U.S. GOVERNMENT PRINTING OFFICE

68–419 CC WASHINGTON : 2001

S. HRG. 106–919

SUCCESSFUL STATE ENVIRONMENTAL PROGRAMS

HEARING

BEFORE THE

COMMITTEE ON

ENVIRONMENT AND PUBLIC WORKS

UNITED STATES SENATE

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

ON

OVERSIGHT OF PROGRAMS DELEGATED BY THE EPA TO STATE

DEPARTMENTS OF ENVIRONMENTAL PROTECTION

MAY 2, 2000

Printed for the use of the Committee on Environment and Public Works

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

ONE HUNDRED SIXTH CONGRESS, SECOND SESSION

BOB SMITH, New Hampshire, Chairman

JOHN W. WARNER, Virginia

JAMES M. INHOFE, Oklahoma

CRAIG THOMAS, Wyoming

CHRISTOPHER S. BOND, Missouri

GEORGE V. VOINOVICH, Ohio

MICHAEL D. CRAPO, Idaho

ROBERT F. BENNETT, Utah

KAY BAILEY HUTCHISON, Texas

LINCOLN CHAFEE, Rhode Island

MAX BAUCUS, Montana

DANIEL PATRICK MOYNIHAN, New York

FRANK R. LAUTENBERG, New Jersey

HARRY REID, Nevada

BOB GRAHAM, Florida

JOSEPH I. LIEBERMAN, Connecticut

BARBARA BOXER, California

RON WYDEN, Oregon

DAVE CONOVER, Staff Director

TOM SLITER, Minority Staff Director

(II)
(III)

CONTENTS

Page

MAY 2, 2000

OPENING STATEMENTS

Baucus, Hon. Max, U.S. Senator from the State of Montana .............................. 5

Lautenberg, Hon. Frank R., U.S. Senator from the State of New Jersey ........... 8

Smith, Hon. Bob, U.S. Senator from the State of New Hampshire ..................... 1

Article, There’s Smog in the Air, But It Isn’t All Pollution .......................... 4

Thomas, Hon. Craig, U.S. Senator from the State of Wyoming .......................... 7

WITNESSES

Bradford, Brent C., Deputy Director, Utah Department of Environmental

Quality .................................................................................................................. 30

Prepared statement .......................................................................................... 124

Report, EPA Vision and Operating Principles for Environmental Management ............................................................................................................... 126

Resolution, Utah Legislature ........................................................................... 135

Responses to additional questions from:

Senator Chafee .......................................................................................... 134

Senator Lautenberg ................................................................................... 132

Senator Smith ............................................................................................ 127

Grumet, Jason S., executive director, Northeast States for Coordinated Air

Use Management ................................................................................................. 43

Article, Heavy-Duty Diesel Emission Reduction Project ............................... 157

Prepared statement .......................................................................................... 152

Responses to additional questions from Senator Lautenberg ....................... 159

Guerrero, Peter F., Director, Environmental Protection Issues, General Accounting Office ...................................................................................................... 11

Prepared statement .......................................................................................... 61

Report, Collaborative EPA-State Efforts Needed to Improve New Performance Participation System .......................................................................... 68–100

Responses to additional questions from:

Senator Chafee .......................................................................................... 67

Senator Smith ............................................................................................ 66

McCabe, W. Michael, Acting Deputy Administrator, U.S. Environmental Protection Agency ...................................................................................................... 9

Prepared statement .......................................................................................... 50

Responses to additional questions from:

Senator Chafee .......................................................................................... 57

Senator Lautenberg ................................................................................... 58

Senator Smith ............................................................................................ 54

Olson, Erik D., senior attorney, Natural Resources Defense Council ................. 42

Prepared statement .......................................................................................... 147

Scarlett, Lynn, executive director, Reason Public Policy Institute ...................... 39

Article, Moving to a New Environmentalism ................................................. 144

Prepared statement .......................................................................................... 136

Responses to additional questions from Senator Smith ................................ 141

Seif, James, Secretary, Pennsylvania Department of Environmental Protection ........................................................................................................................ 28

Letter, supplement to testimony ..................................................................... 122

Prepared statement .......................................................................................... 119

Responses to additional questions from:

Senator Chafee .......................................................................................... 124
Page

IV

Seif, James, Secretary, Pennsylvania Department of Environmental Protection—Continued

Responses to additional questions from—Continued

Senator Smith ............................................................................................ 122

Shaw, R. Lewis, Deputy Commissioner, Environmental Quality Control,

South Carolina Department of Health and Environmental Control, and

President, Environmental Council of the States ............................................... 19

Article, Role of State Governments in Environmental Protection Has

Increaseed ...................................................................................................... 102

Prepared statement .......................................................................................... 100

Report, State Air Pollution Control Program Survey, 1999 .......................... 104

Responses to additional questions from:

Senator Chafee .......................................................................................... 110

Senator Lautenberg ................................................................................... 111

Senator Smith ............................................................................................ 106

Senator Voinovich ..................................................................................... 110

Varney, Robert W., Commissioner, New Hampshire Department of Environmental Services .................................................................................................... 26

Prepared statement .......................................................................................... 112

Responses to additional questions from:

Senator Chafee .......................................................................................... 117

Senator Smith ............................................................................................ 113

ADDITIONAL MATERIAL

Letter, Georgia Department of Natural Resources ............................................... 167

Statement, Texas Natural Resource Conservation Commission .......................... 165
(1)

SUCCESSFUL STATE ENVIRONMENTAL

PROGRAMS

TUESDAY, MAY 2, 2000

U.S. SENATE,

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,

Washington, DC.

The committee met, pursuant to notice, at 10:05 a.m. in room

406, Senate Dirksen Building, Hon. Bob Smith (chairman of the

committee) presiding.

Present: Senators Smith, Baucus, Lautenberg, Thomas, and

Chafee.

OPENING STATEMENT OF HON. BOB SMITH,

U.S. SENATOR FROM THE STATE OF NEW HAMPSHIRE

Senator SMITH. The Environment and Public Works Committee

hearing will come to order.

I’d like to say good morning, everyone. I’d like to welcome everyone to today’s hearing on successful State environmental programs,

and particularly thank the witnesses for some very enlightening

written testimony. The materials we’ve received I think reflect the

importance of this issue, as well as the passion and the innovative

spirit that the States are bringing out to environmental protection.

This is the second in what will be a series of general oversight

hearings that we plan to conduct at the full committee level.

As I mentioned when the committee held its first oversight hearing on EPA’s proposed budget for 2001, I wanted to step back a bit

and take a look at the big picture of environmental protection. We

will learn about programs that work. We might hear some about

others that don’t. But I hope we’ll get many suggestions for some

new approaches to some old problems, and perhaps in so doing not

create more in the future.

I hope that we’re going to hear about opportunities to improve

environmental protection, providing the States the flexibility to

identify their own priorities and to develop their own programs,

and I believe that’s very essential to improving environmental protection.

It has been said before, but it is worth repeating, that one size

does not fit all. There’s no way that we could look at any agency

in Washington and draft an environmental law that says it applies

to every single town, every single community, every single environmental problem in America. My goal over the long term will be to

develop an EPA authorization bill that can incorporate some of the
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concepts that are discussed in these hearings. Today’s hearing is

the first step in that very long process.

Over the past 30 years, Congress and the EPA have taken what

has been called a ‘‘stovepipe approach’’ to environmental protection—one law to address air, one law to address water, one law to

address endangered species, another to address toxic wastes in the

ground, and so forth. The problem is that these laws often don’t

connect. There’s no connection between the stovepipes.

That approach, when we first began with environmental protection, was necessary. We were desperate. We had problems, and we

needed to address them, and we needed to address them in a

hurry. The question is: do we still need to stay with that kind of

focus, or should we do something that connects and prioritizes

these various stove pipes that we talk about.

In the 1970’s, we were faced with rivers that were catching fire,

raw sewage being discharged directly into our rivers and streams,

and smokestacks billowing untreated fumes and toxic wastes,

threatening our neighborhoods, so we did have an end-of-pipe solution, but the environmental problems we face today have evolved

and they are more complex—problems that often can’t be solved by

the old approach.

The Clean Air Act amendments of 1990, for example, imposed a

mandatory oxygenate requirement for gasoline. To meet that mandate, the refiners put MTBE in the gasoline supply. That same

MTBE is now causing serious groundwater contamination throughout our country in tens of thousands of wells, not to mention lakes

and streams, all over America.

The remedy addressed one problem—air pollution—but it created

another one even greater, contamination of the groundwater.

The old approach to environmental protection has been equally

ineffective in targeting limited resources on the most significant environmental problems. Under current law, for example, a company

may be required to spend tens of millions of dollars on a pump-andtreat system to try to clean up an aquifer contaminated with

DNAPLs—dense, nonaqueous-phase liquids—just what I always

thought I’d be talking about when I became a U.S. Senator—even

though the regulators know that the cleanup effort will almost certainly not be successful, because DNAPLs cling to the rocks and

cannot be removed usually by pump-and-treat, as many in the audience know.

But if the laws were more flexible, then those same resources

might be spent on other priorities and we could contain, if that aquifer could be contained, and we could use the money somewhere

else. It might be better spent, for the time being, to clean up another problem. So we need to look at a holistic approach, moving

from pipe to pipe.

This point was made very well in a recent article in the ‘‘Washington Post’’ just this past Sunday. Let me read a quote from that.

The piece was entitled, ‘‘There’s Smog in the Air, but it isn’t all

Pollution.’’ Jonathan Rauch cited a 1998 ‘‘Resources for the Future

Assessment of U.S. Environmental Policy’’ that concluded the following: ‘‘Nine major laws and hundreds of minor ones govern environmental policymaking. The resulting policies are fragmented,

complex, disjointed, beset by rigidity and lack of coherence. Worse,
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priorities have changed little since the EPA was founded in 1970,

with a main focus on water, air, and traditional toxins, even

though other problems, such as radon, are now more pressing.’’

Mr. Rauch went on to note in that article that, ‘‘Environmental

policy is obsessed with cleanliness and chemicals, chasing smaller

and smaller quantities of less and less dangerous substances, and

that is still what the law is doing, and in many of the same ways.

It is fighting the old war with the old tactics, but the world has

changed.’’

I would ask unanimous consent to include a copy of that article

in the hearing.

The point is right now we need new, innovative, flexible, and

more-effective weapons to deal with the environmental problems.

We have to solve the environmental problems we have today, but

we don’t want to create more for tomorrow. I think that’s the essence of what we are about here.

The States will be the key to expanding the toolbox and successfully solving the environmental issues of the 21st century.

In the ‘‘Almanac of American Politics 2000,’’ Michael Barrone

wrote, ‘‘The initiative in shaping public policy is leaching out of

Washington to the States, the localities, and the private sector.’’ I

wish it had been flowing out a little faster than leaching out.

We will hear today from many people that States are taking the

first steps to implement innovative new approaches to environmental problems. They are setting priorities. They are developing

partnerships with EPA and the private sector. And they are achieving real results on the ground. They are taking a holistic approach

to the environment. They’re making decisions based on good

science, on risk assessment, and other tools in the box to maximize

environmental benefits with limited resources, and I think not only

should we listen to the States, we ought to encourage and promote

these successful State programs.

Two weeks ago I was in a symposium in New Hampshire sponsored by the University of New Hampshire on environmental issues. It brought together some of the best, most creative minds in

the State of New Hampshire, and some even from outside of the

State of New Hampshire. I heard a lot of ideas about how we in

Congress can improve our environmental laws to make them more

effective and achieve better results. It is amazing what you learn

when you listen to people on the job every day out there on the

forefront who are doing the environmental cleanup.

One of the most consistent themes of that conference was flexibility. ‘‘Give us the flexibility. Give us the responsibility. Federal

funding, yes, where needed. Help us out with resources when we

need it, but let us do the job. Let us do the job. We’ll get it done

and we’ll do it right.’’ And I believe that the States have a good

story to tell in this regard, and I think it is time we start learning

and it is time we start listening—not just listening with testimony,

but reacting to that testimony and helping them.

So I look forward today to hearing from all the witnesses, and

especially from my friend from New Hampshire, Bob Varney, on

the performance partnership system, which is working so well in

New Hampshire, where New Hampshire has negotiated a performance partnership agreement with the EPA that allows it, the State,
4

to identify priorities, and, within certain parameters, tailor its limited resources to address its own unique environmental problems

and priorities.

So I believe that we should encourage and build upon these

kinds of cooperative agreements that give States flexibility, while

still holding them accountable.

I look forward to hearing about the performance partnership act

agreements, as well as other information and testimony from the

witnesses.

Senator SMITH. At this time, I would yield to my colleague, the

ranking member, Senator Max Baucus.

[The article referenced in Senator Smith’s statement follows:]

[From the Washington Post, April 30, 2000]

THERE’S SMOG IN THE AIR, BUT IT ISN’T ALL POLLUTION

(By Jonathan Rauch)

Thirty years ago, President Nixon, who was soon to announce that he would seek

the creation of an Environmental Protection Agency, left little doubt about what he

wanted to protect. ‘‘The 1970’s absolutely must be the years when America pays its

debt to the past by reclaiming the purity of its air, its waters, and our living environment,’’ he said as he signed the National Environmental Policy Act.

Purity; clean air; clean water. Nixon’s words aptly framed the 1970’s environmental agenda. The good news today is that the country has succeeded with that

agenda beyond most expectations. The bad news is that most people in the country

don’t know it. The public’s ignorance is not at all good for the environmental movement.

While activists came together last weekend to celebrate Earth Day 2000, the public celebrated Earth Day 1970 for the 31st time.

American environmentalists have one of the great American success stories to tell,

if only they would tell it. For example, in June 1969 the Cuyahoga River in Cleveland caught fire (not for the first time); that river burns no longer, and the EPA

estimates that the proportion of major U.S. lakes, rivers and streams that are safe

for fishing and swimming has doubled since 1970, to about 70 percent. Today, the

most toxic thing about the once-foul Potomac River is the view of Rosslyn in Northern Virginia.

The record on air pollution is more striking still. Since 1970, the population has

grown by almost a third, and both the gross domestic product and the number of

miles we rack up while driving have more than doubled. The sulfur dioxide and carbon monoxide levels are down by two-thirds, nitrogen oxide by almost 40 percent,

ozone by 30 percent; lead has effectively been banished from the air. In the cities,

unhealthy air days are down by more than half, just since 1988. All told, the volume

of toxic substances released into the atmosphere has dropped 42 percent since then.

‘‘Pollution in all categories has declined, and pollution has declined even relative to

domestic manufacturing output,’’ says Gregg Easterbrook, whose 1995 book, ‘‘A Moment on the Earth: The Coming Age of Environmental Optimism,’’ was denounced

by some environmental activists as inexcusably cheery.

But here’s the really odd thing: Much of the public doesn’t believe it. In March,

Environmental Defense (formerly the Environmental Defense Fund) commissioned

an Earth Day poll. A clear majority of the 1,000 adults surveyed, 57 percent, said

that U.S. environmental conditions are worse today than 30 years ago; 67 percent

agreed that ‘‘Despite the Clean Air Act and Clean Water Act, air and water pollution seem to continue to get worse.’’ Young people were even gloomier than older

people.

’’We were surprised,’’ says Steve Cochran Environmental Defense’s spokesman.

‘‘It’s clear that people haven’t taken much heart in the progress that’s been made.’’

Other surveys confirm the public’s gloomy outlook: A Newsweek poll conducted this

month by Princeton Research Associates found 52 percent saying the country has

made only ‘‘minor progress’’ toward solving environmental problems since the first

Earth Day, and 23 percent saying ‘‘no progress’’ or that the problems had gotten

worse. Plainly, where the environment is concerned, the public and reality have

parted ways.
5

Why is the public so unaware of the good news? In part, because journalists are so reluctant to report it. In a series of studies, the Washington-based Center for

Media and Public Affairs has found that ‘‘the news makes environmental problems

look worse than the scientific experts believe,’’ according to Robert Richter, the nonprofit center’s president. Critical stories on governments’ and businesses’ handling

of environmental problems vastly outnumber positive ones, the center finds, and stories about impending crises are incessant. Fueling that tendency are environmentalists themselves. The radical ones have spent the past 30 years gleefully forecasting one apocalypse after another. Mainstream groups are calmer, but they don’t spend much time talking about how much

cleaner your air is. The environmental community, notes Environmental Defense’s

Cochran, has always seen its main job as pointing out problems. Fair enough, up to a point; you can’t convince people to change the world by tell- ing them that everything is just fine. But decades of alarmism have extracted a

price. In a roundabout way, environmentalists’ gloom has hobbled

environmentalism.

In 1998, Resources for the Future, an environmental think tank, published an assessment of U.S. environmental policy. The verdict was quietly scathing Nine major

laws and hundreds of minor ones govern environmental policymaking, the think

tank noted; the resulting policies are ‘‘fragmented,’’ ‘‘complex,’’ ‘‘disjointed,’’ beset by

‘‘rigidity and lack of coherence.’’ Worse, priorities had changed little since the EPA

was founded in 1970, with the main focus on water, air and traditional toxins, even

though other problems, such as radon, are now more pressing. ‘‘The system is not

all that different from the way it was in 1970,’’ says Terry Davies of Resources for

the Future, who was an author of the study. Twentieth-century environmentalism began, under Theodore Roosevelt, as a brawny conservationism. But its rebirth in the 1960’s sprang from worries about

pesticides and carcinogens and smoggy air and burning rivers. So Congress and the

EPA dedicated themselves to eliminating incremental nanograms of pollutants:

‘‘microenvironmentalism,’’ to borrow a term from Peter Huber of the Manhattan Institute. Environmental policy became obsessed with cleanliness and chemicals, chasing smaller and smaller quantities of less and less dangerous substances. That is still what the law is doing, and in many of the same ways. It is fighting the old war with mostly the old tactics. But the world has changed. ‘‘The threats

to health and safety from air and water are negligible,’’ says Robert W. Crandall,

an economist at the Brookings Institution. The environmental movement, unlike the

environmental policy, has evolved in step with that reality. What primarily worries

serious environmentalists these days is not the microcosm but the macrocosm: big,

global issues such as extinction and biodiversity, depleted stratospheric ozone,

urban sprawl, rain forest destruction and, above all, global warming. But the public yawns. It stands squarely behind the agenda of the first Earth Day. In a poll earlier this month, the Gallop Organization found that the public

frets a lot about air and water pollution, worries much less about ozone depletion,

rain forests and habitat loss, and cares hardly a fig for extinction and urban sprawl.

At the bottom of the list? You guessed it: global warming. The Environmental Defense poll turned up similar results, with global warming ranked second to last,

ahead of only urban sprawl. In other words, the public’s priorities almost perfectly invert the environmental movement’s priorities. Perversely, the aspirations of Gore-era environmentalism are

now blocked by the public’s commitment to Nixon-era environmentalism. And who can blame the public? Americans’ capacity for worry is limited, and envi- ronmentalists are asking them to worry about everything at once. Air and water are

still dangerous, they tell us, but global warming is even more dangerous—superdangerous! Perhaps inevitably, their message drowns itself out. If, as environmentalists and the media and the movie ‘‘Erin Brockovich’’ remind us, the air and

water are still full of poisons, then the 1970’s agenda is as urgent as ever. And if

we’re still one breath or sip away from bowel cancer, global warming will have to

wait.

So gloom has propelled environmentalism forward, but at the steep price of leav- ing its followers behind. The movement has proved expert at giving alarm; now,

against its every instinct, it needs to learn to give hope. To get beyond 1970, it must

at long last swallow its pride and concede victory.

OPENING STATEMENT OF HON. MAX BAUCUS,

U.S. SENATOR FROM THE STATE OF MONTANA

Senator BAUCUS. Thank you very much, Mr. Chairman. I commend you for holding these hearings. It is always good to take per-
6

spective of where we are and how well these statutes work. Actually the subject of this hearing does cut to the heart of one environmental protection. The relationship between Federal and State environmental programs is the main question. What do we do about

all of this?

The history on this subject, as you know, Mr. Chairman, is long.

The first Federal environmental laws, like the Water Pollution

Control Act of 1956 and the Air Quality Act of 1967, left the States

with the primary responsibility for pollution control. The Federal

Government at that time conducted research and provided technical assistance, but that was pretty much it.

In the 1970’s, under the leadership of this committee, Congress

concluded that those early laws had fallen short, and a national approach was needed. Bipartisan laws, such as the Clean Air Act of

1970 and the Clean Water Act of 1972, were enacted by Congress

and signed by President Nixon. They shifted primary authority for

the formulation and enforcement of environmental standards to the

EPA, but also authorized EPA to delegate that authority to qualified States.

Subsequent environmental laws, like the Safe Drinking Water

Act and RCRA, followed the same model.

This system of Federal standards and State delegation has had

mixed results. On the one hand, it has helped make environmental

protection one of the great success stories of the post-cold-war era.

Since 1970’s, our population has increased by 70 million people, but

our air and our water are definitely cleaner, by a good measure.

Clearly, a system of strong national environmental laws has been

a key to this success.

On the other hand, many people, including many capable and

committed State environmental officials, believe that the Federal/

State relationship is not working as well as it should. They want

more flexibility. They want to be equal partners, not junior partners.

These are not new issues. We have been wrestling with them for

some time. In fact, in 1993, when I became chairman of the committee, one of our first hearings was on this very same subject.

As I said then, I’m prepared to explore reforms in the Federal/

State relationship. I don’t believe that the Federal Government always knows best. But we should explore these reforms carefully.

The current system of national environmental laws has been, for

all of its imperfections, a great success. We should not make major

changes to the current regulatory system without careful consideration of its implications.

To my mind, there are three issues. First, how does EPA set the

basic criteria to determine whether a State is qualified to assume

primary responsibility for implementing a national environmental

law? In the case of some environmental laws, this may be no longer

a big issue because most States already have been delegated the

necessary authority. In some other cases, however, it is an issue.

For example, as we consider reforms to Superfund, the Endangered

Species Act, and the remediation waste program, we need to consider appropriate criteria for increased State roles.

The second issue is the appropriate level of Federal oversight.

We don’t want the EPA to micromanage the States. We don’t want
7

people to focus on bean counting rather than on real environmental

performance. However, even in a reformed system, the Federal

Government does have an important role.

A former chairman of this committee, John Chafee—who was the

father of one of our eminent colleagues on this committee—made

this point during a 1993 committee hearing. He noted that States

sometimes need a threat of Federal enforcement in order to persuade their own legislatures to take necessary action.

Senator John Chafee said, ‘‘I don’t know how in Rhode Island or

Montana or any place else we could maintain strong environmental

programs without the assurance that other States were at least

having a minimal environmental protection standard likewise. We

have tremendous competitive pressures saying, ‘‘You’re forcing us

to do things that they’re not doing next door.’’ I think it is a point

well worth remembering.

Which brings me to the third issue, resources. If we move to a

system that is more flexible and that looks at environmental performance rather than more static measures, we should understand

that the new system will require more resources than the current

one—it will require more people and more money.

If we are going to allow flexible permits that allow tradeoffs between, for example, air emissions and water discharges, they will

take time to measure the tradeoffs and consult with people in the

affected community. Then it will take careful monitoring to assure

that the system is delivering the promised benefits.

Don’t get me wrong. I’m all for more-integrated and flexible approaches. I have proposed multimedia systems of my own. But I

agree with Jason Grumet of NSCAUM who says in his prepared

testimony that ‘‘without increased resources, well-intentioned efforts toward flexibility will ultimately be undermined by a small

minority of interests who will seek to exploit this flexibility for private gain.’’

With that, Mr. Chairman, I thank you again for taking another

look at this issue. It is one that we should look at, but it is one

that does not have easy answers.

Thank you.

Senator SMITH. Thank you, Senator Baucus.

Senator Thomas?

OPENING STATEMENT OF HON. CRAIG THOMAS,

U.S. SENATOR FROM THE STATE OF WYOMING

Senator THOMAS. Mr. Chairman, I will just file a short statement, please.

I am glad, too, that you are holding this hearing. This is a subject that we all deal with. I’ve really come to the conclusion that

much of it is a mentality, a culture of sorts. It is like contracting.

If you are going to contract to someone, then you must have the

supervisory capacity to act, or you should get out of the contract

business.

I think a lot of the local people in the agencies do seek to really

have partnerships, but often from the top down they are not allowed to do that.
8

There are a lot of successes. Wyoming, for instance, had some

real successes on underground storage tanks, and they did pretty

much themselves.

So I hope that, as we go about talking about partnerships, that

we commit to finding the technique, culture, or mentality to let

that happen. I believe that’s what holds us much of the time.

Thank you, sir.

Senator SMITH. Thank you, Senator Thomas.

Senator Lautenberg?

OPENING STATEMENT OF HON. FRANK R. LAUTENBERG,

U.S. SENATOR FROM THE STATE OF NEW JERSEY

Senator LAUTENBERG. Thank you, Senator Smith, for holding this

hearing.

I’ve listened carefully to what you had to say, and I agree that

there has to be more cooperation. That seems to be a theme upon

which we can all agree. How do you put that into place without discriminating against some people who live in States that aren’t performing quite up to the standards that might be best for their

health? Are we to stand by and say, ‘‘There is a pollution discharge

from industrial States of the Midwest and the air floats over New

Jersey, New York, Connecticut, and Rhode Island. That’s that Midwestern State’s decision.’’ Well, it’s not, because it’s not just their

air; it is our air, too. When it comes to rivers and streams, it’s not

their streams; it is our streams, too. When it is the Hudson River

that separates New Jersey from New York, it is a jointly owned resource. It also carries joint responsibility.

So, Mr. Chairman, I think it is a very important subject to review, but too often there have been differences on how you get this

cooperation done.

I think that to suggest that States should be left out would be

entirely wrong. On the other hand, I think to say the Federal Government ought to be left out, in my view, would be entirely wrong.

I think Senator Baucus pointed out that in many cases the

States and the communities were responsible for developing environmental law that ultimately became Federal law, because they

were working directly with the problem.

My own State of New Jersey is laboring to clean up hundreds of

toxic dump sites. We had an industrial past, and it created a grim

present, and perhaps even a grimmer outlook for the future when

you see that pollution of water and air might be the result of the

pollution.

In Southern California, climate and dependence on automobiles

made it susceptible to smog. It still leads the Nation in air pollution. Again, an example of what some had to do in order to clean

the air.

The first models for the acclaimed ‘‘right to know’’ laws actually

came from cities—Philadelphia and Cleveland, to name a couple.

These States and municipalities could not wait for the Federal Government to act. They had pollution problems that needed to be

solved, and solved then.

We have always looked to State and local agencies for that kind

of leadership and information and innovation.
9

At the same time, we’ve got to maintain a level playing field nationwide. There is a critical role for the Federal Government to

play in setting minimum standards for environmental protection.

Water pollution—water bodies don’t recognize State boundaries.

The beaches legislation that this committee recently reported out,

Mr. Chairman, also deals with the issue of consistency among

States.

So without the Federal Government serving to set a baseline for

what is clean, the public can’t be assured that the beaches will be

tested the same way no matter what State they visit. One could be

cavalier about that and say, ‘‘Listen, you’ve got to know the State

that you’re going to. Do they care about the parasites in the water

as much as States A, B, and C?’’ Well, I think the public has really

the right to know that.

Even in the international arena, the key to ratifying the Kyoto

Protocol on climate change will be hammered out as a workable arrangement under which developing countries reduce their greenhouse gases. It affects all of us.

I remember when some of us were in Brazil, at the first summit.

I talked to an interior minister from Brazil and complained bitterly

about the burning of the Amazon. His response to me was that,

‘‘Well, one of our farmers burning an acre of land does substantially less damage to the environment than one of your chemical

workers producing material that works itself into the air and invades our air and other people’s air, as well.’’

So, once again, you are drawn into a cooperative environment

that I think also has to be considered as we write law and as we

hold these hearings.

So, Mr. Chairman, I think you are doing the right thing, and I

hope that we’ll have a chance to hear from the witnesses in full as

to what they think about it.

Senator SMITH. Thank you, Senator Lautenberg.

Senator Chafee, so you have any opening comments?

Senator CHAFEE. I thank the chairman for calling the hearing

and look forward to hearing the successful State stories from the

panelists today.

Thank you.

Senator SMITH. I’d like to welcome Mr. McCabe and Mr. Guerrero. Michael McCabe is the Acting Deputy Administrator of the

U.S. EPA, and Mr. Guerrero is the Director of Environmental Protection Issues at the General Accounting Office.

Gentlemen, as you know, your statements will be made part of

the record. I would appreciate it if you could summarize in about

5 minutes, because we have two other panels, as well. In order to

get the questions in, we’re going to need to kind of tighten up the

time, if we can.

Mr. McCabe, we’ll start with you.

STATEMENT OF W. MICHAEL McCABE, ACTING DEPUTY ADMINISTRATOR, U.S. ENVIRONMENTAL PROTECTION AGENCY

Mr. MCCABE. Good morning, Chairman Smith, Senator Baucus,

members of the committee.

I’d like to thank you for the opportunity to speak here today, to

represent the Agency, talk about this important work that we are,
10

in fact, doing with our partners, the States, to protect public health

and the environment.

As a former Regional Administrator of the mid-Atlantic States,

I saw day-to-day the strengths and frustrations of the EPA/States

partnerships. I am pleased to say that the strengths far outweighed

the frustrations. You will be hearing from some of my colleagues

in the next panel about their perception of this partnership.

As we approach the 30th anniversary of the creation of the Environmental Protection Agency in December, Americans have much

to be proud of. As you mentioned, Mr. Chairman, we have come a

long way in our journey as world pioneers in environmental protection.

The highlights of our 30-year history confirm that the Nation’s

environment is safer and the public health is more secure than it

was when EPA began.

At various times, vested interests have sought to derail and roll

back these significant advances. The foundation of public support

built over the years, however, has proven immovable, and the rallying cry of opponents to strong protection that environmental protection is incompatible with economic expansion has been debunked and discredited in the wake of the strongest economic performance in our Nation’s history.

Under the Nation’s environmental laws, EPA and the States

each have important duties. We are coequal and interdependent. A

longstanding division of labor defines our roles. Broadly speaking,

EPA is charged with developing standards that provide basic protection for all citizens. States are the primary delivery agents,

working directly with businesses, communities, and concerned citizens.

A number of Federal laws call for EPA to delegate to the States

the primary responsibility for program implementation, and States

have, in fact, now assumed responsibility for approximately 70 percent of the programs eligible for delegation. Over nearly three decades, States, localities, and tribes have developed a strong environmental management capacity. A number of States have increased

their investment in environmental programs and have adopted environmental standards that exceed Federal requirements.

During this Administration, we have built on this progress. We

have advanced these partnerships.

Under the unprecedented continuity of leadership provided by

EPA Administrator Carol Browner and senior EPA leadership with

strong State background and experience, new ways of thinking are

reshaping the Agency and transforming the organizational culture

that marked our first two decades.

Nontraditional thinking has strengthened our relationship with

State and local governments, as well as the American public, as a

whole. We are forging a culture of collaboration rooted in mutual

respect, mutual trust, and a shared sense of obligation to future

generations.

State governments have become far more than conduits for Federal policy. Together, EPA and the States are now developing new,

more-effective, and less-costly ways of achieving environmental

goals. Together, we are testing and retesting those ideas. Together,

we are providing the American people with the information they
11

need to better understand their local environment and act to protect it.

In brief, Mr. Chairman, we have laid to rest the ‘‘us versus them’’

approach that characterized EPA’s first 20 years.

Five years ago, in recognition of the critical role States have

come to play, EPA joined with our State partners to establish the

National Environmental Performance Partnerships System,

NEPPS. NEPPS is built on our shared commitment to the continuous improvement of environmental programs. It provides the foundation for flexible partnerships with the capacity to adapt to changing priorities. NEPPS focuses us on performance rather than process, on environmental results rather than procedural details. In

doing so, it frees the States to work with EPA to target their highest environmental priorities. An underlying theme of NEPPS is the

importance of earning public trust by achieving measurable environmental results.

I know that you will be talking about some of the innovations

and accomplishments under NEPPS. I won’t go into that in my testimony, but it is in my written statement.

Our progress has been substantial, but more needs to be done.

As the Environmental Protection Agency nears its 30th anniversary, we are an organization in transition. New ways of thinking

permeate the EPA culture, even as we aggressively meet our traditional responsibilities.

Innovative ways of protecting the environment are flourishing at

EPA, States, towns, cities, and in businesses throughout the Nation. So, too, is the spirit of partnership. These two forces—innovation and collaboration—as you mentioned, Mr. Chairman, are converging to prepare EPA, in concert with our State partners, to respond more effectively to the environmental challenges of this new

century. Together, I am confident we are poised to continue a remarkable record of remarkable progress.

Thank you.

Senator SMITH. Thank you very much, Mr. McCabe.

Mr. Guerrero?

STATEMENT OF PETER F. GUERRERO, DIRECTOR, ENVIRONMENTAL PROTECTION ISSUES, GENERAL ACCOUNTING OFFICE

Mr. GUERRERO. Thank you, Mr. Chairman.

I’m pleased to be here to discuss our recent assessment of the national environmental performance partnership system, or NEPPS.

NEPPS, as you heard, was established 5 years ago this month as

a framework for improving the EPA/State relationship and for improving the effectiveness of State environmental programs.

NEPPS was intended to address longstanding issues affecting

the EPA/State relationship. Among these issues were concerns that

EPA had been inconsistent in its oversight of State programs, that

it had micromanaged State programs, that it had provided insufficient technical support, and that it had inadequately consulted the

States before making key decisions affecting them.

One key element of NEPPS is EPA’s commitment to give States

with strong environmental performance greater flexibility and autonomy in running their environmental programs.
12

A second key element is the agreement among EPA and the

States to develop core performance measures that could be used to

identify whether State programs are achieving their intended results.

Given the expectation among participants that NEPPS could deal

with many of the issues that have long hampered effective EPA/

State relations, we were asked by the chairman of the House Subcommittee on VA, HUD and Independent Agencies to examine the

progress made by EPA in the States since the 1995 agreement. Our

analysis, issued last year, addressed four questions.

The first question asked us to identify the status of grants and

agreements made under NEPPS between EPA and the participating States. When NEPPS was initially tested on a pilot basis, there

were six States that were participating. EPA and the States viewed

the first year as a time to experiment with the new system in various ways to implement it. The number of participating States subsequently increased to 45 in fiscal year 1998, although the extent

of program participation varied widely from State to State. EPA’s

most recent date show that State participation in NEPPS has remained about the same since our report was issued last year.

The second question we were asked was: what progress has EPA

and the States made in developing results-oriented performance

measures for NEPPS and grants? Both EPA and States agree on

the importance of measuring outcomes in environmental activities

rather than just measuring the activities, themselves. In attempting to develop these types of outcome measures, EPA and the

States have faced a number of challenges.

In particular, it is inherently difficult to quantify environmental

results. Results of activities designed to improve water quality, for

example, can take years to appear, and the capacity of most States

to monitor a significant share of their waters is limited. And even

when environmental conditions are reliably and consistently measured, it is difficult to demonstrate the extent to which a particular

environmental regulation or program resulted in the observed outcome.

These challenges were compounded by disagreements initially between EPA and the States on such matters as the degree to which

States should be allowed to vary from national measures. Nonetheless, EPA and State leaders managed to agree on a set of core

measures for fiscal year 2000 that are widely regarded by EPA and

the States as significantly improved from those negotiated in previous years.

The third question we addressed in our report, and perhaps the

most controversial, involves whether the extent of EPA oversight is

changing in States that are participating in NEPPS. Overall, the

large majority of State officials we contacted generally maintain

that participation in NEPPS has not yet brought about a significant reduction in EPA oversight, nor has it resulted in significant

opportunities for States to focus on other priorities or to shift resources to weaker program areas.

EPA officials generally acknowledged this point, but provided us

specific reasons why oversight of State programs has not significantly decreased. They pointed out, for example, that environmental statutes or regulations sometimes prescribe the level of
13

oversight required which, according to some headquarters and regional officials, leaves the Agency with little room to scale it back.

These officials also pointed to the difficulty in scaling back oversight without measurable assurance that alternative approaches

are achieving the desired results.

At the same time, we found a number of barriers preventing

greater State flexibility that could be more readily addressed. For

example, senior EPA officials in three of the four regional offices

we visited acknowledged that the support for NEPPS within EPA

varies. One senior regional official explained that many regional

managers and staff are often more comfortable with pre-existing

ways of doing business and are unsure of how they can accomplish

their work in the context of the partnership under NEPPS. He

voiced the opinion that there may be a need for training regional

staff.

Another senior official said that some agency staff will only take

NEPPS seriously when EPA’s rewards and incentives are more

closely tied to staff performance in implementing the program.

The last question we addressed dealt with whether the performance partnership agreements and grants had thus far achieved the

other benefits envisioned.

EPA and State participants cited a number of benefits associated

with NEPPS, widely crediting the process for improving communications and forging closer working relationships among EPA and

the States.

In addition, NEPPS has provided a means of getting buy-in for

innovative or unique projects and has served as a tool to divide an

often burdensome work load more efficiently between Federal and

State agencies.

Yet, while State participants indicated that their participation in

the voluntary program would probably continue, they also consistently expressed the view that the benefits of the program should

be greater, that the program has yet to achieve its potential, and

that improvements are needed.

Anticipating the need for continuous improvement of the NEPPS

process, the 1995 agreement called for a joint evaluation by EPA

and the States. In recent months, a number of assessments have

been completed, including our own, that point the way toward improving the program. Others will soon be completed.

For the NEPPS process to realize its potential, it will be critical

that EPA and the States respond to these studies in ways that address the impediments identified. For example, when we did our

work, we recommended that EPA develop a set of flexible guidelines that could be used to help clarify, among other things, the

conditions that States must meet to achieve reduced oversight by

EPA. We think this would be an important step in the right direction, and look forward to seeing how well EPA follows through on

our recommendations and those by the others who are currently

studying this issue.

That concludes my remarks, Mr. Chairman. I would be pleased

to answer any questions you may have.

Senator SMITH. Thank you very much, Mr. Guerrero.

Mr. McCabe, let me start with your point that a new relationship

is evolving with the States, that it allows EPA to adapt to changing
14

priorities and experiment with new ideas. I think that sounds like

we are conceptually in agreement.

Can you specifically identify some approaches that EPA has

taken to allow the States to adapt to these new, changing priorities?

Mr. MCCABE. Yes. In fact, some of the results of the NEPPS

framework which I have in my testimony offer some examples. We

have seen in the State of Maryland, for example, that its administrative reporting requirements have been cut in 13 areas, and the

goals that were identified through NEPPS for the evaluation that

was done in conjunction with the State and EPA are really at the

core of these results, but also at the core of the State’s strategic

plan.

Florida has developed a new performance measurement and

tracking system that actually received an Innovations in Government Award from the Ford Foundation and the Kennedy School of

Government at Harvard.

Minnesota has shifted staff resources from the main office closer

to where the real issues are in the State, the district offices, as a

result of the evaluations that they’ve done.

And the State of Washington has seen a paperwork reduction associated with its annual work plan for grants falling from 40 pages

to four pages.

These are just some of the examples. This doesn’t mean that

these are all the examples. I would point to other areas of State/

EPA cooperation as broadly based, perhaps, as the Chesapeake Bay

program, where EPA and three States have a multimedia outcomebased approach to dealing with this large estuary.

Senator SMITH. The examples that you gave are good, but I think

they may be more process-oriented or paperwork-oriented than

they are really substantive.

Most of the time, in the conversations I have with State officials

and a lot of the testimony we’ve had here in the past over the

years, the States would say that, although perhaps it may happen

from time to time, the Federal statutes, themselves, sometimes

interfere with what they want to accomplish.

Do you have a specific recommendation on a statutory change at

EPA that would help us enhance the State flexibility and

prioritization?

Mr. MCCABE. Well, I would certainly agree, and I think that both

Administrator Browner and I have stated on this issue that there

needs to be more flexibility, there needs to be a review of our national environmental statutes, many of which were created 30

years ago. There has not been that discussion, that broad, public

discussion on what the environmental outcomes ought to be as a

result of 30 years of extraordinary progress. We would encourage

that discussion to take place both in Congress and in the public,

in general, to see how we might reform some of those laws.

Senator SMITH. No specific recommendations at this point?

Mr. MCCABE. At this point I think we need to look at the big picture. We need to look at where we are going as a country from an

environmental perspective and also where we have evolved in the

State/Federal relationship.
15

Senator SMITH. Mr. Guerrero, you talk about the inherent difficulty in ‘‘letting go,’’ which is, I think, the term you used with reference to some regulators. One of your recommendations is to reduce that resistance toward the implementation of the NEPPS

through training and strategies.

What do you have in mind in regard to that type of strategy that

could produce more cooperation between State and EPA on these

issues?

Mr. GUERRERO. Mr. Chairman, there are some things that we

feel can address the cultural issues at EPA—and also at the State

level, too, because this represents a cumulative three decades of

doing business in a particular way that States and EPA are now

trying to change through NEPPS: Training, in terms of skills and

team-building, teaching both State and EPA regional staff how to

productively engage in setting goals, common goals, and agreeing

upon that, providing information, sharing information, showing

what works, what has worked in one State that could be adopted

by other States, success examples.

Most importantly I think is putting in place a set of incentives

and rewards that encourages behavior so that EPA employees are

rewarded for using NEPPS and using it to the extent that it allows

greater flexibility and more cooperative working arrangement, that

they get rewarded, as opposed to being rewarded for the enforcement bean or the inspection bean and what traditionally they have

been rewarded for. It is going to be very hard for the culture to

change if people continue to be measured by indicators that measure more traditional kinds of results that involve the kind of stovepipe approach that you talked about in your introductory remarks.

Senator SMITH. Thank you, Mr. Guerrero.

Mr. Baucus?

Senator BAUCUS. Thank you, Mr. Chairman.

Tell us what are the keys to success in reaching more flexibility.

Is it an air/water tradeoff or something else? Remember the Yorktown benzine plant issue a few years ago, where it turned out that

the laws were so specific it required a result that allowed more

benzine to be emitted, whereas if the company were to look at the

whole plant together, including the loading docks, they would have

much less cost to achieve that result.

The chairman mentioned stovepipe application to our environmental regulations—Clean Air Act, Clean Water Act, and so

forth—and it is true that a lot of companies find that the air person comes in or the water person or the waste person comes into

the plant. Some of the stuff they ask for is contradictory, but with

lots of flexibility and coordinating, as the chairman says, a more

holistic approach, you could arguably achieve a much more efficient

result—less pollution at less cost.

What are the keys to achieving that? Let me ask each of you,

what are three of the main standards, keys, approaches, or guidelines that come to mind to achieve that?

Mr. MCCABE. Well, Senator, I think administratively we have

tried to do as much as we can, given limited resources, because any

time you look at an individual case it requires an incredible commitment of resources to deal with that individual situation, as opposed to sort of the broad, generic issue. But administratively I
16

think that we tried to adapt flexibility through a number of EPA

programs—Project XL, CSI.

Senator BAUCUS. I’m not really asking what you’ve done, but

what are three rules of thumb that you use to make this work?

Mr. MCCABE. Well, one is what the standard is, what the requirement is that we are actually looking at.

In the instance of perhaps a manufacturing facility or a plant,

whether it is an emissions standard or an effluent standard, you

look at that standard and work with the facility to see if they have

ways of meeting the standard but in a more efficient and effective

way.

Senator BAUCUS. So one would be to ask the manager of the facility or the company for their suggestions?

Mr. MCCABE. Often we do that.

Senator BAUCUS. OK. What are some other ways?

Mr. MCCABE. The other ways are better communications, more

frequent communications with our partners, whether they are the

States or the regulated entity, to find out what the issues are and

to avoid any kind of specific problems.

Senator BAUCUS. I’ve got a couple of questions here, so we need

to cut it short.

Mr. Guerrero, what do you think?

Mr. GUERRERO. Yes, Senator, a couple things. I completely agree

with Mike that improved communications is central. A key element

to——

Senator BAUCUS. Communications between?

Mr. GUERRERO. Between States and EPA regions, and, in particular, States and EPA’s headquarters program managers, where

communications have not always been as good as they can be. And

that’s a reflection of the EPA organizational structure. It is like

pushing a string to get things done.

So communications is key, because that builds trust. The one

thing we’ve heard is, if the NEPPS process to date has been successful for anything, in particular it is improving communications

and trust.

Senator BAUCUS. Why is there insufficient communications and

trust? What is the impediment?

Mr. GUERRERO. I think it stems from the origin of the environmental protection program, where the Federal Government put in

place programs, delegated those to the States, and then held the

States accountable and measured what the States were doing by

setting annual targets or goals and measuring those in terms of

outputs, such as numbers of permits issued or enforcement actions

taken.

Senator BAUCUS. So what would you——

Mr. GUERRERO. And it was a very directed kind of process, and

now that has changed significantly. The States are a major player

now in environmental protection. It’s where the vast bulk of the resources are. It is where most of the responsibilities for carrying out

these laws reside. The EPA-State relationship has to change, as a

result. And to make that change, you have to change the communications and the trust involved in the process.
17

Senator BAUCUS. Very briefly, the three most common mistakes

that we should try to avoid as we strive toward, generically, flexibility.

Mr. MCCABE. I think that we should avoid the one-size-fits-all

approach. I think that we need to develop good information, because if we don’t have good information we don’t know what the

baseline is that we are operating from, and effective measures to

figure out whether we have done a good job. In fact, that is part

of what NEPPS has been trying to accomplish is performance

measures.

Senator BAUCUS. How about enforcement? I mean, there’s a lot

of tension between States and EPA over enforcements. In fact, as

I understand it, in your testimony, Mr. Guerrero, you talk about

an audit which State administrators often refer to as—they say

that they don’t back off on enforcement, because audits have shown

that State enforcement is perhaps not what it could and should be.

Mr. MCCABE. Right.

Senator BAUCUS. And there’s this over-filing issue, for example.

There is a lot of tension between States and EPA on enforcement.

How do we clear that up?

Mr. MCCABE. I think that there was more tension several years

ago between the States and EPA on enforcement than there is now.

I think that it has improved.

In the case of over-filing, in fiscal year 1999 we had 3,935 administrative and judicial actions, and there were only four instances of

over-filing, so it really——

Senator BAUCUS. So you don’t think there is tension——

Mr. MCCABE. There is——

Senator BAUCUS.—so significant today that we should get worked

up about it?

Mr. MCCABE. No. I think that there is a tension. Clearly, there

is a tension when the Federal Government feels that the minimum

standards are not being met, or perhaps the States are not being

as aggressive on pushing certain companies, certain members of

the regulated community to meet those standards, and that is our

role. It is our role to——

Senator BAUCUS. Mr. Guerrero, your thoughts on Federal/State

enforcement tension.

Mr. GUERRERO. I think the key is to provide EPA this measurable assurance that it needs to satisfy the American public that

these laws are being carried out as intended by the Congress. Ultimately I agree with Mike that what is needed is better information

and better data, especially results-oriented data that would help

address these concerns.

Very often these misunderstandings occur because the data just

are not good, and so focusing on the issue of better data and data

management at EPA is critical.

We also say that the whole process under the Results Act, where

EPA has set some 187 goals and 364 measures to measure environmental progress in this country is burdensome, and the core performance measures that EPA has negotiated with the States need

to be integrated with that process. We need to figure out how to

focus on what the key goals are or what the key kinds of measures

are.
18

Senator BAUCUS. The core performance provisions in NEPPS I

think is going in the right direction, you are saying?

Mr. GUERRERO. I think the assessment that—what we’ve heard

from both the States and EPA is that they have made progress.

The core performance measures are vastly improved.

Senator BAUCUS. It sounds like we need more resources, then.

Mr. GUERRERO. And the third point that I would make to address

what are the three things, I would completely agree. I think there

were two comments made in the chairman’s opening remarks and

in yours that really fundamentally we need to be realistic about

what NEPPS can accomplish, because it is in the framework of, as

Chairman Smith said, a set of stovepipe laws that have accrued

over time that don’t allow the kind of flexibility that perhaps now

we would like to see, and certainly all of these programs are

stressed and taxed and limited in terms of the resources they have

to get the job done, and those are two fundamental issues.

Senator BAUCUS. I thank you. I’ve encroached upon a lot of time

here, and I apologize very much to my colleagues.

Senator LAUTENBERG. If I may, Mr. Chairman, not meaning to

interrupt the Senator from Rhode Island, I would like to stay. I

can’t. I have another committee meeting starting at 11 and I’m an

integral part of that discussion, so I would ask, Mr. Chairman, that

the questions that I will submit in writing be answered as promptly as we can, to see if there are things that we can do to make the

adjustments that seem to be required to have this cooperative venture continue and improve.

I thank you very much and I thank the witnesses.

Senator SMITH. The record will be left open for questions. I have

some that I will be submitting, as well.

Senator LAUTENBERG. Thank you very much.

Senator SMITH. Senator Chafee?

Senator CHAFEE. Yes. Thank you, Senator Smith.

My experience in Rhode Island in visiting various Superfund

brownfield sites has been it is a positive relationship with EPA and

the State DEM and on down to the local communities, and, indeed,

the local activists—nothing but positive. So, as you have said, we’ve

come a long way through the years from heavy-handed, micromanaging by EPA to the situation we are in.

I am sure that you, as the Regional Administrator in the midAtlantic States, have shared that experience. Is that accurate, Mr.

McCabe?

Mr. MCCABE. Yes, it is. In fact, my colleague, Jim Seif, who represented the biggest State in the mid-Atlantic States, is here today

to talk about some of his experiences.

I truly believe that the relationships between EPA and the

States have improved. I think that it really is based on mutual respect. I think that the important issues of enforcing Federal laws

uniformly, making sure that there is consistency among the States,

is one of the key roles that the Federal Government can play, but

there needs to be some flexibility above those minimums for the

State to meet them. I think increasingly we have incorporated that

into our collaborative roles and responsibilities.
19

Senator CHAFEE. As long as that flexibility doesn’t include letting

off those States that are either upstream or upwind. Those downstream and downwind see the negative aspects of any flexibility.

Thank you.

Mr. MCCABE. We need to meet the standards.

Senator SMITH. Thank you, Senator Chafee and Senator Baucus.

As we said we have no further questions, I think we will move to

the next panel. Thank you, gentlemen, for your testimony. I know

that several members do have questions in writing to submit, and

we’d appreciate as prompt a response as possible to those questions.

Bring the second panel up: Mr. R. Lewis Shaw is the Deputy

Commissioner of Environmental Quality Control, South Carolina

Department of Health and Environmental Control and the president of the Environmental Council of the States; Mr. Robert

Varney, Commissioner of New Hampshire Department of Environmental Services; Mr. James Seif, Secretary of the Pennsylvania Department of Environmental Protection; and Mr. Brent C. Bradford,

the Deputy Director of the Utah Department of Environmental

Quality.

We’ll just move down the panel from left to right. Gentlemen, the

same information as to the last panel—your full statements will be

made part of the record. If you could summarize in 3 or 4 minutes,

it would be appreciated, since we do have another panel.

Mr. Shaw, we will begin with you.

STATEMENT OF R. LEWIS SHAW, DEPUTY COMMISSIONER, ENVIRONMENTAL QUALITY CONTROL, SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL,

AND PRESIDENT, ENVIRONMENTAL COUNCIL OF THE

STATES

Mr. SHAW. Mr. Chairman, members of the committee, thank you

for the opportunity to appear before you today.

My name is Lewis Shaw. I am the deputy commissioner of the

South Carolina Department of Health and Environmental Control.

I have 29 years of service to my State, with the last 16 of those

in my current position as the State’s environmental director.

Today, however, I am here representing the views of the Environmental Council of the States, known as ECOS, of which I am

president.

ECOS is the national, nonprofit, nonpartisan association of the

State and territorial environmental agencies. The States and territories are our members, and the people we represent are the leaders of the various State environmental agencies. Other details

about our association are provided in the attachments to this testimony, which I ask be entered into the record.

I am here to tell you of some of the accomplishments that States

have made in environmental protection—accomplishments that are

not widely known. I will make four main points.

First, States now implement most of the delegable environmental

programs. This is good news, because this is what Congress had intended when it enacted laws such as the Clean Air Act and Clean

Water Act.
20

States now have primary responsibility for carrying out those

laws. You heard Mr. McCabe mention that about 70 percent of the

major programs that could be delegated to the States have been

delegated. This means States are running most of the clean water,

clean air, safe drinking water, and waste cleanup programs that

Congress created.

As you can see from chart one, much of this growth was in the

1990’s, and, in particular, between 1993 and 1998, a 5-year period

in which State delegations grew by almost 75 percent.

As part of this responsibility, States are also collecting most of

the environmental quality data. Brent Bradford, my colleague from

the State of Utah, will be speaking more about this later.

We also conduct most of the environmental enforcement activities. In recent years, States have averaged between 75 and 80 percent of all enforcement actions taken by EPA and the States, combined. We conduct at least 97 percent of all enforcement inspections, but we also conduct many other enforcement actions and

compliance assistance that EPA may not count for one reason or

another.

Last year, Congress directed ECOS to conduct research on the issues of counting enforcement and compliance activities and report

the results to Congress. We are working on this project now and

expect to report to you early next year.

A second point is that States are paying for most of this environmental protection. As you can see in chart two, State spending for

environmental protection has grown dramatically since 1986. In

1986, States spent $5.2 billion on environmental protection and

natural resources. Congress, through EPA, provided just over $3

billion of that, almost 58 percent. But by fiscal year 1996, a very

different story has emerged. States spent about $12.5 billion, with

the EPA providing about $2.5 billion, or about 20 percent.

During the 10-year period from 1986 to 1996, State spending on

the environment increased about 140 percent, while total EPA

funding to the States decreased about 17 percent. Most of this decline is attributable to the reduction in the water infrastructure

support programs. In 1996, the States spent nearly twice as much

on environment and natural resources as the entire EPA budget.

My third point is that States conduct many other nondelegated

programs on their own, and that we are great at innovation. For

example, in South Carolina we have our own laws, rules, and practices on the protection of shellfish beds that are not part of the delegated Federal system but are very important to our State. Obviously, these kinds of laws vary from State to State, but they show

the commitment of the States to the environment.

According to the National Conference of State Legislators, States

passed into law over 700 environmental bills in 1997, alone. At

least half of these dealt with nondelegated environmental programs

such as pollution prevention and solid waste management.

As chart No. 3 shows, for example, most of the hazardous waste

sites in the country are actually being regulated and cleaned up

under State authority.

Another study by the Council of State Governments found that

80 percent of the States had at least one clean air standard that

exceeded the Federal minimum standard. In South Carolina, for in-
21

stance, our air toxics list includes 256 constituents, compared to

188 on the Federal list.

States implement most environmental protection programs, so

we are often the first to recognize innovative solutions for environmental problems.

Each year for the past 3 years, ECOS has compiled State programs and implementation innovations. These cover the complete

range of environmental protection, including delegated and nondelegated programs. ECOS has now compiled hundreds of these innovations. Some of these States’ ideas have been nationally recognized by innovations awards programs such as those of the Council

of State Governments and Harvard University.

My final point is that States are committed to the State/Federal

partnership in environmental protection. We believe that the time

for command and control, top-down programs has ended, however.

Perhaps it should be replaced by a set of mutually agreed-upon national goals and standards which would be achieved by the States

in the manner we deem most appropriate and supplemented by

local goals and standards that meet the specific needs of the States.

After all, you are not likely to see the same environmental problems in South Carolina as you would in Utah because the States

have such different ecologies.

Our final chart shows some of the differences that we think will

lead to a more harmonious relationship and better environmental

protection.

Some people still believe that it is 1970’s and that the States

cannot be trusted to protect the environment. We believe the facts

presented here today give the real story. States are leaders in environmental protection and are committed to protecting the health

and the environment of the citizens we serve.

Mr. Chairman, I would be glad to answer any questions. Thank

you for letting me appear here today.

[The charts referenced in Mr. Shaw’s statement follow:]
22
23
24
25
26

Senator SMITH. Thank you, Mr. Shaw.

Mr. Varney, welcome.

STATEMENT OF ROBERT W. VARNEY, COMMISSIONER, NEW

HAMPSHIRE DEPARTMENT OF ENVIRONMENTAL SERVICES

Mr. VARNEY. Good morning, Mr. Chairman and members of the

committee. My name is Bob Varney. I’m commissioner of the New

Hampshire Department of Environmental Services. I’ve held that

position for the last 11 years under three different Governors of

both political parties. I am here today as the past president of the

Environmental Council of the States. I am here to highlight the

success of two cooperative programs that ECOS and EPA have developed jointly, those being the national environmental performance partnership system, or NEPPS, and the ECOS EPA regulatory innovations program.

As you know, NEPPS was created 5 years ago and grew out of

an awareness that Federal and State government could be more effective and efficient if they cooperated as equal partners in planning, implementing, and reporting environmental protection.

The NEPPS agreements are called ‘‘performance partnership

agreements,’’ and in New Hampshire we just signed a performance

partnership agreement with the regional office of EPA. Our comprehensive agreement sets forth the goals, activities, and measures

of progress for a full range of Federal and State programs, which

represents a comprehensive plan for all of our agency’s programs.

Before NEPPS existed, no such document existed.

I should mention that our full agreement is available to the public on our department’s website, and ECOS is linking its home page

to many other State NEPPS agreements, which are also available
27

electronically. This means that any member of the public can review and comment on any of our State’s goals, objectives, and allocation of resources, and so it is truly a transparent process with

the public that emphasizes public participation.

To date, 38 States have performance partnership agreements

under the NEPPS system. Many have been accompanied by performance partnership grants, which allow for realignment of the

EPA funds so that limited resources can be used to address the

most pressing State problems facing the individual State.

We recognize, at the same time, that the NEPPS process is not

perfect, and have been working to try to improve the process.

We had a third national meeting in Baltimore, Maryland, last

fall to further evaluate NEPPS and develop recommendations for

improvement.

ECOS and EPA have recommitted to improving this process by

trying to implement the many recommendations that are in this

plan, and this was further renewed through the adoption of a resolution at our recent national meeting held in April in Philadelphia.

We very much appreciate the work of Deputy Administrator

McCabe, who is trying to ensure that all EPA staff understand and

work toward the continuous improvement of the NEPPS process.

I would like to now talk about another cooperative State/EPA

program designed to stimulate innovative approaches to regulation.

Here I distinguish innovative approaches to regulation from technical innovation, which will be addressed by another witness.

The States have been a well-stream for inventiveness. In dealing

with specific circumstances unique to State location or problem, we

are forced to develop innovative approaches. These documents contain hundreds of State innovations which have been developed and

are shared with other States, are available in published form and

are also available on the ECOS website.

ECOS and EPA recognize that some of these innovations might

be transferrable to other locations with similar issues, and we

wanted to provide a process for dealing with regulatory innovation

by establish a reg innovation agreement, which was signed in April

1998.

In the words of the agreement, itself, ‘‘This agreement presumes

that EPA and the States will find ways to help good ideas succeed,

and that joint EPA and State efforts to promote and test new ideas

will result in the maximum benefit to the American people and

their environment.’’

Texas was the first State to submit a project under the reg innovation agreement. It involved opacity testing. As a result of that

agreement, they were able to reduce the number of certified inspectors from 100 to 50 each year, which freed up more than 75 staff

days to do additional facility inspections and better protect the environment. This innovative tradeoff is now transferrable to other

States who can take advantage of this idea.

This simple example demonstrates the goal of identifying innovative approaches to make available faster, cheaper, and better approaches to environmental protection. It is especially useful when,

as in this instance, the approach can be tailored by other States

to meet their own needs.
28

At the spring meeting of ECOS, it was reported that, to date, five

proposals have been submitted to EPA. Four out of the five have

been approved, and an additional five or six have been submitted

and are pending approval by EPA.

This fall, EPA and the States will conduct a national workshop

on regulatory innovations, with an emphasis on case studies presented by the States.

I have provided for the committee’s use several other ECOS publications describing State innovations, and they fully demonstrate

the accomplishments of the States and the ability of the States to

carry out innovations in an appropriate way and one that is responsive to the needs of the public and is responsive to the laws

that have been set by our legislatures and by Congress.

Thank you.

Senator SMITH. Thank you, Mr. Varney.

Mr. Seif?

STATEMENT OF JAMES SEIF, SECRETARY, PENNSYLVANIA

DEPARTMENT OF ENVIRONMENTAL PROTECTION

Mr. SEIF. Good morning. Thank you for this opportunity to be

here. I am the Secretary of environmental protection in Pennsylvania. I have also been a member of the ECOS board and was a Regional Administrator in Philadelphia for a number of years and an

environmental prosecutor way back in the 1970’s, when everybody

was an environmental prosecutor, because that was the only tool

we had.

I have been before this committee six times now, and with continued patience I will keep doing it until I get it right.

Senator SMITH. Do you think you’ve taught us anything yet?

Mr. SEIF. I always learn more on the way here than I do by way

of teaching.

This morning there are 17,000 Pennsylvanians at work on 650

sites in our States that were, 5 years ago, behind cyclone fences.

Maybe Alan Greenspan gets some credit for that, as well, but I do

believe that a very innovative program, which many of our States

have used, the brownfields program, can also get some credit.

You’ll see in the testimony, and in some materials that I would

be happy to provide, some statistics, lists of awards, numbers of

sites, how many counties, rural, urban, and all of that. It can get

kind of tiresome, I remind myself, but we are very proud of it.

These are real cleanups, by the way, and not the Secretary of

Commerce trying to build stuff, but the Secretary of the Environment trying to clean up stuff. That’s how many cleanups we have,

with hundreds more in the pipeline.

I would call your attention to four elements of the main recipe

of a successful brownfields bill. One is that you have uniform and

real cleanup standards, standards that you can know about in advance and don’t have to argue ad hoc with the GS–14 at the regional office of EPA. You know what they are: they are published;

the public agreed to them, and they meet Federal requirements for

groundwater, soil, and the like.

Second, rapid, well-known, agreed-upon, simple procedures. If

you are a commercial developer, you know what the pathway is

and you know you can get there before your money runs out.
29

Third, a liability release. If you don’t get a liability release, you

don’t have a negotiable asset. You can’t sell it. You can’t rent it.

You don’t want to occupy it. The release gives you that capacity.

It puts the property in play and unleashes private sector money,

which is how we got all those sites cleaned up.

We do have financial assistance, and that’s the fourth element.

We spent about $20 million for site assessments, not for cleanups.

The private sector cleans it up because the property has value if

you can get a real cleanup and a real release. The $20 million is

for assessments for redevelopment authorities and municipalities to

find out what is underneath the ground in the first place, to see

if the property should be put in commercial play.

Let me talk about some of the lessons that have come out of

what I think we have learned.

We’ve talked a lot about delegation this morning. Brownfields

are the one major State program that is not delegated. There is no

provision in Superfund to delegate programs. The fact is, they were

born out of necessity to get around the big gorilla in the closet,

Superfund, which is, I think, the least-successful Federal statute in

environmental history.

And I don’t mean to argue the numbers about EPA. ‘‘Only X

number of sites cleaned up, while we cleaned up many more,’’ and

all that. Those numbers are not the point. I think each of those two

statutes—the State brownfield statutes and the Superfund—have a

role. The sites we cleaned up aren’t the big, messy sites that some

Superfund cleanups are designed for.

But the fact is, the uneven borderline between those two statutes

needs to be, and I hope will be cleared up legislatively.

When Richard Nixon made the choice in December 1970 about

the basic shape of EPA, it was, ‘‘Should it be the National Institute

of Health, a standards-setting organization, or should it be operational?’’ The statutes passed required that it be operational, and

it has been. I think it is time to revisit that, however.

Second, with respect to the regional offices, we have 10 of them,

each with about 1,000 people, managing programs. I think, as

Lewis Shaw has mentioned, we actually really have 50 regional offices in each of the State capitals and around. Maybe we don’t need

to have people patrolling delegation, and that would be especially

true in the brownfield area, where delegation was not even contemplated.

I want to mention also some unexpected consequences of the law.

Once it became possible to find out what was underneath a site

and you weren’t scared to do so because Superfund might apply, we

went looking. What we found was not much. We don’t have pandemonium trichloride and methelethyl megadeath under every site.

You can clean them up, and we do, if you’re not worried about, as

a commercial developer, what might happen under Superfund.

You also have some other developments: the skill mix inside the

agency changes. You get deal-makers, not enforcers. That’s how

you get a site cleaned up. You bring money, you bring scientists,

you bring the community, and you get it done—not an attorney figuring out who he can sue because in 1958 the predecessor corporation dumped a drum there.
30

We also saved a lot of greenfields in Pennsylvania. Those 17,000

people would be working somewhere, I assume, instead of in the

inner city, typically, where they are.

Finally, there is the resource issue, which has been much mentioned here. We do need more resources in some areas. We probably don’t need more resources in the brownfield area. The economy provides the resource and has provided it well, and it makes

the choices about what sites to clean up, not a 1,200 page National

Contingency Plan which ranks every site and gives a long recipe

for what to do next. That’s agility. That’s what the States, among

other things, are good for.

EPA needs to be there. I say that as a former Regional Administrator and I say as a proud colleague of Mike McCabe, who has

done a particularly good job at curing a lot of sore problems. But

in this area I think some of the basic relationships between delegation and between States and the regions are shown up to be ripe

for reexamination.

Thank you.

Senator SMITH. Thank you, Mr. Seif.

Mr. Bradford?

STATEMENT OF BRENT C. BRADFORD, DEPUTY DIRECTOR,

UTAH DEPARTMENT OF ENVIRONMENTAL QUALITY

Mr. BRADFORD. Thank you, Mr. Chairman. I appreciate the opportunity to appear before you today.

Mr. Chairman and members of the committee, my name is Brent

Bradford. I am the deputy director of the Utah Department of Environmental Quality. I am here representing the views of the Environmental Council of the States, of which I am a member, and immediate past chairman of the State EPA Information Management

Work Group and the current vice chairman of the ECOS Strategic

Planning Committee.

I want to speak to you today regarding State activities and initiatives in managing environmental information. I’d like to give

you four messages: first, States generate most of the data in EPA’s

national data systems; second, States are driven to manage this

data effectively because they must have it to operate their own programs; third, States have become the greatest innovators in the

management of environmental data; and, last, States are working

with EPA and the public to make this data available.

First, States collect and provide about 94 percent of the environmental pollutant information contained in Federal program data

systems. This includes data from the regulated community and direct measurements of environmental quality, which include data

for air, water, waste, and drinking water.

States provide EPA nearly all the environmental pollutant and

compliance data it uses to manage the environment. Data that

EPA passes on to the public through programs such as Envirofacts

often originates in State environmental agencies.

Second, States use this data, themselves, to manage their own

programs, and so are driven to be sure that the data is managed

appropriately. This became especially true during the 1990’s, as

States assumed more and more of the delegated programs from

EPA.
31

More States over the past several years have improved quality

and improved public access to data as they’ve invested in information technology and moved toward data integration.

