Major Management Challenges and Program Risks: Environmental Protection
Agency (Letter Report, 01/01/99, GAO/OCG-99-17).
As part of its Performance and Accountability Series, GAO provided
information on the major management challenges and program risks facing
the Environmental Protection Agency (EPA).
GAO noted that: (1) EPA needs more comprehensive information on the
condition of the environment to effectively set priorities, assess
progress in achieving its goals and objectives, and report on its
accomplishments in a credible way; (2) although EPA and the states
collect a considerable amount of data, the agency's data systems are
often outmoded and difficult to integrate to produce comprehensive
environmental information; (3) important gaps in the data also exist;
(4) although the current regulatory system for environmental protection
has had its successes, it has proven to be costly and, at times,
inflexible; (5) noting that complex future environmental challenges will
require fundamentally different regulatory approaches, EPA has initiated
a variety of actions aimed at reinventing environmental regulation; (6)
however, the agency faces several challenges, including helping its
rank-and-file employees to understand and support changes to the current
regulatory system and obtaining consensus among the agency's varied
stakeholders on what these changes should be; (7) as authorized by
environmental statutes, EPA has increasingly delegated responsibilities
for environmental protection activities to the states; (8) the states
have become important EPA partners as they have assumed the
responsibility for implementing most national environmental programs on
a daily basis; (9) despite the importance of this partnership, the
relationship has often been characterized by fundamental disagreements
over roles, priorities, and the extent of federal oversight that
potentially limit the effectiveness of these programs; (10) EPA has
improved its management of the Superfund program--the agency's
$1.5-billion effort to clean up the nation's most hazardous waste
sites--since GAO's 1992 designation of the program as being at high risk
of fraud, waste and abuse; (11) actions are still needed to: (a) ensure
that limited resources are used to clean up sites that pose the greatest
risk; (b) recover billions of dollars in cleanup costs from those
responsible for the contamination; and (c) control site cleanup costs
through the efficient and effective administration of cleanup contracts;
(12) EPA is aware of the importance of meeting these management
challenges and has various initiatives under way to address them; (13)
EPA is also developing a strategic action plan to improve the quality of
the data in its major information systems and a strategy to identify and
fill significant gaps in the available environmental data; and (14)
although EPA is making progress in addressing its management challenges,
they have been long-standing, and overcoming them will require the
agency's long-term commitment and, in some cases, additional resources.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: OCG-99-17
TITLE: Major Management Challenges and Program Risks:
Environmental Protection Agency
DATE: 01/01/99
SUBJECT: Environmental policies
Federal/state relations
Accountability
Management information systems
Strategic planning
Performance measures
Risk management
Pollution control
Information resources management
Liability (legal)
IDENTIFIER: Performance and Accountability Series 1999
EPA National Environmental Performance Partnership System
Superfund Program
EPA Toxic Release Inventory
EPA Integrated Risk Information System
EPA Reinventing Environmental Information Action Plan
EPA Common Sense Initiative
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Cover
================================================================ COVER
Performance and Accountability Series
January 1999
MAJOR MANAGEMENT CHALLENGES AND
PROGRAM RISKS - ENVIRONMENTAL
PROTECTION AGENCY
GAO/OCG-99-17
EPA Challenges
Abbreviations
=============================================================== ABBREV
EPA -
NEPPS -
Letter
=============================================================== LETTER
January 1999
The President of the Senate
The Speaker of the House of Representatives
This report addresses the major performance and management challenges
that have limited the effectiveness of the Environmental Protection
Agency's (EPA) efforts to implement an integrated, cost-effective
approach to environmental protection. It also addresses the
corrective actions that the agency is taking to try to resolve these
challenges. We and others have reported over the years on the
challenges the agency faces in (1) obtaining the critical information
it needs to assess the quality of the environment; (2) designing and
effectively implementing alternative ways to regulate the
environment; and (3) improving the agency's relations with states,
which are critical partners in implementing many of EPA's programs.
We have also raised concerns about EPA's management of the
contractors it uses to evaluate and clean up abandoned hazardous
waste sites so as to reduce the risk of fraud, waste, and abuse in
its multibillion-dollar Superfund program.
EPA is taking actions to address these challenges. For example, the
agency is developing a strategic action plan to improve the quality
of its environmental data. The agency has tried several regulatory
reinvention initiatives and is now assessing ways to improve their
implementation. EPA is also implementing the National Environmental
Performance Partnership System to improve its working relationship
with the states. In addition, EPA is now setting priorities for a
portion of its limited cleanup funds based on the relative risk of
waste sites and has reduced a long-standing backlog of cleanup
contract audits. However, because the agency has not resolved other
management problems, the Superfund program continues to pose a high
risk of fraud, waste, and abuse. Although EPA is making progress in
addressing these management challenges, they have been long-standing,
and overcoming them will require the agency's long-term commitment.
The agency could also more effectively use its strategic and annual
performance planning process under the Government Performance and
Results Act to better set priorities, establish specific objectives,
and assess progress in meeting each of these challenges.
This report is part of a special series entitled the Performance and
Accountability Series: Major Management Challenges and Program
Risks. The series contains separate reports on 20 agencies--one on
each of the cabinet departments and on most major independent
agencies as well as the U.S. Postal Service. The series also
includes a governmentwide report that draws from the agency-specific
reports to identify the performance and management challenges
requiring attention across the federal government. As a companion
volume to this series, GAO is issuing an update to those government
operations and programs that its work has identified as "high risk"
because of their greater vulnerabilities to waste, fraud, abuse, and
mismanagement. High-risk government operations are also identified
and discussed in detail in the appropriate performance and
accountability series agency reports.
