Document ID: EPA-HQ-OA-2005-0003-0005
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2005-10-03T04:00Z

DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
1
DRAFT
REPORT:

A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
2
Contents
A.
Introduction
and
Background
B.
Incentives
Process
1.
Cycle
2.
Accountability
3.
Communications
Strategy
C.
Incentives
Framework
1.
Incentives
Identification
and
Prioritization
i.
Inventory
ii.
Establish
selection
criteria
iii.
Select
Incentives
2.
Incentives
Development
3.
Incentives
Implementation
4.
Potential
Measures
of
an
Effective
Incentives
System
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
3
A.
Introduction
and
Background
The
following
report
proposes
a
revitalized
incentives
system
for
the
National
Environmental
Performance
Track
and
State
performance­
based
programs.
The
purpose
of
this
document
is
to
identify
and
address
the
anticipated
outcomes
from
such
an
approach.
This
revitalized
process
is
anticipated
to:

 
Promote
federal
and
state
performance­
based
environmental
leadership
programs,
including
the
recruitment
of
new
members
and
reinforce
collaborative
nature
of
EPA
and
State
efforts
throughout
the
incentives
process.
 
Provide
members
(
both
existing
and
new
members)
of
federal
and
state
performancebased
programs
with
more
effective
incentives
that
are
developed
and
delivered
faster.
 
Select
and
focus
on
administrative,
policy,
and
regulatory
incentives
that
improve
environmental
performance,
change
behavior,
and
encourage
new
approaches
to
achieving
desired
outcomes.
In
addition,
support
for
financial
incentives,
including
reduced
permit
fees,
and
work
with
green
investment
firms
will
be
considered.
 
Build
upon
current
activities
to
strengthen
and
integrate
state
and
EPA
incentives
efforts
as
a
means
of
leveraging
collective
resources
and
expediting
the
delivery
of
incentives.
 
Provide
a
structured
framework
for
identifying,
developing,
and
implementing
incentives,
with
the
capacity
to
assess
the
value
of
incentives
throughout
the
process.
 
Solicit
and
engage
public
input
at
appropriate
times
during
the
process.
 
Develop
a
communications
strategy
to
encourage
participation
and
inform
interested
partners
and
stakeholders.

To
provide
some
context
for
this
EPA/
State
effort,
we
provide
background
on
the
National
Environmental
Performance
Track
Program
and
State
performance­
based
programs.
Announced
in
June
2000,
the
Performance
Track
Program
is
designed
to
recognize
and
support
top
environmental
performers
 
those
who
go
beyond
compliance
with
regulatory
requirements
to
attain
levels
of
environmental
performance
and
management
that
provide
greater
benefit
to
people,
communities,
and
the
environment.
The
Program
is
based
upon
the
experiences
of
EPA,
States,
businesses,
and
community
and
environmental
groups
with
new
approaches
that
achieve
high
levels
of
environmental
protection
with
greater
efficiency.

State
performance­
based
programs
are
similarly
designed
to
recognize
and
support
strong
and
sustained
environmental
improvement.
More
than
25
states
have
active
programs
or
programs
under
development,
and
eighteen
states
rank
those
performance
based
programs
among
their
top
ten
priorities
according
to
a
January
2005
Environmental
Council
of
States
(
ECOS)
survey
of
states.
Nine
states
have
signed
Memoranda
of
Agreement
with
EPA
to
enhance
coordination
and
alignment
of
state­
level
efforts
with
EPA's
program.
States
and
EPA
have
held
five
conferences
between
May
2000
and
February
2004,
including
specific
sessions
on
potential
incentives
to
be
offered
to
members.

During
the
development
of
these
performance­
based
programs,
meetings
have
been
held
with
a
wide
array
of
stakeholders
regarding
incentive
programs.
Stakeholders
have
included
state
and
local
governments,
non­
governmental
organizations,
businesses,
associations,
and
others.
Over
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
4
the
course
of
these
meetings,
many
incentives
have
been
discussed
that
would
motivate
facilities
to
implement
environmental
improvements.

Beginning
in
2004,
a
series
of
meetings
have
been
held
between
EPA's
media
offices
(
air,
water
and
waste),
states,
and
Performance
Track
members.
The
meetings
have
provided
Performance
Track
members
an
opportunity
for
dialogue
on
mutual
areas
of
interest
and
to
explore
creation
of
new
incentives
and
commitments
for
the
program
that
will
help
achieve
improved
measurable
environmental
outcomes.
Minutes
from
these
meetings
can
be
found
at
www.
epa.
gov/
performancetrack.

