Environmental Regulation: Differences Remain Between EPA and OMB Over
Paperwork Requirements (Letter Report, 08/23/94, GAO/RCED-94-254).

In order to reduce the federal paperwork burden on the public, the
Office of Management and Budget (OMB) has been given broad authority
over agencies' data collection activities. Agencies must submit requests
for information collection to OMB for approval before they are carried
out, and periodically thereafter in the case of recurring information
collection requests. To further protect the public, agencies are
prohibited from penalizing those who fail to maintain or provide
requested information if a currently valid OMB control number is not
displayed on the agency's information collection request.  The
Environmental Protection Agency (EPA) recently found that most of it 500
information requests has lapses, or periods of time when EPA did not
have approval from OMB to collect the request information. Also, about
half of its information collection request control numbers were not
displayed in the Code of Federal Regulations, as required. This report
discusses (1) EPA's problems in managing its information collection
request duties and the enforcement fines and penalties affected by these
problems and (2) the causes of these problems, including the effect of
OMB's oversight on EPA's efforts to collect information.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-94-254
     TITLE:  Environmental Regulation: Differences Remain Between EPA 
             and OMB Over Paperwork Requirements
      DATE:  08/23/94
   SUBJECT:  Paperwork
             Data collection operations
             Environmental monitoring
             Reporting requirements
             Fines (penalties)
             Law enforcement
             Management information systems
             Statutory law
             Interagency relations
IDENTIFIER:  EPA Spill Prevention Control and Countermeasures Plan
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce, House of Representatives

August 1994

ENVIRONMENTAL REGULATION -
DIFFERENCES REMAIN BETWEEN EPA AND
OMB OVER PAPERWORK REQUIREMENTS

GAO/RCED-94-254

EPA's Management of the Paperwork Reduction Act


Abbreviations
=============================================================== ABBREV

  EPA -
  OMB -
  OIRA -
  SPCC -
  BIF -
  OSWER -
  RCRA -

Letter
=============================================================== LETTER


B-257645

August 23, 1994

The Honorable John D.  Dingell
Chairman, Subcommittee on Oversight
 and Investigations
Committee on Energy and Commerce
House of Representatives

Dear Mr.  Chairman: 

In order to monitor and reduce the federal paperwork burden on the
public, the Paperwork Reduction Act of 1980 gives the Office of
Management and Budget (OMB) broad authority over agencies' data
collection activities.  Under the act, agencies must submit requests
for information collection to OMB for approval before they are
carried out, and periodically thereafter in the case of recurring
information collection requests.  To further protect the public, the
act prohibits an agency from assessing penalties against those who
fail to maintain or provide the requested information if a currently
valid OMB control number is not displayed on the agency's information
collection request. 

In an internal review that began in February 1993, the Environmental
Protection Agency (EPA) found that most of its roughly 500
information collection requests had lapses, or periods of time when
EPA did not have approval from OMB to collect the requested
information.  Also, about half of its information collection request
control numbers were not displayed in the Code of Federal
Regulations, as called for in OMB's regulations.  Responding to your
concerns that these problems may have undermined a number of EPA's
enforcement actions, this report discusses (1) EPA's problems in
managing its information collection request duties and the
enforcement fines and penalties affected by these problems and (2)
the causes of these problems, including the effect of OMB's oversight
on EPA's efforts to collect information.  We are also providing
information on the status of the two agencies' efforts to resolve
these problems. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

EPA officials estimate that the agency lost about $2 million in
enforcement penalties because it allowed OMB's approvals of its
information collection requests to lapse before requesting renewals. 

EPA officials believe the lapses were caused, in part, because EPA
management, which often focused on meeting court-ordered and
statutory deadlines to complete rule-makings, devoted insufficient
attention and resources to renewing information collection requests. 
The officials added, however, that some lapses were partly
attributable to disagreements between EPA and OMB staff about the
amount of analysis EPA must produce to get an information collection
request renewed.  OMB officials told us that any additional requests
for analysis they made of EPA offices were necessary, given OMB's
responsibilities under the Paperwork Reduction Act. 

