[Senate Hearing 109-1046]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 109-1046
 
                      EPA REGIONAL INCONSISTENCIES 

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 28, 2006

                               __________

  Printed for the use of the Committee on Environment and Public Works


Available via the World Wide Web: http://access.gpo.gov/congress.senate

                               __________

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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED NINTH CONGRESS
                             SECOND SESSION

                  JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia             JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio            JOSEPH I. LIEBERMAN, Connecticut
LINCOLN CHAFEE, Rhode Island         BARBARA BOXER, California
LISA MURKOWSKI, Alaska               THOMAS R. CARPER, Delaware
JOHN THUNE, South Dakota             HILLARY RODHAM CLINTON, New York
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
JOHNNY ISAKSON, Georgia              BARACK OBAMA, Illinois
DAVID VITTER, Louisiana
                Andrew Wheeler, Majority Staff Director
                 Ken Connolly, Minority Staff Director

                                  (ii)

  







































                            C O N T E N T S

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                                                                   Page

                        WEDNESDAY, JUNE 28, 2006
                           OPENING STATEMENTS

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     1
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..     4
Obama, Hon. Barack, U.S. Senator from the State of Illinois......    25
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................    12

                               WITNESSES

Nakayama, Grant, Assistant Administrator, Office of Enforcement 
  and Compliance Assurance, U.S. Environmental Protection Agency.     6
    Prepared statement...........................................    32
    Responses to additional questions from:
        Inhofe...................................................    36
        Jeffords.................................................    45
        Voinovich................................................    47
Paylor, David, Executive Director, Virginia Department of 
  Environmental Quality, Officer, Environmental Council of States    22
    Prepared statement...........................................    63
    Response to additional questions from Senator Jeffords.......    67
Payne, Jean, President, Illinois Fertilizer and Chemical 
  Association....................................................    15
    Prepared statement...........................................    49
Schaeffer, Eric, Director, Environmental Integrity Project.......    20
    Prepared statement...........................................    60
    Response to additional questions from Senator Jeffords.......    62
Stephenson, John, Director, Natural Resources and Environment, 
  U.S. Government Accountability Office..........................     8
    Prepared statement...........................................    69
    Response to additional questions from Senator Jeffords.......    76
Waterman, Richard W., Chair, Department of Political Science, 
  University of Kentucky.........................................    18
    Prepared statement...........................................    55
    Response to additional questions from Senator Jeffords.......    58
Welsh, Donald, Regional Administrator, Region III, U.S. 
  Environmental Protection Agency................................     7
    Prepared statement...........................................    32

                          ADDITIONAL MATERIAL

Chart, Percentage of Total Regulated Facilities Inspected Under 
  the Clean Air Act During Fiscal Year 2000, by EPA Region.......    72
Document, In the United States District Court for the Southern 
  District of Illinois; Memorandum and Order.....................    97
Letters:
    A-way........................................................    81
    Asmark Institute.............................................    82
    At Arrowsmith................................................    85
    Calendonia Farmers Elevator..................................    86
    Cooperative Gas & Oil Co., Inc...............................    88
    Earlville Farmer's Co-Operative; Crop Production Center......    89
    Effingham Equity.............................................    90
    Har Brand Inc................................................    91
    Kohlbrecher Truck Service, Inc...............................    92
    M & M Service Company........................................    93
    Mont Eagle Mills, Inc........................................    94
    Okaw Farmers COOP............................................    95
    Tarter Feed & Fertilizer.....................................    96
Table:
    ECOS's Recommended Delineation of Appropriate Roles.......... 66-67
    SBA-funded study; The Impact of Regulatory Costs on Small 
      Firms......................................................    77


                      EPA REGIONAL INCONSISTENCIES

                              ----------                              


                        Wednesday, June 28, 2006

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m. in room 
628, Dirksen Senate Office Building, Hon. James M. Inhofe 
(chairman of the committee) presiding.
    Present: Senators Inhofe, Warner, Jeffords, and Obama.

 OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM 
                     THE STATE OF OKLAHOMA

    Senator Inhofe. The meeting will come to order. Our policy 
is to start on time. We have done that 100 percent of the time 
so far, so we want to keep it up.
    Today we are going to take a hard look at the 
organizational structure of the EPA and whether it contributes 
to damaging and unfair practices against States and businesses. 
I am referring to the regional structure that divides the 
Agency into 10 different geographic areas, each one having 
about a thousand EPA career employees. Because of this design, 
the EPA regions are notoriously autonomous and have been known 
to advance their own priorities and agenda.
    Some regional flexibility is necessary; however, when 
regions make their own determination of law we end up with 10 
different sets of rules for regulated communities throughout 
the country. This is unfair to similarly situated businesses 
located in different regions. For example, the businesses in a 
particularly aggressive region must comply with requirements 
that the same businesses in another region don't have to comply 
with.
    The GAO will inform us of their studies on this issue and 
what they believe EPA could do to address this.
    We will also hear today of an example of a renegade region 
whose interpretation of laws is not only contrary to national 
practice and standards but has been openly questioned by 
Congress and the Judicial Branch.
    When District Judge Gilbert threw out the Region V 
pesticide criminal case filed days before the statute of 
limitations ran, he questioned the Government's judgment in 
filing a case and declared the statute unconstitutionally vague 
as applied. Unfortunately, this was after the defendant, Wabash 
Valley, a farmer-owned co-op, had paid over $220,000 to defend 
itself. The Wabash Valley, however, was willing to spend any 
amount of money to keep their pesticide applicator out of jail 
for allegedly ``applying pesticide in a manner inconsistent 
with its labeling.''
    Another troubling incident occurred this past December. The 
Illinois agriculture community was shocked when Region V 
determined that the entire fertilizer retail industry, 
approximately 500 members, was not in compliance with the Clean 
Air Act because they did not include so-called ``nurse tanks'' 
in their risk management plans. This Region V requirement was 
never communicated to the agriculture community and is not 
required in other regions.
    In fact, Region V's first contact with the fertilizer 
retailers was to send enforcement letters to the members who 
had bothered to file the RMPs, only threatening $32,500 a day 
penalties. Incredibly, these letters were mailed right before 
the Christmas holidays. Consequently, it was a very difficult 
thing to try to comply with.
    Jean Payne, the president of the Illinois Fertilizer and 
Chemical Association, is here to provide the facts of this 
story, and we want to hear this. As a former businessman, 
myself, I can speak to challenges of disputing the Federal 
Government and bureaucracies like the EPA. It is not hard to 
imagine the level of fear and uncertainty that accompanies 
letters like these for the average citizen. I became aware of 
this situation immediately after the fertilizer retailers 
received the letter, and I opened an inquiry as chairman of the 
committee of jurisdiction. I felt that someone had to do this.
    We remember the other things that have happened in the 
past, Senator Jeffords, when you and I sat up here and heard 
the testimony of a guy named Jimmy Dunn who had a lumber 
company where they were going to impose penalties on him on a 
daily basis that would have put him out of business after three 
generations of his family running the company, in a matter of 
about 40 days.
    Senator Jeffords. Yes.
    Senator Inhofe. It is the fear factor that is always out 
there of the bureaucracy doing something that is going to take 
away your livelihood.
    Finally, another important aspect that requires review when 
evaluating the EPA's regions and bureaucratic factor: does the 
presence of only one Administration appointee hamper effective 
policy implementation? To what extent are unelected officials 
setting policy in these regions? If bureaucrats are managing 
the regions, how can we be sure that the public's wishes are 
translated into policy and realistically implemented?
    I am a firm believer that elected officials who answer to a 
constituency can best manage according to the public's will. 
Dr. Richard Waterman, author of the book ``Bureaucrats, 
Politics, and the Environment,'' is here today to help us 
understand the nuances accompanying the EPA bureaucracy and the 
strength of their voice in Government today.
    With unlimited resources, the EPA must be mindful of 
prosecution techniques that can actually survive judicial 
scrutiny. We should not hear about cases that are thrown out 
with judicial commentary chastising Government for filing a 
criminal case. I will continue to oversee the EPA's regional 
activities to ensure that we are effectively protecting the 
environment, as well as our citizens.
    In a note to Mr. Schaeffer on the second panel--I am glad 
to see you back here once again. You have become quite a 
spokesman for the environmentalists since your departure from 
the EPA in 2002 when you resigned in protest of the 
Administration's policies. In your testimony you criticize the 
purpose of today's hearing as being motivated by the Region V 
example from last December. My staff began this oversight 
initiative over a year ago, more than 6 months before the 
Region V example took place. They discovered the problem in 
Region V during the investigation.
    It is my intention that today's hearing will be the first 
in a series over the next 2 years looking at how the EPA 
bureaucracy operates. I am considering field hearings at the 
EPA's regional offices and legislation, if needed, to ensure 
that we get measurable results in reforming the EPA's regions 
in their inconsistent, detrimental approach to environmental 
laws.
    This is a problem. I have mentioned only Region V when, in 
fact, there are problems in other regions, too. I think that a 
bureaucracy can become abusive and there has to be some 
consistent policy and regulations between the various regions. 
That is the whole purpose of this hearing.
    [The prepared statement of Senator Inhofe follows:]

            Statement of Hon. James M. Inhofe, U.S. Senator 
                       from the State of Oklahoma
    Today we are going to take a hard look at the organizational 
structure of the EPA and whether it contributes to damaging and unfair 
practices against States and businesses. I am referring to the regional 
structure that divides the Agency into 10 different geographical 
regions headed by a Regional Administrator managing approximately 1,000 
EPA career employees. Because of this design, EPA regions are 
notoriously autonomous and have been known to advance their own 
priorities and agendas. Some regional flexibility is necessary. 
However, when regions make their own determination of law, we end up 
with 10 different sets of rules for the regulated communities 
throughout the country. This is unfair to similarly situated businesses 
located in different regions. For example, businesses in a particularly 
aggressive region must comply with requirements that the same 
businesses in another region do not. The GAO will inform us of their 
studies on this issue and what they believe EPA could do to address 
this.
    We will also hear today of an example of a renegade region whose 
interpretation of laws is not only contrary to national practice and 
standards but has been openly questioned by Congress and the Judicial 
Branch. [SEE CHART] When District Judge Gilbert threw out a Region V 
pesticide criminal case--filed days before the statue of limitations 
ran--he questioned the Government's judgment in filing the case and 
declared the statute unconstitutionally vague as applied. 
Unfortunately, this was after the defendant, Wabash Valley, a farmer-
owned co-op, paid over $220,000 to defend itself. Wabash Valley, 
however, was willing to spend any amount of money to keep their 
pesticide applicator out of jail for allegedly ``applying pesticide in 
a manner inconsistent with its labeling.''
    Another troubling incident occurred this past December. The 
Illinois agriculture community was shocked when Region V determined 
that the entire fertilizer retail industry--approximately 500 members--
was not in compliance with the Clean Air Act because they did not 
include so-called nurse tanks in their Risk Management Plans. This 
Region V requirement was never communicated to the Ag. Community and is 
not required in other regions. In fact, Region V's first contact with 
the fertilizer retailers was to send enforcement letters to the members 
who had bothered to file RMPs only, threatening fines of $32,500 per 
day. [SEE CHART] Incredibly, the letters were mailed out on December 15 
and gave the rural businessmen and women only 10 days to respond over 
the Christmas holidays. [SEE CHART] Jean Payne, the President of the 
Illinois Fertilizer and Chemical Association, is here to provide the 
facts of this story.
    [The referenced document can be found on pages 97-125.]
    As a former businessman myself, I can speak to the challenges of 
disputing the Federal Government and bureaucracies like the EPA. It is 
not hard to imagine the level of fear and uncertainty that accompanies 
letters like these for the average citizen. I became aware of the 
situation immediately after the fertilizer retailers received the 
letters and I opened an inquiry as Chairman of the Committee of 
Jurisdiction. I felt that someone had to help these farmers deal with 
the EPA.
    Consequently, there are many important lessons we can learn from 
studying the EPA regional structure and how inconsistent enforcement 
impacts the regulated community, the States, and their relationship 
with one another. I am interested to hear from the States' 
perspective--through Dave Paylor, the Director of the Virginia DEQ--how 
the EPA regions affect their ability to effectively monitor and enforce 
the environmental laws.
    Finally, another important aspect that requires review when 
evaluating the EPA regions is the bureaucracy factor. Does the presence 
of only one Administration appointee hamper effective policy 
implementation? To what extent are unelected officials setting policy 
in the regions? If bureaucrats are managing the regions, how can we be 
sure that the public's wishes are translated into policy and 
realistically implemented? I am a firm believer that elected officials 
who answer to a constituency can best manage according to the public's 
will. Dr. Richard Waterman, author of the book Bureaucrats, Politics, 
and the Environment, is here today to help us understand the nuances 
accompanying the EPA bureaucracy and the strength of their voice in 
Government today.
    With unlimited resources, the EPA must be mindful of prosecution 
tactics that can actually survive judicial scrutiny. We should not hear 
about cases that are thrown out with judicial commentary chastising the 
Government for filing a criminal case. I will continue to oversee the 
EPA regional activities to ensure that we are effectively protecting 
the environment as well as our citizens.
    And a note to Mr. Schaeffer on the second panel, glad to see you 
back here once again. You have become quite a spokesperson for the 
environmentalists since your departure form the EPA in 2002 when you 
``resigned in protest'' of the Administration's policies. In your 
testimony you criticize the purpose of today's hearing as being 
motivated by the Region V example from last December. My staff began 
this oversight initiative over a year ago and more than 6 months before 
the Region V example took place. They discovered the problem in Region 
V during the investigation.
    It is my intention that today's hearing will be the first in a 
series over the next 2 years looking at how the EPA bureaucracy 
operates. I am considering field hearings at the EPA Regional offices 
and legislation if needed to ensure that we get measurable results in 
reforming the EPA regions and their inconsistent, detrimental approach 
to our environmental laws.

    Senator Inhofe. Senator Jeffords.

OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Senator Jeffords. Thank you, Mr. Chairman. I share your 
interest in learning more about the important patterns within 
the Environmental Protection Agency. I welcome efforts to 
determine whether EPA regions enforce our environmental laws 
differently. But I am afraid that today's hearing will not 
accomplish that goal. Instead, we are here to discuss an 
isolated incident in one State. This one example tells us 
little about EPA's enforcement and a lot about one case that 
has pitted the regulators against those who are regulated.
    We are here to discuss the plight of Illinois' fertilizer 
retailers who failed to adequately file risk management plans 
for the storage of dangerous chemicals. I believe we all agree 
that these risk management plans are essential to aiding first 
responders and protecting those who live near these facilities 
in the event of an emergency. Congress should support the 
Agency's efforts to administer this program.
    I would hope we could expand this hearing to include 
discussion about the gaps in the enforcement in many regions of 
the Country. Perhaps more importantly, we should examine 
whether the lack of enforcement adversely affects human health 
and the environment.
    We know that there must be some flexibility in EPA's 
regional enforcement structure. Quite simply, some regions face 
challenges that others do not. Managing this flexibility is 
sometimes difficult and has likely led to inconsistent 
enforcement actions within the same community. What causes 
these inconsistencies? What variables affect enforcement 
decisions? I asked earlier, how do those inconsistencies affect 
human health and the environment?
    I had hoped today to begin to answer some of these 
questions. I hope that in the future hearings we may begin to 
address them.
    Thank you, Mr. Chairman and thanks to our witnesses for 
participating here today.
    [The prepared statement of Senator Jeffords follows:]

           Statement of Hon. James M. Jeffords, U.S. Senator 
                       from the State of Vermont
    Thank you Mr. Chairman. I share your interest in learning more 
about the enforcement patterns within the Environmental Protection 
Agency.
    I welcome efforts to determine whether the EPA regions enforce our 
environmental laws differently. I am afraid that today's hearing will 
not accomplish that goal. Instead, we are here to discuss an isolated 
incident, in one State. This one example tells us little about the 
EPA's enforcement, and a lot about one case that has pitted the 
regulators against those who are regulated.
    We are here to discuss the plight of Illinois fertilizer retailers 
who failed to adequately file risk management plans for the storage of 
dangerous chemicals.
    I believe we all agree that these risk management plans are 
essential to aiding first responders, and to protecting those who live 
near these facilities in the event of an emergency. Congress should 
support the Agency's efforts to administer this program.
    I would hope we could expand this hearing to include a discussion 
about the gaps in enforcement in many regions of this country. Perhaps 
more importantly, we should be examining whether the lack of 
enforcement adversely affects human health and the environment.
    We know that there must be some flexibility in the EPA's regional 
enforcement structure. Quite simply, some regions face challenges that 
others do not.
    Managing this flexibility is sometimes difficult, and has likely 
led to inconsistent enforcement actions within the same community.
    What causes these inconsistencies? What variables affect 
enforcement decisions? And as I asked earlier, how do these 
inconsistencies affect human health and the environment?
    I had hoped to begin to answer some of these questions today. I 
hope that in future hearings, we can begin to address them.
    Thank you again Mr. Chairman, and thank you to our witnesses for 
participating in today's hearing.

    Senator Inhofe. Thank you, Senator Jeffords.
    We are going to be joined by other members. I think that 
what we have tried to do in the past, unless someone objects, 
when they get here we will only submit opening statements for 
the record for those who are not here on time.
    On our first panel, we have Grant Nakayama. We appreciate, 
Mr. Administrator, your being here. We have Donald Welsh, the 
Regional Administrator of Region III; John Stephenson, Director 
of Natural Resources and Environment from the GAO. We 
appreciate your being here very much.
    We will start with statements. Try to confine them to 5 
minutes, and your entire statement will be made a part of the 
record.
    We will start with you, Mr. Administrator.

STATEMENT OF GRANT NAKAYAMA, ASSISTANT ADMINISTRATOR, OFFICE OF 
   ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S. ENVIRONMENTAL 
                       PROTECTION AGENCY

    Mr. Nakayama. Thank you, Mr. Chairman. Good morning.
    Mr. Chairman and members of the committee, I am Grant 
Nakayama, EPA Assistant Administrator for Enforcement and 
Compliance Assurance. With me today is Donald Welsh, Regional 
Administrator for EPA Region III in Philadelphia. We appreciate 
the opportunity to discuss how EPA ensures consistent 
enforcement of Federal environmental laws throughout the United 
States.
    First, let me state that I believe that consistent 
enforcement of our environmental laws is a very important goal. 
It is my job to oversee responsible and consistent enforcement 
of our environmental laws, and I take it very, very seriously.
    EPA works hard to ensure a level playing field across the 
country when enforcing environmental laws. Unfair disparity in 
the application of the law is not acceptable, and I am 
committed to working to address and reduce instances of unfair 
disparity.
    Second, responsible implementation of environmental laws 
requires a degree of regional flexibility, as I am sure my 
colleague Mr. Welsh will agree. This is a large and complex 
country. We have a wide range of environmental problems, 
regional and local circumstances and conditions. We cannot 
dictate from Washington how every situation should be handled, 
even if we wanted to. The particular issues and circumstances 
are just too many and too varied.
    However, there is a lot that we can do to assure a 
reasonable level of consistency in the enforcement of 
environmental laws, and I want to assure you we are doing that. 
We use a number of tools to bring the regions together on a 
common approach to enforcement. We engage in national planning 
and regular communications with the regions and States to 
identify the most pressing environmental problems and to agree 
on how to address them. My office also issues national guidance 
and policies that direct the enforcement and compliance work of 
all the regions.
    Do we do a perfect job? No, of course not. In a country as 
diverse as ours, it is inevitable that enforcement situations 
will occur that appear to be differences between the regions, 
but as you consider the examples that will be offered today I 
ask you to carefully consider whether you are seeing an unfair 
disparity in treatment or just reasonable variations in EPA's 
responses to different circumstances. Different circumstances 
and varying compliance strategies do not necessarily add up to 
unfair disparity in treatment, but if there is unfair disparity 
in treatment we will take action to address it.
    While we do not do a perfect job, I would like to mention 
some of the excellent work we do. In fiscal year 2005 the 
enforcement program reduced the pollution through the Nation's 
air, land, and water by 1.1 billion pounds. That is the highest 
total in the last 5 years and is one of the highest totals in 
the Agency's history.
    This year we launched a new tips and complaint website to 
allow citizens to easily report potential environmental 
violations. Since the site went up in January, we have seen a 
significant upswing, incredible information from citizens 
reporting significant environmental problems. This has allowed 
EPA to focus on intentional and willful violations. The 
response from citizens tells me we are on the right track.
    We look forward today to discussing with you how we can 
improve our program, and I would be happy to take any questions 
the committee might have.
    Thank you.
    Senator Inhofe. Thank you, Mr. Administrator.
    Mr. Welsh, did you have something to add to that or do you 
have an opening statement?
    Mr. Welsh. Very brief statement, sir.
    Senator Inhofe. OK.

STATEMENT OF DONALD WELSH, REGIONAL ADMINISTRATOR, REGION III, 
              U.S. ENVIRONMENTAL PROTECTION AGENCY

    Mr. Welsh. Good morning, Mr. Chairman. I am Don Welsh, the 
Regional Administrator for EPA Region III. Thank you for this 
opportunity to testify.
    At the regional level we do often see first-hand the 
importance of consistency and the value of flexibility. The 
regional staff, along with our State partners, implement the 
daily activities that are guided by the strategic plan, 
national program guidance, and tracked through the annual 
commitment system. The regions, and through them the States, 
are active participants in the processes that develop and 
contribute to each of these important mechanism. The inclusion 
of the regions and States in a meaningful way throughout the 
process increases the understanding of our shared goals and 
reduces the opportunities for inconsistency.
    While we strive to maintain consistent national program 
implementation, flexibility is occasionally necessary to allow 
us to be responsive to individual States' needs, as well as to 
address issues that are unique to our specific geographic 
areas. In circumstances where we feel that a different emphasis 
or approach can achieve the best environmental result, we 
coordinate closely with our headquarters offices, as well as 
our States, to discuss options and paths forward and to avoid 
surprises.
    This can sometimes be a challenging task, with many 
different State and local partners and perhaps several 
different headquarters offices involved in implementing a 
particular program. I am sure our execution is not always 
seamless, but we do make every effort to avoid confusing our 
partners, the regulated community, and the public.
    In conclusion, at the regional level our on-the-ground and 
State oversight activities necessitate that we maintain a 
balance between a priority of national consistency and 
occasional flexibility to address individual State needs and 
unique regional circumstances.
    Thank you again for the opportunity to testify. I am happy 
to take your questions.
    Senator Inhofe. Thank you, Mr. Welsh.
    Mr. Stephenson.

 STATEMENT OF JOHN STEPHENSON, DIRECTOR, NATURAL RESOURCES AND 
       ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Stephenson. Thank you, Mr. Chairman and Senator 
Jeffords. I am pleased to be here today to discuss our work 
concerning EPA's efforts to ensure consistent and equitable 
enforcement actions among its ten regions. Our testimony today 
is based on many reports we have issued on EPA's compliance and 
enforcement activities over the past several years, as well as 
ongoing work for this committee.
    EPA seeks to achieve cleaner air, purer water, and better-
protected land, in part through compliance with the Nation's 
environmental laws. Enforcement is a vital part of its effort 
to encourage State and local Governments, companies, and others 
who are regulated to meet their environmental obligations. 
Enforcement deters those who might otherwise seek to profit 
from violating the law, but it is very important to ensure a 
level playing field, as you heard, for regulated entities. Most 
companies want to do the right thing, but they need to know 
what is expected and that they will be treated consistently, 
regardless of where they are located.
    While the extent of inconsistencies is debatable, largely 
because of the lack of data, no one disputes the fact that 
EPA's ten regions vary significantly in their approach to 
environmental compliance. These variations show up in key 
management indicators that EPA has used in the past to monitor 
regional performance, such as the number of inspections 
performed at regulated facilities and the amount of penalties 
assessed for non-compliance in environmental regulations.
    For example, one of our past reports showed that 80 percent 
of the regulated facilities in Region III, Philadelphia, 
received inspections under Clean Air Act authorities, versus 
only 27 percent in similar facilities in Region I, Boston, and 
Region II, New York.
    In addition, while our work did not focus specifically on 
the effects of inconsistent enforcement, EPA's own strategic 
plan notes that companies that do not comply with statutory 
requirements gain an unfair advantage over companies that 
invest the necessary resources to comply.
    We also note that a recent study commissioned by the Small 
Business Administration suggests that environmental 
requirements fall most heavily on small businesses that have 
proportionately fewer resources for compliance activities then 
their larger counterparts.
    EPA often cites, as you have heard today, regional 
flexibility or difference in philosophy as the reasons for such 
inconsistencies. For example, one region may choose to conduct 
in-depth inspections at a fewer number of facilities instead of 
conducting less-intensive examinations at more facilities. This 
may be fine, but we believe and have recommended that such 
variations need to be more clearly reported as part of EPA's 
regional oversight process.
    Further, EPA needs to clarify which enforcement actions it 
expects to see consistently implemented across the regions and 
direct the regions to measure and report against these core 
enforcement requirements.
    EPA, in effect, has somewhat competing goals in that it 
wants to allow regional flexibility but also wants to ensure 
consistent application of environmental laws. One can debate 
the right balance for these goals, but the basic problem as we 
see it is that EPA lacks sufficient data--data on the 40-plus 
million entities in the regulated community, on State and 
regional enforcement activities and programs, and on measures 
of environmental results to accurately determine the extent of 
variations and whether they, indeed, represent a problem.
    In addition, EPA still lacks an adequate workforce planning 
and allocation system to effectively deploy staff in a manner 
that will ensure consistency in enforcing environmental 
requirements. We have made numerous recommendations to EPA in 
both of these areas over the past several years.
    EPA, as you have heard, acknowledges that to ensure fair 
and equitable treatment core enforcement requirements must be 
consistently implemented so that similar violations are met 
with similar enforcement responses, regardless of geographic 
location. As you heard in part today--and we will hear more 
from your other witnesses--EPA has several initiatives underway 
to improve management information, to enhance workforce 
analyses and planning, and to establish a State review 
framework that will help address this problem. We are 
encouraged by these initiatives, but it is too soon to tell how 
effective they will be. It will take sustained top management 
commitment on these new initiatives if they are to be more 
successful than past initiatives.
    Mr. Chairman, that concludes my statement.
    Senator Inhofe. Thank you, Mr. Stephenson.
    Senator Jeffords was called away to make a quorum at the 
Finance Committee, and he will be right back.
    I will start with you, Mr. Nakayama. You heard me in my 
opening statement talk about what the judge said when he 
dismissed a Region V regional criminal pesticide case. I will 
actually read his statement here.
    He said, ``When experienced trial lawyers decide whether to 
file a lawsuit, they often look at the instructions the court 
will give to a jury if the case makes it to trial. By analyzing 
what he must prove to the jury, an attorney can make a 
reasonable approximation of the strength of the case. The court 
wonders if the Government considered this simple question. The 
court has considered it and candidly it has given pause by 
question.''
    Now, this is the farmer-owned co-op, Wabash Valley. These 
are the ones that had $220,000 they had to pay in attorneys' 
fees for what I call a frivolous lawsuit. The director of 
criminal enforcement, Tom Seton, at headquarters said--and this 
is a quote--``There is nothing unusual about the Wabash case, 
in that it provided a deterrent effect.''
    Now, I guess the question I would have of you, Mr. 
Administrator, is: does the EPA's goal of deterrence override 
the need to file legitimate enforcement cases?
    Mr. Nakayama. Thank you for the question, Mr. Chairman. 
Certainly not. We need to pursue those cases which are 
legitimate and we need to exercise judgment in deciding what 
cases to pursue.
    Senator Inhofe. You disagree with the Seton statement?
    Mr. Nakayama. I think when a person says there is nothing 
unusual, in our view the case involved the need to protect 
human health and the environment, including ensuring that 
pesticide chemicals are used carefully and properly. In this 
particular case, there was evidence of repeat violations. 
Pesticides actually came in contact with a neighbor.
    We understand the State had previously issued penalties 
concerning pesticide application at this same location. In 
those cases when we believe that there is a repeat violation 
and there is a need for some sort of sanction to prevent 
continued application in a manner which exposes the public, we 
cannot condone activities like that and we do need to take 
action.
    Senator Inhofe. Well, you start out by saying you do not 
think it is appropriate to have gone ahead with this case, the 
fact that they ended up having to pay a defense of $220,000. 
Which side are you on? I am not real sure.
    Mr. Nakayama. Let me clarify the answer. I don't think it 
is ever in the Agency's intention nor is it in its best 
interest of its law enforcement efforts to file frivolous 
lawsuits. I don't believe this case was a frivolous case. Now 
obviously there was a difference of opinion.
    Senator Inhofe. Yes.
    Mr. Nakayama. The judge felt that the standard couldn't be 
met for a criminal conviction and therefore the matter was 
dismissed. This difference in the view of the adequacy of the 
label warning is certainly a legal question, an important 
question, and one that obviously the Agency had a different 
view or it would not have brought the case.
    Senator Inhofe. At the beginning of your statement you 
talked about you believe strongly in consistency of 
enforcement, which I do, too. What have you done? You're fairly 
new in the job, but what have you done to try to promote 
consistency where I believe--and I think you probably believe, 
judging from our discussions prior to your confirmation--that 
inconsistencies are there?
    Mr. Nakayama. Well, a couple things.
    Senator Inhofe. What have you done to try to make that your 
program, your legacy?
    Mr. Nakayama. Right. Mr. Chairman, I think there are a 
couple of things we have done. One of the things we have done 
is strengthen our communications with the regions. We have, 
obviously, regular communications with the regions about 
ongoing enforcement cases.
    We have also improved the coordination between our criminal 
program and our civil program, because, quite frankly, I 
thought that could use increased coordination because we need 
to ensure that we are bringing a unified approach to 
enforcement, and we need to know what the regions are doing as 
well as what our criminal enforcement program is doing.
    Senator Inhofe. Yes.
    Mr. Nakayama. Structurally, the criminal enforcement 
program is actually run out of headquarters and it is run 
through our various field offices. That is run separately from 
our civil enforcement program. So there is a need for better 
coordination both between the civil and criminal side and 
between our regions and----
    Senator Inhofe. You mentioned the tips program. Is that 
something you started or was that already there?
    Mr. Nakayama. We had a website originally that was very 
hard to get to before I came to EPA. It was buried several 
levels deep in the website. We now have a direct link from the 
EPA home page. The idea there was if we could get better 
information we could focus our efforts on really the 
intentional and willful violations if we knew about them.
    Senator Inhofe. Yes. Do the tips come from citizens and 
also from the regulated community?
    Mr. Nakayama. Yes. They come from the public, in general, 
both citizens, the public in general, non-citizens. They come 
from the regulated community, such as competitors who believe 
they are unfairly disadvantaged by another company's non-
compliance.
    Senator Inhofe. OK. Mr. Welsh, frankly, in looking and 
making evaluation of the different districts and different 
regional offices, it seems to me that yours is a pretty good 
model, in that I have heard a lot of complimentary things and I 
think you have made a real effort to doing that. How have you 
accomplished this?
    Mr. Welsh. I would agree with Grant that one of the real 
problems----
    Senator Inhofe. Is your area around Philadelphia or----
    Mr. Welsh. Correct. We are headquartered in Philadelphia, 
and it is the mid-Atlantic region, six States in the mid-
Atlantic region.
    Senator Inhofe. OK.
    Mr. Welsh. I think one of the things that all of the 
regional administrators can work hard to do is really to 
emphasize the communications aspect of the work that we are 
doing.
    Senator Inhofe. Yes.
    Mr. Welsh. When we are doing enforcement activity, we are 
partners with our States and we have to coordinate with Grant's 
office in headquarters, as well as the national program manager 
for the particular media program, such as the Office of Water.
    When we determine something through our pattern of 
investigation that we think needs additional emphasis or more 
work, one of the ways to avoid confusion or any concern that we 
are going beyond what we ought to be doing for the sake of 
national consistency is to be sure that we consult with the 
folks in headquarters and make sure they know what we are 
planning to do and have had an opportunity to review what we 
plan to do so that there are no surprises.
    I mentioned in my opening statement that I am sure our 
efforts are not always seamless in that area, and it brings to 
mind the monthly Monday morning conference call that we have 
with the Administrator and all the AAs where the regions will 
frequently report on something that they are working on or 
something that they have discovered. From time to time the 
Administrator or Grant or the General Counsel will say, ``Wait 
a minute. I haven't heard about that yet. Before you proceed on 
that, please give me a briefing and let me know what's going 
on,'' or, ``Let me see that document before you do it.'' So I 
think communication is one of the best ways that we can avoid 
any areas where we are getting out of consistency in a way that 
is harmful.
    Senator Inhofe. So you are actually talking to each other?
    Mr. Welsh. Yes, I think we do, a good bit.
    Senator Inhofe. All right.
    Senator Warner.

OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE 
                    COMMONWEALTH OF VIRGINIA

    Senator Warner. Thank you, Mr. Chairman. This is a subject 
that has interested me. It is difficult to manage. You want to 
have strong individuals take over the districts and you have 
got to provide them some flexibility of thinking and 
management, and at the same time--and this is no reflection on 
your district, Mr. Welsh, which serves my State very well, and 
throughout my long period here in the Senate I have had very 
good cooperation from the Philadelphia office.
    But the plain fact of the matter is that there are some 
problems which are common among the States that shouldn't have 
variation in solution because the facts of the thing. A dam is 
a dam, really, whether it is built in my State or down in 
Oklahoma or wherever the case may be.
    We have struggled through a dam situation. The clouds 
parted this morning. A little sunshine is now coming down after 
14 years working to get the permits through. It is a dam that 
is badly in need for a growing community and a congested region 
where the military bases are down in Norfolk and Newport News. 
But she's on her way, so I don't want to jiggle the process now 
that we have got it going.
    You have simply got to watch how the States and the time to 
get the permitting. I know, Mr. Welsh, when we were struggling 
with this the infrastructure would chatter, ``Oh, you can get 
this permit down in the Carolinas much quicker than you can up 
out of the Philadelphia office,'' and so forth. But anyway, we 
worked it through.
    You have got to have a certain amount of consistency in 
this permitting process because the industrial base in America 
is struggling to be competitive with the world and we have got 
to protect our environment and do it in such a way that we 
don't put too much stress on industrial and manufacturing base 
to achieve their goals and remain a competitive nation in the 
world economic market.
    So, Mr. Chairman, I thank you for bringing this hearing to 
the attention of the full committee. Thank you very much, 
gentlemen. I appreciate it.
    Senator Inhofe. Thank you, Senator Warner.
    Mr. Stephenson, you have testified to pretty serious 
inconsistencies, and the first question I would ask you is: why 
should we be concerned with inconsistencies among the regions?
    Mr. Stephenson. Well, I think EPA's own strategic plan says 
it best--``If you have inconsistent enforcement, some companies 
may have an unfair competitive advantage over others.'' It is 
not fair for a company in a region with particularly stringent 
enforcement environmental laws to compete against one in a less 
stringent region.
    The problem is that the data doesn't exist on enforcement 
actions and on the activities of the States and the regions, in 
fact, to make informed decisions about the extent of the 
inconsistency and what problems it actually represents. You 
have heard today that flexibility is appropriate, and I agree, 
but without better data you can't tell what's flexibility and 
what is inconsistent enforcement.
    Senator Warner. Would you yield, Mr. Chairman?
    Senator Inhofe. Sure.
    Senator Warner. He has struck on an important point. I 
talked about that international competition, but it is 
certainly State by State. How well you know that we are always 
in competition between the several States for an industrial 
plant, and that area which has a reputation for granting its 
permits earlier is likely to get it and get the jobs that go 
with it. We don't want to put that into our economic system.
    Thank you for bringing that important point up.
    Senator Inhofe. Mr. Stephenson, how long has this been 
going on?
    Senator Warner. Since we probably founded the Agency.
    Senator Inhofe. I asked him.
    [Laughter.]
    Mr. Stephenson. That is the right answer. You know, I have 
been doing this for 6 years, and it has been a prevalent 
problem. It is interesting to note that the State framework 
that EPA is working on now dates all the way back to a Barnes 
memo back in 1986, so at least two decades that they have been 
trying to address this problem. Mr. Barnes was the Deputy 
Administrator during the Reagan Administration. So there have 
been lots of initiatives to try to address this problem, but 
they have had limited success so far.
    You know, GAO is a data oriented organization, and we want 
to see better data with which to measure regional performance 
and State performance, and then you are in a better position to 
say how much of this is inconsistency and how much of this is 
flexibility.
    Senator Inhofe. Senator Warner is right, it has been since 
the beginning of the Agency. That is the whole reason for this 
hearing. We have not, to my knowledge, at least in the last 12 
years, we have not had a hearing----
    Senator Warner. That is exactly right, Mr. Chairman.
    Senator Inhofe [continuing]. That addresses this.
    Senator Warner. You're the first chairman really to bring 
this to the forefront for the whole committee, and I commend 
you for it.
    Senator Inhofe. I think when you hear people in the 
regulated community that might have shops on the east coast as 
well as in Illinois and they see the disparity, it is wrong.
    I think, Mr. Stephenson, with your research and with your 
efforts you could give us a lot of advice as to how to achieve 
a greater consistency. Do you have anything right now you would 
like to say in the way of offering a helpful solution?
    Mr. Stephenson. To hark back on the data, again, better 
data. There could be some 41 million plus in the enforceable 
community--companies, waste water facilities, drinking water 
facilities. EPA, as the DOD IG reporting just last year, simply 
doesn't have a good handle on the types of facilities, the 
extent that they represent a problem. If you don't have good 
information on the regulated community, you don't have a good 
handle on how to effectively deploy your resources. That 
combined with the lack of a good workforce planning system in 
EPA makes you wonder how EPA assigns enforcement resources to 
the individual regions.
    Senator Inhofe. You heard Mr. Welsh talk about their 
communications effort and getting everyone in the same room and 
communicating.
    Mr. Stephenson. Right.
    Senator Inhofe. I had a personal experience in that. It 
happens in my State of Oklahoma we had probably the most 
devastating of the Superfund sites, and have been addressing it 
for some 20 years and nothing has gotten done. I found out that 
it is because we never had the DOI, DOJ, Corps of Engineers, 
EPA, and everybody in the same room. When we did that, we 
started on the road to resolving the problem.
    Do you think that what we are hearing from Mr. Welsh is 
something that may be missing in some of the other regions, 
specifically Region V?
    Mr. Stephenson. I do. Effective communication and 
coordination among the EPA staff and the State enforcers and 
the regulated community is an extremely important aspect of all 
of this. EPA has an oversight role of State enforcement. So 
they have to do some duplicative inspections of facilities to 
ensure that the States are doing it right on the one hand, but 
on the other hand you don't want to see EPA regions 
overstepping the bounds of the State enforcers who work the 
lion's share of the Federal environmental programs.
    Let's face it. The States have over 90 percent of the 
responsibility for inspections, et cetera. So you don't want to 
see EPA coming in after them and overstepping the State 
enforcers and redoing an inspection. EPA needs to communicate 
with the States what they are doing, and with the regions, and 
make sure the regions toe the line and are accountable.
    Senator Inhofe. What do you think about that, Mr. Nakayama?
    Mr. Nakayama. I do agree. I think better communications 
would aid in ensuring consistency, because if there is no 
communication you're not going to know when disparities exist.
    With respect to the work with getting better data, which is 
important, that is one of our highest priorities. We are 
upgrading our integrated compliance information system--it is 
one of the largest data bases in the Federal Government--to get 
better data on what the compliance data for the various States 
are.
    With respect to the State review framework, a very 
important effort started in cooperation with the Environmental 
Council of the States, ECOS, where EPA's regions are assessing 
the adequacy of the various States to ensure that, in fact, 
each State meets its responsibilities, to understand what the 
differences are between States and if there are valid reasons 
for those differences, and to recommend improvements to the 
States where there are areas that need improvement.
    As part of that effort I might mention that there are 
several programs that we directly implement where the States 
have not picked up, it has not been delegated to the States, 
and we are evaluating ourselves as part of that State review 
framework to determine if there are areas for improvement or 
areas of inconsistency. That is a major effort. It continues 
through fiscal year 2007. At the end of that period we believe 
we will have reviewed all 50 States.
    Senator Inhofe. Here's what I would like to do. I'd like to 
follow up and see if some of these things are actually working. 
One of the problems I see in regulation is that we will have 
meetings, point out the problems, and then nothing happens. 
Actually, that was the situation with the Nuclear Regulatory 
Commission several years ago. They had not had any oversight 
and had not had a chance to look and see and develop some way 
of measuring successes and to see what works and what doesn't 
work.
    What I would like to do is, through a communication with 
you and with all of you, to follow through and see what kind of 
improvements we can have. It was not my intention to single out 
just Region V. That is one I probably personally have heard 
more about more of the problems, but I have also heard in some 
of the other areas, too. So I would like to do that and we'd 
like to set up something.
    You will all three be receiving questions for the record 
from members who are not here. Their staffs are here.
    Senator Inhofe. With that, we will go ahead and dismiss you 
as the first panel and call up the second panel. I thank you 
very much for being here. Mr. Nakayama, I look forward to 
having a visit along the lines that we discussed, too.
    Mr. Nakayama. Thank you.
    Senator Inhofe. Yes, sir.
    Our next panel is Jean Payne, president of the Illinois 
Fertilizer and Chemical Association; Dr. Richard Waterman, 
chair of the Department of Political Science, University of 
Kentucky; Eric Schaeffer, director, Environmental Integrity 
Project; and David Paylor, executive director, Virginia 
Department of Environmental Quality, Officer, Environmental 
Council of States.
    Let's go ahead and start with you, Ms. Payne. If you'd go 
ahead and give an opening statement and try to hold in to our 
timing if we can, your entire statement will be made a part of 
the record. We will recognize you at this time.

  STATEMENT OF JEAN PAYNE, PRESIDENT, ILLINOIS FERTILIZER AND 
                      CHEMICAL ASSOCIATION

    Ms. Payne. Thank you, Mr. Chairman. I have been working 
with the Illinois fertilizer dealers for 15 years. We handle a 
lot of anhydrous ammonia in Illinois since the 1950's, and the 
RMP regulation is not really about handling ammonia safely, it 
is about documenting how you handle ammonia safely, which we 
have been doing very well for 30 to 40 years. Most of our 
fertilizer dealers have been in business for 30 to 40 years. 
There are about 700 agriculture chemical facilities in 
Illinois, the majority of which are small businesses.
    When Region V actually reached out to us 7 years after the 
regulation went into effect, we actually kind of welcomed it 
because had it not been for the Fertilizer Institute and the 
Asmark Institute we would have really had no compliance 
materials to help our dealers understand what is a very 
complicated Federal regulation. So when they first initiated 
contact with us in 2002 to say, ``Well, we want to do a pilot 
program and want to check your compliance with the RMP,'' we 
welcomed it, because we do want outreach with the U.S. EPA.
    Unfortunately, 2 years after the compliance program 
started, I really found out by accident that they felt like all 
500 of our fertilizer dealers were out of compliance. I want to 
tell you that the only people they checked were people who 
filed their RMPs and made a good faith effort to comply. There 
was never any effort to locate fertilizer dealers or other 
industries that did not file RMPs. So right away our fertilizer 
dealers feel like, ``Gosh, I tried to do the right thing and 
then I get singled out for enforcement.''
    When I found out that they felt like every one of our 
fertilizer dealers was out of compliance, they suggested a 
monetary penalty----
    Senator Inhofe. You said every one of them. You said 500. 
Is this about what you have?
    Ms. Payne. We had actually a few more than that. They 
requested a list. They worked with our Department of 
Agriculture, which we supported. They requested a list of the 
fertilizer dealers from the Department of Agriculture, which 
they provided with our support.
    Actually, you know, when we found out about it I 
immediately, in fact, the day after I was told by Region V 
staff they were going to enforcement, I fired off a letter to 
the administrator of Region V, as well as to the U.S. EPA 
headquarters, asking them to please not do this until they 
could just sit down with our industry and review what they 
thought were so many onerous violations.
    I asked them in that meeting, when we knew that Region VII 
to the west of us had done a similar kind of pilot program with 
their Department of Agriculture, but Region VII sat down with 
the industry and the only thing that resulted in that region 
was a few fertilizer dealers in Iowa got a preliminary 
determination letter that stated, ``We think you need to 
include your nurse tanks in the RMP.'' They didn't get 
violation notices or monetary penalties.
    So when I asked why would Region V take this approach when 
Region VII did not, I was told, ``Well, we really can do 
whatever we want. That is a different region. Everything is 
done differently.'' That was the only response I received to 
that question.
    We were never given a chance to review the alleged 
deficiencies. Over the entire summer last summer I requested 
meetings with Region V to sit down with us. I wish I had a 
dollar for every phone call and e-mail I made to the Chicago 
office begging for them to sit down with us that was not 
returned.
    You had a copy of a letter up there that was sent to one of 
our fertilizer dealers. Through the whole month of December, 
you know, I was told that our dealers would get--actually, they 
had agreed to us in a meeting with Region V that they would 
send out a letter but it wouldn't say ``violation.'' It would 
say, ``Well, there may be some deficiencies.'' We were OK with 
that, and then it would list the deficiencies, and then they 
would provide our dealers with an opportunity to go to 
training.
    After that meeting, which was on November 30th of last 
year, I really felt good--better, at least--about the way 
things were going. But then 2 weeks went by and we had no 
contact, even though I had called many times saying, ``When are 
you going to send out these letters. It is getting awfully 
close to Christmas.'' This letter to Mr. Hamson he received on 
December 19th with a threatened $32,500 per day. I believe it 
is mentioned twice in there.
    He called me, and I have to tell you, and this may sound 
like small town U.S.A., he owns this small dealership with his 
wife. They have been in business for 35 years. They have, like, 
six total employees. He called me and he was incredibly shaken. 
He had never had an ammonia release in the history of his 
company, never had gotten a letter from Region V or any EPA, 
for that matter, and he actually asked me if he was going to be 
going to jail for this.
    I will tell you that that week he closed down his 
fertilizer facility, the shop, to frame up an addition to the 
church. I mean, these are the kind of people that live in these 
small communities and they were devastated by these letters 
that went out to 500 people just like Mr. Hamson.
    I had to reach out to the Region V administrator, you know, 
begging him to put a stop to these letters because 10 days 
after December 19th is December 29th. A lot of our guys weren't 
even going to be in the office, and here you are subject to 
$32,500 per day, even though these inspections had happened 
over a year earlier.
    The violations that they listed were so inconsistent with 
the Department of Agriculture inspection reports I was actually 
embarrassed for Region V. Those are some of the issues that we 
tried to work out.
    Senator Inhofe, had you not opened an inquiry, you will see 
in that letter our members were going to be subject to consent 
agreements. No other fertilizer dealers in the country have 
been subject to consent agreements for alleged violations of 
their RMP. I am sure that we would have been forced down that 
path had you not intervened.
    We were able, after the intervention of your office, that 
condition was dropped, but at the time when I protested it I 
was told, ``Well, that is the least onerous tool in the 
enforcement toolbox.'' Honestly, I thought to myself, ``Maybe 
we could brush off the education and outreach toolbox and see 
what might be in there for help with the fertilizer dealers.''
    If I could just have 30 more seconds, I have a statement 
from one of our fertilizer dealers that really says it well on 
how they felt about receiving these letters. This is from David 
Smith. He's the manager of Okaw Farmers Co-op in southeastern 
Illinois. He says, ``I started in the grain and fertilizer 
business 30 years ago, and out of those 20 years I am mayor of 
a community of 1,300 people. I have always looked out for the 
safety of our community and not had a problem with anhydrous 
ammonia yet. We have always been checked out by the Department 
of Agriculture and I welcomed their visits to make sure I had 
not overlooked anything.
    Since RMPs were put into effect, my direction has been 
shifted from a local safety standpoint to just trying to 
satisfy the U.S. EPA and the paperwork. The paperwork is not 
understandable. We receive very little help from EPA. Then we 
make one mistake and we are threatened with huge fines.
    The Department of Agriculture cannot even answer my 
questions because they do not understand the regulation, 
either. I would much rather see EPA work with the Departments 
of Agriculture and the agrichemical dealers to create 
regulations that are more uniform across the Country and more 
understandable if we are expected to follow them. If we operate 
a safe business but our paperwork is not up to EPA's 
expectations, we are threatened with huge fines instead of them 
trying to work with us.''
    That really says it.
    Senator Inhofe. It does. Well, even though you have read 
the letter, without objection I will include that letter in the 
record. That is actually important.
    Thank you very much.
    Dr. Waterman.

    STATEMENT OF RICHARD W. WATERMAN, CHAIR, DEPARTMENT OF 
           POLITICAL SCIENCE, UNIVERSITY OF KENTUCKY

    Dr. Waterman. Thank you very much. Thank you, Chairman 
Inhofe and Ranking Member Jeffords, for the opportunity to 
testify before the committee today. I am here to testify 
regarding regional variations within the EPA, a subject that I 
have studied extensively. I have submitted comprehensive 
testimony for the record, but will limit my oral statement to a 
few important issues.
    To my knowledge, this has been a largely overlooked area in 
academic studies of the EPA. Scholarly work tends to focus 
their attention on the activities of States with primacy or on 
the EPA officials in Washington, DC, yet most EPA employees 
operate not in Washington but in various regional offices 
around the Country. These regional offices represent a major 
reason for variations in enforcement.
    EPA officials that I spoke to in the Washington or national 
office during the Presidencies of both George H.W. Bush and 
Bill Clinton described considerable frustration with the 
enforcement activities of the regional EPA offices. This 
suggests to me that this is not a Democratic or a Republican 
problem, as frustration with regional variations was expressed 
during periods when both Democrats and Republicans controlled 
the White House, as well as the Congress.
    Both parties appear to be interested in a more uniform 
style of enforcement, even if they don't ultimately agree on 
what that style should be; that is, whether it should reflect a 
strict enforcement approach or a style that emphasizes a 
greater level of negotiation with business.
    With regard to regional variations, one particular point of 
position stood out as a subject of concern. Most memorably, 
several years ago when I asked one top Agency official in the 
EPA Water Office why there was so much variation in enforcement 
from region to region, I was surprised to be treated to a 
rather candid and colorful exposition of how a particular 
regional administrator was enforcing the law, not in accordance 
with the wishes of the then current Administration, but rather 
in accord with the desires of the political culture of that 
region.
    When I asked for more detail on this point, I was informed 
that some regions are naturally more aggressive in their 
enforcement zeal while others are not. I was told that regional 
administrators represented one of the last vestiges of the 
practice of Senatorial courtesy, and that often the 
administrators represented the political viewpoints of the 
region rather than national interests.
    As a result of this and other discussions with EPA, State 
enforcement personnel, members of environmental groups, and 
people in the regulated industry, I ultimately conducted two 
surveys with two of my graduate students. Among the many 
questions on our surveys, we asked, ``How much influence do 
various policy actors have over how your office enforces the 
law?''
    We asked bureaucrats to rank these policy actors on a five-
point scale, from no influence to a great deal of influence. 
Among EPA officials, regional administrators narrowly ranked 
first in terms of their perceived level of influence, with the 
EPA administrator ranking second. It should be noted that they 
ranked much higher than the Federal courts third, Congress 
fourth, environmental groups fifth, public opinion sixth, and 
the President seventh.
    When we asked State officials the same question, they 
ranked the Governor first, the State legislature second, the 
U.S. EPA administrator third, the U.S. Congress fourth, the 
State's Finance Committee fifth, and then the regional 
administrator sixth.
    What was surprising to us, however, is that regional 
administrators were seen as having essentially the same level 
as the EPA administrator among EPA enforcement personnel, and 
that both were seen as having more influence than either 
Congress or the President.
    What our results suggest then is that, particularly among 
EPA bureaucrats, regional administrators are perceived as 
exerting considerable influence. Given the obvious frustration 
expressed by U.S. EPA officials regarding regional 
administrators, it is also clear that this is a point of 
contention within EPA, itself. In particular, there is a sense 
that EPA regional administrators tend to reflect the viewpoints 
of the regional offices and personnel rather than the national 
office.
    One EPA official in the national office said that the 
regional administrators tended to be co-opted by their 
personnel in the offices, as well as by the political culture 
of the region.
    What then is the solution? It is unreasonable to expect 
enforcement to be precisely the same in each region. There are 
some valid reasons for regional variations which would not be 
appropriate to force a one-size-fits-all approach on all 
regions. A stricter enforcement approach may be required in 
some settings and in some regions, while negotiations with 
industry may be appropriate in others. In this process it is 
clear that elected officials have a legitimate role in 
overseeing the bureaucracy.
    First, while Presidents often pay close attention to the 
qualities of their national EPA officials, past experience 
suggests they are less attentive to the types of individuals 
they appoint to the regional EPA offices. This may be due to 
the fact that they are inherently believed that such officials 
will follow directives by the U.S. EPA. Since my research 
suggests this is not the case, the first recommendation is the 
President should be more attentive when they appoint regional 
administrators. As noted, these ten regional administrators are 
perceived by EPA to have slightly more influence.
    Beyond appointments, is it appropriate for elected 
officials to have continuing oversight of the bureaucracy? I 
believe here the answer is yes. I have found that not only can 
Presidents influence the bureaucracy, but Congress can, as 
well. In fact, what scholars refer to as political control of 
the bureaucracy can be conceptualized as part of our necessary 
system of checks and balances.
    While our Constitution is largely silent on the 
bureaucratic State, it is clear that elected officials can and 
should exert influence over the bureaucracy. Bureaucrats have a 
wide array of expertise that should not be ignored, but elected 
officials represent the public interest in a different way. 
They can make sure that bureaucrats are applying the law fairly 
and in accordance with the intent of Congress, as well as 
representing public opinion.
    Congress has a legitimate role in determining how much 
variation should be permissible and whether regional 
administrators should be more loyal to the regional offices in 
which they serve or the national EPA office.
    Thank you. I will be happy to answer any questions.
    Senator Inhofe. Thank you, Dr. Waterman. That was an 
excellent statement.
    Mr. Schaeffer.

STATEMENT OF ERIC SCHAEFFER, DIRECTOR, ENVIRONMENTAL INTEGRITY 
                            PROJECT

    Mr. Schaeffer. Thank you, Mr. Chairman and Senator 
Jeffords, for inviting me to testify today on the need for 
greater consistency in enforcing Federal environmental law.
    I am Director of the Environmental Integrity Project, a 
non-profit group that generally advocates for more enforcement, 
and previously was director of the Office of Civil Enforcement 
at EPA.
    EPA has a very, very difficult job, as I think everybody 
here recognizes. The Agency has to enforce 19 environmental 
laws in 50 States. EPA has delegated, as it must do under the 
statutes, the responsibility for enforcing those laws, most of 
those laws, to State environmental agencies. States have widely 
different philosophies and levels of competence when it comes 
to carrying out those responsibilities, so, not surprisingly, 
there is a great variation in how an environmental law that is 
Federal is enforced in one State compared to another. If the 
concern is for greater consistency--and I think everybody 
shares that concern--that issue ought to be looked at first.
    I would agree with Dr. Waterman. This is not a partisan 
issue or one Administration versus another. This is a problem 
that has persisted for years. It is something I struggled with 
at EPA and was never convinced I was doing a good enough job to 
address, so oversight is definitely welcome.
    I would suggest starting by looking at audits from the 
Inspector General and the Government Accountability Office 
conducted over the past decade which document this problem and 
put it in very black and white terms. I will start in 1997. The 
IG found that two States had completely failed to identify 
significant violators of Federal hazardous waste laws. In 1998, 
seven States had failed to identify major violations of the 
Clean Air Act. Between six of those States, the inspectors were 
able to document only 18 violations. The Inspector General 
found 103 looking at only about 10 percent of the files.
    In 2002 the Government Accountability Office said over half 
the States don't inspect underground storage tanks every 3 
years, as EPA recommends. In 2003, an IG audit found that 
Louisiana couldn't even locate records that they needed to know 
whether or not facilities were in compliance. And in 2005 the 
IG found that States varied widely in their ability to monitor 
air emissions.
    Those are just a few of the examples.
    Again, I want to say some States are doing an outstanding 
job in some programs. Other States are falling well short. That 
disparity is probably where you are going to see the biggest 
differences in how Federal laws are enforced, and that really 
deserves your attention.
    I also want to emphasize this is not a squabble about 
whether penalties are too high or too low. This is about the 
ability to even identify a violation and require correction in 
the first instance, which I think is pretty serious, and I hope 
you will take it seriously.
    As with all these difficult Government issues, this is a 
lot easier to diagnose than it is to fix. I am sure funding is 
part of the problem for some States. I know appropriations are 
in short supply. I do think States have the authority to raise 
permit fees. Title five of the Clean Air Act is one example. 
Congress could look at that. EPA could make enforcement 
expectations clearer.
    I think the bottom line is the Agency has to grind it out 
on a day-to-day basis with oversight. It is a very hard task. 
There needs to be dialog.
    I know with respect to the Clean Air Act violations, when 
the IG documented all these problems in State programs we sat 
down with States and actually redefined the set of violations. 
We found there was some legitimate confusion about what should 
be counted and what shouldn't. So EPA has some 
responsibilities, too.
    I do want to suggest, and I think maybe Dr. Waterman made 
this same point, that we are in a Federal system. The authority 
to enforce these laws is going to be shared. There is going to 
be some deviation. I think we are going to have to tolerate 
that and decide how much we can tolerate. Ultimately, that is a 
political question. But I think we can do better.
    I can't resist a quick comment on the concern coming out of 
Region V. I have to confess I don't know the situation as well 
as I should. You do often see in Government letters offering 
amnesty, limited amnesty, the ability to comply without 
penalty, language that recites the penalties for failure to 
non-comply. I don't think that is so unusual. I would ask you 
to think about speeding tickets. I like to think of myself as 
law abiding, but I have gotten some. On that speeding ticket 
you will see usually language that says, ``If you don't either 
pay or appear in court you can be arrested.'' That has never 
prompted me to ask for a hearing or suggest there is something 
untoward about that.
    So I would just close by saying I hope you do follow up on 
State programs and the deviations that have been documented in 
these IG and GAO reports. I think the oversight is welcome and 
I look forward to continued discussion.
    Senator Inhofe. Thank you, Mr. Schaeffer.
    Mr. Paylor.

    STATEMENT OF DAVID PAYLOR, EXECUTIVE DIRECTOR, VIRGINIA 
  DEPARTMENT OF ENVIRONMENTAL QUALITY, OFFICER, ENVIRONMENTAL 
                       COUNCIL OF STATES

    Mr. Paylor. Thank you, Mr. Chairman.
    I am David Paylor. I am the Director of the Virginia 
Department of Environmental Quality and I am here representing 
the Environmental Council of States, in which I am an officer. 
The Environmental Council of States is made up of the 50 
States' commissioners, and we exist to improve the relationship 
with EPA.
    States' environmental agencies have as their primary 
contact the ten regional offices, and then we work directly 
with the central office, as well, with which we have good 
relationships. I would have to say in general the State 
relationships with regional offices is very good, but in some 
cases we do find that we have concerns about performance that 
have to do with inconsistencies.
    I think it is worth noting that the States operate 75 
percent of the Federal programs. We have about 95 percent of 
the enforcement actions and we collect 95 percent of the data 
in response to the Federal programs.
    I'd say that the four areas that we would want to point to 
where we have concerns about consistency are related to 
enforcement issues, provisions of grants, interpretation of NPM 
National Program Manager guidances, and then some staffing 
issues.
    when it comes to the question of enforcement, ECOS went to 
EPA in 2004 with our concern that the Agency might be allowing 
inequities in performance with environmental matters. I would 
have to say that the inequities probably fall into two 
categories. One is philosophical and it focuses on whether or 
not the primary measure is, in fact, the size of the penalty, 
or whether or not the primary measure has more to do with the 
environmental result that is achieved.
    We propose that the Agency and ECOS work together in a 
State review framework that you heard referred to earlier. This 
is underway, and we believe that it is bearing some positive 
fruit and would recommend that you follow the State review 
framework to see how that goes.
    As regards to funding concerns, States get between 5 and 30 
percent of their funding for the operation of their programs 
from the Federal Government. Oftentimes, we see delay in 
provision of funding. For example, in Tennessee in Region IV 
just this year, out of 12 grants all but four of them were 
delayed more than 3 months, and one of them still has not been 
paid. We really rely on these grants in order to be able to do 
our programs, and would like to see more consistency in the way 
that the grants are made available to the States so that they 
can have access to those funds.
    Four, national program manager guidance, those rules are 
not implemented consistently across the State. The way it works 
is the central office provides that guidance to the regional 
offices. As you have heard, they have a fair amount of 
flexibility in how they are implemented. I agree that that 
flexibility is needed to deal with regional differences, but I 
would also submit that philosophical differences enter into 
some of those inconsistencies.
    For example, in Oklahoma it was recently determined that 
for a certain rule that a cooling water discharge was exempt, 
EPA initially agreed; then, when they were asked again they 
hedged. Oklahoma had a difficult time and was unable to 
determine what, in fact, the EPA rule was.
    I would say that the inconsistencies that we see fall into 
about three categories. One is a failure to provide clear 
guidance to the States on what the rule would be. A second 
would be adding to the interpretation some regions may 
interpret rules more narrowly than others. For example, in air 
rules they are fairly complicated when you have to determine 
the applicability of new source review requirements. We would 
see different guidance from different regions on whether or not 
those rules apply.
    Third, we would have a concern about the additional 
requirements that come in addition to NPM guidance, and those 
really have to do primarily with adding on reporting 
requirements that are perhaps more than is justified for States 
to have to do, and that impacts our resource issues.
    I wanted to make a comment last about resource issues. In 
1992, the States implemented 45 percent of the Federal rules. 
Now we implemented in 2002 [sic] 75 percent of the Federal 
rules with actually only one new statute during that time, yet 
we see 40 new rules per year come along. States have been 
downsizing over that time in terms of their staff, while 
getting increased resources. From 1992 to 2000 EPA staffing has 
stayed about 18,000. We have not concluded that that is an 
inappropriate level of staffing for EPA, but we just would 
raise the issue that there maybe are some resource issues that 
we need to look at holistically across the Nation so that we 
can continue to provide the environmental services that we are 
called upon to provide in a cost efficient way.
    I thank you for the opportunity.
    Senator Inhofe. Thank you, Mr. Paylor.
    I appreciate the fact that you have come in in a well-
organized way with four suggestions. That helps us a lot. I 
would like to just go ahead and ask if any of the other members 
of the panel, after hearing the suggestions that were given by 
Mr. Paylor, have any comments about those suggestions. Anybody?
    Ms. Payne. We have always enjoyed working with our State 
agencies. I mean, the RMP is one of the few rules that really 
was not delegated to the State agencies, and I think that 
caused the bigger part of the problem. I mean, our Department 
of Agriculture has had oversight over the ammonia regulations.
    We really welcomed this pilot program because we thought 
that would be a good balance of Region V working through our 
Department of Agriculture to improve compliance. But rather 
than take the next step and then review the findings with 
industry and the Department of Agriculture, they went straight 
to enforcement.
    I think that pilot program can work if there is just a 
better understanding up front of engaging the State agencies 
and helping, because the State agencies are at our facilities 
three or four times a year, and we have a lot of respect. Quite 
frankly, we couldn't have a safety record as we do were it not 
for people like our Illinois Department of Agriculture.
    It will be a challenge for Region V now because my 
counterparts in Indiana and Wisconsin and Minnesota saw what 
happened to us and they're afraid to touch this thing with a 
ten-foot pole.
    I think it can be resolved; it is just going to take some 
work and some rebuilding of some trust.
    Senator Inhofe. Any other comments?
    Dr. Waterman. Yes. People have talked about variations in 
enforcement, and enforcement is one of the issues that I have 
looked at the most. One of the things, in terms of variation, 
is the number of enforcements vary tremendously from region to 
region, but there is also a tremendous variation even within 
categories.
    For example, what is an inspection? I looked at fairly 
substantially the national pollution discharge elimination 
system. You would think there is a uniform way to do an 
inspection, but, in fact, some inspections are just somebody 
showing up and looking at a water sauce and saying it looks 
clean. It is essentially called a visual inspection. Other 
times they actually do chemical inspections.
    So when you get the numbers and you look at the actual 
numbers and you see this many inspections were done or that 
many inspections were done, oftentimes that doesn't tell you a 
lot, either, because there are variations in the types and ways 
that these things are done, as well as in the overall numbers, 
so the variation is just really difficult to get a handle on.
    Senator Inhofe. Yes.
    Mr. Schaeffer. I thought Mr. Paylor's recommendations were 
very good. I am especially sensitive to the problem of 
conflicting interpretations because they create a real problem 
for enforcement and make enforcement much more difficult.
    It is going to be hard to get it back because businesses on 
a day-to-day basis want quick answers. They're looking for 
quick answers, and so a lot of the answers come from the 
region, and even more come from the State, so pulling all that 
together and trying to get some consistency is going to be a 
challenge, but it is not a challenge that Government can walk 
away from.
    Senator Inhofe. Ms. Payne, let me ask you a question. Did 
you get a phone call from the administrator of Region V, I 
guess Bharat Mathur--I may not be pronouncing that right--prior 
to your appearance here concerning your testimony today?
    Ms. Payne. Yes, I did, several weeks ago. I have known Mr. 
Mathur since he was at Illinois EPA, so I have known him for a 
long time. You know, it made me uncomfortable being asked that 
question because I have to have an ongoing relationship with 
Region V. This is not going to be the only issue that we have 
to work with them on.
    I will give him credit. I think had he not really took 
notice of what was happening to our fertilizer dealers and 
listened to the concerns of your inquiry we could have ended up 
with a worse situation, but I really feel--and I think this 
happens in more than just Region V--sometimes by the time the 
administrator becomes aware of what the staff is doing it is 
too late and the damage has been done. The violation letters 
have been issued, and those violation letters will always be on 
the records of our fertilizer dealers. They can't undo that.
    That is a concern, because if these guys ever do have an 
accident in the future, maybe not something that they even 
caused, a meth head breaking into an ammonia tank and causing a 
release, they are on record as being in violation of the Clean 
Air Act already for something that we really tried to challenge 
and without your help would have consent agreements on. That 
can shut down your business, as many of you know.
    Senator Inhofe. The threat that we talked about that was in 
the letters, $32,500 a day, was it?
    Ms. Payne. Yes.
    Senator Inhofe. You know, I don't know the financial 
structure of these complaints, but I am sure that you have 
looked at that and certainly they have looked at it. How long 
can they stay in business if they are faced with something like 
that? Again, I use the analogy of the experience that we had in 
Oklahoma in the Superfund site. Here's a guy that was complying 
with the law that would be out of business in 40 days.
    Now, I have to say, Mr. Schaeffer, if the best analogy you 
can come up with to justify that kind of intimidation is a 
speeding ticket, I'd say that you don't have a very strong 
case.
    Mr. Schaeffer. I just have to respectfully disagree. I 
don't find a letter that basically outlines penalties for non-
compliance, you know, by itself to be the end of the world. I 
mean, these are laws and there are penalties for not complying. 
In this case no penalty was collected and the companies were 
allowed to self certify compliance. This strikes me----
    Senator Inhofe. Wait, wait.
    Mr. Schaeffer [continuing]. as a fairly gentle approach.
    Senator Inhofe. Just because no one had to pay, these 
people are not professional bureaucrats. These people are the 
people who are out there with real jobs, paying taxes, paying 
for all the fun we are having up here, and they don't know that 
when they get a letter that is $32,500 a day, all they look at 
that and say, ``How can I be competitive? How can I stay in 
business?'' I know this because I have been in that position 
before. I look at this and I see this as unreasonable, 
outrageous intimidation. I just can't believe this would 
happen.
    Look at my farmers in Oklahoma. The cost of fertilizer has 
gone through the roof. We recognize it. We have had hearings 
here on the cost of natural gas and other things. But this is 
the type of thing also that is causing that, having an adverse 
effect on my farmers.
    I will go ahead and let you go ahead, Senator, from your 
Region V Illinois perspective. I am sure you have some 
questions.

