Environmental Protection: Challenges Facing EPA's Efforts to Reinvent
Environmental Regulation (Chapter Report, 07/02/97, GAO/RCED-97-155).
Pursuant to a congressional request, GAO examined: (1) what the
Environmental Protection Agency's (EPA) reinvention initiatives are and
how EPA is structured to carry them out; and (2) what key issues need to
be addressed for these initiatives to have their intended effect.
GAO noted that: (1) EPA maintains that its reinvention initiatives seek
to reduce paperwork and eliminate obsolete rules, make it easier for
businesses to comply with environmental laws, use innovation and
flexibility to achieve better environmental results, or engage states,
tribes, communities, and citizens in partnerships to protect public
health and the environment; (2) in February 1997, the Administrator
announced her decision to create an Office of Reinvention, which will
provide overall direction and support for EPA's reinvention initiatives;
(3) in addition: (a) EPA's program offices participate in agencywide
initiatives and have generated some of their own, more medium-specific
initiatives; and (b) each of EPA's regional offices has established
varied structures and strategies to implement both the EPA-wide and
program-specific initiatives; (4) while many of EPA's reinvention
efforts are consistent with both the Government Performance and Results
Act's goal of focusing on achieving results and with past
recommendations by GAO and other organizations to achieve a more
integrated, cost-effective approach toward environmental protection, EPA
faces significant challenges that must be addressed effectively if
reinvention is to succeed: (a) key stakeholders in the reinvention
process have expressed concern over the large number of complex and
demanding initiatives now being undertaken, as well as confusion over
the underlying purpose of some of EPA major initiatives; (b) EPA has had
difficulty achieving "buy-in" among the agency's rank and file, who have
grown accustomed to prescriptive, medium-by-medium regulation during
EPA's history; (c) EPA has had difficulty achieving agreement among
external stakeholders particularly when they perceive that unanimous
agreement is required before progress can be made; (d) EPA's process for
resolving miscommunication and other problems involving EPA headquarters
staff, regional staff, and other stakeholders does not distinguish
between problems that require the attention of senior management and
those that should be resolved at lower levels; and (e) EPA has an uneven
record in evaluating the success of many of its initiatives; (5) in
addition, the current prescriptive, medium-specific environmental laws
impose requirements that have led to, and tend to reinforce, many of the
existing regulatory and behavioral practices that EPA is seeking to
change; and (6) as a consequence, EPA will be limited in its ability to
reinvent environmental regulation within the existing legislative
framework.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-97-155
TITLE: Environmental Protection: Challenges Facing EPA's Efforts
to Reinvent Environmental Regulation
DATE: 07/02/97
SUBJECT: Agency missions
Environmental law
Interagency relations
Pollution control
Reengineering (management)
Environmental policies
Strategic planning
IDENTIFIER: EPA Common Sense Initiative
EPA National Environmental Performance Partnership System
EPA Project XL
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Report to Congressional Requesters
July 1997
ENVIRONMENTAL PROTECTION -
CHALLENGES FACING EPA'S EFFORTS TO
REINVENT ENVIRONMENTAL REGULATION
GAO/RCED-97-155
Reinventing Environmental Regulation
(160365)
Abbreviations
=============================================================== ABBREV
CERCLA - Comprehensive Environmental Response, Compensation, and
Liability Act
CSI - Common Sense Initiative
ECOS - Environmental Council of the States
EPA - Environmental Protection Agency
GAO - General Accounting Office
GPRA - Government Performance and Results Act
NAPA - National Academy of Public Administration
NEPPS - National Environmental Performance Partnership System
NRDC - Natural Resources Defense Council
PPG - Performance Partnership Grant
RCRA - Resources Conservation and Recovery Act
XL - Project XL
Letter
=============================================================== LETTER
B-276854
July 2, 1997
Congressional Requesters
In response to your request, this report examines (1) what EPA's
reinvention initiatives are and how the agency is structured to carry
them out and (2) what key issues need to be addressed for these
initiatives to have their intended effect.
As arranged with your offices, 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 call me at (202) 512-4907 if you or your staff have any
questions. Major contributors to this report are listed in appendix
II.
Peter F. Guerrero
Director, Environmental Protection
Issues
List of Requesters
The Honorable John Chafee
Chairman, Committee on Environment
and Public Works
United States Senate
The Honorable Christopher Bond
Chairman, Subcommittee on VA, HUD,
and Independent Agencies
Committee on Appropriations
United States Senate
The Honorable Tom Bliley
Chairman, Committee on Commerce
House of Representatives
The Honorable Michael Oxley
Chairman, Subcommittee on Finance
and Hazardous Materials
Committee on Commerce
House of Representatives
The Honorable Bud Shuster
Chairman, Committee on Transportation
and Infrastructure
House of Representatives
The Honorable Sherwood Boehlert
Chairman, Subcommittee on Water
Resources and Environment
Committee on Transportation
and Infrastructure
House of Representatives
The Honorable Jerry Lewis
Chairman, Subcommittee on VA, HUD,
and Independent Agencies
Committee on Appropriations
House of Representatives
The Honorable David McIntosh
Chairman, Subcommittee on National
Economic Growth, Natural Resources,
and Regulatory Affairs
Committee on Government Reform
and Oversight
House of Representatives
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
By most accounts, the United States has substantially improved its
environment since the Environmental Protection Agency (EPA) was
founded in 1970, but at a growing cost. For example, the costs of
abating and controlling pollution rose from about $64 billion in 1973
to over $121 billion in 1994 (1995 dollars). EPA's leadership notes
that future environmental challenges will be more complicated than
those of the past, requiring fundamentally different regulatory
approaches. EPA has sought to meet these challenges by
comprehensively reexamining and reshaping its efforts to protect the
environment. As noted in a March 1996 report on its progress in
"reinventing" environmental regulation, the agency is undertaking a
number of initiatives to ". . . apply common sense, flexibility,
and creativity in an effort to move beyond the one-size-fits-all
system of the past and achieve the very best protection of public
health and the environment at the least cost."
To better understand EPA's initiatives and progress in implementing
them, several congressional committees asked that GAO provide a broad
overview of EPA's reinvention efforts. GAO was asked to focus on (1)
what the initiatives are and how the agency is structured to carry
them out and (2) what key issues need to be addressed for these
initiatives to have their intended effect.
BACKGROUND
---------------------------------------------------------- Chapter 0:2
Since the early 1970s, EPA's organization and approach toward
environmental regulation have mirrored the statutes that authorize
the agency's programs. These statutes generally assign pollution
control responsibilities according to the regulated environmental
medium (such as water or air) or category of pollutant (such as
pesticides or other chemical substances). As a result, the statutes
have led to the creation of individual EPA program offices that focus
on reducing pollution within the particular environmental medium for
which each office has responsibility--rather than on reducing overall
pollutant discharges. This structure has, among other problems, made
it difficult for the agency to base its priorities on an assessment
of risk across all environmental problems and to take into account
the cost and feasibility of various approaches. The agency's
traditional approach toward environmental regulation has also been
criticized as precluding innovative and more cost-effective ways to
reduce pollution and as being inflexible in dealing with other
"stakeholders" in the regulatory process, such as states, regulated
entities, and environmental organizations.
EPA's efforts to address these issues go back at least as far as the
mid-1980s, when then-Administrator Lee Thomas called on the agency to
manage its resources and activities so that they (1) account for the
relative risks posed by environmental problems, (2) recognize that
pollution control efforts in one medium can cause pollution problems
in another, and (3) lead to achieving measurable environmental
results. Other efforts have sought to involve stakeholders more
collaboratively in the process, calling, for example, for more
negotiated rulemakings. Since that time, however, GAO and other
organizations have stressed the need to make significantly greater
progress in this direction.
The passage of the Government Performance and Results Act of 1993
strengthened EPA's efforts to protect the environment more
efficiently and effectively. The Results Act requires agencies to
consult with the Congress and other stakeholders to clearly define
their missions, establish long-term strategic goals (and annual goals
linked to them), and measure their performance against the goals they
have set. Rather than focusing on the performance of prescribed
tasks and processes, the statute emphasizes the need for agencies to
focus on and achieve measurable program results.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
EPA maintains that its reinvention initiatives generally seek to
reduce paperwork and eliminate obsolete rules; make it easier for
businesses to comply with environmental laws; use innovation and
flexibility to achieve better environmental results; and/or engage
states, tribes, communities, and citizens in partnerships to protect
public health and the environment. The agency launched a
comprehensive reinvention effort in March 1995 with 25 "high-priority
actions" and 14 "other significant actions" to expand the
Administrator's ongoing efforts to improve the current regulatory
system and lay the groundwork for a new system of environmental
protection. In February 1997, the Administrator announced her
decision to create an Office of Reinvention, which will provide
overall direction and support for the agency's reinvention
initiatives and play a direct role in leading certain key
initiatives. In addition, (1) EPA's program offices participate in
agencywide initiatives and have generated some of their own, more
medium-specific initiatives and (2) each of EPA's regional offices
has established varied structures and strategies to implement both
the EPA-wide and program-specific initiatives.
While many of EPA's reinvention efforts are consistent with both the
Results Act's goal of focusing on achieving results and with past
recommendations by GAO and other organizations to achieve a more
integrated, cost-effective approach toward environmental protection,
the agency faces significant challenges that must be addressed
effectively if reinvention is to succeed:
-- Key stakeholders in the reinvention process have expressed
concern over the large number of complex and demanding
initiatives now being undertaken, as well as confusion over the
underlying purpose of some of the agency's major initiatives.
-- EPA has had difficulty achieving "buy-in" among the agency's
rank and file, who have grown accustomed to prescriptive,
medium-by-medium regulation during the agency's 27-year history.
-- The agency has had difficulty achieving agreement among external
stakeholders, including federal and state regulators and
industry and environmental organization
representatives--particularly when stakeholders perceive that
unanimous agreement is required before progress can be made.
-- The agency's process for resolving miscommunication and other
problems involving EPA headquarters staff, regional staff, and
other stakeholders does not distinguish between problems that
require the attention of senior management and those that should
be resolved at lower levels within the agency.
-- EPA has an uneven record in evaluating the success of many of
its initiatives. Evaluation is needed both to show EPA
management what does and does not work and to provide convincing
evidence to external stakeholders that an alternative regulatory
strategy is worth pursuing.
In addition, the current prescriptive, medium-specific environmental
laws impose requirements that have led to, and tend to reinforce,
many of the existing regulatory and behavioral practices that EPA is
seeking to change. As a consequence, the agency will be limited in
its ability to "reinvent" environmental regulation within this
existing legislative framework.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
HOW INITIATIVES ARE BEING
IMPLEMENTED
-------------------------------------------------------- Chapter 0:4.1
The precise number of initiatives under way at EPA is difficult to
establish because, in addition to the 25 "high-priority actions" and
14 "other significant actions" listed,\1 the agency is implementing
other projects with reinvention-related components through its
program offices and regional offices. Moreover, EPA reinvention
officials stressed that a major thrust of the reinvention effort is
to change the agency's culture so that staff are supportive of
innovative approaches to environmental regulation.
While EPA has not formally set priorities among its initiatives, the
agency has clearly identified several of them as central to its
efforts to reinvent environmental regulation. Among them are (1)
Project XL, which allows individual facilities to test innovative
ways of achieving environmental protection if they can demonstrate
that the proposed changes will yield superior environmental
performance, and (2) the Common Sense Initiative, which seeks to
identify innovative environmental regulatory practices for different
industrial sectors (e.g., the printing and metal-finishing
industries). In addition, the agency is seeking to improve its
working relationship with the states through its National
Environmental Performance Partnership System. This effort is viewed
as particularly significant in light of the states' central role in
directly implementing many of EPA's most significant regulatory
programs.
EPA is implementing its key reinvention activities through both its
headquarters and its regional offices. In February 1997, the
Administrator announced her decision to create the Office of
Reinvention to coordinate the agency's reinvention efforts and to
help implement Project XL, the Common Sense Initiative, and several
other key agencywide initiatives. As of June 1997, the exact date of
this office's establishment had not been determined. In addition,
EPA's program offices are implementing their own, more
medium-specific initiatives. The Office of Water, for example, is
promoting "effluent trading" in watersheds, while the Office of
Prevention, Pesticides, and Toxic Substances is encouraging chemical
industries to develop more environmentally friendly practices through
the Green Chemistry Challenge. Similarly, the Office of Air and
Radiation is attempting to consolidate federal air rules for
individual industries.
EPA's regional offices work directly with regulated entities and
other parties in implementing the initiatives and are using various
organizational structures in doing so. For example, EPA's Atlanta
regional office, which has maintained its medium-by-medium office
structure, forms ad hoc teams from these offices to implement
initiatives as needed. The agency's Chicago office has also
generally retained its medium-by-medium offices but has drawn from
these offices to form a number of more permanent "cross-media teams"
to implement initiatives. The Boston office, however, has more
fundamentally restructured its organization along the lines of its
multimedia initiatives. Thus, for example, it has replaced its
medium-specific divisions with an Office of Environmental Stewardship
and an Office of Ecosystem Management to facilitate a more
cross-cutting approach to environmental management.
--------------------
\1 See app. I for a list of these initiatives, including those that
EPA has identified as its "larger, more cross-cutting efforts."
ISSUES TO ADDRESS IF
REINVENTION EFFORTS ARE TO
SUCCEED
-------------------------------------------------------- Chapter 0:4.2
GAO found that while EPA has made some progress in implementing its
reinvention initiatives, the agency still has a long way to go in
resolving several key issues if environmental regulation is to be
truly "reinvented."
Greater Focus on Key Initiatives Could Improve Prospects of Success.
Successful reinvention efforts require a clear understanding of an
organization's mission and of how individual efforts work toward
achieving that mission. However, GAO's discussions with key
participants in EPA's reinvention process suggest that the large
number of initiatives under way may be diverting attention from
high-priority efforts most in line with the agency's reinvention
objectives. Specifically, officials from two of the three EPA
regional offices GAO visited cited the large number of initiatives as
a problem and indicated that setting priorities among the initiatives
would make the most efficient use of the agency's resources. Under
the current situation, they noted, the regional offices are expected
to carry out reinvention activities with few resources beyond those
the regions receive to carry out traditional program
responsibilities. Officials from each of the states GAO contacted
cited similar problems. The problem is further compounded by
confusion both within EPA and among other stakeholders over the
primary purpose of some of the agency's most important initiatives.