Some States have made significant investments of State funds,

and others have relied heavily on Federal funds coming through

EPA’s one-stop program. Such Federal funding has been particularly helpful to smaller States, such as ours.

My third point is that the conditions I’ve already mentioned have

led States to become great innovators in environmental data management. In my home State of Utah, our agency has developed a

standard used by all programs to identify facilities and link them

to program data bases. We’ve also established a global data catalog

to allow public access to information contained within our data

bases. We’ve developed an electronic reporting capability, and we’ve

also developed an Internet access capability that will allow public

access to information 24 hours a day, 7 days a week.

Other States have also made remarkable progress in this area.

A few examples are Pennsylvania, No. 1. This was one of the first

States to present timely multimedia compliance information facilities on line to the public. They are now sharing that system with

other States.

The State of Washington led States in developing a de facto national standard. Its facility identification template for States is now

in its second version and is being used by at least 25 States to help

them jump start their data reinvention efforts. This saves each

State about a $.25 million.

New Jersey’s environmental management system fully integrates

all regulatory and permitting systems, one of the first anywhere to

do so. It will be completed later this year.

Virginia’s centralized enterprise data system, created in 18

months, merged 77 legacy systems that were not compatible into

a single integrated system. The State, itself, invested $12 million

of its own resources to create this system. Virginia is now offering

that system to other States at no cost.

New Hampshire is integrating its environmental data bases by

linking facility and site data, and has begun making site remediation, underground storage tank, and air permitting information

accessible via the Internet.

My fourth and final point is that States are committed to working with our Federal partners in making our data available to the

public. The States and EPA created the State EPA Data Management Work Group in January 1998. We developed a vision statement and a set of operating principles. These define a framework

for a new way for States and EPA to do business together. They

commit States and EPA to a partnership in building locally and nationally accessible information systems.

Some major accomplishments of the work group include the creation of the Data Standards Council, the development of a vision

for a national data exchange network, the establishment of a joint

process for addressing burden reduction in data reporting, and a

discussion forum and action plan for public access to environmental

information.

States are making significant accomplishments in environmental

data management, but the cost is high. Currently, the President’s
32

budget proposes $30 million for environmental information management—$16 million for States and $14 million for EPA. States

believe that this funding is essential in addressing a new vision of

environmental information management.

Continued Federal investment is critical for this vision to be realized, and we need to make sure that all States have a full opportunity to participate. Collective investments and standards development will be needed to make such a network viable.

States envision a national environmental information exchange

which recognizes that the agencies that collect information will be

responsible for its stewardship and will provide access to such information through the network. Such a network is based on common standards and would provide a common base of information

access, exchange, and use that would allow flexibility in meeting

individual State and EPA needs regarding data housing and data

handling. This would move focus away from a common national

data system toward a focus on data quality and interpretation.

This will require both State and EPA effort to make such an exchange work and must be developed in such a way that all States,

both large and small, can participate in the exchange. Given the

impact of decisions made based on environmental information and

the need to assure its accuracy and accessibility, it is important

that States and the Federal Government continue to work together

to develop and utilize data management technology in a sound, responsible, and efficient way.

There is a long way to go, but significant progress is being made.

States have provided leadership in this important effort and are

committed to continuing to do so to assure that the ever-increasing

demands for information are met and that the necessary information is available for responsible environmental decisionmaking.

Thank you, Mr. Chairman.

Senator SMITH. Thank you very much, Mr. Bradford.

Each one of you, in your own way, with a different perspective,

talk about greater control and authority to the States and the fact

that the one-size-fits-all, top-down approach doesn’t work. Let me

just ask each one of you for a real quick response, just go right

down the panel from Mr. Shaw right down. Is this happening in

spite of the EPA or are they working with you to make these things

happen?

We hear a lot of stories both way, frankly—a lot of focus on what

the States are doing, successes with the State. If they are helping

you, tell us how they are, briefly. If they are not, tell me then

where you think we need to make a change in the structure to help

us get where we need to get—just briefly, so I can get a quick response from each one of you.

Mr. SHAW.

Mr. SHAW. Speaking for myself, from my perspective, I do think

that EPA is genuinely interested in having a better system. We

have been working with them in a number of instances to do just

that. However, sometimes they just don’t get it. Now, maybe they

just don’t get it because the laws don’t allow them to. We have

heard some discussion of that. But I do think there is a genuine

interest on their part to do things better and do them along with

the States.
33

You mentioned the enforcement piece and some of the problems

the State has there. We are very sensitive in South Carolina to

who does enforcement in our State, but we have worked out an

agreement with our EPA regional office to share some of that enforcement responsibility. Not all States do that. Not all States wish

to do that. But in our case, we saw it as beneficial to both sides,

so we have been doing some joint enforcement actions in our State.

That’s an example of where we have been able to work together.

Senator SMITH. Mr. Varney?

Mr. VARNEY. I would say that there is a period of cultural change

that is taking place, both within EPA and within the State agencies. I think some of the mid-level managers in our own agencies,

as well as in EPA, don’t like change, don’t want to embrace the

new way of doing things, don’t want us questioning their

prioritization or perhaps considering that we’ll take resources away

from this manager and reassign them to a different manager.

That’s very threatening to our own staff and to EPA’s staff. So

there is this temporal aspect, this cultural change that is taking

place gradually over time.

Let me also say that I think we have to be very careful to make

sure that we do not have regulatory or legislative barriers in terms

of flexibility. An example that I would give is in the SRF programs.

I think there is a lot to be gained by giving States maximum flexibility in shifting resources within the State revolving loan fund

programs, the SRF for the Clean Water Act, the SRF for Safe

Drinking Water Act, and even perhaps brownfields SRF funding, so

that we can shift the money around based on the changing needs

of the State, and to even look at innovative approaches, like using

SRF money for water conservation, and water storage to achieve

in-stream flow protections—those kinds of innovative things that

may have obstacles associated with them because of statutory requirements.

Senator SMITH. Moving from one stovepipe to the other?

Mr. VARNEY. Yes.

Senator SMITH. That’s what it is.

Mr. VARNEY. Exactly, Senator.

Senator SMITH. Mr. Seif?

Mr. SEIF. It’s getting better, Mr. Chairman, I think. You have to

remember, though, that the founding fathers set up a Federal system which is inherently complicated, and when you add new

science, modern industrial organization, and 250 million people, it

is never going to run like a Swiss watch. It will have its rough

spots.

I think, in the broad sweep of history, if we take the Great Society as the height of Federal power, it is moving to the States. It

is leaching, or running, or whatever, to the States.

We do have two block points. The statutes do freeze processes in

place, and that’s one, and the culture on both sides, as Bob makes

a very good point about my own bureaucracy, as well, do tend to

retard growth.

The thing that retards it most—and we can thank Brent for helping the most with this—is the metrics. Senator Baucus asked what

are the things we really need to do, and metrics is one of the three

things that would really make the system best.
34

What can we agree on that we should measure? And what makes

a measurement improve or not? And can we alter our resource mix

to go after improvement in that measure? We can’t with the culture, the statutes, and so on, being as they are.

We need from the committee a holistic, integrated environmental

approach—if not a single, big statute, which some have talked

about, certainly a great, wide duct as opposed to 50 stovepipes.

Senator SMITH. But you do believe that some codification modifications are required, some modifications in the law?

Mr. SEIF. Or uncodification.

Senator SMITH. Decodification.

Mr. SEIF. Right. Yes, sir.

Senator SMITH. All right. Mr. Bradford?

Mr. BRADFORD. Thank you, Mr. Chairman.

In Utah we developed, with EPA and local government, a southwestern Utah partnership that I believe was probably the most

successful environmental activity that I have seen undertaken in

my 28 years in the State of Utah in environmental programs, so

the system can work, and it worked very well.

There were a couple of key things that made that happen, I believe. First of all, we used a model that said we were going to put

the problem in the middle of the table and then see what each of

us brings to it. What is the strength that each of us brings? We’re

not going to worry about oversight jurisdiction. We’ll just worry

about focusing in on the issue.

We were able to do that, and in doing that we got some local ordinances. We determined that the local ordinance was the best way

to go and the most effective way. We got some local ordinances in

place we had been trying for over 15 years to get in place relating

to individual wastewater and to drinking water. So the system

worked, and it worked very well.

I think this model of performance partnership and State/EPA

partnership can work. It took a great amount of leadership from

the top to do that, and there was a lot of distrust at the staff level

to begin with and real concerns on the part of those people that

somehow their job was going to be impacted and the traditional

role was not going to be in place, and it wasn’t. And once we could

change that attitude, some nice things began to happen.

I think our biggest problem in the State of Utah still deals with

the enforcement, in that the partnership doesn’t seem to carry over

into that area, but in the areas of the program management, itself,

it can work and it has worked, and I think we have actually established somewhat of a national model relative to this performance

partnership agreement, and it did develop a lot of trust between

our agency, the local government, and the Federal Government. In

working that, that strengthened all three of us, I believe, in that

process.

Now we are attempting another partnership right now in another

portion of our State which will involve tribal governments, also, so

it will be a four-way partnership. We’ll see if that one works. It is

just underway now. But that one may be a little bit more difficult.

But the system can work. It does require a lot of attention and

it does require a lot of management in order to make it work.

Senator SMITH. Thank you.
35

Senator BAUCUS. Mr. Seif made a point that I think is worth remembering: we have a messy system in this country. We have a

democracy, and it’s just the nature of the beast. Winston Churchill’s oft-repeated statement comes to mind: ‘‘It’s the world’s worst

form of government, except there is none better.’’

From your testimony I sensed that the drift is going in the right

direction with NEPPS. So how big of a problem do we currently

have? As administrators, do you spend 80 percent of your time saying, ‘‘My gosh, I can’t get my job done because of ‘‘block points’’ and

the culture.’’ Or do you spend 5 percent of your time saying, ‘‘Gee,

this isn’t working that great, but I can do what I need to do without it.’’ How big of a problem are these block points, whether they

are cultural or statutory?

Mr. SHAW. Let me maybe start out my comment on that. You

know, in my case it is not the most pressing problem I have. My

legislature is probably the most pressing problem that I have.

[Laughter.]

Mr. SHAW. But, you know, EPA is something that we have to

deal with day in and day out.

Senator BAUCUS. Yes.

Mr. SHAW. So it does take our attention.

One thing I would like to say is, every time we have had a

State’s early involvement in the decisionmaking process with EPA,

we have come out with successes.

Senator BAUCUS. Yes.

Mr. SHAW. Where we have been blind-sided or surprised by situations is where we have most of our problems. That’s where I

spend most of my time.

Senator BAUCUS. In an ideal world there would be some statutory changes, but it is my experience that very often, with great

leadership, a lot of these problems can be dealt with without

changing the law.

Let’s take Superfund, for example. I agree with Mr. Seif that

Superfund has its problems, but I think you’ll agree that the EPA,

through administrative action, is able to solve some of those problems. But still, I mean, how much of this can be relatively solved

with the right attitude?

Mr. SEIF. I think it is right. College sophomores debate process

versus people, when it turns out people can override process.

Senator BAUCUS. Right.

Mr. SEIF. And we do every day.

Senator BAUCUS. Yes.

Mr. SEIF. I don’t consider the time I’m doing today as the 85 percent worrying about the system. This is part of the solution—that

is, bringing this message, the statistics and such insight as we

have been able to provide, encouraging devolution, which is, I

think, historically inevitable and appropriate, given the nature of

the environmental problems, which are now much smaller, more

retail, and the advance of the information systems which would

give us the metrics which will eventually get us there.

So I don’t consider myself being blocked by all of this. These are

inevitable challenges, but we’re going to get there.

The public still believes in the most important message that we

have, which is: let’s keep after the environment. I think environ-
36

mental mood in the country is as strong as it was on the first

Earth Day. It’s just more sophisticated. There are more tools.

There are more problems. But we are going to get there.

Senator BAUCUS. The tone of this hearing is constructive and

helpful. The Constitution contains the Supremacy Clause and I

don’t think it is going to be repealed soon. I’d like to read to you

some testimony of Mr. Jorling, who was the EPA administrator in

New York, I think, in years past.

Mr. SEIF. In the 1980’s. Yes, sir.

Senator BAUCUS. The New York commissioner. In 1993, we held

hearings on roughly the same subject, and this is what he said at

that time: ‘‘It is clear that the three principal responsibilities of the

Federal Government should be: one, setting national minimum

standards for health and technology; two, being the gorilla in the

closet to assure the integrity and steadfastness of the Federal program; and, three, assuring there is a level playing field across the

States by focusing on the States that are not performing as well

as the other States.’’

I’m curious what reaction you have to each of those three points.

Mr. SEIF. I might mention Mr. Jorling is now senior vice president for environmental programs at International Paper, a career

progression which is not to be smirked at, frankly. I, myself, was

at Earth Day in 1970 with my beard and the usual buttons, balloons, and baloney. The movement has matured. It is integrated.

It is people like Jorling who are pioneers in enforcement now doing

it in the private sector, which is where the real action is going to

be in the next generation of environmental improvement.

He’s right. We don’t want to compete against the State. That’s

cutting corners. We want to have a strong enforcement program in

our State so that the polluter who is cutting corners isn’t an unfair

competitor with people who are doing the right thing. So a floor is

important.

But it has been said—and the Benzine study at Yorktown is an

example—in which a modern enterprise is subjected to all of the

environmental laws. If the Baucus Widget Company, for example,

did absolutely everything it was supposed to—no more and no

less—it couldn’t operate. It would be like the game of Twister: randomly you put your hand down on the yellow and your knee down

on the green, and pretty soon you can’t move—you can’t make

widgets.

We need to get out around these historic 30-year cluster of constraints—and Jorling has spoken about this very thing wearing his

new hat. The laws were designed to achieve spot results, and did,

and they now are in the way of the broader result of integration

of environmental concerns into everything we do, as opposed to just

being another regulatory headache. That’s the step we need to

take.

Consensus is emerging on that, I hope.

Senator BAUCUS. Well, how do we advance the ball? You haven’t

come here with a list—nor were you asked to—of recommendations

to change the statutes.

Mr. SEIF. I would be pleased to participate in that process. But

you’re right—I don’t think the time is politically ripe to do that.

Senator BAUCUS. That’s my sense.
37

Mr. SEIF. I think that, ironically, EPA is doing a large number

of things that are very good ideas, often in the shadow of the corporate culture there, which is still in a ‘‘1970 shoot-em-up’’ enforcement mode. It’s still, ‘‘Roll out the stats. Get out the press releases.’’

The fact is, the bulk of what EPA does makes a lot of sense, and

we’re working with them.

It occurs to me that the next President is going to have an EPA

ready to roll into the 21st century and do this stuff. The irony will

be that if Gore does it, everybody will say, ‘‘Boy, it’s about time

someone did that,’’ and if Bush does the very same thing, the Beltway environmentalists will scream bloody murder about backsliding. It will be the same stuff. It will just be a de-emphasis of

the one tool, enforcement, in favor of the broad number of tools

that actually work.

Senator BAUCUS. I’d like to ask the remaining three for reactions

to Mr. Jorling’s statement.

Mr. SHAW. I agree with Mr. Jorling’s principal statements. I do

think that the States need to have involvement in all three of those

issues. I mean, we need to have some involvement in setting the

floor. I’d like to have some knowledge of when the gorilla is coming

out of the closet. But I don’t disagree with what he says in principle.

Senator BAUCUS. Mr. Varney?

Mr. VARNEY. I’d say I also agree, but would just emphasize the

need for flexibility. Just as if one is cutting a budget and you say,

‘‘Keep your sights set on the bottom line,’’ we need to keep our

sights set on the environmental and public health outcomes and

give EPA and the States maximum flexibility to achieve those

goals.

In the interest of being uniform in our application of requirements, some of the requirements are overly prescriptive, which

then get in the way of the best solution or the most cost-effective

or environmentally sound solution, and those are the items that we

should be seeking out, identifying, and addressing.

Senator BAUCUS. But NEPPS is helping a little bit, isn’t it?

Mr. VARNEY. Yes, it is.

Senator BAUCUS. Mr. Bradford?

Mr. BRADFORD. Yes. I would agree with his statement, although

I think we have evolved in some regard beyond part of it. The need

for national standards is important. There is no question about

that. I think all States have come to a realization—we certainly

have in Utah—that environment and enforcement is important.

There are different ways and different approaches to get there.

Our State legislature is notorious for saying that we ought not

to treat people like criminals when, in fact, what they’re trying to

do is comply in a very complex system, and that we ought to be

providing some assistance to them to try to help them get there if,

in fact, the goal is compliance.

So the need for a gorilla may not be there as much as it was

early on, because there seems to be a recognition, at least in our

State, that environment is important and that we need to be able

to deal with these issues, and there is an honest attempt to do

that.
38

Senator BAUCUS. I understand that. I think a subsequent panelist is going to say something to the effect that 17 or 18 States just

do not rise above the minimum. A lot of States have some environmental standards which are above the Federal minimums, but for

about 17 or 18 just—it’s a ceiling. It’s not a floor, it’s a ceiling,

which may mean that the gorilla is needed. I’m just speculating.

Maybe the administrators in those States may want the gorilla to

tell their legislatures to do a little more. I don’t know.

Mr. BRADFORD. They may. And there certainly is an appropriate

role for EPA to enforce statutes, but it doesn’t all have to be done

the same way.

Senator BAUCUS. I know. I agree completely.

Mr. BRADFORD. If we are going to achieve results, compliance is

the goal. There are lots of ways to get there.

Senator BAUCUS. Yes. My experience, too, is that solutions generally are reached when so-called ‘‘adversaries’’ or stakeholders are

all in the same room talking together, with some kind of enforcer

there as well. It may be a Governor, or somebody to get them talking and find a solution.

Mr. BRADFORD. One key point, I think, again coming back to the

experience we had in our State, is that if there is a recognition on

the part of all of the players involved that each one brings something unique to the table to help solve the problem—and if we can

focus on solving the problem and use the strengths of each of the

players—that is, the States and EPA and, in our case, local government—you can get there. It’s when one of them tries to say, ‘‘We

know how to run this,’’ and the other is not important that you

have the problem.

Senator BAUCUS. Right. Same old story.

Senator SMITH. Is there anyone who disagrees with the statement that State finality would enhance your ability to get the job

done on these various environmental problems that you face?

Mr. SEIF. State finality is always desirable in any given transaction. As a national policy matter, however, it depends on what

the final outcomes are in aggregate of whether that’s a good thing

or not, and so we are back again to who sets ultimately the standard. I think the Federal Government has that obligation ultimately. And then finality when the standard is reached—no second

guessing and a lot of things that can happen—is the key.

Senator SMITH. Mr. Varney, one final question. In those performance partnership agreements that we have in New Hampshire,

what specifically in those agreements allows the States—in this

case, New Hampshire—to prioritize specifically on its resources? I

mean, it might be a good thing to look at. I know other States have

them, as well.

Mr. VARNEY. Yes.

Senator SMITH. But what is the most important of all of those

requirements in those agreements that allow the States to

prioritize their own environmental problems?

Mr. VARNEY. Well, in the development of our agreement, we are

essentially putting our strategic plan for the agency with our goals

and objectives and action items and then putting our resources and

annual work program in alignment with that strategic direction for

the department, and then forcing a dialog, which is sometimes
39

somewhat painful, forcing a dialog internally and with EPA and

other stakeholders about what those priorities ought to be, and

seeking feedback so that we can then make adjustments.

We have seen this process to be extremely beneficial, not only in

terms of developing an annual program but also in the use of carryover dollars. For example, we have been able to reallocate funding

to address issues of sprawl, to address implementation of our mercury strategy for New Hampshire and actually make sure we implement it to restore shellfish beds and to address in-stream flow

protection requirements in our State.

Having that kind of flexibility is really critical, especially to a

small State where we have limited resources to deal with a problem, and that flexibility becomes crucial to us and enables us to get

the biggest bang for the buck and to make sure that those Federal

dollars are used as wisely as possible and used within the context

of this 75 percent of funding which is State dollars. It is only 25

percent Federal, 75 percent State, so it enables us to look at the

complete picture of everything that we do and put it all in one document and enable us to look at it from a strategic direction, standpoint, and to me that’s the right way to allocate resources, it’s the

right way to seek public input and involvement, and the right way

to manage an agency.

Senator SMITH. Well, I think, as a Congress, I think we are beginning finally to move in the direction that you are all advocating;

however, it seems like you’re moving there fairly quickly, and then

you’ll get an issue such as the TMDL issue which will pop up on

the screen, where, again, a rule proposed with a deadline which

stirs everybody up and shows the heavy hand again without, in my

view, at least, the appropriate cooperation or discussion before

doing such a thing, so now we’re faced with an implementation of

a rule, I think by June 30th, that everybody is upset about, and

meetings all over the country on these things. There will be a hearing in New Hampshire next week on it.

In any case, I appreciate your time here.

Does anybody have a final comment on this panel?

[No response.]

Senator SMITH. We thank the witnesses for their time.

The committee will take a 5-minute recess as the next panel

comes up.

[Recess.]

Senator SMITH. The hearing will reconvene.

I’d like to welcome the third panel: Ms Lynn Scarlett, the executive director of the Reason Public Policy Institute; Mr. Erik Olson,

the senior attorney for the Natural Resources Defense Counsel; and

Mr. Jason Grumet, the executive director of the Northeast States

for Coordinated Air Use Management.

Welcome each of you. Thank you all for coming.

We’ll start with you, Ms. Scarlett.

STATEMENT OF LYNN SCARLETT, EXECUTIVE DIRECTOR,

REASON PUBLIC POLICY INSTITUTE

Ms. SCARLETT. Thank you, Senator Smith, for holding these

hearings. I’m delighted to be here.
40

As indicated, my name is Lynn Scarlett. I am executive director

of Reason Public Policy Institute. We are a Los Angeles-based policy research organization.

To sort of stitch together some of what you’ve heard today, I’d

suggest to you that we have four recurring challenges that confront

environmental policymakers in order to get to 21st century environmental improvement.

First is how can policies better ensure environmental innovation.

Second is how can they better focus on results and take into account the multiple stovepipes in an integrated way, as Senator

Smith suggested. Third, how can policies better foster incentives

for private stewardship? I think what we are all after ultimately

is a Nation of self-motivated environmental stewards. Fourth, how

might policies better take into account specific local knowledge—

the knowledge of time, place, and circumstance, those devilish details that vary from site to site?

There are an array of State initiatives. They, indeed, are at the

forefront of a search for a new environmentalism that addresses or

attempts to address these four questions. There are four features

of these programs. You have heard two of those features this morning. I want to add two others.

The first feature is flexibility—that is, States moving toward

greater flexibility in the options and ways that they achieve the

goals they are pursuing.

Second is the focus on performance rather than process.

But, third, I want to add an additional element, and that is the

greater use of incentives rather than punishment as the first order

of effort.

And, finally, there is a move toward greater place-based decisionmaking—that is, looping local folks into decisions at watersheds

and so forth.

Let me just give you a little flavor of some of these examples and

then get to some of the challenges, as I see them.

On the flexibility front, I think it is worth underscoring this is

not about roll-back. Indeed, it is about extending the performance

envelope both upward and outward. Let me give you an example

of Wisconsin. They have a green tier permit program underway.

Firms with high levels of performance qualify, not just anybody.

With this endeavor, they actually develop an overall performance

compact. That compact is a multiple stovepipe, integrated, facilitywide permit and allows that firm to look at the entire holistic setting in which they operate.

Oregon has a green permits program very similar. Massachusetts

has an environmental results program. Frustrated with simply

spending a lot of time issuing permits, they, instead, developed an

industry-wide standard, particularly for small- and medium-sized

businesses—for example, dry cleaners and photo processors. With

this result, they were able to yield dramatic reductions in emissions—43 percent reductions for the dry cleaners, 99 percent reductions of silver discharges by the photo processors.

Incidentally, speaking to something that Senator Baucus indicated, all of this was done with fewer, not more, resources—I think

this is something worth paying attention to.
41

On the performance focus front, you’ve heard mention of Florida’s performance indicators. Let me give you a little greater sense

of what those look like. They are moving away from the enforcement bean counting and, instead, have three tiers of indicators.

One is the plum—actual ambient ecological performance.

Second is behavioral, but, rather than simply looking at compliance, they are also looking at things like how many voluntary pollution prevention initiatives they there so that they get beyond

simply the rule focus.

And, third, their traditional enforcement tier of indicators is not

simply a bean counting, but rather tied to effectiveness. That is,

are these enforcement endeavors actually yielding substantial results, and at what cost?

The third type of innovation is incentives. I want to mention one,

but there are many, many programs. Texas has a clean industries

2000 program—over 140 participating firms after one year, 43,000

tons of reductions in hazardous waste that was off the radar chart

and not attended to in the more traditional regulations.

Pennsylvania, Jim Seif, has a pollution prevention site assessment grant program which helps small businesses and others actually invest in pollution prevention.

Finally, turn to place-based decisionmaking. One of the most fertile areas here is in watershed management. There are literally

hundreds of efforts by cooperative State, county, Federal agencies

coming together, bringing all interested stakeholders to cooperatively determine what priorities for a watershed will be and how

to address those problems in a nonadversarial fashion.

Minnesota, for example, has one chain of lakes, all brought under

a cooperative management system with multiple jurisdictions taking part in that multiple problem solving focus.

Senator Baucus might be interested in the Upper Clark Fork

River, Montana experience. They had an enormous adversarial situation over in-stream flows, ranchers, and so forth in contest

against the environmentalists on this issue, but, instead, came to

place-based decisionmaking, sat down, and worked out a plan.

Quickly on the challenges, I think there are three. You’ve heard

about the technical challenges—that is, simply developing measurement tools and so forth. Second, there is a set of challenges regarding fitting the new regulatory structures in the old context,

and perhaps in the questions we can pursue that a little bit more.

The third set of challenges actually relates to stakeholder interests and concerns. Who is at the decision table, particularly in

these place-based decisionmaking?

With that, I’ll conclude and say that the new environmentalism

is a discovery process. There is no reason to think we got things

just exactly right our first go-round, and we’re now underway trying to figure out ways to do better.

Thank you.

Senator SMITH. Thank you.

Mr. Olson?
42

STATEMENT OF ERIK D. OLSON, SENIOR ATTORNEY, NATURAL

RESOURCES DEFENSE COUNCIL

Mr. OLSON. Good morning. My name is Erik Olson. I’m with the Natural Resources Defense Council. I guess I’ll stand convicted of

being a beltway environmentalist. We believe that it is important that there are millions of Americans who believe that there is an important Federal role in environmental protection, and we’re glad the committee is holding this

hearing today. As you know, this debate has been going on for over 30 years, certainly since before the EPA was created. I think that this committee has struck a bipartisan balance over the last 30 years that

has formed a set of laws that are international models for how environmental protection should work, which is not to say that

changes are unnecessary or that the State/Federal relations are

perfect.

We believe that cooperative federalism is a construct that is very important and deserves re-evaluation constantly. I think a lot of

what the previous panel said from the States was very constructive, and we are pleased to hear many of the comments that were

made.

Certainly, the States have an important role. They have more local information, very often, about the local environment. They are

much more expert on local politics and what the local situation is

very often. In addition, States have the role of the laboratories of

democracy, and they certainly have a great deal of creativity in

many cases to address local problems. The Federal Government, however, does have a significant role that has to be considered. I think Chairman Smith and your predecessors, including Senator Chafee, Senator Stafford, and many others have recognized this important Federal role.

First of all, there have been many situations where State inaction simply necessitated Federal intervention. We know about

many of the rivers catching on fire, and so forth, from the 1970’s,

but there still are examples today.

Second, there is, as we’ve heard States say just moments ago, a

need for a level playing field to avoid the race to the bottom.

I wanted to read just briefly from page three of my testimony,

which quotes a brief filed by five States in which they were opposing, strangely enough, a recent court decision that said that a State

can step in and override an EPA enforcement action. Those five

States said that, ‘‘By making it harder for EPA to maintain a level

playing field nationally, the panel’s decision opens up States to

risks that they will suffer the adverse effects of pollution generated

in neighboring States, and that the regulated entities in other

States will gain an unfair competitive advantage over another

State’s law-abiding competitors.’’

I think that is a significant statement coming from five States,

ranging from the State of Louisiana to the State of New York and

California. They are saying that there is a very significant, important Federal role to assure that there is a baseline Federal minimum set of standards.

I think it is also important to note that now 19 States have

adopted ‘‘no more stringent than’’ clauses. This shows that the race
43

to the bottom is not a theoretical problem. In 19 States, at least

for one or more environmental programs, the State is not authorized—in fact, the State legislature has prohibited the State—to be

any more stringent in any regulation than the Federal Government. That suggests that a lot of States have their own statutory

impediments to creative activities.

I won’t discuss it in detail, but it is mentioned in some of the law

review articles that I cited in my testimony, that several court decisions that have prohibited States from using their creative juices

to adopt stronger programs than the Federal Government has, because of these types of clauses.

In addition, very often only the Federal Government has the resources, including the technical and scientific expertise and the

economies of scale, to address some of the large national problems

that we are addressing.

I want to say briefly that we believe there are opportunities for

more creative and innovative interactions between State and Federal authorities. In the future, we think programs like NEPPS, perhaps amended, could provide that kind of flexibility.

The Federal Government does need to maintain an important

role of setting goals and standards and procedural safeguards to

protect citizens and the environment; however, if the States show

that they have the resources, show that they have agreed-upon core

measures of performance that are adequate through a public process, show that they have the openness to track those accomplishments that they are achieving, and are assuring enforcement of the

State and Federal law, that there are opportunities for greater

flexibility at the State level.

We do not believe that there is a need for an overhaul of all the

statutes. In fact, there are many opportunities under current law

to use the flexibility inherent in existing statutes in order to improve State and Federal relations.

Thank you very much.

Senator SMITH. Certainly.

Mr. Grumet?

STATEMENT OF JASON S. GRUMET, EXECUTIVE DIRECTOR,

NORTHEAST STATES FOR COORDINATED AIR USE MANAGEMENT

Mr. GRUMET. Thank you, Chairman Smith.

My name, again, is Jason Grumet, and I am the executive director of the Northeast States for Coordinated Air Use management,

or NSCAUM, which is an association of the air pollution control

agencies representing Connecticut, Maine, Massachusetts, New

Jersey, New York, Rhode Island, Vermont, and, of course, New

Hampshire.

Mr. Chairman, we appreciate the opportunity to address this

committee regarding innovative efforts to reduce air pollution in

our region. I should tell you that my challenge to innovate begins

now, as I try to distill 5,000 words of written testimony into 5 minutes. But what I’ll endeavor to do, Mr. Chairman, is to start out

by posing the challenge to innovate within our clean air regulatory

regime; in the second half of my testimony I will then focus on

some of the exciting projects that we are undertaking, such as die-
44

sel pollution, red light permitting, Mr. Chairman; and in the ‘‘third

half’’ of my testimony I will say a few words about pollution prevention.

As we approach the 30th anniversary of the passage of the Clean

Air Act, it is appropriate, we think, to reflect upon the tremendous

achievements that both government and industry have made in reducing air pollution and protecting public health and welfare.

The desire to provide all citizens with minimum standards of

protection and to provide industry with consistent national obligations compelled Congress in 1970 and in every reauthorization of

the act since to establish substantial Federal oversight and enforcement of our Nation’s clean air strategy.

At the same time, however, through the creation of State implementation plans, Congress recognized that States must bear the ultimate responsibility and, in fact, represent the best hope to design

and implement effective clean air laws.

I think it is useful to reflect upon this most basic tension between the desires for national consistency, on one hand, and the

desire for State autonomy on the other, when exploring how to promote and honor effective State innovation.

One of the central challenges, I believe, in a democracy is to communicate complicated ideas in simple and ultimately popular

terms. In this discussion, the subtle complexities of federalism are

often described as a simple choice between command and control

Federal prescription, on one hand, and innovation and State flexibility on the other.

This construction, which I often use, results from frustration that

many of us maintain as we watch government erect seemingly nonsensical barriers to the creative, well-intentioned efforts of business

owners and local officials who have the courage and the ingenuity

to suggest a different approach or a better way to achieve a clean

environment.

Even worse, Mr. Chairman, under the time-honored theme that

no good deed goes unpunished, many of us can cite many examples

of situations where people who have gone beyond requirements are

actually undermined by the very regulatory system they are trying

to improve.

While my members live this frustration each and every day, we

recognize that these are not problems born of incompetence or malice at any level of government, but rather that these moments of

apparent insanity flow inherently from a regulatory regime necessarily designed to protect the public in situations where private

economic incentives and volunteerism are inadequate.

While command and control versus innovation is, we believe, a

rhetorically powerful construct, the polemic in this description suggests a false choice, and I do believe that a more productive inquiry

will flow from the premise that national standards, while essential,

often fail to capture the ingenuity of local government and industry.

In this light, improving our environmental regulatory system is

a pursuit to refine and not replace enforceable Federal requirements.

Let me now transition, if I can, from the abstract to the particular and touch on two innovative efforts in the northeast.
45

The first area I want to discuss are some exciting projects relating to the retrofit of heavy-duty diesel equipment, and then I’d like

to say a word, if I can, about the innovative efforts to actually reduce pollution before we ever create it by employing pollution prevention techniques.

It is also worth noting that, while we have made tremendous success, we have a lot of work left to do. While we’ve created substantial beachheads within the EPA, where there is robust collaboration, the EPA, like any mega-entity, has a host of corporate cultures. Suffice it to say that those offices within EPA charged with

the obligation of enforcing the statute and EPA regulations are

struggling—at times awkwardly struggling—to maintain a coherent regulatory regime that rewards innovation.

Let me now turn to diesel retrofits. I hope that the pretty charts

and graphs have been submitted to the record. In this kind of ‘‘boy

meets truck’’ story, Mr. Chairman, it is a bad news/good news, bad

news/good news story.

The bad news is that diesel engines are, in fact, creating an assault to public health in this country, and the problem will actually

get worse before it gets better. The good news is that technology

exists today to achieve tremendous improvements, and, so long as

the Administration does not weaken EPA’s proposal to cap diesel

sulfur at 15 parts per million, we will have an opportunity in the

future to have the words ‘‘clean’’ and ‘‘diesel’’ truly belong together

in the same sentence.

Again, though, the bad news is that the existing fleet of diesel

vehicles will be on the road for 25 years or more, accumulating up

to one million miles a truck, and the current Clean Air Act and the

regulation and litigation that describes it has erected barriers that

actually prevent States from requiring retrofits.

Without creativity, this would be the end of the story. The good

news, however, is that the Northeast States, working with the

manufacturers and emission controls associations, the engine manufacturers, and EPA have joined together to create a strategy that

embraces the substantial social desire for change. The desire to

comply with environmental regulations is being enabled through a

project called VMEP, which is enabling Manchester Airport and the

New York City Transit Authority to achieve substantial SIP credit

reductions toward their conformity obligations. The desire of private developers to move forward in ways that are socially benign—

you are certainly aware, Mr. Chairman, that we are building the

Panama Canal in downtown Boston with the affectionate title, the

‘‘Big Dig.’’ This project has created a tremendous desire among corporations in the Boston area——

Senator SMITH. Don’t say ‘‘you.’’

Mr. GRUMET. The royal ‘‘we,’’ Mr. Chairman. I live the Big Dig.

I just don’t have to pay for it.

It is the desire to make sure that that construction happens in

a way that is accepted by the community that has created a commitment among all those engine manufacturers and construction

companies to retrofit their equipment.

Finally, there is a selfless desire among some to actually just

clean things up. We are working with school districts to try to retrofit school buses and a host of other efforts.
46

I will only say about pollution prevention that the opportunities

are robust and so are the barriers.

I will note the one barrier that I think is probably the paradigm

of absurdity, which is the ‘‘once in, always in’’ policy. This is a policy, Mr. Chairman, which suggests that if a facility changes its operation from using hydrochloric acid to berry juice, they don’t get

any benefits of reduced regulatory obligations. The ‘‘once in, always

in’’ policy suggests that once you’ve used a toxic chemical, we will

treat you as if you always use toxic chemicals. That is, of course,

not an incentive for change.

In conclusion, Mr. Chairman, I’ve spoken a lot about the States

and EPA. There are two roles that Congress can fulfill to enable

this evolution. The first has been mentioned several times, and

that is to provide resources and the flexibility to use those resources. Change is always held to a higher standard that the status

quo, and we have to take on that test collectively, with the opportunity to succeed.

Finally, innovation requires trust. We have found that trust is

ample in the face of success. In order for innovation to flourish,

that trust has to be equally dependable in those rare moments

when credible and innovative efforts fall short of their desired

goals.

I want to thank you and the committee staff for initiating this

dialog and welcoming us into it, and certainly hope that we have

opportunities to explore it further in the months ahead.

Thanks.

Senator SMITH. Thank you very much, Mr. Grumet.

Mr. Olson, let me begin with you. In my view, there is no question that 30 years ago or so, when these laws were put on the

books, they were desperate measures for a desperate situation.

They were needed. It was an end-of-pipe solution, if you will, for

environmental laws, and I think it is obvious that a lot of the participants were not willing. They were dragged, kicking and screaming, to the altar of environmental cleanup.

In some environmental programs, such as the Everglades restoration plan that we worked on in the committee, the term ‘‘adaptive management’’ is used. I might just use that in a different perspective here to say we need to be able to adapt to changes.

I think people today—many companies, corporations, States,

other individuals in the private sector from various environmental

groups, to others who may not be considered ‘‘environmental

groups,’’ have adapted and have changed. They have realized now

that the mess we did create needs to be cleaned up. We’re not there

yet.

The question, though, is, as we move into the future, how do we

get it done so that we don’t create more 1970’s reactions, necessary

reactions?

When you hear about such things as performance partnership

agreements, as you heard Mr. Varney talk about and others—I

think 38 States have similar programs—wouldn’t you agree that

these programs and approaches do enhance environmental protection?

Mr. OLSON. Certainly they can, and——

Senator SMITH. But do they?
47

Mr. OLSON.—in many cases they have. The question really is, are

there resources there? And we believe that in many States the resources are there to make this kind of thing work. Is the commitment there? And do we have a way to measure to make sure that,

as there is greater flexibility, in our view there is more accountability. As you start to loosen the reins, you want to make sure the

horse is running in the right direction.

Our concern is that we need to be able to measure that success

is actually occurring, that we’re not just devolving for the purpose

of devolving and ending up not gaining the environmental protection that I think most of us, and virtually all of us involved in the

process, want.

Our concern would be that we make sure that, through an open

process, that we are able to measure the success, and that we are

not simply using this as an excuse to waive standards.

We think that most States really do have much more commitment than they did 30 years ago. Our concern, as I mentioned, is

that, although that is true of most, perhaps virtually all States,

there are a few stragglers. I cited in my testimony some States that

spend 38 times less per ton of waste than some of their colleague

States.

There are States that are stragglers, and the same is true in industry, although there has been a corporate culture change in

many companies, and certainly a change in a lot of State attitudes.

There are always the stragglers, and those are the ones that we

worry about.

Senator SMITH. I would agree with you, which is one of the reasons why I don’t believe in the one-size-fits-all concept. There are

some States that are better at dealing with these problems, have

been much more innovative than others. I think that is a good reason to provide programs like the performance partnership, because

it gives a State who deserves it at least the opportunity to shine,

if you will, and to use that kind of innovation to get things done.

Ms. Scarlett, in your term ‘‘new environmentalism,’’ if I could

compare and contrast the testimony from the two of you here for

a moment, I think you might say that in the Federal/State relationship, maybe it is the Feds that are lagging, that they have not

evolved to the point of where the States are. Where the States are

moving out forward, it is the Federal Government that is hanging

back, not wanting to try innovation: a new technique, or an opportunity to deal with the current environmental problems, and to not

create more.

Ms. SCARLETT. Yes. In fact, as Mr. Olson was speaking, and particularly his emphasis on measurement and the importance of

measurement, I could not help but think that the last three decades of environmental performance we have tended to use as a

proxy for success whether someone had a permit or a series of permits and so forth. What really is happening in the States, in fact,

is to say, ‘‘Well, that might have been OK when we didn’t have

really very good ambient air quality measuring tools. But we really

now need to actually measure real results.’’ That’s what Florida’s

performance indicators and what Oregon’s performance indicators

are about.
48

So I think actually U.S. EPA—and they are working themselves

in this direction, but I think they have a page, something to learn

from the States in that regard.

Senator SMITH. Any specific changes that you would propose to

bring the Federal role into this new environmentalism you’re talking about?

Ms. SCARLETT. Yes. I would put them in three categories: cultural, regulatory, and resources. On the resources front, I think one

change would be—and you heard some of the State regulators say

this—to allow in the resources that are allocated to the States for

environmental performance, allow broader latitude in how they expend those.

Right now, there are some quasi-block grants, but they must be

spent within a particular medium or particular problem set. Give

them more latitude to prioritize and direct.

Second, while it is true that States are moving forward with

NEPPS and Project XL and so forth, we have done a lot of interviewing, both of industry and also of State regulators, finding out,

well, why are there only 8 or 9 of these examples, or 10 or 12, or,

in the case of XL, about 50, when you’ve got really thousands of

potential facilities that might participate.

What you hear is really one primary point: if you are a company

in the Midwest and you must sit down and hammer out with your

local regional EPA and with your State a performance compact for

your entire facility, but then you have to justify with the Federal

EPA, say, ‘‘Well, we get to waive this permit and that permit.’’

Then you’re really back on a case-by-case basis and a source-bysource-by-source negotiation and analysis, which really defeats the

purpose.

That has given some industries cold feet in participating, and it

also has been a deterrent to State regulators in also proceeding.

And the third thing I would do on the performance front is to actually really work with EPA to develop something much more like

Florida’s performance indicators, because it has a way of changing

the internal corporate culture of EPA.

If you are measuring real results, that tends to be what you

spend your time on, rather than on bean counting and so forth.

Senator SMITH. I get the sense that the States—not all—are not

moving as quickly as others. But I think the States may be way

out in front in the sense that they represent the people who are

the closest to the Superfund sites and the dirty air and the dirty

water and the contaminated wells, and so forth. I think that’s why

you’ve seen in the last 25 or 30 years a tremendous growth in expertise by the Departments of Environmental Services.

Mr. Grumet, I want to go back to a point you made in your testimony about trust. It is almost, to me, as if it is distrust. In the

Federal Government, the EPA seems to have some distrust—Mr.

Olson referred to it—in some States, in fairness, not to all—that

they won’t have the ability, or maybe not even the intention, to

move forward and resolve some of these problems. On the other

hand, you see the distrust by the States for the Federal Government, because the EPA doesn’t want to let go.

How do we resolve this? I think we are at a critical point here.

I think we have an opportunity now to break out of the past and
49

move forward into the future, a bright future, a clean future, if you

will, and we just need to be able to de-couple here in a way that

gets both sides to remove themselves from the distrust and start

trusting one another. How do we do that? What’s your recommendation?

Mr. GRUMET. A couple of thoughts, Mr. Chairman.

Obviously, I think the aspiration for the States is that together

we can start to evolve from a bureaucracy to more of a meritocracy,

and for that to work there needs to be, I think, the old adage of

trust, but verify.

I think that we have an obligation to earn the public’s trust by

providing a transparency of process and an access to data so that

the public can understand and watch as we make these transitions

and as we ask for these kinds of changes.

Similarly, I would say that my colleague, Mr. Olson, and many

colleagues in the environmental community, with the basis of that

earned trust, have to have the discipline to join us in not romanticizing the status quo and holding change to a standard of perfection which, of course, is disabling.

We all have a tendency to think about the good old days, but I

would suggest to you that within our command and control system

there are a lot of loopholes, and those are loopholes that will only

be closed by innovation. Right now, for example, in every State in

the country, if there is a source that in a year or two is going to

close down and there’s a new sweep of environmental laws coming

through, those controls don’t go on a source that’s got 2 years of

life left in them. They basically get an AEL—an alternative emissions limitation—also known as a ‘‘free pass.’’

With innovative programs like market-based controls, where people have credit trading and the like, you can ensure that, while not

forcing a facility that’s going to go out of business in 2 years to go

out of business right now by spending $100 million on pollution

control, you have an option other than just giving them a free ride

by enabling them to offset other emission increases somewhere

else. So there are gaps in the existing system that I think certainly

the environment would benefit from plugging.

Senator SMITH. Sounds like a pretty good commercial for the

bubble bill to me.

Mr. GRUMET. I wouldn’t call it a bubble bill, necessarily, but with

strong caps not unlike those that I know you are contemplating for

the utility industry, Mr. Chairman, I think that we then enable a

degree of flexibility that is otherwise not possible.

Senator SMITH. Does anyone have a further comment they wish

to make?

Mr. OLSON. I’d just like to note one area where I think distrust

has been defused.

We have been involved in a few regulatory negotiations where

EPA brings together State officials, industry people, environmentalists, others in a room to negotiate a regulation. Now, this

can’t be the model for every single rule that is issued, and it does

require much more resources for EPA to go through that process

than it would the traditional rulemaking, notice and comment rulemaking. I think, however, the end result of those kinds of negotiations can be that State officials have their input, industry does, en-
50

vironmentalists do, and you reach an agreement very often that is

much more acceptable to all parties and often does not end up in

litigation, which is traditionally the way it has been done. So I think that is certainly one area where the committee may want to look. If you are looking for ways to defuse the distrust, certainly the regulatory negotiation process, in some cases, can make

a lot of sense and can be a very effective way to achieve that goal.

Senator SMITH. Well, thank you very much, all of you, for being here today. I know you had to go out of your way to come. We appreciate it.

This is, as you know, one of a series of hearings that we are hav- ing on the authorization process with the EPA to try to look at attempts to coordinate the various environmental laws that we have

in a way that we can prioritize in the various communities where

the impact is the worst, so your testimony has been very helpful

and appreciated.

At this point, I would just announce that a lot of members had asked about having additional questions, so I’m going to leave the

committee record open until the close of business on Friday to

allow Senators to present questions for the record of any of the

three panels.

With that, the hearing is adjourned.

[Whereupon, at 12:27 p.m., the committee was adjourned, to re- convene at the call of the Chair.]

[Additional statements submitted for the record follow:]

STATEMENT OF W. MICHAEL MCCABE, ACTING DEPUTY ADMINISTRATOR, U.S.

ENVIRONMENTAL PROTECTION AGENCY

Good Morning, Chairman Smith, Senator Baucus and members of the committee. I am Michael McCabe, Acting Deputy Administrator for the Environmental Protection Agency. Thank you for the opportunity to speak with the committee about the

important work we and our partners, the States are doing to protect public health

and the environment.

Looking back over the last 30 years, we are proud of our strong track record of

achievement. The public widely recognizes our work as having dramatically improved environmental conditions throughout the country. Working together, we enabled American towns to improve wastewater treatment—one of the biggest public

works efforts in U.S. history. We have cleaned up hazardous waste sites and closed

unsafe local garbage dumps all over the nation. Our air, land and water are safer

and visibly cleaner, even with significant economic expansion and population

growth. And U.S. environmental expertise and technology are in demand worldwide.

Under the nation’s environmental laws, EPA and the States each have important

duties. There always has been a division of labor, and a dynamic, evolving FederalState relationship. At a minimum, EPA is charged with developing standards that

provide baseline health and environmental protection for all citizens. States and

Tribes, as well as local governments are the primary delivery agents, working directly with businesses, communities and concerned individuals.

Many Federal environmental statutes call for EPA to authorize or delegate to

States and Tribes the primary responsibility for implementing programs and designate them as co-regulators, once EPA has confirmed that a State or Tribe meets

certain qualifying criteria. Over the last quarter century, most States have assumed

responsibility for implementing many Federal programs, with EPA retaining standard-setting responsibility and an oversight role to ensure effective implementation.

In assuming responsibility for a delegated program, a State maintains legal authority, provides its share of program resources, carries out the work required to implement the program and is accountable for the Federal funds allocated to support it.

States now have assumed responsibility for approximately 70 percent of the EPA

programs eligible for delegation. For the past three decades, States have developed

strong environmental management capacity, gained experience and expertise. States

have increased their financial investment in environmental programs, and many

have adopted laws and programs beyond that required by Federal statutes, covering
51

issues ranging from erosion control to coastal management. Some States have environmental standards that are more stringent than existing Federal requirements.

Our challenge now is to build on the progress we have made. But the problems

we face today are much more complex than those of the past. Though significant,

past problems were easier to deal with in some ways. We could target the ‘‘point

sources’’ of pollution, and results from our work were easily identifiable. But that

is no longer the case. For example, polluted runoff—our largest remaining water

quality problem—comes from sources far less evident and greater in number. Many

issues are international in scope, such as depletion of stratospheric ozone and global

climate change.

Under the unprecedented continuity of leadership provided by EPA Administrator

Carol Browner and the new generation of political leadership with strong State experiences appointed by President Clinton and Vice President Gore, new ways of

thinking about causes of pollution, and new approaches to controlling them, are reshaping EPA and transforming the organizational culture that marked our first two

decades. Non-traditional thinking is changing and strengthening our relationship

with regulated businesses, State and local governments and the American public as

a whole.

Because EPA and the States share responsibility for protecting human health and

the environment, a strong partnership between us is essential. States are strong environmental managers, and a new relationship with the States is emerging—one

that allows us to adapt to changing priorities and to experiment with new ideas.

We each have important roles to play, and by cooperating and collaborating we are

achieving better results at less cost.

Today, the States and EPA are working hard to make this new partnership succeed. Our existing regulatory structures—reflecting the separate laws governing air

quality, water quality, and waste management—present some challenges to our efforts to find new ways of doing business. But we are moving forward and finding

ways to address environmental problems in more holistic, comprehensive ways. Together, we are making tough choices about competing priorities in the face of limited public resources, and we are developing more telling measures of environmental

results.

THE NATIONAL ENVIRONMENTAL PERFORMANCE PARTNERSHIP SYSTEM

An important milestone in our collaboration was reached in May 1995, when EPA

joined forces with State environmental agency leaders to establish the National Environmental Performance Partnership Systems (NEPPS).

Many of the concepts embodied in performance partnerships that had been discussed for years such as giving States a stronger role in priority setting, focusing

scarce resources on the highest priorities, and tailoring the amount and type of EPA

oversight to an individual State’s performance were pulled together into a workable,

understandable framework.

Performance partnerships between EPA and the States represent a new working

relationship one in which EPA and the States determine together what work will

be carried out on an annual or biannual basis, and how it will be accomplished.

The centerpiece of NEPPS is a Performance Partnership Agreement (PPA), which

sets expectations for performance yet offers flexibility in meeting goals. This agreement is an innovative way to identify priorities, solve problems, and make the most

effective use of our collective resources. It emphasizes performance rather than process and environmental results rather than administrative details. It gives a State

greater freedom to focus resources on its highest environmental priorities and to select the best strategies for getting results. Prior to developing an agreement, a participating State assesses its environmental problems and conditions, while actively

involving citizens in the process. Based on this information, the State then proposes

environmental and public health objectives along with a plan of action. This forms

the basis for developing the Performance Partnership Agreement with EPA. To date,

34 States have established agreements with the Agency.

Another feature of NEPPS is flexibility in administering grants. States now can

consolidate a variety of individual grants into one. A Performance Partnership

Grant (PPG) reduces administrative burdens by cutting paperwork and simplifying

financial management. It also allows the States more flexibility to use grant money

to address their most pressing environmental problems. Forty-four States have chosen this option. To enhance flexibility for States, a State can participate with a PPG

without a PPA.

The positive changes resulting from NEPPS can be seen in many States:
52

• Maryland has seen its administrative reporting requirements cut in 13 areas, and the goals and objectives identified through NEPPS serve as the environmental

component in the State’s strategic plan. • Florida’s emphasis on showing results led them to develop a new performance measurement and tracking system that received an ‘‘Innovations in Government’’

award from the Ford Foundation and Harvard’s Kennedy School of Government. • Mississippi’s interest in targeting resources to solve priority problems resulted in a reorganization around specific functions, business sectors, and geographic

areas. • Minnesota shifted staff and resources from the main State office closer to

where the real problems occur—out in the districts. • Washington saw the paperwork associated with its annual work plan for grants fall by an order of magnitude—from about 40 to 4 pages.

One of the major components of NEPPS is the use of a common set of national environmental indicators to measure the performance of our environmental programs. This limited set of national data, called Core Performance Measures, is designed to help us better understand the effectiveness of our actions and gauge

progress toward protection of the environment and public health. Core Performance Measures, based on data collected and reported primarily by States, serve the NEPPS objective of managing for environmental results by:

• providing States and the Nation as a whole with the information and tools to increase accountability and make policy, resource or other changes to support improvements in environmental conditions; and • providing a benchmark upon which States and EPA can focus efforts to reduce high cost/low value reporting for public and private entities.

Core Performance Measures help paint a national picture of environmental

progress. Last year EPA and the States took a major step forward in the development of measures that rely more on environmental indicators and program outcomes rather

than process and outputs by agreeing upon a set of Core Performance Measures for

Fiscal Year 2000 and beyond. This agreement was the culmination of a 3-year effort which included the per- sonal involvement of EPA National Program Mangers and senior State officials.

This 1999 agreement demonstrated the broad support among the leadership of EPA

and The Environmental Council of the States (ECOS) for continuing and improving

our joint efforts to implement the various elements of NEPPS. Several States and EPA regions are leading the way in developing even better measures of environmental progress, using environmental data to drive planning

and priority-setting, sharing their findings with the public, articulating more efficient oversight arrangements and using grant funds in more efficient ways. The EPA/State partnership has come a long way, but we have shared challenges to confront in the near and long term. We need to jointly focus our concerted efforts

on fully accomplishing NEPPS goals. Recently both EPA and ECOS reaffirmed our

commitments to NEPPS. In March of this year, I signed a memorandum to senior

Agency leadership detailing this reaffirmation and calling upon them to ensure all

EPA employees share our focus on NEPPS. I designated our Associate Administrator for Congressional and Intergovernmental Relations as the National Program

Manager for NEPPS to secure strong and consistent leadership in this effort. Last

month at its Spring meeting, ECOS adopted a resolution reaffirming its support for

NEPPS and reinvigorating its NEPPS subcommittee to ensure continuing attention

toward making improvements.

We are developing tools to help clarify appropriate performance expectations, as

well as ensure timely and clear communication in developing Performance Partnership Agreements. We are identifying what additional work is needed to move our

Core Performance Measures toward more outcome based measures. We are determining what appropriate steps should be taken by EPA and the States to allow for

greater use by States of the flexibility envisioned under the Performance Partnership Grant system to shift resources and funding among media programs. Together,

we are determining how effective public participation in the NEPPS process can

best be ensured. And, we are developing training to strengthen EPA institutional

capacity and remove cultural barriers so our staff understand how the Performance

Partnership System allows them to be more effective in finding solutions to key environmental problems and better manage their programs.

ADDITIONAL COLLABORATIVE EFFORTS

In addition to our joint work through NEPPS, our partnership with the States is

evolving in other areas, leading us to work in a more collaborative, coordinated
53

manner. Together, we are applying innovate approaches to traditional environmental problems, and we have begun to see results. More importantly, we have set

the stage for greater cooperation and progress in the years ahead. We are beginning

to realize the benefits of our new working relationship, and the spirit of innovation

now reflected in so much of our work.

EPA has several other ongoing efforts with our State partners to address today’s top issues. There are on-going high level strategic interactions with the States on

information, enforcement and compliance assistance, and our media programs. Environmental Information is the foundation for improving performance in accom- plishing our mission to protect public health and the environment. Better, more accurate information and the ability to integrate data across media, as well as exchange data with our State partners, allows for better decisions on priorities and

approaches. This need for better use of information and for taking advantage of

technological advances led to the creation of the Agency’s new Office of Environmental Information. The fiscal year 2001 President’s Budget proposes $30 million

to fund the Office of Environmental Information (OEI).

OEI is working with the jointly created State-EPA Information Management

Workgroup. This workgroup has developed a set of operating principles that now

govern our data and information management activities. Recently, the Information

Management Workgroup developed an agreement and charter for a Data Standards

Council. Recently adopted by ECOS membership, the Data Standards Council is

tasked to develop data standards that will ensure that EPA and State environmental programs can share data meaningfully and efficiently.

In addition, the Agency’s Office of Research and Development is working with the

States and Tribes to transfer new methods of measuring environmental quality and

analyzing trends in the performance of their programs.

EPA’s Office of Enforcement and Compliance Assurance and the States established an EPA/State Enforcement Forum to discuss enforcement and compliance issues of mutual concern. This group has been successful in areas such as identifying

national priorities, the development of enforcement policies, and the design of performance measures. Our work with the Forum complements our work with mediaspecific State and local organizations. We look forward to continuing our collaborative relationship with the States and other Forum members.

EPA’s Office of Air and Radiation has partnered with the States on development

of a ‘‘National Air Quality Program: Joint Statement on Vision and Goals’’ which

will be published in the near future. In February 2000, The Office of Air and Radiation convened its first national State and Local Air Roundtable in Florida. The purpose of this forum is to bring together leaders in State and local air program administration three-to-four times per year to assess how we are working together to

achieve air quality goals and to discuss issues of mutual concern.

EPA—STATES AGREEMENT TO PURSUE REGULATORY INNOVATIONS

While strengthening our working relationships, NEPPS set the stage for another

important development between the States and EPA—consensus about how to test

new ideas that would still work hand-in-hand with Federal laws. Based on the

States’ growing interest in improving environmental management, we negotiated

the EPA/State Regulatory Innovations agreement that expresses our joint interest

in innovation and specifies how it should occur. It creates a new way for EPA and

States to use the flexibility available in existing regulations—allowing new ideas to

be tested while assuring consistent levels of environmental and public health protection nationwide. It commits EPA to promote innovations and gives States room for

flexibility at all levels, which we are doing. And it commits EPA to consider and

respond to these ideas in a timely (90 days) manner.

To date, four Innovations Projects with States have been approved, eight are

under review and more are in the early consultation phase. The projects that have

been approved are:

• The Texas Natural Resources and Conservation Commission and EPA mutually agreed to use existing discretion to lower the number of trained air opacity

inspectors in Texas to align more closely with the use of opacity as a compliance

tool. Texas reduced the number of opacity certified inspectors from approximately

100 to 50, yet this will provide the TNRCC with a minimum of 75 more person/

days a year to do facility inspections. The savings was created by using a smaller

number of inspectors more often and savings hundreds of person/years lost for recertification every 6 months.

• We agreed to do concurrent State and Federal rulemaking for Air permits in

Michigan.
54

• We have an agreement to do a multi-year experiment substituting Michigan’s Department of Environmental Quality’s MS4 program for EPA’s proposed

‘‘Phase II’’ storm water permits. MDEQ is going to start its program 2 years before EPA’s Phase II storm water regulations would have gone into effect and

Michigan’s will cover a broader range of non-point sources than EPA’s proposed

regulations.

• EPA and Michigan have agreed to develop a Resource Conservation and Recovery Act (RCRA) lender liability team to conduct research on the possibility of

providing lenders with liability protection for RCRA corrective action in cases of

foreclosure. While both EPA and Michigan agree that liability protection would

make clean-ups easier, this agreement is subject to determining a legal mechanism to allow it.

In another important arena, EPA continues to work with States and Tribes as key

partners in the cleanup of Superfund hazardous waste sites. During the last 2

years, in fiscal years 1998 and 1999, the Agency provided approximately $225 million to States and Tribes to help manage response activities at Superfund sites. In

May 1998, EPA released the ‘‘Plan to Enhance the Role of States and Tribes in the

Superfund Program.’’ Seventeen pilot projects with States and Tribes have been initiated to help provide additional resources and promote increased State and Tribal

involvement in the cleanup of hazardous waste sites. In addition, EPA provides 42

States approximately $10 million a year to support the development of effective

State voluntary cleanup programs. EPA has entered into 14 Memoranda of Agreement (MOA) with States regarding these cleanup programs. The MOAs provide a

work-sharing process for the cleanup of hazardous waste sites. The Agency continues to work with States to negotiate and sign additional MOAs.

EPA also is working closely with State and local governments to assess, clean up

and redevelop contaminated brownfield sites. The Agency has awarded more than

300 Brownfields Site Assessment Pilots to help large and small communities and

Tribes develop brownfield programs, assess contaminated properties, and leverage

public and private sector financial resources for cleanup and development. The pilots have contributed to the assessment of 1933 brownfield properties, redevelopment of 151 properties, and helped generate more than 5,800 jobs. Pilot communities have reported a leveraged economic impact of more than $2.3 billion. EPA

also has awarded 68 Brownfield Cleanup Revolving Loan Fund Pilots (BCRLF) to

88 communities. The BCRLF pilots complement the Assessment Pilots by providing

a source of cleanup funding for contaminated brownfield sites.

EPA has broadened its impact and effectiveness by reaching out to work in partnership with public and private sectors. Today, more than ever, EPA recognizes that

it must involve everyone—other government agencies, businesses, communities, individuals, and especially our primary partners, the States—to meet environmental

goals. The future will undoubtedly raise other challenging issues, but we are now

better prepared to respond. Environmental solutions through new partnerships and

new tools—that is our expectation for the future. We will meet that expectation

along side our State partners with a spirit of innovation.

Thank you, Chairman Smith. This concludes my written testimony. I’ll be happy

to answer any questions the committee may have.

RESPONSES BY MICHAEL MCCABE TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. In its testimony, EPA stated that it is moving forward and finding

‘‘new approaches to controlling causes of pollution’’ and that a ‘‘new relationship is

evolving with the States—one that allows you to adapt to changing priorities and

experiment with new ideas.’’ Can EPA provide more specificity on these changes in

the Agency? Please address at least the following: What are some of the ‘‘new approaches’’ that EPA has taken? How does EPA allow States to adapt to changing

priorities? Are there changes in the law that would make it easier for EPA to

achieve those kinds of changes?

Response. EPA has placed a strong emphasis on new approaches and innovation

to improve environmental protection. For example, new approaches are helping

make clean air requirements more flexible and less expensive, while yielding better

environmental results. Market-based trading has been successful in controlling acid

rain: between 1995 and 1999, national sulfur dioxide emissions fell by more than

4 million tons annually; rainfall in the eastern United States is now about 25 percent less acidic; and some New England ecosystems show signs of recovery. Trading

has also successfully reduced emissions of nitrogen oxide, the prime ingredient in

smog formation: by 1999, States participating in the Ozone Transport Commission
55

had cut nitrogen oxide emissions 20 percent below levels allowed by law and 50 percent below 1990 levels.

Water quality permitting, monitoring, and reporting are now integrated into broader strategies that focus on individual watersheds, a move that brings greater

efficiency, more attention to local priorities, and better understanding of local conditions. Today, all 50 States, 6 territories, and 80 tribal governments have completed

comprehensive watershed assessments, creating the first coordinated overview of

water quality priorities in the nation’s history. New compliance assistance programs and incentives complement strong environ- mental enforcement. During the past 4 years, 675 companies have identified potential environmental violations at more than 2,700 facilities—voluntarily—based on

EPA’s offer to reduce or eliminate penalties for facilities that routinely audit their

operations, disclose results, and quickly correct problems. Environmental managers

in different business sectors, local governments, and Federal agencies can now find

information on environmental requirements and pollution prevention by going online to web-based compliance assistance centers. The National Environmental Performance Partnership System (NEPPS) is one in- novation that allows States to adapt to changing priorities. NEPPS is built on

founding principles which include joint priority setting; assessment of environmental conditions and programs; negotiation of Performance Partnership Agreements (PPAs); outlining roles and responsibilities between EPA and States; measurement of environmental performance; and evaluation. Based upon its own assessment of environmental conditions and program capabilities, a State is able to propose priorities and corresponding work activities which may differ from EPA’s national program guidance. After consulting with an EPA National Program Manager,

EPA Regional Office leaders can agree to provide the flexibility a State needs to address its own priorities, within the boundaries of statutory and regulatory requirements. In addition to varying from EPA priorities, States may use this flexibility

to further address environmental and public health protection issues that cross traditional program boundaries, such as environmental justice or children’s health. Under authority provided by Congress to EPA in 1996, EPA now offers States the option of combining up to 16 categorical environmental program grants into a Performance Partnership Grant (PPG). In addition to gaining administrative cost savings, a State can use a PPG to direct Federal resources to a negotiated work plan

that addresses the State’s priority problems. PPGs can also fund innovative, crossmedia approaches to environmental and public health protection—such as pollution

prevention, community-based environmental management, or compliance assistance

to small business—that are difficult to fund under traditional categorical grants.

Even States that choose to continue receiving their funds from EPA in categorical

grants will soon have greater flexibility to direct resources to their own priorities.

Under proposed revisions to the Code of Federal Regulations Part 35 rule that governs all EPA State grants, including PPGs, State priorities must be explicitly considered when EPA and States negotiate grant work plans. EPA expects to submit

the final rule to the Office of Management and Budget for review in early August.

We continue to work with States in improving environmental information in order

to support additional innovations. Having and using better environmental data

helps ensure that ‘‘new approaches’’ are in fact better able to protect the environment and public health.

The joint interest of EPA and States in testing new approaches to flexibility available within existing statutes has led to an EPA/State Regulatory Innovations Agreement. This agreement allows new ideas on environmental management suggested

by States to be implemented, while assuring consistent levels of environmental and

public health protection nationwide. I listed four innovations projects in my written

testimony, and we are considering several more proposals at this time. We have

found some flexibility within the current statutes to experiment with innovative approaches. In some cases, it has been necessary to modify our regulations to conduct

such experiments, and we have done so through site-specific rules.

EPA is now going through a fundamental change in thinking about what we need

to make greater progress in implementing innovative approaches. We believe we

have stretched the limits of the law about as far as we can. The authorities now

in place have served us well in the past; they have allowed us to make extraordinary progress in cleaning and protecting the environment and public health. However, we recognize that our laws need to change if we are to meet the remaining

challenges. The Clean Air Act has not changed in 10 years, the Clean Water Act

in 13, and Superfund in 14. These laws need to be improved, and all of us have

ideas on how that could be done. It is time for us to begin a public, nonpartisan

evaluation of the whole legal framework under which EPA operates and how we can

make it better.
56

Question 2. What specific actions has the Agency taken to reduce internal resistance toward implementation of the National Environmental Performance Partnership System (NEPPS)? What results have you seen?

Response. The National Environmental Performance Partnership System

(NEPPS) is a major evolution in how the Agency has interacted with State environmental agencies. It requires a fundamental change in approach by Agency employees from one of oversight and command-and-control to one of partnering with a capable government entity. Three steps have been taken recently to reinforce the importance of NEPPS: 1) the Agency has reaffirmed its commitment to NEPPS and

to provide leadership and accountability designated the Associate Administrator for

Congressional and Intergovernmental Relations to as the National Program Manager for NEPPS; 2) the Agency has tasked its senior career managers to convey to

all employees the value of NEPPS to their work and the environment; and 3) the

Agency is enhancing training to empower employees to carry out NEPPS and integrate the components of NEPPS into their daily work. While there are many challenges ahead in making the transition to a culture of partnership between EPA and

States, EPA employees increasingly see the value that partnership with States

brings to accomplishing our mission of protecting public health and the environment.

