### United States Government Ac countabilit y Office 

# GAO Report to Congressional Requesters



# ENVIRONMENTAL PROTECTION

EPA-State Enforcement Partnership Has Improved, but EPA’s Oversight Needs Further Enhancement July 2007

GAO-07-883

### What GAO Found

**United States Government Accountability Office** 

### Why GAO Did This Study 

# H ighlights **Accountability Integrity Reliability**

www.gao.gov/cgi-bin/getrpt?GAO-07-883

. To view the full product, including the scope and methodology, click on the link above. For more information, contact John B. Stephensonj at (202) 512-6225 or stephensonj@gao.gov

. Highlights of GAO-07-883 , a report to congressional requesters **Jul y**  **2007** 

# ENVIRONMENTAL PROTECTION
**EPA-State Enforcement Partnership Has Improved, but EPA’s Oversight Needs**  **Further Enhancement**

Overall funding to regions and author ized states incr eased from 1997 through 2006, but these increases did no t keep pace with inflation and the growth in enforcement responsibilities. Over the 10-year period, EPA’s enforcement funding to the regions decr eased 8 percent in inflation-adjusted terms. Regional officials said they reduced the number of enforcement staff by about 5 percent. EPA’s grants to states to implement federal environmental programs also declined by 9 percent in inflation-adjusted terms while enforcement and other en vironmental program responsibilities increased. Accord ing to state officials, reduc tions in grant funds have limited their ability to meet EPA’s requ ests to implement new requirements. For example, according to New York State officials responsible for the hazardous waste program, a reduction in EPA grants between 1997 and 2006 has meant a 38 percent reduction in th e full-time state staff supported by federal funding for this program. However, EPA information on the workload and staffing needs of its regi ons and the states is incomplete, and, thus, it is not possible with existing data to determine their overall capacity to meet their enforcem ent responsibilities.

EPA has made substantial progress in improving priority setting and enforcement planning with states th rough its system fo r setting national enforcement priorities and the EPA/state National Environmental Partnership System (NEPPS), which have fostered a more cooperative relationship. For example, on stat es’ recommendation, OECA accepted as a priority ensuring that facilities hand ling hazardous substances, such as lead or mercury, have the financial resource s to close their facilities, clean up contamination, and compensate communiti es and individuals affected by the contamination. EPA and states have also made some progress in using NEPPS for joint planning and resource a llocation. State participation in the partnership grew from 6 pilot states in fi scal year 1996 to 41 states in fiscal year 2006.

EPA has improved its oversight of state enforcement programs by implementing the State Review Framew ork (SRF) as a means to perform a consistent approach for overseeing th e programs. Moreo ver, EPA can make additional progress by addressing weaknesses that the SRF reviews identified and by implementing other im provements to ensure oversight that is more consistent. For example, the SRF reviews show that EPA has limited ability to determine whether the states are performing timely, appropriate enforcement and whet her penalties are applied to environmental violators in a fair a nd consistent manner within and among the states. In addition, GAO noted th at EPA could make further use of the SRF to (1) determine the root causes of poorly performing programs; (2) inform the public about how well th e states are implementing their enforcement responsibilities; and (3) extend the use of the SRF methodology to assess the performance of EPA’s regi ons, which have been inconsistent in their enforcement and oversight efforts. The Environmental Protection Agency (EPA) enforces the nation’s environmental laws through its Office of Enforcement and Compliance Assurance (OECA). OECA sets overall enforcement policies and through its 10 regions oversees state agencies authorized to implement environmental programs consistent with federal requirements. GAO was asked to (1) identify trends in federal resources to regions and states for enforcement between 1997 and 2006, and determine regions’ and states’ views on the adequacy of these resources; (2) determine EPA’s progress in improving priority setting and enforcement planning with states; and (3) examine EPA’s efforts to improve oversight of states’ enforcement programs and identify additional actions EPA could take to ensure more consistent state performance and oversight. GAO examined information from all 10 regions and 10 authorized states, among other things.



### What GAO Recommends

GAO recommends that EPA (1) develop an action plan to address problems identified in state programs, (2) evaluate the capacity of state programs to enforce authorized programs, (3) publish findings of state enforcement program reviews, and (4) assess the performance of its 10 regions. EPA generally agreed with GAO’s recommendations, but stated it will decide whether to publish future state reviews when it evaluates the review process in fiscal year 2008.

# Contents

Letter 1

Results in Brief 7 Background 9 Increases in EPA Funding Have Not Kept Pace w i th Inflation and Enforcement Responsibilities 12 EPA and Sta t es Have Ta ken Steps to Improve Planning and Pr iority Setting for E n forcement, but Results Are Uneven 23 State Revi e w Framework Has the Potential to P r ovide More Consistent Oversight 28 C o n c l u s i o n s 3 3 Recommendations for Executive Act i on 34 Agency Comments and Our Evaluatio n 35



### Appendi x I Scope and Met h odology 37



### Appendix II Development and Im plem entation of the Stat e Rev i ew Framework 40



### Appendix III Comments from the Environmental Agency 45



### Appendi x IV GAO Contact and Staff Acknowledgments 46



### Table

Table 1: EPA’s Candidate and Fin a l National Enforcement Priorities for Fiscal Year s 2005-2 0 0 7 , in Rank Order 24



### Figures
Figure 1: EP A’s Enforcement Funding in Real T e rms, in Total, and by Headqu arters and Reg i onal Offices , Fiscal Ye ars 1997- 2006 1 3 Figure 2: OE CA Headqua r

ters and Regional Total FTEs, Fiscal Years 1997 -2 006 14 Figure 3: OE CA Regional Offices FTEs, Fiscal Yea r s 1997-2 006 15

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- St at e Enfor c em entFigure 4: EP A’s Real Total Funding and Real Total Grant Funding to States an d Tribes, Fiscal Ye ars 19 97 through 2 006 16

Abbreviations

EPA Environmental Protectio n Agency ECOS Environmental Council o f the States FTE Full-Time equivalent NEPPS National Environmental Partnership System NYSDEC New York State Department of Envir onmental Conservation OECA Office of Enforcement a nd Compliance Assurance PPA Performance Partnership Agreement PPG Performance Partnership Grant RCRA Resource Conservation and Recovery Act SRF State Revi e w Framework UST Underground Storage T a nk

T his is a work of the U.S. government a nd is not subject to copyrig h t prote c tion in the United States. It may be repro duce d and dist r ibute d in its en tirety without fu rther permissi on fro m G A O

. Howe ver, becaus e this work may c ontai n copyri gh ted imag es or other materi al, permissi on fro m the copyrig h t holder may b e necess a ry if you wish to reprod uce this material se par ately.

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- St at e Enfor c em entUnit ed Stat e s Governm e nt Acco unta b ility Off i ce Wash ingto n , DC 205 48

July 31, 200 7

The Honorable Norman D. Dicks Chairman The Honorable Todd Tiahrt Ranking Member Subcommittee on Interio r , Environment and Rel a te d Agencies Committee on Appropriations House of Representative s The Honorable Norman D. Dicks Chairman The Honorable Todd Tiahrt Ranking Member Subcommittee on Interio r , Environment and Rel a te d Agencies Committee on Appropriations House of Representative s

The Honorable James M. Inhofe Ranking Member Committee on Environment and Pu blic Works United States Senate

The Environ m ental Protection Agen cy (EPA), in partnership with state agenci es, ov ersees compliance with 4 4 separate e nvironmental programs. These programs regulate facilities— such as sewage treatment plants, petroleum refineries, an d power plan ts—who se operations could pollute the air, water, and land, and thereby endanger pu blic health and the environment. EPA and it s regulatory pa rtners are responsible for ensuring that these re gulated f acil i ties comply with program requirements and taking enfor cement acti on in instan ces of nonco m pliance. T h ese enforcement efforts are important for ensuring a level pl aying field because, among other th ings, facilities that do not comply with program requirements might have a competit i ve economic advant age o ver faciliti e s that take en vironmental requirem ents seriously and thereby i n cur additional o p erational costs. The Environ m ental Protection Agen cy (EPA), in partnership with state agenci es, ov ersees compliance with 4 4 separate e nvironmental programs. These programs regulate facilities— such as sewage treatment plants, petroleum refineries, an d power plan ts—who se operations could pollute the air, water, and land, and thereby endanger pu blic health and the environment. EPA and it s regulatory pa rtners are responsible for ensuring that these re gulated f acil i ties comply with program requirements and taking enfor cement acti on in instan ces of nonco m pliance. T h ese enforcement efforts are important for ensuring a level pl aying field because, among other th ings, facilities that do not comply with program requirements might have a competit i ve economic advant age o ver faciliti e s that take en vironmental requirem ents seriously and thereby i n cur additional o p erational costs.

Many federal environmental statutes, such as the Clean Air Act, the Cle an Water Act, and the Solid Waste Dispos al Act, dire ct EPA to ap prove or authorize qu alified states to im plement and enfor ce en vironmental programs consistent with federal requirements. EPA expects i t s 10 regional offi ces to take a systematic, consistent approach in o verseeing the state enf o rcement programs and, in doing so, to follow EPA’s regulations, policies, and guidanc e . E P A outlines, by policy an d guidan ce, its oversight expect ation s for regional offices with regard to e n suring the state approa ches include the element s of an ac ce ptable state enforcement program, such as the t y p e and timing of the actio n s that should be tak e n for various vi olations, an d track how well the states comply. Many federal environmental statutes, such as the Clean Air Act, the Cle an Water Act, and the Solid Waste Dispos al Act, dire ct EPA to ap prove or authorize qu alified states to im plement and enfor ce en vironmental programs consistent with federal requirements. EPA expects i t s 10 regional offi ces to take a systematic, consistent approach in o verseeing the state enf o rcement programs and, in doing so, to follow EPA’s regulations, policies, and guidanc e . E P A outlines, by policy an d guidan ce, its oversight expect ation s for regional offices with regard to e n suring the state approa ches include the element s of an ac ce ptable state enforcement program, such as the t y p e and timing of the actio n s that should be tak e n for various vi olations, an d track how well the states comply.

P a g e 1 G A O- 07 -8 83 E P A- State En for c emen tThis model of state enfo rcement of e nvironmental laws, acco mpanied by EPA’s regional oversigh t, allows the level of gov e r nment closest to environmental conditions to assume primary responsibility for implementing programs. But it requir es that state s acquire an d maintain adequat e c a p acity to enf o rce state e nvironmental programs that are consistent with federal r equirements and act in a timely and appropriate manner to ensure violat ors come in to complianc e. EPA estab lishes by regulation t h e requirements for state enforceme n t authority, such as the authority to seek civil an d criminal penalties and injunctive re lief. 1 EPA grants autho r ization to the states on a program-by-program basis. EPA policy an d g u idance outl i ne, with gre a ter specific i ty, the elements of an accept a ble s t ate enforc e m ent program—such as the nec e ssary legislati ve authorities a nd the typ e and timing o f the enforce m ent action s for various violations—and track ho w well states comply.

Most states have respon sibility for multiple EPA programs. EPAauthorized states monitor the comp liance of regulated faciliti e s by conducting i n spections, performing eval uati ons, and reviewi n g records t o verify faciliti e s’ compliance with prog rams regulating the discharge of pollutants into surface water or the ai r and the st orage and di sposal of hazardous waste. States are expect ed to pursue enforcement actions against thos e faciliti e s found in non compliance and to repor t their actio ns to EPA.

EPA administers its environmental enforcement responsibilities through its headquar ters Office of Enforcement and Compliance Assurance (OEC A). OE CA monitors the compliance of regul a ted facilities, identifies national enf o rcement co ncerns and s e ts priorities, and provid es overall direction on enforcement policies. While OECA headquarters occasionall y takes direct enforcement action, muc h of EPA’s enforcement responsibilities are carri ed out by its 10 regional offices. Thes e offices are responsible for carrying out core pr o g ram activiti e s under each of the major federal environmental statute s , as well as significant i nvolvement in implementing EPA’s national enforcem ent priorities and takin g direct enforcement action. Th e regions are also responsible for over seeing authorized states’ enforc ement prog rams, implementing progr a ms in

1 Such injunctive relief includes the aut hority t o or der a pa rty t h at is violating a pr ovis ion of the law to refra i n from furt her violation and t o take action to abate or corre ct the

nonc ompliance

.

P a g e 2 G A O- 07 -8 83 E P A- State En for c emen tIndian count ry 2 and states that are not authorized for particular programs. OECA also expects regions and authoriz ed states to establish enforcement priorities and expect atio ns and reach agreement on their respective roles and responsibilities. Authorized states may also receive EPA grants to assist in implementing a nd enforcing authorized programs. In fiscal ye ar 2006, grants to states and tribes totale d $3.2 billio n, or about 42 percent of EPA’s total budget.

Over the ye a r s, states have incre a sed their inspec tion and enf o rcement activities. As a result, EPA regional o ffices are no w more actively in volve d in conductin g oversight and providing states with guidance, tr aining, and technical as sistance to a ssure consistent performance of stat e enforcement programs. If EPA finds a state is not adequat ely administering or enforci n g authorize d programs, individual environmental statutes may authorize EPA to take certain action s , including providing additional technical assistance, condi tioning the r eceipt of grant funds on compliance with EPA guidance, or withdrawing state authoriz ation. In addition, when EPA finds a specific s t ate enforc e m ent action to be inadequ ate, the ag ency may take fe deral enforc ement actio n against the violator.

