U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL

Catalyst for Improving the Environment


## Evaluation Report



# EPA Should Revise Outdated or Inconsistent EPA-State Clean Water Act Memoranda of Agreement

Report No. 10-P-0224

September 14, 2010Report Contributors: Dan Engelberg Kathlene Butler Charles Brunton Anthony Chirigotis Julie Hamann Melba Reed

Abbreviations

CFR Code of Federal Regulations CWA Clean Water Act EPA U.S. Environmental Protection Agency GAO U.S. Government Accountability Office MOA Memorandum of Agreement NPDES National Pollutant Discharge Elimination System OECA Office of Enforcement and Compliance Assurance OIG Office of Inspector General OW Office of WaterU.S. Environmental Protection Agency 10-P-0224 September 14, 2010 Office of Inspector General 

# At a Glance

Catalyst for Improving the Environment

Why We Did This Review
This review is part of a series the Office of Inspector General is conducting of U.S. Environmental Protection Agency (EPA) oversight of State enforcement programs. We assessed whether EPA’s memoranda of agreement (MOAs) with States related to the National Pollutant Discharge Elimination System (NPDES)program impede consistent EPAState enforcement and to what degree MOAs comply with federal requirements under the Clean Water Act (CWA).

Background

The CWA allows EPA to authorize States to operate the NPDES program if States meet certain criteria. States cannot operate NPDES programs on behalf of EPA without an authorizing MOA. MOAs should establish the foundation for EPA management control and oversight, ensure that CWA goals are being met, and ensure national consistency of State NPDES programs.

For further information, contact our Office of Congressional, Public Affairs and Management at (202) 566-2391.

To view the full report, click on the following link: www.epa.gov/oig/reports/2010/ 20100914-10-P-0224.pdf 

## EPA Should Revise Outdated or Inconsistent EPA-State Clean Water Act Memoranda of Agreement

What We Found

NPDES MOAs between EPA and States do not ensure Agency management control and effective oversight over a national program administered by States that is capable of providing equal protection to all Americans. EPA Headquarters does not hold EPA regional or State offices accountable for updating their MOAs when necessary and relies on other planning and management mechanisms to exercise control over State programs. However, MOAs are critical because they ar e the common denominator for Stateauthorized programs and should represe nt a common baseline. Outdated MOAs or MOAs that are not adhered to reduce EPA’s ability to maintain a uniform program across States that meet s the goals of CWA sections 101 and 402. An effective national program mu st maintain consistent management control and oversight of State programs.

What We Recommend

We recommend that EPA ensure that all NPDES MOAs contain essential elements for a nationally consistent enforcement program, including CWA, Code of Federal Regulations, and Stat e Review Framework criteria. We recommend that EPA develop and provide a national template and/or guidance for a model MOA; direct EPA regions to revise outdated or inconsistent MOAs to meet the national template and standards; and establish a process for periodic review and revision of MOAs, including when the CWA or Code of Federal Regulations are revised or when State programs change. Finally, we recommend that EPA establish a national, public clearinghouse of all current MOAs so that EPA, States, and the public have access to these documents.

EPA generally agreed with our reco mmendations, saying it would coordinate assessment and revision of NPDES MOAs with implementation of the CWA Action Plan. Three recommendations are open and one recommendation is listed as undecided. In its final respon se to this report, EPA should provide estimated or actual completion dates for all recommendations.UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL

September 14, 2010

MEMORANDUM

SUBJECT: EPA Should Revise Outdated or Inconsistent EPA-State Clean Water Act Memoranda of Agreement Report No. 10-P-0224

FROM: Arthur A. Elkins, Jr. Inspector General

TO: Bob Perciasepe Deputy Administrator

This is our report on the subject evaluation cond ucted by the Office of Inspector General (OIG) of the U.S. Environmental Protec tion Agency (EPA). This report contains findings that describe the problems the OIG has identified and correc tive actions the OIG recommends. This report represents the opinion of the OIG and does not necessarily re present the final EPA position. Final determinations on matters in this report will be made by EP A managers in accordance with established audit reso lution procedures.

The estimated cost of this report – calculat ed by multiplying the project’s staff days by the applicable daily full cost billing rates in e ffect at the time and adding travel costs – is $660,519.

Action Required

In accordance with EPA Manual 2750, you are require d to provide a written response to this report within 90 calendar days. You should incl ude a corrective actions plan for agreed-upon actions, including milestone dates. Your respon se will be posted on the OIG’s public Website, along with our comments on your response. Y our response should be provided in an Adobe PDF file that complies with th e accessibility requirements of s ection 508 of the Rehabilitation Act of 1973, as amended. If your response contains data that you do not want to be released to the public, you should identify the data for redaction. We have no objections to the further release of this report to the public. This report will be available at http://www.epa.gov/oig

. If you or your staff have any questions regard ing this report, please contact Wade Najjum at (202) 566-0832 or najjum.wade@epa.gov , or Dan Engelberg at (202) 566-0830 or engelberg.dan@epa.gov

.EPA Should Revise Outdated or Inconsistent 10-P-0224 EPA-State Clean Water Act Memoranda of Agreement



# Table of Contents

Chapters

1 Introduction

........................................................................................................ 1

Purpose

....................................................................................................... 1 Background

................................................................................................. 1 Scope and Methodology

.............................................................................. 4

2 Outdated or I nconsistent MOAs Impede Enforcement

................................... 6

MOAs Are Missing Key Regulatory Requirements

...................................... 6 Most MOAs Are Outdated

........................................................................... 8 MOAs Are Inconsistent across Regions and States

.................................... 11 Some MOAs Contain Provisions that Are Inconsistent with the CWA

......... 12 Some EPA Regions Do Not Use MOAs to Manage State Enforcement Programs

........................................................................... 12 EPA Could Establish a National Baseline for CWA Implementation with an MOA Template

........................................................................... 14 Conclusion

................................................................................................... 15 Recommendations

...................................................................................... 15 Agency Response and OIG Comment

........................................................ 16

Status of Recommendations and Potential Monetary Benefits

.............................. 17



## Appendices

A List of CFR Criteria for MOA Assessment

....................................................... 18

B Detailed Methodology

........................................................................................ 21

C OIG Analysis of MOAs by CFR Section

........................................................... 24

D Agency Response and OIG Comment

............................................................. 26

E Distribution

........................................................................................................ 3010-P-0224



# Chapter 1
Introduction

Purpose

We sought to determine the degree to which Clean Water Act (CWA) National Pollutant Discharge Elimination System (NPDES) memoranda of agreement (MOAs) between the U.S. Environmental Protection Agency (EPA) and States comply with federal requirements, and whether MOAs impede EPA’s ability to exercise consistent management contro ls and oversight of State enforcement activities. Past reviews by the EPA Offi ce of Inspector Genera l (OIG) and others identified widespread enforcement probl ems. Although there are many causes for this common pattern of noncompliance, the EPA Office of Enforcement and Compliance Assurance (OECA) identifie d poor quality MOAs between EPA and States as one impediment to consistent enforcement. OECA requested that the EPA OIG evaluate the issue. This evaluati on is part of a series of OIG reviews of EPA oversight of State enforcement programs.



### Background

EPA is the responsible agency for implementing the 1972 CWA. Congress designed the CWA to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters. As part of the CWA, the NPDES program regulates pollution to waterbodies. Th e CWA allows EPA to authorize States, tribes, and territories to operate the NP DES program if these entities demonstrate they have the authority and capability to run th e program, and if their environmental enforcement authorities are at least as stringent as federal law. Both the U.S. Government Accountability Office (GAO) and the EPA OIG have frequently reported on problems w ith EPA-State enforcement.

MOAs, which are part of the States’ a pplication for NPDES authorization, are required, foundational documents between EPA and States. They define baselines and set collaborative expectations fo r program characteristics, permitting, monitoring, inspections, and enforcement, and are required by a unique set of federal regulations. Title 40 Code of Federal Regulations (CFR) Part 123, designed for the NPDES program, sets out MOAs as an instrument for ensuring that EPA and States adhere to the CWA. EPA’s Deputy Administrator has overall authority for directing regiona l offices to revise MOAs.

