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Colorado

I. Project Summary Information Page

I.A. Applicant Information

Project Title
Facility-specific Environmental Management System (EMS) Permit Project

Location
Colorado

Applicant
Colorado Department of Public Health and Environment (CDPHE)

Project Contact
Phyllis Woodford, Administrator - Colorado Environmental Leadership Program,
4300 Cherry Creek Drive South,
Denver, CO 80246-1530
Phone: 303-692-3477, Fax: 303-782-4969
E-mail: phyllis.woodford@state.co.us

Other Federal Funding
No

Required Regulatory Flexibility
If implemented as proposed by the pilot project, EPA would need to approve the use of an EMS as a federally enforceable tool in place of a permit(s).

Management Support
Doug Benevento, Senior Manager of Colorado's environmental programs fully supports implementation of the project. In addition, the executive director and other senior level management must approve the final detailed proposal prior to submitting to EPA. Based on the enthusiasm and support of Mr. Benevento, additional senior level support is fully anticipated.

I.B. Summary Budget Information

Total Funds Requested from EPA: [REDACTED BY EPA]
In-Kind Contribution of the State: [REDACTED BY EPA]
In Kind Contribution of the Project Partners: [REDACTED BY EPA]
Total Project Budget: [REDACTED BY EPA]

II. Pre-Proposal Project Narrative

Strategic use of EMSs can provide the next generation of tools for synthesizing economic development activities and environmental protection for sustainable development. The traditional strategy of regulating pollution at the end of the pipe, or after-the-fact, has achieved significant environmental improvement at high cost. This command and control system creates piecemeal prescriptive environmental standards with associated permitting and reporting requirements. Traditional approaches make it difficult for some companies to keep pace with the rate of technological advancement necessary for a company to compete in the global marketplace. For many companies, environmental compliance is not enough and the traditional procedural environmental requirements stand as an obstacle to superior environmental performance.

The goal of Colorado's facility-specific EMS permit project is to pilot an innovative regulatory project that includes whole-facility compacts with at least five Colorado project partners: two electric utilities; one Portland cement facility; one oil and gas company; and, one manufacturing facility. (Any curtailment of funding would result in three or fewer project participants). Regardless of potential funding constraints, all participating facilities must commit to superior environmental performance through the development and implementation of an EMS premised on the ISO 14000 standards. Achievements must include a continual cycle of planning, implementing, reviewing and improving the actions that an organization takes to meet its environmental obligations. During the three-year pilot initiative, each division under CDPHE's Office of Environmental Programs (air, water, waste, consumer protection, pollution prevention and leadership) must approve the EMS and honor it in lieu of an environmental permit(s) for the facility.

The EMS permit would rely on a strategic communicative management style, including:

II.A. Project Schedule and Time Frame

The CDPHE would commit to the following project milestones if approved for three years of project implementation:

Year One

Year Two

Year Three

II.B. Program Criteria Requirements

II.B.1. Target Priority Environmental Areas

Electric utilities are faced with a wide variety of environmental issues. Collectively, they are Colorado's largest industrial source of air pollutants, including sulfur dioxide, mercury, and greenhouse gases. Large volumes of solid waste (ash), and significant amounts of hazardous waste, including PCB-contaminated wastes, can be generated from coal-fired electric utilities. In addition, mercury deposition contributes to contamination of some of Colorado's waterways. Many factors contribute to the environmental impact of individual power plants, including consumer demand. Colorado has experienced a tremendous population and economic growth cycle in recent years, which translates into greater and greater levels of consumer demand. To meet this demand, power supply increases may be necessary, though much of this can be influenced by consumer conservation, energy efficiency measures, and consumer choice in cleaner energy supplies.

Along with the increased population growth comes a need for increased building materials, thus impacting the demand for Portland cement output, increased exploration of natural resources (oil and gas) and other manufactured goods. Portland cement, oil and gas companies and other manufacturing facilities are likewise faced with a wide variety of environmental issues. Pollution from these facilities includes criteria, as well as hazardous air pollutants, hazardous and solid waste, runoff and other water quality concerns.