Despite the i n terdepende nce between EPA and the states in c a rrying out enforcement responsibilities, effecti v e working relationships have historically been difficul t to establish and maint a in, as we, E P A’s Office of Inspector General, th e National Academy of Pu blic Administration, and others have reported. 3 Th e following t h ree key issues have affected EPAstate relationships:

2 “Indian country ” includes all land within the li mits of an I ndia n res e rvatio n u nder the jurisdiction of t h e U n ited States governme n t a nd all depende n t Indian c o mmunities within the b orde rs of t h e U n ited States.

3 GAO, Envi ronmenta l Pro tect i o n Agency : Pr otecti n g Huma n Hea lth a n d t h e Envi ronment Th rough I m

p r

oved Ma na gement , G A O/RCE D-88-101 (Was h i ngton, D

. C

. : Aug. 16 , 1988 ); GAO, Environmental Pro tect ion: Collaborat ive EPA-State Effort Needed t o Improve New Perfo r mance Partnership Sys tem , GA O/RCED-99-171 (Was h i ngton, D

. C. : June 21, 1999); EPA Office of I n spector Gene ral, EPA Needs Better Integrat ion of the National Environmental Pe rf ormance Pa rtnership System , No. 2000-M-00 0828-000011 (Was hingto n, D

. C. : Mar

. 31 , 20 00); National A c ademy of P ubl ic Adminis t ration, Envi ronment

. G ov: Tra ns for mi ng Envi ron m enta l Pro tect i o n for th e 2 1 s t Centu r y (Was hingto n, D

. C. : N o vember 2000); GAO, En vi ronmenta l C o mp li a nce a n d Enforc ement : EPA’s Effortto Improve and Make More Co nsiste n t Its Co mpliance and Enforc e ment Activities, GAO-06-840T (Wa s hington, D

. C. : J une 2006)

.

P a g e 3 G A O- 07 -8 83 E P A- State En for c emen t• EPA’s funding allocatio n s to the states have not fully reflect ed the differences among the states’ enforc ement workload and th ei r relative ability to enf o rce state environmental programs consistent wi th federal requirements. In this regard, EPA lac k s information on the c a p acity of both the stat es and EPA’s regions to effectiv ely c a rry out thei r enforcement programs, because th e a gency has d one little to assess the overall enfo rcement workload of th e states and regions and the number and skills of people needed to implem ent enforcement tasks, duties, and responsibilities. Furthermore, the stat es’ capacit y continues to evolve as they assume a great er role in the d a y

- to-day man agement of enforcement activities, w o rkload cha n ges occur a s a result of new environ m ental legislation, n e w technolo g ies are intr oduced, and state popul ations shift.

• Problems in EPA’s enforcement plan ning and pri o rity setting processes have resulted in misunderstandings between OECA, regional offices, and the states regarding thei r respective enforcement roles, responsibilities, and prioritie s . States hav e raised con cerns that EPA sometimes “micromanages” state prog rams without explaini ng its reasons for doing so and often does not ad equatel y con s ult the states before making decisions aff ecting th em.

• OECA has n o t established a consistent national s t rategy for o verseeing states’ enforcement of EPA programs . Consequently, the re gi onal offices have not bee n consistent in how th ey oversee the states. Some regional offices cond ucted more i n -depth stat e reviews than others, a nd states in these region s have raised concerns t h at their regulated facilit ies are held to differing standards of compliance than faciliti e s in states located in other region s.

EPA and lea d ers of state environmental programs have trie d o ver the years to esta blish new mechanisms to address ea ch of these l ong-standin g problems in order to strengthen the EPA-state partnership. For example, EPA has linked its budgeting and all o cation process to its strategic goals and objectives, and mak e s strategic decisions in developin g i t s budget for its enforcement workforce to reflect shifting priorities. Nonetheless, according to OECA officials, shifts in funding and staff years made as a result of cha n ging priorit i es are gen erally marginal . In this reg a rd, in July 2005 we reported that a n effectiv e workforce strategy is ne eded, particularly during times of fiscal constraint, so that OECA can tailor

P a g e 4 G A O- 07 -8 83 E P A- State En for c emen tworkforce changes to reflect actu a l c onditions i n the region s and states and minimize potential adverse impacts on EPA’s programs. 4

To better clarify roles, responsibilities, and priorities between EPA and the states, the a gency establ ished the Na tional Envir onmental Pe rformance Partnership System (NEPPS) in 1995 to give state s demonstra t ing strong environmental performance greater f l exibility and autonomy in planning and operatin g their en vironmental programs. Under this system, a state and EPA may enter into a Performance Partnersh i p Agreement (PPA) that identifies th e state’s en vi ronmental go als and pri o rities, and spells out how EPA and state officials a r e to addres s them. States may also ask to combine EPA grants into a Performance P a rtne rship Grant (PPG), whic h is intended t o allow the state great er flexibility in targeting lim ited resources to meet its priorities. In 2003, OECA revised its process for setting national enforcement prioriti es to better consider the views of states and regions and to more eff ecti vely t a rget e n forcement resources. Under the new process, OECA head quarters evaluates the overall environmental performance of indi vi dual industrial sectors, and solicits views about those sectors from state s and region s, the representatives of the industrial sectors, and the public

. OECA uses this informa t ion to identify prio rities that are best addressed through focused federal attention. O ECA issues guidance to the regions and states for implementing the nati on al enforcem ent priorities, as well as guidanc e for deterring no ncompliance among all regulated sectors.

Likewise, OECA imple m ented a new oversight program in 2004, known as the State Re view Framework (SRF), to more uniformly and objectivel y measure the performance of states’ enforcement programs. Under SRF, regions eval uate the ext e nt to which state performance in managing thre e major programs complies with specific leg a l requi r ements, policy, an d guidance, while OECA headquarters manages the overall revi ew process. 5 In conductin g this evalu a tion, the regi ons use 12 r eview elements, such as the degre e t o which states complete planned ins p ections, ac curately identify sign ificant viol at ions, and take timely an d appropriat e enforcement action. As o f January 2007, EPA had conducted S R F reviews

4 GAO, Clea n Wa ter Act: I m

p r

oved Resou r c e Pla nni ng Wo ul d Help EPA B e tter R esp ond to Ch a n gi ng Need s a n d Fi sca l Constra i n ts , G A O-05-721 (Wa s hington, D

. C. : J u ly 22, 2005 ).

5 These three programs are the Clean Water Ac t—National Pol l utant Discharg e Elimination System; Clean Air Act—Statio n ary Sou rces Program ; an d Re source C onserv a tion an d Recovery Act

— Subtitle C Ha z ardous Was te P rogram.

P a g e 5 G A O- 07 -8 83 E P A- State En for c emen tin 33 states and expe cte d to complet e its assessment of the remaining states by the end of fiscal year 2 007

. EPA plans to evalu a te t h e implementation of SRF i n fiscal ye ar 2008 . Appen d ix II contai ns a detaile d description of the devel opment of the SRF.

In this context, you asked that we (1) identify trends in the federal resources provided to regions and st ates for enfo rcement bet w een 199 7 and 20 06, an d determine regional an d states’ view s on the ade q uacy of these resources to implement their activities; (2) determine EPA’s progress in improving priority setting and enforcement planning with its regions and authorized states; and (3 ) examine EPA’s efforts to improve its oversight of state’s enforcement and compliance programs and identify additional actions that could be tak e n to ensure more consistent state performance and more consistent oversight of state progra ms.

To address these issues, we reviewed EPA’s strategic pl ans a nd national strategy, an d its policy a nd guidan ce for planning and implementing its enforcement programs and for establ is hing performance partnerships with authorized state ag enci e s

. 6 We also e x amined the budgets for EPA and OECA for fiscal years 1997 through 2006. We discussed the development and implementation of n a tional strat egy, po licy, guidanc e , an d resource allocation w i th officials of OECA, E P A’s Office of Congressional and Intergovernmental Relat i ons, EPA’s O ffice of Chief Financi a l Officer, and officials responsible for state program oversight in each of EPA’s 10 regional offi ces. In ea ch region, we e x amined reg i onal strateg i c plans, partnership agreements with author ized states, a nd state ove r sight reviews. We used semi-structured in terviews to elicit, organiz e, and evaluat e nar r ative respo n ses from officials at the 10 region al offices and 1 0 authorized state ag enci e s . We select ed one state from each region: fiv e states that h a d performance partners hip agreements with EP A (Iowa, Massachusetts, Minneso ta, Oregon, and Utah) an d five that di d not (Arizona, Arkansas, Florida, New York, and West Virginia). At these state agenci es, we reviewed strategic pl an s and strateg y , and po licy and guidance for planning an d implementi ng enforcement programs. We were not able to a ssess the workload and c a pacity of states to meet their programs because, as me ntioned previously, EPA does not hav e a system to collect inf o rmation needed for suc h an assessment, includ ing consiste nt and complet e information from the states or regio n s on their workload

6 For purposes of this report , st ate agencies include thos e of t h e District of C o lumbia, Puerto Rico, t h e U.S. Virgin Is lands, a n d the Pacific Islands.

P a g e 6 G A O- 07 -8 83 E P A- State En for c emen tand the num ber, type, and skills of staff needed t o carry out t h ese responsibilities. Appendi x I contains a detail ed description of our scope and methodology. We p e rformed our work fro m October 2005 through July 200 7 in accordan ce with general ly ac cepted government auditing standards, which included an assessm ent of data reliability and internal controls.

Overall fund ing to region s and author ized states increased fro m fiscal years 199 7 t h rough 200 6

. However, these increas es did not k eep pa ce wit h inflation and the growth in enforcement responsibilities. Both EPA and state official s told us they are findin g it difficult t o respond to new requirements while carrying out thei r previous responsibilities. Over the 10-year peri od, EPA’s enforcement fundi ng to th e regions increased from $288 million in fiscal year 1997 to $3 22 million in fiscal year 2006, but declined in real terms by 8 percent. In response, regional offi cials said, they reduced the number of enforcement staff by about 5 percent. EPA’s grants to states to implement envi ronmental programs consistent with federal requi r ements also increased o ver the 1 0 -ye a r period, from $2.9 billion in fiscal year 1997 to $3.2 billi on in fiscal year 20 06, but declined in real terms by 9 percent. In additi on, grant fundin g dropped s ubstantially between fiscal years 2004 and 2006, f r om $3.9 bill ion to $3.2 billion. These reductions in funding occurred during a period w h en statutory and regulatory c h anges incre a sed enforc ement and o t her environ m ental program responsibilities. As we reported in July 2005, EPA’s implementation of amen dments to th e Clean W a ter Act (1) increased the number of regulated industrial and m unicipal facilities by an estimated 186, 000 f acil i ties and (2) added hundr eds of thousands of cons truction projects to states’ and regions’ workloads for the storm water program. For example, Arkansas officials said t h at, for the s t orm water program in their state, t h e number of inspection s and storm water permits issued increased by 512 p e rcent from 2003 t o 200 5. In a d dition, other state officials told us that reductions in grant funds have limited their ability to meet EPA’s requests for their states to carry out new requirements. As a result, as the s e officials f o cus on priority enforce m ent work, they ha ve accumulate d a bac k log of work in other areas, such as rene wing permits for regulated facilities. However, EPA does not collect suffi cient information on enforcement workload and staffin g to permit a n independent assessment of the capability of either regions or states to meet their enforcement responsibilities.

EPA has ma de substantial progress in improving priority setting and enforcement planning wi th states th rough its system for setting national 

# Results in Brief

P a g e 7 G A O- 07 -8 83 E P A- State En for c emen tenforcement priorities and NEPPS, which hav e fo stered a more cooperative relationship. With respec t to setting n a tional prior i ties, for example, stakeholders recommended, and OECA accept e d, a f o cus on ensuring that facilities handling haza rdous substances, su ch as lead and mercury, have the fin an c ial resources necessary to close their facilities, clean up any contaminati on, and compensate com m unities and individual s affected by t h e contamin ation. Bec au s e financial assurance is now a national pri o rity, EPA will provide tr aining to state inspector s, who often do not have a financi a l b ackground, on how to assess the adequacy of documented financial re sources. EPA and states have also made progres s in using NEPPS for establishing enf o rcement responsibilities and allocatin g re sources. State participat i on in the p a rtnership grew from 6 pilot states in fiscal year 1996 to 41 states in fiscal year 2006, although the extent of pa rticipation i n the partne rship varies. Of the 41 st ates, 31 h a d both Performance Partn e rship Agreem ents and Performance Partnership Grants; 2 ha d agreement s only; and 8 had grants only. Partici p ation has been une ven , accordin g t o state offici als, because the benefits expecte d from this pa rtnership—f l exibility in managing their programs and directing grant funds—have onl y been partially realized. For example, Minnesota and Massachusetts officials said they have b een a b le to ac hiev e some flexibility from EP A to target state priorities and allocat e grant resources to those priorities. Other st ates, such as Florida and New York, reported that they did no t see signific ant benefits from participation in NEPPS. For example, Fl orida official s told us that state appr opriation procedures restrict their ability to shift resources among programs.

