12 em january 2006 awma.org

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At the 2005 A&WMA Annual Conference& Exhibition in Minneapolis, Thomas P. Dunne, deputy as-sistant administrator of the U.S. Environmental ProtectionAgency (EPA), lamented the lack of innovation within theenvironmental community (see EM, September 2005, page6). Congress, EPA, industry, and environmental groups arestagnating in the regulatory process, Dunne said, and thetime between initiation and implementation of new rules isregrettable, with proposed rules sometimes taking up to 10years just to reach final publication. In the interim, oppor-tunities to protect public health and the environment arebeing lost. Dunne called for a productive alternative to con-frontation and litigation, a new way of doing business inwhich nonregulatory approaches, such as partnerships andvoluntary initiatives, are moved “from the fringes of envi-ronmental policy to center stage.” Nonregulatory actionshould be the first option, Dunne said, the starting point infuture efforts to manage environmental risk. Furthermore,he added, EPA should provide incentives, rewards, andrecognition to companies that achieve exceptional resultsoutside the regulatory system.

AN INCENTIVES-BASED APPROACHEPA’s National Environmental Performance Track programexemplifies the approach advocated by Dunne, using a va-riety of incentives to encourage facilities to improve theirenvironmental performance on a continuous basis.Launched in June 2000, the program motivates facilitiesto go beyond legal requirements and address environmen-tal concerns that are not regulated, such as materials use,

greenhouse gas emissions, and habitat preservation.Performance Track currently has approximately 370

members in 46 states and Puerto Rico. To qualify for mem-bership, facilities must have a history of sustained compli-ance with environmental requirements, an independentlyassessed environmental management system (EMS), and acommitment to community outreach. Members must dem-onstrate past environmental achievements and commit tospecific, quantifiable goals for their three-year membershipin the program. They can choose to include upstreamimprovements, such as increasing the recycled content ofpurchased materials, or improvements to inputs, such asdecreasing the use of energy and water. Applicants can alsochoose to set goals for reducing nonproduct outputs, suchas air emissions, waste, and discharges to water, or for down-stream improvements, such as decreasing the expected life-time energy or water use of products.

Once admitted to the program, Performance Trackfacilities begin to receive benefits, including public recogni-tion, reduced priority for routine inspections, permitstreamlining and other regulatory or administrative incen-tives, and special invitations to conferences, seminars, and

workshops. The program also works with states to recognizePerformance Track members in state regulatory processes,and has established a Corporate Leader designation to pro-vide an additional level of recognition to companies thathave demonstrated a substantial commitment to the Perfor-mance Track program.

In addition to these incentives, members find that goingbeyond compliance can bring financial and competitive ben-efits. “The more we integrate environment into our busi-ness operations, the better the bottom line,” says Paul Tebo,vice president for health, safety, and environment at DuPont,which has six member facilities in Performance Track.DuPont watched its annual expenditures for waste treatmentfall from $1 billion in 1993 to less than $400 million in 2003.Membership in Performance Track may make companiesmore attractive to environmentally conscious investors.Three leading socially responsible investment research and

Daniel J. Fiorino, Ph.D., is the director of EPA’s PerformanceIncentives Division and program director for Performance

Track. E-mail: fiorino.dan@epa.gov.

Members find that going

beyond compliance can bring

financial and competitive

benefits. DuPont's annual

expenditures for waste

treatment dropped from

$1 bil l ion to less than

$400 million in 10 years.

Copyright 2006 Air & Waste Management Association

awma.org january 2006 em 13

advisory firms—Calvert Group, Innovest Strategic ValueAdvisors, and KLD Research & Analytics Inc.—use publiclyreported Performance Track data in their research meth-ods. As an indicator of exceptional environmental perfor-mance, membership in Performance Track may be seen asa measure of effective leadership.

Members report annually on their progress toward meet-ing (and, in many cases, exceeding) their environmentalgoals. To date, Performance Track members report thatthey have collectively reduced their water use by morethan 1.3 billion gallons and have cut their generation ofsolid waste by nearly 600,000 tons. They have also de-creased their energy use by more than 8.4 trillion BritishThermal Units (BTUs), enough to power 80,600 homesfor a year. In 2003, members reported a 37% decrease inemissions of hazardous air pollutants and further reduc-tions in volatile organic compounds, nitrogen oxides, andsulfur oxides. These benefits to public health and the en-vironment go beyond what could have been achievedthrough current regulations alone.