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CWA Enforcement Is Principally Implemented by States, but EPA Retains Authority

EPA has a vital role in ensuring that States, which largely implement the CWA, implement nationally consistent progra ms that offer equal protection from pollution to all Americans. EPA has give n NPDES authority to 46 States and the U.S. Virgin Islands, beginning with Ca lifornia in May 1973 a nd most recently giving authority to Alaska in October 2008. As envisioned by Congress in the CWA, States form the first line of en vironmental defense: States take the majority of inspection and enforcement act ions in the programs they implement. However, EPA does not forfeit its authorit y to independently review and overrule permits, conduct compliance inspections, i ssue violations, or take enforcement actions when it authorizes a State program . EPA remains responsible for ensuring that States operate NPDES programs in a manner that achieves national enforcement goals, protects public health and the environment, and is consistent with the CWA and the CFR.

EPA is the primary entity that can en sure national consistency. National consistency offers equal pr otection from pollution to all Americans, and is also vital to establishing a level playing field for regulated facilities so that no State has an economic advantage.

Authorization MOAs Establis h the Foundation for Consistent Management Control

Office of Management and Budget guidance directs government agencies to operate programs using adequate manage ment controls to ensure effective program operation. Management contro ls involve planni ng, oversight, and reporting systems. As part of a system of national management controls, the CFR requires authorization MOAs between EP A and every State operating an NPDES enforcement program. NPDES authoriza tion MOAs (hereafter referred to as MOAs) must contain and meet relevant re gulatory provisions. The CFR outlines a national baseline and expect ations for the roles and responsibilities of EPA and States for the NPDES program. MO As provide a foundation for national consistency for NPDES program enforcem ent. For example, MOAs must not contain any provisions restri cting EPA’s statutory overs ight responsibility. In addition, renegotiation of MOAs can occur at any time to accommodate changes in federal and State laws and EPA-Stat e agreements. The CFR states that no EPA-State agreement may override the MOA and requires the MOA, the annual program grant, and other EPA-State ag reements should be consistent. See Appendix A for a list of CFR criteria for MOAs.

Although the foundations of the EPA-Stat e enforcement relationship are built upon authorization agreements and th e accompanying MOAs, EPA and States also use other annual and multiyear planning tools to set short-term expectations, establish measures, and set performance goals. The annual and multiyear

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planning documents used by EPA regions a nd States vary by region and by State and are not required by regulation. A se nior EPA official described the EPAState NPDES relationship as a “layer cake, ” with several layers of documents and agreements. The official said that EP A plans to address the multilayered EPAState structure by simplifying the State-EPA enforcement process and accompanying document requirements.

EPA’s Enforcement Performance Has Been Questioned

In 2005, EPA initiated the State Review Framework, a formal process using standardized criteria, collaboratively de veloped by OECA, EPA regions, States, and the Environmental Council of the St ates, to gauge State performance in compliance assurance and enforcement. EPA wanted to increase its oversight inspections and other direct actions in the States. EPA reviewed State data, inspection and enforcement files, negotiated commitments, management discussions with the State, and other ex isting assessments. Through its reviews, EPA identified four programmatic defici encies in State enforcement: data quality, identification of significant violations, the timeliness of enforcement actions, and penalties.

In October 2009, the EPA Administrator te stified before the House Transportation and Infrastructure Committee that EPA was falling short of expectations for effective and fair enforcement of the CWA:

Data available to EPA shows that, in many parts of the country, the level of significant non-compliance with permitting requirements is unacceptably high and the level of enforcement activity is unacceptably low. For ex ample, one out of every four of the largest Clean Water Act dischargers had significant violations in 2008. Many of thes e violations were serious effluent violations or failure to comply with enforcement orders. The government’s enforcement res ponse to these violations is uneven across the country. For exam ple, a violation in one State results in the assessment of manda tory minimum penalties, while in another State, no enforcement action is taken for the same violation. This situation create s a competitive disadvantage for States that are enforcing the law. We need to change this. Strong and fair compliance and enforcem ent across the country is vital to establishing a level playing field for industrial facilities, preventing some regions from a ttempting to achieve an economic advantage over others. 1

1 Testimony of Lisa P. Jackson, Administrator, U.S. Environmental Protection Agency, Before the Committee on Transportation and Infrastructure, U.S. Hous e of Representatives, October 15, 2009. http://www.epa.gov/ocir/hearings/testimony/111_2009_2010/2009_1015_lpj.pdf

.

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Both GAO and the EPA OIG have frequently reported on problems with the EPAState enforcement relationship, noting key issues such as data quality, identification of violations, issuing enfo rcement penalties and other enforcement actions in a timely and appropriate manne r, and general oversight issues. See Appendix B for a list of re ports on these issues.

In its October 2009 testimony before the H ouse Transportation and Infrastructure Committee, GAO reported that longstandi ng issues impact EPA and State enforcement efforts. 2 For example, findings from a GAO enforcement report in 2000 demonstrated that local variations among EPA’s regional offices led to inconsistencies in the actions they take to enforce environmental requirements. 3 In 2004, the EPA OIG responded to a congres sional request to review the Region 3 NPDES program. 4 In part, the OIG found that the MOAs between the States and Region 3 were all more than 10 years old at the time and included outdated requirements. These MOAs had not been re vised as of the date of this report.


### Scope and Methodology

EPA provided the OIG with the 46 State MOAs that were in force at the time we began this evaluation, as well as So uth Carolina’s draft revised MOA.

The OIG identified 46 regulatory requir ements that apply to State NPDES enforcement programs. These requirements are contained in Title 40 CFR Sections 123.24, 123.26, and 123.27 and were th e criteria by which we reviewed the 46 MOAs. See Appendix A for the list of criteria.

The criteria fall into two categories. Th e first category consists of requirements for MOA documents themselves (Title 40 CFR 123.24), and the second category consists of criteria that while not required to be co ntained within MOA documents, are required for NPDES pr ograms themselves (Title 40 CFR 123.26 and 123.27). We excluded two CFR criteria in these sections because they pertained specifically to States with federally recognized Indian tribes. 5

The OIG rated each of the 46 MOAs for inclusion of statements addressing each regulation. For each of the 46 criteria, th e OIG rated the MOA as a “0” (does not address this element), “1” (addresses the element in some way), or “2” (addresses

2 Testimony of Anu K. Mittal, Director, Natural Resources and Environment Team, U.S. Government Accountability Office, Before the Commi ttee on Transportation and Infrastruc ture, U.S. House of Representatives, “Clean Water Act: Longstanding Issu es Impact EPA and States’ Enforcem ent Efforts,” October 15, 2009.

3 GAO, Longstanding Issues Impact EPA’s and States’ Enforcement Efforts , GAO-10-165T, October 15, 2009.

4 EPA-OIG, Congressionally Requested Review of EPA Region 3's Oversight of State National Pollutant Discharge Elimination System Permit Programs, Report No. 2005-S-0002, October 29, 2004.

5 Title 40 CFR 123.24(b)(1)(ii) says that where a State is authorized to issue permits on the Federal Indian reservation of the Indian tribal seek ing approval, MOAs should include provisions for transferring relevant information if the Indian Tribe does no t already have the documents. We excl uded this criterion from the 46-State analysis. Title 40 CFR 123.27(e) is intended for inclusio n in joint State-tribe-EPA MOAs or tribal-EPA MOAs. We excluded it as well based on the rationale above.

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the element verbatim or in synonymous language). Each MOA thus received an overall score in our analysis based on a maximum of 92 points. The OIG does not deem this evaluation system comprehensiv e of all CFR and other requirements. However, the system serves as one indicator of MOA comprehensiveness. The OIG did not evaluate other EPA-State agr eements for their inclusion of criteria not contained in MOAs.

