Organizational changes are common within the federal government, occurring when federal missions change, when certain activities are to be emphasized or de-emphasized, and when a new organizational structure is needed to improve the effectiveness of federal programs. In effect, the types of federal organizations and their activities reflect shifting perceptions of national problems and how the government can best deal with them. Conferring Cabinet status on EPA would not in itself change the federal environmental role or policies, but it would clearly have an important symbolic effect. The United States is the only major industrial power without a Cabinet-level environmental organization. The additional visibility and prestige that comes with Cabinet status would send the symbolic, but important, message to other federal departments and foreign nations that the United States is fully committed to solving the most serious and complex domestic and global environmental problems. Determining which federal activities should receive emphasis at the highest levels of government is not a straightforward task. That is, the criteria are not clear-cut for determining the type of organizational structure that would be most suitable for establishing and carrying out federal policy and programs for the activities. Several factors, however, should be considered when deliberating the structure and role of federal organizations. For example, budgetary and staffing levels provide some measure of whether an organization’s programs warrant Cabinet-level emphasis. With an annual budget exceeding $7 billion and a staffing level of 18,000 employees, EPA is larger than several existing Cabinet-level departments. Other factors, although less quantifiable than budgetary and staffing levels, should also be considered in determining the most appropriate organizational structure for formulating and implementing federal polices and objectives. They include the (1) significance of the problems to be addressed, (2) the extent and level of interaction and coordination necessary with other federal departments, and (3) the need for international cooperation in formulating long-term policies. Such factors are clearly applicable to EPA’s role and responsibilities in managing the nation’s response to domestic and foreign environmental problems. In this regard: Environmental problems are often long-term, complex, and enormously expensive, and pose significant threats to human health and natural ecosystems. As one measure of economic impact, in 1990, EPA estimated that total pollution control expenditures in the United States by industry, government, and households in the late 1980s were between $100 billion and $120 billion annually in 1990 dollars. These estimated expenditures were for air and radiation, water, solid waste, hazardous waste, leaking underground storage tanks, Superfund sites, and pesticides and toxic substances. The agency projected that total expenditures would rise from 1.9 percent of the U.S. Gross Domestic Product (GDP) in 1987 to between 2.6 and 2.8 percent of the GDP by the year 2000. Even as our government tries to solve old environmental problems, new ones, such as global warming and the depletion of stratospheric ozone, demand increasing attention. It is likely that these issues will be even more difficult and expensive to solve. As the agency responsible for establishing environmental policy, EPA must interact regularly with the departments of Agriculture, Defense, Energy, the Interior, State, Transportation, and others. These agencies spend billions of dollars annually to comply with environmental laws and clean up past contamination. However, years of experience have demonstrated that these agencies do not always provide the support and cooperation necessary to further environmental goals. In this regard, environmental consequences were largely ignored at sites of the Department of Defense (e.g., in testing mustard gas at Spring Valley in Washington, D.C.); Department of Energy, (e.g., in using nuclear materials at Rocky Flats, Colorado); and Department of the Interior (e.g., in dealing with thousands of abandoned mines on federal lands). Such sites now are likely to cost the nation hundreds of billions of dollars to correct polluted conditions. Furthermore, jurisdictional conflicts have created roadblocks that are not conducive to cooperating with EPA and that have sometimes resulted in placing a low priority on environmental protection. Such conflicts could be addressed more effectively in the future by placing the head of the federal environmental organization on an equal footing with the heads of other federal departments. This would enable environmental issues to better compete with other national issues in policy, budgetary, and programmatic decisions as they are being made. International environmental problems involving climate change, stratospheric ozone depletion, and acid rain will require greater attention in the 21st century. On these and other issues, EPA’s key international functions include providing technical expertise to the State Department in integrating environmental policies into environmental treaties and foreign trade agreements. For example, under the Clean Air Act, EPA played a major role in implementing the Montreal Protocol by issuing administrative changes to the final rule to phase out ozone-depleting substances in 1995, and provides data and funding that support the protocol. Cabinet status for EPA could enhance the ability of the United States to provide leadership and assistance to the rest of the world by conveying that the nation recognizes the seriousness of domestic and global environmental problems, and that the problems are receiving adequate attention. Whether or not EPA becomes a