As we move forward with
implementing the agreement, we will develop procedures to ensure that
information shared in the development of proposals but designated as
confidential business information remains confidential.
Measuring Success/Core Performance Measures
Comments: A commenter said that core performance measures should
emphasize environmental results (e.g., fewer diseases from pollution)
over bean counting (i.e., number of projects). Another commenter said
that the three environmental objectives (air, water, land quality
improvements) are not inclusive of all ecosystem improvements, and that
the measures should take a broader holistic approach towards improving
environmental quality.
Response: EPA and the states agree that success measures should
look more broadly at improving human health and environmental quality.
The set of measures in Attachment A of the agreement is provided as a
starting point for discussion. As implementation of the agreement gets
underway, EPA and the states, working with stakeholders, will further
develop the set of performance measures that will be used for
evaluating success.
Specific Comment
Comment: A commenter said that the provisions under the Measuring/
Verifying Results principle do not require measurement and monitoring.
Response: EPA and the states believe that the intent of this
language is clear--that innovations must have results that are
measurable and verifiable.
Legal Status of the Agreement
Comment: A commenter stated that it is inappropriate for EPA to
enter into an informal agreement with a non-profit organization (ECOS)
that would subvert EPA's legal obligations.
Response: A paragraph has been added to the agreement to clarify
its legal status. The paragraph says, ``This agreement signals the
commitment of EPA and state environmental agencies to work together on
innovations. It does not create any legal obligations for EPA or the
states, and does not alter EPA's or states' statutory responsibilities
or the nature of authorized or delegated state programs. Any
innovations under this agreement will be implemented within our
existing legal authorities using appropriate procedures.''
Dated: April 29, 1998.
J. Charles Fox,
Associate Administrator, Office of Reinvention.
[FR Doc. 98-11799 Filed 5-4-98; 8:45 am]
BILLING CODE 6560-50-P