Both EPA and OMB have taken steps to prevent future lapses of
approvals for information collection requests.  EPA has developed a
status report on information collection requests, including their
expiration dates and the need for action, which is regularly
distributed to program officers.  OMB has worked with EPA to rank
OMB's reviews of information collection requests and has reduced the
time it takes to review these requests.  According to EPA officials,
as of July 1994 no OMB approvals of EPA's information collection
requests have lapsed since the February 1993 review began.  As a
result, EPA officials told us they do not expect any other
enforcement actions to be significantly affected by lapses. 
Nevertheless, differences remain between EPA and OMB on a number of
key issues that, while not causing new lapses, continue to cause
confusion and delay in the process of reviewing information
collection requests. 


   BACKGROUND
------------------------------------------------------------ Letter :2

EPA has roughly 500 information collection requests at any one time,
ranging from quarterly industrial facility reports on levels of
wastewater discharges to minor activities, such as annual requests
for nominations for the President's Environmental Youth Awards
Program.  Requests for information are central to EPA's enforcement
efforts, since the agency relies substantially on self-reporting and
recordkeeping by regulated parties to monitor compliance with federal
environmental laws. 

The Paperwork Reduction Act established the Office of Information and
Regulatory Affairs (OIRA) within OMB and gave it authority over
federal information functions.  In order to either develop or renew
an information collection request, EPA program offices prepare
request packages that are submitted to the Natural Resources Branch
of OIRA.  Such a request package typically includes a statement of
justification, a brief description of the information itself, a copy
of the data collection instrument, and other relevant documentation,
such as regulations or statutes mandating data collection. 

When submitting an information collection request to OMB, an agency
must also forward a notice to the Federal Register for a comment
period, stating that OMB's approval is being sought.  In each notice,
an agency must include (1) the title of the collection of
information, (2) a brief description of the agency's need for the
information and its planned use, (3) a description of the likely
respondents, and (4) an estimate of the total annual reporting and
recordkeeping burden that will result from each collection of
information.  The information collection request packages for major
EPA programs can number roughly 200 pages, and it can take EPA staff
several months to prepare estimates of the number of respondents and
their reporting costs. 

The act allows OMB 60 days to complete its review of a submission. 
With notification to the agency, this review period may be extended
to 90 days.\1 OMB may approve, reject, or offer conditional or
partial approval of the information collection request.  Under the
act, OMB can approve an information collection request for no more
than 3 years.  When an information collection request expires, an
agency that wants to continue to collect the information must reapply
for an additional approval from OMB. 


--------------------
\1 The Paperwork Reduction Act's implementing regulations stipulate
that if OMB has not acted, upon the 91st day of review the agency can
request and shall receive approval of its information collection
request.  However, under these circumstances, the maximum approval
period is 1 year. 


   EPA ALLOWED INFORMATION
   COLLECTION REQUESTS TO LAPSE,
   REDUCING ENFORCEMENT PENALTIES
------------------------------------------------------------ Letter :3

Because EPA allowed information collection requests to lapse, the
agency lost about $2 million in enforcement penalties.  The Paperwork
Reduction Act generally prohibits a federal agency from collecting
information from the public unless the agency's information
collection request displays a currently valid OMB control number. 
The public protection provision of the act states that no person
shall be subject to any penalty for failure to furnish requested
information if the request does not display the currently valid
control number.  EPA allowed many of its information collection
request approvals to expire.  The information collection requests
were later renewed after periods of time ranging from a few days to
more than 1 year.  These expirations created historical gaps or
lapses when collection requests did not have a current OMB control
number.  In some cases, EPA violated the act by collecting
information during these lapses. 

Also, in many instances EPA did not conform to OMB's regulations to
properly display information collection request control numbers once
the requests were approved by OMB.  In defining the term "display,"
OMB's regulations require agencies, in the case of collections of
information published in regulations, to publish the OMB control
number in the Federal Register and ensure that it will be included in
the Code of Federal Regulations.  In roughly half of its information
collection requests, EPA published the assigned control number in the
Federal Register but did not publish it in the Code of Federal
Regulations. 


