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3M: Hutchinson, Minnesota

3M: Letter from Peder Larsen to EPA Administrator Carol Browner

Minnesota Pollution Control Agency

August 27, 1996

Ms. Carol Browner, Administrator
U.S. Environmental Protection Agency
401 M Street S.W.
Mail Code A100
Washington, D.C. 20460

RE: 3M Hutchinson Project XL Pilot Project

Dear Ms. Browner:

It is with great disappointment that I write to let you know that we are suspending work on the 3M Hutchinson pilot under Project XL. In order to complete our files on this permit, I request that the U.S. Environmental Protection Agency (EPA) formally respond to 3M's letter of August 13, 1996, explaining why 3M's compromise proposal described in that letter did not satisfy EPA's concerns.

Furthermore, because of our disappointing experience in the 3M Hutchinson pilot, the Minnesota Pollution Control Agency (MPCA) is also considering suspending our participation in Project XL. I sincerely hope that we can work with your office to resolve what appear to be significant differences between our expectations of Project XL and our experience.

The MPCA is committed to pursuing sustainable environmental improvements for Minnesota. Our hope was that Project XL would help us develop three essential tools that are crucial to achieving those improvements. The first is flexibility for our staff to use innovative approaches to reducing environmental risks. The second is a regulatory system that rewards companies for exemplary performance. The third is alliances between government, companies and communities to decide together how best to achieve environmental, community, and economic goals. Based on the 3M Hutchinson XL experience, we question whether XL, as currently administered, will help us develop these tools.

The 3M Hutchinson XL permit and final project agreement, public noticed on May 30, 1996, resulted from a consensus-seeking approach between MPCA, 3M, and stakeholders. Those stakeholders included Hutchinson community members, the environmental advocacy community, the business community, environmental engineering and law consulting firms, government, and the University of Minnesota. Even though this pilot project is a major paradigm shift from the way facilities are currently regulated, the MPCA continues to emphasize that the enforceable limits in the public noticed 3M Hutchinson permit are protective of human health and the environment.

520 Lafayette Rd. N.; St. Paul, MN 55155-4194; (612) 296-6300 (voice); (612) 282-5332 (TTY)
Regional Offices: Duluth - Brainerd - Detroit Lakes - Marshall - Rochester

Equal Opportunity Employer - Printed on recycled paper containing at least 10% fibers from paper recycled by consumers.

Ms. Carol Browner, Administrator
August 27, 1996
Page 2


On August 16, 1996, the EPA sent to us its most recent proposal. The proposal continued your staff's position that the permit contain a restrictive and burdensome permit condition for guaranteeing superior environmental performance up-front. Under the proposal, a failure to achieve a single superior environmental performance test would be grounds for amendment or revocation of the permit prior to the end of its five year term.

EPA's proposal fails to entrust 3M, a company with a proven record of exemplary environmental performance, to take on the responsibility and accountability of proving that the Project XL flexibility will result in superior environmental performance. It also fails to take into account other important issues such as: economic benefits, reduction in administrative burdens, and increased stakeholder knowledge and support. Once again I repeat our position, shared by the stakeholders listed above, that the proposed permit we published is protective of human health arld the environment.

On August 20, 1996, after close scrutiny by both 3M corporate and Hutchinson plant staff, 3M rejected EPA's proposal of August 16. The rejection was supported by the MPCA. In particular, we believe that the near absolute nature of the superior environmental performance test, along with its potential to prematurely disrupt 3M's implementation of the project, would force 3M to plan primarily with the traditional regulatory system in mind, and would not allow 3M a secure planning horizon to attempt some of the improvements that the MPCA, 3M, and stakeholders hoped could be achieved by the project.

The narrow focus in EPA's proposal on air emissions to evaluate superior environmental performance also fails to recognize other expected benefits of this XL project. Those benefits include the impact of stakeholder information and participation on 3M's performance, the development and implementation of an Environmental Management System at the facility, re-duced administrative costs for MPCA and 3M, and the additional pollution prevention efforts to be made.

According to the March 16, 1995, publication "Reinventing Environmental Regulation," the XL pilot projects were supposed to implement and evaluate regulatory concepts that would become the "building blocks for a new system." XL was called a critical component" of this effort, and its goal was "to step outside the context of the established way of doing things to identify new and innovative means to achieve our goals."

The MPCA believes that the 3M Hutchinson XL permit and final project agreement would have provided valuable information on the success of new approaches to environmental regulation. Because it was designed to step outside of the current system, the MPCA does not believe that it is appropriate to evaluate the project, and possibly prematurely end it, solely with reference to the existing system. The 3M Hutchinson facility has the resources, commitment, and performance history that make it an excellent choice for this type of regulatory experiment.

Ms. Carol Browner,
Administrator August 27, 1996
Page 3


Furthermore, given the health and environmental protectiveness of the enforceable limits in the permit, the MPCA believes that this experiment has no down side.

In summary, the MPCA believes that a key component of the Project XL experiment is to learn whether regulated parties who have demonstrated excellence and leadership in environmental performance can be held responsible and accountable for superior environmental performance in the future. The MPCA believes the proposed 3M Hutchinson XL Permit ensures human health and environmental protection for the duration of the experiment and that the experiment will result in valuable information to produce even better future environmental regulatory reform efforts.

The MPCA, 3M and Minnesota stakeholders also realize that this experiment could fail in the area of superior environmental performance although, based on 3M's past track record, we believe this is a very small risk. We never envisioned requiring prescriptive permit conditions which render the experimental nature of XL moot. However, it appears to the MPCA that starting with EPA's July comments on the draft XL permit and final project agreement through the August 16, 1996, counter-proposal, it is EPA's intention that only XL projects that contain up front guarantees for superior performance will proceed under Project XL. Because of this, MPCA and EPA need to continue to discuss this difference in approach so that MPCA can decide whether it wants to continue with the Minnesota Project XL pilot.



Peder A. Larson
Acting Commissioner


cc: The Honorable William J. Clinton, President
The Honorable Albert Gore Jr., Vice President
Ms. Kathleen McGinty, Deputy Assistant to the President and Director for
Environmental Policy

Mr. Fred Hansen, Deputy Administrator, U.S. Environmental Protection Agency
Mr. David Gardiner, Assistant Administrator, Office of Policy Planning and Evaluation,
U.S. Environmental Protection Agency
Mr. David Ullrich, Deputy Regional Administrator, U.S. Environmental Protection
Agency, Region 5
The Honorable Arne H. Carlson, Governor, State of Minnesota
Ms. Mary Gade, Director, Illinois Environmental Protection Agency

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