EPA has improved its o versight of state enforc e m ent programs by implementing the SRF to provide a cons istent approach for o verseeing th e programs. Moreover, EP A can make additional p r ogress by addressing weaknesses that the SRF reviews ide n tified and b y implementing other improvements to ensure oversight th at is more consistent. With its implementation of the SRF, EPA has, for the first time, a cons istent approach fo r overseeing states’ co mpliance and enforcement programs. The SRF revi ews have al so identified several sign ificant weak nesses in how states enforce program requir ements. For ex ample, the r eviews frequently f ound that st ates are not properly do cumenting i n spection findings or penalties, as directed by EPA’s enforcement poli cy and guidanc e . W h ile recogn i z ing that the s e findings a r e useful, EPA has not develop ed a plan for how it will uniformly address them in a timely manner. Nor has the a g e n cy identifi e d the root ca uses of the weaknesses, although so me EPA and state officials attribute the weaknes s es to causes such as incr eased workloads conco m itant with budgetary re ductions. Until EPA addresses enforcement weaknesses a nd their cau ses, it faces

P a g e 8 G A O- 07 -8 83 E P A- State En for c emen tlimitations in determining whether st ates perform timely and appropriat e enforcement and appl y p e nalties to e nvironmental violators in a fair and consistent manner within and among the states. The SRF is still in its early stages of implementatio n and offers additional u s es that EPA has not yet considered, such as using the SRF’s s t ructured ap proach to (1 ) provide consistent information to the public on how well the states ar e implementing their enfor cement responsibilities and (2) serve as a basis for assessing the perfor mance of EPA’s regions, which have been inconsistent in their enf o rcement an d oversight efforts in the past.

In order to e nhance EPA ’ s oversight of regional a nd state enf o rcement activities consistent wit h federal r e q u irements, we are reco mmending that the Administrator of EPA use the results of the SRF to (1) identify lessons learned an d develop an a c tion plan to address significant pro b lems; (2) address cap acity issues, such as state staffing le v e ls and workload requirements, of state programs that perform poo rly; (3) publi s h the results of the SRF so that the general public and others will know how well state regulators are enforcing au thorized programs; and (4) for regional enf o rcement programs, conduct a p e rformance assessment similar to the SRF. In co mmenting on the draft r e port, EPA generally agreed with GAO’s recommendations and stated that the a g e n cy is takin g action to ad dress the issues we raised. With respect to our recommend ation to publ ish the results of the SRF findings, EPA said that it had agr eed with the Environmental Council of the States th at the first round of state enforcem ent reviews would not be published. However, EPA said it would consider whether to publish future reviews when it evaluat e s th e implementation of the SRF in fiscal year 2 008

.

Since its creation in 1970, EPA has gene rally been responsible for ensuring the enforcement of the nation’s envi ronmental laws. This responsibility has traditionally invol ved monitoring compliance by those in t h e regulat e d community (such as fact ories or businesses that release pollut ants into the environment or use hazar dous chemicals), ensuring that vi olations are properly identified and r e ported, and ensuring th at timely an d appropriat e enforcement actions are taken a gains t violators when nec e ssary.

Because stat es historically had pr imary responsibility for addr essing environmental pollution, including t a king the l e ad role in enf o rcement under feder a l environmental legislat i on of the 1950s and 1960s, many states were dissatisfied with the ne w enforcement powers Congress granted to E P A. Referring to his first term as EPA Administrat o r during the 1970s, William Ruckelshaus describe d relations between EPA and state 

# Background

P a g e 9 G A O- 07 -8 83 E P A- State En for c emen tgovernments as “terrible,” largely b e cause EPA itself represented a repudiation of what the state regulat o rs had been doing. Th e states felt, h e believed, that in the face of very littl e public or pol itical support, they h a d made considerable progr e ss and were gettin g no credit for it. The very existence of EPA symbolized to state environmental ag encies t h e lack of appreciation the public h a d for their efforts and a ccomplishments.

Furthermore, because E P A was now responsible for ensuring the implementation and enfo rcement of e nvi ronmental laws, states needed to demonstrate to EPA that they had ac q u ired and were maintain ing adequat e au thority to en force progra m requirements consistent with federal law before EPA would “authorize” and continue to al low states to assume the day-to-da y a d ministrati o n of new en vironmental programs. This federal oversight co ntributed to a very diffi c u lt period be tween EPA and the stat es. The states thought EPA dictated too much an d was too intrusive.

Difficulties in the EPA-state relations hip manifested themselv es from the 1970s throu g h the 1 990s and, to some degre e , ha ve continu e d to the present day. In 1980, we descri bed the failings of the EPA-state partnership. 7 In a 19 88 co mprehensive manageme n t review of EPA, we reported that while some progress had been made in improving the EPA/state relationship, t h e goal of a truly effecti v e EPA-state partnership remained el usive. 8 Many state official s expressed concerns ab out having limited flexibility, too much EPA control, and excessively det a iled EPA oversight.

In 2003, OECA officials said that environmental commissione rs in several states and members of the Environmental Counci l of the Stat es (ECOS ) 9 called for O ECA to develop and implement a consistent and objective mechanism for measuring state perfo r mance. Spe cifically , ECOS wanted EPA’s oversight of state programs to be consisten t between EPA regions and states in the same region. ECOS also wanted EPA oversight to be predictable, repeatabl e , and unbiased. In Decem ber 2003, O ECA began jointly devel oping the SR F with input from EPA regions, associations

7 GAO, Fed era l- S t a t e Envi ron m enta l Prog r a m s—Th e S t a t e Per sp ecti v e, CED-80-106 (Was hingto n, D

. C. : Aug

. 22 , 19 80).

8 GAO/RCED-88-101

.

9 ECOS is the na tional no np rofi t , n o n p artis a n a s s o ciation that repres e nts s tat e and territorial envir onmental c o m m is s i oners

.

P a g e 10 G A O- 07 -8 83 E P A- State En for c emen trepresenting state polluti on control a gencies, 10 ECOS and state officials to evaluat e the extent to wh ich state perf ormance in three major programs complies with specific le gal requirem ents, policy and guid anc e

. 11 The SRF measures state performance using 1 2 required el ements and an optional 13th el ement. The el ements include f i ve c a tegori es: (1) revie w of state inspection i m plementation; (2) revie w of state en forcement a c tivity; (3) review of state enforc e m ent commitm ents; (4) review of stat e data integrity; a n d (5) for the optional 13t h element, a review of ad ditional programs of the state’s c hoice to ins u re consideration of stat e acti v ities that support the overall evaluati on. R egions prepare a draft report of the findings and conclusions of each revi ew, jointly d i scuss with the state how major recommendations will be addresse d, and provide the draft reports to OECA headquarters. OECA reviews the draft reports and provides comments on the region s’ analyses a nd recommendations. A more detaile d description of the SRF i s included in appendix II.

The relation ship between EPA and state envi ronmental agen cies varies substantially from state to state and program to program. Staff in EPA’s regional offi ces operate programs in those states that have elected not to seek authori z ation and i n those stat es that EPA has concluded are not prepared to manage the programs eff ectivel y. In s o me cases, where EPA has denied a state with program authorization, state personn el may do most of the work as if they had t h e a u thority to g r ant permits, with EPA employees h a ndling onl y the final ste p of formally issuing the documents. In other states or programs, EPA ma y approve a “partial dele gation” of authority, u nder which a state oper a tes part of a program that can be delegat ed an d EPA operates the remainder.

Just as EPA can authoriz e a state to conduct day-to-day program management, environme n tal statut es may allow EPA to withdraw authorization if a state f a ils to meet certain cond itions, inclu d ing

10 State pollution control associations are nation al, nonpartisan professional organizations representing state and local pollution c ontrol officials. They include , for exa m ple, the Association of State and Terri torial Solid Wa ste Management Officials (ASTSWMO), Association of State and Inte rstate Water Pol l ution Control Admini strators (ASIWPCA), and t h e Natio n a l Association of Clean Ai r Ag encies—former ly known as St ate and T e rritorial Air P o llution P rogr am Adminis t ra tors , a n d As s o ciation of L o cal Air P o llution Contr o l Officials (ST AP P A /ALAP C O).

11 The review elements are base d u pon com p liance an d e n forc em ent policies that have been in place f or ma ny years, such as EPA’s nation al enforcement response poli c ies, complianc e monitoring poli c ies, civil penalty policies, and similar state policies (where i n use a n d consistent with national policies).

P a g e 11 G A O- 07 -8 83 E P A- State En for c emen tmaintaining the cap acity to effectivel y manage th e program and adopting and properl y exercising the legal aut horities to enforce program compliance consistent with federal l a ws and regulations. In practical terms, howe ver, EPA’s ability to directly manage state programs is li mited because of it s staffing lev e ls and othe r resources.

Overall fund ing to region s and author ized states increased fro m fiscal years 199 7 t h rough 200 6

. However, these increas es did not k eep pa ce wit h inflation and the growth in enforcement responsibilities. Both EPA and state official s told us they are findin g it difficult t o respond to new requirements while carrying out th ei r previous responsibilities. However, EPA does not collect su fficient dat a on enforcement workload and staffing, which it nee d s to assess the capacit y of t h e regions a nd states to effectively i m plement their responsibilities for enforcing environmental laws consist e nt with federal requirements.

According t o our analys is of EPA’s budget and workforce for fiscal years 1997 through 2006, EPA’ s total budget increased from $7.3 bil lion to $7. 7 billion—a decline of 13 percent in real terms. 12 At the same time, total funding for EPA enforcement in creased from $455 million to $522 million—a decline of 5 percent in real terms. For the regions, which command the bulk of enforcement res ources, funding increas ed from $288 million to $322 million—a decline of 8 percent in real terms, while headqu arters enforcement funding in creased fro m $167 million to $200 million—a decline of 1 percent in real terms. Figure 1 shows the changes in EPA enforcement funding in real terms, in total, and by headquarters and region al offices. 

# Increases in EP A Funding Have Not Kept Pace with Infl ation and Enforcement Responsibilities

Resources for EP A Regions and the States Have Declined in Real Te r m s

12 When we refer to “real terms,” we mean after subtracting out the effect of i n flation, i.e

. , grow th in p r ices . T r ends i n s p ending of nomi n al amou nts (al s o called cu rre nt d o llar o r then-year value s) may reflect c h anges in bot h pri ce and q u ant i ty. To evaluate real spending trends, it is nec e ssary to rem o ve the effect of changes in pric e s. The effect of inflation is removed by def l ating the serie s , a process tha t requires dividing the nominal value by an appr opriate pri ce index

. The r e sulting series ca n be labeled real, inflation-a d justed, or

cons tant dollar s . T h is rep ort u s ed the Gros s Domes t ic P rod uct (G DP ) pric e index to defla t e the n o minal d o llar amounts of bu dget a u tho r ity am ou nts and arrive at inflation a d jus ted (or real) dollars in 2007 dollars.

P a g e 12 G A O- 07 -8 83 E P A- State En for c emen t**Figure 1: EPA ’s Enforcement Fundi**  **ng in**  **Real Term**  **s, in Total , and by Headquarters** 

**an d**  **Reg i**  **o n**  **a l**  **O ffices, F**  **i scal Years 1**  **9 9**  **7 -2**  **006**

Note: In nominal terms, funding e n forcement in EP A regions in crea sed from $288 m illion in fiscal yea r 1997 to $322 million in fis c a l y e a r 2006.

According t o officials in OECA and EPA’s Office of the Chief Financial Officer, OECA headquarters absorb ed decreases in OECA’s total enforcement funding in r ecent years t o prevent fu rther reductions to the regions. According to our analysis, enforcement funding for OECA headqu arters increased f r om $197 m illion in fiscal year 2002 t o $200 million in fiscal year 2006—a 9 percen t decline in real terms. During the same time, regional enforcement fundi ng increas ed from $279 million to $322 million—a 4 percen t increase in real terms.

EPA reduced the size of the regional enforcement workforce by about 5 percent over the 10 year s, from 2,568 full-time equ ivalent (FTE ) staff in fiscal year 1997 to 2,434 FTEs in fiscal year 2006. In comparison, the OECA headqu arters workforce declined 1 p e rcent, an d t h e EPA total workforce increased 1 percent duri n g the same pe riod. Figu re 2 shows the chan ges i n headqu arters and region al FTEs fr om fiscal year s 1997 throu g h 20 06.

**0 100**  **200 300**  **400 500**  **600**

**2006 2005**  **2004 2003**  **2002 2001**  **2000 1999**  **1998 1997**  **2007 Dollar s**  **in million s** 

S o u rce: GAO a n a ly s i s of EPA d a t a

. **Fi s**  **cal year**

EPA tot a l Region s He a dq ua rter s

P a g e 13 G A O- 07 -8 83 E P A- State En for c emen t**F i**  **g u**  **re 2: O E**  **C A**  **Head q**  **u arte**  **rs an d**  **Reg i**  **o n**  **al T o**  **t al**  **F T**  **E s,**  **F i**  **scal Years 1**  **997- 200**  **6**

As figure 3 shows, the change in FTEs was not uniform across the 10 regions over the period. For example: **0 500**  **1,000 1,500**  **2,000 2,500**  **3,000 3,500**  **4,000**

**2006 2005**  **2004 2003**  **2002 2001**  **2000 1999**  **1998 1997**  **FTE s** 

S o u rce: EPA Office of B u dget. **Fi s**  **cal year**

OECA tot a l OECA region s OECA he a dq ua rter s

• Two regions—Region 9 ( S an Franci s c o) and Regi on 10 (Se a ttl e)— experienc e d increases in their workfo rce: Region 9 increased 5 percent, from 229 to 242 FTEs, a nd Region 1 0 in creased 6 percent, from 161 to 1 7 0 FTEs.

• Two regions—Region 1 ( B oston) and Region 2 (N ew York) experienced the largest d eclines: Reg i on 1 exp e rie n ced a 15 p e rcent declin e, from 195 to 166 FTEs, and Region 2 had a 13 p e rcent de cli n e, from 291 to 254 FTEs.

