Environmental Protection Agency: Management Challenges and Budget Observations
Published: 2011-10-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Environmental Protection Agency (EPA) faces a number of management and budgetary challenges, which are particularly important as Congress seeks to decrease the cost of government while improving its performance. EPA operates in a highly complex and controversial regulatory arena, and its policies and programs affect virtually all segments of the economy, society, and government. From fiscal years 2000 through 2010, the agency's budget rose in nominal terms from $7.8 billion to $10.4 billion, but has remained relatively flat over this period in real terms. This testimony highlights some of the major management challenges and budgetary issues facing a range of EPA programs and activities today. This testimony focuses on (1) management of EPA's workload, workforce, and real property; (2) coordination with other agencies to more effectively leverage limited resources; and (3) observations on the agency's budget justifications. This testimony is based on prior GAO products and analysis..
section_title: What GAO Found
paragraphs: Recent GAO work has identified challenges with EPA's efforts to manage its workload, workforce, and real property and made recommendations to address these challenges. In 2010, GAO reported that EPA had not comprehensively analyzed its workload and workforce since the late 1980s to determine the optimal numbers and distribution of staff agencywide. GAO recommended, among other things, that EPA link its workforce to its strategic plan and establish mechanisms to monitor and evaluate their workforce planning efforts. A 2011 review of EPA's efforts to control contamination at hazardous waste sites found that the program was making progress toward its goals but that EPA had not performed a rigorous analysis of its remaining workload to help inform budget estimates and requests in line with program needs. Regarding real property management--an area that GAO has identified as part of its high-risk series--GAO reported that EPA operated a laboratory enterprise consisting of 37 laboratories housed in 170 buildings and facilities in 30 cities. GAO found that EPA did not have accurate and reliable information on its laboratories to respond to a presidential memorandum directing agencies to accelerate efforts to identify and eliminate excess properties. The report recommended that EPA address management challenges, real property planning decisions, and workforce planning. GAO has reported on opportunities for EPA to better coordinate with other federal and state agencies to help implement its programs. Given the federal deficit and the government's long-term fiscal challenges, it is important that EPA improve its coordination with these agencies to make efficient use of federal resources. In a September 2011 report on the Chesapeake Bay, GAO found that federal and state agencies were not working toward the same strategic goals and recommended that EPA establish a working group or formal mechanism to develop common goals and clarify plans for assessing progress. In a 2009 report on rural water infrastructure, GAO reported that EPA and six other federal agencies had funded water and wastewater projects in the U.S.-Mexico border region. GAO suggested that Congress consider establishing an interagency task force to develop a plan for coordinating this funding. These findings were included in GAO's March 2011 report to Congress in response to a statutory requirement for GAO to identify federal programs with duplicative goals or activities. Periodic GAO reviews of EPA's budget justifications have led to two recurring observations. First, with respect to proposals for new or expanded funding that GAO has examined, EPA has not consistently provided clear justification for the amount of funding requested or information on the management controls that the agency would use to ensure the efficient and effective use of requested funding. Second, GAO's reviews have found that EPA's budget justification documents do not provide information on funds from appropriations in prior years that were not expended and are available for new obligations. Such information could be useful to Congress because these funds could partially offset the need for new funding. The work cited in this testimony made a number of recommendations intended to address management and related budget challenges, including improving the agency's workforce and workload planning, as well as its coordination with other federal agencies. EPA generally agreed with these recommendations.

section_title: Letter
paragraphs: I am pleased to be here today to discuss management challenges and  budget considerations at the Environmental Protection Agency (EPA).  These challenges are particularly important as Congress and the  administration seek to decrease the cost of government while improving  its performance and accountability. EPA operates in a highly complex and  controversial regulatory arena, and its policies and programs affect  virtually all segments of the economy, society, and government.