The performance and accountability series was done at the request of
the Majority Leader of the House of Representatives, Dick Armey; the
Chairman of the House Government Reform Committee, Dan Burton; the
Chairman of the House Budget Committee, John Kasich; the Chairman of
the Senate Committee on Governmental Affairs, Fred Thompson; the
Chairman of the Senate Budget Committee, Pete Domenici; and Senator
Larry Craig. The series was subsequently cosponsored by the Ranking
Minority Member of the House Government Reform Committee, Henry A.
Waxman; the Ranking Minority Member, Subcommittee on Government
Management, Information and Technology, House Government Reform
Committee, Dennis J. Kucinich; Senator Joseph I. Lieberman; and
Senator Carl Levin.
Copies of this report series are being sent to the President, the
congressional leadership, all other Members of the Congress, the
Director of the Office of
Management and Budget, the Administrator of the Environmental
Protection Agency, and the heads of other major departments and
agencies.
David M. Walker
Comptroller General of
the United States
OVERVIEW
============================================================ Chapter 0
The Environmental Protection Agency's (EPA) $7 billion budget funds
diverse regulatory, research, enforcement, and technical assistance
programs directed at controlling pollution of the air, land, and
water. The nation's annual costs to comply with environmental
regulations are estimated at over $120 billion and growing. While
the United States has made considerable progress in cleaning up the
environment, the problems that remain are complex and challenging.
We, EPA's Inspector General, the National Performance Review, the
National Academy of Public Administration, and the agency itself have
documented management challenges that have limited the agency's
ability to implement an integrated, cost-effective approach to
environmental protection that focuses on reducing the greatest risks
to human health and the environment. Although EPA has taken action
to address these concerns, significant management challenges remain.
THE CHALLENGES
---------------------------------------------------------- Chapter 0:1
EPA NEEDS MORE COMPREHENSIVE
INFORMATION ON THE
ENVIRONMENT
-------------------------------------------------------- Chapter 0:1.1
EPA needs more comprehensive information on the condition of the
environment to effectively set priorities, assess progress in
achieving its goals and objectives, and report on its accomplishments
in a credible way. Although EPA and the states collect a
considerable amount of data, the agency's data systems are often
outmoded and difficult to integrate in order to produce comprehensive
environmental information. Important gaps in the data also exist.
EPA FACES CHALLENGES IN
REINVENTING ENVIRONMENTAL
REGULATION
-------------------------------------------------------- Chapter 0:1.2
Although the current regulatory system for environmental protection
has had its successes, it has proven to be costly and, at times,
inflexible. Noting that complex future environmental challenges will
require fundamentally different regulatory approaches, EPA has
initiated a variety of actions aimed at reinventing environmental
regulation. However, the agency faces several challenges, including
helping its rank-and-file employees to understand and support changes
to the current regulatory system and obtaining consensus among the
agency's varied stakeholders on what these changes should be.
A GOOD WORKING RELATIONSHIP
WITH THE STATES HAS BEEN A
LONG-TERM CHALLENGE FOR EPA
-------------------------------------------------------- Chapter 0:1.3
As authorized by environmental statutes, EPA has increasingly
delegated responsibilities for environmental protection activities to
the states. The states have become important EPA partners as they
have assumed the responsibility for implementing most national
environmental programs on a daily basis. Despite the importance of
this partnership, the relationship has often been characterized by
fundamental disagreements over roles, priorities, and the extent of
federal oversight that potentially limit the effectiveness of these
programs.
EPA HAS NOT FULLY RESOLVED
SUPERFUND MANAGEMENT
CHALLENGES
-------------------------------------------------------- Chapter 0:1.4
EPA has improved its management of the Superfund program--the
agency's $1.5 billion effort to clean up the nation's most hazardous
waste sites--since our 1990 designation of the program as being at
high risk of fraud, waste, and abuse. Additional actions are still
needed to (1) ensure that limited resources are used to clean up
sites that pose the greatest risk to human health and the
environment, (2) recover billions of dollars in cleanup costs from
those responsible for the contamination, and (3) control site cleanup
costs through the efficient and effective administration of cleanup
contracts.
PROGRESS AND NEXT STEPS
---------------------------------------------------------- Chapter 0:2
EPA is aware of the importance of meeting these management challenges
and has various initiatives under way to address them. For example,
the agency plans to reorganize its information management and policy
efforts to provide a single point of accountability. EPA is also
developing a strategic action plan to improve the quality of the data
in its major information systems and a strategy to identify and fill
significant gaps in the available environmental data. In addition,
EPA is implementing the National Environmental Performance
Partnership System, which agency and state leaders initiated to
improve the EPA/state working relationship. The new system is
intended to focus EPA's and states' efforts more on results and less
on administrative management and oversight. The system involves the
increased use of environmental goals and indicators, state
assessments of environmental and program performance, and the
negotiation of performance partnership agreements between EPA and
individual states. These agreements are to provide the means for EPA
and the states to negotiate such matters as which problems will
receive priority attention within the state programs and how states'
progress in achieving clearly defined program objectives will be
assessed.
Although EPA is making progress in addressing its management
challenges, they have been long-standing, and overcoming them will
require the agency's long-term commitment and, in some cases,
additional resources. The reorganization of the agency's information
management and policy efforts, the data quality action plan, and the
data gaps strategy are in development. The agency is improving the
implementation of its regulatory reinvention initiatives. The
National Environmental Performance Partnership System is still
evolving--33 states have signed performance partnership agreements
with EPA--and the agency is working to improve its management of the
Superfund program. EPA's current strategic plan generally recognizes
these management challenges and makes a commitment to address them;
however, the strategic plan does not clearly establish what progress
is expected over the plan's time frame. The strategic and annual
performance planning process under the Government Performance and
Results Act can serve as EPA's mechanism for setting priorities,
establishing specific objectives, and assessing progress in meeting
each of the challenges.