An EPA-contracted analysis of the Common Sense Initiative, for
example, pointed to the absence of specific objectives and
expectations, noting that "instead of encouraging out-of-the-box
thinking as hoped, this has led to delays . . . as [stakeholders]
tried to figure out what EPA wanted or would accept instead of
inventing their own priorities and processes."
Extent of Commitment to Reinvention Is Questioned. EPA staff and
state officials contacted by GAO generally agreed that EPA's top
management has articulated a clear commitment to the agency's
reinvention effort. However, significant disagreements have surfaced
in recent months, leading some key stakeholders to question EPA
management's direction in reinventing environmental regulation.
Notably, a recent resolution by the Environmental Council of the
States (which represents state environmental agency leaders)
expressed frustration over its recent efforts to "establish a
consensus framework for true environmental regulatory innovation"
that would identify appropriate roles and responsibilities for the
states. At the staff level, GAO found that program and regional
offices do encourage staff, to varying degrees, to participate in
reinvention activities and that these efforts have engendered wider
staff participation. Nonetheless, all participants GAO
interviewed--both inside and outside EPA--agreed that achieving a
full commitment to reinvention by the agency's rank and file will be
difficult and will take time. One senior program official, for
example, noted that it will take time for culture change to filter
down to EPA line staff and to see if the change takes hold.
Agreement Among All Stakeholders Is Difficult to Achieve. Under
EPA's reinvention strategy, the agency's goal is to share information
and decision-making with all stakeholders, including those "external"
to the agency, such as state regulators and representatives of
industry and environmental organizations. Among other things, the
agency hopes the strategy will help to avert litigation by getting
up-front agreement among the affected parties and a commitment by
industry representatives to meet requirements they acknowledge to be
achievable. GAO found that the agency has, indeed, made strenuous
efforts to involve stakeholders with different interests and
perspectives but that achieving and maintaining consensus has been an
enormous challenge. EPA's greatest difficulties have come when the
agency has sought to achieve--or was perceived as seeking to
achieve--100 percent agreement. Officials from the three states GAO
contacted noted that efforts to achieve unanimous agreement have been
problematic, particularly in Common Sense Initiative negotiations.
Industry representatives agreed, some of whom have cited the problem
as a reason why they have considered terminating their participation
in the initiative.
Sustainable Process Is Needed to Resolve Problems. Some of EPA's
earlier reinvention projects were affected by miscommunication and
other problems among the agency's headquarters and regional offices
and other participants. For example, an XL project submitted by the
3M Company foundered when Minnesota and 3M officials withdrew their
participation because they believed EPA headquarters and regional
offices were raising new issues late in their negotiations. To help
address these kinds of problems, the agency designated certain senior
managers in September 1996 as "reinvention ombudsmen" to respond to
stakeholders' questions and resolve problems in a timely fashion.
This new process has helped in the negotiation of recently approved
XL projects, but many stakeholders have noted that in the longer
term, senior management will not be able to intervene each time a
problem arises. They cite the need for a more sustainable process
that distinguishes between problems that can be resolved at lower
levels within the agency and those that require senior management's
attention.
EPA Is Not Systematically Evaluating Initiatives' Effectiveness.
Measuring performance allows organizations to track their progress
toward achieving their goals and gives managers crucial information
needed to make organizational and management decisions. EPA has, in
fact, made some progress in measuring the effectiveness of its
reinvention initiatives. For example, the agency hired a contractor
to formally evaluate the success of its stakeholder process. EPA
also asked an advisory group to identify criteria the agency can use
to measure the progress and success of other reinvention projects and
of its overall reinvention efforts. At the same time, officials with
the agency's Regulatory Reinvention Team acknowledged that the agency
has neither sufficient performance data nor an evaluation component
for many of its initiatives.
Stakeholders Disagree on the Need for Statutory Change. GAO found
wide disagreement over whether the current environmental statutes
must be revised for reinvention to succeed. Many state and industry
officials have cited the need for statutory revisions, both in the
near term to encourage experiments in alternative methods of
achieving environmental compliance and in the longer term to achieve
a more fundamental change in the conduct of environmental regulation.
For example, after identifying problems experienced by industry
participants in some of EPA's initiatives, a September 1996 industry
report concluded that "there is no short-cut, no way around the
difficult task of trying to legislate a better system." Meanwhile,
EPA, supported by some in the environmental community, maintains that
the current statutory framework contains sufficient flexibility to
allow for real progress on most reinvention initiatives.
GAO has concluded--on the basis of its past evaluations, the results
to date of EPA's key reinvention efforts, and its contacts with a
variety of stakeholders---that constructive modifications can be made
under the current environmental statutory framework. However, the
framework does establish standards that lead to many of the existing
regulatory and behavioral practices the agency is seeking to change.
Consequently, as GAO and other organizations have noted in the past,
EPA will be limited in its ability to achieve major changes in
environmental regulation within the existing legislative framework.
According to the Deputy Administrator, the agency will reexamine this
issue when it receives the recommendations of a key advisory group
(the Enterprise for the Environment) later this year.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5
GAO recommends that the Administrator, EPA,
-- direct the Associate Administrator, Office of Reinvention, to
review the agency's reinvention initiatives to (1) determine
whether there are any that no longer support the agency's
overall reinvention goals and should therefore be discontinued,
(2) set priorities among those that will be continued, and (3)
issue clarifying guidance, as needed, to help ensure that the
specific objectives and expectations of continuing initiatives
are clear among stakeholders within and outside the agency;
-- improve the prospects for achieving consensus among concerned
parties in the agency's reinvention efforts by clarifying the
circumstances under which unanimous agreement is required;
-- develop a systematic process to help resolve problems in a
timely fashion by identifying which kinds of problems can be
resolved at lower levels within the agency and which should be
elevated for senior management's attention; and
-- direct that each of the agency's initiatives include an
evaluation component that measures the extent to which that
initiative has accomplished its intended effect.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6
GAO provided copies of a draft of this report to EPA for its review
and comment and discussed the agency's response with the Director of
EPA's Regulatory Reinvention Team and his staff. The EPA officials
said that the report was balanced and addressed the most important
issues facing the agency's reinvention efforts. They also expressed
general agreement with the report's recommendations. The officials
suggested that GAO modify its recommendation to develop evaluation
components for EPA's initiatives to reflect the difficulty in
developing "outcome-based" measures in all cases. GAO modified the
wording of this recommendation to reflect this suggestion.
The Director of the Regulatory Reinvention Team was concerned that
some readers might infer support on GAO's part for changes in the
media-based structure of the nation's environmental statutes, even
though the report did not specifically recommend such changes to
facilitate reinvention. He further noted that GAO's study did not
assess how changes in environmental law could improve environmental
protection. GAO acknowledges that such an assessment was outside the
scope of its review, although the draft report did reflect the views
of EPA officials, industry and environmental groups, and other
participants in the environmental regulatory process on this issue.
GAO also acknowledges that EPA, in consultation with its advisers and
key stakeholders, is ultimately responsible for assessing whether
changes to environmental statutes should be recommended to the
Congress. At the same time, GAO believes that any discussion of the
issues affecting the success of reinvention would be incomplete
without mention of the inherent limitations to fundamental change
posed by the statutes' present medium-by-medium focus. Such
limitations have been acknowledged by EPA in past years, documented
consistently by GAO and other organizations, and cited as a key issue
by the large majority of officials interviewed for this report.
Finally, the officials suggested that the report focuses on the most
visible of EPA's initiatives, such as Project XL and the Common Sense
Initiative, and does not sufficiently acknowledge (1) the agency's
smaller, less visible initiatives and (2) the extent to which
reinvention principles are being applied throughout EPA's day-to-day
activities. Although GAO did not analyze all of EPA's reinvention
initiatives in detail, focusing instead on the efforts emphasized by
the EPA and state officials contacted during GAO's review, the draft
report acknowledged that EPA has undertaken numerous other
initiatives and listed many of them in appendix I. The draft report
cautioned against measuring the success of reinvention by the large
number of initiatives under way, noting that EPA may need to reduce
the number of initiatives to improve the prospects of success for its
highest-priority efforts. In regard to the extent that reinvention
principles are being applied throughout EPA's day-to-day activities,
chapter 3 of the draft report had, in fact, discussed many of the
agency's efforts to instill reinvention principles into the staffs'
day-to-day activities, emphasizing that EPA management considers
cultural change to be a major goal of its reinvention efforts. Here,
too, however, the draft report discussed the agency's difficulties in
achieving this goal, noting in chapter 3, for example, "widespread
agreement among EPA officials, state officials, and others that the
agency has a long way to go before reinvention becomes an integral
part of its staff's everyday activities."
The officials' specific comments on GAO's conclusions and
recommendations, along with GAO's responses, are included at the end
of chapter 3. In addition, the officials offered other corrections
and clarifications throughout the report, which were incorporated as
appropriate.
INTRODUCTION
============================================================ Chapter 1
Substantial progress has been made in addressing the nation's
environmental problems since the Environmental Protection Agency
(EPA) was created in 1970. Among other improvements, some of our
most serious air and water quality problems have been alleviated,
dangerous pesticides have been banned, and health threats posed by
lead in gasoline and paint have been reduced. However, these strides
in environmental protection have come to the nation at a growing
cost. For example, the costs of pollution abatement and control have
risen significantly--from $64 billion in 1973 to over $121 billion in
1994 (constant 1995 dollars).
EPA's top leadership acknowledges that such resource constraints,
combined with (1) the increasing complexity of environmental problems
and (2) the limited effectiveness of EPA's traditional
medium-by-medium structure to address the full spectrum of pollution
problems in an integrated manner, have forced the agency to
fundamentally rethink its approach to environmental protection.
Toward this end, EPA is currently experimenting with ways to improve
its existing program activities and to lay the groundwork for a new,
more flexible, integrated system of environmental protection--one
that will allow the agency to deliver the highest quality protection
possible in the most cost-effective manner. The passage of the
Government Performance and Results Act of 1993 (GPRA) has provided
further impetus for the agency to improve its management practices,
in part through the requirement that it develop measurable program
results.
To better understand EPA's initiatives and strategy to implement
them, several congressional committees asked that we provide a broad
overview of EPA's reinvention efforts, focusing on (1) what the
initiatives are and how the agency is structured to carry them out
and (2) what key issues need to be addressed for these initiatives to
have their intended effect.
CURRENT STRUCTURE LIMITS EPA'S
FLEXIBILITY
---------------------------------------------------------- Chapter 1:1
EPA was created in 1970 under an executive reorganization plan that
combined various environmental components of other federal agencies.
This left EPA without a formal overarching mission and statutory
framework to guide its activities. Initially, the agency was charged
with the general task of cleaning up environmental pollution--giving
early attention to air and surface water. As further environmental
needs were identified, the Congress enacted laws to address specific
pollution problems. As a result, a dozen or so statutes govern the
agency's activities, and several congressional committees are
responsible for environmental issues. However, these statutes are
not coordinated or integrated, and in some cases they contain
differing approaches and reflect different philosophies. Hence, the
agency has no overall system for setting priorities across all
environmental problems and for identifying and addressing the most
critical environmental needs first.
In response to these legislative mandates, EPA has organized its
activities around environmental media (such as air, water, or land)
and the substances it regulates (such as hazardous waste, pesticides,
and toxic substances)--resulting in a structure that closely
parallels the statutes that authorize its activities. Each of these
program offices focuses primarily on implementing medium-specific or
substance-specific responsibilities detailed in these statutes,
rather than addressing the full range of pollution sources in a
cross-cutting manner. The agency's medium-specific focus can result
in both the intended and unintended transfer of pollution from one
medium to another. For example, removing contaminants from public
sewage systems or industrial smokestacks can create sludge and waste
that can themselves be toxic and lead to further air, water, or land
pollution. As a result, EPA and others have acknowledged a need for
increased attention to such intermedia transfers to ensure that the
agency's pollution reduction strategies have the best overall impact
on the environment.
While organizing EPA's activities in this manner has facilitated the
implementation of individual environmental statutes and has reduced
or prevented many threats to human health and the environment, it has
also created problems for the agency. Most significantly, it has
limited EPA's ability (1) to set risk-based priorities across the
full spectrum of environmental problems and target its limited
resources to the most pressing of these problems and (2) to take into
account the cost and feasibility of various approaches to reduce
pollution. It has also impaired the agency's ability to experiment
with innovative and more cost-effective ways to address pollution
problems, such as pollution prevention (eliminating or minimizing
pollution at its source versus containing it at the end-of-the-pipe)
or market-based incentives (such as taxes on pollution or trading
emission pollution "rights"). Such approaches give polluters
financial reasons to reduce pollution without prescribing the methods
for doing so. The current structure has also restricted EPA's
ability to exercise flexibility with regulated entities, states,
environmental groups, and other stakeholders in the regulatory
process.\1
--------------------
\1 For example, until recently, EPA was limited in its ability to
grant states the flexibility to combine grant funds authorized under
separate environmental statutes (such as those set aside for cleaning
up air and water pollution) into one or more "consolidated" grants to
address the states' most important environmental needs. These grants
(authorized by the Congress in April 1996) are now a key tool for the
agency in providing the states with flexibility in spending federal
environmental grant resources.
AGENCY HAS TRIED TO ADDRESS
LIMITS OF EXISTING STRUCTURE
---------------------------------------------------------- Chapter 1:2
Since at least the mid-1980s, EPA has taken steps to address the
problems associated with its medium-specific structure. For example,
then-Administrator Lee Thomas--recognizing that environmental
problems are complex and interrelated--directed the agency to manage
its programs and activities so that they (1) account for the relative
risks posed by environmental problems to help ensure that limited
resources are directed to the most pressing environmental needs; (2)
recognize that pollution control efforts in one medium can result in
a transfer of pollution to another (and, when feasible, that
pollution should be eliminated or minimized at its source); and (3)
lead to the achievement of measurable environmental results.
While our 1988 general management review\2 of EPA credited the agency
with taking steps to address these concerns, it urged the agency,
among other things, to (1) fill important gaps in its efforts to
manage for environmental results (including setting priorities in
measurable terms and ranking them to ensure that the most pressing
needs are addressed first) and (2) establish more effective
partnerships with the states, since they serve as the agency's key
partners in implementing environmental programs. Since that time,
GAO, EPA's Science Advisory Board, the National Academy of Public
Administration, and other organizations have all pointed to the need
to make significantly greater progress in this direction.
