As the 21st century begins, traditional “command-and-control” environmental regulation increasingly has been supplanted by new approaches. In this respect, the federal government and the states have sought innovative and non-regulatory (i.e., incentive-based) means of maintaining or increasing the environmental performance of regulated entities and of providing adequate and appropriate state oversight of these entities’ activities. For example, the U.S. Environmental Protection Agency (EPA), through its ProjectXL pilot program² and its National Environmental Performance Track program³, has fostered the development and recognition of innovative approaches to maintain or improve the environmental performance of manufacturing facilities, and to reward successful innovative approaches to improving facility performance. ProjectXL ceased taking applications for new members in January 2003; however, EPA continues to conduct the project for the 50 pilot members.⁴ The National Environmental Performance Track Program is ongoing. These programs have inspired state governments to develop their own innovative programs to reward environmental excellence and provide eligible facilities with incentives to continue to improve their environmental performance.

South Carolina has taken legislative and regulatory steps to explore innovative environmental approaches that address issues faced by individual corporations, and to provide alternative approaches for entities that act on their own initiative to achieve superior environmental performance. The state recently adopted a pilot program designed to test and demonstrate these inventive approaches by participating facilities.

On May 29, 2002, the South Carolina General Assembly passed H. 4258 (Act 318 of 2002). The legislation became effective in June 2002. It authorized the South Carolina Department of Health and Environmental Control (DHEC) to establish a pilot program that allows a limited number of selected businesses to make innovative improvements to their environmental operations. The legislation is based loosely on other state environmental innovations programs, most notably Wisconsin’s Environmental Cooperation Pilot Program, which has been in existence since 1997.⁵ For more information on the Wisconsin program, please see the program’s Website at http://www.dnr.state.wi.us/org/caer/cea/ecpp/.

At the time of publication of this article, the South Carolina Environmental Innovations Pilot Program is more than halfway through its authorized period. May 1, 2007 is the deadline for facilities to enroll in the program. Despite the potential benefits expected from participation in the program, however, only two facilities in South Carolina thus far have expressed an interest in participating in the program. On November 26, 2003, International Paper Georgetown Mill submitted its innovation proposal package to DHEC. BMW Manufacturing Corp., located in Greer, South Carolina, is the other facility that has expressed an interest in participating in the program.

SC Environmental Innovations Pilot Program
Pursuant to the authorizing legislation, DHEC established the Environmental Innovations Pilot Program. The goal of the pilot program was to “achieve greater environmental benefits through the integration of pollution prevention, environmental management systems, and technological innovations into facility operations by allowing the facility greater flexibility in meeting its regulatory requirements” (Steagall, 2003, p. 2). The program’s ultimate goal is to provide support for DHEC’s adoption either of changes in regulations, or of changes in the agency’s “permitting or operating processes based upon the successful demonstration of alternative regulatory approaches through the pilot program” (See Steagall, 2003, pp. 2-3).⁶

The authorizing legislation specifies that a maximum of ten facilities may participate in the pilot program. Interested facilities have five years to obtain permission to participate in the program. A cooperative agreement formalizes the relationship between a facility and DHEC. Each cooperative agreement has a term of five years, with the possibility of one five-year renewal. A facility that wishes to participate in the pilot program either must be a member of, or meet the membership requirements of, the South Carolina Environmental Excellence Program (SCEEP).

SCEEP recognizes facilities in South Carolina that have gone “beyond compliance” in their efforts to address the environmental issues that the facilities impact. Many states have environmental excellence programs; however, SCEEP is unique among these programs because it is the only one not administered by the state’s environmental regulatory agency. In 1996, a group of interested parties, including representatives of the University of South Carolina’s Institute for Public Service and Policy Research (IPSPR), DHEC, and a variety of corporations with facilities in South Carolina, began meeting to develop an environmental excellence program for South Carolina. These efforts resulted in the creation of SCEEP in 1997. Since its inception, SCEEP has been administered by IPSPR’s Environmental Research and Service unit. Members of SCEEP include multinational, large, and small corporations with facilities in South Carolina. and Department of Defense facilities. Any South Carolina-based organization, company, or facility that has a goal of improving South Carolina’s environment, and that shows a commitment to waste reduction through the use of pollution prevention activities, and/or reducing its energy use through the reduction of resource consumption or of energy use, is eligible for membership in SCEEP. As of October 15, 2004, the program had 25 “members representing over 56 facilities statewide,” including three Department of Defense facilities.⁷

Basic Cooperative Agreement Structure
The cooperative agreement is a document entered into and signed by the participating facility and DHEC. It is a negotiated, enforceable agreement that allows the permit modifications and variances needed for a facility to test innovative environmental approaches. The cooperative agreement defines the pollution reduction actions that the participating facility will take, and the variances that DHEC will grant the facility in exchange for these reductions. It also spells out the requirements for a participating facility.