This
report
is
in
response
to
an
Environmental
Council
of
States
(
ECOS)
report,
prepared
in
January
2005
at
the
request
of
former
EPA
Administrator
Mike
Leavitt
titled
"
Survey
of
State
Support
for
Performance
Based
Environmental
Programs
and
Recommendations
for
Improved
Effectiveness."
The
ECOS
report
described
the
level
of
support
among
states
for
Performance
Track
and
state
performance­
based
leadership
programs
and
recommended
actions
states
believe
EPA
should
take
to
improve
the
effectiveness
and
value
of
these
programs.

One
of
the
recommendations
of
the
ECOS
report
was
to
"
develop
and
implement
a
revitalized
system
for
identifying,
developing
and
implementing
incentives
for
Performance
Track
and
state
programs."
As
outlined
in
the
ECOS
report,
a
revitalized
incentives
system
would:

 
Develop
incentives
that
have
greater
value
to
participants
and
align
federal
and
state
incentives
to
achieve
maximum
impacts;
 
Be
more
demand
driven,
drawing
more
actively
on
perspectives
and
ideas
from
current
and
potential
program
participants;
 
Include
a
process
to
more
systematically
identify
and
evaluate
incentives
that
would
be
attractive
to
economic
and
industrial
sectors;
 
Better
align
and
coordinate
incentive
identification
and
development.

The
goal
of
this
report
is
to
frame
a
system
for
the
identification,
development,
and
implementation
of
incentives
that
builds
on
the
existing
activities
and
partnerships
between
states
and
EPA.
While
specific
recommendations
and
steps
are
set
out,
it
is
the
intent
of
the
workgroup
that
throughout
this
system
flexibility
and
common
sense
should
prevail,
and
not
strict
adherence
to
the
process.
The
system
and
processes
proposed
in
this
report
are
a
means
to
the
ultimate
end
of
providing
incentives
faster
that
will
bring
about
greater
environmental
improvement.
Many
of
its
elements
are
in
place
in
Performance
Track
and
state
performancebased
programs,
but
perhaps
not
in
as
coordinated
a
manner.

Specifically,
the
revitalized
system
proposed
creates
a
partnership
between
EPA
and
the
states
that
is
designed
to
be:
 
Systematic
and
purposeful
 
Evaluative,
providing
measures
of
an
effective
system
 
Coordinated,
and
improve
communications
with
states
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
5
B.
Incentives
Process
The
goal
of
performance­
based
programs
is
to
achieve
greater
environmental
results
than
those
achieved
in
their
absence.
One
way
to
encourage
such
results
is
to
provide
incentives
to
members
of
such
programs
(
whether
Federal
or
state)
that
would
allow
them
to
operate
in
a
more
efficient
manner,
and
thus
bring
about
greater
environmental
improvement.
The
creation
and
delivery
of
incentives
that
seek
to
recruit
and
retain
members
is
an
ongoing
process
and
one
that
builds
on
existing
efforts.
Federal
and
state
agencies
seek
to
continually
improve
this
process
and
provide
a
range
of
incentives
in
administrative,
policy,
and
regulatory
areas.

As
part
of
this
ECOS
Incentives
Workgroup,
states
were
surveyed
to
gather
information
regarding
state­
based
incentive
processes
and
suggestions
for
improvements.
Forty­
four
states
responded
to
a
survey
conducted
in
the
summer
of
2005
that
asked
for
input
on
current
incentives
and
ways
to
improve
the
process.
To
improve
current
processes
for
identifying,
developing,
and
implementing
incentives,
seven
states
encouraged
greater
opportunities
to
convene
state,
federal,
and
facility
stakeholders,
five
states
urged
that
more
organizational
support
for
innovation
is
needed,
and
four
states
suggested
the
creation
of
a
clearinghouse
of
incentives
in
use.

The
following
process
is
intended
as
a
framework
for
the
federal
performance­
based
program
and
as
appropriate,
for
state
performance­
based
programs.

1.
Cycle
An
incentive
cycle
includes
identification,
development,
and
implementation
of
incentives
and
should
include
assessment
during
the
process.
The
cycle
should
provide
for
assessment
and
an
evaluative
feedback
loop
throughout
the
process
to:
 
Assess
the
environmental
impacts
associated
with
the
incentive
to
ensure
that
there
will
not
be
adverse
or
undesirable
environmental
or
human
health
impacts.
 
