As Governor Don Sundquist's Administration transitions toward a second four-year term, the Tennessee Department of Environment & Conservation (TDEC) is moving from planning to implementation of its program to "reengineer" Tennessee's environmental regulatory programs. These changes may have significant impacts on the regulated community in areas ranging from permitting to enforcement to regulatory fee payments. This article explains the background of TDEC's ongoing reengineering program, explains its significant elements, and suggests the impacts it may have on the regulated community.
What Is Reengineering?
On March 21, 1997, TDEC Commissioner Milton H. Hamilton, Jr. announced a "bold new initiative to strengthen environmental protection and provide better customer service." TDEC's reengineering effort involves two basic changes to the State's administration and enforcement of environmental programs:
Historical Background
TDEC's current reengineering effort can be traced to April 1996, when then-TDEC Commissioner Justin P. Wilson appointed an external, 8-member "Steering Committee on Environmental Permitting" (including Mike Pearigen of Waller Lansden's Environmental Group), subsequently expanded to 13 members, to provide input and oversight in streamlining (simplifying and expediting) TDEC's environmental permitting processes. Among the External Steering Committee's initial activities was the formulation of the following "Guiding Principles for Improved Environmental Permitting":
The External Steering Committee also assisted with the review and finalization of the Tennessee Industry Permits Handbook, which became available on the internet at TDEC's web page (http://www.state.tn.us/environment/permits/index.html)on January 1, 1997 and has been available from TDEC in printed form since May 1997. At the External Steering Committee's request, TDEC undertook to inventory and evaluate the type of permits it administers. Such an inventory had never previously been made and it was determined that, as of 1997, TDEC issued approximately 47 different types of permits. In addition, input from the Tennessee Association of Business (TAB) was solicited through a TAB members' survey regarding permitting problems encountered by the regulated community and requesting recommendations for improvement.
Commissioner Hamilton's March 1997 public announcement of the reengineering effort, approximately one year after the External Steering Committee was established, represented an expansion of TDEC's initial focus on permit simplification. Using EPA-Region IV grant monies, TDEC contracted with AT Kearney, Inc., a private management consulting firm, to analyze and redesign the agency's "core business processes." During the ensuing six months, the primary role of the External Steering Committee was to serve as a stakeholders' sounding board; after September 1997, the External Steering Committee ceased to function and its role as a forum for stakeholder input was replaced with single-issue stakeholders' meetings. As the year progressed, the evaluation and design effort shifted from AT Kearney to internal TDEC reengineering "teams" in the areas of "single point of entry," permit simplification, enforcement, information technology, and environmental fees.
On-going decisions on specific components of the reengineering effort are being made by an internal TDEC Steering Committee which includes the following officials: Commissioner Milton H. Hamilton, Jr.; Deputy Commissioner Rick Sinclair; Assistant Commissioner Wayne Scharber; Director of Administrative Services Chuck Arnold; Director of Support Services Janey Blackburn; and Director of Human Resources Tom Callery. TDEC has established an Office of Reengineering to administer the overall reengineering effort, with veteran TDEC staffer Wayne Gregory serving as its Director.
The Outline Of A "Reengineered" TDEC
TDEC's reengineering effort is a work-in-progress. Following is an overall summary of the reengineering program to date:
Possible Effects of Reengineering
As with any corporate reorganization, TDEC's reengineering effort has the potential to create uncertainty in the near term, both for the regulated community and inside TDEC itself. Changing both TDEC's decision making structure and various bureaucratic processes may result in permitting delays, confusion as to lines of communication between the agency and the regulated community, and blurring of the chain of command within TDEC.
For the longer term, TDEC's decentralization may well increase transaction costs for companies with multiple facilities around the state or which conduct regulated activities on a multi-region or statewide basis. For such businesses, many of the governmental decisions which impact their operations will now be made in different EACs around the state rather than by TDEC Central Office personnel in Nashville. On the other hand, some businesses may welcome the shift from decision making in Nashville to TDEC personnel in closer geographic proximity and who may more familiar with, or have more opportunity to become familiar with, a particular business' operations than Central Office personnel.
