Environmental Protection: EPA Should Develop a Strategic Plan for Its New Compliance Initiative
Published: 2012-12-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Environmental Protection Agency (EPA) oversees many environmental programs that seek to protect public health and the environment. Substantial noncompliance with these regulations and increasing budget pressures, among other things, led EPA to propose a new enforcement and compliance initiative in fiscal year 2012. This new initiativeNext Generation Complianceattempts to capitalize on advances in emissions and pollutants monitoring and information technology. Among other things, EPA expects Next Generation Compliance to provide new and more complete enforcement and compliance information and promote greater public transparency and accountability.
GAO was asked to review (1) actions EPA has undertaken in Next Generation Compliance to increase enforcement and compliance transparency and accountability and (2) the extent to which EPA is developing a strategic plan to integrate Next Generation Compliance into its enforcement and compliance program. To conduct this work, GAO reviewed Next Generation Compliance documents and interviewed selected EPA officials.
section_title: What GAO Found
paragraphs: Since introducing its Next Generation Compliance initiative in fiscal year 2012, EPA has taken four primary steps to increase transparency and accountability in enforcement and compliance. According to EPA documents and officials, these actions will provide greater access to data under EPA-regulated programs and make regulated entities more accountable to the public. In this regard, EPA
formed an electronic reporting task force in December 2011 to provide recommendations for converting from existing paper-based reporting requirements to electronic reporting;
established a work group in April 2012 to identify advanced emissions and pollutants monitoring technology and evaluate how the agency can better use such technology;
formed a work group in September 2012 to advance the use of new compliance tools in its enforcement activities, such as in settlement agreements with entities that are found in noncompliance with regulations; and
increased the public availability of the enforcement and compliance information it currently has available by, among other actions, placing a tool on its enforcement website that allows the public to obtain information about pollutants that are released into local waterways.
EPA has not developed a strategic plan to integrate Next Generation Compliance into its enforcement and compliance program. EPA has prepared some documents on the initiative and its components, but these documents are general in nature and provide little specificity regarding EPA's plans related to Next Generation Compliance. GAO has previously reported that strategic planning for activities below the agencywide level is a leading practice for successful agencies. EPA acknowledges the need for an overall plan for Next Generation Compliance. Developing a plan that incorporates selected leading practices for federal strategic planning could help EPA more effectively integrate Next Generation Compliance into its enforcement and compliance program and promote greater public transparency. Without a strategic plan incorporating these leading practices, EPA may face challenges in helping to ensure that its initiative will achieve its long-term goals of improving compliance and obtaining greater health and environmental benefits from the agency's regulations. Additionally, without a strategic plan to direct its Next Generation Compliance initiative, EPA could waste valuable resources, time, and effort. For example, without proper planning, EPA may pursue emissions monitoring technologies that not all regulated entities--especially the growing numbers of smaller facilities--can fully utilize, thereby requiring EPA to rely on costly individual facility inspections with its limited resources.
section_title: What GAO Recommends
paragraphs: GAO recommends that EPA (1) develop a schedule for completing a strategic plan for its Next Generation Compliance initiative in a timely manner and (2) incorporate selected leading practices in federal strategic planning in the plan. EPA agreed with GAO's recommendations.

section_title: Letter
paragraphs: The Environmental Protection Agency (EPA) oversees many  environmental programs, in partnership with state agencies, that seek to  protect public health and the environment from pollutants produced by a  range of entities, including sewage treatment facilities, petroleum  refineries, and power plants. In carrying out its mission, EPA develops  regulations governing facilities that treat, store, or dispose of hazardous  waste; establishes limits for entities discharging pollutants such as  effluent or wastewater to surface waters; and sets national ambient air  quality standards for entities discharging certain pollutants into the air,  among other things. To ensure that regulated entities meet these  environmental regulations, EPA has established an enforcement and  compliance program. This program includes EPA actions to monitor  regulated entities’ compliance with environmental laws and regulations,  enforcement of regulatory requirements through civil and criminal  penalties for violations, and oversight of state enforcement activities  authorized by EPA. In recent years, EPA has reported that it is not  achieving all of the environmental and public health benefits it expected in  regulating certain entities because of substantial rates of noncompliance  in some programs. For example, 2010 EPA data (the most recently  available data) indicate that 45 percent of certain entities subject to  effluent limits through EPA’s National Pollutant Discharge Elimination  System (NPDES) permit program have reported violations.
