EPA and the States: Environmental Challenges Require a Better Working
Relationship (Chapter Report, 04/03/95, GAO/RCED-95-64).

Pursuant to a congressional request, GAO reviewed the difficulties that
the Environmental Protection Agency (EPA) and the states have in
implementing federal environmental protection requirements, focusing on
the: (1) reasons for these difficulties; and (2) ways EPA and the states
can improve their ability to carry out the requirements.

GAO found that: (1) most states have had difficulty in implementing
federal environmental programs and have become reluctant to accept the
additional responsibilities associated with environmental laws; (2)
resource limitations are a major cause of the states' problems, as
federal funding has not kept pace with environmental requirements; (3)
EPA has required states to apply scarce resources to national priorities
at the expense of their own environmental concerns; (4) the relationship
between EPA and the states has been strained because EPA does not
provide adequate technical support to states and does not consult states
before making decisions concerning them; and (5) although EPA has taken
measures over the past 10 years to improve its relationship with the
states, key issues still remain unresolved.

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

 REPORTNUM:  RCED-95-64
     TITLE:  EPA and the States: Environmental Challenges Require a 
             Better Working Relationship
      DATE:  04/03/95
   SUBJECT:  Environmental monitoring
             Federal regulations
             Federal/state relations
             State-administered programs
             Environmental legislation
             Air pollution
             Water pollution
             Compliance
             Federal aid to states
             Environmental policies
IDENTIFIER:  EPA National Pollutant Discharge Elimination System
             EPA Public Water Supply Supervision Program
             EPA National Corrective Action Prioritization System
             EPA National Metals Policy
             EPA Resource Conservation and Recovery Act Implementation 
             Plan
             EPA Resource Conservation and Recovery Act Corrective 
             Action Program
             STARS
             EPA Strategic Targeted Activities for Results System
             NPDES
             
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Cover
================================================================ COVER


Report to the Ranking Minority Member, Committee on Governmental
Affairs, U.S.  Senate

April 1995

EPA AND THE STATES - ENVIRONMENTAL
CHALLENGES REQUIRE A BETTER
WORKING RELATIONSHIP

GAO/RCED-95-64

EPA/State Relationship


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

  ASIWPCA - Association of State and Interstate Water Pollution
     Control
  Administrators
  EPA - Environmental Protection Agency
  GAO - General Accounting Office
  NPDES - National Pollution Discharge Elimination System
  OECA - Office of Enforcement and Compliance Assurance
  SDWA - Safe Drinking Water Act
  RCRA - Resource Conservation and Recovery Act
  STARS - Strategic Targeted Activities for Results System
  BIF - boilers and industrial furnaces

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


B-259433

April 3, 1995

The Honorable John Glenn
Ranking Minority Member
Committee on Governmental Affairs
United States Senate

Dear Senator Glenn: 

As requested in your October 9, 1992, letter and in subsequent
discussions with your office, we have examined (1) the difficulties
that the Environmental Protection Agency (EPA) and the states have
had in implementing federal environmental requirements, (2) the
reasons that they have had these difficulties, and (3) the ways that
they can improve their ability to carry out the requirements. 

As arranged with your office, unless you publicly announce its
contents earlier, we will make no further distribution of this report
until 30 days after the date of this letter.  At that time, we will
send copies to the appropriate congressional committees; the
Administrator, EPA; and the Director, Office of Management and
Budget.  We will also make copies available to others upon request. 

Please contact me on (202) 512-6111 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
I. 

Sincerely yours,

Peter F.  Guerrero
Director, Environmental
 Protection Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

The Congress designed most federal environmental programs so they
could be administered at the state and local levels.  Such a
framework was intended to draw upon the strengths of federal, state,
and local governments to protect the nation's environmental
resources.  Accordingly, once a state demonstrates that it is capable
of implementing an environmental program, the Environmental
Protection Agency (EPA) delegates most day-to-day responsibilities to
the state (i.e., EPA "authorizes" the state to implement the
program).  After delegation, EPA regions, with guidance from
headquarters, continue to set goals for the states, provide them with
financial assistance through grants, and monitor their performance in
meeting grant and program requirements. 

Concerned about the working relationship between EPA and the states
and the impact of that relationship on the states' ability to
implement federal environmental laws, the Ranking Minority Member of
the Senate Committee on Governmental Affairs asked GAO to assess
issues underlying this relationship.  As agreed, GAO examined (1)
whether EPA and the states have had difficulty implementing federal
environmental requirements, (2) to the extent that they have had
difficulty, why the difficulty has occurred, and (3) how they can
improve their ability to carry out the requirements. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

Upon obtaining authorization from EPA, states become responsible for
regulating key programs, such as those for regulating how facilities
handle hazardous waste, discharge pollutants into surface water, or
provide drinking water to citizens.  States also inspect facilities
to verify compliance and pursue enforcement actions against those
found in violation.  If EPA finds a state's performance deficient, a
region may, among other things, provide additional assistance, impose
grant sanctions, or withdraw the state's authorization and take over
the program. 

GAO reviewed three programs that rely heavily on authorized states
for implementation:  the hazardous waste program authorized by the
Resource Conservation and Recovery Act, the National Pollutant
Discharge Elimination System program authorized by the Clean Water
Act, and the Public Water Supply Supervision program authorized by
the Safe Drinking Water Act.  To examine the effect that the
EPA/state relationship might have on the implementation of these
programs, GAO, among other things, contacted the state program
managers in 16 states,\1 EPA officials at headquarters and in three
regional offices, and representatives of environmental and industry
groups.  GAO also analyzed its own prior reviews, as well as those by
EPA and others. 


--------------------
\1 Specifically, GAO mailed questionnaires to the state managers of
the 44 programs authorized by EPA in the 16 states; 43 of the 44
managers responded.  GAO also telephoned these 44 managers plus 4
managers of state programs that are not authorized by EPA; 47 of the
48 managers agreed to be interviewed. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

Most states authorized to manage federal environmental programs have
at times been unable to meet some of the requirements for
implementing these programs.  Many states have had difficulty
performing key functions, such as monitoring environmental quality,
setting standards, issuing permits, and enforcing compliance. 
Consequently, states have become increasingly reluctant to accept the
additional responsibilities associated with recent environmental
laws. 

EPA and state officials uniformly acknowledged that resource
limitations are a major cause of these problems:  Federal funding has
not kept pace with new environmental requirements, and the states
have been unable to make up the difference.  Many EPA and state
officials contacted by GAO linked this resource gap to the "unfunded
mandates" debate that has gained widespread attention in the Congress
and elsewhere in recent years.  The resource shortage, however, has
been exacerbated because EPA has sometimes required states to apply
scarce resources to national priorities at the expense of some of
their own environmental concerns. 

Also affecting the EPA/state relationship have been states' concerns
that EPA (1) is inconsistent in its oversight across regions, (2)
sometimes micromanages state programs, (3) does not provide
sufficient technical support for increasingly complex state program
requirements, and (4) often does not adequately consult states before
making key decisions affecting them.  EPA officials acknowledged to
GAO that these concerns have, in fact, affected the EPA/state
relationship. 

To its credit, EPA has sought to improve its working relationship
with the states.  Among other things, it has attempted to clarify
federal and state responsibilities through task force reports and
policy statements, as well as to involve states in major decisions
through several EPA/state work groups.  Although some of the state
managers GAO contacted indicated that their relationship with EPA had
improved over the past 5 to 10 years, long-standing concerns over
resource allocation, oversight, and other key issues still need to be
resolved.  GAO is making a number of recommendations, detailed in
chapter 5, to address these issues. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      STATES HAVE HAD DIFFICULTY
      MEETING ENVIRONMENTAL
      REQUIREMENTS
-------------------------------------------------------- Chapter 0:4.1

GAO's audits of federal environmental programs over the past several
years show that many high-priority program requirements are not being
met--and GAO's recent contacts with state and EPA officials indicate
that many of these problems remain.  For example, state environmental
officials in 15 of the 16 states GAO contacted said that resource
shortages forced them to curtail important activities, such as
adopting key EPA drinking water regulations and conducting vital
monitoring activities.  Similarly, two-thirds of the managers of the
state National Pollutant Discharge Elimination System programs whom
GAO interviewed said that they have been tardy in establishing
pollution discharge limits for new and existing facilities. 

Acknowledging the challenges they face in meeting current
requirements, 83 percent of the state program managers GAO
interviewed expressed reservations about accepting new program
responsibilities.  For example, drinking water program officials from
13 of the 16 states contacted said they would have to curtail key
activities, such as sanitary surveys, if they had to implement any
additional requirements without receiving sufficient increases in
federal funding.  These surveys are preventive inspections that many
state officials consider to be the backbone of their drinking water
protection efforts because the inspections can identify minor
problems before these problems become major.  Similarly, officials of
the state National Pollutant Discharge Elimination System and
Resource Conservation and Recovery Act programs expressed concerns
about their ability to implement stormwater and hazardous waste
cleanup rules, respectively. 


      KEY FACTORS IMPAIR STATES'
      PERFORMANCE AND THE
      EPA/STATE RELATIONSHIP
-------------------------------------------------------- Chapter 0:4.2

Overall, the EPA and state officials GAO interviewed agreed that
bringing program costs in line with program resources is the most
important issue now confronting them.  In this connection, EPA
projected in 1990 that by the year 2000 state governments would have
to spend an additional $1.2 billion annually, or approximately 46
percent more than they did in 1986, to maintain the same level of
environmental protection.  Concern for rising state program costs was
echoed by the majority of the state managers GAO contacted for this
review--86 percent of those responding to GAO's mailed questionnaire
said that the level of federal financial support adversely affected
their program to a "great" or "very great" extent. 

Compounding the problem, according to state officials, are EPA
requirements that sometimes preclude states from spending funds in
what they consider to be the most cost-effective ways.  For example,
Wisconsin drinking water officials told GAO that EPA requires them to
monitor for certain radioactive contaminants even though the state
has years of data showing that such contaminants do not exist in the
state's water supplies.  The officials maintained that the money
spent on monitoring these contaminants would provide greater
environmental benefits if it were spent on sanitary surveys and other
preventive programs.  EPA drinking water officials agreed but noted
that the agency's regulations do not currently allow monitoring
waivers for these contaminants. 

Other factors have also strained the EPA/state relationship and made
programs more difficult to implement.  One frequently cited concern
is that disparities may exist in how EPA regions oversee states. 
Seventy-two percent of the program managers interviewed by GAO said
they believe EPA regional offices treat the states inconsistently. 
In their view, this treatment raises questions of fairness or causes
other problems.  However, some state managers acknowledged that if
they had more complete information about how programs are implemented
in other states, they might better understand the reasons for the
variation and feel less "singled out" by EPA.  In responding to
states' concerns over this issue, EPA acknowledged that it does not
know to what extent this "inconsistency" (1) is merely the
appropriate exercise of flexibility authorized by environmental
statutes, (2) is inappropriate and raises genuine questions of
fairness, or (3) is less a reality than a perception arising from
miscommunication or lack of information. 

Another factor frequently cited by state officials is what they
consider to be the micromanagement of their programs by EPA regions. 
Although some states noted improvement in this area, 63 percent of
the state managers responding to GAO's questionnaire still found
EPA's controls excessive.  EPA countered--with some justification,
according to past GAO reviews--that basic problems with state
programs sometimes warrant close oversight.  Despite these
differences, however, state and EPA officials contacted by GAO agree
that EPA should focus more on providing the states with technical
assistance, clarifying regulations, performing the technical research
needed to support state environmental regulations, and giving states
the flexibility to achieve environmental results from their programs
without prescribing the precise steps they must take to achieve them. 


      IMPROVING THE EPA/STATE
      RELATIONSHIP DEPENDS ON
      TRANSLATING PRINCIPLES INTO
      ACTIONS
-------------------------------------------------------- Chapter 0:4.3

EPA tried as early as the 1970s to improve its relationship with the
states.  Indeed, many of the problems identified in this report were
also identified by GAO in 1980.  Since then, several administrators
have called for improving the EPA/state relationship, and the agency
has formed task forces and implemented program-specific efforts
toward this end.  Among other things, these efforts resulted in the
development of broad principles stating that EPA should phase out its
involvement in states' day-to-day decision-making and that it should
increase its technical, administrative, and legal support for state
programs. 

As this report shows, however, EPA and the states have yet to develop
the true partnership envisioned by past administrators and
recommended by previous task forces.  GAO believes the present
challenge will be to translate the conceptual agreements and broad
pronouncements resulting from these past efforts into specific
actions (identified below and detailed in ch.  5) to address the
resource, oversight, and other issues that have long complicated the
EPA/state relationship. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO recommends that the Administrator, EPA, direct the agency's
program offices (and/or regions, as appropriate)--within the context
of current laws--to (1) work with the states to identify how each
state's limited funds can be most efficiently and effectively
allocated within each program to address the state's highest-priority
environmental problems, (2) determine the extent to which regional
inconsistencies in program implementation are merely the exercise of
flexibility authorized by law or are inappropriate and warrant
corrective measures, (3) improve regional oversight of the states by
focusing oversight on helping the states to achieve improvements in
environmental quality without prescribing the specific steps the
states should take to achieve these improvements, (4) build on
current efforts to improve communications between EPA and the states
by consulting with the states earlier and more consistently on major
policy decisions and facilitating the sharing of information between
EPA and the states, and (5) track and report to the Administrator
progress in implementing the above recommendations, in light of the
complexity of many problems in the EPA/state relationship and EPA's
past difficulties in resolving them.  (See ch.  5.)