P a g e 14 G A O- 07 -8 83 E P A- State En for c emen t**Figur e**  **3 : O**  **E C**  **A Reg**  **i o**  **n a**  **l O f**  **fices F T**  **E s, F**  **i scal Yea**  **rs 1 9**  **97-2 006** 

As EPA’s re al total fundi ng declin ed, EPA’s real total grant fu nding to states and tribes decline d , as shown in figure 4. S t ates and tri b es use these grant funds, combined with their own resources, to implement and enforce en vi ronmental programs cons istent with federal requi r ements. EPA’s grants to authorized states a nd tribes increased from $2.9 billion to $3.2 bil lion f r om fiscal years 1997 th rough 200 6

— a decline of 9 perce n t in real terms. However, grant funding t o states and tribes dropped substantially between fiscal y ears 20 04 and 20 06, from $3.9 bi llion to $3. 2 billion—a 22 percent decline in real t e rms.

**0 50**  **100 150**  **200 250**  **300 350**  **400 450** 

**10 9**  **8 7**  **6 5**  **4 3**  **2 1**  **FTE s** 

S o u rce: EPA Office of B u dget. **Re g**  **ion**

Fi s c a l ye a r 1997

Fi s c a l ye a r 2006

P a g e 15 G A O- 07 -8 83 E P A- State En for c emen t**Figur e**  **4 :**  **EPA ’s**  **Re a**  **l Tota**  **l F**  **undi ng a**  **n d R**  **e a**  **l Tota**  **l Gr**  **a n**  **t Fun din**  **g t**  **o S**  **t a**  **t e**  **s a**  **nd Tribes, Fiscal**  **Y ears 1997 through 2006** 

Note: In nominal terms
, funding fo r grant s to s t ate s and tribes inc r e a s ed from $2.9 billion in fis c a l y e a r 1997 to $3.2 billion in fis c a l y ear 2006.

For the prog rams we exa m ined, EPA provides states with federal resources through grant programs. In addition, un der the Clean Air Act,
states must collect f ees f r om permitted faciliti e s to help fund the program. The following are some o f the funding sources for the programs we examined: **0 1**  **2 3**  **4 5**  **6 7**  **8 9**  **10**

**2006 2005**  **2004 2003**  **2002 2001**  **2000 1999**  **1998 1997**  **2007 Dollar s**  **in billion s** 

S o u rce: GAO a n a ly s i s of EPA d a t a

. **Fi s**  **cal year**

EPA
Gr a nt s to s t a te s a nd tri b e s

• Clean Water Act Section 106 Grants

. The Office o f Water provides annual Water Pollut i on Control grant funds to the states under the Cl ean Wat e r Act for, among other thi n gs, enforcement of point source poll u tion requirements.

• Clean Ai r A c t Section 1 05 Grants . States financ e enforcemen t of air quality l a ws with fees paid by permitted faciliti e s (e.g., el ectri c utilities and chemical ma nufacturers), in ac corda n ce with titl e V of the Cl ean Air Act. States assess fees based on tons of pollution emitted. The f e e must be at least $25 per ton (as adju sted for inflation) of regu lated pollutants

P a g e 16 G A O- 07 -8 83 E P A- State En for c emen t(excluding carbon monoxide). EPA provides gran ts to states to help fund programs that prevent a nd control ai r pollution o r to impleme n t national ambient air quality stan dards, inclu d ing progra ms that may address smaller sources that do not have to obtain permits (e.g., dry cleaners and gasoline stat ions).

• Resource Co nservation and Recovery Act (R CR A) Sect ion 3011 Grants

. The Office o f Solid Wast e and Emergency Respo n se provides annual grants to states under section 3011 o f the Solid Waste Disposal Act to support, among other things, state enforcement of the RCRA Subtitle C Hazardous Waste Management programs. 13 EPA’s financial assistance covers up to 75 percent of a state’s t o tal costs for managing hazardous waste.

• Undergroun d Storage Tank (UST) Grants . The Office of Underground Storage Tan k s provides grants to states under subtitle I of R CRA to support state UST programs, including inspectio ns and enfor cement activities.

Given the real reduction s in funding and personn el, region al and state enforcement officials not ed states are finding it di fficult to respond to new enforcement requirements in the Cle an Water Ac t, Clean Air Act, and RCRA, whic h have great ly increased the number of regulated pollutants and sources. 14 However, a s we reported in June 20 06, EPA’s da ta colle ction system for state and re gi onal enforce m ent activiti e s does not provide consistent and complete data on th e wo rkload of the states or the regions, and on their capacit y to meet their workload, incl uding the en forcement of environmental programs consiste nt with federal r equirements. 15 Thus, we 

## EP A Regions and States Find It Difficul t to Respond to New Requirem ents under Current Resource Constraints

13 The Resource Conservation a nd Rec o very A ct of 1976 , Pu b. L. N o . 94-580, 90 Stat. 2795, amends the Sol id Waste Disposal Act, Pub. L. No . 89-272, tit. II, 79 Stat. 997 (1965), t h e first federal law reg u lating s o lid w a s t es —a broad category of ma terials including s u ch mate rials as garbage f r o m treatment pl ants and discar ded mate rials resulting from i ndustrial, commercial, or agricultural ac tivities.

14 Precise information about the overall c h ange s in region and state enforcem ent workload associated with the implement ation of new re quirements—such as inf orma t ion on c h ange s in the num bers of reg u lated entities—i s not a v ailable. How e ver, w e and ot h e rs have reporte d over the years on the impact of cha n ges in the feder al environme n t a l prog rams to the req u iremen ts for EPA’s a n d aut horized states’ enforcem ent p rograms. GAO-05-721 ; Congres s i onal Res e arch Se rvices , RL30798
, Envi ronmenta l La ws : S u mma ri es of S t a t ut es Ad mi ni stered by th e Envi ron m enta l Pro tect i o n Agency (updated Ma r. 31, 2005).

15 GAO-06-840T

.

P a g e 17 G A O- 07 -8 83 E P A- State En for c emen twere not abl e to independently a ssess their capabilities to meet their responsibilities under environmental programs with their existing

resources.

In 198 7 ame ndments to the Clean W a ter Act, 16 Congress expan d ed the scope of the act by regul a ting storm water runoff from rain or snow as a discharge fr om point sources, such as industrial facilities and municipal separate storm se wer systems. We reported in 20 05 that th at t h e new storm water regulations i n creased th e number of industrial and municipal facilities subject to regul a tion by an estimated 186,000 faciliti e s. In that same year, t h e EPA Office of Inspec tor General reported tha t the new requirements added hun dreds of thous ands of co nstruction projects to states’ and r egions’ workloads relat e d to storm water pollution sources. In 2005 , EPA e s tablished storm water a s a national enforcement priority.

According t o state wate r quality e n f o rcement officials, it is d i fficult to meet these new requirements while still meeting older requirements to periodically inspect large municipa l and industrial point sources. For example, Minnesota offi cials told us that there ar e a hug e nu mber of facilities and locations t h at require i n spection and permits in that state. The Minnesota storm water officials provided us a performance report t h at indicated n o n complianc e with storm water requi r ements was so pervasiv e that the stat e’s water enf o rcement pr ogram was n o t meeting it s timeliness targets for cl osing enforc ement cases where it ha s the authori t y to issue a penalty. T h e report said that the situ ation threat ened to und ermine earlier success in implementing the state ’ s storm water permit program. According t o the Arkansas director o f the state’s water qualit y program, storm water enforcement work in the fast-growing northwestern corner of the state has overwhelmed the progr a m. According to state d a ta, the number of storm water permits issued grew by 51 2 percent—f r om 427 to 2,61 6—between 2 003 an d 200 5. At th e same time, the number of permits Arkansas officials issued to tradit ional point sources increased by 19 percent, fro m 190 to 227 facilities. H o wever, the state is begi nning to fall behind in issuing the trad itional permits because i t has had to redeploy inspectors to work on storm water e n forcement.

Regional off i cials told us they ha ve p r ovided assistance to so me states to meet enforc ement requi r ements for storm water, such as hel p ing states complete a s p ecified nu mber or percentag e of st ate inspecti ons. For 

### Clean Water Act

16 Water Q u ality Act of 1987 , Pub. L. No. 100-4
, 101 Stat. 7.

P a g e 18 G A O- 07 -8 83 E P A- State En for c emen texample, Re gion 8 (Denv e r) enforce m ent official s said they share the inspection workload with Montana officials bec ause that sta t e’s permit program is chronically u nderfunded, and this part nership enables state officials in Montana to focus on red u cing their b acklog of re gulated facilities that require per m it renewals.

In 199 0 ame ndments to the Clean Air Act, 17 Congre ss created significant new enforce m ent requirements for both EPA regions and states. 18 Title III of the 19 90 a m endments required EP A to control emissions of 189 air toxics by, among other things, deve l oping tech n o logy-based emissions limits for major stationary sources. 19 By 20 06, th ere were an esti mated 84,0 00 major stationary sources within 158 major source cate g o ries such as incinerat o rs and che m ical plants to which the s e standards applied. Titl e III of the amendments also directed EP A to develop a list of categories of small stationary sources, such as dr y cleaners and gas stations—so-called “area source s”—sufficie n t to represen t 90 perc en t of emissions from sma ll stationary sources of listed hazardo u s air pollutants. EPA and authorized states were then to imple m ent strat egies to contro l toxic emissions from these source s. EPA devel oped a list o f 70 c a tegori es, but, as we reported i n 2006 , it had i ssued standards for only 16. 20

Under title V of the 1 990 amendments, Congress directed EP A and authorized states to implement a co mprehensive permit program for 

### Clean Air Act

17 Clean Air Act A m endments , P u b. L. No . 101-54 9, 104 Stat. 239 9 (1990).

18 GAO, Clea n Ai r Act: EPA S h o uld I m

p r

ove th e Ma na gement of It s Ai r Tox i cs P r

ogra m, GAO-06-669 (W as hington, D

. C. : J une 23, 2006)

.

19 Title III of the 1 990 amendme n ts directs EP A t o impose tec hnology-based sta ndards, or Maximum Achi evable Cont rol Technology (M ACT) standar d s , on ind u stry t o re duce emis s i ons . T h es e technology- bas e d s tanda rd s re quire t h e m a ximum deg r ee of reducti on in emissions that EPA determine s achievable fo r new a n d existing sources, ta king into consideration t h e cost of ac hieving such redu ction, health a nd e n viro nmen tal impacts , an d energy require m ents.

20 The agency fac es court-o rdere d dea d lines to complete stand ards fo r all of t h e remaining 54 source categ ories of small stationa ry so urc es by June 15, 2 009.

P a g e 19 G A O- 07 -8 83 E P A- State En for c emen tsources emitting regulat e d air pollutants. 21 The ne w requirement significantly expanded an earlier per m it program that appli e d only to major new construction or modificati ons of existing major sources of pollution. As of April 200 1, EPA had a u thorized all 50 states an d 63 lo cal governmental units to a c t as cle an ai r regulatory agen cies an d issue Title V operating pe rmits. The 1990 amendments also req u ired states to collect fees from regulated f acil i ties sufficient to cover p r ogram costs. We reported in 2001 that 1 9
, 880 major sources had al ready rec e iv ed, or could be expected to obtain or comply with the conditio n s of, Title V permits; 22 furthermore , federal and state regu lators performed about 17, 800 routine inspections each year in fiscal years 1998 and 19 99.

State air enf o rcement officials said t h at reductio n s in federal air qualit y grants and E P A restrictions on how st ates can use the permit fees limit their ability to meet new Clean Air Act requirements. For example, enforcement officials in Arizona and We st Virginia told us that reductions in section 105 grants have made it dif f icult to meet EPA’s push for states to identify and regulate air toxic emi ssions from sma ll stationary sources, such as dry cleaners. Ac cording to t h e director of West Virginia’s air quality prog ram, while his office has identified th ese sources and provide d this informa t ion to Regi on 3 (Philadel phia), it do es not have t h e resources to regulate t h ese source s. Title V rule s restrict states from using permit fees for enfo rcement of ai r toxic emission standards for small stationary

sources.

Several stat e officials sai d they also f ace diffi culti e s keeping u p with Title V requirements to issue operating permits and inspect faciliti e s. For example, ac cording to West Virginia’s Director of Air Quality, the state program is spending more than it gen erates in revenues from Title V permit fees. Furthermore, the state i s drawing down a reserve fund th at it established i n 199 3, whe n it was operating a preli m inary Title V program

21 Under Title V of the Clean Air Act, sources e m itting polluta nts above certa i n thres h olds are classified as “major sourc es” and must ob tain T i tle V op erating pe rmits

. In ad dition,

mos t major s o u r ces mus t re po rt their aggrega te annual emissions to t h eir sta te air quality agency and pay fees based partly or e n tirely on their level of emissions. Sources that emit pollutants belo w major s o u r ce thres h olds are called “minor s ources ” and d o not have to obtain a T i tle V permit. S o me minor s o urces , ca lled “s yntheti c minors , ” have the potential to emit p o llutants at major s o urce levels b u t choos e t o limit their o p eration s and emit below these thresholds.

22 GAO, Ai r Pollu ti on: EPA S h o uld I m

p r

ove Oversi gh t of Em i ssi ons R e p o rt i n g by La rge Fa ci li ti es, GAO-01-46 (Washi ngton, D

. C.: April 2001).

P a g e 20 G A O- 07 -8 83 E P A- State En for c emen tbefore it wa s authorized to administer this program. West Virginia’s Title V fee is aroun d $21 p e r to n, which is below the nat i onal av erag e fee of $2 8 per ton paid by major sources in 2001. 23 The Director of Arizona’s Air Quality Divi sion said tha t as a result of new standards and n e w types of performance testing, th e Title V per m itting workload has in creased fast er than staff le vels.