Question 3. EPA, in its testimony, recognized that States need more flexibility to

address their environmental priorities. Performance Partnership Agreements (PPA)

and Performance Partnership Grants (PPG) seem like a good first step in this direction. Even those tools seem limited, however. The examples provided in the testimony focus largely on process and paperwork issues. More substantive steps are

needed. For example, could a State use these programs to implement alternatives

to certain Federal programs, like the TMDL program? What can the EPA do to

make these tools more useful in achieving substantive changes in programs?

Response. One of the principal benefits of the National Environmental Performance Partnership System (NEPPS) is that it fosters joint development of priorities

and work-sharing between EPA and States. As a result of negotiating Performance

Partnership Agreements (PPAs) and Performance Partnership Grants (PPGs) the

States and EPA can work together on difficult issues. For example, PPAs between

Region 10 (Seattle) and the States of Oregon and Washington divide up the work

for developing total maximum daily loads (TMDLs) for specific pollutants under the

Clean Water Act. EPA is focusing on developing TMDLs for high priority interstate

waters and for water bodies on Federal and Tribal lands, while the States are focusing on developing TMDLs for waters within their States and on State and private

lands. Similarly, Region 4 (Atlanta) and the State of Georgia have used their PPA/

PPG as a vehicle for dividing up work on TMDLs.

In Nebraska, the PPA includes the Nebraska Mandates Management Initiative

(NMMI), an innovative approach to help small and rural governments cope better

with public health and environmental laws and regulations. The Initiative uses an

intergovernmental and interdisciplinary team process to help local leaders better

understand regulations, analyze local situations and issues to determine which

problems pose the greatest risk, prioritize those risks, and find technically and financially feasible solutions to the problems. The Initiative has proven extremely

successful, with outcomes including: significant savings of capital expenditures; coordination of regulatory, technical, and financial assistance programs; and

empowerment of local leaders and regulatory officials to encourage flexible, customized, and common-sense solutions.

EPA is working continuously to improve implementation of NEPPS. We are developing comprehensive training materials based upon our experience to date as to

what works and what does not. We are constantly analyzing feedback we get from

within and outside the Agency. Through work inside EPA as well as in collaborative

efforts with States, we are addressing barriers and developing tools to make NEPPS

more useful in achieving substantive changes in environmental protection. Among

efforts currently underway we are: more clearly defining the parameters of available

flexibility; improving environmental information collection and use; and finding

ways to reduce low value, high cost reporting.

Question 4. The GAO Report on EPA-State Collaborations makes the point that

EPA’s 1995 Agreement with the States called for a joint evaluation system for EPA

and the States to work together to ensure continuous improvement in their partnership effort. That evaluation apparently has never been done. GAO also recommended that a joint evaluation be conducted. Why hasn’t EPA initiated the evaluation? What will the Agency do in the future to ensure that the evaluation is done

and that any recommended improvements are actually implemented?
57

Response. EPA and the States have conducted joint workshops to assess imple- mentation, identify barriers, and work to remove those barriers. In addition, joint

EPA/State work groups have tackled implementation issues such as core performance measures, information management, and reporting burden reduction. Prior to the release of the GAO report in June 1999, EPA and the Environmental Council of the States (ECOS) met to discuss the possibility of conducting a more formal joint evaluation of NEPPS. Because several outside evaluations had been recently conducted (GAO, EPA Office of Inspector General, and the National Academy

of Public Administration [NAPA] research reports), EPA and the States decided to

use the National EPA-EGOS NEPPS Workshop in the Fall of 1999 to review the

recommendations made in these evaluations. Attendees at the workshop discussed

the evaluation results, as well as their own experiences within the NEPPS process,

to develop recommendations for action by EPA and the States. EPA and the States are now following up on these recommendations. Followup work includes giving increased leadership attention to NEPPS, developing training

for staff so they understand how NEPPS improves their ability to do their work,

improving the quality and usefulness of PPAs and PPGs, and examining how to accelerate efforts to ‘‘right size’’ State reporting. We also are anticipating the completion of the NAPA report due in November of this year. EPA and the States will review this report and the progress made in addressing the various recommendations

before deciding what additional efforts will be undertaken.

Question 5. EPA acknowledged in its testimony that environmental problems today are much more complex than those of the past. Would you agree then that

we need a stronger role for States and their innovations in dealing with these more

complex issues today more than we have in the past? Response. Over the last 30 years the capacity of the States to play a pivotal role in environmental and public health protection has increased dramatically. The

States have become important laboratories where innovative ideas for more effective

management can be tested and proven. EPA and States have collaborated on many

innovative ideas with EPA providing resources, technical assistance, and expertise.

Many of these ideas hold promise for implementation on a ideas wider basis. EPA

will continue working with States to help build their capacity for innovation so they

can assume an even stronger role in generating and testing many more new ideas.

Question 6. The Environmental Law Institute has recommended that Congress authorize the flexibility and workload shifting embodied in the PPA and PPG concepts. Does EPA support this recommendation?

Response. We have found a great deal of flexibility within the current statutes to implement NEPPS. We are working hard to address the barriers that have been

identified. We believe this is a more productive allocation of our limited resources

than proposing statutory changes specific to NEPPS or PPGs at this time.

RESPONSES BY MICHAEL MCCABE TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. In your testimony, you state that ‘‘the problems we face today are much more complex than those of the past.’’ and specifically reference nonpoint

source water pollution as an example. Does the more complicated and site specific

nature of many environmental challenges, such as nonpoint source pollution, argue

moving away from existing ‘‘one-size-fits-all’’ regulation toward a more flexible and

locally based approach? How do you envision such a flexible program working; in

what areas do you feel the States should have greater flexibility?

Response. The Agency has many efforts underway to move away from the ‘‘onesize-fits-all’’ approach toward more flexible and locally based approaches to environmental protection. The National Environmental Performance Partnership System

(NEPPS), which now serves as the framework for our partnership with States, is

designed to provide States with greater flexibility in how they solve their most

pressing environmental problems and provides a vehicle for States and EPA to negotiate innovative approaches. In the regulatory arena, collaborative efforts such as

the EPA/State Regulatory Innovations Agreement and Project XL are seeking innovative ways to achieve environmental protection. The Community Based Environmental Protection program and EPA’s Watershed Protection Approach to environmental management are examples of developing protection efforts based on the conditions and needs of local geographic areas. Through such collaborative efforts, EPA,

States, local governments, businesses, and other stakeholders are working to provide greater flexibility in how environmental problems are solved while ensuring

there is continuous improvement in environmental performance.

NEPPS. The National Environmental Performance Partnerships System (NEPPS)

is the operating framework for EPA’s working relationship with States to accom-
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plish our joint mission of protecting public health and the environment. Through

NEPPS, States can propose alternative approaches to priority problems and direct

Federal funds to implementing these approaches. Under NEPPS, EPA and States

set priorities jointly based on an assessment of environmental conditions and program needs as well as consideration of national, Regional, and State priorities. As

a result of these negotiations, States have greater flexibility to focus environmental

protection efforts on their most pressing environmental priorities. To address the

jointly negotiated priorities, the Performance Partnership Grant (PPG) authority allows States to combine funds from up to 16 categorical grants in a single PPG. Another key element of NEPPS is oversight that is tailored to a level appropriate to

the performance of each State. We continue to work both internally and with States

to make the granting of flexibility more transparent.

Project XL. A good example of the short-term results—and long-term promise of our search for innovative site specific solutions in partnership with States, business,

and the public can be seen in Project XL. Launched in 1995, this innovative program tests ideas that could make the nation’s environmental protection system

more efficient and effective.

Through Project XL, participants can reap the benefits of reduced administrative burdens or increased regulatory flexibility if they take steps to do more than just

comply with regulations—achieving results that go beyond what the law requires.

If a pilot project is successful, it is evaluated to see if those innovations can be more

broadly applied to other facilities. This willingness to experiment outside the regulatory arena signifies our emphasis on getting results, not simply enforcing regulatory requirements. To date, 25 projects are being implemented under Project XL. Watershed Protection Approach. EPA’s Watershed Protection Approach is effectively protecting and restoring aquatic ecosystems while protecting human health.

Rather than just addressing an individual water body or discharger, this strategy

has as its premise that many water quality and ecosystem problems are best solved

at the watershed level. Major features of the Watershed Protection Approach are:

targeting priority problems, promoting a high level of stakeholder involvement, integrated solutions that make use of the expertise and authority of our State partners

and other agencies, and measuring success through monitoring and other data gathering.

Question 2. You argue that ‘‘existing regulatory structures. . . .present some chal- lenges to our efforts to find new ways of doing business.’’ Do you feel that our existing environmental laws such as the Clean Water Act, provide the necessary flexibility?Response. As described in my testimony, EPA and State regulators have success- fully tackled and addressed many of the nation’s pressing environmental concerns.

Building on these successes, EPA and States are now recognizing and focusing our

attention on problems that are not as easily targeted by the existing statutory and

regulatory structure. We have found some flexibility within the current statutes to experiment with in- novative solutions to environmental problems. In some cases, we have made sitespecific regulatory changes necessary to carry out these experiments. EPA is now going through a fundamental change in thinking about what we need to make greater progress in implementing innovative approaches. We believe we

have stretched the limits of the law about as far as they can go. The authorities

now in place have served us well in the past; they have allowed us to make extraordinary progress in cleaning and protecting the environment. However, we recognize

that our laws need to change if we are to meet the remaining environmental challenges. The Clean Air Act has not changed in 10 years, the Clean Water Act in 13,

Superfund in 14. These laws need to be improved, and all of us have ideas on how

that could be done. It is time for us to begin a public, nonpartisan evaluation of the

whole legal framework under which EPA operates, and how we can make it better.

RESPONSES BY MICHAEL MCCABE TO ADDITIONAL QUESTIONS FROM SENATOR

LAUTENBERG

Oversight

Question 1. In 1995, the GAO reported that States complain about excessive EPA

oversight. States felt that a highly performing State should get less oversight than

a State that is having difficulty implementing a program. Is there a method of

measuring such a State performance agreed to by both EPA and the States? Are

States providing and is EPA assembling the information necessary to identify highly

performing States? If so, what are you finding—which States are performing well

and which are not performing well?
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Response. EPA Regional Offices work with each of their States to address State performance. EPA Regional of rices tailor the type and amount of oversight—as well

as the kinds of technical and other assistance EPA will provide—to the needs and

performance of each State. Agreements between EPA and the State about how EPA

will conduct oversight and what technical assistance EPA will provide are often incorporated into a Performance Partnership Agreement (PPA) or other EPA-State

agreement. Among the information considered in the negotiation of these agreements is an assessment of the State’s performance. As envisioned by the National

Environmental Performance Partnership System (NEPPS) that serves as the framework for EPA-State partnerships, EPA and the State will ideally evaluate the effectiveness of their efforts jointly. When EPA was collaborating with the States in the development of NEPPS, States representatives said they did not want EPA to rank or compare one State

against another. As a result, efforts to develop criteria for the leadership aspects

of NEPPS were dropped. However, there are some examples where criteria for evaluating States have been developed, such as Region 8’s enforcement oversight model.

While specific approaches to oversight may vary by Region and program, EPA’s

oversight efforts are designed to foster continuous improvements in each State program. In evaluating a State program, EPA considers a complex set of factors such

as: comparisons of current performance measures against past performance; whether the State is meeting its program commitments; the quality and adequacy of its

program efforts; and factors outside the control of the State agency that might be

affecting its performance. EPA discusses reasons for any problems and what could

be done to improve with the States, and under NEPPS, a joint evaluation approach

is considered the ideal.

We continue to explore ways that would be acceptable to both EPA and States to make differential oversight more transparent. The EPA-State Agreement on Core

Performance Measures puts an important tool in place that should help in measuring individual State environmental and program performance and form a more solid

and equitable basis for implementing a more formal approach to differential oversight in the future.

Environmental Reporting Reform

Question 2. As you know, I am drafting a bill to streamline environmental report- ing. The bill will require EPA to give each business in the U.S. one point of contact

for all Federal environmental reporting requirements. This ‘‘one-stop’’ electronic reporting system will use a common nomenclature throughout and use language understandable to a business person, as opposed to an environmental specialist. It will

also provide pollution prevention information to the business. The following questions relate to that bill.

According to Mr. Bradford’s testimony, the States and EPA are working together to accomplish many of the objectives I am pursuing in drafting my bill. It remains

unclear to me, however, which specific objectives are currently envisioned by the

EPA-State partnership; when we might expect to see them realized, and by what

means. Your answers to the following questions will help clarify my understanding

of the State-EPA partnership.

How long have EPA and State agencies been working to integrate environmental

information management and to streamline environmental reporting?

Response. EPA began its preliminary integration efforts with States in 1990 with

the development of the Facility Index System, a way of tracking a facility through

different data sets. In the ensuing years, the efforts expanded to include direct program assistance to States through the One-Stop Reporting Program; Reinventing

Environmental Information (REI) efforts designed to establish basic data standards

and to implement electronic reporting; and convening in 1998, the State/EPA Information Management Workgroup to deal with ongoing policy issues surrounding information management. Each of these efforts contributed to the development of the

Information Integration Initiative in 1999, the next logical step in developing a comprehensive data exchange network that will provide a wide-range of shared information among States, EPA, tribes, localities, the regulated community, and other data

partners.

Question 2a. Which of the following attributes will the integrated reporting system envisioned by the EPA-State partnership expect to have.

Will a facility be able to identify, through one point of contact, all EPA reporting

requirements that apply to it? Will a facility be able to identify as well, through the

same point of contact, all State, tribal, and local environmental reporting requirements that apply to it?

Response. At present, EPA has not created a single place where a given facility

can identify all reporting requirements that apply to it. However, EPA is taking
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steps toward consolidating the availability of information on Federal regulatory requirements and compliance assistance such as:

1. placing EPA regulations and guidance on line;

2. providing links to information via sector specific codes;

3. issuing simplified guidance on reporting; and

4. establishing compliance assistance centers in cooperation with States and industry associations.

EPA views these steps as critical to providing necessary assistance and guidance.

The integration initiative effort to develop a data exchange network also will be able

to provide internet links to State, Tribal, local, and other Federal agency requirements. These links can in essence create a ‘‘roadmap’’ to information needed by the

regulated community to improve compliance with environmental laws.

Question 2c. Will a facility be able to submit, through the same point of contact,

all information that is normally submitted directly to EPA programs?

Response. The goal of EPA’s Central Data Exchange (CDX) effort is to centrally

process as many of EPA’s data collections as possible. For information security or

other reasons, such as protection of confidential business information, some data collections may remain independent of CDX.

Question 2d. Will a facility be able to submit as well, through the same point of

contact, all information required under applicable State, tribal, and local environmental reporting requirements?

Response. Our current efforts focus on centralizing the exchange of data with our

co-regulators, emphasizing data to ensure compliance with Federal requirements.

Question 2e. Will the reporting system direct the facility to information on applicable OSHA reporting requirements and environmental reporting requirements administered by Federal agencies besides EPA?

Response. While our current efforts focus on centralizing the exchange of data

with co-regulators to ensure compliance with EPA’s requirements, it should be possible to create other Federal links as necessary in the future.

Question 2f. Will the reporting system use data standards for units of measure,

terms for chemicals, pollutants, waste, and biological material, and methods of identifying reporting facilities, developed in consultation with industry, environmental

groups and other stakeholders?

Response. Yes. EPA is working to establish, in consultation with our external

partners, both data element and ‘‘format’’ standards for external data reported to

EPA. The Environmental Data Standards Council consists of EPA, State and Tribal

members. Its purpose is to jointly develop and implement standards which facilitate

the efficient exchange and use of environmental information. To date, the Environmental Data Standards Council has approved standards for facility identification,

date, Standard Industrial Classification/North American Industrial Classification

System (SIC/NAICS), and Latitude/Longitude. The Council is working aggressively

to also standardize chemical identification, biological taxonomy, and other data sets

widely used by EPA programs, States, and Tribes. Work has been initiated on

standards development for enforcement and compliance, permitting, Tribal identifiers, and geographic data elements. All of these standards will be provided to the

public for review and comment before they are made final by the Council.

Question 2g. Will the reporting system use an ‘‘open data format’’ that allows facilities to download information from their own internal data management systems

directly to the integrated reporting system?

Response. EPA’s Central Data Exchange (CDX) program has the lead for establishing the ‘‘transmission formats’’ which prescribe the arrangement of standard

data elements in reporting transactions. CDX has recently received approval

through the American National Standards Institute, an industry/government standards setting body, to deploy a standard data format for exchanging compliance data.

This format is referred to as the ANSI X12 Environmental Compliance Reporting

(179) Transaction Set. CDX is now in the process of deploying the ANSI X12 179

transaction set, and is also in the process of developing equivalent ‘‘Internet’’-based

formats, using ‘‘extensible markup language,’’ to allow a broader range of regulated

entities to provide data electronically.

There should be many benefits if facilities connect their internal management systems to their environmental management and reporting systems. These benefits

could include improved data quality, identification of pollution prevention and costsaving opportunities, and reporting burden reduction. EPA will engage in outreach

to commercial vendors developing enterprise resource planning systems, and other

data management systems for the regulated community, and will encourage them
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to include environmental management and reporting components that are compatible with the integrated reporting network.

Question 2h. To ease reporting by businesses with facilities in more than one ju- risdiction, will EPA and State, tribal, and local agencies all use the same data format and data standards?

Response. The Environmental Data Standards Council will encourage States and Tribes to adopt the approved set of data standards and transmission formats. As

currently envisioned, all members of the integrated reporting network would be required to use approved standards and formats as a condition of membership in the

network. However, EPA cannot require States or Tribes to adopt content and format

standards, nor can we require these parties to participate in the integrated information network. Based on our recent work with States and Tribes, it is clear that

many, if not all, of these entities will partner with EPA in the network.

Question 2i. Will a facility be able to receive information on pollution prevention

technologies and practices through the reporting system?

Response. The integrated system envisioned by the EPA-State partnership is one

which will allow facilities and government to exchange a broad range of information

such as multimedia environmental data, geographic data, and facility data in a

stewardship environment. As the network evolves, a wider array of information, including pollution prevention technology and practices information, may also ultimately be made accessible.

Question 2k. By what date may we expect the envisioned integrated reporting system, or aspects of the system, to be in place?

Response. The Agency will begin to see implementation of concrete integration

projects in October, 2000, that directly support the State/EPA data exchange network. The projects are:

• integration of information about regulatory activities (phase 1);

• implementation of a Facility Registry System;

• expanded integration and access of geospatial information; and

• initial implementation of an integrated central data exchange capability.

These projects create new functionality in data base integration, access/application, and State/external data flows.

EPA also is working closely with our State partners and plans to use the fiscal

year 2001 funding request to:

• support collaborative State development and knowledge/technology sharing;

• work with other data partners beyond States; and

• coordinate the Agency’s other program information efforts with States to

modernize and integrate.

The States and EPA anticipate completion of a fully developed, nationally integrated Network, used by States, Tribes, localities, the regulated community, EPA

and the public within the next 3 to 5 years.

Are the air, water, and waste programs of EPA and the State agencies fully participating in the development of the integrated reporting system?

EPA’s information integration effort is, foremost, a partnership with the States.

EPA also has included representatives from every major Agency program office.

These representatives have been organized into a multi-disciplinary team of technical information experts responsible for recommending and developing the broad

foundation pieces for:

• defining and implementing a national network for environmental data exchange in partnership with States and other data partners;

• assisting EPA’s information partners to participate in the exchange network;

• positioning EPA to participate in the network and the data exchange it will

facilitate; and

• integrating existing information collection processes with data standards and

a centralized data exchange to streamline information sharing.

STATEMENT OF PETER F. GUERRERO, DIRECTOR, ENVIRONMENTAL PROTECTION ISSUES, RESOURCES, COMMUNITY, AND ECONOMIC DEVELOPMENT DIVISION, GENERAL

ACCOUNTING OFFICE

Mr. Chairman and members of the committee: I am pleased to be here to discuss

our recent assessment of the National Environmental Performance Partnership System (NEPPS). NEPPS was established by a May 1995 agreement between the Environmental Protection Agency (EPA) and the States as a new framework for improving their working relationship, and for improving the effectiveness of States’ envi-
62

1 Environmental Protection: Collaborative EPA-State Effort Needed to Improve New Perform- ance Partnership System (GAO/RCED-99-171)

ronmental programs. Under the program, a State and EPA may enter into a Performance Partnership Agreement that identifies the State’s environmental goals and

priorities, and how both EPA and State officials are to address them. The two sides

may also agree on a Performance Partnership Grant, which is intended to allow the

State greater flexibility in targeting limited resources to meet its most pressing

needs.

Both EPA and the States launched NEPPS to help address long-standing issues affecting their working relationship. Among these issues were concerns that EPA (1)

is inconsistent in its oversight of States from one region to another, (2) sometimes

micromanages the States’ programs, (3) does not provide sufficient technical support

for the States’ programs increasingly complex requirements, and (4) often does not

adequately consult the States before making key decisions affecting them. In signing the agreement that established NEPPS, EPA and State leaders stated that they sought to ‘‘strengthen our protection of public health and the environment

by directing scarce public resources toward improving environmental results, allowing States greater flexibility to achieve those results, and enhancing our accountability to the public and taxpayers.’’ Among the key elements of NEPPS were (1)

EPA’s commitment to give States with strong environmental performance greater

flexibility and autonomy in running their environmental programs and (2) the

agreement between EPA and the States to develop effective ‘‘core’’ performance

measures to better understand whether the States’ programs are achieving their intended results.

Given the expectation among participants that NEPPS could deal with many of the issues that have long impeded the EPA-State relationship, the Chairman, Subcommittee on VA, HUD, and Independent Agencies, House Committee on Appropriations, asked us to examine the progress made by EPA and the States since the 1995

Agreement. In response to this request, our June 1999 report (1) identified the status of grants and agreements made under NEPPS between EPA and participating

States, (2) examined the progress that EPA and the States have made in developing

results-oriented performance measures to be incorporated into NEPPS agreements

and grants to the States, (3) examined how EPA oversight may or may not have

been changing in States that were participating in NEPPS, and (4) discussed the

extent to which the use of these performance partnership agreements and grants

had achieved the benefits envisioned for the States and the public. 1

In summary, Mr. Chairman, we found the following:

• State participation in NEPPS grew from 6 pilot States in its initial year in fis- cal year 1996 to 45 States by the end of fiscal year 1998. Of that number, 31 States

had both Performance Partnership Agreements and Performance Partnership

Grants with EPA in 1998; 12 States had grants only; 2 States had Agreements only;

and 5 States did not participate at all. • EPA and the States agree on the importance of measuring the outcomes of en- vironmental activities rather than just the activities themselves, in order to help

them better understand whether their programs are achieving their intended results. Despite a number of technical challenges (e.g., the inherent difficulty in quantifying certain results, and the difficulty of linking program activities to environmental results) and disagreements between EPA and the States on such matters as

the degree to which States should be permitted to vary from the national core measures, EPA and State leaders have managed to agree on a set of core measures for

fiscal year 2000 that are widely regarded by EPA and State officials as significantly

improved from those negotiated in previous years. • The initial expectation that participation in NEPPS would be accompanied by reduced Federal oversight of States has thus far been realized to only a limited degree. We identified a number of instances among the six States that we visited

where oversight reduction did accompany participation in the system. However, in

other cases cited by both State and EPA regional officials, it was difficult to attribute reduced oversight directly to NEPPS participation. Other instances were

cited where oversight had either remained the same or had actually increased. • EPA and State participants cited a number of benefits associated with NEPPS

noting, for example, that participation provided a means of getting buy-in for innovative and/or unique projects and served as a tool to divide an often burdensome

workload more efficiently between Federal and State regulators. Yet while participants from each State indicated that their participation in the voluntary program

would probably continue, they also consistently expressed the view that the benefits

of the program should be greater; that the program has yet to achieve its potential;

and that improvements are needed. The 1995 Agreement anticipated the appro-
63

priateness of such reflection in calling for ‘‘a joint evaluation system for EPA and

the States to review the results of their efforts to ensure continuous improvement.’’

We recommended in our report that such a joint evaluation process be initiated, and

suggested a number of issues to be considered for attention during such a process.

Background

Under NEPPS, States may voluntarily enter into ‘‘Performance Partnership

Agreements’’ with their EPA regional offices. While there is considerable flexibility

in how the agreements may be designed, they typically provide a means for EPA

and the States to negotiate such matters as (1) which problems will receive priority

attention within the State programs, (2) what EPA’s and the States’ respective roles

will be, and (3) how the States’ progress in achieving clearly defined program objectives will be assessed. An important component of the Partnership Agreements is

the use of a common set of national environmental indicators (called ‘‘Core Performance Measures’’) to measure the effectiveness and success of States’ environmental

programs. In their efforts to develop these Performance Measures, EPA and State

officials have sought to move beyond counting the number of actions (such as the

number of inspections conducted or environmental enforcement actions taken), and

increasingly toward evaluating the impact of programs on the environment.

While NEPPS provides the overarching framework for developing partnership

agreements, Performance Partnership Grants, authorized by the Congress in April

1996, serves as a major tool to implement them. This program allows States to request that funds from 2 or more of the 15 eligible categorical grants be combined

to give governmental entities greater flexibility in targeting limited resources to

their most pressing environmental needs. These grants are also intended to be used

to better coordinate existing activities across environmental media and to develop

multimedia programs. While the Partnership Agreements are designed to complement the Partnership Grants, States are free to negotiate both agreements and

grants or to decline participation in NEPPS altogether.

Growth of State Participation in NEPPS

In fiscal year 1996, NEPPS was initially tested on a pilot basis with six participating States. EPA and the States viewed the first year as a time to experiment

with the new system and various ways to implement it. The number of participating

States subsequently increased to 45 States in fiscal year 1998, although the extent

of participation varied widely. For example, half the States have negotiated both

Partnership Agreements and Partnership Grants through their lead environmental

agencies that cover most EPA programs; other States have substantially limited

their participation and cover fewer programs.

States have also varied considerably in the detail and content of their Agreements. Senior officials in EPA’s Office of State and Local Relations explained that

the agency has not attempted to impose uniformity on the development of Partnership Agreements at this early stage of the NEPPS process, and has therefore refrained from issuing guidance on how the agreements should be structured. Hence,

the agreements vary widely in content and emphasis, reflecting each individual

State’s conditions and priorities and reflecting the results of negotiations with their

respective EPA regional offices.

Progress in Developing Results-Oriented Measures

Both EPA and the individual States have had a number of efforts underway to

develop effective performance measures to better understand whether their programs are achieving their intended results. Their collective efforts to develop such

measures for NEPPS has centered around the Performance Measures that were negotiated between EPA and the Environmental Council of the States during the past

several years (The Council is a national nonpartisan, nonprofit association of State

and territorial environmental commissioners.). The effort faced a number of technical challenges inherent in developing defensible results-oriented measures. The results of activities designed to improve water quality, for example, can take years to

appear, and the capability of many States to monitor a significant share of their waters is limited. Moreover, even if environmental conditions could be reliably and consistently measured, it may be particularly difficult to demonstrate the extent to

which a specific government program affected that condition. Officials from Florida

(which has made a significant commitment to measuring compliance rates and environmental indicators), for example, explained that such factors outside their control

as economic activity and weather conditions, make it particularly difficult to link

program activities with changes in environmental conditions.

In addition to these technical challenges in developing results-oriented measures,

the effort was also challenged by disagreements between EPA and the States on issues such as (1) the degree to which States should be permitted to vary from the
64

national Performance Measures and (2) the composition of these measures, particularly regarding the degree to which pre-existing output measures should be retained

as newer outcome measures are added. Overall, however, the States and EPA made

progress in meeting these challenges. For example, officials in four of the six States

whose programs we examined had developed and implemented their own measures

to address their own priorities. At the same time, program officials in each of the

six States also agreed to report information required for the national Performance

Measures agreed upon between the Environmental Council of the States and EPA.

In addition, while they maintained that further refinement will still be needed, EPA

and State officials agreed on a set of fiscal year 2000 measures that, by most accounts, is a substantial improvement over those measures negotiated from previous

years in that they are fewer in number (i.e., better targeted to address key goals)

and generally more outcome-oriented.

Reductions in Oversight Attributable to NEPPS Have Thus Far Been Modest

Instances of greater State flexibility and reduced EPA oversight tended to focus

on reducing the frequency of reporting and, in some cases, the frequency of onsite

reviews. Maine environmental officials, for example, noted that more frequent, and

less formal, dialog between the program staff and regional staff had replaced written reports, saving time and improving the level of cooperation between EPA and

State staff. While Maine program officials attributed the reductions in part to the

assignment by EPA’s Boston regional office of a liaison for each State’s delegated

programs, they credited NEPPS with formalizing or legitimizing the changes. Likewise, Florida program officials identified sizable reporting reductions in its waste

program as a result of a joint effort with EPA included in the Partnership Agreement. Other instances were cited by officials in Georgia and Minnesota.

Aside from such individual instances of streamlining reporting requirements and

similar tracking efforts, the large majority of the State officials we contacted generally maintained that participation in NEPPS had not yet brought about significant reductions in reporting and other oversight activities by EPA staff, nor had it

resulted in significant opportunities for them to focus on other priorities or to shift

resources to weaker program areas. EPA officials generally acknowledged this point,

but they provided specific reasons why the agency’s oversight of State programs has

not significantly decreased as a result of NEPPS—and in some cases has actually

increased. In this connection, we noted that environmental statutes or regulations

sometimes prescribe the level of oversight required of EPA which, according to some

headquarters and regional officials, leaves the agency with little room to scale it

back. These officials also pointed to (1) audits that identified problems in some

States’ enforcement programs (such as the underreporting by States of significant

violations and precipitous decreases in the number of State enforcement actions

taken), which they believed called for greater oversight, and (2) the difficulty in scaling back oversight without measurable assurances that the States’ programs experimenting with alternative compliance strategies are achieving their desired results.

At the same time, EPA officials cited a number of barriers preventing greater

State flexibility that could be more readily addressed. For example, senior EPA officials in three of the four regional offices that we visited acknowledged that support

for NEPPS within EPA varies. One senior regional official explained that many regional managers and staff are often more comfortable with pre-existing ways of

doing business and are unsure as to how they can accomplish their work in the context of the partnership approach under NEPPS. He voiced the opinion that there

may be a need for training EPA regional staff in NEPPS implementation. Another

senior regional official said that some agency staff will only take NEPPS seriously

when EPA’s reward system is more closely tied to their performance in implementing the program. Headquarters officials also acknowledged another problem cited by

many of the State officials we contacted—that headquarters guidance, initiatives,

and special requests sometimes arrived at the regions too late to be used effectively

in regional-State Partnership Agreement negotiations, and that they were working

to address the problem.

Benefits of NEPPS Participation Cited, But Full Potential Has Yet to be Realized

Senior officials and program managers from each of the six States in our review

agreed that NEPPS has provided their programs with worthwhile benefits, and that

its potential for achieving a more effective partnership between EPA and the States

was still worth pursuing. Among the examples cited were instances in which Partnership Agreements were used to more efficiently divide a heavy workload between

regional and State staff, and in which States were able to take at least limited advantage of the flexibility in their Partnership Grant agreements to shift resources

among their media programs. Overall, however, the most frequently cited benefit
65

among both State and EPA regional participants was that the two-way negotiation

process inherent in NEPPS has fostered more frequent and effective communication

between regional and State participants and improved their overall working relationship.

At the same time, State officials almost unanimously expressed the view that the

benefits from their investment of time and resources into NEPPS should be greater;

that it has yet to achieve its potential; and that improvements are needed. Of particular note, almost all of the State officials we interviewed cited progress in achieving reduced oversight and greater autonomy as critical to the future success of

NEPPS. They also cited the need to continue improving performance measures; address the barriers impeding greater acceptance of NEPPS among staff within both

EPA and State agencies; determine how to make greater use of the flexibility under

Partnership Grants to shift resources and funding to address higher priorities; and

improve how EPA’s headquarters offices provide their input into State-regional

NEPPS negotiations.

These concerns pose challenges for the future of NEPPS—challenges that were

anticipated by the 1995 Agreement that launched the program which called for a

joint evaluation system for EPA and the States to review the results of their efforts

to ensure continuous improvement. On the basis of the information that can be

gleaned from the experiences to date of participating States and regional offices, we

concluded that it was now appropriate to undertake such a joint evaluation process.

We recommended that EPA work with senior-level State officials to initiate a joint

evaluation process that (1) seeks agreement on the key issues impeding progress in

developing a more effective National Environmental Performance Partnership System and (2) develops mutually agreeable remedies for these issues. Among the issues we suggested that such a process could focus on were the following:

• Developing a set of flexible guidelines, to be used as a tool by State and EPA

regional NEPPS negotiators, that could help to clarify the appropriate performance

expectations and other conditions that States must meet to achieve reduced oversight in carrying out their environmental programs, and the type of reduced oversight (e.g., reduced frequency of reporting, greater autonomy in setting program priorities) that could be achieved.

• Identifying what additional work is needed to improve the national Core Performance Measures recently negotiated by EPA and State representatives for fiscal

year 2000.

• Alleviating the resistance among some staff (both within EPA offices and

among participating State agencies) toward implementing NEPPS through training

efforts and other strategies.

• Determining what appropriate steps should be taken by EPA and the States

to allow for greater use by States of the flexibility envisioned under the Performance

Partnership Grant system to shift resources and funding among their media programs.

• Determining how effective public participation in the NEPPS process can best

be ensured.

• Developing ways to improve communication among EPA’s headquarters and regional offices and participating States to ensure that States are given clear and

timely information on whether key elements of their NEPPS-related agreements

have the full buy-in of key EPA offices.

In response to this recommendation, EPA pointed out that in March 1999, EPA

and the Environmental Council of the States agreed in principle to conduct such a

joint evaluation and that it would review many of the issues cited in our recommendation. Since that time, however, progress has been limited. According to an

official with the agency’s Office of State and Local Relations, EPA and the Council

have yet to agree on such basic issues as who should undertake the evaluation and

what its scope should be. Furthermore, it is unclear when final resolution will be

reached. Our findings suggest that future support for this program will depend

heavily on the timely resolution of many of the barriers that have thus far impeded

its effectiveness. Therefore, we believe timely efforts by EPA and the Council to

identify what specific issues are to be addressed, and to identify a timetable for addressing them, would be important steps in expanding both the participation in, and

effectiveness of, this important program.

This concludes my prepared statement, Mr. Chairman. I would be pleased to address any questions that you or other members of the committee may have.
66

RESPONSES BY PETER GUERRERO TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. GAO stated in its report that Federal oversight of States participating

in the National Environmental Performance Partnership System (NEPPS) was not

reduced as expected. Among the factors GAO cited are: (a) the inherent difficulty

in ‘‘letting go’’ on the part of some regulators and (b) EPA’s multi-level organizational structure which complicates things. One of GAO’s recommendations is to reduce the resistance toward implementation of NEPPS through training and other

strategies. What are some of those strategies that GAO believes can produce a more

cooperative agency?

Response. One key step would be for the agency to achieve a shared understanding, both within EPA and between EPA and the States, on the core measures that

articulate the goals and objectives all key parties are trying to achieve. In this connection, the agency needs to reconcile the differences that still exist between its

GPRA measures, and the core performance measures it has negotiated with the Environmental Council of the States.

Once this agreement is achieved, NEPPS goals and objectives need to be incorporated into performance expectations among EPA employees throughout the agency (and, ideally, among their State counterparts). Until this occurs, the responsibilities for which EPA staff are currently being held accountable will tend to supercede

NEPPS-related activities in priority.

NEPPS must be approached with strong communication skills and an open mind

as to how environmental problems can best be addressed. Such attributes are important for all NEPPS participants, but particularly for those at the EPA regional level,

where managers and staff sometimes have to balance conflicting headquarters and

State priorities. This makes their role particularly important in helping to forge consensus under challenging circumstances. Our interviews with both EPA and State

environmental managers suggest that training to develop these skills would be a

good investment in helping NEPPS to succeed.

In the past, Headquarters offices have been criticized for not providing States and

regions with timely input needed to facilitate their NEPPS negotiations. In particular, States have complained that headquarters sometimes imposes new requirements on State programs during the year—after the States and their corresponding

EPA regional offices have already agreed on the work to be done for the following

year. In an effort to be responsive to this issue, headquarters offices have attempted

to issue 2-year guidance to regions and States to allow them greater continuity in

carrying out their agreements. We believe this is a step in the right direction.

Question 2. In your opinion, what leadership qualities are needed to best overcome

those barriers to fully implement the NEPPS program?

The most important step that senior EPA and State managers can take to promote NEPPS’ full implementation is to send an unambiguous message to the staff

in their agencies that they fully support the program. Visibility of support and interest from the top levels of EPA and the States are critical if mid-level managers and

other staff are to treat NEPPS as a priority.

Many EPA staff still tend to view environmental programs with a separate,

media-specific focus. States, on the other hand, increasingly find that they must

make tradeoffs among their individual media responsibilities to ensure that their

most important environmental priorities are adequately addressed. EPA leadership

needs to advocate among its staff a broader, multi-media focus that recognizes the

need for these tradeoffs, within the constraints posed by the framework of existing

laws and regulations.

Question 3. Are there any statutory changes that would make Performance Partnership Agreements (PPAs) or Performance Partnership Grants (PPGs) more attractive to States?

Response. As a program promoting a new way of doing business, NEPPS bears

similarity to many of EPA’s and States’ ‘‘reinvention’’ programs. In fact, many

States are trying to use their Performance Partnership Agreements under NEPPS

to accelerate and institutionalize their reinvention efforts. In this regard, we agree

with the Chairman’s observation at the hearing that EPA’s stove-piped structure

has complicated the efforts of environmental regulators and the regulated community to adopt more flexible and innovative approaches to environmental protection.

At the request of Congressmen Boehlert, Dooley, and Greenwood, we have recently

initiated an evaluation of the extent to which laws, regulations, and agency policies

inhibit innovation, and would be pleased to share our findings with the committee

when they are available.
67

Question 4. What should the relationship be between Core Performance Measures

(CPMs) and EPA’s obligations under the Government Performance and Results Act

(GPRA)?

Response. CPMs are generally a subset of the agency’s GPRA measures, and EPA

maintains that there is a close relationship between the two. However, there is a

substantial difference in that the GPRA measures are far more numerous and, as

a group, tend to be more ‘‘output’’ oriented than the more results-oriented CPMs.

EPA needs to make more progress in aligning its GPRA measures with the CPMs

it has negotiated with the States by (1) reducing the overall number of GPRA measures to focus on the most significant measures and (2) continue to shift the relative

balance between output and outcome measures to place increasingly greater emphasis on outcome measures.

RESPONSES BY PETER GUERRERO TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. One of your findings is that the ‘‘initial expectation that participation

in National Environmental Performance Partnership System would be accompanied

by reduced Federal oversight of States has thus far been realized to only a limited

degree.’’ Yet in your report you note that EPA and the States agree that ‘‘a formal

system for implementing differential oversight . . . would be controversial and difficult to implement.’’ Do you believe that EPA and the States can agree on which

programs should be considered ‘‘strong’’ environmental programs?

Response. For years, EPA has essentially made decisions as to which State environmental programs were strong and which weaker. These decisions, however, tended to be informal and were used to support annual grant agreement negotiations

by identifying areas in which EPA would provide additional support to States.

An additional issue is the complication that arises among States’ environmental

programs in publicly identifying which among them are strong performers and

which are weak performers. For this reason, the effort to formalize such a ‘‘differential oversight’’ process through NEPPS was discontinued.

Nevertheless, EPA’s Denver region is attempting to develop such a formal system

of ranking their States to identify stronger and weaker States for purposes of focusing attention where it is most warranted. This system, called the ‘‘Unified Oversight

System,’’ is designed to evaluate State enforcement and compliance program performance. The objective of this system is to strengthen State programs and reward

strong programs with reduced oversight. The system, which will employ both quantitative scoring and narrative feedback, will be used to conduct annual joint planning with States and to manage the limited oversight resources of EPA. Time will

tell whether the Denver region’s experiment will succeed.

Question 2. Given the absence of formal criteria for determining what constitutes

a good program, how can one distinguish between good programs that deserve reduced oversight and inadequate programs that require additional attention?

Response. There are a number of factors that have historically served as indicators of the strength of State programs. Examples include:

• Various measures of enforcement activity, such as the number of inspections

conducted, violations disclosed, fines levied/collected, etc.;

• Adequacy of staffing of State programs;

• Results of periodic EPA audits of State programs;

The challenge in recent years has been to move away from activity measures and

toward outcome measures, such as the extent to which the efforts of programs are

resulting in improved compliance or improvements in environmental quality. The

Core Performance Measures negotiated between EPA and the Environmental Council of States are a key step in that direction in that they are increasingly designed

to emphasize measures of the impact of environmental activities on the environment, as opposed to measuring the number of activities conducted.

As noted above, the Denver region’s experience with its Unified Oversight System

should be instructive to future efforts to systematically assess States’ programs, and

to practice differential oversight on the basis of performance and capability. While

the measures to be used in the System are initially weighted toward outputs, it is

anticipated that outcome measures will be relied upon increasingly over time.
68

[Report by the General Accounting Office]

ENVIRONMENTAL PROTECTION: COLLABORATIVE EPA-STATE EFFORT NEEDED TO

IMPROVE NEW PERFORMANCE PARTNERSHIP SYSTEM

U.S. GENERAL ACCOUNTING OFFICE,

RESOURCES, COMMUNITY, AND ECONOMIC DEVELOPMENT DIVISION,

Washington, D.C. 20548, June 21, 1999.

The Honorable JAMES T. WALSH, Chairman,

Subcommittee on VA, HUD, and Independent Agencies

Committee on Appropriations House of Representatives.

DEAR MR. CHAIRMAN: As requested, we are reporting on the Environmental Protec- tion Agency’s (EPA) and the States’ progress in implementing the National Environmental Performance Partnership System. As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 7 days from the date of this letter. At that time, we will send copies to the appropriate congressional committees;

the Honorable Carol Browner, Administrator, EPA, and the Honorable Jacob Lew,

Director, Office of Management and Budget. We will also make copies available to

others upon request. Please call me at (202) 512–6111 if you or your staff have any questions. Major contributors to this report are listed in appendix II.

Sincerely yours,

PETER F. GUERRERO, Director,

Environmental Protection Issues Executive Summary Purpose.

EXECUTIVE SUMMARY

Purpose

The Environmental Protection Agency (EPA) has had long-standing difficulties in

establishing effective partnerships with the States, which generally have the lead

responsibility in implementing many environmental programs. Among the key issues affecting EPA-State relationships have been concerns that EPA (1) is inconsistent in its oversight across regions, (2) sometimes micromanages State programs, (3)

does not provide sufficient technical support for State programs’ increasingly complex requirements, and (4) often does not adequately consult the States before making key decisions affecting them. To address these problems and improve the effectiveness of environmental program implementation, EPA’s Administrator and leaders of State environmental programs established the National Environmental Performance Partnership System (NEPPS) in May 1995. In signing the agreement that

established NEPPS, EPA and State leaders said that the system is designed to

strengthen protection of public health and the environment by directing scarce public resources toward improving environmental results, allowing States greater flexibility to achieve those results, and enhancing accountability to the public and taxpayers. A key element of NEPPS was EPA’s commitment to give States with strong

environmental performance greater flexibility and autonomy in running their environmental programs.

Given the expectation among participants that NEPPS could deal with many of

the issues that have long impeded EPA-State relationships, the Chairman, Subcommittee on VA, HUD, and Independent Agencies, House Committee on Appropriations, asked GAO to examine the progress made by EPA and the States since the

1995 agreement. Specifically, as agreed with the Chairman’s office, this report (1)

identifies the status of grants and agreements made under NEPPS between EPA

and participating States, (2) examines the progress that EPA and the States have

made in developing results-oriented performance measures to be incorporated into

NEPPS agreements and grants to the States, (3) examines how EPA oversight may

or may not be changing in States that are participating in NEPPS, and (4) discusses

the extent to which the use of these Performance Partnership Agreements and

Grants has achieved the benefits envisioned for the States and the public.

Background

Under NEPPS, States may voluntarily enter into ‘‘Performance Partnership

Agreements’’ with their EPA regional offices. While there is considerable flexibility

in how the agreements may be designed, they typically provide a means for EPA

and the States to negotiate such matters as (1) which problems will receive priority

attention within the State programs, (2) what EPA’s and the States’ respective roles
69

1The six States were Connecticut, Florida, Georgia, Maine, Minnesota, and Oregon.

will be, and (3) how the States’ progress in achieving clearly defined program objectives will be assessed. An important component of the Partnership Agreements is

the use of a common set of national environmental indicators (called ‘‘Core Performance Measures’’) to measure the effectiveness and success of States’ environmental

programs. In their efforts to develop these performance measures, EPA and State

officials have sought to move beyond counting the number of actions (such as the

number of inspections conducted or environmental enforcement actions taken) and

increasingly toward evaluating the impact of programs on the environment. While NEPPS provides the overarching framework for developing Partnership Agreements, the Performance Partnership Grants Program, authorized by the Congress in April 1996, is used by many States as a major tool to implement them. This

program allows States to request that funds from 2 or more of the 15 eligible categorical grants be combined to give governmental entities greater flexibility in

targeting limited resources to their most pressing environmental needs. These

grants are also intended to be used to better coordinate existing activities across environmental media and to develop multimedia programs. While the Partnership

Agreements are designed to complement the Partnership Grants, States are free to

negotiate agreements and/or grants or to decline participation in NEPPS altogether.

Results in Brief

State participation in the National Environmental Performance Partnership Sys- tem grew from 6 pilot States in its initial year in fiscal year 1996 to 45 States by

the end of fiscal year 1998. Of that number, 31 States had both Performance Partnership Agreements and Performance Partnership Grants with EPA in 1998; 12

States had grants only; 2 States had agreements only; and 5 States did not participate at all. Nationwide, for that year, $217 million of $745 million in State environmental program grants was consolidated into Performance Partnership Grants-an

increase of 28 percent from the previous year. EPA and the States agree on the importance of measuring the outcomes of envi- ronmental activities rather than just the activities themselves. However, the development of these measures has been impeded by a number of technical challenges,

including (1) an absence of baseline data against which environmental improvements could be measured, (2) the inherent difficulty in quantifying certain results,

(3) the difficulty of linking program activities to environmental results, and (4) the

considerable resources needed for high-quality performance measurement. In addition, EPA and the States have had to resolve fundamental disagreements over a

number of issues, including (1) the degree to which States should be permitted to

vary from the national core measures and (2) the composition of the measures-particularly regarding the degree to which preexisting output measures are to be retained as newer outcome measures are added. Despite these barriers, EPA and

State leaders have managed to agree on a set of core measures for fiscal year 2000

that are widely regarded by EPA and State officials as significantly improved from

those negotiated in previous years. The initial expectation that participation in NEPPS would be accompanied by re- duced Federal oversight of States has thus far been realized to a limited degree. A

number of instances were identified among the six participating States GAO visited

where oversight reduction did accompany participation in the system. 1 However, in

other cases cited by both State and EPA regional officials, (1) decreased oversight

could either not be linked directly to NEPPS participation or (2) oversight had either remained the same or increased. Among the factors cited by these officials as

complicating reduced EPA oversight were (1) statutory and/or regulatory requirements that in some cases prescribe the kind of oversight required of States by EPA;

(2) reluctance by EPA regulators to reduce oversight without the measures in place

to ensure that environmental quality would not be compromised; (3) the inherent

difficulty in ‘‘letting go’’ on the part of some regulators that have implemented the

existing EPA-State oversight arrangement for several decades; and (4) EPA’s multilevel organizational structure, which complicates efforts to identify whether all key

agency decisionmakers among the agency’s headquarters and regional offices are in

agreement on key oversight-related questions.

EPA and State participants nonetheless cited a number of benefits associated

with NEPPS, noting in particular that participation (1) provided a means of getting

buy-in for innovative and/or unique projects, (2) allowed States the option to shift

resources and funds under the Performance Partnership Grants Program, (3) served

as a tool to divide an often-burdensome workload more efficiently between Federal

and State regulators, and (4) improved communication and increased understanding

among EPA and State program participants about program priorities and other key
70

2The Environmental Council of the States is a national nonpartisan, nonprofit association of

State and territorial environmental commissioners.

matters. Yet while participants from each State indicated that their participation

in the voluntary program would probably continue, they also consistently expressed

the view that the benefits of the program should be greater; that the program has

yet to achieve its potential; and that improvements are needed. The 1995 agreement

anticipated the appropriateness of such reflection in calling for ‘‘a joint evaluation

system for EPA and the States to review the results of their efforts to ensure continuous improvement.’’ GAO recommends in this report that such a joint evaluation

process be initiated and suggests a number of issues to be considered for attention

during such a process.

PRINCIPAL FINDINGS

Growth of State Participation in NEPPS

NEPPS was initially tested on a pilot basis in fiscal year 1996 with six participat- ing States. This first year was viewed by EPA and the States as a time to experiment with the new system and various ways to implement it. The number of participating States has increased since that time to 45 States in fiscal year 1998, although the extent of their participation has varied widely. For example, half the

States have negotiated both Partnership Agreements and Partnership Grants

through their lead environmental agencies that cover most EPA programs; other

States have thus far limited their participation to a Partnership Grant, such as one

administered by their agriculture agency that, for example, addresses only pesticide

programs. States have also varied considerably in the detail and content of their

agreements. Senior officials in EPA’s Office of State and Local Relations explained

that the agency has not attempted to impose uniformity on the development of Partnership Agreements at this early stage of the NEPPS process and has, therefore,

refrained from issuing guidance on how the agreements should be structured.

Hence, the agreements vary widely in content and emphasis, reflecting individual

States’ conditions and priorities and reflecting the results of negotiations with their

respective EPA regional offices.

While Performance Partnership Grants allow eligible States to request that funds

from two or more categorical grants (such as those authorized under the Clean

Water Act or those used to implement the Clean Air Act) be combined to allow for

greater flexibility in targeting limited resources to States’ most pressing environmental needs, the percentage of eligible grant funds consolidated under these

Grants is less than one-third. For fiscal year 1998, $217 million (29 percent) of eligible grants was consolidated among the participating States, while $528 million (71

percent) remained as categorical grants. This level of consolidation represents an increase of 28 percent over the $169 million that was consolidated the previous year.

Progress in Developing Results-Oriented Measures

Both EPA and individual States have a number of efforts under way to develop

effective performance measures to better understand whether their programs are

achieving their intended results. Their collective effort to develop such measures for

NEPPS has centered on the ‘‘Core Performance Measures’’ that have been negotiated between EPA and the Environmental Council of the States during the past

several years. 2 The effort has faced a number of technical challenges inherent in

developing defensible results-oriented measures. The results of activities designed to

improve water quality, for example, can take years to appear, and the capability of

many States to monitor a significant share of their waters is limited. Moreover, even

if environmental conditions could be reliably and consistently measured, it may be

particularly difficult to demonstrate the extent to which a government program affected that condition. Officials from Florida (a State that has made a significant

commitment to measuring compliance rates and environmental indicators), for example, explained that factors outside their control, such as economic activity and

weather conditions, make it particularly difficult to link program activities with

changes in environmental conditions.

In addition to these technical challenges in developing results-oriented measures,

the effort has also been challenged by disagreements between EPA and the States

on a number of issues, including (1) the degree to which States should be permitted

to vary from the national core measures and (2) the composition of the measures,

particularly regarding the degree to which preexisting output measures are to be

retained as newer outcome measures are added. Overall, however, the States and

EPA have made progress in meeting these challenges. For example, officials in four

of the six States whose programs GAO examined have developed and implemented
71

their own measures to address their own priorities. At the same time, program officials in each of the six States have also agreed to report information required for

the national core measures agreed upon between the Environmental Council of the

States and EPA. In addition, while they maintain that further refinement will still

be needed, EPA and State officials have agreed on a set of fiscal year 2000 measures

for use in negotiating EPA-State partnership agreements that, by most accounts,

are a substantial improvement over those negotiated from previous years in that

they are fewer in number (i.e., better targeted to address key goals) and generally

more outcome-oriented.

Reductions in Oversight Attributable to NEPPS Have Thus Far Been Modest

Instances of greater State flexibility and reduced EPA oversight tended to focus on reducing the frequency of reporting and, in some cases, the frequency of onsite

reviews. Maine environmental officials, for example, noted that more frequent, and

less formal, dialog between the program staff and regional staff had replaced written reports, saving time and improving the level of cooperation between EPA and

State staff. While Maine program officials attributed the reductions in part to the

assignment by EPA’s Boston Regional Office of a liaison for each State’s delegated

programs, they credited NEPPS with formalizing or legitimizing the changes. Florida program officials identified sizable reporting reductions in its waste program as

a result of a joint State-EPA effort included in the Partnership Agreement. Other

instances were cited by officials in Georgia and Minnesota. Yet aside from such individual instances of streamlining reporting requirements and similar tracking efforts, the large majority of the State officials GAO contacted

generally maintained that participation in NEPPS has not yet brought about significant reductions in reporting and other oversight activities by EPA staff, nor has it

resulted in significant opportunities for them to focus on other priorities or to shift

resources to weaker program areas. EPA officials generally acknowledged this point,

but provided specific reasons why oversight of State programs has not significantly

decreased as a result of NEPPS-and in some cases has actually increased. Some

headquarters and regional officials, for example, noted that environmental statutes

or regulations sometimes prescribe the level of oversight required of EPA, leaving

little room for EPA to scale it back. The officials also pointed to (1) audits that identified problems in some State enforcement programs (such as the underreporting by

States of significant violations and precipitous decreases in the number of State enforcement actions taken) that they believed called for greater oversight and (2) the

difficulty in scaling back oversight without measurable assurances indicating that

State programs experimenting with alternative compliance strategies are achieving

their desired results.

At the same time, EPA officials cited a number of barriers preventing greater State flexibility that could be more readily addressed. For example, senior EPA officials in three of the four regional offices that GAO visited acknowledged that support for NEPPS within EPA varies. One senior regional official explained that many

regional managers and staff are often more comfortable with preexisting ways of

doing business and are unsure as to how they can accomplish their work in the context of the partnership approach under NEPPS. The official also said that there may

be a need for training EPA regional staff in NEPPS implementation. Another senior

regional official said that some agency staff will only take NEPPS seriously when

their reward system is more closely tied to their performance in implementing the

program. Headquarters officials also acknowledged another problem cited by many

of the State officials GAO contacted-that headquarters’ guidance, initiatives, and

special requests sometimes arrive at the regions too late to be used effectively in

regional-State Partnership Agreement negotiations and that they have taken steps

to address the problem.

BENEFITS OF NEPPS PARTICIPATION CITED, BUT FULL POTENTIAL HAS YET TO BE

REALIZED

Despite their disappointment at the rate of progress in achieving greater autonomy and greater emphasis on State priorities, senior officials and program managers from each of the six States in GAO’s review agreed that NEPPS has provided

their programs with worthwhile benefits, and that its potential for achieving a more

effective partnership between EPA and the States is still worth pursuing. Among

the examples cited were instances in which Partnership Agreements were used to

more efficiently divide a heavy workload between regional and State staff, and in

which States were able to take at least limited advantage of the flexibility in their

Performance Partnership Grant agreements to shift resources among their media

programs. Overall, however, the most frequently cited benefit among both State and

EPA regional participants was that the two-way negotiation process inherent in the
72

program has fostered more frequent and effective communication between regional

and State participants and improved their overall working relationship. At the same time, State officials almost unanimously expressed the view that the benefits from their investment of time and resources into NEPPS should be greater;

that the program has yet to achieve its potential; and that improvements are needed. Of particular note, almost all of the State officials GAO interviewed cited

progress in achieving reduced oversight and greater autonomy as critical to the future success of the program. Also cited was the need to continue improving performance measures; addressing the barriers impeding greater acceptance of NEPPS

among staff within both EPA and State agencies; determining how to make greater

use of the flexibility under Performance Partnership Grants to shift resources and

funding to address higher priorities; and improving the manner in which headquarters offices provide their input into regional-State NEPPS negotiations. These concerns pose challenges for the future of NEPPS-challenges that were an- ticipated by the 1995 agreement that launched the program, which called for a joint

evaluation system for EPA and the States to review the results of their efforts to

ensure continuous improvement. On the basis of the considerable information that

can be learned from the experiences to date of participating States and regional offices, GAO believes that it is now appropriate to undertake such a joint evaluation

process, with the goals of (1) identifying best practices among participating States

for dealing with the most challenging problems facing the program and (2) eventually obtaining agreement on actions that will improve and expand the program. EPA

officials and representatives of the Environmental Council of the States have, in

fact, recently agreed upon the basic outline of such a joint evaluation process. Further progress (including decisions on the specific issues to address and a timetable

for addressing them) would be important steps in expanding both the participation

in, and effectiveness of, this important program.

RECOMMENDATIONS

GAO recommends that the Administrator, EPA, work with senior-level State officials to initiate a joint evaluation process that (1) seeks agreement on the key issues

impeding progress in developing a more effective National Environmental Performance Partnership System and (2) develops mutually agreeable remedies for these issues. Among the issues such a process could focus on are these:

• Developing a set of flexible guidelines, to be used as a tool by State and EPA

regional NEPPS negotiators, that could help to clarify the appropriate performance

expectations and other conditions that States must meet to achieve reduced oversight in carrying out their environmental programs and the type of reduced oversight (e.g., reduced frequency of reporting, greater autonomy in setting program priorities) that could be achieved.

• Identifying what additional work is needed to improve the Core Performance

Measures recently negotiated by EPA and State representatives for fiscal year 2000.

• Alleviating the resistance among some staff (both within EPA offices and

among participating State agencies) toward implementing NEPPS, through training

efforts and other strategies.

• Determining what appropriate steps should be taken by EPA and the States

to allow for greater use by States of the flexibility envisioned under the Performance

Partnership Grant system to shift resources and funding among their media programs.

• Determining how effective public participation in the NEPPS process can best

be ensured.

• Developing ways to improve communication among EPA’s headquarters and regional offices and participating States to ensure that States are given clear and

timely information on whether key elements of their NEPPS-related agreements

have the full buy-in of key EPA offices.

AGENCY COMMENTS

GAO provided a draft of this report for review and comment to EPA and the Environmental Council of the States. EPA said that ‘‘the Report describes, in a fair and

balanced manner, the progress EPA and the States have made through performance

partnerships.’’ EPA also agreed with the report’s recommendation that agency and

State efforts to improve NEPPS should include training and other efforts to achieve

the cultural change necessary for greater success.

EPA also commented on GAO’s recommendation that EPA and State environmental leaders should agree on guidelines that would help to clarify, for EPA and

State negotiators, the appropriate performance expectations that States must meet

to achieve reduced oversight in carrying out their environmental programs and the
73

type of reduced oversight that could be achieved. EPA noted that while it agreed

with this recommendation in principle, EPA and the States believe that each State’s

Performance Partnership Agreement should specify the degree of oversight necessary to accommodate the unique environmental problems and varied program capabilities of that State. GAO agrees that oversight arrangements should be negotiated between each State and its corresponding regional office in a manner that accounts for that State’s unique circumstances, and that these arrangements should

be specified in the Performance Partnership Agreement. GAO continues to believe,

however, that nonbinding national guidance-to be agreed upon in advance by EPA

and State environmental leaders-would be useful in introducing objective parameters to be considered by regional and State negotiators as they seek agreement over

this sensitive issue.

In addition to these comments, EPA provided updated information and comments

on several other issues (discussed at the end of chs. 3, 4, and 5). EPA’s comments,

together with GAO’s detailed responses, are included in appendix I.

Representatives of the Council provided a number of suggested clarifications.

They cautioned that since their comments had not been reviewed by the Council’s

membership, they should be viewed as informal suggestions to enhance the accuracy

and completeness of the report. GAO made revisions as appropriate to incorporate

these comments.

INTRODUCTION

The Environmental Protection Agency (EPA) has had long-standing difficulties in

establishing effective partnerships with the States. Among the key issues affecting

EPA-State relationships have been concerns that EPA (1) is inconsistent in its oversight across regions, (2) sometimes micromanages State programs, (3) does not provide sufficient technical support for State programs’ increasingly complex requirements, and (4) often does not adequately consult the States before making key decisions affecting them.

In an effort to address these problems and improve the effectiveness of environmental program implementation, EPA and State environmental agencies established

the National Environmental Performance Partnership System (NEPPS). Under this

system, strong State programs were to be given more leeway to set environmental

priorities, design new strategies for addressing these priorities, and manage their

own programs-allowing EPA to concentrate more effort, oversight, and technical assistance on weaker programs. A major component of the system is the development

of Performance Partnership Agreements. These agreements are to provide a means

for EPA and the States to negotiate such matters as (1) which problems will receive

priority attention within State programs, (2) what EPA’s and the States’ respective

roles will be, and (3) how the States’ progress in achieving clearly defined program

objectives will be assessed. States may also establish Performance Partnership

Grants, which allow them to consolidate grants as a way of providing more flexibility in managing their environmental grant funds, and to cut paperwork and simplify

financial management. For example, a State that would otherwise have separate

water, air, and pesticide grants can now combine the funds from some or all of these

grants into one or more performance partnership grants.

Given the expectation among participants that NEPPS could deal with many of

the issues that have long impeded the EPA-State relationship, the Chairman, Subcommittee on VA, HUD, and Independent Agencies, House Committee on Appropriations, asked us to examine the progress made by EPA and the States since the 1995

agreement. Specifically, as agreed with the Chairman’s office, this report (1) identifies the status of grants and agreements made under NEPPS between EPA and participating States, (2) examines the progress that EPA and the States have made in

developing results-oriented performance measures to be incorporated into NEPPS

agreements and grants to the States, (3) examines how EPA oversight may or may

not be changing in States that are participating in NEPPS, and (4) discusses the

extent to which the use of these performance partnership agreements and grants

has achieved the benefits envisioned for the States and the public.

NEPPS Was Designed to Improve the Effectiveness of the EPA-State Working Relationship

Most of the nation’s environmental statutes envision a strong role for the States

in implementing and managing environmental programs. Toward this end, in 1993,

a joint State/EPA task force recommended that EPA and the States adopt a more

systematic approach to manage environmental programs in a way that allows each

level of government to contribute according to its respective strengths. In May 1993,
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3 Environmental Protection: EPA’s and States’ Efforts to Focus State Enforcement Programs on Results (GAO/RCED–98–113, May 27, 1998).

the EPA Administrator established a State/EPA Steering Committee to oversee the

implementation of the task force’s recommendations. Subcommittees were established to pursue work on oversight reform, with the goal of increasing State participation in EPA decisionmaking, developing national environmental goals and measures, allowing flexible funding across programs, and improving communications between EPA and States.

As a result of these efforts, on May 17, 1995, the EPA Administrator and the lead- ers of State environmental programs formally agreed to implement a new environmental partnership entitled the National Environmental Performance Partnership

System. This agreement, entitled the Joint Commitment to Reform Oversight and

Create a National Environmental Performance Partnership System, stated that the

long-range goal of NEPPS was ‘‘to provide strong public health and environmental

protection by developing a system where EPA and the States work together for continuous gains in environmental quality and productivity.’’ In establishing NEPPS,

EPA and the leaders of State environmental programs indicated the system is designed to strengthen protection of public health and the environment by directing

scarce resources toward improving environmental results, allowing States greater

flexibility to achieve those results, and enhancing accountability to the public and

taxpayers. The seven principle components of NEPPS are: • increased use of environmental goals and indicators in order to measure the effectiveness and success of environmental programs; • a new approach for conducting assessments of environmental programs, which will include a greater reliance on annual environmental and programmatic self-assessments conducted by each State and sharing with the public information about

environmental conditions, goals, priorities, and achievements; • the development of environmental performance agreements that outline envi- ronmental priorities and goals agreed to jointly by EPA and the States; • a reduction in oversight for those States with strong environmental programs, which will enable EPA to focus resources on States that need more assistance; • the designation of strong State environmental programs as ‘‘leadership pro- grams’’ that are afforded minimal oversight; • increased opportunity for constructive public involvement in the management of environmental programs through a program that encourages regulated entities

and the general public to review and comment on environmental issues; and • the development of a joint system evaluation for EPA and the States to review the results of their efforts to ensure continuous improvement.

As we reported in May 1998, NEPPS is intended to strengthen the effectiveness of the nation’s environmental programs by redefining the Federal and State roles

to ensure that public resources are used efficiently to address the most important

environmental problems. 3 According to EPA, NEPPS is based on a shared recogni- tion that continued environmental progress can be achieved most effectively by

working together as partners. Accordingly, the effort is designed to promote joint

planning and joint priority-setting, which takes into account each State’s environmental conditions and objectives. A key element of this program is EPA’s commitment to give States with strong environmental performance greater flexibility and

autonomy in running their environmental programs. To help document this capability, a primary objective of the program is the measuring and reporting of EPA’s and

States’ progress toward achieving their environmental and programmatic goals.

Negotiation of Performance Partnership Agreements and Performance Partnership

Grants

Under NEPPS, States and their corresponding EPA regional offices are expected to reach an understanding of the State’s environmental conditions and to agree on

appropriate environmental goals and priorities and on program performance indicators to measure progress. The results of these negotiations are documented in Performance Partnership Agreements and/or Performance Partnership Grants. Partnership Agreements are comprehensive agreements that are expected to be used as the

principal mechanism for implementing NEPPS. According to EPA, the agreements

are derived from joint discussions by EPA and the State on their interests, concerns,

choices, and commitments for sound environmental performance.

While NEPPS provides the overarching framework for developing partnership agreements, the Performance Partnership Grants Program serves as a major tool to

implement them. Performance Partnership Grants are intended to allow States

greater flexibility in deciding how Federal grant funds can best be spent to achieve

their environmental goals. Under these grants, which were authorized by the Con-
75

4The Environmental Council of the States is a national nonpartisan, nonprofit association of

State and territorial environmental commissioners. 5Thus, for example, one outcome-oriented core measure in the air program tracks overall

emission reductions for key pollutants over time.

gress in April 1996, eligible States and tribes may request that funds from two or

more categorical grants (such as those authorized under the Clean Water Act or

those used to implement the Clean Air Act) be combined into one or more grants

to give governmental agencies greater flexibility in targeting limited resources to

their most pressing environmental needs. These grants are also intended to be used

to better coordinate existing activities across environmental media and to develop

multimedia programs.

Importantly, State participation in NEPPS is voluntary. In particular, while Partnership Agreements are designed to complement Partnership Grants, States are free

to negotiate both agreements and grants or to decline participation in NEPPS altogether.