Assess
the
benefits,
costs,
and
cost
savings
to
members
and
regulatory
agencies
associated
with
implementation
of
the
incentive.
 
Assess
the
feasibility
of
implementing
the
incentive(
s).
 
Identify
and
analyze
any
policy
or
legal
drivers
or
barriers
associated
with
the
incentive(
s).
For
example,
there
may
be
statutory
or
regulatory
mechanisms
at
the
federal
or
state
levels
that
authorize,
or
impede,
development
and
implementation
of
a
particular
incentive.
 
Consider
stakeholder
input
as
appropriate.

These
assessments
may
apply
at
any
stage
in
the
process
and
are
not
specific
to
a
particular
step.

An
effective
incentives
process
necessitates
managing
and
tracking
the
number
of
incentives
that
may
be
in
development
or
implementation
at
any
one
time.
An
effective
process
should
also
allow
for
adjustments;
for
example,
after
being
selected,
work
on
a
particular
incentive,
based
on
further
analysis,
could
be
discontinued
if
the
anticipated
value
to
members
and
environmental
agencies
is
substantially
less,
or
will
not
be
worth
the
effort.
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
6
Figure
1.

2.
Accountability
Each
incentive
should
have
an
associated
plan
to
develop
and
make
available
the
incentive
within
a
reasonable
timeframe.
An
EPA
staff
person
should
be
assigned
to
track
each
Performance
Track
incentive
and
serve
as
point
of
contact
for
questions,
communications
and
tracking.
Similarly,
for
incentives
developed
at
the
state
level,
a
state
staff
person
should
be
assigned
as
a
lead
point
of
contact.

To
ensure
the
incentives
process
is
implemented
in
an
expedient
manner,
an
on­
going,
active,
and
dedicated
incentives
workgroup,
comprised
of
state
and
EPA
representatives,
will
be
established
to
provide
input
to
the
process.
The
workgroup
will
be
co­
chaired
by
a
state
and
federal
representative.
The
workgroup
will
support
the
incentives
process,
including
seeking
ideas
for
possible
incentives
as
appropriate,
and
reporting
to
EPA's
Innovation
Action
Council
(
IAC)
periodically.

3.
Communications
Strategy
Effective
communications
are
key
to
the
timely
development
and
implementation
of
incentives.
Performance
Track
and
corresponding
state
programs
have
a
strong
history
of
soliciting
stakeholder
and
public
input.
The
revitalized
system
outlined
in
this
report
is
designed
to
ensure
that
EPA
and
states
will
continue
to
communicate
effectively
with
each
other
and
with
relevant
stakeholders
and
the
public
at
appropriate
times
during
the
incentives
cycle.
Communications
include
discussion
of
potential
ideas
with
program
members,
briefing
program
office
staff
on
the
mechanics
of
specific
incentives,
and
seeking
public
input
at
appropriate
intervals
during
the
cycle,
including
formal
public
comment
on
proposed
Assessment
of
Incentives
throughout
Cycle
INCENTIVES
CYCLE
Incentives
Identification
Incentives
Implementation
Incentives
Development
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
7
regulatory­
based
incentives.
Particular
attention
will
be
focused
on
continuing
communications
with
program
office
staff
at
the
regional
and
state
level
who
are
the
front­
line
implementers
of
many
incentives.

Specific
modes
of
communication
will
include
the
following:

 
Regularly­
scheduled
meetings,
conference
calls,
and
newsletters
(
e.
g.,
Performance
Track
weekly
regional
updates
and
monthly
State
calls,
ECOS
meetings,
Performance
Track
Annual
Conference,
PT
newsletter,
etc.).

 
EPA's
Performance
Track
incentives
website
with
information
on
available
incentives;
appropriate
Federal
Register
notices;
adopted
policies;
and
other
reference
documents.

 
Communications
materials
appropriate
for
development
and
implementation
of
individual
incentives.

 
EPA
national
program
office
and
state
media
association
meetings
and
conferences.

 
Targeted
in­
reach
to
program
office
staff
(
federal
and
state)
involved
in
incentives
delivery.

Section
C.,
Incentives
Framework,
identifies
specific
points
in
the
incentives
cycle
(
identification,
development
and
implementation)
where
these
communication
activities
will
occur.

