DOD’s operations at military installations and other defense sites in the United States are subject to the same environmental laws and regulations, such as the Clean Air Act and the Clean Water Act, as is private industry. Additionally, DOD policy calls for its organizational components to achieve, maintain, and monitor compliance with all applicable executive orders, as well as all federal, state, and local statutory and regulatory requirements. DOD has an environmental quality program to address these requirements, which fall into three main categories: (1) environmental compliance activities; (2) pollution prevention activities; and (3) conservation activities, such as the protection of natural and cultural resources present on military installations. DOD has developed and implemented policies for activities in each major program category. By far, the majority of DOD’s investment in its environmental quality program is for its environmental compliance requirements. For example, in fiscal year 2002, about 81 percent of DOD’s investment of more than $2 billion in the environmental quality program was for compliance activities, including personnel costs for the entire program; 11 percent was for pollution prevention; and 8 percent was for conservation activities. (See fig. 1.) Funding allocated to the environmental quality program in recent years has come largely from DOD’s appropriation for operation and maintenance activities. This appropriation account funds a diverse set of activities, including military training, depot maintenance, base operations support, and real property maintenance. The funding allocated to the environmental quality program from the operations and maintenance account may be used for other, nonenvironmental, purposes as needed by the services or installations. For example, once funding for operations and maintenance activities, including environmental quality activities, has been allocated to an installation commander, the commander has the authority to use these funds as necessary for the needs of the installation. Likewise, if funding allocated to an installation by the service or the major command for environmental quality activities is not sufficient to ensure that the installation remains in compliance with its environmental requirements, the installation commander has the authority to reallocate funds to the environmental quality program. Installation commanders are responsible for ensuring that their installations are in compliance with environmental requirements. The installations are responsible for identifying all regulations and other environmental requirements that apply to them, and identifying and tracking pending requirements. To carry out their environmental responsibilities, the installation commanders are typically supported by an environmental program office, including staff with expertise in various environmental areas such as air, water, or hazardous waste. Managers for these areas are responsible for identifying current and pending environmental requirements applicable at their installation. Additionally, DOD has regional environmental offices that assist installations in identifying current and pending environmental requirements, particularly at the state and local levels. Officials at each installation develop a list of planned activities, along with the priority levels and estimated costs of these activities, for the installation’s environmental quality program for the upcoming 6 fiscal years. The greatest emphasis and detail is provided for those activities for funding in the first 2 fiscal years, called the budget years. DOD’s environmental quality policy uses the following classification system to prioritize environmental activities: Class 0 activities are recurring activities needed to keep an environmental program running and meet compliance requirements, such as employee salaries, costs of environmental permits, and office supplies. Class I activities are nonrecurring projects and activities that must be funded in the current program year (and, in some cases, up to several years in the future to complete the project or activity) to correct noncompliance with an environmental requirement or to ensure that the installation will remain in compliance. Class II activities are those that have compliance deadlines, but these deadlines will not occur until after the current budget year. Class III activities are typically referred to as “nice to have” activities that address overall environmental goals and objectives, but are not necessary for an installation to remain in compliance with environmental requirements. Based on DOD’s policy, the services have developed prioritization systems for making funding decisions. Consistent with DOD policy, Army and Air Force policies specify that Class 0 and Class I activities must be funded. Similarly, the Navy and Marine Corps also have a policy of funding all Class 0 and I activities, according to service officials, but their official program policy guidance does not mention this. Consistent with DOD policy, the services also require that selected Class II activities be funded in time to ensure compliance with future requirements. None of the services’ policies require funding of Class III activities. In this report, “must fund” Class 0 and I activities are referred to as high-priority activities. DOD’s policy does not differentiate among activities within Class 0 and Class I. For example, because any unfunded Class I activity will result in noncompliance with an environmental requirement, all Class I activities have equal weight as “must fund” activities, according to DOD’s policy. However, in addition to the priority categories described above, some major commands have developed their own, more detailed prioritization approaches to help ensure that the most important environmental activities will be funded before other, less important activities within the same class. These approaches are intended to rank proposed environmental activities by their relative