KEY CONTACT
---------------------------------------------------------- Chapter 0:3
Peter F. Guerrero, Director
Environmental Protection Issues
Resources, Community, and Economic Development Division
(202) 512-6111
[email protected]
MAJOR PERFORMANCE AND MANAGEMENT
ISSUES
============================================================ Chapter 1
With a $7 billion annual budget and about 18,000 employees, EPA is a
relatively small agency. However, the agency has the critical
mission of implementing various laws and regulations aimed at
protecting human health and the environment. The leadership that EPA
provides and the decisions it makes in support of this mission have a
substantial effect beyond the success of efforts to protect the
quality of the nation's air, land, and water. The nation's cost of
complying with environmental regulations was estimated over $120
billion in 1994 (the date of the latest available data).\1
Over the years, we, EPA's Inspector General, and others, such as the
National Academy of Public Administration and the National
Performance Review, have documented needed improvements in EPA's
performance and management and have recommended reforms. This report
summarizes our more recent findings on the effectiveness of the
agency's efforts to (1) obtain comprehensive information on the
environment, (2) improve the efficiency of the current regulatory
system, (3) establish a better working relationship with the
states--its partners in implementing environmental programs, and (4)
better manage the Superfund program for cleaning up the most
hazardous waste sites. The report also discusses, where applicable,
how EPA has responded to the National Performance Review's
recommendations--
which address problems such as the need for a greater emphasis on
pollution prevention, economic and market-based approaches to reduce
water pollution, greater flexibility for local governments, improving
the regulatory and statutory climate for innovative technologies, and
reforms in EPA's contract management process--and how the issues we
have identified are addressed in the agency's strategic plan
developed in response to the Government Performance and Results Act
(the Results Act).
--------------------
\1 See Survey of Current Business, Bureau of Economic Analysis,
Department of Commerce (Vol. 70, No. 9, Sept. 1996).
EPA NEEDS MORE COMPREHENSIVE
INFORMATION ON THE ENVIRONMENT
---------------------------------------------------------- Chapter 1:1
EPA and the states collect a wealth of environmental data under
various statutory and regulatory authorities, including reports on
air emissions under the Clean Air Act, wastewater discharges under
the Clean Water Act, and pollutant levels in drinking water under the
Safe Drinking Water Act. However, the agency's existing data
management system is outmoded in many ways. It continues to rely
heavily on paper-based reporting, and its many separately designed
databases are generally not technically compatible with one another.
For example, it has been difficult, if not impossible, for EPA to
aggregate data from the many different databases to present
comprehensive information on chemicals, industrial sectors,
localities, and environmental conditions because basic data elements
are not standardized across these databases. Data in individual
databases also are often difficult to compile in a meaningful way.
For example, the state water quality reports under section 305(b) of
the Clean Water Act are a key source of information for measuring
progress in cleaning up the nation's lakes, rivers, and streams.
However, inconsistencies in the water quality assessments and in the
assessment methodologies from state to state make it difficult to
aggregate the data and to use the information to conclusively
determine whether the quality of rivers, lakes, and streams is
getting better or worse over time.
Important gaps in the data also exist. Overall, data obtained from
the detailed monitoring of environmental conditions and of human
exposures to toxic pollutants are limited, and the human health and
ecological effects of many chemical pollutants are not well
understood. An example of these gaps is the available information on
toxic air pollution. EPA's Toxic Release Inventory requires annual
reporting by manufacturing facilities on their emissions to the
environment of over 600 toxic chemicals, including about 173 of the
188 hazardous air pollutants regulated under the Clean Air Act.
However, the emissions of the facilities that are required to file
reports for the Toxic Release Inventory account for less than 10
percent of the estimated total air emissions of these pollutants.
Furthermore, EPA's Integrated Risk Information System, which is a
database of the agency's consensus on the potential health effects
from chronic exposure to various substances found in the environment,
has toxicological data on only one-third of the hazardous air
pollutants. Only a few ecological effects are reported in the
database.
EPA needs comprehensive information on environmental conditions and
changes over time to identify problem areas that are emerging or that
need additional regulatory action or other attention. This
information also informs EPA's decisionmakers, the Congress, the
public, and other stakeholders of the progress that the agency is
making in carrying out its mission to protect human health and the
environment. Absent this information, it is difficult for EPA to set
priorities, evaluate the success of its programs and activities, and
report on its accomplishments in a most credible and informed way.
EPA's strategic and annual performance plans under the Results Act
recognize EPA's need to improve its collection, management, and
dissemination of environmental data. For example, one of the
strategies under EPA's "effective management" strategic goal is to
implement best practices for information resources management and to
integrate information technology investments with the agency's
overall strategic-planning process. Another strategy is to support
electronic reporting by the highest-volume submitters of data to
reduce their reporting burden and facilitate EPA's acquisition of key
information in determining environmental conditions across the
country. The strategic plan further describes EPA's plans to develop
an agencywide accountability process to evaluate and report on
progress toward the agency's strategic goals and objectives.
Since the issuance of its strategic plan in September 1997, EPA has
initiated several actions to improve information management. For
example, in February 1998, the EPA Administrator and Deputy
Administrator approved the Reinventing Environmental Information
Action Plan. A major initiative under this effort is to standardize
basic data elements--that is, adopt common or core data standards--so
that data from various information systems can be pulled together to
present comprehensive information on geographical locations,
chemicals, industrial sectors, and environmental conditions. The
action plan also calls for the expanded electronic reporting of
environmental data. EPA has set specific deadlines to incorporate
these improvements into its databases and work with the states to
integrate EPA's and the states' data systems around common data
standards. According to the plan, EPA is to implement core data
standards and make electronic reporting available in the agency's 13
major data systems within 5 years.