Concerns have been expressed that a decentralized framework could result in a lack of uniformity in departmental policies, or in the application of those policies, across the state. TDEC's position is that the SOPs that are part of the reengineering effort will provide for uniformity in the application of its regulations by the EACs across the state. Perhaps of greater concern is the extent that decentralization of personnel and staff changes involving senior and/or veteran career officials at TDEC's Central Office will negatively impact TDEC's "institutional memory."
The push by TDEC for more public involvement in permitting and rulemaking activities may benefit the regulated community if it results in permits that are less likely to be challenged once issued. However, a 1997 Davidson County Chancery Court ruling in a case involving a private individual's challenge to an Aquatic Resource Alteration Permit (ARAP) issued by TDEC has created uncertainty as to whether the TDEC permit "shields" a permittee from allegations that actions taken in conformance with the permit violate the law. Unfortunately, TDEC's reengineering effort, while expanding public participation requirements and "community outreach" efforts in environmental permitting, has virtually ignored issues regarding the finality and legal status of TDEC permits which are issued at the conclusion of the often lengthy, expensive, and time-consuming permitting process. In doing so, it has missed the opportunity to bring some certainty to a confused and contentious issue.
Programmatic changes will affect each media-specific TDEC Division. The Water Pollution Control Division is discussed here by way of example. Tennessee is a water-rich state and has literally thousands of water features that constitute "waters of the state" regulated by the Tennessee Water Quality Act of 1977. Many activities directly impact waters of the state and are subject to permitting requirements under TDEC's ARAP or NPDES requirements and/or federal laws.
In August of this year, TDEC's Reengineering Steering Committee met and approved reengineering changes to the existing ARAP Program as follows:
In addition, although not as a direct result of the reengineering project, the staff of TDEC's Division of Water Pollution Control submitted an informal staff rulemaking proposal to the Tennessee Water Quality Control Board at its September meeting for the development of comprehensive rules for the ARAP Program. A formal rulemaking proposal will be presented to the Board at its November meeting and it is expected that the Board will vote at that time whether or not to proceed with the rulemaking process. Coming on the heels of reengineering changes to the ARAP Program, this rulemaking initiative will likely be closely watched by environmental and regulated interests.
TDEC's reengineering effort is an ambitious program which will dramatically impact TDEC. It will doubtless receive considerable attention from the public, environmental groups, the regulated community, and the media as its implementation proceeds and as stakeholders measure whether it achieves its twin goals of improved environmental protection and "better customer service." The time is now for those companies who are subject to regulation by TDEC to evaluate how the reengineered environmental agency will impact their business operations.
What Is Reengineering?
On March 21, 1997, TDEC Commissioner Milton H. Hamilton, Jr. announced a "bold new initiative to strengthen environmental protection and provide better customer service." TDEC's reengineering effort involves two basic changes to the State's administration and enforcement of environmental programs:
- A structural reorganization of TDEC from its historical emphasis on centralized bureaucracy and decision making to a new emphasis on decentralized bureaucracy and decision making.
- Procedural changes in the way TDEC permits regulated entities, solicits public involvement in permitting and rulemaking activities, and enforces environmental statutes and regulations.
Certification as an Environmental Law Specialist is not currently available in Tennessee.
Historical Background
TDEC's current reengineering effort can be traced to April 1996, when then-TDEC Commissioner Justin P. Wilson appointed an external, 8-member "Steering Committee on Environmental Permitting" (including Mike Pearigen of Waller Lansden's Environmental Group), subsequently expanded to 13 members, to provide input and oversight in streamlining (simplifying and expediting) TDEC's environmental permitting processes. Among the External Steering Committee's initial activities was the formulation of the following "Guiding Principles for Improved Environmental Permitting":
- Exceed current levels of environmental protection;
- Reduce burden of unnecessary permitting and record keeping requirements on the regulated public;
- Exceed current level of pubic participation;
- Reduce burden on regulatory agency resources while improving regulatory agency efficiency; and
- Make changes that benefit the Department, public and the regulated parties.
