Lucent Technologies

Letter from Hennelly to Morris

Lucent Technologies
Bell Labs Innovations

Debra Sabatinni Hennelly Lucent Technologies, Inc.
Corporate Council Room B2180
131 Morristown Road
Basking Ridge, NJ 07920

Telephone 908 630 2810
Facsimile 908 204-8365
Internet Address
hennelly@lucent.com

March 5, 1997

By Telecopier and Overnight Mail
Dr. Alvin R. Morris
Water Protection Division
Region III
U.S. Environmental Protection Agency
842 Chestnut Street
Philadelphia, PA 19107-4431

Re: Lucent Technologies/Project XL

Dear Dr. Morris:

After careful consideration of your February 26th letter, it is with great regret that we must postpone our Project XL meetings scheduled for March 7th in Reading and March 20th regarding Allentown. Your letter has now highlighted the fact that, despite the understanding we thought we had in place since November, the "root cause problem" that derailed the Project last year has not been resolved. We were proceeding since November, upon our oral agreement with you, under the presumption that USEPA wanted an on-going role in our environmental management system ("EMS") and would remain open to negotiating the information-sharing ground rules to accommodate that unique "outside-the-box" role. In fact, that presumption, and the foundation in our EMS, have been the bases of the regulatory flexibility we have been discussing recently in the demonstration projects. Now that this misunderstanding has surfaced, we are not comfortable proceeding with the demonstration project meetings until this issue is resolved, as the government's on-going role in the EMS is so integral to our discussions.

We had hoped the drafting of the Memorandum of Understanding ("MOU") would provide a reaffirmation and update of our XL Project's original premise, as well as a publicly available description of the work we have done together and our plans for the important work that lies ahead. We though the language we proposed for the MOU was innocuous enough to allow for our oral understanding to guide the FPA negotiations on one track, while proceeding immediately with our demonstration project discussions on a second track, yet having something that could describe our Project to the public on USEPA's Web XL site. Instead, the MOU drafting process has emphasized that we have a basic misunderstanding about the ground rules upon which we agreed in November for getting the Project back on track

With regard to your assertion that we "confirmed" in November that the Interim Participation Agreement ("IPA") terminates when the Final Project Agreement ("FPA) is executed, let us be clear as to what we were confirming: we agreed that what was "interim" would terminate once the "final" version was in place. However, it was always the intent of the Project Partnership that the concepts of the IPA would roll over into the "ground rules" section of the FPA. Please refer to the attached memo, prepared by Katie Thomson last summer when we first called this question, summarizing the record of our Project Partnership meetings and the several collective drafts of the FPA. A review of this record makes clear that this Project has always been premised upon an understanding that there would be on-going ground rules to effectuate and acknowledge that the government has this unprecedented role inside our management system. We also must note for the record, that we have discussed, on several occasions with you and others from USEPA, our willingness to reconsider the provisions among those already executed in the IPA, with which the Agency is no longer comfortable. Our request has never been answered officially until, perhaps, now.

We need time to consider the options you have new put on the table: to use the protections offered through the Environmental Leadership Program ("ELP") as the basis for our negotiations on the information-sharing provisions in our FPA. Contrary to your assertions in your letter, it was not clear to us in November that these protections were being offered for our XL Project. We must have misunderstood; it was our understanding that you were asked to move our Project to the ELP, which we declined in favor of trying to help make Project XL a success.

Since your letter did not offer any specific language from ELP, we will research the specifics of the protections that have been granted through the ELP to date, as well as any new provisions being considered as ELP is currently being overhauled. If we can find acceptable language that could accommodate the premise of our Project, we will propose it to you in the hope that we can resolve this basic misunderstanding, once and for all, about the ground rules for moving forward.

It is unfortunate that our Project has been delayed yet again by our inability to resolve this issue. In contrast, over these last eighteen months, Lucent Microelectronics has designed, built, implemented and is operating our ISO 14001 EMS globally -- in six countries and four languages -- and is in the final stages of being certified to ISO 14001 across our business. We continue to believe that our XL Project offers a unique opportunity for industry, regulators and communities to partner around an EMS that can ensure continual environmental performance improvements, while developing alternative approaches to "cleaner, cheaper, smarter" environmental protection.

We will do our best to get back to you with proposed language in the next few weeks, in the hope that our April 1st FPA drafting meeting can go forward as planned. Please feel free to call either of us if you have any questions.

Sincerely,

Debra Sabatini Hennelly

Ted D. Polakowski

Enc.

cc: Project XL Partnership

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