In April 1998, EPA's Deputy Administrator announced that the agency's
Chief Information Officer would lead an effort to implement an
agencywide approach to ensuring the quality of EPA's
data--particularly a process for correcting errors in the agency's
databases. EPA is also developing a strategy to identify major gaps
in environmental information and to set priorities and establish a
schedule for action to address the gaps. The strategy is to focus on
meeting the data needs of external users or audiences--for example,
by enhancing the agency's ability to report on its goals and
objectives under the Results Act and ability to respond to the
public's questions about conditions in the environment. According to
agency officials, the data quality plan was completed and sent to the
EPA Administrator for final approval on December 30, 1998. With
regard to the data gaps strategy, EPA has developed priority-setting
criteria and is using the criteria to rank data gaps in 26 broad
environmental problem areas. According to an EPA official, the
agency will perform an in-depth analysis of data gaps and develop
options to address the first three priority data gaps by the spring
of 1999, in time to be incorporated into EPA's budget for fiscal year
2001.
In October 1998, the EPA Administrator announced plans to create a
new office responsible for information management, information
policy, and technology stewardship. This office would be responsible
for developing and implementing goals, standards, and accountability
systems to manage and improve the quality of information used within
the agency and for the public. To this end, the office would (1)
ensure that the quality of data collected and used by EPA is known
and appropriate for its intended uses, (2) reduce the information
collection and reporting burden, (3) fill significant data gaps, and
(4) provide the public with integrated environmental and public
health information and statistics. The office would also have the
authority to carry out functions, such as implementing standards and
policies for information resources management and operating and
purchasing information technology and systems. The new office may
consolidate all or parts of the existing Office of Information
Resources Management, the Center for Environmental Information and
Statistics, and other components, such as the Toxic Release Inventory
program.
Although these efforts are steps in the right direction, collecting
and managing the data that EPA needs have been a long-standing
challenge for the agency. Achieving these improvements will require
long-term commitment and resources. In noting EPA's plans to
implement an agencywide approach to ensuring the quality of its data,
a June 1998 report of the Senate Committee on Appropriations stated
that it expects EPA to invest sufficient funds for improving the
quality of data and to ensure that the issue is accorded high
priority within the agency.\2 The report also directed EPA to report
quarterly on its progress in addressing the quality of data. This
quarterly reporting and the Results Act's requirement for annual
performance reports--starting with a report on fiscal year 1999 by
March 2000--offer EPA the opportunity to monitor the progress of its
various initiatives and to reconsider whether its current strategic
and performance plans adequately set out its environmental
information objectives and strategies.
--------------------
\2 See S. Rept. 105-216 accompanying the Departments of Veterans
Affairs and Housing and Urban Development and Independent Agencies
appropriations bill for fiscal year 1999.
EPA FACES CHALLENGES IN
REINVENTING ENVIRONMENTAL
REGULATION
---------------------------------------------------------- Chapter 1:2
The current regulatory system for environmental protection has proven
to be costly and, at times, inflexible. Noting that complex future
environmental challenges will require fundamentally different
regulatory approaches, EPA, in March 1995, announced a series of
high-priority and significant actions aimed at improving the current
regulatory system and laying the groundwork for a new system of
environmental protection. According to EPA, these efforts are
designed to (1) achieve better environmental results through the use
of innovative and flexible approaches to environmental protection;
(2) encourage states, tribes, communities, and citizens to share in
environmental decisionmaking; (3) make it easier for businesses to
comply with environmental laws by offering them compliance assistance
and incentives to prevent pollution at its source; and (4) eliminate
unnecessary paperwork. While EPA has made progress in implementing
its reinvention initiatives, it has to resolve internal and external
obstacles if environmental regulation is to be truly reinvented.
Many of EPA's reinvention efforts are consistent with the Results
Act's goal of focusing on achieving results and with the National
Performance Review's past recommendations to achieve a more
integrated, cost-effective approach to environmental protection.
However, we have identified a number of broad issues that need to be
addressed to create a climate in which regulatory reinvention can
succeed.
-- Key stakeholders in the reinvention process, such as the states,
industry, and other parts of the regulated community, have
expressed concern over the large number of complex and demanding
initiatives that EPA has undertaken.\3 Some participants have
suggested that the large number of initiatives under way may be
diverting attention and resources from the high-priority efforts
most in line with the agency's reinvention objectives.
Stakeholders have also expressed confusion over the underlying
purpose of some of the major initiatives, especially their
specific objectives and expectations.
-- EPA has had difficulty in achieving "buy-in" among the agency's
rank and file, who have grown accustomed to prescriptive,
medium-specific (air, land, or water) regulation during the
agency's almost 30-year history. Both headquarters and regional
EPA management have acknowledged that achieving full commitment
to reinvention by the agency's rank and file is a challenge and
that it will take time for changes to the organization's culture
to filter down to EPA line staff.
-- The agency has also had difficulty in achieving agreement among
external stakeholders, including other federal and state
regulators and environmental organization
representatives--particularly, when these stakeholders perceive
that unanimous agreement is required before decisions can be
made. For example, stakeholders in EPA's Common Sense
Initiative--termed the "centerpiece" of the agency's regulatory
reinvention efforts--spent considerable time on process-related
issues, such as how consensus is defined, rather than on working
to reach agreement on objectives or approaches for addressing
important reinvention issues and policies.