The 1984 am endments to RCRA 24 requi r ed EPA and authorized states to regulate small-quantity hazardous waste generators—those producing between 10 0 and 1, 000 ki lograms of waste per month. Before the 19 84 amendments, EPA only required gen er ators who produce more than 1, 00 0 kilograms of hazardous waste to comply with regulations co ncerning, among other things, reco rd keeping and reporting. In addition, the 1984 amendments required EPA and auth oriz ed states to ensure th at owners and operato rs of treatment, storage and disposal facilities co mply with new prohibitions for disposing of un treated hazardous waste s on land.

This expansion of responsibility, comb ined with a reduction in resources, has made it difficult to carry out responsibilities, accordin g t o state hazardous waste enforcement official s we spoke with. For example, data provided to us by New York State off i cials showed that the st ate’s grant for hazardous waste ma nagement dr opped in real terms by 19 percent between fiscal years 1997 and 2006. As a result of this declin e in funding, New York State offici als said that th e grant suppo rts fewer full-time staff. The officials provided us data that showed New York State’s g r ant for hazardous waste management supported 38 percent fewer full-time staff in the state’s R CRA program in fiscal year 2006 than in fiscal year 1997. Furthermore, while it co ntinues to fo cus on EPA’s national pr iorities for enforcement, the state h a s accumulat e d a ba cklog of permits that must be renewed. Renewing these hazardous wast e permits is critical to protectin g the environ m ent and pu blic health b ecause EPA and authorized states ca n enforce newhazardous waste standards only when they are specified in a permit. According to th ese officials, EPA has issued new standards during the life of th e old permit and these n e w standards are not enfo rceable until the permit is renewed.

Several stat e s identified an emerging challen ge: v e rifying that owners and operators of hazardous waste faciliti e s have th e f i nancial res ources to 

### Resource Conservatio n and Recovery Act

23 GAO-01-46

.

24 The Hazardous and Solid Wast e Amendme n ts of 1984, Pub. L. No. 98-616, 98 Stat. 3221

.

P a g e 21 G A O- 07 -8 83 E P A- State En for c emen tclean up their sites, as RCRA requires, rather than leavin g sit e cleanup to the taxpa yer . As we reported in 20 05, EPA’s Office of Inspect or General concluded t h at required cleanups at some sites could exceed $50 million. EPA made enforcement of the finan c ial assuranc e requireme n t a nation al enforcement priority in 2 005. Howeve r, state offici als told us, a nd EPA’s regional offi cials agreed, that they do not have th e personnel with the necessary sk ills to evalu a te the fi nan c ial assurances provided. For example, Ne w York State officials to ld us that th ey ha ve onl y one person trained to review the adequacy of a f a cility’s financial assurance.

The Energy Policy Act o f 2005 25 also expanded states’ enforcement workload by requiring, a m ong other things, (1) EPA and any state receivin g federal fundin g to inspect by August 8, 2007, all regulated tanks that were no t inspected s i nce Dec e mber 22, 199 8, and (2) EPA or the state must generally inspect r egulated tan k s once e ver y 3 y ears an d complete the first 3-ye ar inspectio n cycl e within 3 ye ars of completing i n spections of underground storage tanks that had not been i n spected by December 22, 1998

. 26 We reported in February 2007 th at acc ording to EPA data there were 645,990 acti ve fed e rally regulat e d undergro und storage tanks registered with state und erground storage tank p r ograms. 27

To carry out these additi onal inspect ions, the act, as amended , allows states to use Leaking Underground S t orage Tank Trust Fund appropriations, and auth orizes substant ial appro p riations from the trust fund during fiscal years 2006 through 2011. Thes e new appro p riations were to be i n addition to State and T r ibal Grant funds EPA provides to states for underground storage tank pr ograms, which historically have been abo u t $187,000 an nually. Th ese additional funds were not appropriate d in fiscal y e a rs 2006 and 200 7. As a r e sult, some state official s told us, they do not have sufficient re sources to meet the ne w inspection requirements. For example, Minnesota officials s a id they hav e sufficient resources for inspecting undergr ound storage tanks onl y once every 9

25 Pub. L. N o . 109-58, 119 Stat. 59 4.

26 The act allows EPA to exte nd the first 3-year period for up t o 1 a dditional year if an authoriz e d s t ate demo ns trates that it has ins u fficient res ourc es to com p lete all ins p ections within the first 3-year period.

27 T h e Leaking U ndergr o u n d Sto r age T a nk T rus t F und , as es ta blis hed in 1986
, pr ovided funds t o states specifically for cleaning up co ntamination f r o m tanks (i.e., re leases or leaks). Prior to the Ene r gy Poli cy Act of 2005, states could not use the mone y for inspections or enforcement of leak detection and prevention requireme n ts.

P a g e 22 G A O- 07 -8 83 E P A- State En for c emen tyears. Regio n al officials acknowledged that man y states need additional inspectors for meeting these new un derground storage tank i n spection requirements and said th ey provide support to states facing fi scal constraints. For example, the Regi on 3 Chief of R CRA enforcement and compliance said the regi on helped st ate offici als in West Virginia by inspecting s m all and midrange g a s stations in th e state. Regi on 9 (San Francisco) has also been working with UST offici als in Arizona to meet the new inspection requi r ements.

EPA has ma de substantial progress in improving priority setting and enforcement planning wi th states th rough its system for setting national enforcement priorities and NEPPS, which hav e fo stered a more cooperative relationship. For example, on states’ recommend ation, OECA accept e d as a priority en suring that facilities han d ling hazard ous substances, such as lead or mercury, have th e fin ancial resou r ces to close their faciliti e s, clean up contaminati on, and compensate com m unities and individuals a ffected b y th e contamina t ion. EPA and states hav e also made some progress in using NEPPS for join t planning and resource allocation. State partici p ation in the partnership grew from 6 pilot states in fiscal ye ar 1996 to 41 states in fiscal year 2 006

.

Since the lat e 19 80s, EP A’s top agen cy ex ecutiv e s have set pr iorities for improving agency mana gement. To develop more collaborati ve relationships among EPA’s headquar ters and regions, and th e states, OECA created the Planning Council i n 2003 to dir ect OECA’s strategic and planning pro cesses, inclu d ing selectin g national e n forcement priorities. The counci l includes bot h EPA head quarters and regional offi cials. In the summer of 2003, OECA asked official s representing state en vi ronmental agenci es, tribal gov e rnments, and air , water, and solid waste pollution control associations to r ecommend priori ties for considerati on as nation al priorities for fiscal ye ars 2005 throug h 200 7. Considering thes e recommendations, as well as those f r om EPA’s media program managers, OECA developed a list o f potential n a tional prior i ties that it p ublished in the Federal Registe r in December 2003. OECA asked for public comments on candid a t e priorities a nd suggestio n s for new national enfo rcement priorities. In January 2004, OECA hoste d a meeting with headquarters and regional offi cials, and re presenta tive s from 10 state environmental agenci es, fo ur tribal gov e rnments, and three poll u tion contro l association s to discuss and rank thei r choices of potential pri o rities. OECA then selected th e final national enforceme n t priorities for fiscal ye ars 2005 through 2007 based on t h e following criteria: 

# EP A and States Have T

a ken Steps to Improve Planni ng and Priority Setting for Enforcement, but Results Are Uneven

EP A Implemented a More Collaborative Process for Setti ng National Prioriti es for Enforcement

P a g e 23 G A O- 07 -8 83 E P A- State En for c emen t• S ignificant environmen tal benefit . In what speci fic areas c an the federal enforcement and compli ance assurance programs make a significant positive impact on human health and / or the envir onment? What are the known or estimated public health or environmental risks?

• Noncompliance . Are there particular econom ic or industrial sectors, geographi c areas, or facility operati ons where regulated ent i ties have demonstrated serious patterns of noncompliance?

• EPA re sponsibility . What identified national pro b lem areas or programs are better ad dressed through EPA’s federal cap abi lity in enforc ement or compliance assistance?

Table 1 sho w s the potential national priorities, and those that were selected.

**T a**  **b l**  **e 1: EPA’s Can d**  **i d**  **a te an**  **d Fin**  **a l Nation**  **al En fo**  **rcemen t Prio**  **rities fo r F**  **i scal Year**  **s 200**  **5-20 07, in**  **Ran k**  **O r**  **d er** 

**Po ten**  **t ial p**  **r io**  **rities Prio**  **rities sele c**  **ted**
**Clean Air Act**
Air toxics • New sourc e re view/prev enti o n of signific ant deteri o ratio n • **Clean W**  **a ter A**  **c t** 
Effects of wet weath e r on
conce n trated a nimal fe edi ng o perati ons, combin ed se w e r overflows, sanitary se wer overflows, a n d storm water runoff •

**Petro l**  **eu m refi**  **n in**  **g** • a

**Reso u**  **r c**  **e Co**  **n ser**  **vatio n**  **an d**  **Reco v**  **ery A c**  **t**
F inanci al ass u r ance/fin anci al r e spo n sib ility • Minera l proces sing •
**T r**  **ib al en**  **viro nmen**  **tal issu es**  • **Federal facilities**
**Reso u**  **r c**  **e Co**  **n ser**  **vatio n**  **an d**  **Reco v**  **ery A c**  **t**
Leaki ng u n d e rgrou nd storag e tanks
**Po rts o**  **f en**  **try**
**As be**  **s t**  **os in s**  **c hools** 
**Au to**  **salvag e yard**  **s**
**En viro**  **n m**  **en tal ju**  **stice**
**Miscellan e**  **o u**  **s p**  **l astics** 

P a g e 24 G A O- 07 -8 83 E P A- State En for c emen t**Po ten**  **t ial p**  **r io**  **rities Prio**  **rities sele c**  **ted**
**Safe Drin kin**  **g W**  **a ter Act** 
Microbi a l s
**Fue ls**  **ma na**  **ge me**  **nt Sig**  **n i**  **fican t n**  **o n**  **c o**  **m p**  **lian ce o**  **versig h**  **t**

Sour ce: EP A.

a EPA’s national petroleum refining priority add re s s e s air emiss i on s from the nation’s p e troleum refineries

. EPA reac hed it s goal o f addre s s i ng 8 0 p e rc en t of the do mes t ic refining capac i ty throug h settlement s or fil e d civil action s. As a re sult, OEC A removed it fro m the national pri o rity list at the en d of fiscal year 200 6.
According t o state and r egional offi cials, OECA’s approach for selecting national pri o rities has fostered a more collabor ative working relationshi p, and they poi nted to the f i nancial a ssurance national priority under RCRA as a case i n point. This priority focuses on ensuring that own e rs and operators of facilities handling hazar dous substances, such as lead or mercury, provide assura nce that th ey have the fi nancial reso urces necessary to close their f acilities, cl ean up any contamination, and compensate communities and individ u als affecte d by any cont amination they cause. Stakeholder s —EPA regions, states, pollution co ntrol associations, 28 and the public—told OECA that financial assurance should be a nati onal priority. EPA and state supporting investigation s confirmed that (1) there are significant noncompliance issu es relating t o the finan c i a l

assurance re quirements; (2) the issues are of nati onal importance and de al with several environmental laws and r egulatory pr ograms; and (3) areas of noncompliance were no t isolated to a specific sector, industry, or geographi c l o cation. In s e lecting fina ncial assura nce as a nati onal priority , OECA state d that an eff ective national enforcement and compliance strategy would help ad d r ess many of the problems created by the regulated f a cilities’ failure to fulfill t h eir financial responsibility obligations. In this regard, EPA is pr oviding train i ng to state i n spectors— who often do not hav e e xpertise in fi nancial man agement—on how to assess the adequacy of f i nancial documentation provided by regulated facilities.

28 Association of State and Terri t orial Solid Wa ste Management Officials also received a collective recommendation from the Northe ast Waste Management Officials’ Association (NEWMOA )
, a non profit, n o n p artis a n inters t ate as s o ciation that has a mem b ers h ip
compos ed of t h e haz ard ous w a s t e, s o lid w a s te, waste site cleanup and pollution prevention program direct ors fo r the envi ronmental agen cies in eight Ne w England Stat es (Con necticut, Maine, Massachusetts, New H a mpshire, New Jersey, New York , R hode Is land, an d V e r m ont)

P a g e 25 G A O- 07 -8 83 E P A- State En for c emen tWhile state and region al officials tol d us the priority setting p r ocess is more collaborative, some state offici als raised a number of issues about how EPA considered their comments about natio n al priorities. For example, Massachusetts and Oregon offi cials told us that they did not understand why OECA ranked some of their priorities lower than the national pri o rities that were selected and would like to have feedback on how their views were considered when selectin g national enf o rcement priorities. In addition, w h ile Minnesota, Utah, an d Arizona officials agree that the plan ning and pri o rity setting has improved, they woul d prefer earlier invol vement in th e decision-making proc e ss, that is, in developi ng the candid a t e list. On the other hand, New York and Arkansas said that they preferr e d to provid e input on th e national enforcement priorities through the pollution co ntrol associations and/o r ECOS. They said, by doing so, OECA will rec e ive states’ collective views on the candidate priorities in a more representative a nd compelli ng way.

After OECA selects the national enforcement priorities, it uses the National Program Managers guidance to inform its stakeholde rs of the national pri o rities and required el em ents of all environmental laws. The managers establish over all national go als for the i r respective programs based on a variety of fact ors, including underlyin g statutory mandates, congressional directives, administration/administrator priorities, and their own view of programs and policies t h at the programs should focus on. EPA regions and states u s e this guid a n ce to n egot i ate a g reeme n ts based on (1) which environmental problems w ill receive priority attention within state progra ms, (2) what EPA’s and the states’ re spective enf o rcement roles and responsibilities will be, an d (3) how the states’ progress in achievi ng pr ogram objectives will be assessed. The results of these negotiations are documented primarily in PPAs and/or PPGs. According t o EPA, NEPPS allows regions and states to negotia t e agreemen ts that vary in content and emphasis to reflect regional an d state conditio n s and priorities.