The OIG also gathered evidence from interviews with EPA and external environmental groups. EPA interviews included the Deputy Administrator; OECA officials; and EPA personnel in Regions 1, 4, 8, and 10. Environmental groups interviewed were the Association of State and Interstate Water Pollution Control Administrators, the Environmental Council of the States, and the Environmental Integrity Project. These groups were selected for OIG interviews because they are key stakeholders and lia isons for State-EPA enforcement issues.

The OIG conducted this evaluation in accordance with generally accepted government auditing standards. Those sta ndards require that we plan and perform our work to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our evaluation obj ective. We conducted our evaluation from October 2009 through June 2010.

For additional information about our methodology, see Appendix B.

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# Chapter 2
Outdated or Inconsistent MOAs Impede Enforcement

MOAs between EPA and States that are out of date or inconsistent hinder Agency management control and effective oversi ght over a national program administered by States that is capable of providing equal protecti on to all Americans. EPA does not hold regional or State offices accountable for updating their MOAs when necessary and relies on other planning a nd management mechanisms to exercise control over State programs. However, M OAs are critical be cause they are the common denominator for State-authori zed programs and should represent a common baseline. MOAs that are outdat ed MOAs or not adhered to reduce EPA’s ability to maintain a uniform program across States that meets the goals of CWA sections 101 and 402.



### MOAs Are Missing Key Re gulatory Requirements

MOAs were missing key requirements of Title 40 CFR 123.24. MOA documents also lacked MOA-specific program regul ations contained in Title 40 CFR 123.26 and 123.27. For each of the 46 criteria, OIG rated the MOA as a “0” (does not address this element), “1” (addresses the element in some way), or “2” (addresses the element verbatim or in synonymous language). Figure 2-1 shows that across all regulatory criteria, MOAs did not contain 39 percent of the criteria, and that 61 percent of regulatory criteria are either not addressed or only partially addressed. EPA should define the requirements for management control of a nationally consistent enforcement program, and then review each State MOA to determine which MOAs are adequate and which MOAs need to be revised.

Figure 2-1: Degree to Which MOAs Meet Regulatory Requirements

37% 39% Number of 0s

Number of 1s

Number of 2s

24%

Source: OIG assessment of NPDES MOAs.

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MOAs did not address key regulatory requirements for MOA documents. For example, the CFR requires that States establish data management systems to support their compliance eval uation activities. Twenty percent of the MOAs did not contain any language about a data ma nagement system. This does not mean the State does not have such a system or that the system is not discussed in another document. However, because th e primary, required document, the MOA, does not mention it, EPA cannot readily de termine whether there is nationwide uniformity in data management systems.

MOAs also did not include a number of the additional regulatory program requirements contained in Title 40 CFR 123.26 and 123.27. These additional requirements correspond to the programmatic deficiencies that OECA identified in its first-round State Review Framework evaluations (data quality, identification of significant violations, the timeliness of enforcement actions, and penalties). For example, the CFR requires that St ates establish mini mum civil penalty policies, such as the ability to assess at least a $5,000 penalty per day for each NPDES violation. The State Review Framew ork identified penalty calculation as a comprehensive weakness. Fifty-four percent of MOAs did not include any language about minimum civil penalty standa rds (i.e., received a score of “0” for this element). Only 1 of the 46 MOAs specified that the minimum penalty per day, per violation, would be $5,000 (a score of “2”).

MOAs most comprehensively addresse d the MOA-specific regulations (CFR 123.24), containing these requirements 77 per cent of the time. MOAs contained fewer requirements in the non-MOA-specifi c monitoring and inspections section (65 percent for CFR 123.26) and fewest in the enforcement section (36 percent for CFR 123.27). For example, 63 percent of the MOAs did not include language verifying that no other State enforcemen t agreement could override the MOA, as required by CFR 123.24(c). Ei ghty percent of MOAs did not note whether the State had the authority to enter any pe rmitted facility (123.26(c)). Figure 2-2 shows how the percentage of missing re gulations varied according to the CFR section under review.

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Figure 2-2: Distribution of Scores by CFR Section

Title 40 CFR 123.24 Title 40 CFR 123.26 Title 40 CFR 123.27

12% 23%

40%

56%

21% 35%

24%

25% 64%

Source: OIG assessment of NPDES MOAs.

Although the regulations listed in CFR 123.26 and 123.27 are not required to be included in MOA documents, the conflu ence of the overarching State Review Framework issues and the mi ssing regulations in MOAs l eads us to believe that State enforcement programs would be improved by standardizing and renegotiating authorization MOAs to include language addressing these regulations. 6



### Most MOAs Are Outdated

The CFR provides that EPA and States can revise MOAs at any time, and 89 percent of the MOAs that we reviewed contained a statement to that effect. However, existing MOAs do not contai n any time-set periodic reevaluation clauses. EPA Headquarters has not advise d regions to revisit MOAs to ensure that they are relevant, nor has it devel oped a periodic review process to ensure that MOAs remain up to date. As a result, most initial MOAs have not been revised. EPA should establish a process fo r regularly reviewing the adequacy of existing MOAs and ensuring that MOAs keep up with changing regulations.

6 Title 40 CFR 123.24(b)(1)(ii) says that where a State is authorized to issue permits on the Federal Indian reservation of the Indian tribal seek ing approval, MOAs should include provisions for transferring relevant information if the Indian Tribe does not already have th e documents. Our MOA assessm ent excluded this criterion from the 46-State analysis. Nonetheless, of the 31 States with both federally recognized Indian tribes and delegated NPDES programs, only 10 contained the necessary information pertaining to the possible transfer of the relevant program information and permit files for Indian tribes. Ti tle 40 CFR 123.27(e) is intended for inclusion in joint State-tribe-EPA MOAs or tribal-EPA MO As. We excluded it as well based on the rationale above. Five of the State MOAs that we reviewed contained la nguage pertinent to this CFR criterion.

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Few MOAs have been updated to addre ss increasing State responsibilities under the CWA, new NPDES programs, and th e expanding CWA regulated universe, which now includes the Storm Water Ph ase II implementation, concentrated animal feeding operations, and concentr ated aquatic animal production program implementations. Further, many MOAs do not address how States should adapt to the increasing number of regulated en tities. MOAs should be written to accommodate for program changes to avoid becoming invalid over time.

MOA quality increases with more recently negotiated MOAs because newer MOAs more closely adhere to the most recent CFR requirements. One of the earliest MOAs received the lowest overal l score of 8.3 points (out of a possible 92), whereas the most recently negotiated MOA (Alaska, signed in 2008) received an overall score of 75.3 points. Alaska’s MOA was generally modeled after the current CFR requirements. The MOA earni ng 8.3 points in our scale, Kansas’s, was signed in 1973 and has not been revised.

We found that 74 percent of active MOAs were authorized more than 10 years ago (prior to 2000). Thirty-five percent of authorized States’ active MOAs were signed in the 1970s, years before the CWA’s Storm Water, Sanitary Sewer Overflow, and Combined Sewer Overflow provisions were established. These MOAs have not been revised to include these newer CWA programs. See Appendix C for State MOA authorizati on years and scores for MOAs by CFR section. Figure 2-3 shows the genera l trend of improved adherence to CFR requirements over time for all MOAs reviewed.

Figure 2-3: MOA Total Score by Year Signed

90

80

70

60

50

40

30

20

10

0MOA Score

1970 1975 1980 1985 1990 1995 2000 2005 2010
Year Signed

Source: OIG assessment of NPDES MOAs.

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Because our analysis shows that older MOAs were more likely than newer MOAs to be deficient, EPA should consider M OA age to prioritize MOA renegotiations. Figure 2-4 shows that average MOA age va ries by region, and suggests using age as an indicator of re negotiation priority.

Figure 2-4: MOA Average Signing Year by Region

Source: OIG assessment of NPDES MOAs. 1950 1960 1970 1980 1990 2000 2010

R1 R2 R3 R4 R5 R6 R7 R8 R9 R10 Most or all MOAs are outdated and require updating Some MOAs are outdated and require updating All MOAs are updated

Noting that the MOAs were outdated a nd contained language that limited EPA oversight, Region 4 independently updated and renegotiated the MOAs with all of its States. The renegotiated MOAs include d several significant changes such as changing the definition for when EPA woul d initiate enforcement actions, adding new enforcement initiatives like the St ate Review Framework, changing data reporting requirements, and changing the method for tracking significant compliance issues. The Region uses the updated MOAs as foundational documents and the CWA section 106 plans for more detailed program information. The new MOAs clearly delinea te roles and responsibilities and may improve EPA-State relationships.

