A number of regulatory innovation efforts were initiated in the mid-1990s in response to a growing consensus that the existing regulatory system, by itself, was no longer sufficient to address new demands or environmental dilemmas unforeseen 30 years ago. Chief among the new challenges are the ever-increasing universe of regulated entities expanding government agencies' workloads and the vexing problems of nonpoint and areawide sources of pollution. The Minnesota Center for Environmental Advocacy (MCEA)¹ launched its "Regulatory Innovations Program" to participate in and analyze the effectiveness of experimental regulatory approaches aimed to deliver better environmental protection more efficiently. In particular, the MCEA set out to determine the merit of "Project XL"—a then-novel U.S. Environmental Protection Agency (EPA) program which had once been described as the "crown jewel" of the Clinton Administration's March 1995 policy report, Reinventing Environmental Regulation.²

EPA designed Project XL, short for eXcellence and Leadership, to provide regulatory flexibility in exchange for industry's commitment to achieve better environmental results than would have occurred otherwise from full compliance with all required regulations. On the same day that President William J. Clinton announced the first eight participants in Project XL, a number of environmental and public interest groups released a joint statement that included a set of key features deemed necessary to the success of Project XL. Chief among them were the requirements for achieving superior environmental results and stakeholder involvement by the local affected communities, workers, and other interested groups.³ The MCEA was among the many advocacy groups, ranging from large national organizations to small state groups, who were guardedly optimistic about EPA's new program.⁴