Development of Performance Measures Is a Key Component of NEPPS

A key component of the 1995 NEPPS agreement was the commitment by EPA and

the Environmental Council of the States to identify a common set of national environmental indicators to measure the effectiveness and success of States’ environmental programs. 4 In an effort to fulfill this commitment, on August 20, 1997, EPA

and the Council agreed on a set of ‘‘Core Performance Measures’’ for EPA and States

to use in measuring progress toward the achievement of environmental and program

goals. This first set was used to measure progress in fiscal year 1998 and, with some

minor revisions, was used again in fiscal year 1999.

In their efforts to develop these performance measures, EPA and State officials

have sought to move beyond counting the number of actions and increasingly toward

evaluating the impact of programs on the environment. Traditionally, performance

measures have focused on tracking ‘‘outputs,’’ such as the number of inspections

conducted and enforcement actions taken. Such actions are easiest to count, and

they provide a useful measure of the level of agency activity. On the other hand,

measuring the actual results a program is intended to achieve, such as the degree

to which progress is made in achieving air or water quality standards, is more difficult but provides information on whether the goals of the regulatory program are

being achieved. 5

In order to strike a better balance between output measures and measures of program results, EPA and the Council developed a tiered approach, shown in table 1.1,

to better account for program results. As the table indicates, an output measure considers numbers of actions taken, demonstrating the level of a particular activity or

how resources are used. An outcome, on the other hand, can measure the results

associated with a particular policy, such as the percent of facilities in environmental

compliance. Finally, environmental indicators demonstrate whether overall, longterm agency objectives are being achieved, such as the trend in the number of bodies of water meeting clean water standards.

Table 1.1: Categories of Environmental Performance Measurement

Measure Characteristic Examples Purpose

Output ....................... Numbers of actions .................. Number of penalty dollars collected; number of violations

discovered.

Demonstrates level of activity;

demonstrates how resources

are used

Outcome .................... Environmental or programmatic

results associated with a

particular program or policy.

Tons of pollution reduced or

percent of facilities in environmental compliance.

Demonstrates results of specific initiatives or policies

Environmental indicator.Indicators associated with

overall environmental or

program objectives.

Trend in number of bodies of

water meeting clean water

standards.

Demonstrates whether overall,

long-term agency objectives

are being achieved

Note: In its efforts to develop overall performance measures for the Government Performance and Results Act of 1993, EPA uses slightly

different terms: ‘‘outputs,’’ ‘‘intermediate outcomes,’’ and ‘‘long-term outcomes.’’ In its guide to implementing the act, the Office of Management and Budget distinguishes between ‘‘output goals’’ and ‘‘outcome goals’’ and calls on Federal agencies to measure progress toward both.

Other experts in the field of government performance measurement labeled the three tiers ‘‘outputs,’’ ‘‘policy or behavioral outcomes,’’ and

‘‘program outcomes.’’ See for example, Sparrow, Malcolm, ‘‘Regulatory Agencies, Searching for Performance Measures That Count,’’ and

Greiner, John M., ‘‘Positioning Performance Measurement for the Twenty-first Century, ‘‘Organization Performance and Measurement in the Public Sector, Quorum Books, (1996).

Source: Environmental Protection: EPA’s and States’ Efforts to Focus State Enforcement Programs on Results (GAO/RCED–98–113, May

27,1998).
76

NEPPS’ emphasis on performance measurement also provides a critical link to the

Congress’ intent in passing the Government Performance and Results Act of 1993.

The Results Act requires agencies to clearly define their missions, establish longterm strategic goals (and annual goals linked to them), measure their performance

against the goals they have set, and report this information to the Congress. Importantly, rather than focusing on the performance of prescribed tasks and processes,

the statute emphasizes the need for agencies to focus on and achieve measurable

program results.

Objectives, Scope, and Methodology

Our objectives in this review were to (1) identify the status of grants and agreements made pursuant to NEPPS between EPA and participating States, (2) examine

the progress that EPA and the States have made in developing results-oriented performance measures to be incorporated into NEPPS agreements and grants to the

States, (3) examine how EPA oversight may or may not be changing in States that

are participating in NEPPS, and (4) discuss the extent to which the use of performance partnership agreements and grants has achieved the benefits envisioned for

the States and the public.

For the first objective, we reviewed EPA documents describing the overall status

of performance partnership grants and agreements made between EPA and States.

We also interviewed officials from EPA’s Office of State and Local Relations to obtain the latest data and related information on the status of Partnership Agreements and Partnership Grants signed by the States and EPA.

For the remaining objectives, we first contacted EPA (headquarters and regional)

officials to identify appropriate State environmental programs for detailed study. In

selecting States, we were primarily concerned with the degree of State participation

in this voluntary program, the length of time they have been participating, and the

desirability of examining States with different experiences and geographical locations.

On the basis of these criteria, we visited six States that have experience with

NEPPS for detailed study-Connecticut, Florida, Georgia, Maine, Minnesota, and Oregon. In each case, we interviewed officials in the States’ lead environmental agency. For each State, we first discussed the program with officials that have overall

responsibility for NEPPS. To get insights into the status of NEPPS at the program

level, we interviewed program managers from each of three environmental programs: the Resource Conservation and Recovery Act, the Clean Water Act, and the

Clean Air Act. We also interviewed program officials in the EPA regional office with

jurisdiction for each State we visited. After these visits, we conducted telephone

interviews with environmental officials from two States that have limited their participation in NEPPS-Michigan and Pennsylvania-to determine their views of NEPPS

and the reasons why they chose not to participate more fully.

At EPA headquarters, we contacted officials from the various offices with NEPPS

responsibilities, including the Offices of Air and Radiation; Water; Solid Waste and

Emergency Response; Enforcement and Compliance Assurance; Reinvention; and

State and Local Relations, to discuss our objectives as well as the results of our specific work at the States and EPA regional offices.

We also gathered information on our objectives through interviews with officials

from other organizations with an interest in NEPPS, including the Association of

State and Interstate Water Pollution Control Administrators, Association of State

and Territorial Solid Waste Management Officials, Environmental Council of the

States, National Academy of Public Administration, National Governors Association,

and State and Territorial Air Pollution Program Administrators. Regarding the second objective, we interviewed officials from the Green Mountain Institute for Environmental Democracy, which participated in studies of issues related to the development and/or use of core performance measures.

We conducted our work from June 1998 through April 1999 in accordance with

generally accepted government auditing standards. We provided copies of this report

to EPA and the Environmental Council of the States for their review and comment.

EPA’s comments and our responses are included in appendix I. The Council indicated that since its response had been prepared without the benefit of review by

Council membership, its comments should be viewed not as reflecting the Council’s

positions, but rather as informal suggestions to enhance the accuracy and completeness of the report. We made revisions as appropriate to incorporate these comments.

We also provided relevant sections of the draft to representatives of the eight States

included in our review to verify statements attributed to them, and to verify other

information they provided, and have made revisions as appropriate to incorporate

their comments.
77

6For this report, NEPPS participation is defined as participation in Performance Partnership

Agreements, Performance Partnership Grants, or both. 7 An Independent Review of the State-Federal Environmental Partnership Agreements for

1996, Environmental Law Institute, (1996). The Performance Partnership Agreement between

EPA and the sixth State was signed after the Institute completed its review and analysis of

the other five agreements and thus was not covered by this study. The Institute’s study did not

include a review of Performance Partnership Grants since the authority for these grants was

not provided by the Congress until the middle of fiscal year 1996.

GROWTH OF STATE PARTICIPATION IN NEPPS

State participation in the National Environmental Performance Partnership System has grown significantly in the 4 years since the system was created, increasing

from 6 pilot States in fiscal year 1996 to 45 States by the end of fiscal year 1998. 6

However, the extent of participation among these 45 States varied considerably: 31

States had both performance partnership agreements and grants; 12 States had

grants only; 2 States had agreements only; and 5 States did not participate at all.

Moreover, while some States included a full range of environmental programs under

their agreements, others included only one or two programs (such as pesticide or

drinking water programs).

Initial Implementation Was Devoted to Experimentation

NEPPS was initially tested on a pilot basis in fiscal year 1996 with 6 participating States. This first year was viewed as a time to experiment with the new system

and various ways to implement it. According to a 1996 study of five of the six pilot

efforts conducted by the Environmental Law Institute with funding from EPA, 7 although the pilot States shared ideas during the process of developing their agreements, the States deliberately avoided discussing some of the specifics of their approaches so as to ensure diversity.

The Environmental Law Institute’s study focused on whether, and how, the pilot

performance partnership agreements achieved and measured environmental results,

how flexibility was exercised under the program, and how accountability was ensured. Based on the experiences of the pilot States, the Institute’s study concluded

that NEPPS showed great promise for improving the relationship between EPA and

the States and for improving the administration of the environmental statutes.

However, the study cited a number of issues that would need to be addressed as

the program evolved. It stated, for example, that while States and EPA had made

progress toward the goal of increasing the use of environmental indicators (measures of overall progress in achieving environmental objectives), much remained to

be done to develop appropriate measures. The study also concluded improvements

were needed to (1) clarify the relationship between Performance Partnership Agreements and Grants, (2) more effectively communicate EPA’s national priorities to

EPA regions and States in time to impact State and EPA regional office negotiations

on Performance Partnership Agreements, and (3) increase public participation in the

program.

State Participation Expanded Rapidly Since Initial Implementation

State participation in Performance Partnership Agreements and Grants expanded

rapidly after the first year. In fiscal year 1997, States and regional offices were expected by EPA headquarters to build on the prior year’s experiences and work on

areas that needed additional clarification or where barriers needed to be removed.

Participation grew that year to 44 States and to 45 States in fiscal year 1998.
78

Of the 45 States participating in fiscal year 1998, 31 had both Performance Partnership Agreements and Grants, 12 States had grants only, 2 States had agreements only, and 5 States did not participate at all. (See fig. 2.1.) Since States can

have multiple Performance Partnership Agreements and Grants, depending on

which State agencies handle the different environmental programs, the 45 States

accounted for a total of 38 agreements and 52 grants.

According to EPA, States vary in the extent of their participation, with half the

States participating broadly by negotiating both Performance Partnership Agreements and Performance Partnership Grants that cover most EPA programs through

their State environmental agencies, while other States limit their participation by

negotiating, for example, a partnership grant through their agricultural agency that

covers pesticide programs. As shown in figure 2.2, of those States that participated

in NEPPS through their lead environmental agencies in fiscal year 1998, 25 had

both Performance Partnership Agreements and Grants, 4 had grants only, and 6

had agreements only.

States also vary considerably in terms of the detail and content of their partnership agreements. Senior officials in EPA’s Office of State and Local Relations explained that the agency has not attempted to impose uniformity on the development

of partnership agreements at this early stage of the NEPPS process and has, therefore, refrained from issuing guidance on how partnership agreements should be

structured. Hence, the agreements vary widely in content and emphasis, reflecting

individual State’s conditions and priorities, and their negotiations with their respective EPA regional offices.
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8 Environmental Protection: EPA’s and States’ Efforts to Focus State Enforcement Programs

on Results (GAO/RCED–98–113, May 27, 1998).

Most States Have Performance Partnership Grants , but Few Take Full Advantage

of the Flexibility Offered

As discussed in chapter 1, allow eligible Performance Partnership Grants States

to request that funds from two or more categorical grants (such as those authorized

under the Clean Water Act or those used to implement the Clean Air Act) be combined into one or more grants to give greater flexibility in targeting limited resources to their most pressing environmental needs. Thus far, however, the States

have consolidated less than one-third of the eligible categorical grant funds under

partnership grants. Of the eligible grants, 29 percent, or $217 million, was consolidated in fiscal year 1998, while 71 percent, or $528 million, remained as categorical

grants. This represents an increase of 28 percent over the $169 million that was

consolidated the previous year.

EPA AND STATES HAVE MADE PROGRESS IN DEVELOPING RESULTS-ORIENTED

PERFORMANCE MEASURES

Both EPA and individual States have a number of efforts underway to develop

effective performance measures to better understand whether their programs are

achieving their intended results. Their collective effort to develop such measures for

NEPPS has centered on the ‘‘Core Performance Measures’’ that have been negotiated between EPA and the Environmental Council of the States during the past

several years. These measures are intended to be used in tracking States’ progress

toward achieving the most important goals of the nation’s environmental programs.

In developing the performance measures, EPA and the States have retained a

number of the traditional output measures they have used in the past but have attempted to focus increasingly on measuring desired environmental outcomes. However, overcoming a number of technical challenges, and reaching agreement on the

most important environmental outcomes and on the methodologies to measure

progress toward those outcomes, has been difficult. Nevertheless, considerable

progress has been made in developing and improving the performance measures-as

evidenced by agreement on a set of measures for fiscal year 2000 that are widely

regarded as improved measures from previous years.

Developing and Agreeing on Core Performance Measures Has Been Difficult

EPA and State officials agree on the importance of measuring the outcomes of environmental activities rather than just the activities themselves. However, developing such measures has faced a number of challenges. Outputs, by their nature, are

inherently easier to measure, report, and understand than outcomes and environmental results. Compared to output measures, developing defensible results-oriented measures has proven to be substantially more difficult. In addition to these

technical challenges, EPA and the States have differed on what the measures

should look like (particularly regarding the relative emphasis of output versus outcome measures) and on the degree of flexibility with which they should be implemented.

Technical Challenges

EPA and State officials identified several key technical challenges that they have

had to address in their efforts to focus performance measurement on desired results.

These include (1) an absence of baseline data against which environmental improvements could be measured, (2) the inherent difficulty in quantifying certain results,

(3) the difficulty of linking program activities to environmental results, and (4) the

considerable resources needed for high-quality performance measurement.

Need for Baseline Data to Measure Progress

As noted in our May 1998 report on EPA’s enforcement program, 8 the absence

of adequate baseline data for comparison is a common problem among many organizations engaged in performance measurement, including Federal and State agencies.

Measuring environmental improvements requires a starting point against which to

measure changes. Without such a baseline, any environmental measurement system

can only provide a snapshot in time; it cannot tell whether conditions are getting

better or worse.

Federal and State agencies have therefore frequently had to build entirely new

data systems and ways of collecting data because the old systems are of limited use

in analyzing programs’ performance. Our 1998 report noted that compliance data
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9Green Mountain Institute for Environmental Democracy, ‘‘Indicator Data Catalog, An Evaluation of Data Issues Related to the Development of Core Performance Measures and Regional

Environmental Indicators,’’ (Nov. 1998). 10Managing for Results: Analytic Challenges in Measuring Performance (GAO/HEHS/GGD–

97–138, May 30, 1997).

are especially scarce for small businesses that historically received few inspections.

Consequently, State programs that are just now attempting to measure results have

limited data with which to compare them. Florida officials, for example, told us that

their recent environmental reports showing industry-wide compliance rates generally have a baseline of 1997 or 1998, because past information is unavailable or

unreliable. An EPA official responsible for NEPPS implementation also noted that

the scarcity of baseline information by which to measure program improvements attributable to NEPPS is a particular challenge and a major concern to the agency.

Inherent Difficulty in Quantifying Data

Generating relevant and accurate data is a challenge under the best of circumstances. Not only do appropriate measures need to be defined, methodologies

need to be established to develop the necessary data. In enforcement programs, for

example, it is difficult to determine the impact on the overall environment from individual inspections conducted or enforcement actions taken. In addition, as officials

told us during our review of enforcement programs, quantifying industry-wide compliance rates and other outcomes has been complicated by the difficulty of deciding

both how to define a compliance rate and how to calculate it. As another example,

the results of activities designed to improve water quality can take years to appear,

and the capability of many States to monitor a significant share of their waters is

limited.

These challenges have led some State officials to note that it may be exceedingly

difficult to achieve comparability from State to State, both in what is being measured and the methodology used in gathering data. In particular, a State with more

complete data may appear to have greater environmental problems than a State

with poor data. Minnesota officials, for example, told us that their data base for ‘‘impaired waters’’ (waters that do not meet State water quality standards) includes waters that have undergone far more rigorous analysis than that performed by other

States. Consequently, according to these officials, Minnesota’s impaired waters may

appear to be far more severe than those of another State that does not subject its

waters to such rigorous analysis.

Similar findings were reached in a 1998 study evaluating an effort where six New

England State environmental management agencies and EPA’s Boston office collaborated on a menu of environmental indicators intended to measure (1) the status and

trends of the quality of the New England environment and (2) program accomplishments toward reaching State and regional environmental goals. 9 The findings of the

study were based on an evaluation of data availability and quality for 12 example

indicators, which included 6 specific performance measures. A key finding of this effort was that the level of consistency required for regional indicators is difficult to

achieve given (1) a lack of clarity in terms of what the indicators intend to measure

and for what purpose and (2) a lack of consistency across States in both the type

of data collected and methodology used.

Challenges in Linking Program Activities to Environmental Outcomes

Assuming environmental conditions could be reliably and consistently measured,

it may still be difficult to demonstrate the extent to which a government program

affected that condition. As we noted in a 1997 report on the complexities associated

with performance measures, ‘‘Separating the impact of [a] program from the impact

of other factors external to the program was cited by government agency officials

as the most difficult challenge in analyzing and reporting government performance.’’ 10

Even in the case of the Florida Department of Environmental Protection’s significant commitment to measuring compliance rates and environmental indicators, regulators made a conscious decision not to link their enforcement programs with

trends in environmental indicators or outcomes like compliance rates. The regulators explained that the causes of these trends are subject to other influences outside their control, such as the state of the economy, the weather, and other departmental actions besides enforcement. The Department’s consultant agreed, noting, for

example, that ‘‘If and when the scallop population in Tampa Bay is restored to

healthy levels, Florida’s Department of Environmental Protection . . . would be hard
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11Malcolm Sparrow, ‘‘Regulatory Agencies, Searching for Performance Measures That Count,’’ (June 9, 1997).

pressed to prove beyond doubt that their interventions actually produced this result,

no matter how compelling their scientific analyses and explanations.’’ 11

Determining causality has proven to be particularly difficult among pollution pre- vention programs. According to EPA headquarters officials, EPA and the States

have not yet been able to determine how to establish a cause and effect relationship

to measure the impacts on the environment from many activities that prevent pollution from occurring.

Resource Limitations

Another barrier, which essentially flows from the others, relates to the significant resources and expertise required for identifying and testing potential results-oriented performance measures. Once measures are in place, gathering and analyzing

the data can also be resource-intensive and can take years to show environmental

improvements. In addition, several program officials of the States we visited told us

that some Federal and State data bases will require significant improvement in

order to track the new information to support results measures. A member of the

Environmental Council of the States’ Information Management Workgroup agreed,

noting that this is an issue EPA and the States still need to address. Two States that have developed systems to measure the results of selected en- forcement efforts found that considerable resources are needed to do quality performance measurement. The Florida Department of Environmental Protection hired

a consultant to assist them in developing their new performance measurement system and dedicated several of its own staff to this effort. A Massachusetts environmental official found that monitoring the results of even a single program can require considerable resources. The former Deputy Commissioner said that in a pilot

test of its new Environmental Results Program, the agency had to invest a great

deal of time and energy to work with the facilities and measure the ultimate results,

even though the test involved only 18 participating companies. Officials from these

and other States noted that it is difficult to commit resources to the development

and implementation of new results-oriented performance measures while still meeting other program requirements.

Results-Oriented Measures Easier to Develop for Some Programs Than Others

As challenging as the exercise may be for all programs, we found that developing results-oriented performance measures has been easier in the case of some programs

than others. Air programs, for example, have long had a monitoring network in

place to measure ambient air quality throughout the country. Accordingly, as officials of EPA’s Office of Air and Radiation told us, the air program has had considerable background with results-oriented performance measures, and that this experience has limited both the burden of developing specific performance measures and

the burden on the States of implementing these measures. Officials of the States

we visited generally confirmed this assessment. A senior official in Georgia’s environmental protection division, for example, told us that developing results-oriented

measures is easiest for the air program, more difficult for the water program, and

most difficult for the waste program. The Georgia official attributed the differences

to the extensive historical experience of the air program with results-oriented measures, the length of time it takes to see measurable results in the water program,

and the difficulty in identifying suitable measures for the waste program. Similar

comments were made by a Florida air program official that noted that States and

EPA have been monitoring air quality for some time, have good data, and can show

results.

Challenges in Obtaining Agreement Between EPA and the States on the Measures

In addition to these technical challenges, EPA and States have had to resolve fun- damental disagreement over (1) the degree to which States should be permitted to

vary from the national core measures and (2) the composition of the measures, particularly regarding the degree to which pre-existing output measures are to be retained as newer outcome measures are added.

Extent to Which States Can Vary From the Core Measures

EPA’s goal to use the performance measures to provide a national picture of envi- ronmental progress necessitates a degree of consistency among the States in what

is being measured. To achieve consistency, the May 1995 NEPPS Agreement provides that EPA and the States will ‘‘. . .develop a limited number of program and

multi-media performance measures that each State will report so that critical national program data is collected.’’ However, recognizing that a set of national meas-
82

12Specifically, the addendum states that a State and EPA may jointly agree to deviate from particular performance measures where (1) the measure does not apply to a State’s or region’s

physical setting or environmental condition; (2) the State does not have authority for the program to which the measure applies; (3) data for the measure are not available or alternative

data are more relevant in painting a picture of environmental progress; (4) the State and EPA

agree that the measure or the work associated with it are not a high priority in the State.

ures may not necessarily address individual States’ priorities (or represent what individual States consider to be the best measures for their State-specific situations),

the agreement further provides that States may develop other goals and performance indicators that will present a more meaningful picture of their State’s environmental quality. This apparent need was further recognized in the August 1997 joint

statement by EPA and the Environmental Council of the States, which accompanied

the release of the measures for fiscal year 1998. The statement indicated that where

a particular performance measure does not fit a State’s situation, that measure may

be modified, substituted, or eliminated if mutually agreed to by both the State and

EPA. Deviations could be warranted, for example, where (1) there may not be adequate data to report on the measure, (2) alternative measures may work better, or

(3) there may be higher priorities in a State. According to Council officials, in the first year of the performance measures, EPA regions were inconsistent in implementing the performance measures across the

country: some EPA staff in regional offices allowed States flexibility in implementing performance measures (as intended by the 1997 joint statement) while staff in

other regions tried to portray the national performance measures as mandatory and

inflexible. In June 1998, the president of the Council wrote to the Deputy Administrator of EPA, asking that the agency reaffirm its support for the flexibility provisions of the joint statement. Noting that one of the most challenging aspects of implementing the performance measures is balancing the need for uniform national

measures with the need to accommodate the circumstances of individual States, the

Deputy Administrator’s September 1998 response reaffirmed that under certain circumstances, EPA regions can adjust a measure that is inappropriate for a particular

State. Updated EPA-Council joint guidance on the use of performance measures, issued in April 1999 as an addendum to the 1997 Joint Statement along with the release of the fiscal year 2000 measures, reiterates EPA’s commitment to allow flexible implementation of the measures in specific situations and with approval of both

the State and EPA. 12

States Have Implemented Both Core Performance Measures and Their Own Meas- ures

As permitted by the 1995 NEPPS agreement, four of the six States that we visited have developed some performance measures on their own, separately from the national core measures. These States use their own measures to track priority issues

in their respective States and to report environmental progress to their State legislatures and the public. Florida environmental officials developed their separate

measures in conjunction with the NEPPS program, and they continue to use them

because they believe they are better measures of results than the Core Performance

Measures. Georgia and Minnesota officials developed measures that focus on specific

State priorities, and Oregon officials developed measures that were specifically tailored to the State’s strategic plan. While environmental program officials in Connecticut and Maine have not developed performance measures apart from the core

measures, they told us that they believed State-specific rather than national measures would be more useful to them and more appropriate to measure the results

of environmental programs in their States. Regardless of whether a State developed its own performance measures, each of the States we visited also agreed to report on the national core measures. Normally,

the States did not adopt the core performance measures verbatim; they made minor

changes where appropriate to meet State-specific situations. In each case, however,

the States’ changes to the national Core Performance Measures were reviewed and

approved by the appropriate EPA regional office to ensure that they were compatible with the national measures. EPA officials told us that they were aware of only

one State (New Jersey) that had deviated significantly from the national Core Performance Measures, and in that instance, the deviation was reviewed and approved

by the appropriate EPA headquarters program office.

Concerns About Applying Core Performance Measures to Nonparticipating States

NEPPS is a voluntary program and not all States have chosen to participate. Be- cause core performance measures are a component of NEPPS, environmental officials in many States initially presumed that they did not apply to nonparticipating

States. EPA’s intent to use performance measure data to present a national environ-
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13Observations on EPA’s Annual Performance Plan for Fiscal Year 1999 (GAO/RCED–98–

166R, Apr. 28, 1998). 14 Among the outcome measures the Office has already implemented under this strategy are

measures of improvements resulting from EPA enforcement actions. Outcome measures curContinued

mental picture, however, led the agency to request this type of data from all

states—not just NEPPS participants. Accordingly, in an October 1998 internal

memorandum on EPA implementation of core performance measures, the Acting

Deputy Administrator stated that: ‘‘The Regions are responsible for obtaining data

on the Core Performance Measures from all States (whether or not they have a Performance Partnership Agreement with EPA) because these measures are intended

to paint a picture of environmental and program progress across the nation.’’ At the Environmental Council of the States’ October 1998 annual conference,

States expressed concern that EPA’s policy of seeking to make performance measures applicable to all States is inappropriate and in conflict with the voluntary concept of the NEPPS program. Subsequently, joint EPA-Council guidance was issued

with the fiscal year 2000 performance measures which stated that ‘‘[Core Performance Measures] as such only apply to States participating in NEPPS,’’ but added

that ‘‘States not participating in NEPPS will continue to provide key information

needed by EPA through State/EPA Agreements, grant work plans, or other operating agreements.’’

Relative Emphasis on Outputs Vs. Outcomes

Among Federal and State officials, there is a broad agreement in principle on the importance of measuring outcomes rather than just outputs. A major concern among

State officials, however, has been a continued emphasis on output measures by

EPA. Ironically, many State officials maintain that much of EPA’s continued emphasis on outputs stems from the agency’s implementation of the Results Act. The Results Act requires agencies to clearly define their missions, establish long- term strategic goals, measure their performance against the goals they have set,

and report this information to the Congress. The statute emphasizes the need for

agencies to focus on and achieve measurable program results, rather than focusing

on the performance of prescribed tasks and processes. Thus, EPA’s goals under

NEPPS and the Results Act would appear to share the same focus on environmental

results. However, as we noted in a 1998 report on the first set of performance measures EPA prepared pursuant to the Results Act, the overwhelming share of measures were heavily weighted toward numerical targets and other outputs. 13

Broad concern was expressed among the States that we interviewed about the impact that EPA’s implementation of the Results Act has had on core performance

measures. To varying degrees, senior level and program management officials in five

States we visited, and EPA program officials in two regions, expressed concern

about the apparent conflict between the results-oriented performance measures

being developed under NEPPS and the generally output-oriented performance measures EPA has thus far used to report on the Results Act. The officials were concerned that EPA’s implementation of the Results Act is (1) maintaining an emphasis

on output rather than outcome measures and (2) adding new measures on top of

existing measures, leading to an overall increase in the amount of data States must

gather and report.

EPA’s enforcement program was illustrative of States’ concerns about the difficulty in moving toward outcome-oriented performance measures. Performance

measures from an enforcement standpoint have tended to focus heavily on outputs,

such as the number of inspections conducted, the number of significant violations

detected, and how violations are handled. Senior and program management level officials in half the States and EPA regional offices we visited specifically cited the

relatively heavy focus of EPA’s enforcement program on such outputs as a barrier

to achieving greater progress in developing outcome-oriented performance measures.

This view echoed those expressed by State officials in our May 1998 report on EPA

enforcement efforts, which relayed concerns among most of the State officials interviewed that EPA’s Office of Enforcement and Compliance Assurance overemphasizes

output measures. We recommended at that time that EPA ensure that the enforcement-related provisions of EPA’s Performance Plan, prepared pursuant to the Results Act, focus on outcomes in a manner consistent with that of the Core Performance Measures developed under NEPPS.

In a November 1998 response to our enforcement report, EPA emphasized a number of initiatives underway, most notably its National Performance Measures Strategy, to build in more outcome measures in its own enforcement program and to assist States in doing so for their programs. 14 The Office also acknowledged the need
84

rently being implemented include (1) the average number of days for significant violators to return to compliance or enter enforceable plans or agreements and (2) the percentage of significant

violators with new or recurrent significant violations within 2 years of receiving previous enforcement action. Outcome measures targeted for implementation in October 1999 include assessments of the levels of compliance among selected regulated populations. 15Observations on the Environmental Protection Agency’s Annual Performance Plan For Fiscal Year 2000 (draft). Specifically, we noted that among the improvements in the fiscal year

2000 plan are goals and measures of generally better quality, and we note some additional efforts to implement outcome measures. Overall, however, we found that the plan still focuses

heavily on output measures. 16Such a sizable reduction reflects the efforts by EPA and the Council to focus Core Performance Measures on what they agreed are the most important measures. The magnitude of the

reduction, however, should be interpreted with caution for several reasons. First, the figures reflect the temporary deletion of all 25 measures for the Pollution Prevention and Toxic Substances Program. Work is currently underway to develop new measures for pollution prevention

and toxic substances, which are expected to be ready for use in fiscal year 2001. Second, the

dropping of a measure as a Core Performance Measure does not necessarily mean that data will

not be gathered in response to that measure. Rather, the inclusion or exclusion of the measure

as a core measure is an expression of its relative importance to the national environmental picture. Third, some core measures have multiple parts, such as ‘‘trends in air quality for each

of the six criteria air pollutants’’ (actually six measures) or ‘‘trends in emissions of toxic air pollutants’’ (189 hazardous air pollutants the Clean Air Act identifies). The discrete data that are

necessary to report under such measures may be aggregated or disaggregated depending on the

amount of detail used to measure performance. Disaggregating the data increases the number

of perceived performance measures.

to reorient its performance plan increasingly toward outcomes and signaled its intent to integrate some outcome measures into the fiscal year 2000 core performance

measures. The Office’s fiscal year 2000 measures list seven measures, four of which

are identified as providing outcome measures. The implementation approach for

three of the four measures is to work with volunteer States to test the measures.

In this connection, the Office has recently announced the availability of funds for

States for projects that will improve the design and use of performance measures

for enforcement and compliance/assistance activities. In evaluating project proposals, the Office plans to give priority to projects designed to develop outcome measures.

Progress has also been made in other EPA programs in reorienting the agency’s

Results Act measures toward outcomes. Specifically, we found that EPA’s fiscal year

2000 annual Performance Plan, which contains the measures to be used to track

progress toward achieving its programs’ goals, demonstrated some progress since

the performance plan of the previous year. 15 Further progress in coming years

would help to reduce the disparity between the generally output-oriented focus of

EPA measures prepared pursuant to the Results Act and the efforts by EPA regions

and States to focus their negotiations under NEPPS increasingly on achieving results.

Status of Core Performance Measures

Notwithstanding concerns among State and some regional officials about the potential impact of EPA’s implementation of the Results Act on their efforts to orient

their NEPPS-related activities toward outcomes, EPA and the Environmental Council of the States have managed to agree on a third set of Core Performance Measures for use in fiscal year 2000 and beyond which, by most accounts, are a significant improvement over the 1998 and 1999 measures. As both EPA and Council officials have noted, one of the most apparent differences between the new measures

and those of past years is that the fiscal year 2000 measures are significantly fewer

in number. Specifically, as shown in table 3.1, data provided by EPA show that the

number of Core Performance Measures has been reduced from an initial set of 104

measures for fiscal year 1998 to 37 measures for fiscal year 2000. 16

Table 3.1: Number of Core Performance Measures, Fiscal Years 1998 Through 2000

Program Fiscal Year 1998

Fiscal Year 1999Fiscal Year 2000

Air and radiation ................................................................................................................ 23 16 10

Water ................................................................................................................................... 31 31 13

Hazardous waste ................................................................................................................. 17 17 7

Pollution prevention and toxic substances ........................................................................ 25 25 0

Enforcement and compliance ............................................................................................. 8 8 7
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Table 3.1: Number of Core Performance Measures, Fiscal Years 1998 Through 2000—Continued

Program Fiscal Year

1998

Fiscal Year

1999

Fiscal Year

2000

Totals ................................................................................................................ 104 97 37

Source: EPA’s Office of State and Local Relations.

In addition to reducing the number of measures to provide greater focus on what

are perceived as the most important measures, progress was also made in shifting

the proportion of fiscal year 2000 measures increasingly toward outcomes and environmental indicators. Specifically, according to EPA, while about 40 percent of the

measures focused on outcomes or environmental indicators in fiscal year 1998, about

60 percent of the measures focus on outcomes and environmental indicators in fiscal

year 2000. Moreover, while EPA and Council officials are not expected to formally

vote on a comprehensive set of new measures each year, the fiscal year 2000 measures are to be periodically updated as deemed appropriate by EPA and the Council.

In this connection, EPA program officials, told us that they have a number of

projects currently under way (in addition to those in the enforcement program discussed earlier) that are specifically designed to develop additional results-oriented

performance measures.

Finally, EPA and the States have also made progress addressing the States’ concern that EPA had required additional reporting by the States to help the agency

meet its data requirements under the Results Act. Under the April 1999 Addendum

to the Joint Statement, co-signed by EPA and the Environmental Council of the

States, Core Performance Measures and other current reporting requirements will

be relied upon to satisfy EPA’s Results Act-related data needs.

CONCLUSIONS

There is broad agreement among Federal and State officials on the importance

of measuring the outcomes of environmental activities. While considerable progress

has been made in developing and implementing results-oriented Core Performance

Measures, a number of challenges involving technical and policy issues have complicated the process. Progress has nonetheless been made in developing fiscal year

2000 measures which, by most accounts, are a significant improvement over measures used in previous years. Continued progress in developing the measures-and the

data systems needed to support the measures-will be critical to States’ and EPA’s

efforts to demonstrate the efficacy of their programs under NEPPS. In the past, it

has been difficult for States to achieve the flexibility they desire without the performance measures in place to demonstrate that their environmental goals are being

achieved, and it will likely continue to be so in the future.

AGENCY COMMENTS

Citing our observations that (1) EPA has focused on outputs to meet its obligations under the Results Act while supporting a transition to outcome-based management under NEPPS and (2) these conflicting priorities have led to confusion that

hinders performance partnerships, EPA said that, to the contrary, both the Results

Act and NEPPS encourage the development of outcome measures and outcomebased management. We acknowledge the shared objective of NEPPS and the act in

focusing on results. The key word, however, is implementation: as we have documented in other recent work, the measures EPA has used in its implementation of

the Results Act have thus far been heavily output-oriented and, therefore, convey

priorities that are often in conflict with the more outcome-oriented measures being

employed under NEPPS.

We acknowledge EPA’s ongoing efforts to orient its Results Act-related measures

increasingly toward outcomes and believe that further progress toward this end will

help to alleviate this problem. In addition, we modified our discussion of this issue

to reflect the progress made by EPA and the States in addressing the States’ complaint that EPA had required additional reporting by the States to help the agency

meet its data requirements under the Results Act. The chapter notes that pursuant

to the April 1999 Addendum to the Joint Statement, co-signed by EPA and the Environmental Council of the States, Core Performance Measures and other current

reporting requirements will be relied upon to satisfy EPA’s Results Act-related data

needs.
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REDUCTIONS IN EPA’S OVERSIGHT ATTRIBUTABLE TO NEPPS HAVE THUS FAR BEEN

MODEST

As originally envisioned, the principle of differential oversight was a key element

of NEPPS. Under this principle, States with stronger environmental programs

would be accorded reduced oversight and greater autonomy over delegated programs, thereby allowing these States greater flexibility to manage their programs,

and providing EPA the opportunity to shift greater attention of its own resources

toward weaker programs. An important component of the concept of differential

oversight was that programs eligible for reduced oversight would meet certain criteria and that the EPA and States would work together to choose a group of measures to use in assessing State performance.

In the years immediately following the 1995 agreement, EPA and many States

agreed that a formal system implementing differential oversight, whereby the merits of a State program would be evaluated based on certain standards or criteria

to determine whether it qualifies for reduced oversight, would be both controversial

and difficult to implement. Nonetheless, the original concept of reduced EPA oversight in exchange for acceptable State environmental performance remains an important goal for both EPA and participating States.

Among the six States we visited, we found instances in which some oversight reduction was successfully negotiated between States and their corresponding EPA regions. Such instances, however, have thus far been limited in both scope and frequency. A number of interrelated factors were cited as limiting the reduction of EPA

oversight, including (1) statutory and/or regulatory requirements that specify State

reporting requirements and other methods of ensuring State accountability to EPA;

(2) EPA’s reluctance to reduce oversight without measurable assurances that environmental goals are still being achieved; (3) the inherent difficulty in ‘‘letting go’’

on the part of some regulators that have implemented the existing EPA-State oversight arrangement for several decades; and (4) the challenge faced by EPA of communicating to States through a complex, multilevel organization involving both

headquarters and regional offices.

Initial Expectations Concerning EPA Oversight of Participating States’ Programs

The May 1995 joint agreement between EPA and the Environmental Council of

the States stated that ‘‘a differential approach to oversight should provide an incentive for State programs to perform well, rewarding strong State programs and freeing up Federal resources to address problems where State programs need assistance.’’ It added that ‘‘after agreement is reached, EPA will focus on program-wide,

limited after-the-fact reviews rather than case-by-case intervention and will work

with States to identify other ways to reduce oversight.’’

Accompanying differential oversight was the concept of ‘‘performance leadership,’’

whereby qualifying programs having a record of strong performance would be nationally recognized with ‘‘leadership’’ status. In such instances, the leadership programs would be afforded minimum allowable oversight based on the belief that they

‘‘deserve to be treated with deference whenever possible and do not need Federal

oversight on a routine basis.’’

In subsequent years, however, both EPA and the States found it difficult to implement both a formal differential oversight process and to formally designate certain

State programs as performance leadership programs. One key problem was the inability of EPA and the States to agree on criteria to use in making such determinations. EPA officials responsible for NEPPS noted that because the capacity of a

State program can change depending upon circumstances, the proper level of oversight should be determined on a State-by-State basis by EPA regional managersnot on the basis of specific criteria that would be universally applied to all States.

In addition, as noted by the Environmental Council of the State’s Executive Director, many State environmental leaders expressed concern that formal designations

of such programs as performance leaders could be interpreted by EPA, State legislatures, and the public as a ‘‘report card’’ of good and bad performers. Such designations would probably be challenged, particularly given the difficulty of developing

and applying specific criteria to use in making these determinations.

Nonetheless, the concept of differential oversight, albeit in a less structured and

visible form, remained an important component of State and EPA regional NEPPS

negotiations. Officials in the six States told us that their early expectations for

NEPPS were that the program would help them to reduce their oversight workload

in some well-run program areas and to allow them a stronger focus on State priorities and problem areas. Officials in three States noted in particular that they believed the NEPPS framework would better allow them to identify and address op-
87

17 Under EPA’s Pretreatment Program, wastewater treatment plants are charged with monitoring and regulating contaminant discharges by industrial users into their sewer systems.

portunities for multimedia projects, rather than continuing to expend time and resources only on the traditional, single media air, water, and waste programs.

States and Regional Offices Report Limited Oversight Reduction Thus Far Directly

Attributable to NEPPS

State officials cited a number of instances in which they negotiated some reduction in regional oversight of their programs. These efforts tended to focus on reducing the frequency of reporting, and in some cases the frequency of conducting onsite

reviews, in situations where both sides agreed such activities were duplicative or

otherwise of limited value. However, most State program officials indicated that the

extent of reporting required has either remained the same or actually increased in

spite of NEPPS, and that few instances were identified where States obtained more

significant independence in operating their programs (e.g., focusing their resources

on State priorities). Most regional staff we interviewed generally agreed that, to

date, oversight reduction attributable to NEPPS has been limited.

Instances of Reduced Oversight Cited by States and Regions

Officials in Maine, Florida, Georgia, and Minnesota cited specific instances in

which reporting requirements were scaled back, at least in part as a result of their

participation in NEPPS. Maine environmental officials, for example, noted that

more frequent dialog and less formal reporting between the program staff and regional staff had replaced written reports, saving time and improving the level of cooperation between EPA and State staff. While Maine program officials attributed

the reductions in large part to the assignment by EPA’s Boston Regional Office of

a liaison for each State’s delegated programs, they credited NEPPS with formalizing

or legitimizing the changes. Florida program officials identified sizable reporting reductions in its Resources Conservation and Recovery Act program as a result of a

joint State/EPA effort included in the Performance Partnership Agreement. The

Chief of Florida’s Bureau of Water Facilities also noted that under the agreement,

the State was able to streamline oversight of its pretreatment program through reduced reporting and by negotiating with the EPA Atlanta office a shifting of resources from the conduct of routine annual inspections and audits to other priority

areas in the program. 17

In some cases, regional and State officials indicated that oversight had been

scaled back, but that such efforts could not be tied directly to a State’s participation

in NEPPS. Connecticut officials reported that quarterly reporting had been eliminated in recent years for some of their air, water and waste programs, but attributed the change solely to EPA regional efforts that preceded NEPPS. Similarly, program officials in EPA’s Boston, Chicago, and Seattle offices each cited instances in

which quarterly reviews and file reviews were eliminated, but indicated that such

efforts often preceded independently of the signing of a NEPPS agreement.

Few Instances of Significant Oversight Reduction Under NEPPS

Notwithstanding the streamlining of reporting requirements and similar tracking

efforts, the large majority of the State officials we interviewed generally maintained

that participation in NEPPS has not yet brought about significant reductions in reporting and other oversight activities by regional program and audit level staff, nor

has it resulted in significant opportunities to focus on other priorities or shift resources to weaker program areas. Oregon officials, for example, explained that their

initiatives to focus on the State’s highest priorities are having difficulty competing

with their obligations to track and report on the national core performance measures and to comply with other EPA reporting requirements. Program managers in

Connecticut, Florida, Georgia, Maine, and Minnesota conveyed similar experiences,

indicating that the addition of new core measures to preexisting reporting requirements had increased their reporting workload, or that they are likely to do so in

the future. Program managers in three of these States indicated they will need to

develop the data and systems to report on the new measures.

Oregon officials also pointed to a significant increase in EPA oversight by the regional enforcement officials of its air, water, and waste programs. EPA Seattle officials told us that the enforcement reviews in Oregon were the outcome of nationwide enforcement reviews by both the Office of Enforcement and Compliance Assurance and of EPA’s Office of the Inspector General, which raised concerns about

whether and how States were bringing enforcement actions against violators. Georgia officials also said that oversight of their hazardous waste program has increased,
88

noting that regional enforcement officials were making regular monthly visits to review program records.

EPA regional program and enforcement officials generally acknowledged that

oversight of State programs has not significantly decreased as a result of NEPPS,

and that in some cases, has increased. Officials in the Atlanta and Chicago Regional

Offices noted in particular that it may have been unrealistic to assume, as many

States had at the outset of NEPPS, that States’ participation in the program would

necessarily lead quickly to reduced EPA oversight. Moreover, regional officials point

to specific reasons why it has been difficult to scale back EPA oversight-and why

oversight has actually increased in certain instances.

Factors Affecting Potential to Reduce Oversight Under NEPPS

We asked both State and regional officials to identify what they believed to be

the most important considerations affecting the extent to which NEPPS has provided States with reduced oversight, greater program autonomy, and the flexibility

to emphasize their highest priorities. There was considerable consistency on the factors identified by both State and EPA officials, although there was some variation

on the degree to which various factors were emphasized. The key factors include (1)

statutory and/or regulatory requirements that in some cases prescribe the kind of

oversight required of States by EPA; (2) reluctance by EPA regulators to reduce

oversight without measurable assurances that environmental protection will not be

compromised; (3) the inherent difficulty in letting go on the part of some regulators

that have implemented the existing EPA-State oversight arrangement for several

decades; and (4) EPA’s multilevel organizational structure, which complicates efforts

to identify whether all key decisionmakers among the agency’s headquarters and regional offices are in agreement on key oversight-related questions.

Statutory or Regulatory Requirements May Limit Options to Reduce Oversight

In some cases, statutory and/or regulatory requirements may prescribe certain

types of EPA oversight, limiting the extent to which further streamlining can be negotiated. EPA headquarters officials in the Office of Air and Radiation noted that

some of the core performance measures for the air program are driven by statutes

and thus are non-negotiable. The officials noted, for example, that dates by which

areas in ‘‘non-attainment’’ with air quality standards must come into compliance are

driven by the Clean Air Act and that EPA accordingly has no flexibility to alter

them. Similarly, a regional official cited the Clean Water Act’s requirement under

section 305(b) that a Water Quality Inventory Report be issued every 2 years. One

State requested an alternative schedule in which the State would submit its information for the report every 5 years for each watershed area. EPA denied the request as contradicting the 2-year frequency required by the act.

In addition, EPA Atlanta and Boston regional staff pointed out that they have a

responsibility to ensure that new regulations, which sometimes pose particular challenges for both Federal and State regulators, are properly implemented. EPA headquarters officials cited as an example their new regulations concerning fine particulate matter, which required significant EPA action during the middle of the fiscal

year. Regional staff said that such actions may inevitably require greater EPA oversight and more detailed reporting. Officials in EPA’s Atlanta Regional Office cited

another example where, in the middle of the year, headquarters implemented a new

initiative that required the region to ask the States to do additional inspections of

metal finishing plants that went beyond the commitment made by States in their

Performance Partnership Agreements.

State program managers acknowledged that statutory and regulatory requirements do in fact sometimes limit the potential to reduce EPA oversight. In addition,

while welcoming the administrative relief and flexibility allowed under the Performance Partnership Grant Program, several noted that the implementation of these

grants is still governed by certain statutory and regulatory requirements. For example, the grants are still subject to certain grant administrative requirements and

cost accounting standards applicable to Federal grants generally. Specifically, while

the Partnership Grants do not require the detailed accounting required of categorical grants, States must still report to EPA on how funds have been spent under

the broader categories. Furthermore, like other Federal grants, the EPA grant

agreements are supposed to include adequate oversight procedures to provide EPA

assurance that Federal funds are used efficiently and effectively.

Perhaps more significantly, both State and regional officials added that the State

programs are still held accountable for accomplishing program commitments outlined in their work plans and that base program requirements under the various

statutes must still be met. Such competition for limited resources to meet the requirements of individual statutes has, in fact, been a long-standing issue that has
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18 Environmental Protection Agency: Protecting Human Health and the Environment Through Improved Management (GAO/RCED–88–101, Aug. 16, 1988). 19 Environmental Protection: Meeting Public Expectations With Limited Resources (GAO/ RCED–91–97, June 18, 1991). 20 Environmental Protection: Status of EPA’s Initiatives to Create a New Partnership With States (GAO/T-RCED–96–87). 21 Environmental Protection: EPA’s and States’ Efforts to Focus State Enforcement Programs on Results (GAO/RCED–98–113, May 27, 1998).

complicated efforts to shift attention and resources to what are perceived as the

highest environmental priorities. We noted in our 1988 general management review

of EPA, for example, that the objective of setting risk-based priorities across environmental media has been complicated by the fact that each statute prescribes certain activities to deal with its own medium-specific problems. 18 In 1991, we touched

on the issue again noting, for example, that numerous legislative mandates have led

to the creation of individual EPA program offices that tended to focus solely on reducing pollution within the particular environmental medium for which they have

responsibility, rather than on reducing overall emissions. 19 More recently, in testify- ing on efforts by EPA to improve its working relationship with the States and to

provide them with additional flexibility, 20 we concluded that as long as environ- mental laws are media-specific and prescriptive and EPA personnel are held accountable for meeting the requirements of the laws, it will be difficult for the agency

to fundamentally change its relationships with the States to reduce day-to-day control over program activities.

EPA Reluctance to Reduce Oversight Without Measurable Assurances That Environ- mental Protection Will Not Be Compromised

Program managers and staff in all four of the EPA regional offices we visited questioned the extent to which the agency can reduce oversight without measurable

assurances that program requirements, and environmental objectives, will be

achieved. The issue has become particularly pronounced in the enforcement program, where some States have taken issue with what they perceive to be heavyhanded oversight by EPA. Among State officials’ complaints are that EPA enforcement officials inappropriately hold States accountable for the number of enforcement actions (outputs) taken rather than achieving better environmental compliance

(outcomes). Some States have also cited the prospect of EPA taking direct enforcement action in States where the lead State environmental agency has primary enforcement authority, or of ‘‘overfiling’’ with an EPA action in instances where a

State enforcement action was determined by EPA to be insufficient. State officials

have also maintained that such a posture is inconsistent with the philosophy under

NEPPS that EPA should focus its oversight on results and should provide States

with greater flexibility as to how to achieve those results. EPA Seattle regional officials, however, have cited the Office of Enforcement and Compliance Assurance’s recent reviews and those of the Office of Inspector General,

which have concluded that (1) many States have underreported violations by dischargers of pollutant limitations and other environmental requirements and (2) the

numbers of enforcement actions taken by State enforcement officials has declined.

These reports, the officials contend, raised questions about the ability of States to

achieve compliance by the regulated community without vigilant Federal oversight.

Moreover, according to the officials, States presently do not have the data to support

their contentions that environmental compliance is still being achieved in cases

where their enforcement activity has been curtailed. State officials told us, both during this review as well as during our 1998 review of State enforcement programs, 21 that the absence of measurable results complicates efforts to use more flexible approaches-not just because it is harder to get

EPA approval, but also because it is harder to obtain the confidence of the media

and the general public. Florida officials, for example, told us that the number of

penalties assessed, and dollar value of penalties collected, under its federally delegated programs decreased from 1994 to 1996, and that questions were raised as to

whether these decreases resulted, at least in part, from a greater emphasis on the

use of assistance to achieve compliance. In fact, newspapers in the State subsequently published articles questioning whether the State was letting violators continue to pollute without fear of punishment. Florida officials told us that their major

investment in measuring the results of their enforcement and compliance assistance

efforts was undertaken, in part, to determine whether these concerns were wellfounded.

The Office of Enforcement and Compliance Assurance points out that it is addressing the problem through its National Performance Measures Strategy and by

collaborating on the development of enhanced outcome-oriented performance meas-
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22 EPA Office of Enforcement and Compliance Assurance, Final fiscal year 2000/2001 OECA

Memorandum of Agreement (MOA) Guidance (Apr. 1999). 23 Environmental Protection: Challenges Facing EPA’s Efforts to Reinvent Environmental Regulation (GAO/RCED–97–155, July 2, 1997).

ures with a number of States. In addition to helping States develop outcome measures, enforcement officials also pointed to recently issued guidance that encourages

EPA regional offices to be more flexible in considering States’ preferences when negotiating regulatory priorities. 22 Specifically, the guidance calls on regions to ‘‘de- velop their priorities in partnership with their States . . .’’ and notes, ‘‘States are

not required to adopt EPA’s national priorities . . . This guidance provides flexibility

for both regions and States to identify and implement their own priorities.’’ The

guidance further states that EPA is ‘‘addressing States’ concerns about joint planning and priority-setting, work sharing, and oversight responsibilities by identifying

this as a management focus area to be addressed by each region in the fiscal year

2000/2001 [memorandum of agreement] process.’’

Resistance to Change at Lower Levels Within Both EPA and Among State Agencies

Our 1997 report on EPA’s efforts to ‘‘reinvent’’ environmental regulation observed the widely held view, both within and outside EPA, that achieving a full commitment to reinvention by EPA staff will be difficult and will take time. 23 The report

further identified widespread agreement among EPA officials, State officials, and

others that the agency has a long way to go before reinvention becomes an integral

part of its staff’s everyday activities, and cites a senior EPA reinvention official as

noting that ‘‘many staff are comfortable with traditional ways of doing business and

consider their program-specific job responsibilities as their first priority and reinvention projects as secondary.’’ Many of the State officials we interviewed contended that comfort level among some EPA staff with the preexisting oversight arrangement-which has generally

been in place for many years-helps to explain the reluctance by many of them to

provide States with greater flexibility and reduced oversight. Program officials in

five of the six States provided examples where they believed that regional program

staff (tasked with the day-to-day implementation of specific programs) asked for information that was not included in the Partnership Agreement or that they had previously agreed with the region to drop. Minnesota officials said that EPA regional

waste officials were asking for predictive or target numbers (such as the number

of inspections the State intends to pursue during the coming year)-information, they

said, that was not required nor included in their Partnership Agreement. Similarly,

Georgia program officials said that EPA enforcement officials requested additional

information after their Partnership Agreement had been negotiated and was ready

to be signed. Georgia’s Assistant Director and the Atlanta Deputy Regional Administrator, recognizing that the difficulty was due in part to different targets and

schedules for enforcement and the media programs, set up an enforcement planning

work group consisting of State and regional representatives from enforcement and

the media programs to study and resolve the problem so that they could avoid last

minute changes in the future. Other State officials told us that EPA has recently

requested information related to the Results Act which, they believed, was outside

the scope of their agreements. Several State officials commented that an openness

toward seeking ways to reduce such information requests appears to be greater

among senior EPA regional managers than among lower-level staff.

It is possible that what State officials may view as an ‘‘resistance to change’’ could

be regarded by EPA staff as a well-founded concern that program requirements be

implemented properly and in accordance with laws and regulations. However, officials in three of the four EPA regions we visited nonetheless acknowledged that support for NEPPS within EPA varies. One senior regional official said that managers

and staff are often more comfortable with the preexisting way of doing business and

are unsure as to how they can accomplish their work in the context of the partnership approach under NEPPS. He voiced the opinion that there may be a need for

training in NEPPS implementation among regional staff. Another senior regional official said that some staff will only take NEPPS seriously when their salaries are

tied to their performance in implementing the program.

By the same token, our interviews with senior State officials suggest that cultural

change is also needed at the State level if NEPPS is to achieve its full potential.

Specifically, several State officials said that State program managers may not always be well-versed in recognizing opportunities that would allow them to exercise

their responsibilities with greater flexibility. Some of them indicated that there is

resistance to NEPPS at the State program manager and staff level because of the

perceived threat to their programs. In one State, in order to get the program direc-
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24 In response to a 1997 survey by the Environmental Council of the States, participating

States commented that headquarters guidance should be finalized by February of each year so

that States and regions can meet in March to set joint priorities and begin the Performance

Partnership Agreement process for the following fiscal year.

tors’ support for participating in NEPPS, senior management made a commitment

not to make any large-scale shift of funds among or between programs. Some regional staff and managers also commented that States have not taken advantage

of opportunities to seek more flexibility under NEPPS, noting in particular that

none of the States in their regions attempted to move significant amounts of funds

among programs or across media lines.

Challenges in Communicating Requirements Through a Multi-Level EPA Organizational Structure

EPA’s organizational structure poses additional challenges in negotiating agreements that have the full buy-in of all key EPA decisionmakers. Headquarters interaction with the States is generally conducted indirectly through the regional offices.

National Program Managers set national strategic direction, and core program requirements and priorities, for each of their environmental programs. The managers

establish overall national goals for their respective programs based on a variety of

factors, including the underlying statutory mandates, congressional directives, administration/administrator priorities, and their own view of programs and policies

that their programs should focus upon. The managers also must develop an accountability system to ensure program delivery by EPA’s regions. The regional offices consult with managers in determining national priorities and communicate these priorities to the States. As such, the regional offices serve as the key EPA focal point

in negotiating with States on program priorities and oversight arrangements to be

reflected in NEPPS agreements. Importantly, the States generally have little direct

communication with the managers. Thus, for example, if States wish to deviate from

a national core performance measure or priority, it is the regions that consult with

the managers.

Buy-in by Key Decision Makers and Mixed Messages Confuse States

As a consequence of this structure, according to the majority of State program

managers we interviewed, it is not always clear that a Partnership Agreement between the State and the region has the full buy-in of EPA’s key headquarters managers. A senior official with Florida’s Department of Environmental Protection cited

the example of the State’s ‘‘Joint Compliance and Enforcement Plan,’’ negotiated

under the State’s 1998–1999 Performance Partnership Agreement. Under the plan,

State and regional officials enter into a process that seeks agreement, on the basis

of industry compliance data, on what the State’s most important compliance problems are and which methods (e.g., enforcement action, technical assistance) are most

appropriate to address them. The official said that while the State has already invested significant time and effort into the plan, and has had expressions of strong

support from EPA’s Atlanta Regional Office, it does not know the extent to which

EPA’s headquarters Office of Enforcement and Compliance Assurance supports the

effort or whether that office will ultimately give its approval.

Similar observations were made by other States’ officials, who indicated that provisions were sometimes added at the request of EPA headquarters to Partnership

Agreements after they were negotiated. The timing of headquarters guidance and

special requests for input into Partnership Agreements was cited by some State and

regional officials as a key factor: final headquarters guidance, or specific requests

in some cases, often come too late to be included in regional and State negotiations,

causing the need for some agreements to be renegotiated. 24

State officials also indicated that some headquarters requirements are negotiated

separately from the overall Partnership Agreement negotiations. Officials with the

Minnesota Pollution Control Agency told us that after successfully negotiating its

agreement with regional program officials, the Office of Enforcement and Compliance Assurance requested separate measures and a separate section apart from the

media programs in the Partnership Agreement. In the opinion of the State officials,

this process illustrated the difficulty in getting all headquarters interests incorporated into the agreement in a timely fashion. Officials in several other States

cited similar circumstances where enforcement provisions had to be negotiated outside the scope of the Performance Partnership Agreement, making it difficult to develop the kind of integrated environmental program NEPPS is intended to encourage.
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EPA Officials Acknowledge Need for Clearer and More Consistent Communication

Officials in the four regional offices we visited told us that sometimes there are inconsistencies between headquarters and regional offices, which complicates the

message the agency sends to the States. Boston regional officials cited one instance

in which Maine and Connecticut had proposed to consolidate funds for their wetlands programs (1 of the 15 eligible programs) under a performance partnership

grant and were initially told by the regional office that the arrangement would be

acceptable. However, EPA’s headquarters Water Office subsequently objected to allowing all funds to be shifted from a categorical grant to a Performance Partnership

Grant on the basis that a portion of the funds were supposed to be used in a competitive bid process for nonprofit organizations (and other eligible parties) to propose

special projects. According to State and EPA Boston regional program managers,

EPA’s Boston Regional Office resolved the resulting confusion by brokering an

agreement to allow for some funding from each of the New England States’ wetlands

grant programs to be set aside for special regional wetlands pilots.

Many EPA regional officials said that headquarters officials sometimes view

NEPPS negotiations as a regional-State matter, and that headquarters offices do

not view themselves as ‘‘signatories’’ to the process. The officials noted that it is only

when there is a significant deviation on the part of the State from a national priority that headquarters may become involved with decisions related to NEPPS agreements.

Most of the headquarters managers that we interviewed acknowledged that EPA

headquarters input into the NEPPS negotiation and agreements process is primarily

left for the regions, to convey to the States, with headquarters primarily engaged

in setting the national priorities and issuing national program guidance. These

headquarters managers acknowledged that headquarters input into the NEPPS

process can be improved, noting in particular that headquarters guidance, initiatives, and special requests sometimes arrive at the regions too late to be useful. In

April 1999, headquarters managers issued 2-year program guidance to help address

some of the problems related to untimely requests. EPA intends that this guidance

will allow the regions and States to include national program priorities earlier in

the negotiating process for Performance Partnership Agreements. At the same time,

however, the managers said certain circumstances that could affect a signed agreement, such as those dealing with new regulations, are sometimes out of their control.

AGENCY COMMENTS

EPA provided updated information about the concern that headquarters program

guidance often arrived too late to be of use in Performance Partnership Agreement

negotiations between States and their EPA regional offices. Specifically, the agency

noted that in April 1999, its headquarters National Program Managers issued 2-

year program guidance to the regional offices simultaneously and on schedule, so

that the information would be available prior to Performance Partnership Agreement negotiations. EPA said that the new procedure has been well received by the

regional offices, and that the introduction of 2-year guidance will allow regional offices and States to extend their planning horizon without fear that the priorities of

the National Program Managers will change dramatically on an annual basis. We

have amended this chapter to reflect this progress. At the same time, the chapter

still conveys agency officials’ views that the guidance will not necessarily prevent

other circumstances, which are out of EPA’s control, from necessitating the reopening of an agreement.

EPA also cautioned that the report should more clearly distinguish between the

terms burden reduction and differential oversight. Burden reduction, according to

EPA, applies to activities, particularly information exchanges, that both EPA and

a State agree are unnecessary, duplicative, or inefficient. In such cases, EPA believes that all State programs should benefit from burden reduction. The term differential oversight, according to EPA, means that oversight may vary depending on

how effectively a State program meets performance expectations. The EPA comment

draws a clear distinction between issues associated with reporting burdens and

other issues that are more appropriately viewed as related to EPA’s oversight of

State environmental programs. We acknowledge that there are circumstances, separate and apart from EPA oversight, in which EPA and a State collaboratively pursue strategies to reduce reporting requirements that they both agree are unnecessary, duplicative, or inefficient. However, the distinction between this activity and

oversight is not always so clear. Specifically, in cases where States and EPA have

disagreed on the need for data not required by statute and viewed by States as extraneous, and EPA has continued to require reporting of such data, States have
93

often characterized the issue as, in their view, a questionable exercise of EPA oversight.

BENEFITS OF NEPPS PARTICIPATION CITED, BUT FULL POTENTIAL HAS YET TO BE

REALIZED

State participants’ expectations for reduced EPA oversight and greater program flexibility-major anticipated benefits at the outset of NEPPS in 1995-have thus far

met with some disappointment. Yet while these participants expressed disappointment at the rate of progress in achieving greater autonomy and greater emphasis

on State priorities, senior officials and program managers from each of the six

States that we reviewed agreed that NEPPS has provided their programs with

worthwhile benefits. Among the benefits most frequently cited were that NEPPS (1)

provided a means of getting buy-in for innovative and/or unique projects, (2) allowed

States the option to shift resources and funds under the Performance Partnership

Grants Program, (3) served as a tool to divide a burdensome workload more efficiently between Federal and State regulators, and (4) improved communication and

increased understanding among EPA and State program participants about each

other’s program priorities and other key matters. Officials in each of the four regions visited substantially agreed with many of the benefits of NEPPS participation

cited by State officials. Yet while participants from each State indicated that their participation in the

voluntary program would probably continue, they also shared a consistent opinion

that the benefits of the program should be greater, that the program has yet to

achieve its potential, and that improvements are needed. To some extent, such an

outcome should not be surprising, given that the program (1) has been in place for

just a few years and (2) began as an experiment in which participants were encouraged to try different tools and techniques. Yet these early years of the program have

also provided a wealth of experiences as to what has worked well, what has not

worked, and how the program can be improved. The 1995 agreement anticipated the

appropriateness of such reflection in calling for a joint evaluation system for EPA

and the States to review the results of their efforts to ensure continuous improvement. On the basis of our work, we believe that it is now appropriate to begin such

a joint evaluation process.

Program Improvements Attributed to NEPPS

State officials in each of the six States we visited identified a number of benefits

to their air, water, and waste programs, but frequently spoke of some benefits, such

as the ability to move funds toward the State’s highest priorities, as potential future

benefits rather than as benefits already realized. EPA regional staff acknowledged

many of the benefits identified by State participants, but were often cautious in

stating that additional flexibility could be exercised only so long as States continue

to meet the statutory and regulatory requirements associated with their base programs. Benefits identified related to the flexibility to work on innovative and special

projects; to use resources and gain administrative efficiencies through the consolidated environmental grant; to more efficiently divide the workload among EPA and

State regulators; and as a means of improving public outreach and involvement in

environmental policies and programs. The additional benefit most frequently cited by State officials is perhaps the most intangible one-that it helped to encourage a more systematic and effective communication between EPA and State officials on key issues and priorities, leading to increased mutual understanding and improved relations. Although many of these officials acknowledged that this progress has not yet resulted in the more equal partnership with EPA to the extent hoped for, the collaboration and negotiation fostered

by the process was viewed as a definite step in the right direction.

NEPPS Provides a Means of Getting Buy-in for Innovative And/or Unique Projects

The majority of EPA regional and State officials we contacted cited the ability to

work on, and get buy-in for, innovative and/or unique projects (such as those dealing

with cross-cutting issues or multimedia projects) as a tangible benefit under

NEPPS. Among the examples cited was a Quality Assessment Management Plan included in Florida’s fiscal year 1999 Performance Partnership Agreement, signed between the State’s Department of Environmental Protection and EPA’s Atlanta Regional Office. Once fully developed and implemented, the plan is expected to provide

the State with the ability to identify and improve the quality of data provided by

private laboratories. The Florida project director spearheading the effort on behalf

of the State said that elevating the project as a priority in the Partnership Agreement legitimized the concept and gained the support of key EPA and State
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25 At a workshop sponsored in July 1997 by the Environmental Council of the States, two

States reported plans to shift between 5 and 15 percent of the funds under their Performance

Partnership Grants to address priorities such as pollution prevention. Also, one State in a 1997

Council survey of the Performance Partnership Agreement process reported setting aside 5 percent of its funds from water grants to address wetlands lakes and a new Performance Partnership Grant coordinator position.

decisionmakers. The prototype or model of the plan has been completed and submitted to State and regional officials with the expectation that the project staff will

next move on to issues related to implementation. According to the project director,

the Partnership Agreement-as a document signed by the senior officials at both the

State and Federal level-was crucial in conveying top management buy-in. The

project director observed that the Agreement, in effect, provided the ‘‘impetus to innovate’’ whereby State and regional leadership formally endorsed a new way of

doing business. Environmental officials in Minnesota recently reorganized the

State’s pollution control agency to eliminate its media-specific structure. The new

organization has three geographic divisions to handle most environmental issues

and two divisions to handle environmental planning and outcomes. The reorganization was undertaken because they believed that an integrated approach to environmental management was needed and because many problems transcend media

boundaries. Agency officials noted that the Performance Partnership Agreement between the State and EPA’s Chicago Regional Office was key to establishing a new

working relationship with EPA and to Minnesota’s efforts to find a better way to

plan and carry out their work. They added that the Partnership Agreement provides

the State the flexibility to go beyond reporting on media-based program outputs toward linking, tracking, and measuring agency activities with actual environmental

results. Among other examples cited, a program manager in EPA’s Atlanta Regional

Office pointed to North Carolina’s effort to use its Performance Partnership Agreement to pursue a multimedia inspection project for metal finishing plants. The inspections are conducted jointly from an air, water, and waste perspective so that

each media program does not have to do its own separate inspection. The Partnership Agreement provided program managers in the State environmental agency

with a recognized vehicle to propose and implement the inspection initiative to

share resources across media lines by getting a formal buy-in from State and EPA

officials through a signed agreement.

Flexibility to Shift Resources and Funds Under NEPPS Grant

As noted earlier in this report, Performance Partnership Grants allow States the

opportunity to combine individual categorical grant funds into a consolidated grant.