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

GAO discussed the factual information in this report with EPA
officials, including deputy division directors and branch chiefs in
EPA's Office of State and Local Relations, Office of Water
(responsible for implementing the Safe Drinking Water Act and Clean
Water Act), and Office of Solid Waste (responsible for implementing
the Resource Conservation and Recovery Act).  Generally, these
officials characterized the report as a fair and balanced treatment
of a complex issue.  In several instances, they suggested technical
clarifications and/or corrections, and they asked that GAO cite
additional efforts by EPA to provide the states with more flexibility
to meet program requirements and to help the states deal more
effectively with other issues cited in this report.  GAO made these
changes where appropriate.  As requested, GAO did not obtain written
agency comments on a draft of this report. 


INTRODUCTION
============================================================ Chapter 1

The Congress designed federal environmental programs so that they
could be administered at the state and local level.  In administering
these programs, the Environmental Protection Agency (EPA) intended to
use the strengths of federal, state, and local governments in a
partnership to protect public health and the nation's air, water, and
land.  Under this framework, EPA expects state and local governments
to assume primary responsibility for the day-to-day implementation of
national programs, while EPA is to provide national environmental
leadership, develop general program requirements, establish standards
as required by legislation, assist states in preparing to assume
responsibility for program operations, and ensure some measure of
consistency nationwide in states' compliance with environmental
requirements. 

For this framework to function as EPA intended and for environmental
agencies at all levels to achieve their environmental goals, a
healthy working relationship between the states and EPA is necessary. 
However, the EPA/state partnership has been difficult to achieve, and
the relationship has often been characterized by fundamental
disagreements over roles, program emphases, and funding. 


   EPA RELIES HEAVILY ON STATES TO
   CARRY OUT ENVIRONMENTAL
   PROGRAMS
---------------------------------------------------------- Chapter 1:1

Major environmental laws--such the Resource Conservation and Recovery
Act (RCRA), the Safe Drinking Water Act (SDWA), and the Clean Water
Act--assigned to EPA the key functions involved in the delivery of
environmental programs, such as setting standards, issuing permits,
and ensuring that program goals are met.  However, these laws also
allow states to assume these responsibilities.  These early national
environmental laws were enacted with a strong federal focus because
public concern for the environment was widespread, the regulated
community demanded that requirements be implemented fairly and with
some degree of consistency across the states, and most state programs
were not broad ranging and integrated. 

As their capabilities grew, states gradually applied for and received
more responsibilities until, today, operational responsibilities for
most of EPA's major programs lie with the states.  For the most part,
EPA now depends on the states to implement the full range of
environmental responsibilities associated with these programs, such
as identifying the extent and sources of contamination, setting
standards to be used as a basis for developing limits on a facility's
discharges/emissions, translating these standards into
facility-specific discharge permits, and monitoring facilities'
compliance with the permits and taking appropriate enforcement
action.  Even when responsibilities for programs have not been
formally delegated, states often play a major role in day-to-day
program activities. 

EPA policy maintains that maximum delegation of national
environmental programs to the states is necessary to achieve the most
efficient use of federal and state resources.  In the first place,
EPA simply does not have the staff or the resources to implement the
broad array of environmental requirements on its own.  Secondly,
direct management of individual state programs by EPA undercuts the
agency's objective of having the states operate as the main
implementers of environmental protection laws. 


   EPA WILL LIKELY CONTINUE TO
   RELY ON STATES TO IMPLEMENT
   ENVIRONMENTAL LAWS
---------------------------------------------------------- Chapter 1:2

The pattern of delegating responsibilities to the states is likely to
continue, given the number of environmental statutes enacted in the
1980s that provide a key role for the states.  In fact, the Congress
expanded the states' role when it directly assigned major
responsibilities to the states in some recent environmental
legislation.  The Safe Drinking Water Act of 1986, for example,
requires states to establish programs to protect areas around
drinking water wells.  The act assigns this responsibility directly
to the states rather than providing for its delegation by EPA. 

Additional environmental responsibilities, however, have been
accompanied by growing financial pressures in many states.  More than
ever before, environmental protection must compete with other issues
(such as corrections, medical assistance, and education) for scarce
resources.  Furthermore, the federal government's relative
contribution to many states' environmental budgets has declined. 

Largely because of these financial pressures, a growing number of
states have expressed reluctance in recent years to assume additional
responsibilities for environmental programs.  This has been
particularly true when federal legislation has required states to
perform program activities--such as meeting new federal standards for
drinking water and wastewater--without providing federal funds to pay
for them.  Heightened concerns over these and other "unfunded
mandates" spawned a variety of proposals in the 103rd Congress to
discourage or even prohibit their enactment, and the passage of such
legislation continues to be a major focus of attention in the 104th
Congress. 


   PREVIOUS GAO REPORTS IDENTIFIED
   DIFFICULTIES
---------------------------------------------------------- Chapter 1:3

Despite the importance of a good EPA/state relationship, difficulties
have characterized the relationship over the years.  For example, in
1980 we reported on a survey of 267 state program managers in 50
states that assessed the states' perspective on their relationship
with EPA.\1

This report identified the major obstacles states said they faced
when implementing programs under five federal environmental laws--the
Clean Air Act; the Clean Water Act; the Federal Insecticide,
Fungicide, and Rodenticide Act; the Resource Conservation and
Recovery Act; and the Safe Drinking Water Act.  According to the
report, inflexible regulations and excessive EPA control over state
programs were two of the most frequently cited problems impeding
program management.  We recommended that EPA establish procedures to
ensure early state input into important decisions having an impact on
state implementation and that EPA establish joint state/federal
committees for each program to advise the Administrator on
implementation issues. 

Our 1988 general management review of EPA concluded that while EPA's
reliance on the states for program management was increasing, many
state concerns closely paralleled those we noted in our 1980
report.\2 In particular, states said they wanted the 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.  The report acknowledged that
EPA had been working to improve its relationship with the states but
concluded that additional efforts were needed to establish an
effective EPA/state partnership.  Among other things, the report
recommended basing the agency's evaluations of state programs on the
extent to which states obtain improvement in environmental quality. 


--------------------
\1 Federal-State Environmental Programs--The State Perspective
(GAO/CED-80-106, Aug.  22, 1980). 

\2 Environmental Protection Agency:  Protecting Human Health and the
Environment Through Improved Management (GAO/RCED-88-101, Aug.  16,
1988). 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:4

Citing concerns about whether environmental laws are being applied
consistently from one state to another, the Ranking Minority Member,
Senate Committee on Governmental Affairs, asked us to examine a
number of issues affecting the current EPA/state relationship.  As
agreed in subsequent discussions with the Ranking Minority Member's
office, we examined

  whether EPA and the states have had difficulty implementing federal
     environmental requirements,

  to the extent that they have had difficulty, why the difficulty has
     occurred, and

  how they can improve their ability to carry out the requirements. 

In particular, the Ranking Minority Member's office expressed
interest in whether there are inconsistencies in the management of
delegated environmental programs from one region to another and from
one state to another and how these inconsistencies may affect the
states' implementation of environmental programs and the overall
EPA/state relationship. 

As agreed with the Ranking Minority Member's office, we focused our
review on three programs--the National Pollutant Discharge
Elimination System (NPDES) of the Clean Water Act, subtitle C
(hazardous waste) of RCRA, and the Public Water Supply Supervision
Program of SDWA.  We performed our fieldwork at EPA headquarters in
Washington, D.C., and at EPA regional offices in Philadelphia (Region
III), Chicago (Region V), and Dallas (Region VI).  We also visited
state officials in Virginia, Indiana, and Texas.  We contacted
representatives of environmental and public interest groups, such as
the Environmental Law Institute and the Association of State Drinking
Water Administrators.  Finally, we contacted business and industry
groups, such as the Chemical Manufacturers Association and others. 

To address the first objective, we interviewed and obtained data from
officials responsible for the oversight of state programs in EPA
headquarters and regional offices.  Specifically, we reviewed EPA's
fiscal year 1994 performance evaluations of each state program in the
16 states located in the three regions covered by our analysis. 
Also, we reviewed pertinent EPA regulations, guidance, and other
relevant documents, as well as guidance for implementing the
pollution discharge, hazardous waste, and safe drinking water
programs.  We also discussed with EPA and state officials the extent
to which federal mandates have been accomplished.  Finally, we
reviewed prior GAO reports and EPA documents that evaluated the
states' ability to meet EPA program requirements. 

We addressed the second objective in two steps.  In step one, we
mailed questionnaires to the states to elicit information from them
on why environmental mandates may have been difficult to implement. 
To better determine the extent to which the EPA/state relationship
may have changed over time, we sought to make this step as comparable
as possible to our 1980 review of the EPA/state relationship.\3
Consequently, we used the same questionnaire as we used in 1980, and
we mailed questionnaires to the 44 managers of authorized state
programs in our 16-state sample.\4 One state program manager did not
return the questionnaire, so our total number of respondents in step
one was 43.  Although the samples from the two studies are different
and therefore not directly comparable, using the same instrument and
surveying only authorized state program managers enabled us to make
inferences about how the states' perspectives may have changed over
the past 13 years.\5

In step two, to follow up on the written responses from step one, we
conducted extensive telephone interviews with 47 of the 48 state
program managers in our sample.\6 We included state programs that
have not yet been authorized in step two because we determined that
these programs (1) were seeking authorization, (2) were already
performing many program tasks for EPA regional offices, and (3) could
comment on how EPA implements programs in unauthorized states.  We
also interviewed EPA officials and representatives of interest
groups, such as the Chemical Manufacturers Association and the
Association of State and Interstate Water Pollution Control
Administrators.  In so doing, we focused on the overall EPA/state
relationship and on the issues that precluded the most efficient and
effective use of federal and state resources. 

We reviewed the results of several analyses conducted by EPA, such as
The Costs of a Clean Environment and Strengthening Environmental
Management in the United States; previous GAO reports; and other
studies, such as State Costs of Implementing the 1986 Safe Drinking
Water Act Amendments, to obtain information on the financial and
program impacts of recent federal legislation on state programs.  In
addition, we considered the potential effects of several bills to
reauthorize the Clean Water Act and SDWA.  We also interviewed
industry and trade association representatives, as well as EPA
headquarters and regional officials, about this issue. 

To some extent, the answer to our third objective, how EPA and the
states can improve their ability to carry out their environmental
responsibilities, was derived from the data and information gathered
to respond to the previous two objectives.  However, we also sought
direct comment on this issue from state and EPA program managers, as
well as from the executive director of a state agency, EPA deputy
regional administrators, and the deputy directors of EPA program
offices.  In addition, national organizations, such as the
Association of State and Interstate Water Pollution Control
Administrators and the Association of State Drinking Water
Administrators, provided valuable insights. 

We conducted our work between February 1993 and February 1995 in
accordance with generally accepted government auditing standards. 


--------------------
\3 Federal-State Environmental Programs--The State Perspective
(GAO/CED-80-106, Aug.  22, 1980). 

\4 The 1980 survey included only authorized states.  Four states in
our 1993 sample--Louisiana, New Mexico, Oklahoma, and Texas--are not
authorized to implement the NPDES program; consequently, we did not
mail questionnaires to the managers of the NPDES programs in these
states. 

\5 The 1980 review covered 5 programs and 50 states. 

\6 Our review included 3 programs and 16 states, for a total of 48
program managers.  One program manager declined to be interviewed for
this review. 


STATES HAVE EXPERIENCED DIFFICULTY
IN IMPLEMENTING FEDERAL
ENVIRONMENTAL REQUIREMENTS
============================================================ Chapter 2

Despite decades of effort and the expenditure of billions of dollars
by both the federal and state governments, many important
environmental program requirements remain unmet.  In some cases,
states are less able to meet requirements now than in the past. 
Moreover, states have become increasingly reluctant to accept new
requirements, and EPA seems unable to step in when states falter. 


   STATES HAVE HAD TROUBLE MEETING
   MINIMUM REQUIREMENTS FOR
   ENVIRONMENTAL PROGRAMS
---------------------------------------------------------- Chapter 2:1

In recent years, each of the 16 states included in our evaluation has
had difficulty performing some high-priority tasks in the federal
environmental programs we reviewed.  For example, under the NPDES
program, significant backlogs of expired permits and permit
applications have accumulated in some of these states.  In addition,
sanitary surveys of drinking water systems--preventive activities
that many consider to be the backbone of their efforts to protect
drinking water under SDWA--have had to be curtailed in some states. 
States have also had difficulty implementing the portion of the RCRA
program that applies to boilers and industrial furnaces (high-profile
emitters of hazardous air pollutants).  State and federal officials
agree that not meeting these and other program goals can adversely
affect the environment and public health. 


      CLEAN WATER ACT'S NPDES
      PROGRAM
-------------------------------------------------------- Chapter 2:1.1

Under the Clean Water Act, the NPDES program limits the discharge of
pollutants into U.  S.  waters.  Under the program, permits establish
discharge limits for specific pollutants.  These limits may be based
on either (1) technology, reflecting a level of treatment that can be
achieved with a given technology, or (2) water quality, reflecting a
level of control needed to meet standards of quality for a particular
body of water.  The permits also require facility operators to submit
to their regulating agencies monitoring reports that list the types
and amounts of pollutants actually discharged at specified monitoring
points.  Forty states have primary responsibility for implementing
the program and therefore perform such functions as issuing permits
to facilities, monitoring compliance, and taking enforcement action
when necessary.  EPA implements the program in the remaining states. 