-- The agency's process for resolving miscommunication and other
problems involving EPA headquarters staff, regional staff, and
other stakeholders has not distinguished between problems that
require the attention of senior managers and those that should
be resolved at lower levels within the agency. Stakeholders
have cited the need for a sustainable process that focuses
senior EPA managers' intervention in problem resolution on those
problems that cannot otherwise be resolved at lower management
levels.
-- EPA has had an uneven record in evaluating the success of many
of its initiatives. Evaluation is needed both to show EPA
managers what does and does not work and to provide external
stakeholders with convincing evidence that an alternative
regulatory strategy is worth pursuing. EPA officials have
acknowledged that the agency has had neither sufficient
performance data nor an evaluation component for many of its
initiatives.
EPA recognizes the importance of overcoming the obstacles to its
regulatory reinvention efforts and the need to work effectively with
governmental and nongovernmental stakeholders if its efforts are to
succeed. For example, consistent with the National Performance
Review's recommendations and the Results Act's requirements, EPA has
taken steps to address these concerns under the goals and action
items established in its strategic plan. The plan highlights the
importance of stakeholders' involvement and notes other external
factors beyond EPA's direct control that are important to the plan's
and regulatory reinvention initiatives' success. In addition, EPA
established an Office of Reinvention to help focus and centrally
manage agencywide reinvention initiatives and has taken steps to
address the need for an improved operating framework and to measure
the progress of its various initiatives. According to EPA officials,
the agency is also taking action to set priorities for its
reinvention activities, clarify how different initiatives fit
together, provide guidance on the issue of consensus among
stakeholders, and evaluate the initiatives' results.
While these actions will help EPA to strengthen its ability to manage
agencywide reinvention initiatives and to influence the external
factors on which their success depends, successfully meeting the
challenges we identified will be difficult. Of particular concern,
as we and other organizations have noted in the past, is the agency's
limited ability to achieve major changes in environmental regulation
under the current statutory framework. This framework, composed of
largely prescriptive, medium-specific laws, imposes requirements that
have led to, and tend to reinforce, many of the existing practices
and behaviors that EPA is seeking to change. Although there is wide
disagreement on whether the current environmental statutes must be
revised for reinvention to succeed, many state and industry officials
believe that legislative changes are needed to encourage experiments
in alternative methods for achieving environmental compliance. EPA's
strategic and annual performance plans required under the Results Act
provide an opportunity for the agency to assess its progress and
reevaluate its strategies for achieving regulatory reinvention goals.
--------------------
\3 These initiatives include Project XL, which allows individual
facilities to test innovative ways of achieving environmental
protection if they can demonstrate that the proposed changes will
yield superior environmental performance, and the Common Sense
Initiative, which seeks to identify innovative environmental
regulatory practices for different industrial sectors (e.g., the
printing and metal-finishing industries). Other initiatives have
included efforts to consolidate federal air rules for individual
industries, encourage chemical industries to develop more
environmentally friendly practices, and promote "effluent trading" in
watersheds.
A GOOD WORKING RELATIONSHIP
WITH THE STATES HAS BEEN A
LONG-TERM CHALLENGE FOR EPA
---------------------------------------------------------- Chapter 1:3
As authorized by environmental statutes, EPA has delegated the
responsibility for the day-to-day implementation of most federal
environmental programs to the states. EPA provides the states with
financial and technical assistance and continues to remain
responsible for overseeing the programs. Although a good working
relationship between EPA and the states is important to the success
of environmental programs, the relationship has often been
characterized by fundamental disagreements over such issues as EPA's
and state environmental agencies' respective roles, appropriate
priorities among state environmental programs, and the appropriate
degree of federal oversight. For example, in 1988, we found that
states said they wanted flexibility to tailor programs to meet local
needs, opportunities to participate in decisions affecting
implementation, and EPA's trust in their ability to make day-to-day
program decisions. More recently, in 1995, we found that financial
constraints were impeding states' efforts to perform key functions
required to implement environmental programs, such as monitoring
environmental quality, setting standards, issuing permits, and
enforcing compliance. We also found that other factors were
affecting the EPA/state relationship, including, states' concerns
that EPA (1) was inconsistent in its oversight across regions, (2)
was sometimes micromanaging state programs, (3) did not provide
sufficient technical support for increasingly complex state program
requirements, and (4) often did not adequately consult states before
making key decisions affecting them.
Our May 1998 report on EPA's and states' enforcement programs
suggested continuing problems in the EPA/state relationship. The
report, which addressed EPA's and states' efforts to focus state
enforcement programs on achieving environmental results, cited
unanimous concerns among the 10 states contacted that different EPA
offices convey an inconsistent message on the appropriate use of
compliance tools. Oregon officials, for example, cited "internal
battles" between EPA's Office of Enforcement and Compliance Assurance
and the agency's program offices, noting that the two tend to have
different initiatives and priorities, which has led to confusion for
both the regions and the states. Officials of Colorado,
Massachusetts, and Pennsylvania cited similar problems.
EPA and the states are pursuing a new initiative that may address
many of these past concerns. The National Environmental Performance
Partnership System (NEPPS), which was developed by EPA and state
leaders, is intended to focus their efforts more on results and less
on administrative management and oversight. States with strong
environmental programs are to have more leeway in setting
environmental priorities, designing new strategies, and managing
their own programs, while EPA concentrates its oversight and
technical assistance on weaker programs. The system's major
components are to include the increased use of environmental goals
and indicators, state assessments of environmental and program
performance, and the negotiation of performance partnership
agreements between EPA and individual states. These agreements are
to provide a means for EPA and the states to negotiate such matters
as (1) which problems will receive priority attention within the
state programs, (2) what EPA's and the states' respective roles will
be, and (3) how the states' progress in achieving clearly defined
program objectives will be assessed. After an initial pilot year in
1996, in which six states entered into performance partnership
agreements, broader implementation of the system began in fiscal year
1997.