Furthermore,  because of incomplete or unreliable data on compliance in some  programs, such as the NPDES, EPA cannot determine the full extent of  entities’ compliance. In addition, as we have previously reported,  unreliable data in EPA’s drinking water program limits EPA’s ability to  identify violations. We and the EPA Inspector General have also  reported inconsistencies in the enforcement of certain state  environmental programs, which are overseen by EPA. For example, the  Inspector General reported that, while EPA has made efforts to improve  state performance and oversight consistency, state enforcement  programs are underperforming. Given these challenges, as well as  growing federal and state budget pressures, EPA stated that it has  become increasingly difficult to rely primarily on its traditional approach of  inspecting individual entities to increase compliance with the nation’s  environmental laws and regulations.
To ensure better enforcement and compliance by regulated entities, EPA  announced a new initiative in fiscal year 2012—Next Generation  Compliance—to capitalize on advances in emissions and pollutants  monitoring and information technology. Under this initiative, which  remains in the early stages of development, the agency proposes to rely  less on its traditional single-entity-at-a-time inspection method and more  on electronic reporting of information from regulated entities and the use  of new technologies to monitor their compliance. For example, according  to EPA documents, EPA anticipates that advanced emissions and  pollutants monitoring equipment, such as infrared cameras that could  detect emission leaks and fence-line monitoring equipment that could  provide emissions monitoring around the perimeter of an entity, will be  used to identify violations and promote compliance. Also under this  initiative, EPA states that Next Generation Compliance will provide new  and more complete information to regulated entities and the public to  promote greater transparency and accountability, as well as improve the  ability of states to implement their authorized federal environmental  programs.
As we have previously reported, in developing new initiatives, agencies  can benefit from following leading practices for strategic planning.  Furthermore, federal departments and agencies such as EPA are to  comply with the Government Performance and Results Act (GPRA) of  1993, as amended, which was passed by Congress to improve the  efficiency and accountability of federal programs, among other purposes.  GPRA requires, among other things, that federal agencies develop long- term strategic plans that include agencywide goals and strategies for  achieving those goals. The Office of Management and Budget (OMB) has  provided guidance in Circular A-11 to agencies on how to prepare these  plans in accordance with GPRA requirements. We have reported that  these requirements also can serve as leading practices at lower levels  within federal agencies, such as planning for individual divisions,  programs, or initiatives.
In light of EPA’s key role in enforcing our nation’s environmental laws and  helping protect the public’s health, you asked us to review EPA’s efforts  to improve enforcement and compliance. Our objectives were to examine  (1) the actions EPA has undertaken in Next Generation Compliance to  increase enforcement and compliance transparency and accountability  and (2) the extent to which EPA is developing a strategic plan to integrate  Next Generation Compliance into its enforcement and compliance  program.
To address our first objective, we obtained and reviewed EPA documents  about the Next Generation Compliance initiative. These documents  included a three-page Next Generation Compliance overview document,  slides describing the initiative, information regarding the roles and efforts  of Next Generation Compliance work groups, an EPA training workbook  on how to design rules with compliance, information on EPA’s efforts to  implement electronic reporting for the NPDES program, and the Office of  Enforcement and Compliance Assurance (OECA) fiscal year 2013  national program manager guidance. We also interviewed EPA officials in  headquarters from OECA and the Office of Research and Development.  We reviewed related federal policies on regulatory accountability and  compliance information to understand how they could apply to EPA’s  Next Generation Compliance. In addition, to demonstrate how EPA has  applied some aspects of Next Generation Compliance, we reviewed  selected EPA settlement agreements with regulated entities that were  publicly announced from October 2011 through October 2012. Through  this review, we identified agreements that included facets of the Next  Generation Compliance initiative, such as requirements for using  advanced emission or pollutant controls, or reporting provisions intended  to provide more information to the public. To address our second  objective, we also spoke with OECA officials about their planning efforts  regarding the initiative and reviewed planning-related documents,  specifically the three-page Next Generation Compliance overview  document and descriptive slides. We also reviewed our prior work on  leading practices in federal strategic planning for agency divisions,  programs, or initiatives.
