Asked at a recent Washington, D.C., seminar on what the next generation of environmental policy will look like, EPA Administrator Carol Browner didn't hesitate in responding: "We already are in the process of answering that question." As one precursor, she cited the joint program of the Chemical Manufacturers Assn. and the Environmental Defense Fund, an environmental group, to test the health effects of 3,000 of the most widely used chemicals. The program is significant, she said, because it is voluntary. Since EPA doesn't have authority to require such testing, it worked with the two groups in accomplishing it within the private sector. As another, she pointed to the market-based emissions-credit trading program under the Clean Air Act that has created better-than-expected reductions in acid-rain pollutants. "The program has worked," she said, "because EPA got out of the way." There'll be more use of the concept, she predicted. Moreover, Browner pointed out that some 6,000 companies are working with EPA through a variety of voluntary partnership programs -- two of the best-known are Energy Star and Climate Wise -- to reduce energy use and improve the environment. In 1997 alone, the programs resulted in operational savings of more than $1.6 billion for participants and prevented the release of some 79 million metric tons of greenhouse gases. However, the most high-profile of EPA's partnership efforts -- the four-year old Project XL (for Excellence and Leadership) to test a performance-based regulatory approach -- hasn't reached its hoped-for potential. Under the program, which was launched with considerable ballyhoo by the White House, industrial facilities are invited to propose pilot projects to test alternative strategies for meeting environmental standards; if the firms can demonstrate that these strategies will result in "superior environmental performance," EPA will waive certain rules. So far, though, only 10 projects are in the implementation stage. "We're not satisfied we've lived up to our goal," says Jay Bensorado, acting associate administrator of EPA's Office of Reinvention. "But more than 20 projects are in the pipeline and between 20 and 30 others are in the preliminary stage. More final agreements will be announced soon." In late March the agency announced changes, developed in conjunction with Union Carbide Corp. and Dow Chemical Co., to streamline the XL process and, in Bensorado's words, "make it more user-friendly."