 OPENING STATEMENT OF HON. BARACK OBAMA, U.S. SENATOR FROM THE 
                       STATE OF ILLINOIS

    Senator Obama. Well, first of all I apologize for being 
late. I was hoping to catch all the testimony. I appreciate 
this, Mr. Chairman. I am going to be very brief.
    First of all, one of the reasons I wanted to come was 
because Ms. Payne and I used to work in Springfield together 
way back when, so I wanted to make sure that she had her 
Senator here when she was providing testimony. It is good to 
see you.
    I actually had the opportunity to read the written 
testimony about the interactions, and as I think everybody here 
is aware Illinois is another farm State, so ammonia has a lot 
of important uses as a fertilizer. It is also flammable and is 
a key ingredient in the production of methamphetamine.
    So my staff and I have met with members of the IFCA. They 
are terrific people. They understand, I think, the need for 
Federal and State regulation to safeguard the storage of these 
substances. But I don't think the IFCA is being unreasonable to 
expect some kind of certainty and consistency in the way the 
regulators do their jobs.
    Now, I have to also say, Mr. Chairman, you know, that 
bureaucrats at the EPA are actually working hard and doing 
their jobs, too, so I don't want the notion that they're not. I 
mean, I think they are civil servants who are trying to do 
their best to apply laws that we passed. So I am very 
sympathetic to that, as well. They are trying to follow 
Congress' mandates, oftentimes because they have limited 
resources.
    I don't want the EPA to not do its job. The RMP program is 
an important one. It has made millions of people safer. I think 
we want to keep on doing it.
    So I think the key--and I saw this in Ms. Payne's 
testimony--is to just develop a better sense of communication 
and trust between the parties so that, to the extent that we 
can avoid a letter going out where a phone call might suffice, 
to the extent that we can make sure there is consistency in the 
application of these rules, that there is good outreach and 
education ahead of time, I think that everybody will benefit.
    Let me just close by saying this. When 90 percent of the 
members of the IFCA are found to have failed an inspection, 
that seems to me to be a sign not of a disregard of regulations 
as much as a serious breakdown in communications about what the 
risk management program requires. It suggests that EPA could do 
a better job of outreach than it is doing right now.
    I appreciate the fact that there were some concrete 
recommendations made by Mr. Paylor and others. I hope that 
those address them. But it strikes me that this is an industry 
that wants to do the right thing, that has a stake in doing the 
right thing, and if we can try to break down some of the 
barriers to folks working together on this we should be able to 
work it out.
    With that, Mr. Chairman, I have nothing further.
    [The prepared statement of Senator Obama follows:]

           Statement of the Hon. Barack Obama, U.S. Senator 
                       from the State of Illinois
    Mr. Chairman, thank you for holding this hearing today. First, I'd 
like to recognize one of the witnesses, who is a constituent from my 
State. Jean Payne is the President of the Illinois Fertilizer and 
Chemical Association, and I appreciate her taking the time to appear 
before the committee this morning.
    Today's hearing is about how the 10 regional offices of the 
Environmental Protection Agency enforce the nation's environmental 
laws. I'm well aware of the difficulties that Federal regulatory 
agencies face in balancing Congress' intent in passing a law and the 
need for some latitude of enforcement. I look forward to hearing the 
comments of the first panel in that regard.
    Later, we'll hear from Ms. Payne about the recent interactions 
between her association and EPA regarding risk management plans for 
anhydrous ammonia retailers. In Illinois, as in other farm States, 
ammonia has important uses in products such as agriculture fertilizer, 
but it is also highly flammable, can form explosive mixtures, and is a 
key ingredient in the production of methamphetamines.
    My staff and I have met with members of the IFCA. They're good 
people, and I know they understand the need for Federal and State 
regulations to safeguard the storage of anhydrous ammonia. But I don't 
think the IFCA is unreasonable to expect some kind of certainty and 
consistency in the way that regulators do their jobs.
    I also know that the hard-working civil servants in EPA's regional 
offices are doing their best to follow Congress' mandates despite 
limited financial resources and an Administration that has a less-than-
enviable track record on enforcement. The EPA's RMP program is an 
important one that has made millions of people safer all across the 
country. We need to make sure that EPA regional offices have the 
guidance, policies and resources to make this program work in a fair 
and effective way.
    So, I'm interested in learning about what happened in my State. 
When 90 percent of the member facilities of the IFCA were found by the 
EPA to have failed an inspection, that doesn't appear to be a sign of 
misdeeds, or a disregard of regulations, but rather a serious breakdown 
in communications about what the risk management program requires. Now, 
I'm not sure I'd call this an example of regulatory inconsistency but 
it certainly suggests that EPA could have done a far better job of 
outreach and communication in this case.
    So, I look forward to the testimony today and hearing about what we 
can do to improve the functioning of our regional offices. Thank you.

    Senator Inhofe. Thank you, Senator.
    You know, you commented that when 90 percent are found, I 
guess, in violation, I would agree with that. There is 
something seriously wrong. It has to be wrong with the system. 
I know that people don't want to violate, because they know it 
costs them money to violate. Quite often there is an attitude 
in Washington that the regulated communities are all out there 
trying to pollute and trying to do things and, in fact, they 
are not. But that does show that there is a serious problem if 
all 500 of the fertilizer dealers were found to be out of 
compliance.
    I wonder, going back to the case that we talked about where 
the imposition of the excessive--what I consider excessive--or 
suggestion of them, even though they never came to reality, in 
that particular company was there analysis made by the company 
or reported to you as to how long they could actually stay in 
business if they were to have to be paying these fines?
    Ms. Payne. I would say that for the majority of our 
fertilizer dealers less than a week probably. I mean, some of 
them have multiple facilities. Some of them are a single family 
owned business. It varies. But we could have accomplished 
probably improved compliance without that threat, and that was 
one thing that I, in a meeting with Region V staff, really 
begged for is, you know, send us a letter, talk about the areas 
that we can improve upon, but there is no need to threaten the 
$32,500 or criminal imprisonment if you don't respond by 10 
days, you know, right before Christmas.
    I really thought that they agreed with us, but they then 
proceeded, which was rather shocking to us and shocking to our 
fertilizer dealers, because, going on EPA's word, I had 
communicated to them that you will be getting these letters. 
Please don't panic. We are going to be working with you at our 
upcoming convention to provide more tips on how to comply with 
the RMP now that Region V has finally told us after 7 years 
what they really want us to do. We had that commitment from 
them. So when they sent that letters anyway--and it was exactly 
like Senator Obama said, a complete breakdown in communication 
that could have been avoided had they just returned one of my 
dozen phone calls.
    Senator Inhofe. Yes.
    Dr. Waterman, you wrote the book called ``Bureaucrats, 
Politics, and the Environment.'' I would ask you the question: 
does EPA's regional structure provide bureaucrats the 
opportunity to wield considerable influence over policy? If so, 
it this bad?
    Dr. Waterman. It definitely does. I mean, there is the 
issue of primacy, obviously, where the States have a great deal 
of influence, but even beyond that it is clear that there are 
substantial variations between regions, and, whether you want 
to characterize it as bad or inappropriate, it clearly is a 
problem. I think one of the factors that explains that problem 
has been discussed by the first panel and by people on this 
panel, as well, which is that EPA has a goal of national 
consistency and flexibility. If you think about that, they are 
contradictory goals. If you want to have national consistency 
and flexibility, those two things are going to be running 
against each other at some point. So regional administrators 
and people in the regional office are trying to deal with this 
contradiction. I think clearly there has to be more of a 
national consistency.
    Senator Inhofe. I think, though, that what I was really 
getting to is the power of an unelected bureaucrat. Now, what 
we do, we are the ones who hear the complaints. We have to 
answer to an electorate. I know this because I spent 30 years 
in the real world dealing with regulators, and I have seen a 
lot of things happen where the fear of putting someone out of 
business is there. It is an incredible power.
    Something you said, Ms. Payne--I wrote it down--you said 
you had a response from one of the people in the regional 
office, ``We can do what we want.''
    Ms. Payne. Yes. I mean, on the CAFO, when I protested the 
CAFOs--and understand, too, we really felt that was wrong. We 
didn't feel like we had the resources to hire attorneys to take 
on the Federal Government, to challenge that. My association 
doesn't have the resources, much less these fertilizer dealers 
have that kind of resource. Yes, I mean, I was told--I tried to 
understand it because I do work with Federal agencies--that it 
was the least onerous tool in the enforcement toolbox. That is 
where I think maybe the flexibility factor needs to come in, 
that there can be other alternatives than just you either get 
this letter or this letter or this letter and that is all we 
can do.
    Senator Inhofe. Mr. Schaeffer, in your testimony you point 
out how the inspections for underground tanks has dropped off, 
according to the GAO, and I would ask you if you were equally 
concerned back in 1998 when, during the Browner administration, 
when the inspections dropped off, although they called it 
``enforcement discretion'' at that time, as opposed to the term 
that is used now as ``environmental rollback.'' Were you 
concerned back then when that happened, or did you disagree 
that it happened?
    Mr. Schaeffer. First of all, in my testimony I said these 
problems weren't confined to one Administration or another. We 
have struggled with this consistency problem for years under 
different Administrations, so I want to be very clear about 
that.
    Second, in the Browner administration the issue was not 
inspection frequency but whether or not we would be closing 
small businesses that didn't comply with the requirement to 
upgrade tanks by the 1998 deadline. So I that case I think the 
concern was that we would be doing the kind of thing that seems 
to be the focus of criticism at today's hearing, which is 
coming down hard on businesses that basically had no options.
    Senator Inhofe. Also perhaps this is my observation, 
perhaps not yours, that that was in 1998 right before an 
election, and that would involve literally thousands of gas 
stations and made a lot of people mad. Was that a 
consideration, do you think?
    Mr. Schaeffer. No, I don't think so. I never heard that at 
all at EPA. Any time you are in an even year, you, it is an 
election year and people raise that as a motivation.
    Senator Inhofe. Yes.
    Mr. Schaeffer. But I don't believe it was at all in that 
case. I certainly never heard that.
    Senator Inhofe. Mr. Paylor, I think you pretty much covered 
everything in your suggestions. We will take those suggestions. 
You testified to the 45 percent increase over the last 10 years 
of States with delegated authority, yet the EPA still has the 
same amount of employees, 18,000. Do you think the EPA regional 
staff should be reduced?
    Mr. Paylor. Mr. Chairman, the primary thing that we believe 
is that the functions of EPA need to be better coordinated with 
the States. We believe there are opportunities to reduce 
redundancy. There are some things that EPA regional offices are 
doing that are duplicative of the State rules.
    Senator Inhofe. Yes.
    Mr. Paylor. So there is at least an opportunity to redeploy 
resources in a different way, and that has become more of a 
concern for all of the States within the last year because of 
reduction in EPA funding, and those reductions translate in the 
reduction from the States without a reduction in the 
expectations of the States.
    Senator Inhofe. Well, what we are talking about and the 
purpose of this hearing is to get some uniformity. Let me just 
assure you this isn't one of these eating, meeting, and 
retreating type of situations. We are going to take these 
recommendations. We are going to watch the performance of not 
just Region V but all the regions to look for that uniformity 
and that fairness, a sense of fairness, and the recognition 
that there are people out there that are working hard, taking 
risks, and paying for all this stuff up here, and they've got 
to be considered in a more thoughtful way.
    Is there anything that any of you are just dying to say 
before we close this thing? Let's start with you, Mr. 
Schaeffer?
    Mr. Schaeffer. No. I thank you for the opportunity to 
testify.
    Maybe one last thing, which is on the matter of consent 
decrees and whether they were required. My understanding was 
ultimately they weren't in the Region V situation. If I am 
wrong about that, then I would like to know.
    Senator Inhofe. All right.
    Dr. Waterman.
    Dr. Waterman. Yes.
    Senator Inhofe. Now, I have never seen a professor that 
didn't want one last shot.
    Dr. Waterman. We are known for talking a lot.
    I think when the laws were originally passed that much more 
of the activity was perceived as occurring at the national 
level instead of the regional offices were seen as a way of 
representing. With the Reagan administration and onward we have 
seen more movement toward the States, so it may be time to 
rethink the role of the regional offices, themselves. I mean, 
do we really need to have so much autonomy in the regional 
offices? Do we really need to have ten regional offices?
    If most of the activity is occurring in States and not at 
the national level, and essentially the national level is 
oftentimes a watchdog on the States, we may just want to go 
back and think about whether or not the regional offices are 
still a valid means of operating today. I know that is kind of 
a bold proposal, but, you know, this was created in 1970, EPA, 
so we might just want to look at it and see whether those make 
sense any more.
    Senator Inhofe. I think that is fairly reasonably. I have 
always said--and I would ask if you agree with this generally 
in concept--that, having served as the mayor of a major city, 
which is the hardest job in America, and served in the State 
Legislature, then served up here, it appears to me that the 
closer you are to the people, the more responsive you are, and 
I think the more thoughtful you are and effective you are, cost 
effective.
    Do you agree with that?
    Dr. Waterman. Absolutely.
    Senator Inhofe. You know, in Tulsa, Oklahoma, when I was 
mayor, if they didn't like the trash system it ended up in my 
front yard. That got my attention.
    Dr. Waterman. I mean, what we have seen is a movement much 
more toward the local level in terms of enforcement and in 
terms of the way that EPA operates. So kind of the regional 
offices are now stuck in the middle. You have got the States on 
the local level, you have got the national office that is kind 
of overseeing everything, you have the regional offices in the 
middle, and I think originally they were kind of perceived as 
more along the local level.
    Senator Inhofe. Yes.
    Dr. Waterman. So now they've kind of become this 
intermediary between the States and the national office, and, 
as we have heard, there is no coordination and communication, 
so it just creates a tremendous amount of uncertainty and 
confusion.
    I agree with what Senator Obama said, that most of the 
people who work in EPA are hard working, they try to do their 
job. There are some people who obviously step over the line and 
don't do their job appropriately, and that is why we are here 
today talking about this situation with Region V. But I think 
one of the problems is that even if you are a hard working 
person working in a region and you don't have proper 
coordination, quite honestly what is happening in Region VIII 
isn't going to be what is happening in Region II. Even if 
people think they are doing the same job, you don't have the 
coordination. The staff aren't talking to each other, even if 
the regional administrators are.
    I think this structure, itself, may be a problem.
    Senator Inhofe. You know, it is not unique to the EPA. I 
agree with Senator Obama, too. There are literally thousands of 
people really dedicated in public service that are out there 
working. One of my occupations in the past was aviation. I can 
remember with the FAA that 98 percent of the inspectors they 
have in the field are people who are really there to serve and 
really there to help and look after safety and try to assist 
people in a very competitive world. However, that 1 or 2 
percent of the others, you have to step in and correct it 
because some people can't handle power. I believe that.
    Dr. Waterman. And you are never going to have national 
consistency as long as you separate things up this way.
    Senator Inhofe. Yes.
    Dr. Waterman. If you want flexibility, the States can 
provide that. The States can provide how they want to enforce 
the law, and that is a more appropriate method in terms of 
saying, ``OK, this State here wants to be very aggressive in 
enforcing the law, this State here wants to work in a different 
way.'' Citizens can have an impact in terms of how they vote on 
that. But this regional structure, again, just kind of puts a 
middle layer in there that seems to be creating a lot of 
confusion within the Agency and obviously here today.
    Senator Inhofe. I am going to read your book.
    Ms. Payne, any last thoughts?
    Ms. Payne. I really appreciate, Mr. Chairman, having the 
last word on this. I wanted to answer Mr. Schaeffer's question 
on the consent agreements. We would have had consent 
agreements, again, had it not been for your inquiry. Region V 
reissued certificates of compliance which our members have to 
sign under threat of perjury that they are in full compliance 
with the RMP--and these are due by July 1st and they have a 
great deal of heartburn about signing that document because 
they still don't know exactly what Region V wants from them on 
some of these alleged violations. So we are the only State in 
the country that has to sign a certificate of compliance for 
the RMP. I just wanted to make each of you aware of that.
    On the Wabash Valley case, if I may, that is an Illinois-
based cooperative, as well. It has been kind of a rough year in 
Illinois this year. That was a spray drift incident. The 
Illinois Department of Agriculture has the authority under 
FIFRA to take authority to issue penalties for spray drift 
violations, which they did in this situation. Five years later, 
Region V pursued this--and the important thing is that this is 
a criminal case. Despite what people might think, this is the 
first time in our industry that criminal charges have ever been 
filed against an agricultural retailer or its employees. 
Criminal.
    I mean, they wanted to put these pesticide applicators in 
jail for supposedly maybe sitting in the fertilizer shop that 
day and deciding, ``Let's go take the spray rig out and let's 
really try to hurt somebody.'' I mean, that is not what 
happened in this case. In a month from now I am going to be out 
here with Wabash Valley Service Company because they won a 
national environmental respect award from our industry, who 
only issues six of those a year, of all the retailers in the 
country, because that is the kind of good company they are.
    Senator Inhofe. Out of how many retailers is that?
    Ms. Payne. In the country?
    Senator Inhofe. Yes.
    Ms. Payne. I think 5,000 to 6,000.
    Senator Inhofe. So they would be one of six?
    Ms. Payne. Yes. So, I mean, I just feel like they haven't 
been portrayed fairly here. The manager of that company is not 
going to let his guys with 20 years of employment history, very 
good gentlemen--I know both of them--go to jail for this. And 
the judge completely agreed.
    Senator Inhofe. Yes.
    Ms. Payne. So, I mean, they didn't have the grounds to try 
to prove that these people set out with some kind of evil 
intent to harm someone. We have spray drift violations 
periodically. Illinois is a windy State and we have a 
compressed planting season. It can happen. But our Department 
of Agriculture steps in and penalizes spray drift violations. 
That happened and it should have been settled. That is why we 
were so shocked by the U.S. EPA filing criminal charges. It is 
not a common thing. It is the only time it has ever happened.
    Senator Inhofe. Thank you, Ms. Payne.
    Ms. Payne. Thank you.
    Senator Inhofe. I want to thank each of the members for 
being here today.
    We are adjourned.
    [Whereupon, at 11 o'clock a.m., the committee was 
adjourned.]
    [Additional statements submitted for the record follow.]
    Statement of Grant Nakayama, Assistant Administrator, Office of 
    Enforcement and Compliance Assurance and Donald Welsh, Regional 
     Administrator Region III, U.S. Environmental Protection Agency
    Good morning Mr. Chairman and members of the committee. I am Grant 
Nakayama, Assistant Administrator for Enforcement and Compliance 
Assurance, U.S. Environmental Protection Agency (EPA). I am joined by 
Donald Welsh, Regional Administrator for Region III. I appreciate the 
opportunity to discuss with you how EPA meets the challenge of ensuring 
consistent implementation of Federal environmental laws and 
regulations.
                         scope of the challenge
    The United States encompasses a wide range of geographies, 
climates, and economic conditions, with a wide array of industries, 
agricultural enterprises, and commercial and Governmental entities. 
EPA's mission is to protect both human health and the natural 
environment across this varied landscape.
    It is not a simple task. EPA must accomplish these protections by 
implementing 28 different environmental programs contained in eleven 
separate environmental laws, each statute with its own mechanisms for 
achieving its goals. In addition, because most of these laws allow EPA 
to authorize States and tribes to carry out the statutory ensuring the 
effectiveness of the State and tribal programs.
    The Agency has responded to this complex situation by developing 
fundamental principles, a framework of management systems, and a range 
of policies that provide nationwide consistency in environmental and 
human health protections. Within this structure, Regions, States and 
tribes are actively engaged in both the planning and the implementation 
of EPA's programs. A critical strength of this system is the balance 
and flexibility that has been built in to accommodate, as appropriate, 
the inevitable variations in environmental, economic and other 
circumstances that arise.
    Let me be clear, flexibility is not an excuse for disparity. EPA 
does not condone enforcement activity that is arbitrary, that results 
in vastly different responses depending upon the location as opposed to 
the nature of the violation, or that springs from animosity toward a 
business, sector or individual. Disparity of this type is 
counterproductive, and does not lead to increased compliance or a level 
playing field for regulated entities.
    While individual cases are composed of specific facts and 
circumstances, differences in enforcement responses do not necessarily 
equate to disparities. After taking these case-specific factors into 
account, what may appear to be a disparity in EPA's response to a 
violation may, in fact, simply reflect those facts and circumstances. 
Managed flexibility allows EPA to maintain consistency while 
accommodating case-specific differences, as may be appropriate.
    EPA's Strategic Plan, developed in accordance with the Government 
Performance and Results Act of 1993, is the foundation used by EPA 
managers nationwide to determine the highest priority environmental 
issues that the Agency must address. Developed by EPA after input from 
stakeholders, it articulates measurable goals and objectives against 
which the Agency's performance is measured, and describes the means and 
strategies that will be used to achieve results. Routine measurement of 
the progress being made under each goal enables the Agency to identify 
and make any needed adjustments to achieve better results.
    Our Plan is built around five annual goals, centered on the themes 
of clean air and global climate change; clean and safe water; land 
preservation and restoration; healthy communities and ecosystems; and 
compliance and environmental stewardship. It discusses the strategies 
that the Agency applies across the five goals, in areas such as 
science, human capital, innovation, information, homeland security, 
partnerships, and economic and policy analysis. The Office of 
Enforcement and Compliance Assurance (OECA) supplements the Strategic 
Plan's goals with National Enforcement and Compliance Priorities.
    The key mechanism for implementing EPA's Strategic Plan is the 
National Program Managers Guidance and Annual Commitment System, 
administered Agency-wide by EPA's Chief Financial Officer. It orients 
all of EPA's activities to meet a single set of strategic goals and 
objectives. The Guidance and Commitment System contains solid waste, 
toxics and pesticides and enforcement and compliance assurance), 
effectively governing the activities of 95 percent of EPA's personnel. 
Within the system, EPA programs make detailed commitments to conduct 
certain activities over a three-year time frame (e.g., fiscal years 
2005-2007). For the enforcement and compliance assurance program, there 
are commitments to undertake activities such as the number and type of 
inspections that each EPA Regional office will perform. These 
activities are reviewed twice each year by Headquarters.
                        consistency: the regions
    Most EPA programs are carried out through ten Regional offices, 
with Headquarters responsible for national program oversight and 
direction. Given the breadth of environmental issues across the 
country, EPA must balance both national consistency and Regional 
flexibility in program implementation.
    With respect to specific enforcement cases, the Regions conduct 
inspections, make initial compliance determinations and provide 
compliance assistance. EPA's Regional offices function as specialists 
on the environmental concerns within their jurisdictions; their 
strength is in supporting the national programs while tailoring their 
expertise and work in response to regional issues. They are also highly 
effective in working with their State counterparts to ensure that their 
work, as appropriate, complements State environmental priorities.
    The Regions and Headquarters collaborate on policy applicability 
and
    interpretation issues; this collaboration is required on issues of 
national significance. Although the Regions have the authority to 
conclude most cases independent of Headquarters, approval by 
Headquarters is required when settlement terms deviate from policy or 
when the settlement addresses a precedential legal issue.
    EPA Headquarters ensures that national priorities are met and that 
the Regions adhere to national program goals, standards, practices and 
policies. To this end, the formal mechanism used by Headquarters is the 
National Program Managers Guidance and Annual Commitment System, as I 
mentioned earlier. In the Enforcement and Compliance Assurance program, 
national consistency is achieved on a less formal, continuous and 
interactive basis. Along with senior members of my management team, I 
travel to each Region at least once a year to conduct management 
reviews.
    The Enforcement and Compliance Assurance program employs a host of 
national policies and guidance that ensure consistency across the 
Regions. Statute-specific policies address compliance monitoring, 
enforcement responses to violations, penalties and responsibility for 
cleanup of hazardous waste sites, all of which were created to provide 
consistency across the Regions and Headquarters.
    Cross-statutory policies include EPA's Audit Policy, the 
Supplemental Environmental Projects Policy, our Small Business 
Policies, and model administrative orders and judicial consent decrees. 
EPA's Audit Policy, for example, encourages companies to implement 
self-audits for compliance with all environmental laws by promptly 
reported and corrected. EPA encourages multi-facility companies to 
enter into auditing agreements that provide for the review of 
corporate-wide compliance, while providing certainty about liability 
for self-disclosed and corrected violations. EPA also has special 
compliance incentive programs that reduce or eliminate penalties for 
small businesses and municipalities that discover, disclose, and 
correct environmental violations. In fiscal year 2005, based on the 
national plan and program guidance, Region III's resolved 37 Audit 
Policy cases involving self-disclosed and corrected violations at 156 
facilities. In addition to mitigating 100 percent of the penalty in 
most cases, each of the companies corrected its violations, and 
committed to improve its management procedures to prevent recurrences 
of the violations.
    For several years, EPA's enforcement program has used National 
Enforcement Priorities to achieve some of our most significant 
environmental and human health benefits. Three criteria are used in 
selecting national priorities: there is a pattern of non-compliance; 
there is the potential to achieve significant environmental or human 
health benefits; and there is an appropriate Federal role in addressing 
the problem. The selection process involved input from EPA 
Headquarters, the Regions, States and tribes.
    Each national priority has an implementation strategy and a 
national team to carry out the strategy and accomplish consistent 
results. Quarterly, a nationally based Planning Council of senior 
managers reviews the progress on each strategy and accommodate any 
unanticipated developments.
    We also maintain national ``core'' program activities: the day-to-
day work of ensuring compliance with the environmental laws. In this 
context, flexibility actually provides the enforcement program with the 
ability to recognize unique or differing circumstances. As an example, 
two ordinary actions to enforce failure to install pollution control 
equipment, taken in different Regions resulted in markedly different 
penalties. Is there necessarily an inconsistency or disparity in 
treatment? No, a lower penalty amount may reflect mitigation for 
supplemental environmentally beneficial projects that a settling party 
agreed to undertake. It could reflect the fact that one violator was a 
small business, whose financial resources are taken into account in our 
policies for determining appropriate penalties. There may be 
exacerbating circumstances, such as the severity of the environmental 
damage caused or the duration of the violation.
    The ultimate goal of our program is to obtain compliance with the 
environmental laws of the United States. To achieve this, we use a 
range of compliance assistance techniques, from web-based information 
to workshops and site visits. We actively engage in compliance 
monitoring, such as collecting and reviewing compliance information 
reported by facilities, conducting inspections and performing 
compliance evaluations. We offer compliance incentives, such as 
favorable settlements through EPA's Audit Policy or its Small Business 
Policy. And we take enforcement actions.
    upon our assessment of the severity of a problem and the technique 
that is most likely to achieve the most effective results. New tools 
and techniques are often piloted on a limited basis before they are 
employed nationally. In any event, we do not expect that every Region 
will address each compliance situation simultaneously using the same 
tool. However, our policies and management systems are designed to 
ensure a reasonable level of consistency nationwide.
    At the Regional level, the importance of consistency as well as the 
value of flexibility are clear. Consistency is essential to provide 
fairness to the regulated community and citizens, as well as ensure 
progress toward national goals. Occasionally, flexibility is necessary 
to allow us to be responsive to individual States' needs, as well as to 
address issues that are unique to specific geographic areas.
                        the need for flexibility
    As mentioned, the vast majority of Regional activities are 
undertaken to achieve specific national commitments. However, there are 
circumstances in which the flexibility that was mentioned earlier has 
been crucial in addressing environmental concerns unique to a Region or 
State. For example, in dealing with the extraordinary regional 
challenge of restoring the Chesapeake Bay, Region III is working 
closely with the Commonwealth of Virginia to carry out an Integrated 
Storm Water Initiative for the Bay. The purpose of this initiative is 
to accelerate environmental results in this area by combining several 
regulatory and voluntary approaches in a targeted fashion. EPA is 
recognition tools to promote Low Impact Development to achieve greater 
pollutant reductions from the developing areas of the State.
    In addition to helping address unique State needs, flexibility is 
often needed to address Regional environmental problems. One example of 
this is the Vinyl Chloride Project. In order to reduce exposure to a 
known carcinogen, Region III developed a region-specific plan to 
address an environmental problem identified by technical staff, 
presented to management and coordinated through Headquarters. Interest 
in this project began when observations were made by field inspectors 
of movement of this particular pollutant, a known carcinogen, between 
air, soil and water at facilities in the Region. Based on these 
observations, further research was conducted using environmental, 
public health, industry and other data to identify the top chemicals of 
concern in our Region. Vinyl chloride was identified as one of these 
chemicals of concern. The Region next evaluated which industries had 
the greatest risk for pollutant transfers and for which non-compliance 
could be an issue. The field observations and data analysis were 
presented to EPA Headquarters. The data showed that several other 
Regions were likely to have similar issues with vinyl chloride. Based 
on Region III's information, Headquarters selected the Vinyl Chloride 
Project as a national pilot that would directly address a 
recommendation by the General Accountability Office (GAO) to employ 
strategic approaches to resource deployment in the compliance and 
enforcement program. The Project was selected because it addresses a 
significant that demonstrates flexibility in sharing resources across 
regions, and can achieve measurable reductions in harmful air, water 
and hazardous waste pollution.
    Region III led this effort, working in conjunction with four other 
regions, the National Enforcement Investigations Center of the Office 
of Enforcement and Compliance Assurance and our Headquarters Office of 
Civil Enforcement. To date, EPA has assessed the multi-media compliance 
status of more than 80 percent of the twenty-three PVC facilities 
nationwide. Inspections conducted under this Project focus on 
regulatory compliance and, when appropriate, seek innovative and 
measurable reductions in harmful air, water and hazardous waste 
pollution. In one case alone, a settlement has been reached that 
reduced vinyl chloride emissions by 26 tons. Without the flexibility to 
develop a Region-specific approach, this project, which is making 
significant progress in environmental improvements in reducing the 
presence of a known carcinogen, would not have happened.
                        consistency: the states
    EPA oversees State implementation of Federal environmental programs 
through policy, guidance and effective working relationships between 
States and EPA Regional offices. The major environmental statutes have 
a mechanism for authorizing State implementation of environmental 
programs. States must demonstrate that they have the capacity to carry 
out program implementation. We use joint planning and priority setting 
to provide States resource flexibility and to foster use of innovative 
strategies for and traditional activity measures for managing programs 
and measuring results.
    With respect to enforcement, EPA is now implementing the State 
Review Framework, which was developed jointly with the Compliance 
Committee of the Environmental Council of the States, to ensure 
consistency both in State environmental enforcement program performance 
and in Regional oversight. It utilizes existing program guidance (such 
as national enforcement response and penalty policies) to evaluate 
State performance and help EPA determine the adequacy of a State's 
enforcement program.
    Essentially, the Framework assesses a State's compliance 
monitoring, enforcement response and data management using agreed-upon 
performance metrics. Reviews are conducted by EPA Regions as 
cooperative efforts that describe a State's strengths and weaknesses 
under each element and make recommendations with respect to areas 
needing improvement. An additional element of the review provides the 
opportunity to give States credit for innovative approaches to 
achieving results in their programs. The Framework includes national 
tracking of recommendations for improvement, to ensure that they are 
timely made.
                         the importance of data
    Consistency would be extremely difficult to achieve in the complex 
world of environmental protection without sophisticated data systems. 
EPA has invested heavily in modernizing its data systems in order to 
improve our ability to identify compliance problems and trends; help 
inform our decisions about program direction; enhance our ability to 
monitor results achieved across the EPA Regions; track progress toward 
achieving specific commitments; and improve the quality of the data we 
report to Congress, OMB and the public.
                               conclusion
    Differences in enforcement responses do not necessarily equal 
enforcement disparities. An enforcement and compliance assurance 
program that is so rigid that it fails to acknowledge and allow for the 
diversity in our Nation's environmental and demographic conditions 
would be counterproductive. EPA's enforcement program is designed to 
produce consistent and fair results that achieve compliance, cure 
noncompliance, deter future violations, and benefit human health and 
the environment. We accomplish this through a system of policies, 
procedures, and plans that achieve a high degree of national 
consistency while also allowing a necessary degree of flexibility. EPA 
remains committed to continuing to improve compliance. If disparities 
exist, we are committed to removing them, while retaining the 
flexibility we need to address differences.
    Thank you for allowing me to appear before you. I would be happy, 
now, to take any questions you might have.
                                 ______
                                 
          Responses by Grant Nakayama to additional Questions 
                          from Senator Inhofe
    Question 1. In the history of the EPA, how many times have criminal 
charges been filed against a pesticide applicator? Please break down 
the cases by year, State of occurrence, and offer a brief fact summary.
    Response. EPA has identified 56 criminal cases against commercial 
or private pesticide applicators through a search of the criminal 
enforcement docket and case files. Summaries of these cases are 
included in Appendix A. The cases are arranged by the year in which 
EPA's criminal investigation division opened the case. We were unable 
to identify all cases charged since the beginning of the program 
because of the record retention and destruction policy. While case 
files were unavailable prior to 1996, we were able to obtain case 
information from criminal enforcement databases; news releases and 
articles; and copies of pre-1996 case files that were retained for 
reasons unrelated to the case.