Our evaluations of the NPDES program over the past 12 years have
identified a consistent pattern of problems across a wide range of
program responsibilities.  In a 1983 report on the program, we
estimated that over 80 percent of the 531 major dischargers in six
states exceeded their permit discharge limits at least once during an
18-month period.\1

We reported a consistent result 8 years later in testimony before the
Subcommittee on Oversight of Government Management, Senate Committee
on Governmental Affairs, noting that 84 percent of the 583 major
dischargers in the Great Lakes basin exceeded their monthly average
limits at least once during the 18-month period from October 1989 to
March 1991.  More importantly, at the end of 1990, 19 percent of the
Great Lakes dischargers were in "significant noncompliance" with
permit conditions.\2 We concluded, among other things, that (1) NPDES
permits allowed significant discharges of some pollutants and (2)
enforcement against violators had been weak and sporadic. 

In preparing this report, we found that states are still having
difficulty meeting minimum NPDES requirements for important program
activities, such as monitoring water quality and issuing permits. 
For example, state and federal NPDES officials we interviewed said
that they consider issuing permits a critical feature of the NPDES
program's framework, noting that timely issuance helps encourage
economic development while simultaneously maintaining water quality
standards.  However, these officials said that issuing new permits
and renewing existing ones had been difficult.  We found that four of
the five states in Region III and four of the six states in Region V
had experienced such difficulties.\3 In Michigan, for instance,
officials said that 65 percent of the major facilities were operating
with expired permits while another 150 facilities were awaiting
permits. 


--------------------
\1 Wastewater Dischargers Are Not Complying With EPA Pollution
Control Permits (GAO/RCED-84-53, Dec.  2, 1983).  The estimates in
this report were based on a review of randomly selected major
dischargers in six states. 

\2 According to EPA criteria, a facility is in significant
noncompliance with discharge limits when it either exceeds its
monthly average permit limit (1) twice in any 6-month period by 40
percent for conventional pollutants or by 20 percent for toxic
pollutants or (2) four times in any amount in any 6-month period.  A
facility that fails to provide any monthly discharge report is also
classified by EPA as being in significant noncompliance. 

\3 Arkansas, the only authorized state in Region VI, did not report
any significant problems in issuing NPDES permits.  NPDES officials
in Minnesota declined our request for an interview to collect these
data. 


      SDWA'S DRINKING WATER
      PROGRAM
-------------------------------------------------------- Chapter 2:1.2

To protect the public from the risks of contaminated drinking water,
the Congress enacted SDWA in 1974.  This act requires EPA, among
other things, to establish (1) maximum contaminant levels or
treatment techniques for contaminants that could adversely affect
human health and (2) requirements for monitoring the quality of
drinking water supplies and ensuring the proper operation and
maintenance of public water systems.  All states but Wyoming have the
responsibility, or "primacy," for managing their drinking water
programs.  These states receive grants from EPA to help pay for the
oversight of water systems and for other program responsibilities. 

As we have reported frequently in the past, states have long had
difficulty implementing fundamental requirements of EPA's drinking
water program.\4 The problem was compounded dramatically, however,
with the enactment of the 1986 SDWA amendments, whose requirements
are estimated to have added about $2.5 billion in annual compliance
costs.  We noted in a 1993 report that some state programs might have
deteriorated to the point that they could no longer support a
credible drinking water program.\5 These programs had difficulty
taking enforcement action against systems in violation of drinking
water regulations, implementing new regulations, and performing
sanitary surveys. 

As a result of these and other problems, EPA has taken the highly
unusual step of initiating proceedings to withdraw primacy from
programs in eight states--Alaska, California, Colorado, Hawaii,
Kansas, Maine, South Dakota, and Washington.  As of December 1994, no
state programs had ultimately lost primacy, but the EPA actions
dramatically illustrated the difficulty many states have in
implementing even the most basic elements of an effective drinking
water program. 

Our interviews with state drinking water officials confirm that
states continue to experience problems meeting basic program
requirements.  Officials in 15 of 16 states we reviewed have either
curtailed or eliminated important activities, such as adopting key
EPA drinking water regulations and conducting vital monitoring
activities.  One key program element often cited as being curtailed
is the state sanitary survey program.  Sanitary surveys involve
periodic visits by state inspectors to water systems, during which
inspectors may test water quality, observe operator procedures,
and/or assess the condition of equipment.  State officials noted that
they have had to reduce these and other quality assurance activities
even though the activities are among the most effective and
cost-efficient tools that states can use to help ensure compliance
and correct problems before the problems become serious. 


--------------------
\4 See Drinking Water:  Compliance Problems Undermine EPA Program as
New Challenges Emerge (GAO/RCED-90-127, June 8, 1990); Environmental
Protection:  Meeting Public Expectations With Limited Resources
(GAO/RCED-91-97, June 18, 1991); and Drinking Water:  Widening Gap
Between Needs and Available Resources Threatens Vital EPA Program
(GAO/RCED-92-184, July 6, 1992). 

\5 Drinking Water Program:  States Face Increased Difficulties in
Meeting Basic Requirements (GAO/RCED-93-144, June 25, 1993). 


      RCRA'S HAZARDOUS WASTE
      PROGRAM
-------------------------------------------------------- Chapter 2:1.3

The RCRA hazardous waste, or subtitle C, program regulates the
generation, transportation, and management of hazardous waste.  The
"base" program includes standards for managing and tracking hazardous
waste from its generation to its ultimate disposal, as well as
issuing permits to regulated facilities and periodically inspecting
the facilities for compliance.  Significant additions to the RCRA
base program include (1) "corrective action," which involves the
oversight of facilities' efforts to monitor for and clean up releases
of hazardous waste into the environment and (2) the boilers and
industrial furnaces (BIF) rule, which regulates the burning of
hazardous waste.  Currently, 46 states are authorized to implement
the base program, while 19 are authorized for the corrective action
program.\6 As of October 1994, seven states had been authorized to
implement the BIF program. 

Just as states in our review have had problems meeting their
responsibilities under the pollution discharge and the drinking water
programs, so they have also had trouble meeting one or more RCRA
targets for issuing permits, inspecting facilities, and enforcing
compliance.  Overall, state RCRA managers report that their
respective staff are stretched too thinly to adequately implement
many important parts of the RCRA program.  For example, inspections
at RCRA facilities are a key means of ensuring facilities' compliance
and thereby preventing releases of hazardous waste into the
environment.  However, states from all three of the regions we
contacted reported that they had either been unable to complete or
had difficulty completing inspections in recent years.  For example,
the Louisiana RCRA program had difficulty meeting some of its fiscal
year 1994 inspection commitments; specifically, the state completed
only three of seven scheduled inspections at commercial disposal
sites.  Similarly, as of July 1994, Arkansas had completed 17 of 29
compliance monitoring inspections targeted for completion by midyear. 

We found that states are also having difficulty meeting the
established criteria for timely enforcement, even for high- priority
RCRA violations.  For example, Region V determined that Wisconsin has
17 high-priority violations that have not been addressed with a
formal enforcement action as required by EPA's Enforcement Response
Policy.\7 Sixteen of Wisconsin's violations are older than the
135-day limit set by this policy. 


--------------------
\6 Twenty-four other states have adopted corrective action
regulations but have not yet been formally delegated authority to
implement the program. 

\7 This policy includes guidance on classifying violations, selecting
the appropriate enforcement action, and taking federal enforcement
action in states with authorized programs.  The policy stresses the
importance of concentrating efforts on the most serious violations
and taking timely and aggressive enforcement actions. 


   STATES ARE INCREASINGLY
   UNWILLING OR UNABLE TO ACCEPT
   MORE PROGRAM RESPONSIBILITIES
---------------------------------------------------------- Chapter 2:2

Given their difficulties in implementing current requirements, many
states are reluctant to accept new program responsibilities.  For
example, drinking water program managers from 13 of the 16 states
that we contacted noted that if they were to implement any additional
requirements without increases in federal funding, they would have to
curtail key activities, such as sanitary surveys.  Thirteen of the 16
state RCRA program managers and 13 of the 15 state NPDES program
managers we interviewed also expressed concerns about being able to
meet new program requirements because of funding limits.\8
Specifically, drinking water managers in 12 of the 16 states we
contacted told us they were ill equipped to assume primacy for the
phase II/V drinking water regulations and/or the lead and copper
rule.\9 In addition, 9 of the 12 states we reviewed that have primacy
for the NPDES base program are reluctant to accept responsibility for
its new components or for the related stormwater, pretreatment, and
municipal sludge management programs. 

Many states have also been slow to adopt and implement RCRA's
corrective action program.  The corrective action program is EPA's
effort to require and oversee cleanup efforts at leaking hazardous
waste facilities.  Some states fear that, in addition to requiring
enormous resources, authorization for corrective action might lead to
fewer resources for preventive measures. 


--------------------
\8 One of the 16 state NPDES managers included in our sample declined
to be interviewed for this review. 

\9 The phase II/V drinking water regulations set standards for more
than 60 contaminants, including pesticides, volatile organic
compounds, and inorganic chemicals.  The lead and copper rule, among
other things, develops corrosion control treatment requirements to
minimize lead and copper deposits from plumbing materials, such as
lead pipes and solder. 


   EPA'S ABILITY TO IMPLEMENT
   PROGRAMS DIRECTLY IS LIMITED
---------------------------------------------------------- Chapter 2:3

Under the Clean Water Act, SDWA, and RCRA, EPA is required to take
over state programs, assuming responsibility for their day-to-day
program operations, if it determines that states are not meeting
statutory goals for issuing permits or taking enforcement actions. 
In addition, EPA is required by law to implement a program in states
that have never assumed responsibility for programs in the first
place.  In practice, however, EPA has not withdrawn primacy from any
state.  In addition, according to EPA officials, the agency would not
have been able to meet its own performance criteria in the states
where withdrawal of primacy seemed warranted. 


      EPA IS NOT PREPARED TO TAKE
      OVER PRIMACY FOR DEFICIENT
      STATE PROGRAMS
-------------------------------------------------------- Chapter 2:3.1

When EPA determines that a state's program has deteriorated to the
point that the state can no longer implement minimum program
requirements, EPA is required by law to take over the program,
although the agency states that it could still rely on state
personnel to carry out some of the work.  However, EPA officials in
the NPDES, SDWA, and RCRA programs in all three regions we visited
said that under such circumstances they would not have the resources
to implement more than a "bare bones" program. 

For example, state funding for the Indiana NPDES and RCRA programs
was significantly reduced during 1993.  Region V and Indiana
officials agreed that without additional state funding, Indiana would
have to return primacy to Region V.  Under these circumstances,
Region V officials said that federal implementation would concentrate
on enforcement and that a full-scale program for issuing permits or
providing technical assistance would not be possible.  In addition,
according to Region V NPDES and RCRA enforcement officials,
enforcement activities in other states would have to be decreased to
implement enforcement in Indiana.  Ultimately, Indiana did provide
the funding necessary to retain authorization for both programs. 

Likewise, the Office of Groundwater and Drinking Water's 1993
contingency plan for EPA's direct implementation of state drinking
water programs notes that EPA's program would be heavily weighted
toward enforcement and data management and would provide little or no
technical assistance for water systems.  EPA's plan places the full
burden of understanding and complying with program requirements on
water systems, noting that more direct EPA involvement in assisting
these systems would have to come at the expense of other critical
needs. 

EPA formulated the plan because it had started proceedings to
withdraw primacy from Washington State for failure to adopt the
surface water treatment rule and from Maine for not having adequate
resources to run the program.  Washington has since adopted the
surface water treatment rule and has retained authority for the
program.  Maine has recently approved a fee program, which, according
to an EPA Region I official, should provide the state with the
minimum number of staff necessary to implement the program and retain
the state's authorization status. 

Although the immediate problem involving each of these states has
been resolved, it is unclear whether EPA has the resources to follow
through with primacy withdrawal.  As we noted in a June 1993 report,
EPA readily acknowledged that it could not administer all key
elements of a drinking water program in more than a few small states. 
We concluded that, given EPA's own staffing problems, rescission of
primacy from only one or two small state programs would severely tax
the agency's resources.\10


--------------------
\10 Drinking Water Program:  States Face Increased Difficulties in
Meeting Basic Requirements (GAO/RCED-93-144; June 25, 1993), p.  9. 


      EPA'S ABILITY TO IMPLEMENT
      PROGRAMS IN NONDELEGATED
      STATES IS LIMITED
-------------------------------------------------------- Chapter 2:3.2

EPA also has limited ability to implement programs in states that
were never delegated primacy.  For example, because Arkansas is the
only state authorized to implement the NPDES program in Region VI,
EPA implements the program for all other states in the region. 
However, according to Region VI NPDES officials, Region VI does not
have adequate resources to, among other things, issue permits to all
facilities or renew expired permits in these states.  As a result,
more than 5,000 facilities are operating without permits or with
expired permits. 

