credits were returned to the state of Illinois for air quality improvement. (See Appendix C for more details on this project.)

These examples are fine instances of ways innovative thinking can result in win-win situations for local governmental groups, as well as the general public.

Beyond Compliance Legislation:

The NAPA report encourages legislation which would provide flexibility and accountability to the private sector and local governments if they can demonstrate that they have gone beyond compliance. Last year, 3M proposed such legislation because we believe it would provide greater environmental benefits at a lower cost than allowed under current regulation. This "Beyond Compliance" proposal allows more flexibility for companies that meet the criteria. It uses existing statutes as a foundation.

Under the proposed legislation, facilities must prove that their air or water emissions are significantly less than the aggregate allowable emissions under the existing statutory regulatory scheme, or, that they can reach a comparable reduction and be eligible for the benefits of the program.

Under this proposal, companies that meet these criteria can obtain permits/contracts with state agencies, and there would be no need for EPA approval or involvement.

Change is critical if American manufacturing is to remain competitive. This proposed legislation would help companies reduce costs, reduce the time associated with complying with regulations and provide more flexibility with significant environmental benefit. 3M believes that legislation like this proposal would provide the benefits of significant pollution prevention while reducing the administrative burdens.

The proposal requires participating facilities to undergo annual compliance audits, conducted in accordance with a detailed compliance audit plan. The audit would reveal if the facility meets the terms and conditions of the special permit which would be granted by the state, not by EPA.

Permit applicants would also be required to develop an emission tracking system that demonstrates compliance with the reduced limits. The participating facility must agree to

permanently cap pollutant releases at the reduced level. It must also provide for early and meaningful participation by local communities.

After consulting other companies, we are now suggesting additions to this Beyond Compliance proposal. We believe that businesses that do not meet this criteria, but do meet all the state requirements, should be allowed to obtain a contract/permit at the state level with the proviso that EPA could look at the contract. For those companies that want to participate and wish to reduce one type of release and raise another, or balance the requirements, EPA would need to approve the permit.

These corollaries to the original proposal are recommended, so that more companies, including many smaller ones, could take advantage of these changes.

All of these proposals require Congressional approval. If approved, the authority to implement the Beyond Compliance permit program would rest with the states.

While the legislation was drafted by 3M, it has the support of many other U.S. corporations. 3M took this initial step because it was another opportunity to apply innovation to environmental issues. If it has worked for us at a local level, we believe it can be successful to the nation as a whole.

With these changes in the current system, 3M believes the nation can reduce the cost of environmental improvements while continuing to make good progress.

Reinventing Environmental Regulations/Project XL:

In addition to supporting the NAPA report and Beyond Compliance Legislation, 3M also supports the President's report, "Reinventing Environmental Regulations," issued on March 16. Like the earlier documents, this report emphasizes that further progress must be made in the environmental arena, and that this progress is likely only if the current system is improved.

It recommends that the adversarial approach between EPA and industry be eliminated so opportunities for creative solutions to the nation's environmental challenges can emerge. Like the President, we believe this will occur only when decision-making is shared by businesses, local and state governments, local communities and their citizens, as well as EPA.

While we favor the 25 High Priority Action items of the President's report, we are particularly supportive of the 13th recommendation, Project XL, excellence and leadership. This project gives responsible companies more flexibility while demanding that the alternative strategies they propose improve environmental performance.

3M is already developing several innovative proposals that would fit under this new program, and we are anxious to proceed with those projects as soon as possible. Many of these new 3M proposals are similar to the ones 3M instituted in Minnesota, California and Illinois. Those projects were discussed earlier in this document.

Recommendation:

We are aware that such significant steps as those outlined in the NAPA report need to be carefully considered before enactment. Now that the concept has been proposed, we are currently in discussion with the appropriate legislators and decision-makers. Once stakeholder acceptance has been obtained, we recommend a pilot program with limited testing of the basic concepts.

Successful testing of the project will require the innovation of industry, coupled with that from state and local government. It will require that industry work closely with the governmental bodies involved and that government encourage innovative solutions. This is best done at a lower level.