    Summary of Criminal Cases against Pesticide Applicators:
                                fy 1982
Bryce Anderson/Randy Zimmerman (Nebraska)
    A criminal information was filed charging the defendants with 
Federal insecticide, Fungicide, and Rodenticide Act (FIFRA) violations 
for applying a restricted pesticide without certification by the 
Environmental Protection Agency (EPA) as an applicator. Anderson pled 
guilty and charges against Zimmerman were dropped. The magistrate 
sentenced Anderson to a fine of $100. Anderson had been a certified 
applicator and let his certification lapse. He had been recertified by 
EPA prior to sentencing.
                                fy 1984
A.C. Supply (Wyoming)
    The defendant, John Michael Anderson (doing business as A.C. 
Supply) was prosecuted jointly by the Federal Government and the State 
of Wyoming for misapplication of a pesticide. He pled guilty and in 
November 1984 was sentenced to a fine of $5,000 and 36 months 
probation.
                                fy 1987
Orkin Extermination (Virginia)
    The case involved the misapplication of the pesticide Vikane by the 
company. In 1988, Orkin Exterminating was convicted at trial and was 
later sentenced to pay a $500,000 fine and was placed on 24 months 
probation.
                                fy 1988
Ronald Rollins (Oregon)
    Ronald Rollins used a restricted-use pesticide (Mobay Furadan 4F) 
in proximity of a waterfowl nesting area and on fields where waterfowl 
fed in a wetland area of the Snake River. In a joint investigation with 
the U.S. Fish and Wildlife Service (FWS), a two count information was 
filed charging the defendant with one count of illegal use of a 
registered pesticide, in violation of FIFRA and one count of unlawfully 
taking migratory birds (Canadian Geese) in violation of the Migratory 
Bird Treaty Act. A Federal District Court jury handed down a verdict, 
which dismissed one count of violating FIFRA, and convicted Rollins of 
one count of violating the Migratory Bird Treaty Act. Rollins was 
sentenced to one year in jail (with all of the time suspended) and one 
year probation.
                                fy 1991
Humane Coyote Getters, Inc.
    Raymond Hall, doing business as Humane Coyote Getters, Inc. pled 
guilty following the discovery of numerous dead animals, including red 
tail hawks, on his property. Tests conducted indicated the carcasses 
contained excessive Carbofuran/Furadan levels. Hall was fined $2,050 
and received 36 months probation. The company was fined $2,375 and 
received 12 months probation.
Lake Doctors, Inc. (Florida)
    Lake Doctors illegally applied pesticides to aquatic areas in the 
State of Florida. The company and 14 defendants pled guilty. The 
company was sentenced in September 2003 to a fine of $100,000 and 60 
months probation. The individual defendants were assessed fines ranging 
from $505 to $20,000. Two defendants received 30 months probation and 
the rest each received 6 months probation.
                                fy 1992
Omni Applicators (Arizona)
    Omni Applicator, a pesticide aerial applicator, and its President, 
Mark Stewart, pled guilty to RCRA and FIFRA violations, including 
knowing endangerment, transportation of a hazardous waste without a 
manifest, and misuse of a pesticide. Stevens was sentenced in February 
1994 to one year and one day in prison and five years probation during 
which time he was not permitted to engage in the pesticide business. He 
forfeited to the Government all assets, including two airplanes 
(estimated cost $60,000) to pay fines and cleanup costs.
Full Circle, Inc. (Washington)
    Full Circle, Inc., a wholly-owned subsidiary of Cenex Limited, 
disposed of the contents of a cement lined containment pond containing 
pesticides and pesticide reinstate that contained listed hazardous 
wastes by spraying it on 100 acres of ground that they rented from a 
local farmer. Full Circle also pushed over the sides of the containment 
pond and covered them with dirt. The company was charged with three 
counts of FIFRA violations: knowing distribution of an unregistered 
pesticide; knowing use of a registered pesticide in a manner 
inconsistent with its labeling and; knowing production of a pesticide 
without registering the pesticide as required. In June 1995 the company 
was sentenced to 12 months probation and ordered to pay a $10,000 fine. 
The company was further ordered to supply the City of Quincy with 
$3,000 worth of chemicals and to report to EPA any impoundment 
containing pesticides at any Cenex Limited location.
Ronald Heward (Wyoming)
    The defendant pled guilty to three counts of unlawful uses of 
pesticides. In October 1993, he was sentenced to a fine of $30,075 and 
12 months probation.
                                fy 1993
Florida Waterways Management (Florida)
    Florida Waterway Management (FWM) operated as an aquatic management 
company throughout the State of Florida from 1986. Steve Weinsier, 
President/owner, was indicted on 17 counts of violating FIFRA-unlawful 
use of a registered pesticide. Weinsier pled guilty to counts 8 through 
17. With his plea the Government moved to dismiss the first seven 
counts. Weinsier was sentenced to 36 months non-reporting probation on 
each of the 10 counts, to run concurrently. He was assessed a $50 
special assessment fee and fined $2,000 on each of the counts he pled 
guilty to, for a total fine of $20,000.
Harry Saul Farm (Indiana)
    The case was charged after the U.S. FWS reported that the pesticide 
FURADAN had been misapplied. The defendant used the pesticide to kill 
migratory birds that fed on his minnow farm. Harry Saul pled guilty and 
paid a $5,000 fine, while another defendant pled guilty and was 
sentenced to pay a $5,000 fine.
                                fy 1994
Y. George Roggy (Minnesota)
    The defendant, the owner/operator of Fumicon, Inc., was a licensed 
pesticide applicator who was under contract with General Mills, Inc. to 
apply the pesticide Reldan 4e to stored oats. Instead the defendant 
applied an unauthorized pesticide, Dusban 4e to the oats, but billed 
General Mills for Reldan 4e application. The defendant was charged with 
11 counts of mail fraud, one count of adulteration and one count of 
FIFRA misuse of a pesticide. In February 1995, the defendant was 
sentenced to 12 months probation, 80 hours of community service and a 
$25 special assessment fee. The defendant appealed his conviction to 
the Eight Circuit Court of Appeals. The Appeals Court affirmed his 
conviction and sentence. The defendant then applied to the U.S. Supreme 
Court, for a writ of certiorari. The Supreme Court denied his petition.
Aquatics Unlimited (Indiana)
    Aquatics Unlimited applied a powerful herbicide, Karmex, to 
hundreds of lakes and ponds in Indiana. Karmex's label specifically 
forbids aquatic use. The company's owner, Carl Klene, pled guilty to 
three counts of mail fraud and one count of misuse of a pesticide. He 
received a sentence of $7,950 in fines, 6 months incarceration and 36 
months probation.
                                fy 1995
Lutellis Kilgore & Sons (Ohio)
    Kilgore sprayed methyl parathion in over 60 residences, in order to 
exterminate pests. Mehtyl parathion is a restricted use pesticide 
approved only for agricultural uses. As a result of the spraying, EPA 
conducted a Superfund emergency removal at numerous residences in 
Cleveland at the cost of approximately $20,000. Kilgore was charged 
with four counts of violating FIFRA-unauthorized commercial application 
of a restricted use pesticide in a manner inconsistent with its 
labeling and illegal distribution of a pesticide. He was also charged 
with making false statements. Kilgore pled guilty to the four counts of 
violating FIFRA. In September 1997, Kilgore was sentenced to 37 months 
incarceration, 24 months probation and ordered to pay $125 in Federal 
fines.
S & M, Inc. (Arkansas)
    Marvin M. Allison was charged with one count of using a pesticide 
in a manner inconsistent with its labeling in violation of FIFRA and 
one count of unlawfully killing migratory birds under the Migratory 
Bird and Treaty Act (MBTA). He applied the pesticide Furadan to his 
rice crops in order to kill migratory birds. The application resulted 
in the death of several hundred birds. In September 1997, he was 
sentenced to a $5,000 fine and 24 months probation.
                                fy 1996
Margaret Stewart (Mississippi)
    Margaret Stewart worked at Spray Lady in Clarksdale, MS. She sold 
the pesticide Endosulfan in improperly marked containers. Endosulfan is 
highly toxic to the nervous system. When Endosulfan is mixed with water 
it turns a milky white color. Minnie Lou Rudd of Batesville, MS died 
after she mistakenly drank from a milk container purchased from Stewart 
that contained a mixture of Endosulfan and water. Stewart was charged 
with two counts of violating FIFRA; and for knowingly violating that 
provision. Stewart pled guilty to the first count and was sentenced to 
12 months incarceration and 12 months probation.
Baird Valley Fish Kill (California)
    EPA assisted the FBI in this case in which overspray from the 
application of the pesticide Endosulfan by Baha Applicators killed 
approximately 5,000 fish along a six mile stretch of a drain which 
leads to the Colorado River. Rick Tilley, the owner of Baha Applicators 
was sentenced in August 1998 to 48 months probation, a $2500 fine and 
$15,519 in restitution.
Farm Air Services (California)
    Farm Air Services aerially applied the pesticide Endosulfan on an 
alfalfa field adjacent to the drain which flows through the Salton Sea 
National Wildlife Refuge. A large fish kill was discovered in the drain 
and company employees were seen dumping the contaminated fish at two 
sites along the New River and Alamo River in an attempt to cover up the 
incident. Farm Air Services pled guilty to a felony of the unlawful 
discharge of pollutants into the Waters of the United States. The 
company was sentenced to 12 months probation, a $2500 fine, and $42,388 
in restitution. No individuals were prosecuted.
                                fy 1997
Reuben Brown (Illinois)
    Ruben Brown, an unlicensed exterminator in Chicago, Illinois, 
sprayed thousands of homes with Methyl parathion, a restricted use and 
highly toxic pesticide. Brown used it as a roach killer. Methyl 
parathion, when exposed to rain and sun, breaks down but may last for 
years in a protected environment, like a home. EPA inspected hundreds 
of homes Brown sprayed, to determine if dangerous levels of the 
pesticide existed. More than a hundred homes were identified as needing 
some clean-up, which involved replacement of walls and other surfaces. 
Some residents had to be relocated during the clean-up of their homes. 
Brown was charged with two FIFRA counts of misusing a restricted use 
pesticide. In December 1997, Brown was sentenced to 24 months 
incarceration and a special assessment fee of $50.
Paul Walls/Dock Eatman (Mississippi)
    In July 1997, Paul F. Walls, Sr. was sentenced to 6 years and 6 
months in prison on 45 counts of knowingly spraying methyl parathion 
without a license and three counts of illegally distributing methyl 
parathion in violation of FIFRA. Walls did not have a license for 
commercial pesticide application, and he had been ordered to cease his 
commercial activities. A co-defendant, Dock Eatman, Sr., also of Moss 
Point, received a sentence of 5 years and 3 months for his conviction 
on 21 counts of illegal pesticide application.
Oscar Miller (Louisiana)
    Several complaints were received regarding the purchase of a roach 
spray from Oscar Miller. The complainants had applied the spray in 
their homes. Samples taken from the homes revealed the presence of 
methyl parathion. Miller was charged with violating FIFRA. The 
defendant pled guilty to the charges and was sentenced to 13 months 
incarceration, 60 months probation and ordered to pay restitution in 
the amount of $61,000 to the U.S. EPA Superfund and pay a victim 
$1,500.
Emanuel Johnson (Louisiana)
    The defendant sold methyl parathion to individuals who were not 
trained or certified to us the pesticide. The defendant also sold 
methyl parathion for the unlawful purpose of eradicating household 
insects. The defendant was charged with two counts of violating FIFRA. 
The defendant was convicted on both counts and was sentenced to 24 
months incarceration, 12 months supervised probation and ordered to pay 
$128,939 in restitution to the U.S. EPA Superfund account and $2,165 to 
a victim.
Lee Poole (Louisiana)
    Poole was an uncertified pesticide applicator who illegally sprayed 
methyl parathion in homes in the Houma area in February 1996, despite 
two previous enforcement actions taken against him by the State of 
Louisiana for improper and unlicensed use of methyl parathion. Because 
of Poole's actions, the Emergency Response Branch of EPA Region VI 
conducted a $2.1 million emergency clean up of methyl parathion 
contaminated homes in the Houma area. Poole was indicted on one count 
of violating FIFRA. Poole pled guilty to the charge and was sentenced 
to 12 months incarceration, 12 months probation, ordered to pay a 
$200,000 Federal fine and restitution in the amount of $2,189,175 for 
the Federal emergency clean up costs.
Kelly Spraying Services (Tennessee)
    Robert E. Kelly, Jr., who operates Kelly Spraying Service in 
Memphis, Tennessee, was arrested on a 42-count Federal indictment which 
alleged that he illegally applied the pesticide methyl parathion inside 
homes. The charges alleged that Kelly purchased at least 280 gallons of 
methyl parathion in Mississippi between 1992 and 1996. In April, 2004, 
Kelly was fined $250,000 and received 20 months incarceration. A second 
defendant was acquitted of all charges.
Casa Famoso Packing (California)
    John F. Clement of McFarland, CA, owner and operator of Casa Famoso 
Packing, was charged with violating FIFRA by improperly exposing 
migrant workers to pesticides. In April 1997, Clement contracted with a 
labor company to provide field workers. While the workers were in the 
field, Clements directed the spraying of the pesticide Agri-Mycin 17. 
In violation of the pesticide label not to re-enter the sprayed area 
for 12 hours, Clements ordered workers to continue working immediately 
after the pesticide was applied. A number of the exposed workers sought 
medical attention. In October 1998, Clement pled guilty and was fined 
$1,000.
Richard Witzke (Michigan)
    The defendant was charged with misusing methyl parathion in his 
house. He was acquitted following a trial in March 1999.
                                fy 1998
    Trehey Termite and Spraying (Kansas)
    The defendant, Daniel Trehey, is the owner and operator of Trehey 
Termite and Pest Control in Kansas City, Kansas. Trehey misapplied the 
restricted use pesticide Rid-a-Bird to the attic above the third floor 
of a building occupied by employees of EPA's Region VII office in 
Kansas City. Rid-a-Bird contains Fenthion which is a highly toxic 
chemical whose use is prohibited in areas near human habitation. 
Immediately following the alleged misapplication of the pesticide by 
the defendant, several EPA employees became ill and sought medical 
attention. This forced the entire third floor of the building to be 
evacuated. Trehey was indicted on one count of violating FIFRA for 
misuse of a registered pesticide. In March 1999, Trehey was sentenced 
to 12 months probation and ordered to pay a $2,000 Federal fine.
Robert Bell (Louisiana)
    Bell sold approximately 62 gallons of methyl parathion to residents 
of a low-income apartment. Eighty of the approximately 96 units in the 
apartment complex tested positive for methyl parathion. Methyl 
parathion is only legal for use in agricultural fields where sunlight 
quickly breaks it down into less harmful substances quantities. Bell 
was charged with violating FIFRA-distribute or sell or to make 
available for use or to use any registered pesticide classified for 
restricted use. In April 1999, Bell was sentenced to 24 months 
probation and ordered to pay a Federal fine of $171.
Glen Dee Taft (Utah)
    Taft was the water master for the Fremont Irrigation Company and 
part of his responsibilities include the de-mossing of irrigation 
ditches. Taft was instructed by his employer to secure an applicator's 
certification to lawfully apply the pesticide. Taft made about six 
applications of the pesticide without having obtained the 
certification. While making one of these applications to the Loa Town 
Ditch, Taft failed to notify the Road Creek Fish Farm and Road Creek 
Rod and Gun Clubs that are adjacent to this ditch. As a result, 
approximately 44,000 fish were killed at an estimated loss greater than 
$100,000. Taft was charged with one count of violating FIFRA-knowing 
application of a restricted use pesticide not in accordance with its 
label. Taft pled guilty to the charges and was sentenced to 6 months 
incarceration, 24 months probation and ordered to pay a $2,000 Federal 
fine.
                                fy 1999
Kerry Pace (Utah)
    Investigators for the Utah Department of Natural resources 
contacted EPA's criminal enforcement division regarding the poisoning 
of four bald eagles with Temik, a restricted use pesticide. The 
defendant, Kerry Pace, had put the poison on deer carcasses in order to 
kill coyotes on his property. In October 2001, he was charged with 
three misdemeanor counts for the Eagle Protection Act, Migratory Bird 
Treaty Act, and FIFRA. He received a sentence of $1,000 in criminal 
fines and 6 months probation
Ray Okelberry (Utah)
    A special agent with the U.S. FWS contacted the EPA criminal 
investigations division regarding the poisoning of three golden eagles 
with temik, a registered, restricted use pesticide. Misdemeanor 
information was filed charging Okelberry with one count of knowingly 
possessing and transporting a Golden Eagle carcass in violation of the 
Eagle Protection act. In September 2000, he was sentenced to a $75 
fine.
Kap Dong Kim (Hawaii),
    Kim, the owner of a ginger root farm in Hilo, HI, was sentenced in 
February 2000 to 4 months in prison and a $5,000 fine and was ordered 
to pay $6,113 in restitution after having previously pleaded guilty to 
illegally using the restricted use pesticide, nemacur, on his crop in 
violation of FIFRA. Kim directed workers to apply it on the crop 
without following required standards for worker protection, even though 
nemacur is prohibited for use on ginger root. One worker was poisoned 
and had to be hospitalized. Kim then deliberately failed to disclose 
the pesticide application when questioned by a Government official.
Jaime Rodriguez (California)
    Jaime Rodriguez plead guilty to charges resulting from his 
application of Thimet 20-6, one of the most toxic restricted use 
pesticides on the market, to his fields. At least 200 ducks died after 
ingesting the pesticide. In February 2001, Rodriguez was sentenced to 
12 months probation, a $500 fine and $1000 in restitution.
Delmar Follis (Indiana)
    Follis was a landlord who allegedly used Diazinon, an outdoor 
pesticide, inside apartments that he owned. The apartments were located 
in low income/minority neighborhoods. Charges were filed and the case 
was ultimately resolved as a pre-trial diversion in June 1999.
Two Feathers Bison Ranch (Tennessee)
    The company pled guilty to illegally applying pesticides resulting 
in domestic pets dying. In April 2000, the defendant paid $2,000 in 
fines and received 24 months probation.
Pineland Plantation (Georgia)
    Defendants pled guilty to misapplying pesticide to kill quail 
predators. In July 2001, the defendants were fined between $500 and 
$5000 each.
                                fy 2000
Pied Piper Pest Control, Inc. (Maryland)
    The company discharged pesticides containing cypermethrin into Rock 
Creek Park in the District of Columbia and Maryland. The discharge 
resulted from the company's attempt to wash down a pesticide spill in 
its parking lot by hosing the pesticide into a storm drain, which then 
discharged into the park. The pesticide killed thousands of fish along 
an eight mile stretch of Rock Creek. In July 2003, after pleading 
guilty to Clean Water Act and FIFRA violations, the company paid a 
$15,000 fine and $5,000 each in restitution to the Maryland Dept. of 
Agriculture and Montgomery County. An employee of the company served 2 
years probation, plus 6 months home detention.
Gary LeBlanc and Paul Vidrine (Louisiana)
    The two defendants pled guilty to one count of FIFRA and one count 
of the Migratory Bird Treaty Act after using the restricted use 
pesticide Furadan on pieces of fish for the purpose of killing vermin 
that were disturbing their crawfish traps. In the process of attempting 
to kill the vermin, they killed at least 12 Federally protected 
migratory birds. In July 2000, each received a $700 fine and 12 months 
probation.
                                fy 2001
Wabash Valley Services (Illinois)
    In 2005, Wabash Valley Service Co. (Wabash) and two employees were 
criminally charged with violating FIFRA by allegedly mis-applying two 
restricted use pesticides on a farm field in Illinois in May 2000 that, 
through the pesticide ``drift'' from the farm field, caused harm to an 
adjacent neighbor, animals and property. The defendants were originally 
charged with failing to follow three different labeling precautions 
prohibiting application when drift might occur. The court concluded 
that the labeling language provided no clear guidance as to how much 
drift was too much, the labeling which prohibited ``spray drift'' did 
not clearly apply to the application method used in this case, and that 
the labeling which prohibited application under ``windy'' conditions 
was too vague. The court initially found all three labeling provisions 
unconstitutionally vague. The court vacated that opinion and the case 
was dismissed.
Joseph Howard (Kentucky)
    A special agent of the U.S. FWS informed EPA criminal 
investigations division that Joseph Howard was under investigation by 
the Kentucky Department of Fish and Wildlife for using Carbofuran to 
poison owls and hawks that were killing his fighting chickens. He pled 
guilty and was fined $3,500 and 12 months probation.
Nelson County Bird Poisoning (Kentucky)
    A special agent of the U.S. FWS informed EPA criminal 
investigations division agents that over forty animals, including 
migratory birds and Red-Tailed Hawks had been killed by Furadan, a 
restricted use pesticide whose use in poisoning any type of animal 
violated FIFRA. Joseph LaFollette pled guilty to a $2,500 fine, 30 days 
home detention, and 12 months probation.
Donald Ray Keel (Tennessee)
    The defendant baited animal carcasses with Temix and killed several 
protected species under the Migratory Bird Protection Act, including 
Red-Tailed Hawks. He was convicted following trial, and in August 2003 
was sentenced to a $1,000 fine, 7 months incarceration, and 12 months 
probation.
                                fy 2002
Menifee County Kill (Kentucky)
    Darce Lee Hudson pled guilty to killing a dog and vulture with 
Furadan, which he was using to kill predators of his fighting chickens. 
In February 2003, Hudson pled guilty to one count of unlawfully taking 
a migratory bird and one count of knowingly using a restricted-use 
pesticide in a manner inconsistent with its label. He paid a criminal 
fine of $1,000.
Albert Doege (Kansas)
    Allegations were made that a certified pesticide applicator was 
misusing a restricted-use pesticide (Thimet) as a poison, resulting in 
the poisoning of several neighborhood dogs. In March 2005, Doege paid 
restitution in the amount of $1,977.
Aldicarb Misuse (Texas)
    Charles and Paul Hajovsky pled guilty to the unlawful application 
of the toxic restricted sue pesticide Aldecarb. Corn saturated with the 
Aldecarb was placed in a freshly planted cornfield in order to kill and 
or drive away feral hogs which had destroyed previous crops. Each 
defendant paid $1,000 in fines and restitution.
Bald Eagles Kill (Nebraska)
    Three individuals pled guilty to intentionally lacing animal 
carcasses with a restricted use pesticide in order to kill coyotes. 
Each defendant paid $1,000 in fines and $4,000 in restitution.
Robert Barnes (Indiana)
    Charges were brought regarding allegations that people were being 
exposed to methyl parathion within homes owned by Robert Barnes. The 
case was resolved as a pre-trial diversion
                                fy 2003
Simpson County Poison (Kentucky)
    The U.S. Fish and Wildlife Service received information that Landis 
Franklin was illegally using Furadan to bait and poison predators of 
his cattle on his farm. A search warrant obtained 38 migratory bird 
carcasses. In May 2003, Franklin pled guilty to one count of violating 
the Migratory Bird Treat Act and one count of violating FIFRA. He was 
sentenced to a $1,250 fine and ordered to pay $10,181 in restitution.
Kahn Angus Farm (Georgia)
    The State of Georgia and the EPA criminal investigation division 
investigated complaints that dead birds were found in a citizen's yard 
near Kahn Angus Farm. A pile of poisoned corn was found on the farm and 
its owner, Roger Kahn, admitted to poisoning corn with the pesticide 
Warbex. Over 3,300 birds died from ingesting the corn. Two large ponds 
had to be sampled and remediated and several thousand pounds of 
contaminated soil were generated as a result of the cleanup. Roger 
Kahn, another individual, and the company all pled guilty to violations 
of RCRA and the Migratory Bird Treaty Act. The company paid $95,664 in 
restitution and a $156,000 fine. Roger Kahn and the other defendant 
each paid a $15,000, as well as 60 days home confinement and the 
performance of 160 hours of community service.
Arnold Sturgill (Virginia)
    Landowner Sturgill, who was not a certified pesticide applicator, 
purchased the restricted-use pesticide Vydate-L by misrepresenting his 
authority to purchase it. He then misapplied the pesticide by 
``baiting'' meat on his property. A significant number of poisoned 
animals were found on the property. The case was investigated jointly 
by EPA and the U.S. FWS. Sturgill was served with three USFWS notices 
(two for the illegal taking of hawks and one for FIFRA misapplication 
of a pesticide). The defendant paid a total of $1,500 in fines.
Springville Bird Kill (Utah)
    EPA's criminal investigation division was contacted by the U.S. FWS 
regarding a kill of about 700 birds along a highway adjacent to Harward 
Farms. The owner, L. Jud Harward admitted to putting out ``bait'' on 
his property to kill blackbirds. The pesticide used was identified as 
Carbofuran. Harward pled guilty to one count of killing migratory birds 
(red tailed hawks) and was sentenced to pay a $1,000 criminal fine and 
$1,000 in restitution.
Henry County Furdan Case (Kentucky)
    The Kentucky Fish and Wildlife Agency advised the EPA criminal 
investigation division that Gary Pohlman set out venison covered with 
the pesticide Furdadan that had killed both domestic animals and Red-
Tailed Hawks in violation of both RCRA and the Migratory Bird Treaty 
Act. The defendant pled guilty to violating both statutes and was fined 
a total of $2,000--$1,500 in Federal fines and $500 in State fines.
                                fy 2004
Big Bend Resort California)
    The Big Bend Resort is a lessee of the U.S. Bureau of Land 
Management (BLM). The defendant, James Colleasure is a part-time 
resident of Big Bend Resort. He mixed pesticide with bird seed and 
spread it on the ground around trailers (leased from BLM) to stop 
damage from rabbits. A number of migratory birds were killed as a 
result of these actions. In June 2005, Colleasure pled guilty to one 
FIFRA count of misapplication of a pesticide. He received one year of 
probation and was required to pay $6,715 in restitution to the BLM.
Alfred Craft (Louisiana)
    An agent of the U.S. FWS requested assistance from the EPA criminal 
investigation division regarding the alleged poisoning of a bald eagle 
through the use of TEMAC. Alfred Craft was convicted at trial and was 
sentenced in February 2006 for violations of the Bald Eagle Protection 
Act, Migratory Bird Act, FIFRA (unlawful use of a restricted pesticide) 
and two counts of witness tampering. He received 12 months on each of 
the five counts, with the sentences to run concurrently. He also was 
assessed $124,000 total in fines and restitution.
Log Creek Properties (Kentucky)
    Testing on a dead bald eagle discovered on a section of Log Creek 
on the Log Creek Ranch confirmed that it had ingested Carbofuran. In 
January 2004, a Federal search warrant recovered more poisoned animals 
and Furadan in an unlabeled container. In May 2004, Log Creek 
Properties pled guilty to one count of taking a Bald Eagle illegally. 
The company paid a $15,000 fine.
Kenneth Schaffer (Missouri)
    The defendant, a rice farmer, mixed the pesticide Bidrin with bird 
seed and spread it on the levy surrounding his rice crop in order to 
kill feeding birds. He was charged under FIFRA (misapplication of a 
pesticide) and the Migratory Bird Act, and was fined a total of $4,000.

    Question 2. Please estimate the cost the Government invested in all 
resources applied to the Wabash Valley prosecution, including but not 
limited to the costs of investigation, case evaluation, and trial 
preparation measured in FTE's and dollars.
    Response. Since the Wabash Valley Service Company case was opened 
in February 2001, EPA has invested approximately .5 FTE and $63,700 for 
activities supporting this case. This includes approximately $61,700 
for special agent and regional criminal enforcement counsel payroll 
costs and $1,000 for associated travel.

    Question 3. Please describe the EPA evaluation process a criminal 
case is subjected to from investigation to the filing of criminal 
charges.
    Response. Headquarters evaluates and monitors criminal 
investigations throughout the case process, which includes the 
following major steps.
    Cases start with leads: A lead is opened when an EPA Special Agent 
learns of a potentially illegal event or receives information of a 
potential crime. Generally, Special Agents gather preliminary 
information to decide whether further action is warranted. Leads that 
clearly do not involve potential Federal environmental crimes are 
closed without further action or, if appropriate, may be referred to 
EPA's civil enforcement office or a State for further action.
    Leads may evolve into formal investigations: EPA is guided by the 
1994 memorandum, ``The Exercise of Investigative Discretion'' in 
determining whether to open a criminal case and evaluates (1) the 
presence or threat of significant environmental harm and (2) culpable 
conduct.
    Case agents have legal and technical support at all stages of the 
case development process: In addition to legal analyses by EPA criminal 
enforcement attorneys, the Department of Justice (DOJ) provides 
assistance throughout the criminal investigative and case development 
process. Case agents have ongoing discussions with DOJ prosecutors and 
EPA criminal enforcement attorneys about the merits of the proposed 
case. The criminal program also relies on a team of forensic engineers, 
chemists, biologists and attorneys to help determine whether 
prosecution is warranted.
    The decision to prosecute an alleged environmental crime and the 
filing of charges resides with the Department of Justice: If the 
criminal enforcement program decides that the evidence is sufficient to 
prove criminal culpability ``beyond a reasonable doubt,'' it will 
request DOJ to charge defendants. Both the decision to indict and the 
choice of statutory charges and number of counts rests with the DOJ.
    EPA evaluates a criminal case, through all steps through the 
following mechanisms: (1) Headquarters reviews new cases; (2) Criminal 
Investigation Division (CID) desk officers conduct day-to-day oversight 
with frequent communication with field agents; (3) Headquarters 
monitors case development via interactive online databases; (4) EPA 
legal counsel ensure legal sufficiency; (5) field agents report weekly 
to Headquarters; and (6) CID's Assistant Director for Investigations 
conducts quarterly case reviews with each field office to ensure that 
the regional offices are consistent in their case selection criteria, 
that cases are chosen in accordance with guidance and the 
investigations are proceeding appropriately.

    Question 4. EPA Region V interpreted the RMP requirements 
differently than other regions across the country. Does the EPA 
authorize regions to interpret laws differently in terms of 
requirements of the regulated community?
    Response. EPA does not authorize its regions to interpret the 
environmental laws and implementing regulations differently. Region V 
did not interpret the Risk Management Plan (RMP) regulations 
differently. Region V's interpretation of the RMP regulations is 
consistent with national program policy and guidance.
    EPA developed and issued numerous guidance documents, including, 
but not limited to, program and industry specific Questions and 
Answers, sector-specific model RMPs, and general guidance documents 
pertaining to the Clean Air Act Section 112(r) program. These materials 
were distributed to regional offices and made available to the public. 
In addition, EPA has developed a written RMP enforcement penalty 
policy, and issued general enforcement and program-specific guidance 
documents to the regions. EPA also holds an annual RMP Regional 
Enforcement meeting and EPA Headquarters conducts monthly RMP 
enforcement conference calls with the regions.

    Question 5 What is the EPA doing to ensure that Federal 
environmental laws are subject to the same interpretation across the 
country?
    Response. EPA works to ensure that environmental laws and their 
implementing regulations are interpreted uniformly nationwide by 
distributing issue-specific policies and guidance and conducting 
training. EPA also holds annual statute-specific national program 
managers meetings and monthly program implementation conference calls, 
in addition to the constant contact that is maintained through the 
daily interaction of EPA Headquarters program offices with their 
Regional counterparts.

    Question 6. In the last decade, there has been a 45 percent 
increase in States' delegated authority yet the EPA has maintained a 
consistent level of 18,000 employees. Why does this decrease in EPA 
responsibility not correspond to a decrease in EPA regional employees?
    Response. The 45 percent increase to States' delegations does not 
equate to a 45 percent increase in workload or staffing for States or a 
decrease in workload or staffing for EPA. Many of the States were 
already doing much of the base program work prior to 1996 before they 
were delegated. Most of the delegations that occurred since 1996 have 
been to augment the basic delegation such as adding a pollutant or an 
industry to the base program.
    EPA continues to have the responsibility of accelerating our 
nation's environmental pace. In a recent Environmental Council of 
States study, from 1996 to 2003, State spending on air, water, and 
waste programs declined from $9.6 billion to $8.5 billion, or 11 
percent. With this decreased spending at the State levels, States 
increasingly have looked to EPA to provide technical or other 
assistance with delegated programs.
    Additionally, targeted projects have increased over the past 
decade. As the numbers of special projects have increased, EPA must 
devote more regional personnel and resources to oversight. These 
earmarks require more oversight and technical assistance than standard 
grants since many recipients are unprepared to spend or manage the 
funds, and projects generally take several years to complete, requiring 
EPA regional resources for an extended period of time.
                                 ______
                                 
          Responses by Grant Nakayma to additional questions 
                         from Senator Jeffords
    Question 1. This hearing included testimony from a representative 
of the Illinois fertilizer and Chemical Association about their 
interaction with EPA with respect to risk management plans for 
anhydrous ammonia retailers. Can you discuss why EPA Region V decided 
to focus on Illinois fertilizer retailers?
    Response. Illinois fertilizer retailers store anhydrous ammonia. 
Anhydrous ammonia is released at the greatest frequency and quantity of 
any reported chemical in the Emergency Response Notification System 
database. Anhydrous ammonia's extremely hazardous nature was 
acknowledged when Congress listed it as one the substances to be 
specifically regulated under Clean Air Act Section 112(r). Anhydrous 
ammonia can be harmful to individuals who come into contact with it. 
Accidental releases of the gas can cause injuries to emergency 
responders, law enforcement personnel, and the general public. 
Inspections of the agricultural anhydrous ammonia industrial sector, 
therefore, fit into the inspection goals of EPA Region V and the 
Agency.
    In April 2002, EPA Region V looked into partnering with State 
departments of agriculture to conduct inspections of anhydrous ammonia 
facilities. EPA Region V contacted the State departments of agriculture 
in the region that had oversight responsibility for agricultural 
anhydrous ammonia: The Illinois Department of Agriculture expressed an 
interest in partnering with Region V and conducting federally 
enforceable inspections. Almost half of the 1,531 agricultural ammonia 
facilities in Region V are located in Illinois. The Region regarded 
this effort as a pilot program. If the Illinois Department of 
Agriculture project proved successful, and if funding were available in 
subsequent years, the pilot could be extended to other States.