The participating requirements are essentially three. First, the facility must demonstrate a commitment to implementing an environmental management system (EMS). Second, through the development of specified waste reduction goals that use “measurable and verifiable terms,” the facility must demonstrate a commitment to superior environmental performance. Third, the specified pollution limits must be “measurable, verifiable, enforceable and at least as stringent as those required by law.”

The cooperative agreement also must detail any approvals that will be replaced by the provisions of the cooperative agreement. In DHEC’s language, an “approval” is a permit, license, or other authorization issued by DHEC. The agreement also must specify any operational flexibility or variances that DHEC grants to the facility pursuant to the cooperative agreement. Further, the facility must demonstrate a “commitment to complete a baseline evaluation of its performance within 180 days, to update it periodically, and to report any violations discovered.” The cooperative agreement also must include a plan to foster public involvement and participation in the development and implementation of the agreement. Finally, the agreement must provide for “an assessment of the project to reduce administrative activities and paperwork.”⁸

Public Participation Requirements
Act 318 of 2002 specifies that the implementation of the South Carolina Environmental Innovations Pilot Program is to be an open process with a significant degree of public involvement. To that end, the Act mandates that a facility interested in applying to participate in the pilot program must form an “interested persons” group. The facility’s application must describe the means by which it formed this group. The application also must list the group’s members and any other persons who have requested notification of the facility’s intent to participate in the pilot program.

The Act also requires DHEC to meet public notice and participation prerequisites. For example, there must be a public comment period of at least 30 days in length before the agency makes any cooperative agreement final. Also, DHEC must make notice of the comment period available to the public at the agency’s headquarters office in Columbia and at its district offices throughout the state. The facility also must provide the public with notice of the comment period. It may do so by (1) distributing the notice, (2) posting the notice in the area surrounding the facility, (3) publishing the notice in the local newspaper, (4) posting it in the area’s public buildings, and/or (5) through any other means deemed effective by DHEC.

Program Status
Again, only two facilities have expressed a serious interest in participating in the SCEIPP: International Paper Georgetown Mill, located in Georgetown, South Carolina, and BMW Manufacturing Corp. in Greer. In the following narrative, these two facilities and their planned cooperative agreements are discussed.

International Paper Georgetown Mill
International Paper’s Georgetown Mill is a large integrated pulp and paper manufacturing facility built in 1937. The mill is located on approximately 900 acres of land. It employs nearly 800 people. The mill manufactures envelope paper, white and manila file folder material, and bleached liner grades and fluff pulp. The Georgetown Mill has been a member of the SCEEP since October 1998 and a member of EPA’s Performance Track Program since August 2002. The facility has an environmental management system in place.

International Paper Georgetown Mill submitted its innovation proposal package, including the draft cooperative agreement, to DHEC on November 26, 2003. DHEC submitted to EPA a request for the authority under the equivalency by permit (EBP) process to use alternative maximum achievable control technology (MACT) standards for the Georgetown Mill. Section 112 (l) of the Clean Air Act authorizes EPA “to approve state or local rules programs to be implemented and enforced in place of certain otherwise applicable CAA section 112 [f]ederal rules, emission standards, or requirements.”⁹ This EPA action allowed DHEC and International Paper to proceed with putting the cooperative agreement into place.

On December 12, 2003, International Paper submitted to DHEC and EPA a permit application to address the “parity and plus” projects that International Paper planned to implement pursuant to the cooperative agreement. DHEC approved the Georgetown Mill’s permit application for the pollution control projects and the cooperative agreement on March 19, 2004. On February 17, 2004, EPA approved the EBP via direct final rule and published a preliminary determination in the Federal Register.¹⁰

The cooperative agreement is intended to cover permits in four areas: an operating permit for air emissions (a permit issued pursuant to Title V of the federal Clean Air Act (42 U.S.C. §§ 7661 to 7661f (2000)), water discharge permits issued pursuant to the federal Clean Water Act’s National Pollution Discharge Elimination System (NPDES) permit program, an industrial waste landfill permit issued pursuant to the Resource Conservation and Recovery Act (RCRA) (42 U.S.C. §§ 6901 to 6992k (2000)), and a radioactive materials license.

In the cooperative agreement, International Paper Georgetown Mill proposes to introduce a series of operations and equipment changes designed to improve its environmental performance in the areas of odor emissions, air pollutant emissions, water pollution emissions, water use, and energy use.