Region 4 did not seek Office of Water (OW) and OECA approval of these MOAs. According to an OW attorney, OW considered these revisions to be minor and the Region did not need approval. This determination was not documented. EPA does not have a policy that governs what sorts of changes require approval by OW and OECA and a process for documenting decisions. This reduces EPA’s management control over the content of these MOAs. To maintain nationally consistent control over all State NP DES programs, EPA needs a policy that governs Headquarters approval of revise d MOAs and maintains control over

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changes in MOAs. On July 27, 2010, EP A’s response to th is draft report indicated that OW has initiated effort s to clarify the delegation process as described in EPA Delegation 2-34.


### MOAs Are Inconsistent across Regions and States

MOAs vary among regions, creating differen ces in State enforcement programs. This variance can lead to differences in how the NPDES program is implemented throughout the country.

Figure 2-5 shows that certain regions (regions are outlined in black) have higherscoring MOAs than others, based on select ed CFR criteria. For example, Region 8 MOAs generally scored higher than Re gion 3 MOAs. Interre gional variability stems from differing regional priorities that influence MOA negotiation and MOA age. Region 4’s recently renegotiated MOAs all scored between 50 and 70 points on our scale, whereas Region 3’s genera lly older MOAs all scored between 25 and 44 points.

Figure 2-5: MOA Scores by State and EPA Region

Source: OIG assessment of NPDES MOAs.

The figure also demonstrates interstate variability in MOA alignment with regulations. Similar to regional differences, interstate variability stems from State priorities as well as MOA age. Update d MOAs typically score over 50 points.

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For example, in Region 10 the highest -scoring MOA (Alaska) was the most recently updated MOA (2008), whereas the outdated MOAs in Oregon and Washington scored lowest. Oregon’s M OA, signed in 1973, scored 27.3 points, and Washington’s MOA, signed in 1989, scored 48.0 points.



### Some MOAs Contain Provisions that Are Inconsistent with the CWA

In addition to missing many regulatory re quirements, a number of MOAs contain other language that is inc onsistent with the CWA. Under the CWA, EPA retains responsibility and authority over CWA implementation and outcomes even when a State has received authorization. Ho wever, 17 percent of MOAs contain language that is worded to limit EPA’ s authority to conduct inspection and enforcement activities in States. In a nu mber of cases, this type of language has led to disagreements between EPA and States.

For example, although the CFR states, “The Regional Administrator will normally notify the State at least 7 days before any such inspection,” South Carolina’s 1994 MOA states, “EPA shall provide to the State at least thirty (30) days notice before a joint or independent insp ection.” A Region 4 enforcement manager stated that this provision limited EPA’s enforcemen t authority. As a result, Region 4 reduced this notice period in the proposed revision. In the draft South Carolina MOA, this provision was revised to state, “EPA will normally provide DHEC [the State Department of Hea lth and Environmental Control] at least seven (7) calendar days notice before a joint or independent inspection is conducted.”

Through the State Review Framework pro cess, OECA found that some States believe that their MOAs preclude EPA en forcement action. OECA officials told us that when OECA has an unfavorable relationship with a State, the State sometimes uses its MOA as a justificati on to avoid taking the enforcement actions EPA feels are needed. In the face of in appropriate clauses in MOAs, EPA could take action in States based on its author ity under the CWA. However, in some cases, EPA did not act; sensitive relations hips between EPA regions and States led regions to look for other solutions.


### Some EPA Regions Do Not Use MO As to Manage State Enforcement Programs

Rather than establishing a consistent na tional approach to meet CWA goals, EPA has largely deferred control to regional o ffices. States and regions frequently do not use MOAs to manage or oversee State enforcement programs. MOAs should be foundational enforcement documents that regions and States use on a regular basis to clarify basic roles and responsibi lities, and the CFR states that no other EPA-State documents can take precedence over MOAs.

Managers in three of the f our EPA regions we interviewe d told us that they do not routinely refer to the MOAs to manage their State programs. In these regions,

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EPA managers used other types of agreem ents such as Performance Partnership Agreements, Performance Partnership Grants, annual inspection and monitoring plans, and National Program Guidan ce for State program oversight.

Some regional managers note MOA shor tcomings. In Region 1, enforcement program managers told us that MOAs do not guide State program management, and regional personnel did not refer to M OAs. Managers see the original MOAs as documents that defined the roles and responsibilities at the time of the authorization and also laid out some ba sic expectations for the transfer of documents. However, they used Performance Partnership Agreements and periodic meetings instead of MOAs to manage State programs. Region 1 managers stated that they use other documents because program management requires flexibility. The Region’s origin al MOAs were not updated to reflect changes to the CWA throughout the years. However, the Region 1 manager stated that MOAs are the basic underpinn ing of State author ization to run the program. The manager said a strong , vibrant MOA should include clear expectations, clear definition of roles/responsibil ities, and clear descriptions of accountability.

An EPA Region 8 enforcement official repor ted that MOAs were rarely used for enforcement as compared with other agr eements. An enforcement manager from the Region reported that alt hough all MOAs have standard statements that declare that MOAs preclude other agreements, in practice, Performance Partnership Agreements trump all other enforcement documents.

However, Region 8 and its States ex perienced conflicts over enforcement authority. In one case, Region 8 did not hold Colorado accountable to its MOA. During our interview, regional personne l reported that while they were negotiating an ancillary en forcement agreement, Colorado asserted that EPA relinquished the right to perform NPDES inspections and enforcement actions once State authorization occurred. Ev en though this was programmatically inaccurate and the MOA supported EPA’s position, regional personnel found it was easier to “give up” on the agreement negotiations rather than to reiterate EPA’s rights and authorities. One mana ger from the Region noted that MOAs should have clearer delineations for EPA and State expectations for issuance of notices of violation, and another said M OAs should contain provisions that better delineate EPA and State facility inspections.

A Region 8 enforcement official also stated that many of its MOAs are more than 10 years old and should be renegotiated. The official added that although the Region uses other documents, it would be be neficial to have a single, overarching document to provide the basic agreement with additional documents providing the necessary details on annual performan ce and operations. Moreover, a regional enforcement manager suggested that MOAs should be periodically modified to accommodate changes in the program.

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Although Region 10 NPDES managers did use the MOA for permitting, they did not use MOAs for enforcement program management. Instead, they used Performance Partnership Agreements, Pe rformance Partnership Grants, and the National Program Guidance.

When OECA began assessing MOAs, some were not available to EPA Headquarters. Therefore, these docum ents, which show how EPA and States manage enforcement, were also not readil y available to the public for review or comparison. EPA could improve transparency and accountability by maintaining a publicly available MOA repository wh ere all States, EPA regions, and the public can access the documents.

The problem with MOAs is cyclical: one reason regional enforcement managers do not use MOAs is that they are not upda ted to reflect current CWA amendments pertinent to new NPDES program require ments and subsequent CFR additions, and MOAs are outdated because regions ha ve not used them regularly enough to target them for improvement.



### EPA Could Establish a National Baseline for CWA Implementation with an MOA Template

EPA faces a significant challenge: to implement a nationally consistent enforcement program that offers equal prot ection from pollution to all Americans. By renegotiating outdated or inconsistent MOAs according to a national template, EPA can establish a current baseline fo r national consistency. A national template could also ease the MOA negotia tion process. EPA should identify the key requirements that should be delineated in MOAs, including the other programmatic concerns disclosed thr ough the CFR and issues uncovered during OECA’s State Review Framework, and incor porate them into a national template.