We conducted this performance audit from March 2012 to December  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: EPA manages its environmental enforcement and compliance  responsibilities primarily through its OECA. OECA monitors the  compliance of regulated entities, identifies national enforcement concerns  and sets priorities for addressing them, and provides overall direction on  enforcement policies. OECA can take enforcement actions, such as fining  entities that are in noncompliance with EPA regulations, but most of  EPA’s enforcement responsibilities are carried out by its 10 regional  offices. These offices carry out program activities under each of the major  federal environmental statutes, such as the Clean Air Act and the Clean  Water Act, have compliance related responsibilities, and also take  enforcement actions. For example, among other things, a regional office  can conduct inspections, provide compliance assistance and training to  state enforcement programs, and take enforcement actions such as  assessing fines for noncompliance with EPA regulations. The regional  offices also oversee certain state enforcement programs and implement  certain programs in Indian country. Many federal environmental statutes  direct EPA to approve or authorize qualified states to implement and  enforce environmental programs consistent with federal requirements,  and most states have responsibility for multiple laws. EPA-authorized  states are to monitor compliance of regulated entities, conduct  inspections, take enforcement actions against entities found in  noncompliance, and report their actions to EPA.
EPA proposed the Next Generation Compliance initiative in fiscal year  2012 to capitalize on advanced technical capabilities and efficiencies in  enforcement and compliance. In developing this new initiative, EPA  stated that it wanted to go beyond its traditional enforcement approach of  inspecting individual entities and make available, among other things,  new and more complete enforcement and compliance information.  According to agency documents, the long-term goals of the initiative are  to improve compliance and obtain greater health and environmental  benefits from EPA’s regulations. The proposed elements of the initiative  are described in a brief overview document and some slide presentations  that the agency has prepared about the initiative. In summary, according  to these materials, the five components of the Next Generation  Compliance initiative are the following:
Rulemaking—designing and structuring rules and regulations to  ensure greater compliance, such as including requirements for  regulated entities to regularly assess their compliance.
Technology—using advanced emissions and pollutants monitoring  technology, such as infrared cameras, for compliance monitoring so  that regulated entities and the public are better informed about  entities’ pollution.
Electronic reporting—using modern information technology to  transition from paper to electronic reporting of items such as permit  data, compliance information, and enforcement actions.
Transparency—making both current and new entities’ enforcement  and compliance information, such as information obtained from  advanced emissions and pollutants monitoring and electronic  reporting, more publicly available.
Innovative enforcement approaches—employing new or innovative  enforcement approaches, such as including tools like advanced  emissions and pollutants monitoring or electronic reporting  requirements in EPA enforcement settlement agreements with  entities.
EPA envisions that Next Generation Compliance benefits will come from  (1) designing and structuring rules and regulations to ensure greater  compliance by regulated entities; (2) obtaining and making public more  and better compliance data so that the public can determine the extent of  regulated entities’ compliance with environmental regulations, thereby  exerting pressure on violators for greater compliance; and (3) improving  the ability of EPA-authorized states to implement their environmental  programs. EPA officials informed us that EPA has started provided  training to EPA staff on how to incorporate the Next Generation  components into designing rules and regulations. As part of this effort,  EPA developed a training workbook for staff on how to design rules with  an emphasis on increasing regulated entity compliance. With regard to  making public more and better compliance data, according to EPA  documents, providing information to the public, together with public  accountability, can result in greater compliance by regulated entities. For  example, EPA stated that reductions in regulated entities’ noncompliance  with NPDES permits in certain states may be related to EPA’s increasing  the public disclosure of related compliance data, along with the release of  state enforcement performance information. These actions, according to  EPA, created more pressure on states to enforce and on these entities to  comply with NPDES permit requirements. Furthermore, EPA believes that  the improved enforcement and compliance data Next Generation  Compliance will provide will allow states and EPA to be more innovative  in developing new approaches to improving compliance.
section_title: EPA Has Taken Steps under Next Generation Compliance to Increase Transparency and Accountability
paragraphs: Since introducing its Next Generation Compliance initiative in fiscal year  2012, EPA has taken four primary steps to increase transparency and  accountability in enforcement and compliance. According to EPA  documents and officials, these steps provide greater access to data under  EPA-regulated programs and make regulated entities more accountable  to the public.