In the initial phase of its project, International Paper proposes to try to offset the high capital and operating costs of hazardous air pollutant (HAP) controls under the MACT requirements.¹¹ International Paper expects to be able under the cooperative agreement to identify alternate air pollution control approaches that have lower capital and operating costs than do alternative approaches. The company plans to use part of the capital savings to implement various process improvements (called “Plus Projects”) that will be endorsed by the interested persons group established pursuant to the cooperative agreement.

As part of the project, International Paper seeks to use a parity demonstration, specifically in achieving reductions of HAP emissions from the plant’s second stage Black Liquor Oxidation (BLOX) system vent. This approach also would make process changes to exempt the plant’s decker systems from control under the Clean Air Act by reducing the methanol concentration in the decker systems’ shower water to less than the level of regulatory concern.

International Paper also plans to make upgrades to the mill’s Number 1 and Number 2 power boiler overfire systems. This change would necessitate obtaining a variance allowing a pollution control project exclusion under the Clean Air Act’s Prevention of Significant Deterioration (PSD) provisions. The plant also would upgrade its blow heat recovery system to reduce emissions. This change also would necessitate obtaining a variance allowing a pollution control project exclusion under the Clean Air Act’s PSD provisions. International Paper estimates that its SCEIPP proposal will reduce hazardous air pollutant emissions by more than 183.2 tons per year.¹²

Plus Projects. In addition to its main projects, International Paper also plans to implement a series of “Plus Projects.” These Plus Projects are designed to address a series of issues at the plant, including odor, fugitive dust emissions, debris from trucks entering and leaving the facility, and wetlands at the facility. Specifically, the Plus Projects will include modifications to the plant’s condensate steam stripper, upgrades to the overfire air systems on the plant’s Number 1 and Number 2 power boilers, upgrades to the plant’s blow heat recovery system, a strategy for developing an alternate route for trucks entering and leaving the facility, improvements to the plant’s broke recovery process, an upgrade to the plant’s refuse bark hog (which turns bark and other wood refuse into a saleable product), removal of wood truck debris, and wetlands restoration and storm water alleviation activities. Of these projects, only the upgrades to the overfire air systems on the plant’s Number 1 and Number 2 power boilers and the upgrades to the blow heat recovery system required a permit. Because most of these projects did not require permits, it will be easy for International Paper Georgetown Mill to implement them with little delay, thus more quickly bringing improved environmental protection to various aspects of the facility’s operation. International Paper expects that implementation of these Plus Projects will result in decreased energy use, the recovery of approximately 1,976 tons per year (TPY) of fiber, reduction of odor through eliminating about 74.7 TPY of total reduced sulfur compounds, and reducing some discharges to the wastewater treatment plant by about 59,622 pounds per year.¹³

The cooperative agreement between International Paper Georgetown Mill and DHEC also expresses a commitment by the facility to abide by all current and future environmental requirements, except for those requirements identified as candidates for variances. Further, the cooperative agreement establishes the means by which the interested persons group was formed.¹⁴

BMW Manufacturing Co., LLC.
BMW Manufacturing Co.’s facility sits on a 1,000-plus acre site in Spartanburg County, South Carolina. It employs approximately 4,700 people, who manufacture all of the company’s sports cars and sport utility vehicles. The plant annually adds approximately $26 million in net revenues to the South Carolina economy. The plant has been operating since 1994. It is one of the first automobile manufacturers in the United States to earn ISO 14001 certification for meeting or exceeding international environmental standards.¹⁵

BMW and DHEC are in the process of developing a draft cooperative agreement that would enable BMW to participate in the South Carolina Environmental Innovations Pilot Program. The draft cooperative agreement shows what permits and approvals will be affected by the facility’s membership in the pilot program. As envisioned by BMW and DHEC, the agreement will be a multi-faceted, multi-media proposal aimed at reducing several administrative burdens and costs for DHEC, EPA, and BMW. As with any cooperative agreement entered into between DHEC and a facility pursuant to the SCEIPP, it also would specify actions that BMW will take to reduce or eliminate pollution from its facility, and the regulatory variances to which BMW and DHEC will agree in exchange for the process and administrative changes that BMW will implement at its Greer facility.

BMW and DHEC are discussing a series of proposed measures designed to make more effective use of staff resources by both the company and the agency. This increase in the effective use of staff resources would be effectuated by focusing less effort at both BMW and DHEC on routine administrative activities and instead focusing more on activities that will result in improved environmental performance. Part of the discussions includes designing a means of streamlining monitoring and reporting requirements. It is expected that this streamlining would emphasize measurements that truly represent the facility’s environmental performance. BMW and DHEC are also seeking ways to create innovative approaches to address inspections and prompt implementation of improvements to the facility’s equipment and operations.