The officials of OECA, EPA regions, and State organizations we spoke with agree that MOAs are out of date and should be renegotiated, but OECA also pointed out that the process could face State resistan ce because it might require considerable resources. Enforcement managers and o fficials in two of the four regions we spoke with indicated that MOA renegotia tion would be a low priority for them and would require them to remove resour ces from other enforcement activities. However, in our opinion, the management control benefit justifies the resource requirement. For example, as a result of renegotiating MOAs, Region 4 enforcement staff reported that they imp roved baseline management control over EPA-State enforcement relationships. In the face of a disagreement over responsibilities, regional staff said th ey show State program staff where an enhanced requirement is written in the updated MOA, and the State program staff then carry out the requirement.

Staff from each region we interviewed and other stakeholders agreed that an EPA Headquarters model MOA would be benefi cial in determining MOA adequacy.

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Region 4 developed a regional template for use in its MOA renegotiations. Regional enforcement officials reported th at the template did not change much between the beginning and end of ne gotiations. A Region 10 enforcement program manager suggested that a model MOA that would serve as a foundational reference document could help to clarif y the core oversight responsibilities. Region 10 staff stated that a model MOA could identify EPA and State expectations with respect to insp ection, timely follow-up, data quality, transparency, and adequate response. In addition, the Environmental Council of the States said its member States would be interested in discussing a model MOA.



### Conclusion

The current state of the MOAs means th at EPA cannot assure it has effective management control over State programs that assures the public that CWA objectives are being achieved. EPA has not established a national template defining the key requirements necessary for current, robust MOAs. In addition, EPA has not developed a periodic review system to determine which MOAs remain adequate and which need to be revised to remain current with changing regulations. MOAs should establish th e foundations for nationally consistent enforcement, defining the baseline roles and responsibilities for EPA and States. MOAs should also be the basis for asse ssing States’ ability and commitment to administer EPA’s NPDES program in accordance with the CWA. The CFR requires MOAs to outline the basic parameters of the EPA-State relationship and ensure CWA goals are being met through St ate-authorized programs. To ensure that MOAs fulfill their intended function, EPA must put in place a system that maintains and oversees consistent manageme nt controls over State programs. To ensure transparency and accountability, EP A should maintain a publicly available MOA repository, making these documents av ailable to all States, EPA regions, and the public.



### Recommendations

We recommend that the Deputy Administrator:

2-1 Develop a national MOA template including essential requirements derived from the updated CWA, CFR requirements, and State Review Framework findings.

2-2 Develop a systematic approach to identify which States have outdated or inconsistent MOAs ; renegotiate and update those MOAs using the MOA template; and secure the active involvement and final, documented concurrence of Headquarters to ensure national consistency.

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2-3 Establish a process for reviewing MOAs on a regular basis, taking into account legislative and mana gement changes that affect the adequacy of the MOA.

2-4 Maintain a publicly available repository of MOAs.


### Agency Response and OIG Comment

EPA’s Deputy Administrator provided the Agency response, coordinating comments from OECA and OW. The De puty Administrator generally agreed with these recommendations and provided an outline of corrective actions that he would take in response to the recommendations.

The Deputy Administrator agreed with recommendations 2-1, 2-3, and 2-4.

In response to recommendation 2-2, th e Deputy Administrator stated that renegotiating MOAs with States can be time consuming and may not be always be the best use of EPA resources. Defi ciencies in State enforcement programs may be better addressed through other solutions and approaches. The Deputy Administrator proposed that OECA and OW integrate MOA assessment into a coordinated State program review proce ss to identify and correct MOAs that present the greatest barriers to State program performance.

The OIG responds by noting that the draft report and the final report both make mention of the other mechanisms EPA uses to manage programs, even noting that there is a layered system of management controls (see page 2, for example). However, the report emphasizes that wh ile EPA uses other mechanisms, the only required mechanism is the authorization MOA. The way in which EPA regions and States use other mechanisms varies , but the MOA is the only document that each State must have. For this reason, it is important that authorization MOAs be up to date and compliant with the CFR.

While acknowledging EPA’s need to maintain flexibility, the OIG believes that MOAs are a critical building block of State enforcement programs. Depending on how it is constructed, a systematic State program review process that contains a strategy for updating outdated or inc onsistent MOAs could address our recommendation. We will list the status of recommendation 2-2 as “undecided,” and list the other recommendations as “ open.” We look forward to a detailed strategy and timeline for implementation in the Agency’s 90-day response to this final report.

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## Status of Recommendations and Potential Monetary Benefits

POTENTIAL MONETARY RECOMMENDATIONS BENEFITS (in $000s)

Rec. No. Page No. Subject Status 1 Action Official Planned Completion Date Claimed Amount Agreed To Amount

2-1

2-2

2-3 15

15

16 Develop a national MOA template including essential requirements derived from the updated CWA, CFR requirements, and State Review Framework findings.

Develop a systematic approach to identify which States have outdated or inconsistent MOAs; renegotiate and update those MOAs using the MOA template; and secure the active involvement and final, documented concurrence of Headquarters to ensure national consistency.

Establish a process for reviewing MOAs on a regular basis, taking into account legislative and management changes that affect the adequacy of the MOA. O

U

O Deputy Administrator

Deputy Administrator

Deputy Administrator

2-4 16 Maintain a publicly available repository of MOAs. O Deputy Administrator

O = recommendation is open with agreed-to corrective actions pending C = recommendation is closed with all agreed-to actions completed U = recommendation is undecided with resolution efforts in progress

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Appendix A



## List of CFR Criteria for MOA Assessment 1

CFR Criterion
1 123.24(a) MOA executed by the State Director and the Regional Administrator and approved by Administrator
2 MOA meets all requirements of paragraph (b)
3 MOA has no provisions restricting EPA’s statutory oversight responsibility
4 123.24(b) Provisions for prompt transfer from EPA to the State of pending permit applications and any other relevant program operation information
5 MOA contain procedure for transfer of any existing permits for administration
6 MOA contain specific procedure for transfer of administration if a State lacks administration authority for permits issued by Federal government

7 MOA contain provisions specifying classes an d categories of permit applications, draft permits, and proposed permits for Regional Administrator review
8 MOA contain provisions specifying the freque ncy and content of reports, documents and other information which the State is required to submit to EPA
9 MOA contain provisions allowing EPA to routinely review State record s, reports, and files relevant to the administration and enforcement of the approved program 10 MOA contain provisions for coordination of co mpliance monitoring activities by the State and by EPA and EPA inspection of select fac ilities or activities within State

11 MOA contain procedures to assure co ordination of enforcement activities
12 MOA contain provisions, when appropriate, for joint processing of permits by the State and EPA for facilities or activities which require permits from both EPA and the State under different programs per § 124.4

13 MOA contain provisions for modification of the MOA in accordance with this part 14 123.24(c) MOA, the annual program grant and the State/EPA Agreement should be consistent. If the State/EPA Agreement indicates that a change is needed in the Memorandum of Agreement, the Memorandum of Agreement may be amended through the procedures set forth in this part. 15 State/EPA Agreement cannot override MOA
16 123.24(d) MOA specify the extent to which EPA will waive its right to review, object to, or comment upon State-issued permits under sectio n 402(d)(3), (e) or (f) of CWA

17 123.26(a) State programs shall have proc edures for receipt, evaluation, retention and investigation for possible enforcement of all notices an d reports required of permittees and other regulated persons (and for investigation for possible enforcement of failure to submit these notices and reports).

18 123.26(b) State programs shall have inspection and surveillance procedures to determine, independent of information supplied by regulated persons, compliance or noncompliance with applicable program requirements.

19 The State shall maintain a program which is capable of making comprehensive surveys of all facilities and activities subject to the State Director's authority to identify persons subject to regulation who have failed to comply with permit application or other program requirements. Any compilation, index or inventor y of such facilities and activities shall be made available to the Regional Administrator upon request; 20 The State shall maintain a program for periodic inspections of the fac ilities and activities subject to regulation.