In the end, we are confident that this careful, considered approach will lead to a new regulatory path. In turn, this will result in greater environmental benefits for all our citizens.

Appendix A

3M St. Paul Plant: Flexible Permit

The 3M St. Paul plant, on the East Side of the city of St. Paul, was built more than 50 years ago

as 3M's original tape facility. Much of the production equipment is 30 to 40 years old.

The continued viability of the plant, which employs nearly 300 people and is located in a distressed area of the city, was under discussion in the early 1990s. Manufacturing costs were high, and obtaining permits from the Minnesota Pollution Control Agency (MPCA) for product requalification would take too long. Minor upgrades, competed in the recent past, had resulted in

cost overruns because, when one modification was made, it soon became apparent that others were needed, since the old equipment wouldn't work with the new modifications.

The plant produced low volume specialty tapes and as many as 250 different tape products in a given year. Many of these products had low profit margins and were in danger of being phased out unless some changes were made. 3M was concerned about the plant and its employees, but had to face some hard financial facts.

Eventually, 3M determined that the only way to maintain viability of the facility was to consider a coater rationalization project. (Coaters are huge, critical pieces of equipment which 3M uses to coat one material on another; in this case, to coat abrasive on backing.) The only apparent solution to the dilemma was to provide quick changeovers from one product to another so that coater loadings could be balanced. The plan called for renewing coating equipment and installing some new coating technologies over the next three to five years.

However, there were environmental challenges that had to be faced for each of the necessary modifications. Under then current law, the MPCA would have required a permit for each of the modifications. 3M estimated that 10-15 permits would be required and that each permit would take 6-12 months of processing by MPCA. This posed a significant obstacle to the proposed project. An innovative solution was necessary for the plant to continue operating.

3M wanted a consolidated permit so that all of the necessary changes could occur on schedule, and the plant would have the flexibility it needed to manufacture any product on any coater on any day. 3M approached MPCA and the U.S. EPA about finding a way to reduce or eliminate permitting so that these delays could be avoided and the plant could remain viable.

3M proposed a permit that would allow installation of the new equipment, under the current emission limitations, and a mix and match of production requirements between the individual coaters. In justifying this permit, 3M pointed out that the facility had voluntarily reduced its VOC emissions by more than 60 percent below statutory requirements, after installation of pollution control equipment in 1988. The company agreed to cap its emissions at these significantly reduced levels if a flexible permit could be obtained.

3M worked with the local community and MPCA to develop details of a flexible permit. Local neighborhood groups met to discuss the basis of the cap and what it would mean to the area. In addition, 3M asked for residents' comments and concerns about this type of permit. Some substantive changes to the permit were made because of this input. Business and civic organizations in the area were regularly updated and the details of the permit were published in a 3M publication that is regularly sent to 10,000 area residents.

Because of this extensive communication effort, there was no substantive public comment when the permit was introduced. The innovative permit was issued March 4, 1993, nearly two years after the first meeting between 3M, MPCA and the U.S. EPA.

The plant has since been upgraded and 3M is confident that it will continue to be a viable facility for many years to come. Emissions of VOC to the community continue to be well below legal limits, and MPCA did not have to spend valuable resources processing numerous permit applications.

As Charles Williams, commissioner of MPCA, said at the press conference announcing the innovative permit, "This is a major break through. 3M volunteered to reduce its emissions in exchange for flexibility for their manufacturing processes. You couldn't find a better example where a willingness to work together has resulted in everybody winning."

Appendix B

3M Camarillo, California: Sale of Emissions Credits

The 3M plant in Camarillo, Calif., manufactures data cartridges for the computer industry. The plant opened more than 30 years ago and employs more than 600 people.

During manufacturing of these data cartridges, a very thin coating of magnetic media must be applied onto the plastic backing. Organic solvents (Volatile Organic Compounds or VOCs) must be used during manufacturing to meet the customers' demands for high quality tape.

If emitted into the atmosphere, these VOCs contribute to the formation of smog, a critical concern in this area of southern California. Ventura County, where the plant is located, has already been classified as a Severe Ozone Non-Attainment Area. As a result, all facilities which