      LAPSED APPROVALS HAVE
      AFFECTED ENFORCEMENT
---------------------------------------------------------- Letter :3.1

The lapses in approvals of EPA's information collection requests have
adversely affected enforcement actions and levels of penalties. 
According to EPA officials, the actual impact thus far has been
limited to Spill Prevention Control and Countermeasures Plan (SPCC)
cases under the Clean Water Act, and Boiler and Industrial Furnace
(BIF) Appendix IX cases under the Resource Conservation and Recovery
Act (RCRA).  Approximately 14 SPCC and BIF enforcement actions--12
administrative and 2 civil judicial cases--were affected because of
the historical lapses in approvals.  EPA officials estimated, on the
basis of standard penalties, that civil judicial and administrative
penalties were reduced by about $2 million in these 14 cases because
of the lapsed approvals.  At this time, EPA does not anticipate that
any other enforcement actions will be significantly affected by
lapses in approvals of information collection requests.  EPA
officials told us that they will continue to conduct lapse reviews on
their enforcement cases for the immediate future. 

One of the cases referred to above--an SPCC civil judicial case--was
dismissed because the information collection request had lapsed.  EPA
officials said that the agency had sought penalties of $75,000 in
this case.  In addition, lapsed approvals prompted EPA to reduce
penalties by $60,000 to $75,000 in eight administrative cases and one
civil judicial case of noncompliance with SPCC plans.  Finally, EPA
officials said that they had reduced four administrative penalties by
a total $1,856,000 for violations of Appendix IX regulations under
RCRA because of lapses in the BIF information collection request. 

The estimated losses in enforcement penalties are less than 2 percent
of all estimated penalties and fines assessed by EPA in fiscal year
1993.  EPA estimated that it had assessed $29.7 million in criminal
fines and $103.8 million in civil judicial and administrative
penalties during the fiscal year.  While 12 administrative orders
were significantly affected by the lapses, EPA had issued 1,614
administrative orders in fiscal year 1993.  While 2 civil judicial
case were adversely affected by the lapses, EPA estimated that it had
brought 338 civil judicial cases in fiscal year 1993. 


      EPA'S COMPETING PRIORITIES
      AND DISPUTES WITH OMB CAUSED
      LAPSES
---------------------------------------------------------- Letter :3.2

EPA officials told us that most lapses in approvals of information
collection requests occurred because EPA program offices, often
behind in meeting statutory and court-ordered deadlines for
regulations, gave low priority to renewing information collection
requests.  For example, according to staff in EPA's Office of Solid
Waste and Emergency Response (OSWER), the program office staff
devoted most of its time to rule-making because the Office is
required to meet statutory and court-ordered deadlines to produce
regulations governing the handling and disposal of hazardous and
solid wastes under RCRA. 

OSWER staff also told us that before EPA's February 1993 internal
review, the staff did not appreciate the impact that lapsed approvals
could have on enforcement.  OSWER staff said that the rule-making
priorities of the program office, coupled with a lack of awareness
among program staff of the enforcement implications of lapses,
created conditions under which approvals of information collection
requests would lapse.  Staff members in EPA's Office of Air and
Radiation added that because approvals for information collection
requests may be valid for up to 3 years, staff in program offices
often turned over between renewals, and new staff may have been
unaware of the need to renew information collection requests or the
conditions OMB may have applied to the renewal. 

While EPA officials could not specify how many, they noted that some
approvals had lapsed because OMB, dissatisfied with EPA's analysis of
the time and cost burdens on respondents of an information collection
request, would occasionally grant conditional approval of requests
for 1 year or less.  The conditional approvals would require EPA
program staff to undertake additional analysis of an information
collection request, such as surveying respondents to determine if the
reporting requirement duplicated another reporting requirement, in
order to receive the maximum 3-year approval.  According to EPA
officials, these more frequent renewals and the staff's efforts to
try to satisfy the extra analytic mandates overburdened EPA program
staff already facing statutory and court-ordered mandates for new
regulations, resulting in delays in EPA's submitting renewal
packages.  OMB officials noted that any additional requests for
information they made of EPA offices were necessary, given OMB's
responsibilities under the Paperwork Reduction Act to ensure that EPA
justifies the utility of the information it wants to collect and
makes the proper effort to avoid duplication with other reporting
requirements. 