Region VI NPDES officials face similar problems implementing the
NPDES sludge management program.  This program's regulations have
added about 2,000 facilities to the region's regulated universe. 
Region VI officials are particularly concerned about their ability to
adequately enforce the regulations, noting that the resources needed
to do so would inevitably be drawn from efforts to take enforcement
actions against violators of other NPDES regulations. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 2:4

States have long experienced problems in implementing their
environmental programs, but these problems have worsened in many
states as the programs have grown in cost and complexity.  In light
of these difficulties, states have become increasingly reluctant to
take on additional responsibilities, either for new programs or for
additional elements of existing ones.  This reluctance has profound
implications for the ability of EPA to fulfill its responsibilities
because the agency would need to divert its own limited staff and
funds to administer programs not conducted by the states themselves. 

These challenges will be difficult to overcome under the best of
circumstances but will be more difficult to achieve unless EPA and
the states each assume their share of the burden and work together
cooperatively.  As the next chapters demonstrate, however, doing so
requires addressing the problems underlying both the states' ability
to comply with environmental program requirements and the states'
relationship with EPA regulators. 


DIFFICULTIES IN RESOLVING SERIOUS
RESOURCE SHORTAGES ARE A PRIMARY
BARRIER TO AN IMPROVED EPA/STATE
RELATIONSHIP
============================================================ Chapter 3

While EPA has ultimate responsibility for overseeing the delivery of
national environmental programs, state and local governments are
expected to assume primary responsibility for the day-to-day
implementation of these programs.  However, many states are unable to
meet current targets for federal environmental programs and have
become increasingly reluctant to accept new responsibilities. 
Although a number of factors explain the difficulties that have
affected state environmental programs, the disparity between program
needs and available resources clearly lies at the heart of the
problem.  Moreover, this resource gap is likely to widen further as
new requirements take effect.  As resources have grown tighter for
EPA and the states, disagreements over program priorities and
approaches have become increasingly frequent. 

In recent years, EPA has tried to help states generate additional
program funds and to target these funds toward the most serious
environmental problems.  The agency has, however, met with only
limited success--although some programs have made greater strides in
this direction than others.  Ultimately, any effective solution to
the problem will require congressional attention, since environmental
statutory requirements are the central determinants of program costs. 


   RESOURCE SHORTAGES HAVE BECOME
   AN INCREASINGLY SERIOUS PROBLEM
   FOR STATE ENVIRONMENTAL
   PROGRAMS
---------------------------------------------------------- Chapter 3:1

The costs of implementing the growing number of environmental
requirements mandated by the Congress are overwhelming the budgets of
many state governments.  In 1990, EPA projected that, by the year
2000, state governments would have to spend an extra $1.2 billion
annually, or approximately 46 percent more than they did in 1986,
just to maintain present levels of environmental protection.\1
Similarly, pressures on EPA's budget have grown over the years as the
agency's responsibilities have increased. 

Overall, the EPA and state officials we contacted said that
insufficient funding is the primary problem impeding implementation
of federal environmental programs.  Moreover, a comparison of our
findings on this issue in 1980 and 1993 suggests that state
officials' concerns over resource shortages have increased sharply. 
Specifically, as figure 3.1 illustrates, 46 percent of the 267 state
managers who responded to our 1980 questionnaire said that an
inadequate level of federal funding adversely affected their programs
to a "great" or "very great" extent, while 86 percent of the 43 state
managers who responded to our 1993 questionnaire expressed this
view.\2

   Figure 3.1:  Changes in State
   Concerns About EPA Funding

   (See figure in printed
   edition.)

Note:  The 1980 data are based on our survey of 267 program managers
in 50 states, while the 1993 data are based on responses to our
questionnaire by 43 program managers in 16 states. 

There is substantial evidence of a gap between resource needs and
available resources in EPA's drinking water program.  For example, as
shown in figure 3.2, EPA estimated that the states needed $304
million in 1993 for the program, yet only $142 million was available
from state and federal sources, leaving a shortfall of approximately
$162 million.  Several reports recently issued by GAO and EPA
indicate that staffing and financial resource constraints are
seriously affecting the states' implementation of the program.\3

Indeed, as noted in chapter 2, as of December 1994, eight state
programs were so deficient that EPA had initiated formal action to
withdraw primacy.  According to EPA, a wide variety of deficiencies
were found in the states' programs, but a common thread was a lack of
adequate resources. 

   Figure 3.2:  Resource Gap for
   Drinking Water Program, Fiscal
   Year 1993

   (See figure in printed
   edition.)

Note:  States' funding needs total $304 million.  The federal share
of the available $142 million is $59 million (42 percent). 

Source:  GAO's presentation of data from EPA's 1993 study entitled
Technical and Economic Capacity of States and Public Water Systems to
Implement Drinking Water Regulations:  Report to Congress. 

A resource gap is also apparent in the NPDES program.  According to a
December 1993 EPA study on the costs to states of implementing the
Clean Water Act, state programs would need significant increases in
funding to implement the act's current requirements, particularly to
issue permits and enforce compliance to the extent required.\4 As
figure 3.3 shows, this report estimated that state programs would
need $387 million to fund current requirements in fiscal year 1995
but that they would receive approximately $233 million, leaving a
resource gap of $154 million.  The report also estimated that states
would continue to experience average annual funding shortfalls of
$166 million through fiscal year 2004. 

   Figure 3.3:  Resource Gap for
   NPDES Program, Fiscal Year 1995

   (See figure in printed
   edition.)

Note:  States' funding needs total $387 million. 

Source:  GAO's presentation of data from EPA's 1993 study entitled
State Program Costs for Implementing the Federal Clean Water Act. 

State NPDES officials we interviewed said that resource shortages
were having adverse effects on their programs.  For example, the
director of Wisconsin's Bureau of Wastewater Management said that in
fiscal year 1994, the state needed almost a 75-percent increase in
staff to run a credible program.  The director maintained that the
additional resources were needed to inspect high-priority facilities,
some of which are now inspected only once every 5 years, and to
provide technical assistance to small facilities.  Ohio officials
told us that they experienced a $4 million resource shortfall in
fiscal year 1994.  According to these state managers, the state's
ability to monitor water quality and issue permits suffered as a
result of the gap. 

EPA has not collected comprehensive data on the needs of state RCRA
programs and on the state and federal resources available to meet
these needs as it has for the drinking water and NPDES programs. 
However, we have previously reported evidence of a resource gap for
RCRA.  For example, we estimated shortfalls of $38 million and $28.5
million in the corrective action program for fiscal years 1992 and
1993, respectively.\5

State RCRA officials whom we contacted also said that resource
shortages were having negative effects on their programs.  For
example, Wisconsin officials said that although the state's fiscal
year 1994 RCRA budget was $2 million, the state needed approximately
$4.5 million to run a full base program.  As a result, these
officials said, many aspects of the RCRA base program were
underfunded.  Similarly, Illinois officials reported that their
fiscal year 1994 program was "grossly underfunded" and that the
corrective action program was particularly costly.  In fact,
according to these officials, some base program activities have had
to be curtailed in order to implement corrective action requirements. 


--------------------
\1 Environmental Investments:  The Cost of a Clean Environment, U.S. 
Environmental Protection Agency, EPA-230-11-90-084 (1990).  In this
document, all cost estimates are in 1986 dollars and the present
level of environmental program implementation is assumed to be the
level that existed in 1987.  These costs are annualized at 3 percent. 

\2 As we noted in ch.  1, the 1980 survey was based on five programs
and 50 states, while the 1993 survey was based on three programs and
16 states.  Yet despite these differences, we believe the results are
useful in inferring the extent to which the states' perspectives on
this issue may have changed during the past 13 years. 

\3 The following GAO reports indicate that staffing and financial
resource constraints are seriously affecting the implementation of
state drinking water programs:  Drinking Water:  Widening Gap Between
Needs and Available Resources Threatens Vital EPA Program,
(GAO/RCED-92-184, July 6, 1992); Drinking Water:  Key Quality
Assurance Program Is Flawed and Underfunded, (GAO/RCED-93-97, Apr. 
9, 1993); and Drinking Water:  Combination of Strategies Needed to
Bring Program Costs in Line With Resources, (GAO/T-RCED-94-152, Mar. 
14, 1994).  The following EPA documents have similar findings: 
Technical and Economic Capacity of States and Public Water Systems to
Implement Drinking Water Regulations:  Report to the Congress, EPA,
Office of Water (810-R-93-001, Sept.  1993) and Safe Drinking Water
Act Reauthorization Overview, EPA, Office of Water (Jan.  1994.)

\4 State Program Costs for Implementing the Federal Clean Water Act,
EPA, Office of Water (Dec.  6, 1993).  The costs that we cite from
this report are defined as those needed to fully implement the 1987
Clean Water Act requirements.  All costs in this report are presented
in constant fiscal year 1995 dollars. 

\5 Hazardous Waste:  Much Work Remains to Accelerate Facility
Cleanups, (GAO/RCED-93-15, Jan.  19, 1993). 


   GROWING COSTS AND PRESCRIPTIONS
   ON SPENDING LIMIT STATE
   PROGRAMS
---------------------------------------------------------- Chapter 3:2

In recent years, as environmental laws have grown in both scope and
complexity, states have been faced with a widening gap between the
costs of environmental protection and the resources available to pay
for them.  State and EPA officials agree that the states' capacity to
absorb these costs is limited. 

The problem has sometimes been compounded, however, by prescriptive
federal requirements that limit the ability of state program managers
to focus on the highest-priority problems within their programs.  EPA
and the states are also limited by law in their ability to allocate
funds across environmental programs to address states' most pressing
environmental problems. 


      FUNDING HAS NOT KEPT PACE
      WITH RESPONSIBILITIES AND
      COSTS
-------------------------------------------------------- Chapter 3:2.1

As we reported in June 1991, in environmental protection, as in other
areas, the federal government has been shifting to state and local
governments the authority and responsibility not only for
implementing but also for financing major programs.  New federal
standards for drinking water, solid waste disposal, and wastewater
treatment, among others, will require state and local governments to
find additional funds to finance needed improvements and to
administer and carry out programs.\6

State and trade association officials we contacted expressed growing
concern about the cumulative costs of what have become commonly
termed "unfunded federal mandates"--programs or requirements that are
imposed on states by the federal government but are not accompanied
by funding to implement them.  For example, the Association of State
and Interstate Water Pollution Control Administrators (ASIWPCA) has
estimated that, upon passage of the 1987 amendments to the Clean
Water Act, the states' workload to comply with the act more than
doubled while, at the same time, federal funding to states for
implementing the act decreased.  In total, ASIWPCA claims to have
documented more than $215 million in what the association considers
"unfunded mandates" in the 1987 bill alone.  According to ASIWPCA,
the most significant unmet needs and the mandates most frequently
cited by states include ambient monitoring and issuing permits for
minor point sources.\7

In elaborating on this concern, state program officials noted that
because federal funding has remained flat in recent years while
program requirements have increased, the state share of program costs
has increased dramatically.  For example, according to Arkansas NPDES
officials, the need to fund the implementation of new municipal
sludge requirements imposed by the 1987 Clean Water Act amendments,
together with the need to fund the implementation of current
requirements, caused Arkansas to increase its use of water fees
between fiscal year 1989 and fiscal year 1994 by about 237 percent. 


--------------------
\6 Environmental Protection:  Meeting Public Expectations With
Limited Resources, (GAO/RCED-91-97, June 18, 1991). 

\7 Ambient water quality monitoring refers to the monitoring of
surface waters for pollutants and specific chemicals that could
affect human health and aquatic life.  Point sources of pollution are
those that involve a single, specific point source, such as a
wastewater treatment facility or a factory. 


         RESOURCE SHORTAGES HAVE
         LED STATES TO DEFER
         PROGRAM ACTIVITIES
------------------------------------------------------ Chapter 3:2.1.1

We have reported recently on the effects of shifting the costs of
implementing federally mandated programs and requirements to the
states.  For example, in March 1994, we testified that states often
defer or eliminate important elements of their drinking water
programs in order to devote resources to developing and implementing
a growing list of regulations.\8 Many of the activities that have
suffered the most--such as technical assistance, operator training
and certification, and wellhead protection--have the greatest
potential to avert contamination and to reduce water systems'
long-term compliance costs. 

The results of our interviews with state program managers are
consistent with these findings.  Eighty-four percent of the state
officials we interviewed said that resource shortages significantly
hamper their ability to meet environmental program requirements.  For
example, 12 drinking water officials from 16 states noted that they
were spending more resources on developing new programs and
regulations, as required by the 1986 SDWA amendments, than on
conducting vital water system inspections (sanitary surveys) or
compliance reviews.  These managers expressed concern that, as a
result, compliance rates as well as water quality could be suffering. 
State managers in the NPDES and RCRA programs voiced similar
concerns.  EPA regional officials concurred that to the extent
additional unfunded requirements result in resource shortages for
states, they can have unfavorable consequences for state programs. 


--------------------
\8 Drinking Water:  Combination of Strategies Needed to Bring Program
Costs in Line With Resources (GAO/T-RCED-94-152, Mar.  14, 1994). 


         LEGISLATION HAS BEEN
         INTRODUCED TO HELP
         ADDRESS RESOURCE
         SHORTAGES
------------------------------------------------------ Chapter 3:2.1.2

States' frustration with unfunded mandates triggered the introduction
of several bills in the 103rd session of Congress, ranging from "no
money, no mandates" measures to more modest provisions that would
require the Congress to report the cost of its actions.  Although
none of these bills was enacted into law during the 103rd session,
passage of legislation on unfunded mandates continues to be a major
issue in the 104th Congress.  For example, S.  1 and H.R.  5,
introduced in January 1995, seek to end the imposition, in the
absence of full consideration by the Congress, of federal mandates
without adequate funding.  As of February 1995, Senate and House
conferees were meeting to finalize a compromise bill on unfunded
mandates. 