ADDING MORE INCENTIVESSince Performance Track’s inception, EPA has been work-ing to create new incentives to encourage facilities to joinand stay in the program. In 2004, the first PerformanceTrack rule was signed by then-EPA Administrator MikeLeavitt, which added regulatory and administrative incen-tives for members under the Resource Conservation andRecovery Act (RCRA) and the Maximum Achievable Con-trol Technology (MACT) provisions of the Clean Air Act.EPA anticipates that the rule will save eligible members atotal of more than $700,000 by 2007. Additional incen-tives for Performance Track members under RCRA arein various stages of development, and EPA has proposeda hazardous air pollutants rule that provides compliancealternatives under MACT with special provisions for Per-formance Track members. Performance Track managersat EPA have organized meetings with other key officeswithin the agency, including the Offices of Water, SolidWaste and Emergency Response, and Air and Radiation,to discuss ideas for future incentives. Performance Trackmembers participate in those meetings and offer theirown suggestions.

EPA has also made efforts to coordinate PerformanceTrack with similar programs at the state level, as well as withindustry-specific performance-based programs. For example,Virginia-based facilities accepted into Performance Trackcan apply for membership in the Virginia EnvironmentalExcellence Program at the Exemplary Environmental En-terprise level by submitting a letter to the Virginia Depart-ment of Environmental Quality. The Virginia program alsoaccepts Performance Track annual reports from facilitiesthat participate in both programs, minimizing the effort ofduplicate reporting. In 2004, EPA forged an agreement withthe American Chemistry Council under which the agencyrecognizes Responsible Care certification as evidence that afacility meets Performance Track’s EMS assessment andimplementation criteria.

FROM CONFRONTATION TO COLLABORATIONAccording to a recent survey of Performance Track mem-bers, one of the most valuable benefits of the program isthe opportunity to develop a more collaborative relation-ship with EPA. Performance Track allows EPA to treat top-performing facilities differently, reducing their regulatoryand administrative burden while retaining accountabilityand oversight. Facilities participating in the program havedemonstrated their commitment to exceptional environ-mental performance, and EPA wants to reward and encour-age that kind of behavior. At the same time, PerformanceTrack facilities must remain in compliance with environ-mental laws, set specific environmental goals, and reportannually on their progress toward meeting their commit-ments, allowing EPA to monitor and publicize theprogram’s results.

Performance Track represents an important step towardfulfilling the vision described by Dunne, in which non-regulatory approaches become the “centerpiece” of en-vironmental policy in the United States. The program pro-vides a logical complement to existing regulations andmarket-based programs, creating a reason for companies togo beyond legal requirements and achieve better results. Italso encourages voluntary progress on environmental issuesthat are currently unregulated, promotes the use of EMSs,and fosters innovation. EPA thinks that is a winning combi-nation. And with a 75% renewal rate in the program, mostPerformance Track facilities evidently think so too. For moreinformation about the Performance Track program, go towww.epa.gov/performancetrack.

Durango-McKinley Paper Co. in Prewitt, NM, pro-duces paperboard for corrugated boxes. A memberof Performance Track since 2001, Durango-McKinleycommitted to reducing its use of materials, water,and electricity, and to reducing the amount of solidwaste it sent to landfill. The facility made improve-ments in all of these areas through a variety of pollu-tion prevention activities, such as operator training,preventive maintenance, maximizing the efficiency ofprocess equipment, and working closely with suppli-ers. Durango-McKinley reduced its use of materialsby 1000 tons more than its original goal, and showeda 20% improvement in materials efficiency during itsfirst three years of membership. The facility reducedits water use by 2 million gallons per year and itslandfill waste by more than 3000 tons. Finally,Durango-McKinley reduced its annual electricity useby almost 5000 megawatt-hours and showed an 11%improvement in electricity efficiency. Durango-McKinley renewed its Performance Track member-ship in 2004 and is committed to further reductionsin energy, materials, and water use.

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Performance TrackMember Spotlight:Durango-McKinley Paper Co.

Copyright 2006 Air & Waste Management Association