EPA's September 1997 strategic plan under the Results Act calls for
EPA, in collaboration with the states, to (1) develop policies,
guidance documents, and training as needed to enhance the agency's
and states' capacity to implement elements of NEPPS; (2) negotiate
with states performance partnership agreements that define roles and
responsibilities; (3) award to interested states performance
partnership grants that provide for flexibility in how environmental
programs are carried out, with increased accountability for results;
(4) continue to refine and use improved measures of environmental and
program performance and strive to reduce the states' reporting
burden; (5) foster EPA's and the states' efforts to make
environmental and health information more available and
understandable to the public; and (6) evaluate and report nationally
on the progress in meeting the goals and objectives of performance
partnerships.
The details of how NEPPS will work are still evolving as the system
is being implemented and refined. An important component of the new
system is the use of results-oriented performance measures for the
states. EPA and the states will need to incorporate more of these
measures in the partnership agreements as they are developed to
assess the results of national environmental programs. In addition,
the full extent of state participation in NEPPS remains to be
seen--as of July 1998, for example, 33 states had entered into some
form of performance partnership agreements with EPA.
EPA HAS NOT FULLY RESOLVED
SUPERFUND MANAGEMENT CHALLENGES
---------------------------------------------------------- Chapter 1:4
EPA's Superfund program began in 1980 as a relatively short-term
project to clean up abandoned hazardous waste sites. Since then,
tens of thousands of waste sites have been discovered, including many
owned by the federal government, and cleaning them up has proved to
be far more complicated and costly than anticipated. Estimates are
that cleanup costs could exceed $300 billion for the federal
government and billions more for the private sector. Given this
backlog of sites and potential investment, federal agencies must use
the limited cleanup funds available each year as efficiently as
possible.
Under the Superfund law, EPA can compel the private parties
responsible for contamination at hazardous waste sites to clean them
up, or it can conduct the cleanup and seek reimbursement of its costs
from the responsible parties. Many states have passed laws
establishing state enforcement cleanup programs similar to the
federal program.
Since the early 1990s, we have identified certain Superfund
management challenges that put the program at risk. First, EPA did
not have systems in place that allowed the agency to fund the worst
sites first--that is, to give funding priority to those sites that
posed the highest health and environmental risks. Second, EPA lost
the opportunity to recover billions in cleanup costs from those
parties responsible for the contamination at waste sites because it
did not assess them for certain costs of operating the Superfund
program or effectively monitor its cost-recovery performance.
Finally, EPA had problems in controlling the costs of contractors
that it used to conduct cleanups, which is especially significant,
given that EPA spends about half of its annual budget of up to $1.5
billion on contractors. This combination of vulnerabilities inherent
in the program's design and EPA's implementation has led us since
1990 to designate the program as high-risk, that is, vulnerable to
waste, fraud, abuse, and mismanagement. While EPA has taken
corrective steps, we continue to find areas of concern and additional
actions that it could take to limit the federal government's
financial risks and achieve more cleanups for the money appropriated.
Because of these continuing concerns, we are maintaining the
high-risk designation for the Superfund program.
EPA IS PARTLY USING RISK TO
SET SUPERFUND PRIORITIES
-------------------------------------------------------- Chapter 1:4.1
EPA generally provides funding for sites in the program until they
progress to the point where they are ready for construction of the
remedy. The agency has a backlog of sites at this stage and cannot
fund them all. In 1995, EPA created the National Prioritization
Panel to help it set funding priorities for these sites. The panel,
which is composed of regional and headquarters cleanup managers,
ranks all of the sites ready for construction nationwide on the basis
of health and environmental risks and other project considerations,
such as cost-effectiveness. EPA then approves funding for projects
on the basis of these priority rankings. Those sites not selected in
one year can compete again for funding the following year.
EPA, however, does not use relative risk as a major criterion when
deciding which of the eligible sites to include in the Superfund
program.\4 In our discussions with EPA headquarters officials and
managers responsible for assessing sites for Superfund consideration
in 4 of EPA's 10 regions,\5 we found that the agency relies on the
states to choose which of the eligible sites to forward to EPA for
Superfund consideration after the states have selected which sites
they will address through their own enforcement or voluntary cleanup
programs.\6 The EPA cleanup managers whom we talked to expect that
sites coming into the Superfund program in the future will not
necessarily be the most risky but, rather, large, complex, and,
therefore, costly sites or those with responsible parties that are
not willing or able to pay for the cleanup.
Because EPA does not usually track the status of cleanups that take
place outside of the Superfund program, EPA does not know if the
worst sites are being addressed first. One of the four regions in
our review is trying to induce its states to voluntarily provide EPA
with information on the cleanup status of the sites that they are
addressing and that EPA considers as potentially posing significant
risk.
--------------------
\4 A site is eligible for the Superfund program if it meets the
criteria of EPA's Hazard Ranking System, which evaluates a site's
potential risk to public health and the environment.
\5 These four regions were selected because they had the largest
number of sites currently awaiting consideration to be included in
the Superfund program.
\6 Most states have set up their own voluntary cleanup programs.
Voluntary state cleanup programs offer parties incentives to
voluntarily clean up sites.
EPA HAS NOT RECOVERED
BILLIONS OF DOLLARS OF
CLEANUP COSTS
-------------------------------------------------------- Chapter 1:4.2
EPA historically has not been charging responsible parties for
certain portions of its costs of operating the Superfund program.