      IMPACT OF DISPLAY PROBLEM ON
      ENFORCEMENT REMAINS
      UNDETERMINED
---------------------------------------------------------- Letter :3.3

EPA's display problem has not affected enforcement actions or levels
of penalties.  However, EPA officials said that not displaying
information collection request control numbers in the Code of Federal
Regulations could affect enforcement actions and levels of penalties
if courts determine this constitutes a violation of the Paperwork
Reduction Act.  EPA, the OMB General Counsel, and the Department of
Justice concur that an agency meets its obligations under the
Paperwork Reduction Act by publishing OMB control numbers in the
Federal Register and that publication in the Code of Federal
Regulations is not necessary.  However, this issue is in
litigation.\2 Despite the federal government's interpretation of the
Paperwork Reduction Act, EPA has taken steps to ensure that current
and future control numbers for EPA's information collection requests
are displayed in the Code of Federal Regulations. 


--------------------
\2 United States v.  Amoco Oil Co., Civil No.  92 CV 1038J (D.  Wyo. 
filed Oct.  14, 1992). 


   EPA AND OMB HAVE MADE CHANGES
   TO IMPROVE MANAGEMENT OF
   INFORMATION COLLECTION REQUESTS
------------------------------------------------------------ Letter :4

Since the February 1993 review began, OMB and EPA have taken actions
to improve both their working relationship and their approach to
managing their respective responsibilities for information collection
requests.  According to both OMB and EPA officials, OIRA staff have,
on the basis of input from EPA, adopted a policy of ranking
information collection requests.  This strategy enables information
collection requests that are about to expire to be reviewed ahead of
others.  According to EPA, as of July 1994 no information collection
requests have lapsed since the February 1993 review, and OMB has
generally limited its issuance of short-term approvals. 

OMB has also reduced the time it takes to review EPA's information
collection requests.  One measure of OMB's management of EPA's
information collection requests is the number of days OMB takes to
review EPA's submissions for information collection.  According to
information available from EPA's Paperwork Reduction Act Management
System data base, and as shown in figure 1, OMB's review times
increased from fiscal years 1989 to 1992 and decreased thereafter. 

Figure 1:  OMB's Review of EPA's Information Collection
Requests, Fiscal Years 1989 Through 1994

As figure 1 shows, of the 56 EPA information collection requests that
OMB reviewed over the last three quarters of fiscal year 1989, only 2
percent exceeded the 90-day limit that OMB is given to complete its
review.\3 By fiscal year 1992, when OMB reviewed 127 EPA information
collection requests, 50 percent of the reviews exceeded the 90-day
limit.  However, after fiscal year 1992, OMB's review times improved. 
As figure 1 shows, the percentage of information collection requests
taking over 90 days for review decreased from 50 percent in fiscal
year 1992 to 18 percent in fiscal year 1993 and to only 5 percent
thus far in fiscal year 1994. 

According to OMB officials, review times may have improved, in part,
as OIRA's Natural Resources Branch staff gained experience in
reviewing information collection requests.  Also, before 1993 OIRA
had an acting rather than a permanent administrator.  Both EPA and
OMB officials indicated to us that the designation of a permanent
administrator in 1993 allowed OMB and EPA program staff to elevate
and more easily resolve conflicts over approval times and conditions. 
Taken together, these factors likely helped reduce OMB's review times
for EPA's information collection requests in fiscal years 1993 and
1994. 

While OMB's review times have decreased, EPA has also taken actions
to improve its management of information collection requests.  In
order to prevent future lapses in OMB's approvals, EPA's Office of
Policy, Planning, and Evaluation developed a status report on
information collection requests, including their expiration dates and
the need for action.  EPA distributes the status report to program
officers every 2 weeks. 