In our 1991 report, Environmental Protection: Meeting Public
Expectations With Limited Resources (GAO/RCED-91-97), for example, we
noted that for EPA to achieve environmental goals with limited
resources, it needs to (1) link budget priorities to relative risks
to the environment and public health rather than rely on public
perceptions of risk; (2) measure changes in environmental conditions
rather than measure activities (such as the number of permits issued)
to obtain meaningful information on the effectiveness of its
investments in environmental protection; and (3) combine traditional
and innovative approaches (such as pollution prevention and the use
of market incentives) to ensure that the most cost-effective methods
for controlling pollution are used. The report observed, however,
that EPA was hampered in setting priorities across all environmental
problems by the lack of integration among environmental statutes.
The National Academy of Public Administration (NAPA) came to similar
conclusions in its 1995 report, Setting Priorities, Getting Results.
In particular, the report noted that EPA lacks a clear statutory
mission because it derives its authority from many different
statutes. It also noted, among other things, that the agency needs
to encourage innovation among its regulated community (localities,
states, and industries) to find the most appropriate methods for
achieving environmental protection.
EPA has responded to these and similar concerns by taking a number of
steps to "reinvent" its approach to environmental protection. For
example, the agency launched its Common Sense Initiative (CSI) in
1994 to allow industrial sectors (such as printing and metal
finishing) and their key stakeholders to work collaboratively to,
among other things, (1) identify opportunities to get better
environmental results at less cost; (2) streamline permitting,
recordkeeping, and reporting requirements; and (3) provide industry
with incentives to develop innovative, cost-effective technologies to
meet or exceed environmental standards. EPA has also increased the
involvement of stakeholders in its decision-making processes.\3
More recently, in March 1995, EPA launched a more comprehensive
effort to fundamentally reexamine and reshape its efforts to protect
the environment. As noted in a March 1996 progress report on its
efforts to reinvent environmental regulation, the agency is presently
undertaking a number of initiatives to apply ". . . common sense,
flexibility, and creativity in an effort to move beyond the
one-size-fits-all system of the past and achieve the very best
protection of public health and the environment at the least cost."
--------------------
\2 Environmental Protection Agency: Protecting Human Health and the
Environment Through Improved Management (GAO/RCED-88-101, Aug. 16,
1988).
\3 This effort is in keeping with Executive Order 12866 (Sept.
1993), which directed federal regulatory agencies to consider the use
of consensual mechanisms (such as negotiated rulemaking) when
developing regulations.
GOVERNMENT PERFORMANCE AND
RESULTS ACT REQUIRES A FOCUS
ON MEASURABLE RESULTS
-------------------------------------------------------- Chapter 1:2.1
The provisions of GPRA, also known as "the Results Act," are
consistent with the principles of reinvention and reinforce many of
EPA's reinvention efforts. One key provision requires EPA and other
agencies to (1) consult with the Congress and other stakeholders to
clearly define their missions, (2) establish long-term strategic
goals and annual goals that are linked to them, and (3) evaluate
their performance on the basis of the goals they have set and report
on their success. Rather than focusing on the performance of
prescribed tasks and processes, the statute emphasizes the need for
agencies to focus on and achieve measurable program results.
OBJECTIVES, SCOPE, AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:3
To address questions about EPA's current efforts to reinvent
environmental regulation, a number of committees asked that we
provide information on (1) what the agency's reinvention initiatives
are and how the agency is structured to carry them out and (2) what
key issues need to be addressed for these initiatives to have their
intended effect.
In addressing the first objective, we interviewed EPA officials
responsible for the agency's reinvention efforts, including the
Deputy Administrator, the designated Associate Administrator of the
future Office of Reinvention, and members of EPA's Regulatory
Reinvention Team. We also interviewed officials in selected EPA
program offices (such as the Office of Water; the Office of
Prevention, Pesticides, and Toxic Substances; and the Office of Air
and Radiation) to better understand how these offices were structured
to implement both agencywide and program-specific reinvention
initiatives. Following our initial contacts with headquarters
officials, we visited three EPA regional offices--in Atlanta, Boston,
and Chicago--to obtain insights into how the agency's regional
offices are structured to carry out the agency's reinvention efforts.
These offices were suggested to us by headquarters officials because
they had experience in implementing some of the agency's key
initiatives. The issues discussed with the headquarters and regional
officials included (1) EPA's reinvention philosophy and goals, (2)
details on key agencywide and program-specific initiatives, and (3)
the agency's structure for carrying out these initiatives (both at
headquarters and among the regional offices).
In addressing the second objective, we asked the same EPA officials
questions about the challenges facing the agency in achieving its
reinvention goals. Our questions focused largely on efforts by the
agency to communicate its goals for change to its staff and to
external stakeholders, its efforts to systematically evaluate the
success of its activities, and other issues that are widely viewed
among management experts as essential ingredients in successfully
achieving desired organizational change. We also posed these
questions to other key stakeholders, including state environmental
officials in Georgia, Massachusetts, and Minnesota (because of their
association with the three regions we visited and their involvement
with key reinvention efforts), key national environmental and
industry organizations (such as the Sierra Club, the Natural
Resources Defense Council, the Environmental Law Institute, and the
American Petroleum Institute, among others), and other organizations
familiar with EPA's reinvention efforts, such as Resources for the
Future and NAPA.
Through these contacts, we identified specific projects to examine in
more detail in order to gain a fuller understanding of the issues and
challenges involved in applying reinvention principles and programs.
In these instances, we contacted industry participants, as well as
other stakeholders in these projects (e.g., representatives of
environmental groups and state regulatory officials).
We conducted our work from October 1996 through May 1997 in
accordance with generally accepted government auditing standards.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 1:4
We provided copies of a draft of this report to EPA for its review.
GAO staff discussed EPA's reaction with officials from the Office of
the Deputy Administrator's Regulatory Reinvention Team. Their
comments, and GAO's response, are discussed at the end of chapter 3.
EPA'S REINVENTION INITIATIVES AND
STRUCTURE FOR IMPLEMENTING THEM
============================================================ Chapter 2
EPA maintains that it is seeking, through reinvention efforts, to
fundamentally reexamine and reshape its approach to protecting the
environment. According to the agency, these efforts will (1) achieve
better environmental results through the use of innovative and
flexible approaches to environmental protection; (2) encourage
states, tribes, communities, and citizens to share in environmental
decision-making; (3) make it easier for businesses to comply with
environmental laws by offering them compliance assistance and
incentives to prevent pollution at its source; and (4) eliminate
unnecessary paperwork.
To achieve changes of this magnitude, EPA is implementing a range of
specific initiatives addressing one or more of these overall
objectives. The Administrator recently announced her decision to
create the Office of Reinvention to provide overall direction and
support for the agency's reinvention efforts and to lead certain key
initiatives. In addition, (1) EPA's program offices participate in
agencywide initiatives and have generated some of their own
medium-specific initiatives and (2) each of EPA's regional offices
has established varied structures and strategies to implement both
the EPA-wide and program-specific initiatives. Reinvention
"ombudsmen" have also been identified in the agency's program and
regional offices to focus senior management's attention on
reinvention-related issues.
EPA REINVENTION INITIATIVES
COVER A BROAD RANGE OF
ACTIVITIES
---------------------------------------------------------- Chapter 2:1
In March 1995, EPA announced 25 "high-priority actions" and 14 "other
significant actions" aimed at improving the current regulatory system
and laying the groundwork for a new system of environmental
protection.\1 However, the precise number of initiatives is difficult
to establish because, in addition to these 39 efforts, the agency is
implementing less centralized projects through its program offices
and regional offices. These projects have either a reinvention focus
or reinvention-related components. For example, EPA's Boston
regional office has initiated its own reinvention-specific activities
(including a database to track the progress of its reinvention
activities) and other efforts that have reinvention-related elements
(such as integrating environmental considerations into transportation
planning). Similarly, EPA's program offices have initiated their own
medium-specific reinvention efforts, such as the Office of Water's
efforts to improve the nation's water quality monitoring information
through strategies and recommendations developed by an
intergovernmental task force. In addition, a senior regional
official told us that it is difficult to determine the universe of
reinvention initiatives because many of the innovative practices
being undertaken in different parts of the agency have been under way
for years but are not necessarily tied directly to the 39 initiatives
formally identified as "reinvention" initiatives.
--------------------
\1 See app. I for a list of these initiatives, including those that
EPA has identified as its "larger, more cross-cutting efforts."
EPA'S KEY REINVENTION
INITIATIVES
-------------------------------------------------------- Chapter 2:1.1
While EPA has not formally set priorities among its initiatives, the
agency has clearly identified several initiatives as central to its
efforts to reinvent environmental regulation. According to EPA,
Project XL and the Common Sense Initiative (CSI) are the cornerstones
of EPA's central objective of working with industry to ". . .
achieve the very best protection of public health and the environment
at the least cost." In addition, the agency is seeking to
significantly improve its working relationship with the states
through its National Environmental Performance Partnership System
(NEPPS). This effort is viewed as particularly important in light of
the states' central role in directly implementing many of EPA's most
significant regulatory programs.
PROJECT XL
------------------------------------------------------ Chapter 2:1.1.1
The President announced Project XL in March 1995, noting that "this
program will give a limited number of responsible companies the
opportunity to demonstrate excellence and leadership. They will be
given the flexibility to develop alternative strategies that will
replace current regulatory requirements, while producing even greater
environmental benefits".\2 According to EPA, the project was created
in response to the concerns expressed by numerous companies, facility
managers, and communities that current applications of environmental
rules do not necessarily provide the best possible environmental
protection at the least cost. Further impetus was given by the
experiences of some in the regulated community, who found that they
could achieve substantial cost savings and improve environmental
protection through more flexible, site-specific solutions to
environmental protection.
Under Project XL, EPA allows companies to test innovative ways of
achieving environmental protection at both the facility and the
community levels if they can demonstrate that the proposed changes
will yield superior environmental performance. This requires
applicants to achieve results superior to the level of environmental
performance that would have occurred without XL. To test such
innovative approaches, project sponsors collaborate with key
stakeholders (including communities located near a project, state and
local governments, and environmental and other public interest
groups, among others) to develop project proposals. These proposals
culminate in Final Project agreements that must be approved by EPA,
the state environmental agency, and the project sponsor in order to
be implemented.\3
For example, a Final Project Agreement signed last year with Intel
Corporation for its manufacturing site in Chandler, Arizona, includes
a number of innovative features through which the company agreed to
comply with all statutory and regulatory requirements (but to achieve
them more effectively) and to go beyond current requirements to
improve its overall environmental performance. In return, the
agreement gives Intel the flexibility to (1) implement a sitewide
environmental master plan that integrates both mandatory and
voluntary environmental undertakings across all media--air, water,
solid waste, and hazardous waste--rather than operating strictly
under separate medium-specific permits; (2) develop new procedures
that will reduce paperwork and other procedural burdens; and (3)
operate under a streamlined air permitting strategy that gives the
company "preapproval" to add new semiconductor-related facilities as
long as the facilities do not exceed emission limits or fail to
comply with other specified requirements (such as those for
reporting). In addition, Intel agreed to report its progress (using
nonproprietary information) to the public in a consolidated,
user-friendly format to allow the public to track the company's
progress in meeting the goals established for each medium.
Working with corporations and key stakeholders (including states,
localities, and environmental groups), EPA has also approved Project
XL agreements with Berry Corporation in LaBelle, Florida, to
consolidate its citrus juice manufacturing operations under a
comprehensive single multimedia permit, and with Weyerhaeuser
Corporation, to reduce the overall impact on the environment of its
mill operations in Flint River, Georgia.
--------------------
\2 Project XL (which stands for Excellence and Leadership) conducts
projects in four areas: (1) corporate facilities, (2) industrial
sectors, (3) federal facilities, and (4) communities. Recognizing
that community-based projects differ substantially from other types
of XL projects, EPA issued separate guidelines for communities in
November 1995.
\3 While a Final Project Agreement is, at a minimum, signed by EPA,
the state environmental agency, and the project sponsor, it does not
(1) contain legal rights or obligations; (2) serve as a contract or a
regulatory action, such as a permit or rule; or (3) represent a
legally binding commitment on any party. However, according to a
notice issued by EPA in April 1997, future XL projects will have an
enforceable component, described in the Final Project Agreement, but
also contained in a legally binding document (such as a permit,
rulemaking or administrative order).
COMMON SENSE INITIATIVE
------------------------------------------------------ Chapter 2:1.1.2
The EPA Administrator launched CSI in July 1994, as a way to bring
government officials at all levels, environmentalists, and industry
leaders together to create industry-by-industry strategies that will
work toward "cleaner, cheaper, and smarter" ways to achieve
environmental protection through consensus-based decision-making.
CSI is similar to Project XL in that both initiatives attempt to
reduce pollution in the most cost-effective manner. However, their
approaches are somewhat different--Project XL is currently focused on
protecting the environment at individual facilities and involves
stakeholders in a relatively informal process to approve
facility-specific proposals for operating flexibility, while CSI
centers on particular industrial sectors and involves stakeholders in
a formal negotiation process.\4
EPA has convened representatives from both its program and its
regional offices, six pilot industries (automobile manufacturing,
computers and electronics, iron and steel, metal finishing, petroleum
refining, and printing), and key stakeholders (including governmental
entities, industry, labor, environmental groups, and environmental
justice and community organizations) to review environmental
requirements for each of these pilot industries. According to the
operating principles developed by EPA for the CSI Council and its
related subcommittees, "the purpose of the [CSI] Council and
industry-focused Subcommittees is to hold meetings, analyze issues,
conduct reviews, perform studies and projects to develop
recommendations for administrative, regulatory, and statutory changes
and carry out other related activities." Subcommittees gather
information in support of a given recommendation primarily through
pilot projects to determine whether a proposal is worthy of being
elevated to the full Council for approval and subsequent submission
to EPA in the form of a recommendation.
--------------------
\4 The Common Sense Initiative Council (established within EPA in
October 1994 as the agency's national advisory committee for
formulating recommendations and advice on the nation's pollution
control and prevention programs relating to industrial sectors) was
directed by EPA to operate by consensus decision-making. In
contrast, recognizing that XL projects and the circumstances that
affect them differ, EPA has not prescribed a single model for
involving stakeholders in developing projects.
PERFORMANCE PARTNERSHIPS
------------------------------------------------------ Chapter 2:1.1.3
As noted in our 1995 report entitled EPA and the States:
Environmental Challenges Require a Better Working Relationship
(GAO/RCED-95-64, Apr. 3, 1995), EPA has had long-standing
difficulties in establishing effective partnerships with the states.