An EMS demonstrates an organization's commitment to environmental protection. The benefits to industry and to regulatory agencies are numerous. Some of the potential environmental benefits anticipated from this facility-based approach include:

1. Increase in demand-side management portfolio, including actively working with the community on energy conservation measures;

2. Energy recovery, for example, re-use of fly ash as an alternative combustion fuel will reduce coal use by ### tons/year and generate #### MWh/year from recovered fly ash;

3. Boost industrial ecology projects such as the beneficial re-use of high-volume industrial wastes [fly ash] in construction materials;

4. Encourage commitments to opacity limits well below the current regulatory requirements, except during periods of malfunction;

5. Improve land use and reduce risk of environmental contamination through commitments to remove ash from landfills for beneficial reuse. The long-term goal is to completely remove ash from one or more landfills and restore the land to more desirable uses. A second goal is to reduce risk and potential liability for groundwater contamination caused by leaching or leaking of materials from the landfills;

6. Baseline environmental performance audits and annual reviews for the duration of the agreement. Key findings and follow-up actions shall be communicated to interested stakeholders;

7. Plant-specific implementation of an EMS documentation process to assist plant and corporate staff in planning, tracking, and reporting on environmental activities and performance;

8. EMS audits of all key suppliers that may present significant environmental impacts as part of the service they provide the plant, including but not limited to any business contracted to recover or process ash from a company landfill;

9. Mercury emission control and clean-coal technology. The facility shall contribute to research and conduct field-testing at the plant to characterize mercury emissions and to evaluate the performance of mercury control and clean-coal technologies for coal-burning plants; and,

10. Continuous PM monitor study. The facility shall work with multiple equipment manufacturers and Electric Power Research Institute in evaluating the performance of a new generation of continuous particulate matter monitors.

II.B.2. Incentives as a Tool

Designing and implementing an EMS for permitting and enforcement purposes is an innovative approach to the traditional command and control structure used by federal and state regulatory agencies since the development of environmental regulations decades ago. This project will pilot a new way of thinking and doing business in the regulatory arena and helps to keep pace with the changing needs of business and regulatory agencies. The goal is to move regulated entities beyond compliance and to demonstrate a new tool for meeting the expectations and requirements of regulatory agencies.

In addition to the environmental benefits an EMS can provide to regulatory agencies, a comprehensive and well-implemented EMS can provide the regulated community with new operational flexibility. For example, environmental performance may allow higher air emissions standards. A facility would still be required to operate within the parameters of the technology and the control technology determinations, but would be afforded the opportunity to demonstrate that a new or different technology could provide improved overall environmental performance. Another incentive for an electric utility could relate to fuel-blended electricity (e.g., coal and wind). A duel-fuel portfolio can be evaluated together to determine compliance with performance standards. This could be further encouraged by placing an emissions limit on the pounds (or tons) of pollutant on unit of production or megawatt produced, instead of a ton per hour or month, and an overall facility cap. If the facility stays below the unit production levels, it could make modifications to the facility without modifying a permit(s).

II.B.3. Transferring Innovation

CDPHE's Pollution Prevention, Cross Media and Environmental Leadership Programs will coordinate the initial transfer of knowledge and associated outreach to project participants and interested parties. Working together, these programs will convene a meeting of facilities and local community representatives that will participate in the Facility-specific EMS Permit Project and initiate the process of tailoring the EMS template to specific facilities. This will help make the development and implementation of the EMS part of the "culture" of each facility. This portion will be funded by CDPHE with possible financial contributions from the industry partners.

During the interim period CDPHE will provide corrective and preventative advice, audit analysis and continued education on EMS development and implementation. At the conclusion of the project a performance report summarizing the results of this project will be developed by CDPHE and disseminated to EPA, industry and other states through the Internet and national forums. The summary report will include the following type of information:

II.B.4. Guaranteeing Measures and Accountability

Measuring environmental performance is critical to this pilot proposal. CDPHE plans to conduct a comprehensive review of "traditional" results versus EMS-derived results from a review of compliance records for electric facilities, Portland cement facilities, oil and gas companies and like manufacturing facilities over the past years. This review will establish a baseline compliance rate that can then be correlated to the compliance rate and environmental performance resulting from the implementation of a comprehensive EMS. A sweeping performance review will allow comparison of innovative permit pilot implementation to traditional regulatory implementation across the entire facility. It will also give the CDPHE more complete information regarding the adequacy of traditional regulatory structures in measuring environmental performance and outcomes.

In meeting this goal, CDPHE will develop a methodology to determine environmental outcomes achieved through measured changes in compliance indicators, pollution prevention indicators, and non-traditional emission sources. The proposed measures will draw the link between the change in an indicator and an environmental outcome. For example, the measure will estimate through the change of (xx) the amount of a pollutant that does, or does not, enter the environment.

Examples of the types of performance measures that may be used for this project include:

Environmental accounting will capture the financial benefits that result from the implementation of an ISO-like EMS. In return for the facility implementing an EMS that utilizes a third-party ISO-certified auditor to conduct annual audits and commits to specific annual environmental goals that are beyond-compliance, CDPHE will waive certain procedural requirements including the traditional media-specific permits and will take necessary steps to define the EMS as the required environmental permit(s).

III. Proposal Budget

The following is an estimate of project costs based on five project partners and full funding from EPA as requested by this grant pre-proposal:

Total Project   Costs State   In-Kind Project Partners   EPA Funding

[REDACTED BY EPA]

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