Once included in the consolidated grant, the funds Agreements essentially lose their

category-specific identity and can be used with considerably greater flexibility.

Environmental agencies within four of the six States included in our review

(Maine, Connecticut, Georgia, and Minnesota) have Partnership Grants with their

corresponding EPA regional offices. Importantly, officials in these States told us

that they have not been able to take greater advantage of the ability to shift funds,

primarily because the programs covered by the Partnership Grant each have their

own base program requirements that must be funded. 25 However, several of the officials told us that the flexibility allowed under a Partnership Grant to move funds

where they are most needed remains an important potential benefit of the program.

For example, a Georgia official said that they hoped to shift funds sometime in the

future to address nonpoint sources of water pollution and air quality in metropolitan

Atlanta. This official added that if an emergency were to arise, the Partnership

Grant would allow the State to move funds and staff quickly from various programs

to address the problem. A grant official with EPA’s Boston office noted that prior

to the Partnership Grant program, States in the region often complained about their

inability to shift funds from programs that had excess funds to other programs that

were short of funds. He noted that such complaints have declined with the inception

of the program.

Program officials in all four of the case study States having Partnership Grants

also cited administrative efficiencies from the ability to consolidate their categorical

grants. The officials noted that the grants have allowed States to condense individual work plans into a single consolidated work plan, and States have gained additional flexibility in the way they account for staff time. State environmental agency

officials noted that they were able to reduce the number of grant applications, budget documents, and work plans required. Some added that they gained administrative relief from not having to track staff time and charges on a detailed, grant-bygrant basis. A Maine official, for example, noted that under the traditional categorical grant process, staff positions funded by multiple categorical grants required con-
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26Superfund: Stronger EPA-State Relationship Can Improve Cleanups and Reduce Costs

(GAO/RCED–97–77, Apr. 24, 1997).

trols to be in place to ensure that employees charge their time to specific grants and

budget categories. The Partnership Grants provide the flexibility to accomplish necessary work without worrying about which tasks are funded by which categorical

grants. EPA regions’ responses to this increased flexibility have been mixed. Regional pro- gram managers in the four regions visited expressed concern about the flexibility

of the NEPPS agreement and grants process and said that there is a need to retain

or develop new State reporting requirements if EPA is to retain proper program

oversight. These program managers commented that eliminating reporting requirements results in EPA losing its ability to hold States accountable and argued for

States to provide predictive annual targets as to what they plan to accomplish and

to develop short-term or interim measures for reporting States’ progress toward

measuring environmental results. Several managers said that it is important for the

States to prove that work is actually being done and cited the consolidation of grant

funds under a Partnership Grant as an example where EPA loses a level of control.

Other regional program managers, however, were more optimistic and comfortable

with the fact that States provide year-end reports on what they have done.

A Tool to Divide a Burdensome Workload Efficiently Between Federal and State Reg- ulators

In 1997, we reported on EPA’s and States’ efforts to improve their management of Superfund site cleanups, 26 and cited innovative efforts in Minnesota and Washington where State and regional officials experienced substantial efficiencies

through work-sharing agreements. In Washington, State and EPA officials reported

that under a formal written agreement signed by officials in EPA’s Seattle office and

the State’s Department of Ecology, responsibility was formally divided for cleaning

up the State’s National Priority List sites between the two agencies. Both EPA and

State officials reported that the formal, clearly articulated division of responsibility

between the two parties helped to reduce both the acrimony and the duplication of

effort that characterized their past relationship. The State official reported a strong

consensus among the staff that the changes contributed to a significant reduction

in the number of staff resources needed to oversee cleanups at NPL sites. Minnesota

officials and Superfund officials with EPA’s Chicago office reported similar success

with such a work-sharing agreement. State and EPA regional officials cited similar benefits of Partnership Agreements, as formal documents that clearly articulate the obligations of both parties to the

agreement. State officials noted that in some instances in the past, communication

seemed to be one of EPA conveying its expectations of the State, rather than the

two-way communication embodied in many Partnership Agreements. Even where

the concept of dividing responsibilities and identifying work-sharing opportunities

has been used, State officials indicated that a formal Partnership Agreement brings

a commitment and focus to the need to share scarce resources and to formalize stated commitments.

Program managers in several of the regions and States we visited cited a number of examples that illustrated the benefits associated with the formal division of labor

memorialized in a Partnership Agreement. Connecticut’s NEPPS coordinator, for example, said that the Connecticut Department of Environmental Protection negotiated with EPA’s Boston Regional Office to pick up some of the State’s training

work load, because EPA could provide joint training for all the New England States

at a lower cost than would be the case if each State provided training individually.

The Connecticut Partnership Agreement specifically States that EPA agrees to assist with training in several areas, such as measuring and documenting the success

of the State’s compliance assistance and enforcement activities. The State’s fiscal

year 1999 agreement also documents coordination with the Boston office, indicating

that the region agrees to work with the State on helping to reduce the State’s reporting burden. According to the agreement, the region was to assume some of the

State’s inspection workload or streamline inspection requirements in order to free

up State staff resources for compliance assistance activities.

Georgia’s Partnership Agreement includes provisions for EPA’s Atlanta office to

assist the State in training, enforcement, and inspection activities generally on an

‘‘as requested’’ basis. For example, the region provided some expertise to the State

and committed to dedicating EPA resources to the training of compliance officers

within the State. Oregon’s Partnership Agreement was similarly used to address

unmet needs in the State’s water program. Officials with EPA’s Seattle Regional Office and the State’s Department of Environmental Quality agreed that the State’s
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27 EPA’s Boston Regional Office, ‘‘Assistance and Pollution Prevention Programs & Priorities

For Fiscal Year 2000 State/EPA Performance Partnership Agreement (PPA) & Compliance

Strategy Discussions’’

program to identify and remediate heavily polluted waters was understaffed and underfunded. Under the agreement, the regional office agreed to provide the State

with two staff to assist in the program.

Opportunity to Improve Public Outreach and Involvement

A key intended benefit and one of the seven principal components of NEPPS in its May 1995 joint agreement is the opportunity to share information with the public on State environmental conditions, objectives, and performance. Officials with

the Environmental Council of the States commented that public participation is a

strong point of the NEPPS program-something that rarely occurred under the formal traditional system where public comment was generally sought on specific facilities or sites only. At the time of the 1995 agreement, some States had begun to

share such information through their annual State of the environment reports. The

NEPPS process, however, offered greater opportunities for constructive public involvement.

EPA and State officials told us that increased public participation and involvement remains a principle benefit of the EPA-State NEPPS process, but its full potential is largely unmet. State officials have found that public interest and input

into the NEPPS process has varied but that, overall, it has thus far tended to be

limited. Minnesota officials, for example, said that they sent out a press release and

copies of their Partnership Agreement to about 400 entities comprised of industry,

environmental, community, and tribal groups and received only a handful of comments. Georgia sought comments on its Partnership Agreement at a public meeting

and received limited comments, and Connecticut held an evening meeting with an

advisory board consisting of representatives for the different media and similarly obtained little feedback. In general, regional and State officials said that it will take

time to increase the public’s understanding and interest in focusing on the States’

and EPA’s long-term environmental goals and performance, rather than only on specific activities or conditions of more immediate concern.

Improved Communication Among Participants About Program Priorities and Other

Key Matters

Nearly all EPA regional and State officials that we interviewed said that a key

benefit of NEPPS has been improved communications among program participants

and the fostering of a better Federal-State working relationship. Members of the

EPA Chicago Regional Office’s NEPPS coordinating committee (which represents all

media and enforcement programs), said that NEPPS has provided the region with

a better understanding of States’ strategic plans, which has assisted the States

when negotiating a change with the region. In addition, NEPPS has encouraged regional and State staff of all media programs to discuss their programs jointly, a

practice that has helped program officials at both the State and regional level gain

a better understanding of each other’s needs. According to State and regional officials, this higher level of understanding has been a major factor that has helped

them to improve the way they set priorities across programs.

Headquarters enforcement officials also point to regional efforts to try to use

NEPPS as a vehicle to more actively engage the States in joint enforcement planning and priority-setting. EPA’s Boston Regional Office, for example, systematically

arrayed a number of multimedia enforcement and compliance assistance programs

for discussion and possible incorporation in States’ fiscal year 2000 Performance

Partnership Agreements. In each case, the priority the agency attaches to the program is indicated as well as the type of collaboration EPA anticipates having with

the States. 27 Similarly, the officials cited as another example a Chicago Regional

Office’s analysis of its Performance Partnership Agreement with Minnesota which

describes, on a media-specific basis, the State’s and EPA’s commitments to participate in mutually agreed-upon enforcement and compliance assurance activities to

realize jointly determined environmental objectives.

Senior officials and program managers in all six States we visited also agreed that

the NEPPS process has improved EPA-State communication and overall relations.

Many also noted that NEPPS highlights and enhances communication among their

own State media programs, as well as among EPA regional media programs. Noting

that improved communications can solve 95 percent of their State-regional problems, Minnesota officials have instituted routine monthly conference calls with

EPA’s Chicago Regional Office to address waste issues and are considering implementing the same process for their other media programs. EPA Chicago Regional
97

Office officials told us that they are also relying increasingly on oral communications with their States in an effort to encourage a more collegial and efficient approach to resolving problems.

Future Prospects for Success Depend on Further Progress

Officials in each of the case study States that we interviewed agree that the concept behind NEPPS, and its potential for achieving a more effective partnership between EPA and the States, is worth pursuing. Yet while acknowledging some benefit from their participation, they also consistently expressed the view that the benefits should be greater; that the program has yet to achieve its potential; and that

improvements are needed. Of particular note, providing States with the incentives

envisioned initially under NEPPS, including the differential oversight as discussed

in chapter 4, was seen by almost all of the State officials we interviewed as critical

to the future success of the program.

This view is reinforced by the resource commitment that some States feel has

been required to take part in the program. Oregon officials, for example, said that

they invested a significant amount of their resources in conducting a State environmental self assessment and other activities to participate in the NEPPS-Performance Partnership Agreement process. To date, however, these officials noted that

they have not gained the advantages of reduced oversight leading to increased self

management of their delegated programs and greater autonomy to focus on State

priorities. Similarly, in explaining a major reason for their decision not to participate in the program, the Deputy Director of Michigan’s Department of Environmental Quality noted that the heavy investment cited by participating States and

the modest benefits achieved by those States has led to the Department’s decision

to wait and see how NEPPS evolves. The Deputy Secretary of Pennsylvania’s Department of Environmental Protection had similar reasons for that Department’s

nonparticipation, noting that the department had several State initiatives underway

that were important and, therefore, they would be reluctant to shift resources to

NEPPS. The Deputy Secretary said that Pennsylvania is reserving judgment as to

its future participation in NEPPS, noting that if greater progress and benefits under

NEPPS accrue over time, it may become advantageous for the State to participate.

For their part, EPA officials acknowledge the States’ desire for greater program

flexibility and autonomy, but believe they are not in a position to grant it unconditionally. Specifically, the officials maintain that additional program flexibility will

have to be accompanied by demonstrated, measurable assurances that statutory and

regulatory requirements and program objectives will still be met.

As we noted in chapter 4, both EPA and State officials have pointed to the difficulty of developing specific, nationwide criteria to be used in determining the appropriate level of regional oversight of State programs under NEPPS. However,

given the importance to the program’s future of making progress on this issue, it

may be helpful for EPA and State officials to collaborate in developing some type

of non-binding guidance that could be used in guiding the negotiations of individual

regions and States on this sensitive issue.

In addition to this overriding concern about oversight, NEPPS participants believe

that the benefits that have accrued from their participation in NEPPS have not

reached their full potential. For example, many participants have noted improvements in communication under NEPPS, but said that further improvements are

needed to ensure that all key EPA offices provide timely input into Partnership

Agreement and Partnership Grant negotiations to help State agencies understand

whether their agreements have full buy-in of all EPA offices. Similarly, while Partnership Grants allow for greater flexibility in shifting funds among media programs,

States have thus far taken advantage of this opportunity to only a limited degree.

To some extent, the base program requirements under individual programs combined with financial constraints have limited States’ flexibility in shifting funds as

freely as they would like. However, other factors may explain the problem as well,

including specific grant regulations, resistance by EPA headquarters and/or regional

staff, or similar resistance among State agencies themselves.

Joint EPA-State Evaluation Process Needed to Improve NEPPS

These concerns pose challenges for the future of the program. However, we believe

such challenges are to be expected in the context of a new program that strives to

chart a new direction in the EPA-State relationship. Importantly, the need to address such challenges was anticipated by the 1995 Agreement that launched the

program, which called for a joint evaluation system for EPA and the States to review the results of their efforts to ensure continuous improvement.

To some extent, such a joint evaluation process was undertaken to produce the

core performance measures. The intergovernmental committees that developed these
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28State and EPA efforts to augment States’ roles in leading Superfund cleanups are discussed

in our 1997 report, Superfund: Stronger EPA-State Relationship Can Improve Cleanups and Reduce Costs (GAO/RCED–97–77, Apr. 1997).

measures, composed of representatives of EPA and State agencies, produced an initial set of measures for fiscal year 1998 that was modified and improved in subsequent years. As noted in chapter 3, the measures approved for fiscal year 2000 are

widely viewed as substantially improved by both EPA and State officials. EPA’s and States’ recent efforts to improve their working relationship in cleaning up priority Superfund sites may offer another useful precedent for such an effort.

Reflecting a growing consensus among many in the administration, State government, and the Congress that States should take on more responsibilities for leading

priority site cleanups, EPA and representatives from different States formed a number of intergovernmental workgroups to recommend ways to overcome the key barriers toward this goal. 28 For example, a ‘‘State Readiness Workgroup,’’ composed of representatives of EPA headquarters and regional offices and State agencies, was

charged with clarifying the requirements and circumstances under which States

could be granted additional responsibilities to clean up these priority sites. Similarly, an intergovernmental ‘‘Assistance Workgroup’’ was also established to identify

the technical financial, administrative, and legal assistance needs of the States in

their efforts to take a lead role in successfully cleaning up Superfund sites. According to the Director of the State, Tribal, and Site Identification Center (within the

Office of Solid Waste and Emergency Response), the workgroups were particularly

useful in fostering collaboration among representatives of EPA’s headquarters and

regional offices involved in the cleanups in a manner that helped to identify where

the key problems were and what practices worked well to address them. The Director said that the results of the workgroups have since been incorporated into pilot

projects in seven States (and their corresponding regional offices) designed to increase States’ responsibilities in leading cleanups of these sites.

CONCLUSIONS

On the basis of information that can be learned from experiences to date of a

number of States and their corresponding EPA regional offices, we believe the systematic joint evaluation process called for by the 1995 Joint Commitment to Reform

Oversight and Create a National Environmental Performance Partnership System

should be initiated. The goals of this effort should be to (1) identify best practices

among participating States for dealing with the most challenging problems facing

the program and (2) eventually obtain agreement on actions that will improve and

expand the program. Such a process has already been used to develop and improve the Core Perform- ance Measures used in the NEPPS program, and has served as a successful model

elsewhere in EPA where new ideas have been developed and tested, and agreement

among diverse parties on their implementation has been reached. We believe a similar effort, which targets key issues affecting NEPPS progress and which involves

representation from EPA headquarters offices, EPA regional offices, and participating State agencies, could similarly help to expand both the participation in, and effectiveness of, this important program. The precise format to be used for this process (e.g., whether individual working groups should be established or whether a single committee composed of senior State and EPA officials should be used) should

be determined by EPA and State environmental leaders.

RECOMMENDATIONS

We recommend that the Administrator of EPA work with senior-level State officials to initiate a joint evaluation process that (1) seeks agreement on the key issues

impeding progress in developing a more effective National Environmental Performance Partnership System and (2) develops mutually agreeable remedies for these issues. Among the issues such a process could focus on are:

• developing a set of flexible guidelines, to be used as a tool by State and EPA

regional NEPPS negotiators, that could help to clarify the appropriate performance

expectations and other conditions that States must meet to achieve reduced oversight in carrying out their environmental programs and the type of reduced oversight (e.g., reduced frequency of reporting, greater autonomy in setting program priorities) that could be achieved;

• identifying what additional work is needed to address the challenges in implementing the Core Performance Measures recently negotiated by EPA and the Environmental Council of the States for fiscal year 2000, including how these measures

can best be reconciled with the measures adopted by EPA under the Results Act;
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• alleviating the resistance among some staff (both within EPA offices and among participating State agencies) toward implementing the National Environmental Performance Partnership System, through training and other strategies; • determining what appropriate steps should be taken by EPA and the States to allow for greater use by States of the flexibility envisioned under the Performance

Partnership Grant system to shift resources and funding among their media programs; • determining how effective public participation in the NEPPS process can best be ensured; • and developing ways to improve communication among EPA’s headquarters and regional offices and participating States to ensure that States are given a clear

and timely indication on whether key elements of their agreements pursuant to the

system have the full buy-in of major EPA offices.

AGENCY COMMENTS

EPA agreed with the report’s recommendation that EPA and State efforts to im- prove NEPPS should include training and other efforts to achieve the ‘‘cultural

change’’ necessary for greater success. The agency also pointed out that it recently

agreed with representatives of the Environmental Council of the States on a basic

outline of a joint evaluation process. We acknowledge this milestone and note that

further progress on the details of such a process, including the specific issues to be

addressed and a timetable for addressing them, will be important steps toward improving NEPPS.

EPA also commented on our recommendation that EPA and State environmental

leaders should develop guidelines that would help to clarify, for EPA and State negotiators, the appropriate performance expectations that States must meet to

achieve reduced oversight in carrying out their environmental programs and the

type of reduced oversight (e.g., reduced frequency of reporting, greater autonomy in

setting program priorities) that could be achieved. EPA noted that while it agreed

with this recommendation in principle, the agency and the States believe that each

State’s Performance Partnership Agreement should specify the degree of oversight

necessary to accommodate the unique environmental problems and varied program

capabilities of that State. We agree that oversight arrangements should be negotiated between each State and its corresponding regional office in a manner that accounts for that State’s unique circumstances, and that these arrangements should

be specified in the Performance Partnership Agreement. We continue to believe,

however, that nonbinding national guidance-to be agreed upon in advance by EPA

and State environmental leaders-would be useful in introducing objective parameters to be considered by regional and State negotiators as they seek agreement over

this sensitive issue.

APPENDIX I

COMMENTS FROM THE ENVIRONMENTAL PROTECTION AGENCY AND OUR EVALUATION

The following are GAO’s comments on the Environmental Protection Agency’s

(EPA) letter dated May 20, 1999.

1. We have clarified, in the executive summary and chapter 5, that EPA officials

and representatives of the Environmental Council of the States have recently agreed

to certain characteristics of a joint evaluation process, and that further progress (including decisions on the specific issues to address and a timetable for addressing

them) would be important steps in improving NEPPS.

2. We have amended the report to reflect the agency’s expectation that its April

1999 2-year guidance should allow the regions and States to consider national program priorities earlier in their partnership agreement negotiations, and thus limit

the need to renegotiate priorities that had been previously established. At the same

time, the report still conveys agency officials’ views that the guidance will not necessarily prevent other circumstances, which are out of EPA’s control, from necessitating the reopening of an agreement.

3. Citing the observation in chapter 3 that (1) EPA has focused on outputs to meet

its obligations under the Results Act while supporting a transition to outcome-based

management under NEPPS and (2) these conflicting priorities have led to confusion

that hinders performance partnerships, EPA stated that, to the contrary, both the

Results Act and NEPPS encourage the development of outcome measures and outcome-based management. We acknowledge the shared objective of NEPPS and the

act in focusing on results. The key word, however, is implementation: as we have

documented in other recent work, the measures EPA has used in its implementation
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of the Results Act have thus far been heavily output-oriented and therefore convey

priorities that are often in conflict with the more outcome-oriented measures being

employed under NEPPS. We acknowledge the agency’s ongoing efforts to orient its

Results Act-related measures increasingly toward outcomes, and believe that further

progress toward this end will help to alleviate this problem. In addition, we modified

our discussion of this issue in Chapter 3 to note that the April 1999 Addendum to

the Joint Statement, co-signed by EPA and the Environmental Council of the States,

States that core performance measures and other current reporting requirements

will be relied upon to satisfy EPA’s Results Act-related data needs.

4. We agree that oversight arrangements should be negotiated between each State

and its corresponding regional office in a manner that accounts for that State’s

unique circumstances, and that these arrangements should be specified in the

State’s Performance Partnership Agreement. We continue to believe, however, that

nonbinding national guidance-to be agreed upon by EPA and State environmental

leaders-would be useful in introducing objective parameters to be considered by regional and State negotiators as they seek agreement over this sensitive issue.

5. EPA’s comment draws a clear distinction between issues associated with reporting burdens and other issues related to EPA’s oversight of State environmental programs. We acknowledge circumstances in which EPA and a State collaboratively

pursue strategies to reduce reporting requirements that both agree are unnecessary,

duplicative, or inefficient; and that such circumstances could be viewed as outside

the two parties’ oversight arrangement. However, the distinction between this activity and oversight is not always so clear. Specifically, where States and EPA have

disagreed on the need for data not required by statute and viewed by States as extraneous, and EPA has continued to require reporting of such data, States have

often characterized the issue as, in their view, a questionable exercise of EPA oversight.

STATEMENT OF R. LEWIS SHAW, DEPUTY COMMISSIONER, SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL AND PRESIDENT, ENVIRONMENTAL COUNCIL OF THE STATES (ECOS)

Mr. Chairman and members of the committee, thank you for the opportunity to

appear before you today. My name is R. Lewis Shaw, and I am the Deputy Commissioner of the South Carolina Department of Health and Environmental Control. I

have 29 years of service to my State with the last 16 of those in my current position

as the State environmental director. Today, however, I am here representing the

views of the Environmental Council of the States (ECOS) of which I am the President.

ECOS is the national, non-profit, non-partisan association of the State and territorial environmental agencies. The States and territories are our members and the

people we represent are the leaders of the various State environmental agencies.

Our mission is to:

1.Champion the cause of States, and

2.Provide for the exchange of ideas, views and experiences among the States, and

3.Foster cooperation and coordination in environmental management, and

4.Articulate State positions to Congress, Federal agencies and the public on environmental issues.

Other details about our association are provided in the attachments to this testimony, which I ask be entered into the record.

I am here to tell you of some of the accomplishments that States have made in

environmental protection—accomplishments that are not widely known. I will make

four main points:

1)States now implement most of the delegable environmental programs, gather

most environmental data, and conduct most enforcement and compliance actions;

2)States are paying for the largest share of environmental protection;

3)States implement many of their own environmental programs, and have become

the chief architects of and advocates for innovations; and

4)States are committed to an environmental partnership with the Federal Government, but have suggestions for how to improve that relationship.

I’d like to now expand on those four points:

First, States now implement most of the delegable environmental programs. This

is good news, because that is what Congress intended when it enacted laws such

as the Clean Air and Clean Water Acts. States now have primary responsibility for

carrying out those laws. As of 1999, about 70 percent of the major programs that

could be delegated to States had been delegated. This means States are running

most of the clean water programs, clean air programs, drinking water programs,
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and waste clean up programs that Congress created. As you can see from Chart 1

(on display and attached), much of this growth was in the 1990’s, and in particular

between 1993 and 1998 a 5-year period in which State delegations grew by almost

75 percent.

As part of this responsibility, States are also collecting most of the environmental

quality data. Brent Bradford, my colleague from the State of Utah will be speaking

more about this today.

We also conduct most of the environmental enforcement activities. In recent

years, States have averaged between 75 and 80 percent of all enforcement actions

taken by EPA and the States combined. We conduct at least 97 percent of all enforcement inspections. But we also conducted many other enforcement actions and

compliance assistance that EPA may not count for one reason or another. Last year,

Congress directed ECOS to conduct research on the issue of counting enforcement

and compliance activities and report back to Congress. We are working on this

project now and expect to report to you early next year.

My second point is that States are paying for most of this environmental protection. As you can see in chart 2 (on display and attached), State spending for environmental protection has grown dramatically since 1986. In 1986 States spent about

$5.2 billion on environmental protection and natural resources. Congress, through

EPA, provided just over $3 billion of that, almost 58 percent. But by fiscal 1996,

a very different story had emerged. States spent about $12.5 billion, with the EPA

providing about $2.5 billion, or about 20 percent. During the 10-year period from

1986 to 1996, State spending on the environment increased about 140 percent, while

total EPA funding to the States decreased about 17 percent. Most of the decline is

attributable to reductions in water infrastructure support programs. In 1996 the

States spent nearly twice as much ($12.5 billion) on environment/natural resources

as the entire EPA budget ($6.5 billion).

My third point is that States conduct many other non-delegated programs on their

own, and that we are great at innovation. For example, in South Carolina, we have

our own laws, rules and practices on the protection of shellfish beds that are not

part of the delegated Federal system, but are very important to our State. Obviously, these kinds of laws vary State to State, but they show the commitment of

the States to the environment. According to the National Conference of State Legislatures, the States passed into law over 700 environmental bills in 1997 alone. At

least half of these dealt with non-delegated environmental programs such as pollution prevention and solid waste management (chart 3 on display and attached). As

the chart shows, for example, most of the hazardous waste sites in the country are

actually being regulated and cleaned up under State authority. Another study by

The Council of State Governments found that 80 percent of the States had at least

one Clean Air Standard that exceeded the Federal minimum standards. In South

Carolina, for instance, our toxics list includes 258 constituents, compared to 188 on

the Federal list.

States implement most environmental protection programs, so we are often the

first to recognize innovative solutions for environmental problems. Each year for the

past 3 years, ECOS has compiled State program and implementation innovations.

These cover the complete range of environmental protection, including delegated

and non-delegated programs. ECOS has now compiled hundreds of these innovations. Some of these State ideas have been nationally recognized by Innovations

Awards programs such as those of The Council of State Governments and Harvard

University.

States are committed to the State-Federal partnership in environmental protection. But we believe that the time for command-and-control, top-down programs has

ended. Perhaps it should be replaced by a set of mutually agreed upon national

goals and standards, which would be achieved by the States in the manner we deem

most appropriate, and supplemented by local goals and standards that meet the specific needs of the States. After all, you are not likely to see the same environmental

problems in South Carolina as you would in Utah because the States have such different ecologies. Our final chart shows some of the differences that we think will

lead to a more harmonious relationship and better environmental protection (see

display chart and attached).

Some people still believe that it’s 1970 and that the States can’t be trusted to protect the environment. We believe the facts presented here today give the real story

States are leaders in environmental protection and committed to protecting the

health and environment of the citizens we serve.

Mr. Chairman, thank you again for the opportunity to appear before you today.

I am happy to take any questions.
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1 ECOS has prepared two papers detailing the legislative history of the Clean Air Act and the

Clean Water Act. We expect to publish these in early summer 1999. 2 Currently presented on the ECOS u eb page at: http://www.sso.org/ecos/states.htm

3These are averages for the delegable programs under each Act for which ECOS has information.

THE ROLE OF STATE GOVERNMENTS IN ENVIRONMENTAL PROTECTION HAS INCREASED

DRAMATICALLY OVER THE LAST 10 YEARS.

(by R. Steven Brown)

A remarkable, and largely unnoticed, change in environmental protection has occurred over the past five to 10 years. The States have become the primary environmental protection agencies across the nation. Much has been written about EPA’s

role, or about State-EPA partnerships. This article seeks to tell the States’ story.

Over the past year with help from other State- based organizations (many of

which have articles in this issue), ECOS compiled a set of data that shows a remarkable maturation of the policymaking and regulatory capabilities of the State

environmental agencies. This article presents those data in five categories: delegation, fiscal, enforcement, information gathering and policymaking.

Delegation

Congress intended for the States to administer most Federal environmental programs. 1 Generally, a State petitions the EPA to administer one of the delegable programs. This process is commonly known as ‘‘delegation,’’ or more legally as ‘‘assumption,’’ or ‘‘primacy.’’ The Governor files a petition after the legislature has passed

authorizing legislation that must be at least as stringent as the Federal standard

and after the State has shown that it has adequate resources.

Most Federal programs are actually delegated in a piecemeal fashion, however.

For example, a State may have created a program for new source performance

standards, but may not have everything in place yet to run the hazardous air pollutant part of the Clean Air Act. Such a system aids the States in that it allows a

State to proceed incrementally, but it complicates the discussion about what is delegated and which level of government runs which program.

Nevertheless, it has become clear that the delegation of environmental programs

to the States has increased dramatically in the past 5 years. In the summer of 1998,

ECOS completed a delegation study for 22 of the programs from most of the major

delegable Federal acts. 2 This study showed the number of States with delegated

programs for the following:

• Clean Air Act: 42 States 3

• Clean Water Act: 34 States

• Waste (RCRA): 37 States

• Drinking Water: 39 States

• Pesticides (FIFRA): 39 States

The overall delegation rate to the States in mid-1998 was about 65 percent, and

about 74 percent for the major environmental programs. This means, for example,

that of the portions of these Acts that could be delegated, about 74 percent had been

delegated.

Contrast this delegation rate to that of 1993, when EPA had delegated 39.5 percent of 22 environmental programs to the 50 States. By 1998, EPA had delegated

757 of 1,166 possible Federal environmental programs to 53 States and territories,

nearly a 75 percent increase from 5 years prior. States also operate many of their

own, nondelegated environmental programs. Some of the rapid increase was attributable to programs like the wellhead protection program of the Safe Drinking Water

Act (from 8 to 36 States) and the New Source Review program of the Clean Air Act

(from 15 to 42 States).

Fiscal

With such an increase in delegated programs, one might expect a parallel increase

in both EPA and State funding to support the new programs. Starting with fiscal

1986, the Council of State Governments periodically researched each State’s budget

to compile total State spending for environmental protection and natural resources

for each State. Data exists for 1986, 1988, 1991, 1994 and 1996. This State spending

can be coupled with EPA and U.S. Office of Management and Budget data on funds

supplied to the States to present a picture of the source of environmental protection

funds in the States.
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4 R. Steven Brown, et al., Tile Resource Guide to State Environmental Protection. Lexington,

Kentucky: The Council of State Governments, 1988. Page 93. 5 ECOS calculation, based on U.S. Office of Management and Budget data. Some funding is

also provided to the State environment/natural resource agencies by other Federal agencies, but

ECOS’ preliminary research indicates that most Federal funds are from EPA. 6Karen Marshall, et al. The Resource Guide to State Environmental Protection Fifth Edition.

Lexington, Kentucky: The Council of State Governments, 1999. p.32 7 As per footnote 4.

8 EPA believes it has ‘‘held the States harmless’’ by protecting the State categorical grant

budgets during times of budget cuts. EPA has stated to ECOS that these grants are about S850

million per year. ECOS has used OMB numbers (which are higher) to reflect total EPA funding

provided to the States for any purpose. Thus, total EPA funding to States has decreased, while

categorical grants are reported to have increased over the past 10 years. 9 Administrative actions and judicial referrals.

10 US EPA, Office of Enforcement and Compliance Assurance; February 18,1998, web

page:http://es.epa.gov/oeca/96accomp/appa6.html. 11 EPA has told ECOS that it is more likely to spend its time on large, complex enforcement

cases, which it believes have a significant qualitative impact, if not a quantitative one. 12 Environmental Reporting Data in EPA’s National Systems: Data Collection by State Agencies. EGOS/EPA, 1999. In press. 13 Aerometric Information Retrieval System (AIRS) and AIRS Facility Subsystem (AFS). Essentially, AIRS/ AFS is states’ data base.

In 1986 States spent about 55.2 billion on environmental protection and natural

resources. 4 The EPA provided just over $3 billion of that, almost 58 percent. 5 But

by fiscal 1996, a very different story had emerged. States spent about $12.5 billion, 6

with the EPA providing about $2.5 billion, or about 20 percent. 7 During the 10-year

period from 1986 to 1996, State spending on the environment increased about 140

percent, while total EPA funding to the States decreased about 17 percent. 8 Most

of the decline is attributable to reductions in water infrastructure support programs.

In 1996 the States spent nearly twice as much ($12.5 billion) on environment/ natural resources as the entire EPA budget ($6.5 billion).

It should come as no surprise that the States have also increased the size of their

environmental staff over this 10-year period. In 1986 the State agencies expended

about 38,000 work-years, but by 1996 that effort had increased to about 61,000

work-years, almost a 60 percent increase.

Enforcement

States are the primary enforcers of environmental law for delegated programs.

The States also enforce many State environmental laws that are not related to the

national laws. EPA tracks and reports the enforcement actions that it and the

States take each year, but only for delegated programs—enforcement actions that

the State takes on non-delegated programs are not counted. Furthermore, EPA may

not count some State enforcement actions for a variety of other reasons, such as differences in data management. Even with those limitations, over the past 10 years

the States have consistently conducted about 75 percent of the enforcement actions 9

taken, with EPA doing the rest. 10 In recent years, the State workload has risen to

80 percent of the actions 11.

Many States have also emphasized ‘‘compliance’’ over ‘‘enforcement.’’ Methodologies for counting compliance assistance activities appear to still be inadequate and

are a matter of current research by EPA and the States. As a result, it appears EPA

and many States themselves do not track compliance assistance efforts that the

States undertake. Unfortunately, this means that States and EPA may not be able

to count some of the most important ‘‘enforcement actions’’ that States undertake.

While EPA data shows that States perform most of the administrative enforcement

actions, we know the number to be even higher because compliance assistance activities are not part of the enforcement action count.

Information

One of the most visible ‘‘products’’ of any environmental protection agency, State

or Federal, is information. Each State agency gathers, compiles, houses and analyzes a great deal of environmental information, both for delegated programs and

for other environmental purposes important to them. When a State is delegated a

program, it usually agrees to forward key information to EPA to one or more of 13

national environmental data bases that EPA maintains. Six of these national data

bases house environmental quality data (the others have toxicology information, or

information about regulated facilities). In the summer of 1999, ECOS and EPA expect to jointly publish a report that describes the source of the data in these six

national data bases 12. For example:

• Air data: >99 percent of EPA’s data comes from States 13
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14Safe Drinking Water Information System (SDWIS), 99 percent; Permit Compliance System

(PCS—a component of the National Pollution Discharge Elimination System), 83 percent of

major sources and 94 percent of minor sources; and STORET, 90 percent. 15 Biennial Reporting System (BRS), 92 percent. 16 1998 State Environmental Innovations. Washington, DC: ECOS, 1998. 17George Hagevik and C. Kohler, ‘‘Trends in State Environmental Law 1997,’’ NCSL Report,

1998.

• Water data: ?91 percent of EPA’s data comes from States 14

•Hazardous waste data: >92 percent of EPA’s data waste data comes from

States 15. That is, over 94 percent of all the environmental quality data in EPA’s national data bases was first collected and compiled by State environmental agencies. The

States and EPA share this data for a variety of purposes (for example, environmental performance measures).

The States also collect additional environmental quality data that is not contained in national data bases. Some of this data is collected for delegated programs, but

is not usually forwarded to EPA because EPA does not require it (for example,

water quality reports from minor point sources). Some data is collected because of environmental laws that States have that are

not related to delegated programs (for example, most solid retaste, water quantity,

natural resource management, growth management or land use planning data).

ECOS has not yet assessed the amount of this other data that States collect, but

w e believe it to be a significant amount, perhaps even exceeding the environmental

data reported to EPA.

Policy Making

States implement most environmental protection programs, so they often see inno- vative solutions for environmental problems first. Each year since ECOS began its

annual meetings (starting in 1994), it has compiled the program and implementation innovations that ECOS’ members have presented. These cover the complete

range of environmental protection, including delegated and non-delegated programs.

ECOS has now compiled hundreds of these innovations. . 16 Some of these State

ideas have been nationally recognized by Innovations Awards programs such as

those of The Council of State Governments and Harvard University. Our members

have consistently rated this kind of peer- sharing as one of the most important benefits of ECOS.

However creative and inventive State agency solutions can be, from time to time

legislative solutions are more appropriate. States have not shied affray from implementation of new environmental laws. According to the National Conference of

State Legislatures, the States passed over 700 environmental bills in 1997 alone. 17

At least half of these dealt with non-delegated environmental programs such as pollution prevention and solid waste management.

Conclusion

States have proven to be serious about their responsibilities as stewards of the

environment, and have more than fulfilled the expectations of the 1972 Congress

that drafted some of the original legislation envisioning the State role in the Federal

environmental protection system. In fact, almost 30 years later, the States are leaders in environmental protection. Whether the yardstick is delegation, fiscal, enforcement, information gathering or policymaking, the States are responsible for an increasing, and perhaps increasing, and perhaps surprising, amount of the work done

to protect the nation’s environment.

STATE AIR POLLUTION CONTROL PROGRAM SURVEY 1999

THE COUNCIL OF STATE GOVERNMENTS, LEXINGTON, KENTUCKY

HTTP://WWW.CSG.ORG

Executive summary

From the lofty heights of Capitol Hill in Washington D.C., it may appear that the

Federal Government makes all the important decisions about clean air policy. After

all, U.S. EPA regulations and the detailed provisions of the 1990 Clean Air Act regulate pollutants that float in the air, pollutants released by industrial and mobile

sources (cars and trucks), and the type of fines and sanctions levied against violators. From the Capitol Hill perspective, all these national standards and regulations

are absolutely necessary. According to the cynics, if left to their own devices the

States would adopt weaker and weaker environmental protection laws, creating a
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‘‘race to the bottom’’ in which States compete for economic growth by enticing industry with less stringent—and less costly—regulations. regulations.

Reality, however, is often at odds with popular perception. In 1998, the Environmental Policy Group at The Council of State Governments and the University of

Kentucky Martin School of Public Policy and Administration conducted a survey to

review State clean air programs, funding and regulations. Overall, the study found

that the Capitol Hill perspective on clean air programs can be misleading. These

days, the States conduct most of the important clean air activities, provide the bulk

of air program funding and oversee a diverse array of air pollution control activities.

Most importantly, despite perceptions to the contrary many States have adopted

clean air standards and programs that are more stringent than U.S. EPA requirements due to each State’s unique interests. So much for a ‘‘race to the bottom.’’

US EPA and the States

The States and the U.S. EPA share responsibility for nearly all air pollution control activities in the nation. Each State submits a State Implementation Plan to the

U.S. EPA outlining its clean air program. For each major clean air activity—setting

air quality and emissions standards, monitoring emissions and ambient air, enforcing policy, and issuing permits—the U.S. EPA sets minimum criteria for State programs. If the U.S. EPA determines that a State’s program meets these standards,

it approves the SIP and grants the State full regulatory authority. If the plan does

not meet the minimum criteria, the U.S. EPA can preempt the State program and

create its oven air pollution program for the State. The U.S. EPA can preempt all

or part of the State program, depending on how adequately it addresses the minimum criteria.

Setting Clean Air Standards

The CSG survey asked respondents to indicate whether their States’ clean air

standards exceeded the U.S. EPA minimum criteria in a variety of areas, from ambient air quality to emission limits for new sources. Ambient air quality standards

are target levels which govern pollutant concentrations in the air that people

breathe outdoors. The U.S. EPA has set National Ambient Air Quality Standards

for six ‘‘criteria’’ pollutants that pose significant health hazards if people breath

enough of them. The NAAQS pollutants are ozone, particulate matter, carbon monoxide, sulfur dioxide, nitrogen dioxide and lead.

The States can expand on U.S. EPA criteria by setting more stringent ambient

standards for criteria pollutants and by establishing ambient standards for pollutants not listed in the NAAQS. Of the 38 States responding to the CSG sure ey, six

( 16 percent) reported that their standards for one of the NAAQS pollutants exceeded the U.S. EPA’s minimum criteria, and six more (16 percent) reported that

their standards exceeded the criteria for two or more pollutants. Only two States—

Michigan and Illinois—indicated that they did not have U.S. EPA authority to implement the NAAQS program, but they expected authorization in the near future.

Surprisingly, 24 of the 38 responding States (63 percent) have set ambient standards for pollutants other than those regulated by the U.S. EPA’s NAAQS standards.

These States have set standards for pollutants such as hydrogen sulfide, calcium

oxide and odors.

The survey shows that States are exceeding U.S. EPA standards in other areas.

Eight of the 38 responding States (21 percent) reported that their emissions standards for new sources were more stringent than the U.S. EPA’s New Source Performance Standards. And 25 States (66 percent) reported that their programs for monitoring ambient air quality exceeded Federal minimum requirements.

The States have also made considerable progress regulating hazardous air pollutants, which are thought to pose public health risks. The U.S. EPA has long sought

to improve HAP regulations, and the 1990 Clean Air Act created an entirely new

regulatory regime for 189 identified hazardous air pollutants. Thirty-three of the 38

responding States (87 percent) have received authority from the U.S. EPA to administer the hazardous air pollutant program, with some States again exceeding Federal requirements. Eighteen States (47.4 percent) regulate hazardous air pollutants

in addition to those listed by U.S. EPA and another 18 regulate additional sources

of hazardous air pollutants.

In a true ‘‘race to the bottom,’’ no State would voluntarily enact stricter NAAQS

standards or regulate nonmandatory pollutants because doing so would risk losing

economic growth to States with more lenient regulations. The CSG study, however,

shows that in many different areas of clean air policy States have adopted standards and programs that are more stringent than what the U.S. EPA requires for

SIP approval.
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Funding State Clean Air Programs

Title V of the 1990 Clean Air Act mandated important changes in how States fund

their clean air programs. Title V requires States to issue operating permits for every

major emissions source specifying allowable levels of pollutant concentrations and

the applicable emission control strategies. Title V also requires States to charge a

fee of at least S25 for each ton of pollutants emitted to help States fund their clean

air programs. The goal of Title V is to facilitate enforcement by centralizing regulations that apply to each source of pollution.

The major categories of funding sources for State air quality programs are State

general funds, dedicated State funds (such as lottery proceeds or special environmental taxes), fees (including Title V permit fees), enforcement (fines and penalties),

EPA/Federal grants, and other (usually mobile source) income. Title V permit fees

have become the most important source of State air program funding, accounting

for 57 percent of the total. Overall, the States still rely on EPA/Federal grants, at

22 percent of the total, the second largest funding category. State general funds are

another major source of clean air funding at 12 percent of the total. The other budget source categories—dedicated State fund (7 percent), enforcement (2 percent) and

other (1 percent), make up only a small percentage of State clean air funding.

State air program expenditures

The survey also investigated how States spend their air pollution control funds.

On average, States spend 24.7 percent of their budgets on permitting activities, 15.8

percent on ambient air monitoring, 12.8 percent on enforcement, 12.1 percent on administration, 10.3 percent on source monitoring, 6.3 percent on technical assistance/

industry outreach, 5 percent on policy analysis, 3.2 percent on environmental

science research, 2 percent on community outreach, and 9.4 percent on other categories (usually mobile source issues). Many States estimated income and expenses,

since they do not record the budget expenditures and sources in the categories listed

in the survey.

Conclusion

The 1990 Clean Air Act contained a series of challenges for State clean air programs. The Title V permit section required many States to restructure their programs, including their regulatory structures and enforcement approaches. The HAP

program expanded the scope of State clean air regulations to a vast new array of

pollutants and sources. For the most part, States have met these challenges. Title

V permit fees have become the most important source of State air program funding,

as the 1990 Clean Air Act intended. By 1998, the U.S. EPA had granted the States

authority to administer the vast majority of air pollution control programs, including the expansive HAPs program.

Most importantly, however, is the obvious intent of the States to pursue their own

environmental protection agenda according to their unique circumstances. The CSG

study shows that in many policy areas the States have gone beyond minimum Federal requirements to become leaders in establishing and implementing clean air policy. Rather than racing to the bottom, the States seem to be vying for the lead in

protecting the health of their citizens and ecological resources in a manner as

unique and diverse as the States themselves.

RESPONSES BY R. LEWIS SHAW TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. The South Carolina Deputy Commissioner and ECOS President stated

in his testimony that the time for command-and-control, top-down programs has

ended and that it should be replaced by a set of mutually agreed upon national

goals and standards. He also emphasized that a ‘‘one size fits all approach’’ has outlived its usefulness. He further stated that local and regional environmental challenges differ and that requires that States have the flexibility to take the lead in

adopting environmental goals and standards, and apply innovative approaches to

achieve them. What is the new direction and how do we get there?

Response. First, in response to this all-encompassing question, we are already

heading in a new direction. For example, the respective roles of EPA and the States

have changed dramatically in recent years. As I indicated in my written testimony,

States have assumed the lion’s share of environmental responsibility and service delivery.

The new direction would have the States and Federal agencies working as true

partners in a Federal environmental protection system. States would have early,

meaningful, and substantial involvement in the development and implementation of

environmental statutes, national standards, policies, rules, programs, reviews, joint
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priority setting, budget proposals, budget processes, and strategic planning. Under

this new system, more programs would be delegated to the States and the appropriate Federal focus would be on program reviews and joint priority setting. EPA

would intervene in such State programs only in rare and egregious cases after the

State has had a chance to correct program defects. Where the Federal Government

requires that environmental actions should be taken, it would fund those actions,

and not at the expense of other State programs. And, this new direction would affirm that the Federal Government would be subject to the same environmental rules

and requirements, including the susceptibility to enforcement that it imposes on

States and other parties.

In this new direction, Congress and the EPA would provide the maximum degree

of flexibility in the design and implementation of environmental programs. The Federal Government would support nonregulatory approaches to meeting Federal

standards so that integrated environmental protection is encouraged and narrow

pollution control regulations are discouraged.

To avoid the ‘‘one-size-fits-all’’ standard and maximize limited resources, flexibility

would include the authority for States to prioritize environmental problems and allocate resources on a ‘‘worst-first’’ basis, as well as the authority to shift EPA-administered grant funds among programs to target local priorities. In addition, EPA

would look at the cumulative impacts of rules across program areas to ensure that

unintended burdens could be avoided and inconsistencies minimized.

A climate that encourages regulatory innovation is critical as we face the next

generation of environmental problems. The EPA and State environmental commissioners have agreed on the need to experiment with new approaches to improve our

nation’s environment, as embodied in the Joint EPA/State Agreement to Pursue

Regulatory Innovation, signed in April 1998. These new approaches can help us

identify cleaner, cheaper, smarter ways to ensure that all Americans enjoy a clean

environment and healthy ecosystems. Through this joint commitment, EPA and the

States agree to encourage, evaluate, implement, and disseminate ideas that seek

better ways of achieving our environmental goals.

Congress could play a key role in defining this new direction. For example, Congress could:

• Expand incentives to encourage innovation, such as regulatory process

changes (things like predictable, timely permitting and reduced administrative

burdens), economic incentives (for example, tax credits, fee waivers, new funding),

and greater use of environmental management systems;

• Actively explore both regulatory and nonregulatory innovations directed specifically at existing unregulated problems, such as nonpoint source pollution, habitat loss, diffuse use air pollution and urban sprawl;

• Enact legislation that provides protection to innovators pursuing agreed

upon goals and objectives while working ‘‘outside the box;’’

• Explore legislation directing EPA to approve delegated State programs that

vary from Federal regulations under specific environmental laws, submitted to

EPA under the regulatory innovation process described above, if the alternative

program approach meets criteria established through discussions among States,

EPA, Congress and other interested parties; and

• Enact legislation that paves the way for an integrating environmental statute.

The new direction would also involve the appropriate use of risk assessment and

cost-benefit analysis to improve environmental decisionmaking. My ECOS colleagues and I believe that the appropriate use of risk assessment and cost-benefit

analysis will enable Congress, EPA and the States to ensure that increasingly limited public resources are used most effectively and efficiently in achieving environmental objectives.

Question 2. What transformation does ECOS see that is needed in the FederalState structure to get us there?

Response. As my previous answer indicates, most of the change that we see as

required involves relationships and processes. There are, nonetheless, certain trends

that suggest structural changes that may be on the way.

For example, many of today’s challenges are multi-media and ecosystem-based,

rather than single-source, single-pollutant issues. Yet, it is the single source/pollutant focus of the earlier years that has dictated our current environmental management structure. As a result, Federal statutes and all the actions that have flowed

from them have had the effect of shifting pollution problems from one environmental medium to another. Contaminant-laden ashes and sludge from air and water

pollution control processes destined for landfills are a couple of examples.
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Meeting the challenges posed by meeting water quality criteria help illustrate the

need for a new structure. Making a stream habitable for a particular fish may involve improvements at a wastewater treatment facility, the reduction of polluted

runoff from farm fields and backyards, cleaning up contaminated industrial sites

along the stream bank, controlling nitrogen oxide and mercury emissions from

power plants many miles away, restoring wetlands and other fish habitat, preventing resuspension of toxics in the stream sediments—and more. Historically, these

have been isolated and independent activities in State and Federal agencies, with

little or no policy direction regarding the interplay among the problems or opportunities among the solutions.

Recognizing this integration problem, Minnesota has reorganized its environmental agency on a geographic basis, as opposed to along media lines (air, water,

and waste). In order for a truly systematic and flexible system to evolve, not only

the implementation but also the policy-making structure must change. We are concerned that Congress’ structure, for example, might preclude the kind of comprehensive policy direction necessary to tackle watershed quality issues or coastal and estuarine challenges that can involve multiple Federal agencies and a multitude of

State and local jurisdictions.

Question 3. The GAO points out that there is no guidance for negotiating a Performance Partnership Agreement (PPA) and that there is a wide variance in content

among the various agreements. Would some standardization be helpful in reducing

the transaction costs that accompany these individual negotiations?

Response. I am not surprised that an auditor would find the PPA process a bit

unstructured. But, that was the intent. The purpose of NEPPS was to move away

from the cookie-cutter mentality and embrace the reality of State priorities and

challenges. The fact that 38 States might negotiate completely different agreements

with EPA was expected and embraced by the States. Our concern all along was how

EPA would react to this new way of engaging the States.

Understandably, EPA was concerned about its obligations under Federal statutes

to ensure their mandates were met, the contents of individually negotiated PPAs

notwithstanding. Given that understanding, and appreciating the need for certain

information from the States on issues of national significance, ECOS has negotiated

Core Performance Measures (CPMs) with the principal program offices at EPA.

We, nonetheless, remain concerned about the interplay of the flexibility promised

by NEPPS and the relatively rigid expectations of the Government Performance and

Reporting Act (GPRA). ECOS has resisted attempts to transform the PPA process

into a dictation by EPA of its expectations—whether derived from perceived obligations under GPRA or other Federal mandates. The States accept that the Federal

environmental statutes provide the floor for PPA negotiations, and that the purpose

of the PPA process was to identify State priorities beyond the Federal requirements,

and find a way to build the capacity to meet those priorities.

Unfortunately, the NEPPS process is still, to large extent, simply laid on top of

the usual programmatic expectations. Some regions, for example, still require States

to submit program workplans in addition to PPAs. NEPPS also needs to be more

fully integrated into EPA’s strategic planning.

In order to address these sorts of issues, EPA and ECOS convened a NEPPS

Workshop late last year. Several short- and long-term issues were addressed. Rather

than look for standardization as a way to inject efficiency, participants agreed to develop a Best Practices Handbook that would describe successful PPAs, practices and

negotiations. This, rather than a more prescriptive process, would best meet each

State’s desire to shape a relationship with EPA that will meet their respective

needs.

Question 4. At the hearing held Tuesday May 2, 2000, by this committee, Senator

Baucus read that quote to you and asked you to respond. Each of you said that you

agreed with Mr. Jorling that there was a need for the Federal gorilla to remain in

the closet. Would you please elaborate on that response. In your elaboration, would

you please address the following issues:

Question 4a. Is it necessary for the EPA, in order to ensure that the States protect

the environment, to second-guess the States, or to be able to second-guess the

States, regarding every exercise of a State’s enforcement discretion, every permitting decision made by the States, and the like?

Response. The relationship between the States and EPA has in the decade of the

1990’s moved from that of supervisor/employee where the States often disagreed

with ‘‘management’’ on what were important tasks of the job and how to get the

job done to a partnership where both parties make joint decisions. In a true partnership, there is no place for one partner to second-guess the other on individual decisions. Instead, the overall performance needs to be evaluated on mutually agreed
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upon outcome based measures. If outcomes are not being achieved, the mutually

agreed upon corrective actions must be put in place.

Question 4b. Are the States able and willing to exercise reasonable, responsible,

and vigorous enforcement and permitting discretion if the States are no longer subject to second-guessing in every case?

I. If so, please explain why that is true today, even if it was not true in past

years.

II. If so, please support your explanation why that is true with examples showing

that the States have reasonably, responsibly, and vigorously enforced the following:

A. Federal environmental laws, and

B. State and local environmental laws, over which the EPA exercises no supervisory responsibility.

Response. The States have a demonstrated record of their willingness to exercise

enforcement and permitting authority. The States are responsible for between 75

percent and 80 percent of all enforcement actions taken by EPA and the States combined. The large majority of permits are issued by the States. While many of us are

concerned about ‘‘enforcement for enforcement sake’’ or bean counting, we realize

that a strong, credible enforcement program is vital to the overall mission of environmental protection. In order to be credible, enforcement actions must be fair and

equitable to all in the regulated community and must be timely in order to affectively deter repeat violations. Many States have developed penalty matrix to assure

fair penalties applied consistently to similar violations.

Since States have largely adopted Federal law and rules into State law and regulations, we do not distinguish between enforcing Federal law and State law. They

are equally enforced. In South Carolina, we have enforced against and fined the Department of Energy, Savannah River Site, just as we have enforced against and

fined a local church for demolishing a building without properly inspecting for asbestos. My Agency has fined other State Agencies such as the Department of Education, Department of Transportation, and Department of Corrections for various

violations of environmental rules over the years. These were obviously politically

difficult actions for us to take, but they show our commitment to utilize our enforcement authority fairly and equitably.

Question 4c. Are there alternative approaches to the current ‘‘second-guessing approach’’ that could still provide assurance to EPA that the States programs are protective of public health and the environment? For example, an approach that would

allow EPA to review, on a 5-year, 7-year, or 10-year, basis, the overall performance

of the State, and renegotiate the State’s delegated authority based on the level of

progress that the State had made toward a better environment during that period.

Response. I believe that it is appropriate for the States to continue to have periodic oversight from EPA. Being accountable for meeting long range goals and shorter term outcomes is an expectation all States should have. However, this process

should focus on overall performances and not on individual decisions made by States

on specific permits or enforcement actions. Such an approach should, however, allow

EPA to act where a State has made an egregious error and has failed to take corrective action after notice from EPA.

Question 5.Please indicate whether you agree or disagree with the following statement: ‘‘Reasonable people, acting in good faith, can disagree over the best method

for protecting the environment. For example, reasonable people can differ over the

proper mix of enforcement and compliance assistance as generic tools, and the proper use of a particular choice of method(s) in a specific case. Accordingly, the best

approach for gauging a State’s environmental protection program is to evaluate the

entirety of the State’s efforts, both enforcement and compliance assistance, over a

long period of time, and to determine whether the State has improved the condition

of the environment, rather than focusing on a particular case or series of cases, the

number of enforcement actions brought in a particular State (or any other similar

so-called ‘bean counting’ system), and the preference (if any) between enforcement

and compliance assistance.’’

Response. I agree with this statement. Without using the word ‘‘flexibility’’ this

statement captures the essence of why flexibility is so important to States in their

efforts to meet National and State environmental protection goals. As long as States

are demonstrating reasonable progress toward meeting those goals within mutually

agreed upon timeframes, then EPA should consider those State programs as acceptable.
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RESPONSES BY R. LEWIS SHAW TO AN ADDITIONAL QUESTION FROM SENATOR

VOINOVICH

Question. As a followup to Senator Baucus’ question regarding the 1993 testimony

of New York’s former environmental commissioner, Thomas C. Jorling, could you

please explain in what ways States have changed since 1993?

Response. At the 1993 hearing, Mr. Jorling mentioned that among the appropriate

roles for EPA was to play the ‘‘gorilla in the closet.’’ The implication—or perhaps

even the explicitly stated reason—was that at least some States lacked the commitment and capacity to meet their and the Federal Government’s environmental expectations. A lot has changed since 1993.

States have demonstrated their commitment to environmental protection by taking responsibility for 75 percent of the environmental programs that can be delegated to States. They have increased spending on environment and natural resources by about 140 percent in the last 10 years. And, States have increased their

work force devoted to the environment by about 60 percent in the same timeframe;

the State work force is now approximately three and one-half times the size of the

Federal work force.

Furthermore, the delegation of programs to the States is proceeding at an increasing rate, with approximately 75 percent of the total delegation having taken place

in the last 6 years. And finally, States perform the vast majority of environmental

protection tasks in America, including 80 percent or more of the enforcement actions; 97 percent of the environmental inspections; and actions which collect more

than 94 percent of the environmental quality data currently held by the EPA.

Rather than seeking an EPA gorilla, the States support the authorization or delegation of programs to the States and believe that when a program has been authorized or delegated, the appropriate Federal focus should be on program reviews and

joint priority setting. We further believe that the Federal Government should intervene in such State programs only in rare and egregious cases after the State has

had a chance to correct program defects or in cases where the State and EPA are

working cooperatively to force compliance or seek recompense from environmental

‘‘bad actors.’’ The recent Harmon decision suggests there is a solid a legal basis for

this view.

RESPONSES BY R. LEWIS SHAW TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. Chart No. 2 in your handout shows that overall expenditures on environmental protection and natural resource programs have increased, while EPA

grant funding has decreased. While this may be true, EPA is not the only government agency that provides environmental grants to States; the Department of Interior, the National Oceanic and Atmospheric Administration and the Department of

Agriculture all provide grant funding. Do you have any sense of how State expenditures compare to TOTAL Federal expenditures, not just EPA programs?

Response. As of Fiscal Year 1996, States spent, on average, about 1.67 percent

of the total State budget on environment and natural resources. This percentage has

increased steadily since 1986.

It is true that States receive funding from other Federal agencies. For those

States with surface mining activities, the Office of Surface Mining within the Department of the Interior can also be a significant source of Federal funding. The

vast majority of Federal funding our environmental agencies receive, however, is

from EPA. These other Federal agencies invest in natural resource activities, which

in many of the States are performed in agencies separate from the environmental

agency.

Unfortunately, I do not have a sense of how State expenditures compare with the

total Federal investment in State environmental and natural resource programs.

That is important information, and it might be worth asking the Congressional Research Service to develop those figures. We would be happy to assist.

Question 2. In your testimony, you argue that ‘‘the time for command-and-control,

top down programs has ended,’’ and perhaps it should be replaced by a set of ‘‘national goals.’’ Several of our environmental laws already set national goals; for example the Clean Water Act has a goal that all waters should be ‘‘fishable and swimmable.’’ How would the national goals you refer to in your testimony differ from the

goals already on the books?

Response. The Federal statutory goals are THE goals to which most of the State

and EPA programs are directed. Fishable and swimmable are great and appropriate

aspirations. Along the road to these goals are many others that relate to how one

achieves them, how one measures progress toward them, and how multiple agencies
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with responsibility coordinate to meet them. EPA’s GPRA goals and objectives are

examples of ‘‘goals within goals.’’ The States, as major players in achieving the will

of Congress, simply desire to be a part of Congress’ and EPA’s processes for identifying the best course for achieving these aspirations—including the interim goals

along the way.

Question 3. You propose a system in which the Federal Government and the States would agree upon goals, and the States would be left to achieve those goals.

Should the States fail to attain the agreed upon goals, what would be the appropriate response of the Federal Government?

Response. In so many ways, the States are already at the vanguard of the process to meet Federal as well as their own goals. States already manage 71 percent of

the programs that Congress has said are delegable to them, and over 75 percent

of that delegation has occurred over the past 6 years. Clearly, both the States and

EPA agree that the States have the will and much of the capacity needed to meet

Federal environmental goals. Furthermore, Congress has already made clear what

should happen to States who fail to live up to that responsibility. At any time a

State has demonstrated such an inability or incapacity, its authority should be revoked.

What the States seek is relative autonomy to meet the goals established by Con- gress, rather than be second-guessed step-by-step. EPA should evaluate overall

State performance on a regular basis, but day-to-day operation of the programs—

including permitting and enforcement and compliance activities—should be the sole

province of the States. Where irregularities and insufficiencies crop up, EPA should

discuss those programmatic shortcomings with the States, not inject itself into individual cases. In that way, EPA and the States can become true and most effective

partners, focusing their respective skills, abilities and responsibilities on achieving

desired environmental results.

RESPONSES BY R. LEWIS SHAW TO AN ADDITIONAL QUESTION FROM SENATOR

LAUTENBERG

Question. Do you agree with the notion that a highly performing State should get

less oversight than a State that is having difficulty implementing a program? Is

there a method of measuring performance agreed to by both EPA and the States?

Are States gathering and disclosing to EPA and the public the information necessary to evaluate the performance of the States? If so, which States are performing

well and which are not performing well?

Response. Generally, we agree that highly performing States should get less oversight than a State that is having difficulty implementing a program. But, more to

the point: this is a partnership, and States and EPA should be working together

to identify goals and helping each other to achieve them on an on-going basis.

NEPPS provides a great model for developing that cooperative working relationship.

EPA should evaluate State performance under delegated programs. Where there

are problems, the partners should work to resolve them. Under this system, States

with difficulties will naturally get more ‘‘oversight’’ and better performing States

will get less. The NEPPS agreement of 1995 envisioned this sort of ‘‘differential

oversight,’’ but because of the difficulty of measuring comparable State performance,

ECOS has not pursued this option with EPA. The States of Region 8, however, have

agreed with EPA to try such a program. Under their agreement, the States are

rated and ranked on their enforcement activities by a set of agreed upon performance measures. Those States ranking the lowest receive additional assistance from

EPA.

Each State in negotiating its Performance Partnership Agreement (PPA) with its

EPA regional office identifies the variety of performance measures by which its programs and efforts would be measured. This information is shared with EPA and the

public—often through State of the Environment reports—and is used as part of the

PPA evaluation process and as a basis for negotiating subsequent PPAs.

To my knowledge, there is no recent composite list of good and bad State performers. Typically, certain States excel in certain areas, whereas they and others may

be relatively weak in others. For example, States and the General Accounting Office

have identified significant shortfalls in the resources of some States to meet the

TMDL requirements of the Clean Water Act. States and EPA have jointly identified

significant resource shortfalls affecting their collective efforts to meet certain Clean

Air Act requirements. Gaps have been identified in several other programs, as well.

Furthermore, States should not be evaluated as good or bad performers based

solely on whether or not they have passed so-called ‘‘no more stringent than Federal

requirements’’ laws. The Natural Resources Defense Council in its testimony before
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your committee on May 2, 2000 tried to suggest that 19 States were deficient in

their environmental commitment because they had such provisions on the books.

These provisions include up-ramps that permit more stringent requirements if

deemed necessary. In any case, legislatures are free to change such a requirement

at any time. Most, if not all, States have some environmental requirements more

stringent than those mandated by the Federal Government. In 1997 alone, State

legislatures passed 700 bills concerning environmental issues.

STATEMENT OF ROBERT W. VARNEY, COMMISSIONER, NEW HAMPSHIRE DEPARTMENT

OF ENVIRONMENTAL SERVICES

Good morning Mr. Chairman and members of the committee. I am Robert W.

Varney, Commissioner of the New Hampshire Department of Environmental Services. I have held that position for the last 12 years serving under the last three Governors. I am also the immediate Past President of the Environmental Council of the

States (ECOS), and it is in that capacity which I appear before you today. I would

like to highlight the success of two cooperative programs that ECOS and the U.S.

EPA have developed jointly—the National Environmental Performance Partnership

System or NEPPS and the ECOS/EPA Regulatory Innovations Program.

NEPPS was created 5 years ago and grew out of an awareness that Federal and

State government could be more effective if they cooperated as equal partners in

planning, implementing and reporting environmental protection. The States and

EPA believed that they could be more efficient if priorities were determined jointly,

and that any planned environmental work was based upon an agreed set of goals.

The States directly implement most environmental laws and often have a better understanding of what is needed to effect environmental improvement. This demands

flexibility to respond to local circumstances so that environmental problems can be

addressed quickly and effectively. As a final component of the NEPPS concept,

ECOS and EPA wanted to reduce the data reporting burden by improving and

streamlining how information is gathered and reported from the States to EPA.

NEPPS agreements are called PPAs, Performance Partnership Agreements. In

New Hampshire, for instance, we just signed a 2-year PPA with the EPA-New England. Our comprehensive agreement sets forth the goals, activities and measures of

progress for a full range of Federal and State programs, which represents a comprehensive plan for all of our agency’s programs. I should mention that the full

agreement is available to the public on our Department’s website at

www.des.state.nh.us. ECOS is linking its home page to many other State NEPPS

agreements also available electronically.

To gauge how NEPPS is working, Congress has asked the National Academy of

Public Administration to study that question and provide you an answer in approximately 2 months. I appreciate this opportunity to tell you why we think it is successful? To date, 38 States have PPAs under the system. Many of them have been

accompanied by Performance Partnership Grants (PPGs) which allow some realignment of EPA funds so that limited resources can be allocated for the most pressing

problems. There now is a cadre of experienced environmental professionals who

have committed to the NEPPS process and whose work is dedicated to continually

improving the system. As a result of the third national meeting in Baltimore, Maryland, last fall, ECOS and EPA have re-committed to improving the NEPPS process

through renewed emphasis on improving how the agreements are forged and how

they are carried out. The commitment we have to NEPPS was renewed by the adoption of ECOS Resolution 00–5, at our national meeting on April 12, 2000. I have

attached a copy of the resolution to this testimony.

Regulatory Innovation Program

I would like to now talk about another cooperative State/EPA program which was

designed to stimulate innovative approaches to regulation. Here I distinguish ‘‘innovative approaches to regulation’’ from ‘‘technical innovation’’ which will be addressed

by another witness. The States have been a well stream for inventiveness. In dealing with specific circumstances unique to a State location or problem, we are forced

to develop innovative approaches. ECOS and EPA recognized that some of these innovations might be transferable to other locations with similar issues. In April 1998,

ECOS and EPA signed a ‘‘Regulatory Innovation Agreement’’ to review and approve

State proposals that exhibited such promise. In the words of the agreement itself,

‘‘this agreement presumes that EPA and the States will find ways to help good ideas

succeed, and that joint EPA and State efforts to promote and test new ideas will

result in the maximum benefit to the American people and their environment.’’
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Texas was the first State to submit a project under the Innovations agreement. The Texas Natural Resource & Conservation Commission (TNRCC) wanted to extend the opacity certification period for all air inspectors from 6 months to 2 years.

Measured opacity is a common test of air quality and a certain level of training and

certification are required to ensure the validity of test results. Texas argued that

opacity readings are not used often enough in enforcement actions to justify the

hundreds of person-days lost for training and certification each year. TNRCC and

EPA agreed to reduce the number of opacity certified inspectors from approximately

100 to 50 each year, thus freeing up 75 more person-days to do facility inspections.

This innovative tradeoff is now transferable to other States wanting to explore the

option.

This example demonstrates the goal of identifying innovative approaches to make available faster, cheaper, better approaches to environmental protection. It is especially useful when, as in this instance, the approach can be tailored by other States

to meet their needs.