C.
Incentives
Framework
The
suggested
framework
below
is
offered
as
a
more
systematic
process
for
development
of
incentives
for
performance­
based
program
members.
Work
on
incentives
already
underway
should
continue,
and
to
the
extent
possible,
seek
to
align
with
the
suggested
process.
This
framework
is
intended
to
build
on
current
efforts.

1.
Incentives
Identification
and
Prioritization
i.
Inventory
There
should
be
an
on­
going
process
to
inventory
performance­
based
incentive
efforts
underway
at
the
federal
and
state
levels.
In
addition,
there
should
be
a
system
to
update
the
inventory
of
administrative,
policy,
and
regulatory
incentives
periodically.
Ideas
for
new
incentives
may
come
from
a
number
of
sources,
including
site
visits,
surveys,
input
from
media
offices,
etc.
To
the
greatest
extent
possible,
ideas
for
new
incentives
should
be
sought
from
current
and
potential
members
and
be
"
demand­
driven."
Incentives
should
provide
value
to
members
and
specific
business
sectors.

Some
specific
state
suggestions
from
the
state
survey
(
not
in
any
order
of
preference)
for
incentives
included:
a)
Expedited
permitting,
including
streamlined
permit
renewals
and
modifications
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
8
b)
Single
point
of
contact
c)
Reduced
(
or
customized)
reporting
and
monitoring
d)
Reduced
inspection
frequency
e)
Sector­
specific
incentives
f)
Public
recognition
g)
Electronic
application
and
reporting
h)
Support
for
financial
incentives,
including
reduced
permit
fees
and
work
with
green
investment
firms
ii.
Establish
selection
criteria
Working
from
a
list
of
possible
incentives,
there
is
a
need
to
refine
those
for
further
attention.
Possible
criteria
for
selection
of
incentives
include
selecting
an
incentive
that:
a)
Establishes
continual
environmental
improvement
as
the
performance
paradigm
aligned
with
sustainability.
Continual
improvement
includes
incremental
and
step­
wise
environmental
improvement.
b)
Creates
unique
benefits
for
members
to
enroll
or
remain
enrolled
in
performance­
based
programs.
c)
Creates
agency
value
in
achieving
core
program
goals.
d)
Empowers
collaboration
and
encourages
innovation.
e)
Reduces
burden
and
net
transaction
costs
related
to
program
participation
for
members.
f)
Assists
leadership
facilities
to
achieve
improvement
in
core
environmental
programs.

iii.
Select
incentives
Suggested
steps
for
selecting
incentives:
a)
Using
the
established
criteria,
develop
ranking
and/
or
prioritization
system
for
making
selection
among
incentives.
b)
The
state
and
federal
staff
workgroup
collaboratively
will
conduct
screening
of
incentives
meeting
the
established
criteria
and
rank
eligible
incentives
accordingly.
c)
As
appropriate,
solicit
input
by
engaging
the
public
regarding
the
screening
of
incentives.
Such
input
may
comment
on
the
process
for
ranking
and
prioritizing
incentives,
as
well
as
the
nature
of
specific
incentives.
d)
Modify
the
selection
process
as
needed,
and
select
those
priority
incentives
to
initiate
development
of,
and/
or
re­
affirm
continuing
work
on
previously
selected
incentives.
e)
Identify
the
type
or
types
of
incentives
selected
(
i.
e.,
whether
administrative,
regulatory,
etc.).

2.
Incentives
Development
Developing
an
incentive
means
generating
the
appropriate
details
that
turn
a
good
idea
into
a
realistic
feasible
opportunity.
The
details
are
critical
in
the
overall
system
because
it
can
either
continue
that
a
good
idea
is
developed,
or
terminate
a
good
idea
because
it
becomes
infeasible.
Specifically:

 
As
appropriate,
engage
interested
federal
and
state
participants
in
development
of
administrative,
policy,
and
regulatory
incentives
and
identify
opportunities
for
soliciting
public
input.
For
example,
the
lead
developer
of
an
incentive
(
such
as
a
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
9
policy)
would
go
to
the
State­
Federal
workgroup
to
assess
interest
in
implementing
the
incentive
during
the
development
stage.

 
Consider
implementation
issues
in
the
course
of
development
and
how
to
accommodate,
to
the
greatest
extent
possible,
incentives
implementation
for
Performance
Track
and
state
performance­
based
leadership
programs.