1 MOA assessment excludes the review of 123.24(b)(ii) and 123.27(e) as noted within the Scope and Methodology.

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CFR Criterion
21 These inspections shall be conducted in a manner designed to: Determine compliance or noncompliance with issued permit condit ions and other program requirements;

22 These inspections shall be conducted in a manner designed to: Verify the accuracy of information submitted by permittees and ot her regulated persons in reporting forms and other forms supplying monitoring data; and

23 These inspections shall be conducted in a manner designed to: Verify the adequacy of sampling, monitoring, and other method s used by permittees and other regulated persons to develop that information;

24 The State shall maintain a program for investigating information obtained regarding violations of applicable program and permit requirements; and
25 The State shall maintain procedures for rece iving and ensuring proper consideration of information submitted by the Public about violat ions. Public effort in reporting violations shall be encouraged, and the State Director s hall make available information on reporting procedures.

26 123.26(c) The State Director and State officers engaged in compliance evaluation shall have authority to enter any site or premises subject to regulation or in which records relevant to program operation are kept in order to copy any records, inspect, monitor or otherwise investigate compliance with the State program including compliance with permit conditions and other program requirements. States whose law requires a search warrant before entry conform with this requirement. 27 123.26(d) Investigatory inspections shall be con ducted, samples shall be taken and other information shall be gathered in a manner (e.g., using proper “chain of custody” procedures) that will produce evidence admis sible in an enforcement proceeding or in court.

28 123.26(e) Maintaining a comprehensive inventory of all sources covered by NPDES permits and a schedule of reports required to be submi tted by permittees to the State agency; 29 Initial screening (i.e., pre-enforcement evaluation) of all permit or grant-related compliance information to identify violations and to establish priorities for further substantive technical evaluation;

30 When warranted, conducting a substantive technical evaluation following the initial screening of all permit or grant-related compliance information to determine the appropriate agency response;

31 Maintaining a management information system which supports the compliance evaluation activities of this part; and
32 Inspecting the facilities of all major dischargers at least annually.
33 123.27(a) To restrain immediately and effectively any person by order or by suit in State court from engaging in any unauthorized activity which is endangering or causing damage to public health or the environment;

34 Note: This paragraph (a)(1) requires that States have a mechanism (e.g., an administrative cease and desist order or the ab ility to seek a temporar y restraining order) to stop any unauthorized activity endangering public health or the environment.

35 To sue in courts of competent jurisdiction to enjoin any threatened or continuing violation of any program requirement, including permit conditions, without the necessity of a prior revocation of the permit;

36 To assess or sue to recover in court civ il penalties and to seek criminal remedies, including fines, as follows:
37 Civil penalties shall be recoverable for the vi olation of any NPDES permit condition; any NPDES filing requirement; any duty to allow or carry out inspection, entry or monitoring activities; or, any regulation or orders issued by the State Director. These penalties shall be assessable in at least the amount of $5,000 a day for each violation.

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CFR Criterion
38 Criminal fines shall be recoverable against any person who willfully or negligently violates any applicable standards or limitations; any NPDES permit condition; or any NPDES filing requirement. These fines shall be assessable in at least the amount of $10,000 a day for each violation.

39 Criminal fines shall be recoverable against any person who knowingly makes any false statement, representation or certification in any NPDES form, in any notice or report required by an NPDES permit, or who knowingly renders inaccurate any monitoring device or method required to be maintained by the Director. These fines shall be recoverable in at least the amount of $5,000 for each instance of violation.

40 123.27(b) The maximum civil penalty or criminal fine (as provided in paragraph (a)(3) of this section) shall be assessable for each instanc e of violation and, if the violation is continuous, shall be assessable up to the ma ximum amount for each day of violation.
41 The burden of proof and degree of knowledge or intent required under State law for establishing violations under paragraph (a)(3) of this section, shall be no greater than the burden of proof or degree of knowledge or intent EPA must provide when it brings an action under the appropriate Act;

42 123.27(c) A civil penalty assessed, sought, or agreed upo n by the State Director under paragraph (a)(3) of this section shall be appropriate to the violation.
43 Procedures for assessment by the State of t he cost of investigations, inspections, or monitoring surveys which lead to the establishment of violations;
44 In addition to the requirements of this paragraph, the State may have other enforcement remedies. The following enforcement options, while not mandatory, are highly recommended:

45 123.27(d) Any State administering a program shall provi de for public participation in the State enforcement process by providing either:
46 Authority which allows intervention as of right in any civil or administrative action to obtain remedies specified in paragraphs (a)(1), (2) or (3) of this section by any citizen having an interest which is or may be adversely affected; or (2) Assurance that the State agency or enforcement authority will: (i) Investigate and provide written responses to all citizen complaints submitted pursuant to the procedures specified in §123.26(b)(4); (ii) Not oppose intervention by any citizen when permissive intervention may be authorized by statute, rule, or regulation; and (iii) Publis h notice of and provide at least 30 days for public comment on any proposed settlement of a State enforcement action.

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Appendix B 

## Detailed Methodology

The OIG initially received 45 State MOAs from OECA. OECA collected the MOAs in 2009 by contacting EPA’s Water Permitting Division. OE CA confirmed that it received current, executed MOAs by contacting region al staff. MOAs were not collected for Connecticut and South Carolina, though OECA later received Conn ecticut’s current MOA. Region 1 was unable to confirm whether the MOAs that had been collected were the most current executed documents. OECA attributed this to the fact that MOAs are rarely used, and the people who originally developed and worked on them are no longer with the Region. When the OIG later interviewed Region 1 water enforcement staff and o fficials, they reported that they had all of their current MOAs. We received the 1994 Sout h Carolina MOA directly from Region 4, where enforcement officials were still negotiating revisions to the document. OIG reviewed both the 1994 and newly revised unapprove d MOA but only used the 1994 approved MOA for our quantitative analysis.

The OIG selected 46 criteria from three Ti tle 40 CFR sections (123.24, 123.26, and 123.27). The OIG chose these sections because they represen t state NPDES program requirements: agreement with the regional administrator, complianc e requirements, and enforcement authority requirements for States that have been authorized NPDES progra ms. The OIG did not evaluate other annual or multiyear EPA-State agreements.

We excluded two CFR criteria from Title 40 CFR sections 123.24 and 123.27 from our MOA Assessment to reflect the fact that not all States have federally recognized Indian tribes and thus create parity across all States. Title 40 123.24(b)(1 )(ii) says that where a State is authorized to issue permits on the Federal Indian reservation of the Indian tribal seeking approval, MOAs should include provisions for transferring releva nt information if the Indian Tribe does not already have the documents. Title 40 CFR 123.27(e) says that where Indian tribes cannot satisfy the criminal enforcement authority requirement s in section 123.27 of the CFR, they may still receive program authority from EP A if they meet other enforcem ent authority criteria (See 40 CFR 123.34).

The requirements included in CFR sections 123.24, 123.26, and 123.27 indicate the requirements for States to receive the CWA enforcement au thorization. CFR section 123.24 indicates the requirements MOA content for NPDES program approval and management, 123.26 indicates the regulations States must follow to demonstrate an adequate comp liance inspection and monitoring program, and 123.27 indicates the regulations States must follow to demonstrate that they can take timely and appropriate enforcement actions . Because each EPA regional office negotiated MOAs differently, OIG believes that the extent to which required language from these three sections is included in MOAs may vary.

The selected CFR sections define the scope of the OIG review by focusing analysis on MOA requirements and also addressing th e issues raised in OECA’s St ate Review Framework: data, identification of significant violations, penalty assessment, and timely and appropriate enforcement actions. By confirming and qua lifying whether each MOA contained adequate

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provisions addressing each requi rement, OIG addressed the comp leteness of MOAs and also assessed deficiencies related to four key issues OECA uncovered in its State Review Framework process: penalty calculation, identification of significant viol ations, data quality, and taking timely and appropriate enforcement actions.