EPA conducts its work under an array of environmental laws, including  the Clean Air and Clean Water Acts. Structurally, EPA comprises  headquarters offices largely aligned with its primary authorizing statutes  and 10 regional offices that help implement these statutes. From fiscal  years 2000 through 2010, the agency’s budget rose in nominal terms  from $7.8 billion to $10.4 billion, but has remained relatively flat over this  period in real terms. The four major categories of EPA spending in fiscal  year 2010 were: operating budget ($3.9 billion) for basic regulatory, research, and  enforcement activities;  infrastructure grants ($3.9 billion) providing financial assistance to  states, municipalities, interstate commissions, and tribal governments  to fund a variety of drinking water, wastewater, air, and other  environmental projects;  trust funds ($1.4 billion) from appropriations to pay for, among other  things, Superfund and leaking underground storage tank hazardous  waste cleanup when responsible parties are not available to pay; and  categorical grants ($1.1 billion) to states, tribes, nonprofit  organizations, and others for specific environmental programs,  including air and radiation, water, drinking water, hazardous waste,  and pesticides and toxic chemicals.
Thus, a substantial portion of the agency’s budget consists of grants to  state, local, tribal, and other partners.
My testimony today draws on our recent work, including our March 2011  testimony on EPA’s major management challenges,and observations  from our periodic reviews of EPA’s budget justification. Many of our prior  reports have included recommendations intended to improve the  management of EPA’s programs. EPA has generally agreed with our  recommendations. I will focus my remarks today on several key  management and budget issues at EPA, including (1) management of  EPA’s workload, workforce, and real property; (2) coordination with other  agencies to more effectively leverage limited resources; and (3)  observations on the agency’s budget justifications.
The first two sections of this statement are based on prior GAO work  issued from 2009 to 2011. We conducted the underlying performance  audits in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform audits 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. The third section of this  statement is based on the results of our reviews of EPA budget  justifications conducted in 2010 and 2011. The objective of our budget  justification reviews is to provide pertinent and timely information that  Congress can use during budget deliberations by raising questions about  specific programs in the President’s proposed budget. We conducted our  work in accordance with all sections of GAO’s Quality Assurance  Framework that were relevant to our objectives. The framework requires  that we plan and perform the engagement to meet our stated objectives  and to discuss any limitations in our work. We believe that the information  and data obtained, and the analysis conducted, provide a reasonable  basis for findings and conclusions in this product.
subsections: section_title: Management of EPA’s Workload, Workforce, and Real Property
paragraphs: With respect to its workload and workforce, EPA has struggled for years  to identify its human resource needs and to deploy its staff throughout the  agency in a manner that would do the most good. In 2010, we reported  that rather than establishing a process for budgeting and allocating  human resources that fully considered the agency’s workload, EPA  requested funding and staffing through incremental adjustments based  largely on historical precedent. We noted that the agency had not  comprehensively analyzed its workload and workforce since the late  1980s to determine the optimal numbers and distribution of staff  agencywide. Moreover, EPA’s human capital management systems had  not kept pace with changing legislative requirements and priorities,  changes in environmental conditions in different regions of the country,  and the much more active role that states now play in carrying out the  day-to-day activities of federal environmental programs. We  recommended, among other things, that EPA link its workforce plan to its  strategic plan and establish mechanisms to monitor and evaluate its  workforce planning efforts. EPA generally agreed with these  recommendations.
Our recent work has also identified additional challenges related to  workload and workforce management. For example, in July 2011, we  reported that EPA had made considerable progress in meeting goals to  contain and control contamination at high-risk hazardous waste sites.  We also reported, however, that EPA had not rigorously analyzed its  remaining workload or the resources it needed to meet its cleanup goals.  We recommended that EPA assess its remaining cleanup workload,  determine whether the program has adequate resources, and take steps  to reallocate its resources or revise its goals. An assessment could also  help EPA develop budget estimates and requests that align with program  needs. EPA agreed with the recommendation.
Also in July 2011, we identified challenges EPA faces in managing its  laboratories and its related workforce. EPA operates a laboratory  enterprise consisting of 37 laboratories housed in 170 buildings and  facilities located in 30 cities across the nation. We reported that EPA had  not fully addressed findings and recommendations of independent  evaluations of its science activities dating back to 1992 and that its  laboratory activities were largely uncoordinated. We also found that,  consistent with our 2010 report on workforce planning, EPA did not use a  comprehensive planning process for managing its laboratories’ workforce.  Specifically, we reported that EPA did not have basic information on its  laboratory workload and workforce, including demographic data on the  number of federal and contract employees working in its laboratories.  Without such information, we reported, EPA could not successfully  undertake succession planning and management to help the organization  adapt to meet emerging and future needs. Because of the challenges  identified in this report, we made recommendations to address workforce  and workload planning decisions. EPA generally agreed with our findings  and recommendations.