To help address state resource shortages, EPA proposed amendments
last year to environmental statutes being considered for
reauthorization.  Some of the proposed amendments were intended to
provide more flexibility to help states implement environmental
programs more cost-effectively.  For example, EPA proposed several
amendments to SDWA, including an amendment to allow states with
primacy to develop alternative monitoring and treatment approaches
for public water systems that have adopted "enhanced" programs for
protecting source water.\9 EPA has also suggested that similar
amendments be made to the Clean Water Act. 


--------------------
\9 Under EPA's proposal, at a minimum, all states would be required
to establish a baseline protection program that would include a
delineation of drinking water protection areas, inventories of
significant sources of contamination, vulnerability assessments,
contingency plans, and local involvement.  An optional enhanced
source water protection program would contain stronger, enforceable
prevention measures. 


      PRESCRIPTIVE FEDERAL
      REQUIREMENTS CAN LIMIT THE
      ABILITY OF STATES TO FOCUS
      ON THEIR HIGHEST PRIORITIES
-------------------------------------------------------- Chapter 3:2.2

One of the greatest concerns expressed by states is the impact of
resource shortages on their ability to address their own priorities
within programs.  According to state and trade association officials
we contacted, prescriptive federal laws and regulations frequently
exacerbate the resource shortage by limiting the funds available to
deal with unique state priorities.  This concern was raised by the
Governor of Nebraska while testifying in March 1994 on behalf of the
National Governors' Association before the Subcommittee on
Investigations and Oversight, House Committee on Science, Space, and
Technology.  The governor said that

     "[unfunded] mandates can actually weaken state environmental
     programs by diverting resources from higher priority matters. 
     They are often inefficient, requiring states and localities to
     implement procedures that are not the least costly method of
     accomplishing an objective."

Most of the state program officials we interviewed agreed:  72
percent noted that specific federal statutory and regulatory
requirements often force them to spend state money on mandated
federal activities that are less important to them than are state
priorities.  As state resource shortages grow, lack of flexibility
for states to set and fund their own program priorities is becoming a
more contentious issue in the EPA/state relationship. 

Several officials gave examples of how federal mandates limited their
flexibility in pursuing state priorities.  For example, about 75
percent of the state RCRA managers we interviewed said that they
would like to more frequently inspect facilities that generate
hazardous waste, especially facilities that are considered
"small-quantity generators" of this waste.\10 Officials from several
states said that at the few small-quantity generators that have been
inspected, illegal dumping and handling of hazardous waste has been
detected.  As a result, these officials said that focusing resources
on small-quantity generators could provide a higher environmental
payoff than allocating comparable amounts to implement the federal
RCRA requirement for annual inspections of major treatment, storage,
and disposal facilities.  However, according to these officials,
after federally mandated RCRA priorities are implemented, there is
little funding left to implement such state priorities. 

EPA officials defended the current federally mandated activities as
necessary to ensure adequate national protection but agreed that
small-quantity generators also need attention.  EPA officials added
that addressing concerns about small-quantity generators could become
a federal priority in the future, but new federal funding is unlikely
to become available for that purpose. 

Ninety-four percent of the state drinking water program officials we
interviewed indicated that mandatory implementation of new program
requirements within federally mandated time frames has caused fiscal
stress in their state programs and has caused some state programs to
discontinue or reduce activities they consider to be more
environmentally significant.  For example, to implement the lead and
copper and Phase II/V rules within specified time frames, program
officials from most of the states in our sample said they had to
reduce the number of sanitary surveys conducted.  Most of the state
drinking water program officials we contacted consider sanitary
surveys a high priority.  This is consistent with our past findings
showing that sanitary surveys and other quality assurance activities
are central to any effort to improve compliance and better protect
the public from contaminated drinking water. 

EPA headquarters and regional staff we contacted were generally
sympathetic to the states' perspective, noting that state resource
shortages are real and that EPA experiences many of the same
shortages.  EPA officials explained, however, that the specificity of
federal environmental laws often limits spending flexibility.  They
added that to ensure a base level of environmental protection
nationwide, the agency must require certain activities to be carried
out in each program in each state. 


--------------------
\10 Currently, EPA requires states to inspect major treatment,
storage, and disposal facilities annually.  Frequently, these
inspections are done at the expense of other work, such as
inspections of small-quantity generators. 


   EPA IS TAKING STEPS TO HELP
   ADDRESS STATE RESOURCE
   SHORTAGES
---------------------------------------------------------- Chapter 3:3

EPA has taken some steps to help address resource shortages at the
state level.  These steps include helping the states to make greater
use of alternative financing mechanisms, such as permit fees,
revolving loan funds, and public-private partnerships.  However, many
states that use these types of mechanisms are generating only a
fraction of the funds needed.  EPA has also examined ways to provide
states with greater flexibility to better target their resources, and
it proposed amendments during the reauthorization of several key
environmental statutes last year that would have brought program
responsibilities more in line with available resources.  However,
EPA's efforts to grant states additional flexibility have met with
mixed success, and none of the relevant environmental statutes was
reauthorized by the end of the 103rd Congress. 


      EPA IS ENCOURAGING GREATER
      USE OF ALTERNATIVE FINANCING
      MECHANISMS
-------------------------------------------------------- Chapter 3:3.1

As we reported in June 1991, EPA's alternative financing initiative
is designed to help state governments find sources of funds for
environmental programs besides general appropriations or federal
grants.\11 The agency has sought to encourage the use of alternative
financing mechanisms through its Environmental Finance Program, which
seeks to build and enhance the capacity of state and local
governments to implement environmental programs though several
activities.\12 For example, the program has led an effort to produce
a compendium on alternative financing mechanisms, played the lead
role in implementing the environmental finance component of EPA's
State Capacity Implementation Plan, and developed an electronic
multimedia environmental finance data base to provide state and local
officials with information and case studies on funding methods.\13

A 1989 study by the National Governors' Association found that
alternative financing mechanisms have been an important source of
revenue for state and local governments.  State officials we surveyed
also emphasized the growing importance of user fees in funding
program implementation--especially in light of limited state revenues
and stagnant federal grant funding.  However, both surveys showed
that these alternatives would not be sufficient to pay for
implementing current federal environmental requirements.  In
addition, the State Capacity Task Force reported in 1992 that some
states had expressed concern about a growing resistance to fee
programs among industry groups and the general public.  Because of
public resistance in Maryland, for example, the state legislature
recently defeated a proposal that would have increased NPDES user
fees at an annual cost of 30 cents per resident. 


--------------------
\11 Environmental Protection:  Meeting Public Expectations With
Limited Resources (GAO/RCED-91-97, June 18, 1991). 

\12 Environmental Finance Program staff work with members of the
Environmental Financial Advisory Board, an independent advisory
committee established under the Federal Advisory Committee Act.  The
Board has 33 members drawn from the public and private sectors. 
Board members represent federal, state, and local governments;
national environmental organizations and trade associations;
academia; banking and financial institutions; and businesses and
industries. 

\13 The State Capacity Implementation Plan is part of the State
Capacity Task Force, discussed in ch.  4. 


      EPA IS SEEKING WAYS TO GIVE
      STATES MORE ADMINISTRATIVE
      FLEXIBILITY
-------------------------------------------------------- Chapter 3:3.2

EPA has been exploring ways to help the states address their resource
shortages by providing them with additional administrative
flexibility.  For example, in June 1992, EPA issued guidance to set
short-term priorities for the drinking water program so that both EPA
and the states could focus their limited resources on the highest
priorities first while allowing the states time to build resources in
order to fully implement the program after a period of up to 5 years. 
This approach has helped some states in implementing program
responsibilities, but it has been of limited use to other states that
have been unable to accomplish even their highest-priority items
under the guidance.  EPA has acknowledged that this guidance is, at
best, only a partial solution to the underlying financial crisis
affecting the drinking water program. 

EPA has also tried to increase states' flexibility in using limited
resources through its RCRA operating guidance.  Beginning with the
fiscal year 1992 RCRA Implementation Plan, the agency initiated a
Strategic Management Framework for the RCRA hazardous waste program. 
This framework identifies priority themes for the RCRA program, and
it gives states the flexibility to determine which specific
activities are the most environmentally significant, as well as to
decide how to balance the various aspects of the RCRA program. 

EPA also plans to seek authority for fiscal year 1996 to fund several
demonstration projects in an attempt to learn more about how flexible
grants might help states better implement federal environmental
programs.  For example, North Dakota has proposed a multimedia block
grant project that would combine categorical grants from 10 federal
programs into a single block grant, which the state, within certain
limits, would be authorized to allocate according to its needs.\14
EPA believes this approach may enable states to better coordinate
programs as well as relieve some administrative burdens.  According
to EPA plans, block grant funds could be used only for costs incurred
by the state in the conduct of these 10 programs, and the state would
have to satisfy all substantive statutory and regulatory program
requirements for each program funded under the proposed block grant. 
EPA also plans to fund similar, but more narrowly based,
demonstration projects in Massachusetts and New Hampshire for fiscal
year 1996. 


--------------------
\14 The 10 programs are air pollution control, indoor radon, toxic
substances enforcement, water pollution control/groundwater, clean
lakes, underground injection control, hazardous waste management,
underground storage tanks, pollution prevention, and regional
multimedia programs. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 3:4

While EPA and the states have taken some constructive steps to deal
with the states' inability to meet the growing costs of environmental
programs, the problem will likely remain a major impediment to
environmental protection as well as an irritant in the EPA/state
relationship.  Our interviews with EPA and state program officials
show that the agency's efforts to encourage the use of alternative
financing mechanisms and to increase administrative flexibility have
met with limited success.  Consequently, it may be up to the Congress
to address this issue, since the programs' costs and the states'
inability to take advantage of the programs' greater flexibility are
predominately a function of requirements contained in environmental
legislation.  The 103rd Congress's strong interest in the costs of
environmental programs, reflected in the debates on reauthorizing the
Clean Water Act, SDWA, and other environmental statutes, continue to
be a major focus of attention during the 104th Congress. 


OTHER KEY FACTORS IMPAIR STATES'
PERFORMANCE AND THE EPA/STATE
RELATIONSHIP
============================================================ Chapter 4

As noted in chapters 2 and 3, EPA and state program managers
indicated that resource constraints are a major limitation in
implementing federal environmental programs.  A number of other
factors, however, have also complicated the EPA/state relationship
and made program management more difficult.  These factors include
(1) concerns over the appropriate balance between consistency and
flexibility in EPA's oversight of state programs, (2) the perception
that EPA micromanages state programs, (3) the need for more technical
support from EPA to implement increasingly complex state program
requirements, and (4) problems in communication between EPA and the
states. 

Over the years, EPA has tried to resolve concerns about its
relationship with the states through task forces, formal policy
statements, and program-specific efforts.  Although progress has been
achieved in some areas, many of the issues identified as impeding the
EPA/state relationship in the past continue to be of concern today. 


   STATES ARE CONCERNED ABOUT
   INCONSISTENCY IN EPA'S
   OVERSIGHT
---------------------------------------------------------- Chapter 4:1

One frequently cited concern--specifically identified by the Ranking
Minority Member, Senate Committee on Governmental Affairs, in
requesting this review--is that disparities and inequities may exist
in the way different EPA regions oversee the states within their
jurisdiction or in the way a single region oversees the states within
its jurisdiction.  Those expressing this concern believe that
disparate treatment has led to inconsistencies in the way states set
standards, write permits, take enforcement actions, and perform other
key functions.  It has been argued that such inconsistencies may
offer unfair economic advantages to some businesses and industries
and may contribute to the belief held by some states that they have
been singled out by EPA for unfair treatment. 

Although we found many examples of what may be inconsistent
oversight, it is difficult to determine the extent to which it is
unfair or has negative consequences.  Specifically, we found (1) some
inconsistency that merely reflects the differences authorized by laws
that allow EPA regions and states to tailor national requirements to
local priorities and (2) some inconsistency that may be unwarranted
and counterproductive.  We also found a strong perception among state
officials that such disparate treatment by EPA regions is
commonplace.  EPA officials acknowledge that the states believe such
disparities are widespread and that the agency does not know whether
such perceptions are well founded. 


      THE APPROPRIATE LEVEL OF
      OVERSIGHT MAY VARY
-------------------------------------------------------- Chapter 4:1.1

The enactment of national drinking water, water quality, and
hazardous waste standards grew partly from a congressional
determination that states varied greatly in their attention to
environmental protection.  Federal environmental protection programs
were, in part, supposed to ensure that industries and states had a
level playing field and that at least a minimum level of
environmental protection was afforded from state to state.  Given the
existence of national standards and of requirements for states to
meet them, it followed that EPA should ensure that the standards were
implemented consistently from state to state and that the states
should be treated consistently by EPA. 

To help achieve national consistency, EPA provides regions and states
with general policy direction as well as specific program criteria. 
For example, before authorizing states to administer a program, EPA
requires them to have sufficient statutory authority and enforcement
capability.  EPA also requires states to follow its policy for taking
timely and appropriate enforcement actions against violators. 
Similarly, EPA has procedures that all states must follow in
reporting data.  In addition, EPA managers at the headquarters and
regional levels told us that they maintain frequent contact with the
states, in large part to ensure consistent program implementation. 