State partici p ation in NEPPS grew from 6 pilot states in fiscal year 1 996 to 41 states in f i scal ye ar 20 06. Of thes e 41 states par t icipating in NEPPS in fiscal year 2 006, 31 h a d both PPAs and PPGs; 2 had agre e ments only; an d 8 had grants o n ly. Twelve states did not participate at all in NEP P S.

Regional off i cials and st ates particip ating in NEP P S said it co ntributed to improvements in their planning and priority setting process b y helping identify enforcement priorities, roles, and responsibilities. The states we spoke with that had a PP A—Iowa, Massachusetts, Minnesota, Oregon, and 

## Extent of States’ Participation in the Planning and Priori ty Setti ng Process V a ries

P a g e 26 G A O- 07 -8 83 E P A- State En for c emen tUtah—also had a PPG a nd generall y agreed th at EPA’s planning and budget process fostered collaboratio n in setting j o int priorities, roles, and
account abili ty for each p a rty. In addi tion, Minnesota and Massachusetts officials told us that they have b een a b le to use gr ant resource s to address other state p r iorities. However, these officials not ed that EPA guidanc e continues to call for a sp ecific numb e r of enforc ement activi t ies, which does not all o w for as much flexibilit y as envisioned.

States without a PPA can still partici p ate in NEPPS through a PPG, which allows them to combine i ndividual categorical grant funds into a consolidated grant. Once the funds are consolid ated, they lo se their category-spe cific identit y and ca n be used with greater flexibil ity. We found that states that had a PPG, but not a PPA, had mixed views on NEPPS. For example, ac cording to t h e New York State Depa rtment of Environmental Conservation (NYS DEC), which currently has a performance grant onl y for water pr ograms, it experimented with a performance agre e ment in the mid-1 990s but dro pped the en deavor because of d i fficulties in drafting an a g reement th at combined multiple agency divis i ons. NYSDEC officials said the amount of work involved outweighed the benefits to individual programs. Furthermore, even with a performance grant for water programs, NYSDE C officials told us, EPA st ill maintains requirements for how the m oney is used and atte mpts to steer the state to ward EPA’s priorities, which are not necessarily NYSDEC’s priorities. In contrast, th e Arizona Department of Environmental Quality, which has a performance grant but n o t a performance agreem ent, said it has a “fantas t ic relations hip” with Region 9 th at i s characteriz ed by extensive co ordination and communicati on. Because of its grant, Arizona officials told us, the state has realized administrative effic i enci es and has more flexibility to move money among programs.

States that d o not partici p ate in NEPPS were gen erally satisfied with the amount of joint planning and coordin a tion in thei r work plan agreements (i.e., memorandum of agreement and annual work plans). For example, West Virginia and Florid a told us that their work plan agreements with their EPA regions provid ed them with much of the same oppo rtunities for joint planning, flexibiliti e s, and prio rity setting as NEPPS participants. Officials from the West Virginia Dep a rtment of Environmental Protection said they did not particip ate in NEPPS because th ey did not w i sh to transfer grant funding among media programs. They said stat e programs rely hea v ily on revenue generated th r ough fees and penalties; therefore, program ma nagers are r e luctant to s h are resources. Accordin g to officials from the Florida Department of En vironmental Protection, t h ey ha ve not participated in NEPPS since 1 999 be cause their work plan agreements

P a g e 27 G A O- 07 -8 83 E P A- State En for c emen tprovide the benefits of NEPPS—go od dialogu e with the regi on in planni ng and priority setting. Moreover, Flori d a officials s a id they can not use the flexibility all o wed under NEPPS to redi rect resources between programs because stat e appropriat i on procedu r es place res t rictions on their ability to shift resources among programs.

With its impl ementation of the SRF, EPA has—f o r the first time—a consistent approach for overseeing a u thorized states’ compli ance and enforcement programs and has ident i fi ed several significant weaknesses in how states enforce their environmental laws in ac cordance wi th federal requirements. 29 For example, the SRF reviews found that states are not properly do cumenting i n spection fi ndings or penalties, as di rected by EPA’s enforcement poli cy and guida n ce. Whil e recognizing t h at these findings are useful, EPA has not developed a pl an for how it will uniformly address them in a timely manner. Nor has the a gency identi fied the root causes of th e weaknesses, although s o me EPA and state offici als attribute the weaknes s es to cause s such as inc r eased workloads conco m itant with budgetary re ductions. Until EPA addresses enforcement weaknesses and their causes, it faces limitations in de termining whether state s perform timely and appropriate enforcement, and whether they ap ply penalties to environmental violators i n a fair an d consistent manner within and among the states. Moreover, the SRF is still in its early stages of implementation and offers a dditional us es that EPA has not yet c onsidered. I n this regard , its structure d approach provides co nsistent information that would be useful to (1) inform the public about how well the states are i m plementing their enforcement responsibilities and (2 ) serve as a basis for assessing the performance of EPA’s regions, whic h have been inconsistent in their enforcement and ov ersight efforts in the past.

As of January 25, 2007, O ECA had c onducted SR F reviews in 33 states and expecte d to complete its assessment of remaining states by th e end of fiscal year 2007. OECA reported goo d performance in most aspects of state compliance and enf o rcement pr ograms. However, it als o reported that the revi ews found several weak ne sses in state programs that will require focu sed attentio n to correct. EPA official s said the fol l owing four weaknesses were the most frequently identified: 

# State Revi ew Fram ework Has the Potential to Provide More C onsistent Oversight

SRF Findings Demonstrate the V a lue of a Uniform Approach to Evaluating State Enforcement Programs

29 As w e repo rted in J une 2006, E P A has long ex perienced difficulties in pr oviding ove r s i ght of state enf orc ement program s with sufficient consistency.

P a g e 28 G A O- 07 -8 83 E P A- State En for c emen t• States are n o t adequately documenting the resu lts of facilit y inspect ions in order to determin e t h e signifi c a n ce of violations . EPA policy states that complet e and a ccura te document a ry evid e nce is needed to determine the nature and extent of violations, p a rticularly t h e presence of significan t violations, and to support timely a nd appropriate enforcement actions. EPA policy also states that a qu ality program should maintain accurat e and up-to-date files and r ecords, and report this information to EPA to support effective program evaluatio n and priority setting. EP A and state officials sug gested that s o me of the c auses of ina d equate state documentati on and repo rting of facil i ty inspectio ns can be tr aced to a la c k of staff expe rtise, inadeq uate training , increasing workload, and reductions in staff and b udgetary res ources in re cent y ears.

• States are n o t adequately entering significant v i olations noted in their inspect ion r e ports into EPA databases . GAO, EPA’s Office of Inspector General, and OECA have reported that the lack of complete an d accurat e national enf o rcement data has been a long-term problem. OECA needs accurate an d complete enforcement data to h e lp it determine whether core enforce m ent requirements are being co nsistently implemented by regions and states and whether there are significa n t variations from these requirements that should be correct ed . In additi on, accurate and complete enforcement data hel p s OECA more efficiently and effecti vel y oversee states and re gions. Accor d ing to EPA regional an d state official s, the SRF is helping th em recognize the reason s for discrepancies betw een state an d EPA databa ses and improve the quali t y of data in these datab a ses.

• States lack a d equate or appropriate penalty authority or policies

. Penalties pl ay a k ey role in environmental enforc ement by de terring potential vio l ators and e n suring that members of the regulat e d community cannot gain a competitive advantage by violatin g enforcement regulations. To qualify as an authoriz ed state for administering environme n tal programs, states must, among other things, acqu i r e and maint a in ade q uate authority to enforce pro g ram requir ements consistent with federal requirements. For example, to obtai n EPA’s approval to adm i nister the Clean Air Act’s Title V pe rmitting requirements for major air pollution sources, states must have, among ot he r things, a u thority to recover civil penalties an d provide ap propriate criminal penalt ies. EPA’s policy provides that all pen a lties should incl ude two co mponents. First, penalties should inclu d e an “econ o mic benefit ” component that reflect s the benefit achieved by avoiding co mpliance. T h is component is consid ered important to “leveling t h e playin g fi eld” among companies within an industry and eliminating any economic advantage violators gain through d e layed or avoided co mpliance co sts. The second component—the “gravity-based

P a g e 29 G A O- 07 -8 83 E P A- State En for c emen tcomponent”—reflects the seriousness of the viol ation, the actual or possible harm it causes, and the size of the viol at or.

• States are n o t documenting how th ey implemen t EPA’s policies fo r calculating and asses si ng penalties . According to EPA policy, states nee d to maintain sufficient do cumentation so that the r egions can e valuate (1) the state’s ra tionale for o b taining a p e nalty and ( 2 ) where ap propriate, th e calculati on of the eco no mic benefit and gravit y

- b ased components. If a state has not assessed a penalty or ot her appropriate sanction against a violator, EP A may take direct enfor cement acti on to recov e r a penalt y. However, regional an d state offices w e interviewe d said applyi ng this policy pl ace s strains on the EPA/state working relationship b ecause state s generall y prefer that EP A not take d i rect enforc ement actio n against regulated en tities in their states. For this reason, EPA general ly does not take direct e n forcement action solely to recover a dditional pe nalties unless a state penalt y is determined to be grossly deficient.

Regional a n d state offici als said states vary as to whether the i r environmental program a d ministrators have the a u thority to a ssess penalties. If program administrators lack this aut hority, they must pursue judicial remedies throug h their state attorney g e n e ral. Judicial actions generall y re sult in penal t ies and cou r t orders requiring corre ction of the violation. H o wever, this route is more time-consuming and resourceintensive th an havin g th e environme n tal progra m office assess the penalty and can sign ificantly d e l ay obtainin g penalties a n d achie ving a return to compliance.

The initial S R F findings provide the basis for discussions between EPA and the stat es on how to address de ficiencies in state compliance and enforcement programs, many of wh ich have been well known and longstanding. According to O ECA officials, EPA will h ave completed an SRF review in all states by th e end of 2007 and will perform an evaluation of the SRF in fi scal year 2008. The proposed evalu a t i on methodology states that EPA will address the effectivenes s of implementing the SRF by surveying th e state en vironmental ag enci es that p a rticipated i n the revi ews and the poll u tion contro l association s . However, this proposed evalu a tion may not yiel d the results EPA will need to better ensure more consistent state performance and more consistent state pr ogram oversight. In this regard, the p r oposed evaluation met hodology do es not specify how EPA plans to use the results of the SRF to begin det e rmining the c auses for cited defi cie n cies and to identify strat egies for uni formly and expeditiousl y implementing potential corrective a c tions. 

## Modifications to the SRF Could Improve EP A

’ s Enforcem ent Oversight Process

P a g e 30 G A O- 07 -8 83 E P A- State En for c emen tWhile EPA’s proposed evaluation m ay prove to be useful in obtaining views on the success of the SRF and on areas ne e d ing improvement in performing the reviews, t h e proposal is still in its early stages of developmen t, and specif i c details h a ve not b een laid out on whether and how certain potential issues will be addressed. EPA could better ensure more consistent state performance and more consistent oversight of state enforcement programs by (1) deve lo ping and im plementing corrective actions for the major def i cienci es ide n tified through the SRF a nd (2) assessing the cap acity of poorly perf or ming state programs to determine whether they possess the staff, finan c ial, an d oth e r resources to effecti vel y implement enforcement programs cons istent wit h federal requirements.

Region 8’s e xperience i n using the fi ndings of its Uniform Enforcement Oversight System may prove to be useful for OECA in addressing the findings of t h e SRF on a nationwide basis. This oversight system was designated a “best practice” in the area of state a gency oversi ght by EPA’s Office of Inspector Gene ral. 30 The regi on evalu a te d states’ enf o rcement programs using uniform review criteria that had been previ o u sly agreed t o by ea ch stat e ag ency. Th e region th e n used the e valuation fin d ings to develop an i m provement strategy tail ored to the particular weakness identified in each state ’ s enforcement program. In order to hol d the states
account able for correcti n g the weak nesses identified, Region 8 also used the improvement strategy in arriving at annual agreements with the states. For example, because of the findings from its oversight revie w of Colorado’s hazardous waste program, Region 8 off i cials became concerned about the adequacy of th e authorized program’s ability to protect human health an d the en vironment or to take on n e w program responsibilities. On the basis of th ese concerns, t h e region conducted an in-depth “capability assessment” of Colorado’s hazardous waste program beginning in 199 8, co veri n g items such as the stat e’s leve ls of resources and staff skills; professio n al developm ent and training programs; and the efforts to resolve legal and institutional limitations in its program. Over the next 4 y ears, regional an d state offici als worked with state government leaders to in crease progr a m funding, staff, and training, and to implement new penalty policies. Region 8 also di rectly implemented compliance monitoring and enforcement activiti e s at select ed Colorado hazardous waste faciliti e s while the state program developed and implemented its

30 EPA Office of I n spector Gene ral, Wa ter Enfor cement : S t a t e Enforc ement o f

Clea n Wa te r Act Di sch a r ger s Ca n Be More Effecti v e, Audi t Report N o . 20 01-P-00013 (Washington, D

. C.: Aug. 14 , 2001 ).

P a g e 31 G A O- 07 -8 83 E P A- State En for c emen tenhanced capabilities. R egion 8 c onducted another capabilit y assessment in 200 1 and concluded t h at the state had made t h e improvements necessary to implement a fully a u tho r ized program.