Cabinet-level department, the challenges that await it are formidable. Department or agency, it must, first of all, pay greater attention to strategic human capital management to improve its performance and accountability in accomplishing its mission of protecting human health and the environment. It must also develop high-quality information to support its regulatory programs and measure environmental results. Finally, it must find alternatives to traditional regulatory approaches in order to streamline environmental requirements while encouraging more effective risk-based means of protecting the environment. In the past, EPA, like most federal agencies, has not made strategic human capital management an integral part of its strategic and programmatic approaches to accomplishing its mission. To emphasize our concern about and the importance of this area, in January 2001, we included human capital management as a newly designated governmentwide high-risk area. In addition, at the beginning of this month, we released to federal agencies our “Model of Strategic Human Capital Management”, to help agency leaders effectively lead and manage their people and integrate human capital considerations into daily decision-making and the program results they seek to achieve. We also note that the administration is giving increased attention to strategic human capital management. The President has placed human capital at the top of his management agenda and the Office of Management and Budget has assessed agencies’ progress in addressing their individual human capital challenges as part of its management scorecard. Agencies have also prepared workforce analyses as an initial phase of implementing the President’s initiative to have agencies restructure their workforces to streamline organizations To its credit, EPA is one of the agencies that recently has recognized the importance of human capital and made substantial progress in developing a strategy to more effectively manage its workforce. The agency is now in a good position to move forward during the next few years toward implementing the human capital activities that are associated with high- performing organizations. Nonetheless, several key actions will be necessary to ensure that EPA’s efforts to better manage its workforce become an integral part of the way it does business, and not just another paper exercise. In this regard, EPA must improve its strategic planning process to specifically address how human capital activities will help the agency achieve its goals, identify the specific milestones for completing actions to implement its human capital objectives, and establish results- oriented performance measures. In addition, EPA must more aggressively manage its workforce to obtain the economies, efficiencies, and effectiveness associated with determining the appropriate size of its workforce, the deployment of its staff geographically and organizationally, and the skills needed to support its mission. For example, in October 2001, we reported that without workforce planning and analysis, EPA was not able to determine the (1) appropriate workforce size, (2) balance between staff carrying out enforcement functions and staff providing technical and compliance assistance, and (3) location of regional staff needed to ensure that regulated industries receive consistent, fair, and equitable treatment throughout the nation. We also noted that the number of enforcement staff available to oversee state enforcement programs varied significantly among EPA’s 10 regions, raising questions about some regions’ ability to provide consistent levels of oversight to the states. As a result of our work, we recommended that the EPA Administrator collect and review complete and reliable information on regional workforce requirements and capabilities before transferring $25 million of EPA’s fiscal year 2002 budget for a new state enforcement grant program and eliminating 270 of EPA’s enforcement staff positions. (Citing our report, the Congress did not provide EPA with authority to carry out this transfer.) We also recommended that the EPA Administrator take agencywide actions to (1) develop a system for allocating and deploying EPA’s workforce, (2) target recruitment and hiring practices to fill critical needs for skills such as those for environmental engineering, toxicology, and ecology, and (3) implement training practices that provide a link between developmental opportunities and the competencies needed to accomplish EPA’s mission. EPA concurred with these recommendations and is in the process of implementing them. To ensure that it is meeting its mission effectively, EPA needs high-quality scientific and environmental information to establish priorities that reflect risks to human health and the environment, and that compare risk reduction strategies across programs and pollution problems. Such information is also needed to identify and respond to emerging problems before significant damage is done to the environment. While EPA has collected a vast amount of scientific and environmental data, much of the data is not complete and accurate enough to credibly assess risks and establish corresponding risk reduction strategies. Likewise, primarily because of inadequacies in its scientific and environmental data, EPA has not been successful in identifying, developing, and reaching agreement with its stakeholders on a comprehensive set of measures to link EPA’s activities to changes in human health and the environment. Spurred by the Government Performance and Results Act of 1993, (GPRA), EPA has made some progress in measuring the results (outcomes) of its programs but doing so has proved to be a difficult task for the agency, and relatively few outcome measures have been developed to date.