The External Steering Committee also assisted with the review and finalization of the Tennessee Industry Permits Handbook, which became available on the internet at TDEC's web page (http://www.state.tn.us/environment/permits/index.html)on January 1, 1997 and has been available from TDEC in printed form since May 1997. At the External Steering Committee's request, TDEC undertook to inventory and evaluate the type of permits it administers. Such an inventory had never previously been made and it was determined that, as of 1997, TDEC issued approximately 47 different types of permits. In addition, input from the Tennessee Association of Business (TAB) was solicited through a TAB members' survey regarding permitting problems encountered by the regulated community and requesting recommendations for improvement.
Commissioner Hamilton's March 1997 public announcement of the reengineering effort, approximately one year after the External Steering Committee was established, represented an expansion of TDEC's initial focus on permit simplification. Using EPA-Region IV grant monies, TDEC contracted with AT Kearney, Inc., a private management consulting firm, to analyze and redesign the agency's "core business processes." During the ensuing six months, the primary role of the External Steering Committee was to serve as a stakeholders' sounding board; after September 1997, the External Steering Committee ceased to function and its role as a forum for stakeholder input was replaced with single-issue stakeholders' meetings. As the year progressed, the evaluation and design effort shifted from AT Kearney to internal TDEC reengineering "teams" in the areas of "single point of entry," permit simplification, enforcement, information technology, and environmental fees.
On-going decisions on specific components of the reengineering effort are being made by an internal TDEC Steering Committee which includes the following officials: Commissioner Milton H. Hamilton, Jr.; Deputy Commissioner Rick Sinclair; Assistant Commissioner Wayne Scharber; Director of Administrative Services Chuck Arnold; Director of Support Services Janey Blackburn; and Director of Human Resources Tom Callery. TDEC has established an Office of Reengineering to administer the overall reengineering effort, with veteran TDEC staffer Wayne Gregory serving as its Director.
The Outline Of A "Reengineered" TDEC
TDEC's reengineering effort is a work-in-progress. Following is an overall summary of the reengineering program to date:
- Permitting and enforcement will largely be shifted from TDEC's Central Office to its regional Environmental Assistance Centers (EACs), formerly called Field Offices. Each EAC will be headed by a Manager. At this time, all EAC Managers have been appointed, some from within the EAC office that they will manage. Others have been transferred from TDEC Central Office positions to the EAC Manager positions. For example, Nashville EAC Manager Chuck Head was formerly Director of TDEC's Petroleum Underground Storage Tanks Division and Columbia EAC Manager Frank Victory was formerly a ranking official with TDEC's Solid Waste Management Division. Other personnel changes can be expected as TDEC moves decision making, permit processing, investigatory, and enforcement activities that were formerly performed by its Central Office to the EACs.
- Concurrently with its decentralization of decision making and other activities to the EACs, TDEC is moving to a "single point of entry" concept. Permit applicants, citizens, and members of the regulated community seeking information, persons wishing to make a complaint, etc., will initially interface with EAC "clearinghouse" personnel rather than media-specific Division officials.
- Permitting is to be streamlined by: (i) eliminating some permits altogether; (ii) replacing other permits with "certifications of compliance"; (iii) developing general permits where possible and thereby decreasing the number of individual permits; and (iv) developing Standard Operating Procedures (SOPs) for permits. Thus far, 34 SOPs have been issued by TDEC and more are under development.
- Public participation is to be increased and maximized in permitting and rulemaking processes by: (i) increased and standardized public notices; (ii) development of public outreach and education programs; and (iii) other means still under consideration.
- Enforcement is to be improved through: (i) "certified inspector" training programs; (ii) authority given to certified inspectors to issue "field citations"; (iii) development of standard enforcement documents, SOPs for enforcement, and civil penalty calculation matrices; and (iv) encouragement of alternate dispute resolution.
- Environmental fee modifications are still under study, including: (i) tying fees to emissions to provide an incentive to minimize emissions; (ii) use of a single consolidated invoice for facilities/entities which pay multiple fees; and (iii) development of an SOP for fee collection activities.
- Beginning in November 1998 on a pilot basis in the Memphis EAC, and in all other EACs by July 1999, implementation of a permit coordination approach to permitting of new facilities that require more than one permit. Each EAC will be staffed with Customer Services Assistants, which are administrative positions, and Environmental Coordinators, which are technical positions, who will be responsible for processing such multi-disciplinary permits.