EPA also created a Quality Action Team to address some of the
agency's compliance problems with the Paperwork Reduction Act.  The
team has developed training materials to make program staff more
aware of information collection request requirements and has
developed a strategy to address the display problems by consolidating
all EPA information collection request citations and their
accompanying OMB control numbers in a table created in a new part of
the Code of Federal Regulations.  On May 10, 1993, EPA created this
new part of the Code of Federal Regulations entitled "OMB Approvals
Under the Paperwork Reduction Act." The new part is to appear in
every volume of the Code of Federal Regulations that contains EPA
regulations. 


--------------------
\3 As noted earlier, the act allows OMB 60 days to complete its
review of a submission.  With notification to the agency, usually an
oral request to a program office, OMB may extend this review period
to 90 days. 


      DESPITE IMPROVEMENTS,
      PROBLEMS REMAIN
---------------------------------------------------------- Letter :4.1

Despite the improvements that the two agencies have made in
preventing new lapses in approvals of EPA's information collection
requests, EPA and OMB continue to disagree about OMB's use of partial
and conditional approvals, as well as about the calculations that EPA
uses to determine the burden on respondents of an information
collection request.  According to EPA officials, these disagreements
may continue to cause delays and confusion in the review process for
information collection requests.  In particular, EPA officials
contend that some of OMB's conditional and partial approvals pare
back reporting and monitoring requirements that had been previously
reviewed by OMB in its examination of the underlying rule.  According
to these officials, such paring back alters the substance of
regulations that OMB has already reviewed and thus constitutes an
unwarranted extension of OMB's authority under the Paperwork
Reduction Act. 

On the other hand, OMB officials told us they have stayed within
their authority under the Paperwork Reduction Act to review
information collection requests issued under regulations.  OMB
officials state that the act gives OMB authority to review
collections of information specifically called for in regulations. 

EPA officials provided us with a number of examples of partial
approvals of information collection requests that change monitoring
requirements that appear in regulations.  In one case in 1988, OMB
concluded a review of EPA's regulations on performance standards for
new residential wood heaters.  Under the regulation, EPA requires
manufacturers to inspect and report on at least 1 of every 150 wood
heaters produced to ensure that the heaters are within tolerances for
heater components, such as the firebox, gas exit, and outer
coverings, that may affect emissions of particulate matter.  However,
in 1991 OMB denied EPA's request to collect information on wood
heater inspections, stating that EPA had failed to justify the need
for the quality assurance emission test.  OMB did approve other parts
of the information collection request, and its use is approved
through August 31, 1994. 

EPA officials also contend that conditional approvals, which may
require EPA program staff to undertake an extensive analysis of an
information collection request in order to get it reapproved, place
unreasonable burdens on small program staffs already facing backlogs
of court-ordered mandates to produce regulations.  For instance,
beginning in 1990, EPA and OMB negotiated for more than 3 years over
OMB's conditional clearances of EPA's information collection requests
from hazardous waste treatment, storage, and disposal facilities.  In
July 1990, OMB approved these information collection requests on the
condition that EPA consult with respondents (in this case, the owners
and operators of hazardous waste treatment, storage, and disposal
facilities and the states) and prepare an information analysis of any
duplicative, similar, or unnecessary reporting requirements.  OMB
also directed EPA to change, if necessary, the current regulations to
eliminate any unnecessary requirements. 

According to EPA officials, these information collection requests
later lapsed in 1992 because OMB and EPA could not agree on which
reporting and recordkeeping requirements were duplicative and whether
the capital costs of reporting, such as the capital investment needed
to gather the information (for example, installing monitoring wells),
and recordkeeping costs should be separated in determining the actual
burden of the information collection requests.  These information
collection requests were eventually approved by OMB for the maximum
3-year period in September 1993, despite these disagreements. 

As a result of these problems, EPA's Quality Action Team identified
in its work plan of June 7, 1993, several long-term issues needing
resolution, including (1) the circumstances under which OMB grants
partial and conditional approvals, (2) the relationship between OMB's
reviews of information collection requests and OMB's reviews of
rule-makings, (3) procedures for handling disagreements between OMB
and EPA, and (4) general criteria for approving information
collection requests, such as the calculations of cost burdens on
respondents.  According to Quality Action Team officials, however,
little progress has been made to date on these longer-term and more
substantive issues.  For their part, OMB officials told us that they
do not plan to initiate any discussions with EPA on these issues but
would be willing to examine with EPA ways to improve the approval
process for information collection requests. 