EPA could al so use the S R F to inform the gener al public an d others abo u t the extent to which states eff ectivel y implement environmental enforcement programs consistent with federal requirements. EPA has not yet determined whether or how the resu lts of the SRF reports will be made availab l e to the gen eral public, con g ressional committees, e nvironmental interest groups, state en vironmenta l organization s , local com m unity groups, and other interested groups and organiz ations. Many of these groups have expressed deep interest in and con c ern over the years about the consiste ncy, fairn e ss, and eff ecti veness of en vironmental enforcement. A common criticism has been that va riation in en vironmental compliance and enforce m ent among the states h a s resulted in the lac k of equitabl e public he alt h and en vironmental protection and t h e lack of a “level pla y in g field” for business fro m one state to another. EP A’s Office of Inspector General also recommended that regi o n al ev aluati ons of state programs should be made easily accessible to t h e public as an important means for holding stat es account able for their environmental performance. ECOS and several states officials we inte rviewed expressed concern that public disseminatio n of the SRF reports wou l d be used in appropriatel y to compare or rank state p e rformance. However, the SRF reports have the potential to convey usef ul information to both E P A managers and to the public on th e extent to which the enforcement program is being implemented consistently and fairly nationwide.

In addition t o the useful ness of the S R F in evalu a ting state en forcement programs, th e SRF provi d es a model that OECA could use to evaluat e progress being made by EPA’s regions in addressing inconsistencies in enforcement actions and oversight. Al though we f o cused our review on EPA’s oversight of state enforcement programs, rather than o n the enforcement programs of EPA’s 10 re gi onal offices, we testified in June 2006 based on reviews on EPA’s enforcement program that the regions vary substan t ially in th e actions they take to enfo rce environ m ental requirements, such as the number of inspections performed at regulated facilities and the amount of penalt i e s assessed for noncompliance with environmental regulation s. 31 In additio n , past EPA Inspector General and OECA evaluations found variations among regions regarding i ssues such

31 GAO-06-840T

.

P a g e 32 G A O- 07 -8 83 E P A- State En for c emen tas sufficientl y encouragi n g states to consider economic ben e fit in calculati ng penalties, taking more dir ect federal actions where states were slow to act, and requirin g states to re port all signi f icant viol at ors.

In our June 2006 testimony, we state d that broad agreement exists among EPA and state enforcem ent officials on the ke y f actors contributing to variations among regions including ( 1 ) differences in philosophy among regional enf o rcement staff about ho w best to secure compliance with environmental requireme n ts, (2) differe nces in sta t e laws and enforcement authorities and the mann er in which regions respond to these differences, (3) variation s in resources avail a ble to both state and region al enforcement offices, (4) t h e flexibility afforded by EPA policies and guidanc e th at allow states a degre e of latitude in their enforc ement programs, and (5) inco mplete and i n adequ ate e n forcement data that hamper EPA ’ s ability to accurately characterize the ex tent to which variations o ccur. 32

Although EPA has noted that some variation in en vironmental enforcement is necessary to take into account lo cal environmental conditions and concerns , it has ackn o wledged th at similar violations should be met with similar enforcement responses to ensure fair and consistent e n forcement and equit abl e treatment for regulate d businesses, regardless of geographi c location. O u r testimony noted that t h e SRF was among the i n itiatives th at could make a positive contributio n to EPA’s efforts to ensure consistent approac h es in regio n al enforce m ent activiti e s, although it i s too early t o tell whet her the initiat i ve will create a level playing fi eld for the regu lated community across the country.

The SRF init iative provid es EPA with a potenti al means to ensure consistent a nd effecti ve enforcement among the s t ates, thereb y addressing a difficult a n d long-stand ing chall e ng e to the age ncy. EPA’s p l an to evaluat e the SRF in 2008 will provide the agency with an opportunity to obtain infor m ation from the regions and the stat es regarding what does and does no t work well in these SRF reviews and to make app r opriate corrections to its review methodolo gy. However, the proposed evalu a tion methodology does not describe how EPA will examine the causes of the significant d e ficienci es n o ted during the SRF revi ews and dev e lop a strategy for addressing them. If these defici encie s are not ad dressed in a 

# Conclus i ons

32 GAO/RCED-00-108

.

P a g e 33 G A O- 07 -8 83 E P A- State En for c emen tuniform and timely manner, EPA and the states will not gain the full benefit of th e SRF.

Regardless of the extent and effe ctiv eness of ove r sight revie w s to determine the consisten cy and effec t iveness of e n forcement programs, corrective actions will not be feasibl e if states lack sufficient funding, staff levels, ex per t ise, and oth e r resources that are vital to carrying out their enforcement responsibilities. On the basis of the audits it has conducted, the EPA’s Office of Inspector General has endorsed the practi c e of havi ng regions follow up on the deficien cies noted in thei r reviews of state programs and making th eir findings public. Likewise, Region 8 demonstrated the val ue of performin g a capacit y assessment to understand why deficiencies exist i n a state pro g ram to demonstrate to decision makers and the public what needs to be improved. Such assessments would provide an impro ved basis for a truly coll a borative approach b e tween the re gions and th e states during their ann u al deliberation s on partnership agreements and grants in order to address the root causes of problems identified in state enforc ement programs.

EPA has not determined whether or how it will share the res u lts of the SRF reviews with the general public and others, i n cluding Members of Congress who over the years hav e raised questi ons and exp r essed concerns ab out the way the enforce m ent program has been i m plemented. If Members of Congress and the publ ic fully und erstand the d e ficienci es and their significance, th en they wou l d be bett er informed about how to assist EPA a nd the states in ensuring that public h ealth and th e environment are protecte d and a l evel playing fiel d is established for regulated f a cilities.

Although th e SRF thus far has been focused on r eviewing state enforcement programs, the process could be ext e nded to incl ude the enforcement programs of EPA’s regi ons. As we have previousl y reported, the regions have lon g be en inconsistent in their oversight of states within their jurisdiction and th e enforceme n t actions th ey tak e in or der to provide a l e vel playing fi eld for regul a ted facilities across the nation.

To enhanc e EPA’s oversight of region al and state enforcement activiti e s to implement environmental programs cons istent with the requir ements of federal statu t es and regu lations, we recommend that the Administrator of EPA take the following actions: 

# Recom m endations for Executive Action

P a g e 34 G A O- 07 -8 83 E P A- State En for c emen t• include, in EPA’s fiscal y ear 20 08 e v al uation of th e SRF, an assessment of lessons learned and an action plan fo r determining how significant problems id entified in st ate programs will be uniformly and expeditiously addressed;

• evaluat e the capacit y of i ndividual au thorized state programs, where the SRF finds the state app e ars to lack s u fficient res ources (e.g., funding, staff, and expertis e), to implement and en fo rce author ized programs and then develop an a c tion plan to improve tha t state’s cap acity;

• publish the SRF findings so that the public will know how we ll state regulators a r e enforcing authorized pr ograms and protecting p ublic health and the envi ronmental conditions in their communities; and

• conduct a p e rformance assessment similar to S R F for regional enforcement programs.

In commenting on the dr aft report, EPA generally agreed with GAO’s recommendations and stated that th e agen cy is ta king action t o address the issues we raised. Wit h respect to our recommendation to publish the results of the SRF findin g s, EPA said that it had agreed with t h e Environmental Council o f the States t h at the first round of state enforcement reviews would not be p ub lished. However, EPA said it would consider whether to pub lish future reviews when it eval uate s the implementation of the S R F in fiscal year 2 008. EPA also provided detail e d technical an d clarifying comments, wh ich we incorporated as appropriate. EPA’s letter is included i n appendix I II.

We are send ing copies of this report to interested congressional committees; the Administrator of EPA; and other interested p a rties. We will also make copies available to ot hers upon request. In addition, the report will be available at no charge on GAO’s W e b site at http://www.gao.gov

. 

# Agency Comments and Our Evaluation

P a g e 35 G A O- 07 -8 83 E P A- State En for c emen tIf you or yo ur staff have any qu estions about thi s report, please contact me at (202) 5 12- 3841 or stephensonj@gao.gov . Contact points for our Offices of Congressional Relatio n s and Publi c Affairs may be found o n the last page of th is report. Key contributors to this report are listed i n appendix IV.

John B. Stephenson Director, Natural Resources and Envi ronment

P a g e 36 G A O- 07 -8 83 E P A- State En for c emen tAppendix I: S c o p e and Method ology 

# Appendix I: Scope and Methodology

To assess how the Environmental Protection Age n cy (EPA) and authorized state ag enci e s work together to deplo y resources, plan, set priorities, and define roles and re sponsibilities for enforcement of and compliance with environmental programs consistent with fed e ral requirements, we (1) identified the fe deral resources provide d to EPA regions and states for enforcement between 19 97 and 20 06, a nd obtained EPA regional and states’ views on th e adequ acy of these resources to implement their activiti e s; (2) dete rmined EPA’s progress in improving priority setting and enforcement plan ni ng with its regions and authorized states; and (3) examined EPA efforts to improve its oversight of states’ enforcement and compli ance progra ms.

For the purpose of this review, we conducted semistructure d interviews with officials at the 10 EPA regions a nd at 10 aut horized state ag encies. To construct qu estions for the interview s , we analyz ed polici e s, procedures, and guid ance materials EPA has developed and i m plemented. We synthesized the findings, conclusions, and recom m endations contained i n reports by us, EPA’s Offi ce of Inspector General (OIG), the N a tional Academy of Public Administration (NAPA), and the Environ m ental Council of t h e States (ECOS). We also met with officials from EPA Region 4, the Georgia Department of Natural Resources, South Carolina Department of Health, and the New Jersey Department of En vironmental Protection t o obtain a m o re thorough understanding of how state agen ci es work together to plan, s e t priorities, define roles and responsibilities, and deploy reso urces for enforcement an d complianc e of environ m ental laws.

We used a n onrandom sample of 10 stat es, which consisted of 1 state fro m each re gion:

• Five had a P e rformance Partnership Agreement (PPA) and Pe rformance Partnership Grant (PPG) with EPA (Iowa, Massachusetts, Minnesota, Oregon, and Utah). These states in co rporated an enforcement program into their PP A, along with other essential elemen ts that EPA and state leaders cons idered important (e.g., j o intly agreed priorities, defined roles/responsibilities, and proce sses for resource deployment ).

• Five states d i d not have a PPA (Arizona, Arkansas, Florida, New York, and West Virginia), but had either a PPG or an alternative working relationship with EPA. 1

1 For the purposes of th is re port, state agencie s include t hose of the District of Colum b ia, Puerto Rico, a n d the U

. S. Virgin Islands, and t h e Pacific Islands.

P a g e 37 G A O- 07 -8 83 E P A- State En for c emen tAppendix I: S c o p e and Method ology

Our evaluati on of 10 sel e cted states cannot be generalized to the other states with authorized programs. However, we met with EPA officials representing all 10 regio n s, who provid ed their p e rspectives about all state programs within their geographic regi on. In additi on, we examined other sources of state invol v e m ent, such a s information avail a ble f r om ECOS and pollutio n control as sociations (e.g., Association of State and Territorial Solid Waste Management Officials, Association of State and Interstate Water Pollution Control Admi nistrator s , State and Territorial Air Pollution Program Administrators, and the Association of Lo cal Air Pollution Control Officials, now known as the National Association of Clean Air Agencies).

We also limited our revie w to the envi ronmental agencies with in each selected stat e that imple m ent the major EPA programs (Clean Water Act, Clean Air Act, Safe Drink i ng Water A c t, and Reso urce Conservation and Recovery Ac t) and did n o t include st ate dep a rtments or agen cies that implemented other programs, such as the Federal Insecticide, Fungicide, and Rodenti c ide Act.

To determine if there we re any trend s in the fede ral resources provided t o EPA regions and states f o r enforcement from 199 7 to 20 06, an d assess EPA regional and state vi ews on the a d equac y of t h ese resources to implement their activiti e s, we reviewed the bud g e ts for EPA and the Offi ce of Enforcement and Compliance Assurance (OECA) for fiscal years 1997 through 200 6. We also reviewed our prior reports and those f r om the Congressional Research Service (CRS), Congressional Budget Office (CBO), Office of Management and Budget (OMB), EPA, and th e EPA OIG, for information on the di stribution of federal resources. We met with officials from the EPA’s Office of the Chief Financial Officer and OECA, ECOS, and the Natural R e sources Defense Council, and admi nistered structured interviews to officials in all 10 EPA r egions and t h e select ed state in ea ch region. In e ach region and state, we obtained p e rspectives on the deploym e nt of resou r ces. However, we were not able to a ssess the workload of the states an d regions an d their overall capabil ity to meet federal enfo rcement req u irements because EPA’ s data colle c t ion system does not col l ect sufficie n t information neede d t o make such an assessment. In this regard, EPA lacks information on the c a pa city of both the states an d EPA’s regions to effect ively carry o u t their enfo rcement programs, because th e a gency has d one little to assess the overall enforcement workload of the states and regions and the number and skills of people n e eded to impl ement enforcement tasks, duties, an d responsibilities. Furthermore, the stat es’ capacit y continues to evolve as they assume a great er role in the d a y

- to-day man agement of enforcement

P a g e 38 G A O- 07 -8 83 E P A- State En for c emen tAppendix I: S c o p e and Method ology

activities, w o rkload cha n ges occur a s a result of new environ m ental legislation, n e w technolo g ies are intr oduced, and state popul ations shift.

