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Memorandum on Dealing with Projects that Depart from the Original Scope of the Proposal

Memorandum on New Activities and Significant Departures in XL Projects After Project Selection

The following is a copy of a memorandum from Maryann Froelich, Director, Office of Policy Development at EPA. The memorandum addresses the issue of projects that may depart significantly from the scope initially outlined in the project proposal.

This memorandum addresses Agency response in cases where a project sponsor contemplates new activities that could be a significant departure from the proposal originally selected for participation in Project XL.

In responding to such circumstances, EPA should keep in mind several general points. First, the nature of many initial XL proposals leaves room for flexibility. The desire not to force decisions to the front end of the process was one of many reasons why EPA did not, in its May 23 Federal Register notice, require more definitive initial proposals. It was fully anticipated that proposals would evolve and change as they were developed further towards Final Project Agreements (FPAs). Second, a willingness to take risks in the name of creativity is at the heart of the XL program. We are learning, as an Agency, how to take risks in order to create superior environmental performance. Third, maintaining the integrity of the XL selection process and an administrative record of that process are in the interest of all parties. And finally, while not making resources the reason not to pursue good ideas, EPA must use its increasingly limited resources wisely. Addressing this issue on a case-by-case basis requires a blending of these equally important points.

In many cases, the new activities contemplated by project sponsors will expand the scope of the project beyond the states, EPA regions and/or program offices already participating in project development. EPA project leads should endeavor to involve the newly-affected state environmental agencies, regions and/or program offices as quickly as possible in determining the appropriate course of action. Typically, a state environmental agency is the principal co-regulatory agency that must approve a Final Project Agreement along with EPA for it to become effective. In some cases, however, a tribal or local agency will have co-regulatory authority and must approve the FPA. References in this document to the states or state environmental agencies should be understood to apply as well to tribal or local co-regulators.

1. Activities that are not significant departures from the original proposal

With the assistance of other interested parties from within EPA and the state environmental agencies, the project lead should make a judgment on whether the activity contemplated by the project sponsor is a significant departure from the original proposal. In cases where the proposed activity was in some fashion referenced in the original proposal, project leads should generally have broad discretion to proceed. As an example, consider a selected project in which a company is developing regulatory flexibility projects at its facilities using a company-wide Environmental Management System (EMS) as the common framework. This example is based on EPA's experience with AT&T's Microelectronics Unit (AT&T-ME). In the proposal selected by EPA for participation in Project XL, AT&T-ME envisioned a series of performance-based permit experiments all based on an ISO 14000 EMS framework. AT&T-ME specifically described one project related to the NPDES program at its Allentown, PA, facility. It also described, as part of the project, the implementation of an ISO 14000 EMS system at all facilities of the business unit. Furthermore, the proposal contemplated other specific permit-related projects that would build on the ISO framework, just as Allentown would, at AT&T-ME's other facilities. One facility, in Richmond, VA, was specifically excluded from this proposal due to enforcement concerns. The original proposal specifies a particular project focusing on water-borne pollution at one facility, but contemplates other less defined projects in this or other media at a bracketed set of other facilities. An expansion of the project beyond the single facility does not, under these circumstances, represent a significant departure from the original proposal. As another example, consider a selected project in which a company is developing specific pollution prevention activities at a single facility. This example is based the proposal submitted by Union Carbide and accepted for participation in the XL program. Union Carbide identified specific pollution prevention activities in its Taft, Louisiana, plant. It also identified a stakeholder process that would likely identify other pollution prevention activities or make changes in its initial list. The original proposal identifies six specific activities, but contemplates bringing together stakeholders and experts to refine these and develop others. An expansion of the project to new pollution prevention activities, or refinement of the existing six proposals, based on the work of the stakeholder group does not represent a significant departure from the original proposal. In these cases, it seems that such an expansion was contemplated by the original proposal, and by the process that selected it for participation in Project XL. OPPE case workers for individual projects may be of assistance in helping project leads make case-by-case judgments.

Where the new activity is not a significant departure from the original proposal, the issue need not be turned formally back to the EPA-wide Project XL selection process. However, project leads should endeavor to document these cases, for example by requesting supplemental material from the company, and should include such documentation in the administrative record of the project. Of course, the true nature of the project should be reflected in the FPA.

2. Activities that are significant departures from the original proposal

The project lead may also determine that a proposed activity is a significant departure from the original proposal. To modify the example above, consider a project that specifies activities at one facility only. A simple replication of the project at another facility would represent a significant departure. In cases of significant departure, a considered and documented Agency decision on whether to move forward with the new activity is appropriate.

2.a. Process for Decisionmaking

With the goal of not having procedural issues delay the development or implementation of a project, this memorandum offers several means by which a project lead can get prompt Agency decisions on substantial departures from originally selected projects. OPPE is, of course, willing to explore other mechanisms as needed on a case-by-case basis.

2.a.1. Direct concurrence from Agency decision official on XL: One option is to seek concurrence for the addition of the new activity to the original proposal directly from the Agency official authorized to select XL projects, currently David Gardiner, Assistant Administrator for Policy, Planning and Evaluation. This option makes sense in cases where the new activity does not pose a serious controversy and is justified under the XL selection criteria outlined in the May 23, 1995, Federal Register notice. OPPE case workers can assist project leads in gaining and documenting concurrence.

2.a.2. Run the additional activity through the XL selection process: A second option is to encourage the project sponsor to submit the new activity as to the formal Agency-wide XL selection process. This option makes sense in cases where the new activity can stand alone, for example where the new activity is a replication of the existing project at a new facility not named in the original proposal, and where there is minimal connection between the two facilities. This option is also useful in that the rest of the project need not be held up by the need for a decision on the new activity. The original timetable set out for the project (e.g. the time line for completion of an FPA) would remain intact, with additional time reserved for incorporation of the new activity.

2.a.3. Run the entire project through the XL selection process: In rare cases, the project lead may wish to run the entire project, the original proposal plus the new activity, through the formal Agency-wide XL selection process. This option makes sense in cases where the new activity does pose a serious controversy, for example where the new activity fundamentally changes the nature of the project such that it is unclear whether the project remains consistent with the XL selection criteria. Under this option, the combination of the existing project and new activity would be treated as a single new proposal. General deadlines would be reset to reflect this new proposal.

2.b. Criteria for Decisionmaking

Regardless of the process, the criteria for determining the appropriateness of a significant departure from the original proposal are the same as those used in the original decision. These are, of course, discussed in the May 23 Federal Register notice.

Of utmost importance is a consideration of the proposal against the eight selection criteria laid out in the Federal Register. EPA should ask whether the departure, which one might refer to as an evolution of the project, is consistent with the XL criteria. As always, EPA should also consider the resource, legal and enforcement implications of the project. Where proposals involve the replication of an existing project, EPA should pay special attention to legal issues raised by the potential to create the perception of categorical exemption, and to the tradeoff between the incremental value of replication and the Agency resources it would require .

As with initial proposals, significant departures should not go forward to FPA development without the support of the relevant state environmental agency. EPA Regions that will be affected by the new activity should have a strong say in the Agency selection process. Affected Regions should, in addition, have the opportunity to assume a leadership role in FPA development within the Region.

Like all other aspects of XL, dealing with the issue of new activities and significant departures requires good judgment and common sense. If you have any questions on this issue, please contact Chris Knopes, Director of Project XL, at (202) 260-9298, or feel free to contact me directly at (202) 260-4034.

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