Last month at the ECOS Spring Meeting, EPA reported that five State proposals have been submitted and four have been approved. Five additional proposals were

recently received for review and another two are expected in early May. It is evident

that the Agreement is proving to be a useful tool, but there is much innovation occurring independently of the agreement as well. I have provided for the committee’s use several other ECOS publications describing myriad State innovations. These innovative approaches demonstrate what can

be accomplished when States work in partnership with each other and with the U.S.

EPA, and when we strive to develop innovative approaches.

Thank you for the opportunity to address the committee this morning and to tell part of the story of the States. I would be pleased to answer any questions I may

have raised in my remarks.

RESPONSES BY ROBERT VARNEY TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. Commissioner Varney suggested in his testimony that States and the

Federal Government need to be equal partners in planning, implementing and reporting environmental protection. Does this partnership exist today? How can the

partnership be improved?

Response. The relationship is evolving. In 1995, EPA and the States entered an

agreement to implement the National Environmental Performance Partnership System (NEPPS). The theory behind NEPPS, in part, was to facilitate a shift from paternalism to partnership in the attitude of EPA toward the States. The evolution

would include a process of identifying State environmental priorities and jointly

building the capacity to meet those priorities.

The State/EPA relationship is highly variable—from State to State; from program

to program; from year to year. The concept of partnership involves not only process,

but also perspectives. Whereas the intentions of EPA’s leadership and the leading

State officials regarding partnership are generally honorable and good, there are

many instances where the partnership fails to live up to the promise.

A great deal of investment has been made by the Environmental Council of the

States (ECOS), EPA, the General Accounting Office, the National Academy of Public

Administrators and others to determine whether the partnership exists and what

can be done to improve it. My assessment: partnership exists, and like any marriage, it will require continuing care and respect to meet expectations.

The partnership can be improved by ensuring that the Performance Partnership

Agreements (PPAs) are indeed the foundation for the State/EPA relationship. These

agreements are the opportunity for the partners to lay out their concerns, set goals

and objectives, agree upon measures of performance, and ensure that everyone is

pitching in appropriately to ensure that national as well as State needs are being

met. Not only should the EPA regions that negotiate the agreements respect them,

but also the national program managers in Washington.

Another major obstacle in the partnership is ensuring that the cultures in both

the States and at EPA adopt a partnership perspective. As Lewis Shaw pointed out

in his testimony, no matter how you slice it, the States are carrying an increasing

majority of the environmental management load. That reality needs to be recognized

and appreciated throughout the system. Given that fact, it is clearly time to reassess the relative capacities and charges of the States and EPA to make sure the

right people are doing the right job. A better partnership will be achieved once those

roles and responsibilities are clearly articulated.

Question 2. States are currently taking a leadership role in many areas of environmental protection, but lack of resources is often an obstacle. Some have sug-
114

gested that the Federal Government can play an important role in this respect by

serving more as a resource to the States, instead of as a hammer—making available

both funding and technical assistance. Does the Commissioner agree with that and

how would the Commissioner suggest that the government’s role be enhanced in

that regard?

Response. ECOS and I agree with this assertion. The issue of defining appropriate

roles for States and EPA is crucial. States are already doing so much of the dayto-day business of managing the environment—roughly 80 percent of the enforcement actions, over 90 percent of the data collection, the vast majority of interactions

of any sort with facilities and citizens.

Question 3. Please describe in more detail how the New Hampshire Performance

Partnership Agreement works. Please address how and what does the Agreement

allow the State to do and how does it allow the State to prioritize resources? How

would you improve it in the future?

Response. Performance Partnership Agreements (PPAs) are the strategic documents that provide the framework for States and EPA in the National Environmental Performance Partnership System (NEPPS). These Agreements are a product

of joint planning and priority-setting between States and EPA, with the ultimate

goals of improving environmental performance and strengthening relationships. Performance Partnership Grants (PPGs) are the financial mechanisms to ensure that

the work outlined in the associated PPA can be carried out. As envisioned through

NEPPS, the PPA and its associated PPG are the two key enabling tools allowing

flexibility in both setting environmental priorities and directing appropriate financial resources.

The most current New Hampshire PPA (available on-line at www.des.state.nh.us/

ppa/ppa—intro.htm) covers the 2-year period October 1, 1999 through September 30,

2001, and sets forth the goals, activities and measures of progress for the full range

of cooperative State-Federal environmental programs under the New Hampshire Department of Environmental Services’ (DES) jurisdiction, as well as all of DES’s nonFederal programs. Thus, all DES programs are represented, regardless of the funding source. In total, the Agreement describes how the available financial, human,

and technical resources will be used in New Hampshire to address the environmental quality issues of the greatest concern to the Department and EPA New England.

The 2000–2001 New Hampshire PPA is distinctly different from the previous

Agreement in that the core section of the document have been organized around the

Department’s 12 Strategic Goals, rather than simply by the three Division—Air Resources, Waste Management, and Water. Taken together, the newly formatted 12

goal sections form the DES Comprehensive Action and Assessment Plan. This substantial formatting change was the direct result of stakeholder comments, and is an

important step in making the Agreement a key directing document at DES.

For the current PPA, DES communicated its environmental priorities and intended resource shifts upfront via detailed program tables, as well as through a discrete list of jointly prioritized ‘‘Focal Points of Cooperation.’’ The information in

these tables (and in the Focal Points list), in most instances, is the result of frequent staff interactions with many on-going and ad hoc stakeholder groups, as well

as with program counterparts at EPA New England. Also reflected are the priorities

outlined and discussed at two annual joint planning meetings (EPA/States meeting

on enforcement and P2 and compliance assistance and a regional PPA meeting).

EPA New England staff typically review the tables and focal points in great detail

on at least two points in the PPA development provide and provide comments to

DES which are reviewed and incorporated as is, or are set aside for more detailed

negotiations. All issues of importance to both agencies must be negotiated before a

signed PPA can be secured.

A key component of a fully functioning PPA, is the State self-assessment process.

At a frequency agreed to by the State and EPA (typically annually), the State must

conduct a self-assessment of progress made at accomplishing the work outlined in

the PPA, as well as specific progress made at addressing identified environmental

priorities and goals. The intent is for these self-assessments to do an increasingly

better job of reporting actual environmental results, not simply environmentally related activities conducted by the State. While good progress has been made, both

DES and EPA New England continue to struggle with to best conduct and gain improvement value from the self-assessment process, as well as how to most effectively

report on the state of the environment in New Hampshire. To help answer these,

and other, results-based questions, DES has identified ‘‘Environmental Indicators

and Program Measures’’ as a Focal Point and has been focusing resources to work

through the issue.
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DES has had success working with EPA New England to redirect resources to those environmental issues of most importance for New Hampshire, both at the

upfront PPA negotiation stage, as well as when there are limited PPG funds available at the end of the fiscal year cycle. One of the significant potential advantages

of the PPG is the ability to look at the grant funds in total and allocate specific

funds as appropriate to the different programs and activities according to an assessment of State-specific needs and priorities. In the past, DES, received different

grant awards for each program, and those funds were earmarked specifically for

that program and could not be used for any other purposes. Now, the Department

receives a single grant award—approximately $4.8 million in Federal fiscal year

2000—that provides funding for a range of air quality, waste management and

water quality programs, and the Department and EPA New England can agree to

shift resources across the programs to reflect the needs and priorities set forth in

the PPA. The PPA is the single, comprehensive work plan, and the PPG is the single funding mechanism to implement the work plan. Some recent success stories

that reflect refocused State (and EPA) priorities include shifting PPG resources to

address sprawl, mercury strategy, restoration of shellfish beds, and protection of instream flow in rivers.

While DES has had some success in both reprogramming priorities and funds through existing PPA and PPG mechanisms, there are barriers in the process. There

appear to be some disconnects between the regional and national program offices

relative to the earmarking and utilization of the various funds (i.e., ‘‘strings’’). The

national program managers appear to be adhering to more stringent standards compared with the Region, and therefore may be stifling some of the possible flexibility.

One example would be strict pass-through requirements for 319 Nonpoint and

104(b)(3) Wetland funds. This is an area that could possibly use some attention. Finally, it is vital that I stress that PPG funds are riot keeping place with infla- tion. The PPG in particular has reached a point where flee funds it provides are

no longer adequate to support core staff positions or the associated core program

responsibilities. Without increased Federal funding for DES, any flexibility possible

through the PPA and PPG is a moot issue.

Question 4. The EPA-State Regulatory Innovation Agreement appears to lay the foundation for better collaboration between States and the Federal Government to

explore new ideas. But again, it seems limited; only five proposals have been approved so far, although a few more are in the pipeline. How can the Congress encourage SPA and the States to take advantage of these programs? Is additional

funding or flexibility in the laws needed to make these kinds of programs work better?

Response. The Agreement is beginning to bear fruit. As of May 20, 2000, 18 projects have entered the process and about one-third of them have been approved.

Moreover, the principles underlying the Agreement are taking root broadly, and a

lot of innovation is occurring that is not strictly done under the official rubric of the

Regulatory Innovations Agreement. Innovation does not mean changing flee basic objectives of a safe and healthy en- vironment. But it does suggest a different way of getting there. Collectively, we can

expand incentives to encourage innovation, such as regulatory process changes (like

predictable, timely permitting and reduced administrative burdens), economic incentives (tax credits, fee waivers, new funding), and greater use of environmental management systems. An integrated Federal environmental statute would greatly assist our efforts to find innovative solutions to increasingly complex, multimedia environmental challenges. Congress can also help by fostering an accountability system that focuses more on environmental results and less on the host of administrative proxies that we call

‘‘beans.’’ By emphasizing the results necessary to achieve our goals, the way would

be cleared for all the partners—EPA, the States, local government, as well as the

entire community—to exercise their collective desires, talents and experience. Existing prescriptions and a cumbersome process stifle creative solutions—including the

development of new technologies that are essential to attaining environmental goals. EPA could be clearly authorized to delegate to the States a certain level of ‘‘inno- vation’’ authority which would enable the States to develop agreements and manage

the day-to-day operations (like permitting) under the agreement, and retain for EPA

a monitoring responsibility to ensure that desired results are achieved. This monitoring could be tied to an agreed-upon performance indicator process like that developed in Florida.

Having EPA focus on the agreed upon goal rather than second-guessing State decisions along the way (including permitting and overfiling) would greatly facilitate

innovation. Along these lines, we would encourage Congress to adopt legislation that
116

would provide protection to innovators pursuing agreed upon goals and objectives

while working outside the box.

It would be helpful to have clearly identified points of contact for innovation

projects at both the State and Federal level. For these new initiatives, agencies tend

to ‘‘borrow’’ folks from other responsibilities. Since these projects involve a different

way of doing business, they frequently bring together a diversity of personnel—with

no one explicitly charged with getting the innovation done.

In order to encourage commercially viable innovative technologies, developers

need quick review and acceptance from agencies. Certification processes like those

being developed by States and EPA need to be fostered.

In a broader sense, we might explore legislation that would direct EPA to approve

innovative alternatives to delegated State programs that vary from Federal regulations if these alternative programs meet criteria established through discussions

among States, EPA, Congress and other interested parties. Innovation includes risk

of failure. Congress could include some indemnification provisions that would ease

the legal consequences of failure, thus stimulating the willingness to take a chance

on new ideas or technologies.

Question 5. Do you see an expansion of the EPA/State Innovation Agreement to

produce a more holistic approach to the environmental issues?

Response. We would like to see the EPA/State partnership evolve to a point

where, with the appropriate goals and accountabilities established, there would be

no limit to innovation. There is growing interest in innovation projects, and several

initiatives are in the works. We hope that the fears and concerns that have accompanied the ideas of innovation and flexibility will fade as we discover ways to

produce desired environmental results visibly, accountably and efficiently. We agree

that common sense and creative thinking should apply holistically to our environmental challenges.

One way we would like to see the innovations effort expanded is for States, EPA

and Congress to pursue innovations directed specifically at existing unregulated

problems, such as nonpoint source pollution, habitat loss, diffuse air pollution and

urban sprawl.

Question 6. In the area of regulatory innovations, SPA has committed to responding to State suggestions within 4 weeks for initial followup and within 90 clays for

a preliminary decision. How are these deadlines working? Is this an appropriate

length of time for these decisions?

So far, there have been no complaints, but EPA has voiced concerns that they

must evaluate not only the process but also the substance of the proposals. From

a State perspective, these deadlines seem to be working fairly well.

Question 7. At the hearing held Tuesday May 2, 2000, by this committee, Senator

Baucus read a quote from a 1993 hearing testimony given by Thomas Jorling, and

asked you to respond. Each of you said that you agreed with Mr. Jorling Flat there

was a need for flee Federal gorilla to remain in the closet. Would you please elaborate on that response. In your elaboration, would you please address the following

issues:

A. Is it necessary for the EPA, in order to ensure that the States protect the environment, to second-guess the States, or to be able to second guess the States, regarding every exercise of a State?s enforcement discretion, every permitting decision

made by the States, and the like?

B. Are the States able and willing to exercise reasonable, responsible, and vigorous enforcement and permitting discretion if the States are no longer subject to second-guessing in every case?

I. If so, please explain why that is true today, even if it was not true in past

years.

II. If so, please support your explanation why that is true with examples showing

that the States have reasonably, responsibly, and vigorously enforced the following:

a. Federal environmental laws, and

b. State and local environmental laws, over which the EPA exercises no supervisory responsibility.

c. Are there alternative approaches to the current ‘‘second-guessing approach’’

that could still provide assurance to EPA that the States programs are protective

of public health and the environment?

Response. As you know, the role and capability of States has changed significantly

over the past 15 years. From 1986 to 1996, for example, State spending on environmental protection increased 142 percent. In 1993, when Tom Jorling made his statement, only 41 percent of eligible programs had been delegated to the States. By

1998, that share had grown to 71 percent. Today, State environmental officials con-
117

duct roughly 80 percent of the approximately 12,000 enforcement actions taken each

year by environmental agencies at the State and Federal level. In addition, it should be noted that many States leave requirements which exceed Federal requirements. For example, the New Hampshire Department of Environmental Services has established standards for the land application of sludge which

are perhaps the most stringent in the nation, and much more restrictive than the

Federal 503 standards. We also recently set a standard for Methyl tertiary Butyl

Ether (MTBE) at 13 parts per billion, a level which is the most stringent in the nation. I could provide many more examples if necessary.

New Hampshire would prefer that EPA’s limited resources be focused on research

and program performance reviews, rather than waste effort on case-by-case reviews.

Any decisions can be criticized or second guessed on a case-by-case basis—the key

is to have an open, transparent and accountable system which relies on the States

as the primary implementation vehicles.

Question 8. Please indicate whether you agree or disagree with the following

statement: ‘‘Reasonable people, acting in good faith, can disagree over the best

method for protecting the environment. For example, reasonable people can differ

over the proper mix of enforcement and compliance assistance as generic tools, and

the proper use of a particular choice of method(s) in a specific case. Accordingly, the

best approach for gauging a State’s environmental protection program is to evaluate

the entirety of the State’s efforts, both enforcement and compliance assistance, over

a long period of time, and to determine whether the State has improved the condition of the environment, rather than focusing on a particular case or series of cases,

the number of enforcement actions brought in a particular State (or any other similar so-called ‘bean counting’ system), and the preference (if any) between enforcement and compliance assistance.’’

Response. I would fully agree with this statement. In fact, such a philosophy is

embodied in an important DES document, the Compliance Assurance Response Policy (CARP), which is available on the DES website at http://www.des.state.nh.us/

legal/carp/. As described in the CARP, DES is committed to a consistent, predictable, and appropriate compliance assurance response, which is protective of public

health and the environment while creating a credible deterrence against future violations. DES believes that compliance with environmental regulations is best ensured by using a multi-tiered, multi-media approach starting with education and

outreach, and proceeding successively to compliance assistance, compliance monitoring, and timely and appropriate enforcement. Compliance assurance is a fundamental goal. DES endeavors to create incentives for compliance and encourage the regulated community to surpass the minimum requirements of compliance through pollution prevention and innovation. Accordingly, DES maintains an open and on-going

dialog with the regulated community.

DES encourages early intervention to ensure that violations of environmental

laws are identified and corrected as soon as possible in order to minimize impacts

to public health and the environment. To this end, DES discloses violations to responsible parties as soon as possible after they are discovered and will offer or recommend appropriate assistance to violators to correct deficiencies even while formal

enforcement action may concurrently be in development to address the violations.

To prevent recurrence of noncompliance, DES investigates root causes of noncompliance and takes action when appropriate. As environmental compliance has a direct

impact on everyone, DES seeks expanded public involvement in compliance assurance activities, and supports the public’s right to know which facilities are in or out

of compliance with environmental laws.

Over the last few years, and as a key component of the Performance Partnership

planning process, DES has made significant progress with flee development and implementation of improved performance measures. The focus of our efforts has been

on going beyond the traditional ‘‘bean-counting’’ system, to more fully employ the

use outcome-based measures and environmental indicators. DES and many other

environmental agencies have recognized that the sole reliance on the traditional

measures does not recognize alternative and innovative approaches to problem solving and does not tell the entire, increasingly complex, environmental protection

story. Our most recent initiatives in this area include the development of a comprehensive measures data base and work on a EPA grant project that will test better compliance measures.

RESPONSES BY ROBERT VARNEY TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. You note that 38 States have Performance Partnership Agreements

under this system. Why don’t all of the States have these agreements, is it because
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the program is relatively new, or are there structural obstacles to getting 100 percent participation?

Response. The original NEPPS agreement between the States and EPA was

signed on May 15, 1995. In terms of participation by the States, else record in flee

short time since has been gratifying. It is not a perfect partnership yet, and all the

full promise of the original agreement remains to be realized. The fact that not all

States participate probably has more to do with obstacles than the newness of the

program.

Among the obstacles is the need to foster a greater understanding and support

for NEPPS among staff in EPA and the States, especially in merging the NEPPS

approach with existing priority-setting systems. We are also concerned that EPA affirm that burden reduction remains a vital aspect of the NEPPS ideal and that the

agency increase reporting burden efforts to implement and effect burden reduction

as a necessary requirement of all EPA programs, offices and regions.

We also see EPA’s continuing presence through direct inspection and enforcement

as inconsistent with NEPPS’ call for use of Federal resources ill jointly identified

State-specific priorities, NEPPS or other joint Federal State planning processes.

EPA also needs to accelerate the transition to a more results-based environmental

management system by making investments necessary to develop improved environmental indicators, outcome-based goals, objectives, measures and information management systems for use in NEPPS, GPRA and other relevant systems.

We realize these transitions are a part of the partnership, and that States and

EPA need to work on these challenges throughout our agencies.

Question 2. In your testimony, you emphasize the importance of State innovation.

What do you feel are the greatest obstacles to State innovation? Given that innovation is an unpredictable process, how would one design national environmental laws

to encourage innovation?

Response. Chairman Smith asked the same question, and I offer the same response that I will share with you here:

Innovation does not mean changing the basic objectives of a safe and healthy environment. But it does suggest a different way of getting there. Collectively, we can

expand incentives to encourage innovation, such as regulatory process changes (like

predictable, timely permitting and reduced administrative burdens), economic incentives (tax credits, fee waivers, new funding), and greater use of environmental management systems. [from Resol. 98–3]

An integrated Federal environmental statute would greatly assist our efforts to

find innovative solutions to increasingly complex, multimedia environmental challenges. [from Resol. 98–3]

Congress can also help by fostering an accountability system that focuses more

on environmental results and less on the host of administrative proxies that we call

‘‘beans.’’ By emphasizing the results necessary to achieve our goals, the way would

be cleared for all the partners—EPA, the States, local government, as well as the

entire community—to exercise their collective desires, talents and experience. Existing prescriptions and a cumbersome process stifle creative solutions—including the

development of new technologies that are essential to attaining environmental goals.

EPA could be clearly authorized to delegate to the States a certain level of ‘‘innovation’’ authority which would enable the States to develop agreements and manage

the day-to-day operations (like permitting) under the agreement, and retain for EPA

a monitoring responsibility to ensure that desired results are achieved. This monitoring could be tied to an agreed-upon performance indicator process like that developed in Florida.

Having EPA focus on the agreed upon goal rather than second-guessing State decisions along the way (including permitting and overfilling) would greatly facilitate

innovation. Along these lines, we would encourage Congress to adopt legislation that

would provide protection to innovators pursuing agreed upon goals and objectives

while working outside the box. [from Resol. 98–3]

It would be helpful to have clearly identified points of contact for innovation

projects at both the State and Federal level. As new initiatives, alley tend to ‘‘borrow’’ folks from other responsibilities. Since these projects involve a different way

of doing business, alley frequently bring together a diversity of personnel—with no

one explicitly charged with getting the innovation done.

In order to encourage commercially viable innovative technologies, developers

need quick review and acceptance from agencies. Certification processes like those

being developed by States and EPA need to be fostered.

In a broader sense, we might explore legislation that would direct EPA to approve

innovative alternatives to delegated State programs that vary from Federal regulations if these alternative programs meet criteria established through discussions
119

among States, EPA, Congress and other interested parties. [from Resol. 98–3 almost

undecipherable]

STATEMENT OF JAMES M. SEIF, SECRETARY OF THE DEPARTMENT OF ENVIRONMENTAL

PROTECTION

Mr. Chairman and members of the committee, I am Jim Self, Secretary of the Pennsylvania Department of Environmental Protection. Pennsylvania is pleased to

appear before you today to discuss some of the innovative environmental programs

that we and other States have developed.

When he took office, Governor Tom Ridge committed to make Pennsylvania a

leader among States and a competitor among nations. He has pursued that commitment by cutting taxes, promoting exports, and making Pennsylvania a ‘‘high-tech’’

State through the introduction of new electronic commerce and electronic government tools. Another important part of the Governor’s plan was restoring and protecting Pennsylvania’s environment by cleaning up old industrial sites—

‘‘brownfields’’—and returning them to productive use.

Complicated Federal remedies of the late 1970’s and 80’s such as RCRA and

Superfund have, at best, a mixed record in addressing the legacy of old industrial

sites left from years of being the world’s industrial leader. The unworkable liability

scheme of Superfund often produced litigation instead of cleanups. Requirements

that contaminated sites be returned to pristine condition—a standard that was financially and sometimes technologically prohibitive—left once-productive sites in

many communities permanently off the tax roles and off-limits to renewal and

reuse.

Governor Ridge, and the leaders of the Pennsylvania General Assembly, recognized that we needed a different approach to cleaning up contaminated sites. The

passage of Acts 2, 3 and 4, the three acts establishing Pennsylvania’s Land Recycling Program, provided the environmental platform to allow us to tear down the

fences around these sites, to begin to restore our communities, and to turn our manufacturing heritage back into an asset.

Pennsylvania on May 2, 2000 is a much different place than it was 5 years ago

on May 19, 1995, the day that Governor Ridge signed the Land Recycling Program

into law. Had you been with us that rainy day in Western Pennsylvania at the site

of the former U. S. Steel National Tube Works, you would have seen an environmental scene that could have been in Anytown, U.S.A.—a rusted hulk that resulted

from the battles and success of our first industrial revolution.

The Lands Recycling Program is an innovative solution that evolved from concept

to reality so successfully that Governor Ridge has described the program as ‘‘simply

a case of government making sense.’’

This common sense approach provides a statutory liability release, standardized

procedures, realistic goals, cleanup options and funding assistance. These features

destroyed the barriers that stood in the way of the Federal and early State remediation programs.

Don’t think that the Land Recycling Program uses lax environmental standards.

On the contrary, the program used sound science to establish cleanup standards

that protect public health and the environment. The difference is that these standards are realistic enough to promote the reuse of contaminated sites.

The program’s four cornerstones—uniform cleanup standards, standardized review procedures, release from liability, and financial assistance—all address crucial

business Issues.

Uniform standards, under four cleanup options, give communities the flexibility

they need to attack this nationwide problem. Total costs and project time are also

easier to establish. Agreements to protect buyers’ rights and the financial viability

of owners of multiple contaminated sites are available to business.

Standardized review procedures provide a uniform statewide process for cleanups.

A technical guidance manual was published, in plain language, to help people use

the program. The program imposed review time limits and guarantees a reply to

applications within 60 days.

Releases from liability take the risk out of remediation. Anyone who cleans up a

site to the new standards is released from any additional cleanup of the old contamination. This liability travels with the property and can extend to financial institutions, economic development agencies, and local authorities. It essentially puts the

site back into the stream of commerce.

While the program has attracted millions of dollars of private sector investment

in cleanup, funding assistance is also available to help reach sites that might not

otherwise get addressed. The Industrial Sites Cleanup Fund, initially stocked with
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$15 million, makes grants and low-interest loans available to cover up to 75 percent

of the cost of site assessment and remediation. Pennsylvania’s Department of Community and Economic Development has already provided in excess of $20 million

in grants and loans to assist land recyclers. The results speak for themselves. Since the inception of our Land Recycling Pro- gram, more than 700 sites have been remediated and hundreds more are in various

stages of cleanup—compared to Superfund, in which only 16 of 112 sites on Pennsylvania’s NPL have been delisted. Many of these brownfields properties are now

back on the tax roles, and more than 17,000 people now have jobs on these redevelopment sites.

As David Gergen from U.S. News and World Report has pointed out, ‘‘These re- sults are impressive. Pennsylvania has created strong incentives for businesses to

clean up and revitalize abandoned urban sites, while preserving farms and undeveloped land in the process.’’

Our program is not only producing environmental protection and economic devel- opment gains at individuals sites, but also is an effective strategy to accomplish

broader policy goals such as reversing urban blight and developing a sustainable future. Working with redevelopment authorities, local government, lending institutions and the private sector, we are creating jobs, increasing tax revenues, improving transportation infrastructure, revitalizing urban areas, and preserving open

space.

Let me go beyond basic statistics though, to give you a flavor of how Pennsylva- nia’s brownfields program has affected and influenced ‘‘real people.’’ • A particularly noteworthy Land Recycling Project is the site of Bethlehem Steel Corporation’s original steel-making facility in Bethlehem, Pennsylvania. This

represents the largest brownfield project currently being undertaken in the Nation

(nearly 2000 acres). This site, which once supported heavy industrial processes, is

being converted into a recreational, educational, cultural and entertainment center

of regional, if not statewide, significance. The Smithsonian Institution will occupy

a key location there to house and display artifacts of our nation’s industrial heritage. • Several other examples include a large industrial complex, the Transit America facility, in North Philadelphia that is being remediated and returned to open space

use as an 18 hole public golf course. In West Chester, a turn of the century Laundromat has been converted into a fitness center. And in McKeesport, in the Mon

Valley, a steel mill site has been converted into the eastern headquarters of

Echostar Corporation and will house more than 2000 customer service representatives. • Our partners in redeveloping these sites have been most generous in their praise. A few quotes illustrate how successful the program has been. Michael

Theisen of Woodmont Corporation, which turned an auto wrecking yard into a shopping center pointed out, ‘‘It would have been impossible to acquire tenants or the

financing needed to make such a center feasible, particularly one located downstream from a Superfund site, without the support and assurances provided [by the

Land Recycling Program]. Perhaps the success of our program is most easily

summed up by Lou Marseglia of Grundy Recreation who said ‘‘If it wasn’t’ for the

[Land Recycling Program], we couldn’t have built it’’ in reference to the recreation

center built on the site of a former carpet mill.

• Further, our program has been recognized as an ‘‘Innovations in American

Government Award Winner’’ and a 1997 ‘‘Ford Foundation Award Winner.’’

• People in other nations have noted our success and looked at us as a model

for programs of their own. The Scottish Environmental Industries Association invited us to share our experience at the Contaminated Lands Forum in Scotland. We

have also gotten inquires from Brazil and Eastern Europe on our program.

The flexibility offered by Pennsylvania’s Land Recycling Program has allowed us

to be innovative in our approaches to cleaning up sites. We have entered into a

multi-site agreement with the U.S. Army, Air Force, Navy and Defense Logistics

Agency to facilitate the cleanup of all sites used previously for military purposes and

to prepare them for reuse a decade earlier than originally scheduled. This was a

landmark agreement that will have tremendous economic development benefits for

the Commonwealth and has formalized a plan of action for resolving Federal liabilities at 1,260 sites in 26 counties. This agreement was only possible because of the

flexibility afforded by the State laws establishing the Land Recycling Program and

clearly can be a model for other States to follow.

As often happens, one successful innovation points the way to others. To raise

awareness of the availability of sites for redevelopment, DEP created the

Brownfields Inventory Grant (BIG) Program, which provides grants to local governments, economic development agencies and other qualifying agencies to inventory
121

the brownfields properties in their area. Sites that are identified are added to the

Pennsylvania Brownfields Directory on our Department’s website, so that parties interested in developing sites will know that they are available. This data base currently lists over 130 sites. As a further inducement for the revitalization of communities, Governor Ridge signed legislation creating Keystone Opportunity Zones, in which tax abatement is

offered to businesses locating in economically depressed areas. The unrealistic standards and open-ended liability of Superfund have often been strong deterrents to the use of new technologies at environmental cleanups. The

cleanup options available to voluntary parties under our program are more conducive to the use of new technologies. Promoting the use of new technologies is another State success story that is shared by many States. States are working together

to improve State permitting processes and to speed deployment of technologies by

using the Interstate Technology and Regulatory Cooperation Work Group, or ITRC,

which is an organization affiliated with ECOS. The ITRC is a State-led, national

coalition of regulators working with industry and stakeholders to improve State permitting processes and to speed deployment of technologies through interstate and

regulatory collaboration. Currently, 31 States actively participate in ITRC activities and additional States are indirectly involved through participation in training events and technical work

team activities. Other participants include the Departments of Energy and Defense,

and the Environmental Protection Agency. The ITRC can document success stories

in all 50 States, through the use of ITRC products or examples of institutional

change. These innovations, taken together, have made the efficient re-use of industrial land far more attractive in Pennsylvania, and have reduced the pressure on undeveloped ‘‘Greenfield’’ areas.

We believe that we have gotten the fundamentals right. Now it is time to make it even easier for these sites to be cleaned up and returned to productive use. The

Pennsylvania Department of Environmental Protection in collaboration with a number of other State agencies has launched additional new initiatives to do just that. • Financial Resources for the Environment is one of two initiatives of its kind

in the Nation in which public sector entities are working together with lenders, utilities and corporations to develop a financing vehicle to provide funding for

brownfields redevelopment. In many cases private financing for brownfields projects

is difficult to obtain. This project will fill in that gap and promote more redevelopment without the necessity for increased public funding. • We are developing a request for proposals to offer a Commonwealth-wide in- surance policy that can protect owners and developers from the uncertain liabilities

associated with conducting cleanups. By purchasing coverage under this—umbrella

policy—owners and developers will receive coverage more affordably than seeking

it alone and can even be insured against actions taken by our Department. This will

provide even more confidence for individuals seeking to sell and buy brownfield

sites.

Many other States have also attacked the problem of brownfields with innovative

programs of their own. At least 35 States have voluntary cleanup programs, and,

while many share common elements, each is tailored to the particular needs of the

State. Thousands of sites around the country have been cleaned up under these programs.

In short, Pennsylvania and the other States have figured it out. Brownfield redevelopment is becoming a common and natural aspect of real estate development and

sound land use planning in our Commonwealth and across the nation. There are

some legislative steps that can be taken to accelerate the pace at which these programs can restore our environment and revitalize our communities.

I encourage the Senate to consider passing brownfield legislation based upon the

model developed and supported by many States. The key elements of such legislation are: (1) a release of Federal liability at State land recycling sites, (2) a waiver

of Federal permitting requirements at State land recycling sites, and (3) Governors

concurrence on proposed NPL listings.

A Federal release of liability will heighten developer confidence that EPA will not

take judicial or administrative action should EPA decide to second-guess a State’s

decision regarding a clean up. Second, there needs to be a waiver of Federal permitting requirements at land recycling sites being addressed under a State voluntary

cleanup program. In Pennsylvania, our General Assembly gave DEP the authority

to waive State permits at sites being handled by our land recycling program, but

only Congress can waive the requirement to obtain Federal permits. These are the

same permitting requirements that EPA has the authority to waive at sites in the

Superfund program. In asking for this waiver, be assured that discharges to the air
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and water are fully regulated by our State regulatory programs, and persons cleaning up sites in our State system have to meet all of our applicable emission and

discharge limitations, both during cleanup an thereafter. In addition, Congress

should reinstate the opportunity for Governors to concur on proposed Superfund listings. Governors can best decide whether sites have the potential to be redeveloped

and, therefore, moved through a State land-recycling program as opposed to being

relegated to the NPL. We are very proud of what we have achieved in Pennsylvania. Our Land Recy- cling Program has preserved open space, revitalized town and urban centers and

made people feel better about their communities and the government’s role in them.

We believe our Program can serve as a national model and I thank you for the opportunity to speak with you today. Thank you.

PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION,

June 1, 2000.

Honorable ROBERT C. SMITH, Chairman,

Senate Environment and Public Works Committee,

Senate Office Building,

Washington, D.C. 20510–6175

DEAR CHAIRMAN SMITH: Thank you again for permitting the Environmental Council of the States to present some of its views to your committee at the hearing on May

2, 2000.

Toward the end of the hearing you had asked a question about finality and I ap- parently misunderstood it. Your question, as Mr. Conover later explained it, was

about the need for or value of finality in the land recycling process. My answer

would be, and perhaps you will permit the record to be supplemented, as follows: Finality in land recycling transactions is the sine qua non for success. Choices made about how sites are selected, about the future use of the site, about future

ownership patterns, and about financing are made by the private sector, and they

will not be made at all in absence of certainty about the finality of government regulatory action. For many sites, this chilling effect of non-finality (for example, possible Federal action), will continue to stand in the way of cleanup and reuse.

Thank you again for the opportunity to testify, and I am looking forward to an

informal visit with some members of your staff to develop some additional thoughts

on improvements to the statutory structure of our nation’s environmental programs.

Sincerely,

JAMES SEIF, SECRETARY.

RESPONSES BY JAMES SEIF TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. The brownfields success in Pennsylvania is a clear example of State

innovation and a commonsense approach. In your testimony, you presented three

recommendations for the Senate to consider: (1) a release of Federal liability at

State land recycling sites, which will give the States ‘‘finality’’ in their decisions,

something they do not currently have; (2) a waiver of Federal permitting requirements at these sites; and (3) Governor’s concurrence on proposed NPL listings. How

would such a release mentioned in (1) work in practice? Would there be instances

where Federal involvement would be appropriate? What are those instances?

Response. The Federal Government, through statute, should establish that Federal enforcement authorities under CERCLA do not apply to sites that have been

cleaned up in accordance with the provisions of effective State voluntary cleanup

programs. Federal involvement at such sites could be appropriate if information

about the existence of serious additional risks from contamination at the site came

to light, and the State was either unable or unwilling to address those risks under

the provisions of its own program. Additionally, contaminated properties exist which

may not be attractive for private investment, and may be posing unacceptable risks

to public health and the environment. It is these sites where Federal and/or State

funded cleanup involvement is warranted and should be focused. Federal action

under the emergency (‘‘immediate removal’’) provisions of Superfund might also be

useful in certain fact situations.

Question 2. What would be the result of providing State finality in decisions on

cleanup of brownfield properties?

Response. The opportunity for voluntary parties to obtain both State and Federal

finality would result in increased participation in the State program. We are con-
123

vinced that this single issue is discouraging many property owners from initiating

voluntary cleanup efforts under our program.

Question 3. Does the Secretary believe that States that adopt this model will find that more funding would be available for cleanup at these sites from private and

State sources?

Response. States with proven and recognized voluntary cleanup programs have been and will continue to attract a greater level of private and public funding for

assessment, cleanup and reuse of contaminated property.

Question 4. How important is it to the States’ continued success that the uncertainty associated with the EPA’s second guessing of a State’s decision regarding

cleanup be removed?

Response. Finality in land recycling transactions is the sine qua non for success. Choices made about how sites are selected, about the future use of the site, about

future ownership patterns, and about financing are made by the private sector, and

they will not be made at all in absence of certainty about the finality of government

regulatory action. For many sites, this chilling effect of nonfinality continues to

stand in the way of cleanup and reuse.

Question 5. At the hearing held Tuesday, May 2, 2000, by this committee, Senator Baucus read [a quote of Thomas Jorling] to you and asked you to respond. Each of

you said that you agreed with Mr. Jorling that there was a need for the Federal

gorilla to remain in the closet. Would you please elaborate on that response?

Response. It is certainly not necessary for EPA to be able to second-guess every

individual State decision. In fact, that second guessing is just as likely to reduce

the effectiveness of State programs, as members of the regulated community grow

reluctant to committing resources to achieving compliance if they believe that another opinion of what constitutes compliance is possibly to be substituted later. This

reverses delegation, turning the day-to-day implementation of programs back to the

EPA.

States are willing and able to exercise reasonable and vigorous enforcement. Governors are elected by the same citizens who elect Senators, and recognize the same

strong support among those citizens for effective environmental protection. Governors are more likely than Senators, I suggest, to be held accountable by those citizens if environmental problems in their States are not appropriately addressed. The

notion that States will ‘‘race to the bottom’’ is just not true.

As evidence of this, States have been shouldering a growing share of the effort

of environmental protection in this country. States have sought and obtained delegation of the vast majority of Federal programs that can be delegated. State spending

on environmental protection has risen steadily and the percentage of State environmental budgets that is provided by the Federal Government has shrunk to about

20 percent on average, and much lower in some States. States conduct the overwhelming majority of environmental inspections, and about 80 percent of the enforcement actions taken nationally.

There are a number of specific instances in Pennsylvania that demonstrate our

willingness to take strong action against those who violate the law. We have assessed and collected a $3.2 million penalty against Westinghouse for groundwater

contamination at a facility in Adams County, using a combination of State and Federal authorities. Another example is Action Mining in Somerset County, where we

brought enforcement action against the company for illegal discharges to a stream,

resulting in $625,000 in civil penalties.

An important point to make however, is that vigorous enforcement is not, in itself,

an adequate measure of an effective environmental program. We have achieved, for

example, an 88 percent compliance rate with the Federal standards for upgrades of

underground storage tanks in Pennsylvania. The large number of tanks and tank

owners throughout the State, many of which are small businesses or ‘‘mom-andpops’’, required the use of many different tools—outreach, education, compliance assistance, and, when needed, enforcement. The enforcement actions alone don’t tell

the story of whether the environment is being protected or not; the compliance rate

does.

Also, we take some enforcement actions in cooperation with EPA. We recently decertified several laboratories in Pennsylvania for inaccurate or fraudulent environmental testing results. EPA then used Federal authorities to bring criminal action

against those who generated fraudulent results. This is the kind of ‘‘gorilla in the

closet’’ that works. We want to have the ability to do the best job we can with our

authorities, and, only then, the option to turn to the Federal Government for help

when their authorities or expertise are needed.

The current Federal laws already provide a mechanism whereby the Federal Government can maintain oversight without the need to second guess individual State
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permitting and enforcement decisions. EPA must approve the delegation of any Federal program to a State, and EPA retains the right to revoke that delegation. If any

State should fail to meet the requirements for operating a delegated program or fail

to be protective of public health or the environment, EPA can initiate proceedings

to revoke delegation, and instead run the program itself. EPA should delegate the

programs, let the States run them, and take them back if the States fail. EPA

should not pretend to delegate the program then continue to make the decisions.

Question 6. Please indicate whether you agree or disagree with the following statement: ‘‘Reasonable people, acting in good faith, can disagree over the best

method for protecting the environment. . .’’ Response. I agree with the statement. I would add that it is not just the mix of enforcement and compliance assistance that matters. We have made some of our

best environmental gains in Pennsylvania through efforts that have little or nothing

to do with patrolling a standard. The Land Recycling program about which I testified is a good example, where we created conditions under which private parties volunteer to spend their own money to clean the environment. Through pollution prevention and energy efficiency programs we are helping businesses and individuals

in Pennsylvania go beyond what the law would require. Our work to promote new

technology is bearing fruit not only for Pennsylvania’s environment but also for the

rest of the country and, in fact, the world. Enforcement is just one facet of compliance with the law, and compliance is just one facet of environmental protection.

RESPONSES BY JAMES SEIF TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. You note in your testimony that Pennsylvania is pursuing an ‘‘umbrella insurance policy’’ for Brownfield cleanups. How can environmental insurance

facilitate further redevelopment?

Response. We have found that uncertainty is one of the primary inhibitions to private sector investment. Our request for finality is one important element in establishing the kind of certainty that will promote greater private investment in environmental cleanups. The insurance program we envision would establish another

kind of certainty. Environmental insurance has come into favor as a hedge against

unanticipated and unexpected costs. We will soon be selecting a qualified broker to

establish underwriting that builds upon the strong points of the Land Recycling Program. Private parties will be able to take advantage of competitive premiums for

primary coverage options including cost overrun, third-party and tort claims, and

State and Federal reopener and compliance costs. We anticipate that this additional

certainty as to cost will make potential redevelopment projects more attractive to

private parties and the lending community in particular.

Question 2. Are most brownfield sites cleaned up under your State program

brought to your attention by the volunteers or do you discover the sites first?

Response. In most cases, we do not know about a given site until a notice of intent

to remediate is filed with us. As I mentioned in my testimony, we have offered

grants to local governments and authorities to inventory brownfield sites within

their geographic areas, and we maintain a data base of such sites for those who may

be searching for a property to redevelop. The majority of the sites in our program

however, are first identified by the voluntary party seeking to clean up and reuse

them.

STATEMENT OF BRENT C. BRADFORD, DEPUTY DIRECTOR, UTAH DEPARTMENT OF

ENVIRONMENTAL QUALITY

Mr. Chairman and members of the committee; my name is Brent C. Bradford. I

am the Deputy Director of the Utah Department of Environmental Quality. I am

here representing the views of the Environmental Council of the States (ECOS) of

which I am a member and immediate past chairman of the State/EPA Information

Management workgroup and current Vice Chairman of the ECOS Strategic Planning Committee.

I want to speak to you today regarding State activities and initiatives in managing environmental information. I’d like to give you four messages:

1) States generate most of the data in EPA’s national data systems;

2) States are driven to manage this data effectively because they must have it to

operate their own programs;

3) States have become the greatest innovators in the management of environmental data, and

4) States are working with EPA and the public to make this data available.
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First, States collect and provide about 94 percent of the environmental pollutant information contained in Federal program data systems (report attached: ‘‘Environmental Pollutant Reporting Data in EPA’s National Systems’’). This includes data

from the regulated community and direct measurements of environmental quality.

It includes data for water, air, waste and drinking water. States provide EPA nearly

all the environmental pollutant and compliance data it uses to manage the environment. Data that EPA passes on the to the public through programs such as

Envirofacts often originates in the State environmental agencies. Second, States use this data themselves to manage their own programs, and so are driven to make sure that the data is managed usefully. This became especially

true during the 1990’s as the States assumed more and more of the delegated programs from EPA. More States over the past 2 years have invested in information

technology and moved toward data integration. This increases the effectiveness of

environmental program management and provides for sharing and exchange of information, and thus improved public access to data and improved data quality.

States work together through ECOS to share experiences and knowledge and thereby assist one another and EPA in developing capabilities to manage environmental

information. Some States have made significant investments of State funds and others have relied heavily on Federal funds coming through EPA’s One-Stop program.

Such Federal funding has been particularly helpful to smaller States such as ours. My third point is that the conditions I have already mentioned have led the

States to become great innovators in environmental data management.

In my home State of Utah, our agency has developed a standard used by all programs to identify facilities and link them between program data bases. We also created a global data catalog to allow public access to information contained in our

data bases. We have developed an electronic reporting capability to allow regulated

facilities to report required information and to provide for sharing of that information among the media programs within the department. From these efforts, we developed an Internet access capability that will allow public access to information 24

hours per day, 7 days per week. We especially wanted to make permitting and compliance information available.

Other States have also made remarkable progress in this area. For example,

1) Pennsylvania was one of the first States to present timely multi-media compliance information on facilities on line to the public. They are now sharing that system with other States.

2) The State of Washington’s led other States in developing a de facto national

standard its Facility Identification Template for States is now in its second version

and is being used by at least 25 States to help them jump-start their data reinvention efforts, saving each State about a quarter of a million dollars.

3) New Jersey’s Environmental Management System fully integrates all regulatory and permitting systems one of the first anywhere to do so when it’s completed

later this year.

4) Virginia’s Centralized Enterprise Data System was created in 18 months, merging 77 legacy systems that were not compatible into a single integrated system. The

State itself invested $12 million of its own State tax dollars to create this system.

Virginia is now offering the system to other States at no cost.

5) New Hampshire is integrating its environmental data bases by linking facility

and site data, and has begun making site remediation, UST, and air permitting information accessible via the Internet.

My fourth and final point is that States are committed to working with our Federal partners in making our data available to the public. The States and EPA created the State/EPA Data Management Workgroup in January 1998. We developed

a vision statement and a set of operating principles (see attached: ‘‘State/EPA Vision

and Operating Principles for Environmental Information Management’’). These define a framework for a new way for States and EPA to do business together. They

commit States and EPA to a partnership in building locally and nationally accessible information systems. Major accomplishments of the workgroup include:

1) the creation of a data standards council,

2) the development of a vision for a national data exchange network,

3) establishment of a joint process for addressing burden reduction in data reporting and

4) a discussion forum and action plan for public access to environmental data.

A full summary of the activities of the workgroup is attached for your information.

Conclusions and Plans

States are making significant accomplishments in environmental data management. But the cost is high. Currently, the President’s budget proposes $30 Million

for environmental information management (proposed as $16 million for States and
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$14 million for EPA). States believe that this funding is essential in addressing a

new vision of environmental information management. States and EPA will use this

funding to develop data exchange standards, and enhance the capability of both

States and EPA to exchange data. Continued Federal investment is critical for this

vision to be realized, and we need to make sure that all States have a full opportunity to participate. Collective investments in standards development will be needed to make such a network viable.

States envision a national environmental information exchange network that recognizes that the agencies that collect information would be responsible for its stewardship, and will provide access to such information through the network. Such a

network is based on common standards that will provide a common base for information access, exchange and use; but will allow flexibility in meeting individual

State and EPA needs regarding data housing and handling. This would move the

focus away from a common national data ‘‘system’’ toward a focus on data quality

and interpretation, while providing States, EPA and others the ability to use their

on-going work to create ‘‘portals’’ for access to information sources. This will require

both State and EPA effort to make such an exchange work and must be developed

in such a way that all States, both large and small can participate in the exchange.

(A copy of the working version of the State-EPA ‘‘Shared Expectations for a National

Environmental Exchange Network’’ document is attached).

Given the impact of decisions made based on environmental information and the

need to assure its accessibility and accuracy, it is important that States and the

Federal Government continue to work together to develop and utilize data management technology in a sound, responsible and efficient way. There is a long way to

go, but significant progress is being made. States have provided leadership in this

important effort and are committed to continuing to do so to assure that the everincreasing demands for information are met and that necessary information is available for responsible environmental decisionmaking.

EPA VISION AND OPERATING PRINCIPLES FOR ENVIRONMENTAL INFORMATION

MANAGEMENT

APPROVED BY STATE/EPA INFORMATION MANAGEMENT WORK GROUP AT SALT LAKE CITY

MEETING

The States and U.S. Environmental Protection Agency (EPA) are committed to a

partnership to build—locally and nationally accessible, cohesive and coherent environmental information system that will ensure that both the public and regulators

have access to the information needed to document environmental performance, understand environmental conditions, and make sound decisions that ensure environmental protection.

Joint State/EPA Operating Principles For Effective Environmental Information

Management

Working closely with local governments, the regulated community, the public, and

tribal governments, the States and EPA will adhere to the following Operating Principles in their efforts to build efficient and effective environmental information systems that recognize customers’’ needs, ensure full public access, strengthen environmental program management, minimize reporting costs, and ensure fairness and

due process in the protection of trade secrets.

1. Data collected by the States and/or EPA should have a specific and demonstrable use that:

• contributes to public understanding and decisionmaking about environmental

and health risks in their communities;

• supports States’ and EPA’s ability to manage environmental programs effectively and enables regulators, legislators and other oversight bodies, and the public

to measure success in the implementation of such programs, in a manner that is

increasingly based upon environmental results; and??

• imposes the least burden on the private and public sectors, consistent with the

above public requirements.

2. The States and EPA commit to developing ways of sharing core environmental

information based on jointly developed data standards and compatible system design. To this end, business processes and information systems designed by either or

both States and EPA should:

• be designed and managed employing methods and technologies that will assure

that the burden of collecting, storing, maintaining, and retrieving these data is

minimized and provides for timely data sharing among all users;
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• be managed and maintained to provide enhanced data quality, reliability, secu- rity and overall system stewardship; • be integrated across programs and facilities based on data standards, in part so that information collection duplication and or redundancy is reduced as much as

possible; • provide the context, purpose, reliability, and collection methods for these data, in order to enhance users’ understanding and use of data to address environmental

issues; and

• promote ready access to quality environmental information for all levels of government, the regulated community, and the public.

3. The States and EPA will leverage and share existing and future State and Federal investments in the use of information technology. Recognizing the opportunities

and risks associated with the rapid pace of developments in information technology,

the States and EPA will work as partners to modernize environmental information

systems as rapidly and efficiently as possible, while doing everything possible to ensure that all EPA components and all States participate fully in this process.

4. The States and EPA recognize that there is a critical need to share information

for each agency to be successful in its general mission. While recognizing that both

have special data needs for specific programs that do not require information to be

shared or for which information sharing may not be necessary, States and EPA recognize the overriding importance of transparency in public activities and decisionmaking and of respect in the use and dissemination of each other’s information.

5. The States and EPA will improve the collection, management, and sharing of

environmental information to support the achievement of their respective and

shared environmental goals and priorities. Integration of and agreement on these

goals and priorities will occur through a structured dialog (such as the National Environmental Performance Partnership System [NEPPS]).

RESPONSES BY BRENT C. BRADFORD TO ADDITIONAL QUESTIONS FROM SENATOR

SMITH

Question 1. The EPA’s testimony stated that Core Performance Measures are

needed to paint a national picture of environmental progress. Can you describe what

some of these core performance measures are? How are the data collected by the

States related to the Core Performance Measures and environmental indicators?

Response. Core Performance Measures (CPMs) have been developed through the

joint efforts of EPA’s program offices and ECOS. The 1995 NEPPS Agreement established a system for developing Performance Partnership Agreements (PPAs) between States and the EPA. The PPAs, in turn, provide a vehicle for articulating

both State and national environmental priorities and for establishing results-based

performance measures. In 1997, the States and EPA signed a Joint Statement on

Measuring Progress and produced the first set of CPMs for fiscal year 1998.

CPMs are a set of environmental indicators, program outcome and output measures used to assess progress in certain subject areas, such as protection of aquatic

ecological health, reduction of pollutant discharges, and others. They have been developed for air, waste, water and accountability measures have been developed for

enforcement and compliance assurance programs. There are no CPMs for pollution

prevention, pesticide, and toxic programs in fiscal year 2000.

As an example, within the air and radiation programs, ECOS and EPA have

agreed upon the following CPMs for reducing air toxic emissions and health risks:

Core Environmental Indicator: Trends in emissions of toxic air pollutants as reflected in EPA’s National Toxics Inventory; Core Program Outcome Measure: Reduction in air toxic emissions from 1990 levels; and Core Program Output Measure:

State progress in collecting and compiling ambient and emission source data for

toxics to better understanding the nature and extent of the air toxics problem.

Each media committee of ECOS and its EPA program counterparts, as a part of

the Core Performance Measures development process, determined not only the

measures, but the information needed to evaluate the measures. In most cases, it

was jointly determined that the data were already being collected and that additional information was not needed. However, it was determined that States and

EPA would have to work together on interpretation of information and assure that

the data were used for the purposes for which it was collected. This has come to

be known between States and EPA as the issue of respectful use. This issue of respectful use resulted in a joint effort on the part of State, EPA, environmental

groups and industry to address how environmental information is used and interpreted, how data quality is assured and how data gaps are appropriately filled.

While States and EPA have agreed to continue to search for and eliminate non-
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productive data collection, this does not seem to be nearly as important an issue

as how those data are used and interpreted.

Question 2. What are the States doing now to ensure that the data they collect relating to core performance measures is of good quality and used in the right context? One concern that is heard often is that States collect different types of data

that may not translate well into a national data base and, also, that data collected

in one context may not be applicable when they are considered in another context.

Do these issues affect the use of information for core performance measures?

Response. The collective State/EPA process that led to CPMs ensured that the

data supporting CPMs would be accessible and of good quality. By their nature,

CPMs are a collection of data that translates well into a national data base—intended, as Mike McCabe’s testimony on behalf of EPA indicated, to paint a national

picture of environmental progress. It is important to understand that the information collected by the States is utilized to manage State programs. These data are

the same information that is shared by States and EPA in the Core Performance

Measures. Individually, States have taken steps to assure quality of data as they

are used for the States own purposes and are available to those to whom the State

agency is responsible. Thus, there is incentive for the State to assure the data are

of highest quality. Many of the national data bases are outdated and unworkable.

This has been recognized by both the States and EPA. Therefore, the current work

of the State/EPA Data Management Workgroup is focused on the creation of a new

data exchange network that would eliminate the needed for inputting data into national program data bases and would allow EPA direct access to State data. This

system would preclude double entry of data and create new ways for States and

EPA to share information and assure its quality and accuracy.

Of course, the envisioned data exchange network does not imply that all Stategenerated and transmitted data will be used as originally or appropriately intended.

There are occasions, for example, when States and EPA have disagreed about the

release of certain data or the proposed use of that data. We understand and share

the urgency to ensure our citizens have access to environmental information. For

that reason, we must continue to work with EPA to ensure that the information and

its characterizations have received the necessary quality assurance, peer review,

and appropriate instructions for interpretation and use. Fortunately, EPA and

ECOS have established a solid working relationship focused on the need for relevant, reliable, high-quality, accessible, and useful data.

Question 3. What is the impact on the type and quality of the data collected, if

the EPA and the States have not agreed on the environmental priorities and goals?

Response. One of the big challenges facing EPA and the States is identifying what

data is necessary to support our collective priorities and goals. ECOS and I believe

that greater attention needs to be placed by EPA and the States on developing high

quality environmental goals, objectives and performance measures that the majority

of Americans can understand and rally around. These goals, objectives and measures will be significantly enhanced if they are developed in close consultation with

State environmental agency leaders who possess significant expertise and experience in environmental management along with significant responsibility for environmental protection. We give credit to EPA for its recent effort to reach out to State

environmental leaders to identify their priorities as EPA undertakes its strategic,

operational and budget planning.

One of the challenges of an increasingly results-based environmental management

system is that old measures of activities are increasingly irrelevant. Some may still

be important, but many others are not. New measures, particularly environmental

indicators, will require new monitoring efforts—and resources are a major concern.

As States and EPA tackle increasingly complex environmental issues such as

nonpoint source pollution, ecosystem health, and toxic risks, new data and analytic

tools will become necessary. The good news is the science is now available. The bad

news is that the funds frequently are not.

National data collection that does not support the attainment of agreed upon priorities is suspect, and as the process of collective priority setting moves ahead, my

colleagues and I are looking for opportunities to drop unnecessary data burdens.

Question 4. What additional assistance, if any, do the States need from EPA to

develop and implement core performance measures?

Response. For the CPMs that are currently in place, States do not need much

more assistance. However, ECOS continues to push for increasingly results-based

measures, and these will require a joint commitment of resources to identify and

implement. One of the reasons we are still heavily reliant on output, or activity,

measures is that they are relatively easy to measure, we are already measuring

them, and they are relatively cheap. Besides, we have been measuring those things
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for years; they are part of the culture. Unfortunately, they are poor proxies for real

measures of our environmental condition.

We also need the ability to collect data over substantial periods. Environmental results often take a long time to develop and materialize. Good, long-term, data are

needed to ensure that the trends are in the right direction and the investment is

paying off. As the States and EPA continue—through NEPPS and other joint planning ef- forts, like GPRA—to identify our environmental priorities, appropriate results measures will also become evident. We need a culture at the State and EPA levels, as

well as in Congress, that will embrace this new management approach and which

will provide the resources necessary to put it in place.

Question 5. Is it necessary for the EPA, in order to ensure that the States protect the environment, to second-guess the States, or to be able to second guess the

States, regarding every exercise of a State’s enforcement discretion, every permitting decision made by the States, and the like? Response. Not only is it unnecessary for EPA to second guess the States, it is un- productive, contentious and costly. It results in delays in compliance and undermines the ability of the State to effectively take and complete enforcement actions.

It is important to realize that State environmental agencies are much closer to these

enforcement issues than EPA and are also held much more closely accountable by

the public and elected officials. Further, it is important to understand that States

have the knowledge and ability to take into consideration local conditions and situations that may have a significant impact on achieving and maintaining compliance.

EPA generally fails to consider such situations in taking actions. In Utah, our experience with EPA enforcement has generally been very negative. EPA has waited

until cases have been negotiated by the State, said little or nothing regarding those

negotiations and then, after a settlement has been reached, come in to reopen the

case and attempt to extract additional or different penalties. This has a significant

adverse impact on the State agency, on the local community and on the facility. By way of example, the experience of the town of Spanish Fork, Utah may be helpful. The town of Spanish Fork is a rural Utah community with a population of

approximately 8000 people. The town built a new sewage treatment facility, for

which our agency issued a permit. The design of this facility is similar to that of

others that are currently operating in the State. The facility did not operate in compliance with permit requirements and the town contacted DEQ and reported the

noncompliance problem. After reviewing the available data, we issued an enforcement action and the town hired a consultant to try to identify and correct the noncompliance problem. A second consultant was brought in to assess the problem and

determine the reason for high residual chlorine. Our staff that had reviewed the

plans and also worked onsite to help identify the problem. Finally, the city expended

an additional $800,000 for a de-chlorination unit and the problem was corrected and

compliance was achieved. The State settled the case without penalty because of the

good faith shown by the city in identifying the problem and coming forth to fix it.

Four years after the issue had been resolved, EPA notified the State that they wanted DEQ to reopen the issue and collect a penalty of at least $100,000. The DEQ

attempted to dissuade EPA from this position given that compliance had been

achieved and maintained over a lengthy period. EPA insisted on pursuing the case.

The Region was requested by the State to meet with representatives of the town

and the State, including State legislators, prior to initiating any action. EPA refused, issued an enforcement action and then, reluctantly, met with the community

indicating that if the State had ‘‘done its job’’, they would not be there. They further

indicated that if the town wanted to appeal the action, a hearing could be requested,

but would be held in Denver. This precludes attendance of many who may be interested, including elected officials who serve part time. EPA then contacted the State

and indicated that they would back out of active participation if the State would

reopen its action and obtain a minimum penalty of $100,000. The community approached DEQ about the possibility of having the State join them in a suite against

the EPA action. Ultimately, the community did meet with EPA in Denver and EPA

settled the case for $24,000. (After telling the State, that they would accept nothing

less than $100,000 in a State-negotiated settlement). Subsequent to this action, the

State legislature passed, and the Governor signed, a joint resolution stating the

State position on enforcement, identifying what they believe is the appropriate EPA

role in environmental enforcement and requesting action on the part of EPA. EPA

has never acknowledged or responded to the resolution This case is typical of the

heavy-handed EPA approach to enforcement and an example of second guessing the

State. The EPA action cost the State, the town, the elected officials and the public

time and funding, accomplished no further progress in environmental protection and

may have permanently damaged relationships between the State, town and Federal
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Government. The DEQ has seriously questioned whether this was what Congress

intended when they empowered EPA to enforce environmental statutes. If, in good

faith, an entity is attempting to understand and comply with environmental requirements should they be treated as a criminal? This is the question that the elected

officials of this State continue to ask as a result of this and other cases brought by

EPA in our State.

EPA’s goal in this case was not compliance. That had been achieved. EPA was intent on flexing its Federal muscle and establishing a presence in enforcement in

Utah. In doing so, EPA only delayed work on the problem, alienated all associated

with it and undercut the ability of the State to take effective enforcement actions.

When EPA takes this kind of approach, it significantly undermines the ability of

the State to enforce, because facilities are reluctant to negotiate with the State for

fear that EPA will not accept the settlement. The result is delay in achieving compliance, continued threat to the environment because of legal positioning of the regulated facility, a lesser commitment on the part of the facility to cooperatively correct the problem and finally, damage to relationships between the State agency,

elected officials, the public and the regulated community. Another example that may be of interest is that of the State action regarding ex- cess emissions at the company’s Salt Lake Refinery. The State initiated an enforcement action for excessive emissions at the refinery. After reviewing the Federal and

State rules and evaluating the information received during inspections and from the

company in response to the enforcement action it was determined that the emissions

were a result of unavoidable breakdown as defined in Federal and State rule and

therefore, penalties were not appropriate as actions had been taken to correct the

problem. EPA determined that the State action was inappropriate and that the

rules had been interpreted incorrectly. EPA sought a $1 million penalty from the

company. The action has been in the legal process for 2 years. The State has recently been informed that EPA now believes that the State interpretation was, in

fact, correct and that violations did not occur.

In the meantime, both the company and the State have incurred substantial legal costs. The EPA action did nothing to achieve compliance, but did create a costly and

contentious process for a period of 2 years.

Question 6. Are the States able and willing to exercise reasonable, and vigorous enforcement and permitting discretion if the States are no longer subject to secondguessing in every case? If so, please explain why that is true today, even if it was not true in past years.

Response. In Utah, we have always taken our responsibility to enforce environ- mental requirements seriously and have aggressively pursued compliance with environmental requirements of both State and Federal laws. It is important to recognize

that the majority of compliance actions taken are State, not EPA actions. In Utah,

we have the capability to take such actions and we take our stewardship to protect

the environment seriously. It is our belief that much of the current problem, at least

between our State and the EPA, is a result of two things: 1) a difference in the philosophy of enforcement and 21 differences between the State and EPA in what constitutes a measure ot success In enforcement and compliance issues. The position

of the State has been that the goal is compliance with environmental requirements.

There are many tools to help us gain that compliance and the enforcement tools represent an important part of the toolbox but not the only tool in the box. However,

if compliance is the goal, then it may not be necessary to always utilize extensive

penalties, orders, and court actions if the facility is cooperative and compliance can

be achieved with lesser actions.

EPA has placed emphasis in three areas: 1) deterrent value of penalties, 2) na- tional consistency and 3) the importance of a Federal presence in each State. All

three of these areas have been troublesome to Utah. While we don’t disagree that

there is value in penalties, when the penalty becomes the major objective in settling

a case at the expense of compliance, this is problematic. This has been our experience with EPA in Utah. National consistency may be important for EPA, however,

it has not allowed for consideration of local circumstances and conditions that may

be important in assuring an adequate solution to the problem. Federal presence has

generally not been to the benefit of the State, because of the credibility issues that

have resulted from the unwillingness of EPA to work with the State and local government in solving compliance and enforcement issues. Federal presence only tends

to entrench the parties further and undermine the ability of the State to expeditiously resolve compliance issues. If measures of success are shifted to problem resolution and compliance rates as opposed to actions taken and penalties collected, the

effectiveness of State actions becomes readily apparent. In Utah, we are achieving

compliance. For example, recently, we shared with EPA the compliance rates that

had been achieved in the Underground Storage Tank program as a result of imple-
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menting a compliance assistance program to help tank owners understand and comply with tank requirements. Current compliance rates are substantially higher as

a result of such assistance than they were when an aggressive enforcement program

was underway. In this example, enforcement and penalties were not achieving the

compliance goal. Assistance was the key and compliance was the result. This is an

example of using the right tool for the right job. EPA had refused to use this tool.

While we have used enforcement vigorously where it is needed, other approaches

have also been effective in achieving compliance if it becomes the goal.

Question 6a. If so, please support your explanation why that is true with exam- ples showing that the States have reasonably, responsibly and vigorously enforced

the following: A. Federal environmental laws, and B. State and local environmental laws, over which the EPA exercises no supervisory responsibility. Response. The following are some typical examples of State actions to enforce Fed- eral environmental laws:

The State filed a natural resources damage claim against Kennecott Copper Cor- poration for contamination of soils and ground water throughout the western portion of the Salt Lake Valley. The State negotiated a settlement which has resulted

in a program for cleanup of contaminated sites and ground water. That cleanup program is ongoing. The State has taken action against other major industry violations

in the mining, oil and power industries. In addition, we have focused efforts on

minor sources which contribute significantly to the nonattainment status along

Utah’s Wasatch Front. We have aggressively administered the provisions of the

Clean Air Act relating to prevention of significant deterioration to protect the

unique canyon country of southern and southeastern Utah. The following are examples of actions taken regarding State environmental laws over which EPA has no responsibility: The State has developed an underground storage tank program that includes cer- tification programs for tank installers and inspectors. The State vigorously enforces

this certification program. There is also a State underground storage tank financial

trust fund established for meeting the financial assurance requirements of the State

and Federal law. The compliance requirements for a tank owner to get onto the fund

and utilize it are much more stringent than the Federal requirements and are vigorously enforced by the State. The State has established a ground water protection

program and groundwater permitting requirements that do not exist at the Federal

level and these are vigorously enforced. Individual waste water disposal system

rules are a joint responsibility of the State and local governments. These are critical

given the growth being experienced in rural Utah. Such rules do not exist at the

Federal level. These rules are aggressively enforced by the State and local government. Utah has designated nerve agents as hazardous waste and has enforced hazardous waste requirements against the U.S. Army at the Tooele Army Depot chemical agent destruction facility. Federal rules do not treat nerve agents as hazardous

waste. Utah has established requirements for Air Quality permits for minor sources

of air pollution. This is above and beyond the requirements for permits under the

Federal clean air act. These are just a few examples of where the State has established and enforced requirements above and beyond those established under Federal

law. Each of these requirements is designed to assure appropriate environmental

protection in the State and address concerns that are either unique to Utah or are

of higher priority to the State than to the Federal Government.

Question 7. Are there alternative approaches to the current ‘‘second-guessing ap- proach’’ that could still provide assurance to EPA that the State programs are protective of public health and the environment? For example, an approach that would

allow EPA to review, on a 5-year, 7-year, or 10-year basis, the overall performance

of the State, and renegotiate the State’s delegate authority based on the level of

progress that the State had made toward a better environment during that period. Response. EPA could have a number of significant and helpful roles in enforce- ment. First, EPA could continue to provide resources to the State in the form of

funding, training and technical assistance. Second, they do have an oversight responsibility under the Federal environmental statutes and it is appropriate that

such a role exist. However, the problem is the ‘‘philosophy’’ enforcement. If EPA continues to take an ‘‘enforcement for enforcement sake’’ position when the State takes

‘‘compliance is the goal’’ approach, it doesn’t matter whether EPA reviews State actions once a month, once a year, or once every 10 years, the conflict will continue

to exist. Until EPA and States can agree to a common goal tor enforcement and

agree to measures that appropriately reflect that goal, it will be difficult, at best,

to find a productive resolution to this problem. Third, EPA can assist the State enforcement and compliance issues where the State has a jurisdictional issue or a resource problem that precludes the State from appropriately addressing the issue.
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When programs are delegated to a State, Federal law requires EPA to make a determination that the State has adequate resources, expertise and authority to conduct

the delegated program. When such a determination has been made, EPA should

shift its emphasis from over sight to collaboration. By partnering with the State, EPA can bring its expertise, resources and authori- ties to the table to work with the State in a State driven process for addressing compliance and enforcement issues. This kind of partnership would allow focus of limited State and Federal resources on problem solving instead of continuing an unproductive dispute over who controls enforcement.