In some cases, however, differences in EPA's oversight and in states'
implementation are authorized by statute and are used by regional and
state managers to address state-specific problems, such as budgetary
constraints.  State and EPA officials also noted that rather than
treating all states in exactly the same fashion, an EPA region may do
better to focus greater oversight resources in a state that is
performing poorly while spending fewer resources in states with
stronger compliance histories. 


      INCONSISTENCY IN EPA'S
      TREATMENT OF STATES IS
      SOMETIMES WARRANTED
-------------------------------------------------------- Chapter 4:1.2

Many state officials and several EPA officials whom we interviewed
agreed that some variation between EPA regions, and between states
within regions, is needed so that the regions and states can tailor
national program requirements to individual local circumstances. 
Factors cited included a state's geography, industrial profile, or
ability to run a program.  EPA's drinking water program illustrates
this point.  For example, a state can, under certain conditions,
waive expensive monitoring requirements for a water system if the
state determines that the contaminant in question will not pose a
threat to the system's water supply.  Wisconsin drinking water
officials reported savings of about $19.8 million from waiving
requirements to monitor for synthetic and volatile organic
compounds.\1

The RCRA program also allows a measure of variation to better meet
individual regional and state priorities.  Under this program,
regions and states can set their own compliance monitoring and
enforcement activity levels on the basis of criteria and guidelines
established in EPA's annual RCRA Implementation Plan.  While the plan
lists national consistency as a governing principle, it also calls
for states to address facility-specific environmental priorities. 


--------------------
\1 These savings represent monitoring costs avoided from 1993 through
1995, not annual savings. 


      INCONSISTENCY CAN BE
      COUNTERPRODUCTIVE
-------------------------------------------------------- Chapter 4:1.3

Even though RCRA, SDWA, and the Clean Water Act allow inconsistency
under certain circumstances, in some cases it may be
counterproductive and may have detrimental effects on the EPA/state
relationship.  In our past and current work, we found that such
problems can develop when regions (1) choose to deviate from formal
national policies or regulations, (2) are unsure of program
requirements, or (3) implement new program policies at widely varying
rates. 

We reported in our 1990 evaluation of EPA's drinking water program
that, contrary to the agency's regulations, EPA's Region X office
(Seattle) did not require its states to comply with certain reporting
requirements.\2 Also contrary to EPA requirements, Region X allowed
states to monitor for turbidity only 20 days per month, when the
regulations required daily monitoring.\3 We concluded that Region X's
approach undermined the integrity of the drinking water program.  EPA
agreed with our conclusion and took steps to better ensure compliance
with national monitoring requirements. 

Similarly, we reported inconsistencies in EPA regional offices'
penalty assessment practices that resulted in the collection of
insufficient penalties.\4 EPA requires regional enforcement officials
to assess penalties that are at least as great as the amount by which
a company would benefit by not complying with the law.  According to
this policy, the final assessed penalty should include this minimum
penalty--an economic benefit component--as well as a gravity
component determined by the seriousness of the violation.  We found,
however, that some regional and state officials chose to deemphasize
penalties in favor of negotiating with violators to obtain
compliance.  Such practices come at the expense of recovering
penalties reflecting the economic benefit to violators.  To hold
regions more accountable for their penalty assessment practices, we
recommended that EPA require regions to include information, such as
the economic benefit and the gravity component, in the Office of
Enforcement's existing penalty-reporting information system.\5

In a May 1991 report on RCRA's corrective action program, we
concluded that EPA's lack of a prioritization system created
inconsistencies in regions' approaches to undertaking cleanups.\6
Because EPA did not develop national criteria or a method for ranking
facilities by the seriousness of their problem, there was
inconsistency in the way regions ranked facilities, in the criteria
they chose for determining environmental threat, and in the weights
they assigned to these criteria.  As a result, the agency lacked
assurance that the most serious problems would receive the highest
priority.  In response to our report, EPA established a process for
ranking facilities, known as the National Corrective Action Priority
Ranking System, which ranks facilities so that those posing the
greatest environmental threat are cleaned up first. 

According to some state and association officials interviewed,
inconsistencies occur because some EPA regional offices are more
aggressive than others in implementing the agency's policies.  For
example, in the NPDES program, some state officials said that EPA's
National Metals Policy was implemented unevenly across regions.\7
According to these officials, the metals policies were very
controversial because some states argued that they were based on
outdated science and resulted in standards for metals that were too
strict.  These officials said that some regions--such as Regions III
and V--were more aggressive and pushed states to meet the
requirements almost immediately.  Anticipating that the standards
would be controversial, other regions--such as Region VI--took a "go
slow" approach to implementing the policies, according to these
officials.  When states in Regions III and V tried to include the new
standards in permits, numerous industrial facilities appealed. 
According to an EPA official from the Permits Division of the Office
of Water Quality, EPA made revisions to the metals policy on October
1, 1993.  This official said that if all states followed the revised
policy, many inconsistencies between states would disappear. 


--------------------
\2 Drinking Water:  Compliance Problems Undermine EPA Program as New
Challenges Emerge (GAO/RCED-90-127, June 8, 1990). 

\3 High levels of turbidity, which is a "cloudiness" in water caused
by minute suspended particles, may reduce the efficiency of
disinfection treatment and mask the presence of microbiological
contaminants.  Turbidity requirements apply only to water systems
that obtain their water from surface sources. 

\4 Environmental Enforcement:  Penalties May Not Recover Economic
Benefits Gained by Violators (GAO/RCED-91-166, June 17, 1991). 

\5 EPA does not intend to act on this recommendation because the
agency believes that it would require the collection of large amounts
of data and the development of a data base that would be compatible
in all states. 

\6 Hazardous Waste:  Limited Progress in Closing and Cleaning Up
Contaminated Facilities (GAO/RCED-91-79, May 13, 1991). 

\7 EPA's toxic metals policies include provisions for identifying and
cleaning up impaired waters and implementing other key toxic
pollution control requirements, including the adoption of numeric
toxic discharge limits. 


      INCONSISTENCY CAN BE
      PERCEIVED AS WELL AS REAL
-------------------------------------------------------- Chapter 4:1.4

Seventy-two percent of the program managers we interviewed perceived
that EPA's regional offices treat the states inconsistently and said
that this practice raises questions of fairness or causes other
problems.  Of the state managers who believed that inconsistencies
had occurred, almost all could describe, or had at least heard of,
disparities between regions.  However, some state managers conceded
that they lacked complete information about how the programs are
implemented in other states.  These managers acknowledged that if
such information were available, they might be better able to
understand the reasons for the variation and perhaps feel less
"singled out" by EPA. 

Our examination of this issue indicates that misunderstandings can
lead state program managers to believe that EPA regional offices
unjustifiably give individual states disparate treatment.  For
example, one state manager we interviewed believed that California
was inappropriately given an extension to require public water
systems to begin monitoring for lead and copper under SDWA.  Another
state manager believed the same to be true for Texas.  According to
EPA regional drinking water officials, however, no such extensions
were given. 


      EPA IS TRYING TO FIND A
      BALANCE BETWEEN FLEXIBILITY
      AND CONSISTENCY
-------------------------------------------------------- Chapter 4:1.5

Our interviews with state and EPA program managers suggest that, in
responding to states' concerns over perceived inconsistencies in
EPA's application of federal environmental requirements, EPA needs to
determine whether an "inconsistency" (1) is merely the appropriate
exercise of flexibility, (2) is inappropriate and raises genuine
questions of fairness, or (3) is less a reality than a perception
arising from miscommunication or lack of information.  By attending
to the latter two concerns, EPA could both improve environmental
performance and address a significant irritant to the EPA/state
relationship. 

In some cases, EPA has demonstrated sensitivity to the need for
striking a balance between flexibility and national consistency.  For
example, the RCRA Implementation Plan, developed with state input,
tries to define national program goals and establish realistic
priorities for these goals.  The program's Beginning of Year Plan,
also developed with state input, sets program activity targets that
reflect both national and state-specific goals. 

EPA's newly created Office of Enforcement and Compliance Assurance
(OECA) has also begun to examine this question.\8

OECA officials have acknowledged that they are trying to determine
the conditions under which consistency should be emphasized over
state autonomy.  They pointed out, for example, that while much of
EPA's guidance is designed to achieve consistency, the agency has
moved in recent years toward giving states greater autonomy. 

Still, the OECA officials believe that EPA headquarters and regions
may need formal mechanisms (such as memorandums of agreement between
regions and states) to clarify how regions are to balance the desire
for more flexibility to respond effectively to local circumstances
with the need for consistency to achieve national expectations and
goals.  By openly recognizing the problem and systematically trying
to deal with it EPA could help address this difficult and sensitive
issue. 


--------------------
\8 In 1994, EPA reorganized its enforcement functions, centralizing
them in OECA. 


   STATES PERCEIVE EPA'S OVERSIGHT
   AS EXCESSIVE
---------------------------------------------------------- Chapter 4:2

The states' perception that EPA "micromanages" state programs is
another long-standing issue in the EPA/state relationship, although
about one-third of the state officials we interviewed expressed a
belief that EPA's performance had improved in this area.  For this
review, we defined micromanagement as excessive control of state
programs by EPA regional offices.  Although EPA's policy on the
agency's partnership with the states emphasizes mutual respect and
trust, as well as sufficient flexibility to accommodate differing
federal and state needs, many state managers continue to believe that
the association more closely resembles a parent/child relationship
than a true "partnership."


      PERCEPTIONS OF
      MICROMANAGEMENT HAVE
      DECLINED SOMEWHAT
-------------------------------------------------------- Chapter 4:2.1

About 32 percent of the state program managers interviewed described
improved relationships with their EPA regional counterparts.  For
example, Illinois RCRA officials noted some site-specific
disagreements but generally believe their relationship with Region V
is at an all-time high, with a good balance between constructive
oversight and flexibility. 

In response to states' concerns about micromanagement, EPA has
modified its oversight of some programs.  For example, Illinois RCRA
managers characterized as "highly promising" a joint state/Region V
effort to revamp the way oversight is conducted, including redefining
the term itself, developing criteria to assess states' performance,
and initiating a pilot program to allow states to evaluate their own
performance.  Four of the five state RCRA managers in Region V were
encouraged by this joint effort, saying that they consider it a good
effort on the part of the region to improve its oversight of the
states.  In the RCRA Corrective Action program, EPA has adopted a
tiered oversight approach.  Under this concept, EPA is tailoring its
oversight to meet the needs of specific facilities, acknowledging the
need to vary the level of oversight to better allocate the agency's
limited resources.  According to agency guidance, the level of
oversight should depend on the extent to which a facility poses a
risk to human health or the environment.  Facilities having the
greatest risk are to receive the closest oversight. 

EPA is also considering similar modifications to its NPDES and SDWA
programs.  For example, the Region V NPDES Quality Action Team
recently recommended that the region review only high-priority NPDES
permits and that even these reviews be limited.  The Region V NPDES
Quality Action Team recommended reducing the number of NPDES permit
reviews so that the region could devote more resources to, among
other things, limiting the redundancy between the states and EPA,
focusing reviews on established high priorities, and allowing EPA to
become a more proactive member of the state/EPA permitting team. 

According to EPA drinking water officials, the agency plans later
this year to announce an initiative designed to, among other things,
base program priorities on risk and to focus more on providing
technical assistance and building the capacity of small water
systems.  One of the hallmarks of this initiative is its stated goal
of "extensive consultation with stakeholders," that is, with states
and water suppliers, in developing ways to achieve these objectives. 


      MICROMANAGEMENT IS STILL A
      CONCERN
-------------------------------------------------------- Chapter 4:2.2

While EPA has made some progress in allaying states' concerns about
its micromanagement, the results of the questionnaire we mailed to
authorized state program managers were consistent on this issue with
the results of past surveys that identified the issue as a state
concern.  In responding to our 1980 survey, for example, 60 percent
of the program managers said that excessive EPA controls were a major
obstacle to effective program management.  In responding to our
recent study, 63 percent of the program managers found the level of
control that EPA exerts over the states a significant barrier to
effective program implementation. 

Almost all of the state officials we interviewed who found
micromanagement a problem said that, despite the states' growing
abilities to administer environmental programs, EPA routinely tries
to second-guess state decisions and dictate program activities. 
These state officials explained that this lack of confidence in the
states' abilities has gradually eroded the EPA/state relationship. 
For example, in 1991 EPA required Illinois to conduct extensive
thermal studies of the upper Illinois River and the Des Plaines River
systems and impose restrictions on the use of bromine products in the
Commonwealth Edison's NPDES permit.  EPA required these steps even
though the state's monitoring data did not indicate a problem needing
immediate attention and the state's 1991 program plan did not call
for such efforts.  Illinois officials viewed EPA's actions as an
unwarranted intrusion into the state's program.  EPA officials
maintained that their analysis had determined that the combined
effect of the thermal discharges from the Edison generating stations
had resulted in violations of Illinois water quality standards for
temperature and that the state's response was not protective enough. 