    Question 2. Is theft an issue at these facilities? Are there 
possible illicit uses of anhydrous ammonia?
    Response. Yes. Anhydrous ammonia is frequently targeted by thieves 
to use in the illegal production of methamphetamine. Theft of anhydrous 
ammonia is a serious environmental and health concern because it 
becomes a toxic gas when released to the environment. The substance can 
be harmful to individuals who come into contact with it or inhale 
airborne concentrations of the gas. When unintentionally released 
during attempted and actual thefts, the gas can cause injuries to 
emergency responders, law enforcement personnel, the public and the 
criminals themselves.
    A March 2000 ``Chemical Safety Alert'' highlighted the potential 
environmental harms posed by the theft of anhydrous ammonia. A review 
of the Emergency Response Notification System database documents 67 
reported thefts of anhydrous ammonia in Region V States from January 1, 
2003, to July 18, 2006.

    Question 3. What types of compliance assistance does EPA offer? 
What types of assistance did the Agency offer or make available in the 
Illinois example?
    Response. EPA's compliance assistance includes activities, tools or 
technical assistance that help (1) the regulated community understand 
and meet its obligations under environmental laws and regulations; or 
(2) compliance assistance providers to aid the regulated community in 
complying with environmental regulations. Compliance assistance may 
also help the regulated community find cost-effective ways to comply 
with regulations or go ``beyond compliance'' by pollution prevention, 
environmental management practices and innovative technologies.
    The Office of Enforcement and Compliance Assurance (OECA) manages 
the EPA-sponsored Compliance Assistance Centers and the National 
Environmental Compliance Assistance Clearinghouse--a web-based 
repository of compliance assistance information. Since 1996, EPA has 
sponsored partnerships with industry, academic institutions, 
environmental groups, and other Federal agencies to launch 14 sector-
specific Compliance Assistance Centers. The Centers offer updates on 
regulatory developments, sector-specific regulatory explanations, 
compliance tools and training, a place to ask questions and get 
answers, databases on technologies and techniques, and pollution 
prevention tips and ideas.
    EPA also has created 33 sector notebooks, which are a series of 
plain language books that describe a specific industry and the major 
environmental regulations that apply to its activities. EPA has 
produced several industry-specific and regulatory-specific compliance 
guides such as The Micronutrient Fertilizer Industry: From Industrial 
Byproduct to Beneficial Use.
    Other typical activities include developing and distributing 
regulatory guidance materials, developing and conducting workshops and 
training courses, developing web-based tools, operating telephone 
``hotlines'' and responding to questions from the regulated community 
and trade associations. EPA also develops compliance guides to 
accompany certain new rules.
    For RMP programs, EPA worked with industry groups to develop model 
programs. Initially, these model programs were created for ammonia 
refrigeration, propane handling, and water treatment operations. In 
addition, EPA wrote a number of guides to assist the regulated 
community in developing, filing and implementing RMP programs. These 
materials were available to the regulated community in both electronic 
and hard copy formats in advance of the initial compliance date of June 
20, 1999.
    At the time the Final RMP Rule was published in 1996, Region V 
conducted outreach to industry and trade associations, including making 
10 to 15 presentations on the RMP regulations. In 1998, Region V 
contracted with a private consultant to develop and conduct an RMP 
basic training course for industry, which focused on the basic 
requirements of the program. In 1998 and 1999, the contractor and 
Region V staff made approximately 15 presentations of the RMP course to 
industry and the public. Region V staff also made presentations 
regarding the RMP program at conferences and meetings throughout the 
Region at the request of various trade groups.

    Question 4. Can you please describe EPA's interaction with the 
States during these types of inspections?
    Response. For RMP inspections, of the six Region V States, only 
Ohio is authorized to implement and enforce the Clean Air Act 112(r) 
program. Therefore, absent a special program such as the pilot 
initiated with the Illinois Department of Agriculture, there would be 
no State involvement in these inspections. EPA's agreement with the 
Illinois Department of Agriculture was established, in part, to foster 
EPA--State collaboration with respect to agricultural sources.
    Illinois Department of Agriculture inspectors completed EPA's Basic 
Inspector Training Course, RMP Program Specific Training, and Health 
and Safety Training in order to obtain EPA inspector credentials. For 
each inspection, the State inspectors obtained a copy of the facility's 
process hazard review and compliance audit. They reviewed operating 
procedures, offsite consequence analysis, incident investigations, 
training given to employees, and the facility's emergency response 
plan. The inspectors documented findings in a format developed by EPA, 
and prepared and submitted a written inspection report. The inspectors 
documented their observations; they did not determine whether a 
violation existed. EPA Region V staff reviewed the observations and 
made violation determinations. EPA Region V staff conducted a quality 
control review of the initial inspections. The Region discussed their 
findings with the Illinois Department of Agriculture to ensure that the 
Region's comments were incorporated in subsequent inspections.

    Question 5. Can you discuss the process each region uses to 
determine its enforcement priorities for a given year?
    Response. When setting new priorities, the regions take into 
account existing national enforcement and compliance priorities, 
existing regional priorities, areas where they are responsible for 
direct implementation, and grant and work agreements with the States 
when setting new priorities. All regions consult their State regulatory 
partners as part of this process.

    Question 6. Did the actions of Region V in this instance deviate 
from this practice?
    Response. No, Region V did not deviate from this practice in this 
instance.

    Question 7. How do you think the Office of Enforcement and 
Compliance's incomplete and/or inaccurate data on the universe of 
regulated entities impacts the consistent implementation of Federal 
environmental laws and regulations across regions?
    Response. OECA's ability to consistently apply Federal 
environmental laws and regulations is not dependent upon having a 
complete knowledge of the regulated universe. Consistency is a function 
of having clearly defined and communicated policies (e.g., enforcement 
response and penalty policies) that describe the appropriate range of 
responses to types of noncompliance, and that set expectations for how 
to address individual noncompliance problems and patterns of 
noncompliance. Complete knowledge of the regulated universe is not 
necessary to ensure consistent implementation.

    Question 8. How do you plan to coordinate with the Office of 
Environmental Information to address the issue of limited knowledge of 
EPA's universe of regulated entities?
    Response. OECA recognizes and uses the Office of Environmental 
Information's Facility Registry System (FRS) as the official Agency 
data base that identifies facilities subject to environmental 
regulations or of environmental interest, and uses Agency data 
standards to integrate information from multiple sources giving a 
unique identifier. Using FRS, the overall number of regulated entities 
is approximately 1.5 million, and these records are linked with permit 
or environmental interest records in Permit Compliance System (PCS), 
Air Facility System (AFS), Resource Conservation and Recovery Act 
Information (RCRAInfo), Integrated Compliance Information System 
(ICIS), Safe Drinking Water Information System (SDWIS) and multiple 
other systems. OECA regularly updates its ICIS and the Integrated Data 
for Enforcement Analysis (IDEA) system using FRS data on regulated 
entities. As FRS makes system and data changes, OECA will adapt in 
response.
                                 ______
                                 
          Respones by Grant Nakayama to additional questions 
                         from Senator Voinovich
    Question 1. Does Region V intend to approve Ohio's request to 
transfer the National Pollutant Discharge Elimination System for 
Concentrated Animal Feeding Operations (CAFO) permitting to the Ohio 
Department of Agriculture? Why or why not?
    It is my understanding that the Ohio Department of Agriculture has 
been in communication/consultation with Region V while developing this 
package. Can Region V make a determination in 6 months or even 3 
months?
    Response. Ohio has not asked Region V to approve a revision to the 
Ohio National Pollutant Discharge Elimination System (NPDES) program to 
transfer the concentrated animal feeding operations (CAFOs) element 
from the Ohio Environmental Protection Agency to the Ohio Department of 
Agriculture. The Region would approve a revised program that meets the 
requirements the Clean Water Act and the Code of Federal Regulations 
(CFR). Federal regulations allow two or more State agencies to share 
NPDES authority and the Act and regulations contemplate EPA approval of 
revised programs that meet the applicable requirements.
    Region V and EPA's Office of Water have been providing advice and 
assistance to help Ohio revise its program. We anticipate requiring 6 
months to make a decision once Ohio submits a request with appropriate 
documentation. This period will include an opportunity for the people 
of Ohio to comment. It would be difficult to make a decision in a 
shorter period of time while giving the people of Ohio a chance to 
participate and fulfilling our obligations under the Act.

    Question 2. Over the years, EPA has published numerous guidance 
manuals that provide valuable information for the industry to consider 
voluntarily complying. It is the observation of some that--at times--
the guidance documents are treated as law, though the first page of one 
such document entitled ``Managing Manure Nutrients at Concentrated 
Animal Feeding Operations December 2004'' States ``This is a guidance 
document and is not a regulation. It does not change or substitute for 
any legal requirements the obligations of the regulated community are 
determined by the relevant statutes, regulations, or other legally 
binding requirements. This guidance manual is not a rule, is not 
legally enforceable, and does not confer legal rights or impose legal 
obligations upon any member of the public, EPA, States, or any other 
Agency. In the event of a conflict between the discussion in this 
document and any statute or regulation this document would not be 
controlling. The word `should' in this document does not connote a 
requirement, but does indicate EPA's strongly preferred approach to 
assure effective implementation of legal requirements.''
    Has Region V or any region ever used the failure of a State to 
comply with such guidance, which is not law, as the basis to reject 
State proposed standards or informed States that if they do not 
incorporate such guidance documents and standards in the development of 
regulations, that it is likely that the new regulations will not be 
approved, even if they meet Code of Federal Regulations (CFR) 
requirements?
    If, for example, a State like Ohio decides to use a practice 
approved by the U.S. Department of Agriculture's Natural Resources 
Conservation Service (NRCS), such as practice standards 633 for 
application of waste versus EPA's guidance as outlined in Appendix L of 
the ``Managing Manure Nutrients at Concentrated Animal Feeding 
Operations'' Guidance Document, would EPA's regional office deny the 
Ohio Department of Agriculture package to transfer the National 
Pollutant Discharge Elimination System permitting authority from Ohio 
EPA to the Ohio ODA?
    Response. The Region has not rejected State proposed standards that 
meet Clean Water Act and CFR requirements. Region V is working with 
Ohio EPA, Ohio Department of Agriculture, USDA Ohio Natural Resources 
Conservation Service (NRCS) and other partners to resolve issues 
related to the Ohio NRCS Waste Utilization Standard (633) for 
application of wastes from agricultural livestock operations. We would 
approve a revised Ohio program that meets the requirements of section 
402(b) of the Clean Water Act and 40 CFR part 123.

    Question 3. Under EPA's CAFO rule, what is the definition of 
``discharge?'' Do all regions share the same definition? How do you 
interpret this definition to apply to livestock farms?
    Response. EPA's CAFO rule does not define ``discharge.'' The Clean 
Water Act includes concentrated animal feeding operations (CAFOs) in 
the definition of the term ``point source.'' Section 502(12) defines 
the term ``discharge of a pollutant'' to mean ``any addition of any 
pollutant to navigable waters from any point source.'' All EPA Regions 
share this definition. EPA's preamble to its proposed, revised CAFO 
rule recognizes that some CAFOs have a higher likelihood of discharging 
and suggests that large CAFOs falling into certain categories consider 
seeking permit coverage. EPA is seeking comments on the completeness 
and accuracy of the preamble list of situations where a discharge may 
occur.

    Question 4a. There is a constant push within the States to be 
faster in issuing permit authorizations. Businesses demand the ability 
to meet changing consumer demands by making quick modification or 
changes to their plants and facilities. Associated with this pressure 
is the desire by business to work within construction seasons to meet 
their time frames for completion of projects. Businesses push States to 
allow as much construction of new or modified facilities prior to 
receiving final permits. Unfortunately, the U.S. EPA has been 
inconsistent in how much construction it will allow prior to receiving 
either a water or air permit for a new facility. Many States seem to 
allow significant amounts of construction prior to final issuance of 
permits. Meanwhile, in States like Ohio, I understand Region V has 
issued letters and taken enforcement actions against facilities that 
initiated construction prior to receiving final permits. For example, 
Indiana has a State rule that allows significant amount of construction 
prior to receipt of a final air permit. I understand that when Ohio 
inquired about that rule the U.S. EPA indicated that they would not 
approve another rule like that in another State. The U.S. EPA should be 
consistent in the standard it holds States to relative to pre-permit 
construction activities. A lack of consistency can put States that are 
more conservative in what they will allow at a competitive disadvantage 
to neighboring States.
    Response. The Clean Air Act and implementing regulations for 
construction permitting set minimum requirements for permitting 
programs, but do not require that they all be the same. This preserves 
State flexibility to tailor programs to meet their own circumstances, 
as long as they meet the Clean Air Act minimum requirements. The 
minimum requirements assure that proposed changes at sources that could 
have an adverse impact on air quality are available for public and 
Agency review and are permitted prior to initiation of on-site 
construction activities. EPA strives to preserve States' flexibility, 
but must assure that minimum requirements are met.
    The requirements for allowable pre-construction activity provide 
flexibility for minor sources of air pollution, but allow very limited 
pre-permit construction for major sources. Within this framework, EPA 
has worked to assure a consistent approach to approving State permit 
requirements. The Indiana rule you discuss is currently being reviewed 
by EPA and we will consider consistency as we complete our analysis and 
finalize our determination.

    Question 4b. All the States should be held to similar requirements 
when it comes to public participation in permitting actions. It appears 
that permits are issued in some States with almost no public 
participation while others have more intensive involvement. If States 
are simply implementing Federal requirements for public involvement, 
then those requirements should be clearly identified and enforced 
across all regions. Otherwise, States with more involved public 
participation will be at a competitive disadvantage because they will 
have longer permitting processing time frames.
    Response. As noted above, the Act and EPA regulations spell out the 
minimum elements of a permitting program. State approaches to public 
participation need not be identical, particularly for smaller sources, 
where the regulations allow for various approaches that have evolved 
over many years of State permitting experience.
    For example, all States in EPA Region V require full public 
participation for construction actions that trigger Federal air 
permitting requirements. EPA is not aware of any States that exclude 
all minor actions from public participation. However, EPA has approved 
various de minimis emission levels below which minor sources can be 
exempt from public participation requirements. When States have 
established public participation threshold levels, EPA analyzes such 
requirements for consistency with other States.
    EPA has become aware of some concerns with existing State rules 
that may not meet minimum requirements for public participation. We 
agree that this could present a consistency issue, and we would take 
action to ensure that minimum participation requirements are met. 
However, we are still evaluating these concerns.

