"Innovation and collaboration could be greatly facilitated by an improved process (whether roundtable discussions, workshops, advisory committees, or by some other means) for interaction and feedback between federal and state agencies." (1)

Experience to date in state environmental leadership programs has demonstrated that providing regulatory flexibility as an incentive in state programs can encounter a lengthy and difficult process of securing EPA approval. This is one of the chief reasons that focusing on financial incentives, which do not require EPA concurrence, in lieu of regulatory flexibility is suggested for a RI ELP pilot phase. This is also among the top reasons why the program, at least initially, should adopt the structure, requirements and incentives of Performance Track. When considering extending the program after the pilot phase, EPA representatives should be invited to participate in the design process to assure concurrence with any regulatory flexibility that will be offered.

Under the Joint EPA/State Agreement To Pursue Regulatory Innovation "the States and [the] EPA [agreed to]promote innovations at all levels to increase the efficiency and effectiveness of environmental programs. Further, "EPA and state roles in innovations must be clearly designed to utilize each party's unique strengths and avoid duplication." A set of seven principles was developed to guide partnerships between the EPA and the states.

1. Experimentation: Innovation involves new ideas, experimentation, changes and some risk of failure. Experiments that may help us better achieve environmental goals are worth pursuing when the objectives are clearly defined, costs are reasonable, and environmental and public health protections are maintained and improved.

2. Environmental Performance: Innovations seek more efficient and effective ways to achieve our environmental and programmatic goals, with the objective of achieving a cleaner, healthier environment and promoting sustainable ecosystems.

3. Smarter Approaches: Regulators may seek creative ways to remedy environmental problems and improve the environmental protection system. In doing so, they should be receptive to innovative and more effective approaches.

4. Stakeholder Involvement: Effective stakeholder involvement produces better understanding among participants and improves the effectiveness of environmental efforts. Stakeholders must have an opportunity for meaningful involvement in the design, implementation and evaluation of innovation projects. Stakeholders may include other 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.

5. Measuring and Verifying Results: Innovation efforts are more effective when based on measurable goals and objectives. Effective measurement and monitoring allows regulators and stakeholders to monitor progress, analyze results, and respond appropriately.

6. Accountability/Enforcement: Innovators must be accountable to the public. Current systems of data collection, reporting and enforcement will remain in place unless modifications are part of the innovation. When innovations involve changes to existing reporting or enforcement, appropriate alternatives are needed to ensure that public health and environmental protections are maintained.

7. EPA-State-Local Partnership: The Agencies will support innovations at all levels to increase the efficiency and effectiveness of environmental programs. This is best accomplished by working together in the design, implementation, and evaluation of innovative ideas and programs.

These generic commitments have been clarified and detailed with respect to at least two state programs through memoranda of agreement (MOA). In the future if a RI program decides to offer substantial regulatory flexibility then a MOA with the EPA would seem essential. "The EPA's Office of Reinvention is encouraging all states interested in state-level innovation projects to adopt an MOA with the appropriate regional office based on the Wisconsin-Region 5 model." (2)

Memorandum of Agreement Between the Wisconsin Department of Natural Resources and the United States Environmental Protection Agency Concerning Implementation of the Joint State/EPA Agreement to Pursue Regulatory Innovation and the Wisconsin Environmental Cooperation Pilot Program - March 25, 1999

The agreement between Wisconsin and the EPA indicates that the state will take the lead in choosing the companies to participate in the pilot project, and negotiating any agreements. "It is not anticipated that EPA will be a party to cooperative agreements between WDNR and companies." The EPA will "when federal involvement is needed or would be helpful" work with the state in evaluating, developing, and implementing program innovations. According to Jerry Speir who recently evaluated the Wisconsin and Oregon programs for the National Academy of Public Administration:

This agreement is significant because it is the first agreement EPA has signed with a state providing for regulatory innovation. The agreement is significant also because it commits EPA to a role of support, through timely input and consultation, not of oversight, and because it assures participating facilities that the benefits conferred by participation will be honored at the federal level as well as the state level. (3)

The agreement further establishes time periods for EPA review of project proposals, limits on regulatory flexibility, and assurances that there would be no audit privileges extended to participants.

Memorandum Of Agreement Between The Oregon Department Of Environmental Quality, Lane Regional Air Pollution Authority And The United States Environmental Protection Agency Concerning Regulatory Innovation And The Oregon Green Permits Program

The Oregon agreement follows the same outline as the Wisconsin model. To insure expedient processing of applications "[t]he Agencies agree that expedited decision-making is essential to this effort, and commit, in lieu of mandated time frames, to pursue resolution to Green Permits questions and issues in an expedited manner."

Notes:

(1) Speir, Jerry, Green Permits and Cooperative Environmental Agreements: A Report on Regulatory Innovation Programs in Oregon and Washington (sic) Wisconsin, Prepared for the National Academy of Public Administration, Learning From Innovations in Environmental Protection, June, 2000, pp.53, [HTML 66 pages, 300 K]

(2) Speir, pp. 35

(3) Speir pp. 19

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