Question 8. Please indicate whether you agree or disagree with the following statement: ‘‘reasonable people, acting in good faith, can disagree over the best method for protecting the environment’’. For example, reasonable people can differ over

the proper mix of enforcement and compliance assistance as generic tools, and the

proper use of a particular choice of methods in a specific case. Accordingly, the best

approach for gaging a State’s environmental protection program is to evaluate the

entirety of the State’s efforts, both enforcement and compliance assistance, over a

long period of time, and to determine whether the State has improved the condition

of the environment, rather than focusing on a particular case or series of cases, the

number of enforcement actions brought in a particular State (or any other similar

so-called ‘‘bean counting’’ system) and the preference (if any) between enforcement

and compliance assistance.

Response. This statement is basically true. If the goal is environmental protection, then measuring progress toward that protection is important and may be the best

measure of effectiveness of any environmental program. However, there may be

value in measuring compliance to be able to ascertain the effectiveness of programs.

There is a significant difference between measuring compliance rates and measuring

enforcement activities. In certain cases, compliance may be achieved effectively with

methods other than enforcement. There is too much emphasis placed by EPA on the

negative incentives of enforcement and not enough emphasis on positive incentives

that can be used in achieving compliance. The net result is that many compliance

approaches other than traditional enforcement are not being utilized effectively.

Measures of success which evaluate all aspects of the compliance process along with

trends in environmental protection would be much more appropriate.

RESPONSES OF BRENT C. BRADFORD TO ADDITIONAL QUESTIONS FROM SENATOR

LAUTENBERG

Question 1. How long have EPA and State agencies been working to integrate environmental information management and to streamline environmental reporting?

Response. The State/EPA Data Management Workgroup was formed in the fall of

1997 and held its first meeting in January, 1998. The first effort of the workgroup

was to establish a shared Vision and a set of Operating Principles. These have become the foundation upon which States and EPA have built their work around environmental data issues (copy attached). After the establishment of the joint vision

and operating principles, the three initial priorities of the work group were to look

at the issues of what information is being collected for what purpose, how is it being

housed and shared and how is it being used. The workgroup formed a series of action teams to address issues around technology transfer, facility identification, appropriate use of data, etc. As the work of these teams went forward it became evident that several issues were important to address. Standards became a central

theme around which all data discussions had to revolve and a data standards council has now been formed. Data quality and data gaps have become significant issues

for both industry and environmental groups and a forum for discussion of these issues has been formed as a part of the respectful use discussions. In 1999, EPA realized the importance of this effort and created their Of flee of Environmental Information to establish a structure within the agency to better handle data issues within the EPA and to focus work with States in this important area. There has been

a recognition on the part of EPA and States that 94 percent of the environmental

program data are collected and managed by States; but, that both States and EPA

rely on those data for program management. This makes it critical that a way be

found to share information, make it easily available to those who have a need for

or interest in it and assure that the information is accurate and used appropriately.

The most recent work effort of the workgroup is the development of a vision for a

national environmental data exchange network in which the stewardship of information resides at the point it is collected, primarily within the States, while providing the ability for EPA and other interested parties to gain direct access to that information. This would eliminate the need for program legacy data bases and would
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eliminate the need for reporting on the part of regulated entities and States. This

has been an evolutionary process which has developed as States and EPA have come

to better understand needs, relationships, technology, interests and importance of

data issues. It continues to evolve.

Question 2. Which of the following attributes will the integrated reporting system envisioned by the EPA-State partnership be expected to have: Will a facility be able to identify, through one point of contact, all the EPA report- ing requirements that apply to it? Will a facility be able to identify as well, through

the same point of contact, all the State, Tribal, and local environmental reporting

requirements that apply to it? Response. The environmental information exchange network envisioned by the States and EPA is not about creating a single point of contact to determine applicable reporting requirements. It is about sharing information through direct access to

it. It would be virtually impossible to have a single point of contact that could keep

track of all Federal, State and local reporting requirements or needs. However, realizing that States collect a majority of information and are the stewards of that information, a system can be created that will allow sharing of that information between

States and EPA and thereby reduce reporting burdens on industry and States and

allow EPA access to necessary information.

Question 3. Will a facility be able to submit, through the same point of contact, all information that is normally submitted directly to EPA programs? Will a facility

be able to submit as well, through the same point of contact, all information required under applicable State, Tribal and local environmental reporting requirements?

Response. The data exchange network would recognize the importance of the State role as collector and steward of information and would provide for EPA to be

able to access information directly within a State data base. EPA would then create

the capability to share that information within the agency with those programs that

need the information. This would eliminate duplicate reporting on the part of the

regulated entity, eliminate a significant reporting burden on States and ensure better quality of information by eliminating multiple inputting of data into various systems. While the discussions have focused on the relationships between State and

EPA, local and tribal needs could be addressed through this same mechanism.

Question 4. Will the reporting system direct the facility to information on applica- ble OSHA reporting requirements and environmental reporting requirements administered by Federal agencies besides EPA? Response. The data exchange network currently being discussed would not ad- dress reporting requirements from OSHA and other Federal agencies as the basis

for the current vision is access to and sharing of information, not the reporting requirements themselves. The reporting requirements have been addressed in two

other forums: the work of ECOS and EPA around Core Performance Measures and

the burden reduction efforts of the State EPA Burden Reduction Action team. The

data system discussion is not the place that discussions about appropriate reporting

requirements have been held.

Question 5. Will the reporting system use data standards for units of measure, terms for chemicals, pollutants, waste, and biological material, and methods of identifying reporting facilities, developed in consultation with industry, environmental

groups and other stakeholders? Response. Data standards are a fundamental component of the information exchange network. States and EPA have created a Data Standards Council to discuss

these and other standards issues. Tribal interests are also included on the Council.

A standards development process is envisioned which would allow participation of

interested stakeholders.

Question 6. Will the reporting system use an ‘‘open data format’’ that allows facili- ties to download information from their own internal data management systems directly to the integrated reporting system? Response. Again, it is important to note that we are not discussing a single na- tional reporting system; but, rather an information exchange network which allows

sharing of information once it is reported and which recognizes most environmental

information as collected. Electronic reporting is currently the subject of discussion

in many States. In Utah, for example, we have developed electronic reporting capability that allows regulated entities to report air emissions inventory and water

quality monitoring data electronically. The information can then be accessed and

shared by various programs within the Department of Environmental Quality. In

the data exchange network envisioned, these data would be accessible to EPA but

would continue to reside in our State data warehouse. The State/EPA data management workgroup is working with the National Governor’s Association and the EPA
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One-Stop program to evaluate and encourage electronic reporting, but; given the nature of environmental data collection today, such capability will have to be developed at the individual State level in order for electronic reporting to be effective.

Question 7. To ease reporting by businesses with facilities in more than one juris- diction, will EPA and State, tribal and local agencies all use he same data format

and standards?

Response. The previously mentioned Data Standards Council will address the

issue of standards. The question of format becomes important at the point of collection, but given that once the information is collected, it will be shared by direct access to it, it would relieve the reporter of the burden of having to concern themselves further with data format.

Question 8. Will a facility be able to receive information on pollution prevention

technologies and practices through the reporting system.

Response. This issue has not been specifically discussed to date. The focus of the

data exchange network discussions have been data flows and information itself. Pollution prevention information could be made accessible through such an exchange

network to the extent that such information is being collected.

Question 9. By what date may we expect the envisioned integrated reporting system, or aspects of the system, to be in place?

Response. Significant progress has been made, a facility identification standard

has been developed and other standards are under discussion, the vision for the national environmental data exchange network has been developed and discussions between States and EPA are on-going. One key factor to the success of this effort is

the continuation of Federal funding. In the President’s budget there are $30 million

identified for environmental information management ($16 million for State and $14

million for EPA). This funding is critical if this effort is to go forward. States have

committed significant resources of their own to develop the capability to manage environmental information, the EPA one-stop program has been key for many smaller

States to enhance their capabilities. The realization of this national data exchange

vision can only happen if the resources necessary to create the structure are available. Without such funding, the States and EPA would have to divert existing resources to this effort. For many States, this may be impossible.

Question 10. Are the air, water and waste programs of EPA and the State agencies fully participating in the development of the integrated reporting system?

Response. EPA has created the Of flee of Environmental Information and charged

it with the responsibility of overseeing and coordinating this effort within EPA. OEI

is having discussions with EPA’s Quality Information Council regarding this issue.

The QIC in an internal EPA group made up of executive representation from the

various programs which is advisory to the Office of Environmental Information.

ECOS is coordinating this effort through the Information Management Workgroup,

a part of the ECOS Strategic Planning committee and through the committee structure established within ECOS. In addition to these efforts, the joint State/EPA Data

Management Workgroup has representatives from EPA programs who are actively

participating in these discussions.

RESPONSE OF BRENT C. BRADFORD TO ADDITIONAL QUESTIONS FROM SENATOR

CHAFEE

Question 1. You note in your testimony that the States are making significant accomplishments in environmental data management, but the cost is high and continued Federal investment is essential. On average, how much of their own resources

do the States spend on environmental information management?

Response. States spend, on average, about 1.67 percent (as of Fiscal Year 1996)

of the total State budget on environment and natural resources. This has increased

steadily since 1986. Unfortunately, we do not yet have any estimates on average

State spending on environmental information management.

In Utah, in the past 3 years, we have expended approximately $3.5 million of

State Funds to enhance our data management capabilities and make information

accessible to EPA and the public. In addition, we have utilized a $500,000 EPA onestop grant to develop a specific project related to public accessibility to permitting

and compliance information, electronic reporting or inventory and water quality

monitoring data. States such as ours rely heavily on Federal funding to accomplish

our data management goals.

Some States have spent significant State funds on information management. For

example, the Commonwealth of Virginia has spent about $12 million over a 2-year

period for its Comprehensive Environmental Data Systems (CEDS). Other States
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are making considerable investments, as well. On the other hand, many States have

not yet made or had the capability to make substantial investments. One thing

seems certain, however. In order to manage better the data that already exists, and

to be able to maximize its utility to managers, government partners, industry and

the public, substantial investments will be required across the board. While States

are stepping up to that need, Federal assistance would be valuable considering

States generate well over 90 percent of the data that EPA relies on to tell the nation’s environmental story.

Question 2. The lack of adequate data has been cited as an obstacle to current

environmental efforts. Do you feel that we as a nation are investing sufficient resources in data collection? How much do the States spend on monitoring programs?

Response. In many respects, we are data rich but information poor. We collect lots

of data, but we cannot always make sense of it without additional resources for

analysis.

Much of the question related to adequate data must be looked at in terms of what

information may be needed to determine progress in environmental protection. This

then relates to goals established for that protection and the measures of success associated with those goals. In some cases additional information may be necessary,

in others, it may be more a case of how to appropriately use the information we

have.

As we focus environmental management more on environmental results, we will

have to begin to measure environmental conditions in a way and to an extent that

is unprecedented. This may require additional or different information to be gathered. It certainly will require substantial work on the part of both EPA and the

States to understand and properly utilize the information we collect. An investment

in development of proper measures and the gathering and interpretation of data

needed for those measures will be essential if the environment is to be protected.

I do not have figures on State spending on monitoring.

ENROLLED COPY H.C.R. 3

RESOLUTION ON THE ADMINISTRATION OF ENVIRONMENTAL LAWS

1999 GENERAL SESSION

STATE OF UTAH

A CONCURRENT RESOLUTION OF THE LEGISLATURE AND THE GOVERNOR

REQUESTING THE ENVIRONMENTAL PROTECTION AGENCY TO REFRAIN FROM OVERFILING ON STATE-NEGOTIATED COMPLIANCE ACTIONS AND TO DEFER TO STATE AND LOCAL PRIORITIES IN TAKING

COMPLIANCE ACTION; AND REQUESTING CONGRESS TO INVESTIGATE

ENFORCEMENT ACTIVITIES OF THE ENVIRONMENTAL PROTECTION

AGENCY AND REQUIRE THE AGENCY TO DEFER TO STATE ENFORCEMENT AND COMPLIANCE ACTIONS WHERE ACTIONS ACHIEVE COMPLIANCE AND ARE PROTECTIVE OF HEALTH AND THE ENVIRONMENT

Be it resolved by the Legislature of the State of Utah, the Governor concurring

therein:

WHEREAS, protection of public health and the environment are among the highest priorities of State governments;

WHEREAS, Congress has provided by statute for the delegation of certain Federal

program responsibilities to the States;

WHEREAS, to obtain delegation of Federal environmental programs, a State must

demonstrate that it has adopted laws, regulations, and policies as stringent as Federal laws, regulations, and policies;

WHEREAS, over the past 25 years, the States have developed and demonstrated

expertise in operation of Federal environmental programs enabling States to obtain

and maintain the delegations;

WHEREAS, the States of Utah, Colorado, Montana, Wyoming, North Dakota, and

South Dakota constitute an area designated by the Environmental Protection Agency (EPA) as Region VIII;

WHEREAS, the States in Region VIII make compliance with environmental laws,

rules, and permits the highest priority;

WHEREAS, the State of Utah has full delegation in all Federal environmental

programs;
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WHEREAS, the EPA and the States have bilaterally developed over the past 25

years policy agreements which reflect roles and which recognize that the primary

responsibility for enforcement and compliance resides with the States, with the EPA

taking enforcement action principally when the State requests assistance or is unwilling or unable to take timely and appropriate enforcement action;

WHEREAS, inconsistent with these policy agreements, the EPA has conducted direct Federal inspections within programs delegated to States, has taken direct enforcement actions, has levied fines and penalties against regulated entities in cases

where the State previously took appropriate action consistent with the agreements

to bring the entities into compliance, and has failed to notify the States in advance

of their action;

WHEREAS, the EPA has begun to use its enforcement authority in cases where

the State had worked with the regulated entity to achieve compliance, and the overfiling by the EPA accomplished no further protection of the public health or environment but only imposed an additional penalty on the regulated entity;

WHEREAS, the EPA’s current enforcement practices and policies and the resultant detailed oversight and overfilling of State actions substantially weaken the

State’s ability to take compliance actions and resolve environmental issues;

WHEREAS, the EPA’s enforcement practices and policies have had an adverse impact on working relationships between the EPA and States;

WHEREAS, the EPA’s reliance on the threat of enforcement action to force compliance may not result in environmental protection, but rather may result in delay

and litigation, cripple incentives for technological innovation, and provoke animosity

between government, industry, and the public; and

WHEREAS, the Western Governor’s Association has adopted ‘‘Principles for Environmental Protection in the West,’’ which encourages collaboration not polarization,

advocates the replacement of command and control with economic incentives and rewarding results, and encourages the weighing of costs against benefits in environmental decisions:

NOW, THEREFORE, BE IT RESOLVED that the Legislature of the State of

Utah, the Governor concurring therein, requests the EPA to refrain from overfiling

or threatening to overfile on State-negotiated compliance actions if the actions

achieve compliance with applicable State and Federal law and are protective of

health and the environment.

BE IT FURTHER RESOLVED that the Legislature and the Governor request that

the EPA, in taking enforcement and compliance actions, recognize and defer to individual State and local priorities that are important for the protection of the environment.

BE IT FURTHER RESOLVED that the EPA should work with and assist States

in evaluating the overall effectiveness of State compliance programs and not focus

on the detail of individual actions.

BE IT FURTHER RESOLVED that the Legislature and the Governor request the

Congress of the United States to investigate EPA enforcement activities and require

the EPA to defer to State enforcement and compliance actions in delegated States

where the actions achieve compliance and are protective of health and the environment.

BE IT FURTHER RESOLVED that copies of this resolution be sent to the President of the United States, the President of the U.S. Senate, the Speaker of the U.S.

House of Representatives, each member of the Utah congressional delegation, the

Administrator of the U.S. Environmental Protection Agency, the Assistant Administrator of the U.S. EPA Office of Enforcement and Compliance, the Regional Administrator of the U.S. EPA Region VIII, the National Governor’s Association, the National Council of State Legislators, the Council of State Governments, the Western

Governor’s Association, and the Environmental Council of the States.

STATEMENT OF LYNN SCARLETT, EXECUTIVE DIRECTOR, REASON PUBLIC POLICY

INSTITUTE

Senator Smith and members of the committee, thank you for inviting me here

today. My name is Lynn Scarlett. I am Executive Director of Reason Public Policy

Institute, a nonprofit, nonpartisan policy research organization located in Los Angeles, California.

Earth Day Legacy

April 2000 marked the 30th anniversary of Earth Day. After three decades of environmental policy initiated since that first Earth Day, environmental policy is in

a state of transition. The environmental model that emerged after the first Earth
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Day had four characteristics. First, the model engendered relatively prescriptive

regulations that both set goals and required particular technologies and methods to

meet those goals. Second, the model emphasized process over performance, with permits often serving as a proxy measure of performance. Third, the old model segregated environmental problems into discrete categories air, water, and waste, for

example and addressed each separately. Finally, the model tended to focus on punishment enforcement actions as the central strategy for achieving environmental

progress. ‘‘Sticks’’ rather than ‘‘carrots’’ predominated. This regulatory strategy produced some successes. Open dumps were virtually eliminated. Phosphorous levels, a major indicator of water pollution, had fallen 40

percent or more in the Great Lakes by the 1990’s contrasted with pollution levels

in the 1970’s. In Los Angeles, stage one smog alerts declined from more than 120

in 1977 to 13 in 1995.

But all is not well. The punitive model often engendered high conflict and litiga- tion. The prescriptive emphasis tended to stifle innovations in pollution prevention

and environmental restoration. Segregating problems into distinct categories sometimes resulted in unintended consequences shifting of pollutants from one medium

to another. And, finally, costs to achieve results were higher than might have been

possible in a context that inspired innovation and wider implementation options.

Moreover, circumstances are changing, giving rise to increasing tensions between the regulatory model of the 20th century and the complex and dynamic 21st century

context.

First, new kinds of problems are moving center stage. The old model focused primarily on ‘‘point’’ sources of pollution. By 2000, many remaining challenges took the

form of ‘‘nonpoint’’ pollution from agricultural waste, stormwater runoff, and so on.

Second, a new breed of industry had emerged that reflected the environmental

values of the broader American culture. By the 1990’s, industries had begun to move

toward ‘‘knowledge-based’’ production and products and ‘‘closed loop’’ production, accelerating the process of dematerialization using fewer resources for each good or

service produced. ‘‘Industrial ecology’’ the deliberate incorporation of environmental

values into product-design and process decisions began to flourish. In this context,

a survey of large American corporations showed that 77 percent cited pollution prevention as an important business strategy.

Architects of environmental policy thus face a new ‘‘problem set.’’ There is a growing mismatch between permit-focused compliance and the reality of complex, often

dispersed problems. There are growing tensions between prescriptive regulations

and the broadening press for fast-paced innovation within firms and on farms and

ranches. Finally, the punitive model has limited scope for inspiring environmental

excellence a nation of self-motivated environmental stewards.

Put another way, four recurring challenges confront environmental stewards in

both the public and private sectors:

• How can policies better ensure environmental innovations?

• How can policies better focus on results and take into account simultaneously

many interrelated goals and complexity of the physical world?

• How can policies better foster private incentives for stewardship?

• How might policies better take into account specific, or local, knowledge the

knowledge of time, place, and circumstance?

New Environmentalism

In this changing context with its combination of new and old challenges, a new

environmentalism is emerging. The States and their environmental protection agencies, working with the private sector, are at the forefront of this ‘‘discovery process.’’

Programs and policies emerging as part of this new environmentalism have four features. These features include: (1) greater flexibility in how firms, farmers, and local

communities might achieve environmental goals; (2) a focus on performance rather

than on process; (3) a move toward incentives rather than punishment as the strategy of choice; and, (4) a move toward place-based decisions where the ‘‘devilish details’’ of local circumstance become part of the decision process.

Flexibility. By the 1990’s, States were overseeing, implementing, and enforcing

the majority of all environmental programs. That day-to-day, hands-on experience

made State regulators acutely aware of some of the challenges, missed opportunities, and unintended consequences of prescriptive and process-focused environmental regulations. Acting upon this recognition, State regulators have launched an

array of programs intended to inject greater flexibility into the way the regulated

community may achieve desired environmental goals.

These experiments in flexibility do not imply ‘‘roll back’’ quite the opposite. Most

of these endeavors involve extending the performance envelope upward and outward

to cover more environmental problems and with higher ultimate goals. Some of
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these endeavors have been initiated independently by the States. Others have advanced in tandem with Federal programs such as Project XL and the National Environmental Performance Partnership system. These programs include the development of ‘‘environmental performance com- pacts’’ with firms and farmers; facility-wide permitting programs that move away

from source-by-source permit requirements; and industry-wide permits. Some are

pilot programs; some have become more broad-based initiatives. States with both

Democratic and Republican legislatures and Governors are moving in this direction. Among the trend setters in developing these programs are Wisconsin, Oregon, Illi- nois, Minnesota, Massachusetts, New Jersey, and Florida. Wisconsin’s Green Tier program establishes a two-tier permit option. The first, the Control Tier, applies traditional source-by-source permits. The second, the Green

Tier, allows firms that demonstrate high levels of compliance an opportunity to develop a ‘‘performance compact’’ in effect, a single, facility-wide permit. This permit

establishes a set of performance criteria, potentially on a multi-media basis, spelled

out in a ‘‘contract’’ or ‘‘compact’’ between the firm and the public. The compact is

enforceable in the courts.

Under its Green Permits program, Oregon’s Department of Environmental Qual- ity (DEQ) offers two types of permits available to facilities that have achieved superior environmental performance a Green Environmental Management System

(GEMS) Permit and a ‘‘Custom Waiver Permit.’’ The GEMS permit requires that

firms use a formal environmental management system through which firms establish and maintain environmental goals. The custom waiver allows limited waivers

of normal permit requirements if a waiver is needed for the facility to achieve superior environmental results (for example, through pollution prevention). Florida is developing a Phosphate Industry permit that establishes a single per- mit for an entire mining operation over its life. The permit agreement sets performance standards and identifies environmental data the industry must report and

make available to the public. It will allow reductions in paperwork and process burdens, results-based performance, and increased public accountability. Massachusetts introduced an Environmental Results Program, which establishes performance goals and compliance assistance for selected industries on an industrywide basis. Under the traditional permitting program, some 10,000 facilities in the

target industries were regulated using over 16,000 permits. The Department of Environmental Protection spent significant resources issuing permits rather than focusing on achievement of environmental results. For example, the department was

issuing air permits to some 4,400 facilities, of which two-thirds were small- and medium-sized companies that accounted for just 5 percent of the State’s total air emissions. Under the new program, the State created industry-wide standards. Participating firms agreed to comply with the standards; the State focused on auditing and

enforcement. The program resulted in a 43 percent reduction in fugitive emissions

from participating dry cleaners and a 99 percent reduction in silver discharges by

photoprocessors.

In the mid-1990’s, New Jersey experimented with a facility-wide permitting program. Through the program, participating facilities must keep emissions below specified performance caps but may achieve those goals in whatever ways they deem

most effective and efficient. For one firm, the old, source-by-source permitting process had generated ten binders of paperwork. The new system reduced paperwork

to a 1.5-inch thick packet. A single permit replaced 80 separate permits and could

be processed in 90 days rather than 18 months. One firm estimated that it reduced

8.5 million pounds of emissions per year because the permit allowed them to modernize their facility (without getting new permits for each individual process

change). Through the modernization, the firm eliminated 107 of 350 pieces of equipment.

Performance. While most State-initiated new environmental programs emphasize

results (rather than process), several programs have particularly focused on developing performance indicators. Among these efforts are programs in both Florida and

Oregon.

Florida, for example, has developed a three-pronged set of performance measures

that move away from simple ‘‘bean-counting’’ of enforcement actions as the proxy

for performance. The first tier of measures sets forth direct indicators for environmental and public-health outcomes. These include indicators of air quality, surface

and groundwater quality, aquatic and marine-resource protection, public health and

safety, and public recreational opportunities. The second tier evaluates behavioral

and cultural measures that go beyond mere compliance statistics. While the State

measures regulatory compliance, it also looks at voluntary adoption of environmental technologies, pollution prevention achievements, energy consumption, per

capita freshwater consumption, and so on. Tier three includes traditional enforce-
139

ment statistics, but they attempt to measure internal agency efficiency and effectiveness as well time taken to issue permits, resources spent on compliance assistance, research, and monitoring, resource management, and land acquisition. Indicators are ranked as ‘‘good,’’ ‘‘watch,’’ or ‘‘focus’’ areas, allowing State regulators to set

priorities by focusing on those areas in which resources are most needed to solve

problems.

Incentives. The ultimate goal of environmental policy is to foster a nation of self- motivated environmental stewards. As States grapple with how to inspire firms and

farmers to move ‘‘beyond compliance’’, many have introduced environmental-incentive and compliance-assistance programs. Through its Texas Clean Industries 2000

program, for example, Texas has attracted over 140 participating firms into pollution-prevention activities. The firms commit to achieving a 50 percent reduction in

toxic chemicals over a 2-year period. After one year, the program was credited with

fostering reductions in hazardous waste by 43,000 tons; reductions in energy consumption by 11.3 million kilowatt hours; and reductions in 317 million gallons of

water consumption. Also in Texas, the State established a landowner incentive program to encourage farmers and ranchers to restore and maintain habitats to attract

threatened species such as the lesser prairie chicken.

Mississippi launched a voluntary stream protection program in which the Depart- ment of Wildlife, Fisheries, and Parks worked jointly with farmers, riparian landowners, and individual citizens to reduce water pollution, primarily through pollution-prevention efforts. Pennsylvania, through its Pollution Prevention Site Assessment grants, helps small-business owners identify pollution-prevention and energyconservation strategies. Wyoming has an Outreach and Environmental Assistance

program also designed to help participants meet environmental goals. Illinois,

through its Clean Break Amnesty program, offers compliance assistance to small

businesses. In exchange for their participation and completion of pollution-reduction

efforts, the small businesses are exempted from various fees and fines.

Among the more notable incentive programs are those designed to clean up ‘‘brownfield’’ (abandoned hazardous waste) sites. A number of States, including

Michigan, Pennsylvania, Illinois, New York, and many others now have voluntary

remediation programs. The programs typically have several central features. First,

they often tailor clean-up standards to the proposed use of the property, so standards are based on expected exposures to hazards rather than on a single, brightline clean up standard. Second, they often provide some liability protection to developers that invest in site clean up to the prescribed levels. Liability protection does

not extend to future pollution but applies to pre-existing conditions only. Place-based Decision-making. As experience with environmental problems builds, one observation recurs many environmental challenges involve location-specific details. A landfill in Florida, with high water tables, faces different challenges compared to a landfill in a desert. Fast-moving streams involve problems that differ

from slow-moving delta streams. Forests in low, wet latitudes require different management practices than forests in high, dry mountains. The recognition of locationspecific challenges of many environmental problems has led many States to experiment with place-based decisionmaking. Local settings also have the potential to

bring together diverse people with varying interests and needs in relationship to

local resources.

To some extent, voluntary remediation programs represent a move to place-based

decisionmaking, because local economic, environmental, and social interests are

woven together in final clean up decisions. But one of the most fertile arenas for

place-based decisions has centered on watershed management challenges. Numerous

States and localities have attempted to tailor decisions about watershed management to local circumstances and priorities by devolving decisions to those most affected by such decisions.

In Minnesota, for example, the Department of Natural Resources, City of St. Paul,

University of Minnesota, and the Ramsey-Washington Metro Watershed District

joined forces to develop a watershed management program for the Phalen Chain of

Lakes in the Mississippi River basin. Since the project’s inception, another seven

city governments and two counties have joined the effort. The project moves away

from the single-problem focus of the more traditional regulatory process, addressing

simultaneously water quality, fisheries, wetland protection, vegetation and wildlife

management, and river corridor protection and restoration.

Minnesota and Idaho have both pioneered effluent-trading schemes that improve

water quality by involving ‘‘point-source’’ and ‘‘nonpoint’’ (for example, chemical runoff from farming practices) sources. The Minnesota Pollution Control Agency

(MPCA) has capped new and existing discharges into the Minnesota River. Because

the cap made it difficult for firms to modernize or upgrade, the MPCA agreed to

work with the Coalition for a Clean Minnesota River and one brewing company to
140

institute an effluent-trading program. Under the program, the brewing company

was permitted to discharge effluent from its new wastewater treatment plant if it

helped reduce other discharge sources along the river. The company agreed to offset

its emissions by investing in programs that helped farmers reduce their chemical

runoff and other pollution sources.

On the Upper Clark Fork River basin in Montana, initial disputes between environmental activists and farmers over instream flows yielded to consensus for a leasing arrangement after a local, collaborative decision process was initiated. The lease

agreement allowed for temporary transfer of pre-1973 water rights rather than the

outright sale or relinquishment of those rights. The lease allayed fears of ranchers

that they would lose prior claims to those water rights, while still allowing them

to be remunerated for conserving water and leasing the ‘‘saved’’ water for instream

flow maintenance. Increased instream flows, in turn, helped to maintain wildlife

habitats.

Challenges and Opportunities

State environmental innovations toward flexibility, performance focus, incentives,

and place-based decisionmaking invite substantial new opportunities to improve environmental performance. In general, these programs allow for a more holistic approach to environmental problem-solving that recognizes the interconnectedness of

many of these problems. They also nurture private-sector innovation and private

stewardship, creating a context in which firms and communities are better able to

set priorities, target resources to critical problems, and craft more cost-effective approaches to reducing these problems.

But these efforts face both political and implementation challenges, including constraints imposed by the existing Federal regulatory context. For example, an April

2000 survey by the Environmental Council of the States, an association of State environmental regulators, ranked problems with EPA’s existing policies, procedures,

and rules as the most significant barrier to their efforts at innovation.

In general, challenges cluster into three categories. First are challenges posed by

fitting new regulatory structures within the old regulatory context. These include

uncertainties about allocation of enforcement responsibilities between Federal and

State agencies. Lack of clarity in this regard has given rise to concerns about potential overfiling in enforcement cases by Federal regulators.

Another central challenge tied to regulatory structures is how to ensure that permits or agreements initiated under the new programs, which often deliberately

avoid issuance of traditional source-by-source permits, will supplant the source-bysource permits without: (a) triggering an enforcement action, or (b) requiring a negotiation process with Federal regulators on each and every source-by-source permit

that is intended to be avoided through the flexible-permitting, or multi-media permitting process. Some streamlined Federal mechanism to allow the new permits to

supersede the old may be warranted. Currently, through its Project XL and other

programs, U.S. EPA has attempted to create conditions for this blending of the old

and the new to occur. However, these processes remain unevenly implemented; procedures and qualifying conditions remain unpredictable.

States also face difficulties in meshing new data-reporting mechanisms that

emerge from more holistic and performance-focused programs with the data-reporting requirements of the old regulatory model.

The second set of challenges are technical.

For example, as States move toward effluent trading, for example, establishing

equivalencies among pollutants subject to trades is not straightforward. Allocation

of initial baselines or emission credits as part of tradable credit schemes is also difficult and often contentious. At least one proposed State air-pollution trading program failed because of difficulties over these allocation questions.

Development of appropriate performance indicators by States also poses technical

and conceptual challenges. Environmental problems are complex and numerous. Reducing indicators to a workable set and determining appropriate measures for different problems involves data aggregation and simplification. Regulators face a

choice between what might be called ‘‘richness’’ detailed, highly tailored indicators

and ‘‘reach’’ indicators that are sufficiently generic so that they can be reduced to

a manageable and broad set.

The third set of challenges relate to stakeholder interests and concerns.

In developing facility-wide compacts with firms or in establishing place-based watershed management programs, a key question is which ‘‘stakeholders’’ should be at

the decision table. These issues likely should not be settled at the Federal level but

rather on an individual basis by States as they determine what decisionmaking forums work well in different circumstances.
141

Some stakeholders have also raised questions about ‘‘fairness’’ as well as about

the certainty of outcomes that might emerge in programs with multi-media permits,

compacts, or voluntary incentives. Air-permit trading, for example, may shift pollution to certain ‘‘hotspots,’’ thereby unevenly benefiting different populations.

Conclusion

George Meyer, Secretary of the Wisconsin Department of Natural Resources, elo- quently summarized the new environmental challenge to lawmakers:

It is time for public policymakers to unleash America’s potential to solve its remaining and emerging environmental problems. . . . With Congressional direction,

and adequate infrastructure, the States can create a learning system, with useful

knowledge applied outward to each other and upward to Washington, their co-implementation partner.

New environmentalism involves a discovery process a search not only for new

technologies but also for new institutional forms that inspire environmental stewardship and yield continuing environmental progress. There is no reason to think

that, in our first attempts at constructing rules and decision processes to address

environmental issues, we achieved institutional perfection. Current State innovations are pointing to new institutional forms that have potential to reduce conflict,

enhance environmental performance, and more efficiently deliver environmental

benefits.

RESPONSES BY LYNN SCARLETT TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. What legislative changes does the Institute think are needed to get

to a new environmentalism approach?

Question 2. What changes does the Institute propose to the Federal role in the

new environmentalism?

Response. The new environmentalism, as embodied in State initiatives toward

flexibility, incentives, and a performance focus, shows substantial promise to deliver

environmental performance more holistically and efficiently. While some innovations

are occurring, without changes in Federal law these innovations will likely remain

marginal ‘‘special’’ programs. Fostering these State initiatives does not require an

overhaul of the major environmental statutes. It does, however, require what Debra

Knopmann of the Progressive Policy Institute has referred to as ‘‘transitional legal

space.’’

Crafting that transitional space requires a delicate balance between, on the one

hand, asserting congressional commitment and authorization for flexibility and, on

the other hand, resisting prescription and micro-management of the innovation

process. Moreover, expression of congressional commitment to innovation may be inadequate. The new environmentalism places a premium on performance measurement, which may require additional resources allocated toward monitoring and helping States invest in developing indicators. Finally, a Federal commitment to a new

environmentalism will require a more systematic way of tying priorities and resource allocation to results as measured through various indicators—a challenge

States like Florida, Oregon, and New Hampshire have begun to address independently.

Options

Congress has a number of options that could facilitate the move toward a new

environmentalism more focused on performance, incentives, and innovation made

possible through greater flexibility for States and firms.

Congress could institute changes through:

• the reauthorization of existing statutes, with provisions for greater flexibility

in reaching environmental goals (it has been over decade since the last CAA debate,

13 years since the CWA received a full review, and 14 years since Superfund was

overhauled).

• development of an EPA authorizing statute that would clarify Federal, State,

and regional agency roles and specifically indicate congressional intent to foster

State environmental innovations, perhaps by endorsing and clarifying the NEPPS

mechanism to provide State flexibility. One mechanism could be through a tiered

approach in which States would hold all permitting and enforcement authority for

fully delegated programs, with Federal monitoring of real-world results. If results

fell short of required levels as agreed to in the delegation (or NEPPS-style) agreement, EPA action would be triggered. The nature of that action would need to be

clarified. Those programs that were not delegated would be implemented by U.S.

EPA or its regions. Through periodic reauthorization of the EPA authorizing statute,
142

additional changes could be made to individual statutes to remove specific barriers

to integrated, flexible approaches to environmental management. • development of an environmental indicators statute that allocated resources to

States to support the development by States of their performance indicators. Such

a statute could also require development by EPA of threshold measurement criteria

to be used by the States to allow some consistency and comparability among measures (particularly for water and air quality). The statute might link to the GPRA

process so that performance indicators are linked to resource allocation decisions

and agency accountability (e.g., modeled after Australia or the U.S. Agricultural Extension Service, which has used analysis of performance measures to enhance outcomes).

Whatever congressional mechanism(s) are selected, Congress should resist pre- scribing a particular ‘‘flexibility and incentive’’ environmental management regime.

As experience with Project XL, the various State alternative permitting programs,

and other environmental management innovations have demonstrated, different

permitting and decision models may be applicable in different circumstances. Moreover, decisions regarding which firms might participate, what benefits they receive

for participation in incentive-based or flexible programs, and so on, should be left

to States to allow for maximum experimentation with different environmental management models.

Question 3. Is it necessary for the EPA, in order to ensure that the States protect the environment, to second-guess the States, or to be able to second-guess the

States, regarding every exercise of a State’s enforcement discretion, every permitting decision made by the States, and the like? Response. Clearer lines of authority and responsibility between the States and U.S. EPA are necessary to ensure less duplication of effort and greater certainty by

States and the regulated community regarding the legal status of State permits or

other performance agreements. The States now account for over 80 percent of enforcement actions. They have demonstrated an ability and commitment to effectively

enforce environmental statutes. One possible arrangement of roles and responsibilities would be for U.S. EPA to maintain permitting and enforcement programs for

nondelegated programs and for States that choose not to have authority delegated

to them. For those States that have signed NEPPS agreements or have otherwise

been delegated implementation authority for specific programs, the States should

have sole permitting and enforcement responsibility. EPA’s role, in these instances,

should be to monitor the State’s performance, ensuring that it is meeting its obligations. If it is not doing so, EPA can take action to challenge the delegation agreement. In other words, the ‘‘backstop’’ role of EPA should not be to overfile on enforcement matters, nor to require its own second set of permits. Rather, its backstop

role should be to monitor State performance, with accountability assured through

review of delegation or other partnership agreements with the States.

Question 4. Are the States able and willing to exercise reasonable, responsible, and vigorous enforcement and permitting discretion if the States are no longer subject to second-guessing in every case? If so, why is this true today even if it was

not true in past years? Support your explanation with examples showing that States

have reasonably, responsibly, and vigorously enforced Federal environmental laws,

State and local environmental laws over which EPA exercises no supervisory responsibility. Response. States have become the center of environmental activity.

• By 2000 70 percent of major programs that could be delegated had been dele- gated • States undertake on average between 75–80 percent of all enforcement actions and 97 percent all enforcement inspections. • State spending on environmental and natural resource protection has grown from $5.6 billion in 1986 to $12.5 billion in 1999 • In 1986, the Federal Government provided 58 percent of spending dollars for States; by 1996, the Federal Government provided 20 percent ($2.5 billion) of State

environmental spending dollars. From 1986 to 1996, State spending increased 140

percent. • States conduct many other nondelegated programs on their own, including in- novations toward more flexible, results-focused programs. States passed over 700

environmental laws in 1997 alone, at least half deal with nondelegated environmental programs (pollution prevention, waste management, etc.)

• 80 percent of States have at least one clean air standard stricter than Federal

minimums.

These data suggest that States have invested increasingly significant resources in

environmental protection. The charge that States are likely to ‘‘race to the bottom’’
143

appears unfounded given that 80 percent of States have at least one air quality

standard that is stricter than Federal standards and have initiated programs for

many environmental problems not addressed by Federal law, and many States have

environmental protection programs that address issues unregulated by the Federal

Government.

The vigorous commitment to environmental quality by States is particularly evi- dent in the lead role they have taken in solid waste management and resource recovery. While the Federal Government does regulate landfill safety, it does not regulate resource recovery. Nonetheless, 48 of the 50 States have independently developed recycling and waste diversion mandates or goals, with no Federal oversight or

requirement that the States implement such programs. These programs have been

responsible for increasing the Up. recycling rate from below l O percent of municipal

waste in the early 1980’s to nearly 30 percent by 2000. Also notable are State efforts to clean up hazardous waste sites. For example,

through their brownfields clean-up programs, Pennsylvania and Illinois have each

cleaned up several hundred sites within a few years of having implemented their

programs. By contrast, a recent GAO report notes that after nearly 20 years and

$14 billion spent, clean up at Federal Superfund (hazardous waste) sites had not

been completed at over 40 percent of National Priority List sites. Numerous other

States have now emulated the models set forth by Illinois and Pennsylvania. A number of States have pollution-prevention programs not tied to any Federal program. Through its pollution-prevention program, California worked with the petroleum industry to achieve 66,000 tons of hazardous waste reductions in one year—

a 30 percent reduction. Examples of State programs implemented without Federal

involvement are too numerous to catalogue here. For additional examples, please

refer to Race to the Top:

State Environmental Innovations, by Alexander Volokh, Lynn Scarlett, and Scott Bush (Los Angeles. RPPI, 1998).

Question 5. Would States be able to protect the public health and the environment

if the EPA, instead of having the ability to second-guess every decision made by a

State, were limited to reviewing on a 5-year, 7-year, or 10-year, basis, the overall

performance of the State, with the EPA having the ability to withdraw a State’s delegated authority if the State could not prove that it had made progress toward a

better environment during that period? Response. Most States have both the inclination and the skills to manage environ- mental programs to maintain public health and eco-system protection (and restoration). Some States, for example, California, actually have greater capabilities than

the U.S. EPA in areas such as air quality protection. Only a handful of States have

chosen not to invest significant resources in environmental protection, some have

chosen to defer to EPA to implement and enforce programs. A tiered approach to environmental protection would ensure that those States

with the commitment and capabilities to manage environmental programs are able

to do so, while those without this commitment or resources could defer to the Federal Government. Specifically, an EPA authorizing statute could clarify Federal,

State, and regional agency roles and specifically indicate congressional intent to foster State environmental innovations, perhaps by endorsing and clarifying the

NEPPS mechanism to provide State flexibility. One mechanism could be through a

tiered approach in which States would hold all permitting and enforcement authority for fully delegated programs, with Federal monitoring of real-world results. If

results fell short of required levels as agreed to in the delegation (or NEPPS-style)

agreement, EPA action would be triggered. The nature of that action would need

to be clarif ed. Those programs that were not delegated would be implemented by

U.S. EPA or its regions. Initially, the periodic review of State delegated programs

should probably occur at intervals of no more than 5 years. Depending upon State

performance, that interval could lengthen over time. Another option would be to

have an initial ‘‘probation’’ period after program delegation, with EPA review occurring after a 2-year interval. If the State is successfully implementing and enforcing

the program, subsequent reviews would extend to intervals office years, with the

focus on review of actual outcomes and performance indicators rather than on

‘‘bean-counting’’ of enforcement actions and review of permitting activity. Any congressional effort to clarify State and Federal roles and to support State

innovations should also be accompanied by development of an environmental indicators initiative that would allocate resources to States to support the development

by States of their performance indicators. Such an initiative could also require development by EPA of threshold measurement criteria to be used by the States to

allow some consistency and comparability among measures (particularly for water

and air quality). The statute might link to the GPRA process so that performance

indicators are linked to resource allocation decisions and agency accountability (e.g.
144

modeled after Australia or the U.S. Agricultural Extension Service, which has used

analysis of performance measures to enhance outcomes). Whatever congressional mechanism(s) are selected, Congress should resist pre- scribing a particular ‘‘flexibility and incentive’’ environmental management regime.

As experience with Project XL, the various State alternative permitting programs,

and other environmental management innovations have demonstrated, different

permitting and decision models may be applicable in different circumstances. Moreover, decisions regarding which f rms might participate, what benef ts they receive

for participation in incentive-based or flexible programs, and so on, should be left

to States to allow for maximum experimentation with different environmental management models.

[From the Reason Public Policy Institute]

MOVING TO A NEW ENVIRONMENTALISM SUMMARY: BARRIERS AND NEXT STEPS FOR

CONGRESS

(By Lynn Scarlett)

What, if any changes are needed to encourage innovation and improve environ- mental performance? How can these changes be orchestrated? What are the respective roles of the legislature through policy modifications and the executive branch

through executive orders and agency policy changes?

Background

Modern environmental regulations developed over the past 30 years have yielded some successes. But persistent challenges remain, and new circumstances require

different policy directions. Specifically, environmental laws and regulations have

generated high conflict, stifled innovation in some instances, and least-cost options

have not generally been pursued. In addition, lines of responsibility have been unclear among the U.S. Environmental Protection Agency (EPA), its regional offices,

the States, and regulated entities. Lack of clarity has resulted in some duplication

of effort.

Moreover, the traditional regulatory model is sometimes ill suited to new problems, such as those created by dispersed (nonpoint) pollution, and the traditional

model limits the possibilities for holistic environmental management by firms.

Finally, the traditional regulatory approach, with its focus on permitting of pollution sources and hazards by medium (air, water, waste), inhibits opportunities for

integrated environmental management. The regulatory focus on prescribing technological solutions and tying permits to those technologies has also turned attention

away from development of clear performance indicators and priority setting based

on measuring results.

State Environmental Policy Innovations

Scope of State Initiatives

As embodied in the Clean Air Act (CAA), Clean Water Act (CWA), Resource Conservation and Recovery Act (RCRA), Safe Drinking Water Act (SDWA), and other

Federal statutes, the traditional regulatory approach offers some latitude for program variations. Through several special Federal programs and through programs

operated by States under delegated authority, experiments with a new environmental model are surfacing.

States have, in fact, become the center of environmental activity:

• By 2000 70 percent of major programs that could be delegated had been delegated

• States undertake on average between 75–80 percent of all enforcement actions

and 97 percent all enforcement inspections.

• State spending on environmental and natural resource protection has grown

from $5.6 billion in 1986 to $12.5 billion in 1999

• In 1986, the Federal Government provided 58 percent of spending dollars for

States; by 1996, the Federal Government provided 20 percent ($2.5 billion) of State

environmental spending dollars. From 1986 to 1996, State spending increased 140

percent.

• States conduct many other nondelegated programs on their own, including innovations toward more flexible, results-focused programs.

• States passed over 700 environmental laws in 1997 alone; at least half deal

with nondelegated environmental programs (pollution prevention, waste management, etc.)
145

• 80 percent of States have at least one clean air standard stricter than Federal

minimums.

A New Environmentalism

Of particular note among these State activities is the proliferation of experiments with a new environmental model that emphasizes flexibility, incentives, and results.

An informal survey of regulated industries indicates interest in the following State

program features:

• Permitting flexibility (e.g., Wisconsin) • Fewer inspections • Fewer or consolidated reporting (e.g., New Jersey and Colorado) • Longer permit duration • Credits for reductions in emissions or discharges (Colorado) • Acceleration of review and processing of permits/equipment changes (Oregon) • Single agency point of contact for permitting (New Jersey, Oklahoma) Plant- wide applicability limit permit (Michigan) • Expedited permitting (New Jersey, Oregon)

Deterrents to Participation: Private-sector Perspective

Deterrents to participation in some of these programs limit the breadth and scope of their implementation. These deterrents fall into two categories: 1) persistence of

some highly prescriptive implementation details in some cases; and 2) limited benefits or extra costs associated with Federal constraints or a lack of clarity in the respective roles of State, regional, and Federal agencies. Prescriptive deterrents include provisions in which States have linked program flexibility or incentives to requirements that firms employ specific environmental

management systems such as ISO 14001, that ISO 14001 systems be externally certified, that firms recycle 100 percent of onsite residuals, or that they conduct mandatory audits. Deterrents also result from unclear Federal, State, or regional roles. On the one hand, lack of clarity sometimes constrains States to offer only minimal or public relations benefits since they do not perceive that they have full authority to supplant

source-based Federal permits with flexible alternatives. A corollary to this limitation

is that details regarding the scope of flexibility offered are sometimes lacking. On

the other hand, lack of clarity also sometimes induces increased costs and workload,

since participating firms must navigate two, or even three, regulatory systems

(State, regional, and Federal) to get approvals for alternative permits. To avoid this

challenge, some States have limited permit flexibility to State permits only, thereby

limiting the overall potential of the new programs.

Deterrents to Innovation: State Perspective

The Environmental Council of States undertook an informal survey of its member State environmental agencies to explore what they perceived as key barriers to

State innovation toward improved environmental performance. Respondents ranked

the following as notable barriers:

• EPA headquarters doesn’t adequately consider States’ opinions or rec- ommendations in establishing priorities, procedures, and rules • Resource limitations, including funding and expertise • Congress doesn’t adequately consider States and passes laws that limit innovation• National environmental groups are a deterrent by charging States with back- sliding if program changes are proposed • The innovation process is a barrier—it is time consuming, resource intensive, and often yields too limited benefits State regulators consider their ability to innovate most limited by air regulations, followed by water and waste regulations.

Federal Innovations

Lessons of Project XL

A brief survey of 45 projects initiated under EPA’s XL program showed that one- fourth of participants sought exemptions or changes in RCRA regulations, including

reclassification of a chemical in order to treat hazardous materials more efficiently

onsite. A handful of XL projects sought changes relating to the Clean Water Act and

Clean Air Act. One each sought changes relating to Superfund provisions and to the

Toxic Substances Control Act.

Types of changes sought were highly situation specific. However, some common

themes emerge. For example, several firms sought pre-approval of modifications to

their manufacturing processes; a number of firms sought multimedia permits. Both
146

changes help firms innovate and maintain their competitiveness in a context of rapidly changing technology. Other desired changes sought through XL projects included a transition to incentive-based monitoring; continuous monitoring rather

than permit-required ‘‘grab’’ sampling; simplified monitoring, online permit applications and renewals, and real-time compliance information.

In each XL project, participants sought to reduce permit acquisition, monitoring,

and reporting costs as a prerequisite to improving their overall environmental and

economic performance.

Lessons of the National Environmental Performance Partnership (NEPPS)

The NEPPS program was unveiled in May 1995 to provide a framework for improving the effectiveness of environmental programs. It emerged out of concerns

about inconsistent oversight by EPA, micro-management of State actions by EPA,

insufficient technical support, and inadequate consultation of State regulators by

EPA. Under the program, States sign agreements with EPA designed to give to the

States greater flexibility while setting forth core performance measures. Though

NEPPS agreements have extended beyond the initial six pilot States to include 45

States by the end of 1998, the impact of these agreements appears to be limited.

A review of NEPPS programs prepared for the National Academy of Public Administration concluded that their effectiveness in reducing Federal micro-management of

States has been limited. Nonetheless, the NEPPS partnership agreements in some

States (for example, New Hampshire) have been credited with improving priority

setting and enhancing State flexibility.

Key Needs

The new environmentalism, as embodied in State initiatives toward flexibility, incentives, and a performance focus, shows substantial promise to deliver environmental performance more holistically and efficiently. While some innovations are occurring, without changes in Federal law these innovations will likely remain marginal ‘‘special’’ programs. Fostering these State initiatives does not require an overhaul of the major environmental statutes. It does, however, require what Debra

Knopmann of the Progressive Policy Institute has referred to as ‘‘transitional legal

space.’’

Crafting that transitional space requires a delicate balance between, on the one

hand, asserting congressional commitment and authorization for flexibility and, on

the other hand, resisting prescription and micro-management of the innovation

process. Moreover, expression of congressional commitment to innovation may be inadequate. The new environmentalism places a premium on performance measurement, which may require additional resources allocated toward monitoring and helping States invest in developing indicators. Finally, a Federal commitment to a new

environmentalism will require a more systematic way of tying priorities and resource allocation to results as measured through various indicators—a challenge

States like Florida, Oregon, and New Hampshire have begun to address independently.

Options

Congress has a number of options that could facilitate the move toward a new

environmentalism more focused on performance, incentives, and innovation made

possible through greater flexibility for States and firms.

Congress could institute changes through:

• the reauthorization of existing statutes, with provisions for greater flexibility

reaching environmental goals (it has been over decade since the last CAA debate,

13 years since the CWA received a full review, and 14 years since Superfund was

overhauled).

• the creation of an Advisory Panel on Intergovernmental Liaisons, established

by statute as an advisory body to EPA to function like the Science Advisory Panel,

but with a focus on institutional interaction.

• development of an EPA authorizing statute that would clarify Federal, State,

and regional agency roles and specifically indicate congressional intent to foster

State environmental innovations, perhaps by endorsing and clarifying the NEPPS

mechanism to provide State flexibility. One mechanism could be through a tiered

approach in which States would hold all permitting and enforcement authority for

fully delegated programs, with Federal monitoring of real-world results. If results

fell short of required levels as agreed to in the delegation (or NEPPS-style) agreement, EPA action would be triggered. The nature of that action would need to be

clarified. Those programs that were not delegated would be implemented by U.S.

EPA or its regions. Through periodic reauthorization of the EPA authorizing statute,
147

additional changes could be made to individual statutes to remove specific barriers

to integrated, flexible approaches to environmental management. • development of an environmental indicators statute that allocated resources to

States to support the development by States of their performance indicators. Such

a statute could also require development by EPA of threshold measurement criteria

to be used by the States to allow some consistency and comparability among measures (particularly for water and air quality). The statute might link to the GPRA

process so that performance indicators are linked to resource allocation decisions

and agency accountability (e.g., modeled after Australia or the U.S. Agricultural Extension Service, which has used analysis of performance measures to enhance outcomes).

Whatever congressional mechanism(s) are selected, Congress should resist pre- scribing a particular ‘‘flexibility and incentive’’ environmental management regime.

As experience with Project XL, the various State alternative permitting programs,

and other environmental management innovations have demonstrated, different

permitting and decision models may be applicable in different circumstances. Moreover, decisions regarding which firms might participate, what benefits they receive

for participation in incentive-based or flexible programs, and so on, should be left

to States to allow for maximum experimentation with different environmental management models.

STATEMENT OF ERIK D. OLSON, SENIOR ATTORNEY, NATURAL RESOURCES DEFENSE

COUNCIL

I. INTRODUCTION

I am Erik D. Olson, a Senior Attorney at the Natural Resources Defense Council (NRDC), a national, non-profit public interest organization with over 400,000 members dedicated to protecting public health and the environment. We appreciate the

opportunity to testify on the important issue of State-Federal relations in environmental programs, often referred to as ‘‘environmental federalism.’’ The appropriate State and Federal roles in environmental programs have been de- bated for decades, beginning well before President Nixon created the U.S. Environmental Protection Agency through a Reorganization Plan, shortly after the first

Earth Day in April 1970, almost exactly 30 years ago. From the 1940’s on, the Federal Government’s role in the environmental field traditionally was limited to conducting research, assisting State authorities, and occasionally issuing generally voluntary, hortatory Federal guidelines such as drinking water guidelines. States usually were free to adopt or reject the Federal standards. It became increasingly clear by 1970 that serious air and water pollution problems

and other environmental crises had reached a critical point. Infamous problems

such as the Cuyahoga River catching on fire, Lake Erie essentially dying, air pollution in Donora, Pennsylvania and elsewhere killing local residents, and a series of

drinking water contamination problems and waterborne disease outbreaks made it

clear that the Federal Government had to step into the breach. States were unable

or unwilling to address these and other problems.

The enactment of the major Federal environmental statutes by Congress, often

lead by this committee, have been a widely touted triumph, immensely successful

at cleaning up the environment, popular with the American public, and heralded

internationally as landmark events in the history of environmental protection.

These statutes, such as the Clean Air Act, Clean Water Act, and Safe Drinking

Water Act, generally adopted the ‘‘cooperative federalism’’ model. The Federal Government sets national standards, while States use their special knowledge of local

issues to implement and apply those standards, with some remaining Federal oversight and enforcement presence. States are expected to live up to national environmental and health standards, but generally are free to go beyond Federal minimum

requirements.

II. THE IMPORTANCE OF COOPERATIVE FEDERALISM

The concept of environmental federalism seeks to take advantage of the best the

State and Federal Governments have to offer. This approach recognizes that States

often have greater localized knowledge of environmental conditions and problems

than the Federal Government may have, and recognizes that the Federal Government needs ‘‘the substantial resources, expertise, information, and political support

of State and local officials’’ to make the programs work. It also acknowledges that

State officials often are more knowledgeable about the local players and political

landscape than are Federal officials. Moreover, cooperative federalism seeks to cap-
148

ture the benefits of the fact that the States are the ‘‘laboratories of democracy,’’ because ‘‘States are a natural laboratory for testing new ideas.’’

However, cooperative federalism also acknowledges the realities that States can

be more susceptible to local political influences and political ‘‘brownmail’’ from powerful local industries that threaten to withdraw from the State or to produce political repercussions if State officials crack down on pollution. This approach also seeks

to recognize that States may not be able to muster the political wherewithal to address pollution problems that primarily affect downstream States, and acknowledges

that States often have fewer scientific and technical resources than the Federal Government.

III. RATIONALE FOR A SIGNIFICANT FEDERAL PRESENCE IN ENVIRONMENTAL LAWS

In these days when the Federal Government’s role in environmental programs has

come under increasing attack from some State officials, it is worth briefly reviewing

the rationale relied upon by this committee, academic commentators, and many

other observers for supporting a significant Federal presence under our environmental statutes. Among the most critical factors are:

• State Inaction in the Face of Significant Environmental and Health Problems.

Before the adoption of the Clean Air Act, Clean Water Act, Safe Drinking Water

Act, Resource Conservation and Recovery Act, and other major Federal statutes,

many States simply failed to address critical and obvious environmental and health

problems. For example, although the U.S. Public Health Service had issued drinking

water standards since the 1940’s, and although 130 waterborne disease outbreaks

had been documented in the previous decade, as of 1971, only 14 States had adopted

these standards, and enforcement of the standards was ‘‘poor.’’ Similar State inaction was documented in the air, surface water, hazardous waste, and many other

areas.

• Need for a ‘‘Level Playing Field’’ Nationally for Industry to Avoid a ‘‘Race to

the Bottom.’’ In the words of a leading treatise by academic legal commentators, ‘‘it

is widely accepted that Federal standards help prevent States from succumbing to

local economic pressures.’’ Without minimum Federal standards, there is immense

pressure on States competing for industries and jobs to adopt weak environmental

standards and enforcement policies even though over the long run, such weak policies are economically destructive. The ‘‘race to the bottom’’ is especially likely where

the environmental or health problems are not immediately readily visible or traceable to particular sources of pollution. This makes it difficult for the public to recognize the problem even if objectively it is extremely serious. A legal brief recently

filed by five States makes this point surprisingly bluntly. The States noted (in opposing a court decision that will undermine EPA’s ability to enforce where a State

later comes in and settles with the same polluter), that ‘‘by making it harder for

EPA to maintain a level playing field nationally, the panel’s decision opens up

States to the risks that they will suffer the adverse effects of pollution generated

in neighboring States and that regulated entities in other States will gain an unfair

competitive advantage over another State’s law-abiding competitors.’’

• The Growing Use of State ‘‘No More Stringent Than Federal Standards’’

Clauses Demonstrates the ‘‘Race to the Bottom’’ is at Work Today. By 1995, 19

States had adopted at least one statute (and sometimes more than one law), prohibiting the State from adopting environmental rules that are more stringent than Federal requirements. Some of these ‘‘no more stringent than’’ clauses apply to all State

environmental programs; others apply only to certain State laws such as a State

clean air law. The increasing use of such clauses lead a leading commentator to

note:

the trend among State legislatures to embrace Federal minimum standards as

State maximum standards, viewed in the context of the States’ historical failure to

produce socially desirable environmental improvements through State legislation

and regulation, provides some evidence that the concern about a ‘‘race to the bottom’’ in the absence of Federal minimum standards remains valid.

• Right to Baseline Minimum Public Health and Environmental Protections for

All Americans. When Americans travel across the country, they expect to be able

to breathe the air, drink the water, swim, fish, and enjoy the environment wherever

they go. They do not expect that their family’s health, or that of their fellow citizens,

will be put at risk, depending upon the State in which they are traveling or living.

A healthy environment is the foundation of a long-term healthy economy and high

quality of life for the U.S. Only with minimum Federal standards can we be assured

that all Americans, and our national environmental heritage are protected. As one

academician has put it, the Nation ‘‘decided to make a moral and arguably constitutional commitment to afford all citizens the same basic level of protection.’’
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• Only the Federal Government Has the Scientific and Technical Resources and

Expertise, and the Economies of Scale, to Adopt Many Standards. With the increasing complexity of the scientific and technical issues that are raised by standards for

protecting public health and the environment, most States simply do not have the

resources or scientific expertise to adopt standards that are scientifically sound and

technically well grounded. This is particularly the case as we move toward more

specific, highly technically sophisticated standards that must take into account the

technical capabilities of major industries. The more tailored a standard is to a particular industry (as opposed to the often-criticized ‘‘cookie cutter’’ approach), the

more scientific and technical expertise is required to promulgate the standard. Local

and State authorities often lack the resources and political capability to face down

major multinational companies that have the financial, technical, and political resources to bury them in studies, litigation, political challenges, and other diversions

that may make it virtually impossible for the State to act. While in some areas a

handful of States have developed significant scientific and technical expertise, because of ‘‘the substantial economies of scale in having environmental standards

adopted on a national scale,’’ often only the Federal Government has the resources

to adopt complex standards.

• The Need for a Federal ‘‘Gorilla in the Closet.’’ State officials, while usually

not saying so in public, often admit privately that without mandatory Federal requirements, it can be difficult for them to muster the resources and political support

to adopt important environmental and health standards, or to take enforcement actions. They sometimes need to point to the Federal ‘‘gorilla in the closet’’ to take

actions that they feel are necessary, but politically difficult, to take.

• The Need to Address Interstate and Trans-boundary Pollution Problems.

States may have little incentive to impose restrictions on pollution by powerful local

industries (or others for that matter) when the ill-effects of that pollution are most

heavily felt in other States. Thus, the ‘‘river of smog’’ that travels from the Midwest

to the Northeastern U.S., the acid rain problem exacerbated by tall stacks that put

pollutants high into the atmosphere to come down and contaminate communities

hundreds of miles away, and the pollution of interstate rivers, estuaries, and the

Great Lakes, all are illustrations of the problem. The State of New Hampshire and

several other States, for example, have filed petitions to seek redress for such interstate air pollution problems.

• National or International Industries Benefit from National Standards. Major

corporations actually benefit from the relative predictability and centralized authority that comes with a Federal environmental legal framework even though the

States are free to adopt more stringent State rules that tailor these minimum Federal requirements to local needs.

• Ironically, Federal Minimum Standards Have Been Shown to Spur State Creativity and Experimentation. Because Federal environmental laws have stimulated

States to establish their own agencies, staffs, and statutes to carry out environmental programs, experts have found that rather than stifling State creativity,

adoption of Federal environmental law ‘‘paradoxically gives States greater opportunity and incentives to undertake policy experimentation.’’

IV. EXPERIENCE WITH ENVIRONMENTAL FEDERALISM: HOW IT’S WORKING

Most States have responded to the challenge in Federal environmental statutes

by adopting State programs that EPA has approved for delegation. Thus, according

to a recent law review summary, delegations include:

• Clean Air Act: 42 States

• Clean Water Act: 34 States

• Hazardous Waste (RCRA): 37 States

• Drinking Water: 39 States (49 States have at least partial primacy for public

water systems)

• Pesticides (FIFRA): 39 States.

Some of these State programs can be pointed to as models demonstrating that the

‘‘laboratory of democracy’’ truly is at work. Indeed, some States have put enormous

effort into innovative laws and programs that build upon or take a different tack

from Federal requirements. In many cases, these innovative State programs later

are adopted by other States, or by the Federal Government.

Recent examples include California’s and New York’s drinking water right to

know requirements, recently adopted into Federal law under the 1996 Safe Drinking

Water Act Amendments. In other States, including Wisconsin, Iowa, and New Jersey, State authorities have adopted innovative programs to protect groundwater

from contamination.
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However, these innovative State laws and EPA’s delegation of programs to States does not tell the whole story. Programs that EPA delegated to many States are not

living up to legal requirements. Enforcement problems at the State level abound,

as do problems with inadequate State resources, poor data management and compliance tracking, and failures to address significant environmental problems. For example: • Serious State Enforcement Inadequacies Have Been Repeatedly Documented by GAO and the EPA Inspector General (IG). A plethora of GAO and EPA IG studies have documented that many States simply are unable or unwilling to effectively

enforce certain Federal programs even in the face of legal requirements to do so.

Among the most significant problems are: (1) inadequate monitoring of regulated

parties; (2) failure to pursue ‘‘timely and appropriate’’ enforcement actions against

significant violators; (3) failure to recover economic benefit of noncompliance; (4) inconsistencies in the approaches used to enforce and in the level of enforcement activity; and serious problems with enforcement and other data. One recent case is

Virginia’s failure for many years to take meaningful enforcement action against

Smithfield Foods’ swine slaughtering and processing plants for major violations of

its clean water permit, ultimately requiring EPA to step in with Federal enforcement action, alleging serious environmental harm, false reporting, and destruction

of records; a recent court decision affirmed liability and a large multimillion dollar

penalty. • Failure to Track and Document Violations. GAO, the EPA IG, and EPA itself

have repeatedly documented that many States with delegated programs simply do

not adequately track compliance and violations, nor do they report even many significant violations to EPA as required. In one recent example, EPA made front page

news when it completed an audit of 27 States’ drinking water programs and found

that States were reporting only 19 percent of known Maximum Contaminant Level

(health standard) violations for chemicals in tap water. Moreover, States reported

just 11 percent of treatment standard violations, and only 10 percent of monitoring

violations to the agency. The ‘‘good’’ news was that States reported 68 percent of

total coliform violations to EPA. • Inadequate State Resources. While some States have successfully sought sig- nificant resources to implement their environmental programs, others have fallen

well behind the curve. A recent review of State spending found huge disparities

among the States, and said that it was likely that ‘‘some States are committing severely inadequate resources to environmental protection.’’ For example, State expenditures per capita on environmental programs varied by almost four-fold; spending per ton of toxic emissions varied even more, with Mississippi spending over 38-

fold less per pound of toxics than Colorado. A recent study of State hazardous waste

cleanup programs found serious State program resource problems. For example,

New York’s program ran out of money in 1999, Kansas, Idaho, Wyoming, and Puerto Rico had zero balances, Missouri had a negative balance, Nebraska and D.C. had

no cleanup fund, eight States had balances of under $1 million, and 14 States had

fund balances of $1 million to $5 million.

• State Inaction on Expired Permits. Recent studies by GAO, the EPA IG, and

others have shown that there is a pattern in many States of failure to address expired State permits for water and air polluters. In Michigan, for example, 65 percent

of major facilities were operating on expired water permits, and many other States

had serious backlogs, according to a 1995 GAO report. A more recent analysis of

6,700 permits for major water pollution sources nationally found that more than

half of all permits for major polluters had expired in seven States, and that more

than one-third are expired in 17 States. Expired permits not only violate the law,

they fail to assure progress toward improving air and water quality, and shut the

public out of the process of seeking water quality improvements.