Similarly, drinking water officials in Wisconsin expressed
frustration with what they consider an inflexible EPA requirement
that they monitor for radionuclides, even though their monitoring
data show that these elements do not exist in Wisconsin drinking
water.\9 According to the state officials, the resources spent on
monitoring for these elements could better have been spent on
preventive activities, such as sanitary surveys and wellhead
protection programs.  EPA drinking water officials stated that even
if radionuclides have not been detected in Wisconsin's (or in any
state's) drinking water, EPA regulations do not allow waivers from
radionuclide monitoring.  As a result, the regions must ensure that
states monitor, regardless of the conditions indicated by the states'
monitoring data.  According to drinking water officials, in 1994 the
agency proposed radionuclide regulations that would allow states to
issue monitoring waivers (as they can now for other contaminants). 
As of December 1994, the proposal was still under consideration. 


--------------------
\9 Radionuclides include radium 226 and radium 228, beta particles
and photons, uranium, gross alpha particle activity, and radon. 
Adverse health effects from exposure to radionuclides include bone
and lung cancer, leukemia, and kidney damage. 


      STATES AND EPA AGREE THAT
      OVERSIGHT SHOULD BE MORE
      CONSTRUCTIVE
-------------------------------------------------------- Chapter 4:2.3

Seventy-two percent of the state officials who responded to our
questionnaire said that philosophical differences between them and
EPA were major impediments to program implementation.  Many state
officials agreed that such philosophical differences often affect
their respective views of program priorities and thus help determine
the extent to which states believe they are being "micromanaged." For
example, 88 percent of the state drinking water officials we
interviewed said that they prefer to rely on technical assistance and
preventive efforts, such as operator training and sanitary surveys,
to keep water systems in compliance with program requirements. 
Several of these officials, however, noted that EPA's drinking water
priorities differed significantly, focusing more on developing new
regulations and pressing formal enforcement actions.  States are more
likely to believe that they are being micromanaged when they are
required to implement a program in accordance with program priorities
that differ significantly from their own. 

Despite their opposing philosophical orientations, EPA and state
officials agreed that EPA should be more constructive in its
oversight, focusing on providing technical assistance, clarifying
regulations, and performing the science necessary to support states'
regulatory efforts.  They further agreed that EPA should focus on
achieving environmental results without prescribing in detail how
these results are to be achieved.  EPA's Joint Policy Statement,
signed by the Administrator in July 1994, acknowledges these views. 
This statement identifies roles for EPA in carrying out its statutory
mission, including "constructive program review, research,
collection/analysis/sharing of information, and technical
assistance." The statement also points out that among the "governing
principles" for achieving an effective EPA/state relationship is a
reliance on "result-based performance measures."


   STATES FIND THAT EPA'S
   TECHNICAL SUPPORT DOES NOT MEET
   THEIR NEEDS
---------------------------------------------------------- Chapter 4:3

According to EPA, providing technical assistance to the states is a
priority and an essential element of the EPA/state relationship. 
However, we found that the agency is sometimes hard pressed to follow
through on its commitments in this area and that, as a result, some
state programs are seriously disadvantaged.  Responses to the
questionnaire we mailed to state program managers showed, for
example, that about 53 percent of the RCRA managers, 69 percent of
the drinking water managers, and 58 percent of the NPDES managers
identified the time it takes EPA to answer technical questions as
adversely affecting their programs "to a great extent" or "to a very
great extent." State officials frequently cited the development of
measurable environmental indicators as an area where technical
assistance is needed but where EPA's progress has been limited.  The
officials also cited more program-specific areas where greater
technical assistance from EPA would help them meet program
requirements. 


      ENVIRONMENTAL INDICATORS
      MIGHT IMPROVE PROGRAM
      MANAGEMENT
-------------------------------------------------------- Chapter 4:3.1

Environmental indicators are direct measures of the health of the
environment, such as the numbers and health of specific, key flora
and fauna in an ecosystem.  Theoretically, these indicators can show
the condition of the environment at a given point in time--a
"snapshot" of environmental quality.  And when measured over time,
they may be able to show trends in the condition of the environment,
thus enabling EPA and the states to (1) pinpoint polluted areas or
areas at risk from pollution so that efforts can be made to identify
and control the source(s) of the pollution and (2) assess the
effectiveness of current and previous program actions.  Given the
increasing costs of, and static budgets for, environmental protection
documented in chapter 3, EPA and state environmental officials agree
that developing environmental indicators represents a way to help
agencies target scarce resources to achieve maximum benefits. 

Historically, however, EPA has relied predominantly on its Strategic
Targeted Activities for Results System (STARS) to manage and oversee
programs.  STARS tracks specific program activities to measure
program performance.  For example, it tracks the numbers and types of
inspections, permits, enforcement actions, and similar activities as
measures of states' performance. 

EPA and state officials acknowledge that such indicators are not as
useful as environmental indicators could be but recognize that
scientific and technical issues must be overcome before indicators
that really measure environmental conditions and trends can be widely
used.  According to EPA officials, the agency is now attempting to
incorporate interim measures (e.g., the number of people in a state
exposed to drinking water that does not meet applicable standards) in
addition to STARS. 

EPA also recently initiated its National Environmental Goals Project
in hopes that it will produce a set of measurable environmental goals
that can be used for planning, communicating, and evaluating the
nation's progress in environmental protection.  The agency would like
these goals to define the desired outcomes of environmental programs,
which EPA expects will heighten attention to results.  Consequently,
EPA believes that the goals could lead to additional flexibility for
the states in determining how the outcomes should be achieved.  The
project has developed a preliminary list of broad environmental goal
areas for which measurable goals need to be set.  EPA held public
meetings across the country during 1994 to discuss the draft goal
areas and obtain public input. 

Some progress has also been made in developing environmental
indicators for specific geographic areas, such as the Chesapeake Bay
Project and the Great Lakes Initiative.  In these areas,
environmental indicators have been effective in locating specific
areas at risk from pollution and in helping EPA and the states
identify actual sources of pollution.  In addition, EPA and ASIWPCA
are currently sponsoring an environmental indicators pilot project. 
State and EPA officials agree, however, that developing and using
environmental indicators for an entire program or region will be an
ambitious challenge. 


      TECHNICAL SUPPORT FOR
      SPECIFIC PROGRAMS IS ALSO
      NEEDED
-------------------------------------------------------- Chapter 4:3.2

State program managers in each of the three programs we reviewed also
noted problems developing defensible standards, preparing and
enforcing permit limitations, and performing other activities
essential to managing their programs.  For example, states have
asserted that they need defensible water quality "criteria" from EPA
for their water quality programs.  These criteria, which identify the
effects of various concentrations of pollutants on human health or
aquatic life, are used by state regulators in developing water
quality standards--allowable pollution limits in state waters.  Water
quality standards, in turn, are used by state permit writers to set
discharge limits for individual facilities.  Without adequate
criteria for states to use in developing scientifically based water
quality standards, permit discharge limits may be overprotective (and
thus unnecessarily expensive) or underprotective (and thus
insufficiently protective of public health and environment). 

As of September 1994, however, EPA had published criteria for the
full range of possible effects on human health and aquatic life for
only 9 of 126 "priority pollutants." Moreover, nearly all of these
criteria were developed in the early and mid-1980s, and few have been
updated to reflect new scientific information.  All but 1 of 72 human
health criteria have been in effect since their formal publication in
November 1980.  EPA officials conceded that new scientific findings
may justify changes to many of its published criteria.  At least one
state has been reluctant to adopt EPA's outdated criteria as a basis
for its water quality standards. 


   DESPITE IMPROVEMENTS,
   COMMUNICATION PROBLEMS PERSIST
   BETWEEN EPA AND THE STATES
---------------------------------------------------------- Chapter 4:4

Many of the EPA and state officials we contacted for our review said
that communications are better today than in the recent past.  For
example, federal and state managers in the three EPA programs in this
review now hold regular meetings and conference calls to stay abreast
of technical and management developments.  In Region V, federal and
state NPDES officials meet at least once or twice per quarter. 
Similarly, while Region V drinking water managers meet only twice per
year, they have regular 2-hour conference calls.  These efforts have
enabled Region V staff to remain knowledgeable about state programs
and to respond to common regionwide problems.  Federal and state
officials noted that frequent informal telephone contacts, especially
on technical issues, have also improved communications. 

Some state officials we contacted also said that EPA is attempting to
involve states in the management process more often now than in the
past.  For example, Ohio NPDES and Region V staff collaborated on the
Ohio Stream Regionalization Project, a successful effort to map the
state by ecological regions and sample water quality, fish, and
invertebrates within each region.  Ohio's water quality standards are
based, in part, on the project's final report.  According to EPA
drinking water officials, the agency has been involving the states in
program/policy decisions for at least 5 years through State/EPA Early
Involvement meetings.  In these meetings, EPA attempts to bring
together state and regional representatives for 1 or 2 days of
meetings to discuss program issues.  These sessions have covered the
implementation of specific rules, the design of data management
systems, enforcement strategies, and state grant allocations, among
other things. 

Despite these improvements, however, state program managers in all
three regions agreed that communication could be further improved if
EPA would hold meaningful, substantive consultations with them before
making major decisions.  Of the 47 program managers interviewed for
this review, 83 percent indicated that EPA needs to do a better job
of routinely consulting the states on key issues, such as new
regulations or program policies, that affect them directly. 
According to these officials, EPA's consultations are too often
perfunctory, leaving them feeling somewhat alienated and "out of the
loop."

Several state RCRA officials indicated, for example, that they had
not been consulted on EPA's Combustion Policy, announced in early
1993.  Officials in Texas and Louisiana--two of the states most
directly affected by the policy because they have most of the
regulated facilities--said that they had found out about the new
policy from press releases.  EPA RCRA officials responded to these
criticisms by noting that the agency has recently taken steps to
increase the states' participation in decision-making.  For example,
states have had major roles in the development of the new Hazardous
Waste Identification Rule, which will address EPA's criteria for
listing hazardous waste under RCRA. 

The EPA/State Capacity Task Force's 1993 report noted that EPA and
the states should communicate more extensively and facilitate
technology transfer by documenting and publishing information on
innovative approaches to building states' capabilities.  The task
force also found that communication links between the states and EPA
are inadequate for effective grants administration.  To address these
concerns, the task force made several specific recommendations that
the agency is currently considering. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 4:5

In addition to the program cost and funding issues discussed in the
previous chapter, several other key factors, which we identified
through our interviews with 47 state environmental program managers
and other state and EPA officials, affect states' ability to
implement environmental laws and impair the EPA/state relationship. 
These factors include (1) perceived inconsistencies in EPA's
oversight of state programs, (2) perceived micromanagement of state
programs by EPA, (3) insufficient technical support from EPA for
increasingly complex state program requirements, and (4) inadequate
communication between EPA and the states. 

Progress has been made in addressing at least some of these issues. 
In particular, about 32 percent of the state officials noted some
reduction in the extent to which EPA regions are viewed as exercising
excessive control over their programs.  Similarly, many EPA and state
officials we contacted said that communications are better today than
in past years.  Nonetheless, the state responses suggest that
although perceptions on some issues are growing more positive,
significant challenges and problems remain:  63 percent of the state
program managers still found the level of control EPA exerts over
state programs a significant barrier to effective program
implementation, and 83 percent indicated that EPA needs to further
improve communication by consulting them more effectively before
making key decisions that affect them directly. 

As discussed in the following chapter, many of the issues still
impairing the EPA/state relationship have been discussed and debated
in past years through task force reports, policy statements, and
other forums.  These activities have served to highlight the problems
and publicize the need for reform.  As that chapter notes, however,
the present challenge will be to translate conceptual agreements and
broad pronouncements into tangible actions--by both EPA and the
states--that can resolve the problems that have long complicated the
EPA/state relationship and hindered the implementation of
environmental programs. 


RECOMMENDATIONS FOR IMPROVING THE
EPA/STATE RELATIONSHIP
============================================================ Chapter 5

Given the perennial nature of the problems affecting the EPA/state
relationship, one can reasonably ask what it would take to make real
improvement in the relationship, particularly since the effectiveness
of past efforts has been limited.  Our work disclosed no formula that
would quickly resolve problems that have persisted for decades. 
However, our observations of positive experiences, together with our
surveys of and detailed interviews with EPA and state officials, show
that success can be achieved when the parties concerned confront the
long-standing problems, discussed in previous chapters, that have
often made this relationship difficult. 


   EPA HAS TRIED FOR YEARS TO
   IMPROVE ITS RELATIONSHIP WITH
   THE STATES
---------------------------------------------------------- Chapter 5:1

EPA began trying to improve its relationship with the states at least
as early as 1975, when an agency task force reported that the states
were unhappy with the EPA/state partnership.  Indeed, our 1980 survey
identified concerns that state managers continue to cite today,
including, among other things, the inflexibility of EPA's
regulations, the amount of control EPA exerts over states, and
philosophical differences between federal and state program officials
over the appropriate direction and emphasis for programs. 

Among the most broad-based EPA efforts to deal with these problems
was the establishment in June 1983 of a task force of senior EPA and
state officials to develop options on appropriate state and federal
roles in implementing environmental programs.  In September 1983, the
State/EPA Roles Task Force issued its report, Options for Improving
the State-EPA Partnership, which concluded that the EPA/state
relationship must change when EPA delegates its authority for
programs to the states.  According to the report, direct program
administration and enforcement should be primarily state functions,
and the key to EPA's future is successful state programs.  The report
noted that while EPA's oversight should aim to improve the
performance of state programs and the quality of national programs,
too many EPA officials view oversight as evaluating and correcting
states' decisions. 