Among the key issues affecting EPA-state relationships are concerns
that EPA (1) is inconsistent in its oversight across regions, (2)
sometimes micromanages state programs, (3) does not provide
sufficient technical support for state programs' increasingly complex
requirements, and (4) often does not adequately consult the states
before making key decisions affecting them.
In establishing the National Environmental Performance Partnership
System (NEPPS) in May 1995, the Administrator and leaders of state
environmental programs indicated they were seeking to
". . . strengthen our protection of public health and the
environment by directing scarce public resources toward
improving environmental results, allowing states greater
flexibility to achieve those results, and enhancing our
accountability to the public and taxpayers. [We] believe that
this new environmental performance system will achieve more
integrated environmental management, promote pollution
prevention, and enhance environmental results."
A key element of the partnership system is the agency's commitment to
give states with strong environmental performance greater flexibility
and autonomy in running their environmental programs.
While NEPPS provides the overarching framework for developing
partnership agreements, the Performance Partnership Grants (PPG)
program, authorized by the Congress in April 1996, serves as a major
tool for implementing them. This program allows eligible states and
tribes to request that funds from two or more categorical grants
(such as those authorized under the Clean Water Act or those used to
implement the Clean Air Act Amendments) be combined into one or more
grants to give governmental entities greater flexibility in targeting
limited resources to their most pressing environmental needs. These
grants are also intended to be used to better coordinate existing
activities across environmental media and to develop multimedia
programs.
As of April 1997, EPA had signed performance partnership agreements
with 27 states and environmental performance partnership grants with
21 states.\5
--------------------
\5 There are three categories of performance partnership
grants--environmental, health, and agricultural. In addition to the
21 environmental grants, as of April 1997, EPA had signed 2 health
and 13 agricultural grants.
ACHIEVING CULTURAL CHANGE
-------------------------------------------------------- Chapter 2:1.2
While EPA has cited Project XL, CSI, NEPPS, and other initiatives as
tangible efforts to reinvent environmental regulation, agency
officials stress that reinvention is more than a collection of
individual projects. They emphasize that reinvention reflects a new
philosophy that will require a significant cultural change across the
agency--shifting its orientation from the traditional
command-and-control, medium-by-medium focus toward a new, more
integrated system that targets the most serious environmental
problems and then seeks to address them in the most efficient manner.
They stress that this new philosophy will need to filter down to the
program level until it is ingrained in the day-to-day activities of
the agency's line staff, and they caution that such a fundamental
change will take time.
HEADQUARTERS AND REGIONAL
OFFICES WILL CARRY OUT
REINVENTION INITIATIVES
---------------------------------------------------------- Chapter 2:2
EPA is implementing its reinvention initiatives through both its
headquarters program offices and regional offices. At headquarters,
some of the initiatives are coordinated agencywide, while other, more
medium-specific activities are being led by the Office of Water,
Office of Air and Radiation, and other program offices. The recently
announced Office of Reinvention, to be located in the Office of the
Administrator, will provide overall direction and support for
reinvention activities and play a direct role in leading some of the
agency's key initiatives.
EPA's regional offices also participate in agencywide and
program-specific initiatives and, in some cases, have initiated their
own reinvention-related efforts. Our visits to 3 of EPA's 10 regions
identified somewhat different structures and approaches for carrying
out the agency's reinvention efforts.
To further support reinvention activities, EPA has also created a
position for an ombudsman (at the senior management level) in each
program and regional office. These officials are charged, among
other things, with ensuring the quick resolution of
reinvention-related issues that arise both inside and outside the
agency.
EPA HEADQUARTERS STRUCTURE
FOR IMPLEMENTING REINVENTION
-------------------------------------------------------- Chapter 2:2.1
In February 1997, the Administrator announced EPA's plans to
establish an Office of Reinvention, to be located in the Office of
the Administrator. This office will provide direction and leadership
for the agency's reinvention activities and take the lead
responsibility for implementing some of EPA's core initiatives, such
as CSI and Project XL.\6 The Administrator decided that a formal
structure was needed to provide effective coordination of reinvention
activities across the agency, including improved communication among
staff working on separate key reinvention efforts. The agency is
currently drafting a proposal that will, among other things, outline
the functions and responsibilities of this office and determine how
its work will be coordinated with that of other EPA offices and
reinvention efforts that fall outside its immediate purview.
EPA's program offices participate in both agencywide reinvention
efforts, as needed, and their own, more medium-specific efforts. For
example, a program office may be called upon to review the
program-specific elements of a Project XL proposal for which it has
responsibility and/or work with a regulated entity to determine
whether its request for flexibility can be accommodated. This type
of review is especially important when a project proposal has the
potential to set a national precedent. For example, such reviews
were required by EPA's Office of General Counsel and Office of Air
and Radiation when a Project XL proposal by the 3M Company requested
major deviations from the Clean Air Act's requirements.\7
Program offices also have the lead responsibility for high-priority,
medium-specific reinvention efforts. For example, the Office of
Water is in charge of one of the agency's 25 "high-priority actions"
to promote effluent trading in watersheds on a national level to
encourage cost-effective reductions in water pollution. Similarly,
the Office of Air and Radiation is participating in another
high-priority effort to consolidate all federal air rules for a given
industry into a single rule and, in turn, to streamline the
requirements for emission limits, monitoring, recordkeeping, and
reporting. Other medium-specific activities include the Design for
the Environment--Green Chemistry Challenge Program. Through this
program, the Office of Prevention, Pesticides, and Toxic Substances
recognizes outstanding accomplishments by industries--large and
small--and academic institutions in designing "environmentally
friendly" chemicals and processes (such as replacing traditional
solvents used in a manufacturing process with alternatives that
pollute less).
--------------------
\6 As of June 1997, the exact date for establishing the Office of
Reinvention had not been determined.
\7 Ultimately, this proposal was withdrawn by the 3M Company and
Minnesota, in part because of unresolved differences over the
flexibilities that 3M had requested.
REGIONAL OFFICES' STRUCTURES
AND STRATEGIES FOR
IMPLEMENTING INITIATIVES
-------------------------------------------------------- Chapter 2:2.2
EPA's regional offices participate in the agencywide and program
offices' reinvention initiatives (as well as their own
reinvention-related efforts), working as needed with regulated
entities, other external stakeholders, and EPA headquarters staff.
Over the past 2 years, EPA has given its regional offices broad
latitude to restructure their operations in order to experiment with
integrating activities across environmental media. Among the three
regional offices we visited, we found considerable variation in the
choice of structure--a decision that has a direct impact on each
office's implementation of reinvention activities.
Atlanta Office (Region 4): EPA's Atlanta office has maintained a
traditional medium-by-medium program structure and carries out its
reinvention initiatives through ad hoc, multimedia teams with
part-time, voluntary membership. According to the Deputy Regional
Administrator, the office has only one full-time staff dedicated to
reinvention efforts--specifically, Project XL--in part because it has
found that spreading the workload for reinvention efforts out among
its staff has allowed it to participate in reinvention while also
allowing it to fulfill its traditional program responsibilities.
While the Atlanta office has not formally revised its appraisal
system to encourage staff to become involved in reinvention
activities, staff are informally encouraged to participate through
the region's awards program.
Chicago (Region 5): The agency's Chicago office has also largely
retained its traditional, medium-specific organizational structure
but has established (1) a new Office of Strategic Environmental
Analysis to, among other things, oversee regulatory reinvention for
the region and (2) more permanent cross-cutting teams to carry out
reinvention activities. The cross-cutting teams draw upon the
expertise of the region's program office staff, as needed, to
implement reinvention activities. In addition, the region has 10
geographical place-based teams that have some involvement in
reinvention efforts. These teams were created to address the most
critical needs of 10 principal places (such as the Great Lakes, the
upper Mississippi River, and northwest Indiana) where the
environmental stresses are so great that concentrated efforts are
needed to restore resources and improve the quality of life.
Regional officials said that reinvention has not been formally
integrated into the region's performance appraisal system but that
some managers do include this type of information in staff
performance appraisals.
Boston (Region 1): EPA's Boston office undertook the most
fundamental reorganization of its activities by adopting a structure
that integrates all media activities into a cross-cutting framework.
For example, it replaced traditional program offices (e.g., air and
water) with five new major divisions: (1) an Office of Environmental
Stewardship to carry out enforcement, compliance assistance, and
pollution prevention activities; (2) an Office of Ecosystem
Management, which has established cross-cutting teams for each state
in the region to facilitate a holistic approach to environmental
protection, to develop environmental standards and goals and to build
the capacity of states and localities to implement them; (3) an
Office of Site Restoration and Revitalization to meet requirements
under the Resource Conservation and Recovery Act (RCRA) and the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 (CERCLA) and to implement related reinvention activities; (4)
an Office of Environmental Measurement and Evaluation to provide the
infrastructure to measure environmental results; and (5) an Office of
Management and Budget to provide workforce support. This new
organization was designed to give the region more flexibility in
solving complex environmental problems and in integrating its
activities across environmental media.
In conjunction with this restructuring, responsibility for
implementing reinvention activities has been integrated into these
new offices and, as appropriate, incorporated into the routine
responsibilities of regional staff. In turn, regional staff are held
accountable for their contributions to reinvention efforts through
the region's performance appraisal system. According to the Boston
office's Reinvention Ombudsman, the office currently has over 40
full-time-equivalent staff dedicated to reinvention-related
activities and has developed a computer tracking system to monitor
the office's progress in implementing them.
REINVENTION OMBUDSMEN
DESIGNATED TO ASSIST WITH
IMPLEMENTATION
-------------------------------------------------------- Chapter 2:2.3
EPA recently designated certain high-level managers as "reinvention
ombudsmen" in its national program offices and regional offices.
These individuals serve as senior management points of contact for
reinvention-related matters both inside and outside the
agency--especially those involving significant policy or legal
matters. This action was prompted by lessons learned during early
reinvention efforts--specifically, that the active involvement of
senior EPA management enhances the likelihood that these efforts will
be successful. In a September 1996 memorandum to EPA senior
managers, the Deputy Administrator directed each regional office and
national program office to designate a reinvention ombudsman to
ensure that (1) significant legal and policy issues are brought to
the appropriate management level for timely resolution; (2) all
stakeholders have easy access to the information and issues being
reviewed and stakeholders' involvement is structured to ensure
meaningful input; and (3) entities seeking to participate in EPA's
reinvention efforts receive timely answers to their applications,
questions, and requests. The Deputy Administrator asked that these
reinvention ombudsmen give "special emphasis" to facilitating Project
XL agreements.
In addition, the memorandum set out separate but related
responsibilities for reinvention ombudsmen in the regional and
national program offices. For example, regional reinvention
ombudsmen were given the lead responsibility for facilitating
site-specific projects; ensuring timely and authoritative responses
to inquiries from external stakeholders (such as states, businesses,
and environmental groups); and coordinating efforts, as necessary,
with senior program officials in headquarters. Reinvention ombudsmen
in the agency's national program offices were directed to take
responsibility for reinvention activities that involve national
precedents and/or multimedia issues and, when necessary, work with
their regional counterparts to resolve medium-specific issues. He
stressed that this new structure was intended to improve
coordination, not to replace the agency's existing decision-making
framework.
CONCLUSIONS
---------------------------------------------------------- Chapter 2:3
EPA's effort to achieve a more flexible, integrated, and
cost-effective approach toward environmental management represents a
major transition for an agency that has focused, since its inception
in 1970, primarily on a medium-specific, command-and-control
approach. In recent months, EPA has responded organizationally in a
manner that seeks to provide greater visibility for, and improved
coordination of, its reinvention initiatives. Among the most notable
of these measures was the agency's decision to create an Office of
Reinvention, both to coordinate agencywide initiatives and to provide
direct leadership for some of EPA's key initiatives.
Given the fundamental changes being sought by the agency, further
organizational changes, both at headquarters and among the regional
offices, seem probable as EPA gains more experience with reinvention.
Achieving the most appropriate organizational structure, however, is
but one challenge facing EPA. Other key challenges are discussed in
chapter 3.
ISSUES TO ADDRESS IF REINVENTION
EFFORTS ARE TO SUCCEED
============================================================ Chapter 3
Many of EPA's reinvention efforts are consistent with GPRA's goal of
focusing on achieving results, as well as with the recommendations of
GAO and other organizations to achieve a more integrated,
cost-effective approach toward environmental protection. Two of the
agency's initiatives in particular, Project XL and the Common Sense
Initiative, seek to provide industries with substantially greater
regulatory flexibility in order to find the cheapest, most efficient
way to comply with environmental regulations. However, our contacts
with EPA headquarters and regional staff; state, industry and
environmental organization officials; and other stakeholders in the
environmental regulatory process--together with the experiences of
other organizations that have attempted to achieve fundamental
change--suggest that the agency faces significant hurdles that must
be addressed effectively if reinvention is to succeed:
-- Key stakeholders in the reinvention process have expressed
concern over the large number of complex and demanding
initiatives currently being undertaken, as well as confusion
over the underlying purpose of some of the agency's major
initiatives.
-- EPA has had difficulty achieving "buy-in" among the agency's
rank and file, which have grown accustomed to prescriptive,
medium-by-medium regulation during the agency's 27-year history.
-- The agency has had difficulty achieving agreement among external
stakeholders, including federal and state regulators and
industry and environmental organization
representatives--particularly when stakeholders perceive that
unanimous agreement is required before progress can be made.
-- The agency's process for resolving miscommunication and other
problems involving EPA headquarters staff, regional staff, and
other stakeholders does not distinguish between problems that
require the attention of senior management and those that should
be resolved at lower levels within the agency.
-- EPA has an uneven record in evaluating the success of many of
its initiatives. Evaluation is needed both to show EPA
management what does and does not work and to provide convincing
evidence to external stakeholders that an alternative regulatory
strategy is worth pursuing.
In addition, the current prescriptive, medium-specific environmental
laws impose requirements that have led to and tend to reinforce many
of the existing regulatory and behavioral practices that EPA is
seeking to change. As a consequence, the agency will be limited in
its ability to truly "reinvent" environmental regulation within this
existing legislative framework.
GREATER FOCUS ON KEY
INITIATIVES COULD IMPROVE
PROSPECTS FOR SUCCESS
---------------------------------------------------------- Chapter 3:1
Most of the headquarters and regional officials we interviewed cited
the large number of individual initiatives under way, coupled with
limitations on the agency's resources, as a key issue to be resolved
as EPA moves forward with reinvention. We also found that progress
on some of EPA's high-priority initiatives has been impeded by
unclear objectives and/or guidance.