 
Develop
a
plan
with
discrete
steps
that
generates
draft
and
final
policies,
rules,
etc.
in
an
expeditious
manner
and
establishes
responsibilities
for
meeting
deadlines
for
feedback,
and
provides
opportunities
for
public
input
as
appropriate.
The
schedule
will
depend
largely
on
what
type
of
incentive
is
under
development.
For
example,
rules
typically
take
longer
to
develop
than
policy
or
administrative
incentives
and
will
continue
to
be
subject
to
the
Administrative
Procedures
Act.

 
Develop
an
implementation
plan
to
identify
technical
needs
and
allocate
appropriate
resources.

 
Request
that
States
identify
interest
in
implementing
an
incentive
during
the
development
of
a
rulemaking,
or
proposed
guidance
for
administrative
or
policy
incentives.
EPA
will
work
with
ECOS
and
trade
associations
to
encourage
adoption
of
the
incentive,
and
approaches
for
implementation
in
state
performance­
based
programs
will
be
identified.

3.
Incentives
Implementation
Comprehensive
implementation
plans
will
outline
approaches
to
support
implementation
of
the
selected
administrative,
policy
or
regulatory
incentives.
Through
the
plans,
alignment
and
coordination
between
EPA
and
States
will
help
to
ensure
that
barriers
are
identified
and
addressed
early
in
the
process.
The
plans
will
include
the
following
specific
actions:

 
Development
of
program
awareness
and
incentives
communication
packages
for
distribution
to
Regional
Performance
Track
representatives,
State
representatives,
and
program
members.

 
Coordination
with
appropriate
sector
trade
associations
to
encourage
adoption
of
the
incentive.

 
Development
of
approaches
for
implementation
in
state
performance­
based
programs.

 
Periodic
communication
with
EPA
programs,
Regions
and
states
in
both
media
and
compliance
offices.

 
Regular
updates
to
IAC
and
ECOS.

 
Development
of
processes
for
feedback
to
identify
lessons
learned
from
States
implementing
early
on,
in
order
to
expedite
the
process
for
broader
adoption
by
states
or
federal
agencies
later
on.
Ongoing
feedback
from
states
and
the
public
regarding
DRAFT
REPORT:
A
System
for
Identifying,
Developing,
and
Implementing
Incentives
for
Performance
Track
and
State
Programs.
September,
2005
10
longer­
term
implementation
issues
will
be
sought
at
Performance
Track
annual
meetings,
monthly
program
calls
with
states,
annual
program
reviews,
and
other
means.

 
Identification
of
an
EPA
Headquarters
point
of
contact
ensuring
EPA
Regional
offices
and
states
are
fully
briefed
and
are
assisting
with
implementation
efforts.
A
single
point
of
contact
in
each
Region
may
also
be
identified.

 
Tracking
of
State
implementation
efforts,
including
state
interest
and
questions
regarding
specific
incentives,
updated
records
of
members
in
Performance
Track
and
state
programs
eligible
for
each
incentive,
and
records
of
members
requesting
and
using
the
incentives.
Specific
state
and
EPA
roles
in
the
tracking
program
will
be
identified.

4.
Potential
Measures
of
an
Effective
Incentives
System
In
order
to
help
ensure
that
the
revitalized
system
is
effective
and
provides
value,
several
measures
are
proposed
that
align
with
those
stated
in
the
introduction
of
this
report.
These
measures
are
not
comprehensive,
but
provide
indicators
for
the
effectiveness
of
the
system.

 
Length
of
time
to
develop
an
incentive
(
Note:
The
length
of
time
will
vary
depending
on
whether
the
incentive
is
administrative,
policy
or
regulatory.)
 
Number
of
incentives
available
 
Number
of
states
implementing
incentives
 
Number
of
facilities
eligible
for
an
incentive
 
Number
of
facilities
using
incentives
 
Number
of
incentives
in
the
pipeline
 
Data
from
the
bi­
annual
Performance
Track
member
survey.
The
State/
Federal
workgroup
should
provide
input
into
survey
development.
Also,
with
ECOS
support,
conduct
a
survey
of
state
performance­
based
program
members
on
similar
issues.
 
Quantified
value
to
members,
States,
Federal
Agencies
such
as
cost
savings,
burden
hour
reductions,
etc.
 
Survey
EPA
headquarters,
regions,
and
States
for
input
on
continuous
improvement
of
the
incentives
process
including
timeliness,
communications,
coordination,
and
other
areas
for
how
the
system
is
working.