In 1984, former Administrator William Ruckelshaus issued two policy
statements that, among other things, called for clear, negotiated
performance expectations so that each element of government knows
what is expected of it; an opportunity for each party to
appropriately influence decisions affecting its role and ability to
carry them out; and a sense of mutual trust and support.\1 These
policies were part of a new effort by EPA to "foster a viable and
mutually beneficial partnership with the states." In so doing, the
agency set forth principles stating that EPA should phase out its
involvement in states' day-to-day decision-making and that it should
increase its technical, administrative, and legal support for state
programs.  Former Administrator Lee Thomas continued this approach,
noting in a 1985 speech that "We intend to do everything we can to
increase the flexibility with which states and localities may
implement Federal standards.  We will also strengthen our technical
support and oversight role."

To address continuing problems in its relationship with the states,
EPA, in October 1991, created the State Capacity Task Force, which is
still at work today.  This task force has sought to deal with the
perennial funding shortfalls affecting state environmental programs
by (1) exploring the viability of creative financing mechanisms--such
as fee-based revenues, public-private partnerships, and alternative
financial planning--as a means of bolstering state programs; (2)
examining federal investment in state infrastructure in areas such as
training, information networks, laboratories, monitoring, and
technical assistance; and (3) investigating ways in which improved
working relationships can help states get the most out of federal
financial assistance and capital investment. 

More recently, a joint policy statement included, among other things,
six "governing principles" designed to serve as the foundation for
the EPA/state relationship and to provide a sound basis for enhancing
environmental management capacity in the United States.  These six
principles were (1) clear goals and expectations on the part of both
EPA and the states; (2) a clear assignment of roles and
responsibilities that utilizes the inherent strengths each party
brings to the relationship; (3) open and honest communication; (4)
shared responsibility and accountability for success in promoting and
implementing environmental programs; (5) mutual respect, trust, and
continuous improvement, including sufficient flexibility to
accommodate different perspectives and needs; and (6) a mutual
commitment to pollution prevention as the principle of first choice. 


--------------------
\1 The two policy statements were "The EPA Policy Concerning
Delegation to State and Local Governments" and "The EPA Policy on
Oversight of Delegated Environmental Programs."


   WHAT IS NEEDED FOR EPA'S RECENT
   INITIATIVES TO SUCCEED WHERE
   PREVIOUS ONES HAVE NOT? 
---------------------------------------------------------- Chapter 5:2

The goals and principles set forth in the joint policy statement have
been met with skepticism among most state and EPA officials we
contacted, who generally agreed that while the agency has often
articulated good intentions in the past, progress to date has been
limited.  This widespread view suggests that EPA and the states have
a long way to go to reorient their relationship along the lines of
the policy statement. 

Our surveys and interviews with both EPA and state officials
identified a number of key issues that both impair efforts by states
to meet their program commitments and serve as irritants to the
EPA/state relationship.  Nonetheless, our findings on these issues
(as discussed in chs.  3 and 4) also suggest that the measures
discussed below would help greatly in achieving the positive
relationship that has been so elusive. 


      THE RESOURCE SHORTAGE NEEDS
      TO BE ADDRESSED
-------------------------------------------------------- Chapter 5:2.1

The financial gap between program needs and available resources has
become the central problem affecting both the states' ability to meet
program requirements and the states' relationship with EPA.  The
widespread recognition of this problem has contributed greatly to the
"unfunded mandates" legislation proposed to reduce environmental cost
burdens or prevent them from becoming more acute. 

Prescriptive statutory and regulatory requirements have often
exacerbated the problem by limiting the states' flexibility to
achieve the most environmental protection with their limited dollars. 
As documented in chapter 3, states are often required to spend
limited funds on problems that may be high priorities nationally but
are not necessarily so in certain states. 

We believe that EPA should continue to build on the efforts under way
in some program offices to negotiate the allocation of each state's
limited funding to correct the highest-priority environmental
problems addressed under each program.  While such measures alone
would not bridge the states' gap between program needs and available
resources, they would certainly make more effective use of the funds
states are devoting to environmental protection. 


      INCONSISTENCIES IN EPA'S
      OVERSIGHT NEED TO BE
      IDENTIFIED AND ADDRESSED
-------------------------------------------------------- Chapter 5:2.2

Chapter 4 identifies cases in which regions handled similar
situations differently but notes that EPA was often appropriately
exercising the flexibility--authorized by many environmental
statutes--to tailor national requirements to specific state and/or
local circumstances.  However, the chapter also identifies (1)
instances when the variation may be unwarranted and counterproductive
and (2) a common perception among state environmental managers that
EPA's regional offices treat the states inconsistently and that this
practice may raise questions of fairness, among other problems. 

EPA officials acknowledge that the states believe inconsistencies are
widespread and that the agency does not know to what extent
disparities exist.  However, two EPA offices (the Office of
Enforcement and Compliance Assurance and the Office of Solid Waste)
have at least acknowledged that the issue requires closer
examination.  They have also acknowledged that EPA headquarters and
regions may need some kind of formal mechanism to clarify how regions
are to balance the desire for more flexibility to respond effectively
to local circumstances with the need for consistency to achieve
national expectations and goals.  As noted in the last chapter, we
believe these offices' open recognition of the problem and systematic
efforts to deal with it could serve as a model for other headquarters
offices. 


      MORE TECHNICAL SUPPORT IS
      NEEDED
-------------------------------------------------------- Chapter 5:2.3

In its policy statements on its relationship with the states, EPA has
emphasized that providing adequate technical assistance to the states
should be an agency priority.  Nonetheless, the agency has frequently
had great difficulty in following through on its commitments in this
area, and some state programs, particularly those that are unable to
perform such technical functions on their own, have been seriously
disadvantaged. 

Although the states' needs for program-specific technical assistance
are great, state officials frequently cited EPA's difficulty in
developing measurable environmental indicators as a particular
problem that cuts across all programs.  Given the importance of such
indicators to improving the cost-effectiveness of environmental
regulations, the 1993 National Performance Review, under the
direction of the Vice President, recommended that EPA develop
measurable environmental goals--a recommendation we made in our 1988
general management review of the agency and continue to support.  EPA
agreed with our recommendation and today has projects on
environmental indicators under way in Regions III and V, as well as
in headquarters.  EPA's progress in this area, however, will be
limited until scientific/technical issues can be overcome. 


      A MORE CONSTRUCTIVE APPROACH
      TO OVERSIGHT IS NEEDED
-------------------------------------------------------- Chapter 5:2.4

The states have long criticized EPA for micromanaging their
environmental affairs.  In our 1980 survey of state officials, for
example, 71 percent identified inflexible federal regulations and 60
percent identified excessive EPA control as major obstacles to
effective program management.  Responses to the same questions by the
48 program managers interviewed for this study suggest that little
has changed in 13 years:  74 percent cited inflexible regulations and
63 percent cited excessive EPA controls as major obstacles.  EPA
officials have responded that in some cases, particularly when the
agency finds that a state program is not sufficiently protective of
the environment, a strong EPA presence may be warranted. 

Realistically, the precise nature of EPA's oversight should probably
vary, depending on each state's technical capability, record of
performance, and other factors.  It is difficult to see why, for
example, a state with an excellent program should warrant the close
and time-consuming scrutiny that should be accorded to a highly
deficient program.  Overall, however, federal and state officials we
contacted agree that EPA should, where possible, move toward allowing
(and, when necessary, helping) the states to achieve environmental
results without prescribing in detail how these results are to be
achieved. 


      BETTER COMMUNICATION BETWEEN
      EPA AND THE STATES IS NEEDED
-------------------------------------------------------- Chapter 5:2.5

Many state officials contacted for this review agreed that
communications with their regional EPA counterparts have generally
improved in recent years.  Nonetheless, they also agreed
overwhelmingly that EPA needs to do a better job of routinely
consulting the states on key issues before making important policy
decisions.  They maintained that earlier, more collaborative
consultations would improve the climate of the EPA/state relationship
and would lead to better EPA policies and regulations. 

We believe that EPA could take better advantage of its unique
relationship with the states to foster greater communication and
cooperation among the states themselves.  Given its pervasive
involvement with all state environmental programs, EPA is uniquely
situated to share information of interest and concern to the states,
such as innovative approaches for dealing with common problems.  As
the State Capacity Task Force noted in a 1993 report, however, open
communication on matters of mutual interest, such as innovative
approaches to state capability-building, typically does not occur. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 5:3

We recommend that the Administrator, EPA, take the following steps to
help resolve the underlying problems that have hindered the states'
ability to meet minimum environmental protection requirements and
have impaired the agency's relationship with the states: 

  To help the states make the best use of available program funds,
     the Administrator should direct the agency's program offices to
     periodically work with the states--within the limitations of
     existing environmental laws--to identify how each state's
     limited funds can be most efficiently and effectively allocated
     within each program to address the states' highest-priority
     environmental problems. 

  To deal with concerns over inconsistencies in EPA's oversight of
     state environmental programs, the Administrator should direct
     the agency's program offices to determine the extent to which
     variations in state standards, enforcement procedures, and other
     key functions reflect the appropriate exercise of flexibility
     authorized by law or are inappropriate and warrant corrective
     measures.  Where inappropriate inconsistencies are deemed to
     exist, the Administrator should direct the program offices to
     issue guidance to the regions (or use other mechanisms) to
     ensure the fair and consistent implementation of national
     requirements. 

  To improve EPA's regional oversight of the states, the
     Administrator should direct the agency's regions to periodically
     negotiate, with each state, a level of oversight that takes into
     account the ability of the state to fulfill its environmental
     program obligations (e.g., its track record in meeting key
     program requirements or its staffing and funding for meeting
     future requirements).  As a general rule, however, the
     Administrator should encourage regional oversight to focus on
     achieving improvements in environmental quality--as measured by
     reliable environmental indicators--without prescribing in detail
     how the states are to achieve these results. 

  To build on current efforts to improve communication between EPA
     and the states, the Administrator should direct the agency's
     program and regional offices to (1) consult the states as early
     as possible on key issues before important policy decisions are
     made and (2) use their unique position vis-a-vis state
     environmental agencies to facilitate the sharing of information
     on issues of interest and concern (e.g., innovative approaches
     to deal with common problems) among these agencies. 

Finally, given the complexity of the problems facing EPA and the
states and the limited progress achieved thus far in solving them, we
recognize that further progress may be slow and may vary from region
to region and from state to state.  Accordingly, we also recommend
that the Administrator direct the agency's Office of State and Local
Relations (or other office deemed appropriate) to track and
periodically report to the Administrator on EPA's and the states'
progress in addressing the above recommendations. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 5:4

As requested by the Ranking Minority Member's office, we did not
obtain written agency comments on a draft of this report or seek
specific comments on its recommendations.  However, we discussed a
draft of this report with officials, including deputy division
directors and branch chiefs, in EPA's Office of State and Local
Relations, Office of Groundwater and Drinking Water (responsible for
implementing SDWA), Office of Wastewater Management (responsible for
implementing the NPDES program), Office of Solid Waste (responsible
for implementing RCRA), and Office of Enforcement and Compliance
Assurance, as well as with members of the State/EPA Capacity Task
Force.  Generally, they characterized the information presented as
fair and balanced.  They offered a number of clarifications and/or
corrections that were incorporated as appropriate.  The following
paragraphs discuss the key issues raised by the EPA officials and the
revisions made in response to them. 

The deputy director of the RCRA program noted, and other EPA
officials agreed, that in describing the states' problems in meeting
minimum program requirements, we should not convey the impression
that the states are incapable of effectively managing environmental
programs, but rather that they are faced with significant resource
constraints that complicate their task.  Our interviews with state
program managers do, in fact, indicate that most states are capable
of implementing effective environmental programs; however, increased
program responsibilities, funding limitations, and other difficult
challenges have hindered the programs' effectiveness.  We have
attempted to identify these systemic problems in chapters 3 and 4 and
to offer recommendations in chapter 5 that would assist the states in
coping with them. 

In commenting on this report's discussion of perceived
inconsistencies in EPA's oversight of state programs, some of the
officials said that we should note their awareness of this difficult
issue, although they acknowledged that they do not know the extent of
the problem.  They also acknowledged that if inconsistencies in EPA's
oversight adversely affect the agency's relationship with the states,
EPA should address this issue.  We sought to ensure that our
description of this issue in chapter 4, and the recommendation on
this matter in chapter 5, take these views into account. 

Agency officials said they were not surprised to learn that many
state managers continue to feel "micromanaged" by their EPA regional
counterparts.  They explained, however, that environmental laws
frequently prevent EPA from giving states significant latitude in
spending their funds and managing their programs.  We acknowledge
these constraints in chapter 4, but point out ways in which EPA's
oversight can nonetheless be made more constructive.  In this
connection, the EPA officials also noted several recent initiatives
to give the states more flexibility (within statutory limitations)
and to bring them into the agency's decision-making process earlier
and more substantively.  We acknowledged these initiatives in chapter
4. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Steve Elstein, Assistant Director
Eugene Wisnoski, Evaluator-in-Charge
Lisa Pittelkau, Staff Evaluator
Amy Maron, Staff Evaluator
Mary Pniewski, Adviser

DALLAS REGIONAL OFFICE

Michael Mgebroff, Staff Evaluator