LARGE NUMBER OF INITIATIVES
MAY BE DIVERTING ATTENTION
FROM HIGH-PRIORITY EFFORTS
-------------------------------------------------------- Chapter 3:1.1
Literature on organizational reinvention and reengineering stress
that an organization needs to have a strong focus and a clear vision
of what it is trying to achieve. A June 1996 GAO report examining
federal management reforms under the Results Act notes that an
organization brings its efforts into focus through a clear
understanding of how individual efforts will support the
organization's overall mission.\1 A 1994 report by the Brookings
Institution states, in particular, that government reform efforts
should "focus . . . on results and avoid having the reform spin
off into scores of different, unconnected directions."\2 Our
interviews suggest that while many of EPA's initiatives are, in fact,
in line with the agency's goal of "achieving the very best protection
of public health and the environment at the least cost," it may be
appropriate at this time for EPA to reexamine whether all the
initiatives now under way are directly linked with this basic
mission.
Officials from two of the three EPA regional offices we visited cited
the large number of initiatives as a problem and indicated that
setting priorities among the initiatives would make the most
efficient use of the agency's resources. Currently, they noted, the
regional offices are expected to carry out reinvention activities
with few resources beyond those the regions receive to carry out
traditional program responsibilities. For example, according to the
Director of the Office of Strategic Environmental Analysis in EPA's
Chicago office, the office has 17 teams dealing with various
reinvention-related efforts, including sustainable development,
enforcement and compliance, emissions testing, brownfields,\3 and
data management. Regional officials said that although all of these
are worthwhile, the office must face the reality that resources are
limited and are already stretched too thin.
Similarly, one of the two Deputy Regional Administrators in EPA's
Boston office said that staff in that office are already being pushed
beyond their limits because they are doing both traditional and
reinvention activities. This official observed that some of the
agency's initiatives are extensions of efforts that are about 15
years old and suggested that the agency review all of its
reinvention-related initiatives and eliminate those that are no
longer a priority. The Deputy Regional Administrator in EPA's
Atlanta office agreed that it is difficult for staff to perform all
traditional and reinvention activities with the limited resources
available but said that he was responsible as a senior manager for
making trade-off decisions under such circumstances.
Other stakeholders interviewed by GAO echoed the concerns of the
Boston and Chicago officials about the number of reinvention
initiatives under way. Among them were the Commissioner of the
Minnesota Pollution Control Agency, who told us that addressing the
problem could help EPA better track and implement the initiatives
that it considers the most important. He suggested that the head of
EPA's future Office of Reinvention take on this responsibility. In a
similar vein, a representative of the National Governors' Association
said that state officials have complained that they are having
difficulty managing the large number of initiatives. A
representative of Resources for the Future, a research group that has
examined EPA's reinvention efforts, also questioned the value of
supporting the current number of initiatives.\4
EPA officials, including the agency's Deputy Administrator, noted
that the agency has no specific plans to systematically review and
prioritize its reinvention initiatives. The Deputy Administrator
said he agreed that decisions should be made periodically over which
initiatives should be undertaken and continued. However, rather than
being performed as a single event, he maintained, these decisions
should be part of an iterative process that takes into account the
results of evaluations of the initiatives' success. He echoed the
Minnesota commissioner's view that such a function would most
appropriately be carried out by the Associate Administrator of the
Office of Reinvention.
--------------------
\1 Executive Guide: Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996).
\2 Donald F. Kettl, Reinventing Government? Appraising the National
Performance Review, Brookings Institution, Center for Public
Management (Aug. 19, 1994), p. viii.
\3 Brownfields are abandoned, idled, or unused industrial and
commercial facilities where expansion or redevelopment is complicated
by real or perceived environmental contamination. Under the
Brownfields Initiative, EPA is working with states, cities, community
representatives, and other stakeholders to overcome barriers to
assessing, cleaning up, and redeveloping brownfields.
\4 The Keystone Center--a nonprofit public policy and educational
organization--issued a report in May 1997 entitled Regulatory
Reinvention Assessment: Summary of Stakeholder Comments, which
reported similar findings. The report, prepared for EPA's Regulatory
Reinvention Team, summarized comments by 20 external stakeholders or
organizations and more than a dozen EPA staff on various regulatory
reinvention topics. Stakeholders representing both EPA and industry
suggested that EPA select a few key reinvention efforts and focus the
agency's attention and resources on these.
KEY INITIATIVES HAVE
REQUIRED GREATER RESOURCE
COMMITMENT
-------------------------------------------------------- Chapter 3:1.2
To further complicate concerns about too many reinvention initiatives
and not enough resources to implement them, two of EPA's major
reinvention efforts--Project XL and CSI--have proved to be more
difficult and time-consuming than originally anticipated. In
particular, the Deputy Assistant Administrator of Project XL said
that one year after that initiative began, it became apparent that
the effort had grown so large that it needed to be managed more like
a program than a series of pilot projects. As a result, a full-time
manager was appointed to coordinate XL activities at EPA
headquarters. Before this, XL coordinators were appointed in each
regional office.\5
The growth of this program is also evident in the agency's annual
budget requests. For fiscal year 1997, EPA requested $2.5 million
for the XL program. In its fiscal year 1998 budget request, the
agency asked for approximately $4 million for Project XL, which
includes the redirection of 20 workyears to the regions for Project
XL support. This request represents an increase of approximately 68
percent over the preceding fiscal year's budget request.
Progress with CSI has also been slower and more difficult than
originally expected. According to a February 1997 contractor study,
CSI participants representing all industrial sectors and stakeholder
groups expressed concern over the pace of the CSI process, noting
that it has taken longer than expected to develop working
relationships among the participants and to reach consensus on
issues.\6
These increased demands are reflected in CSI's budget, which has
grown by over 50 percent during the program's first 3 years of
operation.
--------------------
\5 In this connection, Atlanta regional officials pointed out that
their office dedicated the equivalent of five full-time staff to its
Project XL activities. Chicago officials said they dedicated five
full-time staff specifically to negotiate the 3M Company's Project XL
proposal.
\6 Review of the Common Sense Initiative, The Scientific Consulting
Group, Inc. (Feb. 19, 1997).
UNCLEAR OBJECTIVES AND
GUIDANCE POSE BARRIERS FOR
TWO KEY REINVENTION PROGRAMS
-------------------------------------------------------- Chapter 3:1.3
The challenges posed by the large number of reinvention initiatives
have been further compounded by confusion over the fundamental
objectives of some of the agency's key initiatives, particularly
Project XL and CSI. When EPA announced the creation of Project XL in
March 1995, the agency described XL projects as real world tests of
innovative strategies that achieve cleaner and cheaper results than
conventional regulatory approaches. Officials from two of the three
regional offices we visited, as well as from all three states, said
that this statement (together with others made when Project XL was
initially announced) promoted Project XL as an initiative that would
allow companies great flexibility to experiment with new ways of
achieving environmental compliance.
According to officials from the Minnesota Pollution Control Agency,
it was with this understanding that officials from the state and the
Minnesota Mining and Manufacturing (3M) Company proposed the first XL
project in March 1996. The 3M project proposed taking a "one-stop"
approach to permitting by developing a single comprehensive permit
for air, water, and waste at one of its facilities in Minnesota.
Minnesota officials said that they felt they had been given the
go-ahead by EPA for the project and were surprised when EPA
headquarters and regional officials subsequently raised major issues,
questioning whether the proposal was sufficiently protective of the
environment.\7 These officials said that EPA's suggested changes were
prescriptive and were not in keeping with the initial concept of
Project XL.
Miscommunication between EPA officials and officials from Minnesota
and 3M over the meaning of "superior environmental performance" also
caused difficulties for the 3M project. According to EPA, Project XL
is intended to allow companies that are environmental leaders to test
creative, common sense ways of achieving superior environmental
protection at their facilities and in their communities. In the case
of the 3M project, which involved a facility that was already
performing above current federal standards, both Minnesota and 3M
officials thought that EPA would give the company credit for this
"superior" performance. EPA agreed that the company should receive
credit for past superior performance but disagreed with the company
over the way in which the credit should be provided. Officials from
Minnesota and 3M observed that EPA's definition of superior
environmental performance did not make it worthwhile for companies
that are already exceeding standards to participate in Project XL.
As a result of these disagreements, Minnesota and 3M withdrew the
proposal from consideration in September 1996.
The Deputy Assistant Administrator for Project XL has acknowledged
that in the program's early stages, the agency was vague in
communicating its vision. This caused a number of
problems--particularly a widespread view that the agency was not
"speaking with one voice" when companies and states raised issues
about project proposals. To help address these problems, EPA has
sponsored quarterly meetings with interested parties to further
explain the agency's expectations for project proposals. The agency
has recently clarified its Project XL guidance, including what it
means by "superior environmental performance."
According to the February 1997 contractor study evaluating CSI's
progress, the EPA Administrator said in introducing the program that
everything was on the table. She challenged CSI participants, the
study said, to look comprehensively at industrial sectors in an
effort to imagine the best possible environmental performance for
each sector, identify the barriers to this level of performance, and
develop solutions based on consensus among stakeholders to overcome
these barriers. However, the study found that while the overall
goals of CSI were articulated clearly by the Administrator in
initiating the program, specific objectives and expectations for the
program were not. The study reported that as a consequence, instead
of encouraging out-of-the-box thinking as hoped, the CSI effort was
delayed while confused participants tried to figure out what EPA was
willing to accept. The study concluded that EPA should provide more
guidance on the types of recommendations and projects that the agency
would find most useful for CSI.\8
--------------------
\7 Specifically, EPA staff from the agency's Office of Air and
Radiation and Office of General Counsel expressed concern that the
project would require significant deviations from requirements
imposed under the Clean Air Act.
\8 GAO came to similar conclusions in its ongoing review of CSI.
Specifically, GAO's preliminary findings indicate that EPA should
better define CSI's goal and expected results, including specific
guidance on how the results will be accomplished.
STAKEHOLDERS HAVE QUESTIONED
EPA'S COMMITMENT TO REINVENTION
---------------------------------------------------------- Chapter 3:2
For EPA, as for other large and complex organizations, the success of
its reinvention efforts will depend greatly on the strength of the
commitment expressed by its management and achieved by its rank and
file. The EPA staff and state officials whom we interviewed
generally agreed that top EPA management has articulated a clear
commitment to the agency's reinvention efforts. However,
disagreements have surfaced in recent months that have led some key
stakeholders to question EPA management's direction of the
reinvention efforts. At the staff level, we found that program and
regional offices do encourage staff, to varying degrees, to
participate in reinvention activities and that these efforts have
engendered wider staff participation. Some staff, however, have
resisted participation for a variety of reasons.
TOP EPA MANAGEMENT HAS
ARTICULATED A COMMITMENT TO
REINVENTION
-------------------------------------------------------- Chapter 3:2.1
Reengineering literature supports the view that an organization's
culture must be receptive to the goals and principles of
reengineering. During a 1994 GAO symposium on reengineering best
practices,\9 for example, panelists from leading organizations
emphasized that without a compelling and well-communicated vision by
top management of where reengineering will take the organization,
suspicion and mistrust among staff can prevail.
EPA management has clearly taken steps to communicate its commitment
to reinvention, both to the agency's staff and to external audiences.
For example, in testimony before the Senate Committee on
Appropriations on February 29, 1996, the Deputy Administrator said
that EPA "is working to change the way the Agency accomplishes its
mission" and "remains committed to setting priorities that allow the
Agency to apply limited resources where they will gain the most
public health and environmental benefits." Later, in September 1996,
he stated in a memorandum to all EPA regional administrators that the
Administrator and he "remain committed to reinventing the way public
health and environmental protections are delivered in this country"
and asked for the commitment of senior management to ensure that the
agency "can take full advantage of reinvention opportunities."
As a more tangible expression of this commitment, the Administrator
announced her decision to create an Office of Reinvention in February
1997. As noted in chapter 2, this office will be charged with
providing overall direction and support for reinvention activities,
as well as direct leadership for some of the agency's key initiatives
(such as CSI and Project XL). Currently, the agency is further
defining this office's responsibilities. According to its newly
appointed Associate Administrator, the decision to create this office
reflects an understanding that to make reinvention happen, an
overarching structure is needed to provide ongoing guidance to the
rest of the agency. He added that another purpose of the office will
be to help ensure that reinvention efforts and ideas are shared
across the agency.
--------------------
\9 Reengineering Organizations: Results of a GAO Symposium
(GAO/NSIAD-95-34, Dec. 13, 1994).
STAKEHOLDERS HAVE QUESTIONED
THE EXTENT OF EPA'S
COMMITMENT TO REINVENTION
-------------------------------------------------------- Chapter 3:2.2
Most of the EPA, state, industry, and environmental organization
officials we contacted acknowledged the agency's expressions of
commitment to reinvention, but some have questioned the extent of the
agency's commitment to fundamental change. For example, a recent
report prepared for an industry group\10 notes that the agency is
inherently organized and structured to implement statutes and that
"nonstatutory" programs (such as EPA's reinvention initiatives) tend
to be treated in an "ad hoc" fashion.
The state officials we interviewed all acknowledged EPA management's
expressed commitment to reinvention, but some cited differences over
the roles of EPA and the states in developing and implementing new
projects and processes. These differences centered around issues
such as how much flexibility the states have to negotiate and approve
reinvention projects and how to include stakeholders in negotiations.
These differences came to a head in February 1997 when EPA
temporarily withdrew from negotiations on a proposal jointly prepared
by leaders of the Environmental Council of the States (ECOS) and EPA
staff outlining an overarching framework for how EPA and the states
will promote and implement regulatory reinvention efforts. Among
other things, the proposal was intended to "establish guiding
principles for reinvention and an efficient process that is receptive
to innovative proposals" and "improve decision-making between states
and EPA on innovation proposals, emphasizing clear lines of
communication, decision authority, accountability, and timeliness."
However, EPA's Deputy Administrator temporarily withdrew EPA's
agreement with the proposal, noting, among other things, that
specific conditions must be met before regulatory flexibility can be
granted.\11
In response, ECOS initially asserted that EPA's withdrawal "damaged
trust and [raised] questions about [EPA's] commitment to working in
partnership with the states to create a better environmental system.
. . ." EPA and ECOS subsequently renewed negotiations and plan to
meet regularly to maintain an ongoing dialogue on reinvention issues.
However, according to the Commissioner of the Minnesota Pollution
Control Agency, who has led this effort on behalf of ECOS, the
experience points to some fundamental differences between at least
some of the states and EPA management over the future roles of EPA
and the states in managing the reinvention process. He maintained
that it is unclear at this point whether these differences can be
resolved. As of June 1997, EPA--in consultation with ECOS--expects
to publish a new draft proposal in the Federal Register for public
comment later this year.