• State Failures to Address Major Environmental Problems. There is a long history, continuing over the past 30 years, of State failures to address significant environmental problems, sometimes even when they are required to do so under Federal

law. For example:

State Inaction on Cryptosporidium in Tap Water. Despite several significant outbreaks from this disease-carrying organism, including the largest documented waterborne disease outbreak in U.S. history in 1993 in Milwaukee Wisconsin in which

over 400,000 people were sickened and over 100 died, to our knowledge not a single

State adopted a Cryptosporidium standard for tap water until mandated to do so

in 1998 EPA rules.

State Inaction on Concentrated Animal Feeding Operations (CAFO). While it is

widely recognized that CAFOs are major sources of surface and ground water pollution, most States have done little to address the problem. Officials in the few States

that have begun to tackle the issue, such as Maryland, have privately expressed
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concerns about threats that industry may move their businesses to other, more lax,

States.

Failure to Issue Maximum Pollution Loading Requirements for Nutrients and

Other Water Pollutants. Over 25 States have been sued for failing to adopt the required ‘‘Total Maximum Daily Load’’ (TMDL) rules required by the Clean Water Act

since 1972. These TMDLs are supposed to force a crack down on many unaddressed

sources of pollution in watersheds that are seriously contaminated, since over 40

percent of the nation’s rivers and lakes that have been assessed are not fishable or

swimmable, according to EPA.

States’ Failure to Address Trans-Boundary Air Pollution Problems. Acid rain

problems in the Northeast are due in large part to long-range transport of sulfur

dioxide and nitrogen oxides often from tall stacks at fossil fuel-fired power plants

in the Midwestern U.S. Similarly, the ‘‘river of smog’’ problem is caused by longrange transport of air pollutants from heavily industrialized and urbanized areas,

often to less populated down wind areas. These problems generally have not been

voluntarily addressed by polluting States. Federal intervention has been necessary,

and still is needed, to force States to deal with these classic ‘‘externalities’’ that they

cause but that may not visibly directly affect them.

V. CONCLUSIONS AND OPPORTUNITIES FOR COOPERATIVE FEDERALISM IN THE FUTURE

Many observers suggest that there are opportunities to improve State-Federal relations in the future. EPA and States have initiated a program in 1995 known as

the National Environmental Performance Partnership System (NEPPS), which allows States more ‘‘flexibility’’ to implement Federal laws.

While the concept of NEPPS is attractive in principle, it raises several significant

issues. First and foremost among them is whether the States are able and willing

to make this program work, and whether they will agree with EPA, through an

open public process, to assure environmental protection by meaningfully tracking,

measuring, and assuring adequate EPA oversight of progress in implementing the

programs.

Academic observers have suggested that if this program goes awry and there is

a significant chance that without improvements it may ‘‘we could lose substantial

ground before the public or Congress realizes what is happening.’’ A former State

and EPA enforcement official recently suggested in a law review article that many

States lack the resources for such an approach, and that it NEPPS ‘‘could lead to

a further decline in deterrence-based enforcement, given States’ lack of interest in

conducting such enforcement and other factors.’’

However, it is possible to streamline and improve State-Federal relations in environmental programs, so long as the following key principles are observed:

The Federal Government should:

• Establish national goals;

• Set national health and environmental standards;

• Establish minimum procedural safeguards for citizen participation

• Approves State programs and maintain a backstop enforcement role;

• Periodically publicly review and make findings regarding State performance;

• Provide resources and technical and scientific assistance.

States should:

• Assume primary implementation and enforcement responsibility, where qualified;

• Meet national goals and standards;

• Show they have adequate resources and procedural safeguards to make the

programs work;

• Develop innovative solutions to problems;

• Agree with EPA on performance tracking and documentation of successes or

failures.

Within this context of shared responsibilities, there is much room for State innovation. EPA has recognized that it must, in appropriate cases, loosen the reins of

Federal oversight where a State can show that its is qualified and meets the criteria

for flexible delegation. Such loosened reins cannot, however, mean that EPA gives

up its oversight responsibility or waives basic legal requirements.

In conclusion, NRDC agrees that there is much room for improvement of StateFederal relations. While State flexibility can and does work in some cases, it must

be remembered that States must have the capability and willingness to make this

work. States must agree with EPA upon specific measures to assure that the State

is accountable for making the progress envisioned by Federal laws, that enforcement
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and implementation of basic requirements will not be compromised, and that EPA

and public oversight and participation are meaningful.

STATEMENT OF JASON S. GRUMET, EXECUTIVE DIRECTOR OF THE NORTHEAST STATES

FOR COORDINATED AIR USE MANAGEMENT (NESCAUM)

Introduction

Thank you Mr. Chairman. My name is Jason Grumet and I am the Executive Di- rector of the Northeast States for Coordinated Air Use Management (NESCAUM).

NESCAUM is an association of State air pollution control agencies representing

Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode

Island and Vermont. The Association provides technical assistance and policy guidance to our member States on regional air pollution issues of concern to the Northeast. We appreciate this opportunity to address the committee regarding innovative

efforts to reduce air pollution in our region. As we approach the 30th anniversary of the passage of the Clean Air Act, it is appropriate to reflect upon the tremendous achievements government and industry

have made in reducing air pollution and protecting public health and welfare. The

interlocking Federal and State authority and obligations set forth in the 1970 Clean

Air Act are fairly understood to mark the modern era of environmental protection

in our nation. The desire to provide all citizens with minimum standards of protection and to provide industry with consistent national obligations compelled Congress

in 1970, and in every reauthorization since, to establish substantial Federal oversight and enforcement of our nation’s clean air strategy. At the same time, public

health protection in our Federal republic is appropriately vested within the obligations and police powers of State government. Through the creation of State Implementation Plans (SIPs), Congress recognized that States must bear the ultimate responsibility and represent the best hope to design and implement effective clean air

laws. I believe that it is useful to reflect upon this most basic tension between the

desires for national consistency and State autonomy when exploring how to promote

and honor effective State innovation.

One of the central challenges of democracy is to communicate complex themes in

simple and popular terms. In this discussion, the subtle complexities of federalism

are often described as a choice between ‘‘command and control’’ Federal prescription

and ‘‘innovative and flexible’’ State efforts. This construction results from the frustration many of us maintain as we watch government erect seemingly nonsensical

barriers to the creative, well intentioned efforts of business owners and local officials who have the courage and ingenuity to suggest a different approach or a better

way to achieve a clean environment. Even worse, under the time honored theme ‘‘no

good deed goes unpunished,’’ every close observer of clean air policy can cite several

examples where innovation is met not only with disinterest but is actually penalized

by our regulatory system.

While my members live this frustration, we recognize that it is not borne of malice or incompetence at any level of government. Instead we recognize that these moments of apparent insanity flow inherently from a regulatory regime necessarily designed to protect the public in situations where private economic incentives and volunteerism are inadequate. While the ‘‘Command and Control vs. innovation’’ construct is rhetorically powerful, the polemic in this description suggests a false

choice. I believe that a more productive inquiry follows from the premise that national standards, while essential, often fail to capture and channel the ingenuity of

local government and industry. In this light, improving our environmental regulatory system is a pursuit to refine and not replace enforceable Federal requirements. Congress’ appreciation of the need for clear and enforceable national clean

air requirements is evidenced by the fact that in every reauthorization since the

first clean air public health statutes in the 1950’s, Congress has consistently increased the Act’s prescriptive national requirements and limited the discretion of

both the EPA and the States. It is fruitful to reflect upon this history as we begin

to contemplate the amendments that will guide the fourth decade of our nation’s

pursuit of clean air.

Let me now transition from the abstract to the particular and describe two innovative efforts in the Northeast. These initiatives demonstrate that through creativity and collaboration, States, EPA and industry can identify mutual interests and

opportunities that the current regulatory system would otherwise squander and direct these energies toward environmental improvement. The first area I will discuss

is an exciting array of projects to reduce pollution by retrofitting heavy-duty diesel

equipment. The second initiative I will describe is an innovative effort that goes by

the acronym P4 which stands for Pollution Prevention in the Permitting Process.
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The essential wisdom of this effort is that there is no better way to reduce air pollution than to never create it. In both projects, the northeast States have partnered

with regional and national EPA offices and industry to achieve considerable successes. However, let me stress at the outset that these successes have not come easy

and we are far from finished. While we have created effective beachheads within

EPA to launch these collaborative efforts, the EPA is a large institution with an

array of corporate cultures. Suffice it to say that those offices charged with the obligation of enforcing the statute and EPA regulations are struggling, at times awkwardly, to maintain a coherent enforcement regime that rewards innovation.

Diesel Retrofits

Overview of the Diesel Pollution Problem

Diesel engine pollution is one of the prime concerns of air quality regulators in the U.S. The 10 million heavy duty diesel engines operating in the U.S. emit millions of tons of soot and ozone-forming pollutants annually. Heavy duty diesel emissions comprise 33 percent of total NOx (from all sources) and 80 percent of mobile

source particulate pollution in the northeast States. In addition, diesels contribute

substantially to the nation’s inventory of toxic pollution such as formaldehyde. The

relative contribution from diesels to our nation’s air pollution is rising annually.

Several factors contribute to this trend of increasing heavy-duty diesel pollution.

First, the use of diesel engines to power the nation’s fleets of buses and trucks is

becoming more pervasive due to the durability of these engines. Second, growth in

annual truck miles traveled continues to increase steadily. Third, diesel engines pollute at a higher rate than do gasoline engines and thus replacing gasoline engines

with diesels will cause continued increases in air pollution from mobile sources.

Technologies Exist to Reduce Diesel Engine Emissions

The good news is that there are commercialized technologies to reduce diesel PM, NOx, and toxic pollution such as formaldehyde. New technologies used in the New

York City bus fleet and in Europe have proven that diesel engine NOx and PM pollution can be reduced by 90 percent. The Federal Urban Bus program (begun in

1993) has established the potential of rebuild/retrofit programs to significantly reduce emissions from heavy duty diesels. In 1993, the U.S. EPA began regulating engine retrofit/rebuilds in heavy duty urban buses in cities of over 750,000 population.

The regulations require that newly overhauled transit bus engines meet more stringent particulate standards than required by the original engine certification. As part

of this program, EPA has certified over ten products to reduce emissions from urban

buses. Certified products have the potential to reduce particulate emissions by up

to 80 percent. Over 40 urban areas have benefited from reduced urban bus emissions due to this program. Urban bus certified products can also be retrofitted onto

most existing truck engines. California and New Jersey have established guidelines

and methodologies for implementing retrofit/rebuild programs in non-urban buses.

Diesel Standards Lag Behind Gasoline Engine Standards

While new technologies exist, diesel engine exhaust standards currently lag be- hind standards for gasoline engines by 10 years or more. The Federal Government

must close this gap by adopting strict new engine standards for future diesel vehicles. Implementation of protective diesel emission standards is contingent upon dramatically reducing the level of sulfur in diesel fuel. Like lead, sulfur can poison

many of the after-treatment emission control strategies that must be employed to

reduce diesel pollution. We understand that EPA is on the verge of proposing regulations that will cap diesel sulfur levels at 15 ppm by 2007. Once enacted, this proposal and the resulting emission controls that it enables will dramatically improve

public health across the nation. Ensuring the timely implementation of a 15 ppm

sulfur cap on all diesel fuel is the most important single action Congress could undertake to promote innovative diesel reduction strategies.

Slow Diesel Fleet Turnover Requires a Control Program for Existing Engines

While there is good news in the potential for cleaner new diesel engines, the prob- lem of the existing, highly polluting fleet of 10 million diesel vehicles must also be

addressed. Diesel engines last as long as 25 years and travel more than a million

miles in many applications. Older engines pollute at a much higher rate than new

engines due to 1) engine deterioration and 2) less stringent emission levels in older

model year engines. Thus, targeting emissions from older diesel engines is essential

to reducing the pollution from the nation’s diesel fleets in the near term.

Legal Barriers Prevent Traditional Regulatory Programs

Unfortunately, while cost-effective retrofit technologies exist to significantly reduce diesel emissions from existing engines, and while Federal action has been
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taken to reduce emissions from a small subset of diesels, States are substantially

preempted by the Clean Air Act from taking large steps to reduce pollution from

existing diesel vehicles. Historically, States have been given authority under the

Clean Air Act to regulate in-use engine emissions from mobile sources, but are

largely preempted from adopting independent requirements affecting new vehicles.

However, a 1996 lawsuit brought by the Engine Manufacturers Association (EMA)

resulted in a change to the nonroad engine rule which preempts States from requiring the retrofit of in-use nonroad engines (such as those found in construction equipment) to control emissions. Similarly, States face legal hurdles to the establishment

of mandatory retrofit programs for highway vehicles. As an example, a State cannot

pass a regulation requiring construction companies to install pollution control devices on construction equipment even though cost effective products are available.

Similarly, a State cannot pass a law to require school buses to be retrofitted to reduce childrens’ exposure to carcinogenic elements in diesel exhaust.

Collaborative Action to Overcome Regulatory Barriers

In the face of these legal barriers, Northeast State environmental staff have

worked with the EPA, the Engine Manufacturers Association, the Manufacturers of

Emission Controls Association, and many others to develop opportunities to integrate voluntary diesel-retrofit mechanisms into the existing regulatory regime.

Through this collaborative effort we have encouraged the use of commercially available technologies by developing a standardized method for States to calculate State

Implementation Plan (‘‘SIP’’) credits for retrofit projects. To enable timely, cost-effective action and diminish administrative burden we have developed a third party verification system to review new technologies. Last we have developed a menu of recommendations on technology matches between retrofit equipment and heavy-duty

engine applications.

EPA has provided an overarching forum for this collaborative effort by creating

the Voluntary Measures Retrofit Program (VMEP). VMEP is a quintessential example of creating a space within the existing regulatory framework where innovation

can flourish. The premise behind VMEP is to trust but verify. Through this program

States are empowered to take credit for non-traditional measures to reduce mobile

source pollution in their SIPs. Prior to VMEP, States often had to wait years for

EPA to even consider new approaches before they could proceed with implementation. The VMEP pilot program inspires innovation by allowing States to credit innovative measures for a de minimis portion of a State’s total SIP inventory so long

as States commit to verify that these programs actually achieve their projected benefit in practice. As part of the VMEP retrofit program, EPA announced the establishment of a coalition to achieve the retrofit of 10,000 heavy-duty diesel vehicles

within the next year. The program is also providing technical support to public

agencies and State and local regulators that are implementing retrofit programs.

Due in large part to this effort, a highly successful retrofit program has developed

in the Northeast.

Specific Examples of Retrofit Projects

The specific examples that follow are each inspired to varying degrees by three

main themes: 1) Compliance with regulatory requirements (SIP obligations, conformity requirements etc.); 2) Addressing community concerns over growth and new

construction; and 3) The selfless desire to reduce air pollution.

New York Urban Bus Retrofit Project

New York City has just attained the existing PM 10 standards and recognizes

that further regulatory efforts will be necessary to address levels of fine particle pollution in the coming years. In light of the City’s recent non-attainment status and

the overwhelming evidence of fine particle health consequences, New York State is

devoting considerable energy to reducing in-use diesel emissions. In 1999, the New

York City Transit Authority along with the New York Department of Environmental

Conservation, fuel producers, and retrofit technology developers established a program to retrofit 50 urban buses with continuously regenerating particulate traps.

To date, 30 buses have been retrofitted and testing results show that PM pollution

is reduced 90 percent in the retrofitted buses. Because of the success of the program,

Governor Pataki recently announced a significant expansion of the program. Under

this breakthrough agreement, the New York City Transit Authority (NYCTA) will

purchase low sulfur fuel and traps for the entire fleet of 3,700 hundred buses.

Through the VMEP program, New York State will now be able to take credit for

this substantial achievement in future PM attainment plans.
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Big Dig Retrofit Project

In Boston, over 100 pieces of construction equipment are being retrofitted as part of the ‘‘Big Dig’’ retrofit project. The multi-billion dollar Big Dig project has concentrated hundreds of pieces of construction equipment in the City of Boston, many

of them operating next to apartment and office buildings and hospitals. The retrofit

program was initiated when residents living adjacent to the Big Dig complained

about diesel exhaust from construction equipment. NESCAUM worked with Massachusetts transportation and environmental officials to fund and implement the retrofitting of nearly ★ of the permanent diesel construction equipment on the project. The project has evolved to include a strictly voluntary component and a mandatory

component. The voluntary retrofits are being undertaken and paid for by the highway department and contractors. There is also a contractual requirement stipulating that machines operating near hospitals, apartment and office buildings be retrofitted. Massachusetts is pursuing similar requirements in a host of major construction initiatives in the State. Here, the need to reconcile the needs of the community

with the need to accommodate development in Boston spurred meaningful innovation.

Manchester Airport Retrofit Project

At the Manchester Airport in New Hampshire, airport operators, the New Hampshire Department of Environmental Services, and NESCAUM are collaborating in

an effort to retrofit a majority of diesel ground service equipment. Like many airports, the Manchester airport is currently undergoing a major expansion in order

to increase aircraft service and vehicle access for airport users. This expansion is

likely to increase air pollution associated with airport operations. In part to offset

this increase in emissions, the airport is moving ahead with a project to retrofit 60

airport owned nonroad vehicles such as de-icers and snow removal machines. The

Manchester project is a combination of a program that aims to do environmental

good combined with the need to comply with regulatory (conformity) requirements.

School Bus Retrofit Project

Another project under active consideration by Northeast air quality regulators is

a school bus retrofit project. As part of the program, school districts in Northeast

States will be encouraged to devote resources necessary to implement an varying

array of diesel fuel quality improvements and emission control retrofits. In this case,

the major impetus for the project will be to improve environmental quality and to

reduce childrens’ exposure to toxins.

Diesel Retrofit Conclusion

All told, we anticipate that up to 15,000 vehicles in the Northeast will be retrofitted in the first phase of this incentive driven initiative. As a result, thousands

of tons of PM, hydrocarbon, and toxic emissions will be reduced in the Northeast.

In all of these projects, a combination of regulatory requirements and voluntary

measures have been combined to result in a highly successful program. Our model

is presently being replicated in several cities in California and in Chicago. Based

on the broad interest we have received from programs across the country, we are

optimistic that similar retrofit efforts will be commonplace in the next several years.

Pollution Prevention in Permitting Programs (P4)

Overview of P4 Projects

Efforts to encourage pollution prevention within the existing regulatory structure

reveal many of the barriers to innovation that I identified earlier. While the traditional Federal/State regulatory regime has achieved great success, the traditional

focus on technology based control strategies presents several shortcomings:

• Overly prescriptive compliance approaches foster a focus on actions rather

than results.

• The focus on pollution control rather than pollution prevention discourages industry from investing in less toxic and more efficient technologies.

• The emphasis on single media technology requirements tolerates the shifting

of pollution from one media to another rather than eliminating it at the source.

EPA and the States have developed several innovative programs to address these

shortcomings without jeopardizing the environmental gains that have been achieved

through traditional regulatory efforts. One such program is the Pollution Prevention

in Permitting Project (P4).

The logic of pollution prevention is unassailable. Rather than spending millions

of dollars to manufacture, handle, and ultimately control the pollutant emissions of

hazardous substances used in the creation of desirable goods and services, pollution

prevention enables the creation of these same goods using comparably benign meth-
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ods. By changing manufacturing processes, many industries have determined that

they can reduce air pollution considerably and cost-effectively. Under this approach,

facilities are given maximum flexibility to operate their business while still maintaining adequate measures to ensure compliance with environmental regulations.

Ultimately, these permits create a regulatory incentive to design waste out of the

process and increase production efficiency.

P4 Permits

In 1995, Intel and the Oregon DEQ wrote the first P4 permit. This permit had two goals; (1) to increase operational flexibility at Intel’s Aloha facility and (2) create a regulatory program that creates incentives for facilities to use pollution prevention to meet regulatory requirements. To meet these goals, the permit contained

pre-approvals for specific operational, pollutant-specific, plant-wide emission caps.

Speed and flexibility to expand the facility were key factors for Intel wishing to seek

a P4 permit. As a result of the P4 permit, both the goals of flexibility and pollution

prevention were realized. In the first 2 years of the P4 permit, VOC emissions per

product unit fell 47 percent, while production increased 70 percent. In addition, the

facility was reconfigured without re-opening their Title V permit. Finally, the use

of pollution prevention to reduce per-unit emissions and to keep emissions under

regulatory thresholds resulted in Intel saving $2 million in avoided control costs.

This innovative effort brought considerable benefit to the environment and the company.

NESCAUM P4 Pilot Project

Seeking to replicate this success in our region, NESCAUM has embarked on a multi-State effort to incorporate pollution prevention into the next generation of environmental permits. The basic tenet of our effort is to set stringent environmental

outcomes while providing companies with optimum flexibility to design their compliance strategy. To date, EPA’s efforts to support P4 initiatives nation-wide have resulted in several important achievements: • Development of six enforceable Title V permits that meet all substantive and

procedural requirements; • Creation of permit terms which encourage pollution prevention to achieve com- pliance; and • Integration of ‘‘living’’ Title V permits which include flexibility conditions that support rapid, cost-effective operational change and creates lower administrative

burdens for both sources and permitting authorities. NESCAUM seeks to build upon these successes by leading an effort to fully inte- grate P4 approaches into traditional air permitting activities. Through this effort

NESCAUM is working with our member States and EPA to identify and overcome

regulatory barriers that stand in the way of integrating P4 into the traditional regulatory regime. In addition, NESCAUM will be working in targeted sectors to develop

flexible Title V permits. Targeted sector includes chemical manufacturing, semiconductor (chip manufacturing), pharmaceutical manufacturing, metals manufacturing (coating, anodizing), and pulp and paper operations. Our focus on these target sectors is premised on the recognition that P4 is not equally appropriate in all sectors or for all companies. P4 permits require considerable effort and resources to develop. Therefore, we have opted to focus our energies

on those sectors with the greatest need for flexibility in order to evolve with dynamic market demands. In addition, P4 permits should only be written for those

specific facilities that have demonstrated and credible environmental management

systems. Facilities with poor compliance records tend to have poor process controls.

Establishing flexible permits with such facilities could render the public open to unacceptable risks. By the end of our 2-year effort, NESCAUM expects to have identified a host of sources that are appropriate candidates for P4 and develop consistent

approaches among our member States in crafting these permits.

Barriers to P4 Permits

A current barrier to promoting P4 permits is the overarching deadline for States to complete issuance of all Title V permits. Permitting agencies are under intense

pressure to issue all their Title V permits by January 1. 2001. Permitting programs

in the Northeast were among the last to receive interim approval and therefore have

had the least time to write these permits. This situation puts the States at odds

with P4. Working flexibility into permits requires significantly more time than writing a traditional permit. Given this pressure to issue permits, States are reluctant

to devote significant resources to programs that will slow down the permit process.

Furthermore, barriers created in existing regulations and policies can often hamper innovative efforts. One such barrier is the ‘‘once in, always in’’ policy developed

for MACT standards. Under Title III of the Clean Air Act, EPA regulates hazardous
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air pollutants or HAPs. Generally, these regulations require significant amounts of

monitoring, record keeping, and reporting activities. The ‘‘once in always in’’ policy

creates a perverse disincentive to reduce the use of hazardous substances because

even the elimination of hazardous production materials does not alleviate the

unique regulatory burdens that were explicitly designed for HAP sources. Given this

situation, facilities have little inducement to investigate alternative technologies

that are less polluting.

P4 Conclusion

The NESCAUM project has been underway for nearly 6 months. Work to date has found that many facilities and permitting agencies are eager to engage in this process. Critics within the government and environmental communities however, continue to express the anxiety that flexible programs, such as P4, do not provide adequate protections for the public. The result of these fears has been to hold P4 permits to a far higher standard than that of traditional permitting activities. Our hope

is that the scrutiny and transparency provided by our collaborative regional effort

will help to overcome these fears and enable P4 permits to proceed efficiently.

Conclusion

While the focus of my remarks has reflected upon State and EPA efforts there are two fundamental roles that Congress must fulfill for this evolution to succeed.

First, in the short term, innovation costs money. While our society will save billions

of dollars each year by honing the regulatory system to appreciate the heterogeneity

of our States and businesses, designing and administering flexible yet credible approaches is a far more complex and costly undertaking than the ‘‘one size fits all’’

schemes that many appropriately deride. EPA and the States must be provided the

necessary resources and flexibility to use them if we hope to navigate this transition. Without increased resources, well intentioned efforts toward flexibility will ultimately be undermined by a small minority of interests who will seek to exploit

this flexibility for private gain. Since change is always held to a higher standard

than the status quo, Congress, EPA and the States must work together to ensure

that we are collectively up to the test. Second, even more than financial resources, successful innovation requires trust.

Trust is ample when innovation succeeds. However, innovation will not occur unless

trust isn’t also dependable when well-intentioned, credible efforts fail. Sources must

trust State agencies to provide constructive havens to remedy the creative control

approaches that will inevitably fall short of expectations. States must trust the EPA

to acknowledge and not penalize innovative State programs both when they succeed

and when they do not. EPA must trust Environmental organizations to recognize

that some efforts will not succeed and environmental organizations must trust that

failed efforts will be remedied when critiquing perceived inadequacies. Of course in

all cases, trust must be earned through dialog, access, and transparency of data.

Congress, as the creator of laws and overseer of EPA plays a vital role in setting

the tone for this evolution toward innovation and trust. I would like to thank Senator Smith for initiating this dialog and look forward to working with the committee

in the months ahead.

HEAVY-DUTY DIESEL EMISSION REDUCTION PROJECT

RETROFIT/REBUILD COMPONENT

(Prepared by NESCAUM for the U.S. Environmental Protection Agency)

Executive Summary

The purpose of this document is to expand the use of retrofit pollution control

technologies in heavy-duty engines through the development of consistent guidelines

for voluntary retrofit programs. Such programs would be targeted to heavy-duty vehicles not affected by the Federal Urban Bus Program and would include control

technologies not certified under that program as well as Urban Bus Program certified technologies. Specifically, this document recommends 1) a protocol for calculating State implementation plan (SIP) credits for voluntary retrofit projects; 2) the

structure of a third party retrofit verification system for retrofit technologies; and

3) an in-use testing program to ensure that emission reduction credits claimed are

achieved in the field. The last chapter of this document outlines model State policies

to reduce heavy-duty engine pollution through retrofit initiatives.

This effort builds on the above mentioned U.S. Environmental Protection Agency

(EPA) initiative begun in 1993 to reduce urban residents’ exposure to diesel exhaust, the Urban Bus Retrofit/Rebuild program. The program requires that urban
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buses operating in metropolitan areas with populations over 750,000 be equipped

with EPA certified retrofit pollution control devices such as oxidation catalysts or

be rebuilt using certified low emission components at the time of engine overhaul.

To date, approximately 10,000 of 42,000 eligible urban buses have been retrofitted

or rebuilt as a result of the program. Two States, New Jersey and California, have

undertaken retrofit programs or guidelines as well. These efforts are intended to expand the significant emission reductions gained through the Federal Urban Bus

Program by promoting the use of pollution reducing technologies on the existing

heavy-duty fleets in those States. The need for reducing emissions from the nation’s in-use heavy-duty diesel fleets is clear. Current inventories estimate that heavy duty engine emissions comprise 33

percent of all nitrogen oxides (NOx) pollution and 80 percent of all particulates (PM)

from mobile sources in the Northeast States. Emissions from these engines contribute to serious air pollution problems in the region. NOx causes eutrophication of

lakes and streams, acid rain, and is a precursor to ozone which aggravates lung disease. Hydrocarbon (HC) emissions are also ozone precursors and are made up, in

part, of toxic substances such as benzene, toluene, and 1,3 butadiene, some of which

are known carcinogens. PM emissions are very high from diesel engines and are

known to aggravate lung diseases such as asthma, emphysema, and bronchitis. In

addition, PM has been labeled a probable human carcinogen by EPA and a toxic air

contaminant by the California Air Resources Board. In order for States to achieve

air quality goals, significant reductions in heavy-duty diesel emissions will need to

be made.

The recommendations contained in this document are based on discussions of a

workgroup organized by the Northeast States for Coordinated Air Use Management

(NESCAUM). The workgroup was created to provide guidance to State and local

agencies, as well as to private organizations that plan to retrofit heavy-duty diesel

vehicles with pollution control devices. It included input from State and Federal

agency staff, testing laboratories, and control equipment manufacturers. In addition,

a draft of these guidelines was distributed to EPA regional offices and the heavyduty engine manufacturers. Their comments and suggestions were reviewed and incorporated by the workgroup into the recommendations contained in this report.

PRIMARY RECOMMENDATIONS

All of the recommendations detailed below represent the views of the Retrofit/Rebuild workgroup and NESCAUM.

1. Use of Urban Bus Program Certified Technologies

Oxidation catalysts certified with the Urban Bus Program should be eligible without administrative or peer review for use in any highway heavy-duty engine, with

States being allowed to claim a 20 percent reduction for PM, a 40 percent reduction

for carbon monoxide (CO), and a 50 percent reduction for HC. These credits may

be claimed before a project is implemented. Verification of emission reductions

should be conducted during or after project implementation by 1) a review of retrofitting records and 2) through in-use emissions testing. These recommendations are

detailed in Chapter I, section D and Chapter III.

For use of technologies certified with the Urban Bus Program that are engine specific such as rebuild kits, the workgroup recommends that a PM emission reduction

credit of 20 percent be granted automatically when the rebuild kits are used in engines that the technologies are certified for under the Urban Bus Program. Chapter

I, section B describes the credit allowed for ‘‘.1’’ technologies. As with the use of oxidation catalysts, reporting and in-use testing recommendations for rebuild kits are

detailed in Chapters I.D and III.

2. Use of Technologies Not Certified with the Urban Bus Program

For all products that have not been certified with the Urban Bus Program, emissions testing should be conducted by the manufacturer to determine the emission

reductions potential (percent reductions) of the retrofit/rebuild product. Similar data

should be required for the voluntary program as are required for certification with

the Urban Bus Program (see Chapter III, section A for a detailed description). An

engineering analysis should be conducted by the manufacturer to determine which

engines the retrofit/rebuild equipment may be used on. These data and analysis will

be reviewed by the third party verifier to establish the emission reduction level and

applicability for engine families for the voluntary retrofit program.

3. Third Party Verification System

A third party verification system should be established which consists of an administrator and a peer review committee. The workgroup recommends that Environ-
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ment Canada be the administrator for this program. The administrator will process

all applications to the retrofit/rebuild program, review data for thoroughness, organize the work of the peer review group, make decisions on the level of in-use testing

required, and communicate with EPA. The peer review committee should consist of

temporary volunteer members from industry, laboratories, and trade organizations

(such as the Society of Automotive Engineers) with expertise in heavy-duty engines

and retrofit equipment. The committee will make determinations for emission control devices on the level of in-use testing, completion of the in-use testing requirement, acceptability of in-use testing method, emission reduction potential of emission control products, and engine families that control equipment can be used with.

4. In-use Testing Requirement

In order to verify the emission reductions claimed from retrofit projects and to as- sess control equipment durability a percentage of all emission control products installed as part of a retrofit/rebuild program should be tested in-use. The procedure

for establishing the number of units to be tested in the field is outlined in Chapter

III and is adapted from EPA’s in-use compliance testing requirements for new pleasure craft marine engines. An in-use testing trigger should be established for different types of technologies based on unit sales. A 70 percent pass rate on tested

units will be needed in order for devices to ‘‘test out’’ of the in-use requirement.

5. Calculating SIP Credits

In order to calculate SIP credits from retrofit projects, baseline emission factors for heavy-duty engines to be retrofitted needs to be established. The workgroup recommends that Federal Test Procedure (FTP) certification data for engine families

be used as baseline emission rates for retrofitted engines. Emission reduction percentages (as recommended in this document for devices certified with the Urban Bus

Program and as established by the third party verifier for devices not certified with

the Urban Bus Program) can be applied to these baseline rates. Mass emissions reductions can be calculated for individual fleets using the formulas detailed in Chapter IV and information available to fleet operators such as vehicle mileage, hours

in operation, or fuel consumption. In some cases, States may choose to develop baseline emission rates through testing of heavy-duty engines in-use. The States will

need to develop a testing plan in coordination with EPA to determine these baseline

levels.

6. Retrofit/Rebuild Program Information/Website

The workgroup recommends that if possible all retrofit/rebuild devices certified

with the Urban Bus Program and all devices ‘‘verified’’ through third party review

be listed on a retrofit/rebuild website which States and others interested in undertaking retrofit projects can easily access. The retrofit website could provide SIP

credit calculation formulas, information on emission control products, applicable engines, and EPA certification data for engine families.

7. Model State Retrofit Policies

States have policy and funding options to increase the use of retrofit devices to

reduce heavy-duty diesel pollution. Retrofitting heavy-duty vehicles and machines to

reduce PM, HC, CO, toxics, and in some cases NOx, can assist States in reaching

air quality standards. Executive orders, contract requirements, and agency policies

represent potential methods to increase the use of retrofit devices. Funding from

Federal sources such as the Congestion Mitigation Air Quality Improvement program (CMAQ), State funding in the form of bond issues and agency budgets, and

supplemental environmental moneys can provide financial support for retrofit

projects. The last section of this report outlines model retrofit policies that have

been used in the region, funding sources, and example strategies to increase the use

of pollution control equipment.

RESPONSES OF JASON GRUMET TO ADDITIONAL QUESTIONS FROM SENATOR

LAUTENBERG

Interstate Transportation of Air Pollution

Question 1. NESCAUM has studied the movement of air pollution into the northeastern States from other States. What have you learned and what does that say

about the need to maintain a strong Federal role in environmental policy?

Response. This response presents NESCAUM’s work in two particular areas of air

pollution transport that have received a great deal of attention in recent years. The

first area concerns ozone (smog). The U.S. Environmental Protection Agency (EPA)

recently implemented a regional plan to reduce emissions of nitrogen oxides (NOx),
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the most important precursor contributing to ozone transport on a regional scale.

The second area concerns acid rain. NESCAUM has done recent work on acidic deposition in New England and linkages with pollution sources in upwind regions. The

1990 Clean Air Act Amendments (CAAA) created the Federal Acid Rain Program

that has resulted in a significant decrease in sulfur dioxide (SO2) emissions, the precursor to acidic sulfate deposition. NESCAUM’s work indicates that upwind reductions in SO2 emissions correlate strongly with downwind reductions in acidic sulfate deposition. Unfortunately, environmental recovery appears to be slower than expected, and additional regional reductions are likely needed to adequately protect

sensitive land and water resources from the damaging effects of acid rain. In keeping with the theme of the May 2 hearing before the Senate Committee on Environment and Public Works, NESCAUM would like to reiterate its strong support for State flexibility in addressing environmental problems. The NESCAUM

States take pride in developing their own innovative efforts to reduce pollution within their borders—an approach that requires a cooperative framework with the Federal Government to provide sufficient flexibility for the States. While the

NESCAUM States seek flexibility in addressing the pollution sources within their

borders, they also recognize the need for a Federal role in addressing pollution

caused by sources outside a State’s borders. In light of NESCAUM’s work on air pollution transport, we clearly see the need to maintain a strong Federal role in environmental policy to deal with these types of interstate air pollution issues. Unfortunately, an upwind State all too often has little incentive to reduce pollution from

in-State sources when public health and environmental damage occur downwind

outside the State. In the experience of the NESCAUM States, it seems that upwind

States all too often believe a downwind State must control in-State sources almost

to the verge of bankruptcy before upwind States feel obligated to reduce their own

contributions to a downwind State’s pollution problem. The Clean Air Act, however,

places equal responsibility on all pollution sources for their contributions to downwind pollution problems, regardless of where the sources are located. When upwind

States mistakenly believe they have less of an obligation to address their own contribution to downwind pollution problems, downwind States have little recourse but

to appeal to the Federal Government for relief.

In addition to interstate pollution transport, there is another need to maintain a

strong Federal role in environmental policy. A number of cost-effective pollution control options, such as low sulfur fuels and heavy-duty diesel engine standards, are

often national in scope and fall outside State jurisdiction. These types of control options are the quintessential programs best addressed by the Federal Government.

I. Ozone and precursor transport

The transport of NOx and ozone in power plant plumes has been known since at

least the mid-1970’s. Measurements of power plant plumes have documented high

ozone levels transported from Wisconsin into Michigan (Miller, et al., 1978), Tennessee into Indiana (Gillani & Wilson, 1980), and Missouri toward Chicago (White,

et al., 1983). These studies show that NOx in power plant plumes produces significant amounts of ozone, and the ozone travels long distances into neighboring States.

Within the Ohio River Valley, where the concentration of large coal-fired power

plants is greatest, there is a large and persistent area of high ozone during the summer months relative to air in other parts of the country (Husar, 1996). Within this

region, winds intermingle ozone pollution from different power plant plumes (as well

as other pollution sources). Because of this mixing, a large ‘‘reservoir’’ of ozone forms

across much of the east-central United States. People living in southern Indiana,

southern Ohio, northern Kentucky, and most of West Virginia actually experience

higher long-term ozone levels than people living in metropolitan Chicago or Boston

(see Figure 1).

The large ozone reservoir in the Ohio River Valley returns each summer with little abatement. Researchers have found no significant trends in regional ozone levels

from 1980 to 1995 (Five, et al., 1998). While urban levels have decreased somewhat

due to pollution controls on automobiles, regional ozone and NOx levels have not

significantly changed. This is due in large part to the lack of significant NOx reductions from fossil fuel power plants which, in places such as the Ohio River Valley,

contribute 40–50 percent of the total NOx emissions in a given region. Between

1987 and 1996, NOx emissions from power plants rose 3 percent nationally (EPA,

1998). Because regional ozone is more sensitive to NOx controls than volatile organic compound (VOC) controls, the lack of significant NOx reductions from power

plants is impeding progress toward reducing ozone levels.

Researchers observed the movement of ozone from the Ohio River Valley into the

Northeast as early as 1979. During early August in 1979, scientists tracked a mass

of ozone leaving Ohio, crossing Pennsylvania and southern New York, and entering
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1The researchers also indicated that as the air mass entered the Northeast corridor, it contained enough transported precursor emissions to generate an additional 35 ppb of ozone on top

of the 90 ppb already formed. Consequently, the amount of background ozone and precursors

entering the Northeast could have resulted in an exceedance of the l-hour ozone standard in

the Northeast even if only minimal additional precursor emissions occurred locally. 2The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has remanded

the revised 8-hour ozone standard back to EPA, a decision currently on appeal to the U.S. Supreme Court. Although questioning the standard on constitutional grounds, the D. C. Circuit

recognized that detrimental health impacts occur at ozone levels below the current l-hour standard. 3 U.S. EPA has approved the CALGRID model for ozone attainment planning purposes in the

New England Domain. 4 Communication from Mark Fernau, Earth Tech, Inc., Concord, MA.

into the Northeast Corridor (Clarke and Ching, 1983). When this mass of air from

the Ohio River Valley entered into the Northeast Corridor, it contained about 90

parts per billion (ppb) of ozone. 1 The current 1-hour Federal ozone standard is

equivalent to 120 ppb (0.12 parts per million). Therefore, the amount of ozone observed entering the Northeast was 75 percent of the 1-hour ozone standard and represented a significant contribution to the overall ozone burden experienced in the

Northeast during that time.

As the persistent ozone reservoir establishes itself every summer in the Ohio

River Valley, large amounts of ozone continue to be transported into the Northeast

from the west. During the summer of 1995, the North American Research Strategy

for Tropospheric Ozone-Northeast (NARSTO-NE) conducted aircraft measurements

of ozone in air masses along the western edge of the Northeast Corridor. During

pre-dawn hours, scientists measured ozone levels up to and in excess of 100 ppb

above Shenandoah, VA, Gettysburg, PA, Poughkeepsie, NY, and other locations in

the Northeast (Lurmann, et al., 1997). During this time of morning, the ozone could

not have been formed locally (no sunlight is present to initiate the formation of

ozone), so it must have been transported during the overnight hours. Wind direction

on some of the highest ozone days (e.g., July 14, 1995) was out of the west

(Blumenthal, et al., 1997). Therefore, we can conclude that the ozone traveled into

the Northeast from points to the west, i.e., the Ohio River Valley.

At transported ozone levels of over 100 ppb during the pre-dawn hours, the Northeast is already over 80 percent on the way to an exceedance of the 1-hour standard

before the sun rises. The Northeast is in the predicament of achieving the 1-hour

120 ppb Federal ozone standard in situations where 100 ppb or more of the ozone

is beyond its control. Only an additional 20 ppb of ozone generated within the

Northeast will cause an exceedance of the 1-hour standard, and the situation is even

worse for the more protective 80 ppb 8-hour standard. 2 The high levels of transported ozone virtually guarantee that the Northeast will not achieve air quality

goals without NOx reductions from upwind sources.

Estimating Ozone Transport into the Northeast

A range of ozone transport into the Northeast can be estimated from the field

measurements mentioned in the preceding section, and from computer modeling of

ozone formation and transport. Based on results from a model called CALGRID, 3

we estimate a plausible contribution of transported ozone from outside the Northeast to ozone exposure above the 1-hour 120 ppb and the 8-hour 80 ppb standards

inside the Northeast in the range of 20–45 percent. This was estimated as described

in the following text.

Two modeled scenarios were generated for a severe ozone episode occurring on

11–15 July 1995 in the eastern United States. 4 In the first modeled scenario, the

reductions proposed in the EPA NOx SIP Call were applied only within the Northeast Ozone Transport Region (OTR), and current Clean Air Act measures were put

in place outside the OTR using emissions projected for 2007 (Run 1). In the second

scenario, the EPA NOx SIP Call reductions were applied throughout 22 eastern

States (Run 2).

In each scenario, the total ozone exposure above the 1-hour 120 ppb standard and

the 8-hour 80 ppb standard was determined. The total exposure to ozone above the

1-hour standard was calculated from the model by multiplying all calculated ozone

concentrations above 125 ppb by the total hours above 125 ppb and the area of each

modeled grid cell (144 km2) in which an ozone concentration above 125 ppb occurred. For the 8-hour standard, a surrogate 1-hour value of 110 ppb was used as

the threshold exposure level in the model, and the total exposure was calculated in

the same manner as for the 125 ppb threshold. The 1-hour threshold of 110 ppb is

used because ozone monitoring data suggest that when a 1-hour concentration of
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5The values of 125 ppb (1-hour) and 85 ppb (8-hour) are used to be consistent with EPA’s

monitoring test for an ozone exceedance. According to EPA’s data truncation guidance, an

exceedance of the l-hour ozone standard does not occur until monitored l-hour concentrations

reach or exceed 125 ppb, and an 8-hour exceedance does not occur until the 8-hour average

reaches or exceeds 85 ppb. For the modeling test, this may be a conservative threshold to use

because models often underestimate observed peak ozone concentrations. 6Tables of ozone exposure data calculated from the OTAG July 1995 modeled episode can be

found at the OTAG Northeast Modeling and Analysis Center web address: http://sage.mcnc.org/

OTAGDC/aqm/uamv/jul95.

110 ppb is reached or exceeded, it typically coincides with an 8-hour average above

85 ppb at the same monitor. 5

The reduction in ozone exposure within the Northeast Ozone Transport Region due to NOx controls outside the Northeast is shown in Table 1. The reduction is

given as the percentage decrease in ozone exposure between Run 1 (EPA NOx SIP

Call in the OTR only) and Run 2 (EPA NOx SIP Call in 22 eastern States).

Table 1. Percent reduction in ozone exposure (ppb hr/km2) greater than 125 ppb (1-hour standard) and 110 ppb (surrogate for 8-hour standard) within the Northeast Ozone Transport Region due to applying the EPA NOx SIP Call beyond the borders of the QTR.

Percent daily reduction in modeled ozone exposure within the Northeast Ozone Transport Region due to 22 State NOx SIP Call

July 11 July 12 July 13 July 14 July 15

Reduction in ozone exposure 2125 ppb ............................................. –31% –16% –35% –33% –42%

Reduction in ozone exposure 2110 ppb ............................................. –37% –27% –32% –34% –47%

Modeled reductions are based on 11–15 July 1995 ozone episode.

Based on the modeled reductions in Table 1 and the high levels of ozone observed entering the Northeast during the field studies mentioned above, NESCAUM estimates a plausible contribution range of 20–45 percent to ozone exposure above the

1-hour and 8-hour standards in the Northeast Ozone Transport Region due to transported ozone from outside the region.

The estimated range is consistent with modeling results from the Ozone Transport Assessment Group (OTAG). OTAG estimated ozone transport impacts by ‘‘turning off’’ all human-related sources of NOx and VOC emissions in various parts of

the eastern United States. When human-related emission sources were set to zero

in the OTAG model (OTAG used a model called UAM-V), changes in ozone levels

in downwind receptor regions could be estimated. These modeling runs indicated

that human-related emissions in various upwind regions significantly contributed to

ozone levels in downwind receptor regions. For example, OTAG results for the July

1995 episode indicated that turning off NOx and VOC emissions in parts of the Ohio

River Valley reduced ozone exposure above 120 ppb in the Philadelphia area by 41

percent, and in the Baltimore/Washington, DC area by 43 percent. 6

The Economic Impact of Ozone Transport Into the Northeast

The out-of-region ozone transport contributing to ozone levels above Federal

standards within the Northeast Ozone Transport Region creates additional economic

costs within the Northeast due to the need for more stringent local controls.

If no additional NOx measures beyond Clean Air Act acid rain controls are applied on sources upwind, the additional control costs in the Northeast to compensate

for ozone transport could be from $1.4 to $3.9 billion each year. If upwind sources

met the reductions in EPA’s NOx SIP Call, the economic costs to the Northeast will

be reduced to about $0.2 to $1.1 billion each year (NESCAUM, 1998).

In addition, there are significantly more low-cost opportunities for reducing NOx

emissions at upwind sources than in the Northeast. Upwind power plants are estimated to be able to meet the EPA NOx SIP Call budgets at an average cost of $662/

ton. Northeast power plants will spend about 50 percent more to achieve the same

budget requirements—about $1,013/ton. While the cost to Northeast power plants

is still reasonable, there are not enough available reductions remaining from these

emission sources to fully offset the impact of transported ozone. Any additional reductions in the Northeast must come from other emission sectors at higher costs.

The Need for a Federal Role

The NESCAUM States have struggled for years to overcome the amount of smog

transported into their region from upwind sources beyond their jurisdiction. Without

a Federal presence to implement a multistate regional smog strategy, there is little

likelihood that air quality standards can be met for millions of people living in the
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7 National Atmospheric Deposition Program (NRSP–3)/National Trends Network, 1998, NADP

Program Office, Illinois State Water Survey, 2204 Griffith Drive, Champaign, IL 61820. 8 A correlation coefficient R2 approaching a value of one indicates a strong correlation. On the

other hand, an R2 approaching zero would indicate a weak correlation.

Northeast. The U.S. EPA’s regional NOx SIP Call, recently upheld in large part by

the D.C. Circuit, is the first major step by the Federal Government toward addressing this problem. A Federal ‘‘cap and trade’’ program for NOx, similar to the successful SO2 trading program under Title IV of the CAAA, promises a cost effective

regional program for reducing smog that cannot be accomplished through individual,

uncoordinated State action (or inaction). The program provides needed flexibility to

the States to devise their own control options, but the application of the program’s

NOx reduction targets across many States is the proper and necessary role of the

Federal Government.

II. Acid deposition in the New England States

A number of recent studies have investigated acidic deposition trends (sulfates

and nitrates) since the 1980’s in areas of the United States (Lynch et al., 1996;

Husain et al., 1998; Holland et al., 1999; Shannon, 1999). NESCAUM’s work focuses

on the New England region and extends the period of analysis to 1998, which is

the most recent year for which deposition data are currently available. Consistent

with the results of the earlier studies, NESCAUM found a decreasing trend in annual sulfate deposition in New England since 1980 (Miller, 1999). The decline after

1990 is presumably a result of SO2 emission reductions under Title IV of the 1990

Clean Air Act Amendments, although SO2 power plant emissions have increased

somewhat since 1995 following a period of significant decline. Nitrate deposition

trends show no discernable change over the same period, nor do NOx emissions.

In general, NESCAUM finds that the decreasing sulfate deposition trend in New

England strongly correlates with the SO2 emissions trend from fossil fuel power

plants located within a group of eastern States and the Province of Ontario.

NESCAUM estimated the geographical scope of the SO2 source region that influences downwind sulfate deposition in New England using results from EPA’s Regional Acid Deposition Model (RADM) (EPA, 1995). The RADM model ‘‘tagged’’ SO2

emissions from power plants and large industrial sources in 53 separate subregions

of the eastern United States and Canada. For each subregion, the model simulated

SO2 emissions in 1985 and projected for 2010 after implementation of Title IV of

the Clean Air Act, and then tracked the SO2 and its chemical transformations during downwind transport and ultimate deposition. From RADM’s deposition contribution plots, NESCAUM identified the following States and province as containing

sources that contribute some level of sulfate deposition in New England: Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland,

Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Ontario,

Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia (see Figure 2).

To correlate with the SO2 emissions trend, NESCAUM used sulfate deposition

data from ten monitoring sites in New England collected by the National Atmospheric Deposition Program (NADP). 7 The usual caveat applies in assessing a correlation. A strong correlation between emission and deposition trends does not necessarily imply a cause-and-effect relationship. The difficulty is that SO2 emissions

from power plants are decreasing across much of the eastern United States. Any

deposition decrease in New England could be positively correlated with any decrease

in SO2 emissions no matter where it occurs in the eastern United States. Therefore,

NESCAUM uses the RADM modeling results to better refine the scale of the potential source region. Determining which upwind areas, based on the RADM results,

contain sources contributing to downwind deposition provides an objective rationale

for narrowing the geographical scope of the potential source region. While not completely conclusive, it provides a reasonable basis for believing a positive correlation

between SO2 emissions and sulfate deposition in the New England region will be

more than coincidental.

Figure 3 presents a plot of the emissions-related correlation with the scaled sulfate deposition. The trend in sulfate deposition in the New England region is strongly correlated with fossil fuel SO2 emissions in the source region identified from the

RADM modeling results (correlation coefficient R2 = 0.78). 8 The results are consistent with previous trend analyses by other researchers (Holland et al., 1999; Shannon 1999). The strong correlation supports a conclusion that upwind sources in the

region identified by th RADM results contribute to acidic deposition in New England, and recent SO2 reductions at these sources have led to decreases in downwind

acidic deposition.
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The Need for a Federal Role

A report by the General Accounting Office (GAO, 2000) concludes that at the time

Congress drafted the 1990 Clean Air Act Amendments, it did not recognize how

lakes and soils in the Adirondacks and other eastern areas might lose the ability

to neutralize acidic deposition or use excess nitrogen. Therefore, even with reduced

emissions of acid forming pollutants under the 1990 CAAA, the Northeast’s

ecosystems may be too impaired to respond. Noticeable improvement in the environment may not occur unless pollution sources make deeper reductions beyond current

CAA requirements.

Although pollution sources are meeting the CAAA acid rain requirements, the

acidification of northeastern surface waters continues. Recent reports suggest that

pollution sources will need to achieve additional substantial reductions in SO2 and

NOx emissions beyond what the CAAA Title IV requires (GAO, 2000; Acidifying

Emissions Task Group, 1997). Action at the State level is beginning to respond to

the CAAA shortcomings. Recently signed legislation in the State of New York attempts to discourage New York businesses from selling any available emission allowances to upwind States where the added emissions may contribute further to

New York’s acid deposition problem. While there is debate over whether New York’s

action will have much of an impact, it indicates a growing level of frustration with

progress toward reducing acidic deposition that is beginning to manifest itself politically. Unfortunately, a State has only limited ability to compensate for environmental damage caused by pollution sources located over a broad region outside its

borders. To realistically address this problem, States need action at the Federal

level.

Conclusion

States need flexibility to develop innovative programs that will meet public health

and environmental goals. At the same time, the Federal Government has an important role to play in ensuring that out-of-State pollution sources share equal responsibility in solving downwind pollution problems. Air pollution transport is one such

area that requires in-State flexibility combined with a Federal role to that ensure

all States recognize their mutual obligations to address interstate pollution problems.9

One approach that combines State flexibility with a strong Federal role is a

multistate and multipollutant ‘‘cap and trade’’ program. Title IV of the CAAA has

had great success in accomplishing cheap reductions of SO2 pollution across a broad

region of the country. The Federal Government set an overall target, but left it up

to the States and pollution sources to develop the best approach for meeting the reduction target. The requirements of EPA’s NOx SIP Call promise similar flexibility

in reducing NOx emissions during the ozone season.

At the Federal level, a multi-pollutant cap and trade scheme along the lines proposed by Senator Smith would facilitate flexible State action in partnership with a

Federal role. Under a multi-pollutant scheme, further reductions in SO2 and NOx

emissions could build upon the success of the current CAAA Title IV national SO2

emission cap and trade program. The NOx SIP Call, as currently being implemented, will cap NOx emissions in a number of eastern States, but only during the

5-month ozone season. States will need Federal support to further tighten the SO2

cap beyond current Title IV levels, and extend NOx limits from seasonal to annual

requirements in order to fully address continuing acid rain problems. States could

also pursue complementary reductions in other pollutants, such as mercury, and develop voluntary programs to reduce carbon dioxide, a potent greenhouse gas. The

multipollutant approach would give States flexibility in developing innovative strategies to reduce a range of pollutants emitted in-State, but retain a Federal presence

to ensure all pollution sources share in their mutual responsibility to address interstate pollution problems, regardless of where the sources are located.

REFERENCES

Acidifying Emissions Task Group, 1997. Toward a National Acid Rain Strategy,

Submitted to the National Air Issues Coordinating Committee. Report available

from Environment Canada, Ottawa (October).

Blumenthal, D.L., et al. 1997. Transport and Mixing Phenomena Related to Ozone

Exceedances in the Northeast U.S., Sonoma Technology Report STI–996133–1710-

WD1.1, February.

Clarke, J.F. & J.K.S. Ching 1983. Aircraft Observations of Regional Transport of

Ozone in the Northeastern United States, Atmos. Envt., Vol. 17, pp. 1703–12.

EPA, 1995. Acid Deposition Standard Feasibility Study Report to Congress, EPA

430-R–95-001a (October).
165

EPA 1998. National Air Quality and Emissions Trends Report, 1996, EPA 454/

R–97–013, p. 17, January. Fiore, A.M., D.J. Jacob, J.A. Logan, & J.H. Yin 1998. Long-Term Trends in Ground Level Ozone over the Contiguous United States, 1980–1995. J. Geophys.

Res., Vol. 103, pp. 1471–80. GAO (General Accounting Office), 2000. Acid Rain: Emissions Trends and Effects in the Eastern United States, General Accounting Office, Washington, DC (March).

Gillani, N.V. & W.E. Wilson 1980. Formation and Transport of Ozone and

Aerosols in Power Plant Plumes, Ann. N.Y. Acad. Sci., Vol. 338, pp. 276–96.

Holland, D.M., P.P. Principe, and J.E. Sickles, II, 1999. Trends in atmospheric

sulfur and nitrogen species in the eastern United States for 1989–1995, Atmos.

Envt., Vol. 33, pp. 37–49.

Husar, R.B. 1996. Spatial pattern of daily maximum ozone over the OTAG region,

Web address: http://capita.wustl.edu/OTAG/Reports/otagspat/otagspat.html.

Husain, L., V.A. Dutkiewicz, and M. Das, 1998. Evidence for decrease in atmospheric sulfur burden in the eastern United States caused by reduction in SO2 emissions, Geophys. Lett., Vol. 25, pp. 967–970.

Lurmann, F.W., et al. 1997. Evaluation of the UAM-V Model Performance in the

Northeast Region for OTAG Episodes, Sonoma Technology Report STI–996133-1716-

WD2.1, March.

Lynch, J.A., V.C. Bowersox, and J.W. Grimm, 1996. Trends in precipitation chemistry in the United States, 1983–1994—An Analysis of the effects of Phase I of the

Clean Air Act Amendments of 1990, Title IV, U.S. Geological Survey Open-File Report 96–0346.

Miller, D.F., A.J. Alkezweeny, J.M. Hales, & R.N. Lee 1978. Ozone Formation Related to Power Plant Emissions, Science, Vol. 202, pp. 1186–88.

Miller, Paul J., 1999. Emissions-related acidic deposition trends in Maine and

New England, EPA Project No. CX826563–01–0, NESCAUM, Boston, MA (December).

NESCAUM (Northeast States for Coordinated Air Use Management), 1998. The

Costs of Ozone Transport: Achieving Clean Air in the East, NESCAUM, Boston,

MA, (July).

Shannon, J.D., 1999. Regional trends in wet deposition of sulfate in the United

States and SO emissions from 1980 through 1995, Atmos. Envt., Vol. 33, pp. 807–

816.

White, W.H., D.E. Patterson & W.E. Wilson, Jr. 1983. Urban Exports to the Nonurban Troposphere: Results from Project MISTT, J. Geophys. Res., Vol. 88, pp.

10,745–52.

STATEMENT OF ROBERT J. HUSTON, CHAIRMAN, TEXAS NATURAL RESOURCE

CONSERVATION COMMISSION

Mr. Chairman, members of the Senate Committee on the Environment and Public

Works, I am Bob Huston, Chairman of the Texas Natural Resource Conservation

Commission. I am pleased to provide information to you about the successes we’ve

had in Texas in assuming delegation of environmental responsibilities from the U.S.

Environmental Protection Agency, in particular delegation of the National Pollutant

Discharge Elimination System (NPDES) permitting authority.

I add my testimony to that of other representatives from across the United States:

from South Carolina, from New Hampshire, from Pennsylvania, and Utah. There

are many more like us who could also testify to the successes that come from devolution of environmental responsibilities. Because while the issues may be similar

across the States, there are marked differences in how those issues should be approached. Quality air, good water, safe waste disposal these are the goals to which

we all adhere. Geology, climatic conditions, topography, industrial and commercial

activity, population clusters, diversity of natural resources these are some of the

variables that make each of our States unique and that require responses that are

tailor-made rather than cut down from a one-size-fits-all.

EPA cannot begin to respond to the unique needs and circumstances of each

State. The sheer size of this country makes that a foregone conclusion. Rather, EPA

works best when it serves as our partner, providing oversight, guidance and assistance.

I say this with profound conviction born of first-hand experience through baptism

by fire.

Let me lay out the scene for you:

I was appointed to the TNRCC by Governor George W. Bush in January 1999.

I stepped into the position just as Texas, after 25 years of effort, was delegated re-
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sponsibility from the EPA for administering the NPDES program. NPDES is the national program for issuing permits to all facilities that discharge wastewater. Permittees range from huge industrial complexes and municipal wastewater treatment

facilities to confined animal feeding operations to facilities serving a single subdivision or mobile home park. Permits specify a whole host of criteria: the volume of

wastewater that can be discharged under differing conditions as well as the composition of the discharge, such as the concentration of chemicals, nutrients, and

other substances contained in the discharge. Those who fail to comply with the

terms of the permit face significant penalties. NPDES permits expire after 5 years;

when reissued, they often require the permitted facility to meet tighter discharge

parameters. This process ensures continued progress toward enhanced water quality

. . . at least in theory. In reality, the NPDES program for Texas was not in very good condition. When Texas inherited NPDES from EPA we also inherited a backlog of some 4,000 permit

files, including many applications, some for renewals, others for new permits. Many

of the files were obsolete. Some of the files included applications that were 20 years

old . . . and had never been acted on.

This is not to say, however, that no one in Texas was tracking, monitoring, assess- ing, and, when appropriate, enforcing water quality regulations. The State of Texas

was handling these tasks and handling them well. Texas knows how to properly run

a water permitting program. During the 25 years that NPDES had remained a federally managed program in Texas, we had been issuing State discharge permits to

a much broader universe of facilities. Although NPDES requires permits of all facilities, the program as administered by EPA was focused on major facilities. As demonstrated by the backlog, it was unable to handle most of the minor facilities. Texas

waste-water discharge permits, on the other hand, were being issued to all facilities,

major and minor. This is significant because we are unique among States in having

significantly more almost five times more minor facilities as major ones. Our current

tally is about 550 major facilities compared to about 2,500 minor facilities. Those minor facilities would have fallen through the cracks without our State per- mitting program. And as we all know, small facilities can have potentially major impacts, and the cumulative effects of this universe of dischargers cannot be ignored. Basically we were running a system that was parallel to the NPDES but much more comprehensive. Furthermore, the discharge parameters for all permits whether written by EPA or by Texas have always been based on water quality standards

set by the State, as provided by the Clean Water Act. The States are the ones with

detailed knowledge about the water bodies within our boundaries. Over the years, we continued to refine our system to reflect our ongoing work in the field. For example, Texas has successfully moved permit renewals to a basin rotation, so that all permits within a given river basin come up for renewal at the

same time. This allows us to consider the cumulative impacts of wastewater discharges on water quality, rather than looking at each facility in isolation.

In Texas, like in many other States, the program was working and working well.

Overlaying this comprehensive and effective State program with a Federal program

provided little benefit to the environment and was burdensome to the regulated

community.

Fortunately, Texas was delegated the program in September 1998, along with its

4,000 files.

Now, with the new Texas Pollutant Discharge Elimination System, facilities no

longer need both a Federal and a State permit. They can now apply for a single

wastewater discharge permit through a streamlined and more cost-effective permitting process. For entities with complex permits, this means thousands of dollars in

cost savings and processing time. For Texas, it means more efficient and effective

water quality protection, with permits tailored to the needs and conditions of each

local water body and the communities it serves. The end result is efficient protection

of our water resources.

Building this new system was not easy. We needed to quickly merge the two permitting systems, absorb the Federal backlog, and do so without unduly affecting the

many permittees who expect and deserve their new and renewal applications be

processed in a timely fashion. It was akin to changing a tire on a moving car.

The TNRCC workload increased dramatically. Nonetheless, after first organizing

and categorizing the massive set of inherited files, we set for ourselves an ambitious

goal of clearing out in one year (calendar 1999) the permit backlog accumulated by

EPA over 20-plus years. I am proud to say we excelled at the job: by January 2000

we had erased the backlog and had the new TPDES program running on an even

keel.

How did we do it? There are three parts to that answer. Hard work and knowhow are one part. Certainly, we could not have accomplished this feat without the
167

dedication of TNRCC staff and their years of experience in developing wastewater

discharge permits, their thorough knowledge of the State’s water bodies, and their

comprehensive understanding of Texas water quality standards. Another part of the answer is flexibility. We reallocated resources from other parts of the agency primarily permit writers from our air and waste programs so

that we could focus intensive efforts on this project. This type of flexibility is the

hallmark of State environmental programs; we can respond to priorities in ways not

available to the EPA. In Texas, we see the future of environmental successes not

always in prescriptive regulations and procedural mandates but rather in regulatory

flexibilities that set clearly defined goals and standards for accountability. This is

the way we run our agency and the way we craft our programs. Finally, the third part of the answer is EPA itself. Region 6, under Regional Ad- ministrator Gregg Cooke, provided us with $2.5 million in grants to bring additional

resources to the effort. Just as importantly, Region 6 furnished technical resources

and provided oversight assistance. Region 6 made delegation work. TPDES is a success story for everyone:

• for the TNRCC, which took an already massive State permitting program and merged it seamlessly with a Federal program; • for Texas facilities, which now have a single efficient system for permitting wastewater discharges; • for Texas communities, which enjoy a sound and responsible program for pro- tecting the quality of water in their lakes and rivers; and • for the EPA, which can now focus on its proper role of overseeing and provid- ing resources to ensure successful implementation of Clean Water Act objectives.

Through delegation, it has achieved its goals. In Texas, we firmly believe this success can be replicated in other areas, most no- tably with the Total Maximum Daily Load program. To EPA we say yes, set the

goals, but give us the flexibility to achieve those goals in the most efficient and effective manner, taking into account our unique circumstances. Delegation, not

micromanagement, is the key to successful protection of the environment. Thank you for the opportunity to share this success story with you.

GEORGIA DEPARTMENT OF NATURAL RESOURCES,

May 19, 2000.

The Honorable ROBERT C. SMITH, Chair,

Senate Environment and Public Works Committee,

U.S. Senate,

Washington, D. C. 20510

Dear Chairman Smith: I appreciate the opportunity to enhance the testimony of my

ECOS colleagues as to the role of the States in enforcement of the environmental

statutes of the nation.

The Georgia Environmental Protection Division (EPD) is responsible for enforcing 20 State laws passed over the past 34 years to protect Georgia’s environmental resources. In addition, the responsibility for environmental programs under four Federal laws is delegated to EPD.

The regulated community affected by these laws is extremely diverse, ranging

from individual car owners to large corporations to most local governments.

EPD directly regulates over 60,000 facilities by permit, rule and license. There are

30,480 facilities regulated by permit, 29,260 regulated by rule and 772 regulated by

license. In addition, there are 2,800,000 vehicles in metropolitan Atlanta regulated

by emission testing and inspection.

EPD uses various mechanisms to assure compliance and to respond to non- compliance. These include inspections, review of self monitoring data, written violation

notices, orders, monetary settlement (penalties) collection and referrals to the Attorney General for penalty imposition hearings.

We estimate the compliance rate of facilities in Georgia to be roughly 90 percent.

The remaining 10 percent is the subject of our enforcement.

From 1991 through 1997, EPD executed an average of 412 enforcement orders

each year. However, starting in 1998 our enforcement has been increasing. In 1998,

we issued 996 enforcement orders and in 1999,1410 orders. Since 1991, EPD has

collected over $50,000,000 in environmental penalties.

An important question is, ‘‘How many of our enforcement orders pertain to federally delegated programs?’’ The answer is ‘‘the vast majority’’. For example, in

1999,1263 of the 1410 orders were for such programs.

I would like to highlight an important Georgia enforcement policy. Starting in

1998, Georgia has ‘‘zero-tolerance’’ for violations of the Georgia Water Quality Con-
168

trol Act (the equivalent of the Federal Clean Water Act) for facilities located in sensitive river basins (basically all of highly populated North Georgia). This zero-tolerance policy provides that any violation, no matter how minor, results in a monetary

penalty. This includes wastewater permit violations, sewer overflows or spills, and

failure to meet construction schedules. This policy was put in place with the thinking that the owners and operators of wastewater systems have had adequate time

to know the requirements and to adhere to them. This policy allows no excuse for

violations. In 1998, 79 enforcement orders were executed and $339,000 penalty dollars collected resulting from this policy. In 1999, the 75 enforcement orders were

issued and $552,000 were collected. It is our hope that theses numbers will decrease

over time as our enforcement policy will convince cities and industries to avoid even

the most minor infractions.

It would be inappropriate to fail to mention and commend Region IV of the U.S.

Environmental Protection Agency for its support of our enforcement program. Although EPD carries out a very effective program, we typically ask and receive assistance from Region IV on a few key enforcement cases yearly. Region IV accepts

our requests willingly and aggressively.

Thank you for your consideration of our information and the testimony of other

ECOS members.

Sincerely,

HAROLD F. REHEIS, Director,

The States Protect the Environment.

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