    Question 4c. Continued: Clarity and simplicity of permits should 
also be consistent. Given that all States should be following the same 
requirements set forth in the Clean Air Act, why are States treated 
differently within the region with regard to length and detail of 
permits. For example, Title V permits in some States may be hundreds of 
pages long while in another State for a similar facility it is not even 
a hundred pages. Another example would be permits for ethanol 
facilities. Permits for an ethanol facility in one State are 60 to 70 
pages while--within the same region--a similar sized facility requires 
a permit more than 200 pages in length. The 200-page permit is reviewed 
by the regional office, and the State is told it is meeting the minimum 
required permit content. Why is there a difference?
    Response. Title V contains minimum requirements for permit content, 
which are required as minimum elements of State programs, and EPA 
ensures that all State programs meet these requirements. However, 
States have flexibility in how they actually translate these 
requirements into permit terms, and have, over the years, developed 
permitting approaches that are tailored to their specific circumstances 
and that their permittees are familiar with. This results in varying 
permit length, while still meeting Title V content requirements.
    Permit length varies across States for a variety of reasons. Even 
if Federal requirements are the same for similar facilities, State 
requirements can vary. States also have different approaches to permit-
writing and permit organization. Some States may repeat all the State 
and Federal laws verbatim in the permit, which can make permits 
lengthy. Other States may use a citation approach in which the basic 
emission limits, monitoring and recordkeeping requirements are 
identified, but other details of the regulations are identified through 
citations to the underlying regulations. Other States may format their 
permits differently, using larger print or more blank space. All of 
these variations are permissible under Title V provided they meet the 
permit content requirements. While we recognize there are reasons a 
shorter permit may be desirable, EPA believes it would be inappropriate 
to force States to choose one approach simply because it makes the 
permit shorter.
                               __________
        Statment of Jean Payne, President, Illinois Fertilizer 
                        and Chemical Association
    Dear Mr. Chairman and members of the committee, my name is Jean 
Payne. I am here today on behalf of the Illinois Fertilizer & Chemical 
Association (IFCA). IFCA represents and assists the retail agrichemical 
dealers, who in turn provide agricultural inputs and application 
services to the farmers of Illinois. We have over 1,000 members, 700 of 
which are ag retail locations in Illinois. Agriculture is the largest 
industry in our State.
    Illinois is a State where regulations governing the storage, 
handling and application of agrichemicals are extensive, more so than 
in many other States. IFCA supports the majority of these regulations, 
in fact our Association drafted and secured passage of many of these 
laws to improve the stewardship of the crop input industry. Our 
regulatory agencies in Illinois actively enforce these regulations and 
we work closely with them and with our members to ensure that our 
industry complies with over 70 different Federal and State 
environmental, health, safety and transportation regulations that 
affect agrichemical dealers.
    Our interaction with the U.S. EPA Region V over the years has been 
fairly cooperative, even though we do not work with them on a daily 
basis. That's because the majority of the Federal environmental 
regulations are handed to the State agencies to enforce, and we do work 
daily with State agencies in a very open and fair manner. But I am here 
to share with you a troubling situation that our industry now finds 
itself in with Region V U.S. EPA. Our members are suddenly on the 
receiving end of an enforcement policy that is not justified in 
opinion, was not applied uniformly, was not well communicated and does 
not treat industry in a fair or equitable manner.
           the rmp regulation and illinois ammonia facilities
    In 1998, the U.S. EPA promulgated the Clean Air Act Risk Management 
Plan regulations that affect agricultural retailers who store anhydrous 
ammonia as nitrogen fertilizer. The rule requires our facilities to 
document the management and safety of their ammonia systems and to 
calculate the worst case scenario for the surrounding community if a 
catastrophic release occurs. To give you an idea of the scope of the 
agricultural ammonia industry, Illinois fertilizer dealers take 
delivery of, store and apply an average of 500,000 tons of this 
nitrogen fertilizer each year. Since 1999, when the RMP regulation went 
into effect, we have safely handled and applied over 4.2 million tons 
of anhydrous ammonia with not a single catastrophic release attributed 
to non-compliance with the RMP regulations. Many Illinois corn and 
wheat growers prefer this form of nitrogen because it can be directly 
injected into the root zone and it is the most economical form of 
nitrogen. Our industry is very proud of our safety record.
    Prior to the compliance date for this regulation, IFCA hosted 
training sessions throughout the State to help our members prepare 
their RMP. We utilized materials provided by The Fertilizer Institute 
and Asmark, Inc., a regulatory compliance company who specializes in ag 
retail regulations. Back in 1998 when this regulation was promulgated, 
the only guidance from the U.S. EPA was provided mostly on their 
website. It was somewhat helpful but keep in mind that eight years ago, 
the majority of our ag retailers did not have access to the Internet 
due to their rural location. The only training classes on the RMP 
regulation sponsored by Region V were classes to help people determine 
IF the regulation affected them. At the time Region V offered these 
sessions, the RMP submit computer program was not yet available and so 
many of our members did not attend but relied instead on more specific 
guidance from TFI, Asmark and IFCA. Our industry already knew that this 
would affect our ammonia facilities and so this EPA session would have 
done little to help us prepare to comply with this very complex 
regulation. In our opinion, there was no specific, hands-on U.S. EPA 
outreach or training program enacted by Region V for our industry and 
our State EPA was not commissioned by Region V to act as the State 
enforcement Agency for this rule either. We really were on our own.
    In January 1999, IFCA conducted a RMP training session at our IFCA 
convention, which was attended by several hundred ag retail managers. 
Since then, we have conducted additional courses, almost yearly as part 
of our annual ammonia safety training, to review the requirements of 
this rule and assist our members with compliance. Again, we had little 
guidance to go from, only the federal regulation itself which is not 
easy to interpret and apply in a practical manner. In addition to 
attending IFCA training classes, many of our members utilized the 
compliance services of the Asmark Institute to fulfill the requirements 
of the RMP.
    With help from industry groups like TFI and IFCA along with 
organizations like the Asmark Institute, our members filed their RMPs 
and re-filed them again in 2004 as is required by the rule. During the 
entire time this regulation has been in effect, we have periodically 
reminded our dealers of their RMP obligations such as the three year 
compliance audit and the need to update the plans if changes are made 
at the facility. During all this time, we heard nothing from Region V 
indicating that we were not keeping up with our compliance obligations.
            region v & illinois dept of ag rmp pilot program
    It was 4 years after the effective date of this regulation when 
Region V first expressed an interest in the RMP program as it relates 
to agricultural anhydrous ammonia. Region V approached the Illinois 
Department of Agriculture in 2003 with a pilot program in which the 
U.S. EPA would essentially hire the State of Illinois Dept of Ag 
inspectors to check 500 ammonia facilities for compliance with the RMP 
rule. Immediately, the Illinois Dept of Ag contacted me to attend to a 
meeting with them and Region V to discuss this pilot program. Had the 
Dept of Ag not informed me of this meeting, I would not have known of 
it as Region V did not reach out to IFCA. But this was the first 
communication our industry had with Region V on this program since its 
enactment in 1999, and so IFCA welcomed their involvement because we 
often wondered when or how compliance would be assessed given that no 
State Agency had been given oversight of this regulation.
    It was important to the Illinois Dept of Ag that IFCA support this 
pilot program. In the meeting with IDA and Region V, EPA staff told us 
that the Dept of Ag inspectors would utilize a RMP compliance checklist 
during their inspections. We had the opportunity to review the 
checklist and we submitted comments on the phrasing of several of the 
questions. Region V staff informed us that they would use the 
checklists to review the facilities? overall compliance with the RMP 
and if areas of weakness were discovered, it would allow the Agency and 
industry to target specific training to improve these areas. We took 
them at their word and with that being the premise of the pilot 
program, IFCA supported Region V utilizing the services of our State 
Dept of Ag to assess compliance with the RMP. After all, we had a lot 
invested in the RMP program and we too wanted to know how our members 
were doing and what areas may need to be improved. We were also 
comfortable with the Dept of Ag inspectors because they interact 
frequently and professionally with our dealers and with IFCA.
    We informed our members of this inspection program and urged them 
to work cooperatively with the inspectors. We viewed this program as 
way to establish a closer relationship with the U.S. EPA on RMP 
compliance issues. Two years went by and the inspections proceeded. Per 
EPA instructions the inspection reports were not provided to the 
fertilizer dealers but we had no reason to worry, we thought. There 
were no ammonia incidents or blatant violations of the RMP that we knew 
of or were told about.
                            signs of trouble
IFCA RMP Workshop
    In January 2005, at the IFCA convention which is attended by over 
1800 people in our industry, IFCA with the cooperation of the IL Dept 
of Ag conducted yet another RMP compliance workshop. Approximately 150 
fertilizer dealers attended this training class. The purpose of the 
workshop was to once again review the RMP requirements and help answer 
questions about compliance.
    A few days after the IFCA convention, Region V staff person Silvia 
Palomo called me. She was upset that IFCA and the Dept of Ag had 
offered this program at our convention. She said we had no business 
informing the facilities of the RMP requirements and that I should have 
sought approval from Region V to offer this class. She also told me 
that only the U.S. EPA personnel were qualified to teach RMP compliance 
and no one else. I was actually being scolded for helping our members 
comply with a complex regulation, something we had already been doing 
for seven years with no help from Region V. I found out later that Ms. 
Palomo had also called Jim Larkin, head of the fertilizer bureau at the 
IL Dept of Ag, with the same message. Jim and I were in disbelief. 
After listening to Ms. Palomo's scolding, I politely told her thanks 
for calling but in my opinion industry had every right to help our 
members with compliance since that is one of IFCA?s mission statements. 
Honestly, I think she was upset because she didn't want our members to 
learn more about the regulation while the inspections were going on. I 
believe now that enforcement was Region V?s objective all along and not 
outreach and education as they had indicated to us. This was the first 
sign of trouble.
Inspections End, Enforcement Begins
    In July of 2005, the Dept of Ag told us that they were finished 
inspecting the facilities. We heard nothing from Region V. At the 
request of the Asmark Institute, I worked to set up a meeting with Mr. 
Mark Horwitz and Silvia Palomo at Region V to discuss Asmark's concerns 
with an Expedited Settlement Agreement (ESA) that an agrichemical 
facility in Michigan had received from Region V for alleged RMP 
violations. Asmark was very troubled by the ESA because this facility 
was their client and no one other client in the country who had 
utilized the Asmark RMP compliance tools had been issued any kind of 
monetary penalty for non-compliance.
    It was while we were discussing our concerns with the Michigan ESA 
that Region V staff changed the subject and informed me and Allen 
Summers of Asmark that in their opinion, over 90 percent of the 500 
Illinois ammonia facilities inspected were also in violation of the RMP 
rules, would be formally cited for violations of the Federal Clean Air 
Act, would be fined a minimum of $500 per facility and be required to 
attend a EPA training course. It was inferred to me that the Agency was 
treating the Illinois facilities kindly because they can fine the 
facilities substantially more or issue ESA?s as was done in the 
Michigan case.
    I have never been more shocked in my professional life. We have had 
no ammonia releases in Illinois attributed to non-compliance with RMP 
regulations. Our ammonia facilities have an enviable safety record 
considering the hundreds of thousands of tons of ammonia fertilizer 
that is stored and applied yearly in Illinois. After six years of 
getting no help whatsoever from the U.S. EPA on compliance with this 
rule, we thought we would be working with the U.S. EPA to identify 
areas of uncertainty in RMP compliance and work to improve them; we 
were stunned to learn that the Agency intended to go straight to 
enforcement and that our fertilizer dealers would all be on record of 
being in violation of the Federal Clean Air Act.
    While a $500 penalty may not seem like much to some, it is 
substantial to many fertilizer dealers who in many cases are family-
owned small businesses. To get a letter from the U.S. EPA that States 
you are in violation of federal law with penalties up to $32,500 per 
day if you do not comply with the Agency's directives is frightening to 
our members, especially when they all felt that their RMP inspections 
had actually gone quite well. I immediately sent a letter to Mark 
Horwitz, to the Acting Director of Region V and to the U.S. EPA 
headquarters outlining our concerns with this enforcement approach and 
asking them not to proceed down this track. This was on July 26, 2005.
    Receiving no immediate reply to my letter, for the remainder of the 
summer of 2005 I continued to urge the U.S. EPA to sit down with our 
industry to review the alleged violations so that we could understand 
what our members had done so wrong prior to the violation letters going 
out. I probably called them or emailed them on almost a weekly basis 
requesting this meeting. Finally, in September 2005 Mark Horwitz called 
me to tell me that they had decided not to issue the $500 per facility 
penalties, but that they would require our members to attend a 
mandatory training class as well as enter into a Consent Agreement 
Final Order (CAFO). I thanked him for dropping the monetary penalties 
but again requested a meeting to discuss the alleged violations and the 
CAFO process. Finally, on November 30, 2005 Region V staff agreed to 
meet with IFCA and several other industry representatives who represent 
the vast majority of ammonia facilities in Illinois. This is now 4 
months after the July meeting in which we learned of the enforcement 
initiative.
    At the November 30, 2005 meeting, Region V personnel did review the 
alleged violations with us. While we did not agree with the majority of 
their reasoning for the violations which were by far mostly paperwork 
discrepancies, we still felt it was a very worthwhile meeting. At the 
meeting Region V agreed to offer one of their mandatory training 
classes at the IFCA convention in January 2006. They also agreed to let 
our industry submit sample RMP compliance forms that they could use as 
training tools and they expressed an interest in allowing us to review 
their training program to offer constructive suggestions on how it 
might be presented so that most fertilizer dealers would understand the 
content. Region V told us that the letters to our members would be 
phrased in a non-threatening manner and would cite ``deficiencies'' 
instead of the word ``violation.'' We were told that the letters were 
in the mailroom already, and would be going out in a few days. I 
immediately prepared our members to receive these letters and assured 
them that IFCA would be working closely with them to help them respond 
to the ``deficiencies.'' In early December 2005, IFCA printed and 
mailed out 1,500 IFCA convention programs to our members and in the 
program we listed the U.S. EPA RMP Training Session to be held on 
January 23, 2006 during the convention. Our members began registering 
to attend this training session.
Hamson Ag Receives First Letter
    When no letters had yet been received by our members by the end of 
the second week in December, I called Region V to inquire about the 
status. My phone calls were not returned. On December 19, 2005 I 
received a call from Ronnie Hamson at Hamson Ag in Dahlgren, IL. 
Dahlgren in a small community in deep Southern Illinois. Ronnie is the 
definition of a small business as he runs the fertilizer plant with his 
wife and a handful of employees. He had shut down the facility the week 
prior to Christmas so that they could use the company shop to help some 
members of their community frame up the walls for an addition to their 
church. When he picked up his mail that day, he was shocked. In it was 
a letter from the U.S. EPA and it was not non-threatening. Instead, it 
stated that he had ``violated'' provisions of the RMP, would be 
required to enter into a Consent Agreement and had to respond within 10 
days as to which training class he would attend. If he did not reply to 
the Agency within 10 days (that would be by December 26, 2005) he would 
be subject to $32,500 per day penalties and possible criminal penalties 
or imprisonment. Ronnie said to me ``Jean, what have I done wrong?'' I 
thought my Dept of Ag inspection went fine. I have never received a 
letter from the U.S. EPA in all my years at this plant. Am I going to 
jail? He was sick at heart and I was sick for him. Again, this was less 
than 10 days before Christmas.
    Ronnie's inspection was performed on December 7, 2004 so it was 
over a year before he received any indication that he was not in full 
compliance with the RMP, and yet he had only 10 days during the 
Christmas holidays to respond or face monetary penalties that would put 
him out of business. If this is not bad enough, the RMP class that EPA 
committed to teach at the IFCA convention was NOT listed on the letter. 
Ronnie asked me why the IFCA class was not an option on the letter, 
because I had told our members, based on EPA's verbal commitment on 
November 30, that it would be. I had no answer for Ronnie but told him 
I could contact Region V immediately. His was not the only phone call 
we received at IFCA. Our phones began to ring in earnest and the 
concerns expressed by the dealers were as serious as Ronnie's and 
worse. I wondered how things could have gone so wrong after the 
positive meeting we had with Region V on November 30. In sending out 
these letters, they did not uphold any of the commitments they made to 
us at that meeting nor did they extend IFCA the courtesy of informing 
us ahead of time that they would not be good to their word.
    For nearly all of our dealers, this was the first violation letter 
they had ever received from the U.S. EPA and they are not used to the 
legal language and stern wording in the letters. They were stunned, 
upset, angry and confused. From the tone of the letter you would think 
our entire industry was on the brink of catastrophic and on-going 
ammonia releases. I was very worried that some of our members wouldn't 
pick up their mail until after Christmas and would miss the 10 day 
turn-around and be fined or worse. If nothing else, where was the 
common sense on behalf of the Agency?
    Immediately, that day on December 19, 2005 I called Mark Horwitz at 
Region V to talk to him about these letters, why they were being sent 
right before Christmas, to express concern about their enforcement tone 
and ask why they did not list the IFCA training class as one of the 
choices. I got his voice mail stating he would be out of the office 
until January. I then reached out to Tom Skinner, the Administrator of 
Region V, by email literally begging him to have his staff stop sending 
the letters until after Christmas and until after we could address the 
missing IFCA training class. Thankfully, he had the Deputy Director 
call me back the next day and we got a temporary reprieve. After a few 
more phone calls with Region V staff the IFCA training class was added 
to the list of classes and the U.S. EPA had to re-send the letters 
after Christmas with the IFCA class offered as an option for training.
    Keep in mind that our members would also have to enter into Consent 
Agreements within 90 days, something which troubled me greatly. I felt, 
as did others in our industry, that we had legal grounds to challenge 
the CAFO requirement if nothing else. Region informed me that CAFOs 
were ``the least onerous tool in their enforcement toolbox'' and that 
was the best they could do. But I still felt it was not justified. 
However, with our small budget IFCA does not have the resources to hire 
an attorney to take on the Federal Government. Our members also do not 
have these resources. IFCA is a three-person Association and the 
majority of our members are small businesses. As such, it is difficult 
if not impossible to defend our industry against the Government in a 
court of law without bankrupting ourselves. Therefore, we rely on our 
good name and our solid reputation to try to work things out and that 
is exactly what I did, working often with Tom Skinner and Deputy 
Director Bharat Mathur to try to come to some kind of reasonable 
resolution to this issue. I have great respect for these two gentlemen 
and in my conversations with them, I always felt that they did 
understand our concerns. Unfortunately, so much damage had been done by 
the time they intervened that the perception of the U.S. EPA by our 
members was that of a renegade Agency out to shut down their 
businesses. In one short year, we went from a cooperative industry/
Agency effort to a complete meltdown of trust and unfortunately a lack 
of belief by our members in the U.S. EPA's ability to ever treat them 
fairly. It will be hard to undue the damage and you can sense the on-
going frustration of our members in the statements they have submitted 
for the committee record.
The Alleged Violations
    If all this were not bad enough, the violations cited by the U.S. 
EPA and listed in the letters were based on the Agency's interpretation 
of the State Dept of Ag reports. The majority of the violations were 
procedural or paperwork discrepancies at best; at worst, and in many 
cases, the violations did not match up with the findings of the Dept of 
Ag inspection report. Copies of the inspection reports were not 
provided to our members, only a letter listing their violations. Our 
members who utilized the compliance services of Asmark were cited as 
well, even though other U.S. EPA regions have reviewed the Asmark RMP 
model and found it fully meets the requirements of the RMP rule. But in 
Illinois, Region V found it deficient. Where is the consistency in 
that? I honestly don't believe any of our facilities could have met the 
expectations of the staff in Region V; the violations cited were vague 
and in many cases completely incorrect. I also feel that the IL Dept of 
Ag was not kept informed of how their reports were interpreted or 
utilized. The good name and reputation of Illinois Dept of Agriculture 
and its inspectors have also been tarnished by the way Region V managed 
this pilot program. But what happened was not the fault of the 
Department of Agriculture nor does our industry blame them for the 
unfortunate role they played in what was supposed to be a cooperative 
program.
    Being found out of compliance with a Federal regulation is one 
thing, but being singled out for enforcement is quite another. Region V 
did not contract with the Department of Ag in any other State to 
conduct inspections. Ammonia facilities in the other Region V States of 
Wisconsin, Minnesota, Indiana, Michigan and Ohio were not, and have 
not, been subject to whole-sale inspection or enforcement in this 
manner by Region V. In Ohio, the State EPA administers the RMP 
compliance programs, and in Ohio similar types of RMP deficiencies were 
treated like this: The manager got a simple and unthreatening letter 
asking him to work to improve a certain part of the RMP; the Ohio EPA 
would then follow-up to check his progress. This is a fair, respectable 
and cooperative approach that works well.
    But because the Illinois dealers and IFCA cooperated with the U.S. 
EPA and supported this pilot RMP inspection program in Illinois, we 
were threatened with monetary penalties, received violation notices, 
and our dealers would be required to submit to a Consent Agreement 
Final Order and be on record as being in violation of the Clean Air 
Act. This is how our facilities who filed their RMPs were treated, 
while the Agency, in my opinion, made no real effort to locate and 
inspect facilities in Illinois that DID NOT file an RMP, they only 
ordered inspections for facilities that did their best to comply with 
this regulation because they know who they were, thus making them easy 
to inspect and easy to target for enforcement.
Congress Intervenes
    Word of what was going on in Illinois made its way through our 
industry. Many of my counterparts and fertilizer dealers in other 
States observed what was happening in Illinois with a sense of shock as 
well as a sense of relief that it wasn't them. I felt at the time I had 
done all I could do as a representative of the industry to work with 
the U.S. EPA on a reasonable approach for compliance. We had, after 
all, talked them out of the $500 per facility penalties, but certainly 
many issues remained including the CAFOs.
    In late December 2005, I became aware that Senator James Inhofe had 
made an inquiry into the issue of Region V enforcement of the RMP and 
the impact on the Illinois fertilizer dealers. I believe it was due to 
the intervention of Senator Inhofe and his staff that Region V 
reconsidered the CAFO provision and withdrew this regulatory 
enforcement requirement. Instead, they provided our ammonia facility 
managers with a ``Certificate of Compliance'' that requires them to 
certify, under threat of perjury, that to the best of their reasonable 
knowledge and belief, they are in compliance with all provisions of the 
RMP. While this Certificate is a less threatening enforcement 
requirement than a CAFO, many of our members still have concerns with 
signing the Certificates of Compliance because they still do not fully 
understand the violations they were cited for nor do they completely 
understand what Region V expects them to do to fully satisfy the 
requirements of the RMP. Again, it goes back to lack of education, 
outreach and communication with industry.
    I have to share with you, after months of feeling run over by the 
U.S. EPA it was very uplifting to know that there was someone in 
Washington DC who did care about the agricultural industry and the 
small business person. I have no doubt that without Chairman Inhofe's 
inquiry into our situation, the Illinois fertilizer dealers would have 
been forced into the CAFO process and had a permanent blot on their 
otherwise clean compliance records for handling anhydrous ammonia.
                          is the end in sight?
    In March 2006 IFCA requested that Region V extend the compliance 
date for our members to complete and return their Certificate of 
Compliance. We made this request because otherwise, the requirement 
falls right in line with the spring planting and post-emerge spraying 
season which is the busiest 6 months for our industry. Given the fact 
that this RMP pilot program has been going on now for 3 plus years, 
extending the compliance date to December 31, 2006 was reasonable in 
our opinion. Region V instead extended it to July 1, 2006 which has 
still caused stress for our members in that the spray season is still 
going strong.
                                summary
    Over time, with substantial effort on our part and by making direct 
and constant appeals for nearly a year to Region V staff and management 
and with the intervention of Katherine English, we were able to avoid 
monetary penalties and consent agreements. All the while, our 
Association, The Fertilizer Institute and the Asmark Institute have 
worked diligently to further improve RMP compliance tools for our 
industry. No doubt many ammonia dealers in the country will benefit 
from this unfortunate situation in Illinois and will also utilize our 
improved compliance tools, but the fact remains that Illinois 
fertilizer facility managers are still dealing with the vague 
instructions given by Region V personnel and are spending days revising 
their RMPs to try to address violations that in most cases never 
existed in the first place.
    Our Illinois dealers will always be on record in Region V as not 
meeting the standards of the RMP when in fact Illinois dealers are in 
fact among the most responsive in the country to the mandates of this 
and other regulations. At times I blame myself for being so open to 
this pilot program; had IFCA opposed this process our Dept of Ag would 
likely have refused to participate and our ammonia facility managers 
would be going safely about their business as are others in the country 
instead of worrying about $32,500 per day possibilities. Situations 
like this certainly erode trust in the regulatory process. That is 
perhaps the MOST unfortunate outcome of this event.
    The greatest flaw in the U.S. EPA's enforcement program, I believe, 
is that it is not uniform, and in many cases the Agency personnel are 
not familiar with the industry they are trying to regulate. The RMP is 
not the only example, there are other examples I can provide including 
the U.S. EPA filing criminal charges against an Illinois pesticide 
applicator for a spray drift incident. This is the first time that we 
know of that the U.S. EPA has filed criminal charges against an ag 
retailer and its employees for a pesticide application event. The 
federal judge in the Southern Illinois District recently dismissed this 
case in its entirety but only after our member spent a quarter of a 
million dollars defending their employees from criminal prosecution in 
a case that should never have been filed by the U.S. EPA in the first 
place. For nearly a year, two hard-working certified pesticide 
applicators at Wabash Valley Service Company spent sleepless nights 
worried about going to federal prison and wondering how they would 
support their families. While all of this was going on with the RMP, it 
was doubly disconcerting to learn of the Wabash Valley case. It has not 
been a good year in Illinois with regard to industry and the U.S. EPA 
enforcement initiatives in our State.
    Some Agency staff seem to be trained only to respond with 
enforcement and penalties while industry is begging for outreach, for 
cooperation, and for clear guidance. It is not clear to me if the U.S. 
EPA headquarters is fully aware of what is going on until industry is 
forced to go to the top to try to secure fair treatment. Going to the 
top is not something we like to do. We prefer to work with staff and 
the Regions because they are the ones we have the most communication 
with on many issues. I will say that when we managed to get the 
attention of the Region V Administrator and Deputy Administrator, they 
were responsive and easy to talk to. I have great respect for Tom 
Skinner and Bharat Mathur as I have known and worked with both of them 
for many years, back to the days when they were at the Illinois EPA. 
But at the point when they got involved, so many poor decisions had 
already been made and executed by their staff that it was difficult 
even for them to stop the train of miscommunication and enforcement 
because the damage had already been done.
    When people outright ignore or violate a regulation or cause injury 
or harm, enforcement is justified and we support its swift application. 
In our case, we did our best to comply with a complex regulation, we 
welcomed the U.S. EPA's pilot inspection program and the Illinois 
fertilizer dealers got severely penalized for our efforts.
    We want the industry to be responsive to Government, but we want 
Government to be responsive as well. Among all levels of Federal 
Government it seems that U.S. EPA Regions are notoriously independent 
and can initiate enforcement for alleged violations that other Regions 
do not consider violations at all. Industry asks only for the 
Government to communicate with us in a sensible manner, and to give us 
the benefit of the doubt, particularly when our safety record warrants 
that respect. We do know what we are doing despite the complexity of 
the regulations issued by the Agency.
    Thank you for this opportunity today.
                               __________
 Statement Richard W. Waterman, Chair Department of Political Science, 
                         University of Kentucky
    I would like to begin by thanking Senator Inhofe for inviting me to 
speak before the Senate Environment and Public Works Committee. I have 
been asked to testify regarding regional variations in EPA enforcement, 
a subject that I have studied in relationship to the National Pollutant 
Discharge Elimination System (NPDES). My testimony will address three 
basic themes. First, I will examine whether there is evidence that 
regional variations exist in EPA water enforcement. Second, I will 
discuss the role of EPA Regional Administrators and third I will 
discuss what I believe is the legitimate role of elected official in 
overseeing or controlling the bureaucracy. I should note that I have 
examined each of these areas in my research, with, respectively, Susan 
Hunter of West Virginia University, Robert Wright and Amelia Rouse, 
formerly of the University of New Mexico, and B. Dan Wood of Texas A&M 
University.
    The first question is whether there is evidence that regional 
variations can be found in the way the Environmental Protection Agency 
enforces the law. We expect variations to exist simply because there 
are vast regional differences in what Susan Hunter and I called the 
nature of the ``regulatory environment.'' As we wrote, ``In addition to 
its diverse sources of water and equally, if not more so, diverse 
sources of pollution, the United States is a conglomeration of 
geographical regions with differing environmental situations and 
problems. Each region has different geography, economic basis, 
population densities, and political pressures.'' Thus, considerable 
variation is expected in the overall enforcement numbers. In fact, when 
asked for and were provided with enforcement data from the EPA NPDES 
(covering the years 1975-1988) we indeed found wide variations in the 
number of enforcement actions from region to region. These variations 
may have been the result of some of the factors we described above. 
When, however, we controlled for a variety of these factors including 
the budget for each region, as well as measures of House and Senate 
oversight and court penalties assessed in each region, we still found 
variations in EPA inspection activity in 7 out of the 10 regions. 
Likewise, when we examined EPA referrals to the Justice Department, a 
higher level enforcement activity, we still found variations in four 
out of the ten regions. Hence, our results provided empirical evidence 
that regional variations exist, even when we control for other relevant 
economic and political factors. Again, it is important to note that 
some of this variation is understandable, given the different 
circumstances that EPA enforcement personnel face in each region. We 
therefore should not expect uniform enforcement across all regions. But 
variations do exist.
    One reason why they exist could be found in the then operative 1986 
NPDES Enforcement Manual. The manual advised EPA NPDES enforcement 
personnel that, ``While it would be difficult, but not necessarily 
effective, to have identical enforcement responses for identical 
violations in different States, the enforcement should be directly 
related to the severity of the violation.'' The manual then continued, 
``Given the decentralization of authority and responsibility in 
carrying out the NPDES program, implementation of the basic EMS 
principles should produce national consistency, while still 
accommodating differences between Regions and States.'' The enforcement 
manual therefore called for promoting two contradictory goals: 
``national consistency'' while ``accommodating'' State and regional 
differences. Given this contradictory goal, it is not surprising that 
many EPA enforcement personnel, as well as bureaucrats working at the 
State level who have primacy to enforce the NPDES permit program, have 
approached enforcement in substantially different ways. In some States 
and regions, where there is more local pressure for aggressive 
enforcement, enforcement has reflected these goals. In other States and 
regions where there is an expectation that enforcement should be based 
on a negotiated approach with the regulated industry enforcement has 
been less aggressive. Thus, as a result of these differing regulatory 
expectations, combined with the very real geographical and other issues 
I described above, regional variations are bound to occur. If Congress 
is committed to limiting such discretion it will have to ensure that 
environmental laws are written more specifically so that it limits the 
potential for such discretion. More consistent oversight of EPA 
officials, not merely in Washington, but throughout the country is 
appropriate, as well. But it should be recognized that some variations 
in enforcement will continue to exist, even if all of these measures 
are adopted. Congress can reduce the level of regional variations, but 
it cannot eliminate them entirely.
    Beyond the factors promoting regional variations that I have just 
described, there is another important reason for variations in EPA 
enforcement. To my knowledge this has been a largely overlooked area in 
academic studies of the EPA. Scholarly work tends to focus their 
attention on the activities of States with primacy or on the EPA 
officials in Washington, DC. Yet, most EPA employees operate not in 
Washington, but in various regional offices around the country. These 
regional offices represent a major reason for variations in 
enforcement. EPA officials that I spoke to at the Washington or 
national office, during the Presidencies of both George H. W. Bush and 
Bill Clinton, described considerable frustration with the enforcement 
activities of the regional EPA offices. This suggests to me that this 
is not a Democratic or a Republican problem, as frustration with 
regional variations was expressed during periods when both Democrats 
and Republicans controlled the White House, as well as when Democrats 
and Republicans controlled Congress. Both parties appear to be 
interested in a more uniform style of enforcement, even if they don't 
ultimately agree on what that style should be; that is, whether it 
should reflect a strict enforcement approach or a style that emphasizes 
a greater level of negotiating with business.
    With regard to regional variations one particular appointive 
position stood out as the subject of concern. Most memorably, several 
years ago when I asked one top Agency official in the EPA Water Office 
why there was so much variation in enforcement from region to region, I 
was surprised to be treated to a rather candid and colorful exposition 
of how a particular regional administrator was enforcing the law, not 
in accordance with the wishes of the then current presidential 
administration, but rather in accord with the desires of the 
``political culture'' of that region. When I asked for more detail on 
this point I was informed that some regions are naturally more 
aggressive in their enforcement zeal, while others are not. I was told 
that regional administrators represented one of the last vestiges of 
the practice of ``senatorial courtesy'' and that often the 
administrators represented the political viewpoints of the region 
rather than national interests.
    As a result of this and other discussions with EPA, State 
enforcement personnel, and members of environmental groups, I 
ultimately conducted two surveys with two of my graduate students from 
the University of New Mexico. One was a survey of the attitudes of EPA 
NPDES personnel, the other of State bureaucrats working for the New 
Mexico Environment Department. Among the many questions on our surveys, 
we asked how much influence do various policy actors have over how your 
office enforces the law. We asked bureaucrats to rank these policy 
actors on a five-point-scale from ``no influence'' to ``a great deal of 
influence.'' Among EPA officials regional administrators narrowly 
ranked first (in terms of their perceived mean level of influence) with 
the EPA Administrator ranking second. It should be noted that they 
ranked much higher than the Federal courts (third), Congress (fourth), 
environmental groups (fifth), public opinion (sixth), and the president 
(seventh). When we asked State officials the same question they ranked 
the New Mexico Governor first, the State legislature second, the U.S. 
EPA Administrator third, the U.S. Congress fourth, the New Mexico 
Finance Committee fifth, and then the Region Six administrator sixth. 
It is not surprising that State officials would rank EPA officials 
lower (even though New Mexico does not have primacy over its water 
program). What was surprising to us, however, was that Regional 
Administrators were seen as having essentially the same level of 
influence as the EPA Administrator among EPA enforcement personnel, and 
that both were seen as having more influence than either Congress or 
the president, though a few people did note the obvious point that the 
president appoints the EPA Administrator and the Regional 
Administrators. Among State NMED personnel, however, they were more 
likely to look to their State officials and then to the national EPA 
office for guidance, though regional administrators were still seen as 
exerting considerable influence.
    What our results suggest, then, is that particularly among EPA 
bureaucrats, Regional Administrators are perceived as exerting 
considerable influence. Given the obvious frustration expressed by U.S. 
EPA officials regarding Regional Administrators, it is also clear that 
this is a point of contention within EPA itself. In particular, there 
is a sense that EPA Regional Administrators tend to reflect the 
viewpoints of their regional offices and personnel rather than the 
national office. One EPA official in the national office said that 
Regional Administrators tend to be co-opted by personnel in their 
offices, as well as by the political culture of their region. Again, I 
want to note that this level of frustration has been expressed to me in 
conversations that I had with EPA officials during both Democratic and 
Republican administrations.
    What then is the solution? As I noted earlier, it is unreasonable 
to expect enforcement to be precisely the same in each region. There 
are some valid reasons for regional variations and it would not be 
appropriate to force a one-size fits all approach on all regions. We 
want some flexibility in order to prevent the problem of what two 
prominent scholars, Bardach and Kagan, referred to as the problem of 
``regulatory unreasonableness,'' where regulations that simply do not 
fit are forced to apply to businesses simply to promote the goal of 
uniform enforcement. A stricter enforcement approach may be required in 
some settings and in some regions, while negotiation may be appropriate 
in others. These decisions should be based on the existing regulatory 
needs of each region (and subject to congressional oversight) rather 
than merely the decision of a particular Regional Administrator.
    In this process it is clear that elected officials have a 
legitimate role in overseeing the bureaucracy. First, while presidents 
often pay close attention to the qualities of their national EPA 
officials, past experience suggests that they are less attentive to the 
types of individuals they appoint to the regional EPA offices. This may 
be due to the fact that they inherently believe that such officials 
will follow directives from US EPA. Since my research suggests this is 
not the case, the first recommendation is that presidents should be 
more attentive when they appoint Regional Administrators. As noted, 
these ten officials are perceived by EPA officials to have slightly 
more influence than the EPA Administrator. Presidents of both parties 
should be aware of this point when they make these appointments.
    Beyond appointments, which is clearly identified in the 
Constitution as a means of presidential oversight of the bureaucracy, 
is it appropriate for elected officials to have continuing oversight of 
the bureaucracy? I believe the answer here is yes. In an extended 
research agenda that I conducted with B. Dan Wood, we found that not 
only can presidents can influence the bureaucracy through the 
appointments they make, but also that the budget is a powerful means of 
controlling the bureaucracy. We also found that congressional oversight 
of the EPA exerted some influence, as well, though the impact was more 
temporary. In fact, what we refer to as ``political control of the 
bureaucracy'' can be conceptualized as part of our necessary system of 
checks and balances. While our Constitution is largely silent on the 
bureaucratic State, it is clear that elected officials can and should 
exert influence over the bureaucracy. Bureaucrats have a wide array of 
expertise that should not be ignored, but elected officials represent 
the public interest in a different way. They can make sure that 
bureaucrats are applying the law fairly and in accordance with the 
intent of Congress, as well as representing public opinion. Each is an 
important attribute. Thus, while bureaucrats clearly have a legitimate 
role in enforcing laws as enacted by Congress, Congress and the 
president have an equally legitimate right to make sure that the law is 
being enforced as intended. Here, of course, there will always be 
debate as to what did the law intend and is it being implemented 
fairly. These are political questions that will be decided according to 
the political interests of a particular time. The fundamental point, 
however, is that elected officials have a legitimate role in this 
process and in fact they shirk their responsibility if they do not act 
to oversee the bureaucracy's performance.
    In this particular case, given the prominence of Regional 
Administrators in the enforcement process, and the existence of 
regional variations in EPA enforcement (and it should be noted that 
these variations exist beyond the NPDES program), Congress has a 
legitimate role in determining how much variation should be permissible 
and whether Regional Administrators should be more loyal to the 
regional offices in which they serve or the national EPA office.
                                 ______
                                 
         Response by Richard W. Waterman to addition questions 
                         from Senator Jeffords
    Question 1. In 2005 you wrote, ``What we can say for sure is that 
some level of discretion is required for bureaucrats to perform their 
jobs. The more technical the job is, the more discretion they are 
likely to require.'' In your opinion, how does this assertion apply to 
EPA's enforcement regime?
    Response. Some level of discretion is indeed required. As I noted 
in my testimony it is unreasonable to consider a one-size fits all 
approach to EPA enforcement. The problem that I noted was that there is 
considerable variation in EPA enforcement at the regional level, 
particularly with regard to the NPDES program. In work that I published 
with Susan Hunter (Enforcing the Law: The Case of the Clean Water Acts) 
we empirically examined variations in EPA enforcement. We found that 
factors such as the population size of each State, the population 
density of each State, the amount of surface water in each State, and 
sources of non-point pollution--all factors that are factors related to 
what we call the ``regulatory environment''--explain a large part of 
the variation in EPA enforcement (e.g., permits issued, enforcement 
actions taken). These are factors that explain why we cannot expect 
consistent enforcement to occur all the time across all EPA regions. 
However, even when we control for these factors (with regard to EPA 
enforcements) we still found statistically significant variations in 
the enforcement behavior of three EPA regions (3, 6, and 9). In short, 
while regulatory environmental factors explain many of the variations 
in EPA enforcement, some structural factors also account for variation. 
This then leaves us with a normative question. Is this structural 
variation, evidence of discretion, acceptable? Again, as I noted in my 
testimony, when I have spoken to EPA officials during both Democratic 
and Republican administrations I have been told that there is concern 
with these regional variations in EPA enforcement. Obviously, during 
Democratic administrations there is a greater desire for more 
consistent and vigorous enforcement, while Republican administrations 
generally favor a less aggressive regulatory approach. Thus, the answer 
to how much discretion is acceptable is a political question. I can 
only point out that (1) it does exist and (2) there are genuine reasons 
why we want some level of EPA bureaucratic discretion to continue.

    Question 2. You discuss in your testimony data gathered between 
1975 and 1988 with which you conclude there existed a significant 
regional variation in EPA enforcement on the National Pollutant 
Discharge Elimination System. Have you analyzed any data on the subject 
collected after 1988?
    Response. Yes. Susan Hunter and I analyzed data from 1988 to 1994 
in our book. In addition, Amelia Rouse, Robert Wright and I examined 
survey data which we collected on the EPA NPDES enforcement program 
from May to September 1994.

    Question 3. You mention in your testimony that EPA officials you 
spoke with during the presidencies of George H.W. Bush and Bill Clinton 
expressed considerable frustration with the enforcement activities of 
the regional EPA offices. Is this anecdotal evidence that speaks merely 
to the dissatisfaction of a few individuals or have you conducted a 
systematic survey of EPA employees leading you to conclude that 
feelings of frustration with regional enforcement are widespread 
throughout EPA?
    Response. The conversation with individuals from the administration 
of George H. W. Bush were preparatory to the writing of Enforcing the 
Law: The Case of the Clean Water Acts. Susan Hunter and I were 
interested in explaining how bureaucrats themselves perceive the 
regulatory process. We therefore did a number of interviews with 
officials at the EPA (including a visit to the U.S. EPA Water Office), 
as well as individuals from the environmental community at large. The 
results from this book then led to a second project which I conducted 
with Amelia Rouse and Robert Wright. We again interviewed a number of 
individuals in EPA regional offices as we put together a survey 
instrument on EPA enforcement. The object here was to understand how 
bureaucrats see the political world around them. Our work was published 
in two articles in the Journal of Public Administration Research and 
Theory as well as in our book Bureaucrats, Politics, and the 
Environment.

    Question 4. Which enforcement activities have you monitored over 
the last 18 years?
    Response. I have analyzed EPA enforcement in several projects over 
the past two decades. My dissertation, which was published in 1989 as 
Presidential Influence and the Administrative State included a chapter 
on EPA. I then examined the EPA air, water, hazard waste, and pesticide 
divisions in work published in various journals, as well as in the book 
Bureaucratic Dynamics, with my co-author B. Dan Wood. This then led to 
work published with Susan Hunter, Amelia Rouse, and Robert Wright.

    Question 5. In the past 10 years, how many scholarly books or 
articles have you published on the subject of regional variation in EPA 
enforcement activity? Please provide citations.
    Response. I have examined EPA and its activities extensively 
throughout my career. Many of these deal with regional variations in 
EPA enforcement, or variations in enforcement between different 
organizational units with EPA. My publications in this area include the 
following:

    Waterman, Richard W. 2005. ``The Myth of the Envirocrat." The 
Environmental Forum. 22 (2) March/April 18-23.
    Waterman, Richard W., Amelia Rouse, and Robert L. Wright. 2004. 
Bureaucrats, Politics, and the Environment. Pittsburgh: University of 
Pittsburgh Press.
    Waterman, Richard W. and Amelia A. Rouse.1999. ``The Determinants 
of the Perceptions of Political Control of the Bureaucracy and the 
Venues of Influence.'' Journal of Public Administration Research and 
Theory. 9 (October): 527-569.
    Waterman, Richard W., Amelia A. Rouse, and Robert L. Wright. 1998. 
``The Venues of Influence: A New Theory of Political Control of the 
Bureaucracy.'' Journal of Public Administration Research and Theory. 8 
(January): 13-38.
    Hunter, Susan and Richard W. Waterman. 1996. Enforcing the Law: The 
Case of the Clean Water Acts. Armonk, NY: M. E. Sharpe.
    Wood, B. Dan and Richard W. Waterman. 1994. Bureaucratic Dynamics: 
The Role of Bureaucracy in a Democracy. Boulder, CO: Westview Press.
    Wood, B. Dan and Richard W. Waterman. 1993. ``The Dynamics of 
Political-Bureaucratic Adaptation.'' American Journal of Political 
Science. 37 (May): 497-528.
    Waterman, Richard W. and B. Dan Wood. 1993. ``Policy Monitoring and 
Policy Analysis.'' Journal of Policy Analysis and Management. 12 
(Fall): 685-699.
    Hunter, Susan and Richard W. Waterman. 1992. ``Determining an 
Agency's Regulatory Style: How Does the EPA Water Office Enforce the 
Law?'' Western Political Quarterly. 45 (June): 401-417.
    Wood, B. Dan and Richard W. Waterman. 1991. ``The Dynamics of 
Political Control of the Bureaucracy.'' American Political Science 
Review. 85 (September): 801-828.
    Waterman, Richard W. 1989. Presidential Influence and the 
Administrative State. Knoxville: University of Tennessee Press.

    Question 6. You wrote in Bureaucratic Dynamics that the bureaucracy 
has a responsibility to the American people to provide some 
bureaucratic resistance in order to ensure the policy decisions and 
laws of previous Congresses and administrations are honored. When you 
say in your testimony that ``some regions are more aggressive in their 
enforcement while others are not'', do you attribute this zeal to 
positive bureaucratic resistance?
    Response. It may be. In some cases, as I note above, variations may 
be the result of responses to variations in the nature of the 
regulatory environment in different States and regions. Obviously, 
there is a simplistic tendency to blame bureaucrats whenever we see 
variations in enforcement. This should not be the case. We are better 
served when we understand the nature of these variations.

    Question 7. You mention in your testimony that an EPA official told 
you that regional administrators tend to be co-opted by personnel in 
their offices, as well as by the political culture of their regions. 
Was this a singular conversation or have you conducted extensive 
research across EPA regions on this subject?
    Response. This was a single conversation with top official from the 
EPA Water Office at the U.S. EPA. It was, in fact, one of the top EPA 
officials.

    Question 8. In response to follow-up questions, you suggested that 
the EPA regional ``structure itself might be the problem'' and that 
perhaps elimination of the regional management structure should be 
considered. You said, ``If you want flexibility, the States can provide 
that.'' Which of your published works would lead you to make this 
assertion?
    Response. There has been a move in recent decades toward greater 
State enforcement of environmental regulation, with the national EPA 
acting as the watch dog when States have primacy. Under this 
arrangement States must act consistent with national laws, but they 
have greater flexibility in terms of how they do so. This opens the 
door for variations in enforcement, but there are essentially capped by 
EPA oversight. If States are not doing there job then EPA can 
intervene. In addition, EPA does spot inspections and enforcements to 
ensure that States are doing there job. This system is not perfect, but 
it does suggest that there now may be some redundancy in the EPA 
organizational structure. Regions originally connected the U.S. EPA to 
the States. With the States doing more of the job themselves, it may be 
time to rethink how the regional structure works. The alternative of 
creating yet another layer of bureaucracy at the EPA national level to 
keep an eye on the regional EPA bureaucracy is unlikely to work. It 
will create more bureaucracy without necessarily creating better 
bureaucracy. I am merely suggesting that all options be put on the 
table. I am not recommending that this option be adopted. I would not 
do so without considerable study and a clearer sense of the 
implications of this structural reform. But I do think it is worth 
considering.