--------------------
\10 Industry Incentives for Environmental Improvement: Evaluation of
U.S. Federal Initiatives, Resources for the Future (Sept. 1996).
This report is addressed to the Global Environmental Management
Initiative, a nonprofit organization of 21 leading corporations
dedicated to helping businesses achieve environmental, health, and
safety excellence.
\11 Specifically, the Deputy Administrator's letter stated, among
other things, that proposals seeking regulatory flexibility must
achieve "superior environmental performance" and that "the degree of
superior performance must be proportional to the degree of
flexibility sought."
ACHIEVING COMMITMENT BY RANK
AND FILE WILL TAKE TIME
-------------------------------------------------------- Chapter 3:2.3
Despite some differences between various stakeholders and EPA
management over the future direction of reinvention, all participants
in the process we interviewed--both within and outside EPA--agreed
that achieving full commitment to reinvention by the agency's rank
and file will be difficult and will take time. The Special Assistant
for Reinvention Efforts in EPA's Office of Prevention, Pesticides,
and Toxic Substances reflected many of these views when he told us
that it will take time for culture change to filter down to EPA line
staff and to see if the change takes hold.
The three EPA regions we visited are taking different approaches to
achieving commitment by line staff to reinvention. For example, the
Atlanta office encourages staff to participate voluntarily in ad hoc
media teams that are working on reinvention initiatives. While this
region has not formally revised its reward system to emphasize
reinvention activities, the Regional Administrator has made it clear
to the staff that he views reinvention as a top priority and values
participation. Even so, the Office's Deputy Regional Administrator
acknowledged that the reaction of the regional staff to reinvention
has been mixed, noting that the staff that participate in these
initiatives are generally those that accept change more readily. He
noted that some staff have raised various issues about reinvention,
including concerns that (1) some reinvention projects may not provide
adequate protection for the environment and public health and (2)
some projects may not be legal under current statutes. He
acknowledged that although some of these concerns may be well
founded, others stem from a desire to maintain traditional ways of
regulating.
The Chicago office also encourages staff to voluntarily participate
in reinvention efforts through cross-media teams. According to
regional office management, as teams are formed to focus on various
reinvention efforts, participation is "spreading like roots" through
the regional office. Like the Atlanta office, the Chicago office has
not formally revised its reward system to include a reinvention
component, but staff participation in reinvention efforts can be
reflected in performance ratings. Chicago officials further noted
that wider participation can be expected as the region gains more
experience--and achieves more success--with reinvention efforts.
As noted in chapter 2, the Boston office recently reorganized so that
reinvention activities are an integral part of its program
activities. According to one of the office's Deputy Regional
Administrators, the practical effect of this reorganization, which is
reinforced by regional office management, is that reinvention is
expected to be a routine part of all staff activities. She added
that internal incentives "to reinvent" are built into staff job
descriptions.
Yet in spite of the efforts both at headquarters and among the
regions, we found widespread agreement among EPA officials, state
officials, and others that the agency has a long way to go before
reinvention becomes an integral part of its staff's everyday
activities. For example, the Director of EPA's Regulatory
Reinvention Team acknowledged that reinvention goals have been slow
to trickle down to line staff. This official pointed out that many
staff are comfortable with traditional ways of doing business and
consider their program-specific job responsibilities as their first
priority and reinvention projects as secondary.
Many state and other officials shared this perception. Overall,
these officials said that the existing incentive system leads staff
to focus on traditional ways of regulating and discourages them from
being open to new approaches to environmental regulation. Similarly,
the report prepared for the Global Environmental Management
Initiative maintains that EPA personnel "give the non-statutory
programs low priority because most of their effort is devoted to
meeting requirements set by Congress and the Courts."
CONSENSUS AMONG ALL
STAKEHOLDERS IS DIFFICULT TO
ACHIEVE
---------------------------------------------------------- Chapter 3:3
EPA's reinvention strategy includes the goal of sharing information
and making decisions with all stakeholders, including those that are
external to the agency, such as state regulators, industry officials,
and environmental organization officials. We found that EPA has made
great efforts to include external stakeholders in the reinvention
process but that achieving consensus--especially full consensus--on
reinvention-related issues among parties with varying, and often
conflicting, interests has proved to be very difficult. As noted in
chapter 2, to help deal with issues raised during negotiations among
stakeholders, the agency has designated reinvention ombudsmen to
elevate difficult issues for EPA management's attention in a timely
manner. However, most of the EPA regional and state officials we
interviewed saw this process as a useful but temporary solution.
These officials maintained that, in the long term, EPA needs to
develop a process for resolving less controversial issues at lower
levels within the agency.
REINVENTION STRESSES
COLLABORATION OVER
CONFRONTATION
-------------------------------------------------------- Chapter 3:3.1
Since the early 1970s, EPA's regulations and actions have been the
subject of constant litigation, frequently delaying the
implementation of environmental controls while at the same time
adding considerably to the cost of compliance by industry and to the
costs of regulation by state and local governments. In recent years,
the agency has increasingly tried to address this problem by seeking
consensus among the key stakeholders on broader regulatory
approaches, as well as specific actions. This strategy is intended
to help avert litigation by getting agreement up front among affected
parties and by getting a commitment by industry to meet requirements
it acknowledges are achievable. It is consistent with Executive
Order 12866 (issued on Sept. 30, 1993), which directed each federal
regulatory agency to consider the use of consensual mechanisms,
including negotiated rulemaking, when developing regulations. It was
further reinforced by the President's March 1995 Report on
Reinventing Environmental Regulation, which stated that
"the adversarial approach that has often characterized our
environmental system precludes opportunities for creative
solutions that a more collaborative system might encourage.
When decision-making is shared, people can bridge differences,
find common ground, and identify new solutions. To reinvent
environmental protection, we must first build trust among
traditional adversaries."
To help build trust among interested parties, the report states that
(1) environmental standards must be set with full public
participation; (2) an inclusive decision-making process must be
employed that will provide states, tribes, communities, businesses,
and individual citizens with an opportunity to participate; (3)
state, tribal, and local governments will serve as full partners in
developing and implementing policies to achieve national goals; and
(4) EPA will become a partner providing information and research to
empower local decisionmakers.
DEFINITION OF CONSENSUS
VARIES AMONG EPA INITIATIVES
-------------------------------------------------------- Chapter 3:3.2
EPA reinvention officials acknowledge that the agency is searching
for a workable definition of what it means to achieve consensus among
stakeholders. To date, the agency has defined consensus in various
ways. For example, the Deputy Assistant Administrator for Project XL
told us that the goal of negotiating with stakeholders under this
program is to get all participants' concerns on the table and to show
that the agency respects and is receptive to varying views on issues.
However, this official stressed that EPA may not agree with the
positions raised by the stakeholders and that the agency reserves the
right to make the final decision on whether to approve a project.\12
In the case of CSI, however, stakeholder groups have generally been
seeking to achieve 100 percent agreement among participants.
--------------------
\12 For example, although EPA worked with environmental groups to
address a number of their concerns, the agency ultimately approved
the Weyerhaeuser project even though one major environmental group
was concerned that the regulatory flexibility was not merited.
ACHIEVING FULL CONSENSUS HAS
BEEN CHALLENGING
-------------------------------------------------------- Chapter 3:3.3
Most stakeholders we interviewed agreed that achieving consensus
among stakeholders is one of the most difficult challenges EPA faces
in attempting to reinvent environmental regulation. They noted that
the challenge has been particularly difficult when the agency has
sought to achieve--or was perceived as seeking to achieve--100
percent agreement. Officials from two of the three states that we
contacted, for example, agreed that EPA goes to great lengths to
include external stakeholders in these negotiations but noted that
efforts to achieve unanimous agreement have been problematic,
particularly in CSI negotiations. According to an official from
Georgia, EPA is "bending over backwards" to include stakeholders, but
when unanimous consent is required, any stakeholder has the power to
veto a project. In this state official's opinion, this approach is
an invitation for gridlock and should give way to a less stringent
definition of consensus.
Industry representatives have also voiced concerns about the
feasibility of achieving 100 percent agreement among stakeholders.
This concern contributed to the ambivalence some industry groups
expressed about continuing to participate in CSI. A representative
of the American Petroleum Institute said, for example, that trying to
achieve 100 percent agreement among stakeholders essentially
paralyzes negotiations and is one of the key reasons why
participating in CSI has been very costly and labor intensive for the
petroleum industry. He told us that giving every participant the
power to veto a project "creates a huge road block," especially when
participants assume polarized positions. According to this official,
without more tangible results, the Institute cannot justify its
continued participation in CSI.
The 1997 contractor study of CSI, discussed above, supported many of
these factors. The study concluded that CSI participants perceive
that consensus has been defined as unanimity, thus providing each
individual with veto power. It cited the belief by many participants
that consensus should be redefined to require less than complete
agreement so that an idea can move forward even if some participants
do not favor it but can "live with it."
In response to these concerns, officials from EPA's Regulatory
Reinvention Team said that the agency is currently working with CSI
participants to explore the use of a less restrictive definition of
consensus. The officials caution, however, that some CSI groups may
prefer to continue to define consensus as 100 percent agreement among
stakeholders.
In contrast, under Project XL, where EPA does not seek unanimous
consensus among stakeholders, the agency has experienced increasing
success in finalizing project proposals through negotiations with
stakeholders.\13 As discussed previously in this chapter, EPA was
unable to resolve stakeholders' concerns about the first XL project
proposal, submitted by the 3M Company. However, since this time, EPA
has successfully completed negotiations on three XL projects.
According to EPA's Deputy Assistant Administrator for Project XL,
this success is due, in part, to the agency's insistence that it has
the right to make the final decision on whether to approve or
disapprove a project. For example, during negotiations for two
recently approved XL projects proposed by Intel Corporation and
Weyerhaeuser, EPA decided to approve these projects even though all
stakeholders' concerns were not resolved.\14
Summarizing EPA's approach under Project XL, the Deputy Assistant
Administrator stressed that while EPA always wants to get all
stakeholders' issues on the table and have them thoroughly discussed,
the agency does not expect unanimous support from stakeholders for
all XL projects.
--------------------
\13 According to an April 1997 Federal Register notice outlining
updated guidelines for Project XL, the agency allows a project's
sponsor and stakeholders to determine the ground rules for a project,
such as what type of decision-making process will be used. However,
EPA reserves the right to decide whether to approve a project for
implementation.
\14 According to EPA, in the case of the Intel project, an
environmental group was concerned about the way in which the permit
was structured. Also, a local citizens' group said, among other
things, that the Final Project Agreement should have a much stronger
focus on pollution prevention. In the case of the Weyerhaeuser
project, the Natural Resources Defense Council objected to a
provision of the project proposal that would allow EPA to waive
certain permitting requirements under the Clean Air Act and the Clean
Water Act.
SOME ENVIRONMENTAL AND LOCAL
INTEREST GROUPS LACK
RESOURCES TO PARTICIPATE
FULLY IN PROJECT
NEGOTIATIONS
-------------------------------------------------------- Chapter 3:3.4
Another issue affecting the ability of key stakeholders to achieve
consensus stems from the difficulties many environmental and local
groups face in trying to participate fully in project negotiations.
A representative of the Natural Resources Defense Council (NRDC)
noted, in particular, that these groups do not have enough staff
and/or technical expertise to evaluate project proposals and to fully
gauge the impact of these proposals. She noted, for example, that
although NRDC's resources are already stretched to the limit, the
group had to dedicate two attorneys and one staff researcher just to
evaluate the Weyerhaeuser XL project proposal and to participate in
negotiations on that project. To address this problem, the NRDC
representative said that EPA needs to take steps to ensure that
groups representing environmental and local concerns have the
resources to participate meaningfully in project negotiations.
EPA responded to this problem in January 1997 by announcing that it
is prepared to offer technical assistance to all Project XL
stakeholder groups to help them evaluate project proposals. The
agency plans to offer up to $25,000 in technical assistance for each
project.
EPA INITIATES A PROCESS TO
HELP ADDRESS STAKEHOLDERS'
ISSUES
-------------------------------------------------------- Chapter 3:3.5
An official from EPA's Regulatory Reinvention Team acknowledged the
need to improve the agency's process for including external
stakeholders in project negotiations. As one step in this direction,
EPA has established a process for reinvention ombudsmen to assist in
resolving disputes during project negotiations. In a September 1996
memorandum, EPA's Deputy Administrator instructed each regional
office and headquarters program office to designate a senior official
to serve as a reinvention ombudsman. According to this memorandum,
"The primary role of the reinvention ombudsmen is to facilitate
quick resolution of issues arising in reinvention projects by
raising them to the appropriate management levels throughout the
Agency for attention and appropriate action. The reinvention
ombudsmen are not meant to replace existing decision-making
frameworks, but serve as a single point of contact to ensure
that necessary decisions are coordinated and made in a timely
manner."
The process has met with some success. According to a Georgia state
official involved with the Weyerhaeuser project, the intervention in
negotiations by the Atlanta office's Deputy Regional
Administrator--the designated reinvention ombudsman--was instrumental
in resolving outstanding concerns. The Commissioner of Minnesota's
Pollution Control Agency told us that having a reinvention ombudsman
could have helped to resolve some of the problems that ultimately
caused the 3M project to unravel.
While acknowledging the benefits of using a reinvention ombudsman to
facilitate the Weyerhaeuser negotiations, the Georgia official
pointed out that the negotiations appeared to consume a great deal of
the Deputy Regional Administrator's time and questioned whether such
senior officials can commit so much time whenever a reinvention
initiative encounters a problem. The other state officials we
interviewed echoed this sentiment, pointing out that the reinvention
ombudsman process should be viewed as a short-term solution to the
types of problems that have occurred during project negotiations. In
the opinion of these officials, a longer-term solution should employ
a process that distinguishes between problems that can be resolved at
lower levels within the agency and those that need to be elevated for
senior management's attention.
In this connection, ECOS and EPA are working to develop an
alternative plan to facilitate the approval of reinvention project
proposals. A February 1997 draft of the plan acknowledged that the
process for developing, evaluating, and acting upon proposals for
innovation must be improved. The draft outlined a process for
classifying projects into one of four categories and identified, for
each category, which parties are responsible for reviewing and
approving the proposals.\15 While the Deputy Administrator withdrew
the proposal the following month for a variety of reasons, he told us
that EPA is still committed to working with the states to establish a
system that effectively resolves stakeholders' issues and provides
for distinguishing between problems that are best addressed at lower
levels in EPA and those that must be resolved at higher levels.