First, EPA formed an electronic reporting task force in December 2011 to  provide recommendations for converting from existing paper-based  reporting requirements to electronic reporting. This action is in support of  a broader EPA effort to require regulated entities to electronically report  data, such as permit data and compliance information, to EPA and state  environmental agencies. According to EPA documents, electronic  reporting is not simply e-mailing files to the government, but it is an  electronic method that guides the entity through the reporting process.  The task force is also developing agency policy to include electronic  reporting requirements in all new EPA regulations. According to a senior  EPA official responsible for coordinating the Next Generation Compliance  initiative, in June 2012, the task force started working with the  Environmental Council of the States, a national association of state and  territorial environmental agency leaders, to explore how regulated entities  could electronically conduct business with EPA and state environmental  agencies, including providing electronic submissions of permit  applications and modifications, as well as emissions and pollutants data.
Second, the agency formed a work group in April 2012 to identify  advanced emissions and pollutants monitoring technology and evaluate  how the agency can better use such technology. Among other things, the  work group is charged with preparing a national inventory of the  advanced monitoring equipment EPA owns or has access to from other  sources, such as contractors. The work group’s charter called for it to  prepare a report by September 2012 that addresses 10 items and, among  other things, provide suggestions to establish formal policies and  procedures for deploying and maintaining advanced emissions and  pollutants monitoring technology and training staff on its use. According to  EPA officials, an interim report that contained initial findings and  recommendations from the work group was provided to the OECA Deputy  Assistant Administrator on September 29, 2012.
Third, EPA has begun including Next Generation Compliance in its  enforcement activities by incorporating elements of the initiative into  selected settlement agreements. For example, under an EPA settlement  agreement announced in May 2012, a petroleum company agreed to  install “state-of-the-art” pollution controls at its refinery, as well as a fence- line emissions monitoring system. According to the terms of the  settlement agreement, the company will post data collected from the  fence-line monitoring system on a public website. In an EPA agreement  announced in April 2012, another petroleum company also agreed to  install “state-of-the-art” pollution controls at its refineries and in the  process provided resources and assistance to EPA to acquire new  scientific information for measuring certain air emissions.us that this settlement agreement, taken in its entirety, is an example of  identifying and using advanced technology to both monitor and reduce  emissions. In September 2012, EPA formed a work group to advance the  use of Next Generation compliance tools in EPA settlement agreements.
Fourth, the agency has increased the public availability of the  enforcement and compliance information it currently has available. EPA  officials informed us that they are observing the public’s increasing use of  EPA’s Enforcement and Compliance History Online (ECHO) website and  are continually looking for ways to improve and expand the information  publicly available on the website. For example, in January 2012, EPA  released a Clean Water Act Discharge Monitoring Report Pollutant  Loading Tool on its ECHO website to provide the public with information  about pollutants that are released into local waterways. According to EPA documents, the tool allows the public to compare annual pollutant  discharge amounts from certain regulated entities under the Clean Water  Act and includes a mapping application, toxicity data, and links to other  compliance information.
section_title: EPA Has Not Developed a Strategic Plan for Its Next Generation Compliance Initiative
paragraphs: EPA has not developed a strategic plan to integrate Next Generation  Compliance into its enforcement and compliance program. EPA has  prepared a brief overview document and some slides that provide basic  information on the initiative’s five components, but these documents are  general in nature and provide little specificity regarding EPA’s plans,  goals, or performance measures related to Next Generation Compliance.  A senior EPA official responsible for coordinating the Next Generation  Compliance initiative told us that EPA recognizes the need for a strategic  plan for the initiative and expects to prepare one in fiscal year 2013, but  he could not provide a specific time frame for either starting or completing  the plan.
Federal departments and agencies such as EPA must comply with GPRA  requirements and are to follow associated OMB guidance in developing  their departmental or agencywide strategic plans. We have previously  reported that strategic planning for activities below the agencywide  level— such as planning for individual divisions, programs, or initiatives—  is a leading practice for successful agencies. In addition, we have  previously reported on federal agencies’ strategic planning efforts and  have identified additional useful practices to enhance agencies’ strategic  plans. Taken together, the strategic planning elements established under  GPRA and associated OMB guidance and practices we have identified provide a framework of leading practices in federal strategic planning.These include such actions as defining the missions and goals of a  program or initiative and involving stakeholders and leadership in  planning, among others. Table 1 lists five selected leading practices in  federal strategic planning and their characteristics. We highlight these five  practices because EPA’s Next Generation Compliance initiative is still  being developed, and these practices are particularly relevant to the early  stages of developing a strategic plan.