    Question 9. In your testimony, you refer to a study that you 
conducted in the 1990s which surveyed US EPA regional employees in New 
Mexico. How many U.S. EPA employees did you survey, and does this 
number represent a statistically viable sample of all U.S. EPA 
employees in that year?
    Response. We surveyed the universe of EPA NPDES enforcement 
personnel and NMED enforcement personnel. The response rates in both 
cases were in the 30 percent range. Obviously, we would have preferred 
higher response rates, but the primary means of doing so (conducting 
telephone interviews) was not available to us because many enforcement 
personnel in EPA regions share the same desk and anonymity therefore 
could not be protected under these circumstances. Some EPA regional 
administrators also would not allow us to conduct the survey under 
these circumstances. Thus, the survey results must be considered with 
these limitations in mind. They do provide a valuable insight into the 
minds of Federal and State bureaucrats regarding how they see the 
political world around them. But the survey results are far from 
perfect. Clearly with better resources and more cooperation from 
central EPA we would love to do a survey again that would allow us to 
increase the survey response rate.
                               __________
 Statement of Eric Schaeffer, Director Environmental Integrity Project
    Thank you, Mr. Chairman and members of the Senate Environment 
Committee, for the opportunity to testify today on the need for greater 
consistency in enforcing federal environmental laws. My name is Eric 
Schaeffer, and I am currently the director of the Environmental 
Integrity Project, a nonprofit organization dedicated to more effective 
environmental enforcement. Until March of 2002, I was Director of the 
U.S. Environmental Protection Agency's Office of Civil Enforcement, so 
the topic of today's hearing is a familiar one.
    EPA has been charged by Congress with enforcing nineteen 
environmental laws in fifty States that regulate the discharge of 
pollution from a wide range of economic activity. Responsibility for 
most enforcement activity--including inspections, and the levying of 
fines and penalties for violations--has been delegated to State 
agencies that also issue and review the federal permits that are 
supposed to limit pollution from refineries, power plants, animal 
feedlots, and thousands of other large sources.
    Not surprisingly, in a country as large and diverse as our own, 
States vary widely in both the competence and the philosophy that they 
bring to bear on these important responsibilities. In practice, that 
means that violators can flout federal environmental law in some States 
without fear of penalty, or having to worry that their violations will 
be detected at all. This divergence between States is the greatest 
source of inconsistency in the enforcement of federal law--if we want 
to provide law abiding companies with a level playing field, this 
problem needs to be addressed head on.
    The Inspector General and the U.S. General Accounting Office have 
painstakingly documented the failure of some States to enforce our 
environmental laws in a series of reports issued over the past decade. 
Their findings are sobering, and worth reviewing.
    On April 14, 1997, the Inspector General's review of enforcement of 
federal hazardous waste laws advised that, ``State penalty policies are 
inconsistent from State to State,'' and pointed out that some State 
agencies did not bother to recover the economic benefit that companies 
realized by ignoring federal hazardous waste laws. Separate IG reviews 
in 1999 found that Virginia, ``rarely classified violators with serious 
RCRA violations as `Significant Non-Compliers,''' while Rhode Island's 
Department of Environmental Management did not, ``(1) issue appropriate 
and timely enforcement actions; (2) ensure that violators complied with 
enforcement schedules, and (3) identify significant non-compliance.'' 
In Rhode Island, the IG concluded that the problems resulted from ``a 
lack of management commitment to enforcement.''
    On September 25, 1998, the IG concluded that its audits of air 
enforcement in Alaska, Maryland, Massachusetts, New Mexico, 
Pennsylvania, and Washington had, ``disclosed fundamental weaknesses 
with State identification and reporting of significant violations of 
the Clean Air Act. This occurred because States either did not want to 
report violations or the inspectors were unable to detect them. 
Numerous significant air violations went undetected, and many of these 
were not reported to EPA.'' Where the 6 States identified only 18 
significant violators, the Inspector General's office found 103 in the 
same fiscal year, after examining only a fraction of State records.
    A similar audit of Idaho's air enforcement program in 1998 reached 
similar conclusions, finding that the State's ``enforcement actions 
were not appropriate and penalties not enough to deter violations; 
enforcement activities did not result in a timely return of sources to 
compliance; inspection procedures did not ensure that significant 
violators were identified, and data was not reported accurately.''
    The beat goes on. In 2002, the U.S. General Accounting Office found 
that, ``over one half of the States do not inspect all of the tanks 
frequently enough to meet the minimum rate recommended by EPA, at least 
once every 3 years.'' In 2003, the IG issued a particularly scathing 
report on Louisiana's implementation of Federal programs, finding that 
the State's RCRA database contained many errors, and that, ``Louisiana 
did not know whether facilities were in compliance because self-
monitoring reports were either not submitted by facilities or could not 
be located.'' Just last year, the IG documented wide variations in 
monitoring of Clean Air Act sources between Texas, New York, North 
Carolina and Ohio.
    To be sure, not all of these reviews have been negative. For 
example, the IG applauded the Illinois EPA's enforcement of hazardous 
waste laws in a 1999 audit, and noted efforts by North Carolina to 
improve Clean Water Act permitting of large animal feedlots. State 
attorneys general from New York and a handful of other States have 
sometimes shown that they are more than willing than EPA to crack down 
on some of the country's most powerful polluters.
    Nor can all the inconsistency in environmental enforcement be 
charged to States. The U.S. EPA shares the responsibility for enforcing 
most federal environmental statutes, and is the exclusive authority for 
enforcing a handful of laws, like the Toxic Substances Control Act, 
Federal right to know laws that established the Toxics Release 
Inventory, and tailpipe standards for cars and trucks in every State 
but California. While headquarters determines policy and manages a few 
key cases, most federal enforcement is carried out by staff in 10 
different regional offices who report to 10 different Regional 
Administrators, each separately appointed by the President. This 
fragmentation of responsibility has led to significant variations in 
regional enforcement, although I think it's fair to say these 
differences are not as dramatic as they are between States.
    Like many other problems in Government, inconsistent federal 
enforcement is easier to diagnose than it is to cure, and has persisted 
through various changes in Administration. As long as responsibility is 
shared by EPA and State agencies, we are going to need to tolerate some 
diverse approaches to environmental enforcement, which is not 
necessarily a bad thing. States need room to innovate, and in any case, 
divided Government is part of our constitutional framework.
    But so is the idea that citizens deserve equal protection under the 
law, which becomes meaningless if polluters can virtually ignore 
Federal environmental laws in some parts of the country. Although we 
will never achieve perfection, we need to do our best to provide both 
the regulated industry and the public with a level playing field.
    Although there are no silver bullets, there are some actions that 
could help to improve the consistency of environmental enforcement. 
Both EPA and State agencies are understaffed relative to their 
workload, which means that some of the largest facilities can go years 
without ever seeing an inspector. Permit fees provide a source of 
revenue that can be more reliable than annual appropriations, and both 
Congress and State legislatures should assess whether these are 
sufficient to meet program needs.
    Both the IG and the GAO have recommended that major sources of 
pollution be required to use State of the art monitoring to track 
emissions, instead of the inaccurate accounting still in use at many 
facilities, which amount to little more than guesswork. Instead, the 
U.S. EPA has rolled back emissions monitoring to accommodate industry 
lobbyists, despite having been reprimanded twice for such actions by 
the DC Circuit Court of Appeals.
    EPA needs to make enforcement expectations clearer for States 
running Federal programs. Some States may welcome this clarity; the GAO 
reported in 2002 that 40 of the States it surveyed would support a 
Federal mandate to inspect all underground storage tanks periodically, 
since that could provide the leverage to secure adequate funding from 
their State legislatures.
    Unfortunately, there is no substitute for regular oversight of 
State programs, and this is probably EPA's toughest job. Nobody likes 
to be audited, and the Agency will have to exercise this responsibility 
with sensitivity and skill. Outstanding efforts need to be recognized, 
but the Agency must have enough leverage to step in and at least 
temporarily manage enforcement activity where a State's program is 
clearly deficient.
    Congress can help by asking the right questions and sending the 
right signals to both EPA and State agencies. Unfortunately, I cannot 
think of a single hearing that either the Senate or the House has 
scheduled in the last 10 years to address any of the repeated concerns 
that the IG or the GAO have raised about uneven enforcement of Federal 
environmental laws. Unless I am mistaken, today's hearing was prompted 
by complaints from a trade association that EPA was not polite enough 
when offering to waive all penalties, if its member companies would be 
kind enough to voluntarily comply with risk management requirements 
that have assumed particular importance after 9/11.
    Such voluntary programs can be a valuable adjunct to enforcement, 
and perhaps EPA was not as tactful as it could have been when 
describing the terms of the amnesty it was offering in exchange for 
compliance. But if Congress is concerned about inconsistency, I would 
respectfully suggest that the biggest problem by far is the lack of any 
meaningful environmental enforcement at all in some of the most heavily 
polluted parts of our country. This shortfall has been thoroughly 
documented by the Government's own auditors over the last decade, and I 
hope you will give their work the serious attention it deserves.
                                 ______
                                 
          Responses by Eric Schaeffer to additional questions 
                         from Senator Jeffords
    Question 1. Can you discuss a few recent examples where a lack of 
any meaningful EPA enforcement has jeopardized human health and the 
environment?
    Response. The failure to enforce environmental laws leaves the 
public exposed to pollution that is both dangerous and illegal. Most 
obviously, the U.S. EPA's decision to stop enforcing Clean Air Act New 
Source Review rules against some of the nation's dirtiest power plants 
mean that these ``grandfathered'' facilities continue to release 
millions of tons of sulfur dioxide, nitrogen oxide, and particulate 
matter every year. Companies like Cinergy, which had announced an 
agreement to clean up its power plants in December of 2000 to resolve 
New Source Review violations, abandoned that commitment in 2001 when 
EPA reversed direction. Other companies that had expressed an interest 
in settlement decide to litigate instead.
    Emissions from coal-fired power plants contribute to acid rain, 
smog, and fine particle pollution that EPA estimates contributes to 
hundreds of thousands of asthma attacks and more than twenty thousand 
premature deaths every year. New Federal standards for reducing 
exposure to fine particle pollution will help reduce this appalling 
toll over the next ten years, but enforcement of NSR rules could have 
helped reduce needless exposure to these contaminants much earlier.
    Millions of Americans live within breathing distance of large 
petrochemical plants that every year release large volumes of toxic 
pollutants like butadiene and benzene, as a result of accidents, 
maintenance activity, and plant startup and shutdown. For example, the 
BASF plant in Port Arthur, Texas, released a combined total of 175,000 
pounds of butadiene in 2003 during ``malfunctions'' and related 
maintenance activities. Both pollutants are known human carcinogens. In 
theory, unpermitted emissions during such events are prohibited by law, 
but in practice, the law is almost never enforced. The Environmental 
Integrity Project asked the U.S. Environmental Protection Agency to 
investigate a disturbing pattern of ``upsets'' at petrochemical plants 
in Port Arthur in March of 2003.
    For the last 5 years, the U.S. EPA has refused to enforce laws that 
require large animal feeding operations to account for their air 
emissions, and to control such pollution where it is significant. 
Unlike family farms, modern livestock operations warehouse hundreds of 
thousands of animals in close quarters, where they can be a major 
source of both air and water pollution in rural communities. EPA has 
stopped enforcing right-to-know and Clean Air Act laws since 2001, 
instead opting to provide the industry with long-term amnesty pending 
further research and data collection. This refusal to act means that 
those unlucky enough to live near these factory farms will continue to 
inhale hydrogen sulfide, ammonia, particulate matter, and other noxious 
pollutants that ought to be monitored and controlled.

    Question 2. Can you discuss an example where an industry-wide 
enforcement approach led to positive results for the regulated industry 
and for the environment?
    Almost 8 years ago, the U.S. EPA developed a strategic initiative 
to target chronic and serious violations of the Clean Air Act at the 
Nation's largest oil refineries. The strategy identified four types of 
violations that seemed to have the most significant impact on human 
health and the environment: expansion of ``grandfathered'' units 
without New Source Review permits, benzene released illegally from 
wastewater treatment, volatile organic compounds off-gassed from valves 
and flanges, and sulfur dioxide and other pollutants released from 
flares at sulfur recovery units and other operations. The Agency 
publicized its concern about these violations through Enforcement 
Alerts and at industry trade conferences, invited industry 
representatives to negotiate consent decrees that would establish an 
enforceable framework and schedule for fixing these problems, and made 
clear that the underlying requirements would be enforced.
    To date, 85 refineries representing 85 percent of U.S. capacity are 
operating under one of these consent decrees, leveraging several 
billion dollars of investment in scrubbing, flare recovery systems, and 
other clean technologies that will greatly reduce the pollution that 
was too long accepted as an inevitable byproduct of the refining 
process. The U.S. EPA expects that the consent decrees will eventually 
eliminate more than 80,000 tons of nitrogen oxide annually, and 235,000 
tons of sulfur dioxide per year. These investments in cleaner refining 
have obviously not hurt the industry, which continues to report record 
profits, but should make a measurable difference in the quality of the 
air that people breathe in the neighborhoods around these plants. The 
EPA's refinery initiative is proof of what can be accomplished when the 
Agency targets the most serious violations within an industry sector, 
and pursues a consistent and determined enforcement strategy.
                               __________
 Statement of David Paylor, Executive Director, Virginia Department of 
    Environmental Quality, Officer, Environmental Council of States
    Thank you, Mr. Chairman, for providing the Environmental Council of 
the States (ECOS) the opportunity to present testimony on the 
interactions between the State environmental agencies and EPA's 
Regional Offices. My name is David Paylor, and I am the Director of the 
Virginia Department of Environmental Quality and an officer in our 
national association ECOS. Today I am speaking on behalf of the 
environmental agencies in our member States as well as my own State.
                               background
    The Environmental Council of States is the national non-partisan, 
non-profit association of State and territorial environmental 
commissioners. Each State and territory has some Agency, known by 
different names in different States, that corresponds to the U.S. 
Environmental Protection Agency. Our members are the officials who 
manage and direct the environmental agencies in the States and 
territories. They are the State leaders responsible for making certain 
our nation's air, water and natural resources are clean, safe and 
protected.
    States have the challenging job of front-line implementation of our 
Nation's environmental pollution laws. States have increased their 
capacity and as environmental protection has become increasingly 
important to the general public, more and more responsibilities have 
been moved to the level of Government best able to carry them out--
State and local Governments--which are best able because they are 
closest to the problems, closest to the people who must solve the 
problems, and closest to the communities which must live with the 
solutions.
    Today States are responsible for:

     Managing more than 75 percent of all Federally delegated 
environmental programs;
     Instituting 95 percent of all environmental enforcement 
actions;
     Collecting nearly 95 percent of environmental monitoring 
data; and
     Managing all State lands and resources.

    These responsibilities have become even more challenging in the 
face of severe budget deficits. About two thirds of the $15 billion 
States spend annually on environment and natural resources originate 
from non-federal sources.
       relationship between epa's regional offices and the states
    The State environmental agencies' primary contact with the U.S. EPA 
is via one of the ten Regional Offices. Former members of ECOS, 
including a former ECOS President and the former Executive Director of 
the organization, currently lead five of these offices. For the most 
part, State relationships with these offices are good.
    Most of the major national environmental programs are delegated to 
the States, and we regularly work with the regions on these matters. As 
part of this delegation, States negotiate a ``Performance Partnership 
Agreement'' or a ``State-EPA Memorandum of Understanding'' with the 
regional office each year, or in some cases every few years. This PPA 
or MOU leads to a grant from which the typical State gets about 20-33 
percent of its operating funds to implement the national programs, such 
as the Clean Air Act, the Clean Water Act, and so on.
    Another significant contact that States have with the EPA regional 
offices is receiving new federal rules to implement. Since 2000, States 
have received about 40 new rules each year (in air, wastewater, 
drinking water, waste, etc.) to add to the already formidable list of 
environmental responsibilities that the States have.
    Yet another significant contact between States and the regional 
offices is on enforcement issues. Enforcement of the environmental laws 
is a responsibility of the States to which EPA has delegated the 
programs. EPA's role should be to assist the States when requested and 
to oversee the efficacy of the States' programs, and to assure that 
there is a ``level playing field'' of enforcement among all the States 
and all the EPA regional offices.
    While State relationships with the regional offices are usually 
good, they have failed to perform as expected on occasion. ECOS often 
hears about these problems from our members, and we can summarize our 
observations into four areas:

    1) Enforcement problems
    2) EPA is slow to provide grants to State environmental agencies
    3) Difficulties that States and regions have with NPM guidances
    4) Failure to reduce regional staff after delegations

1. Consistency in Enforcement Among Regional Offices and Related Issues
    In January 2004, the ECOS Compliance Committee outlined its 
concerns about inconsistencies among EPA's regional offices in the 
Agency's review of State enforcement and compliance efforts. Among the 
States' concerns was the belief that EPA's oversight of State 
enforcement programs was not consistent or predictable from one region 
to the next. This dialogue led to the EPA-ECOS ``State Review 
Framework,'' which is a significant commitment of both the Agency and 
the States to revise the manner in which EPA reviews State enforcement 
efforts.
    This effort is currently underway and remains an active joint 
project of ECOS and EPA. ECOS appreciates Congress' interest in this 
subject, but we do not think this subject is ripe for Congressional 
action.
    However, States continue to have difficulties with EPA inspectors 
who conduct inappropriate actions within delegated States. For example, 
in Nebraska EPA staff from the regional office recently showed up at 
the State environmental Agency to look through NPDES files for ``cases 
so we can get our enforcement numbers up.'' When the State staff 
suggested that it needed assistance with basic inspections in a part of 
the State, the EPA staff declined to assist.
    Recommendation. ECOS recommends that Congress ask the Agency for a 
joint report from it and the States on progress being made in 
implementing the State Review Framework, with the report due on March 
1, 2007.
2. Grant Problems
    States rely on Federal STAG funding--the Categorical Grants and the 
Infrastructure Grants--to assist them in implementing the delegated 
programs. In a typical State environmental Agency budget, about 25 
percent of the income is from Categorical Grants, but this can vary 
from a low of about 5 percent to a high of about 50 percent depending 
on the program and the State. States particularly rely on federal funds 
for support of certain parts of their programs.
    When EPA fails to provide federal grant funds in a timely manner, 
States may find it difficult to operate the programs due to cash flow 
problems. For example, in the current fiscal year, Region IV was unable 
to provide all the STAG grants to Tennessee within the first 3 months 
of the current Federal fiscal year. Of 12 major grants, only 3 were 
awarded within the first 3 months of the fiscal year, even though the 
State's application had been submitted before the new fiscal year 
began. EPA took over 6 months to award four of the grants, and one 
grant has still not been awarded, as of June 23, 2006. As you might 
imagine, the lack of timely Federal funds to operate various delegated 
programs in air, water, drinking water and waste puts a significant 
stress on the cash flow of the State Agency and its ability to operate 
these programs.
    This is by no means an isolated case. On June 6-7, 2006 States and 
EPA staff met to discuss this very issue. The summary report stated: 
``An issue of great importance to the workgroup (and the States in 
general) is grant timeliness. When the grant cycle suffers delays, it 
affects the States' ability to promptly implement the programs. The 
group discussed several approaches to resolving this problem, including 
better defining the roles and responsibilities of the State grant 
managers and the EPA program managers, allowing flexibility, and 
promoting consistency across the regions.'' A similar conclusion was 
present in EPA's December 23, 2005 memorandum entitled ``Timely Award 
of State and Tribal Continuing Environmental Program Grants.''
    Recommendation. ECOS recommends that Congress instruct the Agency 
to issue continuing grants (i.e., the Categorical Grants in the STAG 
account) to States and tribes no later than 90 days after the passage 
of EPA's budget, and to provide authorization for States and tribes to 
draw on those accounts at least every 90 days during the fiscal year.
3. NPM Guidances
    As we indicated in the above issue, States negotiate with EPA 
regional offices each year on a work plan that leads to the STAG 
Categorical Grants. These negotiations are very extensive, covering 
every delegated program that States have taken from EPA in water, 
drinking water, waste and air. States rely on ``National Program 
Manager Guidance'' to assure that rules are implemented similarly 
across the nation.
    Unfortunately, the guidances are not always communicated in a clear 
manner as they move from EPA headquarters to the Regional offices and 
to the States. Our experiences show that interpretations of the 
guidance that have sometimes led to confusion about how States should 
implement the rules.
    For example, Oklahoma recently determined that the cooling water 
discharge from a facility was exempt from a certain rule. EPA initially 
agreed with the facility that asked the Agency's opinion. However, when 
the State Agency contacted EPA to confirm this, the Agency hedged. The 
result was that it is not clear from the guidance whether the facility 
is exempt or not.
    In another example from the same State, a facility petitioned the 
State that it should be treated as two separate facilities under PSD 
(an air rule). The State tended to agree, but asked the region to 
confirm that the interpretation was consistent with existing EPA 
guidance on the subject. However, the Agency did not respond and the 
State therefore was forced to act unilaterally.
    Inconsistencies from State to State occur when (1) EPA does not 
interpret its rules in a timely manner, (2) it excessively interprets 
them, and/or (3) it adds additional requirements to the rules so as to 
change them or make them unimplementable.
4. Size of Staff in Regional Offices
    In 1992, EPA conducted a study that determined that about 45 
percent of the delegated programs had been actually delegated to the 
States. At that time, EPA had about 18,000 employees.
    By 2002, about 75 percent of the programs had been delegated to the 
States--a considerable shift of the workload. However, EPA's staff was 
still about 18,000.
    During this 10-year period only one new environmental program was 
created, the Safe Food Act of 1996.
    While we understand that EPA has many responsibilities, many States 
are unsure why the number of staff at the Agency remained the same 
while the bulk of the Agency's responsibilities for implementation of 
its programs was being handed to the States. At the same time, States 
do not have sufficient information to recommend to you whether EPA's 
regional staff should be reduced, not has ECOS taken such a position.
    Recommendation. ECOS suggests that Congress review the relationship 
between the rules and programs delegated to the States from the period 
1992 through current and the size of the Regional Office staff required 
to continue other Agency responsibilities.
                            recommendations
    In addition to the recommendations listed in our testimony above, 
ECOS recommends the following delineation of appropriate roles as an 
approach to appropriate roles:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Thank you, Mr. Chairman, for this opportunity to testify.
                                 ______
                                 
           Responses by David Paylor to additional question 
                         from Senator Jeffords
    Question 1. In discussions with the EPA Inspector General and GAO, 
both organizations have referenced the new ``State Review Framework.'' 
Your organization partnered with EPA to draft the framework. While your 
testimony mentions the program, can you discuss in greater detail you 
current impressions of the program? Is it working?''
    Response. The States partnered with EPA on the ``State Review 
Framework'' (the Framework) to address two principal concerns. First, 
the States find that EPA's oversight of delegated State programs is 
inconsistent between EPA Regions and between States in the same EPA 
Region. Second, the States want EPA's oversight to be predictable, 
repeatable and unbiased. Oversight should also eliminate redundancy.
    The ``State Review Framework'' (the Framework) is a management tool 
designed to provide consistent oversight of State performance in 
enforcement and compliance assurance programs. Developed by EPA with 
input from the States, its purpose is to ensure compliance with the 
nation's environmental laws, and maintain fair and consistent 
enforcement of those laws across the country. Delegation agreements 
between EPA and the States govern State implementation and enforcement 
of core environmental programs under Federal statutes. The Framework 
identifies 12 areas for EPA's evaluation of State compliance and 
enforcement performance in these core programs. A 13th area evaluates 
``uniqueness'' in State programs, highlighting how States are providing 
for flexibility and innovation--often needed to address environmental 
or administrative problems not envisioned in the law.
    The Framework relies on existing guidance and policies, avoids the 
creation of new requirements, and is not inconsistent with performance 
partnership agreements and grants. By design it should improve resource 
allocation, allow for reduced oversight of many States based on 
performance, and facilitate and monitor continuous program improvement. 
It should also provide EPA with the foundation necessary to evaluate 
it's own enforcement activities as well as reevaluate it's guidance and 
policies. EPA piloted the Framework in 10 States, one in each EPA 
Region. After completion of the pilots, the Framework was evaluated and 
revised, and EPA provided training to State and Federal employees on 
the Framework methodology. To date an additional 20 States have 
participated in reviews by EPA's Regional offices. EPA's goal is to 
complete the reviews and conduct a full evaluation of the Framework in 
2007.
    We agree with GAO that it is too early to determine the actual 
effectiveness of the Framework. We do know, based on the pilots and the 
reviews conducted to date, that there is a considerable amount of work 
to be done. The ECOS Compliance Committee is refocusing its efforts on 
the core program components, Elements 1-12. The reductions in the State 
and Tribal Grant Programs, Federal funds provided to the States to 
implement core programs, are making it critical to use the Framework to 
identify opportunities to reduce duplicative work, deploy our 
workforces differently, and engage in more effective work sharing. It 
remains to be seen if we can accomplish all of these efficiencies given 
the changes which will be required in both the Federal and State 
workforces and their management. However, both EPA and the States 
remain committed to our goals.

    Question 2. Can you discuss from a State perspective the process 
for determining annual enforcement targets for delegated programs? Who 
determines those targets? EPA regional offices, the States, or both? Is 
the focus primarily on a few large violators or several smaller ones?
    Response. The States are responsible for the enforcement of 
environmental programs as they are defined in delegation agreements. 
For example, if a State is delegated the National Pollutant Discharge 
Elimination System (NPDES) permit program under the Clean Water Act, 
then the State issues permits governing discharges to waters of the 
State and enforces the terms and conditions of the permits. Annual 
enforcement targets can address priorities within, or focus for, such 
delegated programs. In the water example, the issuance and enforcement 
of NPDES permits for sources of a particular pollutant into the 
Chesapeake Bay by the bordering States could be an annual target. 
Difficultly can arise when nationally-set annual targets impact State 
delegated programs in unintended ways.
    For example, national program managers (NPMs)--Senate confirmed 
Assistant Administrators in EPA Headquarters--in the air, water, waste, 
pesticide and toxics programs issue annual guidance establishing 
national program priorities as does EPA's enforcement program. Not 
infrequently, national guidance can redirects critical resources to 
national emergencies like Hurricane Katrina recovery. Such redirection 
of resources can undermine a State's ability to manage a delegated 
program. For example, not too long ago, EPA's enforcement program 
conducted a ``national dry cleaners initiative'' to address human 
health risk associated with the industry; for some States, however, dry 
cleaners were simply not sufficiently numerous to be a priority--air 
emissions from other major sources were.
    The NPM guidance is directed to EPA's Regional Offices, which are 
responsible for the oversight of delegated State programs as well as 
implementation of national priorities in different areas of the 
country. The Regions address national and annual targets in their work 
planning negotiations with the State through memoranda of/or 
performance partnership agreements and grants. As we noted in our 
testimony, difficulties arise when national guidance is not always 
clearly communicated as it moves from Headquarters to the Regions, and 
through the Regions to the States. Problems can also arise in the 
interpretation of national guidance by the Region and/or regional 
staff. And, although the States have been provided opportunities to 
comment on NPM guidance, and the EPA Regions have the authority to 
approve work plans that do not follow national guidance, neither 
mechanism appears to have any real impacts on annual targets.
    Work plan negotiations may also include Regional priorities that 
layer additional requirements on State programs. While the negotiations 
between the Region and the State continue, Federal funding can be, and 
frequently is, ``held hostage. States rely on grant programs 
established by Federal statutes to partially fund implementation of 
delegated programs. Our testimony provides specific examples of the 
impacts of the lack of timely grant awards on State programs. These 
problems exacerbate the current trend of declining State grants in a 
tight Federal fiscal environment, including a fairly recent practice of 
directing the use of State grant funds for national priorities, without 
sufficient or any additional funding. In the most recent example, 
funding provided to the States under section 106 of the Clean Water Act 
was awarded contingent on the implementation of a new requirement--that 
already stressed State water quality monitoring programs be expanded to 
include freshwater lakes.

    Question 3. GAO and the EPA Inspector General often site data gaps 
as a reason for inconsistent enforcement. Can you discuss the States' 
role in collecting and reporting environmental data?
    Response. At a minimum, the States collect and report environmental 
data in accordance with delegation and grant agreements, and other 
cooperative initiatives. Forty-three States responding to a recent ECOS 
survey reported data from more than 3 million regulated facility sites 
in 2003. Much of the data is submitted to the States by regulated 
facilities in compliance with permits, and is generated by the States 
through inspection and monitoring activities. In most cases, the States 
have additional data collected pursuant to State programs not mandated 
by Federal law and/or standards that are more stringent than the 
required Federal minimum.
    Most States have their own databases to manage and analyze the 
information they collect. They also maintain their own applications to 
provide for integration of data to produce annual reports, and to look 
across both program and industry lines for compliance trends. In these 
cases, the States use proprietary applications to ``upload'' or 
crosswalk data from their databases to EPA's. (Note: EPA's databases 
are not fully integrated.) Over the years, this has been problematic 
because each national program has had different approaches for 
submitting electronic data to EPA and data systems' crosswalk 
applications have failed when respective system upgrades were 
delivered. This has resulted in significant historic data gaps. There 
are also perceived real time data gaps because while the States have up 
to date information in their own systems, EPA usually has only received 
data at prescribed intervals. Therefore, a query to an EPA system of 
record is likely to result in data results which are not as up to date 
as it appears it should be. The development of the National 
Environmental Information Exchange Network (Exchange Network) is being 
developed to eliminate the interoperability issue between State and EPA 
systems and should allow for the synchronization of data between EPA 
and States on a more frequent basis. The Exchange Network is also 
enforcing the use of data standards.
    Where and when EPA has been able to dedicate sufficient resources 
to a project, both itself and for the States, and has taken the lead 
and worked collaboratively with the States, the quality of national 
data systems and the data they manage improves. The States participated 
in the Environmental Data Standards Council that identified and 
developed data standards and develop data exchange standards for 
enforcement and compliance. This has helped improve the quality of data 
over the years. Even with the data accessibility, data synchronization 
and data standards issues, the ``data gaps'' that impact our ability to 
characterize the enforcement of the nation's environmental laws are the 
direct result of any number of factors including agreement on how to 
measure performance in enforcement programs. As GAO noted in its 
testimony, EPA's key management indicators continue to be the number of 
inspections conducted and the penalties assessed for noncompliance. In 
contrast, many States are focusing on the quality and content of 
inspections and the training of staff conducting the inspections. GAO, 
EPA's Inspector General, and recently the Office of Management and 
Budget have all noted that EPA's performance measures need to 
characterize changes in compliance, including compliance rate and other 
outcome data.
    In addition, EPA performance measures need to acknowledge and 
capture State-specific limitations or approaches which may not conform 
to standard performance or tracking metrics, such as lack of State 
authority to pursue a particular case or action, or referral of cases 
to other State agencies with superior jurisdiction. Finally, EPA needs 
to develop performance measure methodology to quantify the use of 
compliance assistance or other incentive strategies, undertaken in lieu 
of or in conjunction with more traditional punitive enforcement 
strategies. These programs are more likely to eliminate a source or 
prevent pollution, thereby achieving environmental results sooner. We 
are working closely with EPA to develop better measures to for these 
programs so that we can better characterize our successes.
                               __________
     Statement of John Stephenson, Director, Natural Resources and 
           Environment, U.S. Government Accountability Office
    Mr. Chairman and members of the committee, I am pleased to be here 
today to discuss our work on the Environmental Protection Agency's 
(EPA) difficulties in ensuring consistent and equitable enforcement 
actions among its regions and among the States. Our testimony today is 
based on reports we have issued on EPA's compliance and enforcement 
activities over the past several years,\1\ and provides some 
observations from the ongoing work that we are performing at your 
request and that of the Subcommittee on Interior, Environment and 
Related Agencies, House Committee on Appropriations. As you know, we 
are assessing how EPA, in consultation with regions and State agencies, 
sets priorities for compliance and enforcement and how the Agency and 
the States determine respective compliance and enforcement roles and 
responsibilities and allocate resources for these purposes. As part of 
this effort, we are assessing EPA's initiated and planned actions to 
address key factors that result in inconsistencies--identified in our 
previous work--in carrying out its enforcement responsibilities. We 
expect to complete this ongoing review on EPA and State enforcement and 
issue our report in March 2007.
---------------------------------------------------------------------------
    \1\ See GAO, Environmental Protection More Consistency Needed Among 
EPARegions in Approach toEnforcement, GAO/RCED-00-108 (Washington, DC: 
June 2, 2000); Human Capital: Implementing an Effective Workforce 
Strategy Would Help EPA to Achieve Its Strategic Goals, GAO-01-812 
(Washington, DC: July 31, 2001); and Clean Water Act: Improved Resource 
Panning Would Help EPA Better Respond to Changing Needs and Fiscal 
Constrains, GAO-05-721 (Washington, DC: July 22, 2005).
---------------------------------------------------------------------------
    EPA seeks to achieve cleaner air, purer water, and better protected 
land in many different ways. Compliance with the nation's environmental 
laws is the goal, and enforcement is a vital part of the effort to 
encourage State and local Governments, companies, and others who are 
regulated to meet their environmental obligations. Enforcement deters 
those who might otherwise seek to profit from violating the law, and 
levels the playing field for environmentally compliant companies.
    EPA administers its environmental enforcement responsibilities 
through its Office of Enforcement and Compliance Assurance (OECA). 
While OECA provides overall direction on enforcement policies, and 
occasionally takes direct enforcement action, many of its enforcement 
responsibilities are carried out by its 10 regional offices (regions). 
These regions, in addition to taking direct enforcement action, oversee 
the enforcement programs of State agencies that have been delegated 
authority for enforcing federal environmental protection 
requirements.\2\
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    \2\ For many Federal environmental programs, EPA either authorizes 
States to administer the Federal program or retains authority to 
administer the program for the State. The State programs that have been 
approved by EPA are described as ``delegated'' in this testimony for 
clarity and consistency with EPA program terminology.
---------------------------------------------------------------------------
    In my testimony today, I will describe the (1) extent to which 
variations exist among EPA's regions in enforcing environmental 
requirements, (2) key factors that contribute to any such variations, 
and (3) status of the Agency's efforts to address these factors.
    In summary, as we previously reported on regional efforts to 
enforce provisions of the Clean Water Act and the Clean Air Act, the 
regions vary substantially in the actions they take to enforce 
environmental requirements. These variations show up in key management 
indicators that EPA headquarters officials have used to monitor 
regional performance, such as the number of inspections performed at 
regulated facilities and the amount of penalties assessed for 
noncompliance with environmental regulations. For example, in fiscal 
year 2000, the number of inspections conducted under the Clean Air Act 
compared with the number of facilities in each region subject to EPA's 
inspection under the act varied from a high of 80 percent in Region III 
to a low of 27 percent in Regions I and II.
    We also reported that it is important to understand the reasons for 
some of these variations, such as a regional determination to conduct 
more in-depth inspections at a fewer number of facilities instead of 
conducting less intensive examinations at many more facilities. 
Accordingly, we recommended that EPA clarify which enforcement actions 
it expects to see consistently implemented across the regions and 
direct the regions to supplement its reporting with information that 
helps explain why variation occurred. We did not focus our work on the 
effects of inconsistent enforcement on various types of businesses, 
including small businesses, the particular focus of the committee's 
hearing today. However, in performing our work we noted that a recent 
study for the Small Business Administration,\3\ as well as other 
studies, have suggested that environmental requirements fall most 
heavily on small businesses. To the extent that this is the case, small 
businesses could be especially disadvantaged by any inconsistencies and 
inequities in EPA's enforcement approach. EPA has made progress toward 
resolving challenges in its enforcement activities that we have 
previously identified. Nonetheless, each of the challenges is complex 
and will require much more work and continued vigilance to overcome.
---------------------------------------------------------------------------
    \3\ W. Mark Crain, The Impact of Regulatory Costs on Small Firms, a 
report prepared at the request of the Small Business Administration's 
Office of Advocacy (Washington, DC, September 2005).
---------------------------------------------------------------------------
    Our work has identified several factors contributing to regional 
variations: (1) differences in the philosophy of enforcement staff 
about how to best achieve compliance with environmental requirements; 
(2) incomplete and inadequate enforcement data, which hamper EPA's 
ability to accurately determine the extent of variations; and (3) an 
antiquated workforce planning and allocation system that is not 
adequate for deploying staff to ensure greater consistency and 
effectiveness in enforcing environmental requirements.
    Finally, EPA recognizes that to ensure fair and equitable 
treatment, core enforcement requirements must be consistently 
implemented so that similar violations are met with similar enforcement 
responses, regardless of geographic location. Accordingly, and in 
response to our findings and recommendations, the Agency has initiated 
or planned actions that are intended to achieve greater consistency in 
regional and State enforcement activities. These actions include the 
following:

     Developing the State Review Framework. This framework 
involves a new process for conducting reviews and measuring the 
performance of core enforcement programs in States with delegated 
authority (as well as nondelegated programs implemented by EPA 
regions). Although the process is a promising means for ensuring more 
consistent enforcement actions, it is too early to assess whether the 
process will result in more consistent enforcement actions and a level 
playing field for the regulated community across the Nation.
     Improving management information. EPA has a number of 
ongoing activities to improve the Agency's enforcement data, but the 
data problems are long-standing and complex. It will likely require a 
number of years and a steady top-level commitment of staff and 
financial resources to substantially improve the data so that they can 
be effectively used to target enforcement actions in a consistent and 
equitable manner.
     Enhancing workforce planning and analysis. For the past 
several years, EPA has taken measures to improve its ability to match 
its staff and technical capabilities with the needs of individual 
regions and States. For example, EPA developed a human capital strategy 
and performed a study of its workforce competencies. Nonetheless, the 
Agency still needs to determine how to deploy its employees among its 
strategic goals and geographic locations so that it can most 
effectively use its resources, including its compliance and enforcement 
resources.