--------------------
\15 For example, project proposals viewed as potentially inconsistent
with a federal statute or regulation would have been placed in
categories 1 and 2. EPA headquarters, the EPA regional office, and
the state would then have jointly reviewed the proposal. Project
proposals viewed as potentially inconsistent with federal guidance,
policies, and past practices or interpretations of the rule would
have been placed in category 3. The state and EPA regional office
would have had the primary responsibility for reviewing the
proposals. Project proposals requiring no changes in federal
guidance, past practices, regulations, or statutes would have been
placed in category 4. Under these circumstances, the states would
have been free to proceed without EPA's review.
EPA IS NOT SYSTEMATICALLY
EVALUATING REINVENTION
INITIATIVES' EFFECTIVENESS
---------------------------------------------------------- Chapter 3:4
GAO found that EPA has yet to develop a systematic process for
evaluating the effectiveness of its initiatives, although it has made
some progress in certain instances. The agency is currently taking
initial steps toward developing criteria that can be used to evaluate
the success both of individual projects and of its overall
reinvention efforts.
MEASUREMENT OF PROGRESS IS
IMPORTANT BUT DIFFICULT
-------------------------------------------------------- Chapter 3:4.1
GAO and other organizations have maintained that a system for
measuring progress is of paramount importance in helping to ensure
successful organizational change. In a June 1996 report on
implementing GPRA, GAO observed that "measuring performance allows
organizations to track the progress they are making toward their
goals and gives managers crucial information on which to base their
organizational and management decisions."\16
In March 1996, GAO testified on the contribution that the Results Act
can make to congressional and executive branch decision-making and
noted that striving to measure outcomes is one of the most
challenging and time-consuming aspects of reinvention. According to
the report "many [federal] agencies are having difficulty in making
the transition to a focus on outcomes." Such findings were
substantiated by a recent report by the National Academy of Sciences,
which focused on industry-initiated efforts to achieve environmental
compliance through alternative means. While emphasizing the value of
developing such measures, the report cautioned that "it is not easy
and often not possible to quantify the effectiveness of most
industry-initiated programs. . . ."\17
--------------------
\16 Executive Guide: Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996).
\17 Fostering Industry-Initiated Environmental Protection Efforts,
National Academy of Sciences (Washington, D.C.: 1997), p. 2.
EPA'S EFFORTS TO MEASURE
PROGRESS HAVE THUS FAR BEEN
LIMITED
-------------------------------------------------------- Chapter 3:4.2
EPA has had some experience in systematically measuring the
effectiveness of new programs. For example, an independent research
firm under contract with EPA issued a report in 1995 on the
effectiveness of its "33/50" program, which seeks voluntary
cooperation from industrial firms to reduce toxic chemicals through
source reduction.\18 At the end of 1996, the agency hired a
contractor to evaluate the effectiveness of its processes for
involving stakeholders. In May 1997, the contractor issued a report
summarizing comments made by various internal and external
stakeholder groups that were interviewed regarding their expectations
for reinvention, opinions on possible performance measures and
criteria for measuring the success of reinvention, and general advice
on regulatory reinvention. Among other things, the stakeholders
agreed that measures of environmental health should be the primary
performance criteria for measuring reinvention success. EPA is
currently evaluating the report's findings.
Nonetheless, EPA reinvention officials acknowledged that a large
number of reinvention projects do not currently have evaluation
components. They added that among the projects that do have such
components, the quality varies widely. These officials explained
that, in part, it is too early to evaluate some of the reinvention
efforts. For example, the February 1997 contractor review of CSI's
first 2 years found that it is too early to observe the effects of
CSI on statutes and regulations as well as on environmental
compliance; environmental indicators; quality of life; public health;
productivity; and burden on industry, government, and society.
Even though it may be too early to observe the effects of reinvention
initiatives, we believe it is not too early to build evaluation
components into reinvention projects so that observable effects down
the road can be evaluated. The agency has recently taken initial
steps toward this end. Specifically, the Administrator has asked the
National Advisory Council for Environmental Policy and Technology's
Reinvention Criteria Committee to identify criteria the agency can
use to measure the progress and success of specific reinvention
projects and its overall reinvention efforts. In October 1996, the
committee completed a 6-month review of seven separate EPA
reinvention initiatives to determine how they might be evaluated.
These initiatives include CSI, Self-Policing/Audit policies,
Self-Certification efforts, the Environmental Leadership Program
(ELP), Project XL, NEPPS and the Sustainable Development Challenge
Grants Program. This review found that two of the seven reinvention
initiatives--ELP and NEPPS--had begun to define evaluation criteria.
Since this review, the committee held a 2-day public meeting in April
1997 to solicit perspectives on defining evaluation criteria from
representatives of state and local government, academia, industry,
environmental organizations, and nongovernmental organizations. The
Committee plans to hold another meeting in July 1997 to continue
discussions on defining evaluation criteria.
--------------------
\18 The nonprofit environmental research firm INFORM found that 31
percent of the reductions in toxic releases claimed by EPA had been
initiated before the announcement of the 33/50 program. The firm
also found that most companies relied on "end-of-pipe" treatment
technologies or on-site recycling and energy recovery, rather than
source reduction, to reduce their toxic releases.
ENVIRONMENTAL STATUTORY
FRAMEWORK LIMITS POTENTIAL TO
REINVENT ENVIRONMENTAL
REGULATION
---------------------------------------------------------- Chapter 3:5
GAO found considerable disagreement among stakeholders on whether
changes to the current statutory framework are needed to facilitate
the regulatory reform process. Most of the state and industry
officials we interviewed cited the need for (1) statutory authority
to waive certain legal requirements that they believe impede
experiments designed to test alternative methods of achieving
environmental compliance and/or (2) more fundamental changes to the
environmental statutory framework to encourage changes in the way
environmental regulation is conducted nationwide, or both. In
contrast, EPA maintains--and some in the environmental community
agree--that the current statutory framework is sufficiently flexible
to allow for real progress in most of the agency's reinvention
efforts and that substantial changes in the statutes could compromise
protection of the environment and public health. The agency further
notes that it will need to consider the results of an analysis by an
advisory group that is currently assessing this issue.
On the basis of past evaluations by GAO and others, the experiences
to date of EPA's key reinvention efforts, and our contacts with a
variety of stakeholders for this review, we believe that some
constructive modifications can be made under the current
environmental statutory framework. Nonetheless, the framework does
impose requirements that have led to and reinforce many of the
existing practices the agency is most seeking to change.
Consequently, as GAO and other organizations have noted in the past,
EPA will be limited in its ability to achieve fundamental changes in
environmental regulation within the legislative framework as
currently constructed.
CURRENT STATUTORY FRAMEWORK
DISCOURAGES CROSS-CUTTING
APPROACHES
-------------------------------------------------------- Chapter 3:5.1
As noted in chapter 1, EPA has no formal, overarching legislative
mission because it was created under an executive reorganization
plan. Instead, its statutory responsibilities are set forth in a
dozen or so separate pieces of legislation that generally assign
pollution control responsibilities according to environmental medium
(e.g., air and water) or category of pollutant (e.g., pesticides).
These numerous legislative mandates have led to the creation of
individual EPA program offices that focus primarily on reducing
pollution within the particular environmental medium for which they
have responsibility, rather than on reducing overall pollutant
discharges.
The complications arising from this framework have been documented by
GAO and other organizations for many years. In our 1988 general
management review of EPA,\19 we cited several problems, including
difficulties in setting risk-based priorities across environmental
media because each statute prescribes certain activities to deal with
its own medium-specific problems. In addition, different statutes
require the use of different approaches in developing and evaluating
regulatory options--often resulting in "fragmentation of effort,
conflict in resource allocation, bias against new chemical/pesticide
products, and multiple risk assessment documents for the same
substance." In 1991, we touched on these issues again, noting, for
example, that "numerous legislative mandates have led to the creation
of individual EPA program offices that have tended to focus solely on
reducing pollution within the particular environmental medium for
which they have responsibility, rather than on reducing overall
emissions."\20 More recently, in testifying on efforts by EPA to
improve its working relationship with the states and to provide them
with additional flexibility,\21
we concluded that "as long as environmental laws are medium-specific
and prescriptive and EPA personnel are held accountable for meeting
the requirements of the laws, it will be difficult for the agency to
fundamentally change its relationships with the states to reduce
day-to-day control over program activities."
As an alternative to modifying the statutory framework, a bill
introduced at the end of the 104th Congress would have authorized a
demonstration program under which the EPA Administrator could modify
or waive an agency rule if, among other things, a regulated facility
could demonstrate that an alternative compliance strategy would
achieve better overall environmental results than would be achieved
under current regulatory requirements. Under the bill, the
Administrator could not approve an alternative compliance strategy
that would result in a violation of a national environmental or
health standard.
--------------------
\19 Environmental Protection Agency: Protecting Human Health and the
Environment Through Improved Management (GAO/RCED-88-101, Aug. 16,
1988).
\20 Environmental Protection: Meeting Public Expectations With
Limited Resources (GAO/RCED-91-97, June 18, 1991).
\21 Environmental Protection: Status of EPA's Initiatives to Create
a New Partnership With States (GAO/T-RCED-96-87), p. 8.
EPA BELIEVES STATUTORY
FRAMEWORK ALLOWS FOR
INNOVATION
-------------------------------------------------------- Chapter 3:5.2
According to the Deputy Administrator, EPA has taken the position
that it needs to review the results of the Enterprise for the
Environment Initiative (E4E) before it considers the need for
legislative changes. This initiative is examining, among other
things, whether policy reforms are needed to shift the current
regulatory system toward one that is more performance-based and
flexible and that uses market mechanisms and alternative enforcement
and compliance approaches to achieve environmental protection.\22
Participants in this effort plan to deliver a package of
recommendations to the Congress and the administration in 1997. The
Deputy Administrator added, however, that the agency's experience to
date with reinvention confirms that much can be accomplished within
the existing statutory framework. EPA reinvention officials
supported this view, maintaining that as they have evaluated proposed
projects on a case-by-case basis, they have found that proposed
changes have been achievable within the constraints posed by existing
statutes.
In addition, according to these officials, the agency can deal
effectively with potential regulatory barriers through "site-specific
rulemakings" that allow it to offer additional flexibility to
participating companies. Under these rulemakings, EPA can promulgate
a rule that will permit the agency to approve the terms of a project
employing an alternative regulatory approach. According to EPA, the
authority for such a rule would be based on an alternative
interpretation of a statute applicable only to the specific site.
The facility would then comply with this site-specific rule.
Many in the environmental community also believe that statutory
change is not needed and that much flexibility already exists in
environmental statutes. An attorney with the Natural Resources
Defense Council cited the Clean Water Act as an example, noting that
the law allows site-specific variances from water quality-based
effluent limitations. Using this flexibility, facilities can have up
to 5 years to comply with water quality effluent limitations.
--------------------
\22 The Center for Strategic and International Studies--an
independent, nonprofit, nonpartisan institution founded in 1962 to
advance the understanding of emerging global and domestic
issues--launched the E4E initiative in Nov. 1995. The objective of
this initiative is to engage key stakeholders (environmentalists,
business, labor), experts, and Democratic and Republican political
leaders in a policy dialogue aimed at rebuilding a consensus on the
strategic direction of U.S. environmental policy.
MANY IN THE REGULATED
COMMUNITY DOUBT THAT MUCH
PROGRESS CAN BE MADE WITHOUT
STATUTORY CHANGES
-------------------------------------------------------- Chapter 3:5.3
EPA's view that reinvention can produce substantial results without
statutory changes is at odds with the view held by many in
industry--whose participation, as key members of the regulated
community, is crucial for reinvention to succeed. Both individual
companies and other industrial organizations, including some
discussed earlier that have participated in reinvention experiments,
have expressed strong reservations about the potential for
reinvention within the present statutory framework. For example, the
report to the Global Environmental Management Initiative, discussed
earlier in this chapter, noted that the agreements under Project XL
do not provide firms with any protection from lawsuits by citizens or
environmental groups that may object to the terms of these
agreements. As a result, according to the report, "industry
participants in reinvention programs generally steer the programs to
peripheral matters because their general counsels caution them
against taking any action that might result in litigation." \23
Similarly, reflecting on its experience as the petroleum industry's
representative on the Common Sense Initiative Council, a
representative of the American Petroleum Institute told us that the
Institute favors statutory change to explicitly authorize
reinvention-type activities. Echoing the Global Environmental
Management Initiative's concern over the consequences to companies of
being perceived as violating the law, he noted that even frivolous
lawsuits pose a real threat. He added that companies "going out on a
limb" need to be afforded statutory protection.
Some industry representatives have specifically questioned whether
EPA's strategy of using site-specific rulemakings will provide
industry with the assurance it desires that actions taken under a
reinvention project will not extend the approval process for
reinvention projects for months or years, because it may take years
to implement a rule and additional years to litigate it. In fact,
these concerns may be well founded because some environmental
organizations have raised concerns that site-specific rulemakings may
allow EPA regions to essentially rewrite federal policies, may raise
questions about whether EPA's rules are applied consistently across
the nation, and may preclude national environmental groups and other
parties from participating adequately in the process. Among the
other reservations voiced by industry representatives are concerns
that EPA may not have the statutory authority to modify a rule in
some cases.\24
The state officials interviewed expressed some disagreement over the
need for statutory change. Georgia environmental officials
acknowledged that current law poses constraints on innovation but
said that legislative changes may be premature until EPA and the
states have gained more experience with reinvention. In contrast,
officials from Massachusetts and Minnesota both agreed that
environmental statutes need to be changed before real progress can be
made in implementing reinvention.
--------------------
\23 Industry Incentives for Environmental Improvement: Evaluation of
U.S. Federal Initiatives, Resources for the Future (Sept. 1996).
This report was published before EPA introduced the use of
site-specific rulemaking, which is intended to help protect companies
from third-party lawsuits. However, as discussed later in this
section, even with the use of site-specific rulemakings, some
industry representatives remain concerned that litigation against EPA
may still delay reinvention projects.
\24 A proposal for a site-specific rulemaking was published on March
31, 1997, for an XL project proposal made by Merck and Company, Inc.
This is the first XL project to use site-specific rulemaking. As of
May 1997, the rulemaking proposal was going through final
negotiations.