The OIG selected the 46 criteria to provide a broad indication of how current MOAs address issues that OECA has identified as lacking in State enforcement programs. Although all of the criteria included in CFR sections 123.24, 123.26, and 123.27 may not have been required at the time MOAs were initially negotiated between EPA regions and States, these sections represent the key criteria for determining whether States with NPDES authority have demonstrated to EPA that they can address permitting requirements, compliance reviews and inspections, and enforcement actions. Our criteria included Title 40 CFR 123.26 and 123.27, even though those regulations are not required of MOAs, because they are rela ted to the four programmatic deficiencies that OECA identified through its St ate Review Framework assessments (listed in Chapter 1).

OIG rated each of the 46 EPA-provided MOAs fo r its inclusion of statements addressing each regulation. For each of the 46 criteria included in a spreadsheet guide (shown in Appendix A), team members rated the MOA as a “0” (does not address this element), “1” (addresses the element in some way), or “2” (addresses the el ement verbatim, or in synonymous language). Each MOA thus received an overall score in our an alysis that could be a maximum of 92 points. The OIG evaluation team did not deem this system comprehensive; rather, it is an indicator of MOA completeness.



### Prior GAO and OIG Work

OIG staff reviewed past oversig ht reports from the EPA OIG and GAO relating to EPA oversight of State enforcement issues. In particular, we reviewed those reports th at cite MOAs or other EPA-State agreements as a root cause of enforcement deficiencies. These reports informed our evaluation design and background.

GAO

Longstanding Issues Impact EPA’s a nd States’ Enforcement Efforts . GAO-10-165T, October 15, 2009.

Environmental Enforcement: EPA Needs to Improve the Accuracy and Transparency of Measures Used to Report on Program Effectiveness . GAO-08-1111R, September 18, 2008.

Collaborative EPA State Effort Needed to Improve Performance Partnership System . GAO/T

RCED-00-163, May 2, 2000.

Environmental Protection: More Consisten cy Needed Among EPA Regions in Approach to Enforcement . GAO/RCED-00-108, June 2000.

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Environmental Protection: EPA’s and States’ Ef forts to Focus State Enforcement Programs on Results . RCED-98-113, May 27, 1998. Water Pollution: Many Violat ions Have Not Received Appropriate Enforcement Attention

. GAO/RCED-96-23, March 20, 1996.

EPA OIG

Better Enforcement Oversight Needed for Major Facilities with Water Discharge Permits in Long-Term Significant Noncompliance . Report No. 2007-P-00023, May 14, 2007.

EPA Region 6 Needs to Improve Oversight of Louisiana's Environmental Programs

. Report No. 2003-P-00005, February 3, 2003.

State Enforcement of Cle an Water Act Dischargers Can Be More Effective

. Report No. 2001-P-00013, August 14, 2001.

North Carolina NPDES Enforcement and EPA Region 4 Oversight . Report No. 2000-P-00025, September 28, 2000.

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Appendix C 

## OIG Analysis of MOAs by CFR Section

MOA Date CFR General Program Requirements

Avg. Score (Scale: 0 – 2) CFR Compliance Evaluation Requirements

Avg. Score (Scale: 0 – 2) CFR Enforcement Requirements

Avg. Score (Scale: 0 – 2) Overall Avg. Score (Scale: 0 – 2) Total Score (Scale: 0 – 92) Alabama 2008 1.40 1.19 0.64 1.09 50.3 Alaska 2008 1.71 1.81 1.36 1.64 75.3 Arizona 2002 1.94 1.88 0.57 1.50 69.0 Arkansas 1995 1.81 1.69 0.93 1.50 69.0 California 1973 0.98 0.31 0.43 0.58 26.7 Colorado 1974 1.02 1.25 0.50 0.94 43.3 Connecticut 1 1980 1.06 1.31 0.36 0.93 43.0 Delaware 1983 1.17 0.44 0.36 0.67 30.7 Florida 2007 1.75 1.13 0.71 1.22 56.0 Georgia 2007 1.63 1.35 0.32 1.13 52.2 Hawaii 1985 0.69 1.25 0.79 0.91 42.0 Illinois 1 1977 0.31 1.50 1.71 1.15 53.0 Indiana 1977 1.06 0.69 0.00 0.61 28.0 Iowa 1978 1.38 0.88 0.57 0.96 44.0 Kansas 1973 0.52 0.00 0.00 0.18 8.3 Kentucky 2008 1.88 1.50 1.14 1.52 70.0 Louisiana 2004 1.69 1.38 0.57 1.24 57.0 Maine 1 2000 1.88 1.94 1.36 1.74 80.0 Maryland 1998 1.10 1.00 0.21 0.80 36.7 Michigan 1973 0.85 0.56 0.07 0.51 23.7 Minnesota 1974 0.92 0.19 0.07 0.41 18.7 Mississippi 2008 1.71 1.19 0.50 1.16 53.3 Missouri 1974 1.25 0.44 0.07 0.61 28.0 Montana 1 2000 1.35 1.38 0.79 1.19 54.7 Nebraska 1974 0.48 0.38 0.00 0.30 13.7 Nevada 1994 1.31 1.44 0.50 1.11 51.0 New Jersey 1981 1.58 1.75 1.21 1.53 70.3 New York 1975 0.81 0.06 0.00 0.30 14.0 North Carolina 2007 1.58 1.19 0.50 1.12 51.3 North Dakota 1989 1.75 1.50 0.86 1.39 64.0 Ohio 1974 1.50 0.63 0.00 0.74 34.0 Oklahoma 1997 1.88 1.44 0.43 1.28 59.0 Oregon 1973 1.21 0.50 0.00 0.59 27.3 Pennsylvania 1991 1.33 1.44 0.00 0.96 44.3 Rhode Island 1984 1.48 0.63 0.57 0.91 41.7 South Carolina 1994 1.44 1.13 0.64 1.09 50.0 South Dakota 1993 1.40 0.75 0.29 0.83 38.3

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MOA Date CFR General Program Requirements

Avg. Score (Scale: 0 – 2) CFR Compliance Evaluation Requirements

Avg. Score (Scale: 0 – 2) CFR Enforcement Requirements

Avg. Score (Scale: 0 – 2) Overall Avg. Score (Scale: 0 – 2) Total Score (Scale: 0 – 92) Tennessee 2007 1.81 1.31 1.14 1.43 66.0 Texas 1998 1.27 1.63 0.14 1.05 48.3 Utah 1987 1.38 1.13 0.43 1.00 46.0 Vermont 1984 0.56 0.88 0.14 0.54 25.0 Virginia 1975 1.27 0.31 0.00 0.55 25.3 Washington 1989 1.06 1.63 0.36 1.04 48.0 West Virginia 1982 1.40 0.44 0.36 0.75 34.3 Wisconsin 1974 1.33 0.44 0.00 0.62 28.3 Wyoming 1975 1.46 1.69 0.93 1.38 63.3 Source: OIG analysis of data obtai ned from State MOAs reviewed.

1 The OIG did not receive signed and dated MOAs. The OIG estimated these dates based on the OECA documentation provided.
2 South Carolina still operated und er a 1994 MOA, but Region 4 and South Carolina were working on a revised MOA at the time this report was issued.

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Appendix D 

## Agency Response and OIG Comment

July 27, 2010



### MEMORANDUM

SUBJECT: Response to the Office of In spector General Draft Report, EPA Should Revise EPA-State Clean Water Act Agreements , No. 2010-1033, June 9, 2010

TO: 

### Arthur Elkins Jr. Inspector General

I am transmitting our respons e to the draft report, EPA Should Revise EPA-State Clean Water Act Agreements , No. 2010-1033, June 9, 2010, whic h focuses on assessing the effectiveness of memoranda of agreement between the U.S. Environmental Protection Agency and states pursuant to the National Po llutant Discharge Elimination System program. We thank your office for underta king this review; we believe it will help us in achieving our goals of improving the quality of our oversi ght of state enviro nmental programs and ultimately the level of state performance in administering NPDE S programs. While we generally agree with the analys is and recommendations of the re port, we offer the following

comments.