In September 2010, we reported on EPA’s library network and found that  EPA had not completed a plan identifying an overall strategy for its  libraries, implementation goals, or a timeline. EPA had developed a draft  strategic plan, but it did not describe how funding decisions were made.  We reported that setting out details for such decisions, to ensure that they  are informed and transparent, was especially important because of the  decentralized nature of the library network. We recommended, among  other things, that EPA complete its strategic plan for the library network,  including implementation goals and timelines. As part of this effort, we  recommended that EPA outline details for how funding decisions were to  be made to ensure they are informed and transparent. EPA concurred  with our recommendations.
Finally, our July 2011 report on EPA laboratories also identified  challenges related to EPA’s management of its real property. Federal real  property management is an area we have identified as part of our high- risk series because of long-standing problems with over reliance on  leasing, excess and underused property, and protecting federal facilities.  The need to better manage federal real property was underscored in a  June 2010 presidential memorandum that directed agencies to accelerate  efforts to identify and eliminate excess properties to help achieve a total  of $3 billion in cost savings by 2012. In July 2010 EPA reported to the  Office of Management and Budget (OMB) that it did not anticipate the  disposal of any of its owned laboratories and major assets in the near  future because these assets were fully used and considered critical for  the mission of the customer and agency as a whole. However, we found  that EPA did not have accurate and reliable information called for by OMB  on (1) the need for facilities, (2) property use, (3) facility condition, and (4)  facility operating efficiency, to inform such a determination. We made  several recommendations for EPA to improve its physical infrastructure  and real property planning, including improving the completeness and  reliability of operating-cost and other data needed to manage its real  property and report to external parties. EPA concurred with the  recommendations.
section_title: Coordination with Other Agencies to More Effectively Leverage Limited Resources
paragraphs: EPA relies on other federal and state agencies to help implement its  programs. Given the federal deficit and the government’s long-term fiscal  challenges, it is important that EPA improve coordination with its federal  and state partners to reduce administrative burdens, redundant activities,  and inefficient uses of federal resources. We have identified key practices  for enhancing and sustaining collaboration among federal agencies, such  as establishing the roles and responsibilities of collaborating agencies;  leveraging their resources; and establishing a process for monitoring,  evaluating, and reporting to the public on the results of collaborative  efforts.
In a September 2011 report on Chesapeake Bay restoration efforts, for  example, we found that federal and state agencies were not working  toward the same strategic goals. We also surveyed federal officials who  said that some form of collaboration was necessary to achieve the goals  of a strategy for protecting and restoring the Chesapeake Bay watershed.  This collaboration could be between federal agencies, federal and state  agencies, or federal agencies and other entities. We recommended,  among other things, that EPA work with federal and state stakeholders to  develop common goals and clarify plans for assessing progress. EPA  generally agreed with the recommendations.
In an August 2011 report on pharmaceuticals in drinking water, we found  that an interagency work group of eight federal agencies (including EPA)  tasked with developing a better understanding of the risks from  pharmaceuticals in drinking water and identifying areas for future federal  collaboration had disbanded in 2009 without producing a final report.  We also reported that EPA coordinated informally with the Food and Drug  Administration and the United States Geological Survey to collect data  that could support regulatory decisions, but it did not have a formal  mechanism for sustaining this collaboration in the future. We  recommended that EPA establish a work group or formal mechanism to  coordinate research on pharmaceuticals in drinking water. EPA agreed  with the recommendation.
In a 2009 report on rural water infrastructure, we reported that, from fiscal  years 2000 through 2008, EPA and six federal agencies obligated $1.4  billion for drinking water and wastewater projects to assist communities in  the U.S.-Mexico border region. We found that the agencies’ efforts to  fund these projects were ineffective because the agencies, except the  Indian Health Service, had not comprehensively assessed the region’s  needs and did not have coordinated policies and processes for selecting  and building projects. As a result, we suggested that Congress consider  establishing an interagency task force to develop a plan for coordinating  funding to address the region’s most pressing needs.