Without a plan that incorporates leading strategic planning practices such  as those included in table 1, EPA cannot be assured that it has  established a framework to effectively guide and assess the success of  this initiative and cannot be assured that it is effectively integrating the  initiative into its overall enforcement and compliance program. For  example, we have previously reported when developing a strategic plan,  it is particularly important for agencies to define strategies that address  management challenges that threaten their ability to meet long-term  strategic goals and include a description of the resources, actions, time  frames, roles, and responsibilities needed to meet established goals.  Without a strategic plan to direct its Next Generation initiative, EPA could  waste valuable resources, time, and effort. For example, without proper  planning, EPA may pursue emissions monitoring technologies that not all  regulated entities—especially the growing numbers of smaller facilities— can fully utilize, thereby requiring EPA to rely on costly individual facility  inspections with its limited resources.
EPA acknowledges the need for a plan for the Next Generation  Compliance initiative, but it has not yet developed one that clearly  articulates a strategy for integrating the initiative into the existing  enforcement and compliance program and provides a comprehensive  analysis of how the initiative will help to achieve the overall goals of the  program. The brief overview documents and slides EPA has developed  for the initiative include only general statements about the need for and  benefits of the new initiative and descriptions of the initiative’s broad  goals. Specifically, EPA’s overview and other documents do not, among  other actions, (1) clearly define the goals of the initiative and steps  needed to achieve these goals; (2) identify and develop a strategy for  including milestones for significant actions to be taken, as well as a  description of the resources needed to accomplish them; and (3) ensure  that all key stakeholders are involved in both the planning and  implementation of the initiative. Without a strategic plan incorporating  selected leading practices, EPA may face challenges in helping ensure  that the initiative will achieve its long-term goals of improving compliance  and obtaining greater health and environmental benefits from the  agency’s regulations.
section_title: Conclusions
paragraphs: EPA began its Next Generation Compliance initiative in an effort to move  beyond its traditional enforcement strategies to improve overall regulatory  compliance. As part of the effort, the agency has undertaken several  worthwhile steps to increase enforcement and compliance and encourage  transparency and accountability. However, the agency has not developed  a strategic plan for implementation of Next Generation Compliance and  could face challenges in helping ensure that the initiative will achieve its  goals of improving compliance and obtaining greater health and  environmental benefits from agency regulations if it moves forward  without one. Also, without such a plan to direct its Next Generation  Compliance initiative, EPA could waste valuable resources, time, and  effort and cannot be certain that it effectively integrates the initiative into  its overall enforcement and compliance program.
section_title: Recommendations for Executive Action
paragraphs: To better integrate Next Generation Compliance into its overall  enforcement and compliance program and ensure that the initiative will  achieve the goals EPA envisions for it, we recommend that the  Administrator of EPA direct the Assistant Administrator of OECA to take  the following two actions:
Develop a schedule for completing, in a timely manner, a strategic  plan for Next Generation Compliance; and
Ensure that this strategic plan incorporates selected leading practices  in federal strategic planning, as appropriate, and describes how Next  Generation Compliance is to be integrated into the enforcement and  compliance program.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to EPA for review and comment. In  written comments, which are included in appendix I, EPA agreed with the  report’s recommendations. Regarding the first recommendation, EPA  stated it will prepare a strategic plan for Next Generation Compliance in  fiscal year 2013. Regarding the second recommendation, EPA stated it  will consider incorporating leading practices in federal strategic planning,  where appropriate, as it develops the strategic plan. The agency also  stated that it anticipates that integrating Next Generation Compliance into  its enforcement and compliance program will be a primary component of  the strategic plan. EPA also provided technical comments on the draft  report, which we incorporated as appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Administrator of EPA,  the appropriate congressional committees, and other interested parties. In  addition, the report also will be available at no charge on the GAO  website at http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made major contributions to  this report are listed in appendix II.
section_title: Appendix I: Comments from the Environmental Protection Agency
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Vincent P. Price, Assistant  Director; Cheryl Arvidson; Elizabeth Curda; Cindy Gilbert; Richard P.  Johnson; Kirk D. Menard; Carol Herrnstadt Shulman; Kiki  Theodoropoulos; and Jason Trentacoste made key contributions to this  report.