More specifically, the agency used an understated, conservative rate
for charging its indirect costs, which include such items as
personnel and facilities costs, to responsible parties. As a result,
the agency has excluded approximately $3 billion--about 20 percent of
the $15 billion spent on Superfund to date--in indirect costs from
final settlements with responsible parties.\7
As early as 1992, EPA proposed regulations to expand the recovery of
indirect costs but abandoned the effort after receiving significant
negative industry comments on the draft rules. Now, in response to a
governmentwide requirement to adopt new cost-accounting standards,
EPA's Financial Management Office is developing a more complete
indirect-cost rate that should be available early in 1999.
Cost-recovery managers in the Superfund program stated that they are
waiting until the methodology used to develop the rate is approved by
the Department of Justice before adopting it for the Superfund
program. According to EPA, adopting the new rate could significantly
increase the indirect costs charged to responsible parties.
Adopting the new rate becomes even more critical because relatively
new EPA policies and other factors may otherwise lower cost
recoveries. For example, EPA now does not charge parties that agree
to cleanups for some of the "orphan shares" of cleanup costs--those
portions of costs attributable to parties that no longer exist or are
no longer financially viable. For fiscal years 1996 and 1997, EPA
estimates that it did not charge responsible parties for $49.1
million in orphan share costs.
We, as well as others, including EPA in its management review of the
Superfund program,\8 have recommended that the agency needs to better
track the amount of costs it actually recovers compared with the
amount that it potentially could have recovered, determine the
underlying factors for differences in the amounts recovered each
year, and identify any actions it may need to take to improve
performance. Establishing performance measures to better track the
outcome of EPA's cost-recovery efforts is consistent with the Results
Act, which calls for agencies to set measures to assess their
programs' performance. On the other hand, EPA has consistently
argued that (1) publicizing annual rates of recovery as a goal would
jeopardize its ability to negotiate the maximum recoveries possible
from individual parties by signifying a willingness to settle for
less than 100 percent of recoverable costs and (2) many factors
outside of the agency's control can affect the amount recovered in a
given year, such as the number of sites for which financially viable
responsible parties do not exist.
However, we have recommended that EPA use annual cost-recovery rates
as a performance measure--not as a performance goal. EPA's goal
would still be to achieve settlement for 100 percent of the
recoveries. Calculating annual recovery rates would let the agency
know how it and its regional offices are doing in meeting the goal.
Without systematically analyzing the reasons for its rate of cost
recovery, EPA cannot really tell if its cost-recovery performance is
due to internal factors that it can control, such as poor cost
documentation or inexperienced negotiators, or external factors, such
as financially nonviable parties.
--------------------
\7 This $3 billion figure represents indirect costs excluded from
final settlements with responsible parties through fiscal year 1997,
the year of the most current information available.
\8 A Management Review of the Superfund Program, EPA (Washington,
D.C., June 1989).
EPA STILL HAS CHALLENGES
CONTROLLING CLEANUP CONTRACT
COSTS
-------------------------------------------------------- Chapter 1:4.3
EPA has had long-standing challenges with controlling the costs of
the contractors it uses to clean up sites or to monitor private-party
cleanups for EPA. In the past, we found that EPA (1) relied too
heavily on the contractors' own cost proposals to determine the final
price for cleanup activities performed by the contractors; (2) had
made little progress in improving the timeliness of auditing
contractors, thus increasing the risk for fraud, waste, and abuse by
contractors; and (3) continued to pay contractors a high rate to
cover their administrative support costs. Since then, EPA has
increased its use of independent government cost estimates to set
better contract prices for the government, but some estimates are
still of questionable quality. In addition, according to EPA
officials, the agency has almost eliminated the backlog of contractor
audits, thus improving their timeliness. However, program support
costs remain high.
In our previous reviews of these issues, we found that EPA was not
preparing independent cost estimates and that most of the final
prices awarded for work closely matched the contractor's--not
EPA's--estimate. In our ongoing work, we found that EPA has improved
in these areas. Of the 35 contractor work assignments that we
reviewed in three of EPA's regions, the agency generated independent
cost estimates for each of them. Furthermore, in about half of the
cases, the final price awarded for the work closely matched EPA's
independent cost estimate, which, according to EPA's criteria,
suggests that the estimates were fairly accurate.
However, additional improvements are needed. In nearly half of the
cases, the final price varied significantly from the cost estimate.
The final prices were below the estimates in 5 cases by as much as 36
percent and were higher than the estimates in 12 cases by as much as
101 percent. EPA estimators often left critical work steps out of
their estimates, and about half of EPA's program contract management
staff for these cases questioned their own ability to generate
accurate estimates because of their lack of experience and historical
data on actual cleanup costs as a reference point for their
estimates. EPA acknowledged these concerns and has designed a set of
corrective measures to address them. As of November 1998, the agency
was in the first steps of implementing these measures--assessing each
region's cost-estimating practices.
EPA continues to experience high program support costs related to
contractors. In our ongoing review of these management issues
regarding the Superfund program, we found that the program support
costs for 9 of 13 contracts exceeded EPA's goal of 11 percent. These
costs ranged from 19 to 92 percent when we included initial contract
start-up costs, such as setting up local offices and designing
computer programs to accommodate EPA's financial reporting
requirements. The costs of the remaining four contracts ranged from
about 6 to 10 percent. A major reason for continued high support
costs is that EPA has more contract capacity in place than work
available for the contractors, even though the agency has
significantly reduced the number of new contracts.
These continuing concerns suggest that EPA may need to evaluate
whether it needs to overhaul some of its contracting practices.
Comprehensively assessing issues, such as whether the agency needs
multiple contracts in each of its regions or whether it needs to use
contracting vehicles that reimburse contractors on the basis of their
performance--not just on the costs they incur--offers the potential
to improve the effectiveness and efficiency of Superfund contracting.
Under its "Contracts 2000" initiative, EPA proposes to consider some
of these issues for the next several years through its contracts
management team, although it could not provide us with a detailed
plan and milestones to implement this initiative.