EXISTING STATUTORY FRAMEWORK
IMPOSES SOME LIMITS ON
REINVENTION
-------------------------------------------------------- Chapter 3:5.4
Our own work substantiates the claims of many state officials and
industry representatives that ambiguities about the legality of at
least some proposed reinvention proposals may be enough to discourage
their use. For example, in June 1992, we concluded that the use of
water pollutant trading had been limited, in part, by the absence of
a clear and unambiguous authorization of this practice in the Clean
Water Act.\25 We cited an EPA analysis of participating states that
found states' concerns over the absence of such authorization
inhibited trading because of perceived legal risks that programs
would be overturned or disallowed by regulators or the courts. We
concluded that there would be benefits in amending the act to more
clearly signal that trading is permissible. A recent study by
Argonne National Laboratory reached similar conclusions, noting that
"to some extent, companies that elect to trade do so at their own
risk. . . . Conservative corporate and municipal government
managers would be more willing to undertake trades if they felt their
risk of future litigation and liability were reduced."
Similarly, we testified in February 1996 that concerns over existing
statutory requirements have hampered states' efforts to experiment
with integrated environmental management, a concept under which a
state focuses on a whole facility and all of its sources of
pollution, rather than on a medium-specific source of pollution.\26
We noted, for example, that while these efforts had indeed met with
some success, they were hampered by EPA funding and reporting
requirements linked to individual federal environmental statutes.
Referring to states' efforts to pursue innovative regulatory
programs, such as integrated environmental management, we concluded
that "as long as environmental laws are medium-specific and
prescriptive and EPA personnel are held accountable for meeting the
requirements of the laws, it will be difficult for the agency to
fundamentally change its relationships with the states to reduce
day-to-day control over program activities."
These examples do not suggest that all meaningful improvements
necessarily require legislative authorization. In fact, EPA can
point to specific instances when constructive, cost-effective changes
have been made under current law. They do, however, substantiate the
claims of many state and industry officials that EPA will be limited
in its ability to truly "reinvent" environmental regulation under the
legislative framework as presently constructed.
--------------------
\25 Water Pollution: Pollutant Trading Could Reduce Compliance Costs
If Uncertainties Are Resolved (GAO/RCED-92-153, June 15, 1992).
\26 Environmental Protection: Status of EPA's Initiatives to Create
a New Partnership With States (GAO/T-RCED-96-87, Feb. 29, 1996),
p.6. For example, rather than performing multiple inspections for
various environmental media, a state could use an integrated approach
that incorporates inspections for all media into a single,
facilitywide inspection that focuses on production processes.
CONCLUSIONS
---------------------------------------------------------- Chapter 3:6
In many respects, EPA's experience with reinvention is similar to
that of other public and private organizations that have attempted to
change their operations and cultures. To date, the agency has taken
some important steps toward devising a system that will protect the
nation's environment more efficiently and cost-effectively. For
example, the agency has learned that it needs a system for elevating
problems requiring senior management's attention. It also has begun
to develop criteria for systematically evaluating its reinvention
efforts. Nonetheless, EPA faces significant hurdles that must be
addressed effectively if reinvention is to succeed.
First, we found that managing a large number of often-complex and
demanding initiatives has caused difficulties for EPA staff as well
as other stakeholders. The problem has been compounded by (1) the
fact that some of the agency's key initiatives have proved to be more
demanding than originally conceived and (2) key stakeholders are
confused about the primary objectives of these initiatives. EPA
officials, including the Deputy Administrator, have pointed out that
the agency should respond to this issue over time as evaluations of
these initiatives provide management with the information it needs to
determine which programs should be continued and what can be done to
improve them. However, a systematic and comprehensive review may be
useful at this time--particularly in light of (1) the problems,
identified by EPA and other participants in reinvention activities,
with the number and clarity of the initiatives; (2) the fact that the
agency has had several years of experience with many of the
initiatives; and (3) the fact that the agency has a long way to go in
developing evaluation components for many of the initiatives. Such a
review could lead EPA to discontinue initiatives that no longer
support the agency's overall reinvention goals; set priorities among
the initiatives that will continue; and ensure that the specific
objectives and expectations for these initiatives are clear to
stakeholders inside and outside the agency.
Second, while EPA has made enormous--perhaps unprecedented--efforts
to involve stakeholders with different interests and perspectives in
the reinvention process, achieving and maintaining consensus has
proved to be an enormous challenge. That challenge has been most
difficult when EPA has sought to achieve--or was perceived as seeking
to achieve--100 percent agreement. As the agency proceeds to
evaluate its involvement of stakeholders in the reinvention process,
we believe that it could usefully clarify its definition of consensus
and the circumstances under which unanimous agreement must be
achieved.
Third, a long-term, institutional process for quickly resolving
reinvention problems could help EPA avert the kind of
miscommunication, disagreements, and other issues that undermined
some of its earlier reinvention projects. While EPA's use of
"reinvention ombudsmen" has helped in specific cases, participants
within and outside EPA have maintained that senior managers will not
be able to intervene each time a problem arises. They maintain that
a more sustainable process is needed--one that distinguishes between
problems that can be resolved at lower levels within the agency and
those that need to be elevated for senior management's attention.
EPA management expressed its agreement to us with the concept of such
a process, and is currently negotiating arrangements for this type of
process with the states.
Fourth, EPA has made progress toward measuring the effectiveness of
some of its reinvention initiatives, developing strategies for
evaluation and establishing criteria to assess its reinvention
efforts as a whole. At the same time, EPA reinvention officials
acknowledged that many initiatives do not have an evaluation
component and that such a component is not formally required. We
believe the agency should build on its initial steps toward
evaluating the success of reinvention by setting the expectation that
each of its reinvention initiatives should include some kind of
evaluation component. Such an evaluation component is all the more
important in light of the acknowledgement by EPA management that it
needs such information to make informed decisions about which
initiatives to continue and how to improve them.
Finally, much discussion has focused on the potential need for
statutory changes as a precondition for reinventing environmental
regulation. We believe that constructive modifications can indeed be
made under the current environmental statutory framework. However,
EPA will be limited in its ability to truly "reinvent" environmental
regulation without legislative changes. EPA says it will need to
consider the results of a key advisory group, expected this summer,
before concluding whether and what kind of statutory changes it
believes are needed.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:7
GAO recommends that the Administrator, EPA,
-- direct the Associate Administrator, Office of Reinvention, to
review the agency's reinvention initiatives to (1) determine
whether there are any that no longer support the agency's
overall reinvention goals and should therefore be discontinued,
(2) set priorities among those that will be continued, and (3)
issue clarifying guidance, as needed, to help ensure that the
specific objectives and expectations of continuing initiatives
are clear among stakeholders inside and outside the agency;
-- improve the prospects for achieving consensus among concerned
parties in EPA's reinvention efforts by clarifying the
circumstances under which unanimous agreement is required;
-- develop a systematic process that would help to address problems
in a timely fashion by identifying which kinds of problems can
be resolved at lower levels within the agency and which should
be elevated for senior management's attention; and
-- direct that each of the agency's initiatives include an
evaluation component that measures the extent to which the
initiative has had its intended effect.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 3:8
Officials with EPA's Regulatory Reinvention Team expressed general
agreement with the report's recommendations, offering observations or
suggesting modifications in some cases. The Team's Director noted,
however, that the timely resolution of complex problems involving
numerous regional and program office staff may not always be
possible. We acknowledge the difficulty of resolving such problems
expeditiously. However, we believe that the type of "triage"
suggested in our recommendation, which would elevate complex problems
for senior management's attention when disagreements could not (or
should not) be resolved at lower levels, would help to address this
difficulty.
The Regulatory Reinvention Team's Director also indicated that our
recommendation to include outcome-based evaluation components for
each initiative may be impractical because measuring environmental
outcomes may not be possible in all cases. We agree and modified
this recommendation to avoid calling for outcome-based measures in
all cases. However, we continue to believe that, when possible,
outcome-based performance measures should be used, as the Results Act
directs.
The Director of the Regulatory Reinvention Team expressed some
concern that although the report did not specifically recommend
statutory changes to facilitate reinvention, some readers may infer
that GAO is advocating change in the medium-specific structure of the
federal environmental statutes. He added that the report did not
assess how changes in environmental law can improve environmental
protection. We acknowledge that assessing how specific changes could
improve the environmental statutory framework was outside the scope
of this review, although our draft report did reflect the views of
EPA officials, industrial and environmental groups, and other
participants in the environmental regulatory process on this issue.
We also acknowledge that EPA, in consultation with key advisers and
stakeholders, is ultimately responsible for assessing whether changes
to environmental statutes should be recommended to the Congress. At
the same time, we believe that any discussion of the issues affecting
reinvention's success would be incomplete without citing the inherent
limitations to fundamental change posed by the statutes' current
medium-by-medium focus. Such limitations have been acknowledged by
EPA in past years; documented consistently in analyses by GAO and
other organizations; and cited as a key issue by the large majority
of officials interviewed for this report.
Finally, the officials suggested that the report focuses on the most
visible of EPA's initiatives, such as Project XL and the Common Sense
Initiative, and does not sufficiently acknowledge (1) the agency's
smaller, less visible initiatives and (2) the extent to which
reinvention principles are being applied throughout EPA's day-to-day
activities. Although we did not analyze all of EPA's reinvention
initiatives in detail, focusing instead on the efforts emphasized by
the EPA and state officials contacted during our review, the draft
report acknowledged that EPA has undertaken numerous other
initiatives and listed many of them in appendix I. The draft report
cautioned against measuring the success of reinvention by the large
number of initiatives under way, noting that EPA may need to reduce
the number of initiatives to improve the prospects of success for its
highest-priority efforts. In regard to the extent that reinvention
principles are being applied throughout EPA's day-to-day activities,
chapter 3 of the draft report had, in fact, discussed many of the
agency's efforts to instill reinvention principles into the staffs'
day-to-day activities, emphasizing that EPA management considers
cultural change to be a major goal of its reinvention efforts. Here,
too, however, the draft report discussed the agency's difficulties in
achieving this goal, noting in chapter 3, for example, "widespread
agreement among EPA officials, state officials, and others that the
agency has a long way to go before reinvention becomes an integral
part of its staff's everyday activities."
EPA'S MAJOR REGULATORY REINVENTION
INITIATIVES
=========================================================== Appendix I
In March 1995, the administration announced a comprehensive effort to
reinvent environmental regulation\1 and identified 25 "high-priority
actions" and 14 "other significant actions" that the agency would use
to launch this effort. More recently, EPA identified 10 efforts for
us as its larger and more cross-cutting initiatives. These
initiatives are denoted below in bold type. Four of the 10
initiatives, which were not included in the original announcement,
are listed below under "Other Larger Cross-Cutting Efforts."
--------------------
\1 President Bill Clinton and Vice President Al Gore, Reinventing
Environmental Regulation, National Performance Review (Mar. 16,
1995).
25 HIGH-PRIORITY ACTIONS
--------------------------------------------------------- Appendix I:1
IMPROVEMENTS TO THE CURRENT
SYSTEM
------------------------------------------------------- Appendix I:1.1
-- Issue a rule allowing open-market air emissions trading
-- Promote effluent trading in watersheds
-- Refocus hazardous waste regulation on high-risk wastes
-- Refocus drinking water treatment requirements on the highest
risks
-- Expand the use of risk assessment in local communities
-- Provide flexible funding for states and tribes
-- Provide sustainable development challenge grants
-- Encourage regulatory negotiation and consensus-based rulemaking
-- Reduce existing reporting and recordkeeping requirements by 25
percent
-- Create one-stop emission reports
-- Consolidate federal air rules
-- Move to risk-based enforcement
-- Establish compliance incentives for small businesses and
communities
-- Establish small business compliance assistance centers
-- Create incentives for auditing, disclosure, and correction
-- Develop a self-certification (compliance) program for
environmental requirements not associated with emissions or risk
data
-- Expand the public's electronic access to information on all EPA
programs
-- Establish an EPA center for environmental information and
statistics
BUILDING BLOCKS FOR A NEW
SYSTEM:
------------------------------------------------------- Appendix I:1.2
-- Project XL (Excellence and Leadership) for facilities
-- Alternative strategies for sectors (Common Sense Initiative)
-- Alternative strategies for communities
-- Alternative strategies for agencies
-- Pilot third-party audits for industry compliance
-- Multimedia permitting
-- Design for the Environment--"Green Chemistry Challenge"
OTHER SIGNIFICANT ACTIONS
--------------------------------------------------------- Appendix I:2
PERFORMANCE AND MARKET BASED
REGULATIONS
------------------------------------------------------- Appendix I:2.1
-- Conduct several demonstrations of facilitywide limits for air
emissions
-- Propose targeted Clean Water Act revisions to provide
flexibility in meeting effluent discharge deadlines
SETTING PRIORITIES BASED ON
SOUND SCIENCE
------------------------------------------------------- Appendix I:2.2
-- Eliminate millions of storm water permit applications
-- Exempt low-risk pesticides and toxic chemicals from regulation
-- Establish a program to forecast future environmental problems
BUILDING PARTNERSHIPS
------------------------------------------------------- Appendix I:2.3
-- Encourage states and tribes to implement a flexible,
performance-based approach for permitting municipal landfills
CUTTING RED TAPE
------------------------------------------------------- Appendix I:2.4
-- Save billions on the costs of disposing of polychlorinated
bi-phenyls (PCB)
-- Simplify air permit revision requirements
-- Simplify the review of new air pollution sources
-- Simplify water permit paperwork
-- Streamline corrective action procedures under the Resource,
Conservation, and Recovery Act
BETTER ACCOUNTABILITY,
COMPLIANCE, AND ENFORCEMENT
------------------------------------------------------- Appendix I:2.5
-- Develop flexible compliance agreements for specific industries
THE POWER OF INFORMATION
------------------------------------------------------- Appendix I:2.6
-- Commission an independent study on collecting and using
information more effectively
-- Establish a data transfer system that will allow facilities to
report monitoring results electronically
OTHER LARGER CROSS-CUTTING
INITIATIVES
------------------------------------------------------- Appendix I:2.7
-- Brownfields Initiative
-- Environmental Leadership Program
-- National Environmental Performance Partnership System
-- Voluntary Partnerships (applies to a broad range of activities)
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II
RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C.
Steve Elstein, Assistant Director
Lisa T. Pittelkau, Evaluator-in-Charge
Beverly Norwood Dulaney, Senior Evaluator
OFFICE OF THE GENERAL COUNSEL
Karen Keegan, Senior Attorney
*** End of document. ***