To determine EPA’s progress in imp r oving priority setting an d enforcement planning wi th its region s and author ized states, we reviewed EPA’s strate gic plans an d national st rategy, its p o licy and gui d ance for planning an d implementing its enfor cement programs, the process for implementing National E nvironmental Performance Partnersh i p agreements with authoriz ed state ag encies, an d Federal R e giste r notices. We also revi ewed our prior reports and those from CRS, O M B, EPA, EPA OIG, and NAPA for information on the plannin g and priority setting process. We met with officials from EPA’s Office of Congressional and Intergovernmental Relat i ons, OECA, ECOS, and the Natural R e sources Defense Council, and administered structured interviews to all 10 EPA regions and the selecte d state in ea ch region. In e ach region a nd state, we examined re gional an d state strategic plans and st ate-EPA enf o rcement agreements, such as memorandums of agreemen t, PPAs, and PPGs. At state agen ci es, we also discussed the states’ perspectives on how EPA administered state-EPA agreements, regi onal pl ans, and nati onal priorities.

To determine EPA efforts to improve its oversight of state enf o rcement and complia nce programs, we reviewed EPA’s policy and guid ance for overseeing s t ate ag enci e s . We met with officials f r om EPA’s Office of Congressional and Int e rgovernmental Relations, OECA, EC O S , and the Natural Resources Defense Council, and administered structured interviews to all 10 EPA regions, and the select ed state in ea c h region. In each re gion, we examine d strategic p l ans, state-EPA agreeme n ts, and 33 state oversig h t reviews of the SRF. At state ag enci es, we revie w ed policy and guid anc e and re ceiv e d perspecti ves on EPA’s oversight process.

We performed our work from Octo ber 200 5 through July 2 0 0 7 , in accordan ce with general ly ac cepted government auditing sta ndards, which included an assessment of data reli ability and int e rnal controls.

P a g e 39 G A O- 07 -8 83 E P A- State En for c emen tAppendix II: De v e lop m ent and Imple m entatio n of the State R e v i e w Framework 

# Appendix II: Development and Implementation of the State Review Framework

EPA’s criteria for assessing the p e rformance of c o mpliance a ssurance an d enforcement responsibilities in authorized states can be traced back to the mid-1980s. I n August 19 86, the EPA Deputy Administrator issued a poli cy guidance memorandum e n titled “Revi sed Policy F r amework for State/EPA Enforcement Agreements.” The policy memorandum was inte nded to provide a framework for gathering inf o rmation and making ju dgments about the effectiven ess of state compliance and enforcement performance and providin g guidan ce o n when and how EPA would becom e involv ed in enforcement actions in a u thorized states. Among other things , the 1 986 policy gu ida n ce discusse d (1) EPA oversi ght crit eria and th e measures that the ag ency would use to define goo d state perfo r mance, (2) oversight procedures and protoco l s, and (3) cr iteria for direct feder a l i n tervention

— factors EPA would consider before t a king direct enforcement action in a state and what states might reasonabl y expe ct of EPA in this regard.

According t o OECA offi cials, subsequent experience with the 1986 policy guidanc e re vealed sever al implemen tation shortcomings that limited EPA’s ability to adequat e ly and cons istently over see state compliance and enforcement programs. For example, the 19 86 poli cy guid ance did not clearly d e scribe how EPA would o versee state en forcement programs, including w h at constitut e d “good pr ogram performance”. Mo reover, EPA and authorized states did not agree o n what uniform program information states needed to maintai n and provid e to EPA for performance

measureme n t. This led t o consider able inconsistency from region to region in ov erseeing stat e complianc e and e n forc ement programs.

By 2003, OECA officials said that environmental commissione rs in several states and members of ECOS were in the forefron t of the c a ll f o r developin g a nd implementing a more uniform and systematic process for EPA’s oversight and eval uation of sta t e complian ce and enfor cement programs. Other factors also pointed to the ne ed to develop a more consistent method of gau g ing state p e rformance. These inclu d ed EPA’s OIG audits of state programs, EPA’s internal assessments, and public petitions for withdrawal of program authorizations for some state programs. A common criticism was th at variation in environmental compliance and enforce m ent among the states was directly a ttributable t o the lack of u n iform EPA oversight an d performance measure m ent and that the result was the lack o f equitabl e p ublic heal th and environ m ental protection a nd lack of a level pl aying field for business from one state to another.

At an ECOS meeting in 2003, OECA officials said t h e Chairman of the ECOS Co mp liance Committee proposed to EPA’s then Depu ty Assistant

P a g e 40 G A O- 07 -8 83 E P A- State En for c emen tAppendix II: De v e lop m ent and Imple m entatio n of the State R e v i e w Framework

Administrator for OECA a method fo r systematically and unif o rmly assessing state performance. Th e as se ssment method, called the SRF, was patterned af ter a review process originally de velo p ed by EPA’ s Region 8 t o assess the performance of state compliance and enforcement programs in that region ( e ncompassing the states of Colorado, Utah, Wyo m ing, South Dakota, North Dakota, a nd Montana and 27 so ver eign tribal n a tions). The SRF was formally agree d to by EPA, ECOS, state media organizations, an d state enviro nmental age ncy offici als in Decembe r 2003.

The 12-poi nt evalu a tion model used in Region 8, called th e Uniform Enforcement Oversight System, bec a me the basi s for a revie w framework for evaluatin g state comp liance and e n forcement performance. These 12 required ele m ents for evaluation of s t ate performance in clude the following:

1. the degre e t o which a state program has completed the uni ve rse of planned ins p ections (ad d ressing core requirements and federal, state and region al priorities);

2. the degre e t o which inspection repor ts and compliance re vie w s document inspection fin d ings, includ in g accurate descriptions of what was observed to sufficie n tly identify violations;

3. the degre e t o which inspection repor ts are completed in a timely manner, incl uding timely identificatio n of violatio ns;

4. the degre e t o which significant viol at ions (e.g., si gnificant noncompliance and high priority viol ations) and supporting information are ac curate ly identi fied and reported to EPA national databases in a timely manner;

5. the degre e t o which state enforceme n t actions in clude requir ed corrective or complying actions (e.g., injunctive relief) that will return facilities to compliance in a specifi c time frame;

6. the degre e t o which a state takes ti mely and ap propriate en forcement actions, in a ccordanc e with policy relating to sp ecific media;

7. the degre e t o which a state includ es both gravity and econ o mic benefit calculati ons for all penalt ies, appr opriately using t h e economi c benefit calculati on model (BEN) or similar state model (where in use and consistent with national policy);

P a g e 41 G A O- 07 -8 83 E P A- State En for c emen tAppendix II: De v e lop m ent and Imple m entatio n of the State R e v i e w Framework

8. the degre e t o which final enforceme n t actions c o llect appro p riate economic b e nefit and gr avity p e nalti e s in accord ance with ap plicable penalty pol i c ies;

9. the degre e t o which enf o rcement co mmitments in the PPA, P P G, and/or other written agreements to deliver a product/project at a specified ti me, if they e x ist, are me t and an y pro ducts or projects are completed;

10. the degre e t o which the minimum data requireme n ts are timely;

11. the degre e t o which the minimum data requireme n ts are accu rate; and

12. the degre e t o which the minimum data requireme n ts are complete, unless otherwise negotiated by the re gion and sta t e or prescribed by a national initi a tive.

The SRF also includes a 13th “option a l” element t h at is open f o r negotiation between reg i ons and states. EPA and ECOS encourage the use of the 13th e l ement to en sure the revi ew takes a measure of the full rang e of program activities an d results. These components can ad d meaningful input into a state’s overall performan ce and program. Topics could include program areas such as c o mpliance a ssistance, pollution pre vention, innovation, i n centive or self-disclosur e programs, relationships with state attorneys ge neral, and o u tcome measur es or environmental indicators that go beyon d t h e core prog ram activitie s covered in elements 1 t h rough 12.

The SRF was also seen b y the parties as being co nsistent with the principles of the National Envir onmental Performance P a rtnership System, which provides a mechanis m for joint planning and program management that takes advantage o f the uniqu e capabiliti e s of each party in addressing pressing environmental problems. Also, the SRF considers commitments negotiated between EPA regions an d states cont ained in PPAs, PPGs, and/or other agreement s that may di ffer from national policy and guid anc e and e valu a tes state perf ormance in terms of those commitments. In cases where states a nd regions h ave n egotiat ed different state commitments (e.g., number of inspections) or other acti v ities, states are held accountable for those commi tments, although the S R F reviewers may provide feedba ck th at those co mmitm ents need to b e i n creased in the future to full y demonstrate an ad equ a t e enforcem ent program.

After a revie w is completed, the re gio n s prepare a draft report of the findings and conclusions, jointly discuss with the state how major

P a g e 42 G A O- 07 -8 83 E P A- State En for c emen tAppendix II: De v e lop m ent and Imple m entatio n of the State R e v i e w Framework

recommend ations will be addressed, a nd provide the draft report to OEC A headquarters. OECA rev i ews the draft reports and provides comments on the regions’ analyses and recomme ndations. OECA expects regions to incorporate these recommendations in to the next round of negotiated agreements, where OEC A will track a nd manage the recommendations to conclusion.

Additional anticipated b e nefits of ap plying the S R F’s elements in a uniform ma nner included, among ot hers, (1) mo re strategic r e source allocation, (2) reduction of duplicati ve work, (3) consistent and predictable baseline oversight across states and regions with agreed-upon thresholds for correctiv e action, (4) differential oversight of state programs based on perfo r mance, 1 (5) a lev e l pla y i n g field for s t ates in competition for business, and (6) impr oved public confidence in federal and state co mpliance an d enforceme n t programs. In addition, the SRF is viewed as pr oviding a basis to establish a dialogu e on perfor mance that will lead to i m proved program management and environmental results.

OECA pilot-tested the S R F during fiscal year 2004 in at least one state in each of EPA ’ s 10 regions . The states t h at participa t ed in the pil o t were all volunteers. The pilot states included Alaska, Arizona, Colorado, Rhode Island, New Jersey, Maryland, Michig an, Missouri, Nebraska, Oklahoma, and South C a rolina. OECA also piloted the SRF in one EPA region, Region 10 (Seattl e), to test the a pproach on EPA’s direct implementation of the Resource Conservation and Recovery Act (RCRA ) and the Cl ean Wat e r Act National Pollution Discharge Eli m ination System (NP D ES) program in Alaska. EPA used the SR F to evalu a t e the enforc ement performance of three media programs (b oth the pilo t reviews and subsequent reviews): the Clean Ai r Act Station a ry Sources program, the Clean Water Act NPDES prog ram, and (RCRA) Subtitl e C hazardous waste pro g ram. For each progra m, the SRF defined the essential ele m ents and then, in a companion Framework Implementation Guide more fully defi ned how each elemen t is to be ap plied and m easured.

1 The term “diffe rential oversight” refers to a m e chanism through which the c o mpliance and enforcement program ca n offe r differing levels of ove r sight based on EPA’s assessment of state performa n ce. States de monstrating a n ad equate core compliance and enf orcement program w ould qualify for be n e fits w h ile s t ate perf ormance not meeting minimum standards wo uld result in en ha nced over sight. This process d o es not negate EPA’s responsibility for oversight; it simply determi nes the level, intensity, and foc u s of t h e oversight.

P a g e 43 G A O- 07 -8 83 E P A- State En for c emen tAppendix II: De v e lop m ent and Imple m entatio n of the State R e v i e w Framework

In February 2005, OECA contracted f o r an evaluation of the p ilot review process to determine whether the SR F provides a n accurat e a ssessment of state compliance and enf o rcement ac tivities. The evaluati on sought to obtain answers to questions, such as the following: (1) Are th e 12 re view elements the right ones? (2) Are the right data metrics being used? (3) What barriers were encountered? The evaluation also addressed such implementation issues as whether th e reviews cou l d be streamlined and made more efficient; wh at barriers were encount ered in cond ucting the reviews and how they co uld be reduced or eliminated; an d th e consistenc y of applicatio n across the country, specifically any need for and ways to improve consistency; problems with objectivit y; and appare n t gaps in capabilit y or expertise that need to be addressed.

The pilots were also eval uated to d e termine what they indi cat ed about th e performance of the stat es, whether corrective a c tions or differential oversight ag reements get codified in grant agre e m ents, and the best way to summarize and communicate the results of the re view. The e v a luation used the results of the pi lots as well as discussions with key stakeholder s to support recommendations aimed at helping OECA imp r ove the SRF before implementing it more broadly. For example, while OECA had allowed regi ons considerable discret i on/flexibilit y on procedures for file selection, th e evaluation identified a number of weaknesses in the file selection pr ocess and hi ghlighted potential improvements to OECA’s file selection pr otocol. The consultant d evelop ed an improved sampling model that would yield representative fil e reviews acro ss states and provide a more representative pict ure of enfor cement and compliance assurance across states with varying lev e ls of enforcement activit y.

P a g e 44 G A O- 07 -8 83 E P A- State En for c emen tAppendix III: Comme n ts from the Environ m ental Agen cy 

# Appendix III: Comments from the Environmental Agency

P a g e 45 G A O- 07 -8 83 E P A- State En for c emen tAppendix IV: A GAO Conta c t and Staff

c kno w l edg m e n ts

P a g e 46 G A O- 07 -8 83 

# Appendix IV : GAO Contact and Staff Acknowledgments

John B. Stephenson (202) 512-3841 o r stephenson@gao.gov

In addition t o the individ u al named a bove, Ed Kr atzer, Assistant Director; Charles W. Bausell, Jr.; Kevin S. Bray; Brian M. Freidman; Carol M. Henn; Tom M. Ja mes; Ralph L. Lowry; Lynn M. Musser; Carol H. Shulman; John C. Smith; and Ignacio J. Y a nes made key contributi ons to this report.

E P A- State En for c emen t 

# GAO Contact

Staff Acknowledgments

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