RELATED GAO PRODUCTS
============================================================ Chapter 2
ENVIRONMENTAL INFORMATION
---------------------------------------------------------- Chapter 2:1
Environmental Information: Agencywide Policies and Procedures Are
Needed for EPA's Information Dissemination (GAO/RCED-98-245, Sept.
24, 1998).
Environmental Protection: Key Management Issues Facing EPA
(GAO/RCED-98-153R, Apr. 23, 1998).
Results Act: Observations on EPA's Draft Strategic Plan
(GAO/RCED-97-209R, July 30, 1997).
Managing for Results: EPA's Efforts to Implement Needed Management
Systems and Processes (GAO/RCED-97-156, June 18, 1997).
Environmental Protection: EPA's Problems With Collection and
Management of Scientific Data and Its Efforts to Address Them
(GAO/T-RCED-95-174, May 12, 1995).
REGULATORY REINVENTION
---------------------------------------------------------- Chapter 2:2
Environmental Protection: EPA's and States' Efforts to "Reinvent"
Environmental Regulation (GAO/T-RCED-98-33, Nov. 4, 1997).
Regulatory Reinvention: EPA's Common Sense Initiative Needs an
Improved Operating Framework and Progress Measures (GAO/RCED-97-164,
July 18, 1997).
Environmental Protection: Challenges Facing EPA's Efforts to
Reinvent Environmental Regulation (GAO/RCED-97-155, July 2, 1997).
EPA/STATE WORKING RELATIONSHIP
---------------------------------------------------------- Chapter 2:3
Environmental Protection: EPA's and States' Efforts to Focus State
Enforcement Programs on Results (GAO/T-RCED-98-233, June 23, 1998).
Environmental Protection: EPA's and States' Efforts to Focus State
Enforcement Program on Results (GAO/RCED-98-113, May 27, 1998).
Environmental Protection: Status of EPA's Initiatives to Create a
New Partnership With States (GAO/T-RCED-96-87, Feb. 29, 1996).
EPA and the States: Environmental Challenges Require a Better
Working Relationship (GAO/RCED-95-64, Apr. 3, 1995).
SUPERFUND PROGRAM MANAGEMENT
---------------------------------------------------------- Chapter 2:4
Hazardous Waste: Unaddressed Risks at Many Potential Superfund Sites
(GAO/RCED-99-8, Nov. 30, 1998).
Superfund: Analysis of Contractor Cleanup Spending (GAO/RCED-98-221,
Aug. 4, 1998).
Superfund: State Voluntary Programs Provide Incentives to Encourage
Cleanups (GAO/RCED-97-66, Apr. 9, 1997).
High-Risk Series: Superfund Program Management (GAO/HR-97-14, Feb.
1997).
Federal Facilities: Consistent Relative Risk Evaluations Needed for
Prioritizing Cleanups (GAO/RCED-96-150, June 7, 1996).
Superfund: More Emphasis Needed on Risk Reduction
(GAO/T-RCED-96-168, May 8, 1996).
High-Risk Series: Superfund Program Management (GAO/HR-95-12, Feb.
1995).
Superfund: EPA Has Opportunities to Increase Recoveries of Costs
(GAO/RCED- 94-196, Sept. 28, 1994).
High-Risk Series: Superfund Program Management (GAO/HR-93-10, Dec.
1992).
PERFORMANCE AND ACCOUNTABILITY
SERIES
============================================================ Chapter 3
Major Management Challenges and Program Risks: A Governmentwide
Perspective (GAO/OCG-99-1)
Major Management Challenges and Program Risks: Department of
Agriculture (GAO/OCG-99-2)
Major Management Challenges and Program Risks: Department of
Commerce (GAO/OCG-99-3)
Major Management Challenges and Program Risks: Department of Defense
(GAO/OCG-99-4)
Major Management Challenges and Program Risks: Department of
Education (GAO/OCG-99-5)
Major Management Challenges and Program Risks: Department of Energy
(GAO/OCG-99-6)
Major Management Challenges and Program Risks: Department of Health
and Human Services (GAO/OCG-99-7)
Major Management Challenges and Program Risks: Department of Housing
and Urban Development (GAO/OCG-99-8)
Major Management Challenges and Program Risks: Department of the
Interior (GAO/OCG-99-9)
Major Management Challenges and Program Risks: Department of Justice
(GAO/OCG-99-10)
Major Management Challenges and Program Risks: Department of Labor
(GAO/OCG-99-11)
Major Management Challenges and Program Risks: Department of State
(GAO/OCG-99-12)
Major Management Challenges and Program Risks: Department of
Transportation (GAO/OCG-99-13)
Major Management Challenges and Program Risks: Department of the
Treasury (GAO/OCG-99-14)
Major Management Challenges and Program Risks: Department of
Veterans Affairs (GAO/OCG-99-15)
Major Management Challenges and Program Risks: Agency for
International Development (GAO/OCG-99-16)
Major Management Challenges and Program Risks: Environmental
Protection Agency (GAO/OCG-99-17)
Major Management Challenges and Program Risks: National Aeronautics
and Space Administration (GAO/OCG-99-18)
Major Management Challenges and Program Risks: Nuclear Regulatory
Commission (GAO/OCG-99-19)
Major Management Challenges and Program Risks: Social Security
Administration (GAO/OCG-99-20)
Major Management Challenges and Program Risks: U.S. Postal Service
(GAO/OCG-99-21)
High-Risk Series: An Update (GAO/HR-99-1)
The entire series of 21 performance and accountability reports and
the high-risk series update can be ordered by using the order number
GAO/OCG-99-22SET.
*** End of document. ***