Related to our findings on interagency coordination issues, our past and  present work seeks to assist Congress and federal agencies in identifying  actions needed to reduce duplication, overlap, and fragmentation;  achieve cost savings; and enhance revenues. In March 2011, we issued  our first annual report to Congress in response to a new statutory  requirement that GAO identify federal programs, agencies, offices, and  initiatives—either within departments or government-wide—which have  duplicative goals or activities. The report identified 34 areas where  agencies, offices, or initiatives had similar or overlapping objectives or  provided similar services to the same populations or where government  missions were fragmented across multiple agencies or programs. The  report also identified 47 additional areas—beyond those directly related to  duplication, overlap, or fragmentation—offering other opportunities for  agencies or Congress to consider taking action that could either reduce  the cost of government operations or enhance revenue to the Treasury.  With respect to EPA, the report included our findings on rural water  infrastructure, as well as the agency’s role in duplicative efforts to support  domestic ethanol production.
Related to the statutory requirement that GAO identify and report on  federal programs, agencies, offices, and initiatives with duplicative goals  or activities, we are monitoring developments in the areas already  identified and will address any additional significant instances of  duplication as well as opportunities for cost savings in future annual  reports. We are developing a methodology to ensure that we conduct a  systematic review across the federal government and report on the most  significant instances of duplication, overlap, or fragmentation through the  issuance of annual reports in 2012 and 2013, as well as the report we  issued in March 2011. Our 2012 and 2013 reports will include the results  of present and planned work related to EPA.
section_title: Observations on EPA’s Budget Justifications
paragraphs: In addition to our published work, we periodically assist appropriations  and authorizing committees by reviewing agency budget justification  documents. To this end, we review agencies’ budget requests, conduct  selected analyses, and evaluate the support for and adequacy of  agencies’ justifications for these requests. We often review the  justification for programs of congressional interest, new programs and  initiatives, and existing programs and practices. We typically provide the  results of our analysis in data sheets or briefings to appropriating and  authorizing committees.
Over the years, our periodic review of EPA’s budget justification  documents has led to two recurring observations. First, EPA has not  consistently provided detailed justification for its activities when  requesting new or expanded funding. In some cases, we have noted that  such requests have not included (1) clear justification for the amount of  funding requested or a detailed description of the type and scope of  activities the funding would support, or (2) information on the  management controls, such as a schedule for spending the requested  funds, EPA would use to ensure the efficient and effective use of  requested funding.
Second, our reviews have often focused on the agency’s efforts to make  use of unliquidated balances, or those funds that have been appropriated  and properly obligated but not expended. In particular, this situation  results from circumstances where no-year budget authority was obligated  to a contract, grant, or interagency agreement that has expired with some  level of funding remaining unexpended. Over the years, we have  encouraged EPA to recover these unliquidated amounts through a  process known as “deobligation.” When EPA deobligates funds from  expired contracts, grants, or interagency agreements, it can “recertify”  and re-use these funds, subject to certain restrictions, assuming the  amounts have not expired and remain available for new obligations. Use  of recertified funds can offset some need for new funding. Over the years,  we have observed that EPA has made progress in its efforts to recover  unliquidated funds from expired contracts, grants, and interagency  agreements. For example, in 2010, EPA deobligated and recertified about  $163 million, primarily in its Superfund, State and Tribal Assistance  Grants, and Leaking Underground Storage Tanks accounts. While we  have observed progress in recovering these funds, we have also  observed that EPA’s budget justification documents do not describe the  amount of deobligated and recertified funding available for new  obligations. We have also observed that such information could be useful  to Congress because the availability of recertified amounts could partially  offset the need for new funding.
Chairman Stearns, Ranking Member DeGette, and Members of the  Subcommittee, this concludes my prepared statement. I would be  pleased to answer any questions that you may have at this time.
section_title: Staff Contact and Acknowledgments
paragraphs: For further information about this testimony, please contact David Trimble  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 statement. Contributors to this testimony include Michael Hix  (Assistant Director), Ross Campbell, Ellen W. Chu, Tim Guinane, Kristin  Hughes, Karen Keegan, Felicia Lopez, Jamie Meuwissen, and Cheryl  Peterson.
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