    EPA's enforcement program depends heavily upon inspections by 
regional or State enforcement staff as the primary means of detecting 
violations and evaluating overall facility compliance. Thus, the 
quality and the content of the Agency's and States' inspections, and 
the number of inspections undertaken to ensure adequate coverage, are 
important indicators of the enforcement program's effectiveness. 
However, as we reported in 2000, EPA's regional offices varied 
substantially on the actions they take to enforce the Clean Water Act 
and Clean Air Act. Consistent with earlier observations of EPA's Office 
of Inspector General and internal Agency studies, we found these 
variations in regional actions reflected in the (1) number of 
inspections EPA and State enforcement personnel conducted at facilities 
discharging pollutants within a region, (2) number and type of 
enforcement actions taken, and (3) the size of the penalties assessed 
and the criteria used in determining the penalties assessed. For 
example, as figure 1 indicates, the number of inspections conducted 
under the Clean Air Act in fiscal year 2000 compared with the number of 
facilities in each region subject to EPA's inspection under the act 
varied from a high of 80 percent in Region 3 to a low of 27 percent in 
Regions 1 and 2.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    While the variations in enforcement raise questions about the need 
for greater consistency, it is also important to get behind the data to 
understand the cause of the variations and the extent to which they 
reflect a problem. For example, EPA attributed the low number of 
inspections by its Region V, in Chicago, to the regional office's 
decision at the time to focus limited resources on performing detailed 
and resource-intensive investigations of the region's numerous electric 
power plants, rather than conducting a greater number of less intensive 
inspections.
    We agree that regional data can be easily misinterpreted without 
the contextual information needed to clarify whether variation in a 
given instance is inappropriate or whether it reflects the appropriate 
exercise of flexibility by regions and States to tailor their 
priorities to their individual needs and circumstances. In this regard, 
we recommended that it would be appropriate for EPA to (1) clarify 
which aspects of the enforcement program it expects to see implemented 
consistently from region to region and which aspects may appropriately 
be subject to greater variation and (2) supplement region-by-region 
data with contextual information that helps to explain why variations 
occur and thereby clarify the extent to which variations are 
problematic.
    Our findings were also consistent with the findings of EPA's 
Inspector General and OECA that regions vary in the way they oversee 
State-delegated programs. In this regard, contrary to EPA policy, some 
regions did not (1) conduct an adequate number of oversight inspections 
of State programs, (2) sufficiently encourage States to consider 
economic benefit in calculating penalties, (3) take more direct federal 
actions where States were slow to act, and (4) require States to report 
all significant violators. Regional and State officials generally 
indicated that it was difficult for them to ascertain the extent of 
variation in regional enforcement activities, given their focus on 
activities within their own geographic environment. However, EPA 
headquarters officials responsible for the air and water programs noted 
that such variation is fairly commonplace and does pose problems. The 
director of OECA's water enforcement division, for example, told us 
that, in reacting to similar violations, enforcement responses in 
certain regions are stronger than they are in others and that such 
inconsistencies have increased.
    Similarly, the director of OECA's air enforcement division said 
that, given the considerable autonomy of the regional offices, it is 
not surprising that variations exist in how they approach enforcement 
and State oversight. In this regard, the director noted, disparities 
exist among regions in the number and quality of inspections conducted 
and in the number of permits written in relation to the number of 
sources requiring permits.
    In response to these findings, a number of regions have begun to 
develop and implement State audit protocols, believing that having such 
protocols could help them review the State programs within their 
jurisdiction with greater consistency. Here, too, regional approaches 
differ. For example:

     Region 1, in Boston, has adopted a comprehensive 
``multimedia'' approach in which it simultaneously audits all of a 
State's delegated environmental programs.
     Region 3, in Philadelphia, favors a more targeted approach 
in which air, water, and waste programs are audited individually.
     In Region V, in Chicago, the office's air enforcement 
branch chief said that he did not view an audit protocol as 
particularly useful, noting that he prefers regional staff to engage in 
joint inspections with States to assess the States' performance in the 
field and to take direct federal action when a State action is 
inadequate.

    We recognize the potential of these protocols to achieve greater 
consistency by a region in its oversight of its States, and the need to 
tailor such protocols to meet regional concerns. However, we also 
believe that EPA guidance on key elements that should be common to all 
protocols would help engender a higher level of consistency among all 
10 regions in how they oversee States.
    While EPA's data show variations in key measures associated with 
the Agency's enforcement program, they do little to explain the causes 
of the variations. Without information on causes, it is difficult to 
determine the extent to which variations represent a problem, are 
preventable, or reflect appropriate regional and State flexibility in 
applying national program goals to unique circumstances. Our work 
identified the following causes: (1) differences in philosophical 
approaches to enforcement, (2) incomplete and inaccurate national 
enforcement data, and (3) an antiquated workforce planning and 
allocation system.
    While OECA has issued policies, memorandums, and other documents to 
guide regions in their approach to enforcement, the considerable 
autonomy built into EPA's decentralized, multilevel organizational 
structure allows regional offices considerable latitude in adapting 
headquarters' direction in a way they believe best suits their 
jurisdiction. The variations we identified often reflect different 
enforcement approaches in determining whether the region should (1) 
rely predominantly on fines and other traditional enforcement methods 
to deter noncompliance and to bring violators into compliance or (2) 
place greater reliance on alternative strategies, such as compliance 
assistance (workshops, site visits, and other activities to identify 
and resolve potential compliance problems). Regions have also differed 
on whether deterrence could be achieved best through a small number of 
high-profile, resource-intensive cases or a larger number of smaller 
cases that establish a more widespread, albeit lower profile, 
enforcement presence. Further complicating matters are the wide 
differences among States in their enforcement approaches and the 
various ways in which regions respond to these differences. Some 
regions step more readily into cases when they consider a State's 
action to be inadequate, while other regions are more concerned about 
infringing on the discretion of States that have been delegated 
enforcement responsibilities. While all of these approaches may be 
permissible, EPA has experienced problems in identifying and 
communicating the extent to which variation either represents a problem 
or the appropriate exercise of flexibility by regions and States to 
apply national program goals to their unique circumstances.
    OECA needs accurate and complete enforcement data to determine 
whether regions and States are consistently implementing core program 
requirements and, if not, whether significant variations in meeting 
these requirements should be corrected. The region or the State 
responsible for carrying out the enforcement program is responsible for 
entering data into EPA's national databases. However, both the quality 
of and quality controls over these data were criticized by State and 
regional staff we interviewed.
    Internal OECA studies have also acknowledged the seriousness of the 
data problem. An OECA work group, the ``Targeting Program Review 
Team,'' stated that key functions related to data quality, such as the 
consistent entry of information by regions and States, were not working 
properly and that there were important information gaps in EPA's 
enforcement-related databases. Another OECA work group concluded in 
2006, ``OECA managers do not have available to them timely, complete, 
and detailed analyses of regional or national performance.'' A third 
OECA work group asserted that the situation has deteriorated from past 
years, noting:

    ``managers in the regions and in OECA headquarters have become 
increasingly frustrated that they are not receiving from [the Office of 
Compliance] the reports and data analyses they need to manage their 
programs. . . [and there] has been less attention to the data in the 
national systems, a commensurate decline in data quality, and 
insufficient use of data by enforcement/compliance managers.''

    Consistent with our findings and recommendations, EPA's Office of 
Inspector General recently reported that, ``OECA's 2005 publicly-
reported GPRA [Government Performance and Results Act] performance 
measures do not effectively characterize changes in compliance or other 
outcomes because OECA lacks reliable compliance rates and other 
reliable outcome data. In the absence of compliance rates, OECA reports 
proxies for compliance to the public and does not know if compliance is 
actually going up or down. As a result, OECA does not have all the data 
it needs to make management and program decisions. What is missing 
most, the biggest gap, is information about compliance rates. OECA 
cannot demonstrate the reliability of other measures because it has not 
verified that estimated, predicted, or facility self-reported outcomes 
actually took place. Some measures do not clearly link to OECA's 
strategic goals. Finally, OECA frequently changed its performance 
measures from year to year, which reduced transparency.'' For example, 
between fiscal years 1999-2005, OECA reported on a low of 23 
performance measures to a high of 69 measures, depending on the fiscal 
year.
    Although EPA is working to improve its data, the problems are 
extensive and complex. For example, the Inspector General recently 
reported that OECA cannot generate programmatic compliance information 
for five of six program areas; lacks knowledge of the number, location, 
and levels of compliance for a significant portion of its regulated 
universe; and concentrates most of its regulatory activities on large 
entities and knows little about the identities or cumulative impact of 
small entities. Consequently, the Inspector General reported, OECA 
currently cannot develop programmatic compliance information, 
adequately report on the size of the universe for which it maintains 
responsibility, or rely on the regulated universe data to assess the 
effectiveness of enforcement strategies.\4\
---------------------------------------------------------------------------
    \4\ EPA Office of Inspector General, Limited Knowledge of the 
Universe of Regulated Entities Impedes EPA's Ability to Demonstrate 
Changes in Regulatory Compliance, Report No. 2005-P-00024, September 
19, 2005.
---------------------------------------------------------------------------
    As we reported, EPA's process for budgeting and allocating 
resources does not fully consider the Agency's current workload, either 
for specific statutory requirements, such as those included in the 
Clean Water Act, or for broader goals and objectives in the Agency's 
strategic plan. Instead, in preparing its requests for funding and 
staffing, EPA makes incremental adjustments, largely based on 
historical precedents, and thus its process does not reflect a bottom-
up review of the nature or distribution of the current workload. While 
EPA has initiated several projects over the past decade to improve its 
workload and workforce assessment systems, it continues to face major 
challenges in this area
    If EPA is to substantially improve its resource planning, we 
reported, it must adopt a more rigorous and systematic process for (1) 
obtaining reliable data on key workload indicators, such as the quality 
of water in particular areas, which can be used to budget and allocate 
resources, and (2) designing budget and cost accounting systems that 
are able to isolate the resources needed and allocated to key 
enforcement activities.
    Without reliable workforce information, EPA cannot ensure 
consistency in its enforcement activities by hiring the right number or 
type of staff or allocating existing staff resources to meet current or 
future needs. In this regard, since 1990, EPA has hired thousands of 
employees without systematically considering the workforce impact of 
changes in environmental statutes and regulations, technological 
advances in affecting the skills and expertise needed to conduct 
enforcement actions, or the expansion in State environmental staff. EPA 
has yet to factor these workforce changes into its allocation of 
existing staff resources to its headquarters and regional offices to 
meet its strategic goals. Consequently, should EPA either downsize or 
increase its enforcement and compliance staff, it would not have the 
information needed to determine how many employees are appropriate, 
what technical skills they must have, and how best to allocate 
employees among strategic goals and geographic locations in order to 
ensure that reductions or increases could be absorbed with minimal 
adverse impacts in carrying out the Agency's mission.
    Over the past several years, EPA has initiated or planned several 
actions to improve its enforcement program. We believe that a few of 
these actions hold particular promise for addressing inconsistencies in 
regional enforcement activities. These actions include (1) the creation 
of a State Review Framework, (2) improvements in the quality of 
enforcement data, and (3) enhancements to the Agency's workforce 
planning and analysis system.
    The State Review Framework is a new process for conducting 
performance reviews of enforcement and compliance activities in the 
States (as well as for nondelegated programs implemented by EPA 
regions). These reviews are intended to provide a mechanism by which 
EPA can ensure a consistent level of environmental and public health 
protection across the country. OECA is in the second year of a 3-year 
project to make State Review Framework reviews an integral part of the 
regional and State oversight and planning process and to integrate any 
regional or State corrective or follow-up actions into working 
agreements between headquarters, regions, and States. It is too early 
to assess whether the process will provide an effective means for 
ensuring more consistent enforcement actions and oversight of State 
programs to help ensure a level playing field for the regulated 
community across the country. Issues that still need to be addressed 
include how EPA will assess States' implementation of alternative 
enforcement and compliance strategies, such as strategies to assist 
businesses in their efforts to comply with environmental regulations; 
encourage businesses to take steps to reduce pollution; offer 
incentives (e.g., public recognition) for businesses that demonstrate 
good records of compliance; and encourage businesses to participate in 
programs to audit their environmental performance and make the results 
of these audits and corrective actions available to EPA, other 
environmental regulators, and the public.
    Regardless of other improvements EPA makes to the enforcement 
program, it needs to have sufficient environmental data to measure 
changes in environmental conditions, assess the effectiveness of the 
program, and make decisions about resource allocations. Through its 
Environmental Indicators Initiative and other efforts, EPA has made 
some progress in addressing critical data gaps in the Agency's 
environmental information. However, the Agency still has a long way to 
go in obtaining the data it needs to manage for environmental results 
and needs to work with its State and other partners to build on its 
efforts to fill critical gaps in environmental data. Filling such gaps 
in EPA's knowledge of environmental conditions and trends should, in 
turn, translate into better approaches in allocating funds to achieve 
desired environmental results. Such knowledge will be useful in making 
future decisions related to strategic planning, resource allocations, 
and program management.
    Nevertheless, most of the performance measures that EPA and the 
States are still using focus on outputs rather than on results, such as 
the number of environmental pollution permits issued, the number of 
environmental standards established, and the number of facilities 
inspected. These types of measures can provide important information 
for EPA and State managers to use in managing their programs, but they 
do not reflect the actual environmental outcomes that EPA must know in 
order to ensure that resources are being allocated in the most cost-
effective ways to improve environmental conditions and public health.
    EPA also has worked with the States and regional offices to improve 
enforcement data in its Permit Compliance System and believes that its 
efforts have improved data quality. EPA officials said that the system 
will be incorporated into the Integrated Compliance Information System, 
which is being phased in this year. According to information EPA 
provided, the modernization effort will identify the data elements to 
be entered and maintained by the States and regions and will include 
additional data entry for minor facilities and special regulatory 
program areas, such as concentrated animal feeding operations, combined 
sewer overflows, and storm water. Regarding the National Water Quality 
Inventory, the Office of Water recently began advocating the use of 
standardized, probability-based, statistical surveys of State waters so 
that water quality information would be comparable among States and 
from year to year.
    While these efforts are steps in the right direction, progress in 
this area has been slow and the benefits of initiatives currently in 
the discussion or planning stages are likely to be years away from 
realization. For example, initiatives to improve EPA's ability to 
manage for environmental results are essentially long-term. They will 
require a long-term commitment of management attention, follow-through, 
and support--including the dedication of appropriate and sufficient 
resources--for their potential to be fully realized. A number of 
similar initiatives in the past have been short-lived and unproductive 
in terms of lasting contributions to improved performance management. 
The ultimate payoff will depend on how fully EPA's organization and 
management support these initiatives and the extent to which identified 
needs are addressed in a determined, systematic, and sustained fashion 
over the next several years.
    Since the late 1990s, EPA has made progress in improving the 
management of its human capital. EPA's human capital strategic plan was 
designed to ensure a systematic process for identifying the Agency's 
human capital requirements to meet strategic goals. Furthermore, EPA's 
strategic planning includes a cross-goal strategy to link strategic 
planning efforts to the Agency's human capital strategy. Despite such 
progress, effectively implementing a human capital strategic plan 
remains a major challenge. Consequently, the Agency needs to continue 
monitoring progress in developing a system that will ensure a well-
trained and motivated workforce with the right mix of skills and 
experience. In this regard, the Agency still has not taken the actions 
that we recommended in July 2001 to comprehensively assess its 
workforce--how many employees it needs to accomplish its mission, what 
and where technical skills are required, and how best to allocate 
employees among EPA's strategic goals and geographic locations. 
Furthermore, as previously mentioned, EPA's process for budgeting and 
allocating resources does not fully consider the Agency's current 
workload. With prior years' allocations as the baseline, year-to-year 
changes are marginal and occur in response to (1) direction from the 
Office of Management and Budget and the Congress, (2) spending caps 
imposed by EPA's Office of the Chief Financial Officer, and (3) 
priorities negotiated by senior Agency managers.
    EPA's program offices and regions have some flexibility in 
realigning resources based on their actual workload, but the overall 
impact of these changes is also minor, according to Agency officials. 
Changes at the margin may not be sufficient because both the nature and 
distribution of the workload have changed as the scope of activities 
regulated has increased and as EPA has taken on new responsibilities 
while shifting others to the States. For example, controls over 
pollution from storm water and animal waste at concentrated feeding 
operations have increased the number of regulated entities by hundreds 
of thousands and required more resources in some regions of the 
country. However, EPA may be unable to respond effectively to changing 
needs and constrained resources because it does not have a system in 
place to conduct periodic ``bottom-up'' assessments of the work that 
needs to be done, the distribution of the workload, or the staff and 
other resource needs.
    Mr. Chairman, to its credit, EPA has initiated a number of actions 
to improve its enforcement activities and has invested considerable 
time and resources to make these activities more effective and 
efficient. While we applaud EPA's actions, they have thus far achieved 
only limited success and illustrate both the importance and the 
difficulty of addressing the long-standing problems in ensuring the 
consistent application of enforcement requirements, fines and penalties 
for violations of requirements, and the oversight of State 
environmental programs. To finish the job, EPA must remain committed to 
continuing the steps that it has already taken. In this regard, given 
the difficulties of the improvements that EPA is attempting to make and 
the time likely to be required to achieve them, it is important that 
the Agency remain vigilant. It needs to guard against any erosion of 
its efforts by factors that have hampered past efforts to improve its 
operations, such as changes in top management and priorities and 
constraints on available resources.
    Mr. Chairman, this concludes my prepared statement. I would be 
happy to respond to any questions that you or members of the committee 
may have.
    If you have any questions about this testimony, please contact me 
at (202) 512-3841 or [email protected]. Major contributors to this 
testimony include Ed Kratzer, John C. Smith, Ralph Lowry, Ignacio 
Yanes, Kevin Bray, and Carol Herrnstadt Shulman.
                                 ______
                                 
         Responses by John Stephenson to additional questions 
                         from Senator Jeffords
    Question 1. In your testimony you cite Clean Air Act inspection 
data demonstrating a variation in inspection activity among the regions 
in fiscal year 2000. How does the percentage of inspected facilities 
vary across fiscal years?
    Response. In our testimony, we reported Clean Air Act inspection 
data for the most recent fiscal year at the time of our report and did 
not compare variation across fiscal years. (See Human Capital: 
Implementing an Effective Workforce Strategy Would Help EPA to Achieve 
Its Strategic Goals, GAO-01-812, July 31, 2001). However, we reported 
in 2000 that earlier observations by EPA's Office of Inspector General 
and internal Agency studies are consistent with our findings that 
variations in regional actions are reflected in the number of 
inspections EPA and State enforcement personnel conducted at facilities 
discharging pollutants within a region. For example, fiscal year 1998 
EPA data show that regional and State inspection coverage for Clean Air 
Act-related programs ranged from a low of 27 percent of facilities 
inspected in the Chicago region to a high of 74 percent for facilities 
in the Philadelphia region. This compares with about 30 percent and 80 
percent of facilities inspected in the Chicago and Philadelphia regions 
respectively, in fiscal year 2000.

    Question 2. Is it possible that a facility not inspected in fiscal 
year 2000 could have been inspected in a later fiscal year?
    Response. Yes. EPA's Office of Enforcement and Compliance Assurance 
(OECA) relies heavily upon periodic inspections by regional and/or 
State enforcement staff as the primary means of detecting violations 
and evaluating overall facility compliance. According to the director 
of OECA's air enforcement division, because the air program does not 
have continuous monitoring, facilities found in compliance some years 
ago may fall into noncompliance without being detected unless they are 
periodically retested.

    Question 3. What factors inhibit GAO from accurately studying the 
effects of inconsistent enforcement on various businesses within the 
regulated community?
    Response. Data on the quality and the content of the Agency's and 
States' inspections, and the number of inspections undertaken to ensure 
adequate coverage, are important indicators of the enforcement 
program's effectiveness. Nonetheless, it is important to get behind 
these data by considering contextual information associated with the 
data. EPA's data and analyses performed by OECA and EPA's Inspector 
General show that variations exist in the quantity and quality of 
inspections, the number and type of enforcement actions, and other key 
elements of the Agency's enforcement program. However, the data 
themselves do little to explain the causes of the variations. Without 
causal information it is not possible to determine accurately the 
extent to which variation represents a problem, whether it is 
preventable, or the extent to which it represents the appropriate 
exercise of flexibility towards the regulated community.

    Question 4. In your testimony, you cite a Small Business 
Administration study that finds, according to your summary, 
``environmental requirements fall most heavily on small businesses''. 
How do you reconcile this finding with the EPA Inspector General's 
determination that EPA ``concentrates most of its regulatory activities 
on large entities and knows little about the identities or cumulative 
impact of small entities''?
    Response. According to an SBA-funded study entitled ``The Impact of 
Regulatory Costs on Small Firms'', published in September 2005, small 
businesses continue to bear a disproportionate share of the Federal 
regulatory burden. Taking into account four types of regulation--
economic, workplace, environmental, and tax compliance--the total 
regulatory cost per employee for firms with fewer than 20 employees was 
$7,647, with environmental regulation amounting to $3,296 per employee 
or 43 percent. However, as the following table shows, the importance of 
environmental regulation as a share of total cost per employee 
decreases rapidly as the size of the firm increases, with environmental 
regulatory costs representing the lowest regulatory cost per employee 
for firms with 500 or more employees.

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    The finding that the costs of complying with environmental rules 
falls disproportionately on very small firms is not necessarily 
inconsistent with the finding of EPA's Office of Inspector General that 
OECA has limited knowledge of the diverse regulated universe for which 
it maintains responsibility or that it concentrates most of its 
regulatory attention on large entities and knows little about the 
identities and cumulative environmental impact of small entities. As 
the Inspector General reported in September 2005, EPA's enforcement and 
compliance monitoring activities focus on major and large entities or 
pollution sources, which represent only a small fraction of the total 
universe of entities subject to regulation. OECA has mostly focused on 
larger and major entities, and has not conducted or obtained analyses 
showing the cumulative impact of the vast number of entities that emit 
pollution below the threshold of major or larger entities. EPA has 
focused on major and larger entities because any one of the larger 
entities, individually, can have a greater impact than any of the 
individual smaller entities. However, given the much greater number of 
small entities and the potential collective or cumulative impact from 
this vast but little understood part of the regulated universe, the 
Inspector General's report argued that it is important for OECA to know 
the cumulative environmental impact of entities that fall below the 
major or large threshold. Improved information on small entities, 
including overall numbers and compliance rates, could help OECA better 
prioritize where to focus resources and facilitate effective management 
of compliance and enforcement activities.
    Lastly, in recognition of the environmental compliance burden 
imposed on small firms, Congress enacted statutes to protect small 
businesses while continuing to regulate their impact on the 
environment. The Regulatory Flexibility Act (RFA) and the Small 
Business Regulatory Act (SBREFA) were enacted to provide small 
businesses with the flexibility and clarity necessary to comply with 
Government standards. Various subtitles of these statutes (1) require 
the Agency to publish Small Entity Compliance Guides written in plain 
language explaining actions a small entity must take to comply with the 
rules; (2) require the Agency to support the rights of small entities 
in enforcement actions , specifically providing for the reduction (and 
in certain cases the waiver) of civil penalties for violations; (3) 
provide small entities with expanded authority to go to court to be 
awarded attorneys' fees and costs when the Agency is found to have been 
excessive in the enforcement of regulations, (4) provide small entities 
with expanded opportunities to participate in the development of 
regulations; (5) require the Agency to provide Congress and GAO with 
copies of all final rules and supporting analyses. Congress may decide 
not to allow a rule to take effect.

    Question 5. In your testimony, you provide examples of various EPA 
auditing protocols that regions employ to oversee State delegated 
authority. Specifically, how would a standardized audit tool developed 
at the headquarters improve compliance?
    Response. In 2004, OECA, EPA Regions, the Environmental Council of 
the States (ECOS), and State representatives from each Region 
collaborated in the development of a tool to provide consistent 
oversight of State performance in core enforcement and compliance 
assurance programs. This tool has considerable potential not only for 
improving compliance but also for increasing consistency among EPA 
regions and encouraging greater uniformity among State compliance and 
enforcement programs. Specifically, the purpose of the assessment tool 
is to provide a consistent level of environmental and public health 
protection across the country and provide a consistent mechanism by 
which EPA Regions, working collaboratively with their States, can 
ensure that States meet agreed upon performance levels. Known as the 
State Review Framework (SRF), the SRF is intended to address issues 
raised in EPA Office of Inspector General audits, concerns raised by 
ECOS' Compliance Committee, program delegation withdrawal petitions 
filed by environmental organizations and others, and other EPA 
assessment efforts. The SRF is based on the 1986 guidance memorandum 
entitled ``Revised Policy Framework for State/EPA Enforcement 
Agreements'' and utilizes existing program guidance, such as EPA's 
national enforcement response policies, and civil penalty policies or 
similar State policies (where in use and consistent with national 
policy) to evaluate State performance and to help guide definitions of 
a minimum level of performance.
    The SRF consists of twelve core elements that examine major aspects 
of a State's compliance and enforcement program plus a thirteenth 
element that provides the opportunity to give States credit for 
innovative approaches to achieving results in their programs. Examples 
of the core elements include: (1) the degree to which a State program 
has completed the universe of planned and agreed upon inspections; (2) 
the degree to which inspection reports and compliance reviews document 
inspection findings, including accurate descriptions of what was 
observed to sufficiently identify violations, (3) the degree to which 
significant violations are accurately identified and reported to EPA 
national databases in a timely manner, and (4) the degree to which a 
State takes timely and appropriate enforcement actions, in accordance 
with specific EPA policy.
    Anticipated benefits of the SRF include, among others: (1) more 
strategic resource utilization; (2) reduction of duplicative work; (3) 
consistent and predictable baseline oversight with agreed upon 
thresholds for corrective action; (4) a level playing field for States 
in competition for business, (5) enhanced (or even relaxed) oversight 
based on State performance, (6) improved public confidence; and (7) 
reduced vulnerability to criticisms regarding EPA's level of oversight 
, particularly from the Office of the Inspector General, the Government 
Accountability Office (GAO), and the public.
    Eleven States participated in a pilot test of the SRF in 2004, one 
State in each region, with the exception of region 7 in which two 
States divided responsibilities for specific programs. The reviews of 
pilot States and Region 10 were all completed by January 2005. EPA 
evaluated the results of the pilot reviews in May 2005 with the 
participation of key stakeholders such as ECOS, the Association of 
State and Territorial Solid Waste Management Officials (ASTWMO), the 
Association of State and Interstate Water Pollution Control 
Administrators (ASIWPCA), and State and Territorial Air Pollution 
Program Administrators/Association of Local Air Pollution Control 
Officials (STAPPA/ALAPCO). Reviews of the remaining States are 
scheduled to be completed by the end of FY 2007.

    Question 6. How has the lack of available compliance and 
enforcement data hindered GAO's ability to study regional 
inconsistency? What other factors hinder a quantitative analysis?
    Response. GAO reported in June 2000 that the lack of reliable 
compliance and enforcement data has hindered the ability of EPA and the 
Agency's stakeholders, including GAO and the EPA Office of Inspector 
General to ascertain the extent to which regional inconsistencies do in 
fact exist, the impact they may have on human health and the 
environment, and the manner in which they should be addressed. (See 
Environmental Protection: More Consistency Needed Among EPA Regions in 
Approach to Enforcement, GAO-00-108, June 2, 2000). GAO's findings and 
recommendations in its June 2, 2000 report, the Inspector General 
reported both in September 2005 and December 2005 that EPA faced 
challenges in developing outcome data, such as compliance rates, to 
evaluate the effectiveness of the Agency's regulatory activities. The 
Inspector General explained, for example, that EPA has limited 
knowledge of the regulated universe for which it maintains 
responsibility. EPA and others need reliable universe information to 
accurately ascertain the scope of EPA's responsibilities and workload 
in different regions and evaluate management decisions about regulatory 
activities in different regions, for example, the basis on which 
regional offices develop targeting strategies, set priorities, and 
allocate resources. Universe data also serves as the basis for 
calculating compliance rates.
    The Inspector General further reported in December 2005 that EPA 
focused primarily on measuring activities, or outputs, such as ``number 
of enforcement actions'' and ``number of inspections'' because of the 
difficulty in demonstrating a direct cause and effect relationship 
between specific enforcement and compliance activities, and outcomes 
such as the impact the activities may have on human health and the 
environment. Without reliable outcome data, EPA, GAO, and other 
stakeholders cannot accurately assess the effectiveness of enforcement 
strategies in different regions. For example, they cannot accurately 
evaluate whether compliance is going up or down, how regions may vary 
in this regard, the extent to which regional differences in compliance 
rates may result from management and program decisions, and how the 
impact of regulations--such as on small entities--may vary between 
regions.
    Other factors hinder quantitative analysis of regional 
inconsistency. EPA headquarters enforcement officials emphasized that 
enforcement and compliance data, by themselves, do not always offer the 
appropriate context to help determine the extent to which the 
variations pose problems because the data do little to explain the 
reasons for variations. Without such information, it is difficult to 
determine the extent to which variations represent a problem, whether 
they are preventable, or the extent to which they reflect appropriate 
flexibility in applying national program goals to unique circumstances.

    Question 7. Has GAO considered in its enforcement studies how 
inconsistent enforcement may negatively impact human health and the 
environment?
    Response. Our reports have not directly addressed the effect of 
inconsistent enforcement on human health or the environment. We 
reported that Federal and State enforcement officials agree that basic 
program elements should be largely consistent, although some variation 
is to be expected. According to EPA, for example, some variation is to 
be expected in how regions target resources to the most significant 
compliance issues in different regions and States. However, we reported 
that it is important for EPA to get behind the data to understand the 
causes of apparently wide disparities, in areas such as the quality and 
content of inspections, to understand whether they reflect a problem 
(for example, to human health or the environment).

    Question 8. In your testimony, you note an earlier GAO finding that 
EPA does not sufficiently encourage States to consider economic benefit 
in calculating penalties. Which Federal environmental statutes require 
such a determination in calculating penalties?
    Response. We have identified no Federal environmental statutes that 
require States to consider the economic benefit of noncompliance when 
assessing penalties, nor have we found any statutes that require EPA to 
encourage States to make such considerations. However, we did find 
several Federal statutes requiring EPA or courts to consider the 
economic benefits of noncompliance when assessing penalties for 
violations of Federal programs or permits. (See 33 USC 1319(d), 
1319(g)(3), 1321(b)(8), 1344(s)(4), 300h-2(c)(4)(B), 7413(e)(1), 
7524(b), 7524(c)(2), 7545(d)(1), 9609(a)(3), 11045(b)(1)(C)).
    GAO's June 2, 2000 report, ``Environmental Protection: More 
Consistency Needed Among EPA Regions in Approach to Enforcement'' 
relied upon earlier EPA Inspector General audit reports and OECA 
regional evaluations for this and several other characterizations of 
the regions' oversight of State programs. Among other things, the 
Office of Inspector General and OECA reports cited the regions for not 
conducting an adequate number of oversight inspections; not 
sufficiently encouraging that economic benefit be considered in 
calculating penalties; not taking more direct federal actions where 
States were slow to act; and not requiring States to report all 
significant violations. Regional officials acknowledged at the time 
that, at least to some extent, the criticisms were valid.
    EPA headquarters has issued basic enforcement policy guidance since 
the mid-1980s, the ``Revised Policy Framework for State/EPA Enforcement 
Agreements'', with periodic addenda and revisions that consistently 
encourage States to consider EPA's penalty policies as they develop 
their own penalty policies. The policy framework states, in part, that 
``to remove incentives for noncompliance and establish deterrence, EPA 
endeavors, through its civil penalties, to recoup the economic benefit 
the violator gained through noncompliance. EPA encourages States to 
consider and to quantify where possible, the economic benefit of 
noncompliance where this is applicable. EPA expects States to make a 
reasonable effort to calculate economic benefit and encourages States 
to attempt to recover this amount in negotiations and litigation. 
States may use EPA's computerized model (know as BEN) for calculating 
that benefit or different approaches to calculating economic benefit. 
EPA will provide technical assistance to States on calculating the 
economic benefit of noncompliance, and has made the BEN computer model 
available to States''.
    In 1993 a revision to the EPA ``Policy Framework'' reiterated that 
it is ``a common goal for penalty assessments at the Federal, State, 
and local levels that penalties should seek to recover the economic 
benefit of noncompliance at a minimum where appropriate plus a portion 
reflecting the gravity of the violation''. In discussing the criteria 
for assessment of monetary penalties, the 1993 policy revision states 
that ``in order to preserve deterrence, it is EPA's policy not to 
settle for less than the amount of the economic benefit of 
noncompliance, where it is possible to calculate it, unless the benefit 
component is a de minimus amount, the violator demonstrates inability 
to pay, there is a compelling public concern, or there are litigation-
related reasons for such settlement. State and local enforcement 
agencies should calculate and assess the economic benefit of 
noncompliance in negotiations and litigation except under these 
circumstances. Where State or local statutory authority would not 
specifically authorize recovery of economic benefit, EPA still expects 
States to make a reasonable effort to calculate economic benefit and to 
attempt to recover this amount in negotiations and litigation using the 
State's own statutory criteria. In addition to these factors, EPA 
recognizes that some State statutes do not support the equivalent of 
the collection of the full economic benefit of noncompliance because of 
limitations imposed, such as penalty caps. In such instances, EPA will 
work closely with the States to assist them in overcoming these 
limitations''.

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