- A department-wide planning process has been implemented which is to result in a 4-Year Strategic Plan, to be followed by Annual Strategic Plans.
Possible Effects of Reengineering
As with any corporate reorganization, TDEC's reengineering effort has the potential to create uncertainty in the near term, both for the regulated community and inside TDEC itself. Changing both TDEC's decision making structure and various bureaucratic processes may result in permitting delays, confusion as to lines of communication between the agency and the regulated community, and blurring of the chain of command within TDEC.
For the longer term, TDEC's decentralization may well increase transaction costs for companies with multiple facilities around the state or which conduct regulated activities on a multi-region or statewide basis. For such businesses, many of the governmental decisions which impact their operations will now be made in different EACs around the state rather than by TDEC Central Office personnel in Nashville. On the other hand, some businesses may welcome the shift from decision making in Nashville to TDEC personnel in closer geographic proximity and who may more familiar with, or have more opportunity to become familiar with, a particular business' operations than Central Office personnel.
Concerns have been expressed that a decentralized framework could result in a lack of uniformity in departmental policies, or in the application of those policies, across the state. TDEC's position is that the SOPs that are part of the reengineering effort will provide for uniformity in the application of its regulations by the EACs across the state. Perhaps of greater concern is the extent that decentralization of personnel and staff changes involving senior and/or veteran career officials at TDEC's Central Office will negatively impact TDEC's "institutional memory."
The push by TDEC for more public involvement in permitting and rulemaking activities may benefit the regulated community if it results in permits that are less likely to be challenged once issued. However, a 1997 Davidson County Chancery Court ruling in a case involving a private individual's challenge to an Aquatic Resource Alteration Permit (ARAP) issued by TDEC has created uncertainty as to whether the TDEC permit "shields" a permittee from allegations that actions taken in conformance with the permit violate the law. Unfortunately, TDEC's reengineering effort, while expanding public participation requirements and "community outreach" efforts in environmental permitting, has virtually ignored issues regarding the finality and legal status of TDEC permits which are issued at the conclusion of the often lengthy, expensive, and time-consuming permitting process. In doing so, it has missed the opportunity to bring some certainty to a confused and contentious issue.
Programmatic changes will affect each media-specific TDEC Division. The Water Pollution Control Division is discussed here by way of example. Tennessee is a water-rich state and has literally thousands of water features that constitute "waters of the state" regulated by the Tennessee Water Quality Act of 1977. Many activities directly impact waters of the state and are subject to permitting requirements under TDEC's ARAP or NPDES requirements and/or federal laws.
In August of this year, TDEC's Reengineering Steering Committee met and approved reengineering changes to the existing ARAP Program as follows:
- Revising endangered species review process
- Development of general ARAPs for minor dredging activities, maintenance or repair of existing structures and facilities, wetlands restoration and enhancement, alteration of springs for domestic water supply or livestock watering, and surveying and geotechnical exploration.
- Decentralization of ARAP permitting process to the EACs
- Delegation to local government of all ARAP permitting activities in Shelby County by means of a general permit for Shelby County activities
In addition, although not as a direct result of the reengineering project, the staff of TDEC's Division of Water Pollution Control submitted an informal staff rulemaking proposal to the Tennessee Water Quality Control Board at its September meeting for the development of comprehensive rules for the ARAP Program. A formal rulemaking proposal will be presented to the Board at its November meeting and it is expected that the Board will vote at that time whether or not to proceed with the rulemaking process. Coming on the heels of reengineering changes to the ARAP Program, this rulemaking initiative will likely be closely watched by environmental and regulated interests.
TDEC's reengineering effort is an ambitious program which will dramatically impact TDEC. It will doubtless receive considerable attention from the public, environmental groups, the regulated community, and the media as its implementation proceeds and as stakeholders measure whether it achieves its twin goals of improved environmental protection and "better customer service." The time is now for those companies who are subject to regulation by TDEC to evaluate how the reengineered environmental agency will impact their business operations.