   CONCLUSIONS
------------------------------------------------------------ Letter :5

A number of EPA's enforcement actions have been undermined--resulting
in the loss of roughly $2 million in forgone revenues from previously
assessed penalties--because of the agency's problems in sending
information collection requests to OMB for review.  In recent months,
however, greater EPA management attention to these problems, together
with closer cooperation between EPA and OMB on the issue, have helped
address the main causes of EPA's problems with information collection
requests. 

However, we believe that continuing disagreement over the longer-term
policy and legal issues raised by EPA's Quality Action Team can have
undesirable consequences, even though these consequences may be less
tangible than the lost revenues produced by lapsed approvals.  As
noted above, for instance, in the absence of clear guidelines on what
capital costs should be included in determining the burden of an
information collection request, OMB and EPA staff spent months trying
unsuccessfully to reach agreement on this issue. 

Unless EPA and OMB reach some understanding on these issues, this
type of inefficient use of limited OMB and EPA resources will likely
continue, as officials from each agency devote substantial effort to
resolving their differences on a case-by-case basis.  Accordingly, we
believe that management attention within both agencies to these
outstanding issues now would go a long way toward preventing
potentially time-consuming and costly problems later. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :6

We recommend that the Director, Office of Management and Budget, and
the Administrator, Environmental Protection Agency, address the
differences between the two agencies on the remaining substantive
policy and legal issues relating to the Paperwork Reduction Act's
requirements on information collection requests.  In particular, we
recommend that they describe in writing (1) the conditions under
which partial and conditional approvals are used, (2) procedures for
handling disagreements, and (3) general criteria for approving
information collection requests, such as the calculations of cost
burdens on respondents. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We discussed the information in this report with the Director of
EPA's Regulatory Management Division in the Office of Regulatory
Management and Evaluation.  The Director generally agreed with the
facts presented in the report.  In addition, we discussed the
information in this report with the Branch Chief and Assistant Branch
Chief of OMB's Natural Resource Branch in the Office of Information
and Regulatory Affairs.  These officials generally agreed with our
presentation of OMB's views on this subject, and on the basis of
comments from these officials, we made clarifications in the report
where appropriate.  As agreed with your office, we did not obtain
written agency comments on a draft of this report. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

The information contained in this letter was obtained through
interviews with the Chief of the Information Policy Branch, EPA
Office of Regulatory Management and Evaluation; the Director, Policy
Analysis and Regulatory Management Staff, EPA Office of Solid Waste
and Emergency Response; the Deputy Enforcement Counsel for RCRA, EPA
Office of Enforcement and Compliance Assurance; and Senior Policy
Analysts in EPA's Office of Air and Radiation.  We also interviewed
the Natural Resources Branch Chief and Assistant Branch Chief of
OMB's Office of Information and Regulatory Affairs.  In addition, we
examined a number of documents from EPA and OMB, including EPA's
internal review of information collection requests, OMB's report on
EPA's lapsed approvals, and OMB's guidance to its desk officers on
their information collection request review responsibilities. 
Information on OMB's review times for EPA's information collection
requests was obtained from EPA's Paperwork Reduction Act Management
System data base. 

We conducted our review in Washington, D.C., from December 1993 to
July 1994 in accordance with generally accepted government auditing
standards. 


---------------------------------------------------------- Letter :8.1

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter.  At that time, we will send copies to
the Administrator, Environmental Protection Agency, and the Director,
Office of Management and Budget. 

This work was performed under the direction of Steven Elstein,
Assistant Director, Environmental Protection Issues, who can be
reached on (202) 512-6501 if you or your staff have any questions. 
Major contributors to this report included Timothy L.  Minelli,
Evaluator-in-Charge; Eileen Larence, Adviser; and Richard P. 
Johnson, Attorney Adviser. 

Sincerely yours,

Peter F.  Guerrero
Director, Environmental Protection
 Issues