importance. These approaches emphasize somewhat different considerations, such as the risk of harm to human health or the environment should an activity not be funded, or the risk of receiving a notice of violation from a regulator if the installation is out of compliance with an environmental requirement. After the environmental program’s staff has identified, prioritized, and estimated the costs of proposed activities, the list of proposed activities may be reviewed by other installation officials, such as legal staff or the installation commander. The list is then forwarded to the next higher command level for its approval. For the Air Force, Army, and Navy, this next higher level is the major command, while Marine Corps installations forward their proposed environmental budgets directly to their environmental program’s headquarters. In some cases, the major command disagrees with the priority level that an installation assigned to an activity or the funding level that the installation requested. The command, or headquarters, in the case of the Marine Corps, may disapprove, or “invalidate,” a proposed activity for environmental funding, revise the funding level estimate (either up or down), or change the priority level. The major command consolidates the requests from each installation under its authority, then submits a commandwide request to its service headquarters. The service headquarters are involved to differing degrees in reviewing the details of the installations’ environmental requests. The Air Force’s environmental staff rely on the reviews of individual proposed activities by their major commands. As mentioned above, the Marine Corps’ environmental office is involved in assessing and prioritizing proposed activities at installations. The Navy’s environmental staff reviews proposed activities to assess whether they are legally required to undertake them, whether the cost estimates are reasonable, and whether the proposed time frames for completing the activities are realistic. The Army’s environmental staff reviews selected environmental activities that were approved by the major commands. Army headquarters officials told us that they expect to expand their review to all activities approved by their major commands now that they have automated their database of proposed environmental activities. Next, the Office of the Secretary of Defense reviews the environmental quality program budget requests. The Secretary’s office does not review these budgets on a project-by-project basis; instead, its review focuses on the services’ overall environmental compliance track records and whether the proposed budgets will serve to continue to improve each service’s compliance performance. Finally, the estimates for the environmental quality program budget are incorporated into each service’s estimate of its overall needs, and DOD’s overall budget request is included in the annual presidential budget request to the Congress. Based on broad DOD policy, each military service has established its own policy and processes to implement the environmental quality program. Specifically, the four services have developed somewhat different criteria under their policies and practices for determining which activities are eligible for funding through their environmental quality programs and which activities are funded. Given these differences, DOD cannot be certain that it is funding the most important and appropriate activities across the services and, likewise, the services cannot ensure that they are devoting program funds to the most important and appropriate environmental activities at their installations. DOD’s policy provides the services with a broad charge to comply with applicable environmental requirements, such as statutes and regulations, but leaves to the services most decisions about which activities are appropriate for funding through their environmental quality programs. We found that the services’ varying interpretations of this policy have resulted in different eligibility requirements and in funding of activities through the environmental quality program that may have been more closely related to military operations or maintenance. Although the services have developed policies intended, in part, to clarify which activities can be funded through the environmental quality program, implementation of these policies has sometimes led to inconsistencies across the services in the types of activities they determine eligible for funding. Also, some of the services or their organizational components have developed additional guidance to assist installations in determining whether certain activities can be funded through their environmental quality programs. For example, the Air Force’s Environmental Quality Programming Matrix provides an extensive listing of activities and indicates whether or not each is valid for environmental quality program funding. The Navy’s Pacific Fleet has similarly developed guidance, its Policy on Environmental Issues Matrix, to help clarify what is eligible for environmental funding. The Pacific Fleet’s guidance also indicates who should pay for activities that are not eligible for environmental quality program funding, something that the Air Force matrix does not address. While these efforts to provide additional guidance are helpful to the individual services’ environmental quality program managers, they do not address or resolve the cross-service inconsistencies on what activities are eligible for funding. For example, we found the following differences in program eligibility: Environmental impact statements. Under the National Environmental Policy Act (NEPA), the military services are required to assess the environmental effect of their major proposed actions, such as new construction or certain military training on their installations. The Navy’s and Air Force’s environmental quality programs consider NEPA-required environmental assessments or environmental impact statements as high-priority environmental activities.