MOAs are not the sole mechanism for ma nagement control of the NPDES program

On the first page of the report in the "W hat We Found" section a nd elsewhere throughout the document, the report finds that "NPDES MOAs between EPA and States do not ensure Agency management c ontrol and effective oversight ove r a national program administered by States that is capable of providing equal protec tion to all Americans." The analysis in this report is incomplete in supporting this statemen t. While we agree that inadequate MOAs may not support our efforts to en sure an effective state program, there are multip le layers of management controls and oversight progr ams that address the implementation and performance of the NPDES progra m but were not included in this review. These layers of controls and reviews, which include complian ce and enforcement, also are relied upon to ensure an effective state program. For exam ple, the Office of Water ensures adequate implementation of the NPDE S permitting program through Performance Partnership Agreements, CWA Section 106 grant-work plans and associated measures, and program and permit-quality reviews and associated ac tion items. The Office of Enforcement and Compliance Assurance uses enforcement agre ements, Performance Partnership Agreements, grant-work plans, biannual regional reviews and the State Review Framework. Thus, while MOAs are one tool used by the EPA to ensure management control an d effective oversight over state NPDES programs, they ar e not the only tool used to de termine the health of a state program. Deficiencies in MOAs can be offset by or addressed thro ugh other management

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### tools. We ask that the report be modified to reflect the multiple layers of management controls, with MOAs as just one of those layers, albeit an important one.

OIG Response : The OIG believes the report adequately characterizes the multiple layers of management controls . More specifically, the report notes, “As part of a system of national ma nagement controls, the CFR requires authorization MOAs between EPA a nd every State operating an NPDES enforcement program.” The report also i ndicates that the MOAs are part of a layered system: “Although the foundati ons of the EPA-State enforcement relationship are built upon authorizati on agreements and the accompanying MOAs, EPA and States also use other annual and multiyear planning tools to set short-term expectations , establish measures, and se t performance goals. The annual and multiyear planning documents used by EPA regions and States vary by region and by State, and are not re quired by regulation. A senior EPA official described the EPA-State NPDES relationship as a ‘layer cake,’ with several layers of documents and agreements. The official said that EPA plans to address the multilayered EPA-State structure by simplifying the State-EPA enforcement process and accompanying document requirements.”



### Methodology

To conduct its analysis, the OIG identifie d 48 regulatory requirements contained in 40 CFR Sections 123.24, 123.26, and 123.27, which apply to the en forcement component of NPDES programs. The requirement s used by the OIG include so me that apply to the MOA documents themselves (40 CFR Section123.24 ), but nearly two-thirds are NPDES program requirements not explicitly required in th e MOAs (40 CFR Sections 123.26 and 123.27). This approach was helpful in that it demons trates how many enforcement-related provisions are included in the MOAs. However, this analysis may not necessarily result in the identification of those MOAs w ith the most significant defici encies because it gives equal weight to all requirements. For example, th e provision in 40 CFR Section 124.24(a) requiring that an "MOA [have] no provisions restrictin g EPA’s statutory oversight authority" is weighted the same as the provisions in 40 CFR Section 123.24(b)(l .l-1.3), which require the transfer of permits from the EPA to the state. The former is crucially important for program oversight, whereas the latter is lik ely moot at this time as a ll relevant permits have been transferred from the EPA to states, with the exception of some permits EPA Region 10 has issued in Alaska 2 

### . Moreover, the methodology does not identify which elements are most important to ensuring program performance , may not be related to actual program performance or are covered by other agreements or guidance. We ask that the report be modified to acknowledge that so me requirements are more import ant than others in terms of ensuring program performance.

2 On October 31, 2008, EPA authorized Alaska to assume responsibility for the NPDES program in phases, pursuant to section 402(n) (4) of the Clean Water Action. 73 Fed. Reg. 66243, 66244 (November 7, 2008). EPA expects to transfer all relevant permits to the State by October 31, 2011. Id.

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OIG Response : The OIG analysis was intended as an objective assessment of MOA compliance with the CFR. The OI G assessment does not address State program performance, only MOA complete ness. The report not es that the OIG included additional elements (in 40 CFR 123.26 and 123.27) based on OECA’s findings from the State Review Framew ork process. The OIG presents one method for assessing MOA quality, and re port recommendation 2-2 directs the Deputy Administrator to “develop a syst ematic approach to identify which States have outdated or inconsistent MOAs, rene gotiate and update those MOAs using the MOA template, and secu re the active involvement and final, documented concurrence of Headquarters to ensure national consistency.” In developing this approach, the Deputy Administrator can choose to assign weights to those aspects of NPDES MOAs that he deems most important.



### Recommendations

2-1 We agree that a national MOA template is a useful tool in establishing nationally consistent MOAs. We have an existing templa te from 1986, but we ag ree that it could be updated to be more usef ul. We note that the EPA is in the midst of implementing the Clean Water Act Action Plan, which will result in ne w approaches for impr oving compliance and water quality. We suggest that any action to refine the existi ng MOA template take place in coordination with the development of new a pproaches identified through this process.

OIG Response: The OIG agrees with the Agency’s proposed actions in response to recommendation 2-1. The r ecommendation is open with agreed-to actions pending. In its final response to this report, EPA should provide estimated or actual completion dates for this recommendation.



### 2-2 We agree that a systematic effort to identify and review problematic MOAs and update them, as appropriate, could assist in improving program perf ormance and should be incorporated into existing periodic reviews of state programs. We do not agree, however, that renegotiating MOAs is the only way to address an inadequate state program. MOAs are twoparty agreements and willingness to make certain modifications w ill vary from state to state. Therefore, renegotiating MOAs can be time-consuming and unpred ictable and, in light of our preceding comments about the va riety of tools used to exer cise management control over state NPDES programs, may not be the most timely or effectiv e mechanism. It is important that the EPA maintain flexibility to develop and use these other types of mechanisms such as enforcement agreements that supplement an MOA in cases where renegotiating an MOA proves impracticable or woul d do little to substantially impr ove a state's program. This approach was suggested in th e Clean Water Act Action Plan.

In responding to Recommendatio n 2-2, we propose that the O ffice of Enforcement and Compliance Assurance and the Office of Water wo rk together to integrate more closely our existing program-review processes and specifica lly to include the review of existing MOAs based on the new template as part of this process. Our goal in this effort would be to identify and correct those MOAs that present the great est barriers to state program performance,

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### implement other solutions and approaches to achieve the maximu m environmental and public health benefits in light of any deficiencies identified or both.

OIG Response: The response does not mention MOAs that are outdated by the current CWA. To maintain consistent , effective management control, MOAs must be current so as to take into account the most up-to-date CWA requirements, as reflected in the CFR. The OIG commends both OECA and OW for proposing to work together to integrate more closely their existing program-reviews processes. The reco mmendation is undecided with agreed-to actions pending. In its final response to this report, EPA should provide estimated or actual completion dates for this recommendation.



### 2-3 We agree that establishing processes, as discussed above, for reviewing MOAs as part of our ongoing program reviews would be usef ul and would assist in ensuring nationally consistent program performance over time.

OIG Response: The OIG agrees with the Agency’s proposed actions in response to recommendation 2-3. The r ecommendation is open with agreed-to actions pending. In its final response to this report, EPA should provide estimated or actual completion dates for this recommendation.



### 2-4 We agree that maintaining a publicly av ailable repository of MOAs would improve transparency and accountability.

OIG Response: The OIG agrees with the Agency’s proposed actions in response to recommendation 2-4. The r ecommendation is open with agreed-to actions pending. In its final response to this report, EPA should provide estimated or actual completion dates for this recommendation.



### Please see the attachment fo r specific technical correcti ons and comments. Should you have any questions or concer ns about this response, plea se contact Nena Shaw at 

### (202) 564

- 5106.



### Bob Perciasepe /s/

Attachment

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Appendix E



## Distribution

Office of the Administrator Deputy Administrator Assistant Administrator for Enforcement and Compliance Assurance Assistant Administrator for Water Director, Office of Regional Operations Agency Follow-up Official (the CFO) Agency Follow-up Coordinator General Counsel Associate Administrator for Congressiona l and Intergovernmental Relations Associate Administrator for External Affairs and Environmental Education Audit Follow-up Coordinator, Office of En forcement and Compliance Assurance Inspector General

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