For example, BMW’s current air permit is touted as an industry standard by both EPA and DHEC as an example of providing both a high level of environmental protection and freedom to address better the permit’s administrative aspects. As part of its SCEIPP process, BMW seeks to develop and implement a similar approach and concepts in an innovative wastewater treatment permit.

A draft cooperative agreement developed between BMW and DHEC also would express a commitment by the facility to abide by all current and future environmental requirements, except for those requirements identified as candidates for variances. Further, the agreement would almost certainly establish the means by which a required interested persons group will be formed.

Conclusion
In conclusion, the current trend in the environmental regulation of manufacturing and commercial facilities is to allow facilities that meet or exceed a range of environmental regulatory requirements to test a variety of innovative approaches designed to assist them in moving beyond mere compliance with environmental laws and regulations. Both the federal government and a number of states have taken steps to provide facilities within their jurisdictions with this ability. Through its Environmental Innovations Pilot Program, South Carolina hopes to provide yet another model for cooperation between state regulators and industrial facilities that will provide adequate protection of the environment and recognize and reward companies that have outstanding and innovative environmental performance. Despite these hopes, however, only one corporation has applied for membership in the program; another has expressed serious interest in SCEIPP participation. With the deadline of May 1, 2007, for applications to the program fast approaching, there is concern that eligible South Carolina facilities will not take advantage of this opportunity to test new approaches to enhance further their environmental performance.

Reference
Steagall, C. (2003, October 31). “South Carolina environmental innovations pilot program: Final report.” Columbia, SC: Institute for Public Service and Policy Research, University of South Carolina.

About the Author
F. James Cumberland, Jr., J.D. is a senior research associate with the Institute for Public Service and Policy Research at the University of South Carolina in Columbia, SC, an adjunct professor at the University’s School of Law, and an associated faculty member of the University’s School of the Environment. He can be reached at cumberland@sc.edu.

Endnotes
1. The author would like to thank Allyson Bristow, Technical and Environmental Group Leader, International Paper Georgetown Mill; Claire Prince, Director, Enforcement and Compliance Assistance Environmental Quality Control, South Carolina Department of Health and Environmental Control; and Gary Weinreich, P.E., Environmental Services Manager, BMW Manufacturing Corp., for their assistance in the production of this article.
2. See http://www.epa.gov/projectxl/.
3. See http://www.epa.gov/performancetrack/.
4. Retrieved October 21, 2004 from http://www.epa.gov/projectxl/whatsnew.htm#news.
5. See http://www.dnr.state.wi.us/org/caer/cea/ecpp/reports/1998/part1.htm.
6. For additional information regarding the South Carolina Environmental Innovations Pilot Program, including a copy of the text of the authorizing legislation, an application form, a template for the Cooperative Agreement, and a description of the program’s public participation requirements, see the DHEC Environmental Innovations Program Website at http://www.scdhec.net/eqc/admin/html/env_innov.html.
7. See http://www.iopa.sc.edu/sceep/default.asp for additional information regarding the SCEEP, including the program’s statement of purpose, an application form, guidelines, and a list of the SCEEP members.
8. See http://www.scdhec.net/eqc/admin/html/env_innov.html.
9. See U.S. Environmental Protection Agency, Approval of Section 112(l) Authority for Hazardous Air Pollutants; Equivalency by Permit Provisions; National Emission Standards for Hazardous Air Pollutants From the Pulp and Paper Industry; State of South Carolina, 60 Fed. Reg. 7372, 7374 (February 17, 2004).
10. See U.S. Environmental Protection Agency, Approval of Section 112(l) Authority for Hazardous Air Pollutants; Equivalency by Permit Provisions; National Emission Standards for Hazardous Air Pollutants From the Pulp and Paper Industry; State of South Carolina, 60 Fed. Reg. 7372 (February 17, 2004). This approval took effect on April 19, 2004.
11. See 40 C.F.R. 63.94 (2003) of the federal Clean Air Act (42 U.S.C. §§ 7401 to 7671q (2000), and under Phase II of the Pulp and Paper MACT standard. See 40 C.F.R. Part 63 (2003).
. See South Carolina Department of Health and Environmental Control, Environmental Quality Control Administration, Notice of Proposed Action: Issuance of Innovations Cooperative Agreement, February 16, 2004. Additional pollution reductions will come from the Plus Projects.
13. See South Carolina Department of Health and Environmental Control, Environmental Quality Control Administration, Notice of Proposed Action: Issuance of Innovations Cooperative Agreement, February 16, 2004.
14. For copies of documents relating to the International Paper Georgetown Mill environmental innovation project, including a summary, the public notice, and the cooperative agreement see http://www.scdhec.gov/eqc/admin/html/env_innov.html#participants.
15. See http://www.bmwusfactory.com/media_